Bits Bucket For June 9, 2008.
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Here is a little update from South Orange County (Ladera/RSM/CD): I took my 2yo boy in for a wig snap this weekend. I was talking to my boy’s usual barber about the economy and such, when I asked him how business was doing? He said “It pretty good. People (men and boys) have stopped coming in so often, maybe from every 2 weeks to every 3, but there was a HUGE increase of little girls coming into the shop. Most are coming with there brothers and dads.” He noted that when times are good I guess you take you little girls to the salon with the mom and get washed, styled and frosted; but when times are bad you go with dad to the barber and get a $10 cut.
Can you imagine a little girl going to a barber, say it isn’t so. Something must be done, this is the South OC by G*d.
My barber said business is up because people are looking for jobs.
When I was little I always went to the barber with my dad and brother. He had comic books and he trimmed my bangs for free.
Comic books? Whatever! My dad’s barber had Playboy. It a was sweeeee-eeeet! Comic books will warp your noodle.
We used to go as a group of adolescents downtown to get our hair cut because they had all the best porno mags :).
When I was little my dad would cut my and my sisters’ hair with one of those electric buzzer things. We looked like midget Marines. Oh, how I wish I was joking.
I have a few photos of my youth on the mantel at my house and time and again someone will be looking and say ‘Who are the cute little boys?’
(It did give me notion that I can be my own barber, which I am to this day, except now I have long hair. Thanks dad. For NOTHING.)
Sorry, but that really made me laugh.
The government should do something to help these people with their hair cuts.
The People’s Republic of China has done what it could to help the USA with hair cuts, by sending $5 hair clippers to be sold at Harbor Freight.
Come on, you know you aren’t desperate until you and the dog are sharing the same Oster brand clipper…
Heck, I went all the time to the barber as a little girl. I started getting uncomfortable about age 8 though.
The last of the flippers
Before: MLS# 12088947
After: MLS# P2110903
The Economy, Why It’s Worse Than You Think…
http://www.newsweek.com/id/140553?from=rss
“Yun is the Little Orphan Annie of forecasters. He’s always sure the sun will come out tomorrow.”
Buahahahahahahaha
Nice call.
It’s a very well written article. I haven’t read Newsweak in a while, perhaps they are trying to distance themselves from Rhyme.
If things a going the way the article purports, then we’ll probably see a double dip on housing prices. The first dip as a result of the credit crunch, the second dip as a result of high unemployment. A two-phase demand shock.
A third shock would make this place look like The Road (Cormac McCarthy).
Oh man that book haunted my nightmares for weeks. I nearly went out and started stockpiling food and weapons after that.
The FEDs Strong Dollar Policy…
http://www.321gold.com/editorials/schiff/schiff060908.html
US economic policymakers are concerned about the effect on the dollar of the European Central Bank’s surprise signal last week that it may raise interest rates to curb inflation.
Washington officials worry that if the ECB tightens monetary policy next month it would undermine efforts on both sides of the Atlantic to prevent the dollar weakening more against the euro, people familiar with the matter said on Sunday.
http://us.ft.com/ftgateway/superpage.ft?news_id=fto060820081850593852
Well, gosh, only if the FED stays loose
US economic policymakers are concerned about the effect on the dollar of the European Central Bank’s surprise signal last week that it may raise interest rates to curb inflation.
The ECB’s policies affect the Euro, not the dollar. The weakness of the dollar is the result of Fed policies, not anyone else’s.
A weaker Euro would make the USD look better against the former, but it would do nothing to stem the decreasing purchasing power of the latter.
Total pre-event spin. Blame the ECB for the infliation that we EXPECT to see (we already know it’s in the pipeline) after they tighten and we don’t–and blame them before the fact. Blame early and blame often, that’s our Fed.
I have the Cheerleading Network Bull$hit Channel (CNBC) on right now. A Fed President (Geithner) would like more power for the Fed. He wants an International Banking organization set in place. That is the MO of scumbags since time began. Create a crisis and then say, “if we had more power this wouldn’t have happened.” And the sheep say, “protect us”. I wish they would let us drink at work.
His bosses at JPMorganChase want MORE power? It’s seems the banking cartel has no fear of rope and lightpoles.
I hope they are reading this blog.
–
I have been saying for years that the Fedsters are the agents of Bankrupters and Fraudsters of New York City (BFNYC) and they want more power to help their masters during troubled economic times.
Jas
I really do feel like the bankers at the fed are like mafiosi, looking out for only themselves and their cronies. No better perhaps than an African dictator who unapologetically rapes his country for his and his cronies’ gain.
Alan Greenspan’s urging people to take out ARMS during a low interest rate phase (it was eminently unlikely they were going to go lower and they did not) really opened my eyes. It was just a gift to bankers, pushing interest rate risk off the banks and onto consumers.
Is this the meeting where the power elite devide up the pie ,or just strategy for the fall?
http://www.prisonplanet.com/articles/june2008/060908_castrated_media.htm
‘I wish they would let us drink at work.’
That’s what a flask is for, my good man.
Indeed. My secretary just gave me a late birthday present last week. It’s a flask printed with “A guy needs to believe in something… I believe I need another drink.”
Very well said.
Lehman is raising $6bn to cover (some of) its losses and it announced $2.8bn in 2Q losses. There they go with that 3Bn loss again. I guess if all the big banks can keep doing this for the next 10 years the crisis will be over. So expect the market to go up on the news.
6 Billion shouldn’t be a problem, all they need to do is call the FED and old uncle Sam will be happy bail them out. Ben B. and his a-hole buddy Greasepan should, I would hope go down in history as bad as it gets at screwing the dollar bill into the ground, and propping failures left and right. History needs to be very unkind to them, and a cast of others.
Yep..by end of the day it will have recouped the loss..
Until more reality hits the fan…
Who’s buying that stock anyway?
Good question. I always wonder that too.
–
Professionals who buy for others, e.g., pension funds. Also, all kinds of indexes and ETFs buy Scams that are part of the index, or the ETF. What a Scam! (I have been using the term Scam Market since 1998).
All the losses would be pushed to sharecroppers and taxpayers. The economy would be socialized and communized. The government would own 10-20M homes.
Jas
More Executives Leave Bear Stearns
http://www.nytimes.com/2008/06/09/business/09bear.html?ref=business
The number of Bear bankers at Bank of America demonstrates just how much focus Bank of America is putting on its own investment banking franchise. Much of the hiring has been led by Stefan Selig, Bank of America’s vice chairman.
From a Whistle-Blower to a Target
http://www.nytimes.com/2008/06/09/business/media/09aol.html?ref=business
Mr. Ripp’s journey from whistle-blower to defendant is another example of the long shadow cast by the AOL-Time Warner merger, now widely regarded as one of the most disastrous corporate marriages in history. It is also a cautionary tale for corporate executives who may illuminate fraudulent conduct to one government agency but then find themselves a target of another.
It all depends on which side of the transaction you were on. AOL shareholders made out like bandits, getting 40% of timewarnder which held it’s value much better than AOL would have. Other dot coms should have done similar things with their inflated stock prices.
http://www.theonion.com/content/node/27938
June 9 (Bloomberg) — Corn jumped to a record as rain in the U.S. Midwest flooded fields, delaying planting and threatening to reduce crops. Soybeans, wheat and rice also gained as soaring oil costs and the dollar’s drop boosted demand for an inflation hedge.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRT0a6qnmxwg&refer=worldwide
Midwest is a mess withflooding.
If some underwater seller had an open house this weekend, the Realtor(Tm) would have to supply a boat and some waterwings instead of some stupid cupcakes:)
All of this “fear pricing” can go straight to hell. Or fear, period. What dreadful times.
power mad:
June 9 (Bloomberg) — Federal Reserve Bank of New York President Timothy Geithner called for greater central bank authority over banks so the financial system can better withstand shocks and recover from the credit crisis.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aIK_.RFxIsZo&refer=us
Why don’t they first figure out how to not create shocks before worrying so much about helping the financial system to withstand them?
Great a new “shock & awe” strategy applied to economics…must have been created over at the “shadow” Gov’t Office.
Why how insulting Professor Bear! The Hampton’s don’t come cheap you know.
A partnership that involves the nation’s largest pension fund and owns 15,000 acres of land outside of Los Angeles has filed for bankruptcy-court protection, representing one of the biggest land deals to sour amid the housing bust.
http://online.wsj.com/article/SB121298363815456607.html?mod=hps_us_whats_news
“…The 2007 deal allowed home builder Lennar Corp. and Cerberus Capital Management’s LNR Property Inc. to reduce their ownership in much of the land to 16% each from a 50-50 split. Lennar and LNR also each received $660 million from the deal.”
Hey I guess this is how Lennar got money to pull that x1 house build in Bakersfried last year…Hey crispy where you been? The HBB needs pictures & an update.
LandSource Files for Chapter 11
A partnership that involves the nation’s largest pension fund and owns 15,000 acres of land outside of Los Angeles has filed for bankruptcy-court protection, representing one of the biggest land deals to sour amid the housing bust.
The Chapter 11 filing by LandSource Communities Development LLC late Sunday is a potentially costly and embarrassing blow for the venture’s main investor, the California Public Employees’ Retirement System, known as Calpers.
The bankruptcy filing in federal court in Delaware means Calpers could lose much of its $970 million investment in the venture, which it made through an investment vehicle in February 2007, only months before land values plunged. At the time, the venture’s assets were appraised at about $2.6 billion. Earlier this year, the value had shrunk to $1.8 billion.
http://online.wsj.com/article/SB121298363815456607.html?mod=hpp_us_whats_news
“Landsource bankruptcy filing…”
Its astounding that Calpers could be that clueless and invest in Jan of 07. They should read this blog.
Here’s a story that will keep you up to the wee hours of the morning-
“Reuters Story Makes Outlandish Claim: U.S. Depression a Likely Possibility
Report raises the prospect of the U.S. government being forced into buying American stocks to avert an economic crisis.
By Jeff Poor
Business & Media Institute
2/14/2008 2:47:25 PM ”
http://www.businessandmedia.org/printer/2008/20080214142523.aspx
Oh..excuse me..but I thought based on the market..the goverment already has its hand in that cookie jar…and has for the past year..
“Report raises the prospect of the U.S. government being forced into buying American stocks to avert an economic crisis.”
Ignore this tinfoil hat conspiracy theory.
Prof,
Are you so sure that is not a possibility and a possible out come!
I do not know, I am not that smart. If things really fall apart, is this not a possibility?
“…the U.S. government being forced into buying American stocks to avert an economic crisis.”
Is that the real real US Gov’t or the US “Shadow Gov’t…and who can print US Dollars faster to buy US stocks or do they just use a mallet and keeping hitting the frog with the “buy buy” sign on it’s tongue?
So the gubment will offer up more worthless T-Notes and Bills to the Fed which the Fed will then buy and give the worthless cash to the gubment so the gubment can buy the sheeples worthless equities and real estate and pretty soon that pretty little dollar in you pocket won’t be worth Jack-Sh!t.
Happy Monday!
Pssst! Don’t look now, but as of June 6th the United States government had only $408 million left on its credit card. So what? Congress will just raise the debt ceiling to more than $10 trillion and step up the production volume on the creation of money. This action will be postponed, however, until after the November election.
