Bits Bucket And Craigslist Finds For February 19, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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“ZIRP” is the new buzzword from the shills on CNBC. That is “zero interest rate policy” to you and I. Unbelievable! They are rolling out “experts” that will attest that a zero interest rate by Bernanke would fix the housing market.
My wife and I were walking through NYC the other day. The only thing that we could conclude is that sky high real estate prices are the worst thing in the world for society. Families and singles can’t afford where they live. Businesses can’t be viable due to outrageous rents. You see that in NYC where businesses, some of them very good businesses, come and go like tumbleweeds. The rents are just so high. But the Masters want to keep real estate sky high so we can hide the desperate weakness of our economy. This is really dumb.
“ZIRP happens” will be the new bumper sticker. The shills are even trying to call a bottom in the dollar. What a funny way to start a week.
Are you kidding me? Now I have to go turn it on, thx a lot NYCBoy!!
Christ-all-mighty, wtf are these idiots thinking. Yes, of course if you can borrow money at 0% it will have a dramatic effect on.. Well, on everything. The banks will salivate; that’s for sure, borrowing money at 0% is a sure money maker for them…
How stupid are these people? And secondly, is it really possible to be that stupid?
HIGH PRICES = BAD FOR CONSUMERS.
You dumba**es.
I wonder what long term rates will be like under ZIRP? What if people refuse to borrow at any rate? Banks are already less likely to lend.
But, I’m a patriot. I’ll will borrow a lot at zero interest. I’ll even spend it on a nice property. Maybe on Cheju Island or Phuket ;-).
“They” have a fix for that also. The PTB will charge a holding fee for banks and individuals that “hold” cash instead of lend/spend it. I just read about it but can’t remember where. I’ll post it if I come across it in my “travels” again.
Two words : capital flight.
Already happening as we speak.
That doesn’t surprise me:
Last week my husband got a nice little letter from M&T.
It said.
Dear Mr. CarrieAnn:
“You’ve been a loyal customer”…blah, blah, blah. “Our relationship with you is important to us because we understand that we can only be successful when you’re successful.
But success won’t come easily in today’s unsettled economy. Last year was a volatile year in the financial markets, and 2008 promises to be equally complex. With so many challenges and choices, times like these call for a financial services paartner that has withstood the test of time.
More than 150 years after being founded M&T Bank today is viewed a sone of the most highly regarded and most steadfast banks in the nation. You can be certain that we will continue to uphold our longstanding tradition of careful, conservative, and consistent management. We want you to know that you can count on us n today’s ever-changing world.”
I SMELL FEAR.
the idea of “capital flight” and possible “capital controls” are a subject in need of a weekend discussion in my opinion. they could be some of the biggest tangential effects that hit even the “savvy” amongst us, imo.
“But the Masters want to keep real estate sky high so we can hide the desperate weakness of our economy.”
What about the other Master, China? When is China going to stop buying our money losing currency?
This is what the ZIRP’ers don’t think about. You can’t control your own interest rates when you have to go cap in hand to the rest of the world for $2 billion every day, any more than you can tell your banker what rate to charge you for a loan.
That “yield steepener” trade is looking better and better each passing day.
Obviously there are foreign bond funds, but is there a fund that invests in foreign CDs only?
You could use Everbank but they have high minimums for the CD’s that I’m interested in.
Also, they don’t give a very favorable exchange rate, and they have strange ways of structuring things. (They are relying on the mathematical fact that the “mean” is always less than or equal to the largest value.)
Well, that doesn’t make much sense. The mean will, of course, always be less than the largest number. But that statement is nonsensical - any number greater than another number is larger than the other number, but so what? Please explain.
After the Olypmics.
Actually, rents and real estate prices are largely uncoupled. LLs will charge whatever the renters can bear.
FWIW, I find the Georgist prescription of aggressively taxing ground rents interesting — since we are stuck with high rents in high wage areas at least we should encourage efficient use of groundspace — but I’m not entirely sure it would prove to be the actual panacea it appears to be.
Actually, you are wrong. If home prices fall by 50 pct in my area and rents stay where they are, I will gladly go buy a home. Many others making this rational decision will cause rents to fall, as rental housing and owner-occupied housing are substitutes in consumption. The notion that LLs charge what consumers will bear is correct, but consumers will bear far less if home prices are much lower.
But who will be able to qualify for home loans when they really have to prove their income, sketchy work history and reveal their trashed credit ratings?
DOC
They won’t, those days are long gone!
Exactly why I think home prices have a long way to fall from here, DOC.
Many others making this rational decision will cause rents to fall, as rental housing and owner-occupied housing are substitutes in consumption.
Wrong. Because when a renter buys a property, that property (if currently rented), or another one down the purchase chain (if not), has to be removed from the rental pool.
It works the other way too - owners selling and becoming renters does not cause rents to go up, because the house they sell (or another down the chain) gets added to the rental pool.
I agree that rents in bubble areas are not rising now, as the units that cannot be sold are being added to the rental stock instead. PB posits a situation where prices eventually fall to make buying and renting comparable in cash-flow terms; this was sort of true in the mid-1990’s. My observation about rents from that time forward was, they didn’t fall, they didn’t much rise, they just sort of sat on their collective rump while prices took off skyward again. That kind of bottom isn’t likely to happen this time, so I don’t know what to expect of rents.
What if the 6X% of “homeowners” reduces as the foreclosed or jingley go into the renter pool, but the houses stay vacant ? (Presumably because the banks can’t figure out what to do with them, or they are too trashed to want to buy at any price. How many flip speculators are there (left) anyway?)
If home prices fall by 50 pct in my area and rents stay where they are, I will gladly go buy a home
and promptly rent it out for market rents!
I would say rather that rents are a much more accurate gauge of the supply and demand of housing than purchase price. The transaction costs are much lower: a security deposit costs much less than that 3%+3% that the realtors charge. Renters move more often than those who purchase houses. Since a higher percentage of rental housing is on the market in a given year the pricing is more responsive to market forces.
But of course all rental housing IS owned by somebody. In normal, sane, non-bubbly times, they wouldn’t be buying property if they couldn’t rent it out at a profit. It’s not that rents are based on purchase prices, it’s that purchase prices are based upon anticipated rents.
You may enjoy the latest movie from Mogambo Film Industries:
“where the plot has Ms Pelosi leading a big safari into the jungle to deliver free goods and services to natives along the way, and one of the bearers of the treasure chests (in the script he is referred to as “Taxpayer Number One”) steps into the deadly quicksand of deficit-spending a fiat currency via unlimited fractional reserve banking. It is then that the movie turns into a farce, as Ms Pelosi is crying out, “Quick! Give him some more money!”
http://atimes.com/atimes/Global_Economy/JB20Dj01.html
Here I had thought ZIRP meant “zero inflation rate policy”? I guess I am behind the times…
I saw a documentary when in Germany about the societal shift in the Lower East Side, where a new luxury (and verrryy expensive!!) hotel has opened (don’t remember the name) and is successful because the clients feel thrilled to room close to people they would otherwise never associate with, i.e. real Lower East side characters.
They reported on the shelter on the opposite side of the street, which has been there for ages, and the owner now finally sold out to developers. Orchard St and the blintzes at Katz’s (From their website, and for those who don’t know NY: “In one of the poorest quarters in Manhattan”), the lamp and kitchen stores, that’s part of the NY I fell in love with. Going going…sigh.
I googled around and found this Krugman article about the end of ZIRP in Japan. It sounds like it didn’t do jack for them - Krugman thought they should continue it of course.
Has their economy ever recovered from the late 80s recession?
Wouldnt that just create more bubbles and more division of winners and losers, with the winners being the least deserving?
I have it on pretty good authority that the Fed will go as low as 0.5%. That would effectively be ZIRP. As we all know the Fed will always bail us out when we need it the most !
Get a bigger hammer!
Cure a bad hangover with enough drink to numb the pain (aka “bite of the dog that bit you” cure).
Bottom in the dollar? That’s much easier to predict than the bottom of the real estate market. I don’t know if prices will start getting inflated again after prices hit 190k, or 150, or 100.
But the bottom of the dollar will be reached when it is completely worthless. Actulally, there is a limit to hyperinflation. A dollar bill will not be worth less that one square of toilet paper, if those two items ever reach parity, expect some substitution.
I disagree. It is quite possible that the dollar will be worth less than a single strip of TP. They will just stop printing $1s. Like many currencies of the world, the smallest bill with be multipe digits long. No more pennies or nickles. Instead of rounding to the nearest penny, we round to the nearest dime. $1 and $5 coins. Smallest bill becomes the $10.
Yep. Not an outcome that I feel is likely, but currencies certainly have inflated to the point where a single unit was worth less than the paper it was printed on. Just look at pictures of people fueling their stoves with marks in 1926.
But toilet paper is softer, and hence worth more.
This society has a zeitgeist, a “spirit of the age”, that strongly pushes personal debt.
Debt is like a hard drug. Feels great at first, but eventually, you crash.
The zeitgeist should evolve, perhaps not to urge a Japanese level of savings, but definitely to a model which urges significantly more prudent personal finance, with more savings and much less personal debt.
I have a Commodity Heavy Trading Account….one of my biggest up days ever.
Get ready for some serious “Food & Energy Inflation”.
Super Stagflation……Nuts…..p
Would it be wise then to borrow money and invest in solid dividend paying investments?
No, sky-high real estate prices are the BEST thing for a feudal society. People cannot afford property any longer, which means they have to beg to their government masters for loans, bail-outs, etc. Then, the government can move people about as desired (like that stupid superhighway for illegals that will cut across Texas all the way to the Dakotas), and there’s nothing the people can do about it.
Sky-high prices reward the rich and punish savers; they break up families and drive out business, creating a permanent class of grifters who live off the scam and poor who are locked into cruddy rentals or houses they cannot afford. From the viewpoint of destroying the middle class, high prices are a great thing.
Same with ZIRP: it wipes out savings or forces people to give their money to Wall Street crooks, who will take a chunk in fees and blow the rest on MBS’s or some other junk. It’s all about preventing people from controlling their own finances and thus having freedom.
“Sky-high prices reward the rich and punish savers”
I don’t get this comment. In order to become rich you must be a saver!! only rich own property NO
No savers own property NO
Your logic is innacurate!! YES
It appears you have issues with those who have saved over a long enough time to become rich
A saver of what is more important than being a saver.
A saver of beanie babies, real estate, gold, equities does not matter as long as you understand market forces. ‘The trend is your friend’ mister ’saver’ so save what is gaining value and don’t save what is losing value. Don’t whine that the rich are oppressing the little guy saver IT DOES NOT COMPUTE!!
“Sky-high prices reward the rich and punish savers.”
A better arguement is the established PTB (typically rich) believe they need to support prices in order to prevent a finacial meltdown in the markets and a failure of our banking system.
Many rich people are caught up in this mess just like the little ’saver’ guy. It doesn’t matter if you are rich or poor, it will be troubled times ahead if the Powers That Be cannot prevent/minimize the financial mess. It is in every Americans interest that the dollars value does not go to zero. The problem lies in the long term deregulation of markets which allow the asset values and GDP to grow but sometimes grow in ways that are undesirable. Blame those who created and changed the rules; not those who learned the rules and played by them. Today the rules are changing and as a saver one must learn them quickly or lose RICH OR POOR!!!
I wonder if this will apply to student loans?
I’m goin’ back to school fo’ SHO’ if I don’ hafta pay no interst!
Bub, let me know if this applies to studentloans, as I will join you. Got some unfinished bidness to ‘tend for higher deg.
Anyone else have this experience recently? My CC (BOA) just wrote to me. Limit increased another 10K. It seems that the scaling back on credit is really not effecting those of us with good credit, and no debt. The limit on this card is (and already was) just insane; although I make a good income, I can’t imagine having this thing maxed out; the interest would have to be a few thousand a month, maybe more (you can tell how often I carry a balance on it, I don’t even know what the interest rate is).
