Bits Bucket And Craigslist Finds For April 2, 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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How Not to Save Housing
http://www.realclearpolitics.com/articles/2008/04/how_not_to_save_housing.html
Whatever the objective merits of the “do nothing - let the market clear” approach espoused in the article, Pandora’s box has already been opened.
Now that bailout plans are out there, the political pressure to adopt one or other of them is likely to become irresistable in an election year.
Samuelson et al should be looking for a least worst plan and supporting it. Sad to say, at this point maintaining an ideologically pure opposition to ANY bailout is akin to Quixote tilting at windmills.
Well, I spec no matter what “they” do, it won’t have much effect and the market will end up sorting it out anyway.
it won’t have much effect on the collapse of the housing bubble, but will cause collateral damage.
That’s damn right. The housing bubble will continue to collapse no matter what.
The question is: How much money and resources will be diverted to it instead of real productive efforts along the way?
I think that is the point that everyone has to keep in mind. I am against any kind of assistance for either individuals or institutions because I don’t think it is good policy. However, in the end the laws of supply and demand can not be repealed, even by the United States Government. Prices will fall back in line with incomes, the only thing in question is how long it will take.
I, for one, am not so much ideologically against government attempts to stabilize the market, as I am against attempts to stabilize it at an unsupportable level. As every one here is aware, we’re nowhere close to bottom, current prices are simply not supportable on current incomes. Intervention is warranted when the combination of low prices and tight credit mean that even “prudent” people can’t buy their own homes, but must instead rent from those with the resources to become landlords. Wall Street whining notwitstanding, we’re nowhere close yet. Intervention too early is just a waste of money and effort.
It seems like your suggesting that it is an appropriate role for the government to put a floor under the price of housing, as long as that floor is a “supportable” level. I don’t think that governments should be in the business of determining what housing prices are (or for that matter the price of anything else). These kinds of policies take money from those who have been responsible during this mania and subsidize the behavior of those who bought properties they can’t afford.
Not so much to determine a minimum price level, but rather a minimum level of credit availability. Look the minimum price level is to some extant determined by the rental market. Prices won’t stay below a price where those with access to money (or credit) can profitabily buy and rent-for-profit on a cashflow basis. The housing is out there, and except in extreeme cases, (think rust belt like Detroit, bubble belt like the IE and Miami, and small agricultural towns) somebody will be living there. The question is: will they be owners or renters? There will always be a mixture, but I would argue that there IS a public interest in ensuring that credit is available for those who choose to own.
Current price/rent ratios are purly speculative, and make NO rational sense. That prices will continue to fall (at least in real terms, compared to incomes) is a foregone conclusion. Trying to stop them is futile. But what we don’t want is a situation where only the wealthy can afford (have access to credit) to buy and everyone else if forced to rent from them. And trying to stop that is a worthwhile exercise.
I agree that price/rent ratios are speculative and irrational. I think where we part ways is that government has a role in insuring that credit is available to those who want to own. This has been part of government policy for quite some time and in my estimation contributed to this mania. The private markets will always provide credit to those who they believe they can lend to profitably. For those in lower income brackets there will always be someone who is willing to lend to them, albeit at a much greater cost.
I actually DON’T think that government intervention into the mortgage market contributed much to this event. The GSEs were around LONG before this particular crisis, and the 417k conforming limit means that they didn’t add much to the bubble in CA. Additionally the dumbest (stated income, negative ammortization etc) loans were securitized in the private MBS market, not the GSE market. And why SHOULD the poor (as opposed to the imprudent) pay higher rates? Even if you only make 35k/yr, if you’ve got good credit and have managed to save up a 16k downpayment, you should be able to get a prime loan for an 80k condo. OTOH, if you make 120k but are still living paycheck to paycheck with 30k in debt you’re subprime in my book.
It wouldn’t bother ME to see the return of real 20% downpayments, I had one in 1999 and I don’t see why other’s can’t. Again, the government shouldn’t be supporting prices, but a minimum of credit availbility. While prices have a “natural” bottom driven by the rental rate of return, credit availability does not. The GSE have historicly done a good job of supporting a minimum level of credit availability. If Congress gets them to loosen their requirements now, they will be unable to continue supporting sane lending when that, too is under threat.
seems like a better role for government would be in outlawing credit schemes that disengage the creditors from risk. if you have an entity making credit artificially available, whether that entity is public - through market controls, or private - through market subterfuge, all that happens is that the price of the assets go up.
so, maybe the poor can more afford to finance a house, but they can less afford to buy a house. i’d rather have expensive credit and cheap assets.
the fight over public v. private is irrelevant. there are equally wide paths to the same disaster in either sector.
Where will the monies for whatever bailout plan(s) are adopted come from? Will people who did not buy homes they cannot afford be asked to compensate those who did? Because the vast majority (I am guessing 95%+) of U.S. wealth lies in the hands of homeowners.
Luckily, that is a self correcting statistic, to a certain extent.
I cant remember the last time my government “asked” me to do anything in a scenario in which it was prepared to accept my answer, regardless of what that answer might be.
Fiscal bailouts - who knows, who cares.
How about the $30 billion guarantee (aka $25 billion guaranteed Federal Reserve Loss), the $200 billion in treasuries exchanged for near worthless MBS (Another $150 Billion in losses or so to the Federal Reserve), and the countless billions in reduced losses to banks and investment banks through below market interest rates (defined as what interest rates would be right now and in the past year plus w/o any interference by the federal reserve)
These don’t count as money thrown down the housing hole? You’re saying only an act of congress counts as a bailout?
The bailout now in the news is a fabricated event. The PTB created the problem, and now the hoi polloi is screaming “save us.” The financial elite created the problem, and now, they are creating the solution — and by the way, will be taking away money from the middle class and creating a slave society. The only problem is that ppl are beginning to open their eyes to this conspiracy and you are seeing the first stages of citizen unrest in the form of striking truckers. Well folks, load up your pantries, buy gold, guns and ammo, and plant a garden. This will not end pleasantly.
I’ve been in the wilderness… building a tree house for Mr. Cole
Seems like K street & Wall street will be competing for U-Haul’s come this Nov…
Where’s the Lone Ranger and his “Silver Bullets”
Re: “The Bailout Theory of Redemption”
Remember? (And as Prof Bear noted: include & add with that 34% group… those tax paying US of A renters!)
“Federal aid ‘would come at a cost,’ said Douglas Duncan, chief economist at the Mortgage Bankers Association. ‘It has to be paid for and the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?’”
&
“A lot of activities within the private sector, hedge funds, private equity — we are not sure where it’s going and what it’s doing,” said Andrew Crockett, the former head of the forum for central banks - the Bank for International Settlements - and now president of JP Morgan Chase International.”
the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?’”
Oh, they know the answer to this question already. The REAl question is how they will hoodwink those 34% into doing it whether the 34% wants it or not.
It’s not only the 34%, but what about all those who have a reasonable debt load, and don’t want to pay for someone else’s unreasonable borrowings.
A lot of folks around the water cooler here don’t want a bailout since they would pay for it (and they have mortgages).
“the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?’”
Oh, they know the answer to this question already. The REAl question is how they will hoodwink those 34% into doing it whether the 34% wants it or not.”
I quit my job, and have no income except from investments. I’ll sit this one out, you guys have at it. I won’t earn income to feed this Frankenstate until it returns to normal. And if it never returns to normal, so be it.
DP
I thought the vast majority of wealth was owned by the top 1 percent, that they own more than the bottom 99 combined. A plutocracy.
“I thought the vast majority of wealth was owned by the top 1 percent, that they own more than the bottom 99 combined. A plutocracy.”
You might look at the religious denomination of those wealth holders. However, don’t look to the U.S. Census Bureau though because this same group has successfully petitioned to have themselves removed as a ranking cohort.
overwhelmingly white men.
“overwhelmingly white men.”
Agreed, but you use a very wide brush. Now show me that you have some nutz, MFH, and tell me what your heart really knows.
Yes, that is the plan. If you are a saver (and, even worse, a non-Bubble Believer), you will be made to pay in some fashion. Hand-outs to home-moaners, high inflation, etc. That’s the goal - make everyone spend and play the game.
Wouldn’t that be debt, not wealth?
The “housing crisis” that Clinton and Obama are tripping over themselves to “fix” is the wrong crisis.. There’s no crisis now, just an unwinding of the real housing crisis that was allowed to flourish between 98/99 to 2005/06… that was the crisis Hilary girl and Barrack boy, so back off and let the free market kill that crisis dead once and for all..
For those of you Texans out there the Corpus Christi Caller Times has a new feature called “Neighborhood Navigator”. It details quarterly sales in a selected zip code or neighborhood. I found it very useful and enlightening. As a matter of fact it showed me that Q4 sales in Corpus Christi (78418) and Round Rock(78664) had both gone down by over 75% from the previous quarter and median/average prices had gone down over 10%.
I also found that the number of listings on Padre Island (North Padre but still alot of beachfront/canal properties) had jumped from approx. 600 properties last fall to 1145 as of yesterday. I knew that as soon as all those realtors from Austin/Dallas/San Antonio started to show up in Corpus that the end was nigh. Add the 3% Nueces county property tax and $2000 insurance to the mix and you have a recipe for a disaster.
http://homes.caller.com/onboard.cfm?state=tx&datatype=4
I was in Port Aransas 1.5 years ago and was shocked to see a house for sale with a list price $800k. It wasn’t even beach front.
I noticed that some brand new townhomes on 11th street are still for sale at $200k. I imagine they should be going back to the bank soon. They would be nice at $80k.
Great thread. No wandering off into politics or other personal peeves. Great exchanges. I wish I were capable of adding to the value of these posts; since I’m not, it’s great just to be able to read them.
April 2 (Bloomberg) — The International Monetary Fund cut its forecast for global growth this year and said there’s a 25 percent chance of a world recession, citing the worst financial crisis in the U.S. since the Great Depression.
The world economy will expand 3.7 percent in 2008, the slowest pace since 2002, according to a document obtained by Bloomberg News at a meeting of Southeast Asian deputy finance ministers and central bankers in Da Nang, Vietnam. In January the fund projected growth of 4.1 percent.
The reduction is the third by the Washington-based lender since last July, when it predicted the world economy would cope with the U.S. credit squeeze and grow 5.2 percent this year. Central banks will need to conduct policy “as flexibly” as the circumstances warrant, the statement said, adding that the European Central Bank has room to lower borrowing costs.
“The financial shock that originated in the U.S. subprime mortgage market in August 2007 has spread quickly, and in unanticipated ways, to inflict extensive damage on markets and institutions at the core of the financial system,” the statement said. “The global expansion is losing momentum in the face of what has become the largest financial crisis in the United States since the Great Depression.”
“The International Monetary Fund cut its forecast for global growth this year and said there’s a 25 percent chance of a world recession, citing the worst financial crisis in the U.S. since the Great Depression.”
That’s not what the stock market, or CNBC, is telling me. They keep screaming, “the credit crunch is over. The bottom is in.” Could the shills really be wrong?
Yeah, they were really in high gear on Kudlow last night. The worst is behind us. Party on!!
I think all will be good until election time. All the incumbents want to get re-elected, so they do whatever is necessary to keep the party going. They’ll be throwing tax payer $$ at the problem with a big shovel. Once the election is over we’ll be more broke than before, watch out below.
Its amazing that with UBS’s 19 Billion write down that the street is now confidant that we understand the extent of exposure of the banks to sub prime problems.
I’m not so confident or anguine. I think we’ll see more write downs this quarter that are specifically sub prime related. I wonder when the other CDO chickens are coming home to roost. Thse that ae backed with cedit card debt etc?
Does anybody see an economic upside on the horizon? Where is the next burt of economic growth going to come from? Are we more or less like to see a hedge fund leveraged to the hilt all of a sudden do a whoopsy a la LTC?
Permit me to be skeptical about the end of economic gloom.
Martin
Does anybody see an economic upside on the horizon? Not if the financial world continues on its present course, to socialize losses & privatize gains at all costs & to the exclusion of any substantial nonfinancial gains. Resources need to be re-allocated. There are plenty of projects that need funding & promise to give real returns to the population at large.
It’s a confusing time when the ability to get credit that was needed to prevent insolvency because of a severe credit crisis is read as a signal that the credit crisis is over. I can understand if the market had already priced in that such entitites would not find short term credit relief and would fold, but it hadnt from my perspective. The one thing that is clear is that it is foolish to listen ppl who did not recognize the a bubble existed before it burst tell us where the bottom is.
OK, UBS expects to lose $19 billion on subprime home loans (1st and 2nd mortgages). Now, what will it lose on Alt-A and Prime I/Os and Option Pays, commercial RE loans, consumer loans, corporate junk bonds, and private LBO debt?
Franc-ly,
They are so screwed…
Re UBS’s current 19billion dollar write down: UBS is a primary dealer for the New York Federal Reserve Bank and is entitled to mosey up to the new credit window and unload their junk.
Just wondering about this. They give in a bunch of MBS of questionable value for a bunch of treasuries.
Now, the treasuries are of questionable value as well since the only way this thing works out is with high inflation.
Or else there is massive deflation then the treasuries are OK and the MBS are toast.
Not sure how all this works out.
Spike - do you know if the Swiss have any kind of window that US institutions can mosey up to for a little help? The other way to ask is, how does a foreign-owned entity or subsidiary get such access to US-taxpayer-backed funds? Or do our error-makers have equal access to other central banks, esp. in Europe?
Chip,
UBS has an ugly history with the NYFed. If you remember the 762 million in US banknotes found in Saddam’s hideouts in 2003?? Turns out it was USB moneylaundering for Saddam, obviously in violation of its agreement with the NYFed. And in 2005, some 3+ billion US banknotes deposited in Cuba and Iran, again in violation of US trade sanctions, again courtesy of UBS. NYFed fined them 100million.
The Swiss are not giving anything away, as far as I know.
More details here, but google ubs ny fed reserve, and lots of articles turn up.
http://www2.nysun.com/article/21250
Spike - thanks. I’m not shocked, except that no one ever calls on them to step up to the plate. Neutrality is well and good, but I think they use it at scam levels. “Nope, can’t contribute to that … we’re neutral! Here, have a chocolate. That’ll be five francs. Please leave by dusk, unless you’re staying in one of our nice hotels.”
“…citing the worst financial crisis in the U.S. since the Great Depression.
The world economy will expand 3.7 percent in 2008, the slowest pace since 2002,…”
We are lucky to live in a world whose economy can grow at a 3.7 pct rate in the worst of times.
Think of the world economy as a cancer that grows for growths sake instead of growing to meet real needs. Also consider that they use artificially low inflation numbers when calculating “growth” of the world economy so in reality it is stagnant or shrinking.
“Growth for the sake of growth is the ideology of the cancer cell.”
- Edward Abbey
Does it matter if the growth is in the large intestine or the brain?
Programmed cell death is a normal phenomenon that promotes development of the organism as a whole. That’s why we have fingers instead of fins (most of us, anyway). The loss of bad investments born by the investors is analogous to this phenomenon.
I wonder what Ed would think if he knew he were being quoted on a blog dealing with out of control banks/consumers? He often lived for weeks at a time in the wilderness, sleeping out in the open. He was the champion of simplicity and freedom.
“Think of the world economy as a cancer that grows for growths sake instead of growing to meet real needs.”
Thanks for the uplifting metaphor.
Is this inflation adjusted, if not I view this as a contraction.
PB,
can’t a “financial crisis” and economic growth coexist? why does one have to relate to the other?