WMBZ - how can they postpone it until after the election? By increasing in some tiny increment(s) before then? $408M is what, a few days in Iraq?
Quarterly estimated taxes are due June 15, and monthly payroll withholding taxes come in on a regular basis. That may hold the Feds for a while, but until November? I don’t think so.
I have to chuclke about the number of posters here who, just a few months back, were absolutely certain that deflation was just around the corner. Every article referenced on this thread this morning points to ever increasing inflation.
Hyperinflation is roiling Zimbabwe and to a lesser extent, Argentina. Is USA next?
Without wage inflation there can be no net price inflation.
Ie. something’s gotta give, eg. rents.
“Without wage inflation there can be no net price inflation.”
I think so yes but its not a closed system anymore but a global market and wages are rising in Chindia. So I bet commodities and stuff that bulk ships may go up in price.
And yea somthing will have to go down here like our standard of living.
Comparing the US situation with Zimbabwe is just stupid. The populations are completely different, not just in size but also in composition. Natural resources and existing industries are also totally different. The methodology that the US is using for printing, allowing banks to print as they lend, is quite different from having one corrupt gang distributing paper. These kind of offhand remarks suggest you really aren’t looking at the numbers at all.
“The methodology that the US is using for printing, allowing banks to print as they lend, is quite different from having one corrupt gang distributing paper.”
Are you sure about that?
$408M is what, a few days in Iraq?
It’s my understanding that all ‘war’ costs are kept off ledger. I am certain the gubmint keeps several set of books.
No, it’s in the total debt figure. They just allocate the money in supplemental bills so it doesn’t appear in the official deficit predictions.
Off by a factor of 1,000 - almost a half trillion dollars in borrowing left
“Balance of Statutory Debt Limit….490,863″ which is in millions of dollars from:
http://www.treasurydirect.gov/govt/reports/pd/mspd/2008/opds052008.prn
490 million is actually 490 billion. Gee wiz….. more propaganda?
Do you have a source for this? The link posted by Jay_Huhman seems to indicate a factor of 1000 discrepancy. Just curious which number is “correct.”
(Using quotes since it’s all basically monopoly money anyway)
“Do you have a source for this?”
History shows that the source will be some ideological idiot like Rush WindBag.
A take off on the “where to buy thread’.
A few mentioned CA as the place to be weather wise which I’m in total agreement. Then someone mentioned Houston as a 2nd choice. Does Tx rate anywhere in the top 5 with anyone here? I pulled duty in Tx and OK while doing my patriotic duty but they aren’t states I’d ever desire to relocate to unless something changed dramatically there.
Don’t change too dramatically in Texas please: the housing rates in the non-granite-countertop zone are already well below $100/sqft. (Note to Californians: Not a Typo)
Don’t come to Houston. Thanks.
Hmmm… The more I look into Houston, the more I like it. Close to the beach, I can easily earn(scalp) 100k+/yr there.
No, don’t you’ll hate it!
JK, seriously, I love it here, but I didn’t at first. I’ve been here 5, almost 6, years. It took me a while to get used to it, but it grew on me. I’ve lived in NYC, West Texas, and Dallas and I’ve traveled to a lot of major U.S., European, and Mexican cities. But, like I said, it takes some getting used to.
I just got off the phone with several home insurance companies for the Houston coastal area. Cowards
mostly aren’t writing new policies around here for the storm areas (2 of the 4 companies I checked with.) House price was small, but property taxes are high (3.2%, purportedly good school district), and the insurance costs are scandalous (I may end up paying 1.6%/yr for wind/other/flood insurance.)
Server seems slow today, sorry if this is a re-post.
LandSource Files for Chapter 11
A partnership that involves the nation’s largest pension fund and owns 15,000 acres of land outside of Los Angeles has filed for bankruptcy-court protection, representing one of the biggest land deals to sour amid the housing bust.
The Chapter 11 filing by LandSource Communities Development LLC late Sunday is a potentially costly and embarrassing blow for the venture’s main investor, the California Public Employees’ Retirement System, known as Calpers.
The bankruptcy filing in federal court in Delaware means Calpers could lose much of its $970 million investment in the venture, which it made through an investment vehicle in February 2007, only months before land values plunged. At the time, the venture’s assets were appraised at about $2.6 billion. Earlier this year, the value had shrunk to $1.8 billion.
http://online.wsj.com/article/SB121298363815456607.html?mod=hpp_us_whats_news
The Weak Dollar, Threat To World Order… It’s not competing, it’s cheating…
http://online.wsj.com/article/SB121296987173655833.html?mod=opinion_main_commentaries
June 9 (Bloomberg) — Let’s get one thing straight: The Federal Reserve isn’t going to raise interest rates to back a “strong dollar” policy.
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_berry&sid=ahl4XeXsUduY
I thought the jawboning was intended to serve the purpose of implementing a “strong dollar” policy?
“If the steep price rise was the result of a tariff imposed by the U.S. government, they could haul us before the World Trade Organization on a complaint that we engage in unfair trade practices. But since it’s accomplished through loose monetary policy for domestic purposes and bolstered by plausible deniability at the highest levels – “A strong dollar is in our nation’s interest” – there is little the Europeans can do about it.”
Let’s look at this another way.
How could free trade hurt the U.S.? After all, you need to sell something in order to get the money to buy something, right? Only because the U.S., individually, and collectively, went deeper and deeper into debt.
For 20 years U.S. policymakers have complained about the U.S. being the buyer of first, last and only resort. Now the U.S. is broke. The rest of the world will have to get over it. So far, it’s doing OK.
I’ve thought about this — while bad in other ways, particularly since we’ve engineered absolute dependence on a necessity (oil), the cheap dollar has been a great trade policy.
I’ve got a technical question with regard to how the new blog software works.
I use the little minus sign at the start of each thread to compress the thread after I’ve read it. That part works great. But whenever I click on anyone’s link within a thread, if I thereafter click the “back” button, it “undoes” all the little compressions I made and puts me into a strange place in the thread so that I have to find my way back to where I was - very frustrating.
Does anyone know a workaround or procedure to prevent this? In other words, is there a way to get back directly to the post at the spot of the link that I opened?
Will be gone most of the day, so will have to acknowledge assistance in the p.m.
I’m no HTML expert but it would be nice if the HTML links opened a new window instead of hijacking the window that you are viewing the HBB.
As it is now, I copy the links into another browser window so I don’t lose my place.
Ben…perty please?
You can right click in IE or Firefox and select “open in new window” or “open in new tab.” On a Mac, Firefox and Safari can be set to open a link in a new tab by holding down a chosen key (I use the apple key). Firefox on the PC has a similart option.
Nice tip. Thanks!
If you have a 3-button mouse (the 3rd button being the scroll wheel in the middle), then clicking on a link in Firefox, Safari or Internet Explorer (at least the latest versions of IE) with that 3rd button opens the link in a new tab. Very easy.
Gritty, Brian, Bluprint - thanks to all of you.
I use IE7 and hold the ctrl key when I click a link. I find it to be more efficient than right clicking as my hand is usually resting directly over the lower left part of the keyboard. The effect is to open the link in a new tab, which I then read either immediately or when I finish reading that thread or whatever.
shift+click will open the link in a new window.
http://biz.yahoo.com/ap/080609/calpers_land_partnership.html
“A 15,000-acre California real estate partnership that has the nation’s largest public employees pension fund as its main investor has filed for Chapter 11 bankruptcy protection…
…The California Public Employees’ Retirement System, its main investor, did not immediately return calls early Monday…”
And the city of Vallejo has officially declared bankruptcy as well. Ah, Kalifornia- The Golden State. I’m sure that Pelosi and Waxman will save the day.
Giant Calif. land partnership files for Chapter 11
http://biz.yahoo.com/ap/080609/calpers_land_partnership.html
LOS ANGELES (AP) — A 15,000-acre California real estate partnership that has the nation’s largest public employees pension fund as its main investor has filed for Chapter 11 bankruptcy protection.
LandSource Communities Development LLC issued a news release late Sunday to announce the bankruptcy filing in U.S. Bankruptcy Court in Delaware. The partnership’s assets include 15,000 acres of undeveloped land north of Los Angeles in the Santa Clarita Valley, making it one of the largest land deals to falter amid the national housing glut.
Hmmm..bad investment. I guess the state will have to increase funding to offset this loss and any expected gain that was also lost, courtesy of Cali tax payers of course.
I remember when Calpers went into real estate hard in 2005 or 2006… I couldn’t believe that any major retirement fund could be operated so recklessly. They can’t possibly claim surprise when an entire blog of amateurs could see this outcome at the time Calpers invested.
Financial Sense - “1st Hour with FS News Team” (upper left for June 7, 2008)
http://www.financialsense.com/fsn/main.html
Peter Schiff - 27:15 - 43:20
Interesting comments on a number of topics:
Value of the Dollar, inflation, price of oil - oil is not a bubble - current price reflects supply/demand, declining American standard of living,
upcoming sharp increases in apparel prices
George Zapata - 44:30 - 1:04:05
Oil is not a bubble. In February 2008, for the first time ever, oil demand exceeded production. Global oil production has peaked. Global production will fall in the second half of 2008. There will be gas rationing in this country in less than 36 months.
Yes, it’s never a bubble when you’re personally invested in it . . .
might take a look at this
http://image.minyanville.com/assets/FCK_Aug2007/File/Pics19/dw691.jpg
A “bubble” implies a coming loss of 50% or more, a la NASDAQ and CA housing. in other words, at least $65 or $70 coming off the current price of a barrel of oil.
Lets imagine oil declines by 60-65% and costs $50 / barrel - can you tell me what oil demand would be - and where all that extra oil would be produced from? At $50 per barrel, it is below the finding and development cost of new oil - according to oil company Total - so how do you keep supplying the market with low cost oil that is below the cost of replacing what you use - at the margin? If you know the answer to that question, I and many others would love to hear it. In the meantime, all of us will pay the current price, whatever it is, because we can’t live without oil.
and they’re not making any more land, and the baby boomers and immigrants are coming and housing always goes up and eyeballs are money and it’s a new paradigm . . . . blah blah blah
http://www.americansolutions.com
Start by telling the enviro-nuts to f**k off and drill everywhere the oil/shale/coal/whatever is.
Genius plan. Then we can use the limited resources even faster, while continuing to ignore the problem, leading to an even greater catastrophe down the line. Bravo sir, well done.
‘Start by telling the enviro-nuts to f**k off and drill everywhere the oil/shale/coal/whatever is.’
Yar, because only kooks need to breath air and drink water and such-like other silly ‘environmental’ stuff.
Start telling the moronic right to f**K off and start conserving. There isn’t enough oil in the US to make a blip in the price of oil. Shale oil takes huge amounts of energy to produce and coal to oil isn’t economical or they would be doing it. It’s the idiots that didn’t plan for peak oil that got us into this mess. They allowed our country to be designed around the concept that oil would be cheap for ever. Now they want to blame some one else.
“It’s the idiots that didn’t plan for peak oil that got us into this mess. They allowed our country to be designed around the concept that oil would be cheap for ever. Now they want to blame some one else.”
Where were you and I?
Hello, my name is $5 per gallon gas. I’m here to effect a change from fossil fuel to a more sustainable, healthy alternative. You’ll learn to love me in the long run.
