Bits Bucket For August 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
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Large U.S. bank collapse seen ahead…
SINGAPORE (Reuters) - The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world’s biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.
“The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say ‘the worst is to come’,” he told a financial conference.
“We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one, one of the big investment banks or big banks,” said Rogoff, who is an economics professor at Harvard University and was the International Monetary Fund’s chief economist from 2001 to 2004.
http://www.reuters.com/article/ousiv/idUSSP21695020080819
Shelia’s going to have some words for Mr. Rogoff.
You’re scaring the straights, Ken.
Nasty Shelia.
It’s OK, cause Ken was talking through a MSM outlet. If he had been posting from a blog, then he might have sparked a panic.
Sheila’s relentless shilling notwithstanding, which bank will be the last standing?
More MSM “scare tactics”…
REVIEW & OUTLOOK
When Henry Met Fannie
August 19, 2008; Page A16
There’s no rest for a Treasury Secretary in a financial meltdown, as Hank Paulson is discovering. Fannie Mae and Freddie Mac continue to bleed mortgage losses, and so the Treasury chief may soon have no choice but to pull the trigger on his new authority for taxpayers to recapitalize the mortgage giants.
Fan and Fred shares took another header yesterday, in the wake of a Barron’s article predicting that a Treasury recap was “almost inevitable.” When a single story in one day can take nearly 22% off Fannie shares, and nearly 25% off Freddie’s, you know investors are scared to death.
They should be. Two weeks ago the companies added another $3.1 billion in losses to the $11 billion they’d already reported in recent quarters. Both companies slashed their dividends and warned they’d buy fewer mortgages, while being more selective about those they do buy. So much for the assertion — made so confidently this year by Barney Frank, Chris Dodd and Chuck Schumer — that Fan and Fred would rescue the mortgage market from the housing slump.
15% mortgage interest rate and 20% down payments at the bottom in 2012. See you there!
‘The Market Ticker’ 8/19/2008
“”Still can’t afford the house. Why not? Because its too damn expensive, that’s why. It costs more than 3x your annual income, and all the “liar loans” and “exotics” that used to be available are gone, as the Ponzi schemes that were being run that made them possible have imploded and buried their proprietors.
You want to fix housing? Drive prices down to no more than 3x incomes on average in a given area. Period. The quickest and easiest way to do that is to provide federal support for only 30 year fixed mortgages with 20% in cold, hard cash (no games) down and a maximum 36% DTI. Intentionally cut off ALL other mortgages from ANY SORT of Federal support, implicit or explicit. Poof. House prices come back to affordable levels because nobody will pay more and people can afford houses again with SUSTAINABLE and AFFORDABLE mortgages.”"
The WSJ editors do not mince words in this op-ed piece.
Typically, the banker’s job is to balance the competing interests of the existing shareholders with the need to raise money at a price the market will bear. That can’t be the priority here. If taxpayers have to ante up, the only justification is to protect the larger financial system. Existing Fannie and Freddie shareholders should be wiped out and managers and directors lose their jobs. We think Mr. Paulson should already have eliminated managers and private holders as a price of the recent bailout legislation. But if he lets either survive after taxpayers are forced to inject cash, the Treasury chief should be run out of town.
…
A taxpayer recap for Fan and Fred can’t be a get-out-of-bankruptcy-free card. As a de facto nationalization, any plan should rein in their riskiest operations with a goal of selling their profit-making businesses to the private sector, and perhaps handing what’s left of their “affordable housing” mission back to Housing and Urban Development. It’s time Mr. Paulson put taxpayers ahead of Wall Street.
Damn that First Amendment!
TUESDAY, AUGUST 19, 2008
UP AND DOWN WALL STREET DAILY
Bailout Blues for Fannie and Freddie
By RANDALL W. FORSYTH
The prospect of a federal recapitalization of the GSEs hangs over their stock and the whole market.
IT’S NOT OFTEN THAT NEWS REPORTERS turn out to be newsmakers, but Barron’s senior editor Jon Laing did just that with his blockbuster in the current issue that a federal government recapitalization of Fannie Mae (ticker: FNM) and Freddie Mac (FRE) is increasingly likely.