I find it interesting that while all I hear on CNBC is the “credit crunch” my experience has been exactly the opposite. Is it possible that the crunch is only for people who NEED credit, and not for those of us who just use it for convenience? I’m just curious where the disconnect is developing, I thought in a crunch it was hard for EVERYONE to get credit, good scores (and good DTI) or not?
michael
i have had the same thing happen to me. i got a increase whch doubled my limit about 4 months ago. i never carry a balance either.
i do not even know my interest rate either i pay in full every month- i thought cc companies hated people like us who use them for 30 day interest free loans
Happened to me recently with Crapital One. They doubled my credit limit to $10,000 on my only credit card, and didn’t even notify me of the change. Nor did I ask for it.
I use the card for everything except rent, because it’s a no-fee card, and they pay me cash back. Because I pay off the balance each month, they’ve been actually paying me quite handsomely to use their card for a long time. Mighty nice of them.
Actually, we’ve been paying you to use their card, in the form of higher prices to cover the 3% (1%?) transaction fee that Mastercard takes on every purchase.
It used to be that stores made credit purchasers pay the transaction % separately — some wholesale clubs still do. But when stores found out that this turned people off, they just jacked everything up for everybody.
I read that now people spend 10-15% more if they use credit or debit because they don’t have to worry about running out of cash. This more than makes up for the transaction fee. *Sigh* I’m just old enough to remember those little plastic punch-button “calculators” that mothers clipped onto their grocery carts to keep a running total of the $$, so they didn’t run out of cash. If we returned to that mentality, the USA would go bankrupt in a month.
Time to short Mastercard?
Actually if a credit card firm (VISA/MC/AmEx) finds out a store has separate pricing for cash and credit, they’ll pull their card acceptance from the store.
Bingo. Boston installed CC parking meters with a minimum $2.00 charge about a year ago. I wrote an email to the Boston Globe writer covering the roll-out of the meters indicating as such. The reporter (bless him) went back to the city with that informaiton, apparently including the PDF copies of the merchant agreements from the credit card companies I forwarded to him, and the city changed the policy (and shut down the meters for a month while making the change). Boston, according to the writer, became the only city in the nation with CC parking meters that didn’t have a minimum transaction.
So, in Boston, you can put $0.25 on your credit card. The city estimates that transaciton costs them, IIRC, $0.27.
I don’t like seeing the city operate parking at a loss, but I do like them to follow rules. I just wish they’d follow their own.
Warren Buffett himself has said that the “credit crunch” is BS. The good risks have no trouble getting credit. It’s the bad risks who are having trouble borrowing. IOW, just like it used to be.
Is it possible that the crunch is only for people who NEED credit
Ahem. The bad risks don’t “need” credit, they need to stop borrowing.
Hi Yogurt,
It may be time to scrape the silver plating off of all those tea sets, knives, forks and spoons:
http://tinyurl.com/2sjdef
Citibank has been raising our credit limit (multiple times) for a while.
Like other HBB’ers, we pay it off every month and get cash back. We also use it for all of our purchases (yes, even Starbucks, on the rare occasions we go there).
I have a CC that the limit kept adjusting upwards and when it hit $5K I went into the bank and told them to lower it down to $500, but I was informed that their minimum was $750 so I agreed to that limit. Viola, in retribution the CC interest was changed from 9% to 15%. I only keep the card because they tell you for credit rating purposes not to cancel your oldest cards.
Congratulations. You just lowered your FICO score by about 30 points.
There is nothing immoral or wrong with having available credit - as long as you use it responsibly. Life sometimes comes at you with unexpected stuff.
I like knowing, that in an emergency, I can pull out a card.
Like a sudden burning need to move $100000 - 4% of cash advances to the Cayman Islands
Michael,
Your experience supports the notion that this is not a liquidity crisis so much as a solvency crisis. There is gobs of money out there and everyone’s more than willing to lend, it is just that there’s noone solvent enough left to loan to, and those that are solvent enough, are completely unwilling to play the please-buy-overvalued-assets game.
Proof that there’s tons of money out there: the low interest rates.
If money were really scarce, we’d be getting higher rates on all our savings accounts. Not happening = no liquidity crisis.
Its an Inflation crisis as in “No more housing Inflation” hurting alot of people.
There are (at least) two ways to ration loans: Rationing by price (e.g. charging a higher interest rate and only loan to those who agree to pay it) and rationing by underwriting (only making loans to customers who convince the lender they are likely to repay the borrowed monies). Interest rates can go all the way down to zero, yet little or no lending will occur if the banks suddenly decide that few pending loan applications are likely to result in repayment of the debt. This problem looms large at a time when the viability of debt securitisation is called into severe scrutiny.
For example, if mortgage lenders believe home prices will fall by much more than sellers in a given area, the only home sales may occur at price levels where the lender believes the home’s value is likely to fall below the purchase price and the buyer is likely to walk. In this case, the buyer may be unwilling or unable to produce a sufficiently large downpayment to cover the lender’s perceived risk of catching falling knife collateral, or to pay a sufficiently high interest rate to cover the risk. Hence, no deal, no matter the ambient interest rate level.
Why ration? Maybe you can make it up in volume!
“Maybe you can make it up in volume!”
And then maybe you can figure out how to get the govt to bail you out from your bad luck at having made a large volume of loans to customers who cannot afford to repay them just before a foreclosure crisis ensued.
“How do you make money doing this? Volume.”
http://youtube.com/watch?v=m8nU-q5YPRQ
” … and those that are solvent enough, are completely unwilling to play the please-buy-overvalued-assets game.”
That’s why they are solvent. And these people aren’t about to change; the frugal aren’t about to suddenly become frivilous spenders.
“..the frugal aren’t about to suddenly become frivilous spenders.” Even with all that extra credit they keep getting?
I’ve so enjoyed my conversations with reps from the two main cards we use, and have used for over 20 years. One has paid us back thousands in cash back- we are major freeloaders. These young people call the house wanting to offer us this or that (fees associated) and I tell them that we dn’t do that, and we’re not in debt, and how nice it is not to have to worry about that at our age. Then, I proceed to ask them how many people they talk to everyday who are up to their nose in debt… and still getting these offers… what do they think about that??? And invariably, every one so far has said that they intend never to get themselves in that situation. On-the-job training in debt aversion.
Visa just voluntarily boosted my limit to 50k from 40k. They sent a letter offering 0% until 8/2008 or 3.99% for eternity. There is plenty of credit available for those who haven’t committed suicide….. yet. I think the credit squeeze the CNBC asshats refer to is the fact that there are no more sheep stepping up to be slaughtered. So to compel the more conservative, they have to make money available at a “lower cost”. In other words, big money can’t earn big returns off the back of stupid folks, idiots and the reckless. Those people are already ass deep in alligators and every last bit of meat has been picked from their bones.
Sorry big money elite…… you have all the money. ALL of it. There is no more left.
It’s always been true that you can borrow money as long as you can prove you don’t need it.
Holy s**t…….50K??? That’s incredible.
Not really. I have one that’s $45K. It’s been that high since back in the 1990s. Not that I need it, since I don’t run a balance. But I guess I could use it to buy a car if I wanted to pay CC rates on a car loan.
you mean you can purchase “half a car” unless you use both CC’s.
I know a woman who came across $40,000 suddenly and the rich guy she was dating at the time said “Oh, you can buy half a car with it” His reality was quite different then most. She bought a car with the money (BMW) and her boyfriend thought it was too low rent and offered to double it in order to put her in a proper car. She didn’t take him up on the offer. She ended up dumping him due to their finacial differences.
They have “no limit” credit cards. I think they have a sort of silent limit where they would want to approve purchases over a certain amount (tens of thousands, maybe more, depending on your financial situation), but the agreement says there is no limit.
Crazy, IMHO.
I’m looking forward to the next “innovative financial product” that will allow borrowers to take out vast amounts of debt for manageable monthly payments.
Or, all that money out there wants to get interest from somewhere. I’m wondering where the next bubble is going to be, as money rushes to it.
“Or, all that money out there wants to get interest from somewhere. I’m wondering where the next bubble is going to be, as money rushes to it. ”
You haven’t been paying attention to the hype from the Gold Bugs.
….or shopping for groceries latey either i guess.
We’ll call it “Auction Rate Usury”
Don’t you think it’s better keep your limit under 10k… in case of identity theft or such?
Why? If you can prove identity theft you are not liable for the balance?
Well, yes but it’s that proving it thing, a hassle and it’s going to cost you a bundle. You can put a freeze on your credit which is what I plan on doing after I get a rewards card I like. My rewards are pretty lame, A zillion points and I can get a toaster oven or some other cheap item. It cost $10 per agency and if you need credit you can unlock your credit with a pin. I think $60 for my husband and I is pretty reasonable.
“If you can prove identity theft you are not liable for the balance?”
Hmmmm …
I smell a shady business opportunity whereby people with good FICOs allow their identities to become “stolen” for a fee.
I called Citi and had them reduce my CC limit to $5k. It’s rarely done and the whole idea really confused the person taking my call. It was enormous fun.
Like stringing the REFI guy along on the phone. “Don’t you want to pay off debt or remodel?” “No I don’t want to borrow more money.” “But you can pay off your credit cards.” “I don’t wish to borrow any more money, from you or anyone else.”
Your amout of credit used VS credit limit affects your overall credit score. The higher the ratio the lower your credit score. I think it effects about 30 or so points. If you credit is above 750 you probably should care. If it is less, than it is better to have a higher limit or ensure you pay off your balance immediately instead of at the end of the month. Your credit score is a monthly snapshot. Ensure the snapshot it sends is with no balance so the ratio is high. This is why, even though I can purchase way beyond what I ever would, I do not lower it. It ensures I stay in the high 700’s. ( I move too often to get/stay into the 800’s)
Hmmm… maybe “credit crunch” really means “lack of new suckers to continue the Ponzi Scheme.”
Yes. Both of my credit cards recently raised my limit. We don’t carry a balance and our monthly purchases never total anywhere near the credit limit, but they raised the limits anyway.
They’ve also been sending those convenience checks, seemingly once per week, and the telemarketers have been calling almost every single day.
Shitti-bank has been sending those freakin’ checks non-stop. I get them near daily now.
I should charge them for the “shredding cost”.
I should charge them for the “shredding cost”.
Do what I did to Citi, canceled all of my credit cards with them when they refused to stop sending me these checks, etc. They were very displeased with me, so I informed them to find a multiple subprime customers to replace my account.
LOL!
Funny!
I just canceled my citi card because they refused to wave the $50 yearly fee. The customer service rep had the gall to try to convince me that my credit limit of $43,000 was My Money and, “Couldn’t you think of anything you would want to spend $43,000 on?” My response, “Just cancel the card, please.”
My Citi card used to give back 5% for gas, pharmacy, and grocery store purchases. They ceased that awhile ago and I’ve since stopped using the card. But yes, they’re constantly sending me those checks. Need to carve out some time this weekend and see if any of the other card providers still offer 5%. I thought I saw something recently, but I’m drawing a blank at the moment. At a minimum I’ll be canceling the Citi card.
I agree with the sentiment, but cancelling cards, or reducing your limit can have adverse effects on your credit rating. It seems that the higher your rating, the more it effects you.
I called Citi and they stopped sending me the checks. I told them I was very concerned about blank checks sitting in my mailbox before I got home every day and could they please stop the practice of mailing me such checks.
They did. No issues. Just took about 4-6 weeks.
Same here. I just informed them when I called that I’d hold them legally liable if we ever had problems with ID theft because of their irresponsible actions (sending those blasted checks).
They stopped. No problem.