Hello, my name is $10 per gallon gas. I’m here to effect a change from fossil fuel to a more sustainable, healthy alternative. You’ll learn to love me in the long run.
I’m not convinced that $5 gas will effect massive change in consumption, but at $10/gal I think you’ll really see people sit up and start to pay attention.
Hello, my name is “No Gas Today” My friends call me “Spot,” short for “Spot Shortages” I will force a massive drop in consumption where you like me or not.
Hello, my name is Permanently High Plateu, or PHP. You’re going to be embarrassed that you mentioned me publicly.
I decided to start telling people about the possibility of rationing in the near future. Talk about putting the fear of God into people. At that point I supose that we’ll just start exporting our used pickups and SUVs to places like Venezuela and the Middle East, at bargain basement prices of course.
“Oil is not a bubble. In February 2008, for the first time ever, oil demand exceeded production.”
The second statement is not strong evidence of the first, unless you can convincingly show that high demand is permanent, not a short-term consequence of markets undergoing wrenching and painful equilibrium adjustment. I remain unconvinced.
I believe demand is here it stay and to get worse..I read this weekend that the creation of the middle class in India is greater than the population of the United States…of that 350 plus million middle class they expect 40 million plus extra cars that will need fuel…
This country’s outsourcing of jobs for cheap labor has now created a backlash into our own society..as usual..we did it to ourselves..
Never, ever trust the words “they expect”. That’s how the housing bubble happened.
Yep.
Key is the word “demand“. In reality - supply vs. demand does determine prices, but demand vs. usage determines bubbles. Demand fluctuates a lot more than usage, since demand includes speculation.
Certainly we are seeing an increase in usage from China and India - that increase in usage has triggered a spike in demand, via speculation that the usage will continue to rise, outpacing production. However I think usage will level off and perhaps even decrease in the coming years, as habits and policy change towards efficiency (as they did in the 80’s), and due to the economic downturn. Closed-down factories don’t use as much energy as operating ones.
Also worth noting that a spike in short-term demand, which we are seeing presently, has opposite effects on mid-term quantity supplied (which increases) and mid-term quantity demanded (which decreases). Both work in the direction of lower oil prices a few years down the road.
“Oil is not a bubble. In February 2008, for the first time ever, oil demand exceeded production.”
I was trying to summarize some of the more interesting comments from several minutes of the interview. Items next to each other in the summary weren’t necessarily directly connected in the interview.
With regard to supply/demand issues, it was noted that in the past it was always possible to increase production (supply) to meet demand. Total global supply is apparently no longer growing and may be in decline. With global demand still growing, that leaves a supply shortfall.
Not covered in the interview, I have read elsewhere the possibility that a significant enough global (not just U.S.) recession could cut demand enough in the shorter term for prices to fall. This would just delay by a period of years, maybe 5 years or so (very rough number), the period where growing demand/supply imbalances would push prices much higher.
The US energy got in the news as saying this in Japan last week: he said the surge in world oil prices was largely a simple problem of supply and demand.
Production has stalled since 2005 at 85 million barrels a day, while economic growth — particularly in China and India — has pushed demand ever higher, Bodman said before a meeting of ministers from the U.S., Japan, South Korea, India and China.
“We’re in a difficult position where we have a lid on production and we have increasing demand in the world,” he told a small group of reporters, dismissing the effects of speculation and unclear inventory levels and other factors on oil prices.
“I would devoutly hope we … see a reduction of the use of oil in the world on the one hand, and an increase in the supply so we can see some mitigation in the pressure on price,” Bodman said.
Bodman mentioned the key point about peak oil — production stalling for a significant period. He “devoutly hopes” there will be an increase in supply. For some odd reason this news got very little attention in the MSM.
Whoops, I left out the source, here.
There will be gas rationing in this country in less than 36 months.
That is the one thing I DIDN’T want to read. Somebody better start gasifying coal, or putting out plug-in hybrids…fast.
http://www.americansolutions.com
The only thing the USA could do to bring down motor fuel prices significantly, here, this year, is to sell off the Strategic Petroleum Reserve at a discount to current crude prices. That’s it. There are no other possible quick solutions. Every proposed solution I am aware of would take years to have an effect. The USA has wasted its chances since the first oil shock, in 1973.
I’m sorry, I left out an obvious solution which is already being used by China & India: direct government subsidies to bring down the retail price of motor fuels. Silly me.
“There will be gas rationing in this country in less than 36 months.”
Either that, or prices will be a lot lower after the ’slowdown’ has run its course in the labor market.
01-06 Housing bubble =Fear, greed, speculation
07-08 Oil Bubble=Fear, greed, speculation
“…or prices will be a lot lower after the ’slowdown’ has run its course in the labor market.”
What? Oil prices will go down when demand increases further?
I must be misunderstanding the comment.
Bankrupt people don’t buy goods. In turn, those goods don’t need to be produced. Companies that don’t produce as many goods don’t need to consume that much oil.
Capisce?
Faster Pussycat,
The amount of “money” that can be produced by central bankers and given away to the public is infinite. Or didn’t you know that?
But, “after the slowdown has run its course” implies that things are improving- more people working, more goods being produced, etc.
Even if they print till the cows come home, people who are forced to eat don’t buy other craptacular retail goods.
Zimbabwe knows all about infinite money.
The people there are doing great.
“print ’til the cows come home”.
This will also have little to no effect because unless wages increase, there will be no way for the consumer to participate in a recovery.
Last time I checked the country was losing jobs and real wages were down.
Haven’t you heard Ben Bernanke’s assertions that the Fed does not believe inflation will be much of a problem going forward? How does that outlook hold together without lower oil prices?
http://www.americansolutions.com
“Drill here… drill now.”
Bad idea. I say leave it in the ground until 2020, when oil is more scarce and valuable than it is now. The oil in ANWR and off-limits coastal drilling areas should be preserved for careful use by future generations, not wasted on our POS 10mpg SUVs. BTW, I have no objection to drilling in these areas w.r.t. environmental concerns. But they’re just a drop in the bucket, and if anyone thinks development of these fields will push gas back to $2.50/gallon, not likely.
Never mind the gas rationing; you can always buy gas on the black market if you have money. But the currency controls will be a problem.
You can’t have a reserve currency AND have currency controls.
Do try to think through positions before you blurt out the first thing that occurs to you.
Reminds me of the phony abe lincoln quotes.
Who says we have a reserve currency? Ignorance and loquatiousness are a bad combination.
The world seems to be under that delusion.
Even your gold ingots are quoted in, guess what, dollars.
“Never mind the gas rationing; you can always buy gas on the black market if you have the money.”
You’re making a good case for going to cash.
He may have been talking about trading gold ingots for petrol.
“He may have been talking of trading gold ingots for petrol.”
In which case the receiver of the gold ingots goes to the pawn shop or whereever and trades them in for cash.
Cash: The Ultimate Financial solution. Don’t leave home without it.
Woo hoo, PB!!!
We used the term “gold ingots” at roughly the same time independently.
Mind meld?!? SCARY!!!
There are millions of Americans like me that own no cars. If we start rationing gas, am I going to be allowed to buy an allotment? You know, for my, um, lawnmower or go-cart or something.
You can bet I’d turn around and sell it to the highest bidder.
There are millions of Americans like me that own no cars. “No gas for you!” — the fuel Nazi.
First there was the ox & cart… then there was the horse & buggy… then there was the steam engine… then there was the gasoline engine… then there was the hybrid engine… then there was the electric engine… then there was the fuel cell engine…then these little green aliens crashed landed in area 57 and show us how we can use cheese (think Wallace & Grommit)…then there was the worlds greatest cheese bubble… afterwards humans had to learn how to survive by eating Dutch tulips. The End
“Necessities is the Mother of Invention”: Nanook the Eskimo
Who holds the most “patents” in the World for great ideas…Iran, Korea, Libya, Myanmar…It seems to constantly be changing.
“How to get out of a stupid idea…Don’t marry him in the first place.”
do not worry everything is fine here in Sarasota Florida
http://www.heraldtribune.com/article/20080609/REALESTATE/806090609/1661
No parking spots
I have been riding my bike to work for years. Once in a while there was another bike parked at the bike stand. This morning it was already full by 7am (4 bikes total). First time this ever happend.
I reckon’ people are parking their SUV and taking the bike to work.
Several news outlets are reporting shortages of bicycles. We may not be able to afford them. We should have imported them, rather than a bunch of crap, from the Chinese while we had the chance.
Good thing I’ve got three locks on mine.
“…shortages of bicycles…”
Where? The bike stores by me are fully stocked and still trying to clear the 2007 models.
Biking to work I’ve observed that many local tushes are suitable only for the large bucket seats found in autos - a lot of these folks couldn’t sit on a bicycle seat if their life depended on it. Sadly, the demand for bikes will never equal that for autos.
Still, you are right, ya better lock ‘em up good - bike theives are everywhere this summer. They are metal after all.
“Still, you are right, ya better lock ‘em up good - bike theives are everywhere this summer. They are metal after all.“
The nice ones have mostly carbon fiber in their construction.
And like everything else, many are made in China.
My bike is made in Italy. It’s a Bianci.
lol
Italy / China what’s the difference. Made in Usa, Japan was my favorite when I was a kid. Never found one that had that printed on it, but it was the joke of the day. Made in Usa
“A notable exception to the USA’s import laws is the Commonwealth of the Northern Mariana Islands, which is allowed to use the “Made in USA” label on their products and export them to the USA duty-free. Legislation was introduced in Congress to close this loophole (also known as the “Saipan Scam”) in 1999, but it died in committee.” (This is the 52nd state of the US.)
Yup, no shortage of bikes in the shops near me, either.
Seeing a lot of lower end and older bikes at the flea market, too.
that many local tushes are suitable only for the large bucket seats found in autos True. Maybe there is an unexploited business opportunity in producing human-powered trikes.
Speaking of which, those who chose the McMansion and SUV lifestyle are getting clobbered financially. The operating costs of their personal capital goods are soaring, and their value is plunging.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a4kOXcpI3dQg&refer=home
“At $4 per gallon gas, $125 per barrel oil and $10 per million Btu natural gas, a lot of activity becomes uneconomical,” says Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.
The lifestyle of the exurban commuter may be one casualty.
Electric heat will finally be less costly than fuel oil…… presuming oil won’t come apart after elections.
Exeter, do you mean “resistance” electric heat or “heat pump” electric heat. Heat pumps consume far less electricity than resistance heaters for the BTUs created, but heat pumps are pretty useless once the temp gets down into the 20s and below. That means they’re not suitable for all those states north of about 40 degrees latitude.
We lived in a house in the D.C. area in the 70’s that was heated by resistance electric heat. In the winter, our electric bill was larger than our mortgage payment.
Electric strips as they’re 100% efficient. Reversing valves in DX cooling systems are worthless in the northeast. Oil, at best is 85% efficient unless there is some new boiler technology I’m not aware of. There might be something getting 87% out there. Nevertheless, strip 15% off your net BTU for oil.
I don’t know about that - I managed some apartments in Capitol Hill after college - and one cheap landlord had electric baseboard heating (he rehabbed a 4 unit building on the cheap) - and the folks who rented those had brutal electric bills - the smart ones left when the lease was up, the deadbeats stopped paying the electric bill (as well as the mortgage).
It wasn’t a drafty building, either - tight, new windows and doors, and brick construction. May not have been heavily insulated in the walls, though.