Irony In Wall Street…
http://www.townhall.com/columnists/ThomasSowell/2008/04/01/irony_in_wall_street
Thomas Sowell baffles me because he is extremely smart and well informed, yet he persistently favors his agenda over the facts. Saying what the Fed did with Bear Stearns and JP Morgan sets a precident ignores the fact that this same kind of thing was done for LTC when they flamed out back in the late 1980s. The precident has been in place for more than twenty years, but suddenly now it becomes an issue? Wrong! The lesson then as now is that it is far more reasonable and cheaper to prevent flameouts with market regulations than it is to try to fix things after the inevitable blowout that fast and loose operations cause.
“ignores the fact that this same kind of thing was done for LTC when they flamed out back in the late 1980s.”
I believe you are wrong. The LTCM bailout was paid for by a group of banks, at the behest of the Fed. Bear Stearns refused to pony up (coincidental?). This bailout came straight with money from the Fed. That is the precedent.
The LTCM situation played out in 1998 (not the 1980s). Are you guys talking about the same event. (As long as Mole Man is gracing us with his font of knowledge, perhaps he could furnish a reference…)
Thomas Sowell is bright, but clueless. He has no issue with outsourcing tech jobs. When I confronted him about what it did to our family, he said I was wrong (via email) and mailed me an autographed book.
“no issue with outsourcing tech jobs” = Chicago school economic religion
I know people in DFW that financed an attempt to outsource Chicago schools
(off hours tutoring via computer from India)
that’s pretty ironic. I’ll bet the people who did that would be outraged if their little Snotleigh were to be “educated” that way rather than at Hockaday
BTW, what issue do you have with outsourcing tech jobs? Do you prefer to pay more monies than necessary for equivalent work?
outsourcing tech jobs — When Henry Ford started paying his workers $5 a day, he was criticized for over-paying unskilled workers. He could have gotten by paying less than $5, at least for a while. However, he realized he also needed customers with enough wealth to buy his products.
Minimizing wages at any cost for equivalent work has its drawbacks, as a few of us are realizing. necessary is an ambiguous term.
The Henry Ford story confounds quality with price. Outsourcing at a lower price in exchange for a decline in quality is different than outsourcing for the same quality of work at a lower price. Call me unpatriotic, but I have driven Japanese automobiles since 1980, and have rarely gone to the mechanic’s other than for routine maintenance.
P.S. I am also compelled to note that Japanese automotive manufacturers have outsourced some of their operations to the U.S.
Ignoring the fact that you are removing well paying jobs that contribute heavily to the US economy, outsourcing tech jobs (or any jobs) is a terrible idea. There is no pride of ownership and no incentive to produce a high quality software product. There are also many cultural/communication barriers that lead to a longer software development time.
America has tossed it’s blue collar jobs in the dumpster and shipped them to the third world. Once we complete that process with white collar jobs we will be a nation of bankers, lawyers, politicians, doctors and welfare recipients. Oh wait we alreay pretty much are…..
But I’d love to see the US legal profession get tossed overseas.
Outsourcing at a lower price in exchange for a decline in quality is different than outsourcing for the same quality of work at a lower price. This is an example of the ambiguity of more than necessary that I referred to.
— I bought a Japanese pickup in 1975 that essentially fell to pieces at 134,000 miles in 1983. In 1983 I bought an American pickup which I am still operating and it is still in good running order at 155,000 miles, it turns 25 years old next month. Your mileage may vary.
BTW, what issue do you have with outsourcing tech jobs?
Well, I recall that when the manufactiring jobs hemorrhage began some years ago we were told not to worry, because our future was in tech, and that there would be “knowledge” jobs for everyone.
That sure didn’t last very long, did it?
Blue collar jobs weren’t sent overseas they were replaced by automation.
Look at chart 6. We didn’t send all that much overseas, but a whole lot is produced by a shrinking number of people.
http://www.whitehouse.gov/cea/forbes_nabe_usmanufacturing_3-26-042.pdf
The workers that remain don’t manually do nearly as much but produce several times the output of workers in the 50s. Tech “outsourcing” is partly the same, partly an over reaction to a trend (expect lots of the foolish jobs outsourced to come back), and a very small part real (R&D centers built in Mumbai).
BTW, what issue do you have with outsourcing tech jobs? Do you prefer to pay more monies than necessary for equivalent work?
If you think your job cannot be outsourced, you are probably mistaken. Wal*Mart greeter is the only job I can think of that cannot be easily outsourced.
Any company that becomes virtual and outsources everything, will swiftly find that it can easily be replaced( look how easy it was for IBM to sell their laptop division to Lenova, I imagine the rest of the company will be bought by Wipro in 10 years).
The irrony is that the normal location to outsource has been india but india has gotten to expensive so they are now out sourcing to mexico and russia….If companys want to out source tech jobs fine, but don’t screem that you need more H1b workers becuase there are’nt enough poeple to fill those jobs here, that is BS, H1b tech workers are basicly slave labor that will work long hours for less money and never complain
Blue collar jobs weren’t sent overseas they were replaced by automation.
Look at chart 6. We didn’t send all that much overseas, but a whole lot is produced by a shrinking number of people.
Then why are there almost no consumer goods made in the US anymore?
Ahh… Those little nuggest of truth Colorado…
Also, don’t think your Walmart greeter can get outsourced? I bet it can get insourced.
“Then why are there almost no consumer goods made in the US anymore?”
U.S. environmental laws have outlawed dirty industry. We let other countries do our dirty production, and enjoy the fruits (though this is not a sustainable policy).
Comment by Professor Bear
2008-04-02 06:53:26
P.S. I am also compelled to note that Japanese automotive manufacturers have outsourced some of their operations to the U.S.
******
Japanese manufacturers first produced vehicles in the US, or parts thereof, because it was the politically smart thing to do - they didn’t do it to save any money on an operating basis.
They wanted to be allowed to compete on a level playing field for market share in the US, without raising the hackles of the average American or our Congress.
It was an image making effort that continues to this day in some form or other because they fear(ed) legislation.
And is the reason why one hears “corporate feel good” Toyota advertising on the all news radio stations here in the Alt-A Bay, which include the figures for how many jobs the company is responsible in California, etc. This began in the past year or so - not coincidentally at the same time Toyota passed Ford and began aiming for # 1 in US sales.
As for actual costs, today or in the near future, the situation may be different. For example, labor costs in Japan may already be equal to or higher than here; particularly as compared to areas where manufacturers have located, usually in right to work states (laws avoiding compulsory union dues), mostly in the South.
FWIW - an industry friend once pointed out that while many autos are assembled in one location in the US, but the parts (including many major items) could be produced in as many as 40 countries.
There’s no money in making $2 plastic cups or $4 t shirts. Manufacturing is more like Caterpiller and Intel. But especially in the latter, machines do 90% of the work. A $2 billion plant will kick out many times that in chips, for domestic use and export, but it might employ a few hundred people.
Consumer goods are still manufactured in the US, but they go by Dell and Pfizer, rather than Brunswick and VF.
In addition manufacturing has shifted dramatically across the US both because more resources are imported from our Pacific Coast, because of more favorable regulatory regimes, and because land value is lower (which translates to lower required wages than on the East Coast. Cheap energy didn’t hurt because it was inexpensive to ship goods made in the west to buyers in the East. Manufacturing employment has been rising in the West and South for years. That overemphasises the national decline in employment in the Northeast (and is a good reason not to support higher homeownership rates).
I am sorry if I am stepping on anyone’s foot, but if productivity is the cause of the reduction in manufacturing (blue collar jobs), then the USA needs to create other jobs for these employees or accept the fact that the profits from increased automation will require that they be paid a fixed income for not working (living wage). If we are so damn efficient in reducing labor through automation, the buyers of these products need an income to do so.
Blue collar jobs weren’t sent overseas they were replaced by automation.
Look at chart 6. We didn’t send all that much overseas, but a whole lot is produced by a shrinking number of people.
For thousands of years, mankind has attempted to relieve them selves of the burden of work. With increased automation of our manufacturing, it appears that has been accomplished through mass production.
So the question is who can afford to buy these mass produced items?
I am not the sharpest tool in the shed, however, if I have no income, then I can not buy your product, imho.
IIRC from Lowenstein’s book the only thing the Fed ponied up for in the LTCM deal was sandwiches for the meetings with the banks. Quite different than guaranteeing $30 billion for JPM.
The Fed assisted BS acquisition involved more than a guarantee. The Fed will buy outright, through a newly formed LLC, mortgage related securities for which it will pay $29 billion, net. The market value of those securities was not made public. The assistance to JPM will be the $29 billion minus the collectible value of the securities.
Regulations are only needed as a poor compensation to the problems caused by fractional reserve banking and the monopoly status of the Federal Reserve. If the system cannot operate in the best interest of everyone regardless of who is in charge of regulators then the system is broken. We need a free-market not a regulated market. The Federal Reserve System and fractional reserve lending are the market REGULATIONS that all other regulations attempt to compensate for.
— When was there ever a “free market”? The Panic of 1837?
—- Personally I see no alternative to some system of market regulations & fractional reserve banking, if economic growth is to be financed.
19th century America was the closest to a free monetary system the modern world has seen (The old bank of Amsterdam had a 200 year run without fractional reserves, leading Amsterdam to be the the proverbial city on the hill, and one of stability and consistent growth as wars raged all around it).
Bank panics are caused entirely by fractional reserve banking. The cure is to have 100% reserves. The other ‘cure’, having a lender of last resort like the federal reserve, creates far more problems than it solves.
Did you know that consumer prices from the 1830s and 1930s were the same? Of course, there was some deflation in the depression, but 100 years with minimal inflation? Can you imagine that?
Also please realize that even average Americans in the 19th century realized the importance of sound money - see Andrew Jackson being elected and abolishing the second bank of the United States. Keynesian and Monetarist thought have obscured the issues incredibly - even though their assumptions are wrong.
Thomas Sowell baffles me because he is extremely smart and well informed, yet he persistently favors his agenda over the facts.
LOL - find me a person that doesn’t! I’m honest enough about my human condition to tell you that I, also, have confirmation bias.
I like Thomas Sowell, if for no other reason, that he penned “The Einstein Syndrome” which matched my son’s experiences with delayed speech to a T. (And no, I hold no illusions that my son is another Einstein *grin* - I’m really hoping for another Bill Gates as I’m thinkin’ I won’t need to worry about retirement then.)
I like Thomas Sowell because he shoots straight from the hip — no BS like the vast majority of the ‘expert’ economists quoted in the MSM. I don’t always agree with what he says, but I truly appreciate his candor.
Same here
“What that means is that the value of your money and my money — all Federal Reserve Notes — goes down when more Federal Reserve Notes are issued to subsidize the purchase of Bear Stearns by JPMorgan Chase.”
I for one am grateful he put this rather obvious point into print.
Anyone still confused on this point ought to go see the movie The Counterfeiters, which is about a bunch of WWII German concentration camp prisoners who are tasked with printing counterfeit British pounds and $US with the aim of destroying those currencies.
Beware of how the mouse clique moves funds.
–Just saw it Saturday as a matter of fact. Good movie.
Stuttering Hank interviewed by WBBR this morning regarding discussions with China;
Reporter: What about the housing mess?
Hank: I explained to the chinese that people think declining house prices is bad.We had unstustainable price appreciation for 5-6 years. I contend falling prices is a good thing. The fixed income/mortgage/housing problems are long term problems. There will be no easy fix.
“I contend falling prices is a good thing.”
Did he tell that to all the people holding the toxic paper that was created by the unprecedented runup?
Do we need someone to do that? I volunteer!!
You can give the speach.
Ex-nnv and I will flip a coin on who hauls in the Joshua tree.
Got Popcorn?
Neil
Unlike the clowns on Wall St. who quickly forget the mistakes of the past, the Chinese will neither forget nor forgive that they were bamboozled by American investment banks who sold them AAA rated toilet paper.
wipe wipe….
“…neither forget nor forgive…”
Maybe, but possibly not. Were they not selling so much stuff that could only be purchased with debt, their economy would not have grown like it has. So it might be seen as a corollary to dumping - the intentional, or at least passively-accepted loss of value/ money in order to grain greater overall advantage/ progress.
fannie:
Fannie Mae announced a new round of tightening in its standards for home mortgages it buys or guarantees.
The government-sponsored provider of funding for home loans told lenders Monday it will require a minimum credit score of 580 for most loans it buys on an individual basis.
http://tinyurl.com/2j8avp
The article is a good summary of what Fannie has been doing over the past few months.
1. Fannie will require a FICO of 580.
2. The recovery period from foreclosure is now five years instead of four.
3. Loan servicers should wait six months of non-payment to start foreclosure, instead of four months.
4. Tightened standards and increased fees for risky borrowers.
The last point rasied the ire of some politicians, and the homebuilders. *wipes tear*
So in this credit environment a credit score of 580 is considered good to go?
I’m curious how many missed payments it takes to earn someone a 580.
A 580 FICO shouldn`t allow anyone to finace a vacume cleaner.
You could have a score that low if you don’t use credit at all and pay cash for anything. Casey Serin, OTOH, probably had a 700 FICO when he “bought” the six houses he defaulted on.
Please inject a little rigor into your reasoning.
I have little sympathy for cash-only people who complain about a low FICO. In MY rigorous reasoning, I believe that even if I can pay cash for everything, it’s smart to use credit once in a while, just to prove I can.
I could have bought my car cash, but instead I signed up for a 4% 36-month loan just to maintain a high FICO. The interest I save on an eventual mortgage will far outweigh the $700 in interest for the car.
When in Rome, do as the Romans do. Or, if you can’t beat ‘em, join ‘em…
Or better yet, flip the bird at the whole system. It’s quite liberating.
I’m with tx on this. I am a lender, not a borrower. What would I want credit FOR?
I wouldn’t lend someone 10 bucks if I knew their FICO was under 700, yet they’re still giving them mortgages. We still have a long way to go.
I’m in the middle wealth bracket. I have cash on hand for a modest car or furniture or pretty much any vacation or expense I would want. But for any house more than a single-wide..well, I’m going to need credit. So I have to look to my FICO.
For people wealthy enough to buy a house outright, no, your 580 FICO doesn’t really matter. But you’re the exception. I don’t think Fannie was thinking of you guys when they referred to 580 FICO.
Wait…they were financing loans to people with less than a 580 until now???
LOL! (And crying.) That was my thought exactly when I read it.
Maybe Fannie is anticipating foreclosures from lower-middle-class families who still work, but can no longer make ends meet with high prices on milk and gas and health insurance. They can’t all be shopping sprees…
Hi. I had a 600 score. I missed a single credit card payment. I had a total of 3 30 day lates, but had a new car payment that was paid in full with 0 lates. I also found Verizon had put something on my report (multiple 120 day lates) that I didn’t know about — it is totally shady and I’m fighting it. It doesn’t take much to get a 600 credit report score if you don’t use credit. The worst part was when I missed the single credit card payment, the first in years, my credit union locked me out of every account… I had many multiples of the amount due in my bank accounts (Savings and checking), they locked me out of both of those. Since I rarely ever use credit, I only then discovered how bad my score was when I tried to sign up for ING direct to leave my local credit union. And removing that Verizon stuff has been an absolute nightmare. I just recently made a youtube video about it, since I can’t get anywhere dealing with Verizon on the collection agencies.
are you dealing with AFNI?
email me offline if you wish. I have good info on how to get them off your report.
