The Housing Bubble

Singing praises has no relevance. When a new finance product is available that enables people to get ahead, the market piles on in force. Alternative products with lesser returns do not compete, they simply stop selling. As with monopolies this is an area where markets benefit from reasonable regulation. Bogus appraisals and thoroughly toxic loans should never be offered to anyone because they end in tears for the market as a whole, not just the customers who get taken or the financial engineers who walk away with their pounds of flesh.

exactly

The could have done so without telling ppl that’s what they were doing (i.e., Greenspan should have not kept rates so low for so long, 100% or greater LTV loans and no due diligence loans should have been abolished, etc.). Obviously, they can’t say they are attempting to deflate a housing bubble. Rather, they need to address the causes intelligently.

Regulation includes such simple things as not keeping interest rates artifically low in the face of an obvious housing bubble, not allowing 100% LTV, and requiring some form of due diligence in making loans. It doesnt have to be complicated.

Yes!

No bailout for speculators.

What makes you so sure that this is about regulators being smart enough to control markets? There is evidence that simply requiring appraisals to be disclosed improves their quality. How is this kind of disclosure inconsistent with your perceived need for individuals to bear the risks of their own foolishness? If this were just about individuals then things would not be so bad, but as you will find over the next few years what has happened is that individuals acting collectively have messed things up for our whole society. That is when regulations start to matter. Why exactly is it that bogus appraisals and toxic lending is so valuable to you? Can you really show where this kind of thing helps society at any level? Markets back in the day before regulations were terribly chaotic, so your whole argument appears to be ignorant of the history of capital and debt markets.

Control the market? Like Wiley Coyote strapping on the Acme Automatic Parachute, you just know that this is going to end badly. But, like like the cartoon, we’re powerless to do no more than watch for the effects of flame, explosion and the law of gravity to take over.
Supermarket, yesterday, everyone had rice in their cart. Young couple ahead of me at checkout, two cartloads of food, four credit/debit cards, all rejected. Said they’d be back, soon. Checkout lady’s comment to employee wheeling away the carts ” Yeah, like they got 200 in cash laying around at home….put it all back.”

The root regulation, the one that forces the creation of so many more regulations, was attempting to a have certain interest rates set by the Fed. Without a Fed, the market would set its own interest rate, and I can tell you that it wouldn’t have set a rate so low for so long as the Fed did.

You don’t have to tell lenders to have rules not to loan money to bad risks. This is common sense not to want to loose money.

Artificially setting interest rates creates periods of time of non-sensical investment like we’ve experienced recently.

Back in the day they didn’t have the wild excesses that all this regulation has created. Its easy to understand this because we are in the middle of the worlds single largest credit correction event.

Precisely: the purpose of the Fed is to blow speculative Bubbles via interest rate manipulation so that the rich can get richer. That’s all it does, and the latest response proves it: the rich lose some money, Bubbles Ben Bernanke drops rates so that the rich can grow richer while the rest of the world faces food shortages and skyrocketing energy prices. But the Fed doesn’t care, so there you go.

Without the Fed, there are still Bubbles, but the flaw in giving power to a group of people who have no interest in using it for good should be obvious by now. People worship the Fed as if they will “fix” the economy, when they have no interest in doing so - they LIKE Bubbles. Bubbles make their pals rich, and Bubbles keep the masses distracted. Take a look at the Fed now: they aren’t fixing anything, but they are blowing another Bubble (commodities, etc.)

yeah. You’re right. Regulations and laws never work so lets just rescind them all.

riiiiiiight.

Nah, we should just pile on ever more layers of regulators. Regulators for regulators for regulators. Eventually we will get it right, everything will be safe all the time and we get more jobs to boot. Just need some o’ them thar tax revenues to pay for it. That stuff comes in like water.

Right on bluprint.

You do.

RE: My big luxury is my DSL line. I love her.

And just think!

She won’t hit you up for alimony, the house, and dog in divorce court-saints be praised!

Why didn’t they just name it the Eighth Bank?

