Bits Bucket For June 22, 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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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Greetings from the napali coast in kauai hawaii. Every third business here is a realty. The local rag is full of fraud stories. I have had 5 mai tai on this cruise. And ben posted the bits buckets way too early!
Aloha, CCC. Just got back from Elk Grove, CA. Was up there for my niece birthday party. Had a lot of fun. Hope your enjoying your vacation.
Hope your=Hope you’re
Ahhh. the Napali - what more can one say?? Stunningly beautiful.
If you like French food, I recommend Chez Paul. My wife and I had a blissful dining experience there the last time we were in Maui.
http://www.chezpaul.net/
FPSS,
See you are human after all.
Sarcasm Seen Evolutionary Survival Skill:
http://news.yahoo.com/s/livescience/20080620/sc_livescience/sarcasmseenasevolutionarysurvivalskill
Thought you would appreciate the article.
Imagine living in an earnest 50’s-style world. I’d kill myself.
In any case, most of modern life can only be viewed through the lens of the Absurd.
Pick up any management book, and see if you can get through it without giggling uncontrollably.
Corporate retreats? Bonding sessions?
WTF?!?!?
Where’s the higher pay, assmunch?
That’s what the computers *want* you to believe.
Computers?!?
Well, looks like we have our little Theater of the Absurd right here.
You’re fit to be a manager now. Congratulations.
You forgot “creating a sense of urgency.” That one is the funniest to me of all. Like they expect people to live their entire lives at work as if they are running a sprint, not a marathon.
I’m sure there are any number I’ve missed.
I need to start collecting those “Little Books of Leadership” they hand out in different corporations.
Anyone know how I can start getting my hands on these? I’ll be happy to pay well for them.
Hey! You gotta get your chuckles somewhere, and this is primo sh*t.
http://www.despair.com/demotivation.html
I’ve usually kept “Demotivational” calenders in my office as an antidote to all those lame motivational posters plastered around the modern workplace. I had a new manager tell me to take it down. As it happened I was going to give my two-week notice the next day - already had a new job lined up - but instead submitted it on the spot, using the calender order as a convenient pretext when asked why I was leaving.
lol….priceless!
Like they expect people to live their entire lives at work as if they are running a sprint, not a marathon.
That is what they expect. So what if you burn out? Contrary to what they claim, there are plenty of eager bodies willing to be canon fodder and take our place.
Oh yeah right like my parahippocampal gyrus has anything to do with anything…
Hey, we could do a count of how many times a poster does /sarcasm or writes sarcasm off and that would indicate how evolved they are, right? Somebody should get a research grant for this. A BIG one, cause you’ll need doctors to check out those parahippocampal gyrii.
/sarcasm
actually, it’s the opposite . . . it’s the ability to detect the sarcasm/irony without the writer having to say “/sarcasm” that indicates the evolvement . . . or I guess it’s both . . .irony giver and irony receiver . . . it takes two to tango . . .
/sarcasm
“A nation trying to tax itself into prosperity is like a man standing in a bucket trying to lift himself up by the handle.” ~Winston Churchill
“A country trying to borrow it’s way in to prosperity is a country that is doomed.” Exeter, 2002
A country that tries to spend it’s way to prosperity is also doomed. Ask Argentina.
Right… but not to worry, if elected BHO has promised to keep sending out ’stimulus’ checks infinitum. So we’ll all be on the dole, except for the evil rich and of course big oil.
I know a very wealthy fellow (he made it in the ‘evil’ gun business) and I’m thinking of asking him to send me ‘my’ money directly to me, so we can cut Gubmint out of the process!
Promises from politicians are crashing harder even than the dollar. Just check out the fancy new hundred billion dollar no more nation building plan that we all collectively bought into. Oops!
Now we will have to listen to checkbook balancing lectures from the people who don’t want to pay for the wars they didn’t want to admit they didn’t want to have, but would make us fight anyway. War bonds? Those might cost money! Victory gardens? Those cost time and dirty and callous the delicate, soft skin our precious hands! Lower taxes will bury all our mistakes, at least until future generations finish getting rid of all the topsoil. Whoops, that was the low interest rate button!
A country can’t tax its way to prosperity either.
Leverage Works - Until It Doesn’t
To be leveraged, in an economic sense, means you control an asset by putting up fewer dollars than the asset is actually worth. Leverage has existed ever since there were systems of monetary exchange. In modern times a home loan is an example. If you buy a house for 20% down and make payments totaling 25% of your income, you’ve got leverage. Leverage in this case is a good thing; a tool used to create a thriving economy. However moving into a house you buy for 0% down and make payments totaling 50% of your net income might be a bit too much leverage. Everyone of course is aware of the sub-prime mess. But not everyone is aware that over-leveraged investments have permeated every facet of our economy, from personal credit to commercial credit… in the US and across the globe. Leveraged economies get into trouble when the assets being levered lose value. That’s happening now.
Most of us understand, either anecdotally or through personal experience, what this means for say, a highly leveraged home loan. The property can suddenly be worth less than you paid for it. Ouch! Try refinancing your way out of that Adjustable Rate Mortgage that just adjusted upward, while the property has just appraised downward. But we have peaked out on leverage across the board, and the process of un-leveraging, if you will, is going to be painful. More so than the mainstream financial press is letting on. It’s something you may want to get ready for.
http://www.321gold.com/editorials/macfarlane/macfarlane062308.html
True. Ppl, especially real estate agents, were very vocal about the benefits of leverage as we expand, such as many homedebtors making several 100k on housing for which they put down only a small cash outlay, resulting in a rate of return that was several 100%, or more, per year on the amount they were actually out of pocket. Housing prices became over-inflated by trillions and trillions of dollars (”Phantom Value”). Much of this Phantom Value was spent in the form of the first and/or second mortgage depending if they bought pre or post bubble, or in the form of future HELOCs. This debt was packaged and sold worldwide to investors including pension funds, municipalities, all sorts of companies, etc. As we return to historical norms, this Phantom Value will need to come out of the system in the form of defaults (or by flooding the system with cash to fill in some of the holes or doing other things that may also have side effects, as I realize that money is not a zero sum game in this Country). Many ppl dont really care based on a misconception that those now holding the Phantom Value, or the debtors who promised to be on the hook for such amounts, are the ones that will suffer as that is what happened in the past (no money down non-recourse loans and the bank’s ability to sell the loan to others in recent years, however, makes this the least likely scenario). The reality is that is the pensions funds, municipalities, banks (note that exposure is not limited to the banks that engaged in questionable lending practices but includes banks that have exposure on the back end derivatives side) are the ones that will take the hit. As these hits occur, it will result in them being unable to fulfill their monetary obligations to others. Many ppl will be in for a rude awakening as they realize that the way it will work its way through the system is that their bank or pension fund may default on its obligations, their municipality may go bankrupt (or whatever the applicable equivalent for municipality is in the local area), etc., etc.
I’ve been saying for years, that the only ppl that really benefited from this boom were the developers, realtors and brokers, real estate investors, etc., that were smart enough to pull profits off the table and create war chests rather than reinvest in the Phantom Value system. As for ppl that held only a single home, unless they sold and moved to a lower cost area or to rent until we correct, they should not have welcomed the boom with open arms. If they are staying in the same area, other prices were rising too so they got no benefit from that, they just got stuck with a higher tax bill and transaction costs. When I buy, it will because i find it to be cheaper than rent. I will want prices to remain flat unless and until I am about ready to retire to some place that is experiencing a lesser rate of appreciation, then I dont mind it rising for a few years.
I still defend solid securitizations as they have benefits outside of debt leverage such as taking advantages of changes in interest rates. It is true, however, that coupled with insane Phantom Value, and a complete misunderstanding of risk from the investors therein, whether by ignorance, or questionable ratings and disclosure, we are in a situation where the risk associated with the Phantom Value has been shifted to those with less culpability and perverse incentives were created for those lower in the chain to do things they would not otherwise have done.
sounds like the stock market pre 3/2000
oddly enough, you can still get astounding leverage in the right circumstances. I have 100-1 BP which astounds me because I would never use even 10% of it.
Leverage is a outstanding tool properly managed…
Leverage is a outstanding tool properly managed… So is a 5-foot diameter buzz saw. But when the saw blade comes off its axle, it can split the worker like a pickle.
Securitization can also have a benefit of allowing loans to be made in areas where the old school rules would never have allowed loans to be made.
Let me explain what I mean.
Old school loan process was that your bank manager knew you, your family, and pretty much everything about your financial life while you were a customer of his bank. And this was before he pulled your credit report. He gave you a loan only if you were considered a good risk. A very good risk, because it was his butt on the line if you defaulted and costs came right out of his bottom line, plus that little issue of capitalization and banking regulations. There were only a few major employers in town. If one of them pulled out or went under, his loan portfolio was in huge trouble. He couldn’t do anything about that since he had to make loans in his local area, so he protected himself from what he could control. Result - very, very strict lending standards and a bunch of families that really could afford a house (and would have saved money over renting by buying one) couldn’t get loans.
This bank manager was never going to make loans in a neighborhood where he didn’t understand the social and work dynamic. Since he was middle class or perhaps a bit better, he didn’t understand poor neighborhoods, what sorts of jobs were good jobs in those neighborhoods, what extra costs were involved in a two earner family (poor women have been working outside the home for a lot longer than middle class women have), etc. If he didn’t understand these neigborhoods, he wasn’t going to lend there. Besides, the only money he had to lend was from deposits and he could put together a nice safe portfolio from that just in the middle and upper middle class neighborhoods.
Enter securitization.
Now, you don’t have to worry about the local plant shutting down, because you can diversify the portfolio geographically. You can get money from someplace other than bank deposits so you may be able to find lenders willing to take on a bit more risk than your typical local bank manager. Best of all, you are dealing with really big numbers so you can use statistics to figure out what the risk will be on a group of loans with similar profiles instead of getting that information from the gut instinct of a middle class bank manager who doesn’t understand how the other half lives.
And here is the problem - you can only rely on the old stats about how the loan portfolio will perform if you stick to the same level of lending standards as you always had. Lets assume, just for the sake of argument, that the gut instinct the bank manager added wasn’t important - that as long as you had other solid information - all other debts, income, something about how likely the person was to be employed (staying with the same employer for 40 years is really over), downpayment from savings, etc. - you could do without the gut instinct. You still have to have all the other information, and if you loosen the standards, you have to wait for a while for the results of that loosening to hit the loan performance numbers so you know what your new stats look like. And if you completely abandon the standards or stop confirming whether the information you collect is true? All bets are off.
Oh, wait, that is what happened. Isn’t it?
I agree, but I see this as something that can be handled effectively through appropriate risk modeling and disclosure. The lawsuits and public outrcy, and the government’s response thereto, occurring over the next few years will hopefully change things albeit too late to prevent massive damage. It is very easy (although it may be time intensive) to establish criteria for what loans are acceptable into a securitization pool and to perform the necessary due diligence, and apply reasonable risk models. The industry had insufficient regulation. This is not directed at you, but I do not think its fair for others to base an opinion on an industry based upon what greedy scammers and con men did to it during an unregulated environment in which there was lots of cash to be made. The real issue is whether it has value if appropriately regulated. I believe that it does. There was a lot of crap I tossed out of my securitization pools although the rating agencies wouldnt have blinked an eye if I did not reject, for the most part they were asleep or brain dead.
Tim ,you can’t say that under any circumstances that a no doc, low down loan, is anything but a default waiting to happen ,even if fraud wasn’t involved . Spreading out the risk by a securitization pool might be a good idea ,but borrowers not having skin in the game wasn’t a good idea on non-recourse loans . No documentation loans wasn’t a good idea on low down loans ,and qualifying by teasers rates with potential for neg. amortization was absurd . In other words ,the loans were faulty in design on risk also in the new age lending and depended on real estate going up . They would not of ran into problem has they require 25% down on any loan that had some serious risk to it .
