Bits Bucket For July 8, 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
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Thought of the day:
If housing price increases don’t cause inflation (as stated by the govt) why do home price decreases cause deflation?
Hmm…
The Primary Precondition of Deflation
Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt). Austrian economists Ludwig von Mises and Friedrich Hayek warned of the consequences of credit expansion, as have a handful of other economists, who today are mostly ignored. Bank credit and Elliott wave expert Hamilton Bolton, in a 1957 letter, summarized his observations this way:
In reading a history of major depressions in the U.S. from 1830 on, I was impressed with the following:
(a) All were set off by a deflation of excess credit. This was the one factor in common.
(b) Sometimes the excess-of-credit situation seemed to last years before the bubble broke.
(c) Some outside event, such as a major failure, brought the thing to a head, but the signs were visible many months, and in some cases years, in advance.
(d) None was ever quite like the last, so that the public was always fooled thereby.
(e) Some panics occurred under great government surpluses of revenue (1837, for instance) and some under great government deficits.
(f) Credit is credit, whether non-self-liquidating or self-liquidating.
(g) Deflation of non-self-liquidating credit usually produces the greater slumps.
Self-liquidating credit is a loan that is paid back, with interest, in a moderately short time from production. Production facilitated by the loan - for business start-up or expansion, for example - generates the financial return that makes repayment possible. The full transaction adds value to the economy.
Non-self-liquidating credit is a loan that is not tied to production and tends to stay in the system. When financial institutions lend for consumer purchases such as cars, boats or homes, or for speculations such as the purchase of stock certificates, no production effort is tied to the loan. Interest payments on such loans stress some other source of income. Contrary to nearly ubiquitous belief, such lending is almost always counter-productive; it adds costs to the economy, not value. If someone needs a cheap car to get to work, then a loan to buy it adds value to the economy; if someone wants a new SUV to consume, then a loan to buy it does not add value to the economy. Advocates claim that such loans “stimulate production,” but they ignore the cost of the required debt service, which burdens production. They also ignore the subtle deterioration in the quality of spending choices due to the shift of buying power from people who have demonstrated a superior ability to invest or produce (creditors) to those who have demonstrated primarily a superior ability to consume (debtors).
Near the end of a major expansion, few creditors expect default, which is why they lend freely to weak borrowers. Few borrowers expect their fortunes to change, which is why they borrow freely. Deflation involves a substantial amount of involuntary debt liquidation because almost no one expects deflation before it starts.
http://www.elliottwave.com/deflation/
Huge point, imo:
…shift of buying power from people who have demonstrated a superior ability to invest or produce (creditors) to those who have demonstrated primarily a superior ability to consume (debtors).
How long (and to what magnitude) has the govt promoted the consumer-driven economy?
26 years.
Hence, my call for house prices to fall to 1983-ish prices (adjusted for inflation.)
Hoz and I parry about it occasionally but we’re bored because we both agree that it’s either 1983-ish or 1994-ish but it’s too much work to decide which, and in either case, we’d rather spend our time drinking whisky not debating something that we essentially agree upon.
26 years.
Well, it’s been as long as I remember anyway.
I just saw something the other day about whiskey…I think it was in the local sunday paper (probably an AP story), and about how American whiskey is selling well internationally. They mentioned Wild Turkey, and of course the granddaddy of all Kentucky bourbon and my personal favorite, Maker’s Mark.
The trouble is, what numbers to use for inflation. Utilizing several different sources, I’ve come up with multipliers all over the board (Example, based upon inflation, said home is anywhere from $275K to $380K…. yeah… ).
back to 1983 sounds fine, for Netherlands that was a few years after the last housing bust. It would require prices to drop about 85% from current levels (taking official inflation into account, even bigger drop if we get deflation). The Dutch economy has been remodeled after the US example during the eighties, with all the speculation and consumer-driven madness that goes with it (just a bit less visible on the outside). But it still has not followed the US housing bust example
I just saw something the other day about whiskey…I think it was in the local sunday paper (probably an AP story), and about how American whiskey is selling well internationally.
Somebody posted a link to a feature article the other day — in the NYT, maybe. At any rate, bourbon and rye are doing well domestically as well as internationally. Lots of small-batch makers seem to be springing up, and the old standbys are expanding.
Either 1983 or 1994 roughly work but then we need reliable inflation data to calculate out with >; (
In my old neighborhood, I call it a roll back to 1999 prices.
At any rate, bourbon and rye are doing well domestically as well as internationally. Lots of small-batch makers seem to be springing up, and the old standbys are expanding.
I remember learning in school as a point of interest that liquor sales always increase during a recession!
I guess that makes it official!
Close to 30 years is my guess.
And the Housing Bubble saw the same effect: idiots who didn’t have 2 dimes to their name could get absurd loans for huge houses that they could never pay back. Sane people who didn’t take on loans they couldn’t repay were thus driven out of the market. Consumption (along with stupidity and greed) are rewarded, while savers, investors, and producers were punished. But hey - that’s the new Amerikan way!
in 1921 we had our biggest 1 year drop- the gov did nothing, so we had our best years immediately after- now we are turning Japanese….observe
FHA can insure and Fannie Mae and Freddie Mac can buy, which the Senate measure sets at $625,000. The House-passed bill set the caps at $725,000, which is preferable to lawmakers from the highest-cost housing markets, including Speaker Nancy Pelosi, D-Calif.
The Primary Precondition of Deflation
excellent post now what effects can a “know-it-all fix-it all FED” have on the normal deflation trend we should expect?
The Keynesians (Bernanke included) say that lowering rates (and thereby expanding credit) always has a positive growth effect on the economy. So it seems likely that is what they will do. The question is whether they can expand credit fast enough to offset (and/or outlast) the change in lender/debtor psychology.
Another question, how can we measure that psychology and the confidence level (and trend of change) of the participants in the context of the article? Can we measure and predict those turning points where the confidence that debt will be repayed changes (either up or down)? Can we measure to what extent production (or lack of) is affecting debt service?
Keynes brand of economics worked in the 1930’s and onwards for one specific reason…
Although the average J6P of the day was stony broke, our government was loaded, and could pay for such goodies as the TVA, CCC, Grand Coulee and much more, to get us going again.
Compare and contrast to today’s Daddy Warbucks
such goodies as the TVA, CCC, Grand Coulee and much more, to get us going again.
They aren’t just “goodies” like The Boy Genius’s $600 tax rebate, they proved to be valuable investments in our nation’s core infrastructure — in addition to putting thousands to work.
“…$600 tax rebate,…”
We have much more faith these days in the free markets’ ability to decide on the best expenditure of stimulus moneys. Viewed in this light, the recent news stories about the link between stimulus checks and increased pornography revenues are highly amusing.
i-pod or infrastructure?
Rock on with your bad self…
the link between stimulus checks and increased pornography revenues are highly amusing
lmao. Do you have a link?
One thought, when govt is going to take care of all the important stuff, what else is there to spend one’s money on?
Here’s the link:
Stimulus checks spent on porn
“The Keynesians (Bernanke included) say that lowering rates (and thereby expanding credit) always has a positive growth effect on the economy.”
This is very, very wrong. Keynes’s whole point was to tweak the classical view to say that in come cases the interest rate level (r) does not drive the level of real investment (I) as envisioned by classical economists. Instead, he posited “animal spirits,” which drive the level of real investment. (Basically he was referring to the collective level of optimism or pessimism about the future). Because of this view, he advocated higher government spending, not lower interest rates, to combat leftward shifts in aggregate demand.
Um, it’s not all that wrong. The Keynsians think that lowering interest rates consistantly “stimulates” the economy to growth. Bernanke himself wrote about it and tons of stuff has been written on the topic.
I don’t see how the rest of your post contradicts that. I realize Keynes attributed level of investment to “animal spirits”, but that’s not the only element of economic output in the Keynsian model.
Well reasoned, but fundamentally illogical. The economy does grow when you expand the purchasing power of individuals and businesses, as easy credit does. Problems occur when the reins are too loose and people over-borrow.
If we followed your logic then no credit would be allowed to anyone and we would operate under a cash system, like maybe back in the middle ages.
Credit greases the wheels, but unfortunately all we are left with at this point is the grease.
Too much grease on the wheels makes the road very slippery, resulting in more crashes.
It’s also nice when people actually have the ability and intent to pay back their debts. Most people buying houses at 10 times their income (or even 5 times) certainly didn’t have the ability to pay back the loan, and most didn’t have the intent - they were just going to flip the house to the next sucker since “housing always goes up!”
So, expanding credit without it being paid back is just plain stupid and leads to crisis. Too bad the Keynesians can’t seem to figure that one out.
Former biz partner is a deflationary Prechterite - we used to argue at great length about inflation versus deflation, expecting gold at 200 and dow <5000.
When gold was 375 in 2003, I told him it would see to 2000 before it saw 200.
Unfortunately, he insisted on staying short S&P futures throughout 2003 and we were wiped out by the Gulf War 2 reflation. Luckily I had other positions.
Alf Field has called for a third of a third gold move (July 2, 2008)…maybe..or maybe not.
Because, even though the cost of housing is not a factor in the CPI equation, the effects of HELOC and other forms of equity cashouts are.
The cashouts injects easy money into the economy which is absorbed by make-believe demand such as candle making and pirate shops. This absorbtion creates a demand for supply of the cashout money thus it keeps price increases in check.
When the cashout money disappears the make-believe jobs also disappear which increases the demand for money and causes prices to fall.
“…such as candle making and pirate shops.”
or in our case…6$ cups of coffee.
“in our case…6$ cups of coffee.”
Yep. But since one can get coffee for $1.00, this $1.00 is the amount used to compute the cpi. The price of Folgers hasn’t gone up in price anything like some of the other coffees but neverless that’s where the coffee consumers were spending their money when the money was easy to get.
Now that money is a lot tougher to get Folgers coffee is now all of a sudden beginning to taste good once again.
And when consumers switch enmass from Starbucks back to Folgers thousands of Starbucks jobs are lost as hundreds of Starbucks places are closed.
The closing of the Starbucks shops create commercial real estate vacancies which, added to other businesses closing, puts a damper on demand for commercial real estate which causes commercial real estate values to drop which will translate into more bank writeoffs, thus more money will disappear form the economy.
Interesting Times are at hand.
believe it or not, the price of instant coffee has skyrocketed recently . . . at least at Stater Bros. , a super cheap supermarket. I feel lucky in that I like instant coffee. A huge container of Stater Bros brand was $5.99 a couple months ago, then i noticed a jump to $6.99, then $7.49, now $7.99. That’s up $2.00 from $5.99, or 33% increase in just a couple months for store brand instant coffee. . . what’s up with that? (And of course all the name brand instants, etc. have also jumped in price.)
Yeah, well that would make sense if people are switching from premium coffees to the non-premiums. Starbucks started offering $1.00 coffees not long ago, maybe that’s because they were losing market share because their customers were switching to the cheaper kind and pushing up their prices.
I watched a little girl buy a generic package of cookies and a quart of milk.
$6.97
Good lawd.
That has got to hurt.
I watched a little girl buy a generic package of cookies and a quart of milk.
$6.97
Good lawd.
Was this at Whole Paycheck? Here in NYC, I would pay $2.50 max at the local C-Town or Met Foods.
The closing of the Starbucks shops create commercial real estate vacancies which, added to other businesses closing, puts a damper on demand for commercial real estate…
In a number of the smaller strip malls, I would think that it is the Starbucks that draws the crowds. Closing them should put even further pressure on the other shop owners.
Apparently since homes are assets, not consumer goods, falling home prices cannot count as deflation, and the Fed has nothing to worry about.
Falling house (n.b. not home) prices are asset price deflation, as are falling stock or bond prices.
Asset prices, consumer prices, and wages can and do move in different directions. There was serious asset price deflation in the 1970’s.
So what it boils down to is what kind of inflation the Fed and the other PTB are really interested in. Looks like wage inflation to me.
wage inflation is for real in Europe. Most of the powerful unions that can cause major disruptions by striking (e.g. police, teachers, airport/trains workers) have gotten 3-4% yoy wage increases lately, often with some extra bonus to top it off. This pay increase is higher than official CPI (in Netherlands below 2% until last month or so). Smaller high level groups (e.g. pilots, politicians, managers) are getting pay increases that are even bigger, sometimes like 20 or 30% up. Same story in Germany and some other EU countries.
Trichet is regularly warning that the ECB does not want to see a wage-price spiral, but the spiral is already there and out of control - and Tricky Trichet is doing nothing besides yawboning.
The CPI is a convenient scam. How many times throughout this housing debacle have you read the words ‘contained’ and ‘froth’ and believed them? Unplug from the MoT matrix. See for your self.
RE: The CPI is a convenient scam
AP blurb out today (couldn’t lift from Boston Glob Online) which said that Proctor and Gamble is raising prices 16%(!) on average for their line of products.
CPI reporting is Joe Gobbels at his finest.
My spouse works for a big accounting firm in Boston. Each year part of the pay package includes an automatic pay increase to account for inflation. Last year that amount was at 4% - a bit more than the official amount of inflation.
This year it will be an interesting indicator if it is higher than CPI this year (will be announced in a couple weeks). With the increased cost of home heating and gasoline the firm may need to match real, unadjusted inflation to keep people from bailing out to get quick raises by going to the competition. They are making plenty of money, so they can afford to meet realistic employee demands for raises.
Is there any reference for this statement that housing price increases don’t cause inflation? It sounds like confusion caused by the indexes used to measure inflation. In order to get a grip on inflation the most often quoted indexes look at only a few products. In the case of gas and food this is because those prices go up and down like crazy and to date no one has found a method for calculating a useful index based on them because of that. Housing unit prices are usually not used for inflation index calculations because there are few reliable housing indexes. Case-Shiller might be a good choice now that it is well proven, but this is more recent than most realize. Unless you can come up with better math pointing at someone else’s calculations and claiming that there are obvious mistakes or perhaps even some kind of conspiracy doesn’t make sense.
House prices are asset prices. Asset prices are not a cost of production and therefore rising asset prices do not result in rising consumer prices.
It’s pretty obvious that rising stock prices don’t result in rising consumer prices, the same is true for house prices. High asset prices mean it’s cheaper to raise capital. For example, high bond prices are identically equal to low interest rates.
Asset bubbles eventually result in cheaper consumption of the asset due to oversupply. For example, cheap long distance calls due to the dot-com/telecom bubble, and cheaper rents in places like Florida and elsewhere now.
(trolling for FBs forum today):
http://www.fdic.gov/news/news/press/2008/pr08053.html
Strategies for promoting responsible and sustainable mortgage lending to low- and moderate-income (LMI) families will be the focus of the FDIC-sponsored Forum on Mortgage Lending for LMI Households on July 8th in Arlington, VA.
(featuring the leading criminals)
Forum participants will include the Honorable Henry M. Paulson, Jr., Secretary of the Treasury; the Honorable Ben S. Bernanke, Chairman, Federal Reserve Board of Governors; and James Dimon, Chairman of the Board and Chief Executive Officer of JPMorgan Chase & Co.
(why are we here?)
The availability of credit to mortgage borrowers has sharply contracted, with total originations in the first quarter of 2008 down almost 30 percent from the first quarter a year ago. Origination volumes have fallen even more dramatically in the subprime segment and in the non-conforming so-called “Alt-A” segment - nearly 90 percent and 80 percent, respectively.
link to webcast:
http://www.vodium.com/goto/fdic/advisorycommittee.asp
Q: Who is attending this forum?