No that would be 1/8. This one is 5/3. Thus the proper name would be the “One-point-six-seven bank”

Banks & churches tend to have similar sounding names…

They can educate for less because they are responsible with their money.

Hah. There are plenty of bloated private universities and colleges out there. They’ll feel the hit soon enough at the marginal institutions — even some of the elite schools are going to trim budgets and administrative fat.

There is a reason so many of these people became realtors and mortgage brokers. For many of them, after being discarded by Corp America, it was the only way to survive. Now they won’t even have that.

nyc did you ever have a mullet?

Agreed….I’d like to do it, once.

“nyc did you ever have a mullet?”

Nope.

You mean “Nope”, or “Hmmm…. not yet… hmmm…” as you stroke the back of your head?

Many years ago, my boyfriend wanted to see the Independence Day 500 so I yawned and brought along about ten magazines.
Never touched one.

Yeah, I have relatives like that. They CAN’T STAND Gordon. I’ve marveled at the level of venom towards him, especially if their fave is Junior.

Just ’cause you’re not a good ol’ boy who talks funny doesn’t mean you can’t be a good driver.

Isn’t Gordon from New York??

New York City!
Next you will say he occasionally wins when they have to turn right!

It’s the one time in life when right is wrong.

Left is right, in Nascar.

They only hate Gordon because he is educated and articulated…..not the typical foul-mouthed, Skoal chewing, Bud driking, truck driving, trailer owning redneck thing.

You say that like it’s a bad thing………:)

I’ve done a lot of ‘weekend Warrior’ HPDE events in both a spec modified Miata and 93 civic with a 2 liter engine transplant which I built myself, yeah yeah yeah, dont start I’ve been to VIR, Road Atlanta, Watkins Glenn and Sebring and I’ve been adicted to turns since watching my first Long Beach Grand Prix as a child. Nascar? Whats nascar? LOL

Oh, and I’m better at driving then spelling

meat

I was thinking of substituting fool by sausage but then my mind seems to work in strange ways.

my eyes!

Your eyes have seen the glory of the coming of the …?

…and a prime cut of beef it is…wink wink

Cue the scene in “Young Frankenstein” with Peter Boyle and Madeline Kahn…

Soylent Green, is people.

And the engines are made by Toyota.

Honda.

No.

It’s a glorious idea.

That’s exactly where they will end up. We went to DD when I was a kid and they were full of sixties and seventies gas guzzlers.

Another fun with is the circle 8s with campers. Will be a good final resting place for all those RVs and campers the yuppies bought on credit.

carpe diem baby

It’s a Cinderella Story…

@ midnight sometime in our future:

Our cars will turn back into horses, and paved roads will turn back into dirt roads

There’s quite a bit of evidence to suggest that “fossil” fuel is actually created by the subterranean biosphere and therefore is the product of “Billions of Years” of internal heat and pressure.

Somehow that makes more sense to me than that we’re driving around cars powered by liquid dinosaurs.

Oil isn’t just from dinos, but also from tons and tons of plankton and plant matter.

I love rice in its liquid form.

Me too! With some raw protein perched on the solid phase stuff…

You can get it at Whole Foods or any decent grocery store. I’ve seen it at Kroger’s, Albertsons, etc. It often comes in a clear plastic jar.

Oh… :I “decent grocery store” Well that pretty much stops the show for me till I get out to T-Town or Birmingham… I’ll look for it though when I do my once a monther.

“I love rice in its liquid form.”

You mean like Gerber?

Mmmmm. Sake.

I like how it cooks up nice and fluffy in our rice cooker.

I think the general behavior regarding commodities and staples is starting to look and feel just like the housing mania… Leave one bubble crashing, start another. I’m seeing lots of signs in this regard.

We all need to eat, and you can’t just build more food…

Everything looks like a bubble, when you are in the midst of the largest one ever perpetuated in the history of the world~

I’m not sure what you mean about building more food, I certainly grow a lot of my own. I live 20 miles from the nearest year-round grocery store, and over an hour from anything resembling a full-size grocery store, so I have to supplement what I can get. With the price of gas we can’t afford to run out and pick up a few things whenever we want.

