Bits Bucket For June 28, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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WOW…MSM hanging out here? Sure seems at least this one just might be a lurker!
Fed Should Run Policy, Outsource Communications: Caroline Baum
Commentary by Caroline Baum
snips…
“”June 27 (Bloomberg) — Wouldn’t it be nice to read the headline, “Fed Does Nothing, Says Same Old Thing”?
At minimum, it would accurately describe the outcome of the Federal Reserve’s policy meeting Wednesday. Fed chief Ben Bernanke and his team have been telling us for weeks that “upside risks to inflation and inflation expectations have increased” while “downside risks to growth have diminished.”
Instead — and this isn’t entirely the Fed’s fault — we’re treated to a nuanced dissection of the statement, complete with highlighted text indicating any adverbial alterations from the previous meeting, and an in-depth analysis of the relative degree of concern about the risks of inflation and growth.”"…
…”"Lower Living Standard
“In previous cycles, consumer expectations about their financial well-being did not collapse when inflation went up,” said Neal Soss, chief economist at Credit Suisse. This time around, according to the Reuters/University of Michigan Survey of Consumers, rising inflation expectations are being met with “a collapse in expectations about their own financial futures, suggesting consumers don’t expect to be compensated for higher prices with higher wages,” Soss said.”"…
…“The implication is that real economic activity is likely to be very sluggish until financial institutions rebuild their capital positions,” Kasriel said.
…”"Banks have raised $320 billion of new capital in the past year to offset losses and writedowns of $400 billion. There’s more to come, judging by the dive in the Standard & Poor’s 500 Financial Index to a 5-year low.
Kasriel expects another benefit from slower money and credit growth.
“The inflationary flames are likely to subside as they are deprived of the oxygen,” he said.
That’s certainly a contrarian view — and one the Fed would welcome. Instead of expecting “inflation to moderate” month after month, policy makers could use a little inflation- moderation reality.”"
http://www.bloomberg.com/apps/news?pid=20601039&sid=awl20×33__fY&refer=home
Just WOW!
Leigh
Inflation matters, but labor markets don’t. Fascinating.
There was a Frontline on a week or 2 ago about young Chinese business people, and a bright 20-something woman was making 40 Cents an hour doing a menial task that required attention.
If she was from Vietnam, 15 Cents an hour might be the going Asian rate of pay?
Labor markets here, don’t matter.
“a collapse in expectations about their own financial futures, suggesting consumers don’t expect to be compensated for higher prices with higher wages,” Soss said.”
The angry govt. hating loons have been successful in their constant barrage of cyncism, skepticism that basically says expect nothing from your govt., expect nothing for your tax contributions.
Given a lifetime of evidence from both parties, expecting anything more seems a bit silly…
Speaking as one of the “loons”, we’ve not been successful at all. Government continues to grow in size and power, at all levels, at the behest of both parties, on all fronts. And it’s poised to take off again at even higher rates of growth.
Actually there’s a few million FB’s, lenders, builders, etc. that are expecting quite a bit from the government, if I read the news correctly this week. I take it they’re you’re people?
You certainly have been successful. The typical voter has come to expect nothing for their contributions anymore.
I live in a conservative rural county that essentially runs off of grant money. I also work in a modern “progressive” industry (solar) that would hardly exist at this stage in it’s without massive government subsidy.
Hold on to your illusion as long as you wish, the entire country is lined up at the trough and has been for a long time. And we’re about to go further down that road, to the tune of another trillion or two. Until at some point it probably all collapses on top of us. Don’t let the facts get in the way of a good political meme.
And there wouldn’t be such a long line at the trough had your bankrupt CONservative mantra failed. It was successful for a very long time. Don’t pat yourself on the back too hard though. Only CONservatives view their efforts as a success. Normal people see it for what really is.
Wait, I thought we meanies kept people away from the trough? Now there is a trough, but the lines are too long? I’m confused, I guess that’s to be expected.
I’ll keep my own interactions at the legal minimum, no matter who’s in charge. Less disappointment that way.
“Less disappointment that way.”"
27 years of cyncism and angry mantra finally got the best of ya? Don’t sweat. Thats all gonna change very soon.
You’re so earnest and serious, ex. It’s really gonna be OK, no matter who gets elected. Really. I’m sorry, I know you and Sean H so want to convince me otherwise. But some of us are pretty obstinate. It’s a bad habit of mine, I’ll try to do better.
Lighten up a little. Laugh some, have some fun. Who’s angry here? People that happen to disagree with you aren’t all that bad, we just seem a little scary, at times I guess.
I expect lots of things from my gov’t.; problem is, most of it is nannystate BS that just results in promises that can never be kept without financially raping us first.
Blano only pawn in game of life.
“Blano just LOVE Sheriff Ben…”
The Fed isn’t government
First!?
How about a topic of gold versus cash, which is the better short to short-medium term investment?
It would be good to see it slugged through once again…
The USA was the 1st country to go off the housing bubble boil, and more fraud than anybody imagined lurked seemingly everywhere, telling the rest of the world our perceived financial acumen was merely a house of mirrors and nothing was as it seemed, and now the rest of the world is experiencing a bust of their bubbles, and being Americans, we tend to not look past our border @ what’s happening, and the whole world is running scared, and these are countries with long histories of retreating to safety via a method that has never failed, ever.
Gold
Alad-
Any comments on Viet Nam banning the import of gold this week?
Anytime you ban something that people want, it only increases the desire…
(example: Cuban cigars)
Yeah.
I enjoyed a cuban cigar once, a present, and it was a nice cigar and all, but it definitely tasted better for being flavored with ’scofflaw’. The best cigars I ever enjoyed were ones I rolled myself, from locally grown ‘hojas de tobacco’, in Zihuatenejo, MX. An expatriate showed me how to roll them: ‘ease the leaf open, working out from the stem, steady, steady…’ My first ones looked like unattractive cat poops, but I got pretty skilled eventually, so that then they looked like pretty cat poops. That was fun. You’d buy the leaves from Santiago, in the white hat, on the north side of the orange Mercado.
Ooooh, I’m experiencing happy nostalgia now. I’d better go drink some Pacifico with a lime wedge.
Is there such a thing as an attractive cat poop???
“A woman is only a woman, but a good cigar is a smoke.”
Is there such a thing as an attractive cat poop???
Hell no.
I love my kitty-cat, but - no.
A few years ago the FDA actually put out an advisory warning pregant women not to handle cat feces with their bare hands. Like, there goes the national pasttime.
Why so focused on short-term?
Long-term, what is the track record of fiat currencies? That’s what I am focused on.
And fortunately for an idiot like me, there are but few constants in all of economic history to learn. And it is all made easier that the big constant, the one really big constant in the whole universe is that a fiat currency that is expanded by massive excesses of money and credit is the essence of the cooties of inflation.
And if you are not a doctor and don’t have much experience with treating cooties, suffice it to say that eventually everything the cooties of inflation touches is destroyed.
Another timeless lesson is “except for the people who had gold.”
And so with expansionary governments, all being financed by fiat currencies and insane levels of fractional-reserve banking in a corrupt environment that is already expanding the American money supply by 13% a year and the Chinese money supply by 14%, the “opportunity” is the same “opportunity” that I see all around me right now.
And that is to buy gold; it is so historically cheap, and the world is so bizarre and divorced from any semblance of economic normalcy, that I calculate that the odds stand at eight zillion to zero that such a condition has never lasted, and the result has always been that people who owned gold made out like freaking bandits.
And in the hearts of grubby, greedy speculator trash like me, the words “made out like freaking bandits” ring sweet and clear. And I hope to you, too, so that you are moved to run out and load up on gold, and then one day in the future when gold is selling at astronomical amounts of money, and there is chaos all around you, you will say to yourself “Wow! I’m rich as hell, and everyone else is not! That Mogambo idiot was right about gold! Too bad he was such a creepy and hateful little man!”
The Mogambo Guru
Rim of Fire: Crisis and Opportunity in the New Asian Era
Vancouver, British Columbia
June 24-27, 2997
2007
Short term focus is cash; cash is what I and everybody I know pay their bill with.
Long term focus are stocks; buy ‘em when everybody else is selling.
Stocks of quality companies, bought at the right price and held onto, will allow an investor to fully reap the benifits of Capitalism with little of his own effort.
Stocks didn’t reach their 1929 peaks again, until the New Frontier rolled around…
Anybody have a few generations to wait for this boondoggle to come around?
Anybody have a few generations to wait for this boondoggle to come around?
Nah, we just need a little world war to restart the economy. And it seems like the administration is doing its best on that front, so today I’m going to buy a 72″ plasma TV (zero down and no payments for twelve months)!
“Nah, we just need a little world war to restart the economy.”
The Broken Window fallacy rears its ugly head.
Stocks didn’t reach their 1929 peaks again, until the New Frontier rolled around…
I heard it was 23 years, making it 1952. Of course, the worst case would have been someone who was completely out of stocks, came into a lot of money, and in October 1929 decided to put it all in stocks! Ouch! And worse, never invest another dime into the market the next 23 years. Double ouch!
Now…Suppose that person was buying a stock mutual fund starting in 1915 (if mutual funds were around), then regularly invested a bit of a time into that fund. By October 1 1929 he would have put less of his money into stocks than if he waited all those years and bought an equivalent NAV. The remainder of the money he would have put in the market should have been put into government securities and build up an emergency fund for use when he became one of the 25% of the people out of work for a few years. Then he would not have to sell much of his stock mutual fund.
We still have our Bill of Rights, and no nation ever compares to that. It’s one thing to say that your gold is out of the country, but what’s the use if you don’t have the second amendment to allow you keep your gold?
I have given some gold coins to younger freinds and relatives with the hope that they will be encouraged to save some gold or do some savings in general. And almost always they ask how much cash can they get for it, because they want to buy something or pay some bills. So i end up keeping the gold and giving cash instead.
My local gold dealer sees the same thing. A few big customers buying gold 100oz or more. And lots of people barely hanging on selling their jewelry or single oz of gold, often with a baby in hand or belly. The rich get richer and the poor get deeper into debt.
Why should it be gold versus cash? 50% gold and 50% T-bills is risk neutral, for those who want a return of their principle rather than worry about a return on their principle.
I like Savings bonds instead of T-bills for tax deferral. I like gold since I do not trust the Federal reserve to make any more soft landings. However gold was lousy to hold from 1980 to 2008. Gold can be a bad investment unless you keep buying in small amounts over the years.
To their credit, at least some policy makers are seeing the light and talking to the press. I think the denial stage of the housing bubble may finally be ending, at least in Washington, DC housing policy circles.
How HUD Mortgage Policy Fed The Crisis
Subprime Loans Labeled ‘Affordable’
By Carol D. Leonnig
Washington Post Staff Writer
Tuesday, June 10, 2008; Page A01
In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.
Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more “affordable” loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.
Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.
If they think the subprimes are roiling the economy, wait until the “pick a payment” AKA “Neg Am” which make up the bulk of the so called Alt A loans, start defaulting enmasse! Which is occurring right around NOW. These babies total around 1 Trillion dollars vs the 400 Billion or so subprime market.
Also, it is my understanding that this grouping is where the majority of fraudulent stated income loans originated. All from a bunch of folks deemed less risky than the subprimers! He He,
A financial ass-pounding this way comes!
I personally do not understand the tunnel vision which enables the MSM financial press to narrowly focus on subprime and even to suggest there is a light at the end of the tunnel at this point. Somehow they fail to notice how the light is actually a freight train of alt-A and prime resets barreling down the track.
Here is my take on it. As long as the problems were seen to be coming from subprime the MSM, and the upper classes they align with, could say the problem was due to “those” poor folks over reaching their station. This made it a “Them”/ “Us” issue which translated into, “We are ok, we can continue our spending”. But if the MSM more accurately acknowledged that the subprime failures were only the rumbling on the tracks of the Alt-A and prime problems to come, then the problem was everyone’s. It is easier to point the finger at others than to take the hard look at oneself. This goes for whole classes of people too. Consider how easily Hitler rose to power by blaming everyone but the German people for Germany’s post WWI problems.
For years on this blog we have discussed the complete lack of objectivity and pittance of true reporting in the MSM on the bubble. They are who they are, weak kneed, ratings driven, entertainers for the most part. The MSM is comfortable and well paid. Why would they bite that hand that feeds them? There is certainly no lack of source information that accurately defines what has, is and may happen. But supping on that meal means departure from the comfort zone and definitely means everything is not all happy happy.
Oooh, we all may have to make hard choices and give up comfy things. Heaven forbid!
“But if the MSM more accurately acknowledged that the subprime failures were only the rumbling on the tracks of the Alt-A and prime problems to come, then the problem was everyone’s.”
And at what point did the MSM assume the job of applying lipstick to pigs? I would prefer the unvarnished truth in my news stories, please.
“And at what point did the MSM assume the job of applying lipstick to pigs? I would prefer the unvarnished truth in my news stories, please”
Principles/cushy income and part of the buddy system?
Priniples/cushy income and part of the buddy system?
Umm, ummmm, ummmm…..
In the news pages at least, the MSM is obligated to report what HAS happened — that which is on the record at a given point in time — not so much what MAY happen. That’s for the pundits. It can be maddening, like riding in a backward-facing train seat, but I’m not sure there’s a good way around it. Hell, biz pages and programs are still debating whether we’re in a recession yet!
The theory I’ve heard is that by blaming this mess on the less well off (aka subprimers) they will either engender sympathy or at a minimum will somehow deflect blame for the true cause, which is basically the Federal Reserve, helped along by the greed of the commoner (present company excluded). The average joe who wasn’t out flipping homes or trying to leverage up for a quick buck knows it wasn’t his fault so obviously he is going to be looking around trying to figure out how it all happened. The MSM needs to redirect this blame away from the FED lest it be revealed for the scam that it is. Shucks, my second tin foil hat post of the morning and I’m still on my first cup of coffee!
Sure, it’s S.O.P. for the PTB. Only the details are new.
I agree…the subprime borrowers are scapegoats. Subprime loans have been around that I know of since at least the 70’s, but only exploded after Greenspan’s credit bubble.
Oddly enough, the credit bubble mostly benefited Wall Street, with the highest corporate
leechesearners profiting the most from these borrowers, who as we now know wound up being even worse off than before.I believe these loans are seen as low risk as a result of faulty credit scoring models. The extent of the risk could be easily determined at this point by going back and auditing a sufficient number of these loans for fraud by matching incomes “stated” against IRS income data and comparing the loan payment after reset to the borrowers expected income at that time ( hint - that would be the same or less than their current income ). I just don’t think anyone wants to know right now…
You might be on to something. I guess rocket scientist IQs and credit scoring ability are negatively correlated.
