Bits Bucket For July 27, 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
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Reeling retailers cut stores, mull bankruptcy protection
Economy, big discounters hurting Mervyns, others
By Penni Crabtree
UNION-TRIBUNE STAFF WRITER
July 26, 2008
At the Mervyns department store on College Avenue, sale signs sprout from every aisle, a forest of discounts as deep as 70 percent.
The only thing lacking are the customers.
“for shopping mall owners and tax-revenue needy cities, a worrisome harbinger of potential retail real estate vacancies to come”
Not to mention rising unemployment.
rising unemployment ??
I just read somewhere yesterday that projections for 09 were 6.9%…
Mmmm, the force is strong with the SD CREIC.
For HBB day traders out there, what’s your feeling about the quality of the advice given by “SnP500Trader” on YouTube. So far it seems pretty sound.
http://youtube.com/user/SnP500Trader
8 mins of talk, 20 seconds of content
I agree that this volatility is a trader’s dream. Too bad he is descriptive and not very prescriptive
Worth what you paid for it.
Buy and hold now, or just quit and fold?
By Paul J. Lim
NEW YORK TIMES NEWS SERVICE
July 27, 2008
In this malaise-filled market, even buy-and-hold investors are starting to wonder whether they should give up on some of their beleaguered stocks.
The misery for investors doesn’t stem only from the recent sell-off, which pushed stocks into an official bear market. The problem is deeper than that. Over the past 10 years, the Standard & Poor’s 500-stock index has ended up going virtually nowhere, leading some people to question their underlying faith in equities.
If there was a run on stocks, the only liquidity left is money in the bank, but as the bank runs of ‘08 have already left the station, then all I can see is the light of an oncoming freight train full of pain.
Got a Plan B?
Here’s an interesting take on where the banking crisis is leading that just popped up from Gary North. Sounds plausible.
http://news.goldseek.com/LewRockwell/1217185040.php
Good article.
Here’s a little primer on how we got here. It is relatively short and the second half gets pretty good. I doubt many folks know this material.
http://www.webofdebt.com/articles/federal-back-fr.php
Both your posts are must reads anger-inn IMO.
anger-inn…good one! Housing Wiz, are you a budding aladinsane?
“Why No Outrage?”
Anyone worth a sh!t is afraid of being tarred an anti-semite.
Great thinker. Reality will set in and only a few will be saved from this coming depression. Common sense has long be gone, missing, and the majority will pay a big price for trusting the Wall St boys and DC gang.
I especially agree with this rule:
In other words, it is one more example of Ludwig von Mises’ rule: whenever the government interferes with the market, the result will be the opposite of what the legislators said they intended to achieve.
An excellent historical account of the fed and its offspring and a concise wrap up:
Under a 1992 law, if either of these two mortgage giants is seen to be severely undercapitalized, it may be placed into government conservatorship. But the plan now being pursued is to bail out these private corporations by increasing their capital base with taxpayer money and their profit margins with greater access to Federal Reserve loans. The result will be to privatize profits to their management and shareholders while socializing risk to the taxpayers. We the people will foot the bill. If the people are going to bear the risk, we should reap the benefits.
Isn’t it amazing how FAST the Congress moved their FAT A$$SES WHEN their Banker, Lender and Corporate friends started screaming from the cab of the runaway trainwreck “Save US in the Name of the poor Housedebtors”
Whooo…Whooo…”All Aboard the Federal, Congress & Failure Special”. We’re running late but tracks are clear and we’ll be Cannonballing at 8 notches all the way to Financial Hell City..All Aboard!!!”
Toot..Toot..Whooo..Whooo:)
The beat goes on. People buy in a Goldilocks market, sell when everything is falling apart.
The time for “Buy and Hold” is approaching, IMHO; perhaps next year as the P/E of the S&P slides below 10, (or maybe 9, or 8?).
Those with cash, knowledge and patience will buy on the cheap from the broke, foolish and impatient.
Where would one best keep their cash now, king of cash?
There’s more than a few sinkwholes to be cognizant of…
“Where would one best keep their cash now, king of cash.”
Savings bonds is a good place, so is Vanguard U.S. Treasury MM fund. Some in a cookie jar.
Your blind faith is unshakeable even in the midst of a 8.8 earthquake financially, you still hold your ground.
“Your blind faith is unshakeable even in the midst of a 8.8 earthquake financially, you still hold your ground.”
This 8.8 financial earthquake will soon offer the well prepared an outstanding buying opportunity.
Of this point you are correct: My faith is unshakeable.
My Financial “Plan B” is to be cheap and invest in a small game license and a used 22 or 45 semi auto and hunt the tired, scared and exhausted little goldbugs lugging heavy small gold bars all the way to the gas stations and grocery stores
ALL of my Gold is overseas, precisely because of the threat of overseize, when the gun becomes the law, in our country.
Many of you fantasize about being gunslingers, and I suspect you’ll tire of being on constant vigil 24/7, on account of all the other gunslingers being on constant vigil 24/7.
“ALL of my Gold is overseas, precisely because of the threat of overseize, when the gun becomes the law, in our country”
That sounds like the long lost e-mail memo from the Inca Ambassador to the King of Spain
There’s millions and millions of Forest Gump-like Americans out there, all armed and dangerous-like, and you are welcome to join their ranks, but i’ve made other plans…
i’ve made other plans…, Please carry those plans out. You’re getting tiresome.
I’m at about my treshold of having to see nothing but whining resulting from your typing efforts…
You bring nothing to the table.
“You bring nothing to the table.”
Can’t EVEN see the table with all the GOLD you are always TRYING pile on to it
In God We Trust; all others pay cash!
The next 4 or 8 years will be tougher than the years between 1973 and 1980. However they will not be insurmountable.
Market cycles have killed precious metals in the past and will do so again. Probably not before gold goes to $3,000 per ounce. But it’s easy to hide metals in the U.S. and more expensive to put your $ overseas. Have to do that $9,999.99 at a time. How many trips abroad must you take to put $1,000,000 away? 100. Easier to put metals away in a crawlspace under your house or in a false wall.
And no, the storm troopers are not going to go door to door looking for gold. Americans are starting to get fed up with all these bailouts that are happening more and more frequently. Americans are just beginning to bristle at any new action by government. Congressional approval is at an all time low of 9%.
Meanwhile those who do not make their statement public will not be bothered by the storm troopers (folks - this is a test. What is my social security number and where is my address? Try to find it through this blog).
Oh yeah, and I used to be a federal employee in DOD myself. 11 years. I can assure you there are quite a lot of fiscal conservative Constitution-loving people in the federal workforce. I know them and I work with others from that group now. There are a bunch of nice people in the federal work force. The real enemy is Congress. Their socialism can be overturned in one election. And it will happen, but not this election.
There is a lot of nice things about being in America that cancels out being subject to high taxes - geography, family, friends, the familiarity of living with your same culture.
We get caught up in our own negativity and say that the USA is going to hell. I heard that before in the 1970s. My dad heard that before in the 1960s. if you prepare for doom your entire life you will be living under a dark cloud.
Cheer up. Even though the next 4 to 8 years will be very tough, there will be many times when you will laugh and enjoy the simpler things in life. You’ll be able to slow down and enjoy the exciting things about living in America - innovations, entertainment, and so on.