Electric strips are 100% efficient, but the process of delivering that electric power to the heating strip has built-in inefficiencies of its own. The coal, gas, and whatever other energy sources drive the dynamos that supply the electric grid & are all converted into electricity at a marked discount from 100%.
Delivery costs are built into the price/kw. Also Zero, efficiency is effiency irrespective of construction types or quality of insulation.
Example of McMansions owners getting clobbered
http://www.realtor.com/search/listingdetail.aspx?gate=msn&pg=1&source=a2mszh1t042&zp=85086&mnp=31&mxp=31&typ=1&sid=8f8f31c7ac3349caa69350e765d4be1b&lid=1099953438&lsn=4&srcnt=119#Detail
This is a 4500 sq ft + McMansion in my area that has been vacant for months. The address is 40517 N COPPER BASIN TRL
Anthem, AZ 85086. This is a nice house on a nice lot across the street from a green belt/playground. It represents one of many other homes of this model that have been repurchased by the bank. The “Average” monthly electrical bill is $335.
Bush to Congress: Get Going on Domestic Oil Drilling
By Susan Jones
CNSNews.com Senior Editor
June 09, 2008
(CNSNews.com) - “The United States has an opportunity to help increase the supply of oil on the market,” thereby easing gasoline prices for hard-working Americans,” President Bush said on Monday.
He reminded Congress that he has proposed opening the Arctic National Wildlife Refuge and the Continental Shelf to domestic oil drilling — something that would “help us through this difficult period.”
No, actually you might want to take a look at this instead, and actually read the comments:
Why Oil Costs Over 130 - Decline of North Sea Oil
Individual oil fields do tend to eventually decrease production, as it becomes cheaper / more lucrative to produce elsewhere.
That is a very misleading statement and I am calling you on it.
Where oh where is oil cheaper to produce than in the giant fields of the middle east? There, all you had to do was poke a hole, stick in a straw, and suck it out. EROEI (Energy return on energy invested) of 100 to 1. Now we are talking drilling in thousands of feet of water and in Artic tundra for EROEI of 10 to 1, sometimes less. Why? Not because it’s more “lucrative,” but because that is all that is left! We are using more energy to get the energy, leaving less for us “consumers.”
Oil discovery peaked in mid 1960s and has been steadily declining.
Total world oil production is nothing but a collection of individual oil fields’ production. Is that not obvious?
The International Energy Agency will come out with a report in November that looks at the top 400 fields (which produce 50% of oil) and they will report that there is a lot less oil than originally thought.
In truth, there are approximately 100 bbl left per person on earth, leaving nothing for our children or grandchildren. This is what the market is waking up to.
Let’s not get too carried away on conjectures, and agree to compare notes in five years. I would bet (as Julian Simon similarly did before me) that oil prices will be much lower in five years than they are now.
That could happen, but it won’t be because of some miracle increase in production. It will be due to developing technology and conservation habits.
“It will be due to developing technology and conservation habits.”
So I guess you don’t believe there is a speculative component of short-term demand currently driving oil demand skyward as a hedge against the possibility that the Fed will not back up its strong dollar rhetoric with action?
I would bet (as Julian Simon similarly did before me) that oil prices will be much lower in five years than they are now. There are several ways for that to occur, some of them quite unpalatable, one being a collapse of the US $ and its economy.
“Let’s not get too carried away on conjectures, and agree to compare notes in five years.”
Oil is not a bubble, absolutly not. Let me ask you, what price of gasoline would get you to reduce your consumption by 50%; or even 10%. For most americans this would be something like $20 and $10 per gallon. Oil is cheap cheap cheap at current prices when americans are faced with the choice between paying more and doing without.
40% of my investment are in oil related stocks. Yes by all means lets compare notes in 5 years.
Right, all those declining fields in Mexico, USA, Indonesia, the North Sea…they didn’t pump all the oil out. They just don’t feel that it is profitable at $140 so they are waiting for…what, exactly? And wasn’t your previous argument that human ingenuity and technology would increase production once prices high enough? They seem high enough, now.
“…human ingenuity and technology would increase production once prices high enough?”
Patience my friend. This is not something that happens overnight (and neither is reaching the Peak Oil crisis stage).
Does anyone else find it highly amusing that some of the same arguments used three years ago against the “real estate always goes up” crowd are now useful for countering arguments served up by “Peak Oil” zealots?
Not really. The situations are fundamentally different. Oil is being depleted and consumed. Also, oil is treated as a commodity, not an asset. Furthermore, oil is one of the foundations of the industrial economy. Has there ever been a long term bubble in something as fundamental as oil? An example might be, say, price gouging of water in a disaster area, but is that a speculative bubble or just supply/demmand?
Oil might be a consumable but oil futures are leveraged speculative assets.
PB, it’s simply a function of negative real interest rates. You’re going to have credit rolling from into one asset class into another creating bubbles in their wake.
There is little speculation driving prices of oil. It is not possible when , at any time, Saudi Arabia could hammer down if they had oil to sell. ditto any OPEC country could pound away. These countries do not wish to see oil at these prices, but every offer they enter is taken.
The question should be:
If there are sufficient oils available, why aren’t the OPEC nations selling at these high prices?
“We’re in a difficult position where we have a lid on production and we have increasing demand in the world,” he told a small group of reporters before the meeting, dismissing the idea that speculation was fueling price increases….”
June 7, 2008
U.S. Energy Secretary Samuel Bodman
Current demand exceeds production by 2MMbbl/day.
According to OPEC, there’s no shortage of oil and they could increase production if they wanted to. They say the high prices are mostly due to speculation:
http://www.nytimes.com/2008/03/05/business/worldbusiness/05cnd-opec.html?hp
Sorry, I’m not sure how to do the link thingie.
Current demand exceeds production by 2MMbbl/day. The statement makes little sense, comparing apples with oranges. Production is a reality, you can put it in barrels and measure it. Demand is a hypothesis used to explain prices vs. production.
“Current demand exceeds production by 2MMbbl/day.”
You just made “Dickey Boy” Cheney smile… that guy can smell a war a 17,000 thousand miles away
a supply/demand curve is the backbone of all modern economics. Hypothesis? wtf
You claim to be able to see these curves? Amazing.
If you’re backing out the curves out of the prices (like we all do), the argument is circular in nature.
‘Full to the brim’
Sinking economy forces owners to give up, abandon pets at shelters
By Jane Clifford
STAFF WRITER
The dogs sensed something was up and turned to Anna Jaramillo for answers. That only made things harder for her and daughter, Eyannah, 9, who were at the San Diego Humane Society to relinquish their beloved pets. Jaramillo moved recently from one house in Santee to another and can’t keep them.
You know what else will cause you to give up your pet..Your Vet..
Biggest rip off..you can pay more in medical care for your pet than you would for yourself..
A friend of mine just paid $1000 to try to save her cat..
cat died anyway…
I disagree. Vet can now offer the same diagnostic and surgical techniques once available only for humans. For which I am forever grateful. The entire cost is borne by the owner, so why should you care what someone chooses to spend on their animal?
Neither vets nor doctors can promise a treatment will succeed.
News flash…humans die while under a doctor’s care as well.
I didn’t even think that screed was worth responding to. I”m sure the friend would do it over if she could. Once I took a dog to a hospital for surgery which had very little chance of working (cancer). I paid them $2,500 up front before it started. He died half an hour into the surgery. I would still do it over. I wanted to give him every chance to live.
I had a similar situation with an elderly cat who had intestinal cancer, but she survived. (The vets were dubious that she’d make it through the surgery, but we opted for it anyway.) She lived for another couple of years.
Spent around $3500 between surgery and recovery. I don’t regret it.
Retards
spike66, right on! They do provide a great service. American medicine is a joke anyway, my cousin is a doc. and he agrees. My wife and I have 4 dogs, 2 of them rescued from 2 different dumb a$$ americans, and their med. bills are not than much. Worth alot more than we spend on them.
Regards,
Lane
I spent $1,131.15 to keep my cat alive last summer (yes, it’s burned into my brain) instead of getting some repairs done on my truck. Still haven’t gotten the repair done.
Sometimes I regret it when he won’t shut up, but other than that I’m glad I did it (for my daughter too).
Way to go, Blano! How can you regret helping another live better, be it animal or human? (I’m more partial to animals, as they can’t help themselves.) But vets are cheap when you consider the amount of education and training they have.
I have a dog with diabetes that I got from Best Friends. She’s a sweetheart. Went blind. I’m about $7,000 to date on cataract surgery and bills from complications. I spend $200/month on insulin and have to give her shots 2x a day. But everytime we go for a hike and I see her running and loving life, it’s worth every dang penny. And, BTW, I’m not rich, except rich in dogs.
The bottom line is to treat others like you’d want to be treated yourself.
I just paid $3,500 for my retrievers ACL/Knee TPLO surgery. He had better care than most Americans…… Open MRI and all…
“The bank showed up 13 days ago,” Jaramillo said, with a notice that her rental property was being sold, the result of foreclosure. “The landlord didn’t bother to tell me this was happening.”
In this particular case, the renter has a lot of important decisions to make on very short notice. Part of her issues were cash flow in addition to the difficulty with finding another rental that would allow the pets.
Her first step should have been to hire a landlord/tenant attorney. She could have stretched the process out by months.
For what it’s worth, one way to stay in a rental is to use the Americans for Disabilities Act. Depression is a recognized disability and a good shrink can recommend a depressed patient have a dog as part of their therapy, and it is particularly useful for the doctor to state that drug therapy is not medically indicated, though not necessary. Dogs provide companionship, a sense of safety and are often a means to navigate socially. It is also a federal law, which supersedes local ordinances.
In NYC, in Tenant Court,with proper documentation from a doctor, it’s nearly a slam-dunk. If you’re trying to help someone, google dog law, nyc tenants court, for examples.
Spike, this bit of info is BIG!!! I’m serious!!
(Wondering how depressed you have to be to get 5 dogs in your rental…)
Isn’t losty starting up a non-profit to rescue such abandoned animals? Truly the innocent victims of this huge lending debacle. We all ought to send her some bucks to help out.
And someone else should start up a non-profit to catch and sterilize the pet owners who dumped their pets when it became convenient to do so. I’d donate even more bucks for THAT project.
“And someone else should start up a non-profit to catch and sterilize the pet owners who dumped their pets…”
Sterilize? I’d prefer not to them off quite that easy… Anything short of prolonged torture is unacceptable. Perhaps you meant euthanize?
hey, Oly, you’ve set me on a new kind of non-profit
spay and release… for humans…
Vallejo blames bankruptcy on contracts with unions
By Ed Mendel
U-T SACRAMENTO BUREAU
June 9, 2008
VALLEJO – Across the bay from San Francisco, this old waterfront city with 120,000 residents shares some history with San Diego.
…
Now the city of Vallejo, hit by the slumping housing market and the economic slowdown, says it is in deep financial trouble. It’s blaming contracts with public employee unions, much like the city of San Diego.
But unlike San Diego, the Vallejo City Council voted unanimously to declare bankruptcy and ask a federal court to break its union contracts – a move that experts say could set a precedent.
…
A spokesman for the unions, Mat Mustard, a Vallejo police detective, said the financial problems are the result of “mismanagement” by city officials, not union demands.