I have actually used some of those convenience checks in the past, but now they have rung every last pinch of profit out of them by offering 0% for 6 months but with a 4% immediate fee.
The fact that they are still mailing these 8% loans out shows that the supply of desperate and financially naive is still finite. But it is shrinking fast, and they are competing to get the last of them.
If it weren’t for the 3-4% up front fee I’d take advantage of it.
“I have actually used some of those convenience checks in the past, but now they have rung every last pinch of profit out of them by offering 0% for 6 months but with a 4% immediate fee.”
I would use them if it weren’t for the fee and if they’d give me reward points on that amount. But it won’t happen. They’re not making money off me as I pay off my bill in full every month.
Michael
MHO is they are just sweetening the deal on the siren song. They’re still scrambling to support the Ponzi structure and you’re a consumer from an ever shrinking pool that’s still got the goods.
I have access to credit totaling nearly twice my yearly income on various credit cards. I just got a letter from Capital One asking why I don’t use my card more. It seems incredible that I have that much credit available to me.
I pay it off every month, or, with online banking, every time I check the account balance. I just use the credit card rather than debit as protection against identity theft.
You can run your debit card as a credit card. Avoids having to use the PIN.
dollar down:
LONDON (MarketWatch) — The dollar remained under pressure in European trading Tuesday, dogged by worries about the path of the ongoing credit crisis and ideas China’s central bank might soon raise interest rates to battle surging inflation.
oil up:
Feb. 19 (Bloomberg) — Crude oil rose to its highest in more than five weeks on speculation OPEC will curb production and refinery disruptions may limit fuel supplies. Crude oil for March delivery rose as much as $2.37, or 2.5 percent, from its Feb. 15 close to $97.87 a barrel in electronic trading on the New York Mercantile Exchange.
http://tinyurl.com/2fvakd
“Crude oil rose to its highest in more than five weeks on speculation OPEC will curb production and refinery disruptions may limit fuel supplies.”
Can someone explain to me how refinery disruptions would raise CRUDE oil prices? Gas prices, of course, but refinery disruptions = reduced demand for crude (along with a shortage of gasoline) = downward pressure on prices. Do they think refineries produce crude oil for the spot market?!?
The standard excuses for ever-rising crude oil prices need not make sense. When weather gets colder, price goes up because ppl are using more heating oil, but when weather warms up, price goes up because ppl are driving more.
580 bazillion:
Feb. 19 (Bloomberg) — Credit ratings on more than $580 billion of asset-backed securities may be cut, sparking writedowns by banks, under New York regulator Eric Dinallo’s plan to break up bond insurers.
“This is one of the worst possible outcomes for the market,” Gregory Peters, head of credit strategy at Morgan Stanley in New York, said in a telephone interview.
http://tinyurl.com/27njqe
A fresh idea to deal with the housing crisis. what do you think?
just let the taxpayers deal with it
http://www.nypost.com/seven/02192008/business/a_fresh_idea_to_deal_with_the_housing_cr_98324.htm
It is certainly a bad idea, however who can be surprised. After reading about the new 401k credit card yesterday it is beyond apparent that the folks on the hill are going to pull every scheme they can dream up straight out of their ass under the guise of saving the ‘American Dream’… Home debtor ship, and of course pass the bill right down the line.
A 401K credit card? Can you please post that link (sorry if it was in yesterday’s threads, I must have missed it)? Not that I don’t believe you, but, my god, that’s an AWFUL idea if I have ever heard one.
I’ll hunt it down, yes it’s true and around 10,000 have already been issued.
Let’s pass the eclairs and the fudge around at the Weight Watchers meeting. That’s a similar notion.
Did I miss the WW meeting? Darn. lol
Here it is… One of the worst ideas ever!!
http://genxfinance.com/2008/01/16/the-401k-debit-card-probably-one-of-the-worst-ideas-ever/
This is the worst.
The sheeple have just gone from a -13% savings rate to -7%. For this country, we’ll call it “progress”.
Now this?
Yeah, but that means you can pay them less and still have them spend more, since they have another source of income. That’s good for the economy during the time period relevant to the people in change.
It occurs to me that there is a silver lining to this cloud. Instead of paying exhorbitant interest rates to Citi/BofA/Capital One/etc., debtors can pay the 20% to their 401(k)s.
Of course, this implies that they had a 401(k) balance to begin with.
I heard one where some screwed up company in the past year or two tried to replace actual paychecks with credit limits on a company credit card. Think of what a dream that would be for evil debt-pushers! You would just get an increased credit limit, but no interest on your “earnings” and the “earnings” aren’t even yours! Of course, they’d charge you interest on your purchases with the company credit card! Anything to avoid people saving and taking control of their lives.
I really have trouble believing this. Admittedly, we’ve seen some fairly unbelievable things like strawberry pickers making $20K getting $700K mortgages but I would want proof for this.
Nobody in their right mind is going to work without a salary. They would just walk.
Bottom line of the proposal: forced refinance at 1%.
As has been said here many times, you could set the rate at 0% and it wouldn’t help.
The MSM has still not grasped the consequences of going from 0% down to 20% (let alone the 45% we read about last week.)
How does this idea mesh with the R-can “no new taxes” political calculus?
It doesn’t.
You think too much. Think like a sheeple.
Fat man, black man, or fat woman?
um, so blackness rates a handle but whiteness is transparent?
whites have a culture, too. it’s not as if there are “people” and then there are “minorities.” get a clue.
Let’s say, a couple can turn down the $1,400 rebate and instead can withdraw $14,000 from their retirement account without tax penalty.
The trillions now stashed in retirement accounts will give the economy a real shot in the arm.
It is time for some new ideas.
—————————————————————————–
I knew someone would be after 401K’s and IRA’s once the house equity was empty.
I doubt there are many underwater people with money in 401Ks. It seems they would have sucked their 401Ks dry by now in an attempt to stave off foreclosure.
Frugal people have 401Ks, spenders don’t.
And the idea that frugal people will suddenly turn into spenders is absurd.
This, incidentally, is also the nail in the coffin of the “global decoupling” argument. The idea that the Chindians are suddenly going to turn spendthrift is equally absurd.
There might be more than you think…I don’t know. All I know is that I was one of those people prior to my final “involuntary deleveraging”. I was smart enough to have a 401(k) to maximize the free money from my employer matching, even though I wasn’t smart enough to confront my bipolar wife on her spending. The system made it sufficiently difficult for me to pull money from it so that I never did.
I was talking to a friend who had a small business. They wanted to maximize employee participation in the 401k so that the partners could participate. It seems that if no/few rank and file employees participate, the high muckety mucks can’t reap the tax benefits. Even when he pointed out to his secretary that if she could pay the maximum in, get the matching funds, withdraw at the end of the month and pay the penalty for early withdrawal she would come out ahead she wouldn’t participate.
I was the director of an ESL school on a community college campus for many years. Our parent company offered a matching 401k up to 4%. Few employees, if any, took advantage. Most said they needed every take-home dollar just to survive in the OC, Very sad.
Just wait until they take away the tax advantages on IRA’s, Roth IRA’s, 401K plans, etc.
The sheeple must not be allowed to keep “their” money!
They wish to “breathe some life back into the housing market”?
The market is still doing relatively well. Last I heard, volume is pretty average, by historical standards. Sales of new and existing are in the early-mid 90’s volume range. The REIC wants to reflate the bubble. They want tax money to help do it.
There already are many real estate price support packages out there. Why should the government be making real estate price support packages? Real estate is not going anywhere. Realtors, et al are not farmers.
Just Say No to real estate price support packages.
“Price supports only for farmers!” could be new rallying cry of HBB’ers. Well maybe not, but who knows
But markets are only allowed to inhale, not exhale.
Idiots that over extended themselves get 1% rates while responsibe people that aren’t upside down and have income to pay their bills get to pay for it????
INSANITY!!!!
They are looking for ways to defuse the bomb without defusing the bomb factory that keeps spitting out the bombs.
NO!!!! Morons! Defuse this bomb, AND deconstruct the bomb factory!
Supply-side economics was a disaster that has yielded bubble after bubble and has resulted in the rich getting richer, the poor getting crazy deep and debt, and the middle class virtually ceasing to exist.
Nice try, but total disaster in execution. DECONSTRUCT supply-side economics. No more fueling an economy based on ever larger amounts of ever cheaper debt lent using ever looser standards.
“Supply-side economics was a disaster that has yielded bubble after bubble and has resulted in the rich getting richer, the poor getting crazy deep and debt, and the middle class virtually ceasing to exist.”
I don’t buy into the doom and gloom peak oil hysteria, but there was an interesting series of articles by a Russian who had witnessed the collapse of the Soviet state, and extrapolated those circumstances to the U.S. While I don’t think a peak-oil related instant collapse is likely, his articles did give an interesting window into what happens when a societies economic underpinnings collapse. Your quote made me think of a quote from one of those articles, about how boomers might react to such a collapse…
“Perhaps in future years we will see baby boomers on the streets of U.S. cities, begging for food while displaying their treasured portrait of Ronald Reagan as if it were holy relic, or a lucky charm, hoping against all hope for a return to a former national greatness, stoically withstanding ridicule from everyone around them.”
I don’t know when this country is going to wake up to what a failure supply-side was, Reagan still has such a (totally irrational, IMHO) hold on the mind of many.
Amen
I don’t know when this country is going to wake up to what a failure supply-side was, Reagan still has such a (totally irrational, IMHO) hold on the mind of many.
Darrell said: “…DECONSTRUCT supply-side economics. No more fueling an economy based on ever larger amounts of ever cheaper debt lent using ever looser standards.”
You seem to have confused Keynsianism with Supply-Side economics:
http://en.wikipedia.org/wiki/Keynsianism
http://en.wikipedia.org/wiki/Supply-side_economics
Check it out.
Hi mgnyc,
From the article:
“What about the tax rebates so many people are counting on? Since the checks have already been promised, go through with the program.
But permit people to opt out and choose instead to spend their own retirement money.
Let’s say, a couple can turn down the $1,400 rebate and instead can withdraw $14,000 from their retirement account without tax penalty.
The trillions now stashed in retirement accounts will give the economy a real shot in the arm.
It is time for some new ideas.”
Worst. Idea. Ever.
Once the retirement money is spent, and many people live a LONGer lives, then what?
Many of our children are not in the position to help us finacially!
More government welfare when we are in the retirement years?
Ya just can’t make this stuff up!
Leigh
At a time when pension plans may be on the edge of default (many already have defaulted & others are heavily invested in some of the financial paper now in trouble), the health of SS & Medicare is in question, people already aren’t saving enough for retirement, etc…and now they are pushing for this.
Not sure if it’s pure malevolence, greed or stupidity; but some people really need the JT treatment.
“Suzanne Researched This” edited:
http://www.youtube.com/watch?v=Muts9aLmyGE
wow
Sweet.
Now all we need is a bitchin’ soundtrack and we’re all set.
That little headshake she does still “gets” me. She deserves a 2×4 to the face preferably with a rusty nail embedded.
in a frozen trout!
haha… I liked it!
The best comment under the original clip:
You should hunt suzanne down, you pasty faced, balless mouseman. Your wife will now cheat on you (probably with suzanne), take the house, your kids will end up in rehab, and youll hang yourself.
grow some nuts in the next life.
When that happened to me I called the credit card company and told them to LOWER it back. It can affect you negatively when you go for a loan because the lender on any loan, looks at that as $10K of debt against you not what the balance is that you carry…
not sure about that Ann
a higher credit line is not a bad thing if you use it correctly
from what i understand it is good for your fico if you have a large limit but only use say 10%-20% of it as opposed to say a lower limit and use 40-50% of it
maybe someone else can clarify
at least for me, yes. After discovering the “60 day float,” (30 days statement, 30 more to pay the bill), I made a major purchase on my CC (5 figure) to get the cash back + use the interest-free 60 day loan.
