Bits Bucket For July 14, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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What do we call them now FEDdie Mac or FEDdie Mae. Something kind of surreal looking at it as “FED” “die”. Oh well.
What the Federal Reserve acknowledged was a there is a problem with the GSEs. Opening the discount window is a joke. If Fannie/Freddie use the discount window, the patient dies. It is a short term stop gap and hopefully it works.
“…What will force the issue is the ability of the GSEs to raise new capital and credit from private sources. They must do both to keep playing the pivotal role they have been assigned in sorting out the housing-finance mess. New private stakes in the enterprises are an unenticing prospect; and private lenders will be concerned about where they stand if more drastic remedies are tried. Until the situation is resolved, the upshot is likely to be a new reduction in the supply, and increase in the cost, of mortgage finance – further lessening the chances of an early recovery in the housing market and the wider economy. Look on your works, Fannie and Freddie, and despair….”
Clive Crook
FT July 13,
How much can the discount window take before the fed pukes? It will be interesting to see if congress gives treasury the blank check it seeks.
Damned if you do, damned if you don’t dept:
If the rest of the world sees us bailing ourselves out, there will be a run on the Dollar…
If we do nothing, there will be a run on the Dollar…
Pick your poison
I claim that you cannot get back a normal flow of housing market sales transactions without at least two of the following four changes:
1) Ample liquidity flowing into the home mortgage market (check);
2) Looser lending standards(?);
3) Higher wage inflation(?);
4) Lower home prices (in progress).
1) and 2) were the unsustainable pillars of the bubble. I see a strong disinclination in policy circles to allow the return of 2), with some noteworthy pockets of resistance (sort of like those Japanese soldiers discovered living in caves years after WWII, who did not realize the war had long ago ended).
At this point, it looks like 3) or 4) will have to carry the housing market back to normalcy, and the evidence points strongly in the direction of 4), at least in the foreseeable future.
RE: sort of like those Japanese soldiers discovered living in caves years after WWII, who did not realize the war had long ago ended).
LMAO…now there’s a grim, image provoking analogy!
and the evidence points strongly in the direction of 4), at least in the foreseeable future.
This is exaclty what the Fed is trying to avoid. By continuing to lower house prices, the portfolios of major banks and GSE’s continue to weaken and foreclosure activity will continue to climb. Looser lenging standards is what got us here to begin with, and wage inflation seems unlikely without protectionist policies, which seem unlikely, thus I see no diversion from the current course. Foreclosures will continue to climb, joined soon by the ALT-A crowd as their resets begin to set in. So at this time, the two choices I see are either wage inflation or property deflation. Wage inflation would devalue our currency overall, but bring prices inline with where they were 10 years ago. Retirement funds would continue to pay out at an affordable rate and our economy would eventually recover. Property deflation will rob our banks and retirement funds. Debts will default at an ever increasing rate, and we will get DA DA.. The Amero. The economy will eventually recover, but our status as a first world country will be no more…
The Amero has been around since 1971, when Nixon ended gold convertibility and allowed the USD to be devalued at will.
Those of you expecting a new currency are going to be disappointed. It will be the same old greenback, just worth a lot less.
That can’t be.
We have a “Strong Dollar Policy”.
Ask Bush, or Paulson (i love wallstreet and banksters, screw you America) our treasury secretary.
/Users/joelsaunders/Desktop/indymac.gif
When you finance your cave with IndyMac Bank, you’re in good hands. We’ll make sure you understand the features of the loan product you choose, and that it meets your unique financial needs.
We guarantee:
We’ll beat any competing quote on your new cave loan by 2 points, or you receive one bag of rat infested rice
We’ll give you a free “Indymac” loin cloth just for applying for our loan program.
Haven’t received a check from the Japanese government in 60 years? NO PROBLEM!
We can get you financed with no documentation whatsoever.
Need a few extra bucks to help turn that Cave into a home? NO PROBLEM
We can finance you for 110% of your Caves value.
Choose from a variety of fixed rate loans and adjustable rate mortgages. You could be approved in just minutes.
It is important to know that with adjustable rate mortgages, your payment may increase significantly over time…
and we know you have plenty of that.
IndyMac.. We are different.
“Until the situation is resolved, the upshot is likely to be a new reduction in the supply, and increase in the cost, of mortgage finance –”
It’s almost as if market forces are at work. Artificially low prices for money, thanks to the fed res, causing reduced supply. Reduced supply putting upward pressure on price. Who’d a thunk.
Just a dumb luck thought -
TAF window open to every Tom, Dick and Harry.
The *idea* or sold bill of goods iz for da peoples in da mortgage morass. (Yeah, that’s the plan, or so I’ve heard).
Said Dinks take from window and buy -
Drum roooooooooooooooooooooooooooooooooooooll…..
Shorts? Oil? Gold? (Fill in your favorite skimming oportunity).
This will end well,
Leigh
“TAF window open to every Tom, Dick and Harry.”
You are making me feel nostalgic for the 2005 mortgage lending market.
You make me smile P’Bear - even when I don’t want to.
Leigh
Jul 15, 2008
Forget those retirement plans
By The Mogambo Guru
And if you think things aren’t too bad and that you just have to hold on, hold on, hold tenaciously on until you retire, which is when you can start consuming all that money you have invested in your retirement plans, then Larry Edelson of MoneyandMarkets.com has some information that will make you crazy.
He has compiled some statistics that illustrate the loss of buying power of the dollar since 1980, thanks to the Federal Reserve creating so much money and credit all that time, and thanks to the corrupt Congress (except Ron Paul) who aided and abetted them every dime and every dollar of the stinking way.
His research shows that, for instance, the average price of a
house was US$62,200 in 1980 and $196,300 in 2007. To compare, monthly rent on an apartment was $300 a month in 1980, and $1,082 in 2007.
http://www.atimes.com/atimes/Global_Economy/JG15Dj07.html
“…Here is the interesting thing. How many people have over $100,000 in their bank savings account? In other words, how many people, despite being at FDIC insured institutions, do not have full account coverage? The U.S. has a $6.881-trillion on deposit with banks, but only $4.241-trillion is insured. In the case of IndyMac something like $1-billion deposits was uninsured….”
Mr. Paul Kedrosky
Not that it would ever happen but a lower level bank manager told me once that the FDIC has up to 7 years to pay on insured accounts.
The new government CEO of Indymac was on the news assuring people that they can get their money out today, tomorrow and the next. He also said they’d welcome people who want to put money in, LOL!
This is very interesting, because it sorta smells like a depression, with possible runs on banks, yet the gov is doing what it can to foster confidence. A good idea, but it all sounds just a tad creepy.
“He also said they’d welcome people who want to put money in”
I keep seeing attractive rates of interest in the fishwraps, from various banking concerns…
Wachovia is offering up 4.25% on a 12 month cd*
*FDIC insured, dontcha know?
How many mopes have uninsured deposits at Wachovia or WAMU? $1B in Indymac with all the news shows how stupid people are. Dumbasses.
“The new government CEO of Indymac was on the news assuring people that they can get their money out today, tomorrow and the next.”
Are depositors queuing outside their doors this morning?
The wife drove by Indymac this morning and mentioned there were about 100 or so lined up around 7:30am. Seems like a crappy way to spend your Monday morning (or afternoon).
I saw something like that on the news this morning - a creepy guy declaring that IndyMac is “in the hands of the FDIC” but “it is a safe… secure… bank.”
Right - sounds to me a bit like Emperor Palpatine “bringing peace… and order… throughout the galaxy.”
I don’t believe either of them!
I redeemed my Indymac CD back in April.
A friend called and asked if I knew of a list of shaky banks. I said no, but to let me know what he learnrf. So he asked his broker and got a one word reply - Indymac.
Next day I gave up nearly $2k as the penalty for early withdrawal - 4 year CD was set to mature in November. When I bought it in 2004 bankrate.com gave them highest marks.
Coincidentally, this CD was bought with profits from selling my ‘big house’ in October 2004 in Laguna Niguel 92677.
I drove past the local Indymac office after lunch today. Line of cars to get in, guard directing traffic in the parking lot, and about 40 people lined up at the back door with dours looks on their faces. Glad I dodged another one….
During the Savings and Loan Crisis, a coworker had a pile of cash in 3 accounts at her bank, and it took 5 years to get all her $ back. If you read up on it, you’ll find a lot of soft language used by the FDIC.
As posted before I have a $50K CD with Indymac. Over the weekend my online access was off, as expected. Today I login and my balance and interest are there just fine and my 5.2% continue to accrue until Sept when my terms expire.
There is nothing to see here. Keep moving.
Blind faith is the best kind.
Hardly blind faith, I just chose not to buy gold bars and stuff them under my mattress (I do have non-small gold holdings thru a commodity-based mutual fund though), as every investment option has *some* inherent risk (like home-invasion robbery).
I wouldn’t want have anything near me or on my property either, what, with a couple hundred million zombies kicking around, all armed and dangerous-like?
Thus, my wealth is far across the ocean, in a place where the citizens can legally buy rifles & shotguns, but not easily concealable handguns.
This is what I see coming…
“The pyramid scheme phenomenon in Albania is important because its scale relative to the size of the economy was unprecedented, and because the political and social consequences of the collapse of the pyramid schemes were profound. At their peak, the nominal value of the pyramid schemes’ liabilities amounted to almost half of the country’s GDP. Many Albanians—about two-thirds of the population—invested in them. When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed.”
http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm
Listen, if you are so sure FDIC will go kaput I will sell you a put option on it: for $10,000 I will sell you a put option payable in the event of FDIC not being able to payout on a < $100,000 limit account in any FDIC insured bank in the next 12 months. If that happens I will pay you $100,000 and I can put it into a escrow account right now (the interest on it goes to me of course). Or if you prefer I can sell you a 24 months put for $20,000 or 36 months put for $30,000 with the same terms.
Would you (or anyone else for that matter) be willing to accept this trade?
You don’t mind if I don’t play along with your cocky gambling talk, and talk sense instead?
Very soon on youtube, there will plenty of interviews with people that are standing in line, waiting to get their money out of banks.
And the crazy thing is, it doesn’t matter if they interview the village idiot or an m.i.t. grad or jane chardonay, fear knows no boundaries…
http://www.youtube.com/watch?v=grhNs_m-s1o
There is rational fear and then there is irrational fear. For my own benefit, based on my own humble opinion, there is no risk to FDIC guaranteed bank accounts and I am willing to sell puts to you (or anyone else for that matter) to put my money where my mouth is. I am still short RE stocks and won’t touch bank stocks with a 10-foot pole right now, but the two issues are completely and inherently separate: whether a bank is solvent or insolvent and whether the US Govt is able to make good on FDIC guarantees.
Those people you see on TV waiting in line at IndyMac branches are in fact acting irrationally. I mean I heard one woman wanting to take her money out of there and put into another bank, even though FDIC has already made good on its guarantee and she wants to do it all over again? To quote one of my favorite mutual fund managers: “Ignore the crowd”.
You have a lot to learn about The Crowd…
http://www.amazon.com/Crowd-Gustave-Bon/dp/0486419568
Not if the crowd is the ones I saw on TV this morning.
The Crowd is all of us human beans, almost without exception.
“The masses have never thirsted after the truth. They turn aside from evidence that is not to their taste, preferring to deify error, if error seduce them. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim.”
Gustave Le Bon
yes, to wonder why the masses are this way is to wonder why the grass is green….
Not all the lemmings go over the cliff.
Betting on your own rationality is one thing. Betting on the rationality of the crowd seems… kind of risky.
The TV news this weekend was full of the housing bust, Fannie and Freddie and Indymac. On one program, it was mentioned that Indymac wasn’t even on a list of 90 banks that are on shaky ground. 90 banks! Anyone know where I can find that list and who puts it out?
Not sure where you find the list perhaps the FDIC. Also this mornings news stated that there are currently 150 troubled banks on the watch list. However there are some 7,000 banks operating in the U.S.A. Back in the 80’s the failure rate was much, much higher.
Yes, but the amount of assets per bank was much, much lower.
Why, you want to cross them all off your list?
The list is not made public in order to not scare us.
Ahhhh, this train is going to crash at 1 of the next 10 stops. I’m glad I don’t know which one. I can relax that way.
Sort of fatalistic.
Banking Russian Roulette
“Banking Russian Roulette”
That must mean only one bullet in the clip. Happy hunting!
In America, wouldn’t it be called a “bank walk”?
I happen to be watching CNBC right now and they said that the list isn’t public.
Why they would even disclose then that IndyMac wasn’t on the watch list then is a puzzle to me. If the list isn’t public, then why even comment on it’s contents?
Who made the list? Is it an FDIC or a Fed thing?
Because it indicates that the regulators that create the list don’t really know what the risks are since they couldn’t predict the problem with Indymac. If there is a list of 150 at risk instittutions and only banks on the list go belly up, then you can argue that only that 150 are at risk - the people who made the list are good predictors. If there is a list of 150 at risk institutions and the first one to go belly up isn’t on the list, then the list of 150 is meaningless and all of them might be at risk.
Yes.
The fact that Indymac wasn’t on the list is very telling, and scary.
Old: McMansion
New: MacMansion
I don’t know if IndyMac was on that FDIC list, but its problem is well-known and has been festering for months now. I mean if Senator Schumer knew it and was able to mention it in a letter to FDIC, you know it should be common knowledge for folks who pay close attention to this sort of news. There are couple of blogs on the Internet that are devoted to finding the best CD & Savings rates and IndyMac’s problems has been discussed to death there. You can also check bankrate.com and they have a ratings page where you can check the health of the banking institution.