Mustard said the city has for several years been shifting money from the general fund to a number of restricted special funds, such as transportation and redevelopment, to make its budget look unbalanced.
“They are not bankrupt,” Mustard said. “They are not insolvent. The city has in excess of 150 different funds.”
The average police officer will receive a base salary of $121,518 under the current contract, with pension, health coverage and other benefits pushing the total cost to $191,060, said a staff report to the City Council on May 6.
The average firefighter will receive an annual salary, excluding overtime, of $130,112, costing $193,174 with benefits. Ranking officers get much higher pay – for example, a police captain earns a salary of $231,120, and the total with benefits is $347,726.
Mustard said the salary report given to the City Council is overstated. He said his paycheck and information from colleagues tells him the average police salary is “somewhere in the neighborhood of $90,000.”
Public employee unions, with their political war chests, can contribute to the campaigns of elected officials in local government and school districts, presumably backing those who will agree to lucrative union contracts.
8 cops showed up to pick up a naked chick in my hood-I asked how many for a guy ?
lol.
“Colonel Mustard with a JT in the council chambers.”
One per each limb, one on the head, and one to administer meds. So 6. I’m sure there is a light bulb joke in there somewhere. Seriously, that is how they do it in hospitals. The police had two extras.
In my old neighborhood it was 3. And they all argued about who had to go tackle him.
Two types of people have been getting richer — top executives who sit on each other’s boards and inflate each other’s pay, and today’s senior citizens, especially retired public employees, who control state and local politics.
Everyone else has been getting poorer. Moreover, the people above have health insurance and early retirement. Everyone else increasingly lacks health insurance and has no retirement.
The rich don’t like to pay taxes, so they often buy municipal bonds. The public employees like to bitch they are underpaid to justify their work attitudes, so they hide their compensation in rich pension and retiree health care benefits. And in NY, pensions are exempt from state and local income taxes.
Bankruptcy could do unto them as they have done unto others.
Might have been true once, not any more. Just started a state job for the first time (Cali). We don’t even earn any retirement credit for the first 2 years, no 401k matching or employer contribution of any kind, pay about 30% below private sector levels for the same work. The “alternative retirement plan”, which is your only choice, simply forcibly takes 5% of your pay above $600, and “invests” it in one of a few choices of bond or mutual funds. It is not an employer contribution, it is deducted from my normal pay. And, I am forced to be in a union, and pay union dues (something I’ve never been subjected to, nor wish to be, as a engineer) which apparently does fuck-all.
Fed benefits are still pretty good and I will likely start looking for another fed job soon. State benefits suck ass. Only upside(and the only reason I took this position): job security. We are bond funded, so immune to normal budgetary problems (unlike the rest of the state gov.)
150 ???
Milwaukee, Wisconsin’s taxypayers were surprised to discover that they were paying $117k with overtime for some contract bus drivers last year.
Forget the cops and firemen, I hate to think what they are paying for some high risk or dangerous jobs like City Dog Catchers
FB Do-Over: I covered the SKF for a little over a buck. Normally I’d hold but I think this little gap up is gonna get sold hard.
Txchk — Are you out of DUG? When are you thinking about getting back in, if ever?
Yeah, I”m trading it now like SKF. Great vehicle for that.
Last few days shows DUG is not a true proxy for Oil, but for Oil and gas company index…. While they usually move together, they have diverged on the big move late last week so just be careful and know what you are buying.
FYI- At around 3:00 Oil was down 3.06% and DUG was DOWN 2.30%, not UP 6.00% as the double/short on oil would have you believe. Wish it was as simple as finding an ETF that just double shorted OIL but I can’t find one. DCR was a pretty exotic double short on oil but is now way out of the money (unless Oil falls to 120) and expires at the end of June.
Good call. Meanwhile, the Nasdaq is doing a cliff dive in early trading. I was beginning to think my QID play was a waste of time.
If/when it does, wouldn’t you want to ride SKF back up??
I like to have a no-brainer type of trade. Don’t see that at the moment.
If J6P starts following these CR Money guidelines for prudent borrowing, the banks are even toastier than they are already.
July 2008
Your debt
8 benchmarks for borrowing
(Illustration of a couple speaking to an advisor)
Follow these guidelines to avoid falling into financial distress.
Illustration by Bob Eckstein
Those who are financially well off might be tempted to turn the page. Don’t. Debt problems can stalk anyone, especially in a slowing economy. “We have doctors, lawyers, and stock brokers on debt-management plans,” says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies.
J6P reads Consumer Reports?
You made a funny.
It is not necessary for J6P to read CS, as information tends to trickle down from the pundits to the masses.
I’m just sayin’…
In Utahr this weekend, I spoke to my brother Saturday and mentioned an aside about the markets.
His question to me, “What happened with the markets?”
J6P doesn’t get the info until it’s too late to be useful.
I’d swear that about midnight last night the Lehman Bros capital replenishment figure was $5 bn.
June 9, 2008 9:15 A.M.ET
BULLETIN
Lehman’s pulling the trigger
Hard-pressed Wall Street bank to replenish capital to the tune of $6 billion, pegs quarterly loss at larger-than-expected $2.8 billion.
It was.
They’re prepping for next quarter too.
Thought it was 3-4 billion last week.
June 09, 2008
Lehman (LEH) Raises Too Much Money
Lehman (LEH) appears to have raised $6 billion from places like The New Jersey Division of Investment and Hank Greenberg’s C.V. Starr fund. It is a nice chunk of change, but it is very bad news that the brokerage had to raise that much.
Back in the day, a crash like Friday’s would have portended a Monday stock market rout, as traders had all weekend to bite their nails before dumping their holdings on Monday. What has changed so that Monday rallies always follow Friday selloffs?
INDICATIONS
Wall Street index futures trim gains
By William L. Watts, MarketWatch
Last update: 7:35 a.m. EDT June 9, 2008
Comments: 77
LONDON (MarketWatch) — U.S. stock index futures remained pointing slightly higher Monday but trimmed some of their earlier gains after Lehman Brothers said it would raise $6 billion in a stock offering.
Futures indicated the potential for a small bounce after ending last week with a steep fall in the wake of a dismal May jobs report and a jump in crude-oil prices to new all-time highs.
dumped the rest of my index puts. Wouldn’t go long here but I’ll bet they bounce this.
Somehow in their euphoria over the MOM increase, they forgot to comment on the YOY change in pending home sales.
BULLETIN
REALTORS’ PENDING-HOME-SALES INDEX UP FOR APRIL
Pending home sales index up 6.3% in April: NAR
By Ruth Mantell
Last update: 10:00 a.m. EDT June 9, 2008
Comments: 11
WASHINGTON (MarketWatch) — An index of sales contracts on previously owned U.S. homes rose 6.3% in April from the prior month, the National Association of Realtors reported Monday. The index, which is considered a leading indicator of existing home sales, was down 13.1% from the April 2007 level. By region, the April pending home sales index fell only in the Northeast, with a 1.9% decline. The index rose 13.0% in the Midwest, 8.3% in the West and 4.6% in the South. End of Story
“The index, which is considered a leading indicator of existing home sales, was down 13.1% from the April 2007 level.”
Sorry, I missed this important bit of news on my first skimming of the article. Perhaps I was blinded by the glare of the headlines.
PB, this is the headline from Yahoo:
April pending home sales rise 6.3 pct: NAR
http://biz.yahoo.com/rb/080609/usa_economy_housing.html
And from our friend Larry Yun another fun Yun:
“Bargain hunters have entered the market en masse, especially in areas that have seen double-digit price declines,” he said in a statement.
En masse? Down 13.1% yoy decline and they are entering en masse? And of course pending sales are not sold homes. A lot of things can happen between pending and sold; like securing the loan.
Not that NAR junk has any credibility but I’m surprised the northeast experienced a decline. There seems to be a decent amount of low priced shacks getting contracts.
I thought of you reading the latest listings in the Sunday paper. There were a few couples that took the plunge and purchased some new $300k homes from builders. However the only larger home ($500k+) closing listed was the purchase of a local commercial developer who was downsizing from a much more expensive home.
I was out driving in the country yesterday and noticed many owners of multi acre properties were skipping the well manicured look. One poor donkey and a lot of horses (yes the actual animals) were standing in 2 foot high grass. Almost couldn’t see that poor donkey. I suppose lawn mower gas/contract is a discretionary cost. The new owners of our property have decided mowing the whole lawn is too much for them. The neighbors must be so happy.
“I was out driving in the country yesterday and noticed many owners of multi acre properties were skipping the well manicured look.”
I take it the Metro-Tards finally figured out that mowing 5 acres is a complete misallocation of time and money? School taxes are 3 short months away in NY state and Onandaga County taxes are some of the more oppressive I’ve seen here in NY state. Everyone here in downstate is wringing their hands whether to lock in a contract price for oil. Add ARM resets and $4/gal gasoline and it creates a perfect storm. Am I overplaying it? Time will tell but I don’t think so.
A lot of farmettes harvest hay, 2X per year for winter feed.
You’re right hoz but I know these properties pretty well and these are not the fields set aside for haying. And my former yard certainly was not meant for haying.
Many of the properties I noticed are not even farms. Many owners just like 30-40 acre plots as a means of enforced privacy. Sometimes the property IS actually used for snowmobiling or kids on ATVs. But usually its just to look at and admire.
And alot more “farmette” owners PAY someone else for 3 cuts per year. The dopes who claim to run a farm don’t have the equipment nor have the expertise to keep equipment operable so they pay others (natives). Hey, it’s no sweat off my ass that these retards keep throwing good money after bad year after year. It’s their funeral.
Will they publish the adjusted numbers next month when the “pending” sales drop 50% due to people backing out of their contracts?
backing out of their contracts = not able to secure financing
Colorado casinos are hurting - from gjsentinel dot com:
CO casinos put out SOS
DENVER (AP) — Revenue at Colorado casinos fell 10.7 percent during the beginning of 2008, the worst drop in the industry’s history.
The industry and gamblers are blaming the state’s new smoking ban as well as high gas prices. Others blame the overall soft economy.
An analysis by The Denver Post shows that the 10.7 drop in revenue between January and April this year is the second-largest drop among gaming states. Only Illinois saw a bigger drop in revenue. Like Colorado, it banned smoking inside casinos starting in January.
Sales of lottery tickets including Powerball, meanwhile, rose 9.8 percent during the first four months of 2008 compared with the same period last year.
“The industry is experiencing its version of the perfect storm,” said Don Burmania, a spokesman for the Colorado Division of Gaming. “How much each factor has contributed to the decline is difficult, if not impossible, to quantify.”
Until now, the worst four-month drop for Colorado casinos came in 2003 when revenue fell 5.5 percent between February and May partly due to the blizzard that hit the state in March.
“How much each factor has contributed to the decline is difficult, if not impossible, to quantify.”
Like finding a trout in your glass of milk…circumstantial evidence…”and then…. it went dark”
This was inserted in the next article, however, everyone may not read it.
Our future economic situation, reports from “ground zero”.
Florida at the Precipice of Depression
I was going to call this “Banks March Us Into Depression,” or maybe more fitting is . . . “Complete Collapse of US Banking System.” Folks, that is what we are looking at. I don’t see any way around it. What we’re seeing here in Florida, is your crystal ball. And what happens here, is coming to a town near you . . . soon.