A: The financial media. CNBC is running out of comedy material.
Q: Why is credit sharply contracting?
A: Because it sharply expanded, you idiots.
Q: What are some strategies for promoting sustainable mortgage lending?
A: You idiots, you already know the answer. Just go fish out a hard copy of your lending standards from 1994 or so.
Q: So, why are we REALLY here?
A: To figure out how to preserve our juicy bonuses.
Q: How can we preserve our juicy bonuses?
A: By whining and dining the guys who hold the taxpayer money. If we ply them with enough overpriced wine, they’ll allow us to invent new Orwellian names for the same fraud that would get individual little guys tarred and feathered.
Q: What if that doesn’t work?
A: We uncork another bottle of whine about “keeping children in their homes” and maybe Fannie and Freddie will pick up the bill for us. Did we mention the media will be there?
That is pithy, but unrealistic. Life goes on. People will be buying and selling homes again even if they stop for a while now. Subprime loans did great when they were first rolled out, so the question is how to get back to that. If greater regulation of assessors helps, that might be one aspect.
The point now is not to sit around wallowing in pain because this awful bubble happened, but to look back at the mess and begin rebuilding the barriers where in retrospect we should now be able to see where they should have been. The argument that this was caused by affordability products and a return to big down payments with traditional amortization over relatively short time frames will be put in place and hold is laughable at best. When this is over there will still be securitization and all kinds of lending variations, but the rules will all be changed.
What will make the most difference is not any changing of the rules but that the end buyers of mortgage debt will have wised up.
Won’t get fooled again.
Not for a long time, that’s for sure. Of course when other markets blow up even worse than ours, we might actually look half good to them again.
Except that the US govt., and by entension, Joe and Jane Six Pack, is going to end up being the end “buyers” of a lot of this mortgage debt.
At least that my fear. I hope it’s not warrented, but I expect otherwise.
“Subprime loans did great when they were first rolled out, so the question is how to get back to that.”
Correction; subprime loans did great when housing bubble prices were inflating at unsustainable rates to unsustainable levels, due to gimmicks like…subprime loans.
It also might help if people could actually afford the houses in question… unless you believe that a toxic explode-a-loan really is an “affordability product.”
If you can’t afford the house, you shouldn’t buy it - period. The belief that toxic loans would “fix” the problem with silliness like “oh, you’ll get a huge raise in a few years to pay for the house” or some other nonsense is what got us into this mess in the first place. There’s no magic money fairy coming along to suddenly make houses selling at 5 to 10+ income affordable. Prices will need to come down.
Don’t forget the answer to add is
“family values” with that “keep kids at/in homes”.
No more loans for IndyMac…
http://www.marketwatch.com/news/story/indymac-halts-new-loans-under/story.aspx?guid=%7B7FA3323C%2D60AC%2D4D72%2D9B4C%2D3E9538694C21%7D
Sorry to jump in with an OT, but this is a truly absurd report on the mindset over at the DHS. If this ever gets implemented then we as a nation are officially dolts. Christ, if I had to wear one of these then I’d have to sign up to be a prison bitch in order to get my self-respect back.
http://www.washingtontimes.com/weblogs/aviation-security/2008/Jul/01/want-some-torture-with-your-peanuts/#again
This is outrageous.
it sounds fake. who would agree to fly anymore?
It’s certainly outrageous and will never be implemented.
However sometimes presenting such wildly outrageous things as possibilities makes the currently-outrageous things more acceptable - often purposely so. Now strip searches and having your toiletries stolen suddenly doesn’t seem so bad.
‘Shoes off’ and ‘no liquids’ is still outrageous, not to mention inefficient and ineffective.
This is why I refuse to fly, and I flew alot. Know I drive to were I have to go and if it takes me 2 or 3 days and a $1000 I dont care. Freedom is being taken a little at a time. This country wont last 10 more years like this. Heck if you read the federalist papers out loud in an airport it would be off to Guantánamo Bay for you.
I also quit flying, in 1994, after a particularly bad flight involving a drunken woman passenger who stood on the armrest of her seat & tried to pull her luggage out of the overhead bin while the plane was still taxiing to the gate, then falling on my mother & nearly killing her. Fortunately mom escaped with just a large thigh bruise — I could not get an ice pack from the flight crew or airport people, they wanted us to go to a first aid station about a mile away. I bummed a trash bag and crushed ice from a hot dog stand near the gate, made my own ice pack, & gave mom the first aid she needed.
After all the TSA shenanigans I suspect the remaining would-be air passengers will actually feel some relief when the airline industry shuts down for good. Maybe the whole TSA s–t is just a clever plot to wean US passengers off air travel forever.
I think this controversy will be rendered moot by the collapse of the bulk of the airline industry under the weight of fuel costing more than they can get away with charging for fares.
Agreed: like the old days, only rich people will fly.
“only rich people will fly…”
… their own private jets.
I went to pick up a friend at the airport last week and watched as a young man was hassled by TSA for complaining that they messed up his neatly folded shirts while searching his carry on luggage. I thought for a minute that he’d be arrested, or at least tazed (one TSA employee had a tazer in hand) but thank god, cooler heads prevailed.
This time.
1984 wasn’t 24 years ago.
I don’t doubt that some DHS official “expressed interest,” but I would guess that the device itself was designed and presented by the “Yes Men.”
http://www.theyesmen.org/
Reading between the line it sounds as though they might want to use it when transporting potentially dangerous individuals rather than on all passengers - ever see ConAir?
How low can a share price go before they are giving away the company for free?
IndyMac Bancorp Plunges On Expectations Of Wider Q2 Loss, Job Cuts
7/8/2008 9:14 AM ET
RELATED NEWS
IndyMac expects wider sequential Q2 loss; to cut 3,800 jobs - Update
(RTTNews) - IndyMac Bancorp (IMB: Chart ) tumbled in pre-market trading, down about 38 percent. The plummet came after the company said it expects a wider loss in the second quarter and announced job cuts.
The stock was down 27 cents just after 9:10 am ET, plunging to 44 cents. If pre-market losses hold, the stock will open at a new low.
In a letter to its stockholders, IndyMac Bancorp said that it expects to report more loss in the second quarter than in the first quarter of 2008, citing the continued downward trend in home prices and a resulting increase in its forecasted credit losses and the related downward trend in the pricing of all mortgage related assets in the capital markets.
If you innocently-enough query Bankrate for Jumbo CDs sorted by yield, look at what you get:
http://www.bankrate.com/brm/rate/high_ratehome.asp?web=brm&prodtype=invest&product=22&sort=2
Granted, there is only one star, but I’d be happier if Bankrate had a policy of removing from such lists those banks that are clearly in trouble, as evidenced by overwhelming media attention. Better yet, don’t post any institutions that rate only one star. Those who complain that they want to find the highest-risk CDs should be using other sources of information, anyway - Bankrate is touted as the source of information for the average Joe.
Who would have thought that IndyMac was actually a self serving of penne for your thoughts?
I begin to doubt that they are too big to fail.
It turns out that IndyMac is not failing, but merely undergoing an orderly unwinding process.
“Insured financial institutions don’t fail in the U.S., they go through an orderly unwinding process under the guidance of regulators, and I think that’s what we’re seeing with IndyMac,” said Fred Cannon, analyst with Keefe, Bruyette & Woods, in an interview on Monday. “We do not expect IndyMac will be the last financial institution to go through this.”
They’re BAAAACK!
http://www.bloomberg.com/apps/news?pid=20601109&sid=a0TGMrBy2PyE&refer=home
Freddie Mac and Fannie Mae gettin jiggy…
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9RNCDYW_Q0U&refer=home
Health care the next financial crisis?
http://www.marketwatch.com/news/story/we-can-all-learn-fed/story.aspx?guid=%7BFB34EED1%2D96F9%2D48DC%2D9AF4%2DD5A2A68AC683%7D
If hospital administrators would put as much emphasis on keeping their facilities, equipment and people clean, as they do with getting the latest machines-health care outcomes would improve and overall costs would decline dramatically.
Insurance companies/Medicare/etc don’t reimburse hospitals for keeping their facilities clean. They pay them for doing tests with the latest machines.
Actually Medicare has started a program where they don’t reimburse hospitals for patients who develope certain kinds of infections while they are in the hospital or if they fall or if they get pressure sores ect.They are penalizing hospitals that don’t prevent preventable problems.
Does that mean the patients have to pay for it, or are forced to sue?
Generally Medicare patients are only obliged to pay bills approved by Medicare if they are hospitalized at a hospital which has an agreement with Medicare. This also applies to some outpatient care: e.g, when my mother broke her wrist, Medicare paid for the ER visit (less a deductible) and her orthopedists care (also a deductible). The doc wanted mom to get physical therapy (which she definitely needed to retain strength & flexible in her injured arm, it definitely helped her.) The bill for that was several hundred dollars. Medicare said that the therapy was not medically necessary, mom was not billed after that point. I guess the hospital just ate that bill.
I think Medicare’s nonpayment for hospital-induced infections will not be recoverable from Medicare patients by the hospitals, which will then do what they usually do — either add the extra expense to every other client’s bill or eat the bill.
Amen to that. American and British hospitals are among the filthiest places on Earth, and the source of hundreds of thousands of serious, even fatal, infections every year. I’ve watched cleaning ladies come in and mop a hospital patient’s room with contaminated water from the next room, replace paper towels with contaminated gloved hands, touch door handles, light switches, elevator buttons, etc. etc., all without changing gloves or washing hands. They wear gloves to protect themselves, not the patients.
In bygone years, American hospitals would have lost their accreditation for the filth that has now become the norm, and to add insult to injury, if they give you, the patient, an infection, they then make a fortune by hospitalizing you longer for it, and treating it with expensive drugs. They have no incentive to clean up their act. Paying someone actually trained in infection control to thoroughly clean is far more expensive than hiring illegals who can’t speak English, and have no concept of the dangers of spreading bacteria and viruses.
Outpatient Magazine a few years ago did an article on doctors and nurses no longer scrubbing before surgery, but relying, instead, on hand sanitizers. The nurses said they didn’t want to damage their manicures by scrubbing. These walking infection factories–both doctors and nurses–should be fired. Nurses should have short scrubbed fingernails, not long, manicured claws, and pre-surgical scrubbing should be mandatory.
The people who believed that going into a hospital would kill them were right.
Cant’ seem to get links posted.
FDA puts “black box” on antibiotic, CIPRO.
Apparently it causes Tendon ruptures that require surgery.
Doc, my cough is fine, but I can’t walk anymore.
What next?
Where’s Dr. Semmelweiss when we need him?
After meeting ridicule & rejection from his disbelieving “colleagues” the good Doctor Semmelweis went mad & killed himself. Probably felt to blame over all the patients who were infected by filthy physicians that he couldn’t convince to change their ways. Believe it or not, some physicians take their failures quite personally.
Incredulous,
Is this why the elderly seem to get pneumonia while in the hospital being treated for something else? Just anecdotal,but I keep hearing about folks’ parents ending up in this situation…or more specifically, the ICU.
Sound like Incredulous (the original) can prob’ly answer this way better than I can, but the consistent misuse and overuse of antibiotics is at least partly to blame — new strains of drug-resistant bugs continually appear, and it’s getting hard to keep up.
Pneumonia can occur if a patient isn’t made to get and start moving around as quickly as possible after surgery–even in a sterile environment. In a dirty hospital, the risks would, theoretically, be much higher.
Antibiotics don’t cause hospital infections. Unfortunately clinics and hospitals routinely prescribe them, making money in the process, instead of properly cleaning and disinfecting their facilities, which cost THEM money. Patients become more prone to infections, which are harder to clear up, when they are given antibiotics unnecessarily. I had a friend who was a surgeon who took antibiotics for every little sniffle. One day, he got a paper cut. Four days later, he was dead from the resulting blood infection that no antibiotic could reverse.
Antibiotics are the so over prescribed that it is frightening.
Won’t take it unless, can’t breathe, or part of me fell off.
Rather overdose on C and D and vaporizers/Vicks and neti pots,chicken soup.
Own stock in kleenex..hahaha
Is this why the elderly seem to get pneumonia while in the hospital The elderly get pneumonia much more easily than younger people, whether or not they’re in the hospital. It has been called the “old man’s friend” by docs, since it so frequently ends a long life without a lot of suffering. The stress of whatever ailment caused hospitalization and the results of being confined to bed also lower the threshold for pneumonia.
Every OR I have been in the nurses and docs scrub in. It cost the facility thousands to treat a hospital acquired infection. Not to mention the malpractice pay out by the doc and the nurses insurance. If proved that nurse can lose there license. Not much you can do to the doc just sue, (its hard to revoke a doctors license). The hospital also gets hit with a big law suit.
original, do you work at a hospital? THe few times I’ve been hospitalized everything seemed on the up and up, although gramps died from a hospital staph infection.
Have a co=worker who just discovered he has an enlarged heart and is on wait list/transplant.
Well, unrelated?, he is now in hospital for week with blood infection.
When I heard that, I thought, they had better get him outa there or he is going to die long before his heart really could give out.
Yikes.
Hospitals are not the spas of choice.
http://news.yahoo.com/s/ap/20080708/ap_on_he_me/antibiotics_warning
Cipro warning, gets FDA ‘black box’ for Tendon ruptures.
Good grief.
How do you know British and American hospitals are the filthiest on earth? Bit of a sweeping statement there. Given your choice where would you rather be — here or in a 3 world country hospital?
I made a sweeping statement; so what? A number of organizations keep records on hospital-related infections and hospital standards, and America’s and Britain’s hospitals rank among the dirtiest in industrialized countries.
Recently, British hospitals were found to be turning over dirty sheets between patients rather than removing and washing them. I saw worse here in Tampa when a relative went into the hospital. When the “nurse” (a meaningless term nowadays) pulled the cover down, the bottom sheet was drenched in blood. So was the bathroom. And this was in the most expensive hospital in town.
I also observed my former family physician (a quack) doing his rounds going from room to room (many of his patients had contagious conditions) without washing his hands. This has become the norm.
As for suing, it’s very, very difficult in Florida to sue for malpractice. If your doctor didn’t accidentally chop your head off or the wrong leg, chances are your malpractice suit will never see the light of day.
A British friend almost lost her leg two years ago. Her GP gave her a steroid injection in her knee, with a needle infected with MRSP.
“A British friend almost lost her leg two years ago. Her GP gave her a steroid injection in her knee, with a needle infected with MRSP.”
That’s terrible. A huge lab in Las Vegas was recently found to be reusing disposable plastic syringes to save money. More than thirty thousand people may have been infected with AIDS, hepatitis, etc.
I knew a whacko (not exaggeration) feminist in Tampa who ran an abortion (ugh!) clinic. Her staff reused disposable plastic canulas (called vacurettes, as in vacuum + curettes), impossible to sterilize in an autoclave, for the same reason. She also sold DYI abortion kits. When I complained, she said: “You don’t understand: A sister would never infect a sister!”
I beg to differ. The medical industry needs to clean up, and I don’t mean financially. In fact, I think the world in general needs to clean up. We’ve gone backwards since the ’70s. E-coli and samonella outbreaks don’t happen by accident: They are the consequence of decades of unsanitary conditions. There is nothing easier or more effective than washing hands, washing vegetables, or using bleach dilutions. In a public restroom, after washing hands, use a paper towel or something similar to turn off the water in the sink; otherwise, you re-contaminate your hands by touching the water handle. Use a paper towel to open the door, and then throw the towel away.
