The Housing Bubble

yeah, the offers were totally thinning out so it levitated by sheer momentum rather than buying volume

Ditto.

There’s always the possibility that some big banks are allowed to fail, in an orderly manner, and that the hyperinflation comes from fully and quickly funding the FDIC instead of a bailout itself.

“Please let me know what your thoughts are, I am curious. I assumed, because you are a bull on gold, that you expected the hyperinflation scenario to bail out the banks..”

So, if we bail out all deposits on banks that go the way of the Dodo, where exactly is that money going to come from, as there is but $52 Billion in the FDIC piggybank, for such emergencies?

nudge nudge wink wink works for awhile when your problem is limited to a LTCM here and a BSC there, but this is so much bigger than that.

I believe FDIC is only for individual small investors, not the banks themselves - is it not?

When you guys talk about the FDIC bailing out all depositors as being a major hit.

Remember the banks are heavily leveraged so the amount of deposits is much smaller than the amount of debt.

If they go under the FDIC will use sell off the assets first to pay the depositors.

Even if they get 10 cents on the dollar it should be enough to bail out the depositors.

Yeah, FDIC doesn’t bail out banks. Though a lot of FDIC activity is inflationary, maybe even hyperinflationary, if a lot of FDIC payments are necessary I hazard a guess that the overall situation of many bank failures would be so deflationary it would balance out.

10 cents on the dollar? I bet it ends up being a few cents on the dollar. To much bad money\debt out there. The hyperinflation created will be to save the banks\economy. It’s like boiling a frog though….

i would invest in toilet paper before I invested in any dollar dominated asset… Wait the paper that is used for TP is the same that they use to make dollars right? Hmmm investing in paper might not be a bad idea, JK precious metals\commodities and no other stuff for me.

I am more interested in a return of my money than the return on my money.

Deposits are usually the largest source of leverage to a bank (your deposits are their borrowing).

Fedophiles think Bennie has infinite power in this age of infinite fiat. It ain’t so; the Fed has shot its’ balance sheet just with the Bear bailout. The system is too big to bail, and they are just papering over the fact that the banks are technically insolvent. Try to save them and the Fed fails…what a lovely thought, actually.

Watcher,

Why do you believe the Fed has a limit to the amount of deposits it can create by buying treasuries?

That is how their ‘balance sheet’ came into existence in the first place. Every time they purchase a treasury, a deposit is created out of thin air for the bank they purchased it for. All of the assets they now hold were created by creating money out of thin air.

Theoretically they could create as much money as they wanted to by just continually buying treasuries that were printed up by a compliant treasury.

Jeremy,

The compliant tresury is the tricky part. The government needs only so much money… its a lot but not infinite. So they can slow bleed the Fed and investment banks on treasuries.

The government can use this to drive the interest rates down while deflation drives costs on unfunded obligations down. Dramatically lowering costs.

So, if you had a clever guy in the treasury like say a former investment banker bigwig. You could really work over the system by removing physical currency from the system and playing some games with all this.

Right. I wouldn’t be surprised if all the equity in the entire financial system went away.

Bank depositors, of course, will be made whole up to $100K. The real question is whether the federal government will bail out holders of financial debt, which the financial companies often owe to each other, and which can take each other down.

My guess is that in the end financial bondholders will be made to take a hit too, in a debt for equity swap. Beware financial stocks. Yes the financial industry will make profits someday, but bondholders may end up with the upside.

Just ask an IndyMac shareholder, if you cannot find any BSC shareholder to ask.

True. That’s why most self proclaimed anti-gov bail-out types have it wrong. They dont understand the difference between keeping entities alive so they can fulfill their financial obligations and not cause a depression, and making shareholders and investment bankers rich. One is a perfectly acceptable role (and I would argue an duty) of the government, the other one is not. Bailing out home owners is akin to the non-acceptable gov role and to hear even educated ppl say why not bail out homeowners when we bail out wall street is so confused, and flat out wrong, I can never again take the person seriously again. Unfortunately, it is about every politician. It really shows where the money trail leads.

Or CFC and the long list of subprime lenders like New Century that went away.

Tim,

Since when did bailing out investment banks keep us from having a depression? Examples please.

Your request is unreasonable. One can not give an accurate example of what would have happened had something not occured. That is the true of all preventative measures. I can assure we would be in a much worse place if BS went down. Also, I am not sure what definition you are attributing to the term “bailing out.” If you mean no intervention at all, the consequences are obvious to anyone in the industry - system wide defaults and failures. The amount of credit default swaps and other derivative products which would be impacted and an entity allowed to file bankruptcy and escape the unwinds as well as other monetary obligations they have makes domino failures a certainty. How you can you envision a world with systemwide banking defaults without a depression result? If you can’t realistically, the fact we are not in one now shows how great it worked.

Tim,

I was hoping you could give an example from another country, or at least an example of a single investment bank failure bringing down a whole economy.

Frankly, I don’t see how it is so obvious that BS was too big to fail. The “little people” have to take it as an article of faith that if the “big people” (i.e. infestors) were harmed by Bear Stearns, then there would be human sacrifice, dogs and cats living together, mass hysteria, etc…

There are plenty of credible arguments (from the likes of such “reasonable” people as Paul Volcker) that suggest this was the worst Fed mistake in a generation. I have read that a “mark-to-market” in securities would have led to a lot of pain for a lot of people, sure, but it would have also led to a quicker recovery instead of the slow hemorrhaging that we are experiencing while the financial glitterati transfer their assets offshore.

IMO, the only people who get extremely upset when you question the BS Bailout (no, I am not the only one who considers it a bailout) are the ones who are the most heavily invested in our corrupt system and who would have stood the most to lose from a long overdue cleansing of toxic waste.

