Bits Bucket For July 19, 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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Moyers had a good show last night on what the subprime mortgage debacle has done to Cleveland and how they are handling it. Especially interesting was how it has affected renters. Just about broke my heart to listen to the one gal who lost five grand in deposits and pre-paid rent and ended up in a homeless shelter. Really sucks. Seeing all the boarded up houses, I was thinking it’s a shame that the city just can’t seize all these properties, get the people to fix them up in exchange for a place to live and maybe a little stipend. Sort of a mini-WPA. I also enjoyed his interview with William Greider, who feels the gov should just nationalize Fannie and Freddie.
Greider’s point was that we (American citizen and taxpayer) are getting nothing in exchange for our guarantees of Fannie, Freddie, Bear Stearns and the like. Nothing. Not even a kiss. I especially liked his idea that in exchange for our help, banks should be made to agree to usury laws. About time.
‘in exchange for our help’
“We” have to borrow $3 billion a day and have a negative savings rate. Who are “we” gonna help?
Can’t squeeze blood out of a rock. How about out of Iraq?
Well, you know, that’s probably the only thing that saves our ass. The cupboard is bare. But it just frosts my patootie that an arrogant prick like Cueball Hank even THINKS he could commit the American taxpayer to guarantee a bunch of Wall Street and Washington toxic waste.
I’m gonna start walking around with my empty pockets inside out. New fashions for the the newly poor.
Billy Hank (homage to both One flew Over the Cuckoo’s Nest & Nascar)
Doesn’t appear to be the sharpest knave in D.C.
I have no idea how the mechanics would work, Ben. All I know is that Paulson signed a document committing the taxpayer to a guarantee should Bear Stearns default (Vanity Fair) and in regard to Fannie and Freddie, I watched a little bit of the C-Span program featuring Paulson’s arrogant testimony to Congress regarding Fannie and Freddie. When asked who would make the guarantee, Paulson said “The government”. He was corrected by the senator who said “you mean the taxpayer”. Paulson said “Yes, the taxpayer”. And then said something to the effect that if the senator didn’t like it, he could vote against it.
This gets down to the question of an all-powerful government, and we are starting to see the rubber hit the road. This morning I am seeing several reports of joblessness and commercial vacancies in California. These guys in Washington better stop worrying about bondholders and start figuring out how the heck the post-bubble economy is going to pay for itself.
Keep in mind that we are in a time after two major asset bubbles. They entirely distorted the economy. People are going to need to find jobs that aren’t based on these false structures. This can happen by chance, or we could be organized about it. Again, only when the leadership recognizes that we’ve had a housing bubble will they be able to react appropriately. Otherwise, they are trying to fix the unfixable.
“These guys in Washington better stop worrying about bondholders and start figuring out how the heck the post-bubble economy is going to pay for itself.”
Exactly. That was something Greider took up in the interview, how Washington is so completely detached and insulated. He was discussing the divide between labor and capital, etc.
“People are going to need to find jobs that aren’t based on these false structures. This can happen by chance, or we could be organized about it.”
We really need to return some manufacturing to the USA. BIG TIME.
I’ve been helping some friends that recently had a baby and they had a bunch of crib problems (product not like floor model, broken slats, slow delivery, replacement part took 6 weeks to ship from “China Warehouse” and it ultimately recalled).
When I saw the crib, I asked them how much they paid… $350. And it was a basic wooden crib like any high schooler could make in woodshop. I kept thinking to myself, “holy frick, a moderately skilled carpenter could build one of these in a day or two and make some good money.”
Get this, the side of the box said, “Hecho in China.”
I agree Muggy. A big part of the problem has been wrongheaded trade policies. We used to negotiate and do deals with one nation at a time on terms that made sense. Now, we do blanket deals that take no regard of the countries wage, environmental policies, etc.
The idea that sending jobs to Mexico would build up a middle class that would then buy our software is a joke.
And yes, when I lived on the border years ago, it was well know south of the border that hundreds of maquilladoras had moved to China.
Yes, but ultimately the reason that they had to start building up a middle class in the 3rd world was that western consumers were tapped out. In order for the big corporations to continue to grow they had no choice but to try and develop the 3rd world so they could sell useless crap over there too.
That should have been the 1st warning sign that the global economy is really just a Ponzi scheme.
RE: We really need to return some manufacturing to the USA. BIG TIME.
Do you think a quasi-illiterate generation supported by the “something for nothing” US welfare system is suddenly going back to work stitching shoes in a non-air conditioned, industrial workshop?
LMAO…dream on.
We need to manufacture trust first.
“LMAO…dream on.”
You have a point. Why make a crib when you can play GTA4 in an air conditioned apartment…
When I saw the crib, I asked them how much they paid… $350. And it was a basic wooden crib like any high schooler could make in woodshop. I kept thinking to myself, “holy frick, a moderately skilled carpenter could build one of these in a day or two and make some good money.”
I have to wonder how much of that $350 is liability insurance?
Because if it could be done cost-competitively in the US, it probably would be. High fuel prices _may_ help spur industrial employment in the US, but only insofar as the cost of a US worker is less than or equal to the cost of a Chinese (slave) worker + shipping.
I used to work at a large clothing catalog company, and they would, for example, buy leather jackets at wholesale from Mexico for $16 and then turn around and sell them to US consumers for $150+. They still went bankrupt. A lot of that was bad management, but I would say a large part of it is that there is a whole management, logistics, IT and fulfillment infrastructure that is generated when you are operating at the scale of a national retailer, and it is expensive. When you operate at that scale, its (obviously) an aggressive game of buy low sell high, with little margin for managerial missteps.
But I really think that creates an opportunity for small scale one and two person firms to compete. I think a craftsman or carpenter could compete, much like the Amish do, by creating high quality furniture and going direct to consumer. Here in Hawaii, “high end” aloha shirts cost $75-125. There is no way you can convince me that a talented seamstress working out of their den couldn’t make a decent living making custom shirts if they could market direct to consumer.
If you produce it locally, you can sell it in farmers’ markets. The ones in Austin are booming. At the downtown one this morning, a number of farmers had sold out by 10. Besides selling readymade shirts or cribs, the local seamstress or carpenter could take custom orders - a $15 dollar “storefront”.
Bingo, Ben!
Mike
we (American citizen and taxpayer) are getting nothing in exchange for our guarantees of Fannie, Freddie, Bear Stearns and the like. Nothing.
i disagree.. The guarantee allows us to keep on playing around, falling down, getting back up, learning and growing.
We are correcting our own stupid mistakes and miscalculations by preventing the failure of our large businesses.
We are just paying for our mistakes, and mistakes are sometimes part of the game.. It’s too bad, but that’s life.
We can decide to continue to give ourselves the freedom to grow, or not… freedom to succeed or fail, or not.
If we are so afraid of failure and it’s occasionally painful consequences that we no longer want to have an economy that we control, then give up control to the regulators and the government.
If we do, it’s because we want to create powerful parents and become their protected children..
“The guarantee allows us to keep on playing around, falling down, getting back up, learning and growing.”
I fail to see the depth of corruption, greed and economic fallout from these dolts as remotely akin to “playing around.”
“We are correcting our own stupid mistakes”
Our own stupid mistakes?
Our? I don’t recall including myself in this sorry ass group.
Mistakes?
How about greedy asshat volitional actions, (although they’re now trying to sell it as mistakes).
“preventing the failure of our large businesses.”
Our large businesses? I don’t recall having any vested interest in, or ownership of these entities.
“We are just paying for our mistakes”
Our mistakes? No need to repeat here…
We can decide to continue to give ourselves the freedom to grow, or not… freedom to succeed or fail, or not.
WTF?
If we are so afraid of failure and it’s occasionally painful consequences that we no longer want to have an economy that we control, then give up control to the regulators and the government.
Ok, I give up…Where’s the airplane glue?
DOC
we have a choice to make..
If we won’t let firms fail in a bust, then we have to contain them during the boom through regulatory controls.
But if we demand they be contained in boom times, containment will prevent the booms, and there will be little or no growth.
No growth is safety. To the degree that regulations stifle growth, business is handcuffed.