I think that if people realized the harm they could do to others by unsanitary behaviors, most would use more caution. This may be unrealistic, but I do believe that most people mean well, and do not want to do harm.
Riddle me this: Fannie and Fannie CDS (credit default swap) spreads have blown out as a result of stock tankage. Why do they even have CDS premiums when the .gov is backing all the paper anyway? Who would buy such unnecessary insurance?
Either:
1. The .gov really isn’t backing the paper, or
2. Mr. Market is wrong.
Choose one.
3. .gov is on the fence about whether or not to back the paper. Mr. Market doesn’t know which way .gov will fall off the fence, so they are hedging their bets both ways.
Good question! Anybody?
Yesterday’s share price movement suggests the rumor that the govt backs the GSEs is under severe scrutiny. I am wondering if push comes to shove, whether the govt will back them in the same manner they backed BSC? If not this, then what?
The portfolios will get supported. I do not believe they have much of a choice there.
The shareholders may get a BSC-style execution.
That is my thought. BB and HP are openly suggesting the same.
Wall Street clobbers giant mortgage firms
Fannie Mae, Freddie Mac see share prices plunge
By Charles Duhigg
NEW YORK TIMES NEWS SERVICE
July 8, 2008
As home prices decline and Washington struggles to end the economic malaise, Wall Street is starting to send a sobering message: The worst is yet to come.
One of the strongest warning signs came yesterday, when shares of the nation’s most important mortgage companies, Fannie Mae and Freddie Mac, plummeted. After falling almost continuously for a month, in just one day Freddie Mac tumbled 18 percent and Fannie Mae lost 16 percent amid concerns that the companies would need to raise billions in fresh capital.
…
“If Fannie or Freddie ever became critically undercapitalized, their regulator would have no choice but to put in place a taxpayer rescue,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics, a consulting company.
To ward off that possibility, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson have urged Freddie Mac and Fannie Mae to raise additional capital from investors.
Ode to Sinatra…
The worst is yet to come, please don’t deny it
You think you’ve seen a bank run, but you ain’t seen a line
Wait till the warm-up is underway
Wait till our lines have met
Wait till you see that sunshine day
You ain’t seen nothin’ yet
The worst is yet to come, please don’t deny it
The worst is yet to come, come the day they are undermined
http://www.youtube.com/watch?v=RDpFION3v2c&feature=related
Q. When does saying nothing say something?
A. When the Fed Chairman says nothing.
MARKETWATCH FIRST TAKE
The elephant who must not be named
Commentary: Bernanke sends a message about Fannie and Freddie
By MarketWatch
Last update: 10:23 a.m. EDT July 8, 2008
NEW YORK (MarketWatch) — A day after investors sent shares of Freddie Mac and Fannie Mae down to double-digit percentage losses, Federal Reserve Chairman Ben Bernanke had this to say about the confidence crisis in America’s mortgage market: nothing.
GM planning more job cuts and will possibly drop a nameplate.
http://www.marketwatch.com/news/story/gm-reportedly-considering-job-cuts/story.aspx?guid=%7B9210C993%2D56C0%2D4F58%2DA88B%2D15F8561F0DB4%7D
Who’s going to be stepping up to buy the cr@p brands that they are trying to dump?
Of course, at the right price, everything will sell. The problem is that for some of these units, the right price might be negative.
I expect Hummer will fetch a premium.
Not.
I saw a TV commercial last night for the new Hummer H3 Alpha. That’s the small one that GM decided to shoehorn a V8 engine into for 2008.
The commercial mentioned “Better MPG than many SUVs”
I just looked it up. It is rated at 13mpg city and 16mpg highway. There isn’t a single small SUV that gets worse fuel economy.
Consumer Reports has singled out Hummers (all models) as some of the worst dogs you can buy.
i just laugh when i see hummers on the road (not too many lately)
are they still laughing at my 4cylinder elantra? doubt it
My condo for your luxury car (Miami)
http://miami.craigslist.org/mdc/swp/744757464.html
I have a contract to close a unit in Axis, http://www.axisbrickell.com, 2bed+den 2bath(model C3), contract price only $356k, excellent price!!(less than $300/sqft)
I have 20% down and would consider taking a luxury car for the contract.
Thanks,
Trade one depreciating asset for another
only in Florida
It appears to be :
“This condo is friggin worthless and if I don’t close I lose my DP, maybe I can find some sucker to trade a Mercedes or Porsche for my DP and at least I get something. “
I’m sure we can find him a BMW that sat underwater after a hurricane or Mississippi River flood…
Trade something that’s been underwater for something that is about to be underwater, and both of them are probably going to have constant problems in the coming years.
Trade one depreciating asset for another
Ah, but he can *drive away* in the car…and live in it, if it comes to that.
I could see the Chinese buying the Buick brand.
RE: GM planning more job cuts and will possibly drop a nameplate.
Buick is complete toast.
Buick is complete toast.
Buick, Olds, Pontiac — the heyday of the GM sub-brands is long past. (Though maybe Pontiac has enough unique vehicles to make it worthwhile.)
Here’s the aftermath of a Forbes article from ‘01 about the demise of the Oldsmobile brand.
The sentence that sticks out is this one:
One point repeated by many loyalists: GM forgot the customer.
RE: Pontiac has enough unique vehicles to make it worthwhile.
This division better get it’s act together or they will follow Buick and Olds into the crapper.
The Austrailian based new GTO was a complete disaster.
The $1600 per pair front struts were defective and owners were told to expect backorders (from Aussieland) up to a year!
The new RWD 300hp V8 powered G8 (BMW 3-series clone) was recently denoted as arriving on the scene “too “L8″ for the times” by the automotive press.
Make ya wonder exactly who the fook is in control and WTF is upper management doin’ to earn those 7 figure incomes in the Big 3.
My guess is it’s more rats are looting the larder before the ship completely capsizes and sinks.
Wouldn’t you really rather have a Buick?
No, thanks. My bicycles get better mileage.
No, thanks. My bicycles get better mileage.
Holy crap!
You don’t have a TV and you have more than one bicycle that you actually ride???
Were we separated at birth?
You would have thought the hoi polloi would have been easily persuaded to buy a Buick because Tiger told them to, but no.
I like my Buick! I’ll get another one. The 3800 engine is bullet proof in the LeSabre and the ride is comfortable. So what if it is life styles of the dead. I average 28mpg. It is not ostentatious and any mechanic in the country can work on it.
Heck, if kids don’t give a rat’s patootie about cars nowadays, why should we care what they look like?
So what if it is life styles of the dead.
Lifestyles Of The Dead has a certain cachet — as long as one can afford to put gas in the tank.
RE: 3800 engine is bullet proof in the LeSabre
3800 was deemed a “Top 10″ car engine until GM went cheap and used a plastic, instead of steel induction manifold which tended to crack and allowed gaz to mix with the coolant.
GM subsequently haggled over warranty coverage.
Call it, death by a thousand cuts.
Recession looming for uk firms
“To put more pressure on business would not only restrict business growth and hit the consumer hard, it would crush further what our economy is based on - confidence.”
but…but…i thought the economy was based on strong fundamentals.
Housebuilder Persimmon job cuts
You know a company is in deep doo-doo when they start talking
about “challenging” times and being “well positioned” for the future.
In other news today
Rubbish golfer hits hole-in-one
Yep, they can go right on talking about emissions. Did anyone see the PBS NOVA special where they discussed the role of trees in the absorption of C02? It takes seven trees to absorb the exhalations of one human bean. Raze those crappy subdivisions all over the world and plant more trees, so China can continue to pollute.
http://news.yahoo.com/s/ap/20080708/ap_on_re_as/g8_climate_change
China has a huge state sponsored tree planting program. The US government sponsors some research, but all the serious action is done by private nonprofit organizations.
how much CO2 is released when the the trees leaves fall off and die or even when the tree dies and decomposes?
shhh… We don’t talk about things like that in polite company.
Pass the bowl of carbon offsets, please.
how much CO2 is released when the the trees leaves fall off and die or even when the tree dies and decomposes? About the same amount of CO2 the tree captured from the air & incorporated into its substance while it was alive.
We had some small campfires over the weekend, and wood that contains the stored energy of Sun, generally takes 1 minute to burn, for every year it was alive.
Somewhere between less than tree absorbed during its lifetime and the exact amount that the tree absorbed during its lifetime.
it’s hard to blame china when we’re far and away the number one polluter in the world.
It depends on how you define “polluter”. Our air, rivers and lakes are much cleaner than theirs. Sure, we release more CO2 into the atmosphere, but that will soon change.
Check your figures. China is poised to pass the U.S. as the largest CO2 emitter.
You might also note that when they held the Olympics in Los Angeles ‘84, or Atlanta in ‘96, they didn’t need to shut down half the local industry to make the air breathable.
US gasoline demand is now declining, due to the higher prices. China’s continues to rise and it is projected to remain that way for the time being.
When China starts paying upwards of $4 a gallon for gas, they’ll start seeing quantities demanded shift, too. Gas bought by the government and sold at subsidized prices in China, it’s about $2/gallon there.
“China has become the largest emitter of carbon dioxide, a leading factor in global warming, and could soon become the planet’s largest overall polluter, overtaking the US. ”
Asia Time, July 9, 2008
By the way it is not a proven fact (no matter what Al Gore says) that carbon dioxide is anything more than a minor flea on mother nature’s global warming back.
IMO, the only fact is that the earth is presently in a short term warming trend (our complete observed data set is only a 100 years or so).
“Global Warming” and “Man did it” have been pumped as exactly synonomous conclusions for political not scientific reasons.
I am all for conserving resources, cleaning up the air and water, keeping things as close to natural as possible, and being good stewards of our planet. However, I get off the bus when extremists tell us that the earth is going to hell in a hand basket unless we stop driving SUVs (ignoring the fuel availability restraints which is a separate issue) and quit using spray-on deodorants.
Common sense just does not have a political platform anymore.
I rented a condo for the 4th of July week at New Smyrna Beach. The property manager said they had not sold a unit since August 05.
At the peak, a 3/2 sold at 675k…They had one for sale for 475k. The 2/2 sold at peak for 575k are now listed for 400k. Monthly dues are 600. I talked to an owner and he said taxes on his 2/2 have come down from 8000/yr to 6000/yr.
So you’re paying $1100 monthly in just dues + taxes.
What’s the rent like?
I paid 1000 for a week. This is peak… During the winter you rent to snow birds for a lot less. So, you rent to families during the summer for a week at a time and to northerners for a month at a time. You cant renters for the spring or fall. I did hear this was the worst July 4th they ever had as far as number of renters.
$1000 bucks is cheap for a week
$143 a night is not bad for a brand new condo
“$1000 bucks is cheap for a week ”
Your thinking is what got us into this problem to begin with. This is Florida, Not NYC.
It may be cheap to you, but it’s much too high for Florida.
It’s why we had so many New Yorkers coming here and saying “property here is undervalued.”
It wasn’t.
You think $5 is cheap for a hamburger.
It’s not.
Average family income here is $50k.
Yankees came here for years because, by comparison, everything was “cheap”. Well, now we’ve got NY prices and lot’s of people are leaving or looking for other places to go.
My friend was in Las Vegas over the 4th and reported that the place was practically deserted. She said there were more people in the pools than in the casino. She paid $50/night at the Nugget and was comped free tickets to a show.
Commodities and oil dropping…
http://www.bloomberg.com/apps/news?pid=20601087&sid=audtzVEXy3pI&refer=home
My, what a surprise.
Yes, just when Ben Stein says the prices for commodities are justified.
Yeah, he would.
The high valuations were justified too last year. It’s always justified. Prices are always justified no matter how high or low. When will the media just fire him?
We can take 87 million barrels of oil per day out of the ground (this number is pretty much fixed for periods of 1 year). The only price that causes people to not want to use more than 87 million barrels per day is $140/barrel (there are all sorts of taxes and subsidies that impact this the subsidies are in oil producing and developing nations rich nations tax oil). If we cut the legal price of oil to say $60/barrel, people will use more than 87 barrels per day, so someone will have to come up with a mechanism to distribute oil equitably. Since this ensures that every barrel gets used for something more valuable than $140 (and no other system could come close to doing that) we’re sticking with capitalism.
“If we cut the legal price of oil to say $60/barrel, people will use more than 87 barrels per day, so someone will have to come up with a mechanism to distribute oil equitably.”
It’s on the way. It’s called “fuel efficiency”.
I think I’m ready to win some of Ben Stein’s money.
I loaded up the truck on some dirt-cheap precious metals stocks today. SIL, DROOY, CDE, GSS, PAL and AGT. Timing, don’t fail me now. I’m not a huge believer in this contrived dollar rally.
Fraud story in the U-T - good overview and examples:
http://tinyurl.com/65rodn
“One example occurred in Mission Hills. In October 2005, a roughly 1,400-square-foot home was listed for $1 million. It didn’t sell. In early April 2006, it was relisted for $989,000. A month later, the price was raised to $1.3 million.”
“It went into escrow for $1.25 million two days after the price increase. The buyer purchased it with zero-down financing, according to deed records. The lender foreclosed on the home in October. The bank resold it in April. The price: $640,000.”
“Lackner, the real estate appraiser, has unearthed about 1,500 such unusual sales in San Diego County. He began researching questionable real estate deals about a year ago after stumbling across some suspect, high-priced purchases.”
“As an appraiser, I’m asked if properties in Mission Hills have decreased 50 percent in value like this one,” Lackner said. “My answer is no. This property was never worth $1.25 million.”
Interesting how all the lenders are not identified in the article. If I were a shareholder in a lender that got punked like that I would be looking into a class action lawsuit against the officers and board members. Can lenders really be so incompetent, or were underwriters getting kickbacks, too?
Lawsuit for what? If management runs a company poorly, the owners ultimately get hurt. That’s the way it’s supposed to be. It provides incentive for owners to be involved and making sure a company is run correctly. If you don’t like your managers, fire them and hire other ones, that’s what business owners do.
Nowadays most shareholders aren’t business owners, but bagholders. The CEO’s, the BOD’s and their cronies are the real owners.
I understand that, which is why most shareholders shouldn’t be.
People can’t have it both ways, to be an owner when times are good and owners are making money, and to be a victim entitled protection when times are bad and owners are losing money.
My experiences as a shareholder over the last 10 years are mostly about making very little money in good times & losing a lot in bad times, net results being about the same as FDIC insured CD’s.
This property was never worth $1.25 million.”
But the neighbors still believe their properties are truly worth >$1M based on it, that’s whats going to drag out this collapse for years and years to come in the “better” areas.
Like the undead, CDOs return…..
http://www.bloomberg.com/apps/news?pid=20601109&sid=a0TGMrBy2PyE&refer=home
Red Rum Re-Remic Red Rum
_____________________________________________________________
“Re-Remic stands for ‘resecuritizations of real estate mortgage investment conduits’”.
“It’s just the reincarnation of the CDO,” said Paul Colonna, who manages more than $100 billion as chief investment officer for fixed income at GE Asset Management in Stamford, Connecticut. “The mechanics are the same, but you’re getting in at a much different level of valuation.”
_____________________________________________________________
Hereeeee’s Johnny!
Well the PPT failed again yesterday. At this rate people might start to wonder if they really do control the markets after all.
That’s funny. I just scalped $5 shorting the SKF in the premarket.
Ban the scalpers they create false markets and cause prices to go higher. Scalpers cause bubbles.
“For as long as we fail to treat scalpers the way they deserve—with a bullet in the head—we will not get anywhere at all.”