Pumping taxpayers dollars to shore up the mortgage giants would almost certainly wipe out the common shareholders while taking massive chunks out of the $14 billion in preferred stock and also holders of subordinated debt. (See “The Endgame Nears for Fannie and Freddie,” Aug. 18.)
I think LEH will go first. Then maybe Citi or Wachovia unless the Feds sell them to someone.
LEH has serious troubles but my money is on WaMu.
Wacky-ovia also has serious issues.
My WAMU CD expires on September 4th. If it is WAMU that might fail next, I hope they hang in there until I close that account. I am getting nervous about having my money there.
Ok but then is B of A or any other big bank any safer?
Not that it’s a lot of money (less than 100K), but yes, we are saving to buy a home someday.
Half our savings goes towards retirement and the other half towards a down payment, when the time is right.
We need a place for our 2 kids, 2 dogs, 2 cats, and 3 hens and I want a goat and my very own wind turbine and to be able to plant trees that my grandchildren might one day be able to enjoy.
Split it in 4, and spread it across banks.
More work, I agree, but would you be rather safe or sorry?
My $$ is on WaMu. It’s interesting though. I received an email being sent by an internal WaMu recruiter targeting RMs and BD officers at other banks. It says while other banks are laying off we are ramping up our small and mid size commercial banking units with RMs and BD officers.
Real or a ploy to send a false message? Not sure but my feeling from talking to several WaMu sales people - the ship is going down fast.
Hmm… thought Wamu had gone under already… bwa ha ha!
They have my mortgage–I’ve gotten two letters from them in last 2 months offering me 250K on a home equity line of credit. Nuts they are.
Nuts they are
Yoda?
WAMU is in my top 25, not nearly as much risk as Wachovia Bank. If there is any insider buying of WAMU, it is time to really short sell. Insider buying in financials is the contrarian indicator that works best. Insider purchases in financials peaked in October 2007 at the top. LOL
“Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion — when you see that in order to produce, you need to obtain permission from men who produce nothing — when you see that money is flowing to those who deal, not in goods, but in favors — when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you — when you see corruption being rewarded and honesty becoming a self-sacrifice — you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.”
Francisco d’Anconia
Wealth is the product of man’s capacity to think.
Wow great post how true it is in this society. Hope we are not doomed and can wake up soon.
I hate it when great posts create a pit in my stomach. Now on to have some breakfast.
To some people, a 1% taint leaves them surprised that you aren’t 100% dead. The difference in this regard between the U.S. and a general third world country is still so vast as to be nearly incomprehensible.
We can legitimately concern oneselves with troubling trends, and worry about tipping points, but forcasting the demise of society by noon is still a bit pessimistic. The vast majority of us still daily follow laws voluntarily that would be nearly incomprehensible to someone in the third world.
Um, I haven’t read the book. Was this guy portrayed as a bit of a lunatic? I guess you can be loony and pithy at the same time, but gee. Would we be having this discussion if Paris Hilton had said it?
http://www.squidoo.com/parishiltonisfranciscodanconia
Why don’t you read the book first and form an opinion second, instead of the other way around?
Why post bits and pieces of the book out of context and then complain about the “invalid” opinions they evoke?
The internet has been great, phenomenal really, but…
It has created a world of “Cliff Notes” thinkers, of no depth whatsoever.
We of a certain age and intellect were brought up having to read entire books, instead of a 1 page synopsis, as is the current vogue.
I dangle my fishing line out, with bait in the form of words, hoping to catch somebody that hasn’t read books by authors I admire.
Got a problem with that?
why don’t you try fishing with your own bait.. then poeple will critique you instead of Ayn.. and we’ll find out how smart you really are.
If you don’t mind, i’ll continue to cut bait according to my whims, not yours…
For the record, aladinsane, it was this blog (and I’m sure your quotes) that led me to read ‘Atlas Shrugged’ during my two week Colorado River rafting trip. Boy was I the life of the party in the evenings
Well, to be fair, I didn’t actually finish it during those two weeks. But I got about 75% through it…
Money is an artifact with limited and tenuous connection to real value or wealth. Stepping away from philosophy for just a moment, scientific observation shows rhetoric such as this is common wherever the well off come in contact with those with little, and is such there is little if any meaning in the words apart from indicating the mixing of classes. No amount of real or perceived criminal activity prevents people from being inventive, innovative, or industrious, and it is from that which value flows whether such efforts are acknowledged through barter or currency.