Requiring 25% down on speculator loans would of prevented many speculators and borrowers from getting in the game who really could not afford it . Since when is home lending suppose to be for the purpose of aiding and abetting a speculator with no skin in the game ,even if they could qualify for the loan ?
Without the fraud in lending ,I agree with you that the bubble could not of gained the heights it did ,but still some of the loan products sold to the masses were the type that few people should of gone on . The industry developed a product that was really designed for a short term loan ,add the pre-pay penalty and it was a sit up to force people into needing to refinance over and over .
IMHO ,you don’t set borrowers up for the need to refinance in a short time on a long term loan and than clip them with a big pre-pay in the process . These loans were designed to create massive profits for the industry ,while the sheep didn’t understand the real cost of money .Also ,the industry paid the highest commissions on the toxic low down loans ,therefore the entire industry pushed those loan . At some point those loans became the easy ones to commit fraud on or use for flipping leverage ,and with appraisers being forced to “hit the mark” on appraisals ,or starve,it was a sit up for what happened.
So I guess my point is that spreading out the risk by the pools of MBS’s might be a good idea ,but faulty loan design and disregarding true risk factors was not a good idea. Add to that ,the industry than breached their duty to prevent fraud and than we got fake markets everywhere .
The real issue is whether it has value if appropriately regulated I think the most important issue is whether or not appropriate regulation will even occur in a world of lobbyists, campaign financing, incumbency for life, special interests, etc. Regulation seems to have failed lately.
I hear you tresho . I’m just saying that low down ,no documentation loans ,that start with a teaser rate ,that have the potential for neg. amortization ,are a crazy high risk loan .I would like to see those type of loans go back to having a big down-payment requirement .
Loan design should not be based on a future projection of value of the asset that is used for the security . A lender has to loan based on the idea that the asset will never go up in value and the only thing that will make the loan become more secure with time is the pay-down of the principal by the borrower . So giving high loan to value refinances also kept borrowers from paying down equity . In the past ,loans became more secure with time ,not less ,like in this last lending cycle .
I agree with you Housing Wizard. I have expressed my opinion that I think there should be a 20% down minimum. I am more conservative than most on that issue. Crappy loans is not an essential element for securitizations to work, but securitizing crappy loans is a way to shift the risk associated therewith that needs to controlled.
Theshno I agree that complex regulation doesnt work, but simple laws such as requiring a certain % down payment, and simple tests in determining whether likelihood of repayment is very easy to administer (e.g., mortgage cant be greater than X% of income after consideration of certain assets, etc.).
Falling home prices and high leverage don’t mix very well.
Falling anything and being levered long don’t mix very well.
I guess what you meant was that being levered many multiples of income, and falling prices don’t mix very well. Houses are incidental.
Aaah, academic nit-picking. Guess you can take the academic out of academia but you can’t take …
This article by MacFarlane would have a bit more credibility if the name “Bear Stearns” had been spelled correctly.
I took the time this morning to write an email to a Bloomberg reporter. The jist of my note to him in question form was ” why do you reporters report only old news, or news that is handed to you by the Wall Street handlers. When are you going to grow a pair and do some investigative reporting? A well disciplined press and a zeal to look deeper into the “line” is part of the founding fathers idea of free press meant. The press has a defined mission to seek the truth, not report the truth as told to them by the liars. Why wasn’t the press investigating the sub prime industry when it was happening?
Why does the press report after the fact? grow a pair, get on it!!!!!
Which journalist?
Bloomberg tends to be the best of the bunch, at least in the financial world.
They know it too, and that’s why it costs an arm and a leg unlike say, the WSJ.
Trimming Limits On C. Cards… Been waiting on this to happen, this will really squeeze a bunch of people.
http://www.nytimes.com/2008/06/21/business/21credit.html?_r=1&adxnnl=1&oref=slogin&ref=business&adxnnlx=1214130125-tWPuomX9eM1WeI6msPy7Zw
A little credit is a good thing, when used wisely. However, the crazy credit of the last decade is way out of control and if credit is cut back then perhaps prices will have nowhere to go but down. I contend that much of the reason goods and services are so expensive is because of credit, thereby inflating the prices. If more people had to pay by cash, the US would look a whole lot different.
“If more people had to pay by cash, the US would look a whole lot different”.
It would be a whole lot different, however in many ways the system has been shifting through the years, and it can be difficult and sometimes impossible to use real paper money in a transaction.
Another thing I wonder how much cash do you suppose the general public keeps on hand? I think the majority of the population depend on an ATM to grab a little cash.If a disaster comes along, good luck with the ATM. We try and keep a couple thousand on hand, just in case.
Where did you say you live?
“it can be difficult and sometimes impossible to use real paper money in a transaction.”
Try taking 30K in cash into a brokerage to buy equities sometime. Did just that about ten years ago and you would have thought I’d come into Schwab with an AK47. They made me deposit it into a bank account and present a certified bank check drawn on the funds. Then it took ten days to clear.
Never made THAT mistake again.
Six months ago I tried to pay for some lab work in Newport Belch with cash. The front desk person actually PHOTOCOPIED the $106 in currency after doing the whole hold-the-bills-to-the-light number and scrutinizing me like a lesion on the tip of a nose job. I could have sworn the whole waiting room gave a collective gasp at my audacity! I could hardly keep from laffing out loud.
“I contend that much of the reason goods and services are so expensive is because of credit, thereby inflating the prices.”
Insurance does the same thing too!
The goal of insurance is to control against tail risk not ordinary risk.
That it has been sold as a solution to ordinary risk at great profit to the insurance companies is nothing short of astonishing.
It’s insane the amount of revolving credit that my wife and I have between the two of us, without trying to accumulate high credit limits. We each have a main credit card (with cashback) that we use for primary purchases, and then two backup cards each (one in our wallet, one in a locked safe). We haven’t opened a new account since we were married several years ago and we never have carried a balance, but we’ve watched all of our credit limits increase dramatically without any request from us.
Last time I checked back in January or February, we could raise close to $100k in CASH ADVANCES if we really wanted to (albeit on pretty unfavorable terms). Purchase limit is around 1.5x that. Absolutely insane. As far as I can tell, none of the credit lines have been reduced yet.
Anyway, it wouldn’t be a bad idea for the banks to reduce some of the available credit.
Yeah, and now Visa wants to go public:
http:///www.msnbc.msn.com/id/19374697/
The Visa folks see their cash cow is about to run dry so now’s the time for them to sell a chunk of it to J6pk.
ya, going public like Sam Zell, and Blackrock!!!
Rats deserting the ship or better yet, take the money and run!!!
lol
The tip off is that if its such a good deal, why cut anyone else in on the profits!
lol
why cut anyone else in on the profits ??
Because you can “Leverage” the profits
SCDave,
You are more sophisticated than I. I have no idea how you could pull this off!
I am yelling, “Dumb me, dumb me”, as I am banging my head against the wall.
lol
Your cited article is a year old. VISA has been public for some time now.
Funny but my Visa limit ws just raised 2K and I didn’t even ask for it. Maybe that’s because I pay my bills on time and didn’t take an 80/20 loan on a home that I couldn’t afford.
Moved here to NoVa 8 months ago but I still like to keep up on my adopted hometowns of Corpus Christi and Austin/Round Rock. Craigslist has some amazing deals on PU’s and SUV’s down there. Anyone who’s ever lived in Texas knows that trucks always sold at a premium and trying to bargain one down at the dealership was tough. I guess things really are starting to tighten up for J6P.
The thing about Craig’s List is that most people demand cash - at least they do on the furniture board where I do most of my poking around (currently looksing for a nice wood 2 drawer lateral file with a lock). Cash. Not a bank check, not a personal check, not a credit card. Cash.
Not terribly suprising.
If you’re going to do a transaction with someone you don’t know, you better ask for cash.
Can we change his name to Joe 2 pack?
Yeah, doesn’t seem he’s going to afford the 6 any more.
Oh! It’s true. I went to check my AmEx, and sure enough, they trimmed my limit from $30,000 to $23,500.
Not that I care. I was a little miffed when they increased my limit to $30k in the first place, without asking. When getting a mortgage, doesn’t a lender subtract your “credit limits” from how much you’re eligible for? So it’s not a good idea to have too much of unused limit, is it?
Anyway, I guess the limit was cut because I’m in at risk group (NYC, financial services). Can’t say I blame the CC companies… Just recently I discussed with a coworker the wisdom of having cash saved for emergencies, and he said he’s going to rely on his credit card if there’s a layoff, LOL.
For some reason BofA keeps raising my limit on CC for a small business. It got up to 25k, so I called them to reduce it back to 5k and by the way close out my personal credit card. After going around and around, they said they would do so. Well, 6 months later my limit is now back to 25k.
These guys refuse to take no for an answer.
BTW, balance to zero every month. Never charge more than 1k in any single month.
lol
I have a credit card that is the only one I use for on-line transactions. When I got it several years ago, the CC company tried to give me a really high limit, and I told them no, I want a low limit.
I explained to them that I was protecting THEM more than me, as per the contract the CC picks up the tab for fraudulent transactions. Therefore, theft would be more easily identified should it occur.
I got the lower limit, and it has never been raised by them.
Since the change in the BK laws ,the credit card companies think they have recourse if a person defaults on CC’s. It’s pretty silly to just extend a massive amount of credit to people with no regard to how much people can really afford . It’s just as stupid as thinking real estate going up will pay for everything .
Hah, my AmEx limit hasn’t changed. Not that I care either way.
Their utility for me is that they pick up the insurance on car rentals. That’s about it.
What else do they do for me?
Someone remarked yesterday that we’re the customers that the banks care about but we don’t care who we bank with ’cause there’s nothing they can do for us.
Sounds about right.
FPSS,
This one is for your. See you are human after all.
Sarcasm seen as evolutionary survival skill:
http://news.yahoo.com/s/livescience/20080620/sc_livescience/sarcasmseenasevolutionarysurvivalskill
If this double posts, my apologies.
Nothing To Be Done…
“So no matter how bad your life is, it could be worse; you could be a bank! Stupid, greedy and broke”! Hahahaha!
http://www.atimes.com/atimes/Global_Economy/JF21Dj01.html
Hey, Ed, Citibank called and they want their money back. All kidding aside, though, it’s too bad he can’t work off the debt by doing some commercials for them, or an ad in AARP.
http://news.yahoo.com/s/ap/20080620/ap_en_ce/people_ed_mcmahon
There was a long discussion in a thread a couple of days ago about how higher gas mileage doesn’t help much relative to other bills. And other discussion about how gas prices remain a small part of the budget, hence the exurban way of life will hold up. Also, discussion about getting big cars / SUVs cheap which more than pay for themselves vis-a-vis a hybrid. While true in today’s environment, what about some of these scenarios which are possible next decade?
1. Civilian gasoline rationing - 10 gallons per month (@$10/gal). Coupons on eBay go for $200 per gallon.
2. Fluctuating prices on a monthly basis, but ever rising prices over longer time horizons. Think $200, $300, $500, $1000 / bbl.
3. Long gas lines (if the USA does not do #1).
4. Regional, area supply outages. No gas available for several days at a time.
The USA will keep the military, government, emergency, supply chains (food) fueled and shut down or reduce civilian access to fuel first. It would not take too much of an import shortfall for some variation of this to be required to be implemented.
Seems like a plug-in hybrid would pay for itself quite quickly in any of these environments.