Vladimir Lenin
Just kidding Tx. lol
(correct Lenin quote is ’speculators’ not ’scalpers’)
The speculators (scalpers) provide liquidity which in case you didn’t notice seems to be in short supply.
Although, if they are momentum traders, they might be liquidity takers too. Either way, they make the market more efficient by committing their own capital.
Sssshhhhhh! Don’t confuse the issue with the facts.
Populists v. Theorists: Futures Markets and the Volatility of Prices
David S. Jacks
Assistant Professor of Economics
Simon Fraser University
8888 University Drive
Burnaby, British Columbia V5A1S6
“In this paper, the divergence between popular and professional opinion on speculation in general and futures markets in particular is explored. Along the way, a synopsis of prevailing popular attitudes on futures markets is presented, and the outlines of formal models of futures markets and their implications for commodity price volatility are sketched. The heart of the analysis is a series of “natural” experiments provided by history. Briefly, the results presented in this paper strongly suggest that futures markets were associated with, and most likely caused, lower commodity price volatility.”
http://www.nber.org/~confer/2005/si2005/dae/jacks.pdf
I don’t need a bleedin’ regression to tell me something that is pretty obvious.
I should also add that I do not believe that “lower” volatility is a worthy goal.
This is an unstated assumption that lower volatility is desirable. Why? I see no particular reason.
Using market manipulation to reduce volatility results in overvalued share prices, as the risk premium tends to vanish when volatility is artificially smoothed.
I see this as analogous to the levee problem in flood control, where building levies (river level volatility smoothing) provides false assurances of blanket government protection against future flooding. Consequently, more homes and businesses are located in the floodplain, setting the stage for a future disaster when a sufficiently large weather event demonstrates the fallibility of flood control measures. A similar effect occurs in financial markets when everyone is encouraged to join the Ownership Society with the assurance that stock prices and housing prices always go up, and the suggestion that prices will be backstopped by the government as needed.
Flood plain communities reassured
Phil Woolas at Sea Palling
Floods Minister Phil Woolas talked to local people at Sea Palling
Villagers in Norfolk in fear of a scheme to flood them to save the coast have been told that is not the government’s intention.
The floods minister, Phil Woolas, has been visiting Sea Palling, 15 miles up the coast from Great Yarmouth.
He told people there that a scenario by Natural England to allow six villages to succumb to rising sea levels, was not what was going to happen.
He said it was the government’s duty to protect the area.
Reducing market volatility in commodities allows companies to make longer term plans.
However since most companies seem to have a time span of less than 3 months, reduction of volatility is a non event.
The speculators aren’t helping the hedgers out of the goodness of their heart. They are in it for an expected profit.
Either, the companies should accept the volatility and shut down the futures market completely, or they should not complain about the speculators.
It is not possible to have this both ways.
(with apologies to txchick for quoting yet another dead guy)
“I am a speculator. The word comes from the Latin speculari, which means “observe.” I observe.”
Bernard Baruch
What’s up with the big hit to SKF?
Down $20 today. What gives?
Who ever said the PPT controlled markets? It is one thing to attempt to control markets, and quite another to succeed.
The people who think a day end rally is a sign that the government is manipulating the stock market.
That would be me, then. But you are confused about what “control” means. In case you missed it, the market tanked at the end of the day despite efforts to paint the tape.
Before I waste another key stroke, have you read Kevin Phillips’ “Bad Money” book? He is a historian, and much more qualified to discuss the activities of the PPT than I am.
I just finished that book. He discussed the PPT in great detail.
Phillips also talked about the study circles* ordinary Americans established in the late 1800s. These were groups of farmers and other small business people who gathered together to help each other understand the economic issues of that era.
Phillips said that he didn’t know of any modern-day equivalents. Well, I do. I think that this and other housing bubble blogs perform this same function.
*I think that’s what he called them. Already returned the book to the library.
I see, said the blind man as he picked up his hammer and saw…I especially like the explanation when “they” say the 3 hour market shut down was because a “rat” chewed thru some data wires.
and then…it went dark!
The view seems to have morphed to that on this board. I think it’s mostly kidding around, though some people may not be viewing it that way. Certainly it’s not true that the PPT attempts to tweak the markets each day. Their activity (mandate, in fact) is to prevent wild swings in the market - like on the order of 10-20%. So things like policy guiding emergency rate changes would be what comes out of that group.
“Their activity (mandate, in fact) is to prevent wild swings in the market - like on the order of 10-20%. So things like policy guiding emergency rate changes would be what comes out of that group.”
If your job were to shore up market confidence, and you had the opportunity on an occasional bad selloff day to bolster confidence by painting the tape, why would you not do so? I personally can come up with no reasons why hubristic masters of the universe would sit on their hands until there was a 10 pct drop, but perhaps you can suggest some?
“Their activity (mandate, in fact)…”
yeah…because we all know government entities only act within their mandate.
like the fed, fannie, and freddie.
If your job were to shore up market confidence, and you had the opportunity on an occasional bad selloff day to bolster confidence by painting the tape, why would you not do so? I personally can come up with no reasons why hubristic masters of the universe would sit on their hands until there was a 10 pct drop, but perhaps you can suggest some?
I can think of two reasons:
- Risk of exposure
- Time value - painting the tape on a daily basis would require a lot of logistics (e.g. to avoid exposure - see above), i.e. cost, with very little gain. Much more ROI in influencing market-driving legislation and such (e.g. BofA’s composition of portions of the current housing bill)
Admittedly this is mostly conjecture on my part. I don’t have the expertise or wherewithal to make a strong case.
yeah…because we all know government entities only act within their mandate.
Believe it or not - I think in this case that might actually be the case.
One thing we must understand - the people who are members of this very small working group are also members of very large groups that have very wide-reaching influence. My view is that the PPT is for the most part just a red herring, and in and of itself relatively harmless. The real danger is in the other influential groups, that determine long-term economic and social policy.
Yes I have a tin-foil hat, though it’s been a bit tarnished lately. I need to shine it up.
Today is a great case in point for my hunch that markets are peremptorily backstopped when the waters are too stormy. Find a shard of good news today that suggests the market should be holding its ground, and I will drop my case.
Oops — forgot about the lower oil price. I guess that might spark a (false) market rally, as Wall Street bulls are too dumb to recognize that lower oil prices signal heightened recession risk.
Dollar’s up today too. That’s had somewhat of a correlation to oil of course, though not necessarily ($ has been flat for 3 months now while oil has been up 30%).
“Dollar’s up today too.”
Other things equal, lower oil prices imply a higher real value of the dollar by definition.
Not relative to other currencies though (what I was referring to), only relative to oil.
It might be a little early to talk about this, but I was just thinking about this holiday season. Many retailers make most of their profits during this time.
I plan on being a tightwad this year and I think there are a hundred million or so others who will do the same.
That said - I predict a very poor holiday season followed by a REAL stock market crash in early 2009. Real estate will enter capitulation hell.
If this plays out like I think, for those looking for a home, dare I say, next spring and forward might be a good time.
I think you are probably right Mr.Vincent. I think the people that are generally pretty responsible in their holiday spending will continue that trend and cut back somewhat due to the overall economic trends.
Those that are generally free spending on credit are becoming an encumbered species, as they can no longer charge, refinance and repeat. Those nasty banks aren’t cooperating with the home equity loans anymore. And even scarier those nasty banks are cutting credit limits on credit cards for millions of people.
The increased food and energy expenses, coupled with the poor consumer confidence levels, should have a dampening affect over the population as a whole this holiday season.
“That said - I predict a very poor holiday season followed by a REAL stock market crash in early 2009. Real estate will enter capitulation hell.”
If it wasn’t an election year, I’d agree, but hope springs eternal from the hearts of fools.
no, no. If the Messiah wins, watch the race for the exits at the end of the year to avoid higher cap gains taxes.
And if McSame wins, gravity will reverse, property will rise, the kool-aid will flow, credit taps will open, and we’ll all party like its 2003.
McCain does not even have a coherent economic policy. That would mean more meandering around in a cloud of self delusion. A redistributionist progressive tax policy would be bitter medicine (after a decade of sacrifice we are finally beginning to make decent money, just in time to have the middle class defined downward), but denial seems more dangerous.
Feh, it is all politics. Which means nobody really knows the right answers.
I’m in, good platform!
let’s raise cap gains 60% today !
He thinks that if we “win” in Iraq, it will reduce the deficit. How does that work? Hmmm….if I stop charging my credit cards, they will start to pay me!
This is one of the big changes to the Chicago School outlook over time. They used to have a more supply side view of things where low taxes are considered essential. Over time research has suggested that for productive endeavors taxes have low negative impacts while investments in infrastructure and research can have very high payoffs. Far more than all that, though, is the basic notion that there is great value in paying bills rather than simply wallowing in debt. Instead of waging war on multiple fronts the proposal is to reduce military activities while increasing revenue.
As far as the capital gains tax goes, it was much higher recently, so there is good evidence that overall the proposed increase will still be a reduction relative to our Dark Democratic Past. The suggestion that capital gains taxes might be raised to 60% is absolutely scurrilous. There is a need for increased revenue and evidence that raising capital gains will limit the impact of that.
We’ve had more than 20 years of trickle down policies during my lifetime and nothing trickled. As Senator Frank has eloquently pointed out, trickle down fails on its own merits if there is no trickle.
“..trickle down fails on its own merits if there is no trickle.”
Let’s do a Feynman experiment :
Turn on a water spigot with a x1bucket under it…notice how the water goes directly into the x1 bucket?…now, without changing anything…place your thumb firmly under the end of the spigot…see how the water is redistributed in a different pattern? This is called Feynman’s law of “trickle about” …it is not the same as: “tickle down” O.K., now every get you buckets & swim suits and lets go over to the administration building and try out this theory.!
Saying that nothing trickled down is like saying that houses can’t be overvalued in places where there was no run-up in prices. That’s only true if you know for a fact what would have happened if a different policy had been pursued. Just because the poor aren’t rich today doesn’t mean they wouldn’t have been more poor had Reagan never existed.
I can’t say I know for sure what would have happened if the 80s had been all about Carter and Mondale, but Frank’s opinion on the subject doesn’t have much weight with me.
Haven’t looked into the details of his cap gains proposal (or if it contains details) - but if he’s smart he’ll either include some serious grandfathering, or else a very long implementation schedule. Otherwise you’re right it’ll be more than just a little downward pressure, and may cause an all-out crash (moreso than what’s already happening anyhow).
tx -
The Great Debater MIA
Actually, even with his “mad cow” impaired speech delivery, I think McSame is better than Shrub. He’s not using that speech & dance coach recommended by Karl Rove is he?
Don’t know, luv.
But Her Hillness may be needing some coaching if she’s pressed back into service.
As of right now, Senator Obama, the DNC, Howard Dean, and a lot of other people know that Senator Obama has far from clinched the nomination, He hasn’t. And if you want any more proof, don’t ask Obama, or the Disassociated Press, don’t ask Howard Dean or Keith Olbermann or Nancy Pelosi or anyone in the media. Ask the person who knows and whose knowledge you can rely on. Ask a bookmaker. Ask any of them if they’ve paid off a nickle on all the bets made on Obama to be the nominee. They will say no and will tell you they don’t pay off until the race is over. And they will tell you to come back in August. If you win.
Oops. There txchick goes again. It’s her goal to infect every HBB topic with her messiah rants and she is succeeding excellently.
That’s O.K., this is how the “Young Republicans” treated their “future” messiah the last time he tried to run for “The Decider” positon:
The smear campaign against his adopted Bangladeshi daughter during the 2000 South Carolina presidential primary so bothered him that, by some accounts, he considered leaving the Republican Party.[75]
http://en.wikipedia.org/wiki/Cultural_and_political_image_of_John_McCain
Karl Rove & the GOP Young Republicans: “We LOVE McSame!”
I thought texas neocons were big fans of the Messiah. Their leader claims to speak with him.
I only hope enough of the damage is clear before the current President leaves office. He’s done enough wrong on the economic front that I don’t mind him getting blamed for things he had nothing to do with as well.
Tell Jorge thanks for the 600.00 spanks.
I agree in principle that there is more downside to go in this market and even the most remotely negative news will trigger significant drops. However I make no prediction as to how and when such downside drops will occur.
I think the holiday sales season will be flat due to massive sales incentives retailers will field, combined with significant cost cutting retailers will undertake within their operations. The flat season will also be achieved by the positive economic affects that usually accompany a presidential election.
I recommend great caution on anyone’s part in financial planning, investing, spending and employment.
Good luck.
just Look at that DIMO guy from JP MOrgan who is dancing verbally as fast/furious as he can to state there is NOTHING to the story that the insiders are sparking declines in markets/corps/funds by their mean spirited talk.
Methinks he doth protest too much.
I disagree. Look at the Option ARM reset chart. It spikes in January 2011. We are going to see inventories continue rise until then, at the earliest.
The spike is in 2011, but the “walk-aways” are happening now. My wifes cousin had one of those loans that reset in 2011. He already walked away from the house. It is in foreclosure now.
A key variable to watch going forward is how many of the scheduled resets out to 2011 are preempted by walkaways.
Yes. Got any link to such data perchance? I’ve wondered about that stat myself.
Often in the past couple of years people have reference the reset chart, expecting the worst foreclosures to happen during the peaks. However that may not be true due to the walkaway factor. As prices drop lots of people who find themselves underwater are probably walking before their reset, knowing that they can save $$ by not paying the interim mortgage payments if they know they’re going to eventually walk anyway.
Conversely however, lots may walk months or years after their reset, as they try to hold on as the higher payments eat away at their savings, hoping for a rate drop or inflation/raises to help them break even monthly. Eventually they may give up, especially if loss of a job or a medical problem forces the issue. Doubt there’s too many of these people though.
I agree, but how would this be measured?
The chart should be updated occasionally to show actual resets that are due. When someone walks away, it’s should not be in the reset data.
Updated chart with option ARMS now nudged to the left.
http://economist.mrwhipper.com/IMFresets.jpg
…followed by a REAL stock market crash in early 2009.
How low do you think it will go? I have this discussion with a guy at work. I say it’s headed to 10,000. He says no way. What would you say defines a “REAL stock market crash”?
The DJIA is down 50% from 2001 when priced in Euros. That is a pretty hefty drop. It still has farther to go.
10,750 is a 50% fibonacci retracement of the move from the ‘02 lows to the ‘07 highs. A logical stopping place
but not this time IMO. Later
It’s really been more like a deflating souffle, oui?
I think we might get below 10000 on the dow.
1. Biggest credit bubble in history.
2. Government debt - need i say more?
3. Here is the big one - demographics.
The stock market run started in about 1982. This was driven mainly by the baby boomers who entered peek earning years at the same time that Reagan tried to spend Russia into oblivion. Lets also not forget the 401k.
The baby boomers actually consist of two parts - the early and late boomers. The early boomers are now entering retirement and need cash for the cruise-ship-balcony. The late boomers, otherwise known as Generation Jones, or more aptly called - Optimistic Partiers, are up to their eyeballs in debt.
The “pig in the python” is either tapped out or needs cash. The generations following them are either too broke or too young to make up the difference.
It was a nice run, but its coming to an end. The stock market could be dead money for several years.
Let’s see—I have wrapping paper left from last year. Will spend $20 each on family close by and send a $100 gift card and some silly stuff to the daughter in Nebraska. Looks like $300 will be more than enough. Doesn’t look as if we will be helping retail very much.
That will probably be our limit as well. Gift cards are very practical, cost little to send, and don’t result in fuel-consuming trips to return an unwanted item.