All these talk about people didn’t know or couldn’t find out, I don’t buy one minute of it.
Government employees may be forbidden from looking up particular entites on the internet throught public search engines. It is considered a transmittal of protected information since someone, somewhere could trace the search back to an ISP address connected to the agency. It might indicate that the agency is investigating the entity in question.
There are other clues. On Bankrate, for 6-month jumbo CDs, Indymac was offering the best rate but also had only one star. As of today, they are off the Bankrate list as far as I can tell.
To me, the clue meter shoots up when anyone is offering a lot more interest on CDs than anyone else. Not a professional approach, just what I consider a common-sense hunch.
“On one program, it was mentioned that Indymac wasn’t even on a list of 90 banks that are on shaky ground. 90 banks! Anyone know where I can find that list and who puts it out?”
It was covered on 1070-AM (Los Angeles) this morning as part of the IndyMac coverage. The FDIC has a list of 90 banks they’re watching. IndyMac wasn’t on that list.
Anyone have any thoughts on wamu?
I am also following WaMu very closely, as my newly widowed mother has $ in there. I had her move a nice sum to a credit union with a 5 star rating. WaMu makes me unsettled too. They were steep in the subprime orgy.
Not sure if this is ‘the’ list but check it out…
http://www.bauerfinancial.com/btc_ratings.asp
I heard they had 10,000 customers with account over $100k. Morons.
i dunno if moronic is the word.. maybe lazy. If you have $1M, spreading it between 10 banks is a chore.
afaik, you must walk into each bank and at least open a regular savings/checking, then prehaps buy CDs or get a MMarket acct, etc.
So, aside from the traveling around, you’ve got 10 ATM cards, 10 check accts to file away and keep track of and watch for unexpected activity.
There are some banks who will do it for you.. ie set up some kinda acct at other banks whereby your “extra” deposit is somehow FDIC insured, but it seems flakey.
RE: i dunno if moronic is the word.. maybe lazy.
Yup…the evening snooze news ran a clip of a glum younger guy standing out in front of a closed IndyMac branch sayin’ to the reporter-”I knew this was coming-but I just got lazy, sat on my hands, and did nothing.”
It’s pretty much an insight into the lemming world.
i assume he had over 100K and is worried about it? Well, the FDIC will eventually get around to selling off IndyMac’s assets and pay non-insured deposits.. i believe they have ‘first position’.
my memory sux but i think the number is either 65% or 85% of such deposits have historically been repaid.
He knew this was coming and he did nothing?!?
Wow, just wow.
If I had $1M to put into 10 banks, I’d gladly take on the extra work required to monitor it.
Yeah, you say that, but it IS a lot of work. For the past year, I’ve had $350k at one bank while I property-shopped. Then, a week ago I finally closed on my house (no comments, please, I’m happy with my decision) and took the account down below the FDIC limits. I worried about that money all the time.
It’s funny how people think that if you just have money, all your stress will go away. It doesn’t work that way. You just have different worries.
ok.. what 10 banks would you pick? Remember that your primary concern, especially now, is that they are highly solvent.
Seriously. I am comfortable with USAA Federal Savings Bank. I know I should take some my downpayment money out the high yield savings account, and put it somewhere else, but where? Credit Unions are under FDIC now, right?
What will be interesting is watching the money market accounts. Many of these have no FDIC insurance, but some private insurance which I suspect is about worthless. Both of my investment accounts had non FDIC MM as their standard option. I had to argue with the broker to get it switched to an FDIC insured account.
What will be interesting is watching the money market accounts. Many of these have no FDIC insurance,..
i think you’re confusing MM accounts with MM funds. All MM accounts certainly are FDIC insured.
Polly,
For credit union the insurance is NCUA. It’s basically the same coverage.
http://www.ncua.gov/
Thanks, Wicked. I checked the one I was thinking about (has a branch right behind my office) and it is not all that well rated. There is a regular bank in DC that is rated A+/5/whatever. I can get their platinum level account with just $15 K, though it will have to be more than that to keep me protected.
USAA is only a B-. Not as reassuring as I had hoped.
Or you open an account a Schwab or any other trading house and buy your CDs through their brokers. Instant access to the best rates and easy as pie to spread amoungst banks. The thing that scared me with Indymac was I tend not to pay attention to the holder of the CD so I had to look it up in the account. Nope, didn’t hold any.
You can also buy CDs at competitive rates through any of a number of major insurance companies, like State Farm. It isn’t difficult to do.
“I heard they had 10,000 customers with account over $100k. Morons.”
It’s not necessarily that bad. If you have a joint account with a spouse (don’t know if it can include a non-spouse), then your coverage is $200K. If you have another account that is a trust account with, say, your kids as beneficiaries, you get to add $100K each. The banks have an FDIC-issued booklet that explains this and surely it is available online.
As to WHEN you are likely to get your money back, I don’t know. It is one reason I use only brick and mortar banks that I can walk into, rather than Internet banks that often offer(ed) higher yields.
The tricky part for me is that the smaller banks I deal with may not have had any worrisome exposure to bad residential mortgages, but they may well have a lot of exposure to commercial loans. The one out of state bank at which I was going to buy a $100K CD last year is now on the verge of going under, from what I can tell.
Best I recall, the whale-size crooks and tax evaders smuggle their money around in the form of D-flawless diamonds. That probably helps explain why the two successful methods of “growing” perfect real-deal diamonds seem to have faded away. I would think they were bought out or threateded with their lives.
If a dozen individuals were to show up @ the same time, at their bank in NYC and request to withdraw $5k each, out of their banking accounts…
What would happen?
My bank (a small, local one) merged about a year ago with another bank (my bank bought them). Recently they were bought out by another local bank. I feel like it’s safe (for now at least), but ya’ never know.
Check out this FDIC ad… (I saw it in People magazine)
http://www.jsmineset.com/cwsimages/Miscfiles/6353_FDIC_Doc1.pdf
Interesting how the $100,000 Banknote says:
“This is to certify that there is on deposit in the treasury of the United States of America
One Hundred Thousand Dollars in Gold, payable to bearer on demand as authorized by law”
You don’t even have to look at the 100,000 note. Just look at any picture of a pre-1933 fed note. It has all the elements of a contract:
“The U.S. Treasury will pay to the bearer on demand the sum of 5 dollars” or whatever the denomination was.
Who will pay? The US Treasury
Who will they pay to? The bearer of the note.
When will they pay? On demand
What will they pay? 5 dollars
It is clear from this engraving on all fed notes that the fed note and “dollar” are separate things. Later on, the wording was amended to read that the bearer would receive “lawful money” or some such nonsense. Now, they don’t even bother. Fed notes just list the dollar amount.
So simply by changing the wording on fed notes over the years, the fed convinced us that fed notes and dollars are the same thing.
The fraud that has been perpetrated is obvious. But Americans are so brainwashed and enthralled with Dancing with the Stars that they don’t even care anymore.
It’s a bit worse than that. You can get 10 reasonably intelligent posters with loads of personal experience in the business & investment arenas who cannot seem to agree among themselves on any aspect of our monetary system.
How would anyone expect J6P to come to any conclusion other than that espoused by CNBC?
A bunch of reasonably intelligent posters can’t seem to understand that there will be a Gold Standard, not a wide-spread one as in the days before ‘33, but more of a Golden Rule.
Those that have the Gold, make the rules.
Those that have the Gold, make the rules.
Santa Claus, Sasquatch and the Tooth Fairy will also emerge from Area 51 and pilot space ships for everyone joining the Rapture to planet Mongo.
Well, in all honesty I was trying to avoid that issue altogether. It seems to me that a lot of well read folks have come to an opposite conclusion and I think it is time to allow for that opposing view instead of continually throwing it up for debate, IMO.
The majority of frequent posters have heard both sides and have “picked their poison” so to speak, on how they intend to ride out the storm.
I think it is important that we all realize how corrupt the current system is. I’d be happy with just a consensus on that issue alone.
’ssshrubery is our Roaming Empire’s Emperor Commodus…
http://en.wikipedia.org/wiki/Commodus
S.P.Q.A.
How familiar is this?
“Dio Cassius, a first-hand witness who had no reason to defend Commodus, describes him as “not naturally wicked but, on the contrary, as guileless as any man that ever lived. His great simplicity, however, together with his cowardice, made him the slave of his companions, and it was through them that he at first, out of ignorance, missed the better life and then was led on into lustful and cruel habits, which soon became second nature.”[5] His recorded actions do tend to show a rejection of his father’s policies, his father’s advisers, and especially his father’s austere lifestyle, and an alienation from the surviving members of his family. Whether this was a wholesale psychological rejection of his father is not something that can be assessed at this distance in time. It seems likely, however, that he was brought up in an atmosphere of Stoic asceticism, which he rejected entirely upon his accession to sole rule. After repeated assassination attempts on Commodus’ life, Roman citizens were often killed for raising his ire. One such notable event was the attempted extermination of the Quintilii house. Condianus and Maximus were executed under the guise that, while the two Quintilii weren’t implicated in any plots of rebellion, their wealth and talent would make them unhappy with their current state of affairs”
Government as the Big Lender
http://www.nytimes.com/2008/07/14/washington/14guarantee.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1216037207-QLTfGK0c9jWk/9s+uy8S0g
In short, in a nation that holds itself up as a citadel of free enterprise, the government has transformed from a reliable guarantor into effectively the only lender for millions of Americans engaged in the largest transactions of their lives.
How the government came to dominate these two crucial areas of American lending is — depending on one’s ideological bent — a narrative of regulatory and market failure, or a cautionary tale about bureaucratic meddling in commerce. Perhaps it is both.
When housing prices commenced plummeting, the ugly truth emerged that many banks did not understand the details of the mortgage-backed investments they owned. Ignorance proved expensive.
I think it was greed more than ignorance.
As the Bush administration readies funds to buy student loans from cash-short banks, and officials plot a potential bailout of Fannie and Freddie that could run into tens of billions of dollars, the government’s outsize role in these two huge areas will not shrink anytime soon.
It seems a strange coda to an era in which markets were sacred, and regulation heresy.
So how long will the market rally on the happy news that banks/lenders/brokerages are going broke?
There seems to be a lot of people think that good government should stand aside, and only a bad government would support the economy in times of trouble.
i think most agree that capitalism requires some govt oversight.. but then, that’s not true capitalism.. is it?
Well, yeah it is. There are rules and once everyone understands the rules then capitalism can exist.
But throwing out the rules after the economy gets underway undermines the whole concept of capitalism.
I do believe we’re witnessing just one small sample of the sheer magnitude of power and money that will be expended to resist the economic downturn .. and there are many more, and more potent tools at the govt’s disposal.
I’m just observing for the sake of my personal well being (and profit) and have no preferences.
I don’t care what the rules of the game are. If one of the rules is “The rules can change at any moment” that’s fine with me. Only through awareness of it might I take advantage of it.
But if the rules can change at any moment then why have rules at all? How can a capitalist evaluate a risk/reward ratio if the rules are altered?
Firm, enforced rules add stability to a transation. Eleminate the rules or eliminate the firmness of the rules and economic stability falls apart.
i agree.. but is economic stability required to make big money? Some would suggest just the opposite.
Here’s the thing.. i don’t really give a rat’s ass about the general economic indicators or what the Fed does or unemployment stats or what politicians say…
I have no control over that stuff and anyway, it doesn’t matter to me personally.
I do have control over my own actions. Playing the game effectively requires a realistic, practical, unbiased fact-based overall viewpoint, imo.
We only need one set of rules for successful capitalism:
Thou shalt not steal.
Thou shalt not lie.
Thou shalt not murder.
Then we need multiple market-created organizations which provide trust ratings for people (and other trust-rating organizations).
If these rules were enforced by a cross-connected distributed reputation system then your average Joe would have the means of evaluating which companies, banks, stocks, etc they can trust and which they cannot.
All of a sudden you do not need big government regulation nor do you need to “change the rules” during the game.
Every time the rules “change” a theft occurs and something that belonged to person A under the old rules now belongs to person B under the new rules. (That *thing* could be market position, competitive advantage, whatever, that thing still has value and was stolen). The fact that 99% of “rules” are theft to begin is beside the point.
Government that isn’t bound by the same rules that bind every other individual / organization will always harm capitalism.
To argue against “capitalism” is to argue against freedom to voluntarily exchange what you have for what someone else has.
I can just see it now.
Female shopper: How do these pants look on me?
Clerk: Like someone covered a beached whale with corduroy.
Follow the money. Politicians like high real estate prices because it gives them tax money with which to buy votes.
National Association of Realtors has been a one of the top 3 or 4 contributors to Congress since 1990. NAHB is up there I’m sure too.
That’s how the government has become a giant mortgage lender.
I don’t think this is what the Founders intended when they penned the founding documents and put their lives on their lives for independence and freedom.
OPINION
There Is No Reason to Panic
By PETER J. WALLISON
July 14, 2008; Page A17
If Fannie Mae and Freddie Mac were ordinary corporations, the sudden collapse of investor confidence last week would have set them to work on their bankruptcy applications. But they are not ordinary corporations — and they are likely to survive because their debt securities have been viewed for decades as ultimately backed by the U.S. government. Barring the unlikely event of a credit market loss of confidence in the U.S. government itself, they should be able to attract the necessary financing for continued operations.
http://online.wsj.com/article/SB121599497892249615.html?mod=opinion_main_commentaries
..
Never say never.
The world is turning their backs on the US, and going about their own business of developing their own economies. They are much less dependent upon us than we think.
We are rapidly declining to the socio-economic standards of a Banana Republic.
In these uncertain times, Lead and Steel will be more valuable than Silver and Gold.