No consumers will be allowed to borrrow more than the collateral is worth in the government’s opinion, and consumers will be protected from themselves.
We essentially hand the economy over to the government.
Some of us certainly do want protection from cradle to grave, and to not be held accountable for whatever trouble the country’s economy gets itself into..
—
The alternative is to pay our debts to the businesses that financed our crazy spending spree, and learn from the mistake, and get on with life. Do what’s necessary to save the failing firms and keep the govt’s regulatory tentacles out of it.
I think govt already has enough power.. do you?
“We are correcting our own stupid mistakes”
Our own stupid mistakes?
Our? I don’t recall including myself in this sorry ass group. Are you a registered US voter? Have you ever voted for an incumbent? Have you ever played a role in someone’s election campaign? So don’t include yourself in this sorry ass group.
Joey,
Feel free to give these corporations all your money. Why not offer to work 100-hr weeks for them, for free?
They knew what they were doing, and they continued to do it even when the “pessimists” were calling for more regulation or a cessation of the toxic lending.
They made their choices, now they can suffer the consequences.
I have no idea why you think any one of us *owes* these corporations a single red cent. WTH???
You don’t have to give the banks anything to “make” them comply with antiusury laws. You have to convince law makers that they will lose their jobs if they don’t pass these laws despite the huge amounts of lobbying money that the banks will throw at them. And you have to be willing to live with the consequenses of antiusury laws which is fewer people getting credit - not necessarily a bad thing, but a consequence.
The problem isn’t high interest rates (usury) or even adjustable rate loans.
The problem is a mathematically unstable monetary policy that only has two out comes… hyperinflation and hyper-defaults. It is really the same outcome the only difference is how the losses are distributed.
I do not care what laws you convince congress to pass, if you do not repeal fractional reserve lending and fiat money then these problems will continue.
A sound monetary system is self-regulating due to the scarcity of resources.
Here’s the link to the Bill Moyer show on PBS
http://www.pbs.org/moyers/journal/index-flash.html
palmetto,
saw the same program. I was impressed! That is the only program that I have seen that has come closest to describing how scr@wed America is.
I watched McNeil News Hour earlier. While they did an extensive piece on housing, they were no different is their description of the problem or any realistic solution (Is their any other than kicking the can down the road).
Good report. Hopefully, we will see more like this program in the future.
I don’t always agree with Moyers, he frequently takes the part of the “victim”, which encourages that sort of mindset and let’s face it, by definition, victims are losers, although there are some who try to win by playing the victim. However, I, too, was impressed by last night’s program. I’ve always enjoyed Greider since I started reading some of his stuff in Rolling Stone. He’s been in Washington for 40 years and his acknowledgment that most inhabitants of Washington are clueless is spot on. A lot of the denial isn’t even malicious.
Time to get those usury laws back on the books.
palmetto,
I never like to be agreeable so early in the morning, however-
as a moderate/fiscal conservative dem/indep, we are in a world of sh–!
I have concluded that McNeil’s Newhour is really no different than MSM. Moyers, while I will not accept everything he says, is absolutely correct in shining a light on the economy, its history of ponzi schemes and the burst of the “last bubble”.
I wish ABC, NBC, CBS and the cable programs would finally do real investigative reporting instead of repeating what the shills say…
Everything is fine…we desperately need the tax payer to back businesses to big to fail by giving us (govt, Fed, etc) greater power to indebt the taxpayer for our screw-ups. We need to keep the system going so that we can continue to suck out the public’s life blood ( money ).
We watch the PBS newshour 3 times a week usually, and you can see chinks in the armor, if you are watching for the right tells…
Earlier in the week, Judy Woodruff was interviewing this banking expert named Bert Ely, who told Judy that there is no recession and banks are really solid. The camera briefly flashed back at her unbelieving face that showed the maximum amount of scorn one could get away with, without making it obvious.
People are Hep to what’s going on.
Time to get those usury laws back on the books.
Seems like an elemental, decent, common sense idea, doesn’t it?
I was also impressed by Greider’s interview last night. Moyers has an equally impressive record as a journalist and (very polite) gadfly, whether one agrees with all of his tangents or not.
It was a shame the Greider interview was pre-taped, though — otherwise I’m sure Greider would’ve mentioned Phil Gramm’s Friday night resignation as a senior advisor for a certain senator, and how Gramm himself helped create the current environment through aggressive deregulation in the financial markets. “Leaders” like that we don’t need.
The best quote from that piece came from the reporter who said about all of these foreclosed homes, “In the end, he says, these houses are worth less than nothing because they simply need to be leveled.” I thought of all the conversations I have had over the years, where I was told “Real Estate only goes up” and “they’re not making any more land” and other various idiocies. I also thought of the predictions of many on this blog who said we would see houses being demolished and that the value of many of the houses that had been put up during this mania would $0.
The most disheartening part of this whole mess is that I don’t see anyone in a position of authority re-thinking the kinds policies that got us to where we are right now. The only one who has vociferously questioned the Fannie Mae and Freddie Mac bailout as well as role of the Federal Reserve. is Sen. Jim Bunning. How is it that an ex baseball player is the only one who is at least asking the right questions?
Don’t forget Ron Paul!
Good point. Ron Paul has been asking a lot of the same kind of questions. Unfortunately, he and Bunning seem to be completely alone.
I have had quotes of $10k to remove a pier beam house.
Here’s a link to the interview if anyone is interested:
http://www.pbs.org/moyers/journal/07182008/watch2.html
Especially interesting was how it has affected renters.
All the state has to do is pass a law saying that all rights and obligations of tenancy, including lease tenure and deposit, are retained by the tenant and passed to the new owner upon foreclosure (or any other change in title).
Many jurisdictions have such a law.
And then Banks would have to raise interest rates and expenses to cover not only the expenses of foreclosure, but also becoming absentee Landlords. IMHO, not a great idea….
Freddie, Fannie and all of Cali are welcome to come to Cleveland and buy up these tens of thousands of jems for $1 each, pour millions into them and they can fill them with thousands of people who will abandon yet more tens of thousands of POS’s for the cycle to repeat yet again.
RE: Freddie, Fannie and all of Cali are welcome to come to Cleveland and buy up these tens of thousands of jems for $1 each, pour millions into them and they can fill them with thousands of people who will abandon yet more tens of thousands of POS’s for the cycle to repeat yet again.
Spot on CC. It’s amazing the idiots who believe that everybody has the “right” to own a house.
FHA used to have to give “home ownership” seminars to the real low end buyers in order to educate them about things like having to take their garbage to the street in order for it to be pick up by the trash collectors’.
However, in the course of doin’ a fair number of FHA/HUD foreclosures, even that simple task was just too difficult. Many would bag their crap and just heave it into the basements to rot. How they could stand the stink is beyond me.
I won’t even get into the animal excrement because the owner’s were too lazy to put the cat or dog out.
Personally, I think every originator who get nailed for fraud should be sentenced to cleaning up foreclosures for 5 years before starting their prison time.
These poor people in OH can’t afford food . . .
(One for the trout-slapper).
RE: can’t afford food…
This is what passes for starvation in America!
Kids don’t learn history anymore, so they don’t get to see the pics from Auschwitz or Bergen-Belson.
Loads of new spam bots coming in this AM. We’ll see what happens.
I wish this stuff could get wiped out. I have the latest spam filters, etc. But somehow these guys come up with new workarounds all the time.
“But somehow these guys come up with new workarounds all the time.”
Tell them Hank Paulson is looking for some fresh ideas.
(Russian Spammer Alert)
“Economics is a subject that does not greatly respect one’s wishes.”
Nikita Khrushchev
Ben, are you using WP-SpamFree? I run it on all my blogs and my spam count has fallen to zero, seriously. One of my blogs (for a band I produce) used to get 200-300 spams a day until I installed this.
I thought spam was illegal?
Loads of new spam bots coming in this AM.
i guess they all have different IPs and the limit to posting is one per minute per IP.
Why not change that to one post per 5 minutes (or longer), assuming that’ll actually help things..
uncomfortable questions regarding the economy
surprisingly i knew all this for years -thanks Ben
http://www.nytimes.com/2008/07/19/business/economy/19econ.html?_r=1&ref=todayspaper&oref=slogin
Executive summary: you’re farked.