“Gift cards are very practical, cost little to send, and don’t result in fuel-consuming trips to return an unwanted item.”
Just make sure the company isn’t a bankruptcy candidate.
Otherwise I agree completely. It’s been my preferred means of gift giving for relatives for years.
i finally got my stimulus check
no retail therapy here either - going to the bank at lunch to deposit it
sorry george
Deposited our check yesterday. Why buy when we don’t need anything?
“That said - I predict a very poor holiday season followed by a REAL stock market crash in early 2009. Real estate will enter capitulation hell.”
This could be the worst holiday season in a very long time for retailers. With credit tapped out and/or drying up, consumers will largely be confined to spending what they earn. Even within that amount, larger portions are going to food and gas leaving less for everything else including those retailers.
There is simply less money to be spent by consumers on those retailers and in addition, those retailers are facing the higher energy-related costs that everyone else is facing. For those retailers that don’t find a way to get their chunk of the reduced consumer spending pie, it could be really bleak.
Lumping in most everybody, it seems like ‘coal’ is this xmas season’s must have gift.
Are you stocking up?
Do the pieces in my back yard count?
36 Retail Stores Closing Doors
http://money.aol.com/special/retail-stores-closing-doors
i think i read an article about this, it said that the merchants were worried about placing orders for christmas because they dont think they would be able to sell the merchandise.
better email Bush bad and beg for a veto - Senate is giving you a second mort
http://news.yahoo.com/s/ap/20080708/ap_on_go_co/congress_housing
Fed eyes extending emergency loans for Wall Street
Tuesday July 8, 8:06 am ET
By Jeannine Aversa, AP Economics Writer
Fed weighs giving Wall Street firms more time to tap emergency loans
WASHINGTON (AP) — The Federal Reserve is considering giving squeezed Wall Street firms more time to draw emergency loans directly from the central bank to help them overcome credit problems, chairman Ben Bernanke said Tuesday.
——–
http://biz.yahoo.com/ap/080708/fed_credit_crisis.html
He is talking pretty early on Tuesday.
we will see $5 or $6 per gallon of gas soon.
I see me walking or staying home most of the time.
http://www.stuartxchange.org/Jeepney.html
I believe I’m going to start my own Jeepney company. If I see you walking down the side of the road, Wolfgirl, I’ll pull over and tell the roof-riders to make some room. Does fifty cents to go across town sound like a fare you can live with? Oh, and one will come by about every five minutes (every five seconds if you live in the Phillipines).
Heliben: 28 day loans to become infinite
July 8 (Bloomberg) — The Federal Reserve may extend securities dealers’ access to direct loans from the central bank into 2009 as long as emergency conditions “continue to prevail,” Chairman Ben S. Bernanke said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSvgnK_7DdYU&refer=home
Which of Merriam-Webster’s definitions applies to the situation at hand? And I thought crisis had ended months ago?
emergency
Main Entry:
emer·gen·cy Listen to the pronunciation of emergency
Pronunciation:
\i-ˈmər-jənt-sē\
Date:
circa 1631
1 : an unforeseen combination of circumstances or the resulting state that calls for immediate action 2 : an urgent need for assistance or relief
Evergreen
A contract that rolls over after each agreed (short-term) period until cancelled by one party.
Maybe this one as well:
I like the original Latin root:
in·dem·ni·fy /ɪnˈdɛmnəˌfaɪ/ Pronunciation Key - Pronunciation [in-dem-nuh-fahy] Pronunciation Key –verb (used with object), -fied, -fy·ing.
1. to compensate for damage or loss sustained, expense incurred, etc.
2. to guard or secure against anticipated loss; give security against (future damage or liability).
[Origin: 1605–15; < L indemni(s) without loss (see indemnity) + -fy]
Not like we didn’t see THAT one coming…
No kidding. In fact, I think we have been predicting it on at least a weekly basis for months on end already.
Pyriteconomy
15 loans on a deadman’s quest
Yo ho ho and a bottle of rum
Econectomy; the surgical removal of your economy?
LOL, …but hey, seriously, the pirate shop is out of business.
Arrrrgggggggggh!
Sounds like Blackbeard could have run the FED:
The only written records recovered from the Adventure after Blackbeard’s death ran as follows.
Such a day, rum all out- Our company somewhat sober- A damned confusion amongst us !- Rogues a-plotting - Great talk of separation- so I looked sharp for a prize- Such a day found one with a great deal of liquor on board, so kept the company hot, damned hot, then things went well again.
Just saw this article on MSN:
http://tinyurl.com/55q3xr
34 cities where it’s still better to rent.
Glad to see the MSM reporting that in some instances (and geographical locations) renting is a better option that owning in the current market environment. My metro area (DC-MD-NoVa) made the list. According to their calcuations, DH and I are saving $979 dollars by renting our 2 br apt vs. owning. We actually save more than that, as our rent is less than the average for a 2 br that they are showing. Plus they haven’t factored in the savings from lower utility bills, maintenance costs, etc.
Also, renting in Alexandria (we could never afford to own here - houses for sale at the end of our street are going for $850K+) gives us the opportunity to save on gas since we live close to work. DH was just commenting to me yesterday that it’s been a month since he put gas in his truck. His commute is about 3 miles. I work in DC, so I go 8.5 miles and fill up once every 3 weeks.
Just the other day my mother, who was one of the many family/friends screaming at us to buy a house, admitted to me that we made a good choice to rent close to work instead of purchasing somewhere out in the boonies which is what you have to do to find affordable housing in this region.
I love living here, and renting allows us to do it for 1/3 of what it would cost us to own. But we know that one day we will have to move as we’ve decided we will not spend more than $200K for a house.
Oy. Even Worcester, MA is still on the list for a net loss for owning. The bottom must be years away…
I am SO forwarding that chart on to people who are still nagging at me to buy.
Interesting article, thanks for posting. Even with such an unusually balanced assessment (for the MSM at least), I wonder if they’re fully taking taxes, insurance, fees and house maintenance into account. I think if they did, their list of 66 cities where buying does make sense might be a good bit shorter. And I’m sure they didn’t take into account the real estate transaction costs associated with realizing that gain in 2012.
Like your pseudonym.
Note that the article suggests 15 years rent or 180 months rent as the time to buy into the housing market. The rule of thumb when I was looking at investment properties in Chicago twenty years ago was buy at 100 times monthly rent if the place needed some work or 110-120 times monthly rent if the place was in very good condition.
Yah, they’re being EXTREMELY generous with the rule of thumb. Mainly because they’re excluding Tax/Insurance/Maintainence out of the equation. Add those in and you’ll see the list of 34 cities it makes more sense to rent in grow to a list of 80+ cities it makes more sense to rent in.
Bad Times Good for the Repo Man
“A repo man will rarely catch you with your pants down. He will, more likely, strike when your pants are off and your teeth are in the soaking glass…Like bail bondsmen and criminal court clerks, repo men have more work than they can handle when things go sour.
“It’s pretty simple,” said Nick Webster, Ramfos’ hard-charging, chain-smoking sidekick. “The economy is down. Jobs are gone and a lot of people are living beyond their means.”…After a dozen years in the business, [Ramfos] is still amazed by the lengths people there will go to hide their third, fourth, even fifth car.
Among the tricks: swapping license plates, trading cars with relatives, storing them in warehouses, parking them four blocks away from the house or the job or simply running away to another state.
“You can run, but I’m going to find you,” Ramfos said while staking out a property in Farmington Hills, waiting for the garage door to open so he could snatch the Hummer that sat inside…In the burbs, the repo men have seen people cry, lay in front of their tires, threaten to call an attorney when they are attorneys themselves. It is the stuff worthy of a mini-series. “People in the rich suburbs are soft,” Webster offered. “Put them out in the woods and they’d die in three days.” “
Repo Man; best movie ever.
RE: People in the rich suburbs are soft,” Webster offered. “Put them out in the woods and they’d die in three days.” “
No truer words spoken.
In Vermont in the winter, when tourists wander off ski area trails late in the day… they are often lucky to survive one night - never mind two or three.
We had a recent wildfire in AZ caused by inbred retard hikers who I guess got lost–so they started a “signal fire”. Hello?? Signal fire in Arizona during the summer dry season? Are you beyond stupid??? [Sherrif Joe oughta give `em pink underwear for a year and make `em tar office building roofs in August.]
Those guys could work 24/7 around here if they wanted to.
Motorcycle Cop: Whatcha got in the trunk?
J. Frank Parnell: Oh… You don’t wanna look in there.
“Still, the unassailable rule of American life holds: You are what you drive. And people are unwilling to give up their automobiles, even when they cannot afford them. ”
I drive a 2002 taurus everyday, what does that make me?
smart
A luxury hound - my Taurus is a ‘97. : )
Also, I don’t drive it every day, but then I can walk to public transportation.
I am anything but a right-wing ideologue myself, but I am highly interested in how passage of this bill would help BoA’s bottom line at the U.S. taxpayer’s expense.
BofA chief stresses discipline in lending
Executive endorses mortgage rescue bill
By Emmet Pierce
STAFF WRITER
July 8, 2008
DANIEL ACKER / Bloomberg News
Getting the nation through the housing downturn will require federal help, Bank of America CEO Kenneth Lewis says.
…
Lewis acknowledged that opposition persists. Although an aid package is needed, “some of the ideologues on the far right are our worst enemy at the moment,” he said.
As a side note - it’s sad that references to the mythical political spectrum of “right” and “left” have become so commonplace. It causes such pigeonholing. So we have to make up terms like “far right”, and somehow implying that a conservative’s ideals flip from “pro-business” to “anti-business” when they go from “right” to “far right”.
Personally I view it as a circle, or perhaps more correctly as a multi-dimensional (more than 3) matrix, with each axis being a major issue. But then that’s just the engineer in me coming out
Did I mention I hate pigeonholing?
Pigeonholing is a useful strategy for discrediting anyone who opposes your position, by turning them into a straw man.
Yep. Straw men are easy to burn.
We’rrrrrrrrrrrrre off to see the wizard…
How about the ideologues on the far left?
It seems to me that anyone who has any beliefs about what is good for everyone, as opposed to what is good for insiders at everyone else’s expense, would be against, regardless of those beliefts.
“What’s good for Bank of America is good for the country.”
Could we then expect Mr. Lewis and his minions to eventually be in GM’s position?
B of A motto: “We’re your Bank of Opportunity” !
I wonder how many marketing sampling sessions went into that one?
Why is the majority of opposition coming from Republicans? Do the libs really think this bill will help FBs?
hell no the lib politiicans know it want help…ahhhh…but the lib voters do.
It’s just a “I voted FOR - ” or “my opponent voted AGAINST” play at this point.
Your political map is wrong. Extremists face problems with belief. Moderates and Centrists try to muddle through and make progress if possible. The bill in question would enable a few hundred thousand loans to be refinanced which would help both the borrowers, who in these cases want the homes are are likely to be able to afford them at current valuations, and the lenders, who want income streams, not the government cheese some claim they are after. So the choice is not which ardent belief to use in deciding who wins, it is whether you are with the extremists who think only in terms of political posturing and zero sum games or with the moderates who would facilitate a deal that results in a combination of wins and losses on all sides.
What does the bill give to the lending industry? It must give them something, or else they would not be sending so much dough to Congress…
You are being stupid. The loans are failing. Some borrowers and lenders would like to refinance instead of letting the loans fail. The bill facilitates that by providing insurance for the refinanced loans. Everyone gets something and everyone looses something. What Congress is delivering is attention. Your everything is a bribe in a zero sum game view of politics is garbage.
“You are being stupid.”
Your comment is childish. I would discipline any of my children who made such a remark.
And by the way, your spelling is loose, though I won’t go so far as to suggest that you are being stoopid.
C’mon PB, I think he was just referring to a temporary state, not a permanent one.
“…with the
moderatessocial engineering brigade who would facilitate a deal that results in a combination of wins and losses on all sides.”Social engineering has so far only served to create a disaster in the U.S. housing market, but that is no reason to give up on it so soon.
Since no answer to my question appears to be forthcoming, here is one possible answer:
“The mortgage legislation would help lenders like Countrywide, which was acquired by Bank of America last week, by allowing them to transfer their distressed loans to the federal government, avoiding potentially huge losses if borrowers continue to default on their mortgages.”
From the article I just posted, I am wondering which of these objections to the housing rescue are coming from those whom Mole Man labels ‘extremists’?
‘After initially signaling approval of the bill, the White House issued a veto threat, singling out for criticism a proposed $4 billion worth of grants to municipalities that would help cities and towns buy foreclosed properties. Backers of the provision say buildings vacated as a result of foreclosure foster crime and may trigger a downward spiral of property values in vulnerable neighborhoods, and that the funds would allow cities and towns to resell or redevelop the properties.
But Tony Fratto, a White House spokesman, said the $4 billion would not help homeowners since the properties have been foreclosed, and would most likely benefit the banks that now own the properties.
“The principal beneficiaries of a plan like that wouldn’t be homeowners, it would be private lenders who foreclosed on borrowers,” Fratto said. “It doesn’t do anything to help homeowners who are struggling.”
Some Republicans have also seized on the reports of Dodd’s loans in an effort to delay the bill. Countrywide, formerly the nation’s biggest subprime lender, gave the senators preferential loans under a company program called “Friends of Angelo,” named for Angelo Mozilo, the company’s former CEO.
Portfolio magazine, which first reported the loans in June, obtained e-mails showing that Mozilo ordered employees to “take off 1 point” on a new loan to Conrad in 2003.
If Dodd or Conrad knowingly accepted a lower rate than was available to the general public, it would be a violation of Senate ethics rules.
Both senators have denied knowing they received a special deal on two home loans they refinanced; Dodd said he and his wife knew they were in the company’s “VIP” program but believed the status was related to their good credit record, and not his position as a senator.
In a letter to Frank, however, 19 Congressional Republicans asked him to delay passage of the bill until he can convene hearings into the Friends of Angelo program.
“My concern is, did a mortgage lender engage in activity aimed at getting sweetheart deals to powerful legislators that kicked out on the other end in the form of legislation that will save them billions and billions of dollars?” said Representative Jeb Hensarling, Republican of Texas, the author of the letter. “When you see this much smoke, I think you’re negligent if you don’t at least look for the fire.“
When a 10-mile detour sinks your budget, you are living close to the edge.
Blues at the beach
Climbing oil prices put squeeze on petroleum-dependent surfers, industry
By Gillian Flaccus
ASSOCIATED PRESS
July 8, 2008
SAN CLEMENTE – For years, Chris Mauro took a 10-mile detour on his way to work each morning to check out the swells at his favorite surf break and plot the best location for his after-work wave-riding.
But with gas approaching $5 a gallon, Mauro recently cut out his daily ritual in favor of the savings.
C’mon, PB. You live in San Diego. You should know what the beach bum surfer lifestyle entails.
I’m not surprised terribly at the surfer’s dilemma. I feel his pain even. All he ever wanted to do was to be a non-productive member of society (a bodacious and totally excellent goal IMO.)
check out that movie someone talked about last night
http://www.surfwisefilm.com
it’s kinda creepy when you get into the family details but an excellent lifestyle otherwise!
I’ll add this to my netflix queue.
I actually ordered the DVD for my collection of offbeat movies (another good one - “Off the Map” about a family in New Mexico living on 5K a year and hiding from the IRS - do you see a theme there? lol)
Nine children? At least since he has some “successful” surf camps, we’re hopefully not supporting it. But NINE children living in a camper? …. *shiver*
He must be taking El Camino Real, I grew up in San Clemente during the 70’s. It USED to be a really nice little town…
Come on dude…skateboard to the library and use the surf web cam…Free!