See http://www.myfaircredit.com for other good info
I had something similar happen when I moved from Chicago to Anchorage about 5 years ago. Because I didn’t have a bank account for 2 months (while I was moving and taking a long road trip), I had 60 day lates. I had just finished grad school and stupidly didn’t care…I wanted my vacation! At the same time my student loans went out of deferment and I missed the first payment, wich resulted in many multiples of the amount that I still don’t understand.
All I did was take a 60 day vacation and close my bank account while I moved to change cities (after calling my CC lender to let them know that’s what I was doing-they didn’t care and wouldn’t let me make my payments in advance).
It was 5 years ago, and I had a FICO of 600 for quite awhile, but luckily have repaired my credit to 720 since.
I’ve never set up automatic payments on anything since I fear closing a bank account and forgetting about one. (Overcompensation for my reptile brain)
‘(Overcompensation for my reptile brain)’
My reptile brains just urges me to eat flies. I tell it, ‘No. Not unless they’re washed.’ Also, it wants to bask on a rock in the sun. Some day it may evolve into a higher reptile brain, like yours, and it can think about automatic payments instead of flies and basking.
VaBeyatch: I had a similar situation years ago with AT&T. I was being billed for early termination of a cell phone contract I never signed. They sent me to one collection agency after another. Each time I requested proof of the debt, they would go away, only to resurface months later in the form of another collection agency. I finally reported them to the Better Business Bureau, the PUC and the FCC. If the situation you are experiencing with Verizon is indeed “shady”, that might be an option for you. Make sure to dispute it with Experian, etc. so that a statement from you appears in conjunction with the Verizon item. Good luck!
I’ve leased cars twice, because the effective interest rate was virtually zero. The “travel glitch”: the lenders would not allow a two-month or three-month prepay, for when I’d be away on a trip. Frustrating. All I could do was photocopy the current payment slip, put the payments in two extra envelopes and count on a friend to mail them on the specified dates.
Credit cards are much easier, IMO. I just pre-pay a balance that is more than I expect to spend on the trip. Of course, that works only for zero-balance cards.
I disputed the debt with Experian, which triggered the first collection agency to actually send me a bill. This was the first bill I ever saw from them, even though they had reported multiple 120 lates on my report (that up till that point I had never looked at). Now it has resurfaced with another collection agency. Originally I had tried to switch to Vonage, but Verizon was delaying the number port for months, so when I moved I never cancelled the account — but I did let Verizon know, and I turned them in to the FCC. Now I know I should have gone to the SEC. There is a law on the books.
I picked up a secured credit card from Bank of America with about $5500 behind it, and after about 3 months I’ve had the score go up. Now I’m going to play the game with the new collection agency. The bill is about $300, but it’s not just about the credit report .. it’s about the fact that Verizon went in to anti-competitive measures to prevent me from moving to a competitor.
Sounds like they are stepping on the gas pedal and the brakes at the same time. Have you ever tried driving that way? It really makes your car smell bad.
Minimum credit score of 580, this may sound harsh, but with a 580 credit score, I would not loan them lunch money, more or less a mortgage.
Isn’t a 580 score like total sh@t? Why ahould we even pay our bills? I wouldn’t loan 20 bucks to a 580 scorer.
“Isn’t a 580 score like total sh@t?”
There are many things that could drive a borrower to the upper 500’s without something major like missing payments or bankruptcy.
Upper 500’s without something major usually means too many credit cards run to the limit that haven’t been open long enough to establish a good history. Someone fresh out of college with $15K in credit card debt and $35K in student loans could be one of these 580’s…even if they’ve always paid on time. Could they pay their bills and take on a mortgage? Probably. Should they be charged a premium for it? Probably again.
What does PMI cost if your FICO is 580? This may be irrelevevant.
My fico got dropped from 720 to 580 after I would not pay Hollywood video for a video I returned, said I owed them $10. FICO is BS.
I was surprised to learn my FICO is over 700. I thought it would be lower because I have no debt and only have one credit card.
Why would you give Hollywood Video your social to begin with?
Thank heavens our library has a good selection of free movies.
You are right I am an ass
It was inconceivable to me that they reacted so “quickly” to the onset of the sub-prime contagion:
(IIRC)
2006: Center for Responsible Lending (?) issues estimate that 20% of sub-prime loans would default
Early 2007: Fannie Mae decided to stop taking liar loans effective August 2007
They certainly don’t want to be called out as “strangling” the mortgage market…
UK mortgage gloom:
New mortgage approvals fell towards an all-time low in February as lenders tightened the criteria on granting new home loans while unsecured borrowing reached a six-year high.
http://tinyurl.com/3avgdm
The UK bubble is bursting, gonna be interesting. How much will London fall?
How dependent are London RE prices upon the financial companies in the city?
Very.
And THERE’S your answer. While Ben wanders the halls of congress saying “tut, tut, it looks like rain,” the balloon has burst, and the financials are falling out of the tree, hitting every single branch on the way down.
Jim! Ben Bernake as Winnie-th-Pooh? That is wonderful. He even looks a little Pooh like.
Silly old bear.
Well he does, but the analogy actually puts him in in the role of Christopher Robin, who “always carries a gun, just in case.” Although he’s running out of bullets.
OK, I’m remebering the story better now. So you have put Bear Sterns and company in the place of Pooh. Hmmm…a little less emotionally pleasing but probably more apt.
I noticed inventories started soaring in a Maryland zip code that I regularly scan, in October 2005. Here it is, April 2008, 30 months later.
I’m guessing the timeframe in the UK will be along similar lines. It might be faster because of the weakened credit markets. Or it might be slower for various reasons too.
S.O.S. Unanswered
Every day more than 4,500 people call Hope Now, the White House-backed group formed to help struggling homeowners.
http://tinyurl.com/2shfmb
Even Hope Now says it is unsure how effective it is. The group does not break out the number of loan workouts that occur as a result of its efforts and those that might have happened anyway. Some people who work with Hope Now say it has done little to keep the housing crisis from deepening.
William A. Longbrake, the vice chairman of Washington Mutual, the big savings and loan, is a senior policy adviser to the roundtable. He said he has “indirect, inferential evidence” that Hope Now is helping.
Why keep real evidence? Longbrake heard from his aunt that her hairdresser’s cousin knew someone who may have been helped out by Hope Now. This shows how unenforced bailout plans are more for show than substance. Enforced bailout plans aren’t likely to be much better.
What appears to be another ineffective volunteer program wrapped in tax dollars that profits the program with little if any value to the desperate FBs.
Well at least it’s providing employment for the call center workers.
And the name of the program, it’s an affirmation, don’t you know?
It chases away the negative nasties of anyone who’s underwater.
“it’s providing employment for the call center workers.”
Depends. Are they in India?
shame on me for not thinking about that, Spike!
It might keep the FB’s from falling prey to even more unscrupulous scam artists entering the “Help Now” market.
Good Morning Ben, this bring sadness to me. The most cost positive thing the government spends money on is the space program. We get so much from it, plus this is the real shock and awe, of exploring the universe,trying to answer the question… just where did we come from?
who cares about 8000 loan officers or RE agents…but laying off 8000 people working on the highest technology is just crazy…
Let’s just keep dumbing down america
——————————–
NASA Says Thousands Could Lose Jobs After Shuttle Program Ends
MIAMI (AP) — More than 8,000 NASA contractor jobs in the nation’s manned space program could be eliminated after the space shuttle program is shut down in 2010, the agency said Tuesday.
The number of civil servants is expected to remain roughly the same, but dramatic job cuts are possible among private contractors as NASA transitions to the Constellation program, which is developing the next-generation vehicle and rockets to go to the moon and later to Mars.
Constellation isn’t scheduled to begin flights until 2015.
Bill Gerstenmaier, an associate administrator for the space agency, cautioned that the estimates of job losses were preliminary and don’t take into account numerous factors of potential workload. “Don’t overreact to these numbers,” he said.
NASA acknowledged job losses could fluctuate depending on who’s occupying the White House next year and their support for space exploration.
The bleakest forecast was issued for the flagship Kennedy Space Center at Cape Canaveral, Fla., where just 1,600 to 2,300 employees were expected to remain in 2011, a cut of up to 80 percent from its current 8,000 workers. The Michoud Assembly Facility near New Orleans was forecast to lose as many as 1,300 of its 1,900 jobs.
“Our greatest challenge over the next several years will be managing this extremely talented, experienced and geographically dispersed workforce as we transition from operating the space shuttle to utilizing the International Space Station,” the report said.
Nationally, NASA said the number of full-time civil servants in its manned space program would fall to about 4,100 in 2011, a loss of about 600 jobs from this year. Including outside contractors, the number of jobs would fall to an estimated 12,500 to 13,800. About 21,000 are currently employed.
NASA said it could be more than a year before it has more dependable job forecasts.
Florida Gov. Charlie Crist said the state was committed to trying to blunt the impact of the job losses with an aggressive effort to lure new contractors to the area that would work with future NASA flights, as well as private launches. In all, he said the state was trying to attract more than 50 space-related firms to the state.
“This rapid shift is opening doors for new companies and technologies that are blurring the previous separations between aviation and spaceflight,” Crist said.
Tracy Yates, a spokeswoman for United Space Alliance, the largest space shuttle contractor, said the new report came as no surprise. “It’s no secret here that we will be a smaller company once the shuttle missions have been completed,” she said.
Peak Country
http://www.youtube.com/watch?v=wSv5383Dpvs
What a great piece of music. The cellists and violinists, etc. bounce their bows on the strings to get that marching sound at the beginning of it. It’s just brilliant. For some reason, I still can’t wrap my head around orchestras. The fact that they can create such glorious sounds amazes me. It’s spiritual.
My sister works for a NASA contractor and I have been thus far unable to prevent her from trying to buy a house in Houston. Hopefully this will do it.
Will she be able to get another job quickly with good pay, enough to afford the mortgage on a very inexpensive house?
Have a talk with her and show her this HBB. Tell her that even *you* rent because you believe those cheap houses will be even cheaper!
Maybe they could all become mortgage brokers?
These people at NASA are pretty smart, but payment calculations on an ARM….come on, they’re smart, but they’re no Anthony Mozillo.
Trillions for war, not a dime for the poor! Or space travel.
“Trillions for war, not a dime for the poor!”
WTF? Are you kidding me?
makes a nice dem-chant tho
That’s what I said.
Take your meds.
Ever heard of the Great Society???
I think watcher was being tongue-in-cheek. He’s bright, and only a fool would believe such a statement.
‘Trillions for war, not a dime for the poor! Or space travel.’
I think watcher is teasing.
I tried to provoke Jas the other day, ’cause he annoys me now and then, as he’s just a weeee bit pompous sometimes, and is as omnipresent as a Rogaine commercial, but his reply was unsatisfactory to me.
You know, I think Steve W was right yesterday, we’ve run out of trolls and now we’re turning on each other! Noooooo! The horror!
Don’t sweat it, O.
Earthlings: bipedal mammals who thrive on conflict.
Peace and harmony exist only in the angelic realm.
Not a dime for the poor? I’m not debating the cost of the war (here), but have you not read the federal budget lately?
LOL - I know.
Everyone on this board who has fits about us spending money in Iraq because it could be going to , please consider this:
We never *had* the money to spend in the money in Iraq. We don’t have money for space programs, social security, safety nets, public education, and defense. The US government is *trillions* of dollars in debt. My personal guess is we will default on that debt within my lifetime.
Remember: deep cleansing breaths and the mantra “We don’t have the money”. It helps clarify a great deal about the current situation with our government.
“Deficits don’t matter” - Dick Cheney, Vice President of the United States.
Tricky Dick of the 21st Century has made up his own reality and rules since day one. Quoting him only makes his followers more angry and isolated.
So?
Don’t confuse the issue with facts. Zealots hate facts.
Remember - it’s VERY insensitive to the self esteem of others to muddy the point of emotional arguments with trivialities such as facts. This MUST stop! What about a cute kitten sticker instead?
I think the space program is a HUGE waste of money. There are people starving on this earth for no reason. It’s unbelieveable how many cuts there are in school and social programs here in the U.S. The things this government wastes money on are mind boggling.
Luke 18:22
Matt 26:11(a) =)
The entire space program is pretty meaningless in the whole scheme of the government budgets. It’s elimination and addition to the rest of government would cover the rest for a matter of days. The government spends the vast majority of it’s total outlays on Social Security, HHS, Defense, and Interest in that order. The rest (which is usually what people cite when they talk about government waste) take up about a sixth of the total goverment budget.
I’d like to see more money and exploration devoted to studying deep oceans.
If the space program can get kids excited about math/science, then it’s not a waste of money. The problem is that what NASA does isn’t well advertised to youngsters, so it becomes a bunch of smart guys in a room working on brain teasers–fascinating for them, less so for us. Admittedly, occasionally interesting things come of their work, but the best thing that can come from it is encouraging kids to learn…
Constellation isn’t scheduled to begin flights until 2015.
I though that the first test launches of the new Ares rockets was going to be in June, 2011 (with the first mission being in 2015). I guess our astronauts will have to ride to the space station on Russian rockets from 2010 until 2015.
It does dismay me that these projects take so long to complete, given that we went from initial manned space flight to moon landing in less than 10 years.
Out damn it.
Oops
Well, we did have the help of a lot of former Nazi scientist working for us back then.
But, I guess that since its cheaper to outsource rocket development to the Russians, we should cancel the Constellation project. I mean, who wants to pay extra money just to have our own rocket program?
While I think that space travel is very very cool, I do believe that manned space flight is a boondoggle, an employment program for the aerospace industry. On the gripping hand, I’m not sure that firing a bunch of people, having them wander off and find new jobs, and then trying to rehire a few years later for the constelation/aeres/whatever-the-PA-people-in-NASA-come-up-with-for-a-name-next-week program is an effective way of managing things.
My uncle is a rocket scientist. Interestingly, he has the worst singing voice on the face of the planet. What does this mean? I don’t know. Is it germane to jim A’s points? Probably not. Yet I tell you this anyhow, because it seems to mean something, somehow. Probably some Jungian thingie.
By the way, jim A, why is your first name lower case and then you elect to use a capital ‘A’?
RE: but laying off 8000 people working on the highest technology is just crazy…
But just think how many social welfare workers and adjustment counselors the inner cities will be able to hire with the NASA money now diverted to Dept. of Health and Human Services!
Barbarian!
I live in Titusville, Florida right across the lagoon from Kennedy Space Center. I watch shuttle launches from the lawn chair in my back yard. Almost all of my friends and neighbors work for USA and NASA. A few key points:
1. There is very little high tech stuff going on out there, relative to the $$$ spent. The shuttle is old, ’70’s technology.
2. Probably 1/3 of the folks working out there do nothing to add value to the process.
3. Our area housing prices are dropping like a rock and foreclosures are heading to the moon. Imagine when the only economic engine in the area shuts down. I’m planning on buying the city and running it as my own kingdom in 2 years.
Jon - from what I can tell, virtually every single owner who bought in that big Harbor Isle condo there has lost money on the resale. Prices have been dropping steadily and rents seemed dirt cheap, considering a nice-looking brand-new condo with great views and nice amenities.
I suspect it is a poster child of the bubble — put it up anywhere and charge whatever you want and somebody will buy it.
Sad that we once had the ability to travel into space. I predict that it’ll be a long time before we regain that ability, if ever. The death of the American space program (for most intents and purposes) matches up nicely with the path the whole nation is taking.
Hopefully the European Union’s space exploration program will fill in the gaps. They and everyone else on the planet have been happy beneficiaries of our program for many decades. It will be nice to be able to count on them footing the bill in the future. I don’t really care if the photos are captioned in French - they’ll be translated quickly enough.