I, too, am grateful for the insight that this website given me….not just on housing but on the overall state of the economy.
I haven’t been posting much because the hubbie has been home. He was put on furlough (local 3)…..luckily not laid off like most off his co-workers. He’s a crazy hard worker so I guess they felt if he went on furlough maybe things will pick up by the time he’s done.
The hubbie is praying things will pick up but not holding his breathe. Luckily, we’ve…or at least I… have been following the reports of so many extraordinary people on this blog and actually took advise of many. Socked away a ton of money, did not buy a house, lived a conservative lifestyle even during the good times and we’re doing darn tootin’ good….for now.
Danni,
May I make a humble suggestion,
Determine what people need in the most dire circumstances, and study the subject so that you/hubby can enter that field as a source of future income.
In my case, I believe that mfg. is a must so I figure math/physics/chemistry courses will be critical. As an old person, I am slower at retaining than young persons. My answer, study on my own using college texts to prepare for formal course work at the local jc.
The key is what is the absolute minimum that everyone needs, no matter how bad it gets. If you determine that and you time it right, you will do as best that can be possible.
He’s a crazy hard worker so I guess they felt if he went on furlough maybe things will pick up by the time he’s done.
Met with a plumber this morning to get a quote on some pipe work for the heating system. I ask him what his schedule is like and he says “Works real slow right now, so I can start anytime”. Last year when I wanted this work done, I couldn’t get anyone to even look at the job. This is in Southeastern Mass…
Few more labor/economic anecdotes:
A subsidiary of my employer has implemented a salary freeze and laid off temporary office help. I’m working on a software project for them (I work for the parent company, so no freeze for me yet) so I’m privy to much that goes on. Revenue is down over 20% yoy. This is in affiliate e-commerce…
Last one:
I have family that work in the landscape industry. They say numbers are off this year and now that the prime landscaping season is over, the cheap labor is being cut (aka South American migrants) and much of the full-time staff is limited to 40 hours (no overtime) and may be cut to 32 hours within the next month. Also, many of the large accounts have had their credit revoked, COD/POD now. This is a large supplier/wholesaler to landscape firms, very little retail exposure…
Employment has been what’s kept Massachusetts housing prices from falling off a cliff in all but the worst areas. That’s about to change…
Big sale on used lawnmowers being held at PawnMan in Las Cruces, NM. Off Main next to the railroad tracks.
My guess is that central & south American lawnmower men are being economically squeezed out. Back to Juarez.
~Misstrial
Boom times for American pawnbrokers as rich hit hard times
“I need $3,000,” Tito Vazquez, 45, says as he looks at his gleaming Harley-Davidson motorcycle. “But the economy’s a mess right now and my credit cards are all maxed out.”
Which brings him here, to Collateral Lender, a few blocks east of ultra-posh Rodeo Drive, in Beverly Hills. In short, it is a pawn shop. Like most pawn shops in Los Angeles - home to not one but two failed mortgage lenders, Countrywide Financial and IndyMac Bank - it is doing a roaring trade.
For Mr Vazquez, that is not good news: Collateral Lender has so many Harleys it does not have room for any more. The manager sends him to another broker in a different part of town, where with a bit of luck he will be able to get a short-term $3,000 float using his “hog” as collateral. The state-regulated interest rate is likely to be about 7 per cent, although pawn shops have a knack of getting around this by charging other fees.
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article4360404.ece
___________________________________________________
Some pawnbrokers won’t extend $3k on a Harley nowadays?
“Socked away a ton of money, did not buy a house, lived a conservative lifestyle even during the good times and we’re doing darn tootin’ good….for now.”
Good moves…same here. Yep, save while times are good so you can spend when times are tough…
Visited Patrick K’s blog and Ben’s blog wayyy back. Smartest moves I’ve ever made. Had dealt with an unbelievable amount of BS from RE crazy coworkers and friends during the runup. I held my ground and warned them of what was to come (to no avail of course). Last week I heard through the grapevine that my Boss (psychologist), coworkers and Dept. Director were remarking I was one “savvy dude.”
Seems lately I’ve been especially thankful I took pause and researched “contrarian” views when I did. Also, it didn’t hurt writing a couple of college research papers in the 90’s on group hysteria, manias, etc. to help recognize the psychological aspect of the bubble when it was gaining steam.
It’s been scary, interesting and sobering to watch this thing build up then implode.
DOC
“The open question is whether we’re in for a bad couple of years, or a bad decade,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.”
If handled well, it will be more than two bad years. If handled poorly, more than ten. I don’t see how you unwind 25 or so years of excess in two. We’re already more than two years into the bursting of the housing bubble and this process still has a long way to go.
“No wonder that in Los Angeles, San Francisco, Phoenix and Las Vegas, house prices have in recent months declined at annual rates of more than 33 percent.”
Excellent article, clearly written, blatently accurate, fantastic graphs. What’s the average Joe to do? On this sad data he will have to chew.
Tampa Bay guys, we totally missed our chance to shine today. The Red Bull Flugtag is happening downtown.
We should have entered as the HBB’ers and crashed a shoddily constructed townhouse.
That would have been awesome and I would have contributed. Make a machine that looks like those condos there in channelside.
We should have entered as the HBB’ers and crashed a shoddily constructed townhouse.
LOL!
And if anyone picks up on this idea, put “USS Economy” in big letters somewhere.
I’m in for next year’s competition if there are interested people. I’m sure the theme will still fit to a ‘T’ a year from now too.
San Diego County slowdown
County jobless rate at 12-year high
One in 16 in local work force was unemployed last month
By Dean Calbreath
STAFF WRITER
July 19, 2008
Unemployment in San Diego County last month jumped to its highest level in almost 12 years, fueled by year-to-year declines in construction and real estate jobs, the state reported yesterday.
Serial bottom callers step up to the plate again
Jitters Ease as Citi, Rivals Show Signs of Bottoming Out
By DAVID ENRICH
July 19, 2008; Page A1
A roller-coaster week for the American financial system ended on a relatively optimistic note Friday, as Citigroup Inc. reported signs of progress at writing down its pile of bad assets even as it announced a big quarterly loss.
Citigroup posted a $2.5 billion loss, which, while large, was better than analysts had been expecting. That news capped a week that began with investors being rattled by the federal seizure of IndyMac Bank and by the woes of mortgage titans Fannie Mae and Freddie Mac — but then saw bank stocks soar 31% from Tuesday to Friday.
What about Citi’s Level 3 assets?
Mike
“better than analysts had been expecting.”
So? What does that mean? Are these the analyst that foretold of this whole debacle? Are these the same analyst that accurately described the rampant fraud in all industries? Are these the same analyst who advised for defense positions and safe harbors?
“better than analysts had been expecting.”
Open casket, as opposed to closed.
Japan loan defaults also increasing. THAT is interesting.
Loan defaults are spreading outside the U.S. Citigroup reported a rise in defaults on credit card loans in Brazil, Mexico and India, as well as in Japan, where huge losses have prompted Citigroup to shut down its consumer-finance business.
I don’t trust the brokerages. I think a person might make a lot of money playing the economic collapse but when their broker goes down they might never see those profits.
I also don’t trust the FDIC to cover bank accounts.
I do trust a can of sardines and a silver dollar.
Hear, hear, Swami. LMAO! I don’t doubt for a minute that the money that people think they have could go poof in a split second. Hocus-pocus, gimme the smoke-us.
I hate to say it, but it’s almost like when Neil Bush of Silverado Fame and his friends of the S&L gangs were LOOTING banks but on a much more massive scale.
Has anyone seen Neil Bush lately and WHOSE turn was it to WATCH HIM ?
Any way to make money out of shorting the “faith bubble”?
faith in gold, or what?
Intangible faith out, truth in.
Someone emailed this to me yesterday, I thought it was a pretty good theory on why the Financials rallied the last few days:
“The following is offered by someone I have tremendous respect for, someone who has run major trading operations on both sides of the Street. If there’s a smarter fellow in finance, I have yet to meet him. You may not agree with his view but as I’ve learned over the last twenty years, it should definitely be respected.