..
Make sure you have an adequate supply of lead in the form of small cast pieces that are .357 or .44 or .45 inches in diameter. Also at least a couple of machined steel devices that are capable of launching them at high speed.
Are you talking about D & D miniatures?
US debt is being downgraded by other exchanges, and will likely lead to dollar devaluation. That would appear as inflation to US consumers when purchasing foreign goods, but it would not affect domestic goods. The “end of the world” is overstating things a bit, unless you are a Wall Street trader.
We’ll see a large economic slowdown worldwide, and lots of bankruptcies of weak sisters. Once the dead weight is cleared out and confidence restored, then it will eventually lead to the US being seen as an investment haven, which might happen in 2-5 years. A capital grab is already happening when it comes to assets like real estate and beer companies.
That would appear as inflation to US consumers when purchasing foreign goods, but it would not affect domestic goods.
Two problems with that theory:
1) It only applies if foreign-held dollars don’t start chasing U.S. goods to an increasing degree.
If foreigners are holding “devalued” dollars, then the relative “value” of U.S. goods (e.g. whiskey) relative to the dollar increases. This would lead to, in fact, more dollars coming home chasing U.S.-made goods, violating the first condition above.
Second, this is an international market. You can’t say the value of a thing has changed world-wide except within our borders. If dollars are worth less internationally, then they are worth less domestically.
“If dollars are worth less internationally, then they are worth less domestically”
That depends on whether or not one believes currency exchange is a zero sum game. While increased demand for exported goods will certainly raise their costs domestically, it will also raise profits and result in more jobs and wages, improve purchasing power, and raise the value of the dollar through the multiplier effect.
If Bernanke raises interest rates, then the money supply will stay limited relative to other currencies as people save dollars and take them out of circulation, and therefore it will maintain its value. If he continues to hold rates artificially low, then the scenario you are stating is true.
it will also raise profits and result in more jobs and wages
Only in terms of dollars, which are of less value. Remember, the thing that started this is that foreigners are giving away the dollar (which is now a lower value than before) for something else (say, whiskey) which has a value that has not changed to them. The nominal price doesn’t go up because foreigners are chasing whisky more than they did before, it goes up because the dollar is worth less. If the real price had simply been lowered, you would have also seen an increase in the quantity purchased by foreigners, an increase in qauntity demanded but no shift in the overall demand function. Instead, the nominal price is unchanged and the real price is lower but the demand curve is unchanged and profits/wages/whatever only go up in nominal terms.
So the “more jobs/wages/purchaseing power” you cite is only true if you measure it in relation to the dollar (nominal terms). Really, the increase in wages is just maintaing to offset against the falling dollar (meaning wages are flat in real terms). And in the mean time, we are giving away more useful stuff (like whisky) than before, a net loss for the U.S. economy as a whole.
It’s like if you change the size of a “liter”. If I give you more liters than before, it doesn’t really mean anything if the size of the liter is changing in proportion to the increase of giving I make to you. It’s a wash. But it sure seems nice if you ignore the value/qauntity of the liter and pretend like you are receiving more.
lol.
THERE IS NO REASON TO PANIC!!!!
Reminds me of a favorite orchestral musician’s gag, which is to write DON’T PANIC in the most difficult passage of your part, as a gift of humor to future generations of performers.
Wasn’t there something like this in the Hitchhikers guide to the galaxy?
Don’t Panic
Then why are my Peril-Sensitive sunglasses completely black?
lol
Visions again of Kevin Bacon in Animal House
“Everybody stay calm! “
Or, if you panic, be the first to panic.
“There Is No Reason to Panic”
There is no reason to mention nonexistent elephants in the room.
iceberg? what iceberg? naa… unsinklble!
“There’s a big difference between IndyMac and Fannie and Freddie,” Dodd said. “IndyMac engaged in very bad mortgages, luring people into deals they could never afford. That’s not the case with Fannie and Freddie.” Dodd said that while there may be more bank failures, “I’m more optimistic about Fannie and Freddie than I am about these banks.”
http://biz.yahoo.com/ap/080714/mortgage_giants_crisis.html
lol, they still haven’t figured out how to file a 10-Q on time!
You really can’t exaggerate how out of touch with reality Washington politicians are.
When your life revolves around hookers and blackjack it’s pretty easy to get distracted and avoid world around you. Our congressmen make the Roman senators look like proper schoolboys. (How’s that for exaggeration?)
This is not very attractive
Citigroup’s $1.1 Trillion of Mysterious Assets Shadows Earnings
By Bradley Keoun
Bloomberg
“…Nowhere mentioned in the accompanying 66-page handout were the additional $1.1 trillion of assets that New York-based Citigroup keeps off its books: trusts to sell mortgage-backed securities, financing vehicles to issue short-term debt and collateralized debt obligations, or CDOs, to repackage bonds.
Now, as Citigroup prepares to announce second-quarter results July 18, those off-balance-sheet assets, used by U.S. banks to expand lending without tying up capital, are casting a shadow over earnings. Since last September, at least $100 billion of assets have flooded back onto Citigroup’s balance sheet, accompanied by more than $7 billion of losses.
“If you start adding up all the potential exposures, it’s a huge number,” said Sam Golden, a former ombudsman for the U.S. Office of the Comptroller of the Currency who now heads the financial-industry practice for restructuring adviser Alvarez & Marsal in Houston. “The banks will say that it was disclosed. Investors are saying, `Yeah, but it was cryptic. We really didn’t know what you were telling us…..”
Dihttp://www.bloomberg.com/apps/news?pid=20601109&sid=a1liVM3tG3aI&refer=home
Hold me back, HBBers! I don’t know if I can resist! What are “breakaway walls”?
http://tampa.craigslist.org/hdo/rfs/754192946.html
“Breakaway wall” is any type of wall, which is not part of the structural support of the building and which is designed to break away under abnormally high tides or wave action without causing any damage to the structural integrity of the building on which it is used or any buildings to which it might be carried by flood waters.
Thank you, ahansen. If that house is where I think it is, eventually there will be a flood.
I remember seeing, in the aftermath of Katrina, an aerial photograph of a subdivision. Every single house was completely destroyed except one concrete home that had a few shingles missing.
I suppose a few people used their brains when deciding to build in hurricane zones.
..
Apollo Beach has a spectacular view of phosphate stacks belching acidic smog into the atmosphere. They cast a smelly pall over the entire town.
Apollo Beach was never meant for this type of development; and is squarely located in the industrial east end of Tampa Bay.
Just a lovely setting for a splendid home.
Actually, those stacks belong to TECO, aka Tampa Electric Company. The plant burns coal, though they lay claim to the cleanest stacks in the US, or at least in Florida. However, there are also phosphate “stacks” in the form of hilly dumps full of waste from the phosphate refining process. They have very poisonous-looking, bright green vegetation growing on those stacks. And when the wind is out of the north, the stink comes from the Mosaic plant (fertilizer) north of Apollo Beach. Smells faintly like a dirty diaper.
However, your point is well-taken. I live in Apollo Beach right now as a renter and I can’t believe all the mid and upper six figure housing with “lovely” views of the power plant. Looks like something out of a sci-fi movie. But hey, at least they’re waterfront, boo-yah!
Interesting to know.
One thing I’ve been thinking about doing someday is getting a house on the water - probably an older house that may not be up to the latest hurricane code. However I don’t want to pay boucoup bucks for hurricane insurance. It seems to me that it might be not too hard to “hurricane-proof” a house, but wanted to get some thoughts from people who may have done or attempted such things. I lived in Florida for a while, including during Andrew, and thus have at least some knowledge on the subject. I also saw a lot of the damage firsthand from Fran in NC in ‘96.
Some thoughts I had were:
If the house didn’t already have really good hurricane shutters, I’d buy some in the form of fairly thick corrugated tin sheets. Something extremely simple and inexpensive, but strong. I’d pre-drill the screw/bolt holes, such that if a hurricane came it’d be a matter of just bolting them in place, which shouldn’t take too long (perhaps a couple of hours).
Seems like the major problems that hurricanes cause for homes on the coast are:
- Flooding due to storm surge
- Roof torn off due to wind (and resulting rain damage)
- House knocked off foundation/stilts due to storm surge or maybe wind
So it definitely seems best to have a house on stilts, to avoid the potential flooding problem (short of a *really* bad surge). And it might have those “breakaway walls” to for looks and to provide wind protection during non-storm conditions.
For the latter two problems I was thinking about a solution - something I actually haven’t seen but seems like it would work. Seems like you could “strap down” a house by using eye bolts and cables, along with either really strong roof joists or even physical metal straps. Just mount some eye bolts into the ground, really deep - like bolting them into buried concrete pillars. Then either bolt some eye bolts into the roof joists (if they’re strong), or into some straps integrated into the roof, or even temporary straps you could put over the roof during a storm. These wouldn’t be that visible, so not an eyesore - then if a storm comes install some cables between the two sets of eye bolts, probably tightening them with turnbuckles. This seems like it would hold the roof down fairly strongly, along with the rest of the house.
Thoughts?
For inspiration and information I would look into places like the Caribbean where the locals don’t have insurance or any other funds or creative solutions to replacing their home if destroyed due to storms. What you will find are concrete block houses built on higher altitude. Extra added benefit of this type of housing is that is relatively easy to expand your quarters as you get more $. Also many retirees from England who are natives are utilizing solar power for energy and rain water for water. Many have large reserves for fresh water. The houses I’ve seen have been completely self sufficient and weathered many of storms without falling apart.
“For inspiration and information I would look into places like the Caribbean where the locals don’t have insurance or any other funds or creative solutions to replacing their home if destroyed due to storms.”
You could also look at Guam which gets hit almost annually by Typhoons.
http://www.heptune.com/guam.html#Typhoons
“Guam is exceptionally well-prepared for typhoons. Homes are concrete bunkers built to withstand the winds. It makes for ugly architecture, but after going through a typhoon or two, you wouldn’t have it any other way!”
What general areas are you considering? In some locations water might be the bigger concern, wind in some, and both in others. I’m assuming you’re wanting to reasonably “hurricane proof” a place against the strongest hurricane a location might reasonably expect in a 20 or 30 year period, not necessarily the worst case scenario.
“For inspiration and information I would look into places like the Caribbean where the locals don’t have insurance or any other funds or creative solutions to replacing their home if destroyed due to storms.”
No insurance? I personally don’t know any homeowners here in the Caribbean who don’t carry insurance, but my scope is restricted to the US Virgin Islands.
My buddy pays $750/mon for $500,000 coverage. That’s well less than the replacement cost, but he’s betting on less than total loss.
Virtually all the houses here are concrete block, and they can be kept nice looking if you do *constant* home repair and upkeep.
The local newspaper had a listing this weekend for a “plywood home” for sale for $8,000. LOL. Plywood homes aren’t very popular here since Hugo blew through.
Packman,
You can buy a metal straps at any local hardware store. They’re called Hurricane Anchors; just ask for them. The way they work is that they provide reinforcement for the connection of the roof trusses to the wall studs, and then also for the connection of the wall studs to the sill plate (which is bolted to the foundation). They cost about $0.48 each.
Roofs blow off because the nails that connect the roof trusses to the walls pull out. The anchors prevent that. By having them at both the roof to wall transition and the wall to foundation transition, you get a very strong unified structure that won’t blow away.
Very, very simple and cheap to do. But noone does it if they can get away with it.
It’s amazing that is not part of the building code there.
I’m familiar with hurricane straps - yes they are current building code in FL, but only as of about 1993 (right after Andrew).
Even though they’re cheap - I believe (correct me if I’m wrong) they’re extremely difficult to install into an existing house, because you have to strip away the existing interior and exterior siding/sheetrock in order to expose the studs, in order to nail on the straps.
Also hurricane straps work to anchor the roof to the house, but not to anchor the house to the ground. One thing I saw a lot of with Fran is houses literally blown off their pilings. Seems like a cable system would help prevent that; with the cables angled outward of course.
Area I have in mind is the west coast of FL - somewhere between Tampa and Ft. Myers - sometime down the road when we get to the bottom.
RE: Thoughts?
I’d take a property high and dry with a view over shorefrontage anyday.
With shortfrontage you are subject to the vagueries of the weather and ocean plus a future “fat-cat” target for the property taxman.
http://www.ultimatechase.com/chase_accounts/mount_washington_summit.htm
I’m not sure why I can’t find a better photo of this building. I have a great close up of it in the summer if I wasn’t too lazy to go scan it in. Count 5 stills down below the video. If you look closely you’ll see that building is chained down. If that building can survive on top of Mt. Washington, it could probably survive any hurricane force winds.
Awesome, awesome pictures!!! I’ve been there actually as well - hiked up. It was June so not so much rime ice, but there still was a lot.
Here’s a better photo of that one building.
http://upload.wikimedia.org/wikipedia/commons/a/a2/Mount_Washington_chained_building.jpg
Packman, Did you go up the Ravine side? My college buds used to ski that baby (not me–tremble) We had some snow at the top when we did the climb in June in the 90s. It was 85 at the base. 38 at the summit. I was sweating like crazy though so shorts and a gortex pullover was enough. That last 1/2 mile is a doozy!
I was just looking at the Roadrace photos. Now those athletes are Ironmen! (and women!)
pack,
If by chance you see this post, e-mail me.
barbluvsong at yahoo dot com.
We built a house in NWF in 92/3, and survived many hurricanes.
Key is how much lime - elevation - proper straps for roof and footings.
We built 400 ft from bay.
Lost (sniff) precious trees *yeah I’m a hugger*
Monolith rebar foundation 12 on center saved our butts.
No shutters (would recommend).