Yeah, but -
你的中文怎么样？
2028年-中国发现一个新的星球，环境条件跟中国的地球遗墨一样。 幸亏咱们中国人是唯一一个有足够技术飞到新星球的国家-咱们不用跟任何鬼佬一起分享比地球大一百倍的新天堂。
哈哈哈哈哈哈哈哈哈哈哈！
Japanese program is OK, too.
I want to enjoy the results of what somebody else pays for. For a change.
这种大话，等中国真的发明出你说的高等技术再说也不迟吧？
恩，有道理。
好吧，要再考虑考虑。
big apple:
April 2 (Bloomberg) — Manhattan apartment sales plunged the most in 18 years last quarter as buyers faced the prospect of a recession and job cuts at Wall Street securities firms.
http://tinyurl.com/2l7ydj
“…plunged the most in 18 years last quarter…”
Q4.2007 - 18 years = Q4.1989.
Uh oh… (To elaborate, the S had barely begun to hit the F by late 1989 during the last real estate bust)
“First-quarter sales fell 34 percent from a year earlier and inventory rose 4.6 percent to 6,194 units, New York-based real estate appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. The median price of a Manhattan co-operative apartment or condominium increased 13.2 percent to a record $945,000.”
Steeply rising prices on plummeting sales volumes; I know it is different in Manhattan, but SoCal real estate saw a very similar movie a couple of years ago…
This is highly interesting, gold at $225 over spot?
——————————————————————————–
[Federal Register: March 31, 2008 (Volume 73, Number 62)]
[Notices]
[Page 16964]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31mr08-144]
———————————————————————–
DEPARTMENT OF THE TREASURY
United States Mint
Notification of United States Mint Coin Product Price Adjustment
SUMMARY: The United States Mint is announcing the prices of the 2008
American Eagle Gold Uncirculated Coin Program.
Pursuant to the authority that 31 U.S.C. 5111(a) and 5112(a)(7-10)
grant the Secretary of the Treasury to mint and issue gold coins, and
to prepare and distribute numismatic items, the United States Mint
mints and issues 2008 American Eagle Gold Proof and Uncirculated Coins
with the following weights: One-ounce, one-half ounce, one-quarter
ounce, one-tenth ounce. The United States Mint also produces an
American Eagle four-coin set that contains one coin of each
denomination.
Because of increases in the cost of gold, the United States Mint
will begin accepting orders for 2008 American Eagle Gold Uncirculated
Coins at the prices indicated below, effective April 1, 2008:
————————————————————————
Description Price
————————————————————————
American Eagle Gold Uncirculated Coins:
One-ounce gold uncirculated coin………………………. $1,119.95
One-half ounce gold uncirculated coin………………….. 565.95
One-quarter ounce gold uncirculated coin……………….. 295.95
One-tenth ounce gold uncirculated coin…………………. 124.95
Four-coin gold uncirculated set……………………….. 2,039.95
————————————————————————
FOR FURTHER INFORMATION CONTACT: Gloria C. Eskridge, Associate Director
for Sales and Marketing; United States Mint; 801 Ninth Street, NW.,
Washington, DC 20220; or call 202-354-7500.
Authority: 31 U.S.C. 5111, 5112 & 9701.
Dated: March 25, 2008.
Edmund C. Moy,
Director, United States Mint.
[FR Doc. E8-6480 Filed 3-28-08; 8:45 am]
BILLING CODE 4810-02-P
There is the “numismatic” value premium over bullion value. Even before the gold bubble, gold coins were at least 20% above spot. Don’t want to pay above spot? Buy gold bars then.
No, these are bullion coins, not numismatic. Currently prices for one ounce eagles sold by dealers is about $20.
Ive never seen those bullion coins sell for below 20% premium over spot. Probably a bad investment if the premium over spot goes away then people will be turning those coins to the refinery to get them melted.
I see silver bullion coins being sold for twice spot. Laughable, I say.
watcher is right. You must be buying at the wrong place. Or more likely not buying american eagles at all.
Try KIMCO, their prices on coins are very good, and track the bullion pretty thinly.
At 17:10 EDT Apr 2, the quote from Blanchard for a 2008 1 oz. Gold Eagle is $955.51.
http://tinyurl.com/2vdn9b
There is a nominal charge for registered mail to get it to you, which abates relative to the number you order.
Is this a promise from the Gubment that they will never confiscate private gold stashes?
They have made gold illegal and can in the future. Or at the very least they may allow private ownership of gold as long as you don’t sell it, only keep for sentimental value.
They did it once already.
http://www.the-privateer.com/1933-gold-confiscation.html
I’ve bought 1 oz Eagles several times and the dealer markup was 4 to 6% over spot. In addition to “plain old Eagles,” the Treasury mints double-struck Eagles sold in plastic cases. These Eagles look nicer and are untouched by human hands. I think these are the “uncirculated” coins referred to in this price list. They sell for much more than 6% over spot but have little numismatic value (too many are minted). The difference in price between a regular Eagle and an uncirculated Eagle is decorative value. Gold bullion investors buy the POEs (plain old Eagles).
You must mean MS(mint state) and PR(proof) eagles. I guess it’s the proof editions that carry the premium. This is true of almost any coin of all denominations. Early proof coins can cost thousands each while their circulated strikes can cost a few dollars each(cheaper with more wear)
according to the us mint website these eagles are special collectibles? not a typical gold eagle?
For a coin collector this could get interesting if the high gold price keeps the total issue to a low mintage number. I just might buy one.
Well, well. Monday and Tuesday Bucket threads certainly had some vigorous political discussions. Which reminded me that Barack Obama made a speech recently referencing his white ancestors who owned a couple of slaves ( http://tinyurl.com/29mzdv ). Does this mean that Obama will have to pay himself reparations? LOL. (my sides!)
Wouldn’t be at all surprised to learn that some of BO’s black ancestors in Africa sold blacks into slavery. More than enough blame to go around in that issue.
Ew, that’s an awful thought. Though his ancestors in Africa were (if I remember correctly) from the east side of the continent; the American slave trade was more on the west side. Not to say there wasn’t some dealing with the Arabs where his people came from…
But c’mon, of all the issues/topics that the man brings along, there are far more important things to harp on (or cheer on) than this one.
Nobody ever chose their ancestors…
However, everyone likes to choose what to remember about their ancestry.
Wouldn’t be at all surprised to learn that some of BO’s black ancestors in Africa sold blacks into slavery
Lots of white Americans’ ancestors were involved in selling whites into slavery, too. Ever hear of ancient Greece and Rome?
Ancient slavery involved people of similar racial origins for reasons of geography. It was only when seagoing technology significantly improved that slaves were trafficked over great distances and slavery took on the racial aspect that we associate with it today.
There were no “Whites” in Greece and Rome. That’s a mistake Americans keep making. “White” wasn’t even invented as a concept until about 1500 A.D.
Comment by tresho
2008-04-02 05:36:00
Wouldn’t be at all surprised to learn that some of BO’s black ancestors in Africa sold blacks into slavery. More than enough blame to go around in that issue.’
I don’t have any idea about Barak’s ancestors, but black Africans frequently sold other black Africans, at least according to the research I did for a paper on the subject for a sociology class. It’s been a while, but I remember just being horrified by what I read. It makes sense, though–why run around in the jungle or grasslands getting bitten by snakes and bugs and tigers, when you can just go to the market and get the slaves you want?
I recall reading accounts and a couple helpful tips about what tribes were easiest to obtain and manage, I seem to recall one account complaining about how awful it was to have to go inland, and advising everyone to stay away from I think the masaai, as they resisted so much and made crappy slaves. One account from a Portuguese sailor who described a man who sold his wife and child into slavery in exchange for a rifle…
Yeah. Humans. Hooray for us.
Yeah. Humans. Hooray for us.
Yeah, yeah for us.
The nastiest part of the slave trade is that it could not happened without the explicit consent of the natives. If the idea was of universally rejected, the Europeans would have probably turned to their efforts elsewhere to get cheap labor. In some ways, the cheapness of life that the attitude represents sheds some light on the modern Africa’s problems.
Oly
Too right,the Masai have a ferocious rep, and are gorgeous to boot. When the Germans decided to get themselves a colony in Africa to rival Britain’s Kenya, they tried Tanganyika…now Tanzania. They German Army of the time never got further
than 100 miles inland…disease, bad water and the Masaai finished their efforts. Men and women of the Masaai are supremely elegant…tall, slender, and convinced of their superiority. Even Kenya’s Kikuyu, they of Mau Mau fame, never mess with the Masaai.
He’ll make a great pinata once the witch has been banished for good.
He does have the “Wright” stuff!
Much like McCain’s “spiritual advisor” (as if this is in any way a real issue). Right?
“Much like McCain’s “spiritual advisor”
Joe Lieberman, isn’t it?
Maybe not an issue for you and me but might be for J6P in flyover country who goes to church every Sunday.
And those are generally the people who decide elections.
I’m sure they will be impressed with the story of his first wife and 3 children. Maybe we’ll hear more of that story in the coming months?
After a whirlwind courtship, John asked Cindy to marry him. But there were some details to clear out of the way.
McCain needed a divorce from Carol, his wife of 14 year
http://www.azcentral.com/news/specials/mccain/articles/0301mccainbio-chapter5.html
“Maybe not an issue for you and me but might be for J6P in flyover country who goes to church every Sunday.
And those are generally the people who decide elections.”
TX, Goldman Sachs decides the elections. McCain, Shillary, and Obama are all “Goldman approved”. The rest is a charade to make it appear we are living in a democracy.
DP
LOL
The Doddering Old Man Of The Sea is pretty ripe for some pinata action himself.
Be assured, when HRC captures the dem nomination, Clintoon Inc. will unleash the dogs of war on him.
Old War Horse that he is, he’ll meet the challenge.
The Manchurian Candidate thinks Americans are too cynical. What a complete ass, to base his entire opinion of Americans on one obnoxious group of coffee drinkers. In case people haven’t noticed, the constant hammer and pound about how crappy we are as a people is a bit much for me. I hear it ALL the time in the press and even on here. Fair warning: this is basically an attempt to debase the American people along with the currency. Deprive them of jobs, of decent educations, of safety and security in their neighborhoods, etc. And then tell them they deserve it because they are of poor character.
http://news.yahoo.com/s/nm/20080402/pl_nm/usa_politics_mccain_dc
McCain, who would be the oldest person ever elected to a first presidential term, said Americans need to take up a cause greater than themselves — join the military, help feed the hungry, seek public office.
“If you find faults with our country, make it a better one,” he said.
My take: He’s advocating volunteerism and public service. Why are you taking issue, palmy?
Also, I was trying to get a line (via internet) on HRC winning the dem nomination, but my work blocked the site. I’m willing to put $$ on it. (if it’s legal in PA of course)
Intrade has her at about 15% odds of winning the Dem nomination.
TY baby
http://www.slate.com/id/2187793/
phillygall,
Is that really what he is saying? Sounds more like an address to the graduation class than a political stump speech. Actually, I think that was the speech my graduating class got.
The best graduation speech I ever heard was called, “In Praise of Boredom.” Joseph Brodsky. It was published in one of his books of essays.
txchk-
checked out the Slate link. I guess I’d better get my wager in before the PA primary, because after that event Big Mo will swing HRC’s way.
In options trader lexicon, will I be purchasing really cheep April 08 calls on HRC?
Off the top of my head: the USS Forrestal accident and his pre-POW military record, his role in the ’80s S&L scandal, climbing in bed with religious right wackos for political gain, his own “family values” issues, his legendary temper, multiple gaffes re: Iraq policy, his connection to Smokey Joe Lieberman, some pretty amazing flip-floppery on policy issues, his admitted lack of knowledge in economic policy, his attempt to evade campaign finance laws that he helped write, his flirtation(s) with joining the Democratic party and/or Democratic tickets, his conservative bona fides in general.
Yeah, should be a really good show.
Get used to saying this:
President John McCain.
I know it will be difficult, but in time you will adapt.
Yes. Resistance is futile.
Get used to saying this:
President John McCain.
I know it will be difficult, but in time you will adapt.
Laugh.
We’ll see, ladies.
I think we can agree it’ll be an interesting fall.
italics off (I hope)
hey ET, I’ll buy you lunch if I’m wrong!
italics off …
hey ET, I’ll buy you lunch if I’m wrong!
Likewise, in reverse.
With or without Whiz.
Saved!
I hope you ladies don’t mind me saving that on my harddrive for some future fun.
Recently McCain has made me take a 2nd look at him but I don’t have the passion I had for him I did when he ran against Bush in the 2000 primaries. I think Republican hubby is correct when he sneeringly calls McCain Bush II (and that was way before it occurred to the Dems to use that rant.)
Locally CNYers lean pretty hard to the right. Some are pure party animals (no pun there belive me!) and would never consider voting outside. But its amazing the silent, but building anger.
As for my further consideration, his vp choice will be crucial as I do fear the man’s age especially when one considers the additional amount of physical damage his body endured while a POW.
Carrie,
I’m glad you got a chuckle from the above posts. This is where I disagree with your husband and cronies: general electorate is not a hard right population. Center right, maybe. Center center most likely.
I should clarify that I don’t think all those things I listed are relevant or important, or even necessarily significant.
But some combination of those potential vulnerabilities (or whatever you’d like to call them) will be used to attack McCain. Some may resonate with voters, many will not not.
Regardless, all three remaining candidates have plenty of vulnerable areas. The two candidates will both be subject to “pinata action” once the national campaign is rolling.
My BF works at Boeing. His union is campaigning full tilt against McCain. (Something about McCain’s support for Airbus). I don’t agree 100% with McCain, policy wise. However, out of the three currently available, he gets my vote.
(I tried offing the italics but it only partly worked. I don’t feel like opening the source page to see where the missing tag belongs. Blog HTML is always fun!)
you fixed the blog
Supporting Airbus?
I don’t know anything of the details of that, but I would support that simply for our own national (or personal) self-interest.
Why?
Because if Airbus wasn’t around to compete with them, Boeing wouldn’t make a damn plane worth anything for a decent price.
Sheesh.
It may not benefit Boeing’s best paid to have to compete with Airbus, trying to exceed the Street’s numbers every quarter, but it benefits everyone else…
I’m not the union spokeswoman, but they probably thought that McCain’s support for Airbus would threaten Boeing Philadelphia plant jobs.
But it’s really six of one, half a dozen of another, since the Ridley Park is a defense, not commercial plant. So they don’t like McCain because of airbus, yet he is strong in his support of national defense. Whatever they do, the Boeing union guys are not going to support BO in the primary if they vote at all.
not that it matters, but it’s probably over the fact that an Airbus / General Dynamic (I think) partnership won a very large military contract for the next generation of in-flight refueling tankers a month or two ago. from what I’ve read Boeing took it on faith they were going to win and submitted a horrible bid.
Fallout from the auction rate meltdown
http://www.abc3340.com/news/stories/0408/508120.html
The beginning of a decline in Manhattan eal Estate??
Prices are rising, but inventory is creeping up
http://www.bloomberg.com/apps/news?pid=20601109&sid=ablSPpNgcHsY&refer=home
http://www.millersamuel.com/reports/pdf-reports/MMO1Q08.pdf
Companies in the U.S. unexpectedly added workers in March, a private report based on payroll data showed today. I don’t believe this. The figure will be revised downward in months to come, as many others in the past have been.
I don’t think ADP is an estimate, it’s pretty easy to count paychecks when you’re the printer of everything you’re counting.