The recent hoarding/rationing of rice is definitely showing signs of classic bubblemania. If rice gets too expensive or isn’t available, substitute potatoes or something else, for pete’s sake! There’s plenty of food to go around, albeit more expensive. This is getting silly.

When I was growing up in Baltimore, everytime the weatherman would forecast snow, there would be a run on milk, eggs, and toilet paper, even though Baltimore has (on average) about 1-2 days per decade where travel is impossible due to snow conditions. It was a regional phenomenon, and there was plenty of joking about it. It’s easy to start a panic.

Food banks all across the land are almost empty and donations have slowed down considerably, so even in a world of apparent plenty, it isn’t if you don’t have any do re mi.

And the GOP in control of the white house and congress until Jan 2007.

Your point?

“the Democrats are in control of Congress.”

In theory, anyway.

And here I thought the bankers were in control of congress!

Congress is something like 52% Dem to 48% Rep. The balance of power belongs to Blue Dog Democrats in conservative districts who are essentially Republicans in everything but name only. When Congress does buck the president, then he retreats behind his shield of non-transparency and stonewalling.

I guess what I’m saying is that the Democrats would actually have real power if they had a veto-proof majority.

Why not just forget about things Democrat or Republican and strike at the root, instead?

Corporations are the route of all evil.

And here I was - thinkin’ TxChick was intelligent and stuff. “the Democrats are in control of Congress”. That’s funny!

We need to abolish the Senate. Once that’s done, Democrats WILL be in control of Congress.

Of course it is all the Dems fault. The Republicans, in the White House and in Congress,have set new standards for honesty, competence and fiscal prudence never before seen in this country. Only the government of Zimbabwe can beat the Republican record.

Thanks for that, Spike.

Yeah, because the Democrats are such examples of virtue, thrift, etc. Whatever.

Both sides are bought and sold by the people with the Big Bucks, which isn’t you or me.

I thought this was a pretty bright crowd in here. I’m surprised to find you all bickering about whose worse: the republipigs or the dumbocrats. Our ENTIRE government is corrupt. Calling these people “public servants” is an insult. ALL of these politicians are bought and paid for by big business and special interest groups and the sooner we get galvanized for a righteous revolution and get a third party up in here, the better. Until then, we keep going from the frying pan, into the fire and back into the frying pan…. then back into the fire. What’s up ahead might be more akin to being dropped into an active volcano, but only time will tell… Wake up people!

Most of congress is playing dumb, which to me means they are in on it. Probably a “fait accompli” that our constitution is history, just thought I’d bring it up regardless.

The question is why would the canadians agree to this, it would screw them more then us, maybe we can sell alaska to canada to pay off our debts….

Oh, and my first post, which didn’t make the cut apparently, was a comment on the public’s amazement that JP Morgan received a bailout. This bailout is also being touted as the “Bear Stearns” bailout, although nothing could be further from the truth as noted by their demise as an institution.

Nevertheless, if anyone is curious as to which Investment banking institutions are going to “make it”, they might start their research around the idea of who owns the FED.
Would it be a surprise that the owner of the FED is first in line to get money from the FED? Conflict of interest? I know, tin foil hat stuff!

http://land.netonecom.net/tlp/ref/federal_reserve.shtml

Augur,
agreed. Mencken used to write that most Americans would never vote for the Bill of Rights,let alone the Constitution.
How right he was. Sad though, to watch the death throes of the old republic. And the rights and privileges of citizenship that we once thought were ours.

Auger, the fact that the Fed is wholly owned subsidiary of JPMChase isn’t anything new.

In terms of Canada and NAFTA, we here in the frozen North hear a number of cries from the States about renegotiating NAFTA. Now I’m not a supporter of the party currently in power in Ottawa, but I agreed with our PM when he pointed out that Canada also has some things in NAFTA that we think ought to be renegotiated, and that (given our oil export capacity) we are in a much stronger negotiating position now than we were when NAFTA was first concluded.