Two Plus Two Equals Four
Financial companies are desperate for capital but their stock prices are so low that any issuance would be dilution death for the companies. The government is desperately trying to keep the financial system together. Add that up and you get the possibility of a great manipulation.
How would the government engineer a rally in financial stocks so that these companies can sell stock to raise capital at a reasonable or at least palatable dilution level?
It might go something like this. Since financial stocks are in such trouble they have heavy short interest; this is natural and well known and can be used to their advantage. A clever “berry” might think to introduce confusing rules that raise the cost of borrowing short stock and temporarily confuse shorts into covering and not shorting more. And this is precisely what the SEC did.
It seems innocuous to most folks, but it put stock loan desks and dealers in complete disarray. New short sellers could find no stock to borrow and many existing short sellers were forced to cover as the technical rules forced allocation of loans at much higher costs.
For example, the rebate rate on Fannie Mae (FNM) the day before the SEC announcement was 1%; the day after it was -5%. Many who were short the stock were forced to cover, thus driving the stock price up.
But this alone would only drive stock prices up so much. The clever berry needs a catalyst, one that would force panic buying into now truncated supply.
It just so happened that the new SEC rules came conveniently the day before many of these financial companies were to report earnings. If just some how these earnings were really good the match would be lit on the kindling.
So far banks have miraculously come through on their end of things. Wells Fargo (WFC) and JPMorgan (JPM) reported better than expected beaten down earnings. Things must be getting better just as the companies need capital.
What a coincidence.
But if you look at how the banks “beat” their earnings the coincidence becomes clear. WFC took the unprecedented step of extending charge-off acknowledgment from 120 days to 160 days. This allowed the bank to move less capital to loan loss reserves and report better than expected horrible earnings. And JPM was even more aggressive. It actually lowered its loan loss reserves quarter to quarter.
The list of financial companies where shorting regulations are being enforced/enhanced is precisely the banks and dealers (and FNM/Freddie Mac (FRE)) that have access to the Fed’s balance sheet (dealers through the PDCF and FNM/FRE through the recently-allowed access to the discount window). So we can speculate on the nature of the ”coincidence”: Perhaps the Fed is getting worried about the value of all that collateral these dealers have posted to the Fed balance sheet and must boost the capital of these companies to protect that value.
And now on cue FRE, a $5 billion market capitalization company wants/needs to issue $10 billion in new stock? Doesn’t that sound a little crazy? Well get ready for others to do the same because the banking system needs capital desperately and the government is there to help.
But help at the expense of who? “
This sort of aligns with what Greider was saying on Moyers last night. The shorts are being punished by the SEC, when in fact their function is very healthy in punishing the over-stuffed bears, clearing the crap out of the system.
What happened to the “free” market this administration and the Fed have been touting?
It got in the way.
This accounting move by WFC (Wells Fargo) was reported somewhat in passing in Thursday’s WSJ on page C12. IMO there should have been screaming headlines on page one that said “WELLS FARGO IS COOKING ITS BOOKS”.
But there wasn’t. The WSJ is losing credibility, IMO.
Sad.
“Is” losing?
Does the #1 housing bubble denier and Bush supporter in the media have any credibility to lose?
It’s truly a shame what is happening to the WSJ. Just as Moodys and Standard & Poors flushed their names and well earned reputations down the drain, the WSJ is following suit.
This is not at all the same newspaper that in the 1950s stood up to the then mighty and all-powerful General Motors and refused to give ground.
Rupert’s an interesting guy to pin the blame on the pachyderm on, a “flyover foreigner”, whose audience was in our flyover.
William Randolph Hearst must be rolling over in his grave, having been knocked off, as being the all-time king of Yellow Journalism…
A few months ago the WSJ Saturday edition had nine full-page ads taken out by various expensive watch manufactures. This is some very expensive advertising.
The following Monday the WSJ had an article disclosing how these same watch companys usually ended up as the highest bidders at Sotheby auctions for their watches. In effect the watch companys were establishing and supporting the prices for their expensive watches; In other words, their watches were expensive because their bidding made them expensive.
All this, although dutifully reported, was downplayed in the article, just as Wells Fargo’s cooking of their books was downplayed.
The WSJ and other newspapers enjoy ideal positions to, in effect, shake down companies. Do some investigating on a company, dig up some dirt, sell full page ads to the company in return for minimizing the damage of the article written about the dirt.
Well observed, combo. Have you noticed more of this sort of thing, or other changes, since Murdoch bought WSJ?
I’ve noticed many of their top journalists have fled. Also noticed lots of self-congradulating horn-tooting references imbedded within their articles.
The style is deterioriating, IMO. It used to be a paper one could trust; Not anymore.
“This accounting move by WFC (Wells Fargo) was reported somewhat in passing in Thursday’s WSJ on page C12. IMO there should have been screaming headlines on page one that said “WELLS FARGO IS COOKING ITS BOOKS”.”
I won’t shed a single tear when the wheel falls off their coach. F*ck ‘em!
To Serve Man
(It’s a set of cooked books!)
and our goose is cooked!!!
“To Serve Man”
I loved that Twilight Zone episode.
The quality at the WSJ was slipping before Murdoch took it over, but since his takeover it has really taken a turn for the worse. I have been a subscriber on and off for about 15 years and the decline in the quality of reporting has been extremely depressing.
The paper still does some good work, but the really well researched and analytical articles are becoming less common. I will give the editorial page kudos for warning about the coming problems with Freddie and Fannie for a number of years, but in most respects the paper has taken a significant turn for the worse.
The quality of all of our news sources is deteriorating. They’ve been consolidating, and selling out.
They’ve had their legs cut out from under them by the internet, esp internet sales ie Ebay craigslist ect. This blog and others will be hurt, we may generate ideas, and analysis but there isn’t a lot of investigational journalism going on.
A lot of other companies want to get on the ‘Do not short list.’ What’s the 1-800 number?
Need a gift for that hard to shop for person?
Can’t Naked Short of the Month Club will deliver a tasty morsel to your laptop once a month for a year.
But wait, there’s more!
Order now and will throw in a Ginzu knife to do yourself in, should the neighbors see you naked, financially.
Operators are standing by, on Wall Street…
LMAO
More evidence from the SD U-T on the SD County slowdown:
Venture capital investments fall 28%
S.D. region sees decline from same quarter in ‘07
By Bruce V. Bigelow
STAFF WRITER
July 19, 2008
Venture capital firms invested almost $365.7 million in the San Diego region during the three months that ended in June – a 28 percent decline from the $509.8 million invested during the same quarter last year.
How about a 33 percent YOY increase in SD County office vacancy rates* to top that?
16% office vacancy rates seen in county
12% reported a year ago; demand down, supply up
By Mike Freeman
STAFF WRITER
July 19, 2008
San Diego County’s office market continued to soften in the second quarter, with vacancy rates reaching 16.1 percent, thanks to tepid demand and new construction adding to supply.
* (16/12-1)*100 = 33 pct
The silver lining that reassured Wall Street that the market has bottomed out: crashing oil prices. How many more bubbles have to pop before the really big credit bubble is a historical footnote?
Consumers get rare break as oil prices take a tumble
Average prices in S.D. County drop 4 cents a gallon to $4.44
By Adam Schreck
ASSOCIATED PRESS
July 19, 2008
NEW YORK – A stunning sell-off dragged oil prices to their biggest weekly drop ever and gas at the pump slipped by more than it has in months, giving consumers a rare breather in a year of record fuel prices.
…
“If this is not the bubble’s implosion, than it’s a reasonable facsimile,” analyst and trader Stephen Schork said in his daily market commentary. “Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view.”
“If this is not the bubble’s implosion, than it’s a reasonable facsimile,” analyst and trader Stephen Schork said in his daily market commentary. “Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view.”
Jeez, that’s weird. My charts show that one year ago, oil was at about $75. Six months ago, oil was at $85. Three months ago, oil was at about $110-$115. Today, oil is at $125-$130 after “the biggest weekly drop ever.”
Whatever. Feel free to trade the squiggles all you want on the short side. The long-term trend is clear and I’m sitting tight, collecting fat dividends each month that make it easy to ignore these short- and intermediate-term pullbacks.
