Bits Bucket And Craigslist Finds For March 2, 2008
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The Housing Bubble
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Believe me later…
http://www.gold-eagle.com/editorials_08/schiff022908.html
Peter Schiff is on top of it, as usual.
Thanks for the link, wmbz.
I think it is funny how much so many of us now relate to Peter Schiff. We all have seen him on TV on such stations as Fux News and CNBC and watched in horror as morons laugh at him. We’ve witnessed stooges like Tracy Byrnes say, “you must have heart problems from being so negative”. WTF? I am sure all of us that are vocal have gone through the same thing at work and at social events. He’s like our Rosa Parks. You just wish that one time he would walk over to a moron like Dennis Kneale and punch the mothafrogger right in his freakin’ throat. Then I could really hold Peter Schiff up as my hero.
I remember one time, on Fox I think, where some realtor guy was laughing and shaking his head at Schiff, which made his RealTard hair sway in the breeze of his forced patronizingness. This hair was so hideous my brain tried to shut itself down and run away to Mexico with my eyes and spleen, just to get the fook out of the country, it was so awful. It was like limp ramen noodles damply hanging in sparse strands from his pallid frog-like head, much much worse than anything Donald Trump has ever managed on his most exalted bad-hair day(s).
I guess there was some actual talking and stuff coming out of that froggy head, but I didn’t notice what he was saying. Schiff, of course, sounded like he always does, smart and composed. He must have gigantic nerves of steel, to exchange dialogue with that guy without wincing. At least visibly. He probably kept his tears bottled up, all man-like.
Warning: Be prepared to barf!
http://youtube.com/watch?v=Sicyi17cT2c
GAH! Oh, no! Rarrr…rrrrgh….gurg…gurg..geCHURK.
Ah, I feel better now.
(and thanks for the link, nycity. I saved it, for repeat viewing, once I man up a bit.)
olympiagal you give the greatest descriptions.
I had to review this link to see what kinda hair you were talking so eloquently about… Does Tom Adkins think he is a rocker? What.. the 80s are OVER way over. I hope he has a bald spot that is going to ruin this look soon.
What a ma roon this guy is.
And the nuts that follow him , talking heads.. what. does everyguy in the world want to be a rock n roll star?
Or be with one?Yuck.
“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.” Lincoln’s Second Annual Message to Congress, December 1, 1862.
I still hear people arguing politics in the frame of “tax and spend” Dems and “rich get richer” Republicans. This is proof to me that most still do not see the storm clouds on the horizon.
These dogmas of our quiet past are inadequate to the stormy present.
The current queation facing politicians should be:
When the FDIC rescue account is drained and large banks are insolvant and must be liquid, when Freddie and Fannie are busted and the government must decide to honor or shirk the assumed guarantee of the bonds, when Social Security turns negative and begins to redeem its IOUs, what will be done?
Print the money needed to make investors whole? Hyper-stagflation
Let the losses be passed on to investors? Global Greater Depression.
” … when Social Security turns negative and begins to redeem its IOUs, what will be done?”
The Social Security solution lies in having people work longer, working until seventy or even longer.
This may not be a popluar solution, but it is one that would work, IMO.
Or have everybody drop dead suddenly at 50.
“Or have everybody drop dead suddenly at 50.”
That would work but is unlikely to occur. What IS likey to occur is for those who retire at 62 live to their Nineties and run out of money before they get there.
Why do I have a sudden urge to change my name to Logan and start running?
I enjoyed that movie.
NO, that’s only a fraction of the problem.
Illegals are getting benefits for their “dependents”.
Newly minted “Americans” who came here from some 3rd world country and have not put 40 years of earnings into the system get a retirement check, even if they only worked for 5-10 years, but are of retirement age. I’ve read lots of stories about how people who should not be entitled to any benefit whatsoever are linked into the social security system. There has even been a move by Congress to provide benefits to illegals who used forged or stolen SS numbers to be able to get a job here.
We have offices of the SS open up in Mexico City to provide benefits.
And lastly, the demographics of America and the Western world shifted to NO POPULATION GROWTH, due to propaganda from the leftists that the world was overpopulated. The entire system is based on GROWING populations, which is why every political party wants to provide an imported population base.
So a Lithuanian arrives at age 45 and starts to work. Puts in 20 years. He will get as much or more than me, because the payouts are based weighted on the last 3-4 years earnings, or a least they were. I have already been working for 35 years and paying into the system.
Seems I should get a bigger payback. Not going to happen.
I am frequently in a Social Security Administration office, helping my newly widowed mother, and the place is packed with illegals and 3rd world trash. I heard 5 languages being spoke, and I was only there maybe 1 hour. The security guard tells me it was a light day for immigrants. They are sucking the system dry. I saw men, their wives, and their anchor babies and children. Unfreak’n real. Why aren’t those bums (husbands) working? By the time I left(same experience all three visits), I saw red. My boss tells me ,he thought I’d blow a head gasket.
they only worked for 5-10 years, but are of retirement age ??
So true….16 quarters I believe is what is necessary to qualify ??…For a immigrant, citizenship is the “golden spoon”….But most are completely satisfied with “qualifying for SS payday….It goes a very long way back in their native land…Yes, that’s right, we “mail” the check to them when they return to their homeland…..It just fricken sick !!!!
“So true….16 quarters I believe is what is necessary to qualify”
You need 40 credits to qualify for Social Security, and you can earn at most 1 credit per quarter, so the minimum # of working years is 10, in order to qualify for SS Retirement. My dad immigrated to this country 25 years ago and put in 25 years of work and his SS payment is less than $1000 a month.
“I am frequently in a Social Security Administration office, helping my newly widowed mother, and the place is packed with illegals and 3rd world trash”
First of all, no illegal alien can qualify for SS payments, period. End of story, no matter if one works illegally and uses a false SSN, the SS tax just goes into the system and never paid out. In fact the SS system gets a big boost from this type of illegal workers since no payout is ever made, this is a well-known fact. As far as your “trash” comment, I won’t even go there. It really gets me that someone can consider someone else “trash” just by the way they look. Maybe you if you see me in person you would say I am also third world trash, but I have two degrees including a master’s in finance and works with with biggest blue chip companies that you ever heard of. But guess I am still trash in your eyes, huh?
What you say is true for the regular SS, but not SSI. Anyone can get ssi regardless of what they paid in.
I just want to second this comment. I am a native born American, ancestors moved here from Scotland and Wales before the revolution. Immigrant bashing is just plain wrong. I would bet that the vast majority of those you saw were legral immigrants or people on work visas getting SS cards so they can go to work and pay taxes to support your widowed mother.
Steel curtain,
wrong, ssi and faked disability payments are the draw for these illegals. also, even those who are legal immigrants are famous for dumping their elderly relatives they “brought over” on the ssi and disability gravy train, draining billions from the system paid for by working Americans.
“wrong, ssi and faked disability payments are the draw for these illegals.”
So you are saying illegal aliens can get SSI? Not even green card holders can qualify for SSI, you have to be USC. See the citizenship requirements on this page.
http://www.ssa.gov/ssi/text-eligibility-ussi.htm
What disability gravy train? SSD is getting really hard to get. The government fights cases frequently now. I met a guy who had owned his own business. He had a degenerative bone disease which had accelerated onset because he was in a terrible collision with a tractor-trailer. The other driver was at fault and the judgement paid for medical bills. Those bills ate all of it, though, so he was fighting to get his SSD. Because he was making so much money before the accident, it was a relatively large check, and the government didn’t want to pay. He was a pretty young guy and looked healthy on the outside, but he was pretty much in terrible pain all of the time and his mobility was limited.
I question the assertion that you can just waltz into the country and pick up a disability check.
ssi is only available if you leave in the US. If you get out, it is cutoff after a feew months. and they always verify if you are really here and not in bahamas.
Social Security was designed (in the mid 1930s) in a world where few lived past age 65. It made some sense at the time (except for the pay-as-you-go feature) to create an “insurance program” for people who lived past age 65. It seems nobody at the time foresaw a future of future life expetancies, accompanied by growth in the present value of unfunded Social Security liability.
This is completely wrong. They publish the actuarial tables and the expected age at 18 hasn’t gone up that much over the past century. We all get that money sent to seniors back, in the end, either through their consumption or inheritance so its a BIG HONKING NON-ISSUE as long as their monthly draw remains in proportion to the wealth this nation is creating.
They are not “rich get richer” Republicans. They are “borrow and spend” Republicans. Much worse than any other thing a political/economic system can offer.
When did the Republicans regain control of Congress?
They had it for 12 years amd what did they do??
That’s right folks continue with partisanship. Both parties want to help destroy America and kowtow to the money and special interest. It has helped us so much to this point. if we don’t find a way to become more united and take more control we might as well just stick our heads in the sand and put a gun up our ass.
I agree Stop with the partisinship!! It is BS!! They are all promise more than they can deliver, have ZERO onderstanding of economics and should be equally HATED!!! Just my 2 Yens worth
It’s been said that the clinical definition of insanity is repeating the same actions over and over again, but expecting a different outcome. The tools who continue to vote for our worthless status-quo Republicrats - there’s not a dime’s worth of difference between the two Wall Street-controlled political parties - while touting “their” party and bashing the equally-odious “other” party, are a huge part of the problem. BOTH PARTIES SUCK! That realization is the beginning of wisdom.
The problem is not the parties, it is the idiots who blindly vote them. While I am not conservative, and think they have been wrong on just about everything over the past 100 years, both the Republicans and Democrats have just about an equal-sized bloc of idiot supporters.
I mainly think that DC should focus on national-scale issues — the big-picture medical, defense, interstate commerce, and let our statehouses have a bigger piece of the admin pie.
Fat chance.
all good points and hard to disagree with. This will probably be the first major emergency we face as a nation going forward. However, money is a man-made phenomenon and while important, will eventually be overcome with some sort of painful accommodation with the rest of the world.
The real “sand in the vaseline” in my opinion is that the world is starting to show serious signs of bumping up against the sides of the petri dish. The fact remains that we cannot, regardless of how resources are distributed, continue to grow the human population at the current rate. The earth doesn’t have an unlimited abililty to sustain increasing levels of polution and grow food. Eco-systems are increasingly stressed and that is unsustainable as well. All of these would argue for a massive human die-off, from some yet to be determined reason, in our future. My guess would be an energy crisis which curtails effective distribution although it could be from some other event like war, etc. It’s going to happen though and it’ll be massive, although the timing is in question as always, again in my opinion.
Pox virus.
Oh, bother. I guess you didn’t see the Julian Simon/YouTube link which was posted here yesterday. We need *more* people, not fewer. Do you think the standard of living was higher when there were 1 million people on earth? 10 million?
Do you have any idea how much unused farmland there is in Pennsylvania alone? If we had more manpower, we could produce more food.
Do you think your standard of living will be higher with 60 billion of people on earth fighting for resources instead of the 6 billion?
There is either a limited capacity for the earth to grow food or it is unlimited. There is either a limit to how much pollution the earth can sustain until it damages life sustaining eco-systems or there isn’t. I’m arguing there is a limit. I’m arguing that should an energy crunch, like peak oil, hit the world the areas that are overpopulated with regard to lifesustaining regional resources will be hit with a large die-off due to ineffectual resource distribution from the food producing areas of the world. Given that the US is one of those areas that produce a surplus of food, I don’t suspect we will see that become an issue here. I didn’t give a timeframe for this so I don’t see the logic in your argument.