“Coupons on eBay go for $200 per gallon.”
Lol. Assuming ebay’s around in the next decade. I quit doing any business there a while back, like a number of people, and have been following the debacle there ever since, just for fun. Wow, that new top management team really screwed the pooch and gives a lot of truth to the old adage that “the new broom sweeps clean”. Even assuming they really did need to make all those feedback and seller rating changes, if it had been me, I would have waited until after their traditionally slower summer season and boiled the frogs during the fall/Christmas season, when many sellers have no option but to stay on ebay. I wonder how many clients that guy Donahoe consulted into the the graveyard before jumping to ebay. LMAO! Wants to compete with Amazon. How’s that working out for him? No business, not even ebay, ever succeeds by screwing their customers.
well…if not eBay, some next gen replacement.
You forgot scenario #5. Fuel prices back off 20-60%.
You forgot scenario #5. Fuel prices back off 20-60%. My favorite scenario is behind door #6, fuel prices fall 90%. BWAHAHAHAHAhahahah…..
Particularly, if oversupply does its traditional job.
And you need practice on that laugh.
BWAHAHAHHAHAHAHHAHAHHHHHHHHHHHHHH!!!
“Particularly, if oversupply does its traditional job.”
Which it will.
40c gasoline… fantasy island. Even more so, given the dollar situation.
We don’t have a shortage of gasoline in this country, on the contrary, we have a surplus. The refineries are running at less than full capacity because consumption for gasoline has fallen off.
There was a WSJ article the other day that predicted the Highway Trust Fund would experience a $3 billion shortfall this year because people weren’t driving as much thus were buying less gasoline thus were paying less gas tax.
I’m listening right now to McCain talking about drilling offshore. How completely idiotic. It would accomplish NOTHING until 2030, if even then. Plus, what people forget is, that oil, if it ever did come out of the seabed, would be sold on the world market anyway and may or may not benefit US citizens. Anyway, forget the offshore drilling. Plenty of oil in the Bakken formation up in Montana, if they want to play that game.
Offshore drilling is stupid, stupid, stupid, when there’s oil on stable dry land, like in Montana. Drilling offshore puts oil at the mercy of hurricanes, etc., thereby presenting traders and speculators to drive up the price every time there’s a storm and supplies get “disrupted”.
oil, if it ever did come out of the seabed, would be sold on the world market anyway and may or may not benefit US citizens. That is true for all oil produced anywhere, not just from offshore drilling.
Big oil, so far, won’t touch the Bakken reserves. Its to exspensive to extract. Same reason why they won’t use their current leases ( not enough reserves + costs ). It’s much cheaper to pay off a dictator in Africa. BTW, I’m not taking sides on this issue and I’m not against drilling, as long as the reserves are there. Both sides of Congress are being less than truthful ( big surprise), to keep their environmental and big oil lobbies happy. Energy is a security issue, as well as, an economic one. Can’t we just all get along.
It would accomplish NOTHING until 2030 I think within ten years expanded drilling would pay off, and that isn’t chopped liver. The US has already wasted 35 years dodging & obfuscating this issue, so what’s another decade among friends?
The oil shale and sands in the West and Canada will likely never be able to be produced at more than 2 million bbls/day. Won’t make up for the 15 million / day we import.
Don’t confuse reserves with production rates. We’ll have 100+ years of 2 million bbls / day (if we can find the energy and water to actually produce that much for that long). 2 million bbls / day will help but won’t make up for declines in Mexico, Saudi Arabia, etc… as these places reduce and then eliminate exports as they use more of their own declining supplies.
There was a WSJ article the other day that predicted the Highway Trust Fund would experience a $3 billion shortfall this year And how would this shortfall be a problem? Fewer miles driven means less repairs needed, etc.
Hey hey, Combo–
Drive around LA Harbor some Sunday afternoon and notice all those pipelines leading from the refineries in Wilmington to waiting tankers in port. Yet gas prices in LA are among the highest in the nation….
We ship a, well, shipload to Japan. You’re totally right about no shortages.
But, but…. We gotta drill in ANWAR. Quelle crock.
#1 is the libs’ dream, if not their actual plan, as it provides the ultimate in control. That’s why they want to nationalize the refineries.
#1 is the libs’ dream, if not their actual plan,
That’s Lieberman’s suggestion, McCain’s buddy, and he is not a liberal.
Where do you get that? Liberalism is most common in cities and areas of high population density where the gas problem is least. All of the extreme reactions to higher fuel prices are coming from you and your ilk. The only person who talked about nationalization was Maxine Waters who is a wingnut and could barely even describe what she meant coherently. Maybe if conservatives would allow innovators to come up with new, safer, better ways to extract, transport, process, and use oil then we wouldn’t be in such a fix, but the big spending priority is always military, military, military and look where that got us.
Liberalism is the ultimate expression of pandering to stupid and parasitic people.
Look up the word in Webster’s, Sammy.
Unbigoted. Open-minded.
“Liberal.”
As in “smart.”
(Like you.)
And they can use the detention camps that Bush built
… I think the energy issues transcend parties - both of which are in denial - well one can’t win a presidential election (or any election) telling people they need to cut back or create incentives for people to switch lifestyles, and energy use patterns.
Wanna fund SS, Medicare? Tax gasoline (add nat gas, coal) like the EU. Also, Put a floor on fossil energy prices to give time, resources and incentive to more fully develop energy alternatives.
I wonder what would happen if gasoline became scarce.. At first there’d be some panic and a lot of grief. But if the fuel-related doomsday scenarios don’t kill us, they just might make us stronger.
At first everyone would make due with what was available. Some will fail.
Survivors would eventually find whatever work was available close to home.. digging ditches, picking strawberries, pulling teeth or whatever.
Now, if this was widespread and lasted a long enough time, all kinds of new businesses and services would start up wherever necessary, with a new, critical criteria: Be as close as practical to people’s homes.
New and existing local (walking distance) businesses would thrive and grow according to the local work force and population numbers.
People would be limited to walking or bicycling to the nearest stores for food and other necessities, and these would sprout like mushrooms. Kids would be home schooled or local buildings would be converted into schools… the necessities of life would be brought to the people.
It might take a decade or more to settle in, but this forced “planned-community” scenario would probably put an end to our auto-addiction once and for all..
People would be limited to walking or bicycling to the nearest stores for food and other necessities
I got a horse.
People would be limited to walking or bicycling to the nearest stores for food and other necessities And just how would those stores be stocked for food & other necessities? Do you think truckdrivers will be pushing handcarts from warehouses to stores? Will Teamsters be reduced to driving teams of horses again? Think it through.
Thinking and common sense are out the window, right now. The extremists are in a power struggle. The economy and the common folk, be damned.
Thinking and common sense are out the window, A couple of months ago Fareed Zakaria wrote the USA “has developed a highly dysfunctional politics. What was an antiquated and overly rigid political system to begin with (now about 225 years old) has been captured by money, special interests, a sensationalist media, and ideological attack groups. The result is ceaseless, virulent debate about trivia — politics as theater — and very little substance, compromise, or action. A can-do country is now saddled with a do-nothing political process, designed for partisan battle rather than problem solving.”
tresho - I love the reducto ad absurdum arguement!
Still, why not remove a lot of those long distance trucks and put freight on trains?
Teamsters will still get work unloading and distributing locally - there’s still a need to get goods from the train depots to local businesses.
why not remove a lot of those long distance trucks and put freight on trains I agree with you. However, the railroads are max’d out. They have very little extra capacity to do as you suggest. Recently one of them proposed they would beef up their track’s weight-carrying capacity in portions of the US if the Federal government would raise the level of highway overpasses, so the railroads could carry semi trailers 2 high on their (mostly eastern US) tracks where it would really make a difference. This is one of many proposed incremental improvements which gets little press.
I would not be surprised if many new tracks were to be placed in or along interstate highway rights-of-way as auto & truck traffic slacks off. This is already being done on I-25 between Albuquerque & Santa Fe. Check out the cool cover page on this PDF about the Railrunner commuter line. I believe the photo is a paste-up to represent the end result.
I see your point, especially about retrofitting tunnels etc.. and from spending time out near Amboy in CA and Flagstaff, I can vouch for the sheer volume of rail freight going on already.
And, unfortunately, its costs a lot more to reinstate a rail line/station than it would have done to keep it running in the first place. The UK decommissioned a lot of smaller rail lines in the 70’s and 80’s (coincidentally, in line with the rise of the car culture, shock surprise), and is now finding it expensive, if not impossibly expensive, to reinstate them, despite there being both economic and social advantages to doing so.
Still, if either side is really interested in creating a national shift in energy consumption, then investment in rail is definately a small but vital key
We need an Apollo- or Manhattan project like effort on restoring rail capacity.
I see a size 4 in my future.
Gotta go dust off the bike again, pump up the tires, already have a basket, look for a lock/chain, and wait for the temperature to drop from 115 to, um, a, a little less.
Mom always said that I liked to peddle it all over town.
“It might take a decade or more to settle in, but this forced “planned-community” scenario would probably put an end to our auto-addiction once and for all..”
See what I mean? “Don’t complain; we’re doing this for your own good.”
Death of America’s Suburbs Is Greatly Exaggerated:
With gasoline at $4-plus a gallon, lots of thinking people see the U.S. undergoing a vast demographic shift, with millions of people moving back to cities. The suburbs, and those places beyond the suburbs, the exurbs, will dry up and blow away.
The notion appeals especially to people who like to think they’ll be in charge after the revolution. They would apparently love nothing more than for the population to be confined to Soviet-style concrete-block high-rises and be forced to take state-run streetcars to their little jobs at the mill.
The notion appeals especially to people who like to think they’ll be in charge after the revolution…be confined to Soviet-style concrete-block high-rises and be forced to take state-run streetcars to their little jobs at the mill. Fine rhetoric fuels no vehicles.
Oooooh, that stinger gotta have left a mark.
The high and mighty conservatives who want to spend every dollar the government takes in and more on wars and random bedroom activity checks constantly brag about how they must escape the liberal cities to protect their families. It is only elementary that after many decades of this people will start wishing that the far out suburbs created by reactionaries will fail in some way. Maybe if exurban families had some option other than to propose enslaving all others then this level of cultural disconnect would never have happened in the first place.
On a side note it might be interesting to investigate American cities some time. Let me know how many Soviet apartment blocks you find.
It wasn’t a singer that left a mark, it was a huge load of stupid that left a collossal debt. Capitalism will find a way to keep vehicles moving, and conservatives will find a way to continue hating and punishing anyone who isn’t exactly like them. What they have done for the Iraqis they will do for us in the US if we let them.
Have to say, from a CA perspective, that when I was in Chicago last week and needed to see a dr immediately, it was only a 3 block walk away and poof, I was seen and treated, whereas, if in CA, I would have had to drive,and all that entails. Nothing wrong with driving, but it was so convenient to just walk a short walk to get groceries,MD, walk dog, see friends, get to a restaurant or pharmacy etc. Just so nice to see folks walking about.
These trends will play out over quite a few years (unless we get an energy shock like in the 1970s, except it goes on indefintely, instead of a few months). Also, more will need to move to the smaller regional cities (local manufacturing/distribution) and into agriculture. Given today’s societal attitudes, I suspect such a trend back to the farm would only develop if people were faced with starvation or sent to farms at the point of a government gun.
