Bits Bucket And Craigslist Finds For March 21, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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TWINSBURG, Ohio — In the first wave of the housing crisis, homeowners across the U.S. lost their properties to foreclosure. Now, many of the nation’s small and midsize home builders are on the ropes.
http://online.wsj.com/article/SB120605561602953221.html?mod=googlenews_wsj
The guy in the feature story has been developing residential housing for almost 40 years. He made a business decision and took out credit.
He misjudged the market and found himself over-extended.
He is a victim not of a nationwide ‘housing crisis.’ He is a victim of a bad business decision, one he probably should never have made given his experience and the ongoing loss of population in Ohio.
“Mr. Whitlatch struggled to find the problem.”
A few weeks ago I posted that several spec houses built by small builders here had gone back to the banks, and that I’d noticed some lots that had been staked and strung for clearing were remaining in that state.
I was wrong. I golfed on our course yesterday for the first time since late last fall and I was blown away by the number of lots being cleared and houses being built. That’s with a record number of completed, empty spec homes just sitting. WTF are these builders thinking? What banks are still funding their construction loans?
“I golfed on our course yesterday for the first time since late last fall and I was blown away by the number of lots being cleared and houses being built. That’s with a record number of completed, empty spec homes just sitting. WTF are these builders thinking? What banks are still funding their construction loans?”
Same occurrance in NY. I can’t make sense of it.
During the Soviet era in Russia, the state shoe factory was given a order to make a million pairs of shoes, but only supplied enough leather to make 600,000 pairs, so they made a million pairs of shoes for little kids, to meet their quota.
The only people benefiting from any new homes being built, is the construction guys and possibly sweetheart kickback deals from where they buy housing material/supplies.
Meeting quotas, American style.
They are building like mad rabid dogs out here in NYC.
Who’s going to occupy all these “high-priced” apartments?
The bankers who are gonna get fired? Or the securitisation lawyers who are fired?
Well Thousands of BS employees wont be able to afford them…..that’s a good start
We have a desperate shortage of affordable and a glut of luxury….what a country!
It is amazing. There’s a new condo development visible from the parking lot of the workplace and I’ve been watching it slowly burble up into towering horror over the past couple of months. There’s another one on my way to the workplace. That one is in the partical board, pre-tyvek stage. It’s right across the street from the one completed last year with its reassuringly solid-looking brick skin over the partical board and Tyvek, and its empty parking lot and its for sale signs in all the windows. I like the work parking lot one best: it looks fantastic right now because they’ve completed the Tyvek and haven’t begun shellacking it over. It’s surreal, like a huge white box kite made out of sadness fell out of the sky and landed on some completely harmless scrap of worthless land and turned it into a noxious toothy life-destroying swamp of doom. There needs to be an opera written about the tyveking of the landscape–maybe a good Christopher Guest project.
Did you get on your city or county commission, yet, so that you can save your fellow Carolinians from this fate? The snowbirds are coming. Did you see Hitchcock’s _The Birds?_ The last scene is particularly illustrative–shows you what too many of the wrong sort of bird can do to your neighborhood.
excellent post. i enjoyed reading this bit of prose. ‘a box kite made out of sadness’ and a ‘completely harmless scrap of worthless land’ are my favorite lines. and i do love the idea of an opera written about the housing bubble.
i was wondering, is particle board still held together with cancer inducing formaldehyde?
“…reassuringly solid-looking brick skin over the partical board and Tyvek…”
A good deal of the new condos here, including one kitty corner from my place, were built exactly this way. Any construction experts care to comment on the robustness of this type of construction? I’ve been told that vintage buildings (2/3 flats) in my area can have brick walls up to a foot thick. What gives?
As somebody that lives in a house with full thickness masonry instead of brick veneer, I’ll just point out that the advantage of veneer walls is that they have insulation, something that I definately miss in the Wintertime.
Double wythe masonry cavity walls beats veneered walls hands down.
This is more complicated than it seems. Brick is a very poor insulator (a good heat conductor) and a brick structure, even with a cavity between brick walls is not insulated. A real issue, especially in cold climates, is where in the wall the dew point falls. That point is where condensation will occur. This is the reason weep holes have to be provided to allow condensate to exit the wall. With a stud wall and insulation it is easy to calculate and account for the condensation; Tyvek is part of that construction and helps control moisture flow within the wall, as well as wind penetration. It is true that a cavity will provide some insulation value, but compared to wood and insulation, not much. At each air gap heat must be radiated from the surface and heat the air in the gap, hence gaps do provide some resistance to heat transfer. This is pretty easy to show mathematically, but I won’t do so here. Also, brick is not a very good structural material in resisting any load that causes flexing, such as an earthquake. It is way simpler and cheaper, as well as safer, to build a stud load bearing wall than a load bearing brick wall. It is also necessary to attach sheetrock (or plaster) the interior spaces; way easier with studs. Bottom line, you actually get a much more efficient wall with studs, pressed board, Tyvek, and insulation than you do with cavity brick construction.
A well built frame house with masonry veneer is not necessarily better or worse than a house built of solid or double-course brick, or cinder block and brick, or steel beam with masonry veneer, etc. etc.
What’s important is that the building materials are of reasonably good quality, are appropriate for the expected loadings, are appropriate for the location where it is built, are available at that location at reasonable cost, and most importantly - that construction methods are sound.
No building, maintained poorly, will last the term of a 30-year mortgage. If you think about it, by the time a 30-year mortgage is paid off, even in a well maintained house everything needs to be replaced, regardless of it’s quality; the roof, the windows, the plumbing fixtures, the appliances, the hvac system; everything.
Logically speaking, without continuous maintenance and upgrade, at the end of a 30-year mortgage, the asset mortgaged is, with the exception of the land, worthless.
SteveH, all true. Certainly my walls are cold to the touch all winter long. The advantage of real masonry walls is the heat sink effect. They DO damp out diurnal day/night temperature variations. In the pre-AC era (when my house was built) this was very nice in the Summer. You’d open up all the windows and run a fan at night to cool the house to it’s night-time temp and close ‘em in the day so that it didn’t get to hot.
Certainly the climate where you live is a big factor; the heat sink/cold sink effect can be really beneficial in hot day/cool night situations. Also, I should have commented on the problem of routing pipes and wiring in all masonry construction. It’s interesting that all three of the homes I have owned have been pretty old but in really good shape thanks to realistic and well done upgrades. I just returned from four years in New Zealand; my house there in Napier was built in 1929, just before the Napier earthquake. It survived with no damage, not even to the brick fireplaces and chimneys (probably mostly because it was on Napier Hill). What was amazing about this house was that under the (added later) sheetrock, all the walls (and I mean ALL the walls, including interior) were actually sheathed with 1″ Remu. The value of the native wood in the walls and floor was huge in today’s rare wood markets. But my point is, quality construction, whether wood or brick, will last. Will todays throw up (in more ways than one) stuff be so long lived? Doubt it. Sure like the well made older homes.
You can’t get much better (structurally, architecturally, and insulation) than a double wythe masonry wall with core-fill insulation. Even perlite insulation is adequate. Double wythe construction isn’t ideally suited for residential, in fact I’ve never seen it used in a residential design but we’re talking about brick/CMU/architectural block here.
I live in Florida. My house is unusual construction for this location; 8″ concrete block construction, 1/2″insulation space, 4″ full brick veneer. I have very low electric bills for the square footage (3500) and the house is very comfortable under all weather conditions (Florida conditions of course). Sound attenuation is very good also.
Faswall. I’m praying the company survives this downturn. My preference is strawbale, but finding truly capable experts isn’t easy. Love that solid, cathedral-sound sensation. Will not surround myself with Tyvek. Loathe the weird, hollow, insubstantial feeling of our newest construction methods. Good only to facilitate mass production, not provide sturdy, healthy, long-lived environments for humans.
Didn’t you hear? The Fed is taking everything in exchance for money: MBS, worthless securities, toxic loans, week-old bananas, etc. These builders probably figure they can eventually turn the empty lots over the Fed, who will then launder the money and spin out new dollars for our genius investors even as inflation eats the rest of us.
It is frustrating - this past week has seen a spurt of “all is well!” BS from the media, banks, etc. with the market actually going up, and so on. A week ago, Bear Stearns rolled over and died - they survived the Great Depression, but not this - but nobody seems to remember that today. Argh!
Same thing at PGA West in CA (though not on the fairways).
“He is a victim not of a nationwide ‘housing crisis.’ He is a victim of a bad business decision”
Greed
Leery Lenders Demand More From Borrowers
http://biz.yahoo.com/ap/080321/credit_crunch_lending.html
The entire states of California, Florida, Arizona, Michigan, Ohio and Nevada — which have seen the highest foreclosure rates and the worst price declines — are blackballed on some mortgage insurers’ lists.
“We’re in the midst of an epic, broad, sweeping change in the mortgage industry,” said Chris Sipe, a loan officer with America East Mortgage in Frederick, Md.
These sweeping changes seem to be ones that simply go back to the industry requirements of ten years ago.
Mortgage Broker: “Wait, you actually want me to ensure that the borrower has the capability to pay back the loan? What kind of madness is this? This will kill the entire market!”
HBBer “Hey, the market IS dead. Y’all are only realizing it now. And unlike Yun we DON’T expect it to get up again on the third day.”
Irreverent, especially on Good Friday, but very funny. Thanks, Jim.
I think this cuts to the very heart of the matter. There are logical, rational reasons why a lender should require a borrower to pay a down payment of at least 20%, have a good credit history, and have a steady local job (RE industry doesn’t count).
When you abandon those standards, you raise the risk of default. It’s really a spiral because the homeowners are realizing that the lax lending standards have created “communities” that are total crap and not worth fighting for. Why keep making payments on an underwater mortgage just to keep living in the typical suburban shi*box? Alienation and solitude are a way of life in these communities. No one in their right mind would do that. It’s lunacy, even crazier than signing the papers for the original mortgage.
Anybody hear the interview on NPR with Roubini where he was remarking how people in the ’20s could buy stock with 10 cents on the dollar leverage and it contributed to the disaster of the depression? How come nobody points out that people are/were buying houses at 0 cents on the dollar leverage, or in some cases seemingly -10 cents on the dollar? Why do these people have so much trouble seeing how wrong *this* is? I wish the person would have immediately asked that licker “Wow! So it must be even worse now because people are buying houses with 0 cents on the dollar and the houses are probably a lot more expensive than the comparable stock purchases back then, right!?”
Alienation is part of the plan: consider that 50% of marriages end in divorce, neighborhoods are often full of “questionable” types of varying degrees of danger, illegals are streaming over the border and setting up their own dumps where people like us aren’t welcome. Now, we tear apart established communities with foreclosures and the waves of druggies, squatters, etc. that follow.
When the people are busy watching their back lest their neighbor stick a knife in them, it makes it easier for the pigs in charge since nobody has time to ask them the hard questions.
Next up, lenders will start blackballing borrower’s line of work.
Landscapers, blackballed.
Real Estate agents, blackballed.
Loan officers will get a memo telling them not to loan to loan officers.
This only works if they ask, and if they check.
“We’re in the midst of an epic, broad, sweeping change in the mortgage industry,” said Chris Sipe, a loan officer with America East Mortgage in Frederick, Md.”
“These sweeping changes seem to be ones that simply go back to the industry requirements of ten years ago.”
Exactly. This mania brought in so many new buyers, that people don’t remember how difficult it was to get a mortgage 10-12 years ago. Down payment. 6 months cash in the bank. Tax returns for the last 3 years. Proof of stable employment. No credit card debt. No car payment preferred.