Anyway, this fiasco has made it obvious that the Glass-Steagall Act should never have been repealed.

“I was hoping you could give an example from another country, or at least an example of a single investment bank failure bringing down a whole economy.”

My whole point is that the fall-out would not be contained. We have not experienced a major investment bank failure in the US during a time when all the others are in a precarious situation themselves and would suffer severe collateral damage. Life would be easier if we had precedent for every decision, but sometimes when you are faced potential disaster you have to take action and do what you think is best after considering the alternatives. I could turn the tables and ask you to show me an example of one major investment bank going under which didnt have disasterous consequences in an environment similar to our current environment, but I already know the answer. I am not sure of your background so I will not assume one way or another how much you know about derivatives and the relationship between the investment banks, nor will I assume you are not more knowledgeable than me on the subject. It is my profession, however, and my conclusions are based on personal knowledge of how the structures work. That doesnt mean I’m necessarily right or that I am trying to say I am brighter or wiser than anyone else. I mention it just to make the point that it’s not something I thought about a few minutes and sent out a cursory response. It’s something I consider on a daily basis with a lot of personal knowledge regarding the subject, and after talking to numerous insiders. My knowledge is not media based, nor altered by media or political bias. In the nature of full disclosure, I admit I have a financial bias and have a relationship with many of the key players that would be affected. I do not believe it is impacting my beliefs however, other than giving me insights others may not have.

As Diogenes (the original) would tell you, a good skeptic would never blindly accept information from someone with a vested interest in self preservation…hence the dogma from RE agents that “it’s always a good time to buy!”.

It is entirely possible that your biases do lead you to only see the worst-case scenario, but you seem intelligent and at least genuine. I can’t fault you if that is what you honestly believe. The only issue I have was that we had to take your assertion as an article of faith. It’s always considered more intellectually honest to at least mention that there is a credible dissenting view.

In the interest of full disclosure, I recently finished medical school and residency, and am now going back to college for a math/computer science degree part time. I also have a strong interest in macroeconomics…so I’m just a geeky professional student who believes in using empiricism and the scientific method in verifying a central thesis.

No worries, you sound intelligent, and I dont mind anyone disputing what I say. It’s hard for me to use too many real examples, however, because I am not a history buff. The exposure I know of is my client’s exposure so I walk a fine line as to what I can say. I can tell you though that every investment bank I represent was terrified that GS would go under, and had reason to be terrified. It’s not like other industries where a competitor going under is good news.

As far as my self interest it cuts both ways. I currently represent investment banks, but given my accumulated savings, if I can continue to preserve my principal (its mainly in CDs now with 7 different banks, so even if one fails I should be able to make a run on the others and then collect from the FDIC), economic collapse would make me a very rich man. Every percent the market drops for me hurts my clients, yet represents greater opportunity for me for investing my life savings.

GS = BS

Yup, that’s definitely the path that we seem to be on. Let the GSEs take all the losses, and then use printed money to re-capitalize them in the name of “saving the ailing homeowner” or some other BS catchy headline title.

The Fed does not have unlimited power, but they do have the power to monetize these losses, and to help the banks distance themselves from the losses. Coupled with the GSE’s, the banks will take much less of the loss then they deserve, dumping much of it onto the backs of the American taxpayer.

Anybody see on the subject yesterday? Seemed out of character for him, if I’m understanding hime.

Oops, screwed up that attempt at creating a link. It’s about an article Cramer released yesterday on the GSEs. Looks like it still works if you click it, I just messed up the format.

You stole my line, LOL. The way I’m positioned now I can think of nothing better than what TX described.

I think that’s her point.

One phenomenon from the network equipment sector has been hyper competition - consolidation of the service providers has caused extreme price pressures on the equipment providers (I work for one). This of course has hit the bottom line very hard - and in many cases also triggered consolidation of the equipment makers so that *they* in turn can pressure the chip makers etc.

It’ll be interesting to see if the same happens in the banking sector - I’ll bet it will. There will be *lots* of consolidation going on in the next few years. I’m not sure what form of hyper-competition may look like (if that happens) - perhaps lowered interest rates or such.

RTC had a specific mission and worked at that time.

My gut tells me this is just to darn big.

Perhaps regional RTCs?

Oh dear!

Leigh

That’s resecuritisation of real estate mortgage investment conduits. Also known as: mutton dressed as lamb. Or in the patois of the international back-office banking shameless: recooked CDOs
Bloomberg reports today that re-Remics are growing rather popular:
Goldman Sachs Group Inc., JPMorgan Chase & Co. and at least six other firms are repackaging unwanted mortgage bonds as sales of CDOs composed of asset-backed securities fall to less than $1 billion this year from $227 billion in 2007 because of the global credit crunch.

http://ftalphaville.ft.com/blog/2008/07/08/14374/the-re-remic-gimmick/?source=rss

Its pretty mind boggling to think the federal gov’t taking over the GSEs. Fannie and Freddie secure 5 TRILLION in debt. The federal government’s deficit is currently ~3 TRILLION. That means that the federal government’s debt would balloon to 8-9 TRILLION. I couldn’t imagine how the dollar will look then. And also, if there are 300 million people in the US, that’s like 30K per individual in national debt. so that’s like maybe 100K+ in household share of the national debt? I can’t see taxes NOT rising in that scenario.

Can you say “Tax Revolt”?

I knew you could…

“A Tax Revolt is a political struggle to repeal, limit, or roll back a government-imposed tax.”