All i was doing is try to imagine the evolution of a society that ran out of gasoline.. i don’t have any moral or ethical or political opinion regarding it’s goodness or lack thereof…
All i was doing is try to imagine the evolution of a society that ran out of gasoline.. i don’t have any moral or ethical or political opinion regarding it’s goodness or lack thereof… Welcome to the 2008 world of US political discourse. Snark, sarcasm, cheapshots, slogans, political hackery, etc. are popular & accepted substitutes for discussion & thinking things through. I think you are on the right track, but don’t be surprised if you find yourself attacked for everything you say/write, or better yet, completely ignored.
tresbo, if a simple idea threatenes or frightens you enough to get all emotional about it, it may be because it holds some measure of truth.
oops… tresbo, i think i misread you the first time around.. totally.
you aren’t the one being driven by emotions. I was, and was being defensive.
This crowd is keeping the petal to the metal… As is the bunch in INDIA.
China will see AT LEAST 6.6 million new cars, trucks and vans hit their roads this year. And I’m not even counting scooters and motorcycles. Some estimates go as high as 10 million new vehicles hitting Chinese roads in 2008!
Last year, Chinese bought 5.5 million cars, minivans and SUVs plus 3 million commercial vehicles, up from just 1.6 million vehicles sold in 1997. This year alone, sales are expected to grow another 15% to 20%.
Plus, a huge percentage of China’s oil demand comes from its massive manufacturing sector: Companies that make and sell trillions of dollars worth of Chinese products to the rest of the world.
Well, we will take care of that, we won’t (can’t afford) buy there goods!
So, take that!
lol
http://carscoop.blogspot.com/search/label/China
The Chinese, per their usual SOP, are shamelessly ripping off car designs from Western companies, which allows them to sell them for cut-rate prices since they didn’t have to cover the R&D work.
This Chindia growth is a big driver for less gasoline, etc… in the US. All trends (location of most of the “good”, cheap oil left is Asia, dollar, loss of mfg base, social attitudes (e.g., SUV, McMansion entitlement)) point to this less energy/declining std of living in the US.
We will have gas lines, rising prices, rationing, all of the above, IMO.
We CAN’T replace the current fleet with hybrids. Each new auto requires 80 barrels or so of oil to construct. We would use all the oil to build the cars, and then having nothing left to put in the tanks.
Regarding Palmetto’s claim about all the “oil” in Montana, it indicates a lack of understanding about Energy Return on Energy Invested (EROEI). Sure, there is a lot of “oil” there, but extracting it and processing it would consume most of the embedded energy. At the end of the entire process, there would be very little energy left over for us consumers.
It’s a liquid fuels problem, not an energy problem.
We’re not running out of oil, but we are running down.
We have to move beyond just trying to think of ways to keep all the cars running.
RE: Chinese bought 5.5 million cars, minivans and SUVs plus 3 million commercial vehicles, up from just 1.6 million vehicles sold in 1997. This year alone, sales are expected to grow another 15% to 20%.
hehehe…go suck some more carbon pollution into those lungs.
I just talked to a kid who spent 4 months in China via a student transfer program.
He said after a while, the phlegm you hawk to clear your throat or nose comes up pure black.
Sounds like millions of dead men walking in Chinaland.
You sound as if you believe you reside on a separate planet, or that pollution cares about national boundaries! Unfortunately, we’re all on the same Earth.
Most air pollutants that cause acute respiratory symptoms do so because they are either quite reactive (ozone, nitrogen oxides, various aldehydes and other partially oxidized carbon compounds) or readily deposited in the lungs (soot and other small particles). Both of those features tend to also limit the transport of such pollutants on a global scale. So, China’s growing industrialization is not terribly likely to affect regional air quality in far away places. Now, whether dumping all of that carbon into the atmosphere is going to have an impact on the planet’s climate in ways we can’t yet fully fathom…
Imagine a “financial planning makeover” for a San Diegan who bought a home in El Cajon one year ago that completely avoids the delicate issue of how much money this poor woman has lost on her “housing investment”? From the sketchy details given in the article, it sounds as though she could have payed off all her debt with the divorce settlement, but decided to try her hand at real estate speculation instead.
MONEY MAKEOVER
Paying off debt is first step in retirement plan
Homeowner should use tax advantages
By Melanie Stevens
June 22, 2008
Teresa Ventura has experienced a lot of change in her life over the past two years.
Upon receiving a divorce settlement more than a year ago, the 48-year-old El Cajon resident decided the most tax-efficient thing to do with the money was to purchase a home.
Free home for divorcees. Starting now!
Only if they put out.
Back to the naked chicks and beer discussion from yesterday. Pony up, ladies.
It’s like dejà vu, all over again!
Can you recap the naked chips and ladies discussion. I musta missed it.
Were there any naked chips and guys included?
As best as I can recall amidst the beer and the general madness, nakedness and putting out was necessary (both genders.)
Beer (and whisky) were desirable but optional, as many parties opined that they could provide their own if necessary.
Realtors and FB’s were not desirable unless they put out a lot. Even then there were objections all around and no consensus could be reached.
HTH.
Nah, desertdweller, however, you and I can make that request of naked guys and chips. Woohoo.
RE: Free home for divorcees. Starting now!
It’s one of O’Bama’s Top 10 Points of Change.
This article has too many issues to just cut and paste one.
IMHO this gal’s in for a big shock when she hits 55.
Falling exam passes blamed on Wikipedia ‘littered with inaccuracies’…
http://news.scotsman.com/education/Falling-exam–passes-blamed.4209408.jp
well.. if the Educational Institute of Scotland is so freakin smart and knows it all , there aint nothing stopping them from loggin on to wiki and correcting whatever mistakes they choose.
Experts in every field will keep watch and will correct whatever mistakes the Institute makes..
But they can’t get any royalties making the info available on Wiki.
Don’t real estate broker license examinations require knowledge of basic finance? How about basic ethics?
The first thing one learns in a basic finance class is that interest rates and asset prices are inversely related (i.e., higher interest rates translate into lower asset prices). Remember how super-low Fed Funds Rates in the early 2000s sent bubble pricing into overdrive?
Most interestingly, the converse does not necessarily work in a falling knife market. As the linked article points out, it is primarily a deluge of foreclosures which has thus far led to price declines. Higher interest rates would be “like pouring water on a drowning man.”
“The only people doing business in this market are people handling REOs,” said local real estate broker Bob Schwartz, referring to “real-estate-owned” properties, meaning properties that have been seized by a bank.
“I’ve been in this business for more than 30 years, and I haven’t seen things this bad. Things are pretty bleak,” Schwartz said.
Brokers say rising interest rates will push prices even lower, since it will make the monthly payment on a home purchase less affordable.
Schwartz said that “anytime rates move up, it’s a negative for housing. On the other hand, things are already so bad, I don’t know if the mortgage rises can make them a whole lot worse.”
When banks raise capital, shareholders
feel effectslose money*By Joe Bel Bruno
ASSOCIATED PRESS
June 22, 2008
NEW YORK – America’s banks and brokerages are scrambling to raise badly needed cash, but it may be at the expense of shareholders.
Since the subprime mortgage market imploded, financial companies caught in the fallout have been raising capital in two major ways – cutting dividends and issuing more shares. Both methods erode shareholder value; analysts believe the industry is poised for more.
*My personal editorial suggestion
This is just plain wrong. If a stupid lender’s shoddy underwriting practices result in them mistakenly trying to pay out your home equity to an identity thieve, why shouldn’t the default outcome be that they eat the entire loss?
HOUSING SCENE LEW SICHELMAN
Identity thieves can steal the equity in your house
June 22, 2008
WASHINGTON – The sagging housing market has presented swindlers with a perfect opportunity to prey on troubled owners. But even owners who are sailing right along, making their payments on time and otherwise keeping their noses clean also are susceptible to being cheated out of their homes.
Do you think the political proponents of these programs realize they increase the risk of a future foreclosure for buyers who use them? I guess that is where foreclosure bailouts come into play?
NATION’S HOUSING KENNETH HARNEY
FHA to ban down-payment gift programs
June 22, 2008
WASHINGTON – What’s wrong with down-payment “gift” programs where all or most of a home buyer’s equity stake comes from the seller, funneled through a third party? And why is the federal government determined to ban them as quickly as possible?
Here’s how they work: Say you want to buy a house, but you don’t have the required cash for a down payment. You sign up with a third-party intermediary – typically a tax-exempt charitable organization that advertises its specialty. The seller of the house sends a contribution to the organization roughly equal to the money you need. The intermediary then pockets a fee of $400 to $600, and passes along the balance for the down payment.
Though rare in the nongovernment loan market, such deals have been commonplace at the Federal Housing Administration, where they’ve accounted for more than one-third of total volume in recent years. Normally, FHA applicants are required to pay a minimum 3 percent down. Using a seller-funded gift program, that can be cut to zero.
But now FHA wants to pull the plug on these arrangements, citing excessive defaults, foreclosures and losses so severe they threaten the solvency of the agency’s insurance funds. On top of that, in the last year the IRS has revoked the tax-exempt status of 31 nonprofit organizations that specialize in down-payment gift programs.
I don’t really think it is that using the program increases the risk of future forclosure to the buyer. I think it is that people who need to use these programs are the ones that are already at higher risk for forslosure. There may be a little bit of influence from the “absolutely no skin in the game” aspect, but not as much as you are always making a risky loan when lending to people with small incomes or people borrowing close to the edge of their ability to pay.
“I don’t really think it is that using the program increases the risk of future forclosure to the buyer.”
Prudent downpayment requirements help lenders avoid what economists call the “adverse selection problem”: Generally speaking, the pool of people who don’t have the means or self-discipline to save up for a downpayment to pay for the home are more likely to lack the self-discipline to pay off a mortgage loan, and this is the pool of buyers adversely selected by requiring no downpayment.
A second channel of adverse selection has to do with how expensive a home a buyer makes relative to their financial means; if the buyer has ten thousand dollars saved up and has to make a ten percent downpayment, he is not very likely to buy a home valued at over $100,000. And with no savings, a buyer will not purchase a home, and as a result may avoid financially hanging himself with an unrepayable alligator mortgage. With no downpayment requirements plus other relaxations of lending standards (e.g., NINJA loans = no-income, no job, no assets required were popular a couple of years back), one could easily soon find Central Valley strawberry pickers earning $30K a year purchasing homes for over $700K.
A third problem is due to the moral hazard created by letting buyers purchase homes with no skin in the game. Foreclosure is a more serious issue for an owner whose own money would be handed over to the bank if they stopped paying the mortgage. This may give the owner more incentive to work hard in order to keep making the monthly nut. Other people’s money is put at risk of loss if downpayments are funded out of tax dollars.
Other than these and a few other reasons, I agree with you — there is no reason to think a buyer’s future foreclosure risk goes up due to no downpayment requirement.
…a home a buyer
makespurchases relative…Farming community takes a beating in housing bust
By James Temple
SAN FRANCISCO CHRONICLE
June 22, 2008
BRENTWOOD – Roger Abraham stands in his driveway, one hand holding the newspaper, the other sweeping across the homes on Solitude Street. “This one,” he points, “this one, this one.”
This farming community on the eastern edge of the Bay Area absorbed an outsize portion of the region’s growth during the prolonged housing and development boom, adding 40,000 residents in the past 16 years as subdivisions and strip malls overtook agricultural land. It regularly ranked among the state’s fastest-growing cities. Now, Brentwood is suffering disproportionately from the bust.
Hundreds of families have lost their homes to foreclosure since the beginning of last year, and in a sign of more to come, at least one out of every 16 households has received default notices.
…
In new neighborhoods, “Foreclosure,” “For sale” and “For rent” signs dot the streets, weeds sprout and newspapers pile up at empty homes as new residents cycle in and out. In projects halted by the downturn, handfuls of houses stand alone amid acres of dirt. Promised parks and community centers remain unfinished or fenced in.