ICF - premo - again, how much lime and depth of water table. Block is great also - depends on location.
Leigh
It is part of the goofy back and forth that goes on between FEMA, insurance companies and Monroe county building codes down here in the Keys. Technically, stilt built homes, at or below a certain flood plain elevation (which is most of them, by the way), cannot have ‘finished’ living space below. FEMA and Citizens Insurance (the state-run insurer of last resort) claim they will not insure losses to illegal lower-level structures. Monroe county confuses things further by classifying properties with such lower level structures as ‘Legal, But Non-Conforming’ if they are constructed with break-away walls below. The reasoning being that storm surges will sweep away the lower walls without taking down the entire structure. What it does do is make purchasing real estate down here complicated, confusing and difficult to assess insurance coverage. Anyway, it is a background issue these days as the market down here continues it’s (well deserved) death spiral.
My great uncle had a house like that on North Padre Island off the coast of South Texas. He rented the bottom out and lived on the 2nd /3rd story. The 2nd floor never flooded. His tenants were not always soo lucky.
“Situated on a nice canal with boat access to Tampa Bay. Built like a fortress, situated on 35′ pilings , first floor is 12′ up from the ground.”
Effectively it’s at sea level on a bay. That construction probably buys a lot of protection for a storm that’s cat 2 or less. However, for a major hurricane, there could well be more than a 12 foot storm surge.
http://www.edf.org/article.cfm?contentID=5411
“In short, in a nation that holds itself up as a citadel of free enterprise, the government has transformed from a reliable guarantor into effectively the only lender for millions of Americans engaged in the largest transactions of their lives.”
New York Times
Fannie and Freddie are like our country’s version of Parmalat, a starter course of corporate greed, influence & dishonesty, to the tune of a measly $20 Billion, in Italy around 5 years ago.
I hope everybody is hungry, because instead of $20 Billion, we are talking about $5,000 Billion with frick and frack…
__________________________________________________________
“Enrico Bondi, the chief executive of Parmalat, said the company’s banks should have known that Parmalat was in financial difficulty when they extended loans in the four years before its default. ”It was clear from a simple comparison between the bank debt listed on the company’s balance sheet and data provided by the Bank of Italy that the group was in difficulty for quite some time,” Mr. Bondi, above, said in a Milan court in the first day of testimony in the trial against the founder, Calisto Tanzi, and 15 others. Parmalat filed for bankruptcy protection in December 2003, after disclosing that a 3.95 billion euro bank account ($4.7 billion) at Bank of America did not exist, leading to investigations by prosecutors in Parma and Milan.”
http://query.nytimes.com/gst/fullpage.html?res=9901E1DE1731F932A35750C0A9609C8B63
A trillion bucks ain’t what it used to be.
“If you’re a socialist, you should be happy.”
“The amount U.S. commercial banks have at risk in derivatives markets jumped 50% during the first quarter as the credit crisis triggered an increase in the value of contracts that protect against borrower defaults and changes in interest rates. The amount of money banks would be owed if all derivatives contracts were liquidated, known as ‘net current credit exposure,’ rose $156 billion in the first quarter to $465 billion…” Bloomberg, July 2, 2008
“The amount U.S. commercial banks have at risk in derivatives markets jumped 50%”
One very good reason this debacle is going to be worse then many people realize. This “risk” didn’t just change…it has always been there.
“There is nothing in the dark that isn’t there when the lights are on.”
Rod Serling
Maybe there is, but they’re just really fast mummies. They could simply whisk under the bed in speedy fashion. Rod Serling should think through these bold declarations more carefully, after doing scientific studies. Is he still alive? Or was he eaten by crazy werewolves? In the dark? I heard that’s what happened. That’s just sad.
Don’t make me wish you into the cornfield, Olympiagal.
(lip snarl)
Come on now, it’s going to be a Good Day!
To Serve Woman
Hahaha! Enjoyable!
Except for the Serving Woman part. (grouchy frown and toss of girlish ponytail) Besides, I bet I don’t taste like chicken at all.
Say, who wrote that one? The Good Day one, I want to say Anthony? But no, that was the creepy-*ss little mutant. You know what I wish, is I had was some Fu Manchu literature. I learned how to read because I saw my Uncle Dan’s book collection and got all in a fever to learn what happened to the fainting blonde lady in a green dress on the cover, being leered at by a giant floating Oriental head with long mustaches. It was a formative body of work and has pretty much influenced my life.
Outer Limits still scares the hell out of me…
I believe the story was written by Jerome Bixby.
‘Comment by aladinsane
2008-07-14 09:49:19
Outer Limits still scares the hell out of me…’
Me too. But I have to be drunk, and it has to be late, and there has to be a mummy crouched in the closet.
Closet?
Oh my, running up the stairs to unlock poor hubby from said closet.
Ooops,
Leigh
When housing prices commenced plummeting, the ugly truth emerged that many banks did not understand the details of the mortgage-backed investments they owned. Ignorance proved expensive.
I think it was greed more than ignorance.
As the Bush administration readies funds to buy student loans from cash-short banks, and officials plot a potential bailout of Fannie and Freddie that could run into tens of billions of dollars, the government’s outsize role in these two huge areas will not shrink anytime soon.
It seems a strange coda to an era in which markets were sacred, and regulation heresy.
So how long does this feel good market rally last? It almost seems pathetic that the only market driver up is a fed bailout of banks/brokerages.
The problem with unfettered blind faith is…
Occasionally somebody calls your hand after you’ve gone all in, and you have to show that you have one of a kind, 7 times.
(2 of hearts, 3 of clubs, 4 of clubs, 6 of diamonds, 7 of hearts, 8 of spades and 10 of diamonds)
A Straight Flush
The worst part about not panicking is…
If you wait to long to panic, you’ll have to hang out in line waiting to pull your Yap Stones out of the bank, along with all the boobs that we despise on a daily basis, here.
We in for a short squeeze this morning?
What is the real world equivalent of the magic bullet metaphor?
Are the Hunters Low On Magic Bullets?
By E.S. Browning
Word Count: 1,173 | Companies Featured in This Article: Fannie Mae, Freddie Mac, IndyMac Bancorp, KeyCorp
One reason the stock market has had trouble rebounding: Investors are beginning to think the U.S. Federal Reserve is running out of the ammunition it has used to support the stock market in past months.
Despite repeated intervention by the Fed and central banks and regulators world-wide, no one seems to be able to prevent further damage to banks and other financial institutions. Shares of mortgage-finance giants Fannie Mae and Freddie Mac slid more than 45% last week alone. At week’s end, investors got a further jolt when California bank IndyMac Bancorp Inc., a big mortgage lender with some $32 billion in assets, was seized by federal regulators.
That was a short short squeeze.
If that was a short squeeze - it certainly was the girly-man version.
The new M.O. of a Friday Crisis followed by a Weekend Treasury Savior is getting old. Maybe everyone’s on to it by now and steering clear.
etrade called me friday to me they i had to cover me short sale of FRE, because its not marginable anymore. But they havent done anything yet.
Once I had a plasma screen
It was fun
It helped me waste my time.
Bought it with a HELOC
Now it’s done.
Buddy can you spare an Amero.
Once I had a Hummer
It was macho and cool
At the singles bar I gave it a try.
But can’t afford the gasoline
Women think me a fool
I might as well move to Dubai.
LOL! Great song.
Good for a followup tune “Bye, bye, on my way to Dubai”
Hello HBB’ers!
Queen Mormon Tea suggests you buy SLV. Open a Roth Ira. Bank transfer some of your own money into SLV Roth shares.
You don’t have any income tax write-off this year, no deduction, no credit.
However since it is a Roth IRA, in ten years,
sell your SLV. The money is now yours tax-free.
Except the problem with SLV is that it is supposed to be backed with a commodity. Now there are reports that SLV has experienced quite a bout of naked short selling which means folks who bought shares only own non-existent shares which one has to assume have no backing. How does one guarantee a share is actually purchased other than taking delivery of said share, which cannot be done with an IRA account?
http://news.silverseek.com/TedButler/1213640342.php
BTW, if one wants physical precious metals in an IRA account then open an account with an IRA custodian that allows these arrangements and actually BUY precious metals. PS, this also allows one to take delivery of gold/silver coins during the withdrawal phase if one so chooses. (google “precious metals IRA”)
for more on Naked short selling debacle go to http://www.deepcapture.com
http://www.thesanitycheck.com
–
A Great Year Trading Long-Term Put Options
I have mentioned several times here that I use a strategy of buying and selling long-term put options on GTC orders on my favorite Scams. My son is an accountant. Since I manage all his money we had a 4-hour telephone “annual meeting” to go thru all the investments and also look at the annual returns for the past 12-months. I was surprised at how well we have done. For 07/13/07-07/11/08 the speculative positions were up 500% thanks to Hopebuilders and Fraudentials (a bet on Housing Bubble Bust). We have already cashed out 4.5X of the 6X and current positions are valued at 1.5X, X being the speculative capital allocated a year ago
If it is OK with Ben I hill be happy to post all the Scams and the most recent positions and their gain/loss.
I don’t believe is posting individual trade advice on daily/weekly basis. My experience is that it doesn’t serve any purpose. There is lot of money to be made from the correct view of the housing and its impact on the economy and various sectors. Best of luck to all speculators.
Jas
PS: I follow a strategy, “Six-Pack,” that I posted on a public forum ten years ago.
Oh how i’ve missed you patting yourself on the back, repeatedly.
JJ’s back… (Dynomite!)
I hope Ben does let you post this information here, or on one of his other blogs.
Jas, this is great information and I’m interested in learning more. You and your son are both lucky individuals…to have each other and work as a team. That’s nice to see. Thanks.
Hope Muggy sees your post.
–
Who is Muggy? Anyway, I am posting Appendix A and Appendix B of the detailed post I sent to my list over the weekend. My view of the housing and housing-driven recession played a big part in the timing and selection of Scams.
Good luck to all.
Jas
“Who is Muggy?”
Me… another regular here at the HBB.
–
This morning I wasn’t expecting the lucky streak to continue, but so far it is. While I was watching recorded business broadcasts from last night one GTC buy order and two sell orders went thru. I always have 20-60 orders in the pipeline. Let the price and volatility do the trick. Trying to time the buys and sells is too difficult and wasteful, IMO. Planning months ahead and placing the orders is the secret of success for my particular strategy.
Jas
Agree that yours is a good strategy.
Every few months I quote the following on this blog; and in light of recent news, I thought it appropriate:
IndyMac - as a direct result of reading this blog I was made aware of the possibility that IndyMac was a candidate for problems months ago. I knew that one of my close friends had her life savings in that bank and immediately made her aware of the suspicion voiced here. I did it in a diplomatic manner and urged her to do her own diligence. My point was be aware of this and look into it. She took her money out of IndyMac and expressed her gratitude to me this weekend.
I pass that gratitude on to Ben and others here.
Thank you.
One of the many great aspects of this blog is stories and experiences like yours.
I, too, am extremely grateful for this blog, as the collective wisdom here enables us to see things well ahead of most people. This blog is a true gem.
Thank you, Ben!!!
I woke up this morning and turned on Bubblevision. There was a young, new guy on who seemed to be talking some sense. He spoke about better oversight, the fact that congress needs to get off their collective arses and make the US more competitive, etc.
I was impressed with their new choice… then I realized it was a GUEST. Not just any guest, but a Congressman - Paul Ryan (R) of Wisconsin. 38 years old. There is one less hack we need to throw out.
Speaking of overthrowing power, Happy Bastille Day. Perhaps day will come soon.
got American Assignat Assets? (triple-AAA rated)
“But the need for money was pressing, and soon all ideas of a small issue in large denominations were swept aside, and in 1790 the first issue of the paper money ‘assignats’ was launched, amounting to some 400 million livres. The assignats were at first a great success. As is always the case with inflation, when the funny money is first issued, business boomed, the states debts were paid off, and everyone felt better off. But then something funny happened: prices began to rise and yet more money was needed to fuel the growing business boom. In September of the same year, a second issue of assignats was made, twice as big as the first, for 800 million livres. Inflation then took off with a vengeance and more money was needed. In June 1791 there was a third issue, in December a fourth, and in April 1792 there was a fifth issue. Inflation now really roared ahead: the prudent middle classes were soon destroyed, their savings halved – soon to become worthless, and it was the opportunists who rose to power and influence. What is worse, a certain madness ensues: money is one of the great anchors of our life, a the measure by which so many valuations are founded, and if that measure suddenly goes awry, a psychological uncertainty enters our soul, and we begin to go a little mad.”
http://www.cix.co.uk/~archaeology/civilisation/Later/french_revolution.htm
“Perhaps day will come soon.”
Regrettably, yes. Corrupt bankers and financiers, as the ruling elite who behind-the-scenes control the Fed and the USG, could be worse than a corrupt king.
Jas
Happy Bastille Day !
Ah, yes, Bastille Day. The end of my bet with a buddy. It was the only way, and an appropriate one, that we could remember. If the Dow closes between 11K and 12K, I win a pizza, if it closes under 11K, I win a nice Indian curry dinner. His win points? Dow at 13K+ and 14K+, respectively. What’s great, in this penny-ante poker bet, is we won’t know what the prize is until the bell today, it’s so close.
False rumor: Anything that makes shareholders want to dump stocks.
Non-falsifiable rumors:
1) Real estate always goes up.
2) The stock market always goes up.
Pressed to Act, SEC to Probe False Rumors About Market
By Kara Scannell, Susanne Craig and Dennis K. Berman
Word Count: 774 | Companies Featured in This Article: Lehman Brothers Holdings, Fannie Mae, Freddie Mac
The Securities and Exchange Commission, under fire for not responding more vigorously to a raft of rumors that have pounded stock prices, says it is cracking down on firms or individuals that illegally spread false rumors.