It took a while to get ready to buy a house. I looked at the Wells Fargo website yesterday. 20% down and 8% for a 30-year Jumbo, 7% for a 5-year ARM. Ouch. At these prices??
“Lenders and mortgage insurers are also requiring proof of income and employment, something they didn’t always do during the housing boom”
I have a feeling that there is so much fraud in most of these loans that the borrowers are terrified to have anybody open up the loans and find the lies. Kind of like getting audited by the IRS.
They would rather walk away than have old loans probed.
Maybe the government programs are really a witch hunt.
Ouro Verde …..You have a good point about people walking rather than have their original loan applications questioned . The fear of “discovery ” and a desire to flee . Wasn’t it last week that the government talking heads were questioning why the borrowers weren’t responding to the we -will -help -you letters from lenders .
Yeah lets start the senate hearings now.
They will discover is was the naughty borrowers who lied,
the agents rewrote docs and the lenders did the add ons.
Hey, anybody wanna decorate this loan?
Hey barney, don’t be a barney.
Let’s bring Spitzer in to head the commitee.
Hey, Eliot can you come work in California?
Threaten all the parties from the housing colusion.
Make them clean up the inner cities instead of jail time.
Hmmm… I wonder how housing prices will “keep going up!” in those states if no loans are allowed?
We need government action! Maybe some sort of “estimated sales value” so no actual sale occurs but people can count the sale for appraiser purposed and then get back to HELOC’ing away their future! Work with me people, or the age of overconsumption might come to an end!
Someone talk me off the cliff here: Wife and I living in Houston and wanting to buy a house. I’m an avid follower of this blog and read much about major downturns in pricing but I’m not seeing it here “in town”. Do you think we’ll see some significant price movement down in this city?
Typical realtwhore comments about Houston:
-We didnt see the same price appreciation as elsewhere
-Population / Economy is growing strongly despite the rest of the country
-Mortgage rates are as low as we may see them for a long time
-$100 oil and you expect Houston to fall? Dream on…
Very frustrating to have seen the coming bust, continued to rent and squirreled away cash to not see the same in my town.
Yeah, they say the same thing here in the outskirts of the Boston area. If you look at wmbz’s post below, Leery Lenders, you’ll see what I think will take my area down. Nobody has the 20% saved. Demand may not decline in my area but the access to loans will.
“Demand may not decline in my area but the access to loans will.”
Which will take care of demand all by itself.
A while back someone asked for suggestions for a catch phrase for the HBB - as a counter to “All real estate is local” of the NAR.
My suggestion is, “Desire doesn’t equal demand.” It kind of sums up the problem with the credit markets of the last few years.
I would base you decision solely using a normal rent vs buy analysis using the assumption that housing appreciation is 0%. The best calculator out there IMHO is the NY Times calculator:
http://tinyurl.com/24vllw
Use the advanced feature to plug in as many variables as you can. Based on those calculation and the expected time you’re going to be in the home, if it’s cheaper to rent, then rent. If it’s cheaper to buy, then buy. By using this type of calculation, you take all the emotion out of the decision and it requires no guessing on the direction of the local market.
Even though I know nothing about the Houston market, I suspect that you’ll find that you’re still better off renting right now.
I’ll take on this one:
Mortgage rates are as low as we may see them for a long time
Times of low mortgage rates are the worst ones to buy, especially if you have a larger downpayment than the other people who are looking. Buy when rates are high which forces prices down. Refinance later to a lower rate. You can’t refinance a high price.
As for the oil is high, population is growing stuff, that is an argument that demand is high. Demand and desire are NOT the same thing. If there are a lot of people in Houston who want a house and only a few of them can get a bank to lend them money, then demand is a lot lower than desire. Wait a while. Unless Houston is immune to the stupid spending habits of the rest of the country and has lots of people with huge savings accounts, demand will come down and prices will come down to match.
And of course when demand is high it is a BAD time to buy. While trying to time the exact bottom to buy is as fraught as trying to time the exact top to sell, most of us ’round here are convinced that the market has a way to go. IMHO we’re unlikely to get exact parity between a 30yr fixed mortgage and rents. But they should be REASONABLY close before you think about buying. My simple advice is to look at the price of rentals equivalent to the houses you want to buy. Take the difference in price and bank it where you won’t use it for living expenses. You’ll get an idea of what you can ACTUALLY afford each month, an you’ll be saving up a downpayment.
To the excellent advice above - I would also add this — start tracking inventory. As long as inventory keeps increasing, prices will continue to fall. You won’t see a bottom forming unti inventory begins to contract.
I don’t know if inventory has grown as much in Houston as it has in places like Phoenix, Vegas or SW Florida …. but growing inventory is going depress a market every time.
And don’t be fooled by normal, seasonal corrections. Those shmucks at the NAR enjoy trumpeting how inventory is declining in the winter (so “buy now or be priced out forever”!) while ignoring both the fact that the winter inventory is still much higher than it was in recent years, and that inventory normally declines in the winter since nobody wants to move in the cold or around the holidays.
Where in Houston are you looking?
$100 oil does nothing for Clear Lake or Sugarland. It’s great for River Oaks.
I’m looking generally in the Memorial / Spring Branch area. Plenty of oilies around here. Y’all are giving some great advice, many thanks!
The other commentators have it correct. Tighter lending restrictions, less available cash (i.e., less ppl making money on the sale of their existing house that might migrate to the area, the recession, etc.), and the new recognition by most ppl that home prices do not always go up will put downward pressure on all areas nationwide. Yes, a particular city’s economics may have specific upward pressures. In most areas, however, the national downward pressure will outweigh any local upward pressure.
Well said Tim. Just like a declining market index will break the back of individual equities.
Look, they’re saying that everywhere. This debacle is bringing everyone down. Only the smartest are going to survive, and intelligence is interlinked with right action, in this case PATIENCE!
Exactly. They’re saying it in W. Colorado and SE Utah, also. It’s just a metter of time.
They are saying that here in Rural “it’s different here” Western NY too, but we are starting to hear the ice cracking. There have been very few sales so far this year, but of the five that I’ve watched in my neighborhood, two of them settled at 25% off wish, one at 30% and many of the new listings are at $50/ft2 rather than the crazy $120+. It is going to be an interesting spring.
Great on the ground observations Blue. $50 per is a number that jives with historical price trends in the rust belt although still high by 5%-10%. It will definitely be an interesting spring if that trend holds.
Well not just patience. You need FUNDS as well as foresight. When the time to buy is best, only those with a well seasoned 20% downpayment, good FICO and good, stable jobs need apply.
My Mom lives in Spring which is north of the City. There, things are really dead. Of course houses were always cheap but these days, houses simply are not moving. The homebuilders have overbuilt and now that mortgages are harder to get, the new homes are being dumped. There may be some good prospects for picking up rental property.
If it really was a “Great time to Buy.”. then realtors would not need to go around shouting at the top of their lungs that it’s a great time to buy.
Are median prices in your are 3x to 4x median income? If not, prices will continue to fall.
Are median prices in your are 3x to 4x median income? If not, prices will continue to fall.
Why yes, they are. In some neighborhoods, it’s 2x median income. But houses still aren’t selling and prices are still falling. They overbuilt and like elsewhere the wacky loans have stopped.
Do you think we’ll see some significant price movement down in this city?
Prices are crazy stupid inside the Loop. It wasn’t so long ago that the Heights was a sh**hole. Now tiny old houses are $400,000.
It seems to me that sales are slowing, but prices are falling only marginally here in central Maryland. In Baltimore City, prices are definitely falling non-trivially. In the outskirts of DC, prices are solid, but again, sales seem to be slowing, based on the data points I’ve come across. The reasons you presented are also factors here, with government realignment and the coming BRAC (Base Realignment and Closure), and the concomitant job stability and population inflow.
Right now, real estate seems to be moving at a historically normal pace - houses being on the market for several months, then being sold.
Anecdote: I saw an instance of this personally. A family put their house on the market about a year ago for 700-something. No movement for many months. They tried an auction. No one met their reserve price of 400K (They purchased the house for less). Finally, just recently, they got a purchaser who paid upper 600’s.
I guess I’d call the buyer a “White Knight” buyer. Swooping into save the day for the seller, paying at or near wishing price. Sellers are going to hold out for White Knight buyers for some time I think, until credit tightens up to pre-bubble levels so that the White Knight buyer becomes as rare as the unicorn. For whatever reason, there are White Knights out there who can still raise bubble-level amounts of cash. So clearly, the credit spigot is still running.
Sellers are holding out for these kinds of scenarios. I guess if someone wants to sell something fast, it will have to be priced competitively.
I’m guessing sales will have to slow a lot more before prices get a chunk taken out of them. People are taking inventory off the market, trying to rent it out to cover the mortgage, or just waiting if they can, paying two mortgages. Or just staying put if feasible.
Typical Maryland - nobody can afford to live here.
I’d love to see BRAC fall through or somehow be shrunk since I am so sick of nitwits telling me how “BRAC is going to bring all these people here and they need houses!” Yeah, even with government help, they STILL can’t afford the typical, overpriced, POS house in this area! UGH!
So, like you, I am stuck waiting, probably forever, in this laughably overpriced state.
It’s better to be renting and having few constraints and good cashflow than it is to stuck with an underwater POS in a bad area.
I do personally know of people in that exact situation - purchased a rowhouse in Baltimore city at a high price. Now, it’s dawned on them why Baltimore City proper might not be the best place to live. So they want out. But, being underwater, they have a serious conundrum:
1) Sell at a (significant) loss.
2) Walk away from the house, which will devastate their credit.
3) Stick it out in a bad area and risk having kids in that area.
4) Buy another place in the suburbs and hope to rent out the place for something that will cover the mortgage (unlikely - the rent for one of the nicest apartment complexes in Howard County is less than their mortgage).
That’s the problem with the panic “have-to-buy” mentality. You get stuck.
Seeing how this national credit situation finally works out will determine how far in the future I’ll have to wait before I try and purchase. The credit environment has a large impact on house prices. Where the credit environment stabilizes, and when is the key.
Right now, renting is not a problem. I can still “build equity”, by increasing my savings. I think I would be a lot worse off had I converted my savings into POS house. I would have taken a significant loss. And my quality of life would have been lower. The people I mentioned above were prudent enough not to put any money down when they purchased. So, they essentially rented, for a lot more than I did, in a much crappier location, for the past few years.
I don’t know when house prices will become affordable again. But, I’m not pressed. I will continue to do my best to manage my finances in a prudent manner, and continue to avoid becoming involved in buying (or selling) panics.
Purchasing a reasonably priced house in a decent area is a good long term investment, but it is not the sole key to happiness nor is it the only key to financial success.
I can still “build equity”, by increasing my savings. Of course. And at current rent/purchase ratios, you’d be crazy to buy. But keep in mind that in a normal, non bubbly market, homeownership doesn’t pay off in the first few years. The primary advantage is that with a 30yr fixed, your principal+interest doesn’t go up, but the equivalent rent does. I probably should have bought years before I did (1999) from an economic point of view, but I kept looking at how much principal I’d be saving with a mortgage and figured I was saving MORE by renting. But in the later years of an amortizing mortgage your payments are more principal than interest. Any you don’t GET to the later years except by toughing out the earlier years.
One more thing occurs to me - people can have kids and raise a family in a townhouse.
THAT in fact was the way it used to be done. Why newlyweds think they MUST BUY NOW is a bit of a mystery. If you can’t buy a house now - rent a townhouse. Or even a relatively spacious condo. Save money in the process. When your finances allow - then buy. You can still raise kids.