IRS is not allowed to use data for purposes other than tax collection and certain studies (there is something on the website called statistics of income). Congress would acutally have to pass a law for this to be possible. It can’t be done by just having another regulatory agency ask for it.
there is a simple income verification process in place :
–IRS LINK–
I suppose it was convenient for those issuing these loans to avoid this since it would have killed their loan.
GH,
Yes, but the person whose information is being requested has to sign the request form. Why would they do that to if it confirms that they previously committed either regular fraud or tax fraud? You could have made signing it a precondition for getting a loan. You can’t make them sign it now.
Just a second…can’t the MORTGAGE companies release that information to the IRS? The IRS won’t be releasing any info…just checking to see if they paid taxes on their stated income.
I’d love to see this happen, but it never will.
BTW: One cost of the Frank-Dodd handout that they never talk about it the lost income taxes! If they’re going to cramdown 500,000 mortgages by an average of 85,000, then that’s a minimum of $12,750,000,000 of Federal income tax that should have been paid. (Calculated by taking the forgiven debt of 500,000 x 85,000 and multiplying by .30). (In fact it’s actually more than that because if you add the amount of the cram down into their 2009 income, then they may be above the AMT minimum and they’ll get no tax deductions.)
Now Barney and Chris claim their plan will “only” cost Taxpayers 1.7 Billion (assuming none of the mortgages they guarantee fail! HA!), but it will actually cost $12,750,000,000 more! Of course, half these mortgages will fail, and we’ll have to pay $300,000,000,000.
“I personally do not understand the tunnel vision which enables the MSM financial”
Why not look to the PHD Economists from the top name brand schools who use they lofty positions to lead the sheep with their all-is-well predictions? The MSM writters
get a UCLA Economics professor predicting great things for real estate, and on the other side you get Ben and the housing bubble. The “C” student reporter goes with the name brand source every time, cause that is what he knows, and it requires little effort to make his deadline. MSM will never change.
Why not look at who owns the MSM?
Most are owned by big corporations.
Most rely on ratings which equal money from advertisers.
Most reporters work for the corporations. How many of them are gutsy or even encouraged to rock the boat?
Most of us here on this blog would like to hear the truth. However when the MSM has tried to tell the truth in the past, the majority of the population, don’t tune in, or don’t want to hear the truth. Ratings plunge, advertisers don’t want to give their money, MSM corporations look at the bottom line, fire or reshuffle, until ratings return.
Follow the money.
I agree with you 100%…I have a guy I know who has $5 million dollars in NEG AM loans..only paying THE LOWEST TIER payment…going into year 2..which means he has 1 more year before he can expect his payment to increase by as much as 77%! Stupid for the lenders to have given him that amount in the first place…
Sounds like the next few years will bring about a bloodbath in high-end housing prices, to match the recent collapse of the low end of the price range.
“A financial ass-pounding this way comes!”
LOL
DOC
We have had this recurrent debate about whether the implicit guarantee of GSE debt was real or not. Here is another shard of evidence.
Government aid to Wall Street a boon to Fannie, Freddie
Thu Jun 12, 2008 5:12pm EDT
By Lynn Adler
NEW YORK (Reuters) - If the U.S government poured cash into the banking system to save it from crumbling under the credit crisis, it will certainly bail out Fannie Mae and Freddie Mac should the housing slump threaten their demise, analysts said this week.
Forget the implicit guarantee, it’s now explicit, top Wall Street analysts and economists told the Reuters Investment Outlook Summit in New York.
Wow, I’m impressed. Some guy SAID it and Reuters put it on the web, so it must be so. That’s about all this argument is. And note to guy; Bear Stearns DID fail. Angelo Mozilo is crying as he talks to his lawyer, while CFC went at a ‘garage sale price.’
Oh, and lets not forget that this came up a few months ago, treasury quickly shot it down, and not a peep from GSE bond or shareholders.
Let me ask this; if congress is torn over a $300 billion, do nothing bill, what chance is it they can swing 3 or 4 trillion or more? The people that have been pushing this crap are the ratings agencies. Fitch, Moodys, S&P. Guess what? This blog has more credibility than those fools, now that the MBSs blew up. I laugh at this stuff.
MSM, zero. HBB, I quit counting.
The USA is a Big-Time Gambler that rolled into Vegas in a Hummer with spinny wheels, playing pot limit poker (bankrolled by the rest of the world) and living off the comps…
But now it can’t find backers and is playing $1.00 15-spot keno tickets in a furious attempt to play catch-up, hoping the waitress will come by with a watered down drink.
I recently heard a story on the radio that suggested Hummers that recently sold new for $60,000 are currently available used for under $30,000. How are all the Hummer owners out there enjoying their fifty-percent haircuts?
Say, that doesn’t sound very inflationary!
I’m glad I got a small truck a few years ago.
My colorado gets about 25 on the freeway.Yesterday I was doing a test run to check mileage if I slowed down on the freeway to about 60.People were pissed as I drove slow.They would come up on my bumper and just glare at me.
I read an article about wind drag as you go faster.I’m no scientist but it made sense to me.
My neighbor lost 12 grand on here chevy tahoe as they have sunk in value.
Is there much metal left in the Hummers they make these days? There’s enough automobile there for the scrap value to start looking good here soon.
“I read an article about wind drag as you go faster.I’m no scientist but it made sense to me.”
The article and you are correct.
The drag force is a function of the square of velocity, so the amount of work required to maintain a given speed increases rapidly as the speed increases. There’s a lower limit associated with maintaining a speed sufficient to be able to operate the car in it’s topmost gear (generally a minimum speed of 50-55 mph is necessary for a typical 5 or 6 speed — depends on the gear ratios and the low end torque available from the engine).
Higher speed also by definition require greater periods of acceleration which are not great for fuel economy.
Speaking of scrap metal my friend that lives out in farm country got cold called yesterday. Drove right in and came to her door ready to load up. (Desperate or making hay while the sun was shining?)
We were laughing as we knew if he was scoping the place he wouldn’t be back. He seemed very obsessed w/her 210 pound Great Dane.
Speaking about the deline in popularity and prices of Hummers, there’s a limo service just down the block from my house in Arlington VA that has been trying to sell a stretch Hummer limo and a stretch Suburban limo for more than a year….these things are easily 25ft long and I reckon they probably get less than 12mpg….the limo company would probably be better off selling them for scrap at this point…
The Hummer and a couple of other monster vehicles are in a different tax class and are eligible for agricultural write downs. On a $60K Hummer, the 1st yr writeoff is $24K. The 3 yr writeoff is 48K. For a self employed individual the Hummer was a better buy than than a $30K Buick.
The loophole was supposed to be eliminated in 2004, 2005, 2006, 2007 etc. The total allowable deduction was $100K
Hoz,
You sure that isn’t a deduction, not a credit? Because deductions get much, much, much less valuable as your income (and therefore your marginal tax rate) go es down.
It is a deduction, I apologize if it appears I implied credit.
You are absolutely correct with marginal incomes. I do not have current incomes available for Hummer owners. Current Hummer buyers (all 4 of them) have real income.
The market is set by what people are willing to spend. Since most of the deductions are available in the first three yrs, I would expect to see a lot of Hummers for sale. for many of these owners selling at $30K is profitable.
The leases on Hummers were also excellent. Leases do not affect the balance sheet, these are all coming on line.
Saw a news story on TV where Prius owners are getting more for their somewhat used cars now than they paid for them new, but very few are willing to sell them (the interviewed owner said it was a 10% premium). I don’t think that is inflation, but a supply/demand problem.
“The USA is a Big-Time Gambler that rolled into Vegas in a Hummer with spinny wheels, playing pot limit poker (bankrolled by the rest of the world) and living off the comps…
But now it can’t find backers and is playing $1.00 15-spot keno tickets in a furious attempt to play catch-up, hoping the waitress will come by with a watered down drink.”
Holy Crap, that’s spot-on.
“But now it can’t find backers.”
No problem. After the keno money runs out, they’ll strike up a deal with their syndicate buddies to strong arm and fleece the “honest working stiffs” of $$ in return for “protection” they never needed to bankroll their next run.
DOC
“Forget the implicit guarantee, it’s now explicit, top Wall Street analysts and economists told the Reuters Investment Outlook Summit in New York”.
We can count on it! Our tax dollars will come into play, and may have already.
I read somewhere last year that among the charges/complaint against Franklin “easy money” Rains was that tax dollars had been used in some back door deals. Of course the cover up went into full motion, and I never read another word about it.
‘it’s now explicit, top Wall Street analysts and economists told the Reuter’
Top WS analysts, economists and anonymous wbmz SAID it. Oh yeah, we can COUNT ON IT!
Again with your ‘back door deals,’ with no proof. ‘Iread somewhere’ ain’t gonna cut it.
NEXT
I am not anonymous, my name is David Wrisley I live in Columbia, S.C. 29205. I did read the allegation last year )or the year before) I BELIEVE it was in the 153? page indictment against Franklin Raines. If I can find it I’ll post it. Either way it was in print, and no I don’t believe every thing I read. I will not be surprised to see the out stretched hand of Freddie or Fannie grasping for tax dollars. Time will tell… And that is a fact.
How about some reason to go with your ‘time will tell facts’? Address what I posted above about how treasury already shot this down. Where will joe6pk get the money? Weren’t these guys wrong all along and now I’m supposed to believe them?
Here’s a fact; on nationwide radio in the summer of 2005 I went on record that this was a bubble, prices were coming down and there wasn’t a thing anyone could do about it. And I told the host flat out that the US gov didn’t have the bucks to save the GSEs. You make your bets, I’ll make mine and we’ll see who’s right.
“You make your bets, I’ll make mine and we’ll see who’s right”.
I am not much of a gambler,and I’m not looking to be right. I am just trying to make some sense in my mind of the on going events. If history can be of use as a guide, the fact that the U.S. Government does not have the money to save the GSE’s will not stop them from trying. I have never believed that any bailout would work, but that doesn’t change the fact that millions of tax dollars are and will be wasted in their efforts. Any move the Gov. makes comes out of our pockets. What’s another trillion to a Country so mired in debt that repudiation of said debt is the obvious out come. Of course every family in America could pony up around $500,000.00 and problem solved, at least for a while. As to ‘time will tell’ it always does. Given enough time it all comes to a head, just like the housing/credit bubble. You’ll get no argument from me, ‘facts’ are every where as are bias’s. Where does one get the cold hard unadulterated facts? I think in many cases the truth is unavailable until after the storm has passed, as in 20/20 hindsight.
I find myself agreeing with both Ben and wmbz, I don’t see what the real argument is here.
Given that there is little if anything that the government can do to change the final outcome of the bubble at the macro level (Ben), we still have every reason to believe that hundreds of billions, perhaps trillions of non-existent federal monies will be thrown at the effort anyway (wmbz). I hope I’m wrong about the likely government interventions, but from my limited vantage point it’s not looking good right now.
The one thing that the government efforts will do to some degree at the micro level, is to determine who gains more and who loses more in the process. And as usual we can expect the most stupid and risky behaviors to be rewarded.
http://www2.tbo.com/content/2008/jun/28/bz-fed-propped-up-wall-street-to-avert-crash/
OK, here’s the latest tin foil hat theory making the rounds. As a disclaimer, I didn’t come up with it nor do I necessarily subscribe to it. I’m only passing it along for sport. It does have a certain symmetry to it though.
He He.
Here it is. The U.S. and other countries like UK, are manipulating the oil price higher in conjunction with an agreement with Saudi Arabia. The agreement is for Saudi Arabia to rebate a certain amount of the extra income generated back to the US/UK in order to be used as a backstop for defending the break down of the monetary system.
This equates to a quick tax on the whole world and is easily generated with the above collusion.
Of course there are major ramifications economically and I would expect, if this were true, that the PTB would have to back off of this program before it caused the total breakdown of the world’s economy. It also has the added benefit of sending a major inflationary signal during a time of massive deflationary credit destruction as well as forcing the alternative energy investment theme into the discussion a bit earlier than would have occurred without the manipulation. How do you like it so far?
I’m not discounting the peak oil theory, whether true or not, this manipulation plays on that concern and at this point the rapid oil price rise doesn’t appear to match the present supply/demand set up. At least that is the conclusion of many oil experts weighing in on the subject. So that lends itself to this conspiracy theory as well. Regardless, it’s fun to speculate and of course I never would put anything past the bunch of crooks running this casino!
Augur, that’s an old theory. It’s been marketed for years by Lindsey Williams, a bible-thumping Baptist preacher who once worked as a chaplain to oil companies building the Alaska pipeline. He claims the deal was done by Kissinger thirty or so years ago.
http://youtube.com/watch?v=NbakN7SLdbk
His web site, which is down at this moment, revealingly sells 9/11 conspiracy videos, so caveat emptor. Keep in mind, he believes that Jesus is coming in the clouds, too.
This is easy to see, of course it is a world wide tax.
I knew that there was someone out there touting the theory that there exists a big oil deposit that the US is holding back on developing,etc.
I have never heard of the theory that there was a conspiracy to raise funds for the backstopping of the monetary system since until recently there was no need to. That was the major thrust of my comments, I didn’t mean to bring the peak oil theory into question. I only mentioned it as a way of dovetailing the oil price into the alternative energy investment theme.
Regardless, it’s all conspiracy stuff and not worth bantering about. I just thought it was interesting enough to throw out to the crowd on a saturday morning
There may be some truth to the man’s claims, however. He did rewrite one of his books in cahoots with an oil company ceo, who, in effect, said it was all true, but the ceo had also been fired from said company, and had reason to trash it.
No matter, I think the oil bubble is exactly the same thing as the real estate bubble, with the same Wall Street players and small time speculators bidding prices into space, using 5% of their own (often borrowed) money–this being all that they’re required to put up. Same game. Same trick. Same eventual crashing result. The housing bubble hurt people all over the world, but the commodities bubble will starve them, for the enrichment of a few. All those huge banks borrowing from the FED, for what? To get Monopoly money they can gamble with, hoping to erase their losses.
No conspiracy needed. Ordinary greed and immorality are more than adequate.
knew that there was someone out there touting the theory that there exists a big oil deposit that the US is holding back on developing,etc.