The need for such a move by the SEC took on new urgency after a brutal week in the U.S. stock market, where major financial firms such as Lehman Brothers Holdings Inc., Fannie Mae and Freddie Mac were battered as rumors about everything from government bailouts to possible mergers flew across Wall Street.
How does this War on Negative Market Rumors square with the Freedom of Speech?
MARKETWATCH FIRST TAKE
Washington takes on the shorts
Treasury bails out Fannie, Freddie, while SEC declares war on rumors
By MarketWatch
Last update: 8:49 p.m. EDT July 13, 2008
WASHINGTON (MarketWatch) — The U.S. financial system has lost hundreds of billions of dollars on stupid investments, but don’t worry: The federal government has found someone to blame: Rumor-mongers and short-sellers.
Sunday the 13th was a very unlucky day if you’ve been shorting Fannie Mae, Freddie Mac, or a host of other financial firms. Washington has put you on notice: If you don’t have something nice to say about banks, don’t say anything at all.
Let’s talk about that FDIC trust fund. What’s in it? Treasuries?
The banks pay the government money. The government spends it, and/or collects less in taxes than it otherwise has to. And puts an equivalent amount of IOUs in the “trust fund” saying someone will pay later, if necessary.
Now it is later.
Does this mean that fake treasuries will have to be replaced by real ones to pay the depositors off? By how many real treasuries? And who will buy them?
What is the distinction in your classification scheme between a “fake treasury” and a real one? (I assume they become real when the debt is repaid?)
The “fake” treasury is the one sitting in the trust fund — the government loaned money to itself, but it’s position relative to the rest of the world is unchanged.
The “real” treasury is the one the government has to sell to someone.
If the deposit insurance trust fund consists of treasuries, it consists of fake treasuries. To pay off depositors, those fake ones will have to change into real ones.
Jake: Uh, Bob, about the money for tonight.
Bob: Oh, yeah, $200, and you boys drank $300 worth of beer.
http://www.larouchepub.com/pr/2008/080711dane_no_rock.html
Big Danish Bank in “Northern Rock” Crisis; 30 Others Under Watch.
[But don't worry - the subprime crisis is contained.]
Despite HP’s stated intention of not rewarding GSE shareholders, the weekend policy action has thus far immensely rewarded anyone who bought the GSE dip late last week. Maybe now that we have the GSE crisis behind us, we can get going on that summer rally TxChick keeps discussing.
OK, I have a tidbit, and a request for advice from the brain trust here.
Last year I paid off my HELOC with National City Bank, and now I get a notice saying they’d like to close the line, and are offering to waive the fees and give me a $400 VISA gift card (whatever that is) in exchange for my agreeing to do this.
Now I’d been wondering for a while about whether they would try to close the HELOC, and I’ve also been thinking of taking out a new loan on it to pay off my 1st mortgage, since I have a high enough limit to do that. It would mean swapping a fixed 5.875% rate for a variable 5.25% (prime + 25), but I am planning to pay off the 1st mortgage within the next three years in any case.
So, do you all think I should
a) accept their offer and take the $400?
b) do nothing?
c) write a check on the HELOC to pay the 1st mortgage (and maybe some extra to keep in the bank)?
d) take it all and buy gold/platinum/wheat/ammo…. ???
Thanks,
LVG
I wouldn’t move out of a fixed rated for a variable rate at this point. There’s a chance that rates could move up very fast in the next 12-18 months. Amortized over 3 years, the difference between 5.25% and 5.875% is only a savings of around $100 per $10,000 financed (interest costs of $829.88 and $931.40 for $10,000, respectively).
If it were me, I’d take the $400 gift card. Be careful with it, though. If you exceed the $400, then they’ll automatically enroll you in a new line of credit with really crappy terms. The things are a pain in the ass, but for $400 it’s worth the hassle. Just before to cancel it.
Take the money. My understanding is that they can close it without giving you a happy card in the overwhelming majority of cases - you would have to read the docs with a magnifying glass and the relevant state laws to be sure. And interest rates are going up, not down. The 65 basis points aren’t worth the risk even over 3 years. And what if something happens and you decide you would rather have the cash than pay it off and then you are really exposed to the floating rate long term?
This sounds like grabbing the severance package when after the buy out expires the rest of the employees get laid off with no buy out at all.
Agree with all the above, and if you’re only a few years away from paying off the mortgage, you will be one of the few lucky ones who actually may be able to get a HELOC (if needed) in the future from somewhere else.
For me it’d depend on if my plans included continuing a long term, friendly relationship with the bank, or not.
Take the money and run!
Take the money and run to the liquor store! Get some good bourbon! Then save the rest.
Is my advice.
Thanks, all. I would really like to keep the HELOC available for emergencies, but it sounds like I won’t be able to anyway. So unless I get motivated to do the necessary legal research to find out for sure, I’ll probably just wind up taking the $400.
Joey, I don’t understand the comment about remaining friendly w/the bank. I thought I was just exercising valid options either way. I am a little curious if they’re exiting this business, or just don’t like the terms of my HELOC, or what. The bank does seem to be in a bit of trouble (stock down to $4).
..hmm.. $4.. you with wamu?
My bank has done me small favors at times for no reason other than the relationship we have is friendly, and they might not be so inclined if I became resistant to their suggestions. They aren’t suggesting you take the $400 for no reason. Call and ask about it. Talk to a bank rep. Ask them why they are offering it.
I’da been dialing the phone a while ago..
Debt isn’t an emergency fund. If you need money for emergencies, save it.
“Debt isn’t an emergency fund. If you need money for emergencies, save it.”
OK, I’ve heard this here before, but I don’t quite get it. It sounds like you guys are saying that no one should ever have a HELOC, or any other debt for that matter.
For the past few years my “savings” has consisted of paying off the HELOC and paying down the 1st mortgage. Are you saying I should have just left the money in the bank?
Hi LehighV’guy!
We are all different (doh). No insult intended.
My .02 - always pay off debt and save what one can save.
You are fortunate to have the HELOC line available.
I do not know your market.
Perhaps the better question may be, “How will my life change if I no longer have HELOC line”?
I love leverage, disciplined leverage. You apparently do also.
Not privy to all the scenarios (nor is this my business), I’d say pay off the debt.
I only say this as a form of freedom.
Hopes this helps (posting late tonight).
Best,
Leigh
Is your car paid off? That’s a small emergency debt fund, if it’s worth more than a couple of grand.
Also, you didn’t mention considering a fixed-rate home-equity loan, versus a HELOC. It would be your problem to invest it in something that net of tax offsets the interest cost, but at least you could get a fixed rate. But even at that, for .65 points in this market, if it were my problem I’d leave the loan alone and take the $400 in good grace.
I wouldn’t move out of a fixed rated for a variable rate at this point. There’s a chance that rates could move up very fast in the next 12-18 months.
Exactly.
I would really like to keep the HELOC available for emergencies
You should probably have a cash emergency fund for this.
I’m going through serious Daily Show/Colbert Report withdrawals (a satiric bank run on the mind?)
Can somebody talk me down, out of the tree?
No, no, trees are good. Stay up there and play with squirrels and things, enjoy the cool green leafy silence, is what you should do.
I hooked up a comedy central i.v. and am feeling much better now.
Remember Alad,
Trees are your friends. Like Olygal says stay up there or under her canopy. Enjoy her shelter.
No sooner than when MarketWatch.com starts to crow about the opening rally, it starts to fizzle.
July 14, 2008 9:44 A.M.ET
BULLETIN
U.S. INDEXES RALLY AT OPEN; FANNIE MAE, FREDDIE MAC SHARES STAGE RECOVERIES
Wall St. lifts glass to bailout
U.S. ‘backstop’ effort, Anheuser-Busch deal set broadly bullish tone
Freddie’s auction went off o.k., i guess all the arm twisting helped, lol.
dead cat bounce maybe
I just can’t wrap my mind over the implications of good ol’ Bud being owned by Belgians, isn’t that just shy of being French? How’s that going to play with the John Deere/Nascar/trucker hat set? I personally could care less, not a beer drinker, but when I do drink beer, it’s Dos Equis.
It is an easy choice. Half the horseys will be Clydesdales the other half will be Belgians. Two great draft horses.
Belgians make *Great Beer* and hard liquor too. And little detectives with the little moustaches, no?
And don’t forget the Dutch-speaking Flemings.
From Wikipedia:
“The official language of Flanders is Dutch (at the Belgian - federal - level at par with French, and to a lesser extent German; the language legislation is complex and politically extremely sensitive).”
“In Flanders fields the poppies blow
Between the crosses, row on row” . . .
Who could ever figure that there would be a run on the banks, when all we had for evidence was Northern Rock, to go by?
I wonder how many people spent Saturday morning opening new bank accounts and transferring money to make sure they were under the FDIC limit.
Imagine the decider deciding, right now?
We may not even need to imploy the PPT (perpetual profit taking) today?
(this message will self-destruct in 5 seconds, good luck with your economic mission… Hank)
I was told by a mortgage broker friend this last week that 100% LTV with 0% down loans are now being offered, if the borrower is willing to say they are purchasing the land to farm it? Can anyone here verify this info? If true it really ticks me off as I’ve worked hard to save up cash for such a purpose, against the time the land prices collapse. I know many people want to buy acrage for the same purpose I do, but have no savings, but this would now allow them to purchase, and prop up grossly overpriced farm land. Any info by those in the know would be appreciated. Thanks.
Traditionally, in the northeast anyways, banks don’t/won’t finance land and mobile mansions. I wouldn’t worry too much about picking up raw land. It’s plentiful. I’d be very careful about how much you’re willing to pay though. So many believe raw land is valuable as if it were the holy grail. As long as that idiocy prevails, it will remain grossly overpriced.
Well, where I’m located, I think 15-20% of current asking price is both reasonable and affordable. I mean, even with the recent run-up in crop prices, it still doesn’t pencil out to pay $10-15k per acre. The only catch is that I don’t want to have to wait another 5+ years before purchasing (I’m planning an orchard that will take at least 3 years to produce once in). So in reality, if it was the perfect plot for what I want to do, I’d be willing to pay up to $3k per acre, but even so, land prices have a long way to go to get down to that level around here. The good news is that just 30 miles farther out the land foreclosures have already forced prices down to $1k per acre and banks are also conducting absolute auctions of numerous parcels, just to get them off the books. But I have no real idea how long it’ll take for those prices to move in to where I’m at.
$1k/acre is about the most I’d pay for tillable land but even $1k/acre is pushing it.
‘I’m planning an orchard that will take at least 3 years to produce once in).’
Oh, good on ya! That’s one big drawback to renting–long term landscaping and gardening takes, well, a long time. As does developing a sense for the place you are, and what it needs. I planted several fruit trees 2 years ago and they are doing great. Last summer I planted 2 kiwi vines and I’m even going to get some this year! Consider kiwis if you have the climate, and if you want a fence or trellis covered up. Or a house covered up. They’re pretty vigorous.
It’s not just all about growing food, although I love that. I also like lots and lots of flowers, and good flower gardens take time to mature as well.
My point is, what a great plan of yours, to have an orchard.
Just don’t forget the costs of drilling a well, septic system, bringing in electricity, etc. can add up to a LOT momre than the cost of the raw land.
My sister & BIl have 40 rural acres, and the power company will not run electrical lines until after there is a building foundation in place to show they are serious about building.
Electric utilities in VT and upstate NY charge $6/ft aerial or $20/ft buried for any runs greater than 500′ from drop pole.
$25/ft roller bit for bedrock well gets mighty pricey when you have to go 500′ to get to water.
Leachfield isn’t too bad if you have your own equipment. Otherwise, figure $10k.
You’re right. It adds up rapidly.
Yeah, I know about what to expect for improvement costs - I’ve run a land development engineering firm :-). IMO drilling a well is a big plus because I don’t have to deal with city/county utility districts for water. I’m looking in the county, but close to the county seat, so while I would love to pay $1k per acre, I don’t think it’ll quite get down to that level. But it might.
Olypiagal - When I lived in Houston my dream was to have a tropical paradise orchard, but now living north of Kansas City I’ve had to ease back on my dreams somewhat. I want about a half acre in blackberries that I plan to let run wild, grapes (may use them to provide shade on the gazebo), use blue berries for landscaping (they are beautiful, plus each bush gives off about 10# of berries), and about 4 acres total in apple, apricot, cherry, plumb, persimon, and whatever else I think will work (I haven’t spent a lot of time researching northern fruit trees yet). I plan on lining the long driveway with sugar maples, and will look for a land parcel with plenty of existing mature black walnut trees. I plan on having quite a few bee hives to help polinate the orchard and 1/2 acre garden.
But some dreams you can’t completely give up on. I plan on building a 3-car garage with a mother-in-law suite on top, that will then have a 2-story greenhouse attached on the rear that gets sun year round. This greenhouse will hold replacements for the fruit I planted in Houston, but luckily managed to sell the house and not get stuck in this market. I plan for an orange, grapefruit, javafruit, several dwarf mango, and a small grove of banana trees. I may possibly add a few kiwi and dragon fruit vines if there is any room left - it’ll be a tight squeeze, requiring a lot of hack pruining to keep in the allotted space.
My dream anyway.
Well that area is very nice, I’m sure you will enjoy it. Best of luck.
Check out Farmer Mac. Yes, it does exist.