I look forward to city living, going to bars, watching baseball and football, going mountain biking, reading science fiction, and so on. I anticipate taking advantage of incredible real estate deals in a few years.
Too bad for Alad that he will be moving out of this exciting nation and will miss out on some great deals of this century. And he will miss out on the return to a libertarian society we will surely get to in 2016. I heard Ron Paul on YouTube say that spending cuts in entitlements will be inevitable. I trust he’s right. It will happen very soon, given the horrendous rate of spending increases we’ve been seeing lately.
Simpler things in life: Before my dad’s hearing really went out (and he knew it was rapidly deteriorating), he developed a love for birds. I recall in the late winters in the California valley when I went to some county parks with my parents. My dad had a parabolic sonic antenna and headphones and wanted to hear the sounds of the waterfowl. Some of you recall I wrote that my dad was legally blind as a result of WWII-related injuries. My dad had a good time that day and It was a thrill to see him happy with his hobby. I was in my early 20s. My father was 38 when I was born.
Depression? Recession? who cares! Enjoy the inexpensive simpler things in life. One of my funnest girlfriends was a gal who proudly claimed to be a cheap date. Such a great personality she had that it was no wonder people would gift her with travel and all. She never whined. An atheist like myself, she was a divorcee and never intended to marry again. My kind of gal!
Good post, Bill. I was visiting relatives on the East Coast when the unthinkable happened: we had a blackout. No TV, no radio, no computers. The lanterns and candles came on, and we all sat outside and had actual conversations. Neighbors wandered over to visit. As the unlamented Casey Serin would say, it was all good. Simple pleasures. Companionship. Laughter on a summer night. I could see actually getting used to a lack of electricity.
A P/E of 9 or 10 would probably be equivalent to a yield of 3%, which would be a slam dunk for a hold.
Despite some people’s hope (not you Combo) that Wall street will go away, it won’t go away. As long as humans exist there will be innovation, and the innovators want to (and will) profit from their ingenuity. Stock buyers will get a piece of the profit too. Best survivors of bad times will be large corporations with lots of cash and superior economies of scale. They are found in the S & P 500, as well as international companies.
Stocks, bought at the right price, is ultimately the place to keep one’s money, at least it is for me.
Buy quality at a discount. Quality is determined by the fundamentals, the discount is determined by Mr. Market.
The fundamentals of a company really don’t change all that much. A good, well positioned, well financed, well managed company will usually remain so in good times or bad. These are the ones to home in on, but only when Mr. Market offers them well below their true “intristic” value.
Buy on the cheap and hold; Sell only when:
1. Mr. Market goes crazy and prices them well above intristic value.
2. The fundamentals of the company begin to fall apart.
3. You can find a better place for your money.
http://www.whistlingshade.com/0603/stocks.jpg
“Buy quality at a discount. Quality is determined by the fundamentals, the discount is determined by Mr. Market. ”
That sounds like GM, maybe 5 years ago. Or what has MSFT done for you lately?
At least in Vegas you get free drinks and a pretty hostess before you go broke
Why with all the constant Vegas pimping, David Cee?
What’s your angle of repose?
“That sounds like GM, maybe 5 years ago.”
And you think GM was a quality company 5 years ago because …?
“Or what has MSFT done for you lately”
Nothing for me because I don’t own it. But if priced correctly I just might buy it, which is my point.
“In economics, hope and faith coexist with great scientific pretension and also a deep desire for respectability.”
John Kenneth Galbraith
Do not take that stock down to 18.
I’d have to relive the dot bowl bust.
It’s bad enough with 1.2 interest on the silly t-bills.
God grant me the personality to survive the next shake-up
Wait until the dividend yield of the S&P 500 is at least 4% (it is 2.4% now). There are much better values in foreign stocks than in US stocks. The US stock market is the most overpriced in the developed world.
Keep the popcorn popping,
Red Baron
This is why the stock market is a profitless system. Yes, some day traders make money, but in general the stock market is not worth it.
When stocks are valued correctly and bought and sold by parties that understand what owning a piece of a business means, the prices aren’t affected by mass sell-offs because you’re paying for the underlying asset value of the company plus a portion of future profits (dividends) expected.
If you buy into a local business, say 10% of that business, and the company has an asset value of $1m and produces a real profit of $200k per year, the value of the 10% share is probably $100k+$60k-$100k or so. $200k for the share is realistic, because you’re paying for the asset value plus expected future profit. If other shareholders in that business wanted to liquidate, you wouldn’t care what the value of your stock is necessarily because eventually the value of the business + future profits will put a floor on the share price.
With today’s stock market, the only thing keep prices up is “expected future value” of the stock. The value of the company is moronic, as is the “profit” because no one offers realistic dividends. P/E+assets ratio of more than 4 or 5 for me is crazy-talk. I can’t figure out why any of you would put anything into 401Ks and IRAs when there are so many investment opportunities floating around in or near your community.
Then again, even HBBers have sheeple among them, I guess. “The stock market always goes up!”
They aren’t making any more GOLD! Bubbles are for bathtubs!
You were going to blog about where to find businesses for sale. Did I miss it?
Thanks in advance.
New tax goodies for loanowners in the bailout bill… Sorry to say, but a $1000/year tax writeoff forever is a paltry offset to having lost $100K+ due to crashing real estate prices. I am wondering if there is any higher principle involved than trying to buy the votes of the majority of Americans who own loans?
NATION’S HOUSING
KENNETH HARNEY
Pending legislation favors homeowners
July 27, 2008
WASHINGTON – The giant federal housing and foreclosure relief legislation now heading for enactment contains a little-noticed – but potentially far-reaching – change in real estate tax policy.
It would permit millions of homeowners who do not itemize on their federal tax filings to claim a deduction for at least a portion of their local and state property taxes. Though the House version of the bill set the maximum write-off at $350 a year for single taxpayers and $700 for married joint filers, the Senate’s more generous $500 and $1,000 deductions were expected to prevail in the final compromise version.
Originally intended as a one-year economic relief measure for Americans who do not itemize, tax experts say it’s highly likely that the new write-off will turn into a permanent feature in the tax code. Currently it would apply only to tax returns filed on 2008 incomes, and cost the federal treasury anywhere from an estimated $1.2 billion to $1.5 billion for the year. The concept originally surfaced in February in the Senate’s version of the national economic stimulus package, but was left out of the final deal with the House.
It also includes a tax credit for first-time homebuyers. It’s 10% of the value of the home (sweet!) up to $7,500 (doh!). Why even bother with the 10%? How many 75K houses are out there?
Picking up pennies in front of the steam roller.
Pennies are worth more by the day, as they aren’t making any more copper…
As part of the ongoing things aren’t as the appear to be series of misadventures by our government…
Cents are actually 99.2% Zinc, with a Gresham Cracker covering of .8% Copper.
in the midst of the Reagan (1982) Reign, we went from Cents being 95% Copper, to being nearly totally debauched…
And, to add insult, I understand that it actually costs more then 1 penny to make a penny.