>> Do you think your standard of living will be higher with 60 billion of people on earth fighting for resources instead of the 6 billion?
Yes, I do. And people do not predominantly *fight* each other for resources, they predominantly *produce* them.
Of course there’s some limit to how many people the earth will support, but we are *light-years* away from it. I recently calculated that if the entire world population moved to Texas, the population density there would be about 20% lower than what it currently is in Brooklyn, NY.
The Malthusians obsess over the finiteness argument but never take into account human ingenuity and productivity. The real obstacles to human well-being are arrogant central planners, not excess population. Please watch the Julian Simon video for more on this.
The Malthusians also fail to appreciate that economics has an inbuilt feedback loop, and that loop works via the price mechanism.
That’s why when central banks f*ck with the price mechanism, the loop goes awry.
Just making sure that the two threads of the argument get tied together, and nothing gets lost in people shouting past each other.
“I recently calculated that if the entire world population moved to Texas, the population density there would be about 20% lower than what it currently is in Brooklyn, NY.”
This may or may not be true, but the world isn’t going to sqeeze into Texas; people go where they want, and crowding is horrible in most so called desirable locations. I, for one, think the government should put contraceptives in the water supply, and only people who have proved their worthiness to have children should be given an antidote. I don’t call the destruction of everything beautiful and livable progress, nor do I think crowding like canned sardines is a happy prospect for most people. I did not grow up in Brooklyn, and I don’t want to live in a human petrie dish. Every year, tens of millions of children on this planet die of starvation, dehydration, or drinking contaminated water. Tens of millions of sentient babies are aborted every year by parents who do not believe they can afford to feed and/or support them, or who want to try over for boys. Billions of humans live in misery and poverty. And tens of billions of animals are slaughtered every year to feed an increasingly selfish human populace that thinks it has a right to kill and/or consume everything in sight.
All of this could be eliminated in one or two generations if people stopped replicating with no thought to the real consequences. I cannot tell you how many men I’ve met over the years who think they MUST produce sons to carry on their family names, as if anybody else gave a hoot about their (mostly common) names, or how many women I’ve met who think they have a biological necessity to reproduce. These people are beyond stupid; unimaginable numbers of innocent children and animals are the victims of their idiotic egos. So are we all.
The Malthusians may be ridiculous, but the pro-population growth Pollyannas who turn a blind eye to population distribution and food and water delivery problems are even more ridiculous. This country is already bursting at the seams from overpopulation, and importing tens of millions of fertile poor, illiterate illegals is going to make it much, much worse. An economy that depends on an ever expanding population base, especially for exploitation, is essentially a pyramid scheme economy. If this the best our genius leaders can come up with, then I believe it’s time for new leaders.
petrie = petri
“That’s why when central banks f*ck with the price mechanism, the loop goes awry.”
Bingo! How can so many well-educated economists fail to practice what they learned as graduate students about the advantages of the market mechanism?
You will do what your income supports. If that means sleeping 16 to a room then so it will be.
There is no God-given right to your suburban status.
The petri dish arguement is the one I’ve used for the last decade against those supporting globilization. True that in an system with endless natural resources, globilization would likely raise the standard of living for everyone. The problems is that there is no way the world can consume at the same rate as the US. It boggles my mind that world leaders and citizens can’t wrap their brains around this fact. If they did there would be a huge push to improve efficiency. It may be that some world leaders like the idea of a world with a tight supply of natural resources. It gives them the ability to monopolize power. Thomas Friedman wrote an article suggesting that when the greatest percentage of wealth is obtained by stripping natural resources democracy flounders. This has certainly heald true in the middle east.
Actually, I think Canada hasn’t turned out so bad.
Nor Australia.
I don’t think the Anglo-Saxon legal system gets as much respect as it really should.
Ask yourself what the UK, US, Canada, Australia, and to a lesser extent India have in common.
you quoting thomas friedman? ha ha ha ha ha.
Rather than natural resources I should have said oil. It generates more wealth and requires requires the fewest # of employees per dollar output. Certainly coal mining farming and forestry require a much larger work force, and until recently haven’t generated the same kind of wealth. If you’re in charge of a country with oil throwing trinkets at your citizens and suppressing those that are vocal is your fastest route to massive wealth, why take the risk of capitalism and democracy. This factor is particularly true if the government is just being established (ie it’s weak) just when oil money becomes a factor. These factors all played a roll in the middle east, where the countries were designed to be weak and fractured. You could say the democratic reforms in Russia were rolled back just when oil production there started to increase.
Bruce Norris began his real estate career when 1.) he questioned getting a house in Riverside for less than a car and 2.) when he researched what the “experts” had said during the housing bust of the 80’s and finding the SAME PEOPLE were saying the SAME THINGS as the market fell. The absolute lack of crediblility in their exertise as they made the same mistakes again but mislead the public about their predictions.
This time the revolution will be televised.
Any researcher who explores even a bit about Tom Adkins is going to find this video. Not in the near future but eventually the politicans and experts are going to be held accountable for what they say.
Activists bare teeth over foreclosures:
http://news.yahoo.com/s/ap/20080301/ap_on_bi_ge/the_shark_hunters
Look, we all know there are some real predatory lenders (fraud at closing, for example), but give me a break. You know some of those people thought they won they lotto when they “bought” their homes.
When did Americans become so dumb?
I don’t think they were ever that smart to begin with.
http://www.youtube.com/watch?v=upyewL0oaWA
This explains our national dumbing-down process better (and more hilariously) than anything I’ve seen to date.
When the entitlement culture become entrenched.
One need not use his or her brain to receive a handout.
ESOP is doing their best to make a few of Countrywide’s bad loans perform again.. Who’s side are they on?
“Afterward, one of the executives asked her how far she was willing to go to keep the house.
“Do you know what obese is?” Gardner says she answered. “Well I’m the medical standard of obese … and I’m willing to walk the double yellow line of the Shoreway buck naked to get that house back.”
What a lovely scene. These “loan workouts” will be interesting.
True to character, the FBs are dense. They don’t understand that foreclosure is the LAST thing Countrywide wants to see.
If they want attention and the supply of cute little plastic sharks was cutoff i suggest they take up a collection. 20,000 sets of house keys.. duplicates, for now.. and throw them on the lawn.
I like the duplicate keys idea - it makes the point a whole lot better.
She is willing to torture others to get her house back?
When things get crazy why do people take their clothes off? The last thing I’d want to be is homeless AND nude.
The last thing I would want is for you to be homeless and nude.
When we finally reach bottom, Ben can host the “Burning House” festival and we can all run around in the buck doing the Shoreway Shuffle.
Even medically standard obese people.
I believe I already have plans that night. I don’t know when that night is but I have plans.
I choose to ballwalk in the privacy of my own local bar & grill.
So, when did it become ok to break the law, trespass and deface a persons private property in the name of justice? Where are the police when these asshats appear? What a great opportunity while you’ve got a whole bus load of them.
Last time it was elected officials participating in the blockage of a foreclosure eviction.
Where are the police when these asshats appear?
They’re too busy trying to figure out how to pay their mortgages.
It seems like the government has pretty much gotten to the point where enforcement of the nation’s laws is pretty much pick and choose. Ever hear about the enforcement of our immigration laws?
That’s the biggest problem I have with illegal immigration. I don’t hate the people that come here. I hate that they came here illegally and our government has blatantly stated that they will enforce the law when they choose to enforce the law. That’s the slippery slope.
LMAO! Laws don’t mean a DAMN thing in the US anymore, unless someone wants to use them against you. Selective enforcement is not a rule of law, it’s a rule of dictatorship, or anarchy. Why should I obey any laws or pay taxes at this point, when illegals don’t have to, or when multi-nationals don’t have to? Really, at this point, the only law is who has the bigger weapons. Just wait for the Balkanization of the US. It’s coming. The illegals have been “empowered”. Shows you that crime pays and wins.
Shows you that crime pays and wins ??
Pretty much….And if you are going to do it, do it once and BIG…..
not in the name of justice
for GREAT justice
all your s#!tbox are belong to us
Jefferson County sewer-bond credit rating cut to junk, increasing odds of bankruptcy
Jefferson County’s sewer-bond credit rating was cut to junk status Friday, increasing the odds of the largest bankruptcy filing ever by a governmental body.
Standard & Poor’s, which ranks the creditworthiness of borrowers, downgraded the sewer rating to junk level, citing uncertainty that the county can make debt payments to lenders such as pension plans and money managers who bought bonds. The sewer-bond rating was cut six levels to B, five levels below investment grade, from BBB.
The downgrade intensifies pressure on the county’s finances and makes it possible for creditors to demand payment on $341 million of investment contracts called swaps.
“Junk” is Wall Street lingo for the riskiest class of investments. It means high debt, low cash and substantial risk that lenders who bought bonds won’t be getting their money back as planned.
“Bankruptcy is certainly an option. This is a serious, serious situation,” said Peter Shapiro, managing director of New Jersey-based Swap Financial Group. “It would be much better to try to negotiate and see if it can enter into some kind of voluntary rescheduling of its obligations.”
Jefferson County Commission President Bettye Fine Collins said Friday she had no comment about the downgrade.
Orange County, Calif., filed the country’s largest governmental bankruptcy in 1994, after its bets on interest rates lost $1.6 billion. Jefferson County’s total debt is nearly three times that - $4.6 billion.
…The subprime effect:
The county’s problems began this year, when periodic auctions for some of its bonds attracted no buyers. The lack of buyers triggered agreements that mean current holders get a higher interest rate as compensation for not being able to sell the securities.
Auctions have failed on $869.45 million of the county’s sewer debt. Buyers evaporated after investment banks, burned by subprime mortgages, shied from bonds such as Jefferson County’s. Mortgage pools whose cash flows backed investments lost billions last year after unprecedented defaults by home borrowers with poor credit records, which reduced the capital that banks had to buy auction-rate bonds.
The county’s Thursday night filing said interest rates on some of its variable-rate demand warrants had soared, now ranging from 3.08 percent to 10 percent; and that rates on its auction-rate securities were sharply higher, ranging from 3.92 percent to 6.25 percent.
Friday’s S&P downgrade also followed a downgrade by another ratings agency, Fitch Ratings Ltd., of $1 billion in county school-construction bonds, which are paid by a 1 percent countywide sales tax. About $400 million of those bonds are in variable-rate debt. Those bonds fell from AAA to AA.
http://tinyurl.com/2nf9rr
If Jefferson County was Jefferson Trust of Wall Street, they’re bond rating would still be AAA… make no mistake about that..
they’re = their.. sorry, it’s early..
I think we need a “wewalkaway.com” for the public sector. Older generations lived large and are trying to stick us with collective burdens through government debts and pensions, as well as their individual debts. Why should we have to pay? Are you being bequeathed a wonderful infrastructure, compared with what came before?
“Older generations lived large and are trying to stick us with collective burdens through government debts and pensions, as well as their individual debts.”
Not to mention sticking us with their devil spawn, like shrub and various members of CONgress, not to mention some of the Wall Street crowd. Not only are these devil spawn stupid, but most of them are crazier than sh*thouse rats.
Wish my wife were with me on this, because I’d be packing my bags for Europe now. It’s not that their economies aren’t toast too. They are. But they have much better infrastructure in many cases, they treat low-level workers better (hours, bennies), and it’s easier to live on a small salary. Some Polish friends told me “you could always go to Amsterdam and teach English.” Hell, I would drive a bus or work package hauling or info desk or whatever in France if I could get papers. See lots of immigrants doing that and AFAIK there’s no fatwa on hiring Amis.