“In the United States, it is often used to refer to a series of anti-tax state initiative campaigns. The first significant wave of these campaigns was during the 1930s. The Great Depression introduced unprecedented tax burdens to Americans. While real estate values plummeted and unemployment skyrocketed, the cost of government remained high. As a result, taxes as a percentage of the national income nearly doubled from 11.6 percent in 1921 to 21.1 in 1932. Most of the increase took place at the local level and especially squeezed the resources of real estate taxpayers. Local tax delinquency rose steadily to a still standing record of 26.3% in 1933.”

“Many Americans reacted to these conditions by forming taxpayers’ leagues to call for lower taxes and cuts in government spending. By some estimates, there were three thousand of them by 1933. Taxpayers’ leagues endorsed such measures as laws to limit and rollback taxes, lowered penalties on tax delinquents, and cuts in government spending. Partly as a result of their efforts, sixteen states and numerous localities adopted property tax limitations while three states instituted homestead exemptions.”

http://en.wikipedia.org/wiki/Tax_revolt

The Federal Deficit is almost at $10 Trillion, not sure where you get the $3 Trillion number… Google ‘debt clock’ (Although I’ve seen $10 Trillion by the end of Bush’s presidency in other sources)

Well, remember that the debt that the GSEs have is actually an asset, that 5 trillion dollars in loans aren’t a liability.

However, if you, like me, expect many, many of these loans (especially once the dumping really starts of crap into the GSE coffers) to go bad, you would anticipate that much of the 5 trillion in debt will go unpaid, and will incur losses. However, the losses will be FAR smaller then the 5 trillion in secured debt; even 20% of that would be, IMHO, a high number (given that many of the loans made are fine/stable, and those that do default aren’t worth 0, they are worth less then the loan value, but not 0).

However, I don’t disagree with your final point. Taxes will rise to help offset the losses that the GSEs will take. Again, private profits, public losses. The way of the capitalistic world.

Also remember that the GSE debt is back with tangible items - literally “real” estate. The Federal Government’s debt is backed by… well, it’s backed by the full faith and credit of the Federal Government!

Circle Jerk Economics

Appears they’ve found another way to sell this crap.

Toxic CDOs Given Up for Dead Coming to Life With Pension Funds.

July 8 (Bloomberg) — CDOs are back.
Collateralized debt obligations that helped drive banks to $400 billion of writedowns and credit losses are finding buyers under a different name: Re-Remics.

http://www.bloomberg.com/apps/news?pid=20601109&refer=exclusive&sid=a0TGMrBy2PyE

Fanny and Freddie 5 trillion debt hey? Do you know you can buy all the gold in the ENTIRE WORLD for a few trillion?

The ratio of good\bad money has got to be insane, I can’t even fathom it. Anyone want to take a stab?

Fathom?

20,000 leagues below the sea kind of fathom?

Re: GSE bailout.

Upthread it was stated that the GSE would buy up all the banker’s crap with their newfound freedoms. I believe we recently saw news that the only crap the GSE is buying is their own!

I’m pretty certain that Benny B. and the boys can’t force the bad paper of others onto these GSE. Above all, they are corporate entities with a corporate will to survive. They will look out for number one.

Will it work? Do they survive? Maybe, but I don’t think their shareholder equity will, after all, investors are rich and can thus be screwed over, right?

I haven’t seen any reports of civil unrest in Zimbabwe. Mugabe seems to have the population well under control. All the problems seem to be caused by his own people.

Billionaires are usually very well behaved people.

“Well behaved people.”

Apparently, Emperor, you’ve not hung out with too many….
I think the adjective you’re looking for is “insulated.”

The trouble with trillionaires…

LOL!

Blano, check it out:

http://www.democratandchronicle.com/apps/pbcs.dll/section?Category=specials35

Thanks for the heads up!! My resume’ got shot down already, but I’m still looking around the general area.

Cheap water transportation.

Kind of the environmental version of the ‘greater fool’.

If we could just package and sell the zebra mussels in some sort of CDO-like package, the circle of crud would be complete!

Unless the Snakeheads eat the Zebra Mussels.

No, we’re just the a country with ignorant people that contains most of the world’s most prominent universities and academic institutions but still has third-world level secondary education.

Oh please….the Dems used that filibuster BS for years in the Senate against judges. Do a little homework before spouting off.

It’s a bipartisan stall tactic.

I stopped believing the DEMs give a shit about any of their rhetoric when I read about Pelosi pulling language from a recent bill that would have forced a congressional vote before Bush could start an Iranian war (actually before that but this is the most recent example of their subterfuge).
We have an upcoming vote in the house (H-362) which to date has 225 sponsors and which forces Bush to commit an act of war against Iran (naval blockade). Do you hear anything about this on MSM? Are any of the precious DEMS out there expressing their outrage against this idiocy? They are ALL assh*les which are bought and paid for.
These idiots knew about the upcoming economic collapse and they knew about the upcoming energy crisis (this ain’t it). They have done nothing but exacerbate what is coming through their actions and inactions. I don’t believe it was by accident/ignorance. I don’t think many americans have any idea what is coming.
That’s my tin foil rant for the day

If it’s not in the MSM, then how can Joe Six Pack disapprove of it in a survey of Congressional Approval? The low Congressional approval rating is due to the general lack of bills passed, which is due to filibuster in the Senate. The News Hour on PBS did a report on this, using Iraq war funding legislation as a case study.

And blano, in general, Congressional approval ratings are measured for both the House and Senate, depend on legislative activity, and affect the re-election of Congressmen. Since the judicial appoointments do not involve the House, do not affect the passage of bills, and don’t really bear on elections (only the reelection of 33 Senators would be at stake), the argument about filibuster of judicial appointments doesn’t really apply here.