830,000 new cars sold in China in June. 15% year-on-year growth, despite rising oil prices and US recession. In a couple years, it will be 2 million cars per month, then 3 million. 4 million, etc., etc.
The world is no longer going to allow 5% of the world’s population to consume 25% of its fossil fuel energy.
What plans does the “world” have to stop us?
The weenie European leaders couldn’t even get Serbia (another European country) to stop its genocide. They had to beg Bill Clinton to step in and send our bombers.
Oh wait, I know how they’ll stop us. They’ll pass a resolution.
Actually Al Gore, Obama’s energy czar, will stop us. And if you think the economy is in dire straits now…
I frequently wonder why environmentalists are still driving cars and flying in jets, and why are they still connected to the power grid. In Gore’s case it’s an obvious, “Do as I say and not as I do.” Hopefully the enviros are at least not reproducing.
Bill,
I don’t think Gore wants to stop us, rather to tax us.
“What plans does the “world” have to stop us?
The weenie European leaders couldn’t even get Serbia (another European country) to stop its genocide. They had to beg Bill Clinton to step in and send our bombers.”
You try ruining 2 generations by war, with a depression stuck in the middle, and you’d lose your taste for blood…
Americans lost 6 people on the home-front during the war.
Europeans and most of the rest of the world suffered a bit more…
______________________________________________________
“On May 5, 1945, a balloon bomb that had drifted over the Pacific killed five children and a woman. It exploded when a 13-year-old girl (Joan Patzke) attempted to pull the balloon from a tree during a church group picnic in the woods near Bly, Oregon. Having taken some local children on an outing, Reverend Archie Mitchell watched in horror as his wife, Elsie (or Elyse) Mitchell, and five children who accompanied them (ages 11 to 14) were killed. The minister escaped by luck of being a short distance behind. Those six were the only known victims of the balloon bombs. However, dangers of the balloon bomb still may exist. Hundreds were never found and may still constitute unexploded ordnance. The six who perished were the only known casualties inflicted by Japanese attack on the U.S. mainland during World War II.”
http://en.wikipedia.org/wiki/Fire_balloon
The balloons attacks from Japan was one of the best kept secrets of the war.
Japan needed feedback as to the success and failures of their balloon attacks. We refused to give them any. Instead there was a total media blackout of the issue.
“What plans does the “world” have to stop us?”
It’s called the free market. They are outbidding us for oil.
We want a war war, and the rest of the world wants an economic war.
frequently wonder why environmentalists are still driving cars and flying in jets, and why are they still connected to the power grid.
And wonder why Bono and his group earn millions of dollars per year and preach that the average American should sacrifice for the rest of the world.
The awful truth is these Limousine Liberals are self-elected high priests who, by virtue of their very own superiority, have the right to spew jet exhaust and such. They feel it’s okay to crack a few eggs to make an omelet. They think the average American should not be allowed to achieve the American dream, hence Obama’s pledge to tax incomes of $250,000 and above (nevermind that middle class families in New York Metro will be grossly affected by Taxman Obama).
Oh My! How sweet it is to be a servant of the limousine liberals!
What plans does the “world” have to stop us?
Why do they have to stop us, it looks like we are stopping ourselves, thanks to Guys like Bill in Carolina. The US will continue to get poorer and weaker as energy prices rise. Why? because we short sightedly built our infrastructure economy and transportation around the concept of eternal cheap energy.
“The world is no longer going to allow 5% of the world’s population to consume 25% of its fossil fuel energy.”
We purchase fossil fuels, do you think the Saudis and the rest of the oil producing countries will stop selling oil to anyone who can pay for it? Aside from that although we account for only 5% of the population we do account for about 25% of all economic activity. It makes sense that we burn the amount fossil fuels that we do.
That’s the whole point.
The US can’t pay for it.
we do account for about 25% of all economic activity.
And how much of that is producing stuff the world wants, as opposed to consuming stuff the world produces?
I go to the gas station and I buy gas along with millions of others, some borrow money through credit cards, others pay cash. With credit contracting and the economy slowing we will, as a nation, use less fossil fuels along with less of everything else. This has nothing to do with the “world” allowing it.
RE: The world is no longer going to allow 5% of the world’s population to consume 25% of its fossil fuel energy.
Automotive section in today’s Boston GLob noted that Alfa Romeo, was attempting to bring a new model called the MiTo
to the US.
Specs…171hp turbodiesel mated to a 6-speed manual transmission with a projected 50mpg highway fuel econony.
Looks very much like the Spanish Altea I drove in England 2 years ago with gaz @ $8.50 per gallon US.
Detroit’ just doesn’t get it.
PB,
Have we seen any reasons why this drop occurred in the last week?
IMO this seemed to correlate to W’s action regarding drilling on the continental shelf and other areas, causing the market to react with lower prices. I think (but don’t know) that the cost of oil will decline even more once Congress agrees to open up these areas for exploration and oil drilling.
But when will Congress open up our oil reserves for exploration and drilling?
Lip
Is the pachyderm party reduced to drilling us daily with same drivel?
alad,
Sorry if you disagree but IMO common sense will require this to happen, unless of course you want the cost of fuel to be so high.
Have a great weekend.
Lip
Hopefully never. We do not have a supply problem - we have a demand problem. 50% of our oil is used for personal transportation - just go to any shopping mall and look at the skew of vehicles in the lot. Too many large SUVs being driven by a paper-thin MILF talking on a cell phone driving silly distances to live in energy-sucking houses.
I remember when someone driving a Suburban was considered a redneck and I long for those days again.
Conservation is not the solution, but it’s the easiest short-term fix to our oil problem, and conservation works just like compound savings - it starts to add up to a lot in the long term.
There’s really no such thing as a “demand problem” or a “supply problem” that the market can not adjust to properly.
The problem with allowing the market to adjust properly is that we have enormous outside forces on the market that are directly complicating the issue. I personally do NOT believe in market transparency, because none of us works transparently for anyone else: greed is built in to how we negotiate our own rates and prices for what we create/serve for others.
Look at the various external complications in the gas market: refinery regulations, custom blends of fuel that vary from state to state or even county to county, taxes hidden or otherwise at every level of distribution, a plunging dollar caused by monetary inflation, and a lack of freedom in mining and extraction based solely on private property rights (see how much land governments own that they lease to oil explorers).
The high price of gas is not correlating with demand/supply only. The high price of gas is being pushed higher directly due to these external influences on the market providing the best price for the product desired.
Get rid of ethanol additives as a mandate and let consumers decide if they want ethanol additives or not. Get rid of custom blended fuel and let consumers decide if they want it or not. Get rid of restrictions on opening refineries and let market investments decide how many to build and where. Get rid of Federal gas taxes and let local states and communities decide if they want to use gas taxes for infrastructure or use another mechanism to maintain roads. Get rid of dollar inflation by striking down the Federal Reserve and the fractional reserve banking mess.
Do that, and gas will fall in price. For me, an avid gold and silver bug, gas prices have not really changed much in many, many years. I’m paying about as much, in silver dollars, for gas today as I did years ago, although there have been a few peaks and valleys throughout that time frame.
As a young unskilled laborer, I earned 20 ounces of silver a day, and I could buy about 60 gallons of gas with that.
As a young unskilled laborer, my son earns 4 ounces of silver a day, and can buy about 20 gallons of gas with that.
Gas is about as cheap in those terms as it was a generation ago. it is our sweat that has grown cheap.
Do you think the ancient Romans ever experienced Peak Chariot?
Swing low sweet chariat?
And a happy S.P.Q.A. right back at ya…
SPQR?
America, The Roaming Empire
Slow, but I get it;. S.P.Q.A.
Lip,
how are the insurance companies doing in the ongoing crisis? Insurance is part of the FIRE economy that appears to be going down in flames.
LC,
Problems abound for many companies and my previous employer, who is more a golfing buddy than anything else, said that the competition has taken about 25% of their business this year. All of a sudden its “poof” its all gone.
My company is more aggresive and is making plans to branch out and do more stuff that requires my expertise. Will this affect my source of income? Time will tell and I might find myself going your route, ie. brokerage, ins agent, or something commision based. I’m getting ready to do some consulting on the side but whatever happens I’ll do alright.