Why not apply Occam’s Razor to this talk about oil? Conspiracy theories typically fall to Occam’s razor. Ghawar and the 4 other larget oil fields in the world are in Saudi Arabia and have been operating since the 1960s.
No major oil fields have been discovered or publicized since then.
There are hundreds or thousands of petroleum geologists out there, plus tonse of professional publications that I’m sure Matthew Simmons would have stumbled on and would be telling us of new oil discoveries. I’m saying that it would be very difficult to keep this a secret.
“New Setback at Khursaniyah: Drilling Mud Discovered To Be Blue Jello
In a shocking turn of events, Saudi Aramco engineers belatedly discovered — to their horror — that they had mistakely been using blue Jello-brand gelatin instead of drilling mud to drill several wells in the Fadhili field, part of the Khursaniyah redevelopment project which is six months behind schedule. “Things did seem to be taking an unusually long time”, related one worker who wished to remain anonymous…”
http://satelliteoerthedesert.blogspot.com/2008/05/new-setback-at-khursaniyah-drilling-mud.html
http://www.usagold.com/goldtrail/archives/another1.html
When the once highly secretive London Bullion Market Association (LBMA) — its venerable membership comprising the world’s largest gold dealers — published its daily clearing volume for the first time in January 1997, it rocked the tight-knit world of international gold traders and analysts.
According to this first of many subsequent LBMA press releases, thirteen hundred tonnes of gold (representing more than 50% of the world’s annual mine production) changed hands daily in this fog-shrouded center of the global gold market. This figure represented over $10 billion per day and $4 trillion per year in bullion banking activity!
The gold market had always stood in austere, quiet contrast to the highly charged, mega-volume world of stocks and bonds. Now this first LBMA report forced analysts, investors, and brokers to reassess their understandings of the gold market. While some revelled in the glow of the large LBMA numbers, others began to raise some very important and rather unsettling questions. First, Why was this much gold on the move? Second, Where was all this gold going? And third, Where was all this gold coming from?
Then, in October of 1997 at the internet’s only gold discussion forum of the day (hosted by Kitco), a series of remarkable postings began appearing under the pseudonym “ANOTHER”, offering plausible answers to those questions…as explained by ANOTHER, an opportunistic arrangement for massive physical gold acquisition among important petroleum producing and exporting nations could be comfortably facilitated within these astronomical trading volumes now being publicly revealed via the LBMA. For the oil states this meant receiving real money (as opposed to government-sponsored paper) in payment for their depleting oil reserves. For the industrialized countries, this meant a continuing supply of cheap oil to fuel the economic boom already in progress. These transactions were to be cleared through the bustling London gold market. Up until late 1996, the volumes were a tightly kept secret so “the deal” proceeded without the knowledge of the general public.
When the LBMA went public with its figures, it raised the shroud off “the deal.” But by then, according to ANOTHER, it no longer mattered. The oil states had already (almost inadvertently) cornered the gold market. As implied by ANOTHER’s own words, his motivation for these postings was the discovery by “big traders” in the Far East of this opportune facility to buy gold at ever lower prices. Their subsequent heavy purchases of physical gold upset the delicate balance. Now there was no longer a reason to keep it secret, and hence, the revelation of this extraordinary tale.
hoz,
thanks for the link to that website
“…oil bubble is like the real estate bubble…”
That would be true only if we were really running out of land.
you should see their offices- free healthcare after working there 5 years
MO FREE SHT
“Barclays warns of a financial storm as Federal Reserve’s credibility crumbles”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/cnbarclays127.xml
Imagine Being Ben Bernanke?
Captain of the U.S.A. Titanic, and being a student of history and the Great Depression in particular, he knows exactly what sort of bad ju ju is coming at us economically…
Sisyphus had it easier, in comparison.
“Being Ben Bernanke”
Coming soon to a theater near you?
Hasn’t the show already flopped?
Even Krugman stopped defending him on his blog.
Well we all know ben got handed a total disaster by greenspan.Greenspan spent more time trying to talk like he knew something more than anything else.He should be helping people save their homes.He is just a puppet.
how about a celebrity boxing match between uncle ben and greenspan? Ben could take out some frustrations.
True. I dont think he is in a position to attack Greenspan and dont know how this would have come out if he was put in power 10 years ago. I dont think he can do or say what he wants to do or say.
Like Buffet said, how many wouldnt turn down that job.
Allan Meltzer did (or so the rumor goes.)
So they’re not all morons.
If anything, it will be the fixation with the Great Depression that will be his undoing - a self-fulfilling prophecy of sorts.
This is an entirely new situation and it demands innovative and flexible responses. Instead, all these cats go running to the history books and their graphs for answers. Thank goodness they aren’t Generals.
But they are Generals…
I don’t know about the rest of you, but it feels very summer of ‘39 around here, but not in a militaristic sense, but a financial one.
World Economic War
One last halcyon summer before the Phony War ends?
How would you like to be the guy who after all his years of study and trying to work out this rubic’s cube of an economic disaster, becomes synonymous with the depression that follows?
Decades from now his name will be used as slang for any number of applications.
For instance; I’ll be right back, I’ve got to go take a bernanke. Or, does a bear bernanke in the woods? Damn, I just stepped in some dog bernanke. Something along those lines. All IMO of course.
Or how about a pharmaceutical drug* with his name incorporated into it, somehow?
*side effects too numerable to mention
Boy, articles like these are going to do wonders for confidence.
I hope someone is keeping track of how many of these GSE-spawned no downpayment loan deals lead low income households down the path to foreclosure over the next few years.
Mortgages With No Money Down Still Available
Fannie, Freddie Programs Fly in Face of Foreclosures
By David S. Hilzenrath
Washington Post Staff Writer
Monday, June 9, 2008; Page D01
Despite the bursting of the housing bubble, it’s still possible to buy homes with no money down. In fact, it’s possible to borrow up to 105 percent of the purchase price, leaving the buyer with more debt than the house is worth.
It might sound like a pitch from a late-night infomercial. But the offer comes from Freddie Mac and Fannie Mae, two government-chartered companies with potentially conflicting mandates to uphold prudent lending standards and make homeownership more attainable.
Freddie Mac says its “HomePossible” mortgages can help buyers with limited credit or savings, including teachers, firefighters and members of the military.
But, as a wave of foreclosures shows, stretching too far to buy a home can end badly.
“Consumers should go into these things with their eyes open,” said Allen Fishbein, director of housing and credit policy at Consumer Federation of America.
Without equity in their property, buyers could end up unable to refinance at lower rates or sell their homes if they need to move.
Refinance at lower rates? Where the hell are lower rates going to come from? The bank of mom and dad? Rates are going up, not down. And I, for one, welcome it. It makes life very good for those of us with substantial downpayments saved up. Send ‘em as high as they want.
“…Rates are going up, not down. And I, for one, welcome it. … Send ‘em as high as they want.”
Wacky Wabbit here…14+ % for 14 months = “Kill the beast!”
x1 burnt finger = kinda hurts…not too bad.
x10 burnt fingers = lasting positive mental avoidance reinforcement.
Credit scores hit by card limits
http://www.nytimes.com/aponline/business/AP-All-Business.html
Just as Americans grow more reliant on credit cards to help pay monthly bills, they’re being hit with a one-two punch: Card companies are reducing borrowing limits for tens of thousands of consumers, which then can lead to lower credit scores.
Those facing this predicament might not even know it until they apply for a loan or another credit card, and then get denied because their credit score has dropped.
This is an unintended consequence of the financial world’s widespread ratcheting down of risk. Banks and other card lenders are trying to better protect themselves from more massive losses like those they’ve seen from subprime mortgages.
As a result, they are looking for ways to reduce their exposure to cardholders more likely to default. That’s why they are lowering credit limits, which means they are reducing the maximum amount of credit extended to an individual, along with boosting card interest rates and allowing fewer balance transfers.
What’s worrisome is that consumers who are faced with a number of ugly economic scenarios hitting at once — falling home prices, surging commodities costs and a weak job outlook — won’t be able to pay their bills.
Just as Americans grow more reliant on credit cards to help pay monthly bills
Is there any evidence for this? I thought that automatic checking account bill pay mechanisms were winning this market. The assertion seems to be that credit card limits are being taken below the amount needed to pay for a fraction of a monthly billing cycle, but that doesn’t seem likely.
Here’s the example given:
Let’s say a cardholder has a credit limit of $10,000 and a balance on the card of $4,000. The card company worries that large balance may increase the prospects for default, so it lowers the credit line to $5,000.
But in doing that, it completely changes what is known as the credit utilization rate, raising it from 40 percent to 80 percent. That is then factored into the calculation of one’s so-called FICO credit score, which measures creditworthiness, according to Craig Watts, a spokesman for FICO-creator Fair Isaac Corp.
A lower FICO score could make it more expensive for someone trying to borrow money. For instance, someone taking out a $25,000 36-month auto loan would see an interest rate of about 6.4 percent and a monthly payment of $765 if they were in the highest range of FICO scores of 720 to 850, according to Fair Isaac’s Web site myFICO.com.
That then jumps to an interest rate of 7.3 percent and a monthly payment of $776 for those with a score of 690 to 719 and as much as 15 percent or $866 a month for those with the lowest FICO range of 500 to 589.
If you don’t have any late payments in your credit history, it seems extremely unlikely that a lowering of your credit limits would drop anywhere near 720, which is nearly subprime territory.
If you do have late payments in your credit history, then you arguably SHOULD pay a higher interest rate due to the increased risk the lender is taking on.
Sounds perfect to me. Hopefully the howmuchamonth crowd will see that monthly nut and say “maybe I should buy a used car?” It is after all only used to get me from point A to point B.
If that extra 9 bucks per month is too much, you could always put in a bigger downpayment.
Now, that is just UNamerican. Pay more principle up front…what was I thinking.
Hmmm that is odd … Citi just raised my credit line another $2500 … I suppose I do not fall into the crowd identified as paying for groceries and mortgages with their cards …
Mortgage matters
Gov’t role in lending boom
June 11, 2008 09:45 AM
The federal government encouraged Fannie Mae and Freddie Mac to buy more than $400 billion in subprime mortgage loans between 2004 and 2006, helping to fuel the boom in risky lending, the Washington Post reports.
The story underscores an important issue: The federal government didn’t just fail to prevent the subprime lending explosion. Rather, it encouraged, abetted and participated in the subprime lending explosion.
Fannie and Freddie were created by the government to buy loans from lenders — basically, to repay loans upfront and then collect the money from the borrower — so lenders could make more loans more quickly.
The two companies literally defined the prime loan market. Loans they were willing to buy were defined as prime. Everything else was not.
How did they wander into the subprime lending business? The Post reports that the federal government in 1992 started requiring the companies to purchase a certain number of loans to lower-income families. Basically, the companies bought huge numbers of those loans without effective quality controls.
They failed to make sure the loans were affordable to the borrowers.
You know how the story ends, or at least where it stands now.
Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/cnbarclays127.xml
Does Rip Van Winkle work as a Barclay’s analyst?
The Big $leep
Let The Big Brokers Fail…
“If I’m a bad businessman and I go out of business, who’s gong to help me?” he said. “But Bear Stearns and the Wall Street elite, because they are tied into the Treasury and the Federal Reserve and they have lunch together, it’s a club and so forth, they’re bailed out. It’s a joke!”
“I think a lot of banks are already bankrupt … but they hide their rotten assets … in categories where you don’t really need to value them,” Faber said. “I think the financial sectors, by-and large, has much larger problems than is perceived by the investment community and the stock market to some extent is telling you that.
“http://www.cnbc.com/id/25406894
Renovators in Limbo…
Banks Freeze Homeowners’ Credit Lines; Fancy Finishes Are Out, Cheaper Appliances In
http://online.wsj.com/article/SB121450401158307823.html?mod=todays_us_weekend_journal
I loved the vignette about the 42-year old electrical engineer who borrowed $18k against his 401(k) when his home equity line of credit was cut off. How pathetic is it to be middle-aged with what has presumably been a comfortably paid career, and yet not have a pot to piss in?
A surprising number of my co-workers in Silicon Valley seem to be in exactly the same situation.
401(k) stays where it is until we retire.
42? He was 24 years old at the last peak but could have seen the real estate slide over the years to 1997 or so. This is merely another example of someone refusing to think about his financial future. The only way to get those fool to think is to absolutely deny any bailout in any way, shape or form to individuals and corporations from now on. It will take a generation to turn people into thinkers instead of people who prefer to let others to do their thinking for them. I’m a Darwinist and actually have come across several people who use that term “Darwinist” to describe themselves.
An engineer told me this joke years ago.
“Why do engineers wear neckties?………….
to hold the 4skin down!!!!!!!!!!!!!!”
I’ll be in town all week.
Mike
The question policymakers should address is whether the notion of using social engineering in the housing market to achieve affordable housing objectives makes sense.
News Release
Setting the Record Straight
Today (June 10, 2008), the Washington Post, citing former HUD officials and academics, claimed HUD’s affordable housing goal requirements of Fannie Mae and Freddie Mac helped to fuel the collapse of the subprime mortgage market. This is a gross misrepresentation of much larger forces that were at work in the mortgage market.
…
In conclusion, both Congress and HUD have long believed it is good policy to encourage Fannie and Freddie, as part of their public mission, to focus on underserved borrowers who were often shut out of homeownership. It’s disingenuous in the extreme to think that HUD’s policies in this area somehow aided and abetted the current subprime market situation.
…
Test
Pass.
I suppose the question of how much capital the GSEs should raise restson the related question of how many bad loans they made in the past several years. Since they are still backing loans with over 100 percent financing into a record housing bust, my guess would have to be “a lot.”
Associated Press
BlackRock CEO says Fannie, Freddie should raise capital
By JOE BEL BRUNO 06.11.08, 2:00 PM ET
NEW YORK -
BlackRock Inc. Chief Executive Laurence Fink on Wednesday said government-backed mortgage lenders need a major influx of capital in order to pursue opportunities in the market’s dislocation, a move that could help the nation’s housing industry climb back from its worst slump in decades.
He believes more cash must flow into Freddie Mac and Fannie Mae to ease the housing crisis, and said on the sidelines of a conference that lawmakers must allow this to happen. Fink’s fund management firm is an adviser to Fannie, and has been hired by companies such as JPMorgan Chase & Co. and ailing state investment pools to better manage inventories of crippled mortgage-backed securities.