The news article implied a rise in employment overall. ADP doesn’t print all the country’s paychecks. I strongly suspect that the ultimate level employment in this period will be shown to have fallen.
“Sad to say, at this point maintaining an ideologically pure opposition to ANY bailout is akin to Quixote tilting at windmills.”
How about the pure ideology of the entire generation now in charge — screw future generations? Mortgages could be bought up by the government at a small discount by trading them for the theorectical Treasuries in the Social Security lock-box.
FICA taxes, and future FICA taxes borrowed against, would be used to pay Social Security for those born before 1958. The mortage bonds, whatever is collected on them, would be used for anyone younger.
“…screw future generations?”
This has been the modus operandi since at least 1980 or so…
Yep, public sector and private. Didn’t the two-tier union contracts date from around then?
“We’re spending our children’s inheritance.” –bumper sticker from the 1970s
You can only operate by screwing future generations for so long before everyone is screwed.
RE: The mortage bonds, whatever is collected on them, would be used for anyone younger.
So easy to slip all this past the Video Game Generation who can’t even place Canada on a world map.
Only thing these idiot kids care or know about is what their curent Guitar Hero score is and whether their Soccer Mom for Higher Taxes left a $20 on the counter to fill their car’s gas tank for the day…
However, they all could be getting first hand experience in what the 30’s were like.
Think of an updated “Lord Of The Flies”
with adult children left to their own devices…
“So easy to slip all this past the Video Game Generation who can’t even place Canada on a world map.”
Blano to teenage daughter yesterday: “my friend is going to Israel tomorrow.”
Daughter: “Where’s Israel??”
Sheesh.
We have real troubles placing things within our borders…
Witness this from a dozen years ago:
____________________________________________________
“A certain Mr. Wade Miller of New Mexico recently called Atlanta’s Olympic committee to buy tickets for the Summer Olympics.”
“I’m sorry, sir,” the voice on the other line replied. “I can’t sell tickets to someone outside the United States.”
“Yep — you heard correctly. The sales office of the U.S. Olympic Committee didn’t know that “New Mexico” isn’t part of old Mexico. Though he tried, Mr. Miller could convince neither the operator — nor her supervisor! — that New Mexico is one of the 50 United States of America. The supervisor, getting on the line when Mr. Miller insisted, told him (you can just hear her tone), “Sir, new Mexico, old Mexico — it doesn’t matter. You still have to go through your country’s Olympic Committee.”
“When reporters from a Santa Fe newspaper asked for tickets, they were told — once again — to contact the Mexican consulate.”
http://www.heritage.org/Press/Commentary/ED072596b.cfm
was the call center in India?
I lived in NYS before moving to NM in 1975. When I told someone there where I was going, they said “Why are you moving to a foreign country?” Correcting their ignorance was not as difficult.
New Mexico Magazine used to have a regular section called “One of Our States is Missing.” I think they’ve changed the name slightly, but it’s still a popular section.
My, oh my. Where’s Israel?
I remember back in eighth grade, our geography teacher made us memorize and draw a map of almost all the countries in the world (the little island places excepted), with special emphasis on their borders and who they were up against. For decent grades, we had to know the rivers, capitals, major cities, and more. We cursed him! Yet I reckon every one of us from that class had a better handle on world geography by ninth grade than most adults will ever have.
Apparently, that type of forced learning is out of vogue.
(Only thing these idiot kids care or know about is what their curent Guitar Hero score is and whether their Soccer Mom for Higher Taxes left a $20 on the counter to fill their car’s gas tank for the day…)
There are those who say younger generations are getting what they deserve from letting it happen.
I was a minor party protest candidate against the state legislature here in NY some years ago. I was trying to call attention to, among other things, the generational equity issue on behalf of my own kids.
I happened upon a bunch of twenty somethings hanging out in the park and tried to give ‘em the facts. They said they didn’t bother to vote, they just worried about themselves.
In a moment of inspriration, I said that a record was kept of who voted and who didn’t. Perhaps, I said, in the future a law could be past assessing a special tax on those who had failed to vote when it might have mattered, and using those revenues for all the debts and deferred costs.
That would never happen, they said. But they looked a little nervous.
RE: There are those who say younger generations are getting what they deserve from letting it happen.
Granted it was a fiasco, but in hindsight, while you might not have believed in the message, you still had to admire the gumption it took for all those 20-somethings getting gassed and having their heads bashed in by Mayor Daly’s gestapo thugs at the DEM Convention in ‘68.
Deja Vue 2008?
It will be interesting to see…
you still had to admire the gumption it took for all those 20-somethings getting gassed and having their heads bashed in by Mayor Daly’s gestapo thugs at the DEM Convention in ‘68.
I do admire those protesters, very much, even though it ultimately didn’t do much good (IMO) outside of Chicago.
As a little side-note, some people I know who make documentary films acquired some previously unknown, very well-shot color film from the government of the ‘68 Convention via the Freedom of Information Act. It’s mostly of Detroit band the MC5 playing and rabble-rousing in the park (the band had a connection to the White Panthers, so were probably already on Hoover’s list). The footage was allegedly shot by FBI agents.
RE: MC5 playing
“Kick Out the Jams…Muthafookers!”
Heady days…
When I was an Australian resident, it was MANDATORY to vote. That was only a few years ago, and I think it’s still that way. Don’t show up on voting day, and you get fined. Seriously. if you’re planning travels, make your absentee vote prep in advance!
(Fortunately, although resident I was not a citizen, so I wasn’t under the mandate.)
Looking at Loxahatchee, FL there now are 29 houses priced at most $200k and 21 lots priced at most $100k. Cheapest house is a $151k shack. Cheapest lot(over an acre) is $80k. I remember just a few months ago there were *no* houses below $200k and no lots below $120k. The inventory of $200k and below houses is growing every week and im starting to see pretty decent houses for $200k. Let’s see how PSL prices are(excluding mobile homes and Savanna club 55+ houses):
$37,500
2 Bed, 2 Bath
1,876 Sq. Ft.
Wow! That’s my kind of price! This house is even waterfront! Most likley a fixer upper, but still a very reasonable price!
$40,000
2 Bed, 2 Bath
1,401 Sq. Ft.
0.23 Acres
Another affordable house!
$57,900
2 Bed, 2 Bath
1,702 Sq. Ft.
0.23 Acres
REO “as is” the banks are slashing prices finally!
$129,111($47/foot!)
3 Bed, 2 Bath
2,748 Sq. Ft.(total)(2000 under a/c)
Huge .3 acre corner lot, perfect condition house.
$159,000
4 Bed, 2 Bath
2,550 Sq. Ft.
0.23 Acres
That house used to be $259k at the peak!
THIS IS A SHORT SALE, WITH OFFERS SUBJECT TO BANK APPROVAL! 3/2/2 CBS HOME BUILT IN 2006 (NEVER LIVED IN)! (This is proof that tons of PSL houses were bought by out of town speculators! Now I see lots of short sales, REO’s and price reductions)
There is over 2000 houses in PSL for under $200k! I remember at the peak, there were only a couple hundred houses for under $200k. Now there is that many houses for around $100k! I feel sorry for this knifecatcher who bought 18 months ago for $200k thinking it was a bargain. Probably worth not much over $100k today. I am seeing many houses below $100 per a/c square foot and was told itll be $50 per a/c square foot at the bottom!
Would you really want to live in a neighborhood of $37K homes?
“Would you really want to live in a neighborhood of $37K homes?”
For a first time home buyer, this is the way to go. These are truly “starter homes”.
It was getting quite sickening to me to read ads for 250,000 listed as “starter homes”.
I have yet to spend 250,000 on a home and I have enjoyed ownership of four homes. The last one 136,000 brand new, 1500 sq feet with a full basement in a lovely area.
Back in those days, spending 136,000 got you a nice middle class neighborhood, a mere 9 years ago.
Sad to say that same home now goes for 300,000 in WINNIPEG, Manitoba. Everyone wants to live there you know!!!!
Although it is nice to see homes in Loxahatchee for under 200,000 we still have a l-o-n-g way to go before I finally spend my 200,000 and it certainly will NOT be for one of those crap shacks.
I am prepared to pay cash and I will not over spend by a dime.
It was getting quite sickening to me to read ads for 250,000 listed as “starter homes”.
$500k-$600k were “starter homes” in California, and still are in the eyes of many in the Bay Area, where the Kool-Aid still hasn’t worn off. Never mind that very few Bay Area residents can actually afford a $500k house, least of all those who actually bought them.
“But with today’s loan products, we can get anyone in home! Prices no longer matter! Buy now, or be priced out forever!”
Oops, sorry… I was channeling 2005 for a moment there! Hahaha!
Is PSL Port St. Lucie? Maybe you don’t have to move to your beloved NW PA at all.
If that $37.5K house is on any reasonable size plot, maybe it would be better to do a tear-down and start over. (not all tear-downs are bad…)
And, per manny comment, you could use that saved $$ for a security fence and a Rottweiler…
Port Saint Lucie has no rough neighboorhoods from what I was told. There is a section with older houses that used to cost under $50k before the bubble. My parents don’t really like PSL for no good reason. It’s better, cheaper and safer than PBC. Nice houses in PSL are still $125k to $150k which is well out of my affordability range. Plus I don’t know if there is good public transportation.
There is still the problem of hurricanes, long, hot, humid summers, no fun four seasons(fall up north is stunning!) no rolling hills, shopping spaced far apart, etc. I think I can get a better quality lifestyle by leaving Florida with the rest.
Then go and quit wasting Ben’s bandwidth.
2nd. please.
the trolliness is making my right brain hurt.
Left brain is still somewhat OK though, probably cause I’m working in Oracle today.
In PSL, for a 3+2+ SFR, there are 3,300 active listings in the price range $75K - $300K. 2006 census estimate: 144,000 people. That’s a lot of inventory. nice-looking waterfront homes can be gotten for $100/ft including the land.
Anecdotal Economy Story-
I have a good friend who runs his own independant VW/Audi repair shop in Bangor, ME. The business was started by his father in 1965. I consider him the best VW mechanic east of the Mississippi. He is also as honest as the day is long, and charges half the labor rates of any local dealerships.
When I spoke to him Sunday night, he told me that he was virtually out of repair work and had been forced to send his two other mechanics home on indefinite leave.
His wife works as the book-keeper so there is no second income. They are in their late 50’s.
He whole-saled off his small inventory of used cars saying, the interest rate carrying costs (so much for the FED-only the big boyz get the cheap money) had become too great for the pitiful number of car he’s was selling.
Says the only thing he gets now for work, are phone calls from people pumping him for info, so they can try to do the work themselves.
Told me this is the worst he’s ever seen even as a kid working with his father during the ‘74/’75 recession.
And the politco honcho’s have the audacity to say there’s no recession.
It’s ALL comin’ down…
Amazing, but it’s a much rosier jobs picture in this report:
http://biz.yahoo.com/rb/080402/markets_stocks.html?.v=6
Adding to optimism about future consumer spending, a report by ADP Employer Services showed private-sector employers created 8,000 new jobs in March, confounding expectations for job losses. The report is seen as a preview to Friday’s broader government report on U.S. employment in March.
March proved another tough month for carmakers, with overall U.S. sales declining 12% compared to the same month last year, reports released Tuesday showed. While results were bad in nearly all categories, among the larger drags were luxury vehicles, which declined 15%, according to Autodata Corp
http://www.latimes.com/business/la-fi-carsales2apr02,1,6334051.story
When will automotive sales bottom out? Has anyone called a bottom yet?
What is the point of this fascination with “calling a bottom”? Is it so important to note the exact point of a long-lasting upturn? I don’t get it.
trainspotting?
cabooser?
Think Agnetha Fältskog of ABBA. I’m calling that bottom.
Roidy
There is no bottom for car sales domestic. It can go negative. All of our cars can be driven onto a RO-RO ship and sold someplace else for real money.
BMW announced plans to increase production here. Mercedes would rather sell every ML and RL someplace else. There will be a market for gas guzzlers in the Persian gulf for a very long time to come.
Our local Toyota dealer has a remote back-fill lot. I would guess in the 400-500 car range when full. Passed it yesterday and there was barely room for any more cars. They were jam packed up embankments etc.
I have noticed that Toyota is following in Detroit’s footsteps in offering huge rebates on some models. Not so long ago they (and Honda) dealers would act like they were doing you a favor in selling you a car.
http://preview.tinyurl.com/248e4v
“Mr. Paulsen also rejected the idea the economy was in recession. “If we’re in recession, why is unemployment 5 percent? Why are 80 percent of nonfinancial companies in the S.& P. 500 still achieving double-digit earnings gains?” he said, referring to the Standard & Poor’s 500-stock index.”
Isn’t there a term for airplane pilots who refuse to acknowledge that their gauges may be malfunctioning, refuse to look out the window to see the ground coming, and then crash an otherwise normal aircraft?
Well, he does have a pretty good point - for all the talk about a “crisis” and the need for massive bailouts, there’s precious little need for it SO FAR. If politicians want taxpayers to open their wallets to stimulate the economy, at least have the decency to wait until unemployment rises above its all-time lows and there’s evidence of serious belt-tightening by consumers. The government is expending a lot of hot air, and the Fed a lot of its ammunition, before the downturn has really even started.
With as weak as the front ends of Audis are, he would have lots of business if he advertised front end replacements at 50% of dealer service rates (about $1200 is the going rate in most dealerships).
One of the best things I ever did was take an adult education course in car repair just as I was finishing college. The knowledge I got there has saved me thousands over the years & I believe once saved my life when my throttle locked open.
Has your friend considered teaching this stuff? When people call him for advice, he could sell lessons.
RE: Has your friend considered teaching this stuff? When people call him for advice, he could sell lessons.
The days of the backyard mechanic are long gone.
Besides that, in this world, you’d teach somebody; then they’d proceed to screw their car up; and then sue for the cost of the repair to fix their mistakes and for fraudulent marketing of the coursework.
It’s the new American creedo-something for nothing.
The days of the backyard mechanic are long gone. I’ve been repairing my own vehicles ever since I took that course, doing what I can and saving tons of money every time. Haven’t screwed a car up yet. A little knowledge can go a very long way. Your mileage may vary.
We have been in a recession for a year now and it’s getting bad. Could be a depression within a couple years. Of course the gubbermint will deny this and say something like “slight economic laspe” or “stagnant growth” but we know the truth
When I spoke to him Sunday night, he told me that he was virtually out of repair work and had been forced to send his two other mechanics home on indefinite leave.
You know, I’m seeing something suspiciously similar here. The repair shop I do business with has for the first time sent out mailers to encourage us to bring in referral customers. And I’ve noticed not only that I can get faster turnaround time from them on medium sized repairs, but their parking lot is rather emtier than usual, with fewer car awaiting parts or time to be worked on.
Yikes! I say yikes because I like these people, and they do a real good job. The last thing I want is for them to have to cut back on staff (read: family, in their case) or worse. Hmmm… maybe it’s time to get that oil change and serpentine belt replacement that I keep putting off. Support your local shop!
And on housing note, I also notice that A/C repair/maintenance guy is being MUCH more persistent about getting us to do the annual checkout/cleaning than he ever was before. I really do expect that he’s installing a lot fewer units these days. And if he had any portion of his business installing new units in new houses, well, you know what’s happened to that market in the DC burbs…
RE: I also notice that A/C repair/maintenance guy is being MUCH more persistent about getting us to do the annual checkout/cleaning than he ever was before.
You should experience the Chemo-Lawn fertilizer guys! They call and badger my 85YO mother every other day to re-up on the service contract my dead father took on. And this is in Jan/Feb with a foot of snow on the ground! The people must be starving to death.