Yes, admittedly, I’m defending Democrats here, simply because they are ones under attack at the moment. We could have the situation exactly reversed two years from now –involving a majority Republican House and Senate and a Democratic President Obama. And my logic would still be valid.

I don’t necessarily disagree with your logic, too often the implication is that it’s a one-way street.

IMO, the very best Congress is one that is out of session. Everything they do is a knee-jerk, close the barn door after the horse is out response to MSM perceived and reported public opinion. The response is always “modified” to suit the big financial interests and best paying lobbyist groups. They spend huge amounts of time and energy selling their stuff to the masses of ignorant voters via the corrupt MSM.
Common sense has no place in any Congressional action.

Just look at the facts;

6 years of Rep. controlled house, senate & white house….No presidential veto’s of ANYTHING in six years..!!!….Dem controlled house and basically a split senate with a rep. in the white house…..Putting blame on dem’s even as incompetent as they are for the crisis we now face as a nation is just asinine IMO….Its been Ideology & collective GREED that has us in the position that we are in today….:(

Isn’t the new theory now that it isn’t tomatoes, but something else altogether??

Yep, apparently the culprit is now jalapeno peppers, especially when in salsa.

As I believe I have mentioned before on this forum, many Roundup Ready seed stocks are engineered with a GM e.coli virus as the recombinant carrier.

As we all learned in Bio 101, viruses/ii, even attenuated, tend to mutate.

We the Public may draw our own conclusions as to the origination of these outbreaks. My own is that feral pigs were likely not the source of contaminated, industrial ag-grown spinach leaves.

I’m in agreement in general with Aladinsane, although precious metals makes up only 10% of my portfolio while it’s probably 100% of his.

Psychotic rants in Atlas Shrugged? Please spare us the insults. I doubt if you could write as 1/10th as good as Ayn Rand did. Although I prefer “The Fountainhead.” People who do not understand the books turn to insults. Also people who do understand the books and hate the fact that individuals should be free to practice capitalism and personal lifestyles others disaprove - they too resort to insults.

“I doubt if you could write as 1/10th as good as Ayn Rand did.” Was that an insult?

She blinded me, with science.

Is this blog about gold or politics, I forgot? Oh wait, it’s about REAL ESTATE. Focus on the crisis, nimrods!

Agree 100%. If you want to rant about the collapse of civilization or whatever, start your own blog, build your own audience, instead of leaching off of Ben’s.

“Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.”

I believe this covers a lot of ground…

Leave the censoring job to Joe MacCarthy. (or some more recent vintage of him)

I choose both, thankyouverymuch.

Why aren’t you worried that prohibition will be reinstated?

Naz Drovia!

Congress is already going after oil speculators. I think oil is to 2008 what gold was to 1936.

Any asset hoarding deemed against the ‘public interest’ is vulnerable to nationalization.

The main reason ALL of my Gold is overseas, is the threat of over-seize.

“на здоровье”

Are you saying that you are keeping your foreign investments in Russia?

aladinsane,

Seizing foriengners assets is an grand old world tradition. Getting some percentage back from uncle sam might seem like a good idea.

Really consider getting a good safe, firearms and security system. Then its secure.

Course its hard to use in practice.

He is simply saying ‘cheers,’ or more literally, ‘to your health’ or something close

Honestly don’t you think that if you have to use gold to buy groceries or go oversees to reclaim it that we are so screwed it won’t really matter??? Its one thing to have real estate or the stock market crash, its another to dream up these doomsday scenarios where the dollar is worthless and we are all carrying gold bars as currency. I say that can’t and will never happen.

The bottom line (very simplistic I know ) is that our government has a huge debt. They and the dollar ARE too big and widely held to fail and will not let it happen. Other governments holding our debt have a very vested interest in keeping the dollar from failing. Falling is OK, failing is unacceptable. We are not Vietnam, Chile, Venezuela, Mexico, Germany in WW II, etc. It could be painful, it could be scary, but honestly the idea that the dollar becomes worthless and we all need to be running around with gold is absurd. Afterall if they come to collect,we have a decent military and some nucs to deter that sort of stuff….

Hope this doesn’t make too many of you angry, just my 2 cents…..

Aladinsane:

what country would you recommend to us readers for holding gold? And if things get so desperate the government is confiscating gold, there will probably be throngs of unemployed thugs roaming the streets doing muggings, carjackings, and home burglaries. Wouldnt it be more prudent to move my body off shore than my savings?

http://www.perthmint.com.au/investment.aspx

The Perth Mint gold storage option is one that comes to mind. Of course, come the Apocalypse, the motherless Red Chinese hordes are probably going to invade Australia and seize your gold anyway.

David

You’ll have to due your own diligence…

I expect much social unrest to occur and possibly a “might makes right” situation, with so many easily concealable handguns floating around the country, motivated by fear.

We like to travel overseas, so we plan on being away for months or years, should the going get weird.

Ben Graham and Warren Buffet as well.

Don’t buy stocks in a Goldilocks market, wait ’till everything is going to hell. Buy when Wall Street conducts one of their periodic clearance sales where everything is priced to sell.

You act as if he was the only person buying from the Vietnamese, or the idea that they didn’t know the going rates per Tael.

There are probably quite a few people in Westminster, Ca. whose first business transaction in our country, was with him.

“Wow, that’s great. Buying gold from desperate refugees at rock-bottom prices. How “moral.””

Sure, sure, and motorcycle riders know that there’s no such thing as the right of way. When an SUV runs a red light and pulls in front of you, you act to save your life. Your right of way is worthless and could easily get you killed.

There’s a direct analogy here. Sometimes people choose to save themselves rather than play nicely. I’d rather be hated for taking care of myself, and doing it well, than be discarded by society for playing nicely straight into desperate poverty, and that’s exactly how I see the continuum.