My FICO has dropped by 60 points (!) because my “revolving balance” has increased despite paying the CC off every month.
Or banks are finally fed up with deadbeats like me who pay their CC off every month…
You are correct, the CC companies report on a specific day to the credit agencies; and they report your balance as of that day. So, yes (and I have seen this as well), if I am carrying a huge balance that day, but then pay it off on my due date; it will still look like I have a massive amount of CC debt.
This is a problem, and something that the reporting agencies should fix. A 50K balance is no big deal, if your credit history shows that you pay off all 50K every month. That, unfortunately does not seem to factor into the FICO score model.
Why not, there’s a chance that when someone’s credit card charge levels rise quickly that they’re in a debt spiral (and not someone to whom you would want to make a loan right then) so FICO drops to reflect that potential. 50k tapped on your credit lines could be a car purchase, or it could be the beginning of a major problem. FICO isn’t perfect, but no one has come up with something that is cheaper and better.
Fair Isaac has a defacto monopoly. you can complete that thought.
btw, manual underwriting is better, and by “cheaper” we could mean “not leading to insolvency”
eh, penny-wise, pound-foolish, the pigmen
u r correct. I’ve got over $100K in open lines, more than I make annually, but only carry $5000 with Citibank on one of their 2.9%-for life-deals (from 2004!). My FICO is currently 790, high enough that raising it higher doesn’t have any real-world impacts.
Plus there is also “identity theft” With higher limits, you have increased exposure.
If I steal someone’s frugal identity. I’m raising their levels ASAP!
The major risk due to identity theft is that someone uses your information to open new lines of credit, not that they get your credit card numbers. The new lines wouldn’t be substantially impacted by your current credit limits (unless you’re tapping them and paying them monthly).
BTW, most people found that it was someone they knew who pilfered their information.
I suggest buying a filing cabinet that locks and storing all your financial informaiton there. I cant believe how many people put there sensitive information on the refrigerator door or on top of the dining table for everyone to see.
Yes. Yes. Yes.
Lock everything and shred everthing!
BUrned out 3 shredders in last few yrs after USPS send envelope with opened mail inside and a letter stating they put the guy in jail for stealing “our” (entire neighborhood)mail. Got a USPS post office mail box, pay the monthly rent on box and hope this won’t happen to anyone else.
Crackhead son of wealthy non resident owner, let son live in his 3rd home.
OMG Desert!
That is disturbing - you’ve inspired me to get a USPS P.O.!
Best,
Leigh
dollars not wanted in China:
SHANGHAI — On a frigid winter afternoon, an old dumpling of a man with buzz-cut hair was holed up in his usual spot, the corner of a busy bank lobby here. He reached into his beige fisherman’s vest, pulled out a wad of bills and turned to the people hovering over him waiting to trade currency.
“No, I don’t want dollars,” he snapped, shooing them away with a wave of his pudgy hands.
Nobody here wants the lowly American dollar anymore. Not businessmen, not bankers, not even the “yellow bulls” like this man, who has been a black-market trader for years and whose presence in the lobby of a large state-owned bank is tolerated, oddly, by its managers.
http://tinyurl.com/ypt9p2
but gold is good:
SINGAPORE: Sky-high gold prices did little to curb demand for jewelry in India, China and some other Asia countries in 2007, suggesting that buyers recovered from initial shocks sparked by persistent rallies in bullion.
Gold surged more than 30 percent last year, peaking at a 28-year high of about $845 an ounce in November. The rally continued into 2008 to touch historic highs of $936 in early this month.
http://www.iht.com/articles/2008/02/19/business/gold.php
By slowly debasing the currency it seems we are defaulting in slow motion.
This has been the trend since 1913.
Debt repudiation is the major trend in which the current housing/RE deflation is a minor trend. So the question of “Is it Inflation OR Deflation?” is irrelevant. It is BOTH monetary debasement (inflation) AND housing/R.E reversion to mean (deflation).
Pedagoguery off.
Bifation?
en.wikipedia.org/Biflation
“…monetary debasement (inflation) AND housing/R.E reversion to mean (deflation).”
countervailing powers
But in the People’s Republic of Cambodia, the ATM spits out dollar bills, which are equivalent currency, same as in PR’s of Vietnam and Laos.
No ATMs with dollars in Laos. One bank tried and was refused. Besides, the kip has appreciated almost 10% against the dollar in the last 18 months, and it is not a “hard” currency. Likely to keep getting stronger too. Lao people still like the dollar, but the baht is better. And the smart people are switching.
Cambodia has no ATMs, but yes they use mostly USD. However not true in Vietnam. You can use dollars many places, but the ATM shoots out local currency.
ATM’s in Siem Reap only, then.
“countries in 2007″
Correct me if I’m wrong but the key wording here is ‘2007′. Just within the last two weeks (2008) there were articles reporting gold sales down in India due to the high cost of the metal.
FWIW: the data landscape is changing so fast now one needs to report the most current data possible when making their case.
I believe that gold sales in India dipped during the gold runup last year as well. This stuff changes pretty fast - because the price of gold is so volatile.
More trader shenanigans
Credit
Suisse suspends traders
There goes another $3b
what is a few billion between friends
how much (money$$) has evaporated in the last 9 months?
$150 billion from the big banks; a trillion or so from real estate val ….. oh wait, that was one of those rhetorical questions, wasn’t it?
It must be nice for these global-scale investment banks to have a few rogue traders around on whom to pin the blame for a few $bns in lost monies.
“oh, that was Mr. Strawman Redherring - he is no longer with us… he was a very bad man!”
Meanwhile, time to return to business as usual back at the ranch…
I help manage an internet community where the public comes in, then some of them misbehaves and we ban them. Then they come back, and ask to be reinstated. The hands down favorite excuse for bad behavior is… wait for it…. My Little Brother Did It.
If the banks hadn’t off shored, they’d know of this technique. The “Rogue Trader” excuse is so January.
On the local morning news today in Albany NY, how Governor Spitzer is trying to address the ten thousand vacant properties bought investors in the Capital region.
Walt…. who bought in the capital region?? Was the “infestment” lie big there? My experience with locals north of capital district is that most of the natives imbibed and believed the RE mob lies. Hence, most are desperately hanging on to the phantom gains they think they’re owed. They go into a tailspin when I tell them to let go or be dragged.
Use this link to look up HUD houses in Capital and other counties of New York — $5,000 houses in Buffalo!
http://hud1.towerauction.net/e10/gen_list/county_pages/NY.htm
“Use this link to look up HUD houses in Capital and other counties of New York — $5,000 houses in Buffalo!”
Google: Bank of America REO; Countrywide REO; Chase REO;
Citibank REO; any other banks REO. HUD is just the tip of the iceberg.
Someone here once offered theforeclosurestore.com link. I found that had an eye opening number of upstate bankruptcies and foreclosures. Every other listing only had a handful for Syracuse area zips.
“$5,000 houses in Buffalo!”
And your point was… ? You do mean Buffalo, NY, right?
Check out Buffalo’s Wikipedia page, especially the section titled “standard of living”
http://en.wikipedia.org/wiki/Buffalo%2C_New_York
It seems that Buffalo is almost as sick as Detroit and St. Louis, but with worse weather.
Can Buffalo Come Back? Probably Not.
http://tinyurl.com/2zlnav
too funny… the Seminar nitwits get hosed bigtime in upstate NY.
Was Albany at the top of Rich Dad’s list of fave places to infest?
I don’t know phillygal. It does seem I know a lot of people that went into the landlord business but then again there was Bizarroworld’s Rochester Democrat link that talked of the English group that had bought up 200 properties in Rochester, Syr and Buff.
A few months ago the local RE blog was abuzz w/out of state investors asking lots of questions about the local rental market. They were getting a lot of straight talk from the locals about vacancy rates and lack of management/maintenance businesses to support them. Sounds like many came and bought anyway.
Rich Dad, wife, 2 other “names” on Larry last week, and still, I believe that RD and Trump with their giant seminars were instrumental, reaped the $$$, in promoting the RE debacle.
I liked some of RD’’s ideas, but the rare times in their seminars that they Might mention ” do your homework”, people do not hear that.Here is how frugal I can be, I volunteered 2000 to do a RD seminar so I could hear/see what all was offered w/o paying.
Amazing to watch masses of ppl in almost hysteria buying books,games, etc.
Probably to be used as garage sale memorabilia later.
Human psychology is amazing and those who make money, make lots of money manipulating mass human psychology..
jim jones, mega religious orgs, RD TRUMP our gov etc.
Any SD HBB’ers willing & able to make it to this hearing regarding the land bank?
Just wondering if we could get enough people who support the **rights of buyers** in this debacle. We need to show that declining prices and foreclosures are the SOLUTION to the crisis of too much debt and entirely unaffordable housing prices.
http://www.signonsandiego.com/uniontrib/20080217/news_1n17landbank.html
I don’t understand the wisdom of the SD govt purchasing homes owned by out of town speculators. Why would a city govt want to try and catch a falling knife? Wouldn’t it be wiser to just provide incentives to get fools to unload their soured investments, and drive home prices to affordable levels that could attract the next generation’s labor force? San Diego could once again have a vibrant economy if housing prices were sufficiently low to attract a vibrant young work force.
CA has just passed some pretty big budget cuts which included cuts to education spending. If I were a school child’s parent, I’d be pretty ticked.
Politicians always do that. Cut schools, fire and police, so everyone gets ticked and then agrees to the tax increase because after all, its for the children, etc etc.
And around here, school spending goes up most years bt wide margins and the schools go down by wide margins. People need to wake up and realize that there is little correlation between per student spending and results. DC is NUMBER 1 in spending and last in performance.
“DC is NUMBER 1 in spending and last in performance.”
I guess in your world, the caliber of students in the class room has nothing to do with school performance?
I agree on that the spending per student does not equate to a good education. If that was the case, The Los Angeles Unified School District would be producing future scholars, not future gang members. I heard a school board tax extractor say, the LAUSD is short 160,000 computers for the students. First teach them to think, then we’ll see about technology.
LAUSD per pupil spending is $8,113.
http://www.greatschools.net/cgi-bin/ca/district_profile/286/#finance
The national average is somewhere around $8287 to $9000.
http://www.google.com/search?sourceid=navclient&ie=UTF-8&rlz=1T4GGIH_enUS212US212&q=national+average+per+pupil+spending
Take into account that cost of salaries, land, etc is higher in LA and it’s hardly extravagant.
I really have no idea how good the schools are there, so there may be a claim that the schools are way below average even with spending slightly below average. But we can’t say that the spending is very high there either.
Wow, when I went to school in the 1980’s, spending per head was about $3k. A little over that in the early 1990’s. Inflation rears its ugly head. (Btw, the first salary to inflate was the superintendent. Not that I sympathized with the teachers, who wanted more bennies while our parents were being downsized, but let’s not forget that they weren’t the worst of the lot.)
Look, guys, spending per pupil includes special ed. We don’t send those children to “homes” any more. They must be served by the school system. They are responsible for a disproportionate share of the costs. Now, factor in the fact that more inner city students are victims of poverty and bad circumstances, ie fetal alcohol syndrome, crack babies, lead poisoning, malnutrition, abuse, and you’ll see that more students there require special education versus the ‘burbs.
Suburban parents don’t have to deal so much with learning disabilities (and when they do, they often begin treatment before school even begins). Hence the hysteria over autism. You don’t see any hysteria over lead poisoning (until this China thing), because old lead pipes and peeling lead paint on the radiator are hazards in the life of an urban child.
LAUSD High Schools have a dropout rate that is at or over 50% according to Mayor Villarigosa. Long article about this in the LA Times:
Link
Well Asparagus, I guess you failed math.