“They need to raise capital for opportunity, while most firms are raising money just to cover their losses,” Fink said. “I’m worried that if we’re not creating new loans, and we can’t get these markets back open, then how are we going to finance housing.”
He would not speculate on how much fresh capital Fannie and Freddie need, other than saying “a lot.“
Curious words from Fink!
Despite the privatization of Fannie, it is still referred to as a “GSE”. Fink goes further and calls it “government backed”. LOL, this guy’s company is Fannie’s advisor.
CONflict of interest.
The inability for us to have even a small rally in the market yesterday following some pretty serious drops, coupled with the mass media publishing stories on things such as maybe it does make more sense to rent (i have seen at least 7 in the last week), makes me believe we have finally moved into the third stage - recognition of the masses that we are in trouble and there may be no quick rebound (first stage being what bubble, second stage being slight bubble but quick rebound). Next stage - panic.
Looking on the bright side, at least the housing bust has largely moved past the first inning (= denial) — aside from myriad home sellers who refuse to lower their list prices to levels where they will ever attract a buyer.
don’t overlook the possibility (likelihood) of a big hedge fund or funds liquidating prior to closing at quarter end. That’s what it looks like to me.
Candidates?
No doubt. I have to say, however, that I am sensing real fear in transactions I am working on from ppl that were bullish as late as last month. No one just assumes companies will be solvent in a few months anymore like they did just last month. Also the number of ppl I know outside of work expecting a rebound has dwindled to almost zero recently. Part of it may be that most of my deals involve monoline insurers, so I see the worst of the worst.
I used to work on muni bond issues sometimes. That’s the only thing I can think of that is more boring.
That’s my key to success. Take the job no one wants and do it well. I really dont mind, other than working on the offering documents which I now try to pass to the newbies and just have to review. Spending 30 hours summarizing a 5 foot high stack of complex documents and compiling the financial information is torture. You might like negotiating the swap documents and GICs, and structuring the securitizations can interesting as well, but the drafting is laborious. The negotiation is my favorite part. Plus most attorneys dont want to spend the time to learn how these products work, so I dont have to compete for the work. The other partners just deliver it to my door with a “please handle - thanks” Post It attached. I still plan on retiring at 55 to pursue other interests, however.
Txchick, do you know anything about these craigslist ads for attys to do (what looks like) collections work on contract? I could use some extra work but it looks kinda scammy..
Tim,
When I did securitizations we generally had a 10% retained/equity stake to keep the ratings of the other tranches high. It was also meant to give the thing a good corporate (vs. partnership) back up. I always wondered if these went out the window when the check-the-box regs were implemented.
By the way, I can think of more boring work. Drafting/reviewing mutual fund disclosure documents. Dull beyond all possible belief. Reviewing contracts for compliance with REIT rules was no picnic either, but I only did that once.
How long do you think it will take for the gloomy spirit of financial insiders to trickle down to the masses? Or does the diffusion work the other direction?
Micro not macro.
No money to spend, means no earnings for companies which means bad earnings reports which makes the insiders cringe eventually.
I dont think there ever will be or can be perfect information, especially, since the insiders make a living off the spin. The market still seems to be moving based on what ppl are told as opposed to what common sense dictates must be the reality. There has been major discounts in this area recently, however, showing some awareness, but I still think we are worse off than many ppl realize.
I think the strict anti-bailout crowd fails to realize what a serious impact bankruptcies of major banking and investment banking entites will have until its too late, especially if their argument is based on some sort of tax dollar savings.
The only way to discourage bad behavior is if that bad behavior has bad consequences. Viewed in that light, a bailout is and must be a non-starter.
“The only way to discourage bad behavior is if that bad behavior has bad consequences.”
Note I only support targeted attempts to stop bankers and the Wall Street crowd from getting out of their obligations by shutting down, and only for the banking and finance industry. The real issue is whether the “bad consequences” will fall on the bad actors or the innocent. If these entities are relieved of their obligations, the bad consequences will hurt the innocent more than the culpable. Keeping them alive but unprofitable punishes the guilty and saves the innocent to the greatest extent possible.
I will let you click on this link for the answer after you guess whom I am quoting below.
“The past decade witnessed the largest increase in home ownership in the past 50 years. Home ownership is part of the American dream, and we want as many Americans as possible to be able to afford their own home. But in the process of a huge, and largely positive, upturn in home construction and ownership, a housing bubble was created.
A bubble occurs when prices are driven up too quickly, speculators move into markets, and these players begin to suspend the normal rules of risk and assume that prices can only move up - but never down. We’ve seen this kind of bubble before — in the late 1990s, we had the technology bubble, when money poured into technology stocks and people assumed that those stock values would rise indefinitely. Between 2001 and 2006, housing prices rose by nearly 15 percent every year. The normal market forces of people buying and selling their homes were overwhelmed by rampant speculation. Our system of market checks and balances did not correct this until the bubble burst.”
Is there a bubble in oil? I really think there are a lot of speculators in that market right now.
Has anyone noticed the price of scrap metal lately?
My dad took two old cat d7 tractors to snitzer steel and got 9000.00.Scrap prices are highest I have ever seen.
The Japanese were our best scrap metal customers, until Pearl Harbor.
When they thankfully made scrap of our obsolete battleships and spared us from a humiliating Russo-Japanese War style whupping from their carriers. If the U.S. had tried its pre-war “Defeat the Japanese strategy” It would have been a disaster. Luckily (in a tragic sense) we were forced to rely on our carriers which ultimately won the war in the Pacific.
Because all 5 carriers were at sea that day.
Locations Of Warships Of The United States Navy
December 7 1941 Aircraft Carriers (7 + 1 Escort Carrier)
Hull # Vessel Name Location Fleet
CV - 2 Lexington At sea transporting aircraft to Midway Island.
460 Miles East of Midway. Pacific
CV - 3 Saratoga At San Diego California. Pacific
CV - 4 Ranger At sea returning to Norfolk Va. Caribbean. Atlantic
CV - 5 Yorktown At Norfolk Va. Atlantic
CV - 6 Enterprise At sea returning to Pearl Harbor from Wake Island.
200 Miles West Of Pearl Harbor. Pacific
CV - 7 Wasp Grassy Bay Bermuda. Atlantic
CV - 8 Hornet Fitting out Norfolk Virginia. Atlantic
AVG - 1 Long Island Norfolk Virginia. Atlantic
“Is there a bubble in oil? I really think there are a lot of speculators in that market right now.”
The answer is maybe, the lack of evidence seen in all other bubbles does not mean that there is no evidence for a bubble (paraphrasing Mr. Krugman).
An ominous sign is that spot crude is higher than near month future price. Why this is ominous is if you or anyone had oil to sell, you would do so and buy the next months future to get it back. Free money + interest for a month. The primary rule of futures market is that there is no possible arbitrage. Futures prices = spot +storage +int carrying cost = US Treasury 1yr yld.
There are a lot of speculators. Half the selling is speculators, half the buying is speculators.
“…the lack of evidence seen in all other bubbles does not mean that there is no evidence for a bubble”
“Socrates argued that a statue inferred the existence of a sculptor”
oil is not a bubble. the exporting countries simply have less to sell, at the same time India and China have more money and affluence to buy it. The US is going to have to cut its imports of oil by 50% one way or another. So if you want to know how oil will go, ask yourself at what price would you personally cut your oil (and airtravel and plastic) consumption by 50%. most americans have so far said they arent going to change because energy is only 1%, 2%, 5%, 10% of their income. If it takes gas at 20$ a gallon to cut your driving in half; that is how high gas will go.
I like this:
“I will not play election year politics with the housing crisis. I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now.
“I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers. Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.
“In our effort to help deserving homeowners, no assistance should be given to speculators. Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren’t. I will consider any and all proposals based on their cost and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense.”
The full version is better, but my estimation of the guy just went WAY up.
Yeah but note he said those things in March. He reversed his position within 3 weeks of those statements and came in favor of bailouts. However I think he will return to his stand on bailouts that you quoted above.
McCain is a more shrewd politician than Obama. If McCain makes an effort to distinguish him from Obama, he will say Capitalism while Obama says irresponsibility. And that way McCain will win. As for if he keeps his promises after elected, that’s another thing.
I distrust all Republicans except Jeff Flake, Ron Paul, and John Shaddegg.
McCain is a more shrewd politician than Obama. If McCain makes an effort to distinguish him from Obama, he will say Capitalism while Obama says irresponsibility. And that way McCain will win.
The essential problem of BO’s candidacy is that he can’t be himself and get elected POTUS.
PB, McSame’s campaign flyer forgot a few footnotes:
“How soon we forget the recent past?” …or…”Talk is cheap…actions speak:”
“…I will not allow dogma to override common sense.”
“McCain received $112,000 by 1987 from Keating and Keating’s relatives and employees to McCain’s Senate campaign, more than any of the other Senators.”
http://en.wikipedia.org/wiki/Keating_Five
The weirdest thing about getting your hand stuck in a cookie jar, is it usually means you tried to pull too many cookies out of said jar all @ once.
McCain makes a good tasting sacrificial lamb, that compliments the earlier entree of lame duck.
All in all, though, McCain’s been fairly upright compared to most others in Congress. I’m disgusted with his pandering to illegals and their enablers (Obama is doing the same), but he at least has a very long history of trying to reform government, unlike his opponent who has no history of doing anything at all (except for claiming credit for bills he signed onto only at the last second, once it was clear they were going to pass), and who apparently believes that as President he would have supernatural omnipotence.
Between now and November, anything could happen to turn the Obamessiah into a bad joke (or a worse one). I wouldn’t bet on either candidate. There are tons of voters out there who think only of themselves or their particular causes, or who don’t think at all. I still don’t know why we can’t have “None of the above” as an option on all ballots for every office. There is nothing in the Federal Constitution to prevent it, and state constitutions aren’t written in stone.
Between now and November, anything could happen to turn the Obamessiah into a bad joke (or a worse one).
That’s what HRC’s supporters are hoping for. Has she released her delegates yet?
Time to eat my words. McCain is on television at this moment speaking to a group of elected and appointed Latino officials, and just stated that not only does he support the Senate’s bail-out legislation (he’s upset it hasn’t already passed), but that “we” need to put a floor under home prices, which presumes that the inflated prices are somehow valid and need to be maintained. He answered this in response to a question about Hispanics facing foreclosure. No mention of the 8 dollor an hour tomato pickers buying million dollar McMansions, or the stupidity of people with nothing trying to live to soap opera characters.
It was noted on this blog years ago that “Hispanic” realtors and mortgage salesmen were fleecing their own, but neither they nor the idiots who lied to get into overpriced properties were mentioned, except in portrayals of the idiots as poor, pathetic victims.
McCain also just said that “comprehensive immigration reform” will be the #1 priority of his administration, and lamented the fact that Congress did not pass the bill he and Kennedy were pushing. This also contradicts prior claims that he had heard the will of the American people and that compresensive immigration reform would not be revived.
Given a choice between bad Obama and bad McCain, what is the answer?
Given a choice between bad Obama and bad McCain, what is the answer?
The answer is a write-in vote for Ron Paul, the only true Republican and Conservative in the race [and yes, I'm aware that he's ended his Presidential campaign]. I refuse to keep perpetuating the two-party duopoly by continuing to hold my nose and vote for Bad rather than Worse. McCain is just another sleazy political operative beholden to the neo-cons and special interests - I refuse to waste my vote on him and his ilk.
Falling exam passes blamed on Wikipedia ‘littered with inaccuracies’
http://news.scotsman.com/education/Falling-exam–passes-blamed.4209408.jp
WIKIPEDIA and other online research sources were yesterday blamed for Scotland’s falling exam pass rates.
The Scottish Parent Teacher Council (SPTC) said pupils are turning to websites and internet resources that contain inaccurate or deliberately misleading information before passing it off as their own work.
Politics
POLITICIANS and their parties are among those Wikipedia entries most vulnerable to deliberate misinformation.
During his time in Downing Street, Tony Blair may have been alarmed to find himself slurred as “George Bush’s bitch-boy”.
The SNP’s entry has previously seen the party described as one “influenced by childish Jacobitism”, while Scottish Labour has been dubbed a “fascist organisation
Fact or fiction?
“Just the facts lady” … Sargent Joe Friday
“Ladies and gentlemen: the story you are about to hear is true. Only the names have been changed to protect the innocent.”
McSame = Busch Lite
“McCain received $112,000 by 1987 from Keating and Keating’s relatives and employees to McCain’s Senate campaign, more than any of the other Senators.”
http://en.wikipedia.org/wiki/Dragnet_%28series%29
Wikipedia is the worst. Since anybody can post to it, and change previous entries, it’s nothing more than a propaganda vehicle, especially for knownothing who think they’re geniuses. The Onion has produced this, which says it all:
http://www.theonion.com/content/news/area_man_honored_to_be_one_who
http://www.omrlp.com/
Troubled times require troubled political candidates. The UK’s Monster Raving Looney Party is the perfect answer to the political whores and swindlers of the British political establishment.
Some times the comments are much richer than the article that precedes them.
Fix Congress’s Housing Fix
The bill before Congress reflects how good government intentions are perverted by interest group politics
By Mortimer Zuckerman
Posted June 27, 2008
…
Reader Comments
Read all 2 comments about this article
Why not me?
Why should I pay for this. Should I simply walk down to my financial lender and say,”well everyone else is doing it”. Is there no consequence for our own actions? Or will the liberal congress forgive stupidity? “Oh, is dat what a amortized mogatage be”? WTF? Do you still get arrested for murder, speeding,public disturbance, ect. ? You are telling me all you have to say is ,”I just was too damn stupid to realize the consequence of being an IDOT! That is it ? Well , I am an IDOT. Why should I not just devalue my home? And let me start over. The industry that prey on stupid people should devalue their companies. But, to hell with that , the dem congress is gonna take care of that. WTF, is a VIP anyway? Apparently , a Chairman of the Banking Committee. I know I am dumb, but, if I can see through this ? We are screwed.Dodd should resign as chair! Not going to happen. If , I had my way he should give his senate seat up. After all he does not understand what it means to be a congressman. He works for the people . Not his best interest.
Market Scan
Homebuilders Not At Home In Housing Market
Lisa LaMotta, 06.27.08, 6:30 PM ET
Builders can’t seem to make a home in the unsettled housing market, as evidenced by second-quarter results from KBHome and Lennar. Both are hoping for stronger sales once the market makes a comeback but U.S. housing data suggests that may be a while since home prices continue to slide.