Some of you would quibble over the caliber of the bullets being loaded into the rifles, as they lined you up against the wall…

Oh, so there were Vietnamese predators too? I guess that makes everything OK. If a slave trader bought his cargo of slaves from an African tribesman, then slavery must have been moral too. Thank you for clarifying that, oh wise one.

Most decent Americans, upon seeing a bunch of penniless, desperate refugees, would say to themselves, “how awful. What can I do to help?” They would donate — DONATE, mind you — money, food, clothing and medicine.

But your friend the gold merchant — who probably has American citizenship but does not really think of himself as American; I suspect his loyalties lie elsewhere — decided to load up a suitcase with cash and go over to the refugee camp to look for incredible bargains.

There was incredible human suffering all around him — orphaned children, families torn asunder, the sick and the dying — but your friend did not give a flip about that, he was there to look for money. Even today, he doesn’t look back on that awful spectacle with sadness. He just gloats over the huge profits that he made. It’s 33 years later, YOU weren’t even there, and you are still salivating over the very thought of those big profits. Disgusting.

If you don’t understand that is monstrous, there is no hope for you. Even the words you used to describe it — “earn their freedom” — are sickening. Freedom isn’t something that you have to earn. It’s an inalienable right.

And let’s talk about where that gold came from, shall we? This is the Third World, we both know how things work down there. Most of the people with gold weren’t prosperous businessmen or farmers. Some of them were, but most were people with connections — Army officers, petty government officials, etc. — who took the gold from the coffers of the dictatorship before they left. Since they had some of that blood money, they were able to buy tickets out of town. Your friend helped make that happen.

The others? Regular people, peasants, orphaned children, the elderly? They were SOL. They didn’t have anything to sell to your friend the gold merchant, and as a result were unable to “earn” their freedom.

YuppieNOVARenter — I obviously don’t blame the refugees. People have to make hard choices in that part of the world, and if I was a Vietnamese person with connections I’d have helped myself to some gold, too. That’s just the way things work in the third world; it’s a harsh place.

But Americans don’t do things that way. We don’t have to live like that, and when we see someone in need, we help them.

“The others? Regular people, peasants, orphaned children, the elderly? They were SOL. They didn’t have anything to sell to your friend the gold merchant, and as a result were unable to “earn” their freedom.”
____________________________________________________

Life was a series of missed opportunites for many that got to stick around Ho Chi Minh City, and get a re-education because they didn’t have a Plan B.

Wow, aren’t you the grizzled veteran. I guess that childhood in Pacific Palisades really made a man out of you and taught you how to survive in this harsh world, huh?

I went to high school with a couple of Vietnamese refugees. (The churches in my blue-collar Midwestern community sponsored the resettlement of quite a Buddhist refugees. I’m sure the people of Pacific Palisades did even more to help — right?) My friend Nhan was one of the boat people. He was from a peasant family, and when Saigon fell they crowded onto a leaky fishing boat which wound up carrying 24 people. Only 19 survived the trip. Two were actually eaten by sharks.

Too bad Nhan, who was 8 years old at the time, didn’t have the foresight to “have a plan B.” I guess he should have been smart — and tough — enough to load up on some taels to sell to your friend the gold merchant when he made landfall, huh? I guess he got what he deserved.

Your friend the gold merchant met a lot of people like Nhan when he was in the refugee camps trolling for bargains. Those places were filled with them. No doubt he was overwhelmed by the human tragedy of it all, and on the spur of the moment decided to adopt several Vietnamese orphans — right?

Alternatively, I’m sure he donated a large percentage of his profits to help those unfortunate people. Right?

You make me sick.

Traders buy and sell, and work the middle-ground between profit and loss, nothing more.

Lots of Vietnamese suffered after we left them in the lurch, but not the ones he staked to a new life in this country, because of their foresight…

Actually, the refugees were using their gold for what it’s true value: to get the hell out when the SHTF. Some of my coworkers spend a LOT of time in Africa. The ones who spend a lot of time in the REALLY bad parts wear big gold watches and a Mr. T type gold chain (under their shirts, of course.) It’s not jewelry, it’s not an investment, it’s insurance. If they really do need to catch the last-flight-out, upon their arrival at the ticketing counter, they will be told that there’s no seats available. After removing the watch and chain and sliding both across the counter to the ticket agent, they never fail to get a seat.

“Hey, I just work here.” I just love the rationalizations people come up with to place themselves above human suffering.

58,000 Americans didn’t come home from that war…

I suppose we can blame that on him, as well?

“Wow, that’s great. Buying gold from desperate refugees at rock-bottom prices. How “moral.””

I’m guessing a goodly number of those “desperate refugees” were the same corrupt government officials who misruled Vietnam for years, then looted the treasury before leaving their unfortunate countrymen to their fate.

More like your small change.

“People keep talking about value as it relates to this or that asset, but knowledge and skills and the ability to employ them are the ultimate value in human society.”

Too bad the abnormal return on stocks and bonds over the past twenty years coupled with shrinking middle class incomes have brainwashed a generation into thinking the way to wealth is through asset ownership. This belief did not work out well for many in the 1930s, and I am afraid the ship is on a similar course today.

To elaborate on this point, think how much one could have made between 1996 to the present by purchasing a home in coastal California circa 1996, selling it in 2005, and renting thereafter. The returns to this strategy for anyone living in coastal California swamp out the potential return on human capital for all but a minuscule share of the population.