Education is mandated by constitutional amendment (voter proposition) to get 40% of the state budget. You can’t have a huge shortfall and NOT cut education.
The gov’t can then “pass” thse properties on to their developer buddies at half price.
Can you say redevelopment?
Can you say redevelopment?
Spot on, Jay. Sort of like no-bid contracts for Halliburton.
Pro Bear-My son goes to Cathedral Catholic(used to be Uni High) where the new 56 is in Del Mar. You would think that all of the parents there won the lottery with what they are driving.
I think I have the only Hyundai when I drive into the parking lot. I often wonder how many of these people truly are wealthy or is it just to keep up with appearances. God forbid if they found out I was a renter.
LMAO! Section 8 home OWNERSHIP, rather than renting, LOL! This sort of thing will spread around the country as a “solution” to vacant homes. Now, just imagine you’re an owner in one of those neighborhoods and about to get some new neighbors. This is another reason not to buy in the near future, IMHO. Who knows what’s going to happen in certain areas. I feel sorry for some of the owners who will have to put up with this crap.
Oh, by the way, how far do you think that million dollar grant will go in the SD area? MAYBE it will cover three homes, whoop-de-doo. And that’s if the million dollars doesn’t go toward overhead, salaries, “studying” the problem, etc.
I knew a single mom on welfare (and working the bars off the books) who was practically given a nearly new house back in the 70s - no down, low payments. Govt’s big idea. But she ended up walking away from it. She didn’t give a rip about owning a house. Big deal.
when you say “working the bars” … lol
also conjures up an image of the jailbird in the pokey trying to loosen the iron bars to escape
This program isn’t new. Saw something about Section 8 home ownership in a book from 2005 called House Poor. The book seems to pretty much predict a housing crash. Even rebuts Lereah. Heh.
I’d like to go but it’s going to be a tough week. Give me a call if you decide to go and I’ll see if I can join you.
Thanks, SD RE Bear!
I’m going to post on Piggington’s (see link in sidebar). If anyone’s interested, please go there for details.
Stuffed Consumer
http://www.stockmania.com/?q=node/2883
Heard on another website that the FBI is now going to investigate the brokers who were correspondent/wholesale ..too funny..so the lenders who gave lines to brokers to rip off FB are now going to have the brokers they dealt with and gave the lines to investigated…the wheel just keeps turning..and in the end alot of tax payer dollars are going to be wasted on “investigations” with no one being held accountable..including the FB who gets a tax break for defaulting…
PAGE ONE
U.K.’s Northern Rock Move
Highlights Risk to Taxpayers
Nationalization Is Credit Mess’s First; U.S. Role Narrower
By ALISTAIR MACDONALD and CARRICK MOLLENKAMP
February 19, 2008; Page A1
LONDON — In the United Kingdom, a new stage in the global financial crisis has begun.
In choosing on Sunday to nationalize troubled mortgage lender Northern Rock PLC, U.K. Prime Minister Gordon Brown is heading down a path rarely taken by a developed-nation government. It’s a path that is fraught with political peril and could ultimately bring the crisis home to regular taxpayers.
http://online.wsj.com/article/SB120333565998274891.html?mod=hpp_us_pageone
It’s different here, as our govt does not intervene.
Global credit squeeze
US banks borrow $50bn via new Fed facility
By Gillian Tett in London
Published: February 18 2008 20:34 | Last updated: February 18 2008 20:34
US banks have been quietly borrowing massive amounts of money from the Federal Reserve in recent weeks by using a new measure the Fed introduced two months ago to help ease the credit crunch.
The use of the Fed’s Term Auction Facility, which allows banks to borrow at relatively attractive rates against a wider range of their assets than previously permitted, saw borrowing of nearly $50bn of one-month funds from the Fed by mid-February.
http://www.ft.com/cms/s/66db756a-de5d-11dc-9de3-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F66db756a-de5d-11dc-9de3-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Wall Street gloom and doom, 24/7 style…
February 19, 2008
Signs Point To Banking Crisis Getting Much Worse
The evidence comes in in pieces. One bit of bad news here and one there.
Today, the FT reported that US banks had tapped the Fed’s Term Auction Facility for over $50 billion in the last few weeks. As one analyst pointed out “The TAF … allows the banks to borrow money against all sort of dodgy collateral,” says Christopher Wood, analyst at CLSA. “The banks are increasingly giving the Fed the garbage collateral nobody else wants to take … [this] suggests a perilous condition for America’s banking system.”
http://www.247wallst.com/2008/02/signs-point-to.html
At least the stock market is doing well today
was
Britain criticized for taking over bank
Opposition party calls nationalization ‘disaster’
By Jane Wardell
ASSOCIATED PRESS
February 19, 2008
LONDON – Prime Minister Gordon Brown’s government faced accusations of mismanagement yesterday as it began nationalizing stricken mortgage lender Northern Rock – the first time in 20 years that a private company has been taken into public ownership.
Ron Sandler, appointed by the British government to run Northern Rock, called temporary nationalization “a period where the bank can move forward and away from turbulent waters where it’s been sailing in recent months.”
The government repeatedly insisted a private sale was its preferred option. But after five months of intense speculation about the future of Britain’s most public casualty of the global credit crunch, Brown said that nationalization was the best choice until market conditions improve.
“We will, and always have, put the interests of taxpayers first,” he said.
http://www.signonsandiego.com/uniontrib/20080219/news_1b19northern.html
Bad news for Hitlary
PAGE ONE
THE DECIDERS
White Men Hold Key for Democrats
Contest May Hinge
On Blue-Collar Vote;
Opening for McCain?
By JONATHAN KAUFMAN
February 19, 2008; Page A1
YOUNGSTOWN, Ohio — In a Democratic presidential nomination race that pits a black man against a woman, the victor may well be determined by white men.
http://online.wsj.com/article/SB120339381585476375.html?mod=hpp_us_pageone
California moved their primary UP to super tuesday to be relevant, WRONG!. If they had waited to march 4 as in previous elections, they WOULD be the “decider”. Now, it’s OH, TX or PA who will be relevant.
Seems like the disenfranchised CA republicans decided on McCain though.
I have no idea how many in CA did this but my in-laws in-laws switched to Dem for the primary just so they could “make sure” that they Hillary got the nomination.
These ‘hard core” elephants could care less for McCain but they wanted the “worst” Dem in the fight.
They seemed a little miffed when I told them they could just register independent to accomplish that goal and not give the Dems the advatnage of bigger representation.
I’m no fan of Hillary (I voted for RP), but could you cut it out with the ‘Hitlary’ bit? It makes you look retarded.
What makes you think I am not retarded?
That is settled. Just a grumpy old wm.
You don’t want to hear what I refer to her as I can assure you.
Hitlery is a compliment in my books.
What a lucky break — the U.S. stock markets have pretty much shrugged off last week’s deluge of bad financial news!
Futures Point Higher, Financial Sector in Focus
A Wall Street Journal Online NEWS ROUNDUP
Word Count: 541 | Companies Featured in This Article: Northern Rock, Wal-Mart, Ambac Financial, MBIA, OfficeMax, Hewlett-Packard
U.S. stock futures Tuesday pointed to a higher open after a long weekend, with the financial sector and results from Wal-Mart in sharp focus.
http://online.wsj.com/article/SB120342170505476673.html?mod=hpp_us_whats_news
Here is some rather convincing evidence that no U.S. recession is forthcoming. There is no way U.S. stock markets could remain persistently infected with such buoyant optimism if a recession were underway.
February 19, 2008 8:41 A.M.EST
BULLETIN
Street lacing on track shoes
Solid gains take shape after long weekend. Wal-Mart and Hewlett-Packard grab investor attention among the blue chips
…
INDICATIONS
U.S. stock futures stronger after three-day break
By Steve Goldstein, MarketWatch
Last update: 8:05 a.m. EST Feb. 19, 2008
LONDON (MarketWatch) - U.S. stock futures on Tuesday pointed to opening gains after a three-day break, with traders looking past a surge in oil futures and an earnings outlook for Wal-Mart Stores below analyst forecasts.
S&P 500 futures rose 13.3 points to 1,365.60 and Nasdaq 100 futures climbed 22 points to 1,808.50. Dow industrial futures rose 123 points.
U.S. stocks limped to end last week, with the Dow Jones Industrial Average falling 28 points and the Nasdaq Composite down 10 points, though the S&P 500 rose 1.1 points.
http://www.marketwatch.com/News/Story/Story.aspx?column=Indications
Yes, I noticed that. I’m sure Mr. Bernanke is just about to announce a 75 basis point emergency rate rise. That should calm the markets down a bit.
That is how these things work, isn’t it?
“rate rise”
Do you mean ‘rate cut’?
No, no. When the futures head down big (as they did at the end of the last three-day weekend), the Fed announces a 75 bp emergency cut. My thinking is that now the futures are heading strongly higher they will want to be consistent and protect the economy by raising rates by 75 bps!
Oh, never mind!
No rate increases until the economy bottoms out…
And then no increases because the economy is “still recovering”.
ZIRP, here we come. Carry trade and capital flight, here we come also!
How could buying risky assets help plug a deficit? Sounds like high stakes gambling to me.
Equities lure US pension guarantor
By Norma Cohen in London and Anuj Gangahar in New York
Published: February 18 2008 20:31 | Last updated: February 18 2008 20:31
The Pension Benefit Guaranty Corporation, the US government-sponsored guarantor for pensions, plans to step up its investments in riskier assets such as equities as it seeks to plug a $14bn deficit.
The move, quietly announced on the President’s Day public holiday in the US on Monday, will mean the PBGC will double its allocation of equity investments to 45 per cent of its total assets.
http://www.ft.com/cms/s/51023502-de5e-11dc-9de3-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F51023502-de5e-11dc-9de3-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Doubling down?
Contrarian indicator??
Heads today’s politicians win. Tails tomorrow’s Americans lose. An irresistable bet given American values.
Isn’t that the standard politician’s bet?
You must do SOMETHING, even if it is the WRONG THING, to fix this problem, NOW! ACT!!!
(What caused the problem again?)
Great time to jump into risky equities….
The stock market must need more support.
Feb. 19 (Bloomberg) — The University of Pittsburgh Medical Center plans to redeem $430 million of its bonds to stem as much as $500,000 a week in losses caused by a crisis roiling the market for so-called auction-rate securities.
http://www.bloomberg.com/apps/news?pid=20601087&sid=alg9g8vGRoV4&refer=home
Then they shouldn’t of sold them in the first place. Is it possible they didn’t read the small print before selling these auction rate bonds? Heavens, that might make them as stupid as the FB’s who are now so far underwater.
Gee, I’m a liitle cranky this morning, aren’t I?
Up 45 points plus on BIDU short and wondering if I should take it. LOL
This morning’s action was like shooting fish in a barrel.
+50 now. That’s enough. Will set a stop there in case they bring it back up. This year has been unreal.
Feb. 19 (Bloomberg) — New York state taxpayers’ weekly borrowing costs increased $2.3 million after banks failed to attract bidders to auction-rate bonds and stopped buying unwanted securities.
Interest rates on Dormitory Authority bonds sold for the City University of New York rose to as high as 6.26 percent last week from 3.42 percent on Feb. 6, according to data compiled by Bloomberg. Buffalo’s rate on water system revenue bonds soared to 11 percent from 3.30 percent. Bonds issued by the Museum of Modern Art climbed to 4.47 percent on Feb. 13 from 3 percent at the end of January.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJzax9hITqcA&refer=home
“Buffalo’s rate on water system revenue bonds soared to 11 percent from 3.30 percent.” Whose nephew was investing for them?