*sigh* still here … railroading contacts think things are going to be great. $100/barrel oil is awesome for them. Didn’t have the heart to tell them that their “government partners” are broke.
The rr’s had better rethink that, immigrant o/o’s are being killed by the high cost of running a truck. I avoid them like the plague when on the highway. Have seen at least 2 in the last 6 months with front wheel bearing failures. Stay away from the 20′ containers on twin axle chassis too, i’ve seen quite a few break in half. They are using them to haul grain in the midwest and are loading them 50k+.
No Scales/Inspection stations….??…We have scales throughout California…That’s not going to happen here….
Easy in illinois, simply run at night when the scales are closed. They are cracking down during the day, though. State shows up with the portables at least once a week. They nailed a few renegades (no cdl) that way .
Anecdotally, some people are riding Amtrak this year instead of driving because they are intimidated by the trucks. (Amtrak’s ridership is up quite a bit this year, despite raising prices AGAIN and cutting some service!)
Truckers are getting KILLED by diesel prices. Read about a guy who went from $50K/year to $11K. That sucks. I know someone who was a class A driver at $60-70K five years ago. This was typical pay OTR.
I have noticed some sloppy driving by trucks lately, but being a CDL myself, I just kind of calmly avoid them and assume they’re having mechanical problems/inexperienced driver. Did not consider the high diesel prices/deferring necessary maintenance connection.
No CDL? Ouch.
And all these trucks hitting trains amazes me. CSX guy yesterday said 1/3 of the collisions are trucks running into the side of trains. Sometimes they overrun their headlights, but 2/3 of these collisions happen in broad daylight. ???? I’ve never so much as rear-ended a car. I work with folks who’ve gone 19+ years without a preventable accident. I know dump truck drivers are sociopaths, morons, and drunks, but I figured you had to have at least two brain cells to rub together to driver tractor-trailer…right? Eh?
Agree with you completely. The current retirees started the Roosevelt entitlement mentality. I’ve heard comments many times about how they worked hard all their lives and paid into the SS system.
Well, back in the 50’s when they first started paying in, they put about 1% of their paycheck. That went to 2% and they thought is was robbery. We are currently paying about 7% to support them and it’s not enough. The TOOK OUT almost all their INPUT in the first few years of early retirement. Many are double and triple dippers who have both SS retirement checks and government pensions. They have TAKEN much more than they put in and continue to relax on the golf course while we toil to support them. They should have not gotten early retirement benefits. I can guarantee you we will not.
I put my anger in a more well placed direction. Instead of ‘blaming’ the poor retirees who put their lives on the line in WW2, who are out there on the golf course I aim it directly at the weapons manufacturers and the war mongers who have run up a 3TRILLION dollar bill on the phony war in Iraq. add to that the 600 BILLION plus a year for the military budget of which the Halliburtons and the Lockheed Martins and their ilk do exceedingly well. We’ll all be able to retire with security if we went after the real culprits here.
Melvin,
If you intend to sway anybody’s opinions, please spew your facts in words that don’t scream out “I heard this on Air America”.
Both parties have wasted money, tons of it. While I can understand your distaste for the war, in fact, we haven’t had any attacks since 9/11. The war is probably a good reason for that.
Did you hear about the Ricin they found in Las Vegas? The Islamo Fasciasts will attack again, it’s only a matter of time. Will the people that you support be able to protect us in a similar manner? It seems we’re about to find out.
Peace.
Lip
I see. I am”spewing” something that I heard on air america radio. I never listen to air america radio! I don’t watch television either. Maybe thats my problem.
“we haven’t had any attacks since 9/11. The war is probably a good reason for that.”
I really hope you are right. 3 trillion is a lot of money to spend on this thing. More importantly the losses of 100’s of thousands of lives, 4 thousands of which are my countrymen and women is a big price to pay for safety from terrorism. Personally I thought we should have been in the mountains of Pakistan not Iraq. I think the war is a failure and misguided, part of this New American Century Ideology, which is making us less safe. I could be wrong but that’s where I stand today.
I don’t intend to sway anyone just stating my point of view, I thought that reasoned, fair, and polite discourse are the ground rules here. As for the ricin in las vegas- yeah i read about it. but what does that have to do with islamo fascists? please inform me. i’m sure it’s possible. However,another example- the anthrax that was in Washington DC in 2001 was traced to military grade American made anthrax. so who the hell knows what is going on? Many believe 9-11 was a false flag operation. I don’t know for sure what really collapsed those buildings and hit the Pentagon. do you? I do have questions. I think thats healthy.. Finally, you seem to know who I support. Truthfully, I haven’t made up my mind yet.
The ricin story is window dressing designed to keep us afraid of boogey-men rather than keeping our eye on those stealing from us (i.e. the really dangerous ones in our own house). Just keep fearing those “islamofacists” (LOL) and they’ve got you.
There’s also no way to measure whether anti-terrorism is working. If there are no attacks, either there were no attacks or they were foiled. If there are attacks, there could have been fewer or more. No metrics that work. Just a money hole like every other “war” that’s not really a war.
If you are drawing on another gov. pension, your ss benifets get reduced to practically nothing, about 200 per month.
Not true. My father draws SS and military retirement. No reductions in either of them.
tell us how many years did he worked after retiring from the military.
One trip to the hospital on Medicare can wipe out an entire life’s contributions plus interest. The Medicare system is another pyramid scheme, where those at the bottom pay out to those at the top, and the bottom must always expand in order to keep up with inflation. It’s a stupid system.
From The Birmingham News, Sunday, March 2:
” … A bankruptcy on the county’s total $4.6 billion of debt would dwarf the previous largest by a government, the $1.7 billion filing by Orange County, Calif., in 1994. In the California case, the fallout was stark. About 1,600 county workers lost their jobs. Every county program was cut.
The saga lives on among financial professionals, who use “Orange County” as a euphemism for catastrophic failure caused by public officials who don’t understand what they are doing. ”
Electing ” … officials who don’t understand what they are doing …” is expensive but we’ll continue to do so.
collective burdens through government debts and pensions ??
I wholeheartedly agree with that part of your comment W T…I don’t agree with the generalization of “The Older Generation”…
They have to downgrade the monolines now that the contagion has spread to the munis. Their business model is dead, they won’t be able to raise capital forever.
Sorry if this is a repost:
February 26 – Bloomberg (Svenja O’Donnell): “The Federal Reserve has ‘rock solid’ credibility on inflation and has kept a lid on consumers’ price expectations, U.S. Treasury official Phillip Swagel said. ‘Expectations remain contained,’ Swagel said… ‘The Fed have really worked within the dual mandate’ and ‘the Fed’s credibility on inflation is really strong, it’s rock solid,’ he said.”
Hmmm, contained, eh…Now remind me again where we’ve heard that word before….?
No kidding. The old Soviet Union has NOTHING on the US when it comes to propaganda, except maybe for the fact that people aren’t yet taken off the streets and put into psychiatric hospitals for speaking the truth. At least, not on a routine basis.
When will one of the stooge presidential candidates announce that they have a “5 Year Plan” to revive the economy? My first bet would be on Carmela Cl!inton but I wouldn’t put it past YoMama or McCant either. Politicians love plans and big ideas that never reflect reality.
Yo Bama hasn’t said too much, but whenever he does say anything, there’s always a governmental solution that requires more tax dollars.
He has a more “liberal” voting record than anyone.
This from a man who never has done an honest days work in his life.
Same with Hillary. I consider her time at the Rose Law firm a government handout job, a company that just billed tax-payers for graft. It was a training period for holding office.
At least McCain put in time in the Armed Forces.
Check in to McCain’s role in the S&L Crisis.
Note that McCain want us in Iraq for 100+ years, and the cost of the war right now is likely to come in at $5 Trillion
W never worked an honest day’s work, and read up on how he gamed the system to get the new stadium for the Texas Rangers.
Besides dumping his wife after he returned from Vietnam because she had gained weight after a severe accident to persue the rich 24 year old BIMBO 20 years his Jr…
Looking at his wife makes me think that if she farts her face may explode.
Obama’s record
Occidental college x 2 yrs
Columbia x2 political science
Worked at business international corp and NY Public Interest Resarch Group.
Worked as community organizer in Chicago – Likely as a first step toward politics.
Entered Harvard 1988
Elected as Harvard Law Review’s president
Completed Harvard J.D. magna cum laude – ie top 20%,
Worked as an attorney 93 to 96
Lectured on constitutional law at University of Chicago 1993 until 2004.
I don’t know it sounds like there was some work in there somewhere.
With regard to there always being a solution that requires tax dollars, I’d say that after the borrow and spend repubulicans have utterly depleted the coffers and driven up the nations debt that we’ll have to come up with the money to pay down the debt and stimulate the country somewhere.
Remember diogenese - Inflation is the ugliest tax of all, and we’ve gotten a big dose of that via our borrow and spend gov.
While I do not like it, Both parties will continue to spend. I think we have to spend in order to keep the economy from getting a knock out blow. (Maybe it needs a knock out blow but I don’t want one due to the pain it will be for all). If we all can agree that spending is the answer, then lets focus on what is the money being spent on. Free Health Care, The 100 year war. Neither bring any real answers to our problems. We need to focus on spending to increase our worth as a Nation. Creating jobs to compete in a Globalized world. Just my 2 Yens Worth.
Government needs an enama. Economy needs a cold reboot.
Mrs. McCain looks like she could take Barbara Bush in Bitch-a-palooza.
Sen. McCain should go on stage with Elizabeth Dole if he needs a female around. GAck*
‘Expectations remain contained,’ Swagel said”
The key word is “expectations”. Not actual but expected inflation. If we just go around telling everybody that inflation is low, maybe they’ll believe it. It’s like a big scam to try and manage the sheeple. I don’t think most people believe it. People go to the grocery store and gas station every week. It’s very apparent to everyone I speak to.
How a Bubble Stayed Under the Radar
By ROBERT J. SHILLER
ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming. (snip)
The fundamental problem is that the information obtained by any individual — even one as well-placed as the chairman of the Federal Reserve — is bound to be incomplete. If people could somehow hold a national town meeting and share their independent information, they would have the opportunity to see the full weight of the evidence. Any individual errors would be averaged out, and the participants would collectively reach the correct decision.
http://tinyurl.com/2bogb7
Umm………. Professor, how about looking around on (in the words of Sen Ted Stevens) the “Series of tubes” called the internet. You might have come across Ben’s several year old HBB!
PS: For the record Shiller is one of the goods guys in regards to the whole housing mess.
I’m beginning to think Shiller is an establishment hack. Sure he can see bubbles and went public with it early. Lots of other people did too. But as the media bubble favorite, he continues to soft-ball the responsibility aspect. I got a pre-release copy of Fleckensteins “Greenspan’s Bubbles.” Read that and see what you think of how Shiller sizes this up.
I’m beginning to think Shiller is an establishment hack.
He’s a prof at Yale. I’m not sure there is anything more establishment than that.
But I think you want him to fill a role that he is not destined to fill. His experience as The Adjudicator of Fault is practically zero, and I don’t think he’s prepared for the fire and brimstone speech that would need to be delivered to the PTB.
His talent as A Discoverer of Bubble Mechanisms is quite substantial, on the other hand. The NYT article is significant because he is (attempting to) elucidate the tradeoff between The Wisdom of Crowds and The Madness of Crowds. In that role, which is more professorial and less judicial, I think he is first-rate.