Using the good Professor’s theory, having bought our coastal home in 2001 and sold it in 2005, we could have rented a $2500 a month house for about 20 years, on our profits from the sale…

PB has abnormal consumption restraint genes…my guess is that 99.825% who saw their homes increase $125,000 per year took out a HELCO thinking that… at worst… the future equity increases would only decline to $62,500 per year…

“and then…it went dark!”

as it is calculated today, the unemployment number is not the number of people out of work. it is the number of people out of work and actively looking for jobs. people who aren’t actively looking or who have ‘given up’ aren’t included.

so if it was calculated the same way during the depression, the jobless number would have been significantly higher than 25%

My point still stands. Everyone made it through one way or another, and the more employable someone was, the better they did. A lot of people with basic survival skills as I’ve described, probably took themselves out of the “official” work force, as they simply did what they could for others, and got basic staples in return.

I’d like to be an investor……

But I usually end up being one of those “Buy High, Sell Low” guys.

Right on! Best wishes on your goals…Isn’t America great…you can be useful without being involved with the “daily” happenings of Wall Street or the marble halls of the Capitol. At least until April 15th or you open IRA statement

(plus I think I’ll enjoy accounting more than IT)

I have never met anyone that enjoys accounting.

I have never met anyone that enjoys accounting.

So far I do, academically anyway. I actually had fun doing an audit project. I realize that may or may not be an indicator of enjoyment of the profession.

I can only compare that to my computer science academic experience, which was painful. Who knows how the two careers will match up.

Auditing is very much different from pure accounting. The burn out rate in auditing is very high and encouraged for the most part. Usually high travel involved.

With your IT background, you might look into IT Auditing, lots of demand right now(and high travel as well).

Yeah, the travel bit is the part I’m apprehensive about. Actually I hate traveling and don’t like the big city.

In any case, I’ll suck it up for a couple years to get some experience under my belt. IT/security auditing is definately where I see myself when I graduate. It makes the most sense breaking into the accounting field and gives me the best chance to do so without completely starting over salary-wise.

The thing I like about accounting is that once I get that CPA (and really just having the degree) opens a lot of doors. You can be an accountant doing many distinctly different things: audit, financial (all kinds of specialties here), tax and then I’m really interested in forensic accounting and/or fraud investigation at some point.

Or maybe I’ll just move up to the hills, make moonshine and do taxes/accounting for the locals. That wouldn’t be so bad either.

I’m saying that between 1933 and 1975 gold was essentially worthless. I heard of people literally throwing their double eagles in the trash. You couldn’t find buyers since it was black market (in the U.S.), and if you could they wouldn’t pay much.

But I’m also saying that “worthless” is true only in the hindsight sense. My life insurance that I bought 5 years ago has been worthless for the past 5 years also, since I haven’t used it and it wouldn’t fetch anything on the open market.

Gold is worth *something* purely as a commodity, since it’s used for electronics and jewelry. It’s not worth nearly $920 for those reasons though. Maybe $80 of its price comes from its commodity value - the rest is safety net speculation. (Yes I pulled $80 out of the air, but it seems about right based on stats I’ve seen on actual gold usage as a commodity).

In the end - guess it depends on how you define “worth”. In this case I’m excluding the safety net as a portion of worth.

A perfect analogy would be that a generator is worthless if you never lose power in your home (unless you use it for camping). Problem is you never know until hindsight whether you’ve ever lost power in your home. The week you lose power it becomes worth a whole lot; problem is then the stores all sell out before 99% can buy one.

Only Gold coins dated after 1933, and Gold Bars were illegal for Americans to own, until 1975.

This law was easily got around by restriking earlier dated coins (1915 Austrian 100 Corona, 1908 Hungary 100 Korona, etc)

$20 Saints or Libs (.97 oz) sold for around $45 to $60 in the 1960’s

Well I was just a twinkle in my Dad’s eye in most of the 60’s, so can’t say firsthand - just going by what my local dealer mentioned. He was more speaking of the earlier portion though - the 30’s and such.

Gold coins dated pre-1933 were also illegal to own then, at least any amount held more than $100 that weren’t numismatics. Like I say though - confiscation wasn’t really enforced.

BTW there were no U.S. gold coins minted after 1933. At least not until the 70’s.

It’s a straw man argument to speak of the value of gold with the condition of ignoring or discounting it’s value as a safe haven. That is IMHO it’s primary driver, and always will be.

Go ahead and name a circumstance under which gold will fall to 10% of it’s current value. I’ll name any number of circumstance where stocks, bonds, currencies, collectables, etc. have done exactly that.

I see these people at the flea market all the time.

The best ones have a good eye for collectibles, comics, LPs, furniture, jewelry, etc. — even if they don’t know what it is or what it’s worth, they follow their instincts and worry about it later.

Thanks k-k-k—keeennn.

Plenty of underfed horses around here last winter…real sad. I can’t stand these @ssholes who never consider the cost to care for the beautiful animals.

There are people who value money above everything else.. are you one of those?

Reminds me of the occasional retard who showed up here last week saying Ahmadinejad made the statement “I want to wipe the US off the map”. Everyone knows that he never made such a statement. Of course the nattering loons can’t let go and admit he’s just another boogeyman to play the fear card on.

“There are people who value money above everything else.. are you one of those?”

Not me, boss! I value raining death and destruction upon an entire country, sentencing future generations to disfigurement and misery from all the depleted uranium, turning a beautiful country into a smoking wasteland and painting a huge bullseye on the @$$ of every American.

That’s what I value. [cue: "Proud To be An American" with dramatic F-16 flyby]

Iran isn’t so nutty. Either the US doesn’t go in and looks weak, or the US goes in and becomes weak fighting 3 wars. How better to defeat a powerful capilitalistic enemy than by forcing them into bankruptcy.

..I value raining death and destruction..