Hang Ten…!
“But with gas approaching $5 a gallon”……..
What are y’all in Cali paying for a gallon of regular these days??
$4.63
Blano, in sd it is 4.59 for unleaded.
$4.39 in queens ny
$3.97 in the Middle of Nowhere
$3.99 in the Middle of Nowhere II
3.81 in Loveland, CO
$4.73.9’s the going rate in just the other side of nowhere.
$4.57 for regular, when I filled up over the weekend, here in Van Nuys CA
3.79 Greenville, SC
$4.06 in the middle of nowhere III. (I.F. ID)
My last fill up on the 3rd in Palmdale was $4.43.
I paid $4.45 this weekend inside the Chicago city limits.
$3.69 St Croix, Virgin Islands.
$4.59 St Thomas, Virgin Islands (40 miles away).
We’ve got the refinery on St Croix.
Paid $4.05 when I filled it up this weekend, but that was a fluke. All the other stations nearby were between $4.15 and $4.19.
Come on girlymen and women…
I hate to think I pay the most for go-juice~
Ouch to you and Bronco both.
Dude, where’s my swells?
Hair of the dog that bit them…
Monday, July 7, 2008
SEC considers easing accounting rules
The Securities and Exchange Commission is considering big changes to accounting rules that American companies have to live by — like letting them use looser foreign standards. John Dimsdale reports.
GO Crissy…Go Crissy, Newport Beach, CA is awaiting your arrival!
http://www.local6.com/money/15975882/detail.html
Just happened to listen to this excellent tune on the way into work this morning. With a nod to last week’s discussion…
“Your Gold Teeth”
Got a feeling I’ve been here before
Watching as you cross the killing floor
You know you’ll have to pay it all
You’ll pay today or pay tomorrow
You fasten up your beaded gown
Then you try to tie me down
Do you work it out one by one
Or played in combination
You throw out your gold teeth
Do you see how they roll
I have seen your iron and your brass
Can’t you see it shine behind the glass
Your fortune is your roving eye
Your mouth and legs
Your gift for the runaround
Torture is the main attraction
I don’t need that kind of action
You don’t have to dance for me
I’ve seen your dance before
Do you throw out your gold teeth
Do you see how they roll
Tobacco they grow in Peking
In the Year of the Locust
You’ll see a sad thing
Even Cathy Berberian knows
There’s one roulade she can’t sing
Dumb luck my friend
Won’t suck me in this time
Got a feeling I’ve been here before
Won’t you let me help you find the door
All you got to do is use
Your silver shoes
A gift for the runaround
Use your knack darlin’
Take one step back darlin’
There ain’t nothing in Chicago
For a monkey woman to do
Do you throw out your gold teeth
Do you see how they roll
- Steely Dan
(dental gold is usually 16k)
You sell 16 Karat and whadya get?
Another day older, but still in debt
Saint Joseph didn’t help me, cause my house won’t go
I owe my soul to the corporate store
http://www.youtube.com/watch?v=Joo90ZWrUkU
Tuesday, July 8, 2008
Britain could be at recession risk
An aerial shot of the financial district of London
The British Chambers of Commerce found a sharp fall in sales, orders and cash flow in the second quarter. Stephen Beard reports the group says Britain might now be at real risk of recession.
Britain is already in recession. The regressionistas just don’t know it yet.
The Illinois State Pension Crisis: Secure Retirement for Public Servants at Risk (2006)
“Currently, the five Illinois pension funds are only 62% funded, leaving a $35 billion deficit. Illinois has the greatest unfunded public pension liability among all of the other states. Yet, the State of Illinois recently amended the Illinois Pension Code in order to reduce its pension funding obligations for FY2006 and FY2007 as well as alter its contribution structure for FY2008 through FY2010 in order to compensate for the loss of funding.”
Not sure if we’ve ever talked about this specifically, but “highly taxed” states will not be able to wring enough dollars out of their people to make up these pension obligations. Heck they can’t even balance the yearly budget.
http://www.dcba.org/brief/novissue/2006/northern1106.htm
At what point does a grown up step in to say, ” We shall limit spending” and who might that grownup be?
“At what point does a grown up step in to say, ‘We shall limit spending’ and who might that grownup be?”
Do you mean limit spending on debt service and pension obligations imposed by past generations?
Or wipe out public services and benefits for younger generations, in lieu of (or more likely in addition to) much higher taxes on those generations, to pay for those burdens.
I’ll be happy to endorse the first.
Clearly state governments are going to have to do both, limit the spending on debt service and pensions, plus limit (not wipe out) services and benefits for the younger generations.
The grownup(s) would have to be voters. When they stop demanding things that costs money, the politicians can stop spending money on those things.
What do you expect with a governor like IL has?
http://www.startribune.com/nation/22803584.html
Still, 62% funded is better than the 49% funded I heard thrown about just a couple months ago. Another reason I am not hot to buy property here right now.
Boy, it would be great if the problem was the governor and the solution was impeachment.
Unfortunately, the pension problems, as well as other problems, existed before the current governor and will exist long after.
Until a majority of legislators in Illinois get serious about solving the budget and pension problems, we are stuck with Madigan’s personal soap opera being taken for politics. It is froth.
Impeachment? Give me a break - won’t happen and everyone knows that - well, unless actual criminality is proven, which it hasn’t been yet. It’s been a waste of time to impeach on the grounds he lists.
Madigan should spend less time on trying to hurt the governor and more time solving the state’s real issues.
Madigan is seen by many as working to pave the way for his daughter in the next governor race. In addition, many believe that Madigan has an over-the-top, intense, personal, (wasteful) dislike of the governor, which got worse when his top aide’s wife was fired by the governor’s adminstration and it goes on from there…. ughghhghgh
I’m not a fan of any of these clowns. But this isn’t about the Madigans either. I agree, though, that statistically speaking, impeachment of Blagojevich won’t happen.
Helocing
job losses
UK’s biggest union “incensed” by debtpushers redundancies.
Think i’ll save my fury for more deserving causes.
BULLETIN
CRUDE-OIL FUTURES IN FURTHER RETREAT, BACK BELOW $138 A BARREL
THE FED
Bernanke seeks new powers for Fed
Fed aid to brokers may be extended beyond 2008
By Greg Robb, MarketWatch
Last update: 8:57 a.m. EDT July 8, 2008
WASHINGTON (MarketWatch) - Federal Reserve Chairman Ben Bernanke said Tuesday that the Fed should have additional powers to prevent and limit financial market turmoil.
The SEC is trying to defang the Post Enron legislation.
“The Bush administration and the Securities and Exchange Commission are pressing forward with a plan that would allow American companies to opt out of using U.S. accounting standards in favor of international ones as a way to ease global business dealings and help corporations raise capital around the world. …”
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/07/AR2008070702461.html
Allow overstated profits blah, blah blah. And the rest of the world is trying to achieve current US standards.
Lets earn money the old fashioned way, steal it.
More “hair of the dog that bit them” hangover cure, IMO.
Hey Exeter~
I just got back from a 600 mile 4th of July road trip to Burlington VT.
It was up I93/89 to the Randolph VT exit up Rt. 100, to B-Town, and then back down 100 to Ludlow and then cross-country from Charlestown NH to Concord; then back to Mazzland.
The only thing I got to say-is the economy west of I93 consists of virtually nothing more other than than a few hold-out dairy farms; small time sports gear retailers; corner road convenience stores; and small scale hostelry businesses all dependant on the fortunes of seasonal weather.
But you can tell people are scared.
Residential “For Sale” signs were everywhere. Of course for the high roller burgher’s of Burlington, predominantly employed education and health care, it’s a situation of “what no bread-what can’t they eat cake?”
But there is no doubt that $5.00 gaz and a tough heating season will render the entire region west of I93 into a complete economic wasteland.
Why be snooty about people who sensibly sought careers in recession-resistant fields, forgoing income for security?
As for the region, western New England has not yet recovered from the 1970s. One more round of crappy prospects for the next generation. The only ones left in ten years will be the academics, college students, a small tourist industry, a scattering of municipal and state employees, a rump medical industry, the retired, the hippies, and the survivalists. Pretty much what we have now, less 30% of the current population of people aged 20-50 years old.
That’s OK.
Exeter will come on and tell us that the nanny government in Montpelier will come to the rescue of everyone and all will be well and fine in his (and mine) former homeland.
Discouraging, at the state level for a couple decades, innovation or risk taking and business development, thereby leading to the “safe” jobs being only in government, or government related (education and healthcare) - is not a way to secure an economic future.
RE: The only ones left in ten years will be the academics, college students, a small tourist industry, a scattering of municipal and state employees, a rump medical industry, the retired, the hippies, and the survivalists. Pretty much what we have now, less 30% of the current population of people aged 20-50 years old.
Tulk-IMHO I think those 10 years have already passed.
RE: Snooty talk…I have a problem with onion skin layered institutions of learning who conspire with the college loan debt industry to put kids and their families in hock for decades to support their namby-pamby “let them eat cake” lifestyles.
And then there is the healthcare industry dependant on an out of control insurance system and bankrupt Federal entitlement programs where people don’t pay for the services rendered.
Like any other professions could get away with this business model and survive.
How long will it take people in the Northeast to realize that it is cheaper to buy a couple space heaters and heat their homes using space heaters than it is to purchase heating oil at today’s prices? What will that do to the electricity grid in the Northeast during the first cold spell?
Just wondering.
I cringe when I hear how much my old neighbors in New York are paying this year to refill their heating oil tanks (with the prepay price program cost no less). I’m guessing we’ll hear more news stories this winter about carbon monoxide poisoning/house fires as people in colder climates try to lower their heating oil usage by supplementation with space heaters and increased use of wood burners. Add to this the usual problems of leaking heating systems/poorly insulated older homes/flues in need of repair, and the challenge to stay warm and safe this winter grows even more precarious.
Add to this the usual problems of leaking heating systems/poorly insulated older homes/flues in need of repair, and the challenge to stay warm and safe this winter grows even more precarious. And they’ve only had 35 years to prepare for this totally predictable predicament.
BubbleViewer, nobody in NE uses space heaters. Wood is the fuel du jour.
RE: How long will it take people in the Northeast to realize that it is cheaper to buy a couple space heaters and heat their homes using space heaters than it is to purchase heating oil at today’s prices?
A couple of articles appeared about a month ago, that the New England electric grid system had the potential for a meltdown this winter due to the fact that electric heat is now cheaper than oil.
What complicates the problem is that state law, forbids electrical companies to disconnect users during winter months. With this freebie in mind, you can bet scores will go purchase a carload of space heaters; run them thru the winter (if the electricity is there) and then proceed to stiff the utilities.
As an example 46k of Bangor Hydro Electric Company’s 68k customers had received disconnect notices as of April ‘08.
What I think will be interesting is if the grid goes down due to overload then everybody’s heat shuts off, because there is no juice to fire the oil-fed boiler.
The Burlington real estate is currently in the process of falling of the cliff and the populace is in the ‘It can’t happen here’ mode.
In the local paper a few days back were a few stats from home sales on a town directly north of Burlington. This town averaged 250 homes sales for the past 2-3 years. This year only 39 sales have been recorded up until May 31st! And that’s prime selling time which means sales might be more than 1/2 as much as last year. Meanwhile the article quotes town officials as being unconcerned and building applications still coming at breakneck pace.
Inventory is skyrocketing and current sellers won’t drop prices and are taking stuff off the market.
Meanwhile the unemployment rate is creeping up and IBM (the big player in the local economy) appears to be winding up operations. Of course the local MSM doesn’t paint this as a big deal because apparently the local hospital now employs more than IBM!!! People just don’t understand how local economies function.
Me and the wife are going to be hoarding cash for the next few years and should be sitting pretty when the house of cards collapses here.
RE: Burlington real estate
I have never seen a greater disconnect than the price of Vermont housing relative to local income levels.
Whoo-weee!
Scores of $400k-$mil properties in a land of $8/12 per hour
incomes.
I figure that after the next season’s heating season, the state will really simply revert to what former HBB forum contributor Lingus always alluded to, which is simply to be the outdoor play-ground for the New York and NJ bond traders.
I think it’s called “going feudal”.
Does not “lingus” = “exeter”?
Man you called it HD. I93 to the west across to the champlain and NY border towns is my family’s domain and you’re right on the nothingness from an economic perspective. Although dairy is doing better, it’s much too late. But make no mistake, the area as turned into DumbAss Country with the influx of equity bandits. It has slowed dramatically in the last say…. 18 months but it’s still comical to watch these asswipes from NYC/Beantown/NJ/CT pretend. As events shortcircuit in metro areas and after a couple hard, painful 7 month winters and a few rounds of property tax bills arrive, these numbskulls will fold and beat feet. Good riddance.
I talked with family there this morning. In the words of my 87 year old father, “the real estate market is siezed up and I’ve never seen so many for sale signs”.
HD, Your observations jive very well.
RE: 18 months but it’s still comical to watch these asswipes from NYC/Beantown/NJ/CT pretend.
Exeter~
Braggin’ rights are over for much of this crowd.
Lots of ‘em drastically over-built for their locations which are in the middle of absolutely nowhere and, now the “greater fool” is no more.
These people might as well have shoveled hundreds of thousands of dollars into a fireplace, albeit a $300 cord of wood will keep you warmer.
I wonder if all these 2nd home owners will be hiring live-in security to keep the copper looters away this winter.
Now there’s your potential VT growth industry!
So much for Country Living Magazine.
Lotsa Sarasota restaurants closing or have closed.
http://www.heraldtribune.com/article/20080708/BUSINESS/807070677/1661
peinding home sales -4.7 vs. -3.0 cons.
another shorting opportunity in skf maybe
Yessir. +2.50 . $7.50 total for the day. This is just too easy.
Just don’t get cocky and spend all that loot at Starbuck’s!
How many more “worse-than-expected” forecasts can the economics profession generate before they start getting them right?
Or before the crowd goes…Ot Oh!
TX, terminology clarification please. Are you buying the ultra-short SKF ETF or are you actually shorting a short aka long?
sold it short. easier than flipping over to the long one
Wow, what happened anyway? Did you grab that long fall back toward 150? Lost my ass in paper money LOL. Can’t figure out how to use the friggin thing yet.
Does this mean financials aren’t so bad after all?
Seems to me the market is oversold, and the housing bill might give a bit of life to the financials. I’m not very good at reading charts though, but it seems a rally is due regardless. When txchick mentioned going long a couple days ago, it sounded like good advise since her radar/sources called the April rally too. She might have some index targets based on TA.
The financial companies are in a bad state, I’m sure many of us will be shorting again soon enough.
Hope you held till the close. What the H#$K happened to SKF ans SRS today. Talk about a haircut. OUCH!
Columbia Bancorp Issues Second Quarter Earnings and Dividend Guidance
“THE DALLES, Ore., July 8 /PRNewswire-FirstCall/ — Columbia Bancorp (Nasdaq: CBBO - News), the financial holding company for Columbia River Bank, issues earnings guidance for the second quarter of 2008. A higher than anticipated loan loss provision, coupled with the ongoing compression of the net interest margin, has Columbia projecting a loss per share ranging between $-0.04 and $-0.06 for the second quarter of 2008. Columbia also announced the Board of Directors approved a reduction of the quarterly cash dividend to $0.01 per share. The cash dividend is payable on July 31, 2008, to shareholders of record as of July 17, 2008. In response to this, Columbia’s Board of Directors announced it will suspend payment of director fees for the remainder of 2008….”