It’s a pretty good solution really.
Again, don’t get me wrong - buying a house at affordable terms, in a good area, can be a really good situation. Eventually, you get to stop paying mortgage/rent. But it’s not the ONLY option.
It is possible to raise a family and increase one’s net worth while renting, incredibly enough
Has Houston not shown huge runups in price from 1998-2005 like most of the country?
Like Lou said, the inner loop/heights area is very expensive. We make well over 100k a year and we can’t afford that area of town. Also some of the western parts seem relatively expensive. I’ve personally noticed a slow down in my neighborhood. There are more houses for lease or sale and there is a foreclosure. We live in the dreaded suburbs and do not rent.
Coworker owns in Houston and has home on market for over 2 yrs. Too many new homes being built as competition. Took house off mkt. But won’t rent. Wants to move.
I have a friend in Houston who is see the same as you: Prices still going up and houses still selling in his neighborhood (new construction). Until recently he wasn’t even aware that there was a crisis.
Vern’s Precipitation…
http://www.wrisley.com/comment.htm
“Broussard has found little sympathy from his lender, Countrywide Financial Corp. While Broussard accepts responsibility for taking out a mortgage whose monthly payments are due to skyrocket once the unpaid principal exceeds the home’s value by 15 percent, he feels betrayed by the lender’s unwillingness to negotiate better terms.”
The junkies and dealers really do hate each other.
‘The junkies and dealers really do hate each other.’
Let’s give both sides a big pile of cleavers and then step back. I don’t even care who wins, I just wanna watch.
LOL…Olympiagal ,too funny , you are one creative gal .
lol
Put some principle payments into your budget. 115% interest reset problem solved.
“When massive numbers of dollars disappear, the ones remaining become considerably stronger.”
There. It. Is.
“Vern’s Precipitation…”
Even if Vern is correct, after 35 years many who heeded his call are long dead or broke.
He was wrong.
His advice was dangerous.
Leery Lenders…
http://biz.yahoo.com/ap/080321/credit_crunch_lending.html
The stinginess of banks is showing up in home loan statistics: The value of all new mortgages plummeted to $450 billion in the fourth quarter of 2007, down 38 percent from a year earlier, according to trade publication Inside Mortgage Finance.
Stinginess. I love it. Sounds like a spoiled rotten kid whose parents just cut him off.
Somebody who won’t lend to ME is stingy. If I won’t lend money out, I’m being prudent.
Bear Stearns CEO Is Said to Rent House
Bear Stearns Cos. Chief Executive Alan D. Schwartz has taken off the market his suburban New York house, listed for $4.5 million, and is renting it, the real-estate agent who had listed the home says.
http://online.wsj.com/article/SB120606313858953785.html?mod=googlenews_wsj
He’s not going to give it away.
He gave the company away. What more do you want from him?
LOL.
Also noticed in the same article a bit about an Allman brother, who bought a house in Florida in 1999 for 1.3 million, and was recently trying to sell for 4.8. No bubble there. Wow.
“What more do you want from him?”
I’d like to see him wearing a Chinese sandwich board.
Another believer and victim of the NAR’s crap.
good morning
the california thread was pretty funny last night
anyone been in the malls and stores lately? just curious how the
easter sales are doing, it kind of snuck up on us early this year
We were at Target the other day and my 6-year old commented, “Gee, why is it so quiet today? There’s nobody in here.”
Of course, it could be the wrong time or day, but it was very slow.
Of all the people we know, nobody is looking to spend more money right now. Can’t think of a single person now who thinks we are not in a recession — and these are the dim bulbs who couldn’t see a housing bubble if it slapped them in the face.
Sadly, I still know a few people in denial. On both housing and the economy. Talk about ostriches.
A lot of people I know are doing ok because they rent or they bought many years and never played the HELOC game. For them, they carry on “life as usual”.
Unless they lose their jobs.
My hair cut lady was buying the largest bunny she could find for one grand daughter, which forced her to upgrade the other also. Now she has a spare. J12P
I wish I knew- my shopping has been at Wal Mart, Sams Club, the grocery stores, and Amazon.com. A few times I tagged along to Target with my wife and the place always seems pretty dead while Wal Mart continues to be packed. I have been loving Amazon lately as they have had some great discounts and the free shipping offers make the deals even better- we’re even going to start buying diapers on Amazon.
Not related to shopping, but I went to Salt Lake City yest. and have never seen so much spring break/Easter traffic coming my way (SE Utah) from the city. Unbelievable.
Kool-Aid drinkers & Heloc raisers…
With apologies to Billy Gibbons, The Bard of Texas Boogie …?
Texas is the next state over alphabetically from Utah, and that’s as close as it gets.
Amen.
Not sure how long you’ve been lost out there but the spring break traffic to Moab, St George and to Lake Foul has been terrible since the mid 80s. Most of it is going to Lake Foul which is the Utah version of Fort Lauderdale complete with drunk coeds ramming house boats.
A lot of them are on their way to Moab - spring break and Jeep Safari - lived there 8 years, it’s big mess. Glad I’m now about an hour away (San Rafael area).
North Texas malls are full, almost like Christmas.
Lowes is pretty empty though.
ah Queens ny such a wonderful place come one come all
http://www.queenscourier.com/articles/2008/03/19/news/top_stories/news17.txt
The funny thing is that this is rampant in Queens. Almost every house in my area, Astoria, has an illegal apt. in it.
And this is also how most immigrants live, cramped into small apts, built for fewer people. And yet, when I tell people that $600,000 is simply unaffordable for most working families to pay for a SFH, they tell me all the immigrants are buying at the high prices. I guess those taxi cab and dish washing jobs pay better than I thought.
America’s saving a sign of the times
http://finance.yahoo.com/banking-budgeting/article/104680/America’s-Savings-a-Sign-of-the-Times
“Two out of 10 Americans say they don’t save much because they work too hard to scrimp on the things they really enjoy.”
God forbid they drink Budweiser. Phony people. Phony economy. Phony wealth. Real destruction!
See you tomorrow night.
Well I’d argue that real beer is a cheap luxury, and well worth the extra money. A brand spanking new car OTOH….
Drink Quality, Not Quantity.
(But if you’re going to drink quantity, a 40 of Coors/Bud/Miller at my local Packie is $2.09).
Quantity is nice too, at 6 bucks a 12 pack. Cast iron stomach recommended.
One can drink 2 Saranac Imperial Stouts - a reasonably priced high-test beer (9% Alcohol By Volume, versus 4.x percent for the average beer), and can get quite reasonably buzzed. Plus one can enjoy a well-crafted beer. Versus drinking 5 or 6 cans of Milwaukee’s Best and winding up with a hangover the next day, and little enjoyment of the taste.
I started making my own wine last year. After some of the initial equipment costs, it’s pretty cheap. I made ~25 gallons of blackberry and paid a LOT for the berrys (there was a freeze early in the year that killed the crop) and still made out with something like $4 per bottle, and that’s including the cost of the bottles (which I will reuse).
That batch turned out good…too good. Both my wife and I stayed home from work the day after we bottled it.
This year we are living in an old family farm house that includes TONS of blackberries all over the place and an orchard that has peaches (blooming now) and apples. Hopefully we don’t get a bad freeze like we did last year and have a bountiful crop (and cheap fruit/berries from other places) and inexpensive drinks all the year long.
I think we have a different definition of quantity.
‘I started making my own wine last year.’
Preach it, bluey! You ought to try home brewing beer, too. I’ve made wine, but beer is so easy, it’s ridiculous. Fun, too, of course.
My brother started making beer a year or two ago. He just turned 21 this year and is making far better beer than most anything you can buy. He has surprised me and really gotten into understanding all the components and how they work together.
I considered making beer a while back but never pulled the trigger. It’s funny I became more interested in making wine since previously I couldn’t really stand drinking wine (but I drink lotsa beer). Now I have started to develop a taste for even store-bought wine. But mostly I still prefer my own (and other’s) homemade fruit/berry-based wines (and muscadine wine of course, I AM a good southern boy afterall).
I think my next thing might be liqour of the *ahem* distilled variety. I would really like to try a one-pass distillation of the blackberry wine to make a strong 40% or so drink that still retains much of the original flavor. I think the strength of that particular wine would stand up nicely to the distillation process without losing it’s character.
I made ~25 gallons of blackberry
That should have been bottles, ~25 bottles. 5 gallons. A single 5-gallon batch makes about 25 bottles. I think I’m using 750 ml bottles.
Sipping the wine already blu?
Sipping the wine already blu?
10 am is a bit early for me…unless I’m playing golf. But it’s one here now, Friday and 70+ degree weather…I would prefer to be sipping on a bit right about now. I’ve got some apple I crushed in October that is probably about ready (although raw tasting). I might give that a test drive tonight (but I also have an advanced accounting test to study for…decisions).
No, I was thinking about 25 gallons b/c I intend to make that much blackberry this year. That is some pretty good wine and I like giving it to people. It seems folks really enjoy things like that, handmade and such.
You guys might want to check and make sure you are within the legal limits of your state production laws and fed tax laws. You do not want the BATF accidently burning down your house.
One of my few splurges is on really good freshly roasted coffee, like Colorado Legacy or an occasional glass of really good wine - like a 1970 Chateau Gazin Pomero.
Ha, right, like I could get any of that way out here. I have trouble keeping enough drinking water on hand.
Well Coffee and Wine might be hard to find in LDS land. OTOH plastic pails full of wheat might come in handy if the extreeme doom and gloomers are right….
Well, coffee is still legal in Utah. Actually, almost every town on the tourist line in Utah has a good espresso shop. Lots of good coffee in Utah, also some very good wineries. I just don’t live that close to any (or anything else).
This article only proves that most people aren’t honest even to themselves, and even when their future success depends on it.
Today’s NYTimes online:
“Oil, gold and other major commodities fell sharply on Thursday, capping their steepest weekly drop in a half-century, as investors fled what many had believed to be the last safe haven in turbulent markets…”
Steepest decline in half a century! Sooner or later, speculative excesses (=bubbles) will end.
Good. I will then buy more gold and oil stocks.
Our VP is heading to the Middle East to try and talk the price of oil down/production up. Good luck with that Dick!
I remember sometime back Steve Forbes saying that $50.00 oil was unsustainable and Americans would not tolerate it… How’d that turn out?
steve forbes lol
jackass
Does any body remember when ol’ Dickey said that Iraqi oil was going to pay for the war?
Give me a break.
He also felt that Giuliani was viable, a flat tax was in sight, and pontificating to your employees is a “debate”.
Don’t be too hard on him - he may have been right.
$50 a barrel oil may be unsustainable IF WE HAVE TO PAY FOR IT, instead of merely charging it and making the minimum payments from now until forever / our next HELOC of our ever-appreciating house.
I shudder to think just how many tanks of gas and Big Macs are still being paid for, bit by bit - with tons of interest, years after being consumed!
Well, Forbes was absolutely right about $50 oil being unsustainable.
Gold yes but I sold my oil stock a few weeks ago I think a recession will lower demand for oil. we’ll see
There is your evidence this bubble is not over…
…ditto
This is indicative of a BULL market. In a sustained bull market you will have large dips on the downside before resuming the upward trend. The opposite of this is the current BEAR market in stocks. There, we will have large swings to the upside before resuming the downward trend.
Gold has a LONG way to go on the upside.
and maybe if you capitalize a few more words, it will actually happen
And click your stilletto heels together and say 3 times….. gold only goes up.