Homes are a huge investment and it’s important for that investment to gain value, but consumers have lost confidence in the housing sector since the subprime meltdown, despite lower prices. This hold-off is taking its toll on home builders as foreclosures mount and a surplus builds.
Maybe if houses weren’t viewed as an investment, and nobody expected them to gain value, they wouldn’t cost so damned much, and we would have more capital available to allocate to other, more productive investments and activities.
The recent trend toward “maybe renting is a better deal” stories in the news may help to bring about this healthier attitude.
Maybe the recent news of unprecedented 15 pct annual U.S. home price declines on a national basis will do the trick.
How will return on investment look for buyers of houses, in the last five years?
Even if prices are back to the peak prices of 2005/2006 by 2015, carrying costs for 10 to 12 years will have been substantial. Without consistent appreciation in values, to offset carrying costs, houses will have been huge money pits for these owners.
In most cases, negative.
Makes “walk aways” look so tempting.
“Makes “walk aways” look so tempting.”
Once buyers realize peak bubble values aren’t coming back in their lifetime, what percentage won’t walk away?
I would think if you had kids in school you would be out looking for a rental before school starts back up in Sept.
But how many might just squat for 6+ months and pay off their credit cards with the “mortgage” money,
I wonder how that woud look on the credit report…. a foreclosure but Zero credit card debt.
A-Tooty-Ta-Ta…. Here’s just one of the many ways we waste tax dollars on edgeamacation down South…
http://www2.islandpacket.com/node/31727
Do you have proof that this is not working? Do you have another method that is demonstrably superior? This is preschool, so expectations are different and being able to get some basic concepts across can be helpful in early grades later on.
Do you have any proof it IS working? As for what might be demonstrably superior, that would be whatever USED to work, you know, like back in the day when people could add, subtract, multiply and divide, before it was more important to have “self esteem” than to be able to balance a checkbook or figure percentages (a skill which, had it been broadly learned, might have helped avert FB-dom for some).
My wife’s cousin recently moved back to Ark from Michigan. She is 20 and is recently married, he’s 19. They are dead broke and sold everything they had as they could only carry what would fit into a Ford Aspire. So they have been living on a trailer that my wife’s grandparents own on the other side of the same acreage we are living on.
Anyway, we’ve been having them over for dinner here and there, trying to help them out a bit. He took the ASVAB(sp?), the test to get into the military recently and failed the math portion.
So we were discussing it, I thought I could probably teach him whatever he had problems with. He said was confused by some of the numbers “with letters in it”. He seems like a reasonably smart kid so I figured it wouldn’t be a big deal to teach him.
So he brings me his study guide, and we start going through it. I’m trying to gauge his level of knowledge and I’m asking him about some of the problems in the book: “do you have problems with this?”, “do you know what this means?, what about this, do you recognize it?”. Finally it’s “Can you multiply?, can you multiply more than one digit?”
Anyway, I estimate his knowledge level is probably about par for a poor 5th grader. I was truly shocked. We are looking at a problem that says something like “What is 4% of 0.0375″. He didn’t know what the “%” symbol was. At all. The weird thing is, once I explain it, he’s ok with it. And he can multiply out the 4x.0375 and so once I explain it all, he’s fine with it.
I think he has the ability to learn the math. I explained some other things, like multiplying variables (a^2 * a^4). I don’t understand how he could get through school like that. He’s not retarded and to me clearly is capable of learning. It’s like just no one ever sat down and explained how to solve for x or do fractions or whatever.
He must have played “hookie” a lot during grades 5-12 or so. There’s no way you can sit through math classes five days a week and not at least recognize these concepts.
I am always complaining about the poor state of our public schools. To me they are nothing but over paid baby sitters.
Teachers who are tenured do not give a shit about the kid s learning. If the kid acts up its, Oh he needs ritalin. I despise the public school system. I think I’m going to run for the school board just to F-with them.
You can if the class devolves into a babysitting session because students have no discipline (parenting) and there is none allowed in school.
Bluprint,
you are doing something wonderful for that kid. no matter where he goes in life, knowing how to calculate numbers will serve him well. As you said, he’s bright enough,he simply never mastered the basic concepts. Good on you.
If it makes you feel any better Blueprint, at the U of A / Fayetteville (my alma mater), the number one bugbear for freshman and sophmore students is trying to pass college algerbra - even the dumbed down computer based one they use nowadays. One gal tried 8 times and finally quit school because she couldn’t pass it (with access to a lot of help too).
Bluepirnt, If you would like an inexpensive standardized program to help him out, the Saxxon home school math program is excellent. My home schooled son went back into a new district for the last 2 mos. of school.
On the State Standardized test he scored grade equivilants of
Math Problems: 9.5
Math Procedures: 10.7
He’s in 5th grade. I know my math and he has a propensity for it but believe me it was the Saxxon program…..excellent!
Thanks CarrieAnn, I’ll look into it. I’m also looking for some adult education programs and I just started a new job at a university, so I’m gonna see what they have.
I’m currently enrolled in grad school with 6 hours, and I’ll be starting a 5-week class for 3 more hours on July 7. After that I’ll be taking 12 hours in the fall, so if he relies on me it’ll be forever before I can cover everything he needs to know.
Bluprint,
Another math program that’s via CD (thus time and money-saving) is at http://www.teachingtextbooks.com. I had some homeschooled kids show it to me and they really like it. I like the way it’s interactive and computer-based.
You always hear about these new programs at the outset, before they’re proven, and never later on when they should be showing results. It’s just, hey what a great idea! This SHOULD really work!
Usually, they’re just discarded for the next new fad or recycled fad.
The only “proof” I could point to is that our school system (in S.C.) has been at or very near the bottom of the Country as to educational scores for as long as they have been keeping records. However for the last twenty years all we have done is throw huge sums of money at the ‘problem’. We are NOT making progress, and that is a fact.
We used to say thank God for Mississippi and now they have passed us!
Didn’t we though?
But a good education can be gotten in SC. The kid just has to really work for it. Mine did. But my son had some incredible stories to tell.
A top student-I forget her actual rank but think it was either one or two-”Is it still illegal to shot someone?” Another student “the Catholics killed Jesus”. In the first case the teacher was shocked and the class laughed. I don’t know the response to the second.
BTW, oldest daughter got into graduate school but decided to make money insead. She’s the one who bought her grandfather’s house. Second daughter has her master’s in computer programming. Third daughter is a college senior majoring in psychology. Son is a rising junior, math major. All doing very well.
/but they had to study more than in minimum required by the classes.
He was educated at … Dillon High School (South Caolina), where he was a high-achieving pupil. He taught himself calculus, edited the school newspaper, was class valedictorian and achieved the highest SAT score in the state that year — 1590 out of 1600.
Who is this? Ben Shalom Bernanke.
He did a lot of work on his own then. I don’t know how Dillon ranked when he was there, but it isn’t very good now. One of the people my husband works with says that the system is poor. He maintains their computer system.
Credit scores hit by card limits
A side effect of CC companies lowering the credit limit: People who do not pay off the balance every month end up with lower FICOs. In turn, their borrowing costs rise.
Ug. Posted this before the 2 copies showed up above.
I should know better than to leave links in before Ben wakes up…
I had to stay late at work on Tuesday, so I was walking home through the Whole Paycheck parking lot (it shares with a plaza -which we used to call a strip mall when I was a kid - with a bunch of other stores) at 10:30. Saw a guy sleeping in his car. He had some clean shirts hung up, and some other stuff in there, but he was sound asleep in a fairly quiet, but not totally dark area.
A week or so ago, I bumped into another man whose car had been stolen in broad daylight from the same parking lot. I think it was for real, because he didn’t ask for money or to come back with me to make a phone call. I told him to call the cops (on his cell) and left.
There is a new homeless guy hanging out on 17th street near the White House. He has a wagon and a sign that says approximately, “Have tools. Need work.” He stays close to the construction sites. Not sure if he thinks the crews will give him something to do or if he just tries to take advantage of the shade under the scaffolding.
Was talking with my union rep on the metro one day this week. It was one of the first conversations I have had with someone who just listened and seemed to accept it when I explained that prices were going to keep coming down (and why), they wouldn’t bounce back up (and why), and he should be glad because his son is a young adult and the change means the son will be able to afford to buy a house someday. He did admit the kid looked at his long term financial situation as a bit hopeless. I told him to tell his son to pay off his student loans, save a downpayment and be patient. Not sure how realistic that is on 3 part time jobs, but it is only advice and worth what he paid for it, I suppose.
Furniture category of Craig’s list in the DC area is filled to the brim with people selling small commercial office suites. I have been searching on “desk” and “filing cabinet” and “lateral file” and similar phrases. The up swing is noticeable.
The first run on banks happened rather silently, you’d hear a story or 2, but not much really.
Food Banks across the country are nearly broke.
Who is going to feed the new ex-middle-class, that will be pushing out traditional homeless (drugs-alcohol-psycho) people from their haunts?
“Food Banks across the country are nearly broke.
Who is going to feed the new ex-middle-class, that will be pushing out traditional homeless (drugs-alcohol-psycho) people from their haunts?”
And can anyone here in CA publish alcohol and lottery sales and graph them against food bank withdrawals; people will take the free food while holding on to all their vices and goodies.
We will have to feed ourselves. That is going to be the true shocker for a lot of people.
My wife and I have been getting veggies out of our garden, this is our first year to have a garden. The cucumbers and zuchinni are fantastic. There is nothing quite like fresh vegetables. Store bought just don’t do justice. I quit eating store bought tomatoes (including in restaraunts) years ago. They taste terrible compared to fresh out of the garden.
We are in the midst of growing our first crop of veggies in our greenhouse (up yours!, gophers) and it’s been fun, can’t wait to eat em’ up, yum.
Next year, try growing one of the smaller ’salad’ potatoes in pots or growbags - like Fingerlings, Belle de Fontenay, or Pink Fir Apple.
Fresh potatoes, straight from the ground, have to be one of the most delicious things in the world.
growbags?
G oogle trash bag potato, or trash can potato.
For fun Google
Potato Gun - we had fun with those. The salad potatoes work great, the Idahos blast holes through barns.
thanks dude
I should say this isn’t the first garden I’ve ever had, just the first as an adult/married. We used to have a garden every year growing up, but I never really appreciated it except for the corn and watermelon.
My wife and I have also been trying to raise bees. For a couple years, we kept them at her grandparents farm, so it was difficult to keep up with them and they died every winter. Now we have them on our place and have 4 hives going, one of which we are trying to requeen (the other 3 have been successfully re-queened and we did the last one just about 5 mins ago). We also have an odd situation with a 5th hive we call the orphan hive…but that’s kind of a long story. Hopefully we can keep them alive through the winter this year.
I believe the party in America is over. We are going to have to be more self-sufficient. I’m not saying it’s gonna be “mad max”, but growing/making a little of your own food/wine/whatever and trading services/goods with other people, local connections, energy efficiency, recycling, stuff like that is going to help make ends meet.
And I’m not really much of an investor of any sort, but a little gold buried out back for a rainy day might not hurt either.
A week or so ago, I bumped into another man whose car had been stolen in broad daylight from the same parking lot.
It’s probably been a year or more, but a while back my brother was sitting in the passenger side of a truck in a parking lot while his coworker was getting something from inside the store. There was a car parked directly to the right of them, right next to my brother. While he was waiting, the car left. A little while later, the coworker gets back in the truck. He was talking to a guy, and then gets in and says “That guy’s car just got stolen”. My brother turns around, and the guy was standing in the empty space that the car left out of a few minutes earlier. Apparently, that car had been stolen while my brother was sitting right there.
Of note: Went to Costco yesterday afternoon (2 pm) and was really amazed. Usually people are walking in and looking at the big screen tv’s and almost every aisle is taken up by slow moving parents with several unruly kids in tow but not yesterday. Yesterday almost 98% of the shoppers were confined to the food section and a few picking through the clothes section. There is no question that gasoline pricing is taking hold here.
I saw something quite similar at Trader Joe’s two nights ago. My daughter and I were among the twenty-or-so shoppers in the store at 7:30p on a Thursday evening. One year ago, there would have been at least fifty fellow shoppers jamming the checkout lines.
When coupled with the realization that the value of their house and 401k is falling by an amount greater than their gross income in many cases, it’s time to focus on priorities again.
What 401k?
They took the tax hit and cashed out, to be able to keep going.
Might have. Might not have. Paperwork is hard.
Aristotle: “Needs are finite; desires are infinite.”
“Desire is half of life; indifference is half of death”
Kahlil Gibran
I haven’t seen much difference in shoppers inside Sam’s Club yet. However, the lines for gas outside are reminiscent of gas lines in the 70s. It’s crazy. I would guess the price there is on average no more than .05 cents lower than the other gas stations, but that’s enough to send people flocking to it.
Sam’s club prices are not that great.I can always find cheaper gas than them.They have great buys on other things but I buy gas here at quicktrip.great price and clean stores.
Our QuikTrip is WaWa and their gas prices are usually around what Sam’s prices are.
I went to a gunshop yesterday to puchase my first handgun. They store was packed and people were buying. The shooting range in the rear was very active judging by the sound. The clerk who processed my purchase said they will be closed on the Fourth but they are open every non-Holiday day and business is booming.
Buy now or be priced out forever - if the NYT has its way.
“…Supporters of gun control must fight in court to ensure that registration requirements and background-check rules, and laws against bulk sales of handguns — a major source of guns used in crimes — are all upheld.
The court left room for gun-control advocates to fight back. It made clear that there were gun restrictions that it was not calling into question, including bans on gun possession by felons and the mentally ill, or in “sensitive places” like schools and government buildings.
That last part is the final indignity of the decision: when the justices go to work at the Supreme Court, guns will still be banned. When most Americans show up at their own jobs, they will not have that protection.
This audaciously harmful decision, which hands the far right a victory it has sought for decades, is a powerful reminder of why voters need to have the Supreme Court firmly in mind when they vote for the president this fall. …”
http://www.nytimes.com/2008/06/27/opinion/27fri1.html?_r=1&partner=rssnyt&emc=rss&oref=slogin
So the New York Times is worried that crime in Washington DC is going to get worse. Washington DC is already number 1, how much worse can it get?
“Audaciously harmful decision” It just supported 200 years of constitutional law. No big decision.
I saw my first bandit sign at an intersection advertising concealed-carry licensing classes. This is in my upper-middle class neighborhood. Sign of the times.