The underlying materials are worth more then the penny itself. Kind of funny, when you think about it; imagine if 100 dollar bill was worth more for the heat value (or writing material) then the note itself. Well, it’s already happened to the lowly penny.
Oddly enough, the only U.S. Currency or Coins that are worth more than face value are the lowly Cent and Nickel.
It costs around 8 Cents to mint a Nickel, and it costs around 40 Cents to print a $100 Banknote.
One costs 60% more than face value to mint, and one costs 1/250th of face value to print.
What’s the salvage value of a nickel? Converting all your $ taken out of the stock market into nickel coins & then scrap metal could be a sure-fire investment.
The scrap value is around 6 Cents and our government deemed the likelihood of most of them heading to the far east as scrap metal such a problem, that they outlawed their export…
It is illegal to melt in-circulation pennies or nickles for their scrap value, I’m told.
Yep, the US can’t even maintain it’s currency to the zinc standard.
Isn’t that an unconstitutional law that should be disobeyed?
Sure, if you’re a penny or nickel ante kinda capers…
Can you imagine getting caught by the coppers, for melting copper?
“Oddly enough, the only U.S. Currency or Coins that are worth more than face value are the lowly Cent and Nickel.”
I believe there are a few gold and silver $1 and $50 etc. denominations that would beg to differ.
(Though I’m guessing you mean “circulating coins”)
“How many 75K houses are out there?”
Let’s revisit that in a few years. Does the credit have a sunset clause?
In Sacramento, I was surprised to see a few SFH for sale for under $100k. Granted, these are small (<1000sqft), presumably poor condition older homes, but some of them are actually not in terrible neighborhoods. There is one for sale for just under $100k in 95825 (East Sacramento): 3/1 1034sqft on a ~6500sqft lot. It sold for $305k in 06/30/05, foreclosed on last month.
Probably a $50k investment to update the home, but a house like that will be available for mid-90s prices before too long. It won’t be long (starting in mid or late 2010) before it becomes commonplace to see 3/2 ~1500sqft homes in decent neighborhoods be available for under $100k. Exactly right where a starter home should be given median household income for this area.
The only question is how far the regional recession is going to force an overcorrection.
Walt….I would like to email with you off the board if you are interested…
Sure. Just add a @gmail.com to my HBB username.
Here’s one:
http://sfbay.craigslist.org/eby/rfs/771562085.html
http://maps.google.com/maps?q=415+South+34th+St.+Richmond+CA+94804
Um, lessee, 75K can get you 15 houses in Detroit, and a few in Cleveland…
The worst part is that you have to pay the $7500 back over X years, although it is at least 0% interest.
Hey, if I could find a decent little house for $75,000, I wouldn’t even care about the tax credit (or, rather, interest-free loan).
I purchased my first rental in 1973…At that time, you could put 5% down and at a minimum be break even…It would be nice to get back to that level again…
Who the hell pays property taxes but can’t itemize? I suppose seniors with paid-off homes. I suspect this may allow persons stung by AMT to get some of their deductions back. Another break for the working poor! I should have studied journalism in college and smoked more pot.
The AMT is fairly insidious. In high cost areas, a household with two working professionals (and neither particularly making a lot of money) can get ensnared by it.
I don’t disagree with your point. It’s just odd/duplicitous to trumpet some bill as “help for the helpless” when it really benefits other “less helpless” constituencies.
Hint to renters who want to buy: Don’t try to catch yourself a falling knife.
Renters
By Emmet Pierce
STAFF WRITER
July 27, 2008
The housing market decline that has triggered a wave of foreclosures and deeply eroded recent home equity gains is also opening the door to ownership for renters who can meet tightening lending standards.
With the departure of the easy credit terms that triggered the mortgage market meltdown, lenders have raised the bar on who can qualify for a home loan. But those with high credit scores and money for down payments are finding that many homes are priced to sell, particularly in entry-level neighborhoods hit hard by mortgage defaults.
To compete with bank-owned homes, other sellers have been forced to cut their prices. For renters who watched the median price of a home rise from $185,000 a decade ago to $517,500 at the height of the recent housing boom, June’s countywide median of $370,000 seems like a bargain, said Gary Kent, a real estate agent who began selling foreclosures when the housing boom ended.
Don’t know how good these numbers are, but here is a little back’o'theenvelope calculation to estimate how far SD homes could still fall from here if they don’t overshoot:
Median price one decade ago = $185,000
Median hh income one decade ago (1999 dollars) = $47,067
Recent median hh income (2006 dollars) = $59,591
Rough estimate of inflation-adjusted 2006 price trend level, assuming home price to income ratio remains constant:
$185,000*(59,591/47,067) = $234K
Implied percentage drop off recent median:
(234/370-1)*100 = -37 pct.
Wake me up when a bottom is reached.
I think you are in the ballpark. Faux news business cheerleaders and CNBC Kudlow Goldilocks types won’t ever mention anything like this common sense back of the envelope calculation. Fence sitters and responsible renters are financially savvier by watching this real estate collapse. What you have is a simple, fast, and accurate housing market calculation in under 30 seconds. The cheerleaders are spending days and months spinning all they want but fewer people are taking the bait. We remember Faux News types one year ago saying “this is the time to buy real estate.” Also when they said this two years ago. This weekend they said (guess what) “this is the time to buy real estate.
BTW, assuming the bust continues to play out at the recently reported rate of decline (CA median sales price down 38 pct YOY), next summer might be a good time to start picking over the foreclosure rubble pile to see whether there are any bargains lurking in the scrap heap.
-37% is probably conservative since cost of living (i.e. food and gasoline) didn’t take as much out of household income, and 10 years ago everyone believed house prices go up over time if you just hold on - I think that recent events changed that thinking.
“For many renters, the combination of a lagging economy and tighter credit means their prospects for home ownership are actually worse than before home prices began dropping, said Delores Conway, director of the Casden Real Estate Economics Forecast at the University of Southern California.”
“What will ultimately restore affordability is if the credit crisis ends so we have loan availability,” she said. “Right now the consumer is very stressed about high energy prices, high housing costs, whether they are renting or paying a mortgage.”
No. What will ultimately restore affordability is for prices to fall back in line with incomes.
“The study found a 4.8 percent vacancy rate countywide, an increase from the 3.4 percent reported in the fall poll.”
But we were told by the “experts” that apartment vacancy rates would fall. Oops. Instead we get a 41 percent increase in the vacancy rate. If that trend continues, rents should either level off or begin to fall. Increased supply of all housing and a shrinking population should be pushing the cost of all housing lower.
Credit cards
Superprime slime
Jul 24th 2008 | NEW YORK
From The Economist print edition
American Express reveals unexpectedly weak results
AFTER the subprime crisis, a superprime one? That depressing scenario looks plausible given the unexpectedly weak second-quarter profits from American Express, America’s fourth-largest card issuer and the one most geared towards well-heeled consumers. June was particularly ugly: “roll rates”—the number of customers falling from current to 30 days delinquent, or from 30 to 60 days—jumped sharply. Amex’s charge-offs of debt deemed unrecoverable have climbed in a few months from unusually low levels to well above the historic average of 4.8% of balances outstanding. It has scrapped its earnings forecast.