Fuel oil truck just delivered to same mother. 192 gallons @ $4.07 per gallon for a total of $781.44.
That’s for about 6 weeks of heat..
Hope all you Southerners still got your urban/community planners.
The Great Migration is about to start.
Well, Chem-Lawn was ALWAYS that way. It’s part of their business model. Really!
Man, oh man, $4.07/gal for fuel oil, that’s almost enough to make you want to switch to electric heat.
I noticed the exact same thing last week at mechanic shop.
My mom’s car was only 1 of 3 cars being worked on and none in the waiting. And the night before they waited 1/2 hr after closing for me and tow truck.
I don’t want those guys getting slow.
I feel like they are my safety net, my ‘insurance’.
Very interesting…
My favorite mechanic (BMW & Porche only) had a horrid November and December. When a line mechanic quit to pursue auto racing, they couldn’t justify replacing him nor replacing their retiring receptionist (she gave two years notice…).
But suddenly, they have more work than they can handle! Why? Boxter engine replacements! It doesn’t pay to skimp on car repair work. They’re like dentists; they hurt for the first six months or so in a recession and then their income returns to normal. (Or better if people nurse along an older car.)
Got Popcorn?
Neil
(Or better if people nurse along an older car.)
I’d assume that there’ll be a lot of nursing in the next few years, even with higher end cars.
And, heck, I think that’s the way it should be. Too many Americans get rid of their cars after two or three years. Plain stupid.
Voz posted YoY March sales decrease of 32%, A/R conintues to increase from poor performance. Watched a meltdown of local fleet service outfit, pretty sad. Picked up a couple of fleet service contracts and a long in the tooth salty dog mechanic.
Big money bus customer salvaged the month with a Cat repower on his Eagle coach. Sales have not bottomed yet, looks like 20% off minumum for yearly sales totals.
Ill share this as well,
Pape Group is rolling up small independent dealerships in the PNW.
This reminds me of the way TECTA AMERICA rolled up many independent commercial roofing operations in the late 90’s early double aughts.
I am having difficulties getting into independent small business that is not getting gobbled up by private equity outfits.
Everywhere I turn, big money wants the action all for themselves.
Tige boats just layed off 60 of 150 people. Went from 5 boats/day to 2. Seattle dealer just closed after 30 years.
Bayliner had the massive layoff already, consolidated jobs, and downsized the molds.
they are not even looking for people to hire or boats to build. Its stall ball.
HD74 - thanks for the interesting anecdote.
Hedge Funds to Investors: We’re Stumped
HEDGE fund managers generally see themselves as smarter than the average investor. After all, their business is finding profits that others miss and earning above-average returns. How else can they justify their legendary fees, unless they are bringing extra insight to the table?
Lately, though, even these high-finance wizards seem lost. In their letters to investors, many hedge fund managers have conceded that they have little to no idea what’s in store for the markets, which have been careening in directions that fancy computer models could never predict.
Gee, I think I recall Mr Hedgefundanalyst telling me I hated housing because I couldn’t cut it in NY. Typical jackass. Funny, though, I haven’t had any problem making money in these markets.
Something tells me they aren’t “stumped” when it comes to taking their fees however.
Maybe you should be the next fund/stock manager. You seem to make profit most of time time with options(especially puts)
It is a lot easier to run a few millions than to run a few billions. Not that Ms. Txchick would not be a great fund manager - just the stock market is so small that there is little flexibility in larger positions. There are an awful lot of job openings in NY right now. More than in 1987.
Yes, I know that and why I haven’t been tempted to try to “run” OPM
I thought it was because it is more fun and profitable to play with your own moneys. lol
I see these too but they’re not real, has happened before when there is trouble. They post and recruit but never hire. Just before various announcements, both Lehman and Bear advertised more positions than they have in years.
Maybe true, but I have received more calls for referrals than ever. Every firm and bank is looking for risk managers and compliance officers.
But not managers or traders. Right?
The best risk managers are former independent traders.
Being a trader for a large firm like Merrill or Goldman has about as much power as a junior clerk at a law firm - but, the pay is better. The power and direction is set up by Risk Management. They can override everything.
New York has very few competent risk managers. When this is settled Chicago will need a lot of new risk managers. The really good ones will be going to New York, London and Hong Kong firms. (not necessarily in that order)
The reason the Federal Reserve used Blackrock to evaluate Bears’ positions is they are the best at risk management trading. Despite protestations to the contrary, there are few firms with true risk management, there are even fewer individuals that can quantify risk. Citigroup lost $150MM every day their trading department was open last year, nice risk management.
2% of capital and 20% of profits (if any) is about standard. I’ve never heard of an agreement where they offset the 2% of capital they take with 20% of the losses so that the investors would get their “management” for free if the fund lost 10% that year. It would be fun to see someone try to get them to change the partnership agreement to do an offset like that. Really fun. OK, I have a weird sense of fun.
If the investors do push for a modification of these agreements, my guess for the first thing to go is the clause where the funds can halt all redemptions whenever they want to. Just because the managers want to wait for a bad position to turn around, doesn’t mean everyone does.
“HEDGE fund managers generally see themselves as smarter than the average investor.”
Are they smarter than the average bear?
In every industry there are screw ups. The vast moneys available to being a hedge fund manager was incentive enough to start a fund. A game that should have never lasted more than a year or two. There are good hedge funds. My breakdown of the hedge fund industry has not changed over the last few years. 1% are brilliant, 4% are above average, 15% are me too’s, 60% make money when the markets go up, 15% should be working at McDonalds, 5% are crooks.
It’s the drift toward being an asset collector, rather than an investor. I know of many groups that have purposefully stayed small…off the radar. Raise what they want (not what they can), keep overhead low, invest in less competitive small/mid markets, keep maximum discretion.
They make very good money, but don’t have that investment “style drift” as they grow, since they can stay in the same niche that made them successful. And they are OK being anonymous successful investors as opposed to needing their ego being stroked by managing “billions”.
These are the groups to invest with, not the manager who just raised $15 billion.
I heard this story on the radio last night, and I am still trying to figure out whether it is an April Fool’s gag. (I wish it weren’t, but now that I see the URL…aw shucks.)
Tuesday, April 1, 2008
IRS making sure your rebate gets spent
An energy efficient air conditioner for sale.
Most taxpayers will get anywhere from $600 to $1,200 from Uncle Sam as part of the federal plan to stimulate the economy. But many taxpayers will use the money to pay down debts instead. So, the IRS isn’t taking any chances. Rico Gagliano reports.
Any news posted on April 1 is highly suspect.
you must not have heard the tag at the end of the story–”people, look at your calendar!”
I loved that they got Reich to go in on it. You could hear him barely holding back on the guffaws.
“RYSSDAL: Oh, c’mon, check your calendars, everybody.”
Tuesday, April 1, 2008
Banks deep into unregulated ‘gambling’
7 Out, Line Away…
Next shooter, please
This interview was Kai Ryssdal at his ingenuous best:
RYSSDAL: I’m going to make the analogy here to a March Madness office pool, right? I go in, I pick a basketball team, and if they do great, that’s great, but I’m not vested.
It is. Except instead of wagering on UCLA and Auburn, these big bankers and brokers and hedge fund managers pick up the phone and they negotiate these wagers privately. Nobody really regulates this. They’ve created this incredibly enormous shadow financial system, if you will, that’s virtually hidden from investors and analysts and regulators.
RYSSDAL: How big would “incredibly enormous” be?
MOON: OK, I’m about to unload some numbers on you here, so I’ll speak slowly so you can follow this.
The value of the entire U.S. Treasuries market: $4.5 trillion.
The value of the entire mortgage market: $7 trillion.
The size of the U.S. stock market: $22 trillion.
OK, you ready?
The size of the credit default swap market last year: $45 trillion.
RYSSDAL: That’s a lot of money, Bob.
Brother, Can you spare 450 Trillion Dimes?
“They are the most hideous kind of speculation. To have a federally insured bank like JPMorgan as the largest dealer in this market, to me says we don’t know what we’re doing anymore, and we don’t understand the difference between real work — real economic activity — and something that’s essentially wasting.”
That’s the money quote, IMHO.
Measuring notionals isn’t a very good way of sizing an options market. For one thing most dealers commonly create an offsetting position to balance their exposure. So what starts as a billion dollar bet by someone and ends up spread across 1000 dealers with a million each, will create $50 billion in securities. A bank with a smaller position than JP Morgan could have substantially more exposure to a credit failure than the big dealer even if the Morgan’s notional exposure was many multiples of the smaller banks.
end itallics
party on, dudes:
NEW YORK (CNNMoney.com) — Manhattan apartment prices hit fresh record highs in the first quarter of 2008, even as the rest of the country was reeling from the mortgage meltdown.
The average price of a New York City apartment ranged from $1.63 million to $1.72 million in the first quarter of 2008, according to separate reports released Wednesday by Brown Harris Stevens, the Corcoran Group, Halstead Property and Prudential Douglas Elliman. That represents an increase of anywhere between 19% and 47% over average apartment prices for the first quarter of 2007.
http://tinyurl.com/2v8o3r
The silence on the right regarding a bailout for homeowners is deafening. McCain is basically letting the dems dig their own political grave. Every foolish suggestion for a bailout is being recorded and will be unleashed in a coordinated, devastating rebuke after the nominations. >30% of Americans don’t have a mortgage and among those that do, the VAST MAJORITY are nowhere near forclosure. In fact the most reliable voting blocks (middle class boomers and seniors) are least likely to be affected by subprime. All McCain has to do is explain how responsible homeowners and renters will be paying for the mortgages of irresponsible people who bought McMansions with no money down. It may be an exaggeration but it froms a pit in the stomache none-the-less. This will be a slam-dunk issue in November. It’s a shame too, cause I was really warming to Obama and would like to see him work as a true diplomatic prez.
Yep. And that is how it should be.
Interesting analysis. I hate McCain (don’t like Hillary or Obama either), but I also hate bailouts. Hmmm….
Being Ben Bernanke (triple-b rated)
Has just thrown out the recession flag…
I’m listening to Ben Bernanke’s live testimony before Congress on Bloomberg Radio via XM. Some quotes from Ben follow.
“We did not bail out Bear Stearns.” 10:15 EDT. “..if that transaction did not go through, the consequences would be severe” 10:21 EDT.
“Housing is the Congress’s sphere of influence, not the Fed’s.” 10:18 EDT.
How did the $29 bn in guarantees to sweeten the BSC non-bailout come from? Let me guess: The printing press technology?
The Media Depression
http://ibdeditorials.com/IBDArticles.aspx?id=291942022546625
Don’t worry. Iraq will make an issue of Iraq.
Roidy
Heck, 3/4’s of the town here is on foodstamps, you see those USDA debit cards being used all the time at the store. I always get a kick at the contents of those carts. No wonder so many people in the lower end of the spectrum have a weight problem. They apparently consider salty snacks to be a primary food group…
Kay-Are-Aye-Eff-Tee
cornuts for the elite.
I picked it up on sale.
This being the Deep South, there are always some variant of smoked hog jowls, salt pork of fatback involved in most of the cooking in poor households here (lot of the better off ones too), southern cooking can be delicious (but heavy)but I draw the line at the fried fatback sammies that are popular among some.
which is a total shame, as the growing season is long and the vegetables can be amazing….my mother grew up on a farm in North Georgia and was an amazing cook. Vegetables and salads ruled. Granted, she was born in 1911 and thus had plenty of common sense to spare in the kitchen.
Whenever we go to lunch at one of the local “downhome” establishments, all I ever do is fill my plate with the wonderful veggies - beans, peas, snaps, corn, okra, greens, etc. All with a big square of cornbread to soak up the juices…
I pay almost no attention to the meats.
I suspect most of those downhome veggies are seasoned with salt pork or some variation. Plain ol’ boiled greens have little flavor, while a little smoked or cured pork does wonders.
I’ve noticed over the years that low-income persons prefer a high fat, high sodium, and high sugar diet. I challenge you to go into a supermarket in a working class neighborhood and find any low sodium, low fat, or high fiber packaged product. You won’t even find the reduced sodium or reduced fat versions of popular products such as Wheat Thins and Hellman’s mayonaise. Of course the only fish you’ll find in such grocery stores are frozen fish sticks and breaded fillets (both deep-fried). I’ve noticed this to be true no matter where I lived (midwest, south, and northeast).
I’m glad the media has finally begun to tell the economic truth. When the failure of deregulation, supply side economics and globalism becomes a first page story, I’ll know we’re getting somewhere.
http://tinyurl.com/2n2jvz
A good article on how the tax code contributed to the housing bubble.
“On top of the mortgage deduction, the Clinton administration and a Republican Congress added another break in 1997, in the name of encouraging home ownership. The new break essentially exempted families from paying taxes on the first $500,000 of a house’s appreciation after they sold it. So homeowners would not only get a better deal than renters on their annual housing costs, they would also get a better deal on their long-term investment than stock or bond holders (who typically had to pay taxes on all their capital gains). The law encouraged people to flip their homes for a profit, and flip they did.
In the Boston suburbs, houses that had appreciated by up to $500,000 since their last sale began going on the market more frequently after 1997, according to an analysis of local housing records by Hui Shan, an economics graduate student at M.I.T. (Ms. Shan controlled for the general rise in house sales happening at the time.) Bruce Bartlett, a former Republican Treasury official, has pointed out that the law went into effect just before house prices nationwide began to take off, suggesting that it played some role in creating the bubble.”
Prices in most areas were reasonably flat until 2003 when lending standards changed. The tax change no doubt got the ball rolling but total consumer mortgage lending increased from $200B/yr in the 90s to ONE TRILLION PER YEAR in 2005-2006.
The lending practices were the dominant driver of the expansion, since prices are largely limited to what banks think people can afford.
I agree that Lending practices played a large role as well, but I think much of the speculation would not have occurred without the capital gains exemption, regardless of what lending practices were. During the height of this mania I had a co-worker pitch me the idea of flipping houses with his sole selling point being the capital gains exemption. The capital gains exemption was something that encouraged many to engage in speculation who would not have done so other wise.
The exemption required you to live in the house as your primary residence for 2 years. That ain’t the way flippers work. Also, it only replaced an exemption that already existed which was unlimited (I think) as long as you bought another house with the proceeds in a few months.
The change was set up because people were worried that under the old exemption regime, boomers would end up retiring in the big old houses they already owned instead of selling them to much younger families and moving to smaller cheeper condos in retirement communities as they were expected to. It was a classic sop to the baby boomers.
When appreciation was limited by proper loan qualification, no one would look at the 6-10% you could make in 2 years as a flipper incentive - that kind of appreciation barely covers the realtor fee.
The exemption required you to live in the house as your primary residence for 2 years. That ain’t the way flippers work
If they lied on their mortgage applications, I wouldn’t be at all surprised if they lied on their taxes as well…
The particular scheme that was pitched to me was one in which one of us would claim the flip as our primary residence. I am not disputing that lending standards played a role in this, my point is that the tax code, among other things, contributed to this mania as much as lending standards did.
There was certainly speculation among primary residences as well. People bought larger properties than they would have because of the tax-free gain. That was one of the main reasons the concept of your primary residence being a “great investment” came to be.
I know a guy that built a couple (large) houses. He lived in the first one for a few years. Sold it (made a pretty good penny) and lived in a rent house while he designed and built his next one. He planned on selling the second one also after passing the capital gains exemption (living in it for 2 years).