There Will Be Blood
Suits seek punishment over lending practices
By Mark Jewell
ASSOCIATED PRESS
February 19, 2008
BOSTON – Regulators are trying to punish Wall Street for mortgage finance practices that expanded home ownership and spread risk among a host of new players – but also may have duped borrowers and investors who supplied cash to fuel a housing boom that’s turned bust.
A handful of state securities regulators and a couple of foreclosure-blighted cities have fired the opening shots with lawsuits trying to prove that investment banks and big lenders are guilty of more than just bad business decisions and failing to foresee looming mortgage troubles. Some regulators say greed and fraud underlie much of the subprime mortgage mess that has spread across the broader housing market, triggering a spike in foreclosures.
Aside from the civil cases, the FBI is looking at possible criminal action, focusing on what Wall Street firms knew about the risks of mortgage securities backed by subprime loans, and whether they hid risks from investors.
Observers don’t expect the financial penalties that regulators extract in the civil cases to be massive. But the cases could turn up evidence that forces Wall Street to defend itself amid growing talk of government help to ease subprime-related financial strains on bond insurers. Revelations of bad behavior turned up by the government also could spur private investors to file even more lawsuits than the hundreds they’ve already brought to recover losses.
“This could get a lot nastier, for many reasons,” said John Akula, a business law lecturer at the Massachusetts Institute of Technology’s Sloan School of Management. “Prolonged close scrutiny often turns up all kinds of dubious practices that in normal times are under the radar.
“If the government sponsors any kind of bailout with public funds, this may be coupled with an aggressive prosecutorial agenda in support of efforts to get private parties to kick in.”
http://www.signonsandiego.com/uniontrib/20080219/news_1b19subprime.html
Buy private jail stocks. (Also the stocks of the companies that make jail locks, jail bars, security, etc.) They will go soaring. The boom industry.
Aren’t people or firms that do bad things suppose to pay the entire bill for their crimes . What is this sh-t that the powers are “trying to get private parties to kick in “. I’m a taxpayer who is entitled to Justice ,but the powers are “trying” to get the criminals to pitch in ? What about a Judge ordering the crooks to pay the whole tab ? This is a situation that requires criminal legal remedy ,yet the government powers act like we the taxpayers should pay for GRAND SCALE GREED CRIMES .I guess it would be the biggest case in history for the law books and so the normal remedies for white collar crime are going to be avoided . Makes you sick
“Aren’t people or firms that do bad things suppose to pay the entire bill for their crimes.”
They don’t have enough monies. But I agree that the perpetrators should pay first; only spread the remaining losses after those who created the mess have paid dearly.
Loan crunch could squeeze commercial colleges
By Jonathan D. Glater
NEW YORK TIMES NEWS SERVICE
February 19, 2008
Major commercial education companies are scrambling to ensure a steady stream of college-level students despite the credit squeeze, with some preparing to offer student loans themselves.
The move shows how dependent this sector of education is on student loans and how vulnerable the industry could become if credit woes continue to make it harder for lenders to raise capital.
http://www.signonsandiego.com/uniontrib/20080219/news_1b19students.html
The best thing that could happen to higher ed. is to break free from student loans. Per-hour tuition would fall like a rock and it would force universities to act like private entities. At this point, potential students could make an economic decision to pay for college and receive wage X or go straight to the workforce and receive wage Y.
After spending 6 years as a student (undergrad/grad) at three different universities, I’ve seen so much waste it’s insane. Especially at the community college level - there many student have a choice between McDonalds at $8/hr or an AA degree and working at Supercuts for $10/hr + $17,000 in student loans wasted on rims and car stereos.
The ROI of a non elite College degree is rapidly dwindling. Why get 10’s of thousands of dollars into debt just to work at what just 10-20 years ago would have been considered a menial job, like at car rental agencies? What’s next? Will WalMart and Target start recruiting $9/hr “sales associates” at the local colleges?
The ROI of an “elite” college is also in doubt.
Not every graduate becomes an investment banker, lawyer or innovative patent holder. For the remnants, that $150-200K of debt hanging around their neck is a slowly strangling noose.
My admittedly unscientific observation is that “success” in the real world correlates with low debt hangover.
Not dissing education, just dissing debt.
The ROI of a non-elite college is indeed non-existent. It’s just a waste of time in my book. Same could be said for the “elite” colleges that are not universities.
“The ROI of a non-elite college is indeed non-existent. It’s just a waste of time in my book. Same could be said for the “elite” colleges that are not universities. ”
Really? Unless you go to trade school, are a really good salesperson or have family money to back you, what can you possibly do in this country w/ no college degree and be a financial success? You may have zero debt, but you can’t even get your foot in the door. The degree is the price of admission to the game…
Now granted, you may be better off investing the 250 grand it takes to go to an ivy league school than go party for 4 years if you have the cash, but most families are borrowing the money so it is irrelevant…
I agree that a college degree is the price of admission but that’s the whole point. Getting into mucho debt from a non-elite college is a waste.
The waste being the debt hangover not the education or the degree.
I think you may be misinterpreting my point.
If and when this economy crashes and all the elite educated foreign nationals (H2-B’s), international US companies leave the good old USA, who will start up and operate our repatriated and new manufacturing industries?
While I am not happy about the US’s attitude towards immigrants, I also recognize that the change in everything has been to rapid.
I suspect the US, based on economics will withdraw from the world and shut down our boarders. I suspect that we will have to regenerate ourselves internally-rebuild our manufacturing base and our middle class. Normally the lack of competition, will allow local manufactures to produce crappy products at higher costs. That may be true in the beginning, however the extensive regulation that will be reinstituted will control this to some extent. Also, i suspect our military obligations will be significantly reduced for financial reasons.
Just one person’s opinion.
“The ROI of a non elite College degree is rapidly dwindling. Why get 10’s of thousands of dollars into debt just to work at what just 10-20 years ago would have been considered a menial job, like at car rental agencies? What’s next? Will WalMart and Target start recruiting $9/hr “sales associates” at the local colleges?”
They don’t have to recruit, because these are some of the only available jobs in many areas. One of my favorite bartenders in town has a bachelor’s in philosophy. I’ve known many video store clerks with MA’s. Bachelor’s degree is the new high school diploma. You can’t even get the entry-level jobs without the bachelors.
Sad to me is the total devaluation of any type of humanities degree. If you major in English or history and (hopefully) learn to think critically and write well, those skills are not needed or even sought by employers. You will end up shuffling papers in a cubicle somewhere. At least as a “sales associate” you get to walk around and maybe your body won’t atrophy as quickly.
Effect on the mind is probably about the same.
At a place I used to work we has University of Colorado Computer Science grads working in tech support for $12/hr. And while CU is not considered “ivy league” it is considered a good school.
The ROI of an “elite” college is also in doubt.
Not every graduate becomes an investment banker, lawyer or innovative patent holder. For the remnants, that $150-200K of debt hanging around their neck is a slowly strangling noose.
No argument here. But Wall Street doesn’t recruit at Colorado State nor the University of Denver. If you go to one of those schools you will probably end up working in a cubicle for 40K a year (or less).
The first statement is true but the second is not.
Not everyone on Wall St. comes from Ivy-league schools. If you’re talking the traditional analyst-associate-vp route, then yes but a lot of people start at a smaller lesser-known firm, and “zig zag” higher.
“The ROI of a non-elite college is indeed non-existent. It’s just a waste of time in my book. Same could be said for the “elite” colleges that are not universities. ”
Really? Unless you go to trade school, are a really good salesperson or have family money to back you, what can you possibly do in this country w/ no college degree and be a financial success? You may have zero debt, but you can’t even get your foot in the door. The degree is the price of admission to the game…________________________________________
I can tell you this. I work for a fortune 50 company. A degree is mostly irrelevant in lower to mid-positions, yet they are technical IT positions.
I did not complete college, and am primarily self-taught but yet I still make more than 45% higher salary than any new hire with a degree, and still climbing.
I suspect the reason for this is that the education they are receiving is somewhat lacking. It is most frustrating to me for other new systems engineers to be asking me questions about the most basic items that they should have been taught as a foundation for “advanced degree” and apparantly my superiors feel the same way.
COMPSCI is a joke. The point of COMPSCI is to train more COMPSCI professors.
I have a physics degree. I drive a bus. I would like to be a transit planner (which still pays less than $40K, but that’s okay) but so far no luck. Fortunately, my debts are paid off. If I had debt hanging over my head in the 6 figures, ouch.
There weren’t a lot of exciting job opps in phys as far as I was concerned. You can work in defense industry, or become a quant, or go into academia. Bleh. Some people also went to work for companies working on high tech plasma tv’s and stuff, but that wasn’t setting me on fire. It’s more chemistry than phys anyway. Finally, one can move into biophys. Sister did this. Haven’t thought about that for a while because my heart has been set on public transit for so long. Anyway…
Degrees aren’t worth much. If you work a job from 16 and max out your IRAs and savings, and then, heck, quit saving at 25, you will retire millions richer than the guy who starts saving after leaving grad school at 28 and who saves twice as much! Play with an investment calculator sometime. It’s an eye-opener. If works from 16 guy (let’s say he started PT and did finish HS, as GED doesn’t have the same currency as real HSD) spends a few hours a week studying investments, while grad school guy works 60 hour weeks on his career and lets his “money guy” do his investments, then that difference in assets could blow even wider!
Then, add in the fact that grad school guy is in a specialized field and must move where the jobs are, piling up RE transaction costs and opportunity costs from not knowing new area (get ripped off by mechanics, don’t know where to live to be on public transit, etc), while PT at 16 & saving guy is the master of his own destiny.
WHY DO YOU THINK SMALL BUSINESS OWNERS IN “DIRTY” INDUSTRIES (junk yard, pull your parts, coin laundries, uniform service) ARE DECAMILLIONAIRES, WHILE GRAD SCHOOL EDUCATED ARE LUCKY TO HAVE CLEAR TITLE TO THEIR HOUSE?
I work at a private university in Dallas and it will be interesting to see how a recession will play out now with the credit/loan crunch. In the past such as in 2001 – 2003 the university saw an increase in admissions due to so many out of work telecom and dot net folks looking to change careers.
My husband anticipates a pickup in trademark business too because a lot of these types take their buyout package or cash out their 401(k)s to start a business (which inevitably fails).
Scrapbooking. Candle-making. Doggie spa. Yoga studio!
How could you not cash out a 401(k) for this stuff?
Easy. Just be an HBB-er.
In the past such as in 2001 – 2003 the university saw an increase in admissions due to so many out of work telecom and dot net folks looking to change careers.
So how successful were these laid off 40+ year olds in jump starting a new career? I ask because everyone that I know who has tried this wound up self employed, either as realtors or with a “portfolio” of self employment: wedding photographer/masseuse/dog groomer/etc.
From what I understand there was a hefty pick up in the school’s business and law graduate programs but I can only speak for myself as many of my ex-coworkers and partners have scattered to the wind. Being a “victim” of the dot com bubble after my company went belly up; I chose to go work for the university instead of enrolling. I took a cut in salary but after simplifying my life I couldn’t be happier.
I do miss my beemer but have grown to love my Honda because… it’s paid for.
And the influx of people starting grad school ballooned in 2001/2002 as noted, and they all exited at the same time, depressing each others wages. The smart person entered in 2004 and exited when times were good in 2006. Generally, if the herd is going one way, it’s best to go the other way.
Just did income taxes, owe $3K as I did not reduce exemptions on my W4. I have been aggressively paying off mortgage and thus little interest deduction remains.
Will lots of foreclosure FBs have a similar tax problem if they haven’t reduced their W4 deductions, but have not been making mortgage payments nor paying taxes?
Hadn’t thought of that, but I suppose if you just stop making payments there goes the interest deduction.
Now one part of uncle sam wants to bail you out and another may want to come after you. The hits just keep on coming…
Will lots of foreclosure FBs have a similar tax problem if they haven’t reduced their W4 deductions, but have not been making mortgage payments nor paying taxes?