PPT/Bailout rally fading fast. What’s next in their bag of tricks?
ahhh little bennie b. do you not remember this classic…
“all the king’s horses and all the king’s men…couldn’t put humpty dumpty back together again”.
test
Schumer looks like a good guy to the hoi polloi, with no harm to him (ratting out IndyMac) financially or politically.
S.P.Q.A. cameras are standing by…
He just pointed out the obvious, they can’t pin the failure on him.
’ssshrubery & co. have been playing pin the nail on the donkey pretty effectively, to their dwindling base.
I am not sure that is correct.
The SEC is opening its ceremonial investigation of rumor spreading. SInce the FDIC had weekly reports on Indymac, Mr. Schumer may very well be complicit in the bank failure. Were his friends short? What about his outside business associates? What Mr. Schumer did is sabotage a US company. The last time this happened (in my memory) was 1958, when some mopey senator said something like “Russia puts up Sputnik and all we have is the Edsel.” zIt killed the Ford Edsel, one of the most technically advanced cars of the time.
Senators should shut up and play golf.
And every last one of them should be voted out. No exceptions.
APPENDIX A: Scams and Category (That I have been short)
1 A T
2 AAPL T
3 AMZN T
4 BA C
5 BAC F
6 BRCM T
7 CSCO T
8 DELL T
9 EBAY T
10 FCX CM
11 FNM F
12 FRE F
13 GM C
14 HPQ T
15 IACI T
16 IBM T
17 INFY T
18 JNPR T
19 JPM F
20 LRCX T
21 MER F
22 MS F
23 MSFT T
24 NVLS T
25 ORCL T
26 PCU CM
27 QCOM T
28 SBUX C
29 SCHW F
30 TOL H
31 WMT C
32 XLF F
33 XOM C/CM
34 YHOO T
C Consumer
CM Commodities
F Fraudentials
H Hopebuilders (All profits taken in 5 other Hopebuilders– CTX, DHI, HOV, KBH, LEN)
T Tricksters (Cashed out GOOG)
The list changes over time.
Jas
–
(There were three up cycles of 100%-300% gain for the past 12 months and losses of 20-35% between the up cycles).
Appendix B: Positions and Change During the Latest Up Cycle of 05/19/08-07/11/08 (+167%).
Change Symbol Option
643.5% FREMC FRE JAN-09 $15 PUT
588.9% VBOMK BA JAN-09 $55 PUT
575.9% VBOML BA JAN-09 $60 PUT
520.4% VFNMC FNM JAN-09 $15 PUT
505.7% WBAMC BAC JAN-10 $15 PUT
352.6% WBAMD BAC JAN-10 $20 PUT
279.1% XMJMH MS JAN-09 $40 PUT
233.3% VGNMD GM JAN-09 $20 PUT
228.6% VPCMD LRCX JAN-09 $20 PUT
226.7% VJPMH JPM JAN-09 $40 PUT
200.0% VHPME HPQ JAN-09 $25 PUT
183.9% VBAMH BAC JAN-09 $40 PUT
180.6% WJPMF JPM JAN-10 $30 PUT
161.5% GSMP GS JAN-09 $80 PUT
150.0% JUXMC JNPR JAN-09 $15 PUT
148.0% VPCMF LRCX JAN-09 $30 PUT
144.0% CYQMC CSCO JAN-09 $15 PUT
143.2% MSQME MSFT JAN-09 $25 PUT
141.0% OTYMD TOL JAN-09 $20 PUT
140.0% OMTMJ FCX JAN-09 $50 PUT
134.6% WFSMY XLF JAN-10 $25 PUT
129.3% MERML MER JAN-09 $60 PUT
123.3% GSMD GS JAN-09 $120 PUT
112.0% ZQNMI AMZN JAN-09 $45 PUT
111.9% OMTML FCX JAN-09 $60 PUT
108.5% ZQNMF AMZN JAN-09 $30 PUT
107.8% YFTMJ GS JAN-10 $50 PUT
98.2% OTNMD NVLS JAN-09 $20 PUT
95.5% QTHMF IACI JAN-09 $30 PUT
95.0% OMTMH FCX JAN-09 $40 PUT
93.3% IUNME INFY JAN-09 $25 PUT
85.5% WXOMJ XOM JAN-10 $50 PUT
84.0% WPWME HPQ JAN-10 $25 PUT
81.9% VKPMH XLF JAN-09 $34 PUT
77.8% WXOMH XOM JAN-10 $40 PUT
76.4% OTNME NVLS JAN-09 $25 PUT
74.4% WMFME MSFT JAN-10 $25 PUT
72.3% LZJMF INFY JAN-10 $30 PUT
68.4% XOMMK XOM JAN-09 $55 PUT
61.7% WWSMC SCHW JAN-10 $15 PUT
61.5% VYSMD SCHW JAN-09 $20 PUT
55.1% WPWMG HPQ JAN-10 $35 PUT
41.6% QXBME EBAY JAN-09 $25 PUT
41.0% ZQNME AMZN JAN-09 $25 PUT
37.0% SQXME SBUX JAN-09 $25 PUT
35.5% WIBML IBM JAN-10 $60 PUT
29.3% WMRMF MRK JAN-10 $30 PUT
28.4% WWTMF WMT JAN-10 $30 PUT
25.0% VOCMC ORCL JAN-09 $15 PUT
20.4% PCUUO PCU SEP-08 $75 PUT
20.0% WOQMD ORCL JAN-10 $20 PUT
19.7% QAAMN AAPL JAN-09 $70 PUT
15.8% WOQMC ORCL JAN-10 $15 PUT
6.7% OAEMF A JAN-09 $30 PUT
5.6% WGJME BRCM JAN-10 $25 PUT
-10.0% AAQMH AAPL JAN-09 $40 PUT
-100.0% NJWRC FNM JUN-08 $15 PUT (Expired)
-100.0% PCURN PCU JUN-08 $70 PUT (Expired)
Jas
–
Symbols on some Jan’09 puts changed today.
Jas
PS: I follow a strategy, “Six-Pack,” that I posted on a public forum ten years ago.
_________________________________________________________
Sir:
Would you be willing to repost this strategy?
Thank you.
Filed under: America the Beautiful!
“Business mogul Donald Trump is a co-owner of the Miss Universe beauty pageant. Donald Trump Junior was a judge.”
The exporting drug countries had a good showing:
The final contestants were:
Miss Venezuelan / Miss Colombia / Miss Dominican Republic / Miss Mexico / Miss Russia
Jerry Springer & Communist Vietnam
I’d say Mr. Stump is one heckva US Patriot, see all those acknowledgments to the communist Vietnam leaders in the audience.
http://www.efluxmedia.com/news_Miss_Venezuela_Dayana_Mendoza_Is_Miss_Universe_2008_20307.html
…and then there was Cramass giving “poor folk” investment strategy from NASCARS Pit Row.
If only Fox news could have provided video of Cheney’s annual colon exam it would have been a Sunday Night TV Tri-vecta.
I don’t know if IndyMac was on that FDIC list, but its problem is well-known and has been festering for months now. I mean if Senator Schumer knew it and was able to mention it in a letter to FDIC, you know it should be common knowledge for folks who pay close attention to this sort of news. There are couple of blogs on the Internet that are devoted to finding the best CD & Savings rates and IndyMac’s problems has been discussed to death there. You can also check bankrate.com and they have a ratings page where you can check the health of the banking institution (not FDIC rating, but proprietary rating).
All these talk about people didn’t know or couldn’t find out, I don’t buy one minute of it.
You were merely a F.O.F.I. (first out, first in) lottery winner, in the FDIC scheme of things…
Bauer Financial rates banks and credit unions, using a star system. The first tier is free.
Ranking Banks:
http://www.bauerfinancial.com/btc_ratings.asp
http://www.bankrate.com/brm/safesound/ss_home.asp
White House: Bush to lift offshore drilling ban
Congress must still lift legislative ban before offshore drilling can start
http://www.msnbc.msn.com/id/25674571
OK Congress, now its your turn.
Cheney_Shrub come up with a quirk fix solution to immediately lower gas prices with only 4 months left in their 8 year… “I’m the Decider”… reign. Now that’s what a Yale “cheerleading” education will get ya.
Rene Zellweger / Jerry Maguire: “You had me at: “Mission Acomplished!”"
“You have done enough. Have you no sense of decency sir, at long last? Have you left no sense of decency?”
Joseph Welch
http://en.wikipedia.org/wiki/Joseph_Welch
“If you find yourself in a hole - stop digging”
- Will Rogers
They may see it W’s way:
Democrats Are Distancing Themselves from Obama
“When it comes to offshore drilling, a growing number of Obama’s Senate colleagues are distancing themselves from his steadfast opposition. They’re even starting to side openly with McCain’s proposal to allow it. First it was Sen. Durbin, the senior senator from Obama’s home state, who said yes to offshore drilling and no to Obama. Then reports emerged that Senate Majority Leader Harry Reid might change his tune on allowing offshore drilling. Now there’s word that the rise in oil prices has inspired a change of heart in Sen. Sherrod Brown of Ohio, who had previously opposed such plans.”
(Lip - saw your post the other day. No worries! xox)
“Democrats Are Distancing Themselves from Obama”
Don’t forget about the Republican’s largest state Politician
Arnold may consider Obama energy post:
http://news.yahoo.com/s/politico/20080713/pl_politico/11710
Hasn’t the Governator left the confines of the mansion lately to see what’s going on in the world at large?
Obama is yesterday’s news. In August, Hillary will rise over the Denver skyline like a giant pantsuited Rodan…and I am no supporter of HRC . I just think the way things are unfolding, the Dems are gonna need someone to get their chestnuts out of the roaster.
Hasn’t the Governator left the confines of the mansion lately to see what’s going on in the world at large?
Forget the governator…Have you gotten out much lately? Obama is leading McCain by a healthy 8 points in the polls, as of last Friday.
“…….giant pantsuitted Rodan…….”
LOL…….I guess you just have to be a certain age to understand a “Rodan” reference.
Got “Monster Zero”??????
NoSingleO -
Gallup 3 point race
Rasmussen
Rasmussen 2 points
Newsweek 3 points
This is not a “my poll is better than your poll” exercise. This is merely to illustrate a point: Why is Senator Rock Star not mopping up the floor with McSame, (McCrazy, McPain, The Old Man, GRANDPA…choose preferred pejorative)? If I were a Democrat voter, I would be wondering. And yes, I did get out this past weekend, I wish I’d have been able to spend some quality time at home, in fact. Thank you for asking.
As usual, two sides to the environmental issue.
The environmentalists have become the new Luddites within the Democratic Party. They would have more credibility with the publicif the didn’t try to stop growth (impossible), but focused on managing responsible growth (desperately needed).
I would support the Dems in strengthening enforcement of regs already on the books, and supporting scientists who do the research and testing, unlike the Reps, who have stuck their heads in the sand just like they did on the credit crisis.
Thanks phillygal.
To the guys and gals with BDS (Bush Derangement Syndrome), I know that in your eyes W can’t do a thing right, but in this instance he’s right and the political reality is going to be toward exploration and extracting.
Did anybody catch the episode on 60 Minutes about the roving free clinic, catering to Americans w/o insurance, or that have healthy deductibles…
In drilling operations over one weekend, over 1,000 teeth were extracted from ex-middle class people, in pain.
Yesterday I saw a guy applying Armor All to his Cheney-Shrub bumper sticker on his tax deductible energy saving Hummer!
It’s not just a Hummer, it’s a tax break
If you use the big SUV for business, you could deduct nearly $38,000:
http://seattlepi.nwsource.com/local/104601_hummer17.shtml
“I know that in your eyes W can’t do a thing right, but in this instance he’s right”
Even a stopped clock is right twice a day.
lol
Bush doing the right thing in the opinion of those suffering from BWS (Bush Worship Syndrome):
*Borrowing a trillion dollars and squandering it on nation building in Iraq.*
Have you cut your $16,000 check you owe for this mismanaged disaster? Why not?
It is purely political. If it made any sense, Bush would have done it years ago.
You can’t force oil companies to drill when it is far more profitable to import. ECON 101.
“It is purely political. If it made any sense, Bush would have done it years ago.”
*GASP* The ReClepticans do things for purely politcal reasons?!!!! BLASPHEMY!!!!
Exactly. The GOP controlled both the House and Senate for half of Bush’s tenure. They could have approved it then if they really wanted to. It’s not like they were missing any input from the oil industry.
Bush (or should I say someone advising Bush) just wants to use the issue to divide the Dems during an election year.
The GOP tried at least twice when they controlled both chambers to open ANWR, but couldn’t get a plurality to override a filibuster.
Alaskans (myself included) of both parties are almost unanimous in wanting to see ANWR opened. There are maybe one or two Alaska Native tribes (vs. 30 other bands) who oppose opening ANWR, but the environmentalists are keeping it closed because of the potential effect on some caribou herds.
Puhhhlease…
The GOPs had 8 years to reign in oil consumption, and instead gave tax breaks to Hummers and told us that conservation was a personal virtue. Now that there’s a crisis, it’s all the Dems fault for not wanting to fall all over short sighted measures, like tax holidays and drilling willy nilly in coastal waters, which may or may not affect stuff like, say fisheries. Most Dems are not opposed to exploring available resources, but if IRAQ is any measure of the right-wing approach to infrastructure and accountability, then there’s a reason to be reluctant about fear-mongering carte blanche oil drilling.
I’ve read that the big oil companies prefer NOT to invest in off-shore drilling because the cost to mitigate massive oils spills is prohibitive. Most Californians are leery of off shore drilling due to the catastrophic spill in 1969 :
By Miles Corwin, Los Angeles Times, January 28, 1989, page I23.