I’ve been meaning to ask how your transistion happened from Loss Control to Commisions? To be honest I admire the fact that you did it and I don’t really look forward to the fact that I might have to do it myself.
Lip
The government is helping
by taking out radio ads to tell us we don’t have any flood insurance in Florida
IMO this seemed to correlate to W’s action regarding drilling on the continental shelf
This is laughable
1. GW has no control over it, his actions are meaningless.
2. It will take a decade or more to get these areas producing
More likely it’s a collapse of demand
Inflation is killing everyone. If the US is cutting back on driving you can bet that third world people facing 10% inflation who spend 40% of their income on food are cutting back.
I posted an article the other day about how China’s car demand has fallen 10% or so over the last couple of months and the cars are piling up on the lots.
Twin twisters are headed your way. Take (tax) shelter immediately!
Twin twisters
The financial crisis claims another two victims—and once again the taxpayer picks up the pieces: leader
Rochester-area home sales down, but prices mostly steady
http://www.democratandchronicle.com/apps/pbcs.dll/article?AID=/20080719/BUSINESS/807190321
There were 1,076 closings in the region last month, almost 12 percent fewer than in June 2007, according to a report Friday by the Greater Rochester Association of Realtors.
Yet in a sign of the market’s stability, the median selling price slipped only slightly year-over-year, to $118,000 from $121,250.
That was evident from June’s statistic on purchase offers accepted, an indicator of future sales because it takes about two months to proceed from an accepted offer to closing. The number of accepted offers dropped more than 10 percent in June from a year earlier, to 1,011.
Batabyal spoke of a friend who has had a home on the market in Dayton, Ohio, for 21/2 years and dropped the asking price three times without getting an offer.
“That would never happen in Rochester,” the professor said.
How can there be market stability when sales are down 12% and accepted offers are down 10%? The reporting on this piece is less than stellar, such as using the friend of a professor as the reference for home sales. Do the amount of homes for sale include foreclosures and FSBO or just those on the MLS? Garbage reporting keeps the area from paying a visit to housing reality.
“the median selling price slipped only slightly”
Rochester admits that one foot is in the twilight zone, but denies the other is on a banana peel.
securitize
To buy ( loans, such as mortgages ) from lenders, arrange them in groups, and issue bonds on the groups
That`s the definition I found. Why are the banks writing off 300 billion ? Where are all these bond holders ?
Never mind.
Acouple of weeks ago I was talking to a bond trader ( he was actually in one of the World Trade Center buildings when it was hit on 9/11 ) and I asked him about pension funds, he said that was the next thing to go.
I asked him about pension funds, he said that was the next thing to go.
I’m kicking myself for never getting going with a pension bubble blog (even registered the domain name). It’s going to get ugly, and it’s going to hit hard.
I don’t think pension funds are the next thing to go, I think they’re already gone and people haven’t realized it yet.
I’m going to open sweat shops around the country after the fall, and let all the old folks with no pensions come and knit nice socks and sweaters to ship to China and India as we prepare for global cooling. They’ll have a place to live, and I’ll get cheap labor.
How much ya payin ?
So the big local scandal here in Sacramento is that the County Library apparently has $4.6M in uncollected late fees. I was looking at the County budget last night… Sacramento County spends $27.5M per year on the General Library fund (not including any facility or capital improvement costs–those come out of other funds) and they’re only open a few days of the week and seldom have any new books, it seems.
So the library is spending $300k to conduct an audit that will issue a final report in December, as there are apparently other instances of gross incompetence, plus $30k to do a phone survey to ask residents if our needs are being met.
Did I mention that Sacramento County has a $125M budget deficit, out of $2.2B budget. Again, that absolutely astounds me that the COUNTY has a budget of $2.7B for only about 1.4M people. That works out to be around $1950 per person, which does not include most spending on K-12 education or prisons.
Now I’m a fan of public libraries, but to put the $27M in perspective, the County only spends $61M on the District Attorney’s office and $25M on the Public Defenders office.
Walt:
Considering how uneducated most internet savvy kids are today, maybe we should start forcing kids to go back and start using a library again.
I remember our parents driving us or riding our bikes to the public library on saturday because we had homework assignments due on Monday…that required us to use the library books.
—————————————-
Now I’m a fan of public libraries, but to put the $27M in perspective, the County only spends $61M on the District Attorney’s office and $25M on the Public Defenders office.
I have 3 degrees thanks to public libraries. If you want to help poor, motivated smart kids - that’s the way to do it.
Sounds like they need to send a collection agency after the deadbeats. That’s what my local library started doing during the last economic downturn. Now, if your fine is more than 25 bucks (which it can easily reach, if you forget to return one hardcover book) they sic the collection agency on ya. You should hear the people bitch and moan about it. No sense of responsibility whatsoever.
I am a fan of public libraries, but it disturbs me how they have become unfunded homeless shelters in most cities. They also are now unpaid babysitters for latch key kids. Librarians aren’t trained (or paid) for either of these jobs. The kids swarm all over the free internet to check their myspace page or whatever, making it impossible for a poor person with no internet at home to fill out a job application or work on a resume.
Alas, I fear the homeless problem is only going to get worse in the coming years. Because they are public buildings, you can’t just run every “undesirable” out, but the funky odors, and mentally unstable folks talking to themselves, and gang activity are scaring away the middle class patrons. They are the ones who will ultimately vote to continue funding the library. Or not.
Civic Debtbeats
I worked in a public library in California for my first 2-years of college, so my comments are going to reflect my personal experience.
Many taxpayers were angered by the inclusion of Spanish language and bi-lingual reading and video materials. They felt, and rightly so, that persons new to America should become competent in English as communications mastery in this language is *essential* for professional and economic success.
They were furthered angered that precious library monetary resources would be diluted by the forced purchase of Spanish and Asian language materials. So they left.
Many library patrons, unable to find current and new books on the shelves, simply went to B and N or Border’s and bought their own materials. This is particularly true relative to parents purchasing current books and study/research materials for their children.
Homeschoolers were another factor as they could no longer rely upon public libraries to provide up-to-date books and educational videos for their student children. So they went to the booksellers too.
Libraries are now generally, the province of homeless persons and immigrants and their children (aka “Anchor Babies”). There are retired persons too, some, but not many. Librarians tend to be adherents of a particular political persuasion and so the hiring has shifted away from educated persons of any nationality to persons hired under quotas.
I doubt that I could get hired in any library again under today’s standards. Sad, because I graduated from undergrad school debt-free due to my library employment.
~Misstrial (who thanks the taxpayers of California)
IIRC the libraries put their fines on renewing your license, or some such thing. Or registering your car.
In S.CAL. but I could have that mixed up. At least when I learned or “got” this tidbit, I made sure that all books were returned and paid up in full. Whatever the information, it worked on me!
Street level observations from Wisconsin:
The “Junk Quality” houses of flippers, slumlords and desperate RE agents are flooding Craigslist in Wisconsin cities. The crap “equity deals” and POS house floatsome are already popping up to the surface like a wreck. The dazed and confused crew of the RE Titanic just nicked the icecube and is barely listing a few degrees.
The crew of the governor, state regulators and officials remain
unusually silent on housing, foreclosures and the banking situation . I can almost hear the rehearshed crys of “Surprise..Surpise and WHO could have ever IMAGINED this could have happened to US Here?”
The same with junk cars and boats. Everyone is in a panic trying to unload their lower end trash shacks and gas buggies of every kind on the next sucker.
I say HARNESS the cows, they have been lollygagging in the barns LONG ENOUGH
Its the weekend to head to the beach or the lake, and everyone is in their swimwear. When did americans become so fat? Half the people I am seeing are seriously everweight, its all ages and all races! When i was a kid, our class had The fat kid. Now fat kids are half the class! Have americans given up any form of phsyical activity and just eat prepackaged food with corn syrup and 32 oz big gulp sodas? If you have seen Wall-E, the people in this movie look a lot like americans today.