The Wizard of Oz is a monetary allegory regarding bimetallism - Oz for oz of gold - and why Dorothy’s slippers were silver (ruby for Hollywood) - or is this news to you?
Gold only goes up…..
There. I said it for you.
Forget saying anything.
Hit my bid next week.
GCM12 call 1400 strike- you’ll get ~$9000.
Ha! Good one.
Gold will absolutely be higher by the end of the year. If not, I’ll gladly taking my beating from you friendly HBBers.
The dollar will continue its downward spiral. How rediculous have things gotten when the FED drops 75 basis points and the talking heads on tv are calling them hawkish? What a freakin joke.
Dear Oracle,
Should I hurry out now and buy as much gold as I can? Should I be buying stocks too?
Please Respond
Gettin into Au isn’t the problem. As these financial problems become deeper and knowlege of them become broader I’d predict that there’s alot of run left in the yellow metal. But when the economy improves and productive assets aren’t overpriced, it tends to lose its luster, and its value.
You don’t need a crystal ball to see that the FED’s plan is to debase our currency.
I don’t recall telling anybody what to do with their own money… If you need investment advice perhaps you should open an account with GS or JPM, I’m sure they wouldn’t steer you wrong.
As much as I learned from my last 3 years of experience with the HBB and Ben’s money blog, do not judge the market seeing what it is doing in a day or a week.
“You don’t need a crystal ball to see that the FED’s plan is to debase our currency.”
We’ll see if you still have your MOJO after this liquidity tornado is done exacting its toll on asset prices.
Let’s put a price on these opinions.
In the next week or two, one of you can sell me a GCM12 gold call @ 1400 - price will be Black-Scholes since there are no trades that far out yet. At EOD the call was sellling for ~$9400. I’ll be paying $94 for the option to buy 1 oz of gold at $1400 in 2012. In 2/06 I paid $150 to my dentist per oz of gold for his opinion that gold would not close at/over $1000 by 2/10 (then trading at 550). Following said option price will provide years of entertainment.
“I’ll be paying $94 for the option to buy 1 oz of gold at $1400 in 2012″
Not knowing much about the market, could you explain how/where I could do something like that?
Thanks!
COMEX/NYMEX futures options market.
My dentist said gold is only good for filling teeth. He has gold from patients’ teeth/crowns converted into goId eagles. I offered him $150 in 2006 for each ounce if gold did not close at/above $1000 London spot by 2010. If it did not, he kept the money. If it did I would get to keep the gold (exercise the option). He wrote (sold) a covered call. You can do the same in the futures options market, or you can ask your dentist.
Some of the big players (large specs) will buy calls and take delivery of the underlying. A small spec (trading
He has gold from patients’ teeth/crowns converted into goId eagles. The Mint doubles as a dental lab?
Oddly enough, I heard about it on Bob Brinker a few months later. I guess alot of dentists or dental techicians do this - or you can get a mangled crown back.
Well, even after the biggest drop in half a century, oil is still over $100 per barrel and gold is over $900 per ounce. And all because the Fed cut by .75 instead of a full point! Oh, those inflation hawks at the Fed!
I’m glad I “speculate” each month by putting whatever excess cash I have (not a lot) into a goldmoney account.
Agreed. They’re so hawkish, that when its all said and done, they might only drop the FED funds rate to 1% instead of 0 !
“…All the Fed moves, have, in aggregate, grown the Federal Reserve Bank credit by only 2.2% annualized, or $18.7 billion, according to McCulley. The Fed has been aggressively selling down its Treasury portfolio so the net impact of the TAF (term auction facility) has been muted in terms of balance sheet growth. …”
Wachovia Bank.
There is conjecture of a wild party at the fed, but the Federal Reserve numbers as of a week ago suggest a funeral.
I find it amusing a minor 10 -15% drop in commodities after a 7 year run and the pundits are calling it over.
Now the US stock market S&P500 are down 30% from 1998 adjusted for the US dollar deflation and the same morons are saying buy stocks.
There is a special place in hell for mutual fund managers and stock touts.
Look at a graph of the S&P 500 from 1998 onwards, and don’t adjust for inflation, it looks like white noise. No appreciation.
(cut off - continued)
Some of the big players (large specs) will buy calls and take delivery of the underlying. A small spec (trading
http://tinyurl.com/2h2phg
Some of the bloom is coming off of Greenspan’s rose.
Kenneth Rogoff, a Harvard economics professor and former chief economist at the International Monetary Fund, says that “the important point . . . is the philosophy of monetary policy that says ‘you don’t pay attention to asset prices when they are rising, only when they are falling.’ ” In reality, Rogoff adds, “if you cut interest rates when asset prices are in free fall, then when asset prices are rising while indebtedness is rising all over country, you need to raise rates. He actively chose not to do that.”
A lesson for the future Presidents is this: never appoint a really old man as a Fed Chairman. Greenscam was so old that he didn’t really have much at stake, he’d ruin the economy, but he must have thought he’d die soon anyway because of his age. So what did he care?
Judas Beast was well compensated, with the usual payment of…
30 pieces of silver and 15 minutes of fame.
That silver is worth a lot more than our dollars - thanks to the Fed!
Notes from Bowling Green KY.
Thought I would add some observations on my perception of the real estate market here. I saw in today’s Louisville Courrier Journal in an article that home prices have edged up 1.1%, while the number of sales have declined 13.6% over year ago levels.
I would first note, that since 1999 real estate prices have advanced 2-4% a year depending on the property, not a bubbly market.
There is lots of inventory, especially in the 250k and up range, but plenty of inventory where you can buy a liveable fixer upper for 50-100K, a modest 1200 sq ft 3/2/1 move in condition for 100-120k, and up from there.
My former landlord just bought another 3/2/1 for a rental. These are 90-110 k 3/2/1 properties that rent for $725-750. He expects rents to increase about $25/mo this yr on his units.
Two or three weeks ago, at auction I saw a 2000 sq ft house that was brick, 35 yrs old, dated, but liveable with a very strange floor plan go for $53/ft. That is about the bottom that I have seen.
One odd thing about Bowling Green that I see is that many parents buy their adult children houses. Many of the folks that showed up for this auction were looking to buy for their children.
I watch some forclosure listing sites, and now see that the forclosures are showing up in the realtor ads for sale as “realtor owned”. I believe here in KY, if the realtor owns the property, they must say so in their ad. The forclosure properties are mostly in the 75-100 k price bracket. Evidently the realtors feel they can make some dough with these properties.
Area unemployment is between 4-5%, and median household income is about $43000. Property taxes run about $7/1000.
One last note, I noticed in my old neighbood where I sold a 4/3/2 2800 sq ft house in 2006 for $272k. Neighbor just sold accross the street for $250k. This house was approx 2500 sq ft.
Hard to say what the future will hold, but I would say if you want and need a house in this area, you can shop hard and do well. You will have a limited pool of buyers if you buy at the upper end of the market and have to sell.
“Many of the folks that showed up for this auction were looking to buy for their children.”
*GASP* Imagine the shame cast on the good family name when your offspring are renters.
*GASP* Imagine the shame cast on the good family name when your offspring are renters.
With Kid’s attention span these days - most won’t give a shit about having a nice house. They care more about video games, iPhone, and going out to hang out at the pizza joint. And the cool part of town is constantly changing, they want to be able to move around, not anchored. When the time comes to go take that cool job or move in with the girlfriend - you want to in a hurry.
Take a college town like Austin, already renting is an entire lifestyle. Hello, real estate agents love to help people find rentals - a steady stream of income.
Look at how college kids are often the first to adopt small cars. I predict kids are going to find uncool: large cars, large houses, granite or anything excessive. I expect it to be like the 1960’s where cheap home-made clothes, living simple and saving the world will be the reaction to the stupidity of the adults.
heck, I’m 35 and rent. Why? I frequently travel for work, days, weeks, sometimes months away from home. I’ve lived and worked for three months in an apartment with just the contents of a large duffle bag. Mobility is my greatest earning asset, I have no desire to cripple my earning potential by buying a house.
Why not a condo/HOA that takes care of all that, you say Ms. Realtor? Because when I do buy, I want the freedom to put up the ugliest fence in the world. If I own it, I want the freedom to paint my house orange.
“The things you own soon own you”
(I watched Fight Club the other day - that movie was waaay ahead of its time).
Mobility is something that most drastically underestimate as an asset. I am little older than you and I still rent as well. I will have to move within the next 12-18 months and if I had taken the advice of many friends and relatives and bought in the area I live in a few years back it would have ended up being a financial disaster for me. The “It always goes up in the long run” crowd never takes into account the value of mobility when calculating the purchase of real estate.
“Mobility is something that most drastically underestimate as an asset.”
This has been very true for my family and me. Last year I was in LA in an expensive private grad school, anticipating a move within LA that would have been both expensive and undesirable, when I discovered I could do the same in Seattle in a topnotch public program. Now they pay me to go to school, and we live in a fantastic neighborhood. Once here in Seattle, a year after moving, again thanks to renting, I found a nice rental house that is a block in either direction from my two best friends here.
I’m joining the chorus. I’m a little older too and rent. Mobility has helped my career over the last few years. Mobility (and education) is going to be precious over the next three years.
Got Popcorn?
Neil
“Look at how college kids are often the first to adopt small cars. I predict kids are going to find uncool: large cars, large houses, granite or anything excessive. I expect it to be like the 1960’s where cheap home-made clothes, living simple and saving the world will be the reaction to the stupidity of the adults. ”
hell i’m 50 and i still live like it’s the 60’s with some upgrades like a Prius car. but living simple, no tv and cheap clothes from the army navy store, solar panels on my roof and a vegetable garden in the backyard are still the route for me. as for the stupidity of adults, i’ve had to endure 30 yrs of people selling out and buying into the general ideology of ‘consumer culture’ . there are many exceptions however.
People under 40 have been forced to live smaller and more mobile because of lower salaries, frequent job changes, overall crappier work situation than older generations. A lot of them are living smaller by necessity, not choice.
Many choose where they want to live (”cool” cities like Austin, Portland, Chicago, etc.) and then take whatever job they can get there, figuring if you’re going to have a crap job it might as well be in a place you want to live.
I predict kids are going to find uncool: large cars, large houses, granite or anything excessive.
Pickup trucks ain’t goin away any time soon in Texas…
We’ve subjected my in-laws to this shame. They did condescend to visit us in our rental (darn it!) but I’m pretty sure they don’t talk about us at church.
(I wish I were joking on the last point..)
I guess I’m different. I would love to be able to buy a house for my daughter, SIL and grandson. They are working hard to pay off student loans (both teachers) and are responsible folks. I guess I don’t get this whole anti do for your kids thing. When I have lotto daydreams, I’m always thinking of things I could do for my kids and other family members.
To me, giving your kids houses and anything else you think they need is not doing good things for them. One should teach their kids to fish, not fish for and feed them. People who are given everything do not learn the value of anything. If I think back to some of my childhood toys, the ones that come to mind are these (and I still have them):
1. A silly, round deck of playing cards. I saved bubble gum wrappers about a year to get this.
2. A Crosman 766 BB gun that I spent days picking up bottles and cans to earn the money to buy it (thanks Oregon bottle return fund!!)
3. A cheap yo-yo that I walked 5 miles to buy when I was about 9.
Those things I know the value of because I know the labor it took to acquire them. I’m sure I was given plenty of yo-yos in my time, and they’re all forgotten, lost, thrown away except the one I worked for. A friend walked with me and bought a yo-yo for himself, too. We still talk about them.
Just MHO. Your mileage may vary.