Went with my 9y son and buddy and his 9y son to a pawnshop after eaing out. Place was full of folks making payments and bringing in old computer monitors and nice mountain bikes. The place is only ~2500 sq ft, but there were 5 (!) folks working the counter and one in the back for jewelry!
Local Walmart seems to be hurting. I think they have cut back on meat. I’m not seeing as much in the cases and very little marked compared to a few weeks ago. On the other hand clothes get discounted fairly quickly. School supplies are already being featured with almost two months until school starts. The schools around here put out supply lists a couple of weeks before classes start. They always have things you wouldn’t think of and often forbid things you would expect to need. And they may not be the same things as last year. Then there are the things a parent is expected to supply such as kleenex, markers, printer cartridges.
You guys see this? I love it! I will buy one
http://autos.yahoo.com/articles/autos_content_landing_pages/591/nissan-cube-something-weird-is-coming/;_ylc=X3oDMTE3YTA0OGprBF9TAzI3MTYxNDkEc2VjA2ZwLXRvZGF5BHNsawNuaXNzYW4tY3ViZQ–
Don’t you already have an Element??
There are so many good looking cars and you want this? lol
Try some of the gorgeous Italian car/trucks.
The only problem with them is once you’re in them you start driving like an Italian.
Kinda neat looking.
I wonder if they’ll offer one of those rubberized interiors like they have in the Honda Element? One of the best recent innovations in vehicle-dom — a real godsend for multi-dog or multi-kid households. You can just hose the inside of the car out.
I want this one:
http://www.nissan-global.com/EN/PIVO2/index.html
Doesn’t seem too practical for Chicago winters, though, does it?
“We ask that no action” be taken before legislators can decide it’s in the economy’s “best interests,” Connecticut Democrat Christopher Dodd and Alabama Republican Richard Shelby, the Senate Banking Committee’s top lawmakers, said in a letter to Bernanke, Cox and Treasury Secretary Henry Paulson.
This is pretty frightening. Since when do “legislators” make these kinds of decisions? Under what Constitutional authority? And that Dodd has shown himself to be the worst sort…not just a corrupt pol, but one who can be bought cheaply.
A hissing sound in Ontario.
http://ca.news.yahoo.com/s/capress/080627/national/gas_prices_cottages_1
Suddenly, my gf’s neighbors in Perth are saying cottage prices are collapsing. No one has the gas money. A few months ago they were all convinced Canada was invincible, especially those “God ain’t making any more of them” cottages.
gas Hosers
You think you got it bad. The gas in Montreal translates to $5.79 for a U.S gallon. Where I come from it’s only $5.25 for regular.Ha! On top of that we pay 15-20% more for the same cars you buy ie, 2008 Honda Fit Niagara Falls N.Y, $15600. Same car Niagara Falls Ontario, $19,800. Nice eh? So quit your whining about gas prices. You still have it better than the rest of the western world. Just start paying your bills and we will all be better off.
? Would silver be a good buy?
I am thinking about buying a contract of silver and was wondering if it a good buy. A friend of mine is a commodities broker and swears silver is going to go up to $100. Since the people on this blog have credibility in my opinion I ask the question.
If he’s so sure, ask him why he’s not out there borrowing all this money, and betting on silver?
Silver is currently at 17.5.
The chances of it hitting 100 in a year is roughly the same as my turds running for president.
Silver is almost an industrial metal and barely a precious one…
Pass
But, aren’t turds running for President right now? According to the left or right we have turds running
Better to buy when silver is 100 contracts, sure you can go 6:1 or 8:1 - but by then you will have learned the tricks of the trade, or you will have been bounced out.
What is your stop? Will you buy a put as insurance? Why not purchase a long-dated call (again when prices have been pounded down under the 200 dma)?
Are you free of consumer/student/stupid debt? Can you put your hands on 10 grand? Lots to consider.
Good grief - that was a weird text deletion.
Best to buy silver when it is under the 200 day moving average. If just starting best to go with no leverage, buying a minicontract or little leverage - two-to-one. The ultrashort or Ultraolong ETFs and ETNs are 2:1. When you are are large spec with 100 contracts …(vide supra)
I think buying some physical silver is a good idea. Depending on your finances, 100oz bars, or a roll of 1oz silver coins. Also you can buy the SLV ETF if you have money in your stock brokerage account to invest. Some people think there will be a serious shortage of physical silver while speculators have an enormous short position. $100/oz is not impossible, and there definately is a case to be made for higher silver.
I have been collecting coins off-and-on for many years, and I would suggest that a small silver investor consider buying 1-ounce government-minted bullion coins, such the US Silver Eagle or the Canadian Maple Leaf. Other countries make similar coins, such as Mexico, Great Britain, China, and Australia, maybe others too. This is an easy, safe method of accumulating silver for someone without a lot of money.
These coins are dated so you can make a fun collection along with your silver investment. Most can be purchased for $3 to $5 more than their silver value. Most coin dealers have them in stock and they can also be purchased through the mail from numerous sources - easy to find with Google. US Eagles are not available directly from the mint.
If you buy 5 a week or $100 a week, in only 10 weeks you’d have either 50 ounces or $1,000 at cost. If you bought in larger quantity the unit price would be a little cheaper.
Another good alternative, as suggested by another, is to buy old US silver coins (90% fine, 1964 and earlier) or silver dollars (also 90% fine, 1878-1935). US silver dollars have slightly more silver per dollar than other coins: 4 silver quarters have about .72 ounces of silver and 1 silver dollar has about .77 ounces. Most coin dealers sell common circulated silver coins by the roll at retail for slightly above silver value. Retail buyers are competing with smelters who obviously pay slightly less than silver value. If a dealer only has $40 or $50 face value on hand, it’s easier to sell it to you than to ship it and then wait for the check.
There are over 100 different date and mint mark combinations of silver dollars. Most are relatively common and can be purchased for about $3 to $10 more than silver value - so, again, you can have a fun collection to go with your silver investment.
Even if your main goal is price appreciation - in which case commodity contracts are probably the most efficient method - there is, I think, something to be said for having a little physical silver on hand for an emergency. US 90% silver dimes and quarters would probably be best for that purpose, but silver dollars would also be good.
http://www.kitco.com/market/
Palladium seems to have more upside potential, relatively speaking, than gold, silver, or platinum. Some of the mining stocks, i.e. CDE, VGZ, and PAL, have been beaten down and are looking like good buys at these levels, too.
Buy all you can afford to put up. Pray you dont need to use it .
Ah, home-sweet-HHB-home! Man I hate being blocked from so many internet sites at work. I have to do a mad dash to try to catch up from the week. I may have to change my name to weekender. Don’t forget about me, my fellow bloggers!
So, I had chimed in over the years about a woman at my work who nearly bought back in peak bubble days. I kept trying to convince her not to. Whether I was the reason she never did it or not, I don’t know. But what I do know is that her husband has recently been diagnosed with mild to possibly early-moderate Alzheimers. Back when they were looking at moving, she wanted to go to a 55+ community, he wouldn’t hear of it. I am so glad that they never moved because now she will probably have to go to a 55+ and possibly one where she can get nursing assistance for him.
She says over and over how glad she is now that they didn’t move a few years ago. I sure hope she can find somewhere that will work out well for them now and sell her current house with relatively little (to no) hassle.
TIVO “Survivor Man” for future reference.
don’t know if this has been submitted but here’s a realtor in florida trying to work it…
http://www.cnn.com/2008/LIVING/personal/06/27/heart.for.sale.ap/index.html
“More new money was created while George W. Bush was president than in all the years since the Declaration of Independence combined.” ~Bill Bonner
Mathematically incorrect as written. Probably meant:
More new money was created during the bush presidency than in all of the years prior to his presidency, in nominal dollars.
We were momentarily taken aback by Bill Bonner’s commentary today about “Mr. Dung’s Dong.”
We had forgotten that dong is the Vietnamese unit of money. “This week, the government of Nguyen Tan Dung moved to center stage. Vietnam had recently become the world’s largest importer of gold bullion. Investors and householders bought the yellow metal for the same reason people always have – as a way to protect themselves from paper. The paper at issue is called the “dong,” the official currency of the Socialist Republic of Vietnam. Lately, the dong has been losing value against consumer prices at the rate of 25% per year.
“A year ago, the typical Vietnamese investor might have turned to the share market for safety…and growth. But Ho Chi Minh’s stock exchange fell every single day in May and is down nearly 60% since January. Or, he might have bought property. Alas, the recent downturn has hit Hanoi property like Richard Nixon’s B-52s. Apartment prices in commercial centers, according to Morgan Stanley, have fallen in half so far this year. How about the dollar, another common refuge from shady money in sunny places? The dong has stayed fairly close to the dollar; but it must have felt as thought it was handcuffed to a leper. Since the Roosevelt era, the dollar has sunk from 1/20th of an ounce of gold down to 1/1000th. In dong or in dollars, the average price of gold so far this year is 250 above the average price in the same period last year – a loss of 37% in the value of the paper currencies.”
Don’t forget to add that the response of the gov’t of Vietnam wasn’t to try and fix the forces behind the inflation. Nope, they took away the import licenses of the gold merchants and have stopped the importation of gold. Yeah, that’ll work.
ah, thankyou wbmz.
That was the info I was hoping Alad might supply above.
The party’s over at Pleasure Island: Disney to shut down 6 nightclubs….they are calling this a redevelopment program. “NOT”!
Walt Disney World is shutting down the six nightclubs at Pleasure Island to make its party district at Downtown Disney more family friendly.
BET SoundStage Club, Mannequins Dance Palace, 8Trax and three other clubs that have for years catered largely to young, single adults — rather than to Disney’s bread-and-butter family market — will close after Sept. 27.
During the next couple of years, Disney will reopen the Pleasure Island venues with a broader mix of restaurants and shops.
I actually believe this. Apparently the clubs were hugely popular:
Now 19 years old, it may have seemed an odd venture for Disney, but it appeared to thrive — so much so that some in the industry have blamed it for accelerating the decline of the nightlife district in downtown Orlando during the 1990s.
…but I’ll bet Disney feels they can make more $$ if it’s geared towards the family crowd.
I remember from way back when: Disney put those nightclubs there in order to cater to a missing market segment. Sorta like Vegas advertising itself as family-friendly, but in reverse.
I had a great night at House of Blues during a conference there. If only I could remember it.
I remember a great night dancing in the street w/fireworks over our head. That wasn’t that many years after it first opened.
I really enjoyed the “Adventurer’s Club”. Craftily themed in Disney’s special way, but with drinks and no little kids. I spent a lot of time there while doing some contract work for Imagineering.
But nothing lasts forever. Hopefully they will come up with something equally cool for people with time to kill in Orlando.
DH and I LOVED the Adventurer’s Club. I hope they aren’t closing that one.
Good times.
Apologize if this has been posted before. McCain on housing crisis: http://www.cnn.com/2008/POLITICS/06/27/mccain.housing.crisis/
I will not play election year politics with the housing crisis. I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now.
I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers. Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.
In our effort to help deserving homeowners, no assistance should be given to speculators. Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren’t.
When we commit taxpayer dollars as assistance, it should be accompanied by reforms that ensure that we never face this problem again. Central to those reforms should be transparency and accountability.
Homeowners should be able to understand easily the terms and obligations of a mortgage. In return, they have an obligation to provide truthful financial information and should be subject to penalty if they do not. Lenders who initiate loans should be held accountable for the quality and performance of those loans and strict standards should be required in the lending process. We must have greater transparency in the lending process so that every borrower knows exactly what he is agreeing to and where every lender is required to meet the highest standards of ethical behavior.
Policies should move toward ensuring that homeowners provide a responsible down payment of equity at the initial purchase of a home. I therefore oppose reducing the down payment requirement for FHA mortgages and believe that, as conditions allow, the down payment requirement should be raised. So many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with. When conditions return to normal, GSEs (Government Sponsored Enterprises) should never insure loans when the homeowner clearly does not have skin in the game.
In financial institutions, there is no substitute for adequate capital to serve as a buffer against losses. Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.
I am prepared to examine new proposals and evaluate them based on these principals. But I think we need to do two things right away. First, it is time to convene a meeting of the nation’s accounting professionals to discuss the current mark to market accounting systems. We are witnessing an unprecedented situation as banks and investors try to determine the appropriate value of the assets they are holding and there is widespread concern that this approach is exacerbating the credit crunch.
We should also convene a meeting of the nation’s top mortgage lenders. Working together, they should pledge to provide maximum support and help to their cash-strapped, but credit worthy customers. They should pledge to do everything possible to keep families in their homes and businesses growing. Recall that immediately after September 11, 2001 General Motors stepped in to provide 0 percent financing as part of keeping the economy growing. We need a similar response by the mortgage lenders. They’ve been asking the government to help them out. I’m now calling upon them to help their customers, and their nation out. It’s time to help American families.
http://www.prospect.org/cs/articles?article=the_meltdown_lowdown_062708
And the Bubble Keeps on Bursting
The new Case-Shiller housing data showed that prices kept plummeting in April. Real house prices in the 20-city index were falling at close to a 26 percent annual rate over the months from January to April. Since their peak in the summer of 2006, real house prices have dropped by more than 23 percent. This means that we’re probably a bit more than halfway to the bottom of the bubble.
Prices in the most rapidly deflating markets are dropping much faster. In the last three months, real house prices in Phoenix, San Francisco and Miami have all fallen at close to a 40 percent annual rate. The implications of this rate of price decline are incredible.
Imagine you had paid off 20 percent of a mid-priced home in the San Francisco area as of January. This would have given you approximately $136,000 in equity on a $680,000 home. Three months later, that home is $597,000 and your equity stake is down to $53,000. In three more months at this rate, you will be underwater. Such are the joys of home ownership in a collapsing bubble.
Of course, it is not gloomy for everyone. Imagine that you are a wise renter who was thinking of buying a mid-priced home in the SF area. You are now $83,000 richer as a result of your decision to wait. That’s not bad — you get almost $28,000 a month for not buying.
Now there’s rationale for renting!
I figure that since moving to the Bay Area in 2005, I’ve been paying less than half what a mortgage would cost on a similar crapbox. Let’s call it half just to make the numbers easy, and let’s use round numbers like $2000/month rent against $4000/month mortgage. We will ignore insurance, maintenance, property tax.
Just the payment difference alone amounts to $2000/month or $24k per year, so I’ve saved $72k in three years just in payments alone. And there has been no net house price appreciation since 2005, so the buyer didn’t make up that difference via appreciation.