Amex’s problems stem in part from a familiar source: an aggressive move out of its traditional business of charge cards, which must be paid off each month, into riskier credit cards that allow customers to carry a balance.
“Amex’s problems stem in part from a familiar source: an aggressive move out of its traditional business of charge cards, which must be paid off each month, into riskier credit cards that allow customers to carry a balance.”
This of course is the business model for every other tom, dick and harry credit card, which usually has a $10,000 bass hooked on the minimum monthly payment, flailing in the water.
Cardholders carrying large balances = “plankton”
Financial behemoth credit card companies who lend to them = “whales” (also more recently known, to me at least, as “deadbeats”)
When plankton dies off, so do whales.
Actually, the whole appeal of the Amex was that it was exclusive. The only cards that they offered had to be paid off at the end of each month, so it was a bit of a status symbol to flash that card rather than MC or Visa. There was no doubt that you were just using plastic for the simple convenience, rather than because you were on the brink of insolvency. I think that the brand definitely suffered when they expanded their clientele to J6P who used it for buying groceries and beer at a baseball game.
Similarly, Fan and Fred were known to only deal with the best quality mortgage debt until quite recently. It is sad when a quality brand debauches its reputation, luring fools into losing a bundle of dough in the process.
Yep ,PB ,and F&F will be turned into the sub-prime lender of choice ,but this time backed by the USA . I think a lot of the losses it has right now is because of Countrywide pass-offs .
REAL ESTATE
Some Judges Stiffen Foreclosure Standards
By AMIR EFRATI
July 26, 2008; Page A3
A cadre of state-court judges scrutinizing foreclosure actions in a string of recent rulings have discovered flaws in documents that borrowers may be able to use to keep their homes.
The judges, including a committee from the Kings County Supreme Court in Brooklyn, N.Y., are highlighting shortcuts taken by mortgage companies in court filings, which borrowers might be able to exploit when facing foreclosure.
The rulings show the critical role that judges are beginning to play as foreclosures mount in the most severe housing crisis since the Great Depression. The recent decisions build upon widely circulated opinions issued last fall by federal judges in Ohio who found trusts that hold the mortgages regularly begin foreclosure proceedings before they obtain the legal right to do so.
“Judge Spinner wrote that the lender included a document that “purports to” but doesn’t legally transfer the promissory note, the borrower’s promise to pay back the loan, to GMAC from the original lender. He also questioned why the note was purportedly executed at Fairfax, Va., and signed by the borrower on the same day that the borrower allegedly signed the mortgage in New York. A spokeswoman for GMAC declined to comment.”
I’m sure it happens all the time that borrowers sign paperwork in New York and suburban DC on the same day. I can’t imagine why GMAC declined to comment.
The more that judges force the lenders to produce paperwork behind the loans, the more interesting this will get. At best, you could say some lenders were merely sloppy.
PAGE ONE
Chrysler Halts Auto Leases
Move Could Dent Sales;
Vehicle-Financing System in Turmoil
By NEAL E. BOUDETTE and JOHN D. STOLL
July 26, 2008; Page A1
DETROIT — In a sign that the woes afflicting Detroit and Wall Street are starting to feed on one another, Chrysler LLC said Friday it will no longer offer auto leases through its lending arm, a move that could further crimp the car maker’s sales.
The move by Chrysler Financial, first reported on the Web site of The Wall Street Journal, comes as the finance unit has been scrambling to borrow fresh money amid tight credit markets. It also underscores how weak sales are starting to undermine the financing arrangements that underpin American car sales.
Exactly why I won’t buy an “American” car: terrible resale value compared to Asian carmakers.
GMAC, et al figuring to lose a bundle over the next few years as autos come off lease worth considerably less than residuals. Part of it is the fuel economy (no one wants an 8-cylinder SUV with 50k miles on it), but a big part is just that the cars don’t have as long as expected life. For nearly 20 years now, Japanese-made cars have crushed American cars when it comes to resale value.
GM, Ford, and Chrysler just offer an inferior vehicle for a list price that is insufficiently discounted to account for their poor relative value.
I may be in the market for a car out here in Maryland in a month. $10,000 my limit. Saw some Nissans that look good at Carmax. Expect to take a $2,000 loss when I have to sell and go back out west, but it’s cheaper than renting a car.
And when you rent a car, you miss out on all the fun of having to sell it.
A car could prove to be a good inflation hedge in the current environment. Suppose BB succeeded beyond his wildest dreams in stagflating the economy away from the dangerous shoals of deflation. A good automobile would tend to stagflate in tandem with helicopter drops of liquidity, especially if it was financed on a fixed payment plan.
Make sure you buy a convertible, as to better catch the Benjamins Bernanke blows your way.
That’s actually a good nickname for him; “Benjamins Bernanke”.
Have you ever heard of a site called LeaseTrader.com? People who want to get out of leases (and there are a lot of them out there right now) post and sometimes offer a cash incentive to lower the monthly payment. Assignment fee varies by lender, but is usually no more than a few hundred dollars.
If you only need a car for a finite period of time (12-18 months) and put minimum mileage, it can be a good solution. My sister did that in 2005 or 2006 when she came back to the Bay Area for a year before returning to Boston.
My situation is more complicated. I have been renting because I was told I would be here on this engineering contract between 6 and 9 months. Most leases are 3 years. Never heard of 12 to 18 months though. Now it’s been 10 months since I started working on this gig. I’m on the schedule into late December.
I tend to be a Murphy’s law follower, so I’m “confident” that if I do buy a car, they will say that I will have to leave within 3 months. Kind of like when you wash your car it rains the next day
No, the idea is that you take over an existing lease that has <36 months left from someone who doesn’t want it. Most lease agreements allow for the assignment to another qualified lessee for a modest fee. That’s how you can get a discounted lease for 12-18 (or sometimes shorter).
Hmm..Could be good to look for a 6 month lease. I will have to wait a few weeks to see how many hours they renew on my gig before doing it.
I bought a Nissan Sentra from Carmax for under $10K in 2001 - its been a good, reliable car. Not pretty by any means, but good value. Give it a service every 6 months or so, and it’ll chug along happily.
July 26, 2008, 1:05 pm
Dodd Demands Meeting With Fed, Treasury Officials
The top member of the Senate Banking Committee is demanding a meeting with top Bush administration officials and the Federal Reserve over potential delays to implement the foreclosure prevention program passed by the Senate Saturday.
Sen. Christopher Dodd (D., Conn.) said he wants to meet Tuesday morning with the Federal Reserve, Federal Deposit Insurance Corporation, Treasury Secretary Henry Paulson, and Housing and Urban Development Secretary Steve Preston to discuss quick implementation of the bill.
“I want to know why we can’t get this legislation enacted and the regulations in place far more quickly,” Dodd said at a press conference. “I’m not going to tolerate a slow walk on something that is so important to the American consumer.”
Dodd said at a press conference. “I’m not going to tolerate a slow walk on something that is so important to the American consumer.”
I wish I was in his district because I’m not going to tolerate a Congressman who took favors in the form of lower rates and fee forgiveness from having anything to do with any mortgage related legislation. This guy should be hung by the short ones!
Also, he is deranged. When did our congressmen begin representing “consumers” instead of Citizens?