Maybe it’s an age difference - One daughter is 36, went back to college in late 20s and then worked husband through. Other daughter is 19 and worked extremely hard to get large scholarship for college. They were not overly indulged as children.
Michael.. “A cheap yo-yo that I walked five miles to buy when
I was about 9.”
I use to ride my bike real fast 3 miles to downtown to get a 1 cent candy . Than I would ride back real fast . I would ride real fast so my mother didn’t know what I was doing .
For most of my adult life I hated candy .
So you clearly haven’t forgotten those times. You probably remember a lot of the rides individually and which 1 cent piece you bought. Do you remember the 1 cent pieces of candy that people gave you at that age as well as you remember your bicycle rides?
IMO whether or not you like candy now isn’t relevant to my point.
My point was that I burned up my desire for candy by paying for it by to much effort . The candy was the goal or the excuse to take the ride . The great part was the challenge of getting up and back quick . To this very day I have strong legs ,but not much desire for candy . Also the journey to get the candy was the real plus part of the trip .
So ,my real point is that the journey was the real reason for the trip and the candy was the excuse to take the trip .
Goldman Job Cuts…NYC Ain’t Immune
March 21 (Bloomberg) — Goldman Sachs Group Inc. plans to dismiss as much as 15 percent of its workforce in the capital markets and related support departments, the New York Post reported, citing unidentified people familiar with the matter.
The reductions are likely to come in the division that includes investment banking, debt and equity underwriting and merger advice, the newspaper said. Employees were first notified about the staff cuts on Monday, the Post reported.
hey spike
we all know all gs employees have millions in the bank so this will not have any effect on manhattan
the euro’s will save the day
Law firm associates to follow….
already happening in Dallas, where there is no bubble
But, do we still get bonuses this year if we are laid off in June?
Let’s not forget that their president is cashing out over $5 million in stock. “Pink slips for thee, and big money for me.”
Typical Wall Street!
Oil Crisis… What oil crisis? There’s plenty of the stuff we just can’t drill for it.
http://biz.yahoo.com/ap/080321/cheney.html
Damn librulls.
I don’t think it’s libs as much as it is nail bitting, bed wetting, candy assed, tree huggers that really haven’t a clue, but plenty of time. Funny how it’s OK for the Chicoms to drill in the Straits of Florida of Cuba but here off the coast of South Carolina where we know we have oil we can not. Does not add up to a smart way to go about it imo. However wasting millions on corn that people could eat is going to save us… Not!
Or like the Oil Institute funding GreenPeace?
“…but here off the coast of South Carolina where we know we have oil we can not”
What are the odds of a oil platform, say directly off the point at…Hilton Head?
“What are the odds of a oil platform, say directly off the point at…Hilton Head?”
*stutter* *clearthroat* errr… ummm… well.. ummm….
Thought so.
Drilling off SC and ethanol are both dumb choices. And I haven’t wet my bed in a while and try not to hug too many trees.
Personally, I’m in favor of saving ANWAR for 20-50 years from now when we’ll REALLY need it. Just think of it as a strategic petroleum reserve that requires no maintenance, testing or administration.
The oil in ANWR and elsewhere is only going to get more valuable, it’s also a drop in the bucket and will have minimal impact on the steady decline of US oil production. Unfortunately the answer of republicans is we should burn the candles we have at both ends. Unfortunately with no gov leadership conservation will be accomplished only through driving the majority of the US into poverty.
Also, even if they started today in ANWR, it would be 10 years before anything got to market. Having lived in AK for many years, I’m against it - better we stop wasting so much oil and work on alternative fuel and better engines then just drill up AK.
Aren’t we supposed to be getting free oil from Iraq or something?? (That was the point in addition to redeeming the Bush family honor, right?)
neo-citizenry for a neo-century…
Bushomeless
What people have failed to realize about Iraq is that by invading Iraq, the US has further consolidated oil power in fewer hands. Hence prices go up. That was the goal all along.
Iraq has been an unequivical success when viewed from a strictly business perspective…..the taxpayer pays the tabs and big business wins all around.
^ what he said. The occasional conservative type likes to issue the taunt about contrasting “No blood for oil!” and current high oil prices.
What said conservative either doesn’t or can’t understand is that the war was [to some great extent] about *access* to the oil. Under the late Hussein regime the 300B bbl — thirty TRILLION dollars at today’s prices — would have eventually opened up to the pre-existing French, Russian, and no doubt future Chinese oil interests.
The plan to go in and put Chalabi in power was a bold, but brilliant leveraging of OPM.
“Aren’t we supposed to be getting free oil from Iraq or something??”
Yep, I think Rumsfeld said the war would be a slam-dunk and would pay for itself. Wonder how that Iraq embassy is coming along. Vanity Fair Magazine has a great article by Stiglitz on the REAL cost of the war.
http://www.vanityfair.com/politics/features/2008/04/stiglitz200804
With the economy tanking, the cost of the war is taking center stage. This bypasses the arguments about whose fault it is, and cuts to the bottom line…how much of your future and your children’s future are voters willing to give up to keep it going.
My guess is it’s a more potent argument than who’s right, who’s wrong.
A tanking economy speaks loudly.
You’re right, the costs of the war are a potent argument — even more so as the economy shambles down the street like a drunken clown on six-foot stilts. You don’t have to be an MBA to see how little return we’ve received for our investment.
But let’s not forget who was wrong about this entire episode. And, uh, lied about it. Let’s not forget that either.
If you think the war costs are staggering now, wait until worldwide opinion (and power) declares the invasion illegal and we have to pay reparations. Also, we’ve only seen the tip of the iceberg as far as war profiteering goes. When a new adminstration comes in, we will be flooded with stories of Iraqi-occupation corruption. (I know the flow is quite heavy now.) A fine mess…
How can the denizens tell, what with all the rioting, looting and blowing each other up?
another tidbit on the cost o’ the war
With just the amount of the Iraq budget of 2007, $138 billion, the government could instead have provided Medicaid-level health insurance for all 45 million Americans who are uninsured. What’s more, we could have added 30,000 elementary and secondary schoolteachers and built 400 schools in which they could teach. And we could have provided basic home weatherization for about 1.6 million existing homes, reducing energy consumption in these homes by 30 percent.
But the economic consequences of Iraq run even deeper than the squandered opportunities for vital public investments. Spending on Iraq is also a job killer. Every $1 billion spent on a combination of education, healthcare, energy conservation and infrastructure investments creates between 50 and 100 percent more jobs than the same money going to Iraq. Taking the 2007 Iraq budget of $138 billion, this means that upward of 1 million jobs were lost because the Bush Administration chose the Iraq sinkhole over public investment.
http://www.alternet.org/waroniraq/79988/
The Iraq War Is Killing Our Economy
I hate these kinds of comparisons.
The US is trillions of dollars in debt. A short list of stuff can’t afford:
-A Mideast War
-Universal Health Care
-The Boomer Retirement through SS
-Subsidies to: the poor, the rich, and the farmers
-Special Education (yes, I know that risks getting me flamed - I’m talking about where we spend the kind where we spend thousands on children who are least likely to benefit or return the benefit to society.)
-Questionable, although I hope we can pay for it: public education
We’re flat busted broke. The sooner we accept that the faster we can default and rebuild. The military is not bankrupting us - we were already there.
No No No…Nix Nix Nix…
Direct quote from the burning “shrub”: “He tried to kill my daddy”
Damn historical revisionists.
record profits will continue - there is no oil crisis - these people are in the oil business when they are not on the dole from usa government installed in jobs they do not know how to handle and travelling around the world on tax payer money - just more smoke and mirrors to get the oil companies more profits
New Study: U.S. States Suffer as They Become Biggest Corporate Taxers in the World
Combined with federal tax, corporate income tax in most states is world’s highest
http://www.taxfoundation.org/publications/show/23015.html
This new study breaks the tax down state-by-state, adding each state’s corporate tax rate to the federal corporate tax rate. The results show that 24 states impose, when combined with the federal rate, a higher business tax rate than in any other nation. In fact:
24 states have a combined corporate tax rate higher than top-ranked Japan.
32 states have a combined corporate tax rate higher than third-ranked Germany.
46 states have a combined corporate tax rate higher than fourth-ranked Canada.
All 50 states have a combined corporate tax rate higher than fifth-ranked France.
Ouch.
And then we wonder why companies outsource. The 24 that outrank Japan are in for an adjustment. Florida in particular will get hard hit.
California hasn’t even begun to accept they must cut spending. A $10 to $20Billion cut in anual spending is certainly going to sting. We here know deflation conditions are accelerating.
Got Popcorn?
Neil
NYC has a local corporate income tax, on top of the state corporate income tax. But firms with pull cut deals and don’t have to pay it.
In fact, although NY’s tax take as a share of income is higher than any state other than Alaska, there are so many deals that if you don’t have one, or have fewer than average, you really get hosed.
Those numbers are meaningless unless you also look at the # of deductions. My friend owns a business and writes off most of his income. His effective tax rate is close to zero. Many other US corporations due the same. States and Cities often throw money at companies to create jobs. Rolling back all taxes on these companies would dramatically increase my income taxes. Seeing as AMT is already raping the middle and upper middle class while the effective tax rate on the top 0.1% has been slashed, I think I’ll oppose cutting the corporate tax rate.
From your facts, I propose a new AMT for businesses to get rid of those deductions
The tax rates may need to be adjusted, but the myriad taxpayer subsidies must be demolished, and the loopholes closed. Then adjust rates competitively.
Dollar Overnight Rate Soars; Fed Move Signals Crisis
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3_JhxxF79hw&
Can you start to post recent articles - this is from March 17.
Merely a reminder.
Ahh - the age of the Internet. 4 days old and it’s not recent.
Has nil to do with the internet. In a rapidly changing situation, 4 hours-old news can be ancient history.
Geez……a little slack, please???
Yeah. The market has soared up, then crashed, then soared since then.
Financial crisis is officially over. Haven’t you heard?
Political musings: Clinton is going to win the remainder of the Democratic primaries. She will be behind on delegates but not on popular vote at the convention. The FL and MI delegates (states she “won”) not being seated is actually going to help her. It will make her look like a victim. That, along with her having the lead in the popular vote, and people tiring of Obama and seeing he cannot win in November, will give the superdelegates the cover they need to swing the election to her.
McCain will start out with a big lead, but the Democrats will unify somewhat, and McCain will appear old and befuddled while Clinton will look energetic. The question will be, who can lead us out of recession, and “saving” the money from Iraq will become a hot issue.
Clinton still has a very good chance to be the next president.
lol. The way I see it is by the time the D convention is over, so will be the election, unless they manage to shanghai Al Gore into running.
amazing but I now think the GOP has this election to lose.
It will be the GOP’s to lose, just like the last two were the Dems to lose. I think McCain will have a 15-point lead after the Dem primary. And will lose most if not all of it. It’s just the nature of the election “market.”
BTW, states where (potentially) Clinton beats McCain but McCain beats Obama: Ohio, Kentucky, West Virginia, and possibly Florida, Missouri, and Virginia.
Clinton beats McCain in VA? Are you nuts? Do you forget that Dubya won VA both times he ran? He solidly beat Gore/Kerry by at least 8% of the vote if I remember correctly? Rural VA still outweighs the Northern VA voters.
I’m from rural VA and have been involved in VA politics. I also have a pretty good understanding of demographics and changes in same. Clinton and McCain in VA would be very close. Everything is about change. As recently as 12 years ago Virginia was more conservative than North Carolina or Tennessee. I may be nuts, but like an elephant forget very little.