What tax problem? You won! You didn’t make an interest-free loan to Uncle Sam!
People who get tax refunds are the true suckers! (Unless they’re getting the EITC for making “too little”. Then they’re lucky ducks).
My accountant just informed me that I may have underpaid in my withholding (based on earned income only) for 2007 and now owe interest penalties for 2007. Depends on how wide the gap is.
Anyway, bottom line is, I did not win
The under witholding penalties aren’t too bad. 7-8% interest, IIRC.
Just don’t forget to file. The penalty for that is usurious.
Kennedy Homes Lay Off Staff
Kimball Hill Homes may declare Bankruptcy
Daily Herald, Chicago
Some Homeless Squat in Foreclosed Houses
Feb 17 02:25 PM US/Eastern
By THOMAS J. SHEERAN
CLEVELAND (AP) - The nation’s foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses. Some street people are taking advantage of the opportunity by becoming squatters.
Foreclosed homes often have an advantage over boarded-up and dilapidated houses abandoned because of rundown conditions: Sometimes the heat, lights and water are still working.
“That’s what you call convenient,” said James Bertan, 41, an ex- convict and self-described “bando,” or someone who lives in abandoned houses.
While no one keeps numbers of below-the-radar homeless finding shelter in properties left vacant by foreclosure, homeless advocates agree the locations—even with utilities cut off—would be inviting to some. There are risks for squatters, including fires from using candles and confrontations with drug dealers, prostitutes, copper thieves or police.
“Many homeless people see the foreclosure crisis as an opportunity to find low-cost housing (FREE!) with some privacy,” Brian Davis, director of the Northeast Ohio Coalition for the Homeless, said in the summary of the latest census of homeless sleeping outside in downtown Cleveland. …
—East of San Francisco, a man was arrested in November on a code violation while living without water service in a vacant home in Manteca, Calif., which has been hit hard by the foreclosure crisis….”
http://tinyurl.com/2bj45z
Breitbart
If the Federal Government had chosen to spend the $160B in the housing market, they could have given these homes to the homeless and unfortunates and eased two problems.
I know of an individual who is trying to get section 8 houseing in SoCal. Apparently Orange County is so overwhelmed that it is no longer accepting applications, and San Diego county is supposed to have a 5 year waiting list.
That’s what happens when a once properous state becomes a 3rd world state. Wasn’t it Milton Friedman who said that open borders and the welfare state are incompatible?
That list has a 10 yr wait. No of some seniors who are on list now for 7 yrs and counting.
Ah France, the one country I count on to throw gas on flames.
“Bank of France Says Fed Overreacted to Market Decline (Update2)
By Francois de Beaupuy
Feb. 19 (Bloomberg) — The Bank of France said the U.S. Federal Reserve may have cut interest rates too much and too quickly in response to financial-market declines.
An unsigned article in the Paris-based bank’s monthly bulletin, published today, said new financial products have amplified asset price swings.
That may lead to “stronger monetary reactions than what would otherwise be necessary, as shown by the recent decision of the Federal Reserve,” the article said.
The unusual criticism by one central bank of another may reflect the European Central Bank’s reluctance to follow its U.S. and U.K. counterparts in cutting rates to cushion against an economic slowdown. The ECB left its benchmark rate at 4 percent this month even as growth prospects deteriorate. …”
“…The European Central Bank also gets some props. Unlike the Fed, the ECB monitors money-supply aggregates as a harbinger of medium-term inflation threats. Since innovations including CDOs have structurally boosted the supply of credit, the Banque de France says, “the monetary pillar is of particular relevance.” While money-supply figures shouldn’t be interpreted “mechanically” since they’re imfluenced by factors outside the sphere of monetary policy, “more efforts should be devoted to analyzing credit aggregates.” – Joellen Perry
WSJ
http://tinyurl.com/285345
“…Brazil’s real interest rate, or the difference between the 11.25 percent benchmark lending rate and annual inflation of 4.56 percent, is 6.69 percent, the highest in emerging markets. Turkey has the next highest, 6.05 percent. In the U.S., the real rate is negative 1.1 percent…”
Bloomberg
http://tinyurl.com/36tjnb
You buy US securities, while I continue to convert to Reals and buy Brazilian government securities yielding 12%.
Hoz,
I’d appreciate it if you could give some information on where you convert to Reals and buy Brazilian government securities, please.
Thanks in advance,
-Michael
You have to go through a local affiliate or invest in a structured note. Affiliates can be any of the major security houses as well as the foreign banks. Merrill etc (I am not a Merrill fan, but they sell bonds from most countries in that countries currency denomination -including 3% yields on the Renminbi). The problem or benefit with the structured notes is they hedge against the dollar.
I have some of Merrill structured notes. The problem I have with them is they have a typical 1 year period where you must stay in or sell at a lower rate to Merrill. I don’t like being tied in in case the ‘winds shift’. It is better than nothing but not like investing directly with full control.
Try ABN AMRO, they offer the bonds.
Thanks Hoz!!
Thanks Hoz!
Yes Hoz. Any information would be great. Thx.
A link to the most recent Brazilian Bond auction
NASDAQ
http://tinyurl.com/369c2r
I’ve been laughing at these overpriced spec houses a few blocks from me and an anonymous commenter said they were going to be auctioned. I just now heard the ad on talk radio, 5 houses to be auctioned off Feb. 24.
There went my comps!
Can you get the auction results? The prices could become the comps if they were properly publicized.
Not sure. I think right now it’s a Desperate Realtor marketing ploy, not a foreclosure, and I’m not sure how to get info around here since so much is not online like it is elsewhere. I’m listening to the radio now trying to hear the ad again so I can get the number…otherwise I’ll call the number on the sign on the way home.
It will not be a real auction. There will be reserves or right of refusal or shill bidders.
For sure, it’s a sham. But they have not been resorting to that here yet so this is new for us.
There was a pseudo-auction a few blocks away from the Arizona Slim Ranch. Auction was back in December. House is still on the market.
Got a pic of the auction sign on the way home. I drove around a bit and they’re still building other houses out there. Bet they loved seeing that sign go up.
Crisp Update:
http://bakersfieldbubble.blogspot.com
I have totally lost interest in buying a house anytime in the foreseeable future. And I can pay cash! Just don’t want to.
Did you watch the video? If you missed church on Sunday, there is a sermon there for you.
Okay, I will.
I’ve missed church for the past 30 years.
Bob Porter: Looks like you’ve been missing a lot of [church] lately.
Peter Gibbons: I wouldn’t say I’ve been *missing* it, Bob.
My god, all that jeebus crap spouting from the lips of crisp’s bodyguard was too much. What a hypocritical fundamentalist tool.
“But I don’t even believe in Jeebus!”
LOL!
What that bodyguard was saying is so out of whack I’ll actually pray that he gets the proverbial bolt of lightning jammed up his sorry a$$. How embarrassing.
What’s insidious about him is that he tells Francis, who is willing to listen and have a dialogue, that he’s being obnoxious and “ungodly”, while he himself is being a verbal bully, making veiled threats (you may die tomorrow, god will judge you, you’re in peril) and dominating the conversation.
Also, the man is totally dense if he can’t figure out that the press helped put Crisp in the spotlight of the law and that many of the homeless were put there by fraudsters like that. Helping the homeless without pursing the fraudsters and greedsters is ridiculous, but not entirely inconsistent with certain versions of xtianity.
That’s why xtians can’t even decide what a true xtian is.
This is for all you young ladies in HBB land. LOL
20 toys for girls that don’t look like, er, toys for girls
“For all you girls who are alone on Valentine’s Day — or you guys who want to get your GFs a little something more than just chocolate and roses — personal massagers are always a good option. The problem is, personal massagers aren’t something discerning girls want to be seen with. The usual choices are freakish models that look like something out of a David Cronenberg movie, or sleek ones that aren’t scary but also aren’t going to hide the fact that your date for tonight runs on electricity….”
http://tinyurl.com/2um6cj
You freak
“3. The Screaming Octopus
The Screaming Octopus Waterproof Massager promises to be eight times the fun with a tentacle for every occasion. Small, purple and see-through, you may want to keep it out of the toy cabinet as it could easily double as one. Despite its name the Octopus’s screams, at least, are silent. $10″
“Since it fits right on your keychain, you can use it anywhere”
(Nose scrunch) Really? Call me old fashioned but I never thought anything on my keychain was hygienic enough for that.
What about toys for the, er, boys, freakissimo?
lol
If it is not real, it is not for me. No derivatives bought here.
US banks borrow $50bn via new Fed facility
““The TAF … allows the banks to borrow money against all sort of dodgy collateral,” says Christopher Wood, analyst at CLSA. “The banks are increasingly giving the Fed the garbage collateral nobody else wants to take … [this] suggests a perilous condition for America’s banking system.”
http://www.ft.com/cms/s/0/66db756a-de5d-11dc-9de3-0000779fd2ac.html?nclick_check=1
I wonder if some bright guy, or gal, at the Fed will come up with the idea to allow banks to payoff these loans through surrender of the collateral? For example, nominal collateral value of 110, loan amount of 100, market collateral value of 70. This would be a way for the banks to shift most of the loss to the Fed (monetization of private debt loss).
If that happens, isn’t the Fed legally required to remove the uncollateralized money by selling securities? I think they are. Whether they would actually do such a thing or not may be another matter all together…
Some information regarding commercial RE and community banks:
CRE Concentration: The OCC reports that more than 60% of
community banks nationwide have CRE concentrations that
exceed 300% of their capital and about 30% have construction
and development loans that exceed 100% of capital.
The Short View
By John Authers
“…What is remarkable about the past 20 years is not the performance of stocks, but the way inflation was contained.
Now, Barclays says, this is coming to an end. Taking a four-year rolling average, inflation on both sides of the Atlantic has risen by more than 1 per cent during the current expansion - the first time this has happened since inflation was tamed in the early 1980s.
This is attributable to the growth of the developing world. With China and other countries demanding more, and the supply of resources limited, the logical consequence is inflation.
With inflation back as a real risk, policymakers no longer have the easy solution they have used for the past 20 years - cutting interest rates at the first sign of trouble. That implies the current credit crisis is not another turn in the cycle, but the end of an anomalous period when inflation was under control. It also implies the level of inflation in China is crucial. And the market expects Tuesday’s Chinese consumer price inflation number for January to be the highest in more than a decade.”
http://tinyurl.com/yulabz
FT
This author is an idiot if he thinks that cutting rates reduces inflation. Inflation is the CAUSE of reduced rates: the FED has to create money in order to affect the MARKET rates.
The reason that inflation has been “low” for the past 20 years is because of an unprecedented increase in production efficiency. Take computers for an example, they get cheaper every year in spite of the dollar falling. TRUE inflation must be calculated by comparing where prices SHOULD be vs where they ARE instead of where they were yesterday vs where they are today. In effect, the central banks have stolen all of the productive increases in efficiency over the past 30 years and now that we are unable to keep up the pace with new technology we are starting to see prices rise.
As the population grows and the money supply stays fixed then PRICES SHOULD FALL because there are more people producing goods chasing the same amount of money. It all goes back to the supply of money which has been growing at 10-13% for a while now.
IMHO you misunderstood what Mr. Authers wrote. I do not think he disagrees with you at all. What he is writing is that the government cannot lower rates as a result of the pending recession probabilities because inflation is accelerating as demand from the manufacturing countries for raw materials exceeds supply.
err, unfortunately rather:
government
cannotshould not lower ratesExcellent, excellent. Smack on target.
Now, if we could only get a few of the monetarists to understand this. Only the Austrians get it.
MWHAHAHAHA! PAL(north american palladium) blew past $8per this morning.
Will my blog gold bug who shorted PAL last week please step forward?