It seems the whole govt. structure now panders to Wallstreet.
Well, you think during an election year he’d at least have the horse sense to refer to them as “voters”! He can go back to using “consumers” in 2009.
I submit this, if there were ever grounds for us to really “change” things it would be the utterly disparaging and contemptable use of the word “consumer” by those who depend on us for everything.
Sen. Christopher Dodd (D., Conn.) said he wants to meet Tuesday morning with the Federal Reserve, Federal Deposit Insurance Corporation, Treasury Secretary Henry Paulson, and Housing and Urban Development Secretary Steve Preston to discuss quick implementation of the bill.
“I want to know why we can’t get this legislation enacted and the regulations in place far more quickly,” Dodd said at a press conference. “I’m not going to tolerate a slow walk on something that is so important to the American consumer.”
Truth in Lending Revision:
Sen. Christopher Dodd (D., Countrywide) said he needs to meet ASAP morning with the Federal Reserve, Federal Deposit Insurance Corporation, Treasury Secretary Henry Paulson, and Housing and Urban Development Secretary Steve Preston to discuss payoffs.
“I want to know why we can’t get this legislation enacted and the regulations in place far more quickly,” Dodd said at a press conference. “I’m not going to tolerate a slow walk on something that is so important to my wallet and my buddies’ wallets.”
This wad must still think he’s in the running for veep.
“Sen. Christopher Dodd (D., Countrywide)…”
ROTFLMAO!
The top member of the Senate Banking Committee is demanding a meeting with top Bush administration officials and the Federal Reserve over potential delays to implement the foreclosure prevention program passed by the Senate Saturday.
Dodd probablly needs to re-fi into an FHA insured loan.
Hey …. first one on here… greetings from Long Island!!!!!!
Were do you live, my mother lived in great Neck. Now we live in the Netherlands
Is oil at its peak? Experts split
By Elizabeth Douglass
LOS ANGELES TIMES
http://www.statesman.com/business/content/business/stories/other/07/27/0727oilpeak.html
In five years, demand for oil might exceed 94 million barrels a day and continue rising, spurred by growth in China and India, the International Energy Agency estimates. Experts put daily global production between 82 million and 86 million barrels, and even the most optimistic oil authorities can’t see production keeping up with demand without a big boost from unconventional sources such as Canada’s vast oil sands or U.S. oil shale. Getting crude from such sources is more difficult, expensive and environmentally harmful.
“Unconventional oil includes all these things like tar sands … and some people count all that stuff as oil,” said Texas oil investor Jim Baldauf, who in 2005 helped found the U.S. chapter of the Association for the Study of Peak Oil & Gas, with affiliates in 22 countries. “If you do that, then you have a much rosier picture.”
It is getting harder to reconcile the peak oil moment with the stomach-churning drop in oil prices that has recently played out.
Prior to 2006, it had never exceeded $80/bbl. After approaching $150/bbl in , it’s retreated to $125/bbl. That’s still a huge runup in a very short period of time, especially if you go back just to 2001 when it was just ~$30/bbl.
In ‘97 I paid 73 cents a gallon for gasoline. Reconcile that one.
In 1999 I was paying 44 cents for fuel oil/off road fuel.
‘For the past three years, global oil production has remained constant at roughly 85 million barrels per day. OPEC production has remained largely flat while non-OPEC supply growth has been well below levels seen just four years ago. … If there are no additional supplies of oil, for every 1 percent increase in demand, we would expect a 20 percent increase in price to balance the market.’
“In five years, demand for oil might exceed 94 million barrels a day and continue rising, spurred by growth in China and India, the International Energy Agency estimates.”
That could push prices up another 200 percent in 5 years - $12/gal of gas. RIP airlines and exurbs and a lot more if that happens.
Within 5 years, plug-in hybrids will widely available and economical.
The big question is when will the US wise up and start building the nuclear power plants we need to support a carbon-free power generation infrastructure.
I received from Southern California Edison, information about how the generate energy vis a vis their “Power Mix” for the year 2007 and 2008.
Coal and Large Hydroelectric supplied 56% of SCE’s power in 2007, and this year it accounts for just 13% of the power.
Natural Gas and Nuclear was 34% of the power mix in 2007, now it’s 71%.
Renewable Energy was 10% of the mix in 2007, this year 16%.
Why lump natural gas and nuclear together? It makes absolutely no sense.
Nuclear is carbon-free energy, natural gas isn’t (although it’s cleaner than coal and oil). Nuclear has its own set of environmental issues, but its truly clean energy and doesn’t consume as finite a resource as natural gas.
The actual breakdown goes:
Natural Gas 2007: 31%
Natural Gas 2008: 50%
Nuclear 2007: 3%
Nuclear 2008: 21%
On July 25, 2008, First Heritage Bank, N.A., Newport Beach, California was closed by the Office of the Comptroller of the Currency (OCC). Subsequently the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.
The FDIC has the information regarding your relationship with First Heritage Bank, N.A. Besides a checking account, you may have Certificates of Deposit, a business checking account, a Social Security direct deposit, and other relationships with the institution.
All deposit accounts have been transferred to Mutual of Omaha Bank, Omaha, Nebraska.
_____________________________________________________
Why would the FDIC move First Heritage Bank’s accounts in Newport Beach, to Mutual of Omaha?
Something smells wrong in the wild kingdom…
“Why would the FDIC move First Heritage Bank’s accounts in Newport Beach, to Mutual of Omaha?”
They probably submitted the low bid to service the deposits until a sale was completed. No grand conspiracy, I don’t think.
My point being, usually the FDIC prefers a local bank to take over a failed bank…
If you were a First Heritage Bank customer, wouldn’t you feel a bit more warm & fuzzy if your new bank was somewhere else in Orange County, not Nebraska?
Sometimes its a local bank, sometimes its not. It just depends on who is interested in temporarily servicing the accounts until the failed bank’s sale is finalized.
Labor costs (customer service call center) are considerably cheaper in Omaha than Orange County. In the wake of bank failure, there’s a lot of time consuming handholding that the new servicer will need to do for customers who mostly have very insignificant balances and who are unlikely to produce very much revenue. It’s not hard to imagine how an Omaha-based bank could underbid an Orange County bank.
“If you were a First Heritage Bank customer, wouldn’t you feel a bit more warm & fuzzy if your new bank was somewhere else in Orange County, not Nebraska?”
is this a joke? given what i know about nebraska businessmen (think warren buffet) and what i know about orange county businessmen (think Angelo Mozzilo), i think id prefer my money in Omaha.
Nebraska seems as remote as Albania to the bankagraphically challenged, behind the Orange Curtain.
With all these Friday afternoon bank actions…my question is this? Do the folks at the FDIC get overtime pay for weekends?
With all these Friday afternoon bank actions…my question is this? Do the folks at the FDIC get overtime pay for weekends
With a suspected 95-106 US shaky banks on the FDIC “Watchlist”, I sure as hell HOPE we aren’t paying these monster Fridaynight FDIC takeover gangs…BY the HOUR
FDIC employees are unionized. So yes, they are paid overtime.
Also on Friday, the First National Bank of Arizona was closed by the FDIC. Accounts were also transferred to the same Mutual of Omaha Bank.