My nephew just moved to Brentwood…Sold his house in 95051 and purchased a house for $650,000. that originally sold for $975,000…
I just got back from the beach and I have a giant bag of oysters. I went down there early to see what all the machinery was doing late yesterday, in case I had to take photos and then tattle to department of ecology. It’s always nice to get photos unannounced, as some scofflaws get grumpy for some reason, and then…but what is this? Goodness, look at those ugly little lumpy gray things lying all over the beach, so careless like! Crassostrea giga. (I think I got that right.)
Anyhow, I used my psychic powers to discern that they want me to eat them, with butter and garlic and, oh golly, at least a gallon of beer. Maybe two gallons.
Oh, I forgot to mention–no tattling necessary this time, as I’m sure you’re all pleased to hear.
Often developers do their worst bad stuff on weekends, when county and state compliance personnel are not available to be notified and to come stop them. Then, unless you’ve got photos, you’ve got no proof. ‘Wetlands? What wetlands. There’s no wetlands here. Just a whole lot of gravel…’
Assh*les. Lordy, how I hate them.
Hey, Oly, ever see those devil’s toenails they have down by Capitol Reef? Little tiny petrified clams. If you eat all the clams, what will future paleontologists/geologists/rockhounds have to do? It’ll be really boring around there for them.
what will future paleontologists/geologists/rockhounds have to do? They will be excavating petrified McMansions, examining our bones, scat, & cooking pots while arguing whether or not we ate each other.
ever read “Motel of the Mysteries”? Pretty funny (maybe you wrote it, I dunno).
“Wetlands? What wetlands. There’s no wetlands here. Just a whole lot of gravel…”
A Section 404 permit is required for digging shellfish too.
Surface collecting is legal.
Mmmmmmmmmmmmmmmmmmm.
Wish I were there.
Dodd Must Clear Air Over Deals
Kevin Rennie | NOW YOU KNOW
June 22, 2008
When cornered, Sen. Christopher J. Dodd maintains an ambiguous relationship with the truth. His clumsy and contradictory explanations of the favorable mortgage deals he received from Countrywide Financial continue to shred his credibility.
Dodd would spew righteous venom over anyone who offered the Senate testimony as convoluted as what Dodd has served us in the past 10 days.
“Outrageous,” he thundered in a press release on Friday the 13th. How dare anyone suggest he would derive a personal benefit from his public trust? With that, he skedaddled out of Washington, officially traveling and unavailable in the communications age. One more profile in courage.
…
And then someone inside the biggest miscreant, Countrywide, Dodd’s indulgent lender, leaked the details of Dodd’s special deal. What fresh hell is this for the chairman of the Senate Banking Committee? And it’s unfurling before us as the Senate moves toward a $300 billion bailout of lenders that includes the No.1 subprime mortgage maker, Countrywide, and more significantly, Bank of America, which is acquiring Countrywide.
…
Dodd’s mortgage deals and the bank bailout bill combined to draw attention to his fundraising. Countrywide was a steady contributor, but not nearly as generous as Bank of America. Since Dodd became chairman of the Banking Committee in January 2007, he’s received more than $70,000 from Bank of America and its executives. And Bank of America is the big winner in Dodd’s expensive legislation.
So put away your outrage, Sen. Dodd. There’s a simple way for the public to reach its own conclusions. Release the documents related to the mortgages. Show us the mortgage commitment letters, good-faith estimates and closing documents that are standard forms. You probably voted to require some of them. There’s nothing intrusive about them, especially when your reputation and the integrity of the Senate are at stake.
A man who raised $17 million in campaign money to win one Iowa precinct delegate of the 2,501 elected in January knows something about financial disclosure. Producing a few documents shouldn’t rattle a senator who believed he was qualified to serve as the nation’s commander-in-chief and oversee its trillions in national spending.
“So put away your outrage, Sen. Dodd. There’s a simple way for the public to reach its own conclusions. Release the documents related to the mortgages. Show us the mortgage commitment letters, good-faith estimates and closing documents that are standard forms. You probably voted to require some of them. There’s nothing intrusive about them, especially when your reputation and the integrity of the Senate are at stake”.
He’ll never do it, of course he would be calling for the head of another Senator( particularly a Repub) in this position. He’s just another in a very long line of dishonest POS public ’servants’, and these servants are stealing their employers blind.
The MSM’s “outrage” is remarkably subdued. Think it’s because Dodd is a Dem? Nahhh.
Actually, it’s torpedoed his chances of being VP.
You should keep track of what you can’t observe as much as what you can observe.
Bastiat lives!!!
Actually, it’s torpedoed his chances of being VP.
Not just the Veep position, but there had been speculation that Senator Reid might be ousted from the Majority Leader’s spot in favor of Dodd during the next term. Rumor only, but I’m sure that’s DOA as well.
Thanks for the reference — something to add to my unread book collection here.
Author: Bastiat, Frédéric (1801-1850)
Title: Selected Essays on Political Economy
Published: Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., trans. Seymour Cain., ed. George B. de Huszar, 1995.
First published: 1848, in French.
What Is Seen and What Is Not Seen
In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.
His VP chances may be gone with the wind, but his seat is safe. He was re-elected by a 2-1 margin in 2004. He’s probably there for life. He can do or say anything he wants and knows he will get away with it. Hence the unbridled arrogance that comes with unchecked power.
How did he ever think he was presidential material. What’s with the permanent sneer on his face, anyway? I’ve always wondered about that.
Chris Dodd is from Connecticut. The perpetual sneer is the Official State Expression. We are so above you all that the rules which apply to mere mortals do not apply to us. Did you not receive the Memo?
NAH< I think the public outrage is just plain old tired of the same bs and rhetoric. I think the public is tired and working as hard as they can to keep wood on the fire, so to speak.
And then there is that Cross town game going on between the Cubs and the White Sox..
You know, after a number of years in this life I have to the opinion that people are not perfect. Pols, in spite what they say, can be bought or purchased.
My only complaint is that they can be bought off so cheaply!!! BofA/CW contribute $70k in return for legislation of $300 Billion. That is one h*ll of a return on an investment!
lol
LostControl
I have always maintained that the best return on investment a person can make is to buy a politician.
I’m sure they contributed to a lot of other campaigns, and I’m sure a lot of their friends in the banking community also contributed. Don’t worry the pigs in congress are all well fed.
RE: Show us the mortgage commitment letters, good-faith estimates and closing documents that are standard forms. You probably voted to require some of them. There’s nothing intrusive about them, especially when your reputation and the integrity of the Senate are at stake.
MSM should be on this like a ravenous dog to a piece of meat.
Not a single blurb all week nor in todays’ Sunday edition of the Beantown Glob.
Kent Conrad’s “Quid” For Countrywide’s “Quo” Is Being Overlooked
Disclaimer: This article is a blog post and does not represent the views or opinions of Reiten Television, KXNet.com, its staff and associates and is wholly owned by the user who posted this content.
…
Any time there is a scandal over a member of Congress receiving gifts or special treatment from certain interests there are two parts to the scandal. One part is the gift or special treatment. With Conrad and Countrywide that’s already been established by Conrad’s having admitted to accepting “VIP loans” from Countrywide CEO Angelo Mozilo (though Conrad says he didn’t ask for them and didn’t know he received them).
The other part is what the member of Congress did for the interest in question to receive the gift or special interest. Normally this is difficult to establish, but in Conrad’s case it’s fairly obvious. Both Conrad and Dodd, one of the other recipients of VIP treatment from Countrywide CEO Angelo Mozilo, tag-teamed a $300 billion bailout for the mortgage industry in which Countrywide Mortgage is the biggest player
Given that, you have to ask yourself why this aspect of the Conrad/Countrywide scandal has yet to be reported anywhere in the North Dakota media. It would seem pretty important, no? And yet none of the reporters in North Dakota seem to find this newsworthy
Funny how that works, no?
“I wonder how much cash do you suppose the general public keeps on hand? I think the majority of the population depend on an ATM to grab a little cash.If a disaster comes along, good luck with the ATM. We try and keep a couple thousand on hand, just in case.”
I was in Lower Manhattan when disaster happened and no, I didn’t have much cash. NYers who lived here back in the day carry very little, just what they absolutely need or, if they don’t need any, some “mugger money” so the armed crackhead won’t feel insulted. We never have more than $200.
9/11 knocked out the telecommunications system in large parts of NYC, as the key Verizon switching station was hit. No credit card transactions, no ATMs in Brooklyn. There was also no traffic across the water, so no one could get cash. Eventually, the Federal Reserve had to send emergency cash trucks to Brooklyn.
Until that happened and the teleco system restarted (about a week or two), you basically lived off what you had, or what you could get at local stores where you were known ran a tab.
WT,
My broker at Merrill tells me he carrys ‘mugger money’ as well. I’d rather club them like a baby seal.
Regarding ATM’s. He said after watching the first WTC tower collapse the first thing he did was go to an ATM and start withdrawing cash.
I keep cash in my safe. The amount varies but I always try to have some on hand. You just never know when you’ll need it.
I remember an old timer I worked with years ago (he’s deceased). He carried $10K in his pocket where ever he went. I asked him why and he replied that it was needed in case he found a good deal on some property.
Mike
He’s baaaaaaaaaaack!!!
Ross Peroit has a website with a presentation and 35 graphs. Maybe good information…
http://perotcharts.com/challenges/
After reviewing this program and the obvious message that something must be done now (take away SS & Medcare), I have only one thing to say…No.
The only way the public will allow the reduction of benefits or to avoid the payment of benefits will only if the US Govt defaults on all of its debts, otherwise there will be a revolution in this country.
Have you ever seen 60 million (maybe?) oldsters in walkers and on canes protesting in DC. As funny as this may sound, it would indeed be a sight to see…
lol
The coming generational war—
Pres:”Where’s the National Guard?”
Sec. of Defense: “Sill in the Middle East. All we have are the Boy and Girl Scouts that we could nationalize”.
Pres: “We are scr*wed.”
60 million Boomers marching on DC and demanding more entitlements? Time to call in an airstrike!
Back of the envelope calculations.
Queens, NY. “Starter homes” in decent neighborhood, $450K - $500K.
Mortgage-around $30k/year. Income necessary (even at paying 1/3 income to housing.) - $90K/year. Average income in Queens- $45K.
So people who make almost 6 figures can barely afford a POS starter home.
A regular SFH is still over $600K.
The numbers just don’t add up, yet the prices, though falling a bit, remain insane.
Yeah, prices need to correct at some point, but when and at what speed?
Meant to post this in Weekend observations. Will post it there now.
HBB friends, squatting is depressing. Not recommended. My other place isn’t working out (the renters won’t leave). But I may be moving to Colorado soon if I take the job I was offered, so no worries.
I dunno, maybe part of the problem is that I just got home, after walking about 20 miles yesterday in the heat and I’m tired. I got carried away by a gang of gnats and barely escaped. NYCityBoy, where are you - even though it’s early, you could share some Squatters Beer here with me.
While I was out there walking, I was thinking of good old Al Greenspam. I even made up some new cusswords on his behalf. Then when I got home I checked out the foreclosures in W. Colorado and it made me feel better. Seems like a tidal wave, tons more since last time I checked. Ben’s right, this thing is gonna be HUGE!!!
They had a big party in the park last night, across the street, a real band and all that, big deal for here. I sleep with the door open, it’s too hot to close it, and I drifted off to the refrains of “I shouldda been a cowboy.”
OK - I think I’ll go to Moab today and find some real beer. But when I was out there walking in the hot desert, I had a vision, an epiphany, and I saw myself in a nice house by a big alfalfa field and I didn’t even have a house payment.