As far as I know he’s still in it. I don’t know if he has attempted to sell that house yet but it’s huge. 3600+ sq ft. I don’t know what the median salary is in Conway, Arkansas but I imagine it’s in the 30’s. If/when he does put his place up, I’m sure he’ll be asking 300-350 for it. He probably completed that house a year and a half or two years ago…I’m not certain.
Anyway, the point is that without the cap gains exception I’m pretty certain he wouldn’t have done all that. I also know of at least two builders that did the same thing, build a house and live it in for a couple years then sell it and move on. When things were good it was a good way to make some money (or own a house outright) I guess…
This was a generous gift to taxpayers or, depending on your perspective, the largest middle-class welfare program in the history of earth.
Pocketed $68.000.00 in August 2005 for a home I purchased in 1992 for $69.500.00. Even with the interest I paid, I almost broke even…
There’s a new sport in South Florida - Developer Tasering! I’m looking into joining a Wednesday night league. There’s even a video:
http://www.palmbeachpost.com/localnews/content/south/epaper/2008/04/02/m1a_talbott_0402.html
Bwaaaa Hahahahaa! OMG that’s funny
- thanks. The guy reminds me of a spoiled 2 year old instead of a high powered (maybe once) developer.
I have some good news this morning. My friend the doctor from Bellevue sent me an email this morning, that she is throwing in the towel on working to support her mortgage and is looking at cheaper rentals this am.
I’ve posted about her before, and this came without prompting from me.
I know she’s late, but she might still be able to sell if she prices it right.
The kicker was that she’s been talking to the other docs from Bellevue and all of them are in debt…”that they don’t expect to ever pay off”.
Suddenly the bells have gone off for her…I just thrilled that she may still be able to get in the lifeboat.
RE: My friend the doctor from Bellevue sent me an email this morning, that she is throwing in the towel on working to support her mortgage and is looking at cheaper rentals this am.
Whew…when the doctor’s start defaulting you know the USS Titanic’s 1st class steerage accommodation are now slipping beneath the waves.
The hoi-poli in 3rd class have long since drown-but everybody still wandering the deck is in denial.
My family’s family doctor informed me he was relocating to Hawaii because the cost of living was just too high here in San Diego. This doctor was extremely good, I recommended him to many and everyone thanked me and told me he was the best. When a truly great general practioner can’t even cut it in San Diego, that is truly sad and does not bode well. The year: 2002. That is why I have to shake my head when people claim the bubble started circa 2002-2004. In SD we were well beyond any sane level already in 2002 for even a very good doctor to want to stick it out, and he was born, raised, and lived in San Diego his entire life.
When cost of living is less than Hawaii, you are in trouble.
Perhaps he’s just looking for fewer deadbeat clients…
Good for her!
The decision to rent when everyone assumes that a doctor shouldn’t want or need to, has got to be a tough one.
I’m reminded of two doctors here in SD. They are older, recent graduates who moved here from a flyover state. They’ve been renting because of sticker shock, and are currently trying to buy. I’ve tried my best to help them understand that renting a little longer would be a much better idea, but they are each feeling anxious to own something and escape the stigma of being renters.
There’s plenty of debt and bad ideas to go around among the professionals I know too. Nice to hear that your friend is trying to side step it.
M.D. = money (dumb)
My 2 cents:
The bailout of some kind happens and the first thing to happen is these broke families stop paying cable, phone and electric.
Tell Barney these people are tapped, not victims.
I’ve been relentless in sending emails to Dodd, Schumer, and Frank displaying my angst at these bailouts. It is to no avail. It is political season and, as I said earlier, the GOP always ends up caving in. Kinda funny that all these proposals are aimed at keeping deadbeats in houses that aren’t really theirs and that they lied to get into, but no piece of legislation is aimed at helping first-time potential homebuyers (who didn’t defraud the system) get into more affordable housing via a tax credit or something else. I’ve never seen a more out-of-touch Congress in my life. Barney’s idea of buying foreclosed homes in order to stave off price decreases is particularly nauseating. Since when did this become the Soviet Union? And why is it all these New England states’ senators have become so pro-bailout? Must be the thought of the investment properties declining in value.
Do they plan on redoing mortgages for “couples” who have lost both jobs?
Will they rework loans for over fed food stampers?
Will they be checking up to see if these underwater losers have been paying their cable, phone and electric bills?
It’s a nationwide Katrina blowout special!
“the GOP always ends up caving in”
And you just realized this?
Shrinkage…
Wise man, he’s saving the last bullet for himself.
Car loans get throttled
“Ease the throttle” is 180 degrees away from a good word choice to describe 13.5% lending rates.
I was watching a piece on ABC last night about the massive rise in the sales of car interupter systems. They can keep a car from starting if the owner (borrower?) hasn’t made a payment to the shyster lot he rented (rent to own now applies to cars too) the heap from. We have a dealer in town who buys $1500 cars at auction, slaps a price with fees in excess of $8000 on them and will probably end up selling the same car 3-4 times before it is too worn out to resell. No-one ever ends up getting the title. But the interupter means that he usully gets the car back.
Alas, my temporary rental situation has come to an end and I have several comments to share with my fellow bloggers on the new rental search:
Thanks to those who mentioned an extra security deposit when facing a “no pets” stipulation. I have signed a lease on a rental which originally asked for no pets and I’m taking all my critters w/me! (Big giant smile from me and the critters)
When comparing telephone services I found they are now doing credit checks on all their new customers. My record of 6 years of on time payments when I owned my last house has no bearing on anything.
Yesterday when looking at replacement furtniture the salesperson informed me she was also a realtor and wanted to give me her card. (Funny I had that icky feeling of being sized up like too many realtors I’ve dealt with. (Although wearing some designer duds I hadn’t cleaned my boots–it is mud season here–since venturing into the barn. Gasp—so incredibly gauche….Olympiagal, can I borrow one of your tiara’s for next time.)
Btw—meant to add for today: Lost in Utah, I wanted to jump on a plane and go visit your lovely lovely national parks after viewing your most wonderful website. I’ve added it to my favorites (as I have with a few other bloggers who’ve posted theirs.
CarrieAnn, thanks for the encouragement for renting with pets, as I’m considering a move before the heat gets too bad here in SE Utah and I have lots of critters also. I will pursue the deposit theme, great idea. And thanks for the kind words about my website, VERY much appreciated, it’s an ongoing labor of love, hope to have more on it soon, including two new books.
Pet Rent is the only way to rent in an apartment community.
In south orange county and north county coastal it’s always required.
Selfish landlords will consider renting if you give them a big cash present.
PS CarrieAnn, if you read this, please contact me via my webpage, have something for you…
Gas supplies drop while demand unexpectedly increased yet oil inventories are rising. Why is that? Because what the investors want for the oil and what the refiners can sell gas for is a loss. They can’t sell more gas than they are refining and demand is really dropping like a stone yet when gas inventories drop investors naturally buy more oil. Isn’t oil inventory at a high right now yet gas is at a low because refiners cant make any money turning oil into gas so why make it?
Oh the increase last week in demand was from an earlier Easter.
You are referring to the crack spread, which is very small right now.
As for inventories, they are high in nominal terms but very low in terms of days of inventory. Oil prices will remain high due to increasing global demand and reduced supply (mexico production is down over 20% in the last year). I also don’t believe that demand in USA will drop much; people have to drive in this country. Finally, don’t forget dollar depreciation.
Didn’t i read something that said the yucatan is about tapped out?
http://seekingalpha.com/article/25557-mexican-cantarell-oil-field-in-decline-prelude-to-a-larger-crash
Russia looks peaky:
MOSCOW, April 2 (Reuters) - Russia failed to grow its oil output for a third month in a row in March and closed the first quarter with a one percent production decline year-on-year, confirming gloomy outlook by analysts for the whole of 2008.
A big controversy in Mexico these days is whether Pemex should be privatized. Apparently there are some good reserves left but Pemex lacks the competence to drill and extract in the offshore fields. The right wants to privatize and the left wants the status quo.
This is a sticky issue. Mexico’s gov’t gets the lion’s share of its revenue from Pemex’s profits. This is in part why Pemex has no deep water platforms (corruption is another big reason). But unless Pemex modernizes then its production will continue to plummet. But if it privatizes the gov’t won’t be able to keep all the profits like it does now. Plus the notion that the oil “belongs to the people” is sacrosanct, almost at a religious level. When Mexico nationalized the oil fields in 1938 school children raided their piggy banks in a symbolic gesture to help pay for the expropriation.
http://en.wikipedia.org/wiki/Pemex
Speaking of sacrosanct, Iranians are addicted to subsidized gasoline worse than any midwest agro-corp. And they don’t even refine it domestically in any significant amounts. The next Iranian revolution will start when the gas stops flowing.
Refiners cut production due to low margins. See Valero news.
I think it is more likely that they want to create a shortage during peak summer driving season. It’s called oligopoly. Everyone takes production off line for repairs prior to heavy driving periods.
Not really. That contrived-shortage speculation keeps getting investigated over and over by the government, and nothing is found to support that conjecture.
Thing is, if profit margins are slim, what BETTER time than now to take a refinery or two out of production? You certainly don’t want to do it when margins are fat! You do it NOW! And refineries are like cars — they do need regular maintenance, else you run the risk of problems.
And a “problem” at a refinery can be much more dramatic than a problem in your car engine. I know because I’ve actually experienced a couple of refinery problems myself — from a quarter mile away. It’s very dramatic, you might say.
The Buzzards are circling:
http://www.smeissner.com/auction_rate_securities_investigation.html
Banks aren’t out of the woods, this will cost them.
Perfect! This is another venue for “Moral Hazard” - getting vigorously and thoroughly sued.
Roidy
P.S. I like lawyers after all. LOL
Throughout the website he references “non for profits.” It’s done more than once so it isn’t a typo. He also refers to broker-dealers as “wire houses.” Based on this alone he wouldn’t be my choice for a plaintiff’s securities fraud lawyer.
Has shrub & “Dickey Boy” Cheney reached this level.. in their “legacy” quest?
http://en.wikipedia.org/wiki/Peter_Principle
Bush sets out to salvage legacy on world stage
http://www.reuters.com/article/topNews/idUSL0267354820080402
Hi, Everyone,
I just sent the following letter to President Bush, Secretary Jackson, and my Senators and Representatives via Congress.org opposing the bail out of lenders and borrowers. I ask and encourage all of you to send letters and call your Congressmen as well. Here’s a link to the site: http://tinyurl.com/3dk59d The form will put in the names and email addresses of your recipients.
Here’s my letter:
As a voter, taxpayer, and financially responsible citizen, I am dismayed and disgusted by your proposals to bail out both irresponsible home-debtors (I refuse to call them homeowners because they do not own, they rent from the bank) and the irresponsible institutions that lent to them. These are contracts with which you do not have the Constitutional authority to interfere. What you are doing is privatizing the profits and socializing the losses. You are redistributing wealth, and it is wrong!
Many people saw this financial disaster approaching for years. Prices of houses doubled or tripled in five years, but salaries did not keep pace. The savings rate went negative for the first time since the Great Depression. We became a service economy that sent our manufacturing jobs overseas; and, instead of producing things, we relied on consumer spending for our economy. It was not that hard to see this coming. Yet, Congress did nothing to prevent it when it would have mattered.
Those of us who did our due diligence and realized that house prices should not have escalated 200-300 percent in 5 years and that a mortgage should not cost us 5-10 times our income, did not buy houses. Those who already owned did not take out unmanageable lines of credit. Those who bought despite the ridiculous prices took out 30-year fixed mortgages that they could afford. Your legislation is an affront to us all.
Those of us who rented sacrificed settling our families in our own homes because we knew that taking out one of these suicide loans would have been irresponsible. We were pressured to buy by those in the real estate industry by being told ridiculous things like,” Real estate always goes up!”, and “They aren’t making any more land, you know.” We were ridiculed by home-debtors who called us “bitter renters” and “chicken littles” because we questioned home prices and the loans that were being made to finance them. Through all of this, we stuck to our principles and held our ground. We did what we knew to be best for our families.
Now, you are forcing us to pay for this lending/borrowing fiasco by bailing out those same irresponsible lenders and debtors who pressured and ridiculed us. You are stealing from us, our children, and our futures.
You cannot stop prices from falling. They need to correct. They must come back into a reasonable relationship to incomes. The irresponsible people who lose the homes that they never should have bought in the first place will simply have to rent. The irresponsible banks who lent to them will have to eat the losses. Those of us who sacrificed, saved our money, and acted responsibly will then be able to buy homes for our families at reasonable prices.
I hope you will consider what I have said and make the right decision. When you took office, you swore to uphold the Constitution. If you pass this legislation and, in so doing, break that oath, I will not vote for you and I will do everything in my power to prevent your reelection. I will send letters to newspaper and television media. I will post on blogs. I will vociferously and unrelentingly communicate your malfeasance to everyone I know. And, in so doing, I will encourage others to spread the message and vote you out of office.
As a voter, taxpayer, and responsible citizen you are insignificant to them.
Not true! Letters, especially physical written letters with a signature and everything, are HUGE in their influence. These things are rare and always a bellweather (great thread on that, by the way). Letters do get read and do have an influence, so if you have something to say by all means write it down and send it!
Nice, can I modify your your letter? I’m too lazy to start from scrach and like your a lot.
cap
And as witnessd by the numerous typos, I’m practically illiterate. Geez.
Yes. I’m just glad you’re writing. I usually only participate in the political process by voting, but as you can tell by my letter, this has me really angry!
Sorry, if this comes through twice, nothing happened the first time.
Sure, you can modify it! I’m just glad you’re writing. I usually don’t take part in the political process other than by voting, but, as you can tell by my letter I’m really angry about this.
Wow. That’s one hell of a letter. Nice.
Thanks!
Secretary Jackson
He walked the plank.
Yes, he did.
Congress is asking for comments in favor of and in opposition to the bailout. The link I provided is on congress.org. It goes to the page on which to submit comments in opposition to the bailout. It automatically sends your e-mails to President Bush, Secretary Jackson, your Senators and Representatives. All you do is compose the text of your letter and fill in your personal information.
“Examining the home price boom and its effect on … the economy as a whole”
Here’s one: My biz partner of ~12 yrs told me a few wks ago that he wanted to dissolve the biz and go out on his own to reduce overhead and improve cashflow: scale back employees, outsource everything, no benefits (part-time only), very small office, appointments through the internet (like an airline). He has built one of the most expensive houses in the state and needs to pay the mid-7-figure note. Ok I said, let’s have the accountant figure out the equity and you can go, and you have to acknowledge that it was your idea to move into the bigger office last year. Turns out he would have to pay me 350K to leave! (And no, still no money for my cousin if I ever would see that). He is hoping some rich foreigner or out-of-stater will pay 7-8 million for the house.
He is hoping some rich foreigner or out-of-stater will pay 7-8 million for the house.
better give him the Hope Now phone number.
Was at Costco yesterday. The family in front of me at the check out had a bill of $187 and the man swiped his CC, it was denied so he swiped it again, and then a third time. The teller said something and then the man pulled out a $100 bill which the teller then deducted from the $187 charge leaving an $87 balance. This was followed by the man reswiping his CC and viola, it worked. During the whole ordeal the wife kept mumbling something about the CC company screwing up their card.
RE: This was followed by the man reswiping his CC and viola, it worked. During the whole ordeal the wife kept mumbling something about the CC company screwing up their card.
No more HELOC’s to re-charge the cc balances.
Toast…
I hope it wasnt a debit card. BA WaMu WF etc… would charge $39 for each failed attempt.