Understanding the mortgage bailout ?
I need some help here to help temper my level of outrage at this pandering to the over-extended masses of speculators. See if I understand the plan:
I go to buy a house in 2005 that I am willing to pay $150,000 with 25% down and a 15 year fixed mortgage.
Another fellow jumps up with a “payment Option” mortgage and agrees to pay $250,000 with a 5% kick-back to cover closing costs. He wins and moves in.
He starts paying $800 per month (minimum payment) and lives in the house for 3 years at less than comparable rent.
At 2 years, the mortgage starts to adjust upward by 7.5% payment increases or something like that, but he now owes about $1000 per month more in back payments that were added to the balance. Let’s just say $25,000 for the 2 years. So he “owes” $275,000. He has stopped making the payments, as they re-set in 3 years to $2450 per month, and the buyer either can’t or won’t pay the bill.
Foreclosure is impending.
Congress jumps in and says, well, if the Lender takes a loss on the excessive lending amount and reduces the mortgage to 90% of “current market value”, then FHA will write a new 30 year fixed loan and the buyer gets a do-over. The current market value is 60% of the original purchase price, a 40% decline. 250,000 x .6 = 150,000.
Gee, that’s the price I thought is was worth back in 2005 and was willing to put up the money and make the $1500 payments. But, no, I got kicked out by a debt-beat, who is no longer making any payments.
But the Lender has lost not only the $100,000 overpay, but the additional closing costs and the $25,000 back-loaded equity.
The “owner” keeps the house under the new payment plan, but, only if he sells in the next 5 years, then the Lender who took the write-down gets 50% of any gains made from the sale of the property. Is this correct?
Also, since the Lenders sold off most of the loans as securitized investments, then who approves the deal? The current bondholders? Does it go back to the original lender?
If my math is correct, the CONgress has estimated that it will save 400,000 mortgage holders from losing their houses. The put $30 Billion into the package. I get $75,000 taxpayer transfer per loan, based on simple division of Cost/number of loans.
So, as I see it, I get to pay a portion of the $75,000 to help keep a property speculator living in a house that I got out-bid on. However, the buyer got a do-over. I got the bill. Is this correct Mr. Dodd? Mr. Paulson?? Mr. President?? Am I missing something??
Any of you guys or gals on the blog who understand this better, please help me see why this bill is so important.
For some “mild” amusement, check out NBC and CBS this am. Brokaw is having a chin-chin with O’Bama and CBS has McCain. Pass me the barf bag. O’Bama is basking in the glory of his second-coming type welcome in Germany and discussing Afghanistan. McCain is justifying the Bear Stears deal to Stephanopoulos on the basis that “millions of innocent people” would have been hurt if there hadn’t been an intervention.
Now, O’Bama is talking about building schools in Iran and Afghanistan. Seriously, these two jerks have a bad case of megalomania. They’re auditioning for a seat on the One World Gov’t council.
And as far as O’Bama goes, I don’t think I’ve ever seen someone so obviously in love with himself. My dad used to sing a little ditty back in the day that applies:
“I love me, I love me
I’m wild about myself.
I love me, I love me
My picture’s on my shelf.”
True, however, I think “people behind” Obama are running a brilliant campaign. His “buddies” (same buddies that are behind McCain) are rightly assuming that now, perhaps more than ever, Americans are unable to focus and put themselves to the task of THINKING and connecting dots. Therefore they came up with this guy OBAMA that many can project their guilty social conscience on and feel that by supporting him a miraculous social and economic change will take place; at the same time they are helping to make the world a better place. Grow up!
-And hey Obama is loving it, why not, this is his opportunity to shine:)
yeah, americans did such a stellar job of “thinking and connecting dots” in 2004 that we are still paying for it.
How DARE you disparage the Messiah!
Yes, their blasphamey has been noted and punishment in this life and the next is assured….
250,000 Germans showed up to see and hear him…
25 people in a German restaurant in Columbus, Ohio showed up to see his competitor.
They actually showed up to drink beer and eat bratwurst and listen to the 2 bands that were playing for 2 hours before he got up to run his mouth about being a citizen of the world.
All a big photo op.
This guy is a joke.
25 votes for McC in Columbus; zero votes out of 250,000 in Berlin.
Ohio like the rest of states, will deliver Obama the largest margin of victory ever recorded in a presidential race.
He’s the Harlem Globetrotters going up against McCain’s Washington Generals…
Fate Accompli
The largest margin of victory ever recorded in a presidential race? What kind of odds are you offering on this “fate accompli”?
I don’t suffer fools nor engage in a wager with said sods, so you’re out of luck.
Obama is God!
“I love me, I love me
I’m wild about myself.
I love me, I love me
My picture’s on my shelf.”
I heard Bill Clinton recited that every morning after he woke up and every night before he went to bed.
But at least he didn’t need a teleprompter to be able to say it, unlike the present nimrod presiding over us.
True. We went from Narcissist to Dimwit over the Millenium.
I was in the middle east many years ago. I was invited to a local goat grab which was attended by arabs of several different nationalities and a heated discussion began on what the US could do to help in the Middle Eastern countries.
I asked my Jordanian friend next to me what was his thoughts on the low level mult-national heated debate going on.
His reply was that the then, common canned, people on the street arab answer.
They’d all like you to keep your US Army and Phantom jets out of the area but an any financial and technical help with simple village schools, clinics and deep drilled sweet water wells from the American People would be most, most welcome.
The Public Relations Brains in the US Gov’t and the corporate powers that be, BLEW OFF those Safe, Simple, Cheap and Effective Options 40 years ago… when they were really welcome and needed
Good luck with winning Hearts and Minds, now that we’ve once again, “Bombed the Village to Save It”
China was a great capitalistic power that got hooked on drugs (opium supplied by the UK) and began a long descent that took a couple hundred years to rehab, and we were a great capitalistic power that got hooked on debt, (money supplied by China) so how long will our descent to base-necessity camp take us?
So, it seems the big money question for this upcoming decade might be…
Can China develop it’s domestic demand (in a sustainable and stable fashion - read - no bubbles) faster than our demand for their goods is destroyed? The race is on!
Good analogy.
is commercial as wacked as residential ?
I’m thinking not by a long shot
So the senate passed the housing bill, all 700 pages of it.
How does one plant so much pigsty into a pigpen written “War & Piece” on such short notice?
That bill wasn’t written on short notice at all. Just the other day some guy from a housing/consumer group said that the bill contains measures they’ve had laying around for more than a decade - just waiting for “crisis”.
Sounds like the Patriot Act.
Exactly. And what other special legislation is floating around inside the beltway waiting for its special “crisis”?
The pols may not realize it, but a lot of their recent behavior does not inspire the confidence they think it does. Has there even been one bit of legislation passed that would make you want to rush out a buy an overpriced house and commit decades of your life and labor to it?
Why didn’t they just call it quits @ 666 pages?
Houseing Bill should be named.
“End Hope Now”
When in Danger,
or in Doubt,
Run in Circles,
Scream and Shout,
then kindly Pass,
a Quick and Dirty,
“End All Hope Bill”
Sheesh…Only in the Corporate Ownership Society of Amerika
“That bill wasn’t written on short notice at all. Just the other day some guy from a housing/consumer group said that the bill contains measures they’ve had laying around for more than a decade - just waiting for “crisis”.”