I agree with you JP, his treatment of cognitive economics in this article is excellent
Hey Hoz. What do you think will happen next with the monolines? Tnx in advance.
“…Banks stand to lose as much as $70 billion on insured debt they hold if the ratings of bond insurers are reduced, according to New York-based analysts at Oppenheimer & Co….”
Mar 2 Bloomberg
“It’s just one more wave of wild speculation that’s going to end the same way the others have. To try to conclude that the bear market is over is the height of lunacy.”
The rest got cut off, my bad!
“Think about it. If all the stuff covered by ‘mark to make believe’ accounting loses its accounting treatment because it is no longer AAA rated, is there really going to be anyone around left to sue? Will there even be a banking system? I wish I was joking. It will take a printing press to capitalize Bad Co. to afford it a AAA rating….
According to a knowledgeable friend I call the “Lord of the Dark Matter,” we may be on the verge of the biggest document failure ever. In some cases, there will be nothing on the other side.”
Mr. Bill Fleckenstein
Feb 25, 2008
I’ve thought this about him as well… I give him some credit; however, I still lump him in with many other economists who are quick to deflect responsibility for this mess, whether that responsibility was setting monetary policy, advising a CEO/CFO or publishing something in academia…
I mostly agree, except for the ‘hack’ qualification. After reading his Irrational Exuberance book I think he is very well informed regarding the bubble subject, but extremely cautious when it comes to putting blame on higher authorities and individuals. When he points his finger (e.g. at the news media) it always is in a very general sense and never specific. I guess that is just the way it is in his field, start fingerpointing and you are out of a job and no longer welcome with the media.
We have the same problems in my country, e.g. with real estate professor Eichholz (who worked with Shiller regarding housing bubbles etc.). He acknowledges the serious housing bubble problems around the world and points his finger at some of the culprits, but at the same time he says the Dutch housingbubble is not a big risk (which is hilarious when you look at the facts). Just like with Shiller, his job depends on remaining relatively upbeat about the economy and real estate in general.
‘I guess that is just the way it is in his field, start fingerpointing and you are out of a job and no longer welcome with the media.’
equals hack
“why even most experts didn’t recognize the bubble as it was forming. (snip)”
They don’t want be perceived as throwing water on the party. A lot of people get paid to “go with the program”.
Shiller was writing about bubbles (he called it irrational exuberance) long before this blog existed. His position as a faculty member at Yale somewhat constrains his freedom to stand on a soapbox with megaphone in hand, shouting, “The housing market crash is imminent! Prepare for the worst!!!” Nonetheless, if you read what he has written, he was out in front of the situation all along (although I have the impression he may have underestimated the severity).
Being a faculty member at Yale should do the exact opposite of constraining his freedom. The whole point of tenure is to put a certain group of peope in a position where they can’t lose their jobs even if their research leads them to say really unpopular things.
Whether any individual is inclined to say very unpopular things is, of course, up in the air. And the sort of person who is desperate to “stick it to the man” will never get through the agonizing process of graduate school and getting tenure in most departments anyway. That being said, my brother has elaborate fantasies about the things he will be able to say in a “post-tenure” book (not economics).
I think Schilller came up with a better way to measure price of housing trends a long time ago. It takes a lot more work than the old ways but eliminates a lot noise in the numbers that people before him thought couldn’t be eliminated. He didn’t come up with it to diagnose a bubble, it just did. All he did was find the info - he doesn’t have any special insight on why it happened, but the media is too lazy to find anyone else to ask those questions.
And quotes from Yale profs get past editors pretty easily.
Are you referring to the same Yale that is home of the Skull and Bones Secret Society ?
Yes, what does a bunch of self-important undergraduates playing games with secret meetings and funny nicknames have to do with the tenure protections of the faculty?
polly,
You misunderstand the pre-tenure and post-tenure game.
Theoretically, it works as you say.
In practice, you are forced to play ball because every tenured professor wants a raise each year which is political, and they want to get to a Named Chair.
You can’t rock the boat in academia. You will be instantaneously blackballed. And you can’t just leave the job and go to a competitor (at least not as easily.)
I actually think the restraint comes much more from wanting to get lucrative consulting contracts or adulation from publishing than from hoping for better raises within the academic job. That being said, the result is the same and not much different than the restraint I mentioned above - a person truely inclined to make huge waves would never be able to keep quiet during the 12-15 year process of trying to get tenure.
“The whole point of tenure is to put a certain group of peope in a position where they can’t lose their jobs even if their research leads them to say really unpopular things.”
Just because the tenure system protects academic jobs does not mean their colleagues and constituents will not punish academics for speaking of inconvenient truths.
“punish academics for speaking of inconvenient truths.”
Probably why academics are not held in much regard. If even with protected jobs, they are afraid to speak or write on their subjects truthfully, then what value do they really have?
“…then what value do they really have?”
Many of them are the first to foresee or notice trends. Just because they don’t scream about it on a blog or the boob tube does not mean their quiet observations behind the scenes are worthless.
“ONE great puzzle about the recent housing bubble is why even most “experts didn’t recognize the bubble as it was forming.”
Nice thing about the bubble crash, the empty content of “expert” opinions has been clearly documented.
Diane Swonk, Retsinas, Snaith, Husing, Yun, Berner, the dolts at Harvard and George Mason U., ibank economists, Fed governors and chairmen,Treasury secretaries Snow and Paulson….every one of them, wrong every step of the way, with not a useful insight among
them. And that’s assuming that their posturing was not criminally negligent.
‘ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming.’
OK, this is nothing more than revisionism. Not only did most ‘experts’ not see a bubble, they denounced the idea as a crazy conspiracy theory. This in turn was picked up by the media and feed to the public. There was a lot more to this campaign than being clueless. Shiller is giving the REIC a pass, as well as the government bodies that fed the housing bubble. No wonder he gets editorial space at the NYT.
You are wrong Ben. All of my co-workers are now telling me it was clear that the housing mania was unsustainable. They couldn’t be wrong. The “experts” are telling us the same thing. They couldn’t be wrong. They all saw the bust coming. They just didn’t want to bring anybody down. Bwahahaha. What a bunch of f—ing a–holes they all are. They can’t even predict the past.
Here in the bottom of the third inning, I have the score as follows:
HBB: 147
Experts: 2 (driven in by Thornburg and Shiller)
This is Shiller’s style. He is not a shouting CNBC mouth. He is an academic. His language is nuanced and he does not overly speculate where the data does not support it. His work on housing price history is THE definitive work on the subject, and the well Known graph of 100+ years of housing prices is the image that made the bubble real for many people.
He is not a counterpoint to Kudlow or Cramer. But his work has a bigger and more lasting effect than any of the big mouths.
When you read this article, he careful puts the blame in the laps of the policy makers.
“His language is nuanced…”
There is the main disconnect. Some posters here seem overly eager to label anyone who does not shout their message as a hack. Love it or hate it, caution is part of the standard unwritten behavior code for academics.
“His language is nuanced…”
So was Greenspan’s. I would like less nuance and more truth. It doesn’t have to be screamed. It just has to be spoken.
There is a bi difference between Shiller, who is nuanced and correct, and Greenspan, who obfuscated and was wrong.
’shout their message’
Who cares about messages? This isn’t a tastes great, less filling debate. What about truth?
Right now we are in the bargaining stage of this bust, but IMO we will get to a point where people are going to look for answers as to how this happened and why. As the media appointed answer guy, Shiller isn’t up to the task. I suggest Fleckenstein and Thornberg.
I’m sure the last thing Shiller would want to be is the Media point man on this, whether the media appoints him or not. He sees himself as an academic, not a spokesman.
I don’t think most academics see their role as media spokeman — quite the contrary in fact. I crossed paths with an academic recently who I have seen quoted in the MSM as a housing market expert. I asked him about it, and the impression I took is that serious academics look at the duty of making MSM comments as akin to drawing the short straw. You guys are free to apply an unfair standard of judgment if that is what it takes to help you feel superior, though.
Agreed, these two, in addition to having statistical evidence, tend to be far more definitive and I think ‘braver’ in that they publish their actual thoughts unvarnished and unedited.
Thornberg was muzzled for a long time, at least until he left UCLA and went into private practice. Lots of posters on this blog were outraged anytime he was politically subdued and accused him of being a housing bull. Now he can speak out - I am guessing his income depends on it. Shiller has the same problem Thornberg had - there is little academic freedom in being too extreme with your views. It’s easy for us to sit here and post anonymous rants against the REIC, and Ben, your income depends upon you pointing fingers, but Shiller does not have that freedom. He was a rare bird pointing out the problem. Let’s give him the appropriate kudos for that and for his continuing position that we are nowhere near the end. His job was to point out the problem, not try and determine every idiot who should hang for their crimes.
I am guessing I am not the only one here who cannot be as direct and open about the problem in housing as I would like to be. For one thing, I could have been sued if I told people I KNEW housing was going to collapse and it did not. For another thing, I believed for all the reasons we have discussed here that housing was greatly overpriced. But it was an opinion, there was no fact to say that housing was going to fall by XYZ% in ABC years. It’s easy for us to see the forest, we’ve been expecting it for years. But to expect politicians and others to immediately have the knowledge we have gained from years (for some of us) of reading this blog is ridiculous. Everyone involved is to blame, and Shiller’s job is to keep pointing out the economic truths. I’m glad he’s doing it and starting to get the recognition he deserves. But he still has to keep his day job and that means he’s going to stay political.
I wonder if students at Duke University would agree with your last sentence.
ROTFLMAO! Good one, Professor.
Tapping Into Homes Can Be Pitfall for the Elderly
http://tinyurl.com/37459b
However, a former sales agent, Hani Shenoda, and an agent who still works at the company who spoke on the condition of anonymity because of fear of retribution, said in interviews that managers at Senior American Funding encouraged them to pressure older homeowners into unwise loans and investments. The company disputes that assertion.
“This saleswoman was so friendly and personable,” Ms. Baker said. “It was like God had sent me a friend to tell me how to survive.”
“Anytime anyone gives a counselor a donation, they expect a quid pro quo,” said Buz Zeman, a reverse mortgage counselor with Housing Options Provided for the Elderly, a nonprofit group financed by government grants. “The point of counseling is to make people consider other options. That’s difficult if you feel like your next paycheck relies on convincing someone to get the loan.”
Hmmm..Friendly salesman and financially desperate senior. I wonder who wins that encounter. More sad tales, more financial fraud, more lawsuits and this is just starting.
“Friendly salesman and financially desperate senior. I wonder who wins that encounter. More sad tales, more financial fraud, more lawsuits and this is just starting.”
While fraud against the elderly is troubling, as someone who has had to deal with a very stubborn and occasionally nasty elderly parent (whose children, of course, were nowhere NEAR as nice and intelligent as the sharpie on the other end of the phone, to hear the parent tell it) and who also recently tried to talk an elderly friend out of a reverse mortgage, the task of saving these folks from themselves can be completely thankless.
“the task of saving these folks from themselves can be completely thankless.”
The great generation reminding me they are real estate geniuses, because their 90,000 home they bought 30 years ago became a 1,000,000 (million), so they really know how to invest. Like talking to a wall.
right on, david cee. LMAO! Try to “help” some elderly person who is in the process of being taken advantage of and you just get excoriated and snorted at for being stupid. Then, when the damage is done, who do you think gets appealed to for help? “Oh, help me, help me, I’m a poor victim senior citizen”.