Virginia is trending Democratic, mostly because of the large NoVa population. (I grew up in NoVa, went to school in Charlottesville, have family all over VA, but haven’t lived there since the early ’90s.)
My own guess is McCain would narrowly beat Clinton in Virginia, while Obama would narrowly beat McCain.
ET - interesting. (Wa-hoowa, BTW.) Not sure I agree, but I will admit that the Obama/Clinton tradeoff in VA is better for Obama than it is in the other states I named. But of the three candidates, HRC is the one who stands to gain the most new supporters, slowly, month-by-month, IMO. Strangely, she is going to be perceived as having the LEAST baggage.
She’s going to have a problem with her lies on trade policy in some of those states.
I’m really getting into working on this election. It’s very interesting.
All the candidates have their various problems. McCain is loaded down with problems - age, health, too-heavy focus on Iraq, lack of understanding of economics, flip-flops on immigration, lukewarm endorsement by his party, etc. I think Clinton is just getting warmed up and can work him over. I say Romney is by far McCain’s best and most strategic choice for VP. Romney has already indicated he would take it. I think he’s the one guy who can help McCain over the top.
Don’t forget the Keating seven and the reported affair with a lobbiest he helped.
Keating five??
None of the candidates exhibit an understanding of economics, judging from the things they’ve been saying. In any case, the US economy will be in a different situation by September, perhaps the candidates will learn something in the meantime & propose a solution or two. But no one predicted what FDR would be like when he took office in March 1934.
I agree completely. I think everybody is growing tired of Hil and Bama lately. They’ve already messed up an easy Dem win in November. Now the GOP probably does have the upper hand.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389×3038941
29th Republican to retire from the House of Representatives this term
The Democratic Congressional Campaign Committee has $38 million in cash. Republican Committee has $5 million in cash. I thought that the Republican party was the party of the rich.
There’s still time for them to HELOC the White House before mailing the keys back at the end of the year…
If the Dem convention is locked, up, how about a dark horse like J. Edwards? He appeared to be the only person other than RP who talked about economic conditions in America. jmho
I was hoping old Owl Gore would run, he always made me laugh! Talks as if he was talking to kindergartens.
“I was hoping old Owl Gore would run, he always made me laugh! Talks as if he was talking to kindergartens.”
Maybe thats all the public is in a mind to accept, jmho
txchick57 nailed it
Has Billary decided which missile secrets she’ll be selling to China to fund her campaign over here?
I hate to say it, but “fire in the belly” and “every dog for themselves” is acceptable guarantees that any secrets will be sold for a price. At of the absolute will to win and everyone for themselves, would you expect anything different?
The key is “do not get caught or have a ready patsy.
I am sorry, however I have become very cynical in my old age!
You’ve got to be kidding.
Anybody with a brain can see that she’s just trying to change the rules everybody agreed to play with re: MI and FL to win. Why she hasn’t been mercilessly mocked by Dems escapes me.
If you want to see a victim card, wait ’til a black man goes to the convention with more delegates AND popular vote, and the Beotch tries to take the nomination from him anyways, which I think she’ll try anyways. The howling this summer will be a continuous source of amusement.
I used to think the GOP nominee didn’t have a chance in hell against either one. McCain has a shot against Obama because he’s already losing white Democrats, if my Dem friends are any indication. If it’s the Beotch, he’s a shoo in. If Obama picks her as VP, he’s screwed.
Check your calendar. Today is March 21. Election Day is November 4.
Exactly. And I’m tired of talking about this election already.
I disagree with your analysis. Take one point - electability. The Dem hierarchy now understands that there are more states HRC can beat McCain in than Obama can beat McCain in, and HRC knows that the Dems know this. (If someone can tell me states that Obama can win from McCain that HRC can’t win, I’d like to hear them.) The purpose of political parties is to win elections, not to keep from offending certain constituent groups.
(If someone can tell me states that Obama can win from McCain that HRC can’t win, I’d like to hear them.)
Virginia and Missouri.
I understand what you’re saying, here, and below, and you have a point. But will that theory still play out if it’s clear Obama has gotten the royal screwing?? I don’t think so.
Not offending certain constituent groups ALWAYS gets top billing in the ole USA.
Blano - one more, then I’ll quit. Elections are about winning states. There are only 8-10 states in play. I’ve named 6 of them. Your analysis that Obama does better than HRC simply doesn’t cut it on a state-by-state analysis of the in-play states.
Is it really that important who wins? I, in my old age, suspects that who ever wins on what ever agenda, will change their agenda, based on the economic circumstances that they were facing. Heck, if Shrub two or three more years, you would be screeming that he is no different than the socialists (democrats)!
It is really important who wins. The Chief Executive can do a great deal (or not, which is still a great deal). I don’t like any of them at the moment.
Political musings: Clinton is going to win the remainder of the Democratic primaries. She will be behind on delegates but not on popular vote at the convention.
(Laugh.)
Don’t look at polling data much, huh?
Obama is a lock for the majority of the remaining states, both delegate-wise and vote-wise (barring catastrophe). His current vote lead is almost certainly insurmountable, even if one throws in a healthy margin of victory for HRC in PA and the in-limbo states of MI and FL.
Why she hasn’t been mercilessly mocked by Dems escapes me.
Believe me, there is plenty of unhappiness and dissension in the Democratic Party about HRC’s actions. She is openly disliked (and mocked) by younger grassroots types. She is well-ensconced among the Old Guard of the Democratic Leadership Council, though, and that power base has makes it difficult to force HRC out or reason with her, despite what the electoral math says.
Obama is a lock for Kentucky, West Virginia, Pennsylvania, Puerto Rico, Indiana? Dream on.
As for polling data, McCain has gone from 15 pts down on Obama to 10 pts up in ONE MONTH.
It’s all about momentum. Obama doesn’t have any. Not saying he won’t win the nomination, only that there is a very plausible scenario for him not winning.
APRIL 2008
* April 22: Pennsylvania (188)
MAY 2008
* May 3: Guam (9)
* May 6: Indiana (84), North Carolina (134)
* May 13: West Virginia (39)
* May 20: Kentucky (60), Oregon (65)
JUNE 2008
* June 3: Montana (24), South Dakota (23)
* June 7: Puerto Rico (63)
I still say, imho, that the next president will be a one term president. With the way this economy is going and with debt and the war, everyone will hate the incoming pres. worst than the Shrub.
I suspect that the good candidates or potiential candidates along with their respective parties pray that they lose this election! Who wants to try to solve America’s insurmountable problems. Why is it that none of the current candidates are talking about the problems and potiential solutions to our ills? Who wants to take the blame for this mess and be tagged as Hoover or Carter?
“Again just mho.
You just explained why the GOP trails in fundraising!
The RNC would be very wise to tell donors to keep their money until 2012. Let the Dems get 2008 - they are running their donors dry for four years that, in the end, a lot of people will just want to forget.
agreed Lost. this is what I have been saying.
“…only that there is a very plausible scenario for him not winning”
“The impossible I can believe…it’s the improbable that I have problems with…” Alfred Whitehead
Oh jeez, this has to drag into June???
I think yesterday’s news about the breach in Obama’s passport records will help to dig him out of the hole the Rev Jeremiah Wright left him in, and garner him some sympathy.
As for Clinton, someone on MSNBC put it beautifully yesterday - ‘with her, you always have to look at the fine print’ - her campaign is all about finessing and technicalities.
Not to say that she won’t ultimately get the nomination, but I think there will be a (figurative) bloodbath if she does - it’ll be a Pyrric victory at best, as she’ll lose all the younger voters along the way.
McCain strikes me as too much of an old curmudgeon - and a bit, how can I say this diplomatically, forgetfull.
Mixing up Sunnii and Shiia not once, but 4 times, in 48 hours isn’t just a ’slip of the tongue’.
Plus - with Bush’s approval rating bumping along in the lower 30’s - why would anybody vote for another 4 years of pretty much the same?
I too find this race very interesting - I’ve never really paid much attention to politics before - but I’m paying attention now.
Back on topic - noticed something wierd in the L.A ZipRealty lists I keep - no new places for the last 4 days!
A few double listings have appeared, but nothing new.
Maybe the whole place is busy preparing thier new listings with increased prices, now that 2008 Spring Bounce Season is upon us.
Not
If I was HCR, I would graciously allow “O” win the nomination, since our economic situation will only get worst along with our various foreign intanglements (read wars).
Since the GOP, imho are BK in ideas that work (de-regulation of the financial system was never a good idea when society serves as a backstop), she could set herself up for a successful presidency, and salvage her husband’s record(read NAFTA).
Again, imho
Paul, I had a reply to your points above that’s seemingly gone AWOL. Hopefully it’ll appear out of the mists.
“The question will be, who can lead us out of recession, and “saving” the money from Iraq will become a hot issue”
Answer to question #1: Housing & the stock market
Answer to question #2: No “savings”…only smaller withdrawals by Pep Boys & VA Hospitals… as Our Nation of “taxpayers” money is spent to repair broken Hummers & 30,000 “damaged” wounded soldiers for the next 15 years.
The real question is: Who will be in the “shadow Gov’t” after shrub & “Dickey Boy” Cheney… saddle up and head to their “Ranch” to munch on their Wagyu beef short ribs while planning their “vacations” to Dubai…musings indeed.
Its a long way to the april/may primaries, but this weeks polls show both obama and hillary holding the same states they held before (and consolidating a little bit). As far as McCain is concerned, he is a good guy but just unlucky. The country is taking a decidedly communist turn. Remember that bush approval rating moves only in concert with gas prices and nothing else. Thats our political IQ.
It seems almost possible that Clinton could win, but the rule against third terms is pretty solid.
Talk about a bad day. She didn’t have a leg to stand on, and then she got her a$$ handed to her:
http://www.foxnews.com/story/0,2933,339270,00.html
And the other guy got a foot up his ass.
Okay - my day is already looking up. *grin*
Greenspan to blame for money mess?
The record of longtime Federal Reserve chairman Alan Greenspan is getting a critical look as his successor Ben S. Bernanke wrestles with problems that began on the Maestro’s watch.
http://www.msnbc.msn.com/id/23738353/
The slide show is pretty good.
Partying Like It’s 1929
http://www.nytimes.com/2008/03/21/opinion/21krugman.html?_r=1&ref=opinion&oref=slogin
Good read - thanks for the link.
“…but mainly by creating a “shadow banking system” that relied on complex financial arrangements to bypass regulations”
O.K., Shadow Gov’t…Shadow Banks…what’s next Shadow Taxpayers?
’shadow banking system’ sounds so very black market, to me.
Government price fixing has never worked. All the market interference we’ve seen over the last several months is aimed at keeping loan asset prices elevated. Until those prices are allowed to fall, the run will continue.
The late unlamented Hoover-era Sec Treasury Andrew Mellon in the early years of the Great Depression advised the road to recovery was to “liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” To which John Maynard Keynes responded, “I do not understand how universal bankruptcy can do any good or bring us nearer to prosperity.”
Come to think of it txchic…you’re coal calling that kettle black…being that you’re really just a: “shadow investor”
I don’t have a profound understanding of what txchick does except that she works in an open, regulated market unlike the hedge funds. It’s not “shadow investing.” Any of us could do what she does, although few or none would likely make any money at it. I know I wouldn’t.
The problem is not the lack of regulation, the problem is the government regulation and provision of a false “safety net”. Without government regulation legalizing the fraud of issuing debt notes that are indistinguishable from deposit notes then the free market would take over and automatically regulate itself.
Fractional Reserve banking regulation is nothing less than price fixing the value of a warehouse receipt, a gold debt, and a gold coin.