What does the requirement to report credit card transactions to the IRS have to do with the housing crisis? By that justification, you could have thrown almost anything into this bill.
Are we going to find out later that buried deep in the bill was a provision to exempt from prosecution anyone that got a Countrywide VIP loan?
That’s the problem with Congress and its bills; they throw all this other crap into otherwise focused bills and then Congress Critters are forced to vote against the superfluous issues.
I see McCain didn’t vote.. that’s curious.
Nor did Bunning. Bunning was harping about how terrible it all was..
I had guessed 87 would vote for it, but didn’t account for 15 no-votes.
http://www.govtrack.us/congress/vote.xpd?vote=s2008-186
The biggest pigsty is Title IV Section 257 11(K)1 which is shared appreciation. The FHA will get a certain percentage ( initailly 10% then decreasing to 5%) of property value appreciation over the life of the loan. Think about the unintended consequences–FBs would have no incentive to maintain or improve their homes–Legal squabbles over things like seller paid closing costs when the house sells (is this a shared cost that is also deducted from the FHAs profit percentage when the house sells ?)—Legal issues over Constituionality (GA is a property rights state so it seem this legislation would be unconstituional here)—Could the FHA force improvements to protect its interest in the property?–As lendning tightens will the FHA & other lenders try to make shared appreciation a part of every loan?
The more I think about this the more nightmarish it seems. I hope I am wrong on my dark view of this.
Taxpayers don’t want to take a loss.. and don’t want a share of the profits either? Well, what do they want?
“Well, what do they want?”
Representatives with a little common sense and courage enough to make the Wall Street Brokerages & Hedge Funds than have profited so mightily from the housing bubble pay for its aftermath, rather than socializing homeownership as this section of the housing bill does, would be a good place to start.
i see.. so the flippers who profited aren’t even on the radar.. the people who lied on loan docs, borrowing more than they could ever hope to repay.. the investors who begged the brokerages for a never ending stream of MBSs and other RE paper.. they are somehow absolved. OK.
“Representatives with a little common sense and courage enough to make the Wall Street Brokerages & Hedge Funds than have profited so mightily from the housing bubble pay for its aftermath”
Basphemy I declare! How dare you suggest the bankster and fraudsters be held accountable.
Say, what ever happened to that promise of restoring honor, integrity and family values?? *slap*… thats right… they went out the window with all the other lofty self righteous promises.
Sorry, there is a BIG typo in my above comment. The shared appreciation percentages should be 100% gradually falling to 50%.
The part about sharing appreciation is so unbelievable . Sometimes I just think its a matter of Congress/Senate justifying putting the taxpayers on the hook ,”See here taxpayers ,this is how we are going to get your money back ,and than they never do it .”
Many clauses in the bill are just darn insulting . Like one of the brokers on this blog addressed ,the bill never addressed the corruption in the system ,so the REIC will make hay with the bill and get into their usual gaming of the system.
The power people either don’t know what they are doing ,or they do know what they are doing and it benefits who they want it to benefit ,in spite of it looking like it’s benefiting xyz.One talking head mentioned the other day that the powers were trying to benefit China and foreign investors by all the back up of Fred and Fannie .
Normally in the course of business if something happens the rules are in place for what is suppose to happen . The investors get screwed ,the stockholders of bad companies get creamed ,real estate equity gets clobbered at the loss of the owners or banks on foreclosures ,and if there is hanky -panky the Judicial system and law enforcement handles that .People who have insured accounts usually have some protection ,and people who didn’t have anything to do with any risk or game don’t get hurt .
In other words ,business is all about the rules being in place already ,so this attempt by the power elite to change the tides of who will bear the pain of a drunken fraudulent party is a obstruction of justice and everything else that is bad . No longer can anyone in the course of business not be concerned about what acts the government will take to make sure who the winners and losers are . it’s also painfully clear that the ones that win with this government tampering are not the innocent ones .
Not to worry, there will be a future Democratic party initiative that mandates the FB gets to keep all appreciation–if the value of the house ever does go up. And, as I predicted several months ago..GWB would eventually recant and sign the housing bailout. The Repubs have no backbone and always give into the socialist demands of the Dems (privatize profits, socialize losses). Hopefully in 4 or 8 years, Americans will finally decide they’ve had enough and a politician will actually rise to the occasion.
IMO, the shared appreciation is one of the best aspects of the bill.
Anyone who took on more debt than they could pay should NOT get out of their obligations while the taxpayers foot their bills.
Personally, I wish the lenders would just foreclose and get it over with, but the last thing we need is an incentive for the FB deadbeats to commit fraud –selling for a profit to a cousin or friend for a higher price and pocketing the profits while the lenders (bond investors, pension funds, mutual funds, etc.) were forced to write down the principal amounts of the loans.
Note that analysts have upped their estimate of YOY declines in this month’s Case-Shiller index data from its recent record drop of 15.3 pct. Moreover, Lehman analysts foresee no bottom until at least 2010.
Housing
On Tuesday, Standard & Poor’s will release the Case-Shiller home price index for May. For April, home prices across 20 major U.S. cities dropped a record 15.3% over the year.
“The Case-Shiller index will show a further drop in house prices, although markets will also look at whether this is starting to become more of a regional story,” wrote Avery Shenfeld of CIBC World Markets Inc.
For May’s annual result, Lehman Brothers is looking for a 16.4% drop in house prices across 20 major U.S. cities. Lehman analysts see the 10-city index falling 17.5%.
“This drop would bring average home prices back to summer of 2004 levels,” Lehman analysts wrote. “In the April report, home prices surprisingly rose on a monthly basis in eight of the 20 metro areas surveyed. However, we attribute most of the rise to seasonal distortions as prices are typically high during the spring selling season.”
Lehman analysts added that downward pressure on home prices is likely continue into 2010 in bubble markets given the “huge” overhang of homes for sale and rising foreclosures.
Sounds like 3rd and nine become 4th and fifteen for more than a few FBs.
From the text of the mortgage bill:
INDEPENDENT CONTRACTORS.—An independent contractor may not engage in residential mortgage loan origination activities as a loan processor or underwriter unless such independent contractor is a State-licensed loan originator.
SEC. 1505. STATE LICENSE AND REGISTRATION APPLICATION AND ISSUANCE.
(a) BACKGROUND CHECKS.—In connection with an application to any State for licensing and registration as a State-licensed loan originator, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant’s identity, including—
(1) fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and
(2) personal history and experience, including authorization for the System to obtain—
(A) an independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act; and
(B) information related to any administrative, civil or criminal findings by any governmental jurisdiction.
There goes azlender’s privacy.
I was wondering about that too. Does this apply to seller financing? If I sell a property, originate and hold a note, does this apply to me?
All of the above is trying to give the warm fuzzy on no more Fraud. I can tell you, California is getting ready for Super-Fraud round 2. 800 Billion on the table and the Real Estate Attorney’s are pouring over the Bill “End Hope Now” and the Loop Holes and edges of the Truth will be found. “Government intent”, we know how that works.