NR

That’s almost as naive as the wonderment surrounding the bailout of JP morgan by the FED, also known as the BearStearns bailout.

JP Morgan IS the FED, is it a big surprise that the banks/banking families that own the FED are going to be bailed out? I’m mean COME ON, how friggin stupid are we supposed to be here?

http://land.netonecom.net/tlp/ref/federal_reserve.shtml

BTW, this article ought to dispel any notion that the Bear Stearns take down was some random, unplanned event. Read it at the risk of your free-market sanity.

http://www.optionsforemployees.com/articles/idx/0/130/article/Bear_Stearns_BuyOut_100_Fraud.html

Intelligence agencies commonly ascribe to treason what often should more properly be blamed on the “i”ntelligence (of their adversaries).

I mean, what is the chance anyway of this fantastical situation:

“Maybe the buyers of puts and short sellers of stock
just didn’t believe Reuters, Cox, Schwartz, Cramer and
Faber and went massively short anyway, buying puts that
required a 70% drop in a weeK.”

Yeah, The petition to open new put options and the subsequent purchasing of 50,000+ put options FIVE days prior to expiry and WAY out of the money, that was just plain old “intelligence”.

Here’s the BIO of the author who is saying he is 100% positive this is fraudulent.

“John Olagues is the owner and principal consultant for Truth IN Options and a recognized authority on listed and employee stock options.

After graduating from Tulane University (where he captained the baseball team and set many of Tulane’s pitching records), John applied his B.A. in mathematics and his competitive spirit to the real world of stock options.

In 1976, John became a member of the Pacific Stock Exchange in San Francisco trading and managing options positions in scores of different stocks. John joined with Blair Hull to create Options Research, the first service to provide theoretical options values to market-makers and to the general public. In 1980, he became a member of the CBOE, where he personally traded more options in more diverse situations than any other trader.”

I did fine on Bear Stearns with no knowledge at all. Just common sense.

The contention of the article wasn’t that Bear Stearns was not in trouble but that the downfall was pre-planned. I don’t doubt you did well and I think it is no big secret that most Investment banks are going to tank to some degree, timing not withstanding (which is always the sand in the vaseline, so to speak).
However, it is the unusal petitioning to add puts just days before the take-over, the amount of puts purchased with just hours remaining before they became worthless as a result of this petitioning that is the focus.

Did you buy puts that were WAY out of the money, five days before expiry and four days before the stock crashed?

No but I sure heard about others doing that.

How much would those 50,000+ puts have cost, way out of the money, and only days before expiry? Sounds like it would have only been a small investment even for a very small account.

Good question, the article doesn’t say. I would assume (perhaps incorrectly) that the author would have thought about that angle prior to staking his professional opinion on something so easily explained. However, I acknowledge that I don’t have any idea as to the accuracy of the claim.

I posted on here the unusual activity in Bear Stears OOM puts in the days before it crashed. I got the info from Dr. J who was seeing it on his heat seeker program and commented that it must be “amateurs” buying the 50 strike puts. Those puts should have had no bid and asked at 5 cents before people started buying them.

Look at the June 30 strike calls (left side of the table). That’s about what you’d have been looking at in those way OOM puts on BSC on a normal day.

http://www.cboe.com/DelayedQuote/QuoteTable.aspx

for instance, the BSC June 30 calls are now no bid, .05 ask. That would be about the equivalent. But the buying of these puts started well before the event.

Last trade prices of BSC puts just before the collapse:

BSC Mar08 25 put 15 put
3/13 57.00 .30
3/14 30.00 4.50 1.70
3/17 4.81 20.10 10.20

I saw that, shipping rice to relatives in the Philippines, and I have to wonder, what the heck does it cost to ship that stuff in small (e.g. 50 to 500 pound parcels) even at cheaper surface rates? Having shipped a fair amount of stuff myself overseas and back, from 1 pound to 6,000 pounds, this just doesn’t seem cost-effective, even at Manila black market prices, unless you do a whole container load.

‘ Most people, myself included have a couple of days worth’

Not me. I have about 6 months worth of food I like to eat plus I plan to supplement my diet by eating my neighbors, if needful.