When I was a kid, we walked to school. These days the parents drive them. Plus most kids don’t get involved in any sports, and they sit around and play video games instead.
funny…most the football players i new in high school are a bunch of fat asses now.
i am 38, still playing video games and maybe could loose 5 or 8 pounds.
One I played football with in high school was a super bowl MVP, and to the best of my knowledge doesn`t now or never did play video games.
Well who was the MVP?
Mike
Steve Young
I went to high school with somebody a few grades higher, that won an olympic gold medal, whilst in school.
Did they play video games?
I was a collegiate Rifle champion. We didn’t have video games. We didn’t have calculators.
David when I was a kid ( Iam 48 ) we would be outside playing baseball , football , street hockey until our parents made us come in. I don`t think you burn the same amount of calories playing video games. Surprisingly I heard on the radio just yesterday the average age of a video gamer is 35. We ate a bunch of crap when we were kids too , we just burned it off.
Exactly, Jeff.
The problem today, IMHO, is that parents are not allowed to let their kids run around outside, so the kids stay in the house and watch TV, play on the computer, play video games, etc.
We also ate total crap as kids, but burned it off building forts, riding bikes & skateboards, etc. Can’t ever remember a parent being around for any of it, and so glad we had the opportunity to enjoy the freedom of being outdoors, unsupervised. Having a parent there would have ruined everything.
So, we parents, in all our paranoia and fear, watch as our kids become useless, whiny, entitled blobs. Sad.
Well greatly reducing or removing phys. ed. in schools certainly didn’t help. My 4 year old son is in an extra-curricular class at his daycare that teaches fitness and nutrition and it’s amazing what he’s learning /retaining. I feel like this may be his one chance to get an education on this (other than by way of me) so I’m leaving him in the program for now - even though it’s an extra $65/month on top of the actual daycare fees.
I was traveling across Wyoming a couple of days ago and I stopped at a truck stop to grab something to eat. I was amazed at the gross overweight condition of almost all of the other people in the restaurant. These weren’t truckers, just other travelers like myself. The guy at the table next to me consumed two heaping plates of disgusting looking food from the salad bar and buffet. I guess I need to get out more often.
Yep. I had an interesting epiphany the other day; I saw some pictures of Woodstock and was astounded, astounded I tell you, at what good shape just about everybody was in. There were no fatties. We have changed, and not for the better. I returned to the States in January after four years in NZ and was really struck by how fat so many people here are. Maybe the coming food crisis is a good thing for some.
Eat whole grains, fruits, vegetables, fat free or low fat dairy, and lean proteins.
“Eat whole grains, fruits, vegetables, fat free or low fat dairy, and lean proteins.”
Exactly, stay away from fried food, refined carbohydrates : sugar, white bread, pasta, etc.
General Jack D. Ripper: Now why don’t you just take it easy, Group Captain, and please make me a drink of grain alcohol and rainwater, and help yourself to whatever you’d like.
Swim 2 mile or walk 5 miles per day and a few carbs mixed in with veggies and protein are no problem. Me? 5 foot 11″ and 169 lbs in only my skin, and age 49. And I consider myself 10 lbs over my ideal weight for fast swimming.
I’m going to help myself to a good carne asada type of meal with a 20 oz Dos Equis a bit later…
It’s easy now to find canned vegetables with no salt at grocers these days. You can get more nutrients per calorie in canned spinach, turnip greens or mustard greens - soul food. Extremist but it’s healthy.
I also drink lots of green tea. Moderation is a virtue except when it comes to exercise. You gotta burn the calories to earn the fat calories.
eat right, exercise daily and die anyway.
What you can’t find are foods like soups or beans without sugar - canned or not. Even in the Health food stores. Or bread without sugar. Prepared tofu has sugar. I HATE sugar in foods which were meant for nutrition. That whole food industry is so degenerate.
True. I spend a lot of time in South America and it’s completely different down there, not near as many fat asses.
well let see - government cut all recreation programs and study of the arts, cut back on library services, cut back on park hours, cut back anything that is good and healthy. Schools put in snack and soda machines and stopped serving healthy foods and call french fries a vegetable (Reagan) so cut lunch to almost just carbs. What is considered a vegetable is not.
Walking to school is not safe in most neighborhoods anymore. Even standing at school bus stops is not safe.
Playing in the street is not safe anymore. Being outside is unsafe in many neighborhoods.
We have weekly reporting of joggers being mugged and killed so how does someone get exercise.
What used to be part of the curriculum in schools is now outsourced and local business have gyms on buses, exercise classes, drama classes are all in the local business hands and only two family incomes can support all this outside activity.
Playing on the playground at lunch time, during breaks, and during gym was great exercise. Riding our bike to school. All of this is gone.
The wilderness is surprisingly a very safe place, in contrast to the cities.
I’ve seen 11 black bears so far this summer, a few as close 20 feet away.
RE: I’ve seen 11 black bears so far this summer, a few as close 20 feet away.
You’ve see more and more since hunting has become so politically incorrect these days.
Better tie those garbage buckets up in the garage rafters!
Stan Marsh: My Uncle Jimbo says we gotta get up there early. Right Uncle Jimbo?
Jimbo: That’s right, Stanley. Animals are much easier to shoot in the morning.
aladinsane,
I live in the LA area and have been to Sequoia National park. In college we visited Yosemite National Park.
How are things in the Sierras? God, I need to get back there for a little piece and quiet!
I have a 8 year old chow that would love it!
The marmots, chipmunks, deer, grouse, bears and birds and bees remain blissfully unaware of our foolish goings on financially, in the quietest kingdom of all, The High SIerra.
The smoke isn’t so bad and it looks like the Mexican Monsoons have gone away for awhile, after clearing out the sky with almost a week of rain, up high.
I’ve often wondered if we *also* overlook the non-obvious. For instance, the rate of smoking has dropped, which used to help people keep weight off.
That’s true, Q. I can personally vouch for that.
Early 70s the corporations decided that sugar cane was too expensive versus, Sucrose which is 4 molecules-3 or which are pure chlorine, Fructose which is CORN and pure sugar, which is now patented by the Monsanto corp and genetically modified.
SInce then all sodas are pure Fat producing drinks, why do you think they feed cows corn, to fatten them up.
And since the 70s our nation has gotten fat with all our foods, sodas made with pure genetically modified corn/fructose and sucrose.
I remember THE fat kid, she and I are friends now. Funny how things work as we grow older and reconnect with people.
Good thing I wasn’t rude to her in elementary-HS.
Nice person.
I noticed the same thing while in Chicago on CTA driving by middle schools. So many SOFT pudgy kids. We were never like that, couldn’t get us inside and stop playing.
We have good friends that I gave the skinny on what was gonna happen presently, about a year ago…
They were over for dinner last night, and we got to talking about how much $5 Trillion was in regards to the 2 Riders of the AF.F.ocalypse, and hey it’s only 5,000 Billion.
Nothing to see here folks, please move on…
That’s not really a problem. We will just borrow it from the SS trust fund. Or we can always float some new BS stock. Or we can borrow it from the other healthy banks. Or we can take our budget surpluses and start running deficits. I’m sure there are more but as you can see there really are a myriad of options at our disposal.
less manufacturing = less sales = less money = less jobs = less money = less charity. all the way down the pipeline. (sorry if i missed a step)
so if the amount of available money to spend shrinks, where does all this money that the FED is creating go? it seems to me that these banks/etc are borrowing from the window just to write-off the money on their books? so is the money supply expanding and shrinking at the same time? and if so, what effect is this causing down the line? any help on this would be greatly apprciated.
As I see it, the money put into circulation remains in circulation until it hits the bank’s balance sheet, and on this balance sheet is where it stays to replenish the reserves that have been written down.
Just as the banks loan money into existence, their writedowns remove money from existence.
I’ll see you on the dark side of the Moon today, 39 years ago…
The $6 Million Man seems reasonable now…
(take me back to the future, somebody?)
“The $6 Million Man seems reasonable now…”
Yeah, but who would have thought that would just be the copay.
Gotta love healthcare in the 21st century.