Mike Morgan, J.D., CRS, GRI
Stuart, FL
http://activerain.com/blogsview/538147/Florida-at-the-Precipice
CNBC Keeps saying the Fed can`t raise rates.
Why not?
Because they said so?
lol
The Federal Reserve’s policy rule is, “We know less than you think we know.”
Catholic’s know what a pickle the FED is in…it’s and old concept of conditional circumstances:
The word “purgatory” is also used, in a non-specific sense, to mean any place or condition of suffering or torment, especially one that is temporary.[7]
http://en.wikipedia.org/wiki/Purgatory
“CNBC Keeps saying the Fed can`t raise rates.
Why not?”
Oh, that’s just media speak for “we’re terrified of what comes next if the Fed raises rates.
PETER BRIMELOW
Does gold, commodities surge signal war?
Commentary: Gold bug sees impending attack on Iran
By Peter Brimelow, MarketWatch
Last update: 10:21 p.m. EDT June 8, 2008
Comments: 192
NEW YORK (MarketWatch) — Bears were blindsided by the past week’s sudden spike in gold and commodities. But gold bugs have an explanation: the world smells war in the Middle East, specifically, an attack on Iran.
Here comes the calvary. We’ve been saved!
Fannie Mae, Freddie Mac Offer No Downpayment Home Loans
http://www.allheadlinenews.com/articles/7011211866
“The two largest mortgage firms are aware that their mandates to uphold prudent lending standards and make owning a house more within the reach of the average American, could be conflicting.
Freddie Mac’s Home Possible mortgages allows buyers with almost no credit or savings such as teachers, firemen and members of the military to own homes, but this may lead only to more foreclosure incidents in the future.”
Er, if they are aware of a conflict with a mandate to uphold prudent lending standards, then why are they trying to reinstate lending standard debauchery? And are they looking forward to being the future scapegoat when myriad teachers, firemen and members of the military face foreclosure incidents in the future, due to the easy money lure of no-downpayment mortgages?
Oh fer cryin’ out loud. How many times do we have to say this?
Even if they gave them loans at 0% interest, they wouldn’t be able to pay back the principal.
How hard is it to grasp this absurdly simple idea?
Read in WaPo this morning that up to 105% financing was still available for teachers, fire fighters, military, etc. If you are a teacher or in the military and you can’t afford a house then guess what? You rent! It won’t kill you I promise. My wife and I rented through my entire 17 years of active duty and after having owned two homes since I retired, we’re renting again! Feels so good to wake up in the morning and know that I can transfer somewhere without losing my life’s savings in order to sell my house.
If you are not making enough money to buy then you should not buy regardless of the programs that are available. You’ll probably regret it later. Oh btw for you military folk who lurk here: Think a repo or jingle mail won’t hurt you if you’re on active duty and you walk away from your home? Try keeping (or getting) a security clearance with a BK or home repo on your record. It ain’t gonna’ happen!
All loans for military are full document. The ratios are the same as for an 80% loan. If they cannot afford, they can’t buy.
And as we all know; the military is not a job, its $2,000 per month. The young men and women that enlist in the military aren’t currently receiving benefits suitable to the risk entailed.
“…The young men and women that enlist in the military aren’t currently receiving benefits suitable to the risk entailed.”
See here now, Wall Street takes all the risk, even with US taxpayers money…very, very difficult job…must be compensated…perhaps even with a bonus, especially near the day most American’s celebrate the man with nails through his body hangin’ on a cross…there’s “suffering” involved.
How did Monday turn into: “A Fourth Day”
Wow! Wamu is falling off a cliff this morning. I came sooooo close to covering at open but decided against it.
Can you say, “woohoo!!!”? (from Wamu advertising)
Well, I’m on my way home soon, back to the house I’m renting for free to see what’s left after my landlady took her stuff out over the weekend.
Discovered a new beer called Squatters Beer and bought a case to take back with me (I’m not making this up, check out my new video on youtube: http://www.youtube.com/watch?v=WrHd0nVkw8c
or search youtube for “Do Whacka Moab”).
Will keep you posted…and wish me luck!
Lost,
Can’t wait for the follow-up post. It ought to be entertaining reading. Good luck to you!
Thanks!
I have a Canon Digital Rebel XT and a few good lenses. Then I import the photos onto my Mac Book Pro and use iMovie. Pretty easy, actually. Any fool could do it, really.
dng keyboard! THIS WAS SUPPOED TO ASNWER
oh man, I give up…
OK, this was supposed to answer sanfrancisco’s Q below.
PS Squatter’s update at end of thread (end as of now, anyway).
“dng keyboard! THIS WAS SUPPOED TO ASNWER
oh man, I give up…
OK, this was supposed to answer sanfrancisco’s Q below.”
Looks like you’re enjoying those Squatter’s Beers, there lost. I’m gonna have to get me some.
LOL!!!
Loved your video Lost.
What type of equipment do you use to put together the video?
Nice job…
Squatters Beer…funny…do you drink any? 
yeah, google it:
“These beers were decent, and they’ve actually won some awards at the Great American Beer Festival (GABF). However, they’re very low in alcohol content - 4% by volume?!?! C’mon.
This is all due to the corrupt Utah theocracy trying to keep us decent, beer-loving Americans down. Oh, well, I guess people fear what they don’t understand…Like we said, these beers are pretty tasty, too bad about the whole Utah thing. For a good buzz, supplement with the hard alcohol of your choice.”
Self-righteousness alert: I wiped out some words in that post that would get me arrested in Utarrr. If you google it and get arrested, not my problem.
Nothing I’m posting over 10 words is showing up. Oh well, nothing that important to say, anyway, but yeah, google it. It’s for real…
Whoops, more than 10 words, won’t show up…
So prove me wrong again, dang it…
cue Roger Miller’s song:
dang me
dang me
they outta take a rope and hang me…
I’m flipping a coin and betting with myself whether this will show up… I know I’ll lose either way…
A guy interviewed on CNBC saying we did not invesst in energy while prices were low, so we weren`t ready for the huge jump in demand and we had better get used to higher oil prices, sounds a lot like Bob Toll saying we had better get used to permanently high home prices.
REAL ESTATE
Making the cut
Five signs that it is time to trim the asking price on your house
By Amy Hoak, MarketWatch
Last update: 2:36 p.m. EDT June 8, 2008
Comments: 43
CHICAGO (MarketWatch) — Sluggish housing markets are filled with listings that are lingering on the market, prompting many home sellers to ponder a price cut.
Speaking from experience I can honestly say this article is dead on. I put up my property in the spring of 06 and priced it ~10-15k less than FMV (based upon comparable places up for sale and that recently sold (415-10k & mine was listed at 399k). Plus I was leaving behind 5k in new appliances. I got 2 bids, one 6k less the other 10k less than asking. I took the 6k bid and lived to regret it. They backed out. I put the place back up and the other bidder returned but now he wanted to go for no more that 375k, 24k less than asking & 34-39k less than FMV. Plus the bidder kept everything oral and relayed via his agent, so with nothing in writing I presumed he was not serious. I turned it down and lived to regret it (if it was ever a real bid). After the place languished on the market for another month and despite a 20k price cut I had my agent contact the low ball bidder’s agent to see if he was still hanging out there. The response was NO he took a spec home from a developer for 375k w/ several free upgrades & a price cut from 420k. I do not know the truth of all this, but the light bulb went off and I had the price cut 10k a week over a 3-4 weeks in September/early Oct of 06 until I got a new bidder at 350k who did put everything in writing. I level of interest spiked and I got tons of viewings. So the real FMV was now 60k less than what things had been selling for in the spring. Nothing comparable has sold in the 2 years since mine. They all continue to languish in the 390k range, except for those that swithc to rental. I’m sure the realtors always say my sale was a fluke due to a “kook” of a owner. I know my neigbors hate me for pulling theirs down, but hell they were mostly flippers anyway looking for a quick sale/profit. All I know is that a huge drain on my finances was lifted and I’ve been able to slowly rebuild my finances, something that would not have happened if I let the place stay at the bubble paradigm estblished price and not the burst bubble paradigm price.
I was reading the “Atlantic” this month. There’s an excerpt from Robert Shiller’s (Yale economist) forthcoming book “The Subprime Solution.”
Here’s what he says about bailouts:
[Bailouts] are needed–not to prop up Wall Street profits or housing prices, but to prevent a fundamental loss of economic confidence and to maintain a sense of social justice for those of modest means.
It’s interesting that, once a person (like myself) manages through frugality and hard word to no longer fall into the category of “modest means”, then the Liberals will drop him like a hot potato. Why do they want to punish the people who were responsible during this bubble?
Why do they want to punish the people who were responsible during this bubble?
It’s not punishment per se, you just don’t make up a large enough voting block to matter.
Ain’t democracy great?
I wrote a letter to the Atlantic in response to Shiller’s editorial:
“you just don’t make up a large enough voting block to matter.”
Well, there’s that. And I’m guessing you’re not currently running a mega billion dollar IB into the ground. Those CEOs, whose numbers demographically are pitifully small, have more punch than a dozen states.
Thats why the founding fathers created a Republic.
I wrote a letter to the Atlantic in response to Shiller’s editorial:
I don’t think the “liberals” drop you once you have moved up the food chain - it seems to me that most true liberals seem to want to help the less fortunate, underdogs, the downtrodden, etc. Once you’ve made it out of those categories, you don’t need help anymore. I’m not sure what you mean about punishment - I haven’t heard anyone suggest punishment for anyone that didn’t buy a house or didn’t spend beyond their means. You may feel punished by inflation or because people make suggestions to help those less fortunate, but I’m betting you wouldn’t trade places with an FB for anything and that by being financially stable, you’re much better off.
I haven’t heard anyone suggest punishment for anyone that didn’t buy a house or didn’t spend beyond their means.
You haven’t? What about keeping interest rates low…SPECIFICALLY to keep mortgage payments down? That’s been the explicit rationale at least twice for lowering interest rates.
That punishes savers, plain and simple.
Where’s the social justice for those who were priced out of real estate by artificially inflated prices from, say 2000 to 2006?
Where’s the social justice for people who’ve lost their homes in the last two years?
Where’s the social justice for people who bought a home at an inflated price, and have managed to keep/afford it by careful budgeting or doing without other luxuries or even necessities?
Where’s the money going to come from to sort out the people who might genuinely deserve some measure of social justice from those who scammed the system or over-extended themselves to a patently irresponsible degree?
That’s the idea, Robert - reinforce failure indiscriminately, rather than concentrate how to prevent it in the future.
Crisis shifts to regional lenders
By Saskia Scholtes and Francesco Guerrera in New York
Published: June 8 2008 23:32 | Last updated: June 8 2008 23:32
Home equity loans are rapidly emerging as the next front of the credit crunch, as falling house prices and lax underwriting lead to growing losses for US regional banks that have huge portfolios of such loans on their balance sheets.
The rising defaults on home equity loans, used by people to raise funds by taking out a second mortgage on their houses, underscore how the financial crisis is shifting from big banks’ writedowns on complex derivatives to consumer-related problems for smaller banks.
The next wave of housing trouble?
http://tinyurl.com/582pdv
This is weird: TOL’s stock chart shows a gain but the quoted price shows a loss. I am wondering how this will look by day’s end.