Alright, I’ll bite….
BOOK’S SPOILER ALERT
What aladinsane quoted above was one of many powerful and memorable speeches in the book Atlas Shrugged. Unfortunately it lost some of its punch for me when the author makes that character into a bit of a virtual eunuch by the end of the book. (Reminded me more of a parroting politician than an independent, strong mind w/original thought)
I respect Rand more for her insightful cultural examinations than her storytelling. I felt her characters’ socio-economic relationships and motivations were dead on. Her endless speeches are thought-provoking but too long. Her character development sucks and her dialogue all sounds the same. At times I wanted to toss her a thesaurus.
In the end, I felt Atlas Shrugged is a socio-economic screed wrapped up in a Harlequin Romance. Although many of Rand’s characters’ ideologies are well worth discussion, turning the hero into Fabio was supremely disappointing.
See Alad, I read the entire book!
Can I have my cookie now?
Sure,
I’ll send some Mrs. Fields…
“No amount of real or perceived criminal activity prevents people from being inventive, innovative, or industrious”
Really? Then why did the USSR, (former) communist China, Cambodia under Pol Pot, and countless other countries under the rule of communist dictators prevent most people from being inventive, innovative, or industrious?
If the amount of criminal activity (and to justify the above examples as criminal activity we can use natural rights as a basis for the crimes committed) adds up to enough that almost all of the rewards for invention, innovation, and industry go to others (criminals), what then?
The quote from Jefferson below by auger-inn is great, here is another oft quoted saying by him:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Although I don’t believe in the paper money system by the people Jefferson is calling for, it is a heck of a lot better than all of our money originating out of thin air from the Federal Reserve in exchange for treasury debt.
The Fountainhead was the only Rand book I’ve read. The good guy always stood with a wide stance, and the heroine had hair like a helmet.
I skipped Rourke’s speech at the end where he sets the whole world straight.
Thanks for the brief breath of reason.
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.
Thomas Jefferson
• “A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the Nation and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the world - no longer a Government of free opinion no longer a Government by conviction and vote of the majority, but a Government by the opinion and duress of small groups of dominant men…. Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the U.S., in the field of commerce and manufacturing, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.”
- Woodrow Wilson - In The New Freedom (1913)
• “The Federal Reserve Bank of New York is eager to enter into close relationship with the Bank for International Settlements….The conclusion is impossible to escape that the State and Treasury Departments are willing to pool the banking system of Europe and America, setting up a world financial power independent of and above the Government of the United States….The United States under present conditions will be transformed from the most active of manufacturing nations into a consuming and importing nation with a balance of trade against it.”
- Rep. Louis McFadden - Chairman of the House Committee on Banking and Currency quoted in the New York Times (June 1930)
• In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interest, and their subsidiary organizations, got together 12 men high up in the newspaper world and employed them to select the most influential newspapers in the United States and sufficient number of them to control generally the policy of the daily press….They found it was only necessary to purchase the control of 25 of the greatest papers. “An agreement was reached; the policy of the papers was bought, to be paid for by the month; an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature considered vital to the interests of the purchasers.”
- U.S. Congressman Oscar Callaway, 1917
• “The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson.”
- U.S. President Franklin D. Roosevelt in a letter written Nov. 21, 1933 to Colonel E. Mandell House
• We can’t be so fixated on our desire to preserve the rights of ordinary Americans.”
- Bill Clinton, USA Today on 3/11/93, page 2a
• “In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority. National sovereignty wasn’t such a great idea after all.”
- Strobe Talbot, President Clinton’s Deputy Secretary of State, Time Magazine, July 20th, l992
• “The invisible Money Power is working to control and enslave mankind. It financed Communism, Fascism, Marxism, Zionism, Socialism. All of these are directed to making the United States a member of a World Government.”
- American Mercury Magazine, December 1957, p. 92
• “It is the system of nationalist individualism that has to go….We are living in the end of the sovereign states….In the great struggle to evoke a Westernized World Socialism, contemporary governments may vanish….Countless people…will hate the new world order….and will die protesting against it.”
- H.G. Wells, in his book, “The New World Order”, 1940
• “Today, America would be outraged if U.N. troops entered Los Angeles to restore order. Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government.”