Factor in the lower house prices that now prevail, and add the insurance, maintenance, and property tax, and I bet I’ve saved close to $300k in three years. That may even be a conservative estimate.
When will we bounce back?
http://www.newsobserver.com/business/story/1123393.html
Q. How will we know when the worst in the housing crisis is over?
A. We’ll get a hint when home sales start to pick up consistently in the hardest-hit markets, such as Florida and California. “House prices have to stop falling, or at least the rate of decline has to slow,” said Mark Zandi, chief economist for forecaster Moody’s Economy.com.
“I think there’s some* room to go … [down] on this market,” said Cameron Findlay, chief economist for online mortgage lender LendingTree.com in Irvine, Calif.
Home prices are unlikely to bottom before March, he said. Until then, “I think foreclosures are going to continue to drive those prices down, and that’s driven primarily by the higher inventory of unsold homes.”
* Some = the polictically correct way to say “a lot more” in an interview.
Cain’t take much more of Geritol Johnny trying to tell me he has an economic plan, when just a few months ago he admitted he didn’t know much about economics.
FIrst write downs on AAA ABX
~12K/MM
http://www.markit.com/information/products/category/indices/abx/contentParagraphs/03/document/ABX_Jun2608_Notice.pdf
Implications?
Sure these are full doc AAA loans that are defaulting. oops. Not Alt-a, not subprime just FBs.
He who picks bottoms ends up with stinky fingers.
On the lighter side:
The S&P500 is ~50 points away from a losing decade. 1998 - 2008 0% growth. Nice job in the US index funds, but that 2% dividend really makes up for it. The last time this happened? look it up.
1930’s: Hoovervilles
2000’s: Bush Leagues
“The S&P500 is ~50 points away from a losing decade.”
Twin peaks
Last hurrah
I started renting in Chicago in May. So far, I am happy with my building, its construction, service, location, etc. However, I have seen a few units come up for sale with insane prices. Case in point:
http://www.trulia.com/property/1062283120-330-W-Grand-Ave-2106-Chicago-IL-60610
Any of the other Chicago dwellers have predictions of what this unit will actually sell for?
My rent is about 50% of PITI+HOA.
Being that I lived in Chicago for 7 years, I was curious about your post. Here’s a nearby comparable (in bedroom, bathroom, and sq. footage) condo: http://www.zillow.com/HomeDetails.htm?zprop=3405686.
And here’s the 10-year price history on the comp: http://www.zillow.com/Charts.htm?chartDuration=10years&zpid=3405686.
Don’t know what the one you listed *will* sell for, but I would say it *should* sell for around $300K - $350K (in today’s market) and around $200K - $250K when this thing bottoms out.
And: the real estate competition in River North is still coming online at a furious rate. The cranes are everywhere.
(Though a few blocks north on Erie there’s a Lennar building site that appears to have completely shut down.)
That is one ugly graph. Hope this chump did not buy in 05. I don’t think I will buy in a highrise, but I do like my renting experience so far.
A Smart Idea Spoiled
Is securitization dead?
No. It’s a matter of going back to basics and ascribing liability to actions. There was no reason to remove income verification and full appraisals when making loans. It’s actually simple: We have to take out of the system what was never logical. If we’re going to take a person who is relatively financially illiterate and give him a higher-risk loan, then it should be done with supervision and liability. Otherwise the whole notion is absurd.
http://biz.yahoo.com/bizwk/080627/0827b4091040380049.html?.v=1
how much of the american population do you think he is describing? i would say at least 65%
“A Smart Idea Spoiled”
If the idea was so easily and so thoroughly spoiled by market forces, isn’t it a bit premature for its inventor to crow about how smart it was?
I am wondering whether Charles Ponzi bragged about his “smart idea” after the first Ponzi scheme collapsed?
I just looked over a copy of Kevin Phillips’ recently-published book, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. It takes aim at the questionable virtues of securitization in the introduction. There are also several interesting passages regarding the PPT/President’s Working Group, which reference articles I posted on this blog for discussion a couple of years ago.
Back when I posted these articles, an army of trolls came out from under their rocks to accuse me and other who did not instantly dismiss the notion of a Plunge Protection Team propping up U.S. asset prices of wearing tinfoil hats. Now that Kevin Phillips has openly discussed this policy in his book, I am not feeling quite as conspiratorial as I used to feel.
OK, I had to go out and buy myself a personal copy of Phillips’ book, as I am sure it is destined to become a classic of this era. (Hopefully I can catch up to him on a book signing tour some day!)
Here is a relevant excerpt from the preface, which is entitled The Political Economics of Deception:
“Falling home prices are getting most of the attention now, with pessimists predicting the greatest plunge of our lifetimes. We are told that much of the risk comes from mortgage lenders who signed up too many bad risks. Under normal circumstances, such misjudgments would not be so numerous as to weigh so dangerously.
Ah, but this time there were huge institutional pressures to entice as many customers as possible, reflecting the enormous profits to be made from taking mortgages and securitizing and repackaging them en masse in what became — most people now recognize these names — mortgage-backed securities and collateralized debt obligations. Lenders needed to woo high-risk borrowers for the good commercial reason that there weren’t enough low-risk borrowers to meet the volume demanded by the big commercial banks, investment firms, and other packagers, all pursuing the lucrative fees.
What’s securitization? some will ask. A pompous six-syllable word, to begin with, but also a humongous new business launched by Wall Street in the 1990s. To oversimplify somewhat, sophisticated financial institutions discovered gold in tying together five hundred or five thousand loans, mortgages, or whatever, and then selling fresh securities based and valued on the new assemblage. These securities, issued in pricey amounts, were cut into separate slices, or tranches (French and suitably expensive sounding), according to degrees of risk. Sure, some of the slices had lower credit ratings, but risk could be spread out and the affected bits of patisserie sold more cheaply. In practice, however, there was less clarity and candor — sometimes considerably less.”
I guess I am one of the pessimists to whom he refers, because I predicted unprecedented home price declines along with many other posters on this blog for three years running, and the data shows that we are right while almost all of the ‘experts’ are currently stuffed full of baked crow.
From Barry Ritholtz;
“S&P500 investors are on the verge of experiencing something not seen for a very long time — a losing decade. If markets continue their losing streak for a few more months, that is a realistic possibility. The S&P500 is now down 4.8% since June of 1999. To hit the decade mark, the SPX would need to be below the 1998 close of 1,229 — less than 50 points below Friday’s close of 1278.38 come December 31st. This has not occurred since the 1930s.”
Heck of a job with the economy Georgie Boy. Guess I’ll vote for McCain to continue these great policies.
Glad we have individual accounts that can grow in the market instead of that guaranteed Social Security stuff.
guaranteed Social Security
You slay me.
Oh, because the program is only solvent until 2075?
Those private accounts Bush wanted would have done just great, huh? Put it all into big trusted stocks, like GM.
Those private accounts Bush wanted would have done just great, huh?
How on earth did you read that into my post? There were exactly three words, none of which were “private” “accounts” and certainly not “bush”.
Solvency is not the point. Even greenspan said that he could not guarantee the buying power of the promised benefits.
In honor of my first Social Security payment, due to me in 2024…
You wait 16 years, and whaddya get?
Another year older and the U.S. deeper in debt
$1153.27 a month don’t you call me, ’cause I can’t go
Collect any money from the company store
Far enough, it just seemed you were responding to my point that GWBs Social Security plan was a joke.
Buying power not withstanding, SocSec payments are still guaranteed.
And I tend not to believe anything Ali G has to say.
“S&P500 investors are on the verge of experiencing something not seen for a very long time - a losing decade.”
Music to my ears. Spread the word: Stocks suck. Tell everyone that only a fool would put his money into the stock market. Tell them to buy gold instead.
Beat down the price of stocks to where the P/E is below ten. Better yet, make that a P/E of below nine. Maybe even below eight.
That’s will be the time to come out of cash and to go into stocks.
Stocks: The Great Wealth Distributor.
Please show us some follow through and turn your paper into computer blips, oh sage one.
After getting screwed on housing, let’s hear it for credit cards and any other loan. ‘Credit scores hit by card limits”.
Lesson - stay out of debt and don’t let this happen to you.
Ben - this would be a great thread topic. Yahoo article on front page now.
http://news.yahoo.com/s/ap/20080628/ap_on_bi_ge/all_business
Another case made for cash.
Anybody read/speak Dutch?
http://www.dft.nl/bedrijven/fortis/4339542/Amerikaanse__rsquo_meltdown_rsquo__reden_geldinjectie_Fortis.html
According to this translation they are calling for a banking collapse within weeks if not days. As translated by google:
BRUSSELS / AMSTERDAM (DFT) - Fortis expects within the next few days to weeks to complete the collapse of the U.S. financial markets. That explains the bank insurers interventions of the series Thursday at dealing with € 8 billion. “We are ready at the last minute. It goes in the United States much worse than thought, “said Fortis chairman Maurice Lippens, who maintains that CEO Votron to live. Fortis expects bankruptcies of 6000 U.S. banks that now lack coverage. “But Citigroup, General Motors, there begins a complete meltdown in the U.S..”
Fortis took yesterday € 1.5 billion with a share issue. At the end of last year was the Belgian-Dutch group € 13 billion of new shares for the takeover of ABN Amro, for which it paid € 24 billion. Lippens bases its concern on interviews with bankers. “Two months ago we knew not so bad that it is in America. And it will be much worse. We have a thick mattress needed for the next eighteen months to come when we can bring to ABN Amro. ”
Two weeks ago reported the U.S. investment bank and adviser to Fortis Merrill Lynch certainly € 6.2 billion in additional capital was needed. The VEB yesterday demanded clarification of Fortis: CEO Jean-Paul Votron stopped in late april Fortis maintains that after the purchase of ABN Amro does not need on the capital market. In one year € 30 billion in market capitalization destroyed. After Votron last confession kelderde the share price by 19.4%, although yesterday climbed by 4.4% to € 10.65.
The massive unrest around the bank insurers, especially with our neighbours in Belgium as a bomb broken. While the fuss arose in the Netherlands to the limited financial world, it is with our neighbours the call of the day. Not only is the bank dominates the streetscape, but by the mokerslag for the Belgian volksaandeel are also hundreds of thousands of small investors hit hard.
All Belgian newspapers opened yesterday with real rampenkoppen, where the free fall of the bank insurers was wide coverage. ‘Fortis crashes, “” Rampdag for Fortis’ and’ Fortis loses 5.3 billion, “opened three leading newspapers.
The panic around the group across the border so great that the national regulator CFBA has had reassuring words to speak to the desperate savers. “The emergency of Fortis is no reason to bank run and money to get off,” said a CFBAwoordvoerder. “The bank complies with all legal requirements, but has itself just very sharp targets.”
Maurice Lippens claims that all major shareholders yesterday “unanimously support” have pledged.
Like arrows in the Netherlands focus mainly on CEO Jean-Paul Votron, who are heavily vertild appears to have complied with the takeover of ABN Amro. But while the Netherlands in Brussels calling his bonus of € 2.5 million to be paid back in Belgium is demanding his departure.
Who makes such big mistakes, must bear the consequences and therefore resign, “said Huybregtse chairman of the Flemish federation of Investment and Investors. The fall of the share is for him a confirmation that the takeover of ABN Amro far too expensive and was poorly timed.
“The former shareholders of ABN Amro are now taking a bath in champagne”, stressed Huybrechts. “Who makes major mistakes, must go. Fortis is a really volksaandeel and with confidence that you can not cope reckless. ”
The Belgian newspaper the Standard is tough on the CEO: “The kredietcrisis has affected all banks, but it is no excuse. Fortis is much sharper fall, “says the commentator. “Fortis has always denied that there was still a capital increase. They were therefore either lies or ignorance. Both are equally bad, so must Votron the honour to itself. He is the only one who has earned something to the whole operation. ”
According to Belgian media wanted Fortis announce Thursday that the bonus Votron would be removed, but this is at the last moment not yet happened. Also, all press speculation about his succession, with the name of Filip Dierckx.
Votron itself will of being firm. “The shareholders are behind me and also in the top of the group, I only support for this I have put in operation,” said the under fire lying Fortis chief executive.
The refund of the now controversial bonus points he resolutely. “What I do with my money, my case. The bonus had nothing to do with ABN Amro, but was about the year 2007, “said Votron. The CEO is a willing part of his salary in Fortis documents.
Votron may also still rely entirely on chairman Lippens, who denies that the bank itself on the takeover of ABN Amro has completed. “Votron remains simply the CEO. At present intervention, which is difficult, that’s really show leadership. “
A banking collapse of Fortis, not the world. A panic, induced by Fortis needing a couple of Billion. So they screwed the shareholders like all good banks.
Yeah, it’s all the fault of those funny guys over there.
There was no speculation in the Netherlands, none at all.
And yeah, what’s up with that? Screwing the bank’s shareholders is traditional. Sucks when they they are so incompetent that they can’t even do their traditional job.
O brave new world
That hath such people in’t!
‘“We are ready at the last minute. It goes in the United States much worse than thought, “said Fortis chairman Maurice Lippens, who maintains that CEO Votron to live. Fortis expects bankruptcies of 6000 U.S. banks that now lack coverage. “But Citigroup, General Motors, there begins a complete meltdown in the U.S..”’
It seems like gloomsters are coming out of the woodwork these days. Couldn’t they have paid a competent translator to convert this Dutch syntax into English?
I think that’s a computer translation.
The computer is a dumbsh!t.
Calling nhz, nhz, where are you?
We have a little investment-trading group that meets at one of the local watering holes at irregular intervals- there’s one fellow who is interested in attending. He’s 60y, had a couple of divorces, and has 10 grand for speculation - he is asking about taking positions in the Euro and Mexican peso.
Reply:
I also assume you have no CC debt, have not borrowed against 401K, no car loan, have fixed/no mortgage (or if mortgage, someone else is paying it), no balloon payment notes, no medical bills, no IRS liens, and can put your hands on 10 grand cash.
This is funny.
I think I’ll post a note on my door, ‘moved to Brazil’
An anti-stagflation strategy: move back home
By Tim Harford
“…Moving from investment tips to money-saving advice for consumers, there is good news and bad news. The bad news is that most things are getting expensive quickly. The good news is that the banks will not lend you the money to buy any of them, so the problem is largely academic.