Holy sh!t, Palmetto. You’ve met my FIL. Old people that are jerks were usually jerks as young people. Look at all of the younger people that have laughed at us or told us we were crazy when we warned them about this housing mess. How many bought in the face of serious arguments and tossed out some stupid cliche to justify their stupidity?
How vulnerable do you think these young fools will be to scams when they hit 70? F-ck ‘em.
Testify, brothah NYCityBoy. I suppose this hits close to home with me, because I recently had a go-round with a senior citizen who just HAD to take a reverse mortgage to keep a failing business going and pay for an entourage of hangers-on, in order to keep up some facade of wealth. This person had appealed to me for help with their business, but I soon saw it was a losing proposition and backed off, because the people who are bleeding her dry can do no wrong. So I just said “F-ckit”. It is not worth it. I’ve seen her turn viciously on people who have tried to help her in the past. I think some of these senior citizens just enjoy setting their acquaintances and children at each other’s throats, for their own pathetic amusement.
“I think some of these senior citizens just enjoy setting their acquaintances and children at each other’s throats, for their own pathetic amusement.”
Like God?
Old people that are jerks were usually jerks as young people.
lol. I agree!
There is a terrific little book called “Coping With Your Difficult Older Parent”. The nutshell is that small personality disorders in youth can manifest as big personality disorders in old age.
(And FYI: I didn’t find this book because of dealing with my parents, but because I met one of the authors.)
The reverse mortgage people may be taking advangage of seniors, and seniors may think they are too smart to be taken advantage of, but at least with a reverse mortgage the senior isn’t paying a monthly nut right from the start. In the “active senior” development where my parents live, a bunch of people who needed reverse mortgages, got HELOCs instead. When they spend the money, they can’t make the payments. Idiotic.
My parents may still be following Bob Brinker (who saved them quite a bit of money in the dot com debacle but seems to think this one is much less significant), but at least they won’t get caught in that sort of bind. My mom is too risk averse to take on fixed payments when they don’t have employment income. She did, however seem to think that the last sale in their development indicated a bottom of the market. I tried to convince her otherwise, but was remarkably unsuccessful.
“How vulnerable do you think these young fools will be to scams when they hit 70? F-ck ‘em. ”
Exactly. And, conversely, the many sharp people on this blog who are in their 20s and 30s will not suddenly become stupid and vulnerable in their 70s and 80s. You’re either stupid or you’re not. My father lived to be 94 and was as sharp as a tack nearly to the end. Until a week before he died, at which point he was basically drifting in and out of consciousness, he would have told any financial scam artist trying to con him into something to shove it.
their 20s and 30s will not suddenly become stupid and vulnerable in their 70s and 80s. You’re either stupid or you’re not.
Would that it were true. Watching the descension of a sharp mind is not pretty.
Just a few comments. First, reverse mortagages. When these elderly people run the balance to zero..and they will…what happens to them? Do we again bailout stupidity for not saving? Second, anyone wheter it be in academics , financials or politics, that didnt see this housing bubble coming is an idiot! That being said, the next train coming is the great depression. As assets deflate, banks fail and bailouts prove ineffective, all else will go down the black hole of greed. If you want to survive this train coming, take a good look at this countries economy in 1967. Average wage was 15k annually, average house 22k, the price of a good Ford was 3k. I think exclusivily in those dollar terms. I will not pay more than 3k for a car, Liability only on car insurance, no fast foods, coffee comes from my pot, food only on sale, then in large amounts, no cable tv, cell phone, hell what for..to be interrupted all day…flat screen..why?…stereo surround..I’m too old to hear it anyway..gas..spend no mre than 6.00 per day…make it last..
I built my own 1400sq ft home…cost 45k…with property taxes at 1k annually…toys if you must have, but never buy new.Heat and light…get off the grid, ac whats that? get used to your enviroment! College for kids..student loans and grants..soccor moms..give me a break! Multitasking, another give me a break..learn how to work! No free lunch. Yes, its easy to live on 15k annually. Quality is more important than money….I could care less what happens to the greedy, I will always survive!
It’s different here:
http://www.phillymag.com/articles/everything_you_know_about_philly_real_estate_is_wrong/
Much of PhillyMag’s recent ad revenue is from full-page ads taken out by developers.
Shiller in the NYT: “Were all these people stupid? It can’t be.”
http://www.nytimes.com/2008/03/02/business/02view.html
“The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks.”
Ah, I get it. So the next bubble will be gold and silver alloy solar panels covered with Saudi oil stock certificates. Now all we have to do is call the top correctly.
That article was a bunch of bulls–t in my opinion. When 800 square foot lofts are going for $800,000 in the ‘hood in Harlem you know there’s a f—ing bubble. This is why professors are often as useless as a third nut.
You apply a very unfair standard of judgment. I suppose that unless a professor can walk on water, you would regard his opinion as “useless.” How, in your scheme of things, did it become the role of academicians to be all-seeing, all-knowing and all-revealing profits?
“if people do not see any risk”
For a professor, Schiller is careless with words. Note that he uses “people”,instead of stating ” some people”, implying that there were no reasonable folks who looked at the growing housing mania and stepped to the sidelines. The implication is misleading and even dishonest.
And a nice Freudian slip from Bear…”all-knowing and all-revealing profits”.
That was a Freudian misspelling, not a slip (s/b prophet, not profit…). But your point is a good one.
Stucco, I know you are biased on this one and I try not to tread too heavily on your feelings but we’ve all met a lot of professors. I have yet to see many that live in the real world. Take for instance the Russian history professor I had that still thought Lenin was a man of genius and a great guy. It was Stalin that was the awful man. No amount of evidence to the contrary would convince him otherwise.
In many ways professors are just academic politicians. Don’t worry. There are a lot of professions loaded with such fools and phonies.
Don’t take it to hard, Prof Bear. There are also some great professors but $800,000 lofts in Harlem and most of these academics couldn’t equate that with a bubble? WTF?
If I could not withstand criticism, I would neither read nor post here.
I know physicists and economists who still think there was no bubble. Rational expectations and all that jazz.
We’ve just lived through the greatest credit buble in history. Every asset class has been inflated — Indian art, first editions of books, Chinese real estate, land in Panama — and they can’t put two and two together?
Land outside Chandigarh (in India) selling for more than Manhattan prices? Condos in Panama costing more than Chicago’s Gold Coast?
How hard is it to see the obvious? And why do we have to yell so loudly?
“physicists”
Thanks for reminding me of my favorite bubble quote for the ages by a physicist:
I can calculate the motions of the heavenly bodies, but not the madness of people.
– Sir Isaac Newton –
(After losing a fortune speculating in The South Sea Company, as quoted in ” The Damn’d South Sea” Harvard Magazine (May/June 1999))
http://en.wikiquote.org/wiki/Issac_Newton
“And why do we have to yell so loudly?”
The MSM is hard of hearing.
Don’t be so down, nobody wants to hear bad news.
Isn’t the second nut kind of useless too? I mean, it’s not like the fluid from both combine like those epoxy kits you buy at the hardware store…
Many systems in the human body are fail-safe (respiratory, excretory, and reproductive to name some); if one of the organs fails, its pair can sustain life.
BTW, I have a friend who lost one of his family jewels in a wild moment of debauchery with a heavy set woman, so this is not just theory I am talking about.
What do you think she told her friends the next day when they asked her, “hey Bessie, how did your night go?”
“Not bad. I went to dinner with a guy, took him home and broke his ball. The veal was fantastic.”
I know both these people very well. Heard the story through the grapevine, and never had the gall to bring it up with either of them (perhaps if I had that third nut, I would have done so…).
Maybe if you weren’t an academic, and your language wasn’t nuanced, you might have had the nut to bring it up?
“Not bad. I went to dinner with a guy, took him home and broke his ball. The veal was fantastic.”
NYCB-Huge LOL! Thanks.
Nah — I was working in the private sector when I had the opportunity. And besides, I was born with only two of them.
When I owned a car I only carried one spare tire in the trunk. Two would have seemed kind of silly.
I carry 2 spare tires, because once you put on the first one on, you still have a spare, until you can get the flat fixed. On a road trip, it`s most important.
The second nut IS the spare tire.
Exactly. And the third nut would be the extraneous second spare tire. I should have uploaded a diagram.
‘I should have uploaded a diagram.’
Well, I, for one, am awaiting one with great interest.
Didn’t the Bad Guy in the James Bond flick “Man with the Golden Gun” have 3 nipples…?
” have 3 nipples…?’
Oh, jeeze, who doesn’t. We’re talking about UNUSUAL extra bits, here.
You might be harshing on him for things he is not writing about. Reread the first line of the article: “ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming.”
So you and I knew the bubble was there, but why not people who do this for a living? THAT was the point of his article, and I think it is a terrific question to ask.
And you might answer because “they’re a bunch of friggin idiots.” I might even agree with you. But now there is a situation where the “experts” realize they were wrong, so how did that learning process occur? and why not sooner (or later)?
Honestly, good solid answers to such questions are worth a LOT of money in identifying other/future bubbles.
He at least mentioned the ReIC (MBA, NAR) “experts” whose employment causes them to consciously ignore and misreport data.
Part of the reason so many experts got it wrong, they had a personal stake in believing. Most experts own their own home and probably a 2nd home and some investment property too. If they were to open their eyes that we were in a bubble, they would have to rethink the value of their personal wealth. If they truly saw the magnitude of the bubble, make some undesireble moves at a personal level; sell their personal residence, sell their vacation home. Sometimes its easier to deny it being a bubble than to make major life changes.
This theory poses a major challenge to the “efficient markets” view of the world
Didn’t Buffett’s shareholder letter from a few days ago make a wisecrack about how you absolutely do run across inefficient markets all the time, just not in financial departments of Ivy League universities? That crack must hit close to home for Shiller!
how far will the us economy fall?
http://www.nypost.com/seven/03022008/postopinion/opedcolumnists/hitting_stock_bottom_99988.htm
(Add it all up, and Americans may be in for a painful few years, more painful than we’ve seen in two generations.)
NYC felt the pain in the early 1990s, with 11% unemployment, 10% of the jobs lost, huge tax increases and cuts in public services, 1 million people on welfare, and a crime and drug wave.
For us, I expect the public sector situation to be as bad, but not the rest. But it will be that bad in many parts of the country, including suburban/Sunbelt areas that are not used to this kind of decline.
(But Morris sees a real “disaster,” though, not in the overall credit bust itself, but in our possible reaction to it - that is, the possibility that government officials, prodded by powerful financial executives, will “downplay and conceal” the real losses to avoid the pain.)
Here’s my view — this is all about the election. Bush wants to put off the recession until after November, so the Republicans can blame it all on the Democrats. The Democrats, because they made the mistake of taking control of Congress before the election, want to make sure that they aren’t blamed for doing nothing before the election.
The real proposal is allowing bankruptcy judges to write down residential mortgages, just like they write down commercial mortgages. Let all the little Donald Trumps be like the big Donald Trump. The merits of that are debatable.
The merits may be debatable, but the reaction to it isn’t.
Depending on the exact wording of the requirements for a rewrite, the banks will stop lending money to anyone without a huge downpayment, reasonable payment to income ratio and reasonably secure job or other income stream. The payment to income ratio return is long overdue. The downpayment requirement will collapse prices. And I have no idea what will happen if they actually require steady employment since that isn’t the way the US works anymore. Also, banks might try to create a new “strong” mortgage in which the borrower agrees to go to arbitration rather than bankruptcy and the rules of the arbitration include having to liquidate retirement funds that are currently protected in bankruptcy.