War does have value. Through it we regain peace and tranquility.
Now claim we can live without war.. i’ll wait.

Al, if it ever gets serious, we’ll get serious. The “compassionate” war like that in Iraq, where we expend unneeded amounts of money and American blood for the sake of sparing a few innocent lives, will be a thing of the past.

Iran has some serious choices to make. It controls it’s own destiny. If it chooses to be a nail, we know how to be a hammer.

“War does have value. Through it we regain peace and tranquility.”

According to some flawed ideology. Next you’ll tell us death and destruction is a good thing.

So are you ready to put an equity stake in this and mobilize yourself and your family? Have you written the $16,000 check you owe as payment for the current debacle?

Iran is a much different country then Iraq. A much larger population. Their troops will not fight because they are told too. They will fight to protect their homes and their families.

Remember, this is the same country that gave “keys” to Heaven to 13 year old boys and walked them across the minefields in front of the tanks in the Iran-Iraq war.

Do not underestimate their fortitude. And do not overestimate our lust for war.

Don’t forget the Iranians are Persians, not Arabs. Most of them, anyway. For centuries Persians have shown themselves to be more intelligent, resourceful, clever, devious, and disciplined than Arabs could ever hope to be. More formidable foes, in other words.

One of the L.A. nicknames for Persians(about a million or so) in city of angles, is Irangeles.

wow..talk about deja vu .. That’s almost word for word what we had to listen to before the first gulf war..

“That’s almost word for word what we had to listen to before the first gulf war..”

Word for word? Wow . . . . I’m impressed. So, how’s that “war” going in Iraq? I hear it went so nice–we did it twice.

The U.S. didn’t even try to occupy Iraq after GW I (knowing it to be a fool’s errand). They “won” and went home. George W. et al . . . well, not so bright. Gives new meaning to the word “hubris” [God! I love that word--it so applicable these days]. They’ll never “win” in Iraq. They can occupy certain areas with a huge military presence, but like Afghanistan, holding a few towns doesn’t make the country yours.

Now Iran . . . well hold onto your laptop . . . that’s gonna be a whole different ballgame. If it goes down, it won’t be just vicarious hoo-rah on CNN for the testosterone-challenged. Iran is baiting us and we’re going for it–but it’ll be a bridge too far.

Of course we didn’t try to occupy Iraq. Evidently you’re too young to remember that war. Pick up a history book (preferably not a modernized leftist one, although most of the basic facts should still be in there somewhere.)

Learn why we went there and what the goal was.. about how Stormin Norman wanted to go all the way to Baghdad but wasn’t allowed.
Quite a few very interesting things happened (and didn’t happen) in so short a war.
..so do some research and then we might continue this most interesting discussion in a manner worthy of Ben’s bandwidth.

joey,

You bring nothing to the table like nobody’s ever done before…

joey,

How many average Iranians on the street have you talked to?

And your dogma is stuck in the 1st century, so what makes you any better?

“you’d be surprised at what the average Iranian on the street would have to say about eliminating the current Iranian leadership. Most of them are actually ready to exit the 9th century and join the modern world.”

I attended college with many Iranians. My roommate was from Tehran. Iranians are hardly living in the 9th century. They have many smart, highly educated, and–compared to U.S. kids–worldy young people who put most of our college kids to shame. Ex: when I was in college the Iranians kids coasted through their first two years–it was all review for them.

Man in the street? I’m sure you’ve chatted with dozens. Perhaps you mean well-groomed “exiles” like Chalabi who would say anything to butter his own bread and appease his neocon patrons?

Who wouldn’t like a change in their government? I sure would. When they’re not smoking hookahs and building nukes, I’d bet the Iranians are in no hurry to trade their status quo to become another vassal state wasteland — er, “democracy” like Iraq. Spare me the trite neocon agitprop.

Wow–you’re keeping score? Deduct away! [ouch]. I equate the MiddleEasterncountrythatcannotbenamed with South Africa in the 80s. Fact-based-thinking. Sorry if I picked on a sacred cow . . . We sure pick some peachy allies, though, don’t we?

I attended college with many Iranians. My roommate was from Tehran.

and i’ve worked with Persians who someday planned to return home and overthrow the Shah .. but pissing contests don’t interest me.

As an ally, i like Israel.. they got guts. They aint afraid of fighting to defend themselves and will pre-emptively strike if sufficiently threatened. You’ve gotta respect that. (oops.. i forgot what i was talking to.)

“They aint afraid of fighting to defend themselves and will pre-emptively strike if sufficiently threatened. You’ve gotta respect that.”

Why should we get involved in Israel’s matters, then?

My plan for dealing with Iran (for what it’s worth…):

-Do nothing until next President is elected

- Next President goes on a “charm/love offensive”. Go to Tehran. Have a few sit-downs……who knows, all this bombast they put out may be for their own J6Ps, or to run up the price of oil in the futures market.

-Tell the world that we don’t have a problem with Iranians possessing nukes……if their immediate neighbors don’t seem to have a problem with it, why should we?

-Explain to them (in private) the responsibilities/consequences of being a nuclear armed nation. Make sure they understand the downside of any nuclear “accidents” or “incidents”.

-Announce the availability of the Patriot and Aegis/SM-3 missile defence systems for export to our “friends”.
For a nominal fee, of course.

(Some will argue that these systems can be defeated. I believe that they will/can work well enough to generate a lot of uncertainty about how many missiles would actually get through to a target).

Of course, the Israelis will do something to eff up the plan, and let Uncle Sugar fix the mess afterwards.

This plan of course, is contingent on not knowing what the President/CIA/NRO knows.

-

Why should we get involved in Israel’s matters, then?

Unlike Vegas, what happens in the ME does not stay in the ME.