Santa Barbara’s oil spill of 1969 is re-examined as the birth of the modern day environmental movement.
SANTA BARBARA - From a large crack on the bottom of the Santa Barbara Channel, about 5 miles off the coastline, a few barrels of oil bubble to the surface each day. The slick and the nearby Unocal Corp. drilling platform Alpha are the last visible vestiges of the worst oil spill in the nation’s history.
Twenty years ago today, on January 28, 1969, a “blowout” erupted below the platform and, before it was plugged, more than 3 million gallons of crude oil spewed from drilling-induced cracks in the channel floor. For weeks national attention was focused on the spill’s disturbing, dramatic images. Oil-soaked birds, unable to fly, slowly dying on the sand. Waves so thick with crude oil that they broke on shore with an eerie silence. Thirty miles of sandy beaches coated with thick sludge. Hundreds of miles of ocean covered with an oily black sheen. But the spills impact went far beyond the fouled beaches. The disaster is considered to be a major factor in the birth of the modern-day environmental movement.
It was the Spark, “The blowout was the spark that brought the environmental issue to the nation’s attention,” said Arent Schuyler, lecturer emeritus in environmental studies at UC Santa Barbara. “People could see very vividly that their communities could bear the brunt of industrial accidents. They began forming environmental groups to protect their communities and started fighting for legislation to protect the environment.”
During the next few years there was more environmental legislation than at any time in the nation’s history. In 1969, Congress passed the National Environmental Policy Act which requires environmental impact studies before any federal action can be taken. California adopted similar legislation in 1970. A wave of national environmental legislation followed, including clean air and water acts, and laws that protected sensitive coastal areas and endangered species. The spill caused many people to doubt the safety claims of the oil industry and the government, said Michael Paparian, state director of the Sierra Club. Environmental activism gained widespread support he said and in the two years after the oil spill, Sierra club membership doubled.
“The spill caused many people to doubt the safety claims of the oil industry and the government.”
Hey, rumor has it that ALL the registered Republican’s living at Hilton Head South Carolina are in favor of oil drilling in Alaska, …and just offshore in their private Atlantic, and since most now go shopping in their golf carts ….they are not really concerned about the price of gasoline for their Cadillac Escalante’s
And Ted Kennedy, John Kerry, and RFK Jr (environmentalist extraordinaire) oppose windmills off the coast of Nantucket.
Everyone’s still stuck on NIMBY. Californians want electric vehicles so they can push all their pollution away from the cities and out into the desert southwest, where I live. None of us yet want to accept the consequences of our own consumption, either regionally or nationally.
Why didn’t Cheney-Shrub kick the “Oil Drilling Now” ball into the Congress of Republican’s for the last 7 years? Shrub “The Decider” would still be buying millions of barrels of oil @ $147.00…and pumping it into the salt mines.
“Cheney’s over in the “Shadow” Gov’t Office handling the x1 Afghanistan War & Dubai duck hunting blinds at Halliburton’s new headquarters…I’m handling the x1 Iraq war & campaigning my arse off for McSame…Condi is busy sewing up the Middle East “Peace Forever” campaign…we’ve only got 4 months to put the final polish on the Cheney-Shrub Legacy so that we go out with high approval ratings.”
“This “domestic” gasoline issue will just have to wait…I’ve got to get those tax credits for the wealthiest 2% of America locked into law…so just quit with the “belly aching & whinning” ”
So, no one has a viable plan. No one. Solar is still peeing in the ocean, and will remain that way for another couple decades at least. I’ve installed solar systems for the last 7 years, and they’re great. But when you sit down and do the energy math - it’s just not there, given how we consume energy.
Plan on using a lot less dino fuel, because it’s going to be expensive, no matter who’s in power. Too many people in too many other nations want it for themselves. It’s what we should do anyway, if you really believe that we need to reduce CO2 emissions. No magic solutions there.
Cheap gas and conservation are pretty much mutually exclusive propositions without the heavy hand of rationing.
In the mean time, we need to drill more, unless we want to make ourselves even more dependent on oil-producing states that hate our guts. Like I said, we’re still stuck on NIMBY. Nobody in government is proposing anything that will make a real difference. At least there’s plenty of venture capital flooding to alternative energy, plenty of jobs and opportunities. I’d take one of the jobs myself, but most are in CA. Who can afford to live there.
Let’s see if they grow a pair
Let them lift offshore drilling ban but institute a tax on gas/oil to keep it at 5 bucks a gallon.
Then send procedes of the tax directly to Americans.
Many will spend the money on fuel efficient cars, insulation, better windows ect. Wind projects solar ,cogeneration ect will produce more US jobs.
sounds like a viable plan.
$4000 worth of windows going in to replace 1950’s. Only half the house. If new job lasts, will do the whole thing by November. This while price of home is falling 500/ month. Im still not sure this is the right path for us. Maybe a good war….oh, we already have one. My bad.
I’m drinking coffee, from a French Press…
Happy Bastille Day!
I’m humming Les Miserable all day.
I’m going to wear a silly hat of some sort and sneer all day and speak in a fake accent.
(Of course, I do that every day.Therefore, to make today even more special, I will, when in stores, each and every store including Ace Hardware, I will demand that the garcon being me a criossant or a bound aristocrat.)
I think i’ll let my cats eat cake today.
Sounds like a plan. If they refuse to honor your request, scream “Liberte’, Egalite’, Fraternite’ ” and then start knitting their names right in front of them…that’ll scare the heck out of them.
You’re a genious, mon frere’!
I shall “fart in their general direction”…….
For a Bastille day funny
google
“french military victories”
and click on the first link
With the Belgians trying to take our beer, it’s more important than ever to fortify our ties to our allies on the continent.
Things can only go uphill for the Budweiser brand.
I think you should walk around town saying, “Je pense que tu etes un imbecile!” to anyone that looks in your direction.
(All those years of French…wasted)
Nuh-uh, because now you can wear a silly hat with authority.
Allons enfants de la Patrie
Le jour de gloire est arrivé ! and like that
La Colombe , good coffee. A couple guys from Nice came to the States- wanted a good cup of coffee, and the rest is histoire…
This Frenchman had French toast for breakfast.
vive la France!
“Frahnch fries … Frahnch dressing … and Frahnch bread. And to drink …Pay-roo!”
I beleev zis evening I weel engage in some lovemaking in ze French manner…
I have sharpened my guillotine for any buyers of houses.
Here are two web pages that reflect some RE activity in Salinas and the central coast.
1. Foreclosures listings for Salinas (30 pages) http://www.foreclosurenet.net/city_results.asp?state=CA&county=Monterey&city=Salinas
2. Paso Robles south. Very cool map that you can just grab and move your way down hwy 1 or 101 toward Santa Barbara and see neighborhood areas of listed property. http://www.locallinks.com/paso_robles_real_estate_mls.htm
I keep hearing “People bought too much house ” The fact is people were loaned much more than the houses were worth.
or… people got much less house than they payed for
Ding! Give that man a Kewpie doll.
The REIC hopes the charade will continue as long as we can be bamboozled into thinking that the bubbly prices were and are “normal”. By blaming the little folk who overstepped their station and “bought too much house”, they can try to keep those prices high, while scapegoating FBs. The problem is that the artificially inflated pricing is collapsing under its own weight and no amount of perceptual management is going to put the brakes on the reversion to mean (with overshoot).
I`ll take that orange Mozillo doll over there next to the Bernanke doll
If you believe the old saying “It’s worth what someone is willing to pay for it” then the primary determination of FMV isn’t what some appraiser or bank says, but what the new buyer and seller have agreed on.
Now, whether a bank is willing to loan that amount is another story, and for quite some time, we’ve seen the answer be “yes” when it was probably in the bank’s interest to say “no”, but that’s somewhat a seperate issue. It’s not like there is some book published by an omnicient being with the “TRUE” value of items that the banks can look at.
I think the mistake that banks made was they they only considered fair market value and didn’t consider the environment in which that value was determined. If you had a house that was selling for, say, 1M in bubble times and is at 500k now, it doesn’t mean that it’s true value was 500k all along. During the bubble times, the fair value was 1M, it just so happens that was during a time when there was a bubble in the market, which was destined to deflate.
If a person bought a house in the middle of the bubble, that’s what the house was worth at that time. Later the value of the house changed. If the person couldn’t afford the loan (perhaps b/c they were speculating) then they certainly bought more than they could afford and the bank lent what the house was worth at that time (but shouldn’t have) without consideration for how the market might change in the near-term.
The price changed, not the value.
“Price is what you pay. Value is what you get” - Warren Buffett
In America, we commonly refer to the current market price as “fair market value”. It’s interchangeable.
Price is how we express the very personal thing called value. It’s (imo) reflective of the fact that “value” in the other sense is only ever personally subjective and can never really be communicated to another person, and so holds no real place in any sort of financial or economic consideration that deals with more than one person. (such as the case of a house being bought by one person, sold by another, and loaned against by a third) So we have to interpolate personal value into a “common” expression of that value.
And by the way, even value in the sense you are using it is not unchangeing. e.g. Most people here probably don’t value toys the same as we did as kids. People’s personal values change all the time.
bluprint “when it was probably in the bank`s interest to say “no” ” That is like saying it was probably in the best interest of the Titanic passengers to get into the life boats.
I am 48 and before this housing bubble homes were worth what someone was willing to pay for it, but during thie bubble a home was worth what someone was willing to lend on it.
I think the mistake the banks made was what we all heard growing up ” if your friends were jumping off a bridge, would you ” apparently they would.
before this housing bubble homes were worth what someone was willing to pay for it, but during thie bubble a home was worth what someone was willing to lend on it.
———————
BINGO!!!!
Couldn’t agree more with the notion that people borrowed too much money, they did NOT “buy too much house.”
While market price is determined by willing buyers/sellers in a normal market, we did not have a normal market since 2001, IMHO. The fundamental value of a house in a given market is what sellers are willing to sell for and buyers are willing and able to pay. It’s the “able” part that was left out of the equation, and it’s THE most important variable — as we can see based on the foreclosure “crisis”.
We (generally people on this blog) can’t have it both ways. Past prices don’t dictate current or future prices. 25 years ago prices were dictated one way. In the past ~10 years, they were dictated another way. Now they are reverting back to something else or maybe to something new. Current market prices at any given time are what they are. Lending standards certainly affect what a person is willing to pay (as do other factors: taxes, social standards, etc), but at the end of the day the rule stays the same. FMV is what people are willing to pay.
To say otherwise is to conceed that “real value” can be something at some previous time, i.e. “my house is worth 700k but I can only sell it for 350k right now.” We all know that’s not true. If you can claim that the “real value” of a house is something 20 years ago, someone else can just as easily claim the real value is the one from 4 years ago. Both are wrong. The real value is whatever it can sell for right now.
It normally takes battalions of lawyers and accountants months to do the due diligence on multi -billion dollar deals. How does the FED manage to accomplish these deals over night?
Helicopters?
Easy. No due diligence.
I would wager that the PTB have been quietly working on this little scheme for the better part of a year.
Anyone noticed that WaMu is in crash mode today?
Not sure if this has anything to do with it or not. Or if WAMU looks suspiciously like IndyMac did.
http://money.cnn.com/news/newsfeeds/articles/apwire/dbba6d03fcee910141bbe58879ba57fa.htm
How so?
i did, and am toying with the idea of buying some.. almost bought at $5..
Don’t do it.
..got no gamble in ya?
It’s a reasonable bet, imo. Round and round she goes.. where it stops nobody knows.
Their preferred is yielding 19.5%.
I am short WAMU. No reason to cover.
Richard Bove a banking analyst said WAMU is ” on the edge “
Dick Bove: Fannie Mae and Freddie Mac in my view are disasters they were basically companies that were filled with fraud and mismanagement for the last five or six years. They have to be broken up, they have to be gotten rid of. I don’t think there’s any question about that, but it can’t be done now and can’t be done in a period of hysteria…. I think what you’ll see is that Fannie Mae and Freddie Mac will be gone.
Steve Liesman: That’s sort of, I hate to say it at 6:14 in the morning, insane.
LOL - I think Mr. Bove has every right to make his statement. I doubt if Mr. Liesman ever made a dime in the markets.
On the edge of what? I believe he gave a list of banks in trouble and WAMU was “on the edge” of being on that list.
Front office staffers at my office are wondering about the advice to not panic. Also heard about someone’s FIL who mentioned that depositors are making an unusually high volume of withdrawals from WaMu.
ncc halted.
http://finance.yahoo.com/q?s=ncc
Fannie Plan a `Disaster’ to Rogers; Goldman Says Sell
http://www.bloomberg.com/apps/news?pid=20601087&sid=av8pcGLz4lr8&refer=home
sorry if this was posted already.
It seems like every day WAMU falls further than the other financials, but yeah, they’re currently down more than 31%. From what I can tell since Indymac failed the investors think WAMU is close behind.
Lehman says WaMu needs capital! Quick, get the sec after the rumor mongers! lol.
Time to buy the dip?
That dip’s got Jalapeno in it, with Salmonella. Stay away.
China tells Bush Administration: “we demand you insure our investment in our Fannie & Freddie $376 Billion bond liability.”
Bush: Consider it done!
In other news “This Bud’s for you” now to read “This Belgium’s for you.”
..while back at the ranch:
Laura and George’s multimillion dollar ranch expansion marches forward. Note to Laura: does Neiman Marcus discount all those purchases you’ve lined up? Nothing like a rosewood rake with a platinum head to spruce up the plantings while the American public clips coupons, carpools, and works two jobs to survive. That’s showing up those Clinton scoundrels in their Chappagua digs!