I don’t know if bankruptcy law allows this, but if it does, I see this as a possibility.
Given all this blame-game, I have been considering filing suit against the friends who introduced me to my ex-husband. They should have checked his references before they invited him to the party where we met. They didn’t warn me that in 5 years I wouldn’t be able to afford him.
Have you heard about the class-action lawsuit against “Airborne” the product that is supposed to prevent colds?
http://www.airbornehealthsettlement.com/
Why don’t they sue Sen. Orrin Hatch, the co-author of DSHEA, the law that made it impossible for the FDA (or anyone else) to stop companies from making false claims when selling worthless “supplements”?
In fact, when it was discovered that Ephedra (ma huang) was killing people, the FDA was told they didn’t have the authority to pull it from the shelves.
The makers of Airborne and similar crap products (like Zicam) are just giving the sheeple what they want. Yeah, we used to have some notion of the FTC and FDA enforcing fair play, like you can’t sell stuff that’s toxic and it has to contain what you say it contains and you can’t lie about what it does. But our religious right wing-nut we-know-best-for-you congress critters decided otherwise.
So not only is the FDA in bed with Big Pharma, but it’s been castrated by the nutritionals/supplements industry. Sounds like the FDA is a little bitch. Heel!
What Airborne did (scamming you) was 100% legal. Sue congress.
Gator. I’ve worked for a company for 20 years, that sells ingredients into the supplement industry. Your characterization is 100% accurate. It’s legalized snake oil, for the modern ties. The personal care industry can be painted with the same brush. If any of these claims were true the products would then have pharmacological actions and categorized as drugs, giving the FDA power to regulate. Now it’s spilling over into the food industry with “magical” herbs and vitamins added to all kinds of food products. Even the beer makers have gotten into the act by adding things like Guarana, as a natural source of caffeine, to keep people up and drinking more, especially young people. We’ve become a nation of scam artists.
A big motivation for these people is that they still walk away much better off even if they get sued.
Sen. Orrin Hatch is from Utah, a hotbed of MLM companies. So DESHEA was self serving to business in is state. Many of the companies are owned by mormons. So I guess the Mormon church isn’t against businesses that scam the public.
‘So I guess the Mormon church isn’t against businesses that scam the public.’
That’s because it IS one of those businesses. 10% of all your income, or you’re not getting to heaven. (Obeying the Profit + 10% gets you the Celestial Kingdom (this is level 1), if you’re not quiiiiiite righteous enough you get the Telestial Kingdom (level 2), witch is evidently some sort of suburb of the Celestial Kingdom, and then the Terrestrial Kingdom (level 3) much like, oh, Renton, WA, and THEN Outer Darkness, which I suspect is just like Lacey, WA, except Satan lives there. Although, come to think of it, I believe the Big Red S has a second home in Lacey. So, just like that.
I grew up in a small fundamentalist town in Utah. That’s how I know these things.
Utah = scam capital of the nation
Read “The Mormon Murders” if you’d like to get a glimpse @ how Mormondom really works, and how they scam one another…
“We’ve become a nation of scam artists.”
Geez, scams are as old as history, it’s just that the US has been in the forefront since its birth as a nation. A sucker born every minute and all that. Snake oil salesmen were part of the great frontier migration. And we’re more self-critical as citizens than other countries, that’s for sure.
Scams are older than the Mormon Church. If you want to read some interesting history, study up on Joseph Smith’s real estate dealings in the 1830s.
A nation of scam artists and people stupid enough to believe them! How can a society as educated as ours constantly be taken in by these scams. Does anyone really believe any commercials? Therin lies the crux of all our problems…
Ya know people fly back to the Northeast from tropical climates in the winter, wearing shorts and flipflops and tank tops. The list of irresponsible exposure is endless…and not all can be helped by otherwise good and flawless vitamins.
Vitamins do not prevent diseases. Vitamin deficiencies cause diseases, yes. In the US, our food has vitamin supplements to prevent these diseases. Take a vitamin pill if you like. Some factors can increase your risk of a deficiency, eg, taking antibiotics depletes your B vitamins. Thus, it’s a good idea to eat foods rich in B vitamins and/or take B pills if you are on antibiotics.
However, vitamins are not going to prevent or fight viral or bacterial infections. That’s utter nonsense. Look, one symptom of a zinc deficiency is a runny nose. (Another is “clouds” in your fingernails.) If you do something about that deficiency, the runny nose stops. Some people think they have cured a cold (ie, a rhinovirus). I think this phenomenon explains the popularity of these zinc-based “homeopathic” cold remedies. (Actual homeopathy contains undetectable “concentrations” of the substance, so measurable amounts of zinc mean that it is not homeopathic at all! Homeopathy is a load of chaff, anyway; don’t bother with it.)
Isaac Asimov wrote some great essays many decades ago about the discovery of vitamins that hold up to this day.
Late to the party, but there are plenty of people who swear by Airborne. I’m one of them. Since using it, I’ve managed to stay healthy even when the rest of my family (of five) is sick.
If you take it at the first sign of being sick (beginning of a sore throat & headache), you can actually feel yourself feeling better immediately after drinking it. I’ve known enough people who’ve had the same experience to think it’s not just a coincidence.
An economic slowdown?
Just how badly is the United States really doing?
By James D. Hamilton
March 2, 2008
Sixty-one percent of Americans believe that the U.S. economy is already experiencing a recession, reported a recent AP/Ipsos poll. People who study the economy for a living are also concerned, but they are not quite as pessimistic. In a survey of economic forecasters by the National Association for Business Economics, 55 percent of the respondents declared that we’re not in a recession and are not going to have one this year.
The best data that we now have available suggest that the economy is still growing, but just barely.
http://www.signonsandiego.com/uniontrib/20080302/news_lz1e2hamilton.html
The trouble with the “best data we have” is that it tends to depend heavily on what was happening in previous months or quarters as a basis for assessing current conditions. A similar problem confronts those who try to measure current market values of homes based on last months’s (or years’) comp prices (e.g., Zillow).
“…still growing, but just barely.”
The big story isn’t so much that 4Q 07 growth was ~0.6%, the big story is the rate of deceleration experienced from 3Q 07. Such a huge economy slowing so perciptiously is downright scary. There was “crash” alright last fall - it just didn’t manifest itself in a single dramatic event ala “Black Monday”.
“deceleration”
No way Hamilton is unaware of this, but unless I missed something, any discussion thereof is omitted from his SD Union Tribune piece (see below)…
above (d’oh)
“There was “crash” alright last fall - it just didn’t manifest itself in a single dramatic event ala “Black Monday”.”
That’s because the FRB kept heading it off with timely rate cuts. It’s coming, however. Now, the rate cutting is working against the FRB. They are having to justify further rate cuts with doom and gloom.
“They are having to justify further rate cuts with doom and gloom.”
That is a great way to encourage sheeple to buy stock! Only a slowdown, not a recession, is expected this year, and lots more rate cuts are on the way, so why don’t y’all go out and spend your stimulus checks on some stock market investments, cuz the stock market always goes up, in the long run…
A recession in San Diego has a style of its own
By Alan Gin
March 2, 2008
A few years ago, when the local economy was growing strongly, I said at a presentation that being an economic forecaster in San Diego was similar to being a weather reporter. Just as there were limited ways in which a weather reporter could say that the weather was going to be great, there were limited ways in which a forecaster could say that the local economy was going to do really well. In 2008, though, it looks like the forecast for the local economy is for rain and even a possible major storm.
http://www.signonsandiego.com/uniontrib/20080302/news_lz1e2gin.html
It is quite interesting to see how Gin’s assessment has evolved in synch with the changing media perception of the San Diego economic situation. I can remember months ago when his own San Diego index of economic conditions was going incessantly down, down, down. His assessment of the situation was, at the time, very dissonant with the indications provided by his own data.
Some “larger than expected” numbers are shown in the sidebar to this piece:
IN SAN DIEGO
19%: average decline in the price of a resalehome purchased in 2005, the height of the housing boom
STRETCHED TOO THIN
128%: increase in notices of default compared with the previous year
DOWN AND OUT
353%: increase in foreclosures compared with the previous year
Alan Gin: “The question then is whether the weakness in real estate alone, unaccompanied by a massive loss of manufacturing jobs, will be enough to take the rest of the local economy down. It wasn’t enough in 2007. Despite the loss of nearly 8,000 real estate-related jobs, job growth in the other sectors of the economy was actually higher than in 2006. While that strength probably won’t last in 2008, I don’t expect things to turn negative, either. Big clusters of cutting-edge industries such as biotechnology and defense spending – for personnel, manufacturing, research and retirement – that continue regardless of where the economy is in the business cycle, and a strong tourism industry, will help keep job growth positive and thus avoid a recession as defined by a decline in the number of jobs locally.”
CLICK!
More Business news
Jobless data raise fears of recession in California
All employment sectors in county shed workers in Jan.
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
March 1, 2008
http://www.signonsandiego.com/news/business/20080301-9999-1n1jobs.html
An interesting article on unemployment in the NYT
First time in MSM it is mentioned that national unemployment including discouraged workers is 12.5%. Story centers on Oakland.
http://tinyurl.com/2uo9sa
Hoz — Do you know at what point in the history of U.S. employment statistics the “discouraged worker” category was added to the BLS methodology?
(For those unfamiliar with this concept,
D = discouraged workers = members of the (potential) U.S. labor pool who are unemployed and have given up actively seeking employment.
The Bureau of Labor Statistics calculates the unemployment rate roughly as follows:
UE Rate = A/(A+E), where
A = number of unemployed workers actively looking for work, and
E = number of currently employed workers.
Alternatively, one might calculate
UE Rate = (A+D)/(A+E+D),
which would result in much higher reported unemployment, especially in recessions of long duration when many workers give up wasting scarce resources seeking nonexistent jobs.)
I’ll try to get that for you Mr. Stucco, but I am still trying to balance my books. (And it is taking me longer than usual, inability to focus.)
It’s the effect of this damn distracting blog.
Watch out JP or I’ll release my flying monkeys! LOL
Even more, the “retraining programs” that politicians and free trade proponents trot out as a panacea for outsourced industries is revealed as the scam it is.
Let’s see…making less…costing more….yep I am recessed.
Que sera sera
“… Investors have filed arbitration complaints against brokers including Lehman Brothers Holdings Inc. and UBS AG after being unable to sell the debt securities. Securities lawyers say more cases are on the way.
“If Wall Street is going to tell the average investor they’ve bought a cash-equivalent investment, they have to stand by their word,” said Jeff Sonn, a Florida securities lawyer who’s been unable to sell about $700,000 of auction-rate debt since the market seized up last month. “Investors are not responsible when they are not told the whole story,” he said today in an interview.
Investors were stuck holding more than $300 billion of the securities after auctions used to trade them collapsed amid concern that the finances of insurers guaranteeing the debt were deteriorating. Banks, facing $181 billion in losses related to subprime mortgages, have stopped serving as the buyer of last resort in the auctions, which they arrange for a fee. …”
http://tinyurl.com/24arbh
We saw a movie last night which could become the kiss of death to Hillberry’s run for higher office if many Americans see it, Definitely, Maybe. There was some great footage of the former CIC and first lady, including the time he discussed an issue that depended “on what the definition of is is.”