All government regulations do nothing but create false confidence in the population that enables the bankers to build ever bigger schemes.
Regulation does nothing but create monopolies and privileged classes. It provides a barrier to entry and prevent innovation.
The vast majority of government “regulations” are designed to fix the problems caused by other government regulations.
“Moody’s started taking comments on its plan to give state and local governments the option to get a so-called global-scale rating, based on the criteria used to assess corporations, for tax-exempt bonds beginning in May. Fitch named Robert Grossman to lead efforts by its public finance unit to explore whether corporate and municipal ratings should be blended. More than a dozen states, cities and public agencies said in a March 4 letter to Moody’s, Fitch and Standard & Poor’s that the current system exaggerates the risk municipal borrowers will default on their debt.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=apn3INgBg5bY&refer=home
Bad timing. Are they aware of the pension and retiree healthcare liabilities of local governments? My generation and those after didn’t run up those bills. We could have much better services and lower taxes if we didn’t pay them back. Why suffer the reverse?
Bad timing. Are they aware of the pension and retiree healthcare liabilities of local governments? My generation and those after didn’t run up those bills. We could have much better services and lower taxes if we didn’t pay them back. Why suffer the reverse?
Just personal experiences here, but there seems to be a collective taboo on the idea that we can’t afford boomer retirement or health care. No one wants to talk about it. Apparently, the money will just appear somehow.
I’m not really surprised that the taboo is embedded in the financial world as well.
I suspect most politicians are looking for ways to spend money thus buy votes. Looking that far ahead to try and head off that problem, isn’t going to do them much good in the near term. Of course when it becomes a crisis, they’ll all have lot’s to say.
Unless voters start demanding that the problem get some attention, the politicians will keep ignoring it, like it doesn’t exist.
I am afraid, imho, that voters want to get out easy, what got us into this crisis in the first place. Tho only way voters will demand change will be when their collective personal situation demands it.
When did it happen that people began to feel they had a god-given right to a 20+ year vacation?
This is a result of the work-’til-sixty-five-then-retire theme left over from the previous century. This theme worked well when people’s lifespans were shorter, but such is no longer the case.
The solution lies in having people work longer - working into their Seventies.
This is not a popular solution but it is a viable one, IMO.
Unforunately, people’s health and unspoken age discrimination often prevent people from working that long. Bring ‘em in when they are young, treat like crud, then can them when they are old and sick to bring in the next round of serfs! It’s the Amerikan Way!
Longevity, productivity, age discrimination are the key factors. No easy solutions here. One of the roles of Social Security was to get the old people out of the labor market altogether so that the “youth” could take the jobs. Worked beyond FDR’s wildest imagination.
I’m thinkin with the new Deal. It’s going to be hard to dispell the new deal.
sorry - “dispell a notion that’s been around that long”
I work for the public works dept of a municipality. The current rating systems really don’t reflect the risk in municipal bonds. Most cities are run very very conservatively and pay their bills on time every time. However, we are forced to buy bond insurance b/c we often get lower ratings, which is a total waste of tax payer money. If cities were corporations most would be rated either AAA or AA.
I realize that cities are different from corporations in terms of a lack of assets and very low cash on hand. However, we do have one sure fire way of rising money - taxes and most people pay their taxes no matter what happens in the economy,
we do have one sure fire way of rising money - taxes and most people pay their taxes no matter what happens in the economy Past performance is no guarantee of the future. That applies to tax levies as well as to investing in the stock market. If a municipality repudiates its debt, are its creditors going to repossess it? Hardly. Debt repudiation by governments has happened.
“My generation and those after didn’t run up those bills. We could have much better services and lower taxes if we didn’t pay them back. Why suffer the reverse?”
Because like everything else the Boomers have done, they’ll get theirs and to hell with anybody coming after them. Those pensions will be paid, at the cost of bankrupting the munis responsible, or the wailing and gnashing of teeth will drown out discussion of anything else.
You know what the definition of a secret is?
It’s a story you tell, one person at a time…
“The stories we tell have a way of taking care of us.”
Kenneth Graham, The Wind in the Willows
(but I don’t think he was talking about secrets or gossip)
Txchick,
Can you elaborate more as to why you see this stock market rally extending all the way into the summer? Yesterday you said that it has to do with technicals and that it looks like 2003. As for 2003, that bottom occurred about 3 years after the top in 2000. The most recent top was less than a year ago.
You seem to have a pretty good feel for this though, so it would interesting to read your take.
Hmmm.
Police: Client kills Wisconsin Realtor
The dudes name is James A. Hole ?!!!!!! Oh you’ve just GOT to be kidding me. Again, life trumps fiction because you just cant make this stuff up.
Not safe in either Oakland.
he kills a 71 year old woman brutally
do they have the dp in wisconsin? if so i will flip the switch
No! And I am opposed to the death penalty. (Also opposed to abortion.)
Stories like this scream out for it though.
Pro DP here!
Anyone notice any problems with RealtyTrac? I haven’t been able to get foreclosure listings. for Suffolk County NY, more current than the end of February, for the last week.
“James A. Hole”
Fitting name for the suspect.
Yep, and they should hook me up to it and pull the switch.
LOL. No wonder he was deranged. Cruel parents.
“Anyone notice any problems with RealtyTrac?
Not here. I have been on there every day tracking a couple areas here on the West Coast.No problems when I have been there.
This is for Txchick…since she adds so much here. AIA award winning housing designs for 2008. Photos included.
http://www.latimes.com/features/home/la-hm-aiaawards_20mar-pg,0,5373089.photogallery
Geez…I can just imagine Dean Martin walking down the hall singing and carrying a martini…some of those look like a throw back to the ’50s
My favorite out of all the winning designs is the Wildcat Ridge Residence.
Way OT…. Lunatic Asylum… Can’t call a spade a spade anymore.
http://hosted.ap.org/dynamic/stories/L/LUNATIC_ASYLUM?SITE=FLTAM&SECTION=US
“I am, frankly, considerably concerned when I see the extent to which we are developing a one-party press in a two-party country.”
Adlai E. Stevenson, Jr.
Just want to know, where do you find these quotes?
Many of them come from a book of his complete speeches of the presidential campaign of 1952, that I have.
Good for you,
we need someone who will research the records of the past, to provide perspective!
http://www.brokeruniverse.com/grapevine/thread/?thread=509015
Can you believe this CRAP?????!!! I really didn’t need this right now in this market!!!!
I’ve been working with this young first time home buyer couple for the last 3 months. I’ve answered every email, text message, and phone call promplty no matter where I am since Christmas. I have sent them over 25 GFE’s over this period of time for every single property that they were interested in putting a contract on. I have over 100 emails archived from them during the last 3 months; informing them about every aspect of mortgage financing….
This is great rant!
More good stuff from Ron Pebbles at Prudent Bear - The (high) definition of sacrifice
Still, maybe the February retail sales numbers are as much an aberration as a 10-year Hollywood marriage. Maybe. But there is key evidence that consumers are weaker than even the retail numbers suggest. The evidence lies in a statistic so grim that even Larry Kudlow breathing nitrous oxide in a dental chair couldn’t spin it in a positive light:
Americans are buying fewer big, big screen TVs.
Question for you bankers and bank experts.
What happens to the collateral (a lot of it poor collateral) that the banks and the investment banks have been giving the Fed in order to borrow from the Fed? I know that the loans are only short-term, so does the collateral go back to the banks or do they simply roll over the loan into another short-term loan? Do both parties hope that the collateral will improve or be better than expected, so is this just to buy them time? What happens if the value of the collateral remains bad and gets worse, does the Fed just hold onto it forever? In this last case, what impact does this have on the Fed and the country?
Thanks.
Some of the most brilliant economists in the country are mulling these same questions.
The Federal Reserve can continue to ‘roll over’ the loans, this is de facto nationalization of the banks.
Some of the debt will be good, but Mr. Buffett is not buying any.
Nobody knows what happens when the debt goes bad. Flip a coin.
For a partial list of people that argue these and other questions and maintain blogs on the subject:
Mr. Martin Wolf
Mr. Dani Rodrik
Mr. Greg Mankiw
Mr. Andrew Leigh (australia)
Mr. Brad Delong
Mr. Brad Setser
Mr. Paul Kedrosky
Mr. Robert Reich
There are over 50 blogs from World economists discussing these questions. Some are pro Federal Reserve actions, some are anti Federal reserve actions. They are for the most part well thought out.
Thanks. I’ll read some of their blogs.
Hoz, what do you think will happen? I’ve read your posts and your insights seem to be right on.
“‘roll over’ the loans”
The natural incentive is to require repayment of the loans, but to keep making more and bigger loans down the road as needed to save the economy from a disaster which so far is mainly visible only to the Fed and a few others in high and mighty places (e.g., the kind of folks who read pink newspapers and such). Unless economic growth occurs in direct proportion to the amount of printing required to fund those later, bigger loans, the result is a dilution and spreading of loss over current holders of U.S. dollars. Eventually enough printing has occurred to keep MegaBank, Inc. in the green at the expense of dollar savers (e.g., elderly folks on fixed-income pensions or with bank savings and CDs). Luckily since not many Americans are savers, not many American households are hurt (other than those on fixed-income pensions or with other quaint and outdated savings plans).
Please let me know if this non-expert opinion seems way off base and why.
“Some of the debt will be good, but Mr. Buffett is not buying any.”
They won’t give it away for free, and he and other shrewd financiers with deep pockets and endless patience won’t overpay. So there is obviously a market failure here requiring govt (aka other-people’s-money-funded) intervention, right?
They will be rolled for as long as the banks want to keep the loans. I don’t know if there are maintenance margin requirements but if there were it would somewhat defeat the Feds purpose. Both parties will simply play “make believe” with the collateral value as it’s in their respective interests.
The loans will be repaid when third-parties have the confidence to lend the IBs and CBs money. The Fed loans replace debt that is being called, or not rolled, by the private sector.
I heard something interesting this morning…
That the drop in oil/gold was NOT because of disappointment in the Fed’s actions, but instead because of tightening margin requirements on investors (some of whom were levered investors in Gold/Oil).
Anyone else hear this?
That was part of it, prices also rose to unsustainable levels.
I doubt it, but if equities were falling (they were rising) that could have triggered cash demands on hedge funds invested in commodities. Commodities (including oil), gold, and FX get way ahead of themselves as hedge funds jump in based on correlation studies and momentum. This fund buying sends the price way above what’s justified by the fundamentals. A few funds then cash out and then the others follow sending prices down dramatically in a short period of time. This happened in Spring 2006. I expect oil, gold, foreign currencies, and commodities to fall somewhat more and present good buying opportunities as the price will be below the long-term trendline. To keep things in perspective, below are January 1, 2007 prices compared to prices today, 15 months later:
…….1/1/07…today
DJAIG…160…..197
DBA……25…….36
Oil…….60……100
Gold….635…..920
$Indx…..83……73
The supply and demand balance, or imbalance, for the above has not changed much.
Margin requirements were recently raised on PM futures.
Counter-Party Problems
SCA is a publicly traded company that had written credit default swaps (CDS) on the “AAA” tranches of collateralized debt obligations (CDO). The December, 2007 financial statement shows that SCA had issued $60.0 billion in CDSs and had, in its opinion, $2.7 billion in marketable, financial assets. A few weeks ago SCA repudiated its CDS obligation on a $3.1 billion AAA tranche of a CDO issued by Merrill Lynch. SCA claimed that Merrill violated the CDS agreement through assignment of control (control of the loan servicer, re: loan modifications and REO disposition) to unidentified third parties. Prior to its repudiation, SCA had established a loss reserve of $0.6 billion for this AAA-rated $3.1 billion CDO. Yesterday, Merrill sued in Federal court for a declaratory judgment that would negate SCA’s repudiation of the CDS.