Housing Market Is Showing Signs of a Turnaround
Pending sales of previously owned U.S. homes unexpectedly rose in April to the highest level in six months as foreclosed properties flooded the market and drove prices sharply lower, a real estate trade group report showed.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in April and seen as a key barometer of future housing activity, increased 6.3 percent to 88.2 from an unrevised 83.0 in March.
AP
This headline is so insane.
It’s a weird time in which we are living. More than once in the past several years, I have thought “that is simultaneously completely and utterly insane and yet fully and completely within expectations.” The instances of these instances seem to be increasing exponentially.
Are we entering a cognitive disconnect bubble?
“The instances of these instances.” Very well said.
I get your point. I can’t help but notice more and more cheerleading happening in the MSM. Like that Barbara Cochran nutjob saying that buyers are greedy and it’s definitely time to buy a house. I didn’t see it but an HBB comment said that she was literally shaking, like she knew she was lying.
And every single week there’s some headline like “Turnaround near? Housing about to rebound?” Just because they put a question mark on the end of the headline doesn’t make it impartial.
Barbara Cochran completely oblivious? Maria Bartiromo descendant of fish?
“Like that Barbara Cochran nutjob saying that buyers are greedy and it’s definitely time to buy a house”
The first time I saw BC on the Today show about 4-5 years ago she was doing the same rah-rah dance. I think she’s really a wind-up doll.
–
Real Estate
Lipstick On A Pig
Maurna Desmond, 06.06.08, 12:00 AM ET
One of the things that made the American subprime crisis a crisis was the availability of mortgages to borrowers with dubious credit histories. Turns out that some of the middlemen arranging the mortgages were — and still are — temporarily boosting borrowers’ credit scores, passing off risky bets as worthy investments for the ultimate lenders.
Unlike years past, many of those lenders are not banks or savings-and-loan associations, but international investors who buy bundles of mortgages. The mortgages are securitized — turned into bonds — that pay a little more interest than government issues but are supposed to be nearly as safe, often sporting triple-A ratings.
The investors are in it for the long haul, but they’re buying mortgages originated via commission-hungry brokers who apparently think nothing of tarting up the credit of dubious homebuyers just long enough to get the deals done. If the buyers default as often as their true credit scores suggest they should, the holders of mortgage-backed securities end up with losses, which seems to have been the case in the subprime crisis.
…
http://www.forbes.com/2008/06/06/credit-optimizer-expert-markets-bonds-cx_md_markets46.html?partner=weekly_newsletter
Jas
Kevin Depew’s Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Jump in Pending Home Sales Forecasts Jump in Pending Failures to Close
The National Association of Realtors’ Pending Homes Sales Index based on contracts for homes signed in April rose 6.3%, far above most economists’ expectations for a 0.4% decline. The Pending Home Sales Index is based on contracts for homes that have been signed, but have not yet closed.
According to the NAR it’s the highest level for the index since last October, but the more important datapoint is the year-over-year decline, which remains 13.1% below April 2007 levels.
Lawrence Yun, NAR chief economist, said pending sales contracts picked up in areas that experienced double-digit price declines, “but it’s unclear if they are investors or owner-occupants.”Regionally, the West saw the best performance with pending home sales 4% higher year-over-year, but that is also the region that has seen the largest price declines.
The bottom line is lower prices are needed to reduce inventory, and many areas have not yet seen prices decline to levels where buyers are willing to step in. It will be interesting to see how much tighter credit conditions impact the ability for these buyers to actually close on the pending contracts.
To the tune “Born to be Wild”
Wheel barrows full of dollars’
pushing to the bakery
Lookin’ for some cheap bread
And someone to take this fakery
Yeah Fed’s gonna make it happen
Take the US down in a disgrace
lowering to negative rates,
it blows up in our face.
I like gold and metals
Heavy crude and oil
Shortin’ the 500
And watching the dollar roil
Yeah Ben’s gonna make it happen
shove dollars in Park Place
lowering to negative rates
it blows up in our face
As a true American child
We were born, born to be mild
As the dollar dies
inflation’s gonna fly
Born to be mild
Born to be mild.
Hoz,
You posted recently a portfolio I believe for a 401K. Sorry my memory is a little hazy. Could you please repost.
Thank you.
A reduced risk long term investment strategy:
Vanguard 500 Index VFINX 10 - 15%
Vanguard Emerging Markets Stock Index VEIEX 10%
Vanguard European Stock Index VEURX 0 - 5%
Vanguard Extended Market Index VEXMX 10%
Vanguard High-Yield Corporate VWEHX 10%
Vanguard Inflation-Protected Securities VIPSX 10%
Vanguard Long-Term U.S. Treasury VUSTX 10%
Vanguard Pacific Stock Index VPACX 15 -20%
Vanguard Small Cap Growth VISGX 5%
Vanguard Small Cap Value Index VISVX 5%
Vanguard Total Stock Market Index VTSMX 5%
T. Rowe Price Africa & Middle East (TRAMX) 0-3%
This allocation backtracks to an annual rate of return of 22%. The TRowe fund is the only frontier fund that I found suitable(there are 3 frontier funds -Merrill’s fund is restricted to large institutions -frontier markets have a history of 100% returns/year and 50% losses/yr. ergo the fund). Even though I know Europe is toast, I still have it in the portfolio - any single market can go bad, but the total risk is significantly reduced.
The reason for Vanguard and this mix is NO overlap of investment - you are not buying 2 funds that both hold Samsung or Citi or Bank America. The world exposure is excellent with over 45% of the moneys outside of US risk. The fees are moderate. Once set up do not touch.
Do your own research before you invest, read the prospectus, understand the fees and make sure this suits your needs -Do not let some broker say there is a better option available without showing you proof including all fees. What is suitable for me, myself and I may not be suitable for any other investor.
That’s a lotta funds. Don’t they charge maintenance fees for each fund, hoz? Seems like it would eat into any profit.
Vanguard 500 Index VFINX 10 - 15%
Vanguard Total Stock Market Index VTSMX 5%
I think these two funds have some overlap ?
Do you divide all your cash evenly in all these funds? Like 1/12 each fund and then rebalance yearly?
I’m too lazy I have Vanguard lifestragey Growth and Vanguard index growth. no bonds no REITS and some cash which pays nothing really.
Thank you hoz.
I always do my research and will do so on this.
Appreciate your help.
–
Keep on dreaming and keep on singing, hoz.
The question to ask is: Who all will benefit from high inflation?
Jas
Banks and the federal government
Hey Jas
Find me one country that had a deflationary period when the country was a net debtor.
I can find you 17 countries over the last 80 years that were net fiscal debtors and ended up in inflation and several that ended in hyper inflation. Out of the 2 countries that ended in deflation both countries were net asset holders.
“Inflation occurs when fiscal policy creates more government liabilities (either money or debt) than people are willing to hold at existing prices.”
Its the government debt STUPID. It is not private debt that is bothersome. This government is already assuming the private debt.
Anyone who owes alot of money and can pay it back cheaper with time.
Especially if there is higher-than-expected inflation between the times of borrowing and repayment.
Can I get a response from one or more of the Messiah’s acolytes?
Monday, June 09, 2008
BARACK OBAMA
How is Obama’s veep searcher Jim Johnson not one of those overpaid CEOs the candidate decries?
The McCain camp is hitting one of Obama’s veep hunters, Jim Johnson, for his seemingly sweet loans from Countrywide Financial Corp.
Jim Johnson, A Former CEO Of Fannie Mae Chosen To Lead Obama’s Vice Presidential Search Committee, Received Special Loans From Countrywide Financial CEO Angelo Mozilo. “Countrywide Financial Corp. makes mortgage loans through a vast network of offices, brokers and call centers. But a few customers have gotten their loans a special way: through Countrywide Chief Executive Angelo Mozilo. These borrowers, known internally as ‘friends of Angelo’ or FoA, include two former CEOs of Fannie Mae, the biggest buyer of Countrywide’s mortgages, say people familiar with the matter. One was James Johnson, a longtime Democratic Party power and an adviser to Sen. Barack Obama’s campaign, who this past week was named to a panel that is vetting running-mate possibilities for the presumed nominee.” (Glenn R. Simpson and James R. Hagerty, “Countrywide Friends Got Good Loans,” The Wall Street Journal, 6/7/08)
• While CEO Of Fannie Mae, Johnson And Mozilo Worked Closely And Maintained A “Close Friendship.” “From 1991 to 1998, Mr. Johnson served as CEO of the Federal National Mortgage Association, also known as Fannie Mae, which worked closely with Countrywide, one of the nation’s leading lenders and loan servicing companies. In 1996, Mr. Johnson named Mr. Mozilo as chairman of Fannie Mae’s national advisory council. A 1999 article in the American Banker said the two men had a ‘close friendship.’” (Josh Gerstein, “Top Talent Scout For Obama Tied To Subprime Lender,” The New York Sun, 6/9/08)
They note Obama’s chief strategist, David Axelrod, criticized his counterpart with Hillary, Mark Penn, for working with Countrywide.
David Axelrod: “She’s stuck him with him through the revelation that his firm was working for Blackwater and working for Countrywide, and, you know, so, it’s kind of stunning. Remember that the embassy said they weren’t sure whether he was there as a representative of his firm or a representative of Senator Clinton. I mean, I think there are issues associated with this. I’m not - you can use the word hypocrisy, but there are certainly questions that arise from this.” (MSNBC’s “Countdown,” 4/7/08)
Readers of the Kerry Spot will remember Johnson, once Kerry’s veep-searcher, getting caught up in the Fannie Mae financial mismanagement mess. Byron noted it more recently in the Corner.
Here’s the thing… Johnson made $21 million in one year from Fannie-Mae, a quasi-private corporation that enjoys a massive subsidy of taxpayers’ money.
Obama repeatedly complains about CEOs making more in ten minutes than most workers make in a year, calling it a “moral deficit.” If Johnson worked the standard 40 hour week for 52 weeks that year, he had an hourly rate of $10,096.15.
Salaries at Fannie Mae vary quite a bit, it seems, but it appears that Johnson had to work about five hours to equal the annual salary of a securities analyst, or just under twelve hours to equal the annual salary of an IT project manager. (No word on what the janitors, groundskeepers/facilities management and secretaries made there…)
Really, if making anywhere from 175 to 412 times the salary of your worker is an unacceptable “moral deficit” to Obama, it’s not clear why he would tolerate it on his running mate search team…
06/09 12:34 PM
Tx, standards don’t count when applied to “my team”.
kthxbye
Watching all the talk about the Messiah waking on water gives me a headache.
I try not to bring up the topic in conversation at all. I’m largely bored by it. The economic storm already here is so large that the candidates are hardly going to matter in the longer term.
The Messiah will probably make things worse but that just means there will be a greater opportunity to pick up financial assets on the cheap à la Jimmy Carter.
The economic storm already here is so large that the candidates are hardly going to matter in the longer term. That’s what I’ve been telling everyone who wants to discuss the upcoming election with me.
“She started it!”
“Did not”
“Did so”
“Did not”
“Did so”
……….Huge slap with a 20# trout…..thud…(body slams to the floor)
“dazed moaning”………..”I’m telling Dad”
Yelling: “Beeeeeeeeeeeeeeeeeeeeennnnnnnnnnnnnnnnn!”