People get ready, there’s a train a comin’…
http://www.youtube.com/watch?v=eBovhZXSRTA
Just watch out for the Pinkerton s…
Mr. E.F. Huffington does not cotton to free loaders on his trains…
Butch Cassidy and the Sundance Kid. Hole in the wall gang, Utah, I believe…
lol
Huffington=Harrington?
Harrington
The town I’m in was infamous in its day for outlaws and wild parties. Not settled by the Mormons, originally a railroad town. Butch came through on his way to Under the Ledges and Robber’s Roost country. He also holed up on the San Rafael Swell, 20 miles away. Colorful country. A family friend knew Butch (both are long gone, RIP the characters of another era).
I’d like to talk with you off the blog. We’re getting serious about looking now and you seem to come across the best stuff . . .
TX, contact me through info@yellowcatbooks dot com
Will be gone most of today.
There are some cool properties around W. Colo SE Utah.
PS Any advice I have isn’t free, however, you have to donate to a dog rescue of your choice (preferably F. bulldogs)
Ute girl;
Without going to a map, what cities are around
w. colo se ut?
1. Grand Junction, CO.
2. Grand Junction, CO.
3. Grand Junction, CO.
Of course if you modify the definition of a city down to a population of 3,000 or greater, there’s a couple other places that should make the cut, but don’t hold me to that.
Near Matheson? I knew a guy who’s father had a huge cattle ranch near GJ. So is this a hot area now?
No Matheson around here.
Just Grand Junction.
And yes, Ouro, it’s hot today, but I suspect that’s not what you meant. BTW, my portfolio has been liquidated.
Lost,
Here’s a great ride if you’re interested.
You take hwy 141 off of hwy 50 just south
of Grand Junction. This will take you just north of the Uncompahgre plateau through the town of Gateway to the turn off of John Brown Rd., a dirt track that traces its way up a steep and narrow canyon that tops out on the top of the mountains east of Moab. There are a couple of goat tracks that you can take to go all the way down to Moab. It is a full days ride and you’ll see some to the most spectacular country in the west. I doubt more than 20 people a year see this
Hey Rogue, when was the last time you took that route?
Have you heard about what’s happened in Gateway? Bad bad news, the Discovery Channel guy (Hendricks?) bought up thousands of acres to “preserve” it and then built himself a 28k sq ft mansion and a lodge and is turning it into a destination for tourists. Also a vintage car museum. That route you described was sacrificed along with Gateway as a commuter route for some of the people who lived in Moab and worked there. Can’t even get on the Dolores R. there w/o getting hassled by his toadies, they think they own the place (and they’d be wrong in that assumption, HE does).
Ahhh, progress… (sorry if this bums you out, it did me)
yeah,
and I am getting serious about planning for the extinction of the way things were: food
driving
healthcare
xmas
pool parties
credit cards
school lunches
goodbye corn on the cob.
Whatever.
I’ll buy “corn on the cob” for the HBB. I doubt it’s going away anytime soon.
Butter is so boring. With lime, black salt, and spices, it’s one of life’s true pleasures.
FIERY!!!
Ya forgot the parmesan!
I forgot nothing.
You forgot that you can’t even get spices where you are.
Dohhh! You’re right - but I’m hoarding what I brought with me in the freezer! They’ll pry em out of my cold dead hands!!!
Folks just can’t seem to save anything…
http://bloomberg.com/apps/news?pid=20601087&sid=aODheW_khzJg&refer=home
Lessee now - Saudi Arabia is increasing production by 200k bbls a day, Chevron is turning off production of about 160k bbls a day. Will 40k net bbls do any good? “The world wonders”.
http://bloomberg.com/apps/news?pid=20601087&sid=aECpcxIaPbpg&refer=home
http://bloomberg.com/apps/news?pid=20601087&sid=akdkSosheHNw&refer=home
Just getting ready for the coming week. Now, is the run on all banks starting tomorrow? My intuition meter is signaling danger.
I hate the term bitch slap, but I may need a scarlett slappin’.
Will the banks be open all week???
Here’s a good deal. Too bad it must be a typo.
http://longisland.craigslist.org/rfs/728516776.html
http://www.businessinsurance.com/cgi-bin/article.pl?articleId=25202
Spank me if this is a re-run.
I’m trying to get an appraisal on an airplane hanger in Ventura County - and the appraisers who are qualified to do that sort of property are all booked up for the next 2 months.
It sort of makes you wonder what they are all up to - I guess the banks might be keeping them busy right now…
Here’s a deal for any of you that wants to get married in a huge wedding in Austin in 2 weeks — negotiable…
GET MARRIED in 2 WEEKS! Huge 5th of July Weekend Wedding @Town Lake (Austin, Town Lake)
http://austin.craigslist.org/for/726854989.html
it’s been deleted, tell us what it was about…
Probably a pre-arranged event where one of the parties backed out at the last minute…
Wonder if a bride or groom came with the deal?
“Mexican Standoff” perhaps…
Or hey, maybe it’s a ploy to get a groom for a shotgun wedding, buyer beware!
GET MARRIED in 2 WEEKS! Huge 5th of July Weekend Wedding @Town Lake (Austin, Town Lake)
Reply to: sale-726854989@craigslist.org
Date: 2008-06-20, 4:01PM CDT
text from ad:
Your wedding can begin at 6pm July 5th. Get Married in Two WEEKS! Don’t mess with the stress, just bring the dress.
Everything has been planned and paid for. Selling the entire wedding package, price and package are negotiable.
Includes Dinner for 100 people and Indoor/Outdoor Reception space in a 5-star hotel on Town Lake, downtown Austin the evening of Saturday, July 5th.
Please email for details.
GET MARRIED in 2 WEEKS! Huge 5th of July Weekend Wedding @Town Lake (Austin, Town Lake)
Reply to: sale-726854989@craigslist.org
Date: 2008-06-20, 4:01PM CDT
Your wedding can begin at 6pm July 5th. Get Married in Two WEEKS! Don’t mess with the stress, just bring the dress.
Everything has been planned and paid for. Selling the entire wedding package, price and package are negotiable.
Includes Dinner for 100 people and Indoor/Outdoor Reception space in a 5-star hotel on Town Lake, downtown Austin the evening of Saturday, July 5th.
Please email for details.
no stress, bring the dress - negotiable sale of wedding package, negotiable dinner for 100 and indoor outdoor reception, 5 star hotel on townlake Sat 5 July
as friend who sent me the link said, they’ve probably avoided an expensive divorce
tried twice to post ad copy, w/o success
Anyway, bring your checkbook and your shotgun, gals.
Depending on your size, you might be able to pick up the dress for pennies on the dollar.
Otherwise, just go to the SATC movie and in the extended “product placement” part of the film, you will get your Cliff Notes lesson in current wedding fashion … then head to the bridal resale shops.
Early rate rises not in Fed’s Plan A
By Krishna Guha in Washington
Published: June 22 2008 21:49 | Last updated: June 22 2008 21:49
The Federal Reserve is likely to indicate some increased concern about inflation following its policy meeting this week, but to do so in a manner than avoids any suggestion that interest rate rises are imminent.
Indeed, it may not say that it now sees the risk to inflation as greater than the risk to growth. If it does, it will probably qualify the assessment either by stating that the risks remain quite closely balanced, or by emphasising economic uncertainty. Interest rates will stay on hold at 2 per cent.
The US central bank is trying to walk a fine line. It wants to convince investors and the public it will do whatever it takes to stop high rates of inflation – pushed up by oil and food prices – becoming entrenched in inflation expectations.
But it also wants to avoid an excessive run-up in market interest rate expectations, since that would push up the actual cost of loans unduly, putting pressure on a still-fragile economy.
Larry Meyer, a former Fed governor, says recent hawkish talk by Fed officials represents a “conditional commitment” to raise rates if the sources of inflation risk deteriorate. But he says the market has difficulty distinguishing this from an “unconditional signal that policy tightening is imminent”.
If The Economist turns out to be correct regarding the Fed’s recent inflation saber rattling exercise turning out to be a head fake, look for a stock market rally to take off on a vicious rally that carries right through election season. This would be my leading guess about where things are headed at the moment.
Leaders
The Federal Reserve and the European Central Bank
Hawk alert
Jun 12th 2008
From The Economist print edition
Central bankers are talking tough. They may be talking themselves into trouble
YOU can hear the talons scratching. Ben Bernanke, chairman of the Federal Reserve, first adopted a hawkish tone on June 3rd, lamenting the weak dollar’s part in an “unwelcome” rise in inflation. Two days later Jean-Claude Trichet, president of the European Central Bank, stunned financial markets by declaring that the ECB may raise short-term rates at its next meeting in July. Then Mr Bernanke swooped once more. In a speech on June 9th he played down the news that America’s jobless rate had risen in May by half a percentage point, to 5.5%. He argued that the risk of a nasty economic downturn had fallen and he promised that the Fed would “strongly resist” any rise in people’s expectations of future inflation. As central banks from Canada and Britain to Vietnam and India have shown their claws, bond markets have been in turmoil (see article). Investors have concluded that short-term interest rates are heading up, and fast.
…
The Fed seems much less likely to raise rates. Despite some warning signs—on one measure, for instance, consumers’ expectations for long-term inflation are at a 12-year high—wage growth is slowing, and average pay cheques are falling sharply in real terms. There is no whisper of a wage-price spiral. What is more, house prices are still tumbling and the financial hangover from the credit crunch is not over yet. The risks to growth, as Mr Bernanke admits, are on the “downside”. And, for better or worse, the Fed is charged with caring about both full employment and stable prices. Add in the politics of raising interest rates just before a presidential election, and the odds are that the Fed’s talk remains just that.
A wide transatlantic gap between rhetoric and action is unfortunate—and bodes ill for the Fed’s credibility. After the Fed’s rapid, pre-emptive loosening to a federal funds rate of 2%, financial markets will be watching to see whether it is correspondingly prepared to tighten again. Mr Bernanke has made his job all the harder by adding the dollar to the mix. If the ECB tightens and the Fed does not, the dollar is likely to weaken against the euro—exactly the opposite of what Mr Bernanke last week implied he wished to happen. For the time being, the dollar is up and oil prices down. The hawkish rhetoric seems to be working a treat. But unlike real talons, mere words will not leave a lasting mark.
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=194327
File this under: Whiskey Tango Foxtrot
2008 Assessed value: $613,400
2008 Asking Price: $1,400,000 w/$20k/taxes
Onondaga country tax web site lists taxes higher than realtor website: but what’s $1000/year when you’re shelling out that much
I checked out another home on the same street and the assessed was very close to market so it’s not the assessor’s screw-up. This woman’s either senile or smoking something.
No, DRINKING something…
Speaking of drinking (and this ain’t koolaid), Hwy’s buying free Squatters Beer for anyone who can make it out to Ray’s Tavern in Green River, Utah (see Cali thread).
Right, Hwy?
The bad news keeps accelerating. I am considering a small holding of physical gold. Any dealer recommendations?
Thanks
Consider a large holding of cash instead.
Editorial
With Friends Like Angelo . . .
Published: June 22, 2008
Time and again, the Senate is bedeviled by its own clubbiness, its lost sensitivity to how ordinary people live their lives. So it is with Christopher Dodd and Kent Conrad, who turned up on the “Friends of Angelo” V.I.P. list at Countrywide Financial Corporation.
Countrywide, a home-loan powerhouse, figures prominently in the subprime mortgage crisis, which has put hundreds of thousands of Americans at risk of losing their homes. The revelations about Mr. Dodd, Democrat of Connecticut, and Mr. Conrad, Democrat of North Dakota, are particularly troubling since the two senators are principals in trying to pass emergency legislation to address the damage from the mortgage crisis.