You got to be kidding! Why don’t they just put a gun to your head and take the money.
What?! $39 for each failed attempt? That’s another reason I never, ever use a debit card. I like to use cash, actually, though I also use credit cards for gasoline (keeps me out of the store) and online. But groceries, food, etc. are cash.
One of the guys at worked asked “But what if you lose your cash??”. Easy, dude. If it’s gone, it’s just gone. My bad. No hassle, no worry, no phone calls to the bank, no time wasted on hold, and no affidavits and paperwork in case someone finds it before I call. I just go to the bank and get some more cash.
I always just make sure that I have the cash in my account to cover whatever I’m purchasing. I have WF and I’ve never incurred any fee whatsoever following this boring old strategy.
Yes, loosing your cash is soo not as bad as loosing your credit card.
Costco in the Northeast only take checks or cash. No CC’s.
Interesting juxtaposition on a local Dallas area radio spot this afternoon.
“Cliff’s Financial Minute” (IIRC)
Starts off with an advertisement for some upcoming real estate investing seminar, “see more at dfwmoney.com” (love the URL).
Then “Cliff” comes back on with his pithy advice:
(as close as I can remember it - NOT paraphrased)
Your house is not an investment, it is a liability.
It takes money out of your pocket each month and does’t put it back.
Buying a bigger house only keeps up with the Jones.
Instead, you should buy the big investment, watch it grow, then use it to buy the big house.
That’s straight from Robert Kiyosaki.
Comment by Paul in Jax
2008-04-01 16:19:13
“…And what’s with so many presidents being left-handers…”
50% of all geniuses are left handed, yet only 10% of the population is left handed. Ergo there is a better chance that we will finally elect someone reasonably intelligent if we keep electing left handed individuals.
LOL
President Garfield was ambidexterous and could write in 2 different languages simultaneously…
Not very good at dodging bullets, however.
I heard a whole thing about left-handers on NPR not long ago. Apparently they tend to be more accident prone. They are something like (I don’t really remember the number but it was significant) 50 times more likely to die from an accident.
My FIL is left-handed. I’m convinced after the NPR report and knowing him that the accident-prone thing is true.
They are apparently more prone to certain mental conditions. I don’t recall if there was a specific list but I seem to remember things like depression/bipolar being among them.
Like this untouched photo of the current president Looking for Weapons of Mass Destruction?
http://tinyurl.com/34tyz8
I worked with a woman who wore a medical bracelet alerting CPR and medical people that her heart was on the wrong side of her body. She was totally reversed inside. So…would her being right-handed mean she was actually left-handed?
OMFG, never heard of that before.
Curious, did anyone check to see if her appendix functions? That would be cool if it did.
As far as I know, everything worked.
She was really smart, too. Worked in high tech in Boulder.
Jim Hamilton was interviewed this morning on San Diego public radio’s These Days shows. Ya gotta love economists who refuse to paint lipstick on pigs. He suggested that San Diego home prices will continue falling “for the next several months.” Then the interviewer suggested that recessions have historically lasted for 10 mos or so and tried to get Hamilton to conjecture how long the current one will last. Hamilton said that this time was different due to problems in the financial sector, and refused to offer a hint about when he thought the recession would end.
All told, I thought it was an excellent and candid interview with someone who obviously cares more about his reputation than about painting a pretty picture. I will post a link to a podcast later if one becomes available.
I had Hamilton for a professor when I went back to grad school in the mid-80s in economics at Virginia (we’re about the same age). Can’t even remember what the course was - Advanced Macro Theory or something - all that Minnesota school stuff for the cognescenti. (I took my MA and said, thank you, but the opportunity cost of PhD-dom is too high - had a business going on on the side - and went off and taught a few years myself.) Remember him being both smart and a good teacher. His wife taught econometrics - she was a real piece of work. Saw them once out sleazing around one of the grittier honky tonks in Charlottesville when there was a good country band in town - Asleep at the Wheel or some such. I’d seen his name surfacing some recently and so looked up the pic to see if it was the same guy - sure ’nuff. Good guy.
“Minnesota school stuff”
He is a saltwater economist, not
freshwater.
Kind of an aside, but you will appreciate, PB: When I was in grad school, it was the heyday of mathematical economics. The micro-type courses, such as International Trade, were obsessed with proving all sorts of completely useless nonsense about curved spaces and continuity and the like, while macro was dominated by rational expectations and the “Minnesota school” - Lucas and Sargent and their followers. The point at the time was to see who could do the most confusing and complex mathematics - these guys were the stars. I looked at as trying to “kill off” the human capital of the people above you in the world of economics by guiding the field toward a complexity the old-timers would be shut out of. Bottom line is that at that time getting a PhD. in economics was similar to getting a PhD. in math, and already in my 30s, it was not a very pleasant way to be spending my time.
I keep racking my brain trying to think of Hamilton’s wife’s name - she used her own last name, and it was a Jewish one, but it escapes me - perhaps she is still teaching in SD or LA also. Hamilton was a very meek, little guy, but his wife was this math-obsessed hardass built like a brick shithouse - both nice people, though. I remember Hamilton as being a little naive about the way markets worked - he had a hard time understanding that real profits could be made by traders as information came into the market, that it was not absolutely instantaneous, as economic models predict.
These Days
Addressing Consumers’ Economic Concerns
Apr 02, 2008
Tom Fudge: What’s the number one issue in the U.S. today? To quote Bill Clinton’s old campaign manager, it’s the economy, stupid. If you follow the news, you’ve heard plenty of evidence. The dollar is weak, home prices are in a free-fall, consumer confidence is nearly at an all-time low. This morning we got the cheerful news that factory orders are down in the U.S.
The only thing people aren’t quite willing to concede is that we’re in a recession. Chairman Ben Bernanke of the Federal Reserves testified before Congress this morning. Even though he said the economy is contracting, he didn’t use the “R” word. That’s because you need to have two quarters of economic shrinkage before recession is official. So far, officially, we’ve had anemic growth. I hope that makes you feel a little bit better.
There are many reasons why the economy is doing poorly. The war in Iraq is draining money from the treasury and causing the dollar to devalue. The boom and then bust of the housing market is having an effect that’s similar to that of the dot-com bust we saw early in the decade. When will it end, and what can we do about this?
Guests
* James Hamilton, professor of economics at UC San Diego.
* George Belch, professor of marketing and chair of the marketing department at San Diego State University, where he teaches Strategic Marketing Planning and Consumer Behavior.
nice work on the GM there Hoz. expect that to continue or ??
I took a half this morning - never averse to an undeserved 15% profit in less than a week. I will put it back on after this pullback. I am bullish on the company, but there are some scary scenarios.
Looking at it now too, perhaps as my first foray back into the market.
“I told you this night, I timed the market on GE, Global Powerhouse, and the globe has won.
Im long GM, American cars can win.
21.65 GE 2002
21.65 GM 2008
look to the future…..in America.”
not you personally, but Im just making an effort for the recovery.
and it begins and ends in China and America.
Im also bullish Sprint, they want headroads in China. Im still long oil and Natural gas, I cant get away from it. Im big Cap industry, lookin for a break on TMM, give the little guy a chance Hoz.
I want long US financial, but its a crap shoot at best.
UBS 40 dollar calls are goin in the money….its part of the recovery, in Europe….DAX down, Japan down, France down…
everybody else UP.
Oh my..there goes the stock market. And oil is up $3.
This article almost made HBB look like chearleaders
http://onlinejournal.com/artman/publish/article_3069.shtml
They suggested FED had pissed away about half of its 8-900billion so far. There was some suggestion that the FED could offer its own bonds to keep the party going. Anyone have a handle on how that works.
Look in your wallet. Those green things are the Fed’s bonds.
Disconnect in Twain Harte, California, between fantasy and reality.
Fantasy…
Asking $459,000 (listed this week)
Zestimate: $300,000
2Bd: 2 Ba: 2 1280 sqft. 0.16 acre lot
Sold 06/17/1998: $85,000
Reality…
Recently Sold: $299,000 (February 25, 2008)
Zestimate: $546,500
3 bd 2.5 ba 2,500 sqft 5.4 acre lot
12/18/2000: $126,000 (land only)
Little Twain Harte?? Friends bought there a couple of years ago for $450k. They had to totally renovate the house, though it’s nice now, has a few acres. I think they paid a bit too much, they think they stole it…
This from the NY Times today:
“By now, it should be obvious that not every dollar spent on real estate is such a good investment.”
(http://www.nytimes.com/2008/04/02/business/02leonhardt.html?ref=todayspaper)
I’ll buy when Times magazine has a cover story that says ” Real estate is never a good investment”.
A while back, there was a post lokking for suggestions for the most worthless jobs that would disappear along with the housing bubble.
I saw the hands-down winner on the news last night……
“Yoga Instructor for dogs” (isn’t this a sign of the Apocalypse???)
In Cali, if course……..
Yeah, I think it is…
Just SEEING stories like that makes my head hurt……
I just don’t understand the mentality of someone who actually CHARGES people for a service like that.
What about the mentality of someone who PAYS it???
You must know my ex-wife…….
“A successful husband is one who can earn more money than his wife can spend; A successful wife is one who can find such a husband.”
Chinese Proverb
Voz proverb:
If you dont get married, you never get divorced.
I thought for sure it an April Fools news segment. Maybe it was slotted to look that way……….
dogs already know how to do yoga….as in, “the downward-facing dog pose” and the “upward-facing dog pose”…
Hmmm, interesting prospects:
http://tinyurl.com/369j2o
Report: Bay Area faces tough challenges to maintain status in global economy (Silicon Valley / San Jose Business Journal)
Wednesday, April 2, 2008 - 11:27 AM PDT
http://tinyurl.com/3bwcmf
Question for gold bugs: Was the recent spot price drop from 1035 to 880 the big correction I was anticipating or is a second leg down coming? The 2006 correction was 20% while the recent pullback was only 15%. I took some profits in the high 900s and am looking for a re-entry point.
1030 only happened in Asia for about 30 seconds. Anyway, there is no rule that says correction has to be 20%. I didn’t buy on this dip because it didn’t go low enough, but I don’t see it going to 800 this time around.
Depends on how leveraged you want to be.
Price to 50day MA - buy lightly, 1:1 or 2:1
Price to 200day MA - leverage say 4:1-5:1
Price to 300day MA - HELOC the house 8:1-10:1
I found this on craigslist - it’s a new spec house near me that has been for sale since it was built last summer. Now it says owner financing possible!
http://montana.craigslist.org/rfs/627923637.html
I clicked on a link and it seems to be owned by some sort of new “value-added” realty outfit, website under construction, and I know the owner. How embarrassing. What “value” could they be adding I wonder? Is this just a flip outfit going online a little too late?
I’ll give them a nickel for it. And they’ll walk away happy.
There Is No Gas Shortage
Businessweek Opinion Piece
A lot of assertions without any supporting documentation. Where is the evidence?
Recommended reading:
Sway: The Irresistible Pull of Irrational Behavior (Hardcover)
by Ori Brafman (Author), Rom Brafman (Author)
review: *DISCLAIMER: If you decide to buy this book because of these endorsements, you just got swayed. One of the psychological forces you’ll read about in Sway is our tendency to place a higher value on opinions from people in positions of prominence, power, or authority.
(But you should still buy the book.)
“If you think you know how you think, you’d better think again! Take this insightful, delightful trip to the sweet spot where economics, psychology, and sociology converge, and you’ll discover how our all-too-human minds actually work.”–Alan M. Webber, founding editor of Fast Company magazine
Nudge: Improving Decisions About Health, Wealth, and Happiness (Hardcover)
by Richard H. Thaler (Author), Cass R. Sunstein (Author)
review: “This book is terrific. It will change the way you think, not only about the world around you and some of its bigger problems, but also about yourself.”—Michael Lewis, author of The Blind Side: Evolution of a Game and Liar’’s Poker
from Amazon
A dollar policy or a lack of a dollar policy:
“…Ideally, the Gulf states would de-peg their currencies from the falling dollar.
Yet, Saudi Arabia, the heavyweight of the nations, has long been reluctant to make such a move. When Kuwait moved the dinar to track a basket of currencies last May, the US was unimpressed — and that was before the dollar started its rapid descent.
Gulf government officials privately argue the US would view such a move now, when the global economy is already fragile, as equivalent to a declaration of economic war, which would have security consequences.
Under the circumstances, a currency revaluation against the dollar would be more diplomatic. Economists estimate that a one-time revaluation of up to 20% would be needed to bring inflation under control. …”
Una Galani
Livemint.com
http://tinyurl.com/2jleof
Cool buzz words “declaration of war” “20% revaluation” ; strong dollar Mr. Paulson, m’ass.
Inflation for them is the cost of hiring out our aircraft carriers, smart bombs, and abrams tanks. we are the de facto “gulf defense force, inc.”
The Gulf area sells us oil and pays us protection money. It’s an extremely bad neighborhood.
click on my name for the link
America’s coming garage sale
By Michael Schuman
Hong Kong: For years, Americans have reveled in profligate, load-up-the-back- of-the-SUV-at-Target excess, much of it paid for by credit cards, home equity or other loans. The binge has produced some supposedly healthy economic growth and provided everyone lots of nice stuff. But now debt collectors from around the world are knocking. That’s why today’s turmoil in US financial markets will end in a massive transfer of wealth from America to the rest of the globe.
No surprise about “The downside is that the foreign business community – especially in Asia – will own larger swaths of the U.S. economy”. But is that a bad idea?
Foreign countries are sitting on $9T US that Mr. Paulson would like to have them spend on MBS and CDOs. CNOOC wished and tried to buy UNOCAL. After the rebuff by Congress, we will be lucky to get Chinese investors in the US.
Why is it great when a US company buys a German company or Russian company, but when one of these countries run a more efficient operation and wish to buy a US Company, we give them the shaft?
The US needs an infusion of about $1.5T in business investment. Where is it going to come from? I hope foreign investors. We have no moneys here.
Better link here, sorry.
Not buying it. Decoupling is a myth. A few countries may be a position to buy U.S. assets (witness the sovereign wealth fund phenomenon) but many others will sink along with the U.S. consumer which did the heavy lifting in the global economy for the past umpteen years. (This is all just MHO, of course…)
Ironic that it is Time Magazine — didn’t they feature the Home Sweet Home guy hugging his “investment” (house) on the cover, a couple of years ago? Or was it the Lereah cover?
Scary article Bkiddo.
This is the most reckless reporting I have seen this year.
“…Unlike in the past, Merrill is not planning to make any major announcement about the layoffs. The firm is hoping to make the cuts as quietly as possible. Job cuts are likely to grow at other Wall Street firms due to the sharp slowdown in business. …” CNBC
Merrill is not going to violate the law. Any layoffs involving 50+ requires a state Mass Action notice. When Merrill plans its layoffs, there will be an MA filed. The reporter at CNBC should check his/her sources. An MA is always major news.
Current estimates are 200,000 to be let go in finance this year.
ughhh
avoid financials
find the real economy
financials and complex bonds, as well as other sorted derivatives, will not lead out, in America.
dont buy something you dont understand. Equity lasts as long as the guys diluting sell paper…..find a solution.
ugghhh….
I have a question that I would like someone to answer since the econ. teachers couldn’t. I have a vague understanding of comparative advantage, however, it would appear that the economy is circular. Can increased productive lead to a greater benefit economically/physical improvement to the world population or any efficiency in production of some lead to the poverty of the non relative productive?m I net zero benefit to the world as a whole (closed system, somewhat like conservation of energy)?
least significant digit:
40 dollar April Calls.