Here’s a response: Stop the political trolling. It’s bad enough I have to scroll past all your inane stock picks.
you don’t have to do anything. Hope the haterade tastes good though.
…haterade…
lmfao
This is still cracking me.
Thanks, I needed that today.
Her stock picks and especially her directional predictions have been spot on.
You must not read txchick on this board too often.
Bingo. We know you’ve got the hots for Billary and loathe Osama. Let’s leave the political nonsense alone.
In the end the fleecing of America will continue no matter who is leading this sinking ship. Got CFR?
Inane?? Try looking in the mirror.
Long now, just the S&P.
Who cares???
think:
try to and watch her picks. I have for almost three years along with a shitload of other analysts. She doesn’t need me to defend her but I tell you for you own benefit.
Who cares???
Those of us who are interested in learning. The Bits Bucket covers all kinds of stuff. You don’t like it, fine, ignore it. Obviously you don’t live according to your moniker.
Who cares???
Don`t be a Richard
“…If Johnson worked the standard 40 hour week for 52 weeks that year, he had an hourly rate of $10,096.15.”
If poor Karl Rove could…some how…get this type of “compensation”…perhaps he could afford a really, really good dance coach. It’s not he a a “real job” these days anyways.
127 on SKF. It was a nice buy at 89
Looking to buy some index calls late this afternoon if we get to around 1340
FHA chief balks at taking on more bad loans
Federal Housing Administration Commissioner Brian Montgomery said a plan for his agency to take on two million at-risk loans could make the housing crisis worse.
http://money.cnn.com/2008/06/09/real_estate/FHA_ban_on_downpayment_help/index.htm?postversion=2008060914
Damned lies, statistics and fair value
By Romil Timbadia
Published: June 8 2008
“…They found that as individuals move toward herd behaviour, the probability distribution changes from the normal bell curve, with expectations clustered around the 50/50 level, through a tipping point, where there is an equal likelihood of a balanced or unbalanced market of expectations, to a position where a market is almost certain to be unbalanced in its expectations. At this extreme, the whole market has the same view, so the balance of expectations is polarised one way or the other.
Mr Kelly believes this work shows that market prices can be based not only on fundamentals, but also on the amount of “herding” or correlation in crowd behaviour. The implication is that market prices can, and do, move away from fair value equilibrium when the behaviour of market participants becomes herd-like. …
It breaks free from traditional economics and could be a precursor to the emergence of new methodologies used to produce models that estimate the amount of internal divergence (from fair value mean) in any market subject to human expectations and biases.
Such models could then be used by banks, hedge funds, accountants, regulators and central bankers to calculate more realistic values for institutional risk and associated capital requirements.”
FT
http://www.ft.com/cms/s/0/2005e96a-33f1-11dd-869b-0000779fd2ac,dwp_uuid=b2e7f792-b6a6-11db-8bc2-0000779e2340.html
The math in the original paper looks good, now to figure a way to back test.
http://biz.yahoo.com/rb/080609/usa_economy_paulson.html
Paulson conceded that record oil prices and $4-a-gallon gasoline were “a problem” for the U.S. economy but blamed it on supply and demand and declined to blame speculators for playing a role in soaring prices.
“My position, and I’ve looked at this very carefully, is I don’t believe financial investors are responsible to any significant degree for this price movement,” Paulson said on CNN.
Why is it I think his banker friends are the speculators Paulson can’t see? I bet he’s letting them make money on oil so the government doen’t have to keep bailing them out ? Now everbody who uses energy can pay for overpriced RE and bad loans. High oil will cause a long Recession and paulsons remarkes about a strong dollar are becoming a bad joke.
Indymac Bank, Fsb, Pasadena,Ca Primary
CD rates are a little higher with this bank and they have offerings of CD’s in all different maturities. Are they going out of business or somthing?
Sorry… first post got eaten.
Not long ago in my neck of the woods, National City started posting better rates than Countryfried. You know what happened to them last week.
http://austin.craigslist.org/rfs/711159793.html
All units come with garages!
Were asking $342,700 owner says send us an offer. He lives out of town and just wants to sell it!
One of the best 4 plex areas in Austin.
2bed 1 1/2 bath $675 [$725 market ]
2bed 2 1/2 bath $715 [$750 market ]
2bd 2 1/2 bath $725 [ $750 market ]
3bed 2 1/2bath Vacant[ $850-$950 market ]
All have garages which is almost unheard of in a 4 plex.
this is a great investment opportunity for more info
Well, I love the garages, but who wants to live on Schick? I would hold out for a fourplex with garages on nearby Bubbling Springs Trail, Sparkling Creek Drive, Dove Valley Trail, or best of all sounding so upper class - Foxhound Trail.
Squatter’s update:
WAHOOO!! You’re all welcome to the official opening of the Squatter’s Inn B&B!!! No stove, no frige, no washer/dryer, no swamp cooler, and no heater.
But she left the doors and windows, so we’re in business!!
Also have water and electric, because they’re in my name. But it’s nice and cool in here, and I have my official Squatter’s Lounger and a can of Squatter’s Beer, so I’m stylin’. And, of course, dog beds and my Squatter’s cot, which I will set up shortly.
Actually, in some ways it’s nicer than when she had all her stuff here.
Oh yeah, I also have my official documentation via date stamped camera of what she took. Don’t know if it’s worth anything, but may buy me some time with the bank, although I don’t think they’ll be around any time soon.
But you know, this is weird, living history like this. Never dreamed I’d be a squatter. I have a little camp stove, so that’s covered. I can get a cheap swamp cooler and a friend has offered me a frige (portable). I just now need to decide if I really want to put this one on my resume…
From Phoenix Craigslist:
…”home isn’t selling, so I’m selling everything inside of value.”
http://phoenix.craigslist.org/hsh/711880464.html
Lender will enjoy getting this one back, sans tub.
- Angus
[sorry for multi-post, meant to drop in bits, first]
For those interested in my Squatter’s Update: Server slow, my post’s not coming through yet, but let me say that my landlady locked the doors after she stole everything! She’d make a great mortgage banker!!!
lol.
I assume you didn’t have any personal belongings?…or maybe we should discuss when the main post shows up.
I’ve lost a post earlier too, so that’s at least one today. And it was a small one.
I posted a long time ago, so no idea if/when, so let me say I had everything out (stored in my camper). She took the stove, frige, washer/dryer, and event the gas heater (there is another forced-air in the basement, so the house will still have heat). Left the dishwasher. Ironically, it was all junk and I thought if I were to buy the house, I’d have it all hauled out. The house looks better w/o her stuff.
WAHOOO!! Now I’m an official squatter! I have a key to the house adn she didn’t say I had to leave, so I’m still legal until she gives it to the bank.
Mr. Greenspan, come on out and we’ll have a BIG party!! We’re making history, here, as I said in my earlier post. Have another Squatter’s Beer!!
On another note, I found a really good home for the cat she abandoned while in Moab, so that was good.
Awesome Lost! (on both counts)
Keep us posted. We especially want to hear what happens if any badges show up.
BTW (you probably posted this already) - what are the squatter’s rights laws in Utah? Might you be able to take free ownership at some point (e.g. in CA I believe you can after 7 years)?
Seven years, you have to pay the taxes and live in it openly.
The Squatter’s Inn B&B is officially open!!! Just set up the cot!! Come on out, the river’s running high (and check out the video I made while in Moab, youtube, search for Do Whacka Moab).
(But don’t expect a COLD beer, after all, we’re squattin’ now…)
(Hope this isn’t a double post, Ben’s server is going rogue on us.)
Seven years, you have to pay the taxes and live in it openly.
The Squatter’s Inn B&B is officially open!!! Just set up the cot!! Come on out, the river’s running high (and check out the video I made while in Moab, youtube, search for Do Whacka Moab).
(But don’t expect a COLD beer, after all, we’re squattin’ now…)
PS Should I put this on my resume for any future employers??
He’s “renting”, so he has permission, thus AFAIK no adverse possession.
My posts aren’t showing up (will all come at once, probably). Seven years and you pay the taxes.
The “permission” is of the variety, “go ahead, I’m outta there, I could care less.” My landlady will give it to the bank in the next week, so she says. And I’m a she, not a he.
she.
Did anyone else see my posts up above THREE times? Or is this Squatter’s Beer that good…4%, can’t be the beer…
Not three times…but several old posts finally showed up.
But them I’m halfway into some apple wine I made last year so…
Utah, are there any street lights on your street?
I didn’t think so. Got a harmonica?
I do have a harmonica, but can’t play it. But I have electricity, so I can listen to others play on youtube.
One of many times i’ve wished for a delete function! )
“To put the performance of the machine in perspective, Thomas P. D’Agostino, the administrator of the National Nuclear Security Administration, said that if all six billion people on earth used hand calculators and performed calculations 24 hours a day and seven days a week, it would take them 46 years to do what the Roadrunner can in one day.”
Military Supercomputer Sets Record
http://www.nytimes.com/2008/06/09/technology/09petaflops.html?_r=1&oref=slogin
Like I said: The best ideas & tools money can buy… Those Radical Islamic cassette recording fanatics must really scare the heck out of Cheney-Shrub, they keep reminding me everyday to know the alert flag color and make permanent those tax breaks for the wealthy. Oh, and to continue to be afraid…very afraid.
maybe now they will find them WMD’s…
Say hello to Skynet…we know what comes next
What event will trigger the metamorphosis of the subprime crisis into the covenant-lite crisis?
Payback time looms for diligence-lite lending
By Andrew Hill, John Aglionby and Paul Betts
Published: June 9 2008 18:06 | Last updated: June 9 2008 18:06
Sceptics were forecasting that the trend towards lax loan conditions would end in tears almost as soon as the first “covenant-lite” deals were struck in the US in 2005 and 2006.
But you know what they say about bad workmen. Institutional investors – particularly those that bought loans at the peak with the same insouciance as they might previously have bought equity – are wrong just to demonise “cov-lite” or the more prevalent European “cov-loose” model. Instead, they should look to their own failings.
Filed under: “and then…it went dark.”
or “behind closed igloo’s” or “when lights went out in McMurdo”
Antarctica base gets 16,500 condoms before darkness
http://www.reuters.com/article/lifestyleMolt/idUSWEL3048620080609
latest news
Two-year Treasury yields jump the most since 1997 to 2.74%
THE FED
Bernanke: Slowdown will bring down inflation
By Greg Robb, MarketWatch
Last update: 8:25 p.m. EDT June 9, 2008
Comments: 11
CHATHAM, Mass. (MarketWatch) — Federal Reserve Board Chairman Ben Bernanke said Monday that he believes that sluggish growth will hold down inflation, suggesting he is in no hurry to raise interest rates to combat higher prices.
Ok! There was *another* article in the Atlantic this month. One that didn’t make me so angry because it confirmed something I always wondered about.
In “Inconspicuous Consumption”, Virginia Postrel writes about a study done by two U of Chicago economists with one from the U of P.
Conspicuous consumption, this research suggests, is not an unambiguous signal of personal affluence. It’s a sign of belonging to a relatively poort group. Visible luxury this servers less to establish the owner’s positive status as affluent than to fend off the negative perception that the owner is poor. The richer a society or peer group, the less important visible spending becomes.
This, no doubt, was one of the causes of the greed that encouraged people to borrow money they had no intention to–and couldn’t possibly–pay back!