You could refer to the lists of money-saving tips provided in certain newspapers, but I cannot personally recommend them. One “top 10” featured the following eye-catching tip: roll a lemon around on a flat surface before squeezing it, because this produces more juice. That is thought-provoking, but one thought it provoked was that the money-saving gurus have failed to reveal either for how long the lemon should be rolled, or how much extra juice would be harvested. I strongly suspect that calculated as drops of juice per minute, lemon-rolling does not pay the minimum wage. What is more, does anyone really look at a little dish of lemon juice and ruefully reflect that there is nothing for it but to squeeze another slice? As money-saving tips go, this is not much better than taking the batteries out of your doorbell and checking every minute to see if someone is on the doorstep…
Then there are the teenagers and young adults living at home. Despite being too young to know what stagflation is, they have perfectly positioned themselves to take advantage of it. The rising cost of fuel, food and services does not bother them: they do not pay for domestic heating or school fees, and they always borrow the car and leave the tank empty….”
http://www.ft.com/cms/s/0/7bb429e2-4446-11dd-b151-0000779fd2ac.html?nclick_check=1
http://www.nytimes.com/2008/06/28/us/politics/28barr.html?ref=politics
It will be interesting to see if Bob Barr can make a dent in McCain’s support.
http://www.prospect.org/cs/articles?article=fixing_the_subprime_mess
A debate between Dean Baker and Robert Kuttner on the Dodd-Frank bill. From Dean Baker:
“Bob and I agree on one other important point, the housing crash is really horrible. Innocent people are losing their homes and their life saving because of the malfeasance of people with names like Greenspan, Mozilla, and Bush. The difference is that I consider it no more reasonable or desirable to try to sustain a housing bubble than to sustain a 5000 Nasdaq.
We have a 100 year-long trend in which house prices just tracked inflation. In the years from 1995 to 2006, real house prices rose by more than 70 percent. This run-up led to an unprecedented construction boom, which led to a massive oversupply of housing, which is causing house prices to return to their trend level. I don’t know how to keep prices from declining in this context and I don’t know anyone who does.
The Dodd-Frank bills will not keep prices from falling, as simple arithmetic shows. It will provide $300 billion in guarantees (the equivalent of perhaps $12 to $15 billion in new investment) in a $20 trillion market. That will not prop up a market that is more 1,000 times larger. “
“It will provide $300 billion in guarantees (the equivalent of perhaps $12 to $15 billion in new investment) in a $20 trillion market.”
That is the part that really gets me. How can you guarantee against something that has already occurred (i.e. a housing price crash)? Isn’t there a risk that the ‘claims payments’ will turn out to be much ‘larger than expected’ due to poor ‘appraisals’ (aka blind estimates) of still-undiscovered price declines?
Yet, if you read Bob Kuttner completely incoherent arguments they come down to nothing more than “we’ve got to do something”. This so-called champion of the poor wants to give a multi-billion dollar bailout to large financial institutions that will do absolutely nothing to help 99% of borrowers. What is it about this bubble that has made so many people completely lose their minds?
Innocent people are losing their homes
C’mon! Has anyone who’s paid the mortgage per the terms of the contract he signed lost his him?
Every word in the phrase “losing their homes” is a lie.
“losing” - no money down and neg/am or i/o? What’s the loss?
“their” - no equity means the bank owns it 100%
“homes” - it’s a HOUSE
Home ownership is not the only facet of the Ownership Society that is sliding. Why is it that million dollar yacht sales and debt-strapped consumers don’t mix?
Yacht sales on troubled waters
Dealers hope boat show will turn the tide
W.J. Hennigan THE WASHINGTON TIMES
Sunday, June 8, 2008
Washington-area yacht dealers are hoping a choppy economy doesn’t discourage boat lovers from taking a walk around the new marina at the National Harbor Yacht Show.
The show, which ends Sunday, features dozens of million-dollar yachts available for sale or charter. Visitors also can peruse displays showcasing marine engines, electronics and hardware.
Boat sales have been declining in recent months as debt-strapped consumers rein in discretionary spending. Sales of new boats declined in nearly every category last year, and new boat sales were down 8 percent overall, according to the National Marine Manufacturers Association.
The Boat Owners Association of the United States reported that its membership rolls have increased about 1 percent this year, but the number of people who own boat insurance policies has dropped more than 10 percent - a strong indication that boat ownership has fallen recently.
“Anybody who is trying to sell a boat right now is in a tough spot,” said Bill Oakerson, chief executive officer of the association.
I posted this article just over a year ago as an example of a “shoe shine boy” moment for the end of the credit bubble:
THE WEALTH REPORT
Flip That Yacht
Rich Buyers Sell Unfinished Boats, Reaping Millions in Profits
May 25, 2007
Terry Taylor, a Florida car dealer, has purchased five yachts since 2001. But don’t expect to see him anchoring off the coast of Cannes this week. Mr. Taylor is boatless, having sold all of his yachts to other buyers for huge profits.
“I wouldn’t feel too bad for Terry,” jokes Felix Sabates, a partner in Trinity Yachts of Gulfport, Miss., which built Mr. Taylor’s boats. “He’s probably made more money off those boats than we did.”
Where Are the Customers’ Yachts? or A Good Hard Look at Wall Street
(A Marketplace Book) (Paperback)
by Fred Schwed (Author)
“WALL STREET,” READS the sinister old gag, “is a street with a river at one end and a graveyard at the other…”
This is a great book.
Just some food for thought for those people who think We The People should bail out failed specuvestors, houseflippers and deadbeats.
From this week’s Business Week. (7/7) The one with “The Home Price Abyss” on the cover
Mass foreclosures accelerate a neighborhood’s decline, triggering a spiral of abandonment and decay. A survey of agents this year for “Inside Mortgage Finance” bu Goesegment Systems and Campbell Communications found that about half of foreclosed properties had significant damage, which reduces a properties value by about 25% [...] Ruined floors and carpets, holes in walls, and missing appliances
Now, of course, this figures are also used by R-E agents to convince prospective buyers that they can’t consider a foreclosure’s price as a comp because it’s been “trashed”.
However, it does demonstrate that 50% of FBs won’t hesitate to steal money from a bank! And even if missing appliances are only worth $10K and not $100K…that’s still bigger than the average take from a bank robbery!
Add in the numer of FBs who lied on their mortgage application, and you’ll find that the overwhelming majority of FBs are little more then criminal opportunists. The fact that there’s millions of them doesn’t soften these crimes.
Business Week tries to be a little more balanced, after all they’re on Business’s side. My feeling is if the Government feels we need to prop up banks, we should do so directly and not do it by bailing out a criminal class of people.
“Now, of course, this figures are also used by R-E agents to convince prospective buyers that they can’t consider a foreclosure’s price as a comp because it’s been “trashed”. ”
Do mortgage appraisers use foreclosure prices as comps?
For you folks whose hearts melt for McCain, he spoke in front of a Hispanic crowd today and said Immigration reform is his top priority yesterday, today, and tomorrow. Whatever that means, I trust that means amnesty to the lawbreakers.
Obama is certainly not the alternative, but worse.
Bob Barr Libertarian Party Presidential candidate is the alternative to tweedle dee and tweedle dumber.
Would y’all be more inclined to believe the predictions implied by swaps values, or the opinions of the analysts who downplay the gloomy indications?
Have Swaps Overdone the Gloom?
By Serena Ng
Word Count: 532 | Companies Featured in This Article: General Motors, Ford Motor, MBIA, Ambac Financial Group
Stocks keep falling but the prices of derivatives that track how investors feel about potential defaults are signaling even deeper concern.
The values of these credit-default swaps have hit levels that imply high losses or default risk over the next few years on everything from subprime-mortgage debt to bond insurers and auto makers.
Analysts say the markets for swaps have likely gone too far and the doom they are predicting overstates the problems in the mortgage market and broader economy. But the moves reflect significant concerns in the marketplace over how individuals and companies will be affected by the mix of slumping housing prices, spiking oil and commodity costs, and a slowing economy.
Swaps tied to the bonds of General Motors Corp. and Ford Motor Co. are indicating that investors see more than a 70% chance that the auto makers will default in the next five years. For bond insurers MBIA Inc. and Ambac Financial Group Inc. the swaps are implying an even-higher default probability of over 90%.
In the subprime market, an index of swaps suggests that a majority of the home loans made to less-creditworty borrowers in recent years will end up in default.
Weekly Syracuse report:
We don care ’bout no stinkin’ recession. We’re packin’ ‘em in at Loew’s. KFC is busy. The mall parking lot is jammed packed. I went up to Route 11 (Cicero) and did not see one commercial parking lot that wasn’t jam-packed.
I don’t get it. A last hurrah? An “I don’t care—-I hate discipline” ‘tude? Am I the only person in central NY that isn’t swimming in deep wells of cash?. I saw someone’s brand spankin’ new Caddy SUV so darn big she had to inch around the corner of the drive-up to make the curve. Brand sparkling new! If that doesn’t say f*#k the gas prices, I don’t know what does.
Where am I?
How did I get here?
Who are these people?
Meanwhile, in Carrie’s brain: I’m starting to get that sinking feeling when I go to the grocery store and some of my items’ prices are up 150%-200%. If I have to give up my pomegranite martinis this slowdown is really going to suck.
Our society is run by insane people for insane objectives. I think we’re being run by maniacs for maniacal ends and I think I’m liable to be put away as insane for expressing that. That’s what’s insane about it.
John Lennon
Holy mother of St. Joseph.
Trying to get out of this squat and into new digs in Colorado this weekend, went to take a shower this morn and no hot water, went down into the crawlspace where the heater is and there’s an inch of water.
I think the landlady must’ve taken the sump pump, too.
Who do I call? Countrywide? Geez, I hate to just leave the place to flood out, I did talk to the Mormon bishop next door, but what’s he supposed to do? There’s a high water table here in the summer from ditch water.
Maybe the place will just float away…
Here’s a long quotation from a great Onion piece on the bubble, sort of:
“With home prices falling at their fastest rate in 20 years, the creepy-mansion market has gone from booming to moribund as realtors head into what should be their most lucrative season, Halloween. Thousands of agents who used to specialize in old homes with a terrible secret in their walls have switched to non-paranormal houses, which, while still difficult to sell, are faring better on average than their green-glowing counterparts.
“‘It’s hard enough right now to move a renovated ranch-style house within walking distance of mass transit,’ says Cleveland-area agent Maria Reynolds, adding that she has stopped including photos of wraith-infested mansions in her real estate catalogs. ‘Never mind a place that’s got blood running from the faucets, the apparition of a boy in a sailor suit standing at the top of the stairs, and no granite countertops.’
“As banks and lenders decline financing to people who would once easily qualify, buyers have soured on almost every kind of supernatural home, including transdimensional portal houses, demonic-possession houses, split-levels, and even ramshackle cabins on the edge of town occupied by mysterious hermits who turn out to be kindly old men. Overall sales of cursed and bedamned residences have fallen 45 percent in the past 14 months—more than twice that of non-evil houses. In response, many agents have begun offering incentives, such as waiving half their fee or including the price of an exorcism with the closing costs.
“Perhaps most alarming to realtors is the inability to attract first-time buyers.
“‘Even if you do get that young family who’s willing to share the two-car garage with the spectral figure hanging from its rafters, there’s no guarantee they can get a mortgage,’ Morgan Stanley analyst Ben Hodges says. ‘A first-time buyer with no equity can’t even get a severed foot in the door.’
“Though Congress is debating several bills that would offer tax breaks to wealthy urban couples with no children and an overall lack of humility who purchase creepy mansions in the countryside, industry specialists say the outlook remains dire.”
http://www.theonion.com/content/news/realtors_blame_housing_market_for
There’s a woman in Ouray, Colorado (old mining town) who, I believe, works as a waitress. However, she also specializes in exorcising ghosts and is said to be somewhat in demand by certain old local hotels where guests occasionally are visited by ghosts. The Beaumont Hotel is supposedly haunted.
BTW, if you’re ever in Glenwood Springs and want to stay with a ghost, reserve the belltower room at the Hotel Colorado.
I personally don’t believe in things I can’t see (except gravity, magnetic forces, electricity - which you can see occasionally, like if you forget to turn off the hairdryer and pull it out of the wall - and things like that). Oh yes, and the Long Arm of the Law, which I’ve never personally seen but some of my friends have.
As Bill Evolves, Mortgage Debt Is Snowballing :
http://tinyurl.com/53dgnw
“While the proposed program would help some homeowners, analysts say it would touch only a small fraction of those in trouble — the Congressional Budget Office estimates it would be used by 400,000 borrowers — and would do little to bolster the housing market.”
“It’s not enough, even in the best of circumstances,” said Mark Zandi, chief economist of Moody’s Economy.com. The number of people who will be helped “is going to be overwhelmed by the three million that are headed toward default.”
“To take part in the proposed program, lenders would have to lower each debt obligation to 85 percent of the home’s current value. Borrowers would stay in their homes but would have to pay a 1.5 percent annual insurance premium. If homes’ values grow and borrowers sell or refinance, they would have to share the gain with the government.”
With these terms, wouldn’t it just be better to walk away?
“There is a precedent for such government endeavors, but not since the New Deal. In the 1930s, the government created the Home Owners Loan Corporation to buy mortgages and modify them. In three years, it bought a fifth of the country’s home loans, said Alex J. Pollock, a resident fellow at the American Enterprise Institute in Washington.”
“We won’t need to do anything of that magnitude here,” he said.
If he’s saying that because he doesn’t think the problem’s going to be that big or big enough, he may be proven wrong.
Slightly off-topic, but this morning I flew from Atlanta to Denver. As I settled into my seat, some kid (boy about four years old) started having a screaming fit about being on the plane - howling at his mother that he wanted to drive instead, and generally being an out-of-control brat. The mom sat there for a good 20 minutes trying to reason with him, with every passenger on the plane silently fuming and wishing someone would take both of them out behind the woodshed for a long-overdue thrashing. Finally, right before takeoff, the mom caves in to the screaming kid, and meekly leads him off the plane. So, she’s out airfare, her bags are already loaded on the plane, and now she’s got to figure out some alternative way to get from Atlanta to Denver - all because she caves to a four-year-old’s temper tantrum. All the passengers were glad to see them go, but would have been a lot happier to see Mom put her foot down hard and shut up the little hell-spawn with some good old-fashioned corporal discipline. It was truly a disgusting spectacle, and made me shudder when I think about the societal impact of so many kids who have no concept of loving but firm parental discipline.