A lack of sensitivity?
posted at 10:36 am on June 22, 2008 by Ed Morrissey
The New York Times tries to sound tough in its editorial on the sweetheart deals two Democratic Senators received from Countrywide Mortgage, but the Times falls far short of the real issue. While Democrats like Barack Obama demonized Countrywide for its role in the subprime collapse, Democrats like Chris Dodd and Kent Conrad — charged with overseeing these markets — got preferential treatment from Countrywide instead. That makes the issue more than just a lack of sensitivity, the sternest scolding the Times can apparently muster…
That’s not the really troubling part of the story, and the Times knows it. Dodd chairs the Senate Banking Committee, and Conrad sits on the Finance Committee. Both have oversight in banking and credit issues, especially Dodd. Accepting gifts from actors in their fields of regulation isn’t just insensitivity, it’s a clear conflict of interest — and looks a lot like corruption.
Their work on a bailout package for lenders amplifies that appearance. When first floated, I noted that the bill assisted the lenders that made the bad decisions while only offering “counseling” to homeowners who stood to lose everything. Now we know why; lenders like Countrywide had greased the wheels earlier with below-market loans that saved these Senators tens of thousands of dollars.
This goes way beyond “sensitivity”. It hits at the heart of the entire regulatory mechanism. If the elected officials we put in charge of the henhouse turn out to be the foxes, then the burdensome and costly bureaucracies we build to regulate these industries are useless.
The Times is right in one respect: the Senate Ethics Committee isn’t likely to take any significant action against Conrad or Dodd, the latter of whom has the more egregious fault in this case. Neither will Dodd’s constituents in Connecticut. Conrad may be lucky that he won’t stand for re-election for another four years, because he would almost certainly lose if he had to run this year in North Dakota after this scandal. And as long as no consequences result from this kind of slimy double-dealing, it will continue to occur.
Still no outrage ?
The public has grown numb.
“numb”
You mistyped ‘dumb.’
Luckily high end Manhattan housing prices always go up, or this news of job cuts at major NYC investment banks might be cause for high-end NYC housing price concern.
Investment banking
Job fears mount as Goldman sheds staff
By Chris Hughes in London and Saskia Scholtes in New York
Published: June 22 2008 23:32 | Last updated: June 22 2008 23:51
Bankers fear the pace of job losses in the investment banking industry is set to accelerate over the summer after it emerged that Goldman Sachs, the sector’s star performer, cut staff at its investment banking division last week.
The Wall Street bank is now expected to cut up to 10 per cent of staff in the division that handles mergers and acquisition advice and corporate fundraisings over the course of 2008, with a fresh round of trimming starting last week.
The latest cutbacks, which come in spite of impressive second-quarter results, are separate from Goldman’s annual performance review, which typically sees the worst-performing 5 per cent of staff leave the bank.
Wall Street rival Citigroup is already in the midst of a 10 per cent reduction to its 65,000 strong investment banking staff. People at the bank say half of the layoffs have been made with further cuts likely in the coming weeks.
Trapdoor falling on equities in stagflation cage
By Tony Jackson
Published: June 22 2008 21:31 | Last updated: June 22 2008 21:31
Those of us who have been fretting for some time about inflation now look like being trampled in the rush to agree. Indeed the big brokers have become so excitable on the topic that, were the situation not so serious, it might even seem time to buy.
…
What we are talking about here, of course, is stagflation – which deserves a word on its own. In the 1970s, conventional economics had considerable problems with stagflation, on the grounds that it ought to be impossible.
If unemployment was up, inflation must be down and vice versa, like the two ends of a seesaw. If both were up at the same time, that meant the seesaw was broken, which made no sense.
But as the brilliant American non-economist Jane Jacobs pointed out, stagflation was in fact the norm in poor backward countries, or in poor backward parts of rich ones. The effect had been described in the late 18th century by Adam Smith, who remarked that while unemployment in his native Scotland was high, so were prices, which were set by Scotland’s richer neighbour England.
Today, we have a curious twist to that. Rich countries such as the US and UK are teetering on the edge of recession because of excessive borrowing and the need to de-leverage.
Black Swan soup is a delicious dish…yum!!!
Trapdoor falling on equities in stagflation cage
By Tony Jackson
Published: June 22 2008 21:31 | Last updated: June 22 2008 21:31
…
Or, to put it another way, the risk is that rates will not be raised for fear of a serious stock market collapse. But if they are not raised, the corresponding risk is that investors will suspect that the central banks have lost the plot, so the collapse will happen anyway.
It is certainly true that the US Federal Reserve has been reining back expectations of rate rises, as we should perhaps expect in an election year. But the ECB, as RBS puts it, is meanwhile “hell-bent” on raising rates.
This provokes a cheery thought from Richard Koo, chief economist at the Nomura Research Institute in Tokyo. Think back, he says, to the summer of 1987. Tension was in the air over resurgent inflation and how to deal with it.
The Bundesbank hiked rates from 4 per cent to 4.5 per cent, then again to 5 per cent.
The second hike was promptly followed by Black Monday, with shares falling worldwide by 30 per cent in a day.
Again, this is perhaps a touch excitable. But as Mr Koo also points out, the situation for equities is in some respects worse today than it was in 1987.
Then, inflation was of the demand-pull variety, so that corporations at least had rising demand to cushion the blow.
It is now cost-push, so that they are whacked by falling demand as well.
“Meanwhile, says the RBS team, the key safe haven is cash. It could prove a dismal summer.”
If downside risks to the economy are diminishing, what is to stop the Fed from tightening the reigns of interest rates for the balance of the year?
Another long hot subprime summer? Signs are mixed
3 hours ago
WASHINGTON (AFP) — A year after a summer subprime crisis roiled markets and squeezed credit worldwide, analysts are looking for signs the worst is over for the troubled US housing market and banks that made risky bets on the sector.
Economists are divided on the crisis at the approach of summer, with memories still fresh of a turbulent period in 2007 that resulted in an upheaval in global markets in July and August.
Federal Reserve chairman Ben Bernanke said this month that the risk of a severe downturn stemming from the housing meltdown “appears to have diminished.”
Treasury Secretary Henry Paulson also argues the crisis is winding down: “In my judgment we are closer to the end of the market turmoil than the beginning,” he said last month.
music is the same.
commodities still dancin to the same tunes.
the things we do for love.
- rules are the same
- no lessons learned
- no meaningful reforms
same slow music, same slow dance as before
ASIA MARKETS
Tokyo stocks drop for third straight session
By V. Phani Kumar, MarketWatch
Last update: 9:11 p.m. EDT June 22, 2008
HONG KONG (MarketWatch) — Japanese shares suffered big losses Monday, extending their decline into the third straight session, as exporters such as Toyota Motor Corp. and Nikon Corp. reacted to a strengthened yen and a decline on Wall Street.
The Nikkei 225 Average lost 1.5% to 13,732.43, on top of the 1.3% drop Friday, and the broader Topix index gave up 1.7% to 1,333.17.
South Korea’s Kospi shed 1.6% to 1,703.78 and Australia’s S&P/ASX 200 lost 1% to 5,235.90, while New Zealand’s NZX 50 index slipped 0.3% to 3,275.26.
In the name of “freedom”. While bushies have fairy tale weddings, soldiers with cognitive disorders are dying in Iraq.
http://www.newsweek.com/id/142640
Pressure increases on Detroit carmakers
By Bernard Simon in Toronto
Published: June 22 2008 17:52 | Last updated: June 22 2008 17:52
A fresh chorus of concern has erupted over the ability of Detroit’s three embattled carmakers – General Motors, Ford Motor and Chrysler – to withstand the steepening slide in US vehicle sales.
Ratings agencies warned on Friday that they might further downgrade the three carmakers and their financing arms, which are already deep in junk territory. GM and Ford shares, once considered among Wall Street’s safest investments, have tumbled. GM lost more than 15 per cent last week to $13.79, its lowest level in almost three decades.
Buy the dip!
I went long F & GM last week. Totally speculative, and will probably lose, but what the heck!
Could this explain where helicopter drops of liquidity that landed on Wall Street ended up?
Double, double
Oil’s a bubble…
Panel Cites Surge in Speculative Oil Trades
By Stephen Power and Ian Talley
Word Count: 782
WASHINGTON — Speculative traders’ interest in crude oil has grown to the point that they now account for roughly 70% of all trading in West Texas Intermediate crude on the New York Mercantile Exchange, compared with 37% in 2000, according to an investigation by a congressional subcommittee that forms part of an escalating political assault on Wall Street’s role in the run-up in oil prices.
Outrageous indeed! I hope the POTUS recognizes a veto-worthy bill when he sees one.
OPINION
Congress’s Fingerprint Fine Print
By JOHN BERLAU
June 23, 2008; Page A17
Fingerprints have long been considered to be among the most personal of information. Proposals for creating fingerprint databases are usually controversial and often lead to a spirited public debate. Even when a fingerprint registry will likely help fight terrorism or crime, many still fear it will lead to a surveillance state.
Yet this week a measure creating a federal fingerprint registry totally unrelated to national security or violent crime may clear the Senate with little debate. The legislation would require thousands of individuals not suspected of any wrongdoing to send their prints to the feds.
What issue is so important that it warrants creating a fingerprint database without public debate? Believe it or not, the housing slowdown. The database and fingerprint mandates are contained in the housing bailout bill that will likely come to a vote on Tuesday.
The bailout is not playing in Peoria.
Our View: Bailout, sweet bailout
Journal Star
Posted Jun 22, 2008 @ 11:00 PM
PEORIA —
Congress wants to have a nationwide housing bill ready by July 4. That’s ironic, since not much about its bipartisan legislation seems to foster independence. Quite the opposite. Capitol Hill’s attempt at helping Americans saddled with mortgage debt amounts to little more than a bailout.
At the heart of the big bill in the works, from Sens. Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.), is a provision letting the Federal Housing Administration guarantee up to $300 billion in “distressed” home loans. If approved, the Congressional Budget Office estimates it would help some 400,000 homeowners facing foreclosure.
That may sound like a good deal. But consider also that analysts predict lenders will off-load their highest-risk loans on the FHA, an already stressed agency. The FHA just announced that it expects to lose $4.6 billion due to unexpectedly high delinquency rates on loans in its existing portfolio. Is this a good time to gamble? If some homeowners default - the CBO predicts 35 percent will - taxpayers will be left holding the bag.
Fargo Forum: Conrad Did Nothing Wrong, Republicans Are “Over The Top” In Criticism Of Him
Disclaimer: This article is a blog post and does not represent the views or opinions of Reiten Television, KXNet.com, its staff and associates and is wholly owned by the user who posted this content.
Democratic party = bailout party
U.S. CONFERENCE OF MAYORS
Obama meets with U.S. mayors, touts housing bill
Barack Obama used his address at the U.S. Conference of Mayors in Miami to shore up support for a $300 billion foreclosure bailout and assail rival John McCain’s tax proposals.
Posted on Sun, Jun. 22, 2008
BY BETH REINHARD
breinhard@MiamiHerald.com
Making his pitch to a key group of power brokers, Barack Obama promised hundreds of mayors gathered in Miami that he would push back on President Bush’s threatened veto of legislation aimed at rescuing homeowners facing foreclosure.
The bill would allow the federal government to insure $300 billion in new loans so homeowners who can’t pay their mortgages could refinance. The legislation is a priority for many mayors whose cities are faltering under the housing crisis.
”If George Bush carries out his threat to veto the housing bill — a bill that would provide critical resources to help you solve the foreclosure crisis in your towns and cities — I will fight to overturn his veto and make sure you have the support you need,” Obama said.