At least the BOD is deferring its payments. So long regional banks.
(cue the turntable)
http://www.youtube.com/watch?v=z6xV4d1kRog
http://www.youtube.com/watch?v=zqiblXFlZuk&feature=related
Nothing new to report here, but caught up with some friends over the long weekend. Folks at US Air getting nervous with all the news of upcoming changes/layoffs also of captains being demoted to FOs. Have a friend who is a jr. captain who has been told to prepare for a demotion. As part of the preparation looked to re-finance out of his 15 year loan and into a 30 year loan to drop the size of the house payments. Had the house appraised, appraisal came in at 390,000. Unfortunately, he owes $392,000 so no re-finance for him!! 2 years ago, house appraised for $650,000. The house was bought in 2004 for ~330,000, then HELOC for the pool and then refianced both into 15 year mortgage.
Once again, just a reminder for myself that things are going to end badly and this is just the beginning of the pain.
“Had the house appraised, appraisal came in at 390,000. Unfortunately, he owes $392,000 so no re-finance for him!!”
Wow… for the lack of $2K in savings, which a person in his position SHOULD have.
Doesn’t surprise me, though.
Can’t refinance to 100% anymore, so he’d need more than 2K.
In the roaring 20th (century) we used to jet around the country, just for fun. Those were the salad days…
I have a question about commercial real estate. How are these loans evaluated? The reason I am asking is because someone in my area was just denied a permit for a strip mall. I think the town is doing him a favor and he’s obviously po’d.
If the commercial vacancy rate is, say, around 20 - 25%, why would a bank loan anyone money to build more? If he had gotten approval from the town, would any bank lend him the money and on what basis? If he is claiming that he pay the mortgage from the rents, how stupid would any bank be to lend him the money?
I can tell you how it works in Netherlands (just to get an idea how stupid the banks are):
Loans are based on the rated value of the building; this value is based on the official rent x amount of office space. As long as the loan is covered (= rated value keeps rising) nobody worries. So the owners (debtors) constantly increase the rent, even if that means that most of the space in the building is vacant. They even use the new ‘equity’ to get additional loans and build even more office space, just like J6P used the home-ATM.
We have HUGE overproduction of commercial RE here, something like 35% of total volume is vacant now (some reports estimate it will take 10 years to take up existing free space even if building of new office space is nearly stopped). I know office buildings in my area that have been mostly empty for at least five years, but don’t try to negotiate about pricing - the owners are totally uninterested because lower rent means lower value for the building. Not sure if this applies to malls, they could have a different model but probably just as stupid …
Maybe he had financially sound potential tenants already lined up with signed leases.
It’s doubtful. Half of the storefronts on the same street are empty. Why would someone rent something that isn’t built yet when they could have their choice of a gazillion other places?
It all depends on rents, cost and pre-leasing.
If you are pre-leased, and building to an 9% yield on cost (annual rents divided by cost=9%), banks will lend you 70-75% of the cost to build the project today, which would probably end up being about 60% loan to value, with rents that would cover your debt service 1.5x+.
They are very protected in those cases, especially if there is strong credit to tenants unlikely to go bust (think groceries and drugstores, not high-end handbags).
That’s why banks would lend.
Commercial properties need to underwrite with rents paying the mortgage (usually with coverage levels of 1.2x or greater–meaning if your debt payment is $100, you need to show the bank $120 or more of net rental income).
During the madness, for construction loans, the 1.2x shrank to be in some cases 1.1x, or even 1.05x, but we’re back to normalcy at 1.2x+.
If you’re building completely speculatively, you’re out of luck today.
We are fast approaching “The Norton Line*”
* The good Emperor’s theory that once the line between net take home pay per day and cost in gas per day to get to said workplace is crossed, why go to work?
Example:
If you have a $10 an hour job and drive an hour to and from work presently, your net take home pay for an 8 hour day is around $55, and the gas bill for the day is around $30.
$125 a week net take home pay, or $6500 a year.
Reality Bites…
“Now is the winter of our discontent, Made glorious summer by this sun of Bud.”
Mr. Adolphus Busch IV
lol… good one.
ouch
$10 an hour workers should not be driving 30 miles to work
the suburbs are freaking toast get the marshmellows
Bring S’mores, if they invested in more than one house in the ‘burbs…
You don’t, unless you have a second job too. Ran into someone like that in New York a few weeks ago. Day job hours got cut back to the point that it covers gas to and fro work, and that’s it.
Good bye Sir John
“He bought low during the Depression, sold high during the internet boom and made more than a few good calls in between.”
95 years old thats a long life.
Makes me wonder whether financial prudence and longevity are positively correlated?
Calm investors generally do well–they tend to be rational when others are irrational–selling in the dot-com boom, buying during the depression, etc. Going with the crowd implies a herd mentality–panic to sell and eagerness to invest.
Herd mentality=inability (lack of discipline) to control your surroundings=stressful life.
Going against the grain=being in complete control=less stress in your life.
Stress is not good for you–you’ll die sooner if you are constantly stressed out.
I only feel stressed out because the housing bubble collapse is turning out worse than I expected.
including a call of the housing crash what, 2-3 years ago?
I admired him.
Pending U.S. resales fall by 4.7 percent, much more than expected (so what’s new)…
http://bloomberg.com/apps/news?pid=20601087&sid=aQ1yh.2aUng4&refer=home
MOM decline in what is supposed to be the best month of the year.
Hurrah!!! Ding, dong, the dead cat bounce is dead, the wicked dead cat bounce is dead!
Cue the “all real estate is local” shills. Printing presses are getting ready for the “our area didn’t decline as much as the national average” (proof of “its different here”) interviews curtesy of the local NAR chapters.
Platts review bars Lehman from key oil trade window
Energy pricing agency Platts has put Lehman Brothers (LEH.N: Quote, Profile, Research) under a temporary review that effectively excludes it from trading benchmark-setting oil contracts, four sources close to the matter said on Monday.
The exact cause of the move was not immediately clear, although the practice of disallowing a market player from trading during Platts’ price-setting window is relatively common and can be imposed for a variety of reasons, from credit issues to trade disputes to shipment technicalities
“Yes, it’s because of credit issues,” said a source familiar with the matter who declined to be named, when asked for the reason for the review. The source was not able to be more specific about what kind of credit issues had prompted the review.
http://in.reuters.com/article/oilRpt/idINSP18502220080707?sp=true
So close and yet so far…
A serious offer,
but no $10K to bring to closing.
We’ll see what today brings.
can the guy get a loan? that’s only 50-50 in this area
oh sorry. he’s lowballing. The offer is valid and unencumbered, but *I* would have to bring $10k to closing to cover his closing costs.
In my situation, that’s too much. And too quick. (they want to close in 2 weeks).
Correction. Looks like they just relented on the closing costs.
Looks like we have a deal to sell the house and close a week from Friday.
I will still need to bring about $2k to closing. (My fault for giving the wrong numbers to my agent in the negotiations), but that’s how much I’d be paying on the mortgage on Aug 1 anyway, so given this market, I’d rather walk now than try and wait it out (and down).
Congratulations!
No kidding. You sold a house in DFW. No small feat. See today’s Morning Snooze. Sales down 20%
The elephant who must not be named
Commentary: Bernanke sends a message about Fannie and Freddie
http://www.marketwatch.com/news/story/bernanke-steps-around-elephant-room/story.aspx?guid=%7B34839CC6%2DD993%2D4AFE%2D8042%2D351878E2FBC7%7D&siteid=yhoof
“I’ve seen the Elephant”
Saying from the California Gold Rush, meaning to give up and go back home.
You’d think “Dickey Boy” Cheney would want to know how it might effect Duck migration:
The White House deleted six of the original 14 pages of Gerberding’s testimony, including a list of likely public health impacts of global warming.
Cheney wanted cuts in climate testimony:
http://biz.yahoo.com/ap/080708/cheney_climate.html
Scientist: “So, my conclusion is WE’RE ALL GONNA DIE!!!”
Cheney: “err.. Mr. Chairman, I move to strike that comment from the record?”
Barbara Boxer: “I object! We are ALL GONNA DIE!!!”
How does Shrub spell censorship?: C-H-E-N-E-Y
If you want a taste of censorship, visit your kid’s 3rd grade classroom .. observe from the back. The subject being taught at the time doesn’t matter.. English, math, history..whatever.
When the topic of global warming comes up, and it will, raise your hand and, when called upon, suggest that global warming caused by man is a myth.
Here’s is a 45% Cheney edited version of your post:
If you want censorship, visit 3rd a grade classroom .. observe the subject being taught: when the topic of global warming comes up, raise your hand and suggest that global warming is caused by man.
What percentage is 6 pages out of 14?
I think I know why ‘Dickey Boy” spends so much time in the “Shadow” Gov’t Offices…the light is dimmer…can’t see what he’s doing with his left hand.
Now, I got nothin against the guy, but with the wide assortment of famous personalities to choose from, what draws you to Cheney?
ah well… to each his own.
They hate science
They hate journalists that aren’t bought and paid for
They hate truth
You’re right…..that’s the problem with the global warming crazies.
The global warming “crazies are the scientists”
Tell me who has “bought and paid for these scientists”
It’s clear that many of the scientists who publicly doubt global warming have been bought and paid for.
http://www.pbs.org/wgbh/pages/frontline/hotpolitics/reports/skeptics.html
http://www.msnbc.msn.com/id/16593606/
http://money.cnn.com/2007/02/02/news/companies/exxon_science/index.htm?cnn=yes
Are these “crazies” so smart that they can sway the leaders of the G8
http://news.yahoo.com/s/ap/20080708/ap_on_re_as/g8_climate_change;_ylt=AhuI7hVH3enVuZ6e2UGK5Was0NUE
Fools on the right have no concept of what science is. They stick their head in the sand just like the FB who stuck his head in the sand prior to the collapse of the housing bubble.
The 2500 scientists in the IPCC are all crazies? You are basing this on what?
Now who is bought and paid for
http://money.cnn.com/2007/02/02/news/companies/exxon_science/index.htm?cnn=yes
http://www.pbs.org/wgbh/pages/frontline/hotpolitics/reports/skeptics.html
“You are basing this on what?”
1) Your ignorance of all the scientists around the world who disagree;
2) Common sense
31,072 American scientists have signed this petition,
including 9,021 with PhDs
http://www.petitionproject.org/
the index to the signers, in alphebetical order..
http://www.oism.org/pproject/s33p357.htm
Never underestimate the power of blind faith, in rendering the logical implausible.
It’s quite evident that the man-caused warming question is very much undecided, even among experts.
There’s nothing wrong with debate… it’s healthy, and we might even prove what’s really happening one way or the other.
However, understanding and determining global weather, it’s causes and effects, is still beyond our technical capabilities and without proof the theories remain just theories.
Would intelligent, thoughtful citizens want to spend multi-$$$trillions on efforts to stem a danger that may or may not exist?
If the danger does not exist, wouldn’t that money be better spent on other well known environmental causes?
Sad to say that some of us are anxious to blow off all that hard earned money. Those leaders of govt and industry who will gain poitical power or profit from the man-caused-warming idea certainly do not want us to wait for proof.
Would intelligent, thoughtful citizens want to spend multi-$$$trillions on efforts to stem a danger that may or may not exist?
Another way of viewing it would be to ask would thoughtful citizens want to skimp on spending the money when it could mean mass starvation. People spend money on medications to lower cholesterol in the hopes of avoiding a stroke or heart attack. The fact that they have a high cholesterol does not guarantee that they will have a stroke, but it does increase the risk. The fact that they take medications to lower cholesterol does not guarantee that they won’t have a stroke but it does lower the risk. You have the vast majority of scientists stating that global warming is real and man made. Why wouldn’t you take precautions.
The great thing about reducing global warming is that it would certainly focus efforts on conservation which would reduce our dependence on foreign oil. It’s a win win situation. Burning our oil at a faster rate is dumb. The oil just gets more and more valuable.
Those trillions of dollars will create jobs. If we had used the trillion dollars wasted in Iraq on conservation we’d be much less dependent on foreign oil. Our energy plan has lead to 146/bl oil and a collapse of our economy. We are about to watch GM, Chrysler and possibly Ford head into bankruptcy. Our cities and economy are designed around cheap energy that no longer exists. J6P is stuck in an SUV that he can’t afford to sell, and he can’t afford to drive.
“Never underestimate the power of blind faith, in rendering the logical implausible.”
Yep, my thinking exactly.
Bottom line, the climate has changed one way or another since Day 1, and will continue ’til the Last Day.
Man wasn’t the cause then, he isn’t the cause now, and won’t be the cause in the future.
“Fools on the right have no concept of what science is. They stick their head in the sand just like the FB who stuck his head in the sand prior to the collapse of the housing bubble.”
Try to not be such a moron. Just ’cause someone doesn’t bow down to the God of so-called science as espoused by the Pathetic Left doesn’t mean they can’t observe what is actually going on.
Once again we witness the Pathetic Left celebration of diversity.
global warming petition project =
Scientific American took a sample of 30 of the 1,400 signatories claiming to hold a Ph.D. in a climate-related science. Of the 26 we were able to identify in various databases, 11 said they still agreed with the petition —- one was an active climate researcher, two others had relevant expertise, and eight signed based on an informal evaluation. Six said they would not sign the petition today, three did not remember any such petition, one had died, and five did not answer repeated messages. Crudely extrapolating, the petition supporters include a core of about 200 climate researchers – a respectable number, though rather a small fraction of the climatological community.
Next up how many of them were funded by Exxon
http://www.pbs.org/wgbh/pages/frontline/hotpolitics/reports/skeptics.html
MEaston ..
You have the vast majority of scientists stating that global warming is real and man made. ??
Click on the link i provided above.. the petition.
you’re all over the board.. Iraq? heart disease? dependence on foreign oil? bankrupt auto dealers?
This is why i do not usually engage the global warming and enviornmental fanatics, the vast majority of which are decidedly left leaning:
Because they don’t rule the entire political world, they are willing to throw a wrench into the machinery to bring it all to a stop.. They don’t give a crap if man made-global warming is real or not, or what it costs us to “fix” it, and arguing with fanaticism is a waste of time.
Blano
1) Your ignorance of all the scientists around the world who disagree; The global warming petition project is a joke. Look it up in The Scientific American
2) Common sense
So your common sense says that global warming is a conspiracy committed by the vast majority of climate scientists based on what their desire to get grants? Well grants are handed out by our government and as you can see our government has decided to suppress scientific opinion. So much so that leading officials in the scientific community have resigned. If all these scientists were after money why not sign up with Exxon. Tell us exactly who is financing this campaign to support global warming and why they are doing it.
Scientific American used to be about science.. i collected it.
But something happened in the 90’s.. it turned into some sort of Reader’s Digest aimed at Oprah fans..
“Theology is never any help; it is searching in a dark cellar at midnight for a black cat that isn’t there. Theologians can persuade themselves of anything.”
Robert A. Heinlein
Here we go again, with JoeyinCali posting a link that he posted several months ago — a link that has been thoroughly debunked on this blog at least once or twice now. See this link:
http://www.sourcewatch.org/index.php?title=Oregon_Institute_of_Science_and_Medicine
You and your evangelical creationist buddies Blano and Brian_in_Norfolk should give it a rest. It is obvious you are just trying to create FUD where there is none. Nice try, though.