Double plus good the great benevolent PTB decided to act before things got out of control. What’s more, it is nice to see them isolate the source of the problem in the toxic loan distribution chain. It’s not like anyone else was involved. All in all, it is a wonderful rectification of the past.
Winston
The revolt against England’s rule in 1776 had as much to do with debt and taxation as it had to do with liberty and freedom.
Thomas Jefferson had already observed the effects of England’s pact with private bankers on its citizens:
“If we run into such debts as that we must be taxed…as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, and give the earnings of fifteen of these to the government for their debts and daily expenses;
And the sixteenth being insufficient to afford us bread, we must live, as they do now, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account; but be glad to obtain subsistence by hiring ourselves to rivet their chains around the necks of our fellow sufferers;
And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for a second, that second for a third, and so on ’til the bulk of the society is reduced to be mere automatons of misery, to have no sensibilities left but for sinning and suffering…
And the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.”
Wow ,anger-inn I dig your post . What the people in power are doing now is a reversal of what was done at the beginning of this Country and the reasons we rebelled against our oppressors and formed the principals of this great Country .In other words
the current government is sending us back to the oppression that was the grounds for our rebellion and becoming a free Country to begin with .
Bingo! Unfriggin real, isn’t it?
Can Hank Paulson Defuse This Crisis?
By STEVEN R. WEISMAN and JENNY ANDERSON
The New York Times - Published: July 27, 2008
… The House speaker, Nancy Pelosi, a California Democrat and a critic of the White House, praised Mr. Paulson for changing Mr. Bush’s mind. Senator Christopher J. Dodd, the Connecticut Democrat who is chairman of the Senate banking committee, is also singing “Kumbaya.”
“I’ve watched him grow in the last year, not in terms of intellectual capacity but in his appreciation of how this town works,” says Mr. Dodd.
Then again, in an environment where financiers and public-policy makers have temporarily tried to forge a bipartisan front to address the most severe economic tempest in a generation, few people are willing to speak critically of Mr. Paulson for attribution — recognizing, they say, a need for a nervous public and queasy financial markets to believe that the federal government is in charge, is capable, and knows exactly how to confront the downturn.
“There’s reluctance to be critical because they understand that to be critical would further erode investor confidence and therefore cause the markets to dive deeper,” says James D. Cox, a corporate law professor at the Duke University School of Law. “We are at a point where it’s difficult to determine how much of this is being driven downward by psychology or the excesses of the past working themselves out. Most people think it’s excesses of the past, but they hope no one else realizes that.”
Moreover, Mr. Paulson has especially endeared himself to the denizens of Wall Street by using federal power and the public purse to rescue the financial industry from its own, outsize mistakes and prevent the meltdown from getting out of control.
“He’s saved their bacon,” Mr. Cox says…
http://www.nytimes.com/2008/07/27/business/economy/27hank.html#
*****
Well, that’s what we’ve been saying.
He’s learned how the town “works” - and that’s to overspend with the people’s money… and he’s also saved Wall Street’s bacon.
At least someone in the media is pointing this out.
“Men have been swindled by other men on many occasions. The autumn of 1929 was, perhaps, the first occasion when men succeeded on a large scale in swindling themselves.”
John Kenneth Galbraith
Whilst they prospered, insane lads knitted their own golden parachute.
KoolAid in Humboldt:
“The siding needs to be replaced. There is dry rot damage to structural wood members under the house. Most likely a lender will not loan on this property without a sizable down payment, if at all. To be sold AS IS. Priced to sell.”
Square Ft: 900, Year Built: 1950, Condition: Poor
Price: $ 179,900
Sale History
08/03/2005: $30,000
Priced to sell to whom???
Humboldt county California is absolutely the most overpriced in the state. The median price still hangs at $308,000, which is only 10% below its peak. And, this median is now only slightly above that of San Diego county. I don’t know how it manages to stay so high (just like the people that live here). But, drugs definitely have something to do with it, as do the extreme number of people who own multiple properties in this county.
Make that the median home price in Humboldt is only slightly below that of San Diego county. Pretty amazing given the HH median income in Humboldt is a whopping $40,000, and San Diego county’s median income is 50% higher.
Yeah, it’ll come down. The house prices. Seen it in other rural counties. Humboldt went up late, coming down late. Just timing… like Canada. Drugs are not gonna float it at San Diego levels. +Thanks for the numbers, BTW.
Otherwise nice up there.
How much did the hedge fund Summers advises make on the passage of the bailout measure?
The way forward for Fannie and Freddie
By Lawrence Summers
Published: July 27 2008 18:00 | Last updated: July 27 2008 18:00
Anyone who cares about the health of the US economy should welcome the enactment of the Treasury’s rescue plan for Fannie Mae and Freddie Mac, along with other measures to support the housing market. While there is room for argument about details, the risks to the financial system were too great to allow delay.
No one should suppose, however, that the issue is now satisfactorily resolved, even for the short term. Emergency legislation was necessary because market participants were unwilling to buy Fannie and Freddie’s debt; investors doubted that the government-sponsored enterprises were healthy enough to repay it and did not draw sufficient reassurance from the implicit guarantee of federal support. If their debt proves easier to place now, it is only because this guarantee has been strengthened, not because anything has changed at the GSEs.
“Anyone who cares about the health of the US economy should welcome the enactment of the Treasury’s rescue plan for Fannie Mae and Freddie Mac….”
IOWs, if you don’t support the plan, you don’t care about the health of the US economy.
Translated using the 10ed of the NewSpeak dictionary.
But the rescue team ,headed by Paulson ,never tell you really who is going to benefit ,or that it is evil that certain people benefit instead of needing to pay for their folly, greed , fraud ,or their risks. Lets write a big list of who is NOT going to benefit from the interferences and discrimination of people by the powers and maybe we can get somewhere on just how good the bail-out plans for the general welfare for the citizens of the USA .
Has anybody ever wondered why the banks/lenders/Wall Street ,
even the Judicial system ,didn’t come unglued
when the powers started messing with usurping long standing Contract law ?
I was a very, very good boy with my mortgage debt, but I was a very, very bad boy with my credit card debt (but that was because I was coerced by the unscrupulous advertising of the credit card marketers, and a society that emphasizes buying what we can’t afford), and now I want my helping hand from Uncle Sam. I’d settle for renegotiating my credit card debt down by 20 percent and lowering my plastic rate to 8 percent, but if this isn’t good enough for you (nah, nah, nah) I’ll just walk away from my responsibilities like so many others, and in seven years when my slate is clean - I’ll begin saying those familiar American word’s again - “just charge it.”
The BK Reform of 2005 made sure that unsecured CC debt would be very difficult to discharge, unlike the secured real estate loans.
Watch over the next decade as banks lobby state legislatures to make all real estate loans recourse loan.
Oh worst ,they will make recourse on loans retroactive knowing
them . Look at how the forgiven debt acts were applied retroactive .
Inflation? I just booked a round trip in late August through September from Phoenix to Baltimore for $300 less than the price I paid for the late June to early July round trip. That’s $332 for this August trip when in June it was $670.
I guess the elves made more oil under Kansas.
Actually, there is quite a bit of oil in Kansas, along with Natural gas.