Did anyone explain to Obumma that Bank of America would be a primary beneficiary of the $300 bn in guarantees?
da da da dot da da CHANGE!
Op-Ed Columnist
Home Not-So-Sweet Home
By PAUL KRUGMAN
Published: June 23, 2008
“Owning a home lies at the heart of the American dream.” So declared President Bush in 2002, introducing his “Homeownership Challenge” — a set of policy initiatives that were supposed to sharply increase homeownership, especially for minority groups.
Oops. While homeownership rose as the housing bubble inflated, temporarily giving Mr. Bush something to boast about, it plunged — especially for African-Americans — when the bubble popped.
…
In effect, U.S. policy is based on the premise that everyone should be a homeowner. But here’s the thing: There are some real disadvantages to homeownership.
First of all, there’s the financial risk. Although it’s rarely put this way, borrowing to buy a home is like buying stocks on margin: if the market value of the house falls, the buyer can easily lose his or her entire stake.
This isn’t a hypothetical worry. From 2005 through 2007 alone — that is, at the peak of the housing bubble — more than 22 million Americans bought either new or existing houses. Now that the bubble has burst, many of those homebuyers have lost heavily on their investment. At this point there are probably around 10 million households with negative home equity — that is, with mortgages that exceed the value of their houses.
Owning a home also ties workers down. Even in the best of times, the costs and hassle of selling one home and buying another — one estimate put the average cost of a house move at more than $60,000 — tend to make workers reluctant to go where the jobs are.
And these are not the best of times. Right now, economic distress is concentrated in the states with the biggest housing busts: Florida and California have experienced much steeper rises in unemployment than the nation as a whole. Yet homeowners in these states are constrained from seeking opportunities elsewhere, because it’s very hard to sell their houses.
Finally, there’s the cost of commuting. Buying a home usually though not always means buying a single-family house in the suburbs, often a long way out, where land is cheap. In an age of $4 gas and concerns about climate change, that’s an increasingly problematic choice.
There are, of course, advantages to homeownership — and yes, my wife and I do own our home. But homeownership isn’t for everyone. In fact, given the way U.S. policy favors owning over renting, you can make a good case that America already has too many homeowners.
O.K., I know how some people will respond: anyone who questions the ideal of homeownership must want the population “confined to Soviet-style concrete-block high-rises” (as a Bloomberg columnist recently put it). Um, no. All I’m suggesting is that we drop the obsession with ownership, and try to level the playing field that, at the moment, is hugely tilted against renting.
Investors Hide as Banks Come Knocking
By Robin Sidel
Word Count: 887 | Companies Featured in This Article: KeyCorp, Washington Mutual, Sterling Financial, BankUnited Financial
Once bitten, twice shy.
As banks rack up billions of dollars in losses from bad loans and blundered investments, large investors are becoming skittish about pumping more money into them.
In the past several weeks, bank executives have encountered unexpected resistance from investors, who have expressed reluctance to participate in the capital-raising transactions sweeping through the industry, according to people familiar with the situation. Already bruised by big losses and fearing that bank shares haven’t yet hit bottom, some of these investors are choosing to tighten their purse strings.
How is the empirical evidence on the decoupling theory holding up these days?
Steep Fall for High-Fliers
By Joanna Slater in New York, James T. Areddy in Shanghai and Jackie Range in Mumbai
Word Count: 913 | Companies Featured in This Article: PetroChina
As 2008 approaches its midpoint, two of the world’s worst-performing stock markets were not long ago investors’ biggest darlings — China and India.
Both countries came into the year with stocks trading at expensive levels, leaving them vulnerable to a reversal in investor sentiment. While economic growth remains robust in the two countries, few analysts believe it will match last year’s stellar performance. And investors are increasingly anxious about rising inflation and government efforts to stem it, which could further dent growth.
Reflection From Futures Is Puzzling
By Mark Gongloff
Word Count: 494
The Fed-funds futures market is supposed to reflect expectations of Fed policy. Lately it’s been more like a funhouse mirror, without the fun.
Federal Reserve policy makers meet Tuesday and Wednesday to deliberate on the economy and interest rates. Forecasters expect the Fed to leave unchanged its target for the federal-funds rate, an overnight bank-lending rate that influences many other borrowing costs. It has been 2% since April.
The Fed lately has made clear that inflation is again high on its worry list. It will likely reflect that in the closely watched statement accompanying its decision.
MONDAY, JUNE 23, 2008
CURRENT YIELD
Bernanke Rethinks Priorities
By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR
WATCH WHAT THEY SAY, not what they do. Fed watchers (and everybody else) will be turning around the famous admonition by former President Nixon’s Attorney General, John Mitchell, to decipher the course of monetary policy.
The Federal Open Market Committee will almost certainly keep its key policy target, the federal funds rate, unchanged at 2% this week. But the panel’s statement, due out at 2:15 PM EDT Wednesday, will be the what will be scrutinized.
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Credit problems appeared in the automotive sector, a distressing turnabout for these companies. Friday, Moody’s Investors Service and Standard & Poor’s Corp. served notice that the credit ratings of General Motors (GM) and Ford Motor (F) were at risk while Moody’s also warned that the outlook for the credit of Chrysler (now owned by private equity firm Cerberus Capital) was negative. Recognizing those risks, the markets dialed back their anticipation of Fed rate hikes. The futures markets Friday put just a 43% probability on a 2.25% fed-funds rate, up a quarter-point, at the Aug. 5 FOMC meeting, down from 83% a week earlier. Fed-funds futures also Friday priced in an 84% chance of a 2.50% by the end of the Oct. 28-29 FOMC meeting. A week earlier, the futures market thought a 2.50% funds rate was a certainty by then, with 58% chance of 2.75%.
MONDAY, JUNE 23, 2008
BARRON’S COVER
Bye, Bubble?
The Price of Oil May Be Peaking
By ANDREW BARY | MORE ARTICLES BY AUTHOR
The price of oil may be peaking in the current range of $130 to $140 a barrel. Here’s where you want to be when the bubble bursts.
Look at who is talking like a gloomster now!
U.S. housing rebound to be prolonged: Harvard study
Mon Jun 23, 2008 12:32am EDT
By Lynn Adler
NEW YORK (Reuters) - Record foreclosures and limited access to credit will make it harder than usual to rebound from this U.S. housing market slump, the worst at least since World War Two, according to a Harvard University study on Monday.
A two-year home price drop is eating into housing wealth, curbing consumer spending and slicing away economic growth. This is unlikely to change until potential home buyers are convinced that prices have stopped tumbling, the study found.
The downturn has room to run.
The highest home loan rates in nine months and strict lending standards are keeping buyers on the sidelines, even after aggressive Federal Reserve intervention and a 16 percent national home price slide from the 2006 peak, by some measures.
“Historically, housing markets recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability,” Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard, said in a statement.
“It will take longer this time to rebound given the unusually high levels of foreclosures and constrained credit markets,” he said. “The slump in housing markets has not yet run its full course.”
Housing slump hits hard
Report: ‘Worst in 50 years’
By Jerry Kronenberg
Monday, June 23, 2008 - Updated 3h ago
The U.S. housing bust is probably the deepest downturn in a half-century and “may (still) have a way to go,” Harvard University researchers conclude in a report due out today.
“The current housing slump is shaping up to be the worst in 50 years,” experts at Harvard’s Joint Center on Housing Studies write in their annual “State of the Nation’s Housing” report. “The national median single-family home price fell (for) the first time in 40 years of recordkeeping, leaving several million homeowners with properties worth less than their mortgages.”
The study finds that:
Median U.S. home prices have lost 18 percent in inflation-adjusted terms in the 2 years since the market peaked. By contrast, prices actually rose 6 percent by this point in the early 1990s downturn.
Foreclosure rates are the worst ever in the 34 years experts have tracked such data.
The housing market has a hefty 10.7-month supply of unsold existing homes listed for sale. There’s also an 11-month supply of newly built housing - a 30-year high.
Mortgage rates, which fell as much as 6.8 percentage points in prior busts, have barely dropped this time around.
“All of these factors may make this downturn more protracted than usual,” researchers write.
Oh bugger…
Credit crunch: 15 sellers to every buyer
By Rupert Neate
Last Updated: 12:24AM BST 23/06/2008
The ratio of properties on the market to buyers has doubled to 15-to-one in a year, forcing homeowners to slash prices.
Only one in every 15 properties on the market were sold last month, according to figures published today (Mon). The oversupply has forced owners to slash nearly £3,000 off the average house price in the last five weeks.
The average home is now valued at £239,564, a fall of 1.2 per cent. The drop is the first ever recorded fall in house prices in June, which is traditional seen as peak season for house selling.
Betting that real estate always goes up has turned into a personal Hell for lots of folks.
Economic View
What Happens if We’re Wrong?
By PETER L. BERNSTEIN
Published: June 22, 2008
IN 1995, home prices in the United States rose by 1.7 percent. They kept climbing over the next 10 years at an accelerating rate. The climax was in 2005, when the increase was 15.7 percent, putting home prices at more than double their 1995 level. Except for the early years after World War II and during the great inflation of the 1970s, home prices in the United States had never doubled in the short space of 10 years.
This amazing development could not have occurred without one widely held assumption: that home prices could only go up.
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Risk means the chance of being wrong — not always in an adverse direction, but always in a direction different from what we expected.
The key word is “consequences.” I learned this lesson many years ago from studying Blaise Pascal, a French mathematical genius in the 17th century who spelled out the laws of probability more clearly than anyone before him. This was a thunderclap of an insight that, for the first time, gave humanity a systematic way of thinking about the future.
Pascal was both a gambler and a religious zealot. One day he asked himself how he would handle a bet on whether “God is or God is not.” Reason could not answer. But, he said, we can choose between acting as though God is or acting as though God is not.
Suppose we bet that God is, and we lead a life of virtue and abstinence, and then the day of reckoning comes and we discover that there is no God. Well, life was still tolerable even if less fun than we might have liked. Here, the consequences of being wrong would be acceptable to most people.
Suppose, however, we bet that God is not, and lead a life of lust and sin, and then it turns out that God is. Now being wrong has put us into big trouble.
RISK management, then, should be a process of dealing with the consequences of being wrong. Sometimes, these consequences are minimal — encountering rain after leaving home without an umbrella, for example. But betting the ranch on the assumption that home prices can only go up should tell you the consequences would be much more than minimal if home prices started to fall.
No gain without pain…
Houston’s Pipelines of Prosperity
In Oil Industry Hubs, High Energy Costs Bring More Growth Than Pain
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“Things are hitting just right,” said Alan Hutchins, vice president and general manager for A&A Machine and Fabrication, a La Marque, Tex., firm whose business has doubled in each of the past two years, leading executives to advertise as far away as Detroit and Chicago in search of skilled machinists. “With the price of oil where it is, the companies are going to keep these plants running. They are making that money and investing it back in the plants.”
All of the activity is leading to strong retail sales, increasing tax revenue and an uptick in housing prices — in short, the opposite of what is happening in most of the country, which is being squeezed by flagging consumer confidence and high gas and oil prices.
Coming soon to a theater near you: The Accidental Renter
Foreclosures create new class: ‘Accidental renter’
Availability tightens, requirements rise
By June Fletcher | The Wall Street Journal
June 22, 2008
The housing slump has created another type of pain: the suffering of people who find themselves navigating a tight rental market after losing their home.
Hundreds of thousands of former homeowners have been scrambling to find a place to rent. Yet rentals are in short supply in many markets, pushing prices higher. And some landlords are imposing tougher credit requirements on people who have gone through foreclosure.