Through the Looking Glass…
Once a pawn a time
“it seems to me that it’s up to all of us to try to tell the truth, to say what we know, to say what we don’t know, and recognize that we’re dealing with people that are perfectly willing to, to lie to the world to attempt to further their case and to the extent people lie of, ultimately they are caught lying and they lose their credibility and one would think it wouldn’t take very for that to happen dealing with people like this.”
Donald (R.Q.) Rumsfeld
Iceberg lettuce price increases sighted off the starboard bow…
(just a little increase is visible, in keeping with the government’s cooked inflation numbers)
Corrupt George and his crew of thieving magpies ran the USS America into an iceberg.
We sent the green floating stuff to China.
Ice burg lettuce slime just in time for the Olympics.
These bailouts are losing their punch on Wall Street, this rally only lasted about an hour. And for how much ?
The clever diversion is the Prez’s announcement, retracting the executive order against offshore drilling. That feeds the MSM the headline they need to shove Fannie/Freddie into second place. It’s all in the timing and getting the audience to watch the right hand while the left is doing its “magic.”
Ahhh… “Clever” may be too charitable. “Sinister” is better. There is 0.0% chance that the timing of the Fannie/Freddie announcements before the weekend and the oil drilling one on Monday before the markets close is just blind Wall Street luck.
“Home ownership is the American dream”
- President Bush
“Get rich quick is the American dream”
- Joe Blow
Joe Blow’s got it right.
Wall Street: “Psst, Hey Cramass…get your yelling face on!”
Community Sentiment
Top stocks creating buzz on Yahoo! Finance message boards
Bullish
* Cardiome Pharma Corp. (CRME)
* Fannie Mae (FNM)
* Freddie Mac (FRE)
http://finance.yahoo.com/
Countrywide files last 8-K
I would not like to be a long CFC bonds. CFC has been moved into a wholly owned subsidiary. Assets and servicing have been moved to Bank America.
http://www.sec.gov/Archives/edgar/data/25191/000095014408005376/g14113k2e8vk.htm
What happens next?
They paint Trojan Horses Orange, don’t they?
“…The U.S. Treasury Department’s plan to shore up Fannie Mae and Freddie Mac is an “unmitigated disaster” and the largest U.S. mortgage lenders are “basically insolvent,” according to investor Jim Rogers.
Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson’s request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview….
“I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,” Rogers, 65, said in an interview from Singapore. “So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.”….
“These companies were going to go bankrupt if they hadn’t stepped in to do something, and they should’ve gone bankrupt with all of the mistakes they’ve made,” Rogers said. “What’s going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What’s going to happen three years from now when the situation’s much, much, much worse?”….
Bloomberg
A band aid here, a band aid there… Just kill the dollar and get this dripping over with.
Rogers was shrewd and moved just about everything he owned, including his domicile, out of this country. Really lucky timing, too, if I read correctly that Congress passed some sort of Zimbabwe-style exit-tax for those leaving the country permanently.
Sure wish I weren’t so poor as to be unable to afford a decent lifestyle in Singapore. Guess it’s Panama or nothing.
Ode to Jan & Dean…
It’s the little old bank run in Pasadena
The little old bank run in Pasadena
(Go, Money, go, Money, go Money go)
Has a pretty long line of withdrawal eaters
(Go, Money, go, Money, go Money go)
But parked in a dubiously insured banking garage
Is a brand new, shiny red Super Tax Dodge
And everybody’s sayin’ that there’s nothing meaner
Than a bank run on the streets of Pasadena
(reality bites real fast and it bites real hard)
IndyMac’s the terror of Colorado Boulevard
http://www.youtube.com/watch?v=xGdLDOXyWsg
_____________________________________________________________
“IndyMac Bancorp Inc customers lined up outside a branch at the company’s headquarters on Monday, hoping to withdraw their money after regulators seized what was once one of the largest mortgage lenders in the United States.”
“Several hundred people arrived around 4 a.m., five hours before the Federal Deposit Insurance Corp planned to open that branch.”
“I have $360,000 in this bank, and I was misled by this bank,” said Robert Clark, a Glendale resident who was waiting on line. “I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don’t know what to do. I really don’t know what to do.”
http://www.reuters.com/article/topNews/idUSWA000014120080714?feedType=RSS&feedName=topNews&rpc=22&sp=true
I’d like to ask you wizened ones about a little scheme I’m concocting. I would like to start a company that manufactures video games that are a cross between a small carnival ride and a traditional arcade cabinet, and places them in arcades owned by the company.
I have taught myself to develop video games, and am looking into some low end CNC machine equipment to produce parts for the machines. I am starting out by retrofitting an elliptical trainer I have with sensors and using it as a controller for a game designed specifically for it. Later on I’ll be making things like motorcycle simulators, punching bag games, anything that 1.) provides strong physical interaction and 2.) can’t easily be replicated in the home.
I am counting on being able to rent a retail space cheap for the arcades, so that I can make the games cheap to play…a quarter or 50 cents, and provide entertainment to people without much money…kind of the niche the movie theaters had during the depression.
What do you all think? A good bet, or am I blinded by all the things I want to build?
Going into almost any kind of business right now, is like setting sail into the eye of a hurricane.
It did work for Forest Gump and Lieutnant Dan.
instead of trying to be the chief machinist-programmer-business manager-inventor-bottle washer in a one man shop, how about farming some of that out to experts. Even then, you may not live long enough to see it turn a profit if you start on a shoestring budget.
Traditionally, you might formulate a complete business plan, down to the last detail. Include where you plan to set up along with that area’s demographics. Stretch your plan out 3 or 5 years.
Go to the bank with it. Ask them to lend you money. When they turn you down, go to another bank. Rinse and repeat. At worst you’ll receive some valuable feedback and criticisms.
After the banks, there’s always venture capitalists who might be willing if you’re willing to give up a substantial amount of control.
Good advice. I’ve been trying to talk myself around into getting help for various functions, but employees are problematic in many ways…especially in California. Currently I’m pondering some kind of profit sharing arrangement, where people invest their time and are paid back for the value of their contribution, plus a risk premium, out of any profit. With unemployment climbing, my hope is that more people would consider such an arrangement. I like the idea of contributors having real skin in the game, not just money.
I’ve got the skeleton of a business plan, but I would like to avoid getting tangled up with lenders/cash investors. I’ve got a good bit of cash to get started with, if I can keep the costs down.
Asking for bank loans to get my business plan vetted is a very good idea, though.
‘I’d like to ask you wizened ones about a little scheme I’m concocting. I would like to start a company that manufactures video games that are a cross between a small carnival ride and a traditional arcade cabinet, and places them in arcades owned by the company.’
First of all, russ, I’m not wizened. I’m only sunburned. Secondly, by ‘carnival ride’, do you mean there is to be a scary on-the-lam child-molester buckling the players in? Thirdly, I like Halo 3 very much. Fourthly, why develop a ‘punching bag game’? I would think that sort of game is quite easily replicated in the home. Fifthly, you should serve beer and grape popsicles at your arcade.
And lastly, it could be that you are ‘blinded by all the things you want to build.’ That happens, but you should just do it anyway, I say.
You know what, lady? I think I will.
I have ritualistically sacrificed extra-virgin olive oil into a consecrated pot, and will try inflation experimentations with the colonel & co.
Got butter?
For those of you of the opinion that US Treasuries are still a sound investment: What happens if Freddie and/or Fannie have to go to the discount window for real moneys with the current US treasuries holdings?
Just a thought, I don’t pick bottoms.
They are just like the other promise sorry notes, questionable.
so I am not going to get Social Security when I retire?
You’ll get it unless Uncle Sam goes out of business before then (highly improbable). The question you should ask is what share of your retirement living expenses will be covered by the monthly SS check.
Good grief — we have been in a banking crisis since August 2007, and the folks at American Public Media’s Marketplace show have just caught wind of it.
Economy
‘Marketplace’ Report: Banking Panic
Listen Now [2 min 56 sec] add to playlist
Day to Day, July 14, 2008 · How safe is your bank account? After 11 days of panicked withdrawals, the bank IndyMac opens its doors Monday under control of the Federal Deposit Insurance Corporation. It’s one of the largest regulated banks ever to fail. The news has analysts asking which other banks might be facing a similar situation. Alex Chadwick talks with Amy Scott about fears of a banking crisis.
The PPTitanic is unsinkable.
More like the “Good Ship Lollipop” sung by Shirley Temple
I’ve thrown away my toys
Even my drum and train.
I wanna make some noise
With real live aeroplanes.
Some day I’m going to fly.
I’ll be a pilot too.
And when I do, how would you
Like to be my crew…
On the good ship lollipop.
Its a sweet trip to a candy shop
Where bon-bons play
On the sunny beach of Peppermint Bay.
Lemonade stands everywhere.
Crackerjack bands fill the air.
And there you are
Happy landing on a chocolate bar.
See the sugar bowl do the tootsie roll
With the big bad devils food cake.
If you eat too much ooh ooh
You’ll awake with a tummy ache.
On the good ship lollipop
Its a night trip into bed you hop
And dream away
On the good ship lollipop.
This from the Sunday Real estate section of the LA Times “Hot Property” column. (Recall I contributed the story of the Sharon Stone $1m loss a couple of weeks ago.) John Cleese has sold his horse ranch in Montecito (near Santa Barbara). Asked for $28m, got $16.5. Don’t know if that made him do Silly Walks.
http://www.cnyhomes.com/Listing/Search/more_photos.cgi?mlnum=195273
major commute location
not bad but not a top tier school district
$250k
You didn’t need a kitchen with that, did ya ma’am?
http://www.reuters.com/article/topNews/idUSWA000014120080714?feedType=RSS&feedName=topNews&rpc=22&sp=true
customers line up at Indymac to withdraw their savings
Just FYI for those with brokerage accounts…SIPC insurance:
http://www.sipc.org/how/brochure.cfm
No more foreclosures for IndyMac customers.
http://www.reuters.com/article/bondsNews/idUSWBT00941020080714
Sorry if a dupe, but an interesting read to me
http://www.charleston.net/news/2008/jun/08/anatomy_bank_failure_when_liquidators_comes_callin/
FDIC Failed Bank List since August 2007
failed date updated date
IndyMac Bank, Pasadena, CA July 11, 2008 July 11, 2008
First Integrity Bank, NA, Staples, MN May 30, 2008 May 30, 2008
ANB Financial, NA, Bentonville, AR May 9, 2008 May 9, 2008
Hume Bank, Hume, MO March 7, 2008 July 1, 2008
Douglass National Bank, Kansas City, MO Jan 25, 2008 June 17, 2008
Miami Valley Bank, Lakeview, OH October 4, 2007 April 28, 2008
NetBank, Alpharetta, GA September 28, 2007 April 28, 2008
http://www.fdic.gov/bank/individual/failed/banklist.html
Supposedly there are interested buyers of the Indymac Bank, but at a price even Lars could afford.
Oh when those banks come tumbling down
oh when those banks come tumbling down
Oh I will be going to Rio
when those banks come tumbling down.
Caution: Reading this post may arouse the concern of First Amendment censors at the SEC. The saddest cut of all: Mr Stock Market is not confident the plan will save the situation at hand.
July 14, 2008
The rescue of Fannie and Freddie by Hankie and Feddie
The bail-out of Fannie Mae and Freddie Mac by the combined forces of the US Treasury and the Federal Reserve Board is the ugliest exercise of its kind I have ever observed outside early transition economies and mature banana republics.
There are two open-ended (possibly permanent) measures by the US Treasury and one supposedly temporary measure by the Fed. The Treasury’s proposals require Congressional approval to become effective, something that should be forthcoming some time next week. The Fed measure does not require Congressional approval.
The open-ended Treasury commitments are the creation of a facility enabling the U.S. government to become a major shareholder in the two GSEs, possibly for as much as $15 billion equity in each of the two institutions. The existing Treasury lines of credit to the insitutions (currently limited to $2.25bn each) would, as far as I can tell, become open-ended and uncapped.
The Fed is to provide the two GSEs with access to the discount window on same terms as commercial banks. The announcement is not very informative: “The Board of Governors of the Federal Reserve System announced Sunday that it has granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary. Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities. ….”
It is clear that this extends the lender of last resort role of the Fed to the two GSEs.
Fixing Fannie and Freddie
Published: July 14 2008 14:40 | Last updated: July 14 2008 20:11
After nodding and winking itself into exhaustion, Washington has had to make its support for Fannie Mae and Freddie Mac explicit. The two government-sponsored enterprises are not Bear Stearns. But repeated statements from US officials that the GSEs are adequately capitalised have not worked – hardly surprising when their direct and guaranteed liabilities were almost 65 times their regulatory capital at the end of the first quarter.
Near term, the priority is retaining the confidence of buyers of Fannie’s and Freddie’s debt, many of whom are foreigners. By increasing the GSEs’ credit line and pushing for authority to inject fresh equity if necessary, the Treasury’s plan should allay fears of failure. Freddie seemed to have few problems offloading $3bn of new paper on Monday, although some arm-twisting may have been needed to persuade banks to buy it.
Sorry if this is a repost:
Recession-Plagued Nation Demands New Bubble To Invest In
July 14, 2008 | Issue 44•29
WASHINGTON—A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.
“What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future,” said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. “We are in a crisis, and that crisis demands an unviable short-term solution.”
A prominent finance expert asks Congress to help Americans rebuild their ficticious dreams.
The current economic woes, brought on by the collapse of the so-called “housing bubble,” are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent…..”
http://www.theonion.com/content/news/recession_plagued_nation_demands
If I did not think that this is the goal….What’s the next bubble?
Still commodities and foreign currencies?