London (Reuters )
Citigroup chairman Winn Bischoff has warned that house prices in Britain and U.S. could fall for another 2 years
Professor Bear I am sure you can find the story.
just two years for the UK? they have to speed up the pace then, otherwise they will never make it to a sustainable bottom in time
Just got back from San Jose, CA looking for rental houses. It was very interesting. We looked at a variety of places in the 3-4 bedroom range, townhouses and SFH. These ranged widely in size, condition and location and price, but the rents were all within a fairly narrow range. For any of these that were purchased within the last 5 or 10 years, there is no way that our rent is going to cover the PITI. I asked each landlord when s/he had bought the place, etc. One retirement age guy had bought the place 2 years ago and basically said he was prepared to be cash-flow negative for “some length of time”. I wonder how long? What does he think is going to happen to change that situation? We ended up renting a house substantially nicer than anything we could even think about buying in that area (although nothing spectacular about it in any *other* normal area of the country). The rent is not cheap, but it’s so much cheaper than a mortgage would be on that depreciating place, I can’t see why anyone would buy now.
What are the rental prices per sq/ft like? In S. FL, the “educated” rate seems to be about 1 dollar per sq/ft (rent a 3000/sq/ft home for 3K a month).
Just curious as to what it looks like out west.
Thx.
On LA’s West side, rents are about $2.20/sqft. and up. Well over $3.00 for really nice places. Then there are the failed spec houses and FB-owned properties that are asking over $4.00/sqft, but I doubt that anyone will actually pay that.
It was fun watching you Piranha chew up “Chico, and the MAN” (real estate is double-plus-good eventually) yesterday…
My, what razor sharp teeth you have~
Phil Graham, Glass-Stegall slayer and founding father of the credit bubble, resigns as John (I don’t know anything about economics) McCain’s chief economic adviser.
Geritol Johnny will lead the Neo-Know-Nothings nowhere.
Neighbor is flight attendant for major corp, had the Geezer on her flight, butter won’t melt in this flight attendants mouth, and yet, her take on the Geezer, He is an ass.
Stunned I say. Stunned.
More so that she would think and actually say this out loud!
The next administration must be strong on the economy, and in a lot of other areas, whether it wants that or not. If a candidate is weak on the economy, as is McCain, economic advisers are crucial. Gramm, as an architect of parts of the current mess, is a total non-starter. His departure is a plus for McCain, but McCain must still find suitable replacements, and soon.
I recommend Ron Paul and/or Ralph Nader!
Aye for Ron Paul,
Mike
Ralph Nader would actually be a good choice for Obama
You will finally have the outsider working on the inside for “change”
nader.. oh lord please preserve us from such a fate..
The only ‘08 ticket that has a chance of winning and resolving the financial mess in an appropriate manner is Judge Judy/The Hulk
joey, that is the only thing I can agree with you today on..Judge Judy/Hulk Hogan or JUDGE Judy and Dave Ramsey.
Whew, that would be a knockout@!
Phil Gramm is an embarrassment, an economic dinosaur, and a perpetual foot-in-mouther.
It was incredible that Johnny Maverick held on to him as long as he did — not a politically astute move. At least they were smart enough to go for the Friday Night Body Dump (an age-old classic) heading into the weekend news cycle.
Youtube has speeded up the process of showing us what a bunch of phonies our ersatz leadership is…
An MTV that we control.
Wait a second. All I heard is that Phil Gramm called America a nation of whiners! What’s the matter with that? What else did he say? If that’s all he said, I say he’s spot on!
Great…
There goes your chance @ being the geezer’s ewrongimist~
Got a Fix? Please, Call the Fed
The government’s short-term solution is to promise to lend $300 billion to Fannie and Freddie, if necessary, and hope that things don’t get worse. Anyone who has a long-term solution should contact the Treasury and the Federal Reserve immediately.
http://www.nytimes.com/2008/07/18/business/economy/18norris.html?fta=y
An oldie but a goodie. Dean Baker had mentioned this is one of his posts at the American Prospect. I don’t know if Bernake actually believed this or if he felt he couldn’t say otherwise, but it doesn’t inspire a lot of confidence in the man.
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html
From the article:
U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president’s Council of Economic Advisers, in testimony to Congress’s Joint Economic Committee. But these increases, he said, “largely reflect strong economic fundamentals,” such as strong growth in jobs, incomes and the number of new households.
So a run up in housing prices that was unprecedented, completely disconnected from incomes reflects “strong economic fundamentals”?
… just like the pre-2000 run up in stock prices reflected the Greenspun ‘productivity miracle’.
RE: “Scandals are a lot easier to cover up with big words than little words. Use words like ‘Securitization,’ ‘Government Sponsored Enterprises’ and ‘Collateralized Debt Obligations’ and you can cast the liveliest conversation into dead silence. Look past that mind-numbing jargon and you will see a $5 trillion scandal.”
Bingo! It’s about time.
$$$ 5 trillion…there’s the magic number to clean up the mess.
Whowoulddathunks?
– Whowoulddathunk Joe 6Pack would use his stimulus cheXXX to whack off?
– Whowoulddathunk widespread use of toxic pay-option ARMs would create such a financial storm?
– Whowouddathunk encouraging the GSEs to pursue more marketshare in a collapsing housing market would jeopardize their very existence?
I’ve got a good FB story to share- a co-worker of mine (young guy) was looking to rent an apartment. Found one in a nice, new neighborhood, but when he looked at the place it hadn’t been cleaned (it was very dirty) or painted at all and the floors had started to buckle (how does that happen in a new condo? Bad construction or water damage?). Anyways, he is going on a two week vacation and the owners promise that all cleaning, painting, and floor repair will be done before he comes back and moves in on the 1st. He decides to take it since they are letting him keep his dog, gives them a deposit and signs a lease. When he returns and is ready to move in, the woman he is renting from says that she just hasn’t had time to do any cleaning or repairs. Her ex-husband wants him to sign an addendum stating that they will not be held liable for any injuries or damage associated with the buckling floors (which they had not fixed). My friend offers to paint the place and clean it for a $300 deduction on the first months rent - they refuse - will only pay him $75 to do the work and want HIM to fix the floors for $200. He declines and so they tell him to take the offer or forget moving in. He accepts their offer to call the deal off. Two days later this woman’s ex calls him and says that he has broken the lease so they will be keeping his deposit and if he gives them any trouble about it will charge him $1300 a month rent til they find tenants. The guy goes on to tell him that they bought the place as an investment and are just underwater on it (how this is anyone elses fault I don’t know). My co-worker looks into small claims and realizes it will take months to get his money back, if he does at all, so makes a deal with them to have just half the deposit returned. We’ll see if he gets it. They claim its in the mail.
I looked up the property on Zillow and based upon the price they paid, taxes for last year, and the average HOA, this couple of idiots is putting out $2300 for a condo they can’t even get rented for $1300 a month because they won’t clean or do necessary repairs. Clearly this is everyone elses problem so they steal money from prospective tenants who maybe aren’t savvy or mature enough to look out for themselves. I hope these two get a major karma asskicking and end up in foreclosure/bankruptcy - hopefully they refied the place and the loan is nonrecourse at this point. Jerks.
Well, I suppose the best that can be said is your young friend just learned a whole lot about contract law & deposits for much less than the price of law school…
If he has a friend who is a lawyer, he might be able to get all the deposit back just by having the lawyer write a quick letter on stationary explaining that they were the ones who broke the lease by not providing it at the start of the lease term in a habitable state. He can prove that they knew it wasn’t habitable because of the addendum releasing them of liability if he was hurt that they tried to get him to sign. Or a call to the local (city? county?) landlord/tennant dispute board might be able to clear things up. He should not sign anything saying that the return of half his money resolves the issue. Depending on the state, it is possible that verbal agreements are not binding when the dispute relates to real estate.
Bloody scumbags. Soon enough, they’ll get what they deserve.
HE SHOULD HAVE MOVED IN and not paid rent…..it would takes onths to evict him
FAIR IS FAIR.
Heard on BBC World Service earlier that Zimbabwe has introduced the Z$100 billion dollar note. It’s still not enough to buy a loaf of bread.
Alan S. Blinder, Princeton economist and former vice chairman of the board of governors at the Federal Reserve:
“We haven’t seen this kind of travail in the financial markets since the 1930s.”