P.S. Not the greatest movie ever made, but quite entertaining…
P.S. I am now (proudly) in the club of hbb posters who knows how to create “a href” tags. No more ugly URLs for me
Welcome to 1993! We’ve been expecting you.
Better late than never (old dogs learn new tricks very gradually)…
‘..in the club of hbb posters who knows how to create “a href” tags.’
Well, I don’t know how. Tell me, so I can be in the club.
(a href = “The URL you wish to reference goes here.“) The text you wish to hyperlink goes here. (/a)
Replace “(” with “” in the above, and you are in the club.
OK, let me try one more time:
Replace ( with , and you are in the club.
Three is a charm???
Replace “(” with the “less than” symbol and “)” with the “greater than” symbol.
( becomes \
No wonder nobody has bothered to explain hrefs here!
Here’s how you do it.
You need to type:
<a href=”http://www.google.com”>Here’s the link</a>
You will see:
Here’s the link
and the link will work, etc.
After the Roubini testimony on the hill this week, and a sufficient pint shanting momment by many of the depends wearing members of Congress, I would strongly expect even more legislation trial baloon floating as the script-writers begin gaging the magnitude of the bailout proposals…
get ready, the PTB are about to pull out all the stops on trying to get out in front of the sh*tstorm. Not to mention the breathtaking momment of Bennie talking about banks goin under.
If all crashes are black swans, and all black swans are unknows, are all crashes unknowns? I think we are at the known unknown momment…trigger is cocked. March madness may take on a whole new meaning, as I look back and try to frame the current meltdown…..March wants to rally, sun coming out…people getting ready for sumertime fun an frolic…tell me whats different. Are the sheeple waking up or just going through the zombified motions?
My gut tells me we are gonna test the lows just before the mid march FED cut, which will most likely be a fifty bip nugget for Mr Bankers, while the yield curve tries to steepen, only to have massive rally after the cut to shore up Q1 numbers prior to the mutual fund statement release points.
thoughts? observations? attacks? I like the conflict, it helps tell the real story.
“If all crashes are black swans, and all black swans are unknows, are all crashes unknowns?”
Logic says YES but is the premise correct that “all crashes are black swans”. I would say NO. Crashes happen due to a lot of pent up pressure needed to be released but due to Govt intervention or market manipulation the pressure was not allowed to be released prior to the crash. I believe we are at the “Known unknown moment”. We ‘know’ that the market wants to head lower but manipulation is trying to shore it up. We ‘know’ that the monoline issurers should be downgraded, and a lot of the debt they issure as well, but are not due to the impact it would have (market manipulation). We ‘know’ housing and Stock market values are declining. We ‘know’ the CC companies are starting to charge higher prices for their debt. We ‘know’ the population is aging and the risk tolorance of the retired and unemployed is less than a younger employed person. We ‘know’ The dollar is losing its value as a reserve currency. We ‘know’ inflation is starting to rear its ugly head (at least short term-deflation is possible after the crash). We ‘know’ that debt is being repriced and ‘in more cases’ -not being funded. I think there are a lot of knowns that point to a market crash. What is unknown is the date!!! I also know The PTB will stretch the timeframe out as long as possible - due to it will be a new administration problem and if the credit bubble is allowed to unwind smoothly then it will prevent the crash. The question is: due we have faith in our system working effieciently enough tocreate a soft landing. My answer is NO and thus I am positioned for this scenerio.
San Diego on $10,210 per year, anyone?
DEAN CALBREATH
Critics say poverty rate no longer reflects reality
March 2, 2008
Let’s see prices in SD were 280k for a home in 2000. Then they shot up to the 600’s. That was unreported inflation then, and now we have real inflation. So eight more years of this will make me a worn out rag doll.
Isn’t stimulus explicitly intended to exacerbate this condition?
MICHELLE SINGLETARY
Americans have chronic spending problem
March 2, 2008
As the director of a financial ministry at my church, I get an up-close and personal look at the spending habits of a lot of people.
And year after year, I am stunned at the decisions people make that get them into financial trouble. I’ve seen monthly car notes the size of mortgage payments. People take vacations or buy big-screen televisions and expensive jewelry while ignoring huge federal tax obligations.
Although it would be easy to judge these people for the mess they’ve gotten themselves in, I wonder – even worry – why they spend so much. Why do they continue to use credit even though they are already weighed down by so much debt?
http://www.signonsandiego.com/uniontrib/20080302/news_1b2single.html
Where in the Fed’s mandate does it spell out their role as stock market rally starter?
Fed’s moves yet to energize anticipated rally
By Paul J. Lim
NEW YORK TIMES NEWS SERVICE
March 2, 2008
(William McChesney Martin, Jr.’s) most famous quote about his central banking philosophy was that the job of the Federal Reserve is “to take away the punch bowl just as the party gets going,”[1] referring to the need to raise interest rates when the economy is at its most active.
Yeah, and Alan Blinder’s quote was “The last duty of the central banker is to tell the public the truth.”
1994 on PBS too!
October 27, 1989:
“The stock market is certainly not too big for the Fed to handle. The foreign exchange and government securities markets are vastly larger. Daily trading volume in the New York foreign exchange market is $130 billion. The daily volume for Treasury Securities is about $110 billion. The combined value of daily equity trading on the New York Exchange, the American Stock Exchange and the NASDAQ over-the-counter market ranges between $7 billion and $10 billion.”
…
“An appropriate institution should be charged with the job of preventing chaos in the market: the Federal Reserve….The Fed already buys and sells foreign exchange to prevent disorderly conditions in foreign exchange markets. The Fed has assumed a similar responsibility in the market for government securities. The stock market is the only major market without a marketmaker of unchallenged liquidity or a buyer of last resort.” … “The Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole.”
Mr Robert Heller
Former Federal Reserve Governor
Wall Street Journal
“Owing to persistent advances in information and computing technologies, the structure of our financial institutions is continuously changing, I trust for the better. But that evolution in financial structure has also meant that supervision and regulation must be continually changing in order to respond adequately to these developments. In today’s markets, for example, there is an increased reliance on private counterparty surveillance as the primary means of financial control. Governments supplement private surveillance when they judge that market imperfections could lead to sub-optimal economic performance.”
Mr. Alan Greenspan
Remarks by Chairman Alan Greenspan
Before the Society of Business Economists, London, U.K.
September 25, 2002
To what in the hell does “private counterparty surveillance as the primary means of financial control” refer? The master of obfuscation prided himself in never uttering a single phrase which transparently communicated his message. All language was encrypted, in order to play fooling games with his intended audience.
Note the propaganda technique used here: Standard English usage of “surveillance” refers to a passive activity of observation, but the Greenspeak redefinition clearly refers to some undisclosed policy procedure.
The standard dictionary definition of surveillance includes no scope for “financial control”:
surveillance : close watch kept over someone or something (as by a detective); also : supervision
Greenspan was nuanced.
“Greenspan was nuanced.”
Understatement of the new millenium…
In 1999 the ‘Counterparty Risk Management Policy Group’ (CRMPG) was formed to address the issues with LTCM and to develop policy that would protect the financial world from another threat to the financial markets such as the LTCM incident.
————-
Greenspan: “There should not be much dispute that markets function best when the participants are fully informed. Yet, paradoxically, the full disclosure of what some participants know can undermine incentives to take risk, a precondition to economic growth.
No one can deny that fully informed market participants will generate the most efficient pricing of resources and the most efficient allocation of capital. Moreover, it could be argued that, if all information held by individual buyers or sellers became available to all participants, the pricing structure would more closely reflect the underlying balance of supply and demand. Thus full information would appear to be the unambiguous objective. But should it be?”
————————-
“I think one must ask themselves how, across the board, the top mega banks can show such substantial growth trading their own funds while the funds they manage for others show less stellar returns. The only way it can be done is through an orchestrated effort involving the Federal Reserve and the ‘PCS’ team. Remember, these are the same banks that the Federal Reserve uses to put more money into the system. Through collusion these member banks can gain substantial profits for their proprietary accounts at the expense of not only the small investor, but anyone that is not a member of this group.”
—————————————-
some might rememeber this from a Kitco Commentary from Sept 2006.
“Yet, paradoxically, the full disclosure of what some participants know can undermine incentives to take risk, a precondition to economic growth.”
IMHO, encouraging stupid gambles by fooling individuals and firms into thinking there is no downside risk does not foster economic growth.
anyone seeing a historical return a to negative correlation of commodities and stocks? or is that game just about up?
Anecdotal and not worth much, but I was visiting my grandma in the nursing home yesterday and she told me that she thought the US was heading into a depression and she was worried about how to preserve her wealth. I have no idea where she gets her information, but she lived through the first depression so maybe she recognizes something? I was just astonished about her feel for what was going on.
I fear for my 91 yo grams. She’s the sweetest person I know, and I do not want her to live through the hell of another GD.
She is financial secure and extremely conservative, yet watching her grandchildren suffer (me excluded) would surely crush her heart.
This is why I fear an instant pop - few would be prepared.
Leigh
Modified loans surge upward as remedy for growing foreclosures
By Emmet Pierce
STAFF WRITER
March 2, 2008
missing link…
http://www.signonsandiego.com/uniontrib/20080302/news_1h02loan.html
Lenders don’t want more REO. Apparently some lenders are willing to take a known loss on the loan modification rather than an unknown loss on the REO. It looks like they sensibly prefer a substandard performing asset (modified loan) to a non-performing asset (REO). How many of the borrowers though will continue to throw good money after bad (carrying debt on a house losing value with dim prospects of recovery)?
Independent truckers see end of the road
By Ellen Simon, Associated Press
Trucker Robert Griffith is on the road three weeks out of four, pulling oversize loads like crane booms, railroad ties and air conditioning ducts. One of his biggest worries: How he’ll find the money to buy his daughter a prom dress.
As the cost of diesel doubled over the last four years, his take-home pay has plummeted, from $50,000 to $11,000 last year. He’s literally burning money; he spent $64,000 on diesel in the last eight months. Since he canceled his satellite radio, he’s on citizens band radio constantly (handle: Instigator) talking about what needs to change so truckers like him can survive.
“I had to learn to live totally different,” said Griffith, 41, of Lebanon, Tenn.
No more $150 family outings to Shogun sushi. No more weekly washes for his Western Star 4900 EX truck. No more health insurance for him and his family.
“It hurts,” he said. “I’m a man who’s trying to make a living for my family and I’m not succeeding.”
Trucking’s owner-operators, the self-employed drivers who haul everything from Hummers to hay, are suffering. Many say they’re running on the edge of bankruptcy, about to disappear unless they get help. While a wave of trucking failures now might be invisible to consumers, when the economy rebounds, it would push up shipping rates, helping increase prices.
The housing downturn and decreased consumer spending have cut into loads; the extra trucking capacity is pushing down freight rates. Diesel prices, which are always higher in the winter, have hit such highs that Truckinginfo.com runs ads for thief-stopping fuel-tank locks.
“If you can run all week without a flat tire, you’re a little bit ahead, otherwise, you’re basically just running to put the money right back into the fuel tank,” said trucker Benjamin Stanley, 40, of Spotsylvania, Va. “Truckers are in the same spot farmers were in a few years back.”
Reposessor Nassau Asset Management repossessed 110% more trucks in 2007 than it did in 2006, according to president Edward Castagna. And it’s taking less time to pick up a truck, which he sees as a sign that there’s less work to keep them on the road — and out of his reposessors’ reach.