That’s me. Not to worry, I bought the Jan 2010 Leap 5 call, just in case. How’s your oil short doing? I see oil hit 100 today. Or maybe you can call the top in gold again? If you liked it at 850 you must love it now. Cheers.
Be nice, kids.
Who shorted oil? I already made my 100% gain on gold.
Still a dollar short and a day late even when wheeling out the boogeyman.
Arroyogrande: here’s a cool web site for the CA central coast housing. You just grab the map and move it in any direction to see houses listed for sale. Man, some of these towns (Paso Robles, Santa Maria, SLO) look like a shot gun pattern. http://www.locallinks.com/paso_robles_real_estate_mls.htm
Oil just hit 100 again. Where’s Jas Jain and the guy who counts the tankers off Seal Beach? Are they off making their own gasoline?
lol
It is still early in the game. The deflationistas may still be correct. Not enough data points. I am of the inflationista side as a result of 17/19 recessions have resulted in inflation. The only exceptions the great depression and the Japanese collapse are the result of raising rates after the recession started.
Recessions result in stimulative monetary policy, and the latter is inflationary.
“The only exceptions the great depression and the Japanese collapse are the result of raising rates after the recession started.”
Why did they raise rates? To contain inflation of core goods? If so we might be at the first stage of deflation. I see pressure starting to mount to raise interest rates from other countries. If inflation starts to spike due to a devaluing dollar it will leave little choice but to raise the rates to support the dollar (prevent its collapse globally). If solvency is still an issue when this happens then I think deflation will take hold. If the bleeding can be contained before this happens then we will avoid defaltion. I welcome other thoughts Ideas!!
What happens when the national debt grows in real value due to deflation? The US government must default because a deflationary crash will spiral down until all of the created money is destroyed. Deflation means banks will fail as the only way to pay of their debt with interest is to create enough new money to cover the interest. If banks start to fail, foreigners will no longer want the dollar.
Deflation / Inflation is the result of demand (much like housing). If trust is gone then demand falls. When international demand starts to fall for dollars then you will get more inflation. At some point inflation becomes a self-fulfilling prophecy because when inflation increases people want to get out of dollars. When people get out of dollars demand falls and causes inflation to rise.
That is too simplistic - you are right about insufficient data points though - makes calling the inflation / deflation scenario conjecture at this time at best.
Watcher,
the little elves are busy creating more oil underground. Soon the Great Oil Pumpkin will appear and shine rays of light toward the super duper oil field 1 foot below the surface in Guwubawubaland
(pronounced “Gah Woo Bah Woo Bah Land”). Yeah 50 years of ever improving technology and satellite-based geo-prospecting will have proven a failure compared to the Great Oil Pumpkin. Right under our noses!
Pop! My dream is over. I’m buying more precious metals and more of PGH.
Mortgage Companies Join Foreclosure-Freeze Effort
By Alison Vekshin
Feb. 19 (Bloomberg) — Mortgage companies including Fannie Mae and HSBC Finance joined a U.S. Treasury Department-led effort to offer 30-day foreclosure freezes to give delinquent borrowers more time to arrange payment plans.
Remaining members of the Hope Now alliance adopted the initiative announced last week by Treasury Secretary Henry Paulson and six banks, including JPMorgan Chase & Co. and Citigroup Inc., the group said today in Washington. The coalition of lenders, loan-servicing companies and counselors formed last year as foreclosures surged in the subprime crisis.
The initiative “is one more means of helping homeowners, and combined with the other parts of Hope Now’s outreach, these initiatives can make a measurable difference,” Paulson said today in an e-mailed statement.
“Project Lifeline” expands on a Treasury-brokered agreement with mortgage servicers to freeze interest rates for five years on some adjustable subprime mortgages. The new effort directs struggling borrowers with subprime, “Alt-A” and prime loans to contact servicers to work out payment plans.
Hope Now members, comprising more than 90 percent of the market for servicing subprime loans and almost 70 percent of all mortgage servicers, will adopt the plan by March 31, the group said. Mortgage servicers collect and process mortgage payments.
Besides Citigroup and JPMorgan Chase, Bank of America Corp., Wells Fargo & Co., Washington Mutual and Countrywide Corp. initially agreed to participate in the effort.
Letters to Homeowners
The program will start with a letter to homeowners more than 90 days delinquent that lays out procedures to qualify for a “pause” in the foreclosure process. The homeowner will have 10 days to respond so the servicer can weigh payment options.
Some servicers who’ve signed onto the Hope Now effort said they are already using the program’s approach.
Option One Mortgage Corp. “has a strong commitment to helping borrowers who are struggling with their payments,” said Christine Sullivan, a spokeswoman for the H&R Block Inc. subsidiary. “We have already implemented Project Lifeline because it’s another tool that helps us reach out to our borrowers and keep them in their homes.”
HSBC spokeswoman Kate Durham said the company has had such a program in place since 2004 “as part of our broad range of homeownership-preservation solutions.”
“Whee, I get to live for another month for free”, said the FB haltingly.
This article from the BBC News has an awesome interactive graphic covering the mortgage crisis: http://news.bbc.co.uk/2/hi/business/7073131.stm
Will someone explain to me why houses are going like hotcakes in Toledo? A friend of mine just bought a few houses to rent in the LaGrange area for 20K and said rents fetch 500/mo.
I zillowed and am shocked, SHOCKED, to see how many houses are changing hands, in a 2 mile radius something like 150 homes have closed in the last few months!
What gives? My head is spinning.
Nevermind, city-data.com explains the whole area is a ghetto and getting worse. I had no idea there were riots there in 2005. Hard to believe, I gotta get off this island more often (or not!).
Maybe its because everyone is a closet Mud Hens fan, and hence everybody wants to live there?
Hey, its as plausible as any explanation coming out of the NAR.
Txchick, this one has your name on it!
“…A 101-carat, near-flawless diamond may fetch more than $8 million at a Christie’s International sale in Hong Kong, the first time a gem of this quality and weight is auctioned in Asia, according to the London-based company…
During the London photo call the diamond slipped from the grasp of Christie’s black-dressed staff-member Alexandra Jaffray and fell to the thickly carpeted floor.
“Lucky that didn’t hit a chair,” said a relieved Sancroft- Baker. “Diamond is the hardest substance in the world, but it can chip.”’”
http://tinyurl.com/2t2fxb
Bloomberg
So Alexandra Jaffray drops a 101 carat diamond, awesome! This diamond should go for $16 to 20MM. Get your checkbook out Tx.
i Guess you have all read by now, the Chino, Ca slaughter house wherein they contracted to provide beef under contract to I guess every school in the US.
Well, as a loss control rep with a major-line insurance company, I inspected this plant/location in the early 1990’s. It was illegal then from what I believe was there attitude to wards safety of employees, operations and employees as I suspect it was the day the locked the doors.
By the way, if you want to provide safety for most of the market (read children: population), and not efficiency (read cheapest price), then you use multiple sources, so that you do not sink/affect the entire market.
So much for just in time inventory and cost efficiencies. God, we were so smart in the 1990″s, that American business could do no wrong. They were smarter than government, and now we are paying for it!
Like the housing bubble bust, everything is fantastic, until it isn’t.
The “hair of the dog” cure is biting oil prices, and has knocked the steam out of today’s stock market rally.
http://www.marketwatch.com/tools/marketsummary/
There was a rally? LOL
40% of new condos going to rentals in Calgary. This can’t end well.
http://www.canada.com/calgaryherald/news/story.html?id=348c49c4-c194-4d3a-9446-5564332a1ea9&k=96391
Not everyone has lost faith in the prospect of a pure neo-Keynesian financial engineering solution to fix the credit markets. I personally believe a less routine solution will be necessary to restore trust which was destroyed by the hiding of asset price deterioration elephants under the living room rug.
IRWIN KELLNER
A matter of coordination
Commentary: Meld monetary, fiscal policy to thaw out U.S. credit markets
By Irwin Kellner, MarketWatch
Last update: 8:47 p.m. EST Feb. 18, 2008
PORT WASHINGTON, N.Y. (MarketWatch) — One way to defrost the credit markets might be to twist the yield curve so that the spread between short- and long-term interest rates gets even wider than it already is.
http://www.marketwatch.com/news/story/lets-twist-yield-curve/story.aspx?guid=%7BBD1CA1F7%2D841F%2D4086%2D9FE7%2D04AE0A99E27E%7D
Kia ora!
Greetings from New Zealand…
We are in the north of the North Island checking out Kauri trees.(almost the girth of a Giant Sequoia, not very tall though. We walked through rainforests full of sounds to view them, astounding!)
The real estate market here is on tilt, it seemed as if 1/3rd of the houses from Auckland to Cape Reinga are for sale, and not much is selling.
Combine this with being able to get 8.8% on a 9 month cd, to as much as 10+% for 2 year terms, and you’ve got something completely different from anything in the states, as people have a plan B, to invest in.
Sales of homes went from 10,000 in 2006, to a little over 5,000 in 2007.
We are amazed at the asking prices for 2/1 or 3/1 homes that are 40-50 years old, in areas where there is no real employment possibilities, like $NZ 250-400k or more.
This country is a definite canary in a coalmine, and will lead the charge of downward prices worldwide, outside of the USA.
tick tick tick tick tick tick tick tick tick, boom
I was hoping you would check in. Please take some pics for the gallery!
We went out to breakfast today and pased a butcher, and on the window it said “Home Kills Processed”
Only in NZ…
I’ll be taking plenty of photos…
New Zealand is a photographer’s wet dream.
ta ta for now~
A Bush-appointed federal judge, who presided over many Bankruptcy cases, was just arrested. You’ll never guess what for…
http://www.pensitoreview.com/2008/02/18/total-drag-bush-judge-appointee-resigns-after-dui-arrest-while-cross-dressing/
LOL!!!!!!!!!!!!!!!!!!!!!!!!!
The most interesting thing was the comments. The overwhelming majority lambasted Bush and the Republicans for hypocrisy because Bush had appointed the guy, as if that was the point of the story and as if being appointed to a federal judgeship by a Republican president automatically made him some right-wing nut case. So typical. I was thinking, How right-wing can the guy be, a judge from the Boston area? Then I found it: one responder did a little research and discovered that the guy had donated money to the Democrats.
“America’s economy risks the mother of all meltdowns”
From news.yahoo.com:
http://tinyurl.com/2p424m
Hopefully Ben or someone else can obtain a link to the full text of this piece… (The Ingram Pinn illustration is itself worth at least 1000 words, though.)
America’s economy risks mother of all meltdowns
By Martin Wolf
Published: February 19 2008 18:21 | Last updated: February 19 2008 18:21
Ingram Pinn illustration
“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.” Alan Greenspan, The Age of Turbulence.
http://www.ft.com/cms/s/4d19518c-df0d-11dc-91d4-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F4d19518c-df0d-11dc-91d4-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fcomment%2Fcolumnists%2Fmartinwolf
http://tinyurl.com/2bntms
As Obese Population Rises, More Candidates Courting The Fat Vote
Video The Onion News
Vallejo, CA on Brink of BK
http://tinyurl.com/34s2qs
I also noticed a bunch of trolls that have no business posting here. Several are admitting they have recently bought a house or are buying one. When the regulars tell them not to, the trolls blow them off with their deluded herd mentality and throw lame excuses. Don’t lose sleep worrying about them, they will learn soon how stupid they were when they are forced to walk away from the house.
I am buying a house but in the cheapest good, safe location and at under $50k, my downside is limited. It’s cheaper than renting anywhere and if I could find rent for under $300 a month(which is what my house will cost with all expenses combined) I would rent instead. I don’t care if the house depreciates, I would still lose less than rent accroding to my math. Once the market bottoms out then ill buy a nice big house for pennies on the dollar.