Now, if the environmentalist would cut us some slack and let us extract our own oil and build more refineries, and stop opposing nuculear power, etc, etc, etc, we might not be as interested in these mid east squabbles..

Of all the sandboxes in the middle east, Israel’s has no oil.

joey… Feel free to embrace any lie you’d like but please refrain from repeating them here.

The facts is that nobody has stood in the way of building more refineries. In fact, there hasn’t been one application for permitting a new facility since 1979. So why is that? Why were crude importers mothballing refineries as recently as 1999? Further, why do you fail to mention that the Oil Heat Institute funded Greenpeace….

hmmmmm?

um.. yes. Israel has no oil.
You’ve found a dot. Now draw a line to dot #2… then #3 and so on, until you run out of dots. Then stop.

So many dead wrong ideas and assumptions–I don’t know where to start. Here goes . . . .

In the U.S. we have this thingy called the Constitution. It is what we are all about as a country. It is our moral compass. Torture is unconstitutional and immoral. Next.

Spying on citizens without probable cause is unconsitutional and–again–immoral. We believe in the presumption of innocence (even if our government does not). Next.

“They” killed 3000 of our people on 9/11. Yes “they” did. Which “they” are you referring to? The conspiracy theory or the other conspiracy theory? Next.

” . . . given the fact that 100% of the GI’s captured by the other side has [sic] been tortured to death - for propaganda purposes and kicks . . . ” OK, this is just ludicrous and (depending on where you get yourself information) proves you to be an overly-credulous “tool”. Next.

“Some of them were factually wrong. But they weren’t lies - we had no way of knowing that Saddam didn’t actually have WMD’s.” Wow!! A true believer in our midst. Put down the remote and DO SOME RESEARCH! The truth about the cavalcade of lies is out there. Even the servile corporate media has begrudgingly admitted it was “played” by the White House/Pentagon. Next.

So . . . you condone pre-emptive invasions of sovereign states based on specious information, approve of torture (short of hacking of limbs–that’s just inhuman, right?) and are OK with pro-actively spying in citizens because there’s an evil terrorist behind every tree. Sound about right?

You *are* a U.S. citizen, right? You actually believe in the Constitution? You might want to get a refresher course on what this country is all about. If not, a one-ticket to the banana republic of your choice might make you feel more at home.

“If ye love wealth better than liberty, the tranquility of servitude than the animating contest of freedom, go from us in peace.We seek not your counsel or your arms. Crouch down and lick the hand that feeds you; may your chains set lightly upon you, and may posterity forget that ye were our countrymen!” –Samuel Adams

Do you have anything to add or are you too busy popping zits?

I just started a marketing class this week. The book claims that ~$.50 of every dollar spent by consumers goes to marketing.

Seems high but I would not be surprised.

I keep track of my input costs (I’m an excellent cook, and I cook a lot. It’s a hobby.) They have gone up but nowhere what people claim.

And at the higher end, some of the luxury goods have gone DOWN even with the high euro. Demand destruction, I assume.

Same with the organic free-range eggs, etc.

The exact phrase was “In advanced economies, marketing costs about 50 cents of every consumer dollar.”

So it might be a measure of cost/revenue ratio…they didn’t site a reference or anything. Also I believe they are using a broad definition of marketing, including things like determing overall direction of the company and no telling what else.

Anyway, I think your point stands. Marketing is a significant input cost. I’ve often thought that a person could probably build a successful local business with very little marketing, via word-of-mouth, cheap roadside signs, handing out business cards to other business owners, etc. I’m guessing that the exorbitant costs of marketing is a product of large national and multi-national corporations that require vast amounts of revenues just to “maintain”.

-Current EPA rating for the Prius is 46mpg.

-Doesn’t compare acquisition costs of the vehicle. SUVs are cheaper than dirt right now. Toyota dealers are (as usual) on max-price-gouge mode for the Prius.

A question for the HBB brain trust…..the current EPA “Highway” cycle for determining fuel mileage is only 12 minutes long. What happens to the highway mileage as the battery gets drawn down?

I’m guessing that the mileage drops down to what you might expect from a low compression Honda Civic, loaded with 500 pounds of batteries.

I get 49-51 mpg with my Civic hybrid doing 65-70
The prius 2001 gets 48-50.

There is no drop off on mpg after 12 minutes
The engine in the hybrid is smaller thus you get better mpg even on the highway. Even at 65mph you need only a fraction of the horsepower in most cars. With a hybrid you only use the electric motor to accelerate, when you back off the engine recharges the battery.

Now if you drive 100mph, or drive straight up a mountain or tow frequently at full capacity a hybrid may not be the right car for you, you are better off with a diesel.

If you drive the speed limit on flat terrain or rolling hills or better yet drive in the city get a hybrid.

“Mugabe however, ran off the experienced white farmers and gave their land to black supporters of his, a scheme that intensified in the last 5 years.”

This is true but Mugabe didn’t do this by himself. He had plenty of help coming to power from the do-gooder crowd who seem to be nowhere around now that the country has fallen into total chaos. Unfortunately SA seems to following into the same pattern.

Just pinging away at the sitting birdies. Let em stretch their wings, then BLAM.

Tomorrow beerboard the Oregon communists.

Im being boarded by the greyhound.

rather, Im vodka-boarding myself…..Im off the barley and malt, and long potato’s…

For the Glory….for the lucre…Short the GSE’s, FRE and his red headed sister to a buck and change.

beware the curse of Nationalization. The beltway mopes will not let them go under. See how much debt is outstanding and since the owners of the debt are in NY (surprise, surprise), the question Nationalize? or Federal Reserve Guarantee? One of the 2 will happen.