Yes Scientific American is junk but some crack pot web site that produces a petition signed by a tiny fraction of environmental scientists some clearly on the payroll of Exxon is credible.
Heck even our oil centric president and the EPA he controls have finally admitted global warming is real and man made
http://news.bbc.co.uk/1/hi/world/americas/2023835.stm
Given that you don’t believe the vast majority of environmental scientists or our EPA or the international consensus at the G8 meetings this week, tell us what their incentive is to keep this lie going.
The vast majority of scientists once theorized that the world was flat. Does it really matter why?
The train wreck is pulling into the station…
Tighten those persimmon strings
Builder makes 2k job cuts
Check this guy’s name!!
http://blogs.tampabay.com/breakingnews/2008/07/pinellas-contra.html
Obviously not sufficiently nimble…
http://apnews.myway.com/article/20080708/D91PMQA80.html
This paragraph is most interesting about new Fed rules for lending to be announced next week:
“It would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower’s income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower’s ability to repay a home loan from sources other than the home’s value.”
So, for the last part, does this mean if Grandma has diligently paid off her 30-year fixed mortgage on her now $3MM family home, and at age 90 has health problems that require a big chunk of cash, a bank will be barred for giving her a reverse mortgage for her $100k in medical bills unless she has the money somewhere else that can repay the loan?
I see forced sales of old rundown homes on great land in our future if the rules stick and would work as I understand…
Or perhaps a massive opportunity for any lenders who can avoid the new regulations…
BEN STEIN Alert
http://finance.yahoo.com/expert/article/yourlife/91896
The comments section there make me appreciate the attention to detail we all put in our posts here at the HBB.
“Doom & Groom”
“Specially”
makes, ha!
Ben Stein’s sage investing advice: “Buy stocks, no matter what.”
“Don’t Panic! Buy Index funds and real estate!”
“Give us your weak, your poor, your aged seniors with paid off homes”
Don’t you just love how quick these pencil heads find the next mark…Wall Street sure knows how to keep to the high moral ground of our Nation, love that “financial innovation” keep at it boys & girls.
“…The company plans to focus its efforts on its reverse-mortgage subsidiary, Irvine-based Financial Freedom.
“The unit is a leading reverse-mortgage lender, producing more than $5 billion in new loans annually.”
http://www.ocbj.com/article.asp?aID=611700802.8419201.1651026.1604391.5900748.583&aID2=126993
These guys need to be headed off at the pass.
Ha Ha Ha.
http://www.dailymail.co.uk/news/worldnews/article-1032909/Summit-thats-hard-swallow–world-leaders-enjoy-18-course-banquet-discuss-solve-global-food-crisis.html
Dont’cha just love how the do-gooders around the world like Brown, Gore, Hollywood & Co. want all us heathens to tone it down while they jet around and live the high life??
Eat, drink and express heartfelt concern for the less fortunate.
“I feel your pain.” Right.
What! No Wagyu beef short ribs? …Well, at least Shrub didn’t vomit.
God. It’s crap like this that makes every single leader of every single nation look like a complete ass.
The housing bust continues to seep into popular culture. On Monday’s new episode of Showtime’s “Weeds” (marijuana-dealing suburban mom story), the Albert Brooks character Lenny wishes to sell his newly inherited So. Cal near the beach house, but there is too much debt to sell it for the million-plus realtor assessment. Realtors (who show up to get the listing during the mourning period for deceased grandmother) mention that he can wait for a rebound in the housing market. Lenny exclaims later that “Real estate always comes back!” The character is a problem gambler, like some many FBs in California and elsewhere.
What onions teach us about oil prices
Onions have no futures market, yet their recent price volatility makes the swings in oil and corn look tame.
“…The bulbous root is the only commodity for which futures trading is banned. Back in 1958, onion growers convinced themselves that futures traders (and not the new farms sprouting up in Wisconsin) were responsible for falling onion prices, so they lobbied an up-and-coming Michigan Congressman named Gerald Ford to push through a law banning all futures trading in onions. The law still stands.
And yet even with no traders to blame, the volatility in onion prices makes the swings in oil and corn look tame, reinforcing academics’ belief that futures trading diminishes extreme price swings. Since 2006, oil prices have risen 100%, and corn is up 300%. But onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April. …”
http://money.cnn.com/2008/06/27/news/economy/The_onion_conundrum_Birger.fortune/?postversion=2008062713
I’m not shedding any tears over volatile onion prices LOL
“…But onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April. …”
Time to buy the dip…Ruffles have ridges.
Since BoA swallowed Countrywide, wouldn’t the mortgage rescue benefit BoA, not Countrywide?
The Boston Globe
Emergency mortgage aid bogged down
Veto threat, congressional maneuvering delay bill to avert foreclosures
In May, 261,255 homes went into foreclosure nationally, up 48 percent from May 2007. In May, 261,255 homes went into foreclosure nationally, up 48 percent from May 2007.
By Alan Wirzbicki
Globe Correspondent / July 8, 2008
WASHINGTON - Emergency legislation intended to help as many as 500,000 homeowners on the brink of foreclosure to renegotiate their mortgages, which congressional leaders had predicted they would approve by Independence Day, has been delayed and may now be weeks away from passage, lawmakers said.
The sweeping housing bill has been slowed by an unexpected veto threat from the White House, legislative maneuvering in the Senate, and differences between the House and Senate versions of the bill.
In addition, some House Republicans have demanded that the legislation be delayed so lawmakers can investigate a loan by a major subprime lender to one of the mortgage bill’s authors, Senator Chris Dodd, Democrat of Connecticut. The lender, Countrywide Financial Corp., would be a big beneficiary of the bill.
Shows how idiotic the talking heads are.
Countrywide made the loan. The loan was made to one of the bill’s authors. The bill would benefit the originator of the loan. Therefore Countrywide would benefit from the bill.
Talking heads just forgot that as of last Tuesday Countrywide no longer exists. Duh. Doh.
$300,000,000,000 in guarantees to help 500,000 loanowners comes out to $600,000 in taxpayer-funded guarantees per loanowner who is helped.
Or did I make a mistake in my arithmetic?
Nope — I checked it; still $600,000 per loanowner.
Also, don’t forget to account for the fact that the Frank-Dodd cramdowns of 15% below current rates come out to be about 80K per homeowner. While the democrats argue that taxpayers aren’t paying for that, they can’t ignore the fact that this 80K is TAX FREE. We need to get the word out to working renters that Frank/Dodd/Obama want to give 80K tax free to 500,000 people.
That’s $24,000 of taxes these people won’t have to pay. The rest of us Taxpayers will have to make up the $12,000,000,000 difference!
BTW: I don’t know if any STATE goverment will make any effort to collect income tax on these cramdowns. There’s no interest in the CA legislature.
The Republicans have their “War on Terror” and the Democrats have their “War on Savings and Affordable Housing”. Both wars will cost the Taxpayers about the same amount.
I congratulate you on your fair minded dissing of both parties.
Lawrence Yun, the village idiot, is on Bloomberg right now.
Why do business channels keep putting these losers on TV?
and his advise was to buy in SD and LV since the home prices have already dropped 20-30% and there is very low downside risk…yeah right!
Bernankerupt
Are you watching Paulson now on CNBC?
http://www.cnbc.com/id/25589029
Paulson says home foreclosures will remain high
He must be reading HBB entries from late 2005.
Did i accidentally push the red button while dozing here at work and buy SKF? what is other explanation for $20 drop?
PPT in action.
Just checking to see who’s looking.
My post above from this am saying what a nice shorting opp there was right after the pending home sales news
can u short a short? damn… i thought it would go down too but not $20. crazy!
You can try a long at 134 but if it doesn’t give you $5 very quickly, I’d cut it and just wait
Are you this amazed when the sun sets and comes up every day also?
WOW i feel a bowel movement coming on AGAIN!!
My husband just got back from a jaunt on I-5 (drove with his Dad from Portland to Sacramento, then flew back to Portland while his Dad drove on to LA)…stayed last night in the Mt. Shasta recreation area. Not much traffic on the roads, not many people staying in and around Shasta. He negotiated for a room & had his pick.
The local food pantry is boo-hooing about possibly having to close its doors in a month or two, leaving “thousands of poor families to go hungry.” Note that the pantry has to have volunteers stand guard at the church that opens its door to these riff-raff so they don’t steal the lightbulbs and toilet paper - literally - while picking up their free food. I think it’s a combination of donor fatique and the belated recognition that the vast majority of those using the food pantry are bums, parasites, and people who would plead poverty but wouldn’t dream of canceling their HBO or cell-phone service or tearing up their credit cards.
A few years ago I volunteered at a mission that was feeding down-and-outs, and in my observation about 95% of the people who showed up were just plain lowlifes, and lazy. I got exiled to washing pots & pans after telling some perfectly healthy, albeit morbidly obese slug to get off his fat ass and get his own piece of pie from the dessert table, after he ordered some poor overworked teeny-bob to do it for him. We all have an obligation to help those less fortunate, but I’ve limited my contributions only to the truly needy and deserving.
You’re all heart Sammy!
I actually agree with you though, the organization I donate to have a really thorough vetting for it’s needy, including checking for financial waste such as premium TV, cell and long distance abuse, etc.
I will note, however, that even the most persnickety process for review of household finance is only as good as the reviewer. Those who work in charity have an annoying leaning toward, well, charity!
I circumvent all of that by giving 100 percent of donations to animals.
No mention is given here of how many billions in immediate gains the lenders would reap if the housing rescue is passed, or how much of that will get funneled back into campaign coffers.
Election 2008
Candidates Move Closer Together On Housing Crisis
by Chris Arnold
Comparing Plans
McCain and Obama both support major legislation, currently working its way through Congress, that would let struggling homeowners refinance their mortgages into more affordable and traditional loans. Homeowners would get 30-year, fixed-rate mortgages backed by the government. To qualify for a loan, the applicant would need to be an owner-occupant who could pay a reasonable interest rate. The lender first would have to agree to lower the amount owed to 90 percent of the home’s current value.
The candidates differ, so far, in whether homeowners should be allowed to keep their homes if they declare bankruptcy.
REVIEW & OUTLOOK
$600 Million Baby
July 8, 2008; Page A20
As the Senate prepares to vote on its mortgage bailout this week, one part of Banking Chairman Chris Dodd’s bill deserves more scrutiny. It’s a section called “affordable housing allocations,” and while it sounds innocuous, in practice it amounts to a new tax to create a permanent subsidy for state governments and political activists.
REAL ESTATE
Paulson Touts Covered Bonds
As Way to Boost Homebuying
By MAYA JACKSON RANDALL
July 8, 2008 3:56 p.m.
WASHINGTON — The U.S. Treasury Department is continuing to consider ways to resuscitate weak homebuying activity, Treasury Secretary Henry Paulson said Tuesday, highlighting the potential of covered bonds as a “promising” solution.
Thank you, Arnold. Finally, something in a housing relief bill addresses the bitter, priced out renters. I also hoping the article meant fines of “$1000 a day,” as I am not sure what a one-time $1000 fine could do to motivate a MegaBank lender accustomed to writing down their value in $3 bn lumps.
I am a bit unclear on how the 30 day notice will help loanowners with houses they cannot afford stop foreclosure, though.
Governor signs law to help homeowners keep their properties
Samantha Sondag, Chronicle Sacramento Bureau
Tuesday, July 8, 2008
(07-08) 17:06 PDT Sacramento - –
Gov. Arnold Schwarzenegger offered help to struggling California homeowners today, signing a bill that aims to keep many of them from losing their properties to foreclosure.
“Half a million Californians have subprime loans that would jump to higher rates over the next two years,” Schwarzenegger said at a signing ceremony in Oakland. “Those people need help.”
Under the law, mortgage holders will be required in 60 days to begin contacting homeowners at least 30 days before issuing a notice of default.
In addition, the law immediately gives tenants 60 days to move out of foreclosed dwellings before they face eviction, replacing existing law that allowed 30 days. It also immediately authorizes local governments to impose fines as high as $1,000 on lenders who do not maintain foreclosed properties.
It may be per day.
In one city in DFW, it is apparently a $2000/day fine if you are caught with a home business improperly zoned. They stopped hassling my last employer though. Maybe the neighbors who might have complained the first time realized that the owners foreclosure would be worse than a few extra cars in the circular drive.
It is $1000 per day — see my next post.
Has someone in Sac been reading Professor Bear’s suggestions? I can only hope. (I am feeling very happy at the moment that I voted for Arnold!!!)
The measure, SB 1137, gives tenants at least 60 days to move out when a lender forecloses on a rental property. To prevent neighborhood blight, local governments can impose daily fines of $1,000 on lenders that fail to maintain empty homes.
Banks find way to cushion losses
By Francesco Guerrera and Ben White in New York
Published: July 8 2008 23:01 | Last updated: July 8 2008 23:01
Banks are set to cushion the blow of more credit-related losses by using an accounting rule that enables them to record exceptional gains when their financial health deteriorates.
The method, which has allowed US and European banks to add more than $8bn in paper profits, faces increasing opposition from investors, analysts and credit rating agencies.
Look for bigger drops in oil prices as recession denial gives way to acceptance. Note that the economy had already been in a recession for eight months running as of February 1991.
Oil Falls $5.33 a Barrel, In Biggest Drop Since ‘91
By Anna Raff and Tatyana Shumsky
Word Count: 800
Crude-oil futures posted their largest single-day drop in dollar terms since the first Gulf War, as investors confronted with economic turmoil cashed in on last week’s all-time highs.
But Tuesday’s plunge wasn’t quite as significant in percentage terms, at 3.8%, because the overall price level is much higher. In contrast, oil’s drop on Jan. 17, 1991, of more than $10 erased a third of its value.
Auction-Rate Probe Grows Over Clarity From Brokers
By Amir Efrati, Liz Rappaport and Randall Smith
Word Count: 1,297 | Companies Featured in This Article: Credit Suisse Group, Morgan Stanley , UBS, STMicroelectronics
Federal prosecutors, ramping up criminal probes stemming from the credit crunch, are investigating whether two former Credit Suisse Group brokers lied to investors about how they placed their money into short-term securities, according to people familiar with the matter.
At issue is the $330 billion market for “auction rate” securities, which allow issuers such as municipalities and student loan companies, closed-end mutual funds or financial institutions to borrow money for the long term but at short-term, or lower, interest rates.
Weekly or monthly auctions conducted by Wall Street firms reset those rates, but the market seized last February.
Newspeak: Rush to withdraw
Oldspeak: Bank run
IndyMac faces rush to withdraw
By Eric Dash
Published: July 9, 2008
Time is running out for IndyMac Bancorp, one of the faded darlings of the subprime era.
On Tuesday, IndyMac, one of the nation’s largest independent mortgage lenders, faced what amounted to a run on the bank. As depositors rushed to withdraw money, IndyMac’s share price, already in a free-fall, spiraled even lower.
Spawn of Countrywide
IndyMac Begins Dismantling Business
As It Struggles to Keep Investors’ Faith
By JAMES R. HAGERTY and JONATHAN KARP
July 9, 2008; Page C1
Pasadena, Calif.
First, Countrywide Financial Corp. went down, as the nation’s biggest mortgage lender was acquired in a rescue operation July 1 by Bank of America Corp. Now Countrywide’s offspring, IndyMac Bancorp Inc., is on the ropes.
Former mortgage lending giant faces its grim future
How did IndyMac end up with a 41-cent stock, a junk rating from Fitch, and a run on the bank?
By Roddy Boyd, writer
July 8, 2008: 2:09 PM EDT