In May, 2007 SCA’s stock traded at $34.00 per share; yesterday the stock closed at $0.66 per share (loss of 98%). I expect that SCA will file for bankruptcy and that the beneficaries of the CDSs written by SCA will not be made whole on current and future losses. By the way, a 20% loss for a AAA tranche indicates a 40% overall loss on the underlying loans. Losses that high indicate to me that there were a lot of 2nd mortgage loans and fraudulent 1st mortgage loans (big cash-back transactions) in the CDO pool
This sort of crap is where a lot of the thin-air money was generated and from where it will disappear.
Yuan Heads for Biggest Weekly Advance in a Month on Inflation
http://www.bloomberg.com/apps/news?pid=20601087&sid=aS.e5L6KJgNw&refer=home
More pressure on the dollar. China sees the only way to truly reign in inflation is to let that yuan rise. Commodities will be going down with the dollar too.
I say let J.Mcain win the presidential election! A stake has to be driven into RR. The GOP have basically run our country into the ground since 1980, so let them finish the job, and destroy America as soon as possible, so we can start rebuilding our country and kill off forever, the stupidity of unregulated financial institutions.
When I heard about RR’s plans about de-regulation (It started with Carter’s deregulation of the Airline industry and RR’s firing of air traffic controllers) while I was taking college economics courses in the 80’s, an the instructor could not make any sense of it, I knew we were in for a significant collapse.
I suspect I was not the only one! Our problems have finally caught up to us. Oh well, our past indiscretions were going to have to paid sometime. What better time than now?
Does anyone remember David Stockwell? Just checking our memory!
imho, our problems go back a long way, however, I think the sharpest departure was under RR, “Good Morning America”. Some go back to JFK or Ike. Pick your start poinof our decline. I think its important that our current problem did not start 8 years ago, the correction could have started anytime in the last 50+ years, but every politican/president “kicked the can down the road”, because no one wanted to be a “J.Carter”.
OptionsXpress for beginners (accounts held at JP Morgan); start (if at all) small and with caution, no margin.
Tradestation for high rollers (alot of monthly fees).
[How do you end up with $2 million on Wall Street? Start with $10 million].
Ironically, people who carry debt may actually be better savers than people without debt….
some convoluted logic used here..it tries to make a point that debtors save more than others who are not in debt. But if you are a good saver then you would not be in debt to begin with…but interesting read none the less
Hmmm, actually, that kind of makes sense in some ways. I do a lot of things to trick myself into saving and one thing I do is charge things on my CC instead of using my savings. Then, I feel enormous pressure to pay off my CC before the end of the month, so I put more energy into paying off the CC. I wouldn’t feel quite the same pressure to pay back my savings right away. doesn’t make sense, but works for me.
(I never carry a balance)
I hope you are not looking for a light at the end of the tunnel. I would attempt to get out of the way. Hope for a glancing blow to your personal and financial situation. Like “life”, no one and I mean no one will pass through this unscathed.
imho.
Something completely off-topic for you New Yawkers out there.
A blog written by a New York bouncer of incredible wit, talent and insight.
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Breaking News (few hours old)…
S&P has put Goldchain and Lehman on credit watch (a step before credit rating down grade?). This could be big market moving news. We shall find out on Sunday evening when the futures start trading.
I guess the cockroach theory is proven once again.
Jas
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http://www.reuters.com/article/pressReleasesMolt/idUSN2146670420080321
Goldman, Lehman outlooks cut to “negative” by S&P
Fri Mar 21, 2008 1:09pm EDT
By Jonathan Stempel
NEW YORK (Reuters) - Goldman Sachs Group Inc’s and Lehman Brothers Holdings Inc’s credit rating outlooks were cut on Friday by Standard & Poor’s, which said volatile markets could result in lower profit and revenue.
S&P revised its outlook to “negative” from “stable” on Goldman’s “AA-minus” and Lehman’s “A-plus” long-term credit ratings, suggesting a possible downgrade in one to two years.
The ratings are S&P’s fourth- and fifth-highest investment grades, respectively. Lower credit ratings can result in higher borrowing costs.
Goldman is the largest Wall Street investment bank by market value, and Lehman is the fourth-largest. Goldman did not immediately return calls seeking comment. Lehman spokeswoman Kerrie Cohen declined to comment.
Banks have suffered from lower earnings and share prices as the housing crisis, a slowing economy and worries about credit quality led investors to stop buying a wide range of riskier securities. This has cut into revenue from trading, arranging debt offerings, and advising on mergers.
Several banks have also been cutting jobs, and Bear Stearns Cos agreed last Sunday to a $2-per-share buyout by JPMorgan Chase & Co after a cash crisis.
S&P still has a negative outlook on Merrill Lynch & Co’s “A-plus” credit rating, and expects to decide within 30 days whether to downgrade Morgan Stanley’s “AA-minus” rating. The credit rating agency said net revenue in the industry may decline 20 percent to 30 percent this year.
“Market volatility and the possibility of further weakening of economic activity may result in a more substantial fall in revenues,” possibly resulting in one-notch downgrades, said Paul Coughlin, S&P’s head of corporate and government ratings, on a conference call.
…
LOL
At this point in time it is hard to have any faith in S&P. Upgrades or downgrades. Would you rather have moneys invested in Ambac or GS?
Every investing house is doing its own research and homework - now!
The homework is now in the hands of the Fiscal Authorities. I am of the opinion that monetary policy is failing. This failure comes with the admission that the liquidity trap has sprung (note 3 month Tbill this week).
We might get an “unprecedented” end of the bloodbath paint-the-quarter move up in the broad based indicies by the big guns so as to help the sheeple digest the losses, but the fundamentals are poor going forward.
very poor indeed. I am having trouble convincing myself that its time to sell, again…but Im hearing ya Hoz.
Voz old friend and amigo,
The Treasuries were liquidation of risky positions by Bear Stearns new management. The blood bath is far from over, the stock market may have a dead cat bounce for 2 months or so. But as you point out, “the fundamentals are poor…”
OK, this is pretty off topic, but it’s the bits bucket!
Since January, I have been trying to find mutual funds that look good for long term growth, because I want to keep a little bit of retirement money in the market. Indexed/ETF funds don’t seem very ideal to me when the market is so volatile. I want to wait a couple of years.
Alternative energy already seems pretty hyped up, but I did find a water infrastructure fund:
http://www.vengrowth.com/criterion_pressDetails.asp?id=591
They have currency hedged options, which is new to me. I am not sure if there is an American version, but I believe it is based out of Switzerland and the UK. Anyway, I think it looks pretty good for a long term bet, but I thought I would throw it out here first. Anyone heard anything good or bad about Pictet Asset Management, Criterion or Vengrowth?
(I swear I have nothing to gain by promoting the fund, and I am not currently invested in any of their products.)
“…Pictet Asset Management is delighted to have won the Emerging Market Equities Award at Global Investor’s annual dinner in June 2007 in London.
Picked by a panel of independent judges from a shortlist of nominations offered by the industry, the Awards recognise performance, rigorous investment processes and commitment to transparency and best practise.
The panel felt that “Pictet had been highly strategic in establishing footholds in new markets and expanding its emerging market equity product range.”
Pictet Asset Management was also nominated in the same category in 2005….”
’nuff said
Thanks, Hoz!
I am searching aroud town for a financial planner. Wish I lived near you
(reply - continued - options, options on futures)
Some of the big players (large specs >100 contracts) will buy calls or futures and take delivery (’stand for delivery’) of the underlying. A small spec (trading
Here is some delicious cud for the WS bulls to chew on over this long holiday weekend:
March 21, 2008 4:00 P.M.ET
BULLETIN
S&P cuts outlook on brokers
Standard & Poor’s gives negative outlook on Goldman Sachs, Lehman Brothers, saying revenue could fall 20%-30% this year.
But what’s their projection for the end-of-season fat-ass broker bonuses?
Dare I hope that upcoming Wall Street bonuses reflect the dismal reality that Wall Street hath wrought?
A sure sign that the stock market has further to fall, Jim Cramer has called the bottom.
Here is one of his pearls of wisdom:
“With the systemic risk taken off the table, you can even see a possible end to the housing crisis that got us into this soup. Mortgage rates are at last leveling off, because the federal government has begun to cooperate with Fannie Mae, rather than choke it to death because it leans Democratic at times. The bulk of the most crippling mortgage resets, the so-called 2 and 28 loans, is going to be done in the next six months. And given the big decline in the number of homes being built, oversupply won’t be the issue it was before the credit crisis started. I don’t know a soul who’s predicting an immediate end to the national decline in home prices. But I think that the upticks in the stock market, particularly in banks and home builders, are foretelling the truth: The worst will soon be over.”
Do not use Mr. Jim Cramer’s name in vain.
Every once in a while he is correct. Just like ‘Casey’ was correct about gold. The American public believe Mr. Cramer is telling the truth, we need a shill like Mr. Cramer. Who else is going to pump the stocks up for dumping? Nightly Business Report, I don’t think so.
There have been upticks in the homebuilder stocks for over a year. The problem is that the downticks always were of greater magnitude. Hard to call a bottom using that logic.
There are a couple of videos on YouTube with Cramer calling a bottom for homebuilders in November, 2006. I know the guy is more of an entertainer than anything else, but it is incredible to me that he is quoted as if he is a successful stock picker.
The URL in question:
http://nymag.com/news/businessfinance/bottomline/45299/
Kitco, Monex, CNI Numismatics all out of physical silver.
From Jason Hommel’s Silver Report:
Three more major silver dealers are reported to be out of silver today: The U.S. Mint, Kitco, and Monex. This, on top of the major dealers yesterday, Amark, Perth Mint, CNI Numismatics, and APMEX, all reported sold out. Further, nearly all of Canada is reported to be out of silver, from Vancouver to Toronto.
This is unprecedented, and is a perfect case of market manipulation in the paper market at COMEX and other futures exchanges to see silver prices continue to drop down to below $17/oz. today. Paper promises can be created endlessly, but real silver cannot.
This is NOT a case of the dealers getting spooked, and selling out to the refiners just in time, at peak prices. This is a case of the public buying up the stock at coin shops across the world ever since gold hit $1000/oz.. That event finally sparked a little of the public’s buying of silver and gold. Thus, the typical coin shop flow of silver to the refiners just stopped in the last few weeks, and especially the last two days.
“This is NOT a case of the public creating a top with ‘everyone’ in silver, because nobody’s in silver yet. In 2006, only $1 billion was spent on investment silver, which is 0.007% of the $13.5 trillion of money in the banks. As I have long reported, the silver market is so small, there is no room for new investor demand, not even 0.1% of money could be spent on silver, because that would be $13 billion, which would push silver prices to $200/oz., and we are seeing only the tiniest beginnings of that. “
This is why industry was against the Silver ETF. Industry does not want to pay more for silver with investors competing for supply.
I own PAAS a silver miner. I think the dollar will trend lower for some time. The FED is replacing lost dollars with new loans that may or maynot get paid back in full. When we can create silver and gold that easy then I will stop investing in companies that mine the stuff. Sure was easier to create dollars by selling pieces of mortgages and turning the pieces in AAA paper. Thats dollar mining the Goldman Sachs way, hows that working out anyway?
Maybe when I retire instead of SS money I will get a house in Queen Creek AZ Hahaha