The summary info I have read is that:

Philippines has morphed toward just-in-time food on advice of the World Bank. System here-to-for has lowered their cost in subsidizing their rice to the poor, (Subsidies making it less profitable for local farmers hurting internal production further.)

Internal production 39% of demand down from 42% several years ago.

This is why they are one of the largest rice importers.

Only 7% of world rice production goes onto the world trading market, hence the susceptibility to speculation, hoarding, and export restrictions among the few who do export. (Export restrictions keep local prices down (the intent) again providing less income to farmers and hurting incentive toward more local production.)

Couple that with production problems in some of the exporters, and with planting shifts (e.g.: Australian drought farmers changing over from water sucking rice to
stuff like grapes at twice the profit per acre), and the rice supply problem doesn’t seem to have any helpful signs except for hoping for serendipitous better harvests next time, despite these building structural problems.

The rice importing nations suddenly all realised they were naked?

That’s part of it. Daytime temps were higher, but night temps were lower than before the flight ban. In essence, contrails have a modulating effect; they cause the highs to be lower and the lows to be higher. This had been predicted since contrails are water vapor which is better than CO2 at retaining atmospheric heat.

Exactly: the temperature range was greater, which makes sense since the contrails are basically clouds which block out the sun during the day and keep in the heat at night.

Why don’t you guys off yourselves now and avoid the rush.

I retired from there in 2000, Oahu is paradise for tourists, the rich, and the military (mou included), for everyone else, it’s a choice slice of tropical Hell.

So, we have at most 20 years left until the rest of the US becomes like LA. Good to know… Probably less time if the North American Union goes through, of course.

I haven’t been in southie since before the “clean-up” or rather since I realized the bartenders at my favorite southie watering hole felt it necessary to pack heat.

Didn’t Bostonians say that about southie because of the attitudes of those that lived there (including Mr. Whitey Bulger types)? Are those activities still going on there? Do 20-30 somethings like one of my previous co-workers still consider it a sign of manhood if you take part in street beatings on a regular basis? I don’t know the answer but I wonder if those types got pushed out when investment cashola moved in. Or maybe they’re just cashing in legally but once that gravy train ends the organized activities start up again. It’ll be interesting to watch.

My husband has had the same phone number for 7 years now and he’s still getting collection calls for some clown who walked debt at least that long ago.

That is NOT comforting to hear!

Ah, sorry, I misunderstood the gist of your post.

NP ET. It annoys me a bit when someone trumpets their “far-reaching environmental initiative” when it is really a drop in the bucket. Right direction, wrong magnitude.

Not many people recall the Maori greenstone bubble of 1333.

I remember it like it was yesterday.

OK, but my way is funnier.
Still, building a freeway down the center of a flood prone river is still slated to be another Dallas area first!

Assuming they don’t ever actually officially ask the Corps of Engineers if they can do it.

(To be even more fair, the Dallas Observer is the local scandal rag. Still, it is much more interesting to read than the local major papers. DO writers actually go to the city council meetings. Amazing what head scratching stuff goes on.)

They were the only ones accurately reporting on the Trinity River boondoggle. I see that Schutze and Angela Hunt are in this story as well.

It’s fun going to the pit at the Grain Exchange in Mnpls and watching the traders doing the open outcry thing. A little bit of the past (lots of shoving followed by lots of standing around followed by …)

Lets me at the ok corral, tomorry at haaaa noon for a six gun showdown….. lmao.

Hey, did any of you ever play the game “Pit” when you were kids? We fancied ourselves quite the Wall Streeters. You pass out a bunch of cards and then everyone tries to get the corner by having all the cards of one kind (commodities). Well, anyway, the main fun part of the game was when the dealer said, “Pit’s open!” and then everyone would yell “Corn corn, I got 3 corn” or “Wheat, wheat, 2 wheat” until …until your mom ran you outta the house…

Bingo! Most students DO have too much free time.

“when I wasn’t doing one I was doing the other.”

And the girlfriend??