“It used to take weeks, now it takes days or hours,” he said.
http://tinyurl.com/2kpun3
As I have a tendency to work with many trucking outfits on a 60hour basis during the week…..its full contact selling. I will no longer accept anything but comcheck (et all) bank drafts for repairs, and in many cases….ACH bank transfers with truck release pending verification. Ryder Transportaion has also been 86′ed as it were.
The shop is running at almost break even (after 30% layoffs), and the sales for February are so low, “How low are they?”….its been a technology cycle since I’ve seen numbers this low, the records for these types of numbers are not even stored on site.
Rising commodities and slowing demand will crush the consumer economy. More and more capacity will rest. Margins will evaporate and unemployment will rise. There is no easy way out. By trying to save the stock market the FRB will destroy the US economy.
They’re not trying to save the stock market. They are trying to save the banking system. They may succeed in that but they are definitely in the process of taking out the economy.
Most of the speculative money is going into commodities. The consumer is gonna get Deep-JT’ed.
Gee… two years ago DH’s company had to deal with truckers would call from truck stops to say they were leaving their loads there because they were signing on with a competitor for more money. That was quite a problem when dealing with refridgerated cargo.
Now the railroads are going strong and the truckers are crying in their beer. Interesting times, indeed.
Say Goodbye to Granite Countertops
http://money.cnn.com/2008/02/26/real_estate/remodel_cost_value_ratio_drops/index.htm?postversion=2008022811
Someone tell the half wits at “My house is worth what?”
Last paragraph was great:
———-
Mick De Giulio, of Chicago-based De Giulio Kitchen Design, also senses a downshift in the market. “The high-end is still strong, but there’s something in the air,” he said. “I just finished jobs for two very high-end clients. We put kitchens in their new homes, but they can’t sell their old ones.”
What are the prospects for a near term pickup in consumer spending? The prospects are grim for these reasons: (1) Although personal income increased 0.3% in January, inflation adjusted disposable income rose only 0.1% after a similar gain in December, while it posted declines in October (-0.1%) and November (-0.4%). On a year-to-year basis, real disposable income moved up 1.2% in January, representing a sizable deceleration from a 3.0% increase in January 2006 (see chart 2). Latest employment numbers point to weakness in hiring, which reduces expectations of growth in income to provide a lift to consumer spending.
(2) Income is offering scant support, how about savings? The saving rate of households as a percentage of disposable income was -0.1% in December, after negative readings in November and December (see chart 3). In other words, households are spending more than their current income. So, we have ruled out savings and income as factors that could support consumer spending.
(3) With several billion dollars of debt resetting in the months ahead, households will face additional budget constraints. The current house debt service (see chart 4) is close to record high. Home prices have fallen sharply, which has reduced the ability to obtain funds via mortgage equity withdrawal.
Essentially, a case of weak consumer spending is so tight, it would be implausible to pencil forecasts of even moderate growth in consumer spending in the near term.
The inflation story is also not encouraging and it has featured in all recent speeches of Fed officials. The overall personal consumption expenditure price index has moved up 3.7% from a year ago (see chart 5). The core personal consumer price index excluding food and energy increased 2.18% from a year ago; the recent cycle low was 1.91% year-to-year increase in June 2007. The Fed’s forecasts show inflation moderating later in the year.
The above is from Northern Trust Bank
Feb 29 Market Analysis Daily Global commentary
http://tinyurl.com/rxh5g
Hoz, thanks for the link.
Add to that 401k cashouts, stock market will be dead money for years.
Are you suggesting it is a good time to buy the dip now?
No, you should just DCA like the economists suggest in the nuanced language of their academic papers.
I personally believe we will have a correction in 2008 and will be in a secular consolidation period for the next decade!!
Just my 2 Yens Worth
Here’s a fellow with a clever visual summing up the current economic situation.
And, he’s an investment banker in Afghanistan too!
http://suddendebt.blogspot.com/
Hoz, while you’re around.
I believe you are on record as considering dollar-cost-averaging to be folly.
If so, could you explain why?
What would be a prudent alternative for we ordinary, financially unastute, mortals?
If you google “Dollar Cost Averaging Fallacy”
There are 359,000 listings.
There are simple market timing techniques that have returns at least 2X greater than DCA. The oldest and still the best for the new investor is “Buy when it snows, sell when it goes.” If one had traded that over the last 50 years, the average rate of return is 19% annually. If one had done that over the last 18 years you would have beaten the S&P500 every year. (Including this year, which is a loser). The general rule is Buy Nov 1, Sell May 1. From May 1 to Nov 1 buy T bills. Contrary to what the used stock salespeople try to tell you, market timing is not very difficult. The funds love DCA, it guarantees the rep an income. That is why they push it. So if you wish to be a tool to support a reps salary go for DCA.
If you wish to make money, spend an hour a week doing homework.
“The funds love DCA, it guarantees the rep an income. That is why they push it.”
Time for BiM and Gekko to ‘fess up. You guys are really used stock sales people, right?
Nope. I buy Vanguard funds for my IRA and outside my IRA. I put $100 per week into the Vanguard 500 fund. In my 401k I am putting $500 per week into American funds until I get my max. I got a $3900 matching for 2007 and it all went into American funds. Been into stock mutual funds since 1989. My net worth keeps growing and you all think I’m a dolt. Go figure.
I guess my 0.18 expense ratio in Vanguard 500 index fund guarantees a huge income for Gus Sauter. And when I get to the admiral fund level ($100,000) it will be 0.09.
0.18 % * $114100M = $205M annually
That’ll be keeping a lot of people in a lot of $plendor. I don’t think they are doing this for charity. (Not that I mind that; just stating the facts.)
Bill — I for one don’t think you are a dolt. Sorry I cannot resist razzing folks who preach the wisdom of DCA into a bear market, though.
And if you want a “valid” economic reason to Hoz’s timing, it’s because the bozos who manage your pension funds and mutual funds like their vacations (not talking about the Wall St. traders, talking about the big whales.)
There’s not a whole lot of “action” going on between May and Oct. You might as well go on vacation too.
True, All traders like to take the summer business trips en la Provence followed by fall business trips in Barbados.
I don’t mind the homework, but it needs to be done in conjunction with a valid technique. With so many contradictory or imprecise approaches to trading in existance, one is likely to become insolvent learning a profitable method.
One finds oneself spending far to much time reading this blog, by the way, but the knowledge gained is so valuable.
Ok, seriously I would recommend a few books by two authors.
The first book is the famous “Reminiscences of a stock Operator” available on the internet fror free in pdf. form.
The market is a two way street stocks go up/stocks go down, so far this year the stock market as measured by the S&P500 has had a 20%+ move. If you do not learn how to sell, there is little reason to go any further.
The second set of books are by Mr. Peter Lynch. From 1977 to 1991 (when he retired) he ran an average annual return of 31% - no public available fund has come close to topping or even measuring up to it. He never got beaten by the S&P500 average. During those same period the S&P500 averaged 8.9%. (There are private funds that have averaged 36% a year for the last 20 years, but they are closed to the public - Medallion Fund for example). At any rate Mr. Lynch has written several books about investing, he taught a 7th grade class about investing and 90% of his students beat the S&P500. I recommend “Beat the Street.”
Have fun, they are good books.
“The general rule is Buy Nov 1, Sell May 1. From May 1 to Nov 1 buy T bills.”
Just for kicks… does that work in reverse south of the equator? Could you profitably trade, say, Brazil from May thru November?
Globalization and coupling being a technicality here, of course.
Here is a bit of revisionist history: The Greenspan housing bubble expanded from 1990-2005, and began correcting thereafter (and the correction continues to date). Check out how well this story agrees with this new home sales graph.
Another doozy…
http://research.stlouisfed.org/fred2/series/HOUST
and another…
http://research.stlouisfed.org/fred2/series/PERMIT
PB,
Look at the stock charts of the big homebuilders. Seem to correlate with the above graphs, IIRC (I am not looking at them right now, so double-check my theory).
The HBs make their moves before the upturn.
http://tinyurl.com/2t4tkj
From Bloomberg magazine. Very interesting article on Toyota, oil shale, EIA’s energy outlook, and global warming. Sobering comments from top energy and auto folks. This has enormous repercussions. This is why I think living in cities with established mass transit and nuclear energy will be the best way to thrive, and not live out in the country.
We are in Te Anau on our way to Stewart Island, and have had to wait out amazing rainstorms during our stay here.
Saturday’s downpour was the most recorded in one day, in 27 years~
It makes taking a hike, difficult.
From bloomberg:Auto, Home Buys `Won’t Happen’ as Rates Don’t Budge
http://www.bloomberg.com/apps/news?pid=20601109&sid=alwmuZu5h7UI&refer=home
This article shows how what the Fed is doing isn’t transferring to the market - Thus is not working!!
“The slippage between the Fed’s rate cuts and consumers’ ability to borrow or reduce loan costs is weakening the central bank’s ability to stimulate the biggest part of the economy, consumer spending. It accounts for more than two-thirds of goods and services output and stalled for the second consecutive month in January after adjusting for inflation, the Commerce Department said today. `Missing Activity’
With many households unable to borrow, “those transactions won’t happen, and that missing activity is the missing economic growth,” said Neal Soss, chief economist at Credit Suisse Group in New York. “So the Fed will have to do more than otherwise to compensate.”
The party is over and is not going to get started any time soon
Just my 2 Yens worth!!
Saving the banks, not the buyers.
“Thus is not working!!”
Time to relearn the meaning of the old adage about ‘pushing on a string.’
debt saturation…
Another $16b goes wheeeeeeeee!
HSBC to unveil $16billion writedown
what price the figure quadrillion is used before this is all done.
nice….I like that turn of phrase..a factor of quadrillion.
keep sniffing out the deflation.
Ahhh, off to money heaven I see.
Roidy
Asia, ozzie, and Nippon are taking it on the chin….
gonna be a bad weak to stop sniffing glue.
All markets are different! LOL
“What me worry?”
Its all contained.
I really hope you keep posting here, along with the txchick….
Im a signer of the Crash Proof for Ben.
When she called out humbling the Lad, it really set a tone for me.
Again, Hoz, thank you…..dont give up….Id like to go to the Dew Drop with ya.
ASIA MARKETS
Tokyo stocks dive on yen rally, lead region’s decline
By V. Phani Kumar, MarketWatch
Last update: 12:13 a.m. EST March 3, 2008
HONG KONG (MarketWatch) — Asian markets tumbled Monday, with Japanese stocks suffering heavy losses on exporters such as Honda Motor Co. as the dollar weakened further against the yen, while steelmakers such as Nippon Steel Corp. plummeted on fears its annual profit could fall below an earlier forecast.
The region’s financials also took a dive on concerns about the financial markets and a U.S. recession, led by Mizuho Financial Group in Tokyo, National Australia Bank in Sydney and HSBC Holdings in Hong Kong.
Next shoe to drop…
HEARD ON THE STREET
Wall Street for Its New Pain
Commercial Real Estate
To Yield Write-Downs;
Defaults Slim So Far
By LINGLING WEI and RANDALL SMITH
March 3, 2008
After suffering a beating from their exposure to home loans, banks and securities firms are about to take their lumps from office towers, hotels and other commercial real estate. And the losses could last longer than those from the subprime shakeout.
Tag off?
Trading Strategies
Finding your inner bear
The Federal Reserve’s rescue has failed
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:56am GMT 03/03/2008
The verdict is in. The Fed’s emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed.
Yields on two-year US Treasuries plummeted to 1.63pc on Friday in a flight to safety, foretelling financial winter.