- Henry Kissinger, Bilderberger Conference in Evians, France, 1991
• “The world is governed by very different personages from what is imagined by those who are not behind the scenes.”
- Benjamin Disraeli, first Prime Minister of England, “Coningsby, the New Generation”, 1844
• “I believe that if the people of this nation fully understood what Congress has done to them over the last 49 years, they would move on Washington; they would not wait for an election….It adds up to a preconceived plan to destroy the economic and social independence of the United States!”
- George W. Malone, U.S. Senator (Nevada), speaking before Congress, 1957
• “The drive of the Rockefellers and their allies is to create a one-world government combining super capitalism and Communism under the same tent, all under their control…. Do I mean conspiracy? Yes I do. I am convinced there is such a plot, international in scope, generations old in planning, and incredibly evil in intent.”
- Congressman Larry P. McDonald, 1976, killed in the Korean Airlines 747 that was shot down by the Soviets
• “The United Nations will spearhead our efforts to manage the new conflicts (that afflict our world)….Yes the principles of the United Nations Charter are worth our lives, our fortunes, and our sacred honor.”
- General Colin Powell, 4/21/93, receiving the UN-USA Global Leadership Award
• “The real menace of our Republic is the invisible government which like a giant octopus sprawls its slimy legs over our cities, states and nation. At the head is a small group of banking houses… This little coterie…runs our government for their own selfish ends. It operates under cover of a self-created screen…seizes…our executive officers…legislative bodies…schools… courts…newspapers and every agency created for the public protection.”
- John F. Hylan, Mayor of New York, Mayor, 1918-1925
Wow anger-inn where is my pitchfork ? I have been shocked lately at what I’m seeing regarding government intervention ,and I can’t help but think that either a big mistake happened ,or there is in fact a group that is leading the Nation down a path ,not of the majority choosing .
I’m most curious how our country responds, once the pressure-cooker existence we live under, blows it’s top…
“I’m most curious how our country responds, once the pressure-cooker existence we live under, blows it’s top…”
That is the $1,000,000 question or is that $1,000,000,000 adjusted for inflation…
Land of the free, home of the brave? We shall see.
You know how it goes with rookie rioters…
‘You know how it goes with rookie rioters…’
That’s why it’s best to practice.
RE: when you see corruption being rewarded and honesty becoming a self-sacrifice — you may know that your society is doomed.
Yeah, exemplified by the legions of corrupt, self-serving, number hitting appraisal hacks who literally took over the business in the past decade.
While duly warned, the high placed have virtually no idea of the enormitity of the rot which eminated from the bottom
Based upon that quite accurate quote, then we’re finished.
This just shows how blind, incompetent, retarded and out of touch this group of executive ‘experts’ were/are…
Fannie’s Perilous Pursuit of Subprime Loans
As It Tried to Increase Its Business, Company Gave Risks Short Shrift, Documents Show
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081802111.html
At this point, being the effective title holder of 5 trillion dollars in real estate, it is in thier best interest to do whatever they can to prop up prices as long as possible. This can only happen if phony loans continue to be be made available. Pulling EZ financing effectively kills the value of their holdings and further increases the liklyhood of further foreclosures and price reductions. Of course the alternative is even more foreclosures and price reductions, so it is clear this house of cards is not able to stand on it’s own. I don’t know the degree to which the govt can intervene, but believe the losses are simply too large.
It’s a Fate AcCOMPli…
Everybody that contemplated buying a house since 9/11 has done so, more than likely, and phony loans got us to where we are at right now, so going back to the future isn’t an option.
Let em’ burn!
I feel like what we may see is the difference between a Honda Civic hitting the barrierl at 70mph and a tractor trailer truck hitting it at 40mph. Fannie will definately make a bigger mark than say, AHM, even if the level of stupidiy is less.
Is this like one of them math question thingies? Like back in junior high! I remember those days, being taught math by the basketball coach, who couldn’t hardly freakin’ add his own self. The thing I best remember was how his chest hair would spring frighteningly out of the top of his shirt like a frizzy poodle trying to climb out his neck hole. It paralyzed me with fascinated terror. That’s why I’m no good at that math stuff now, I’m sure. Because of Coach Steeles’ hairiness. Thanks a lot, Coach!
Or was that Coach Griffin? Oh, who cares, different game, but same mathematical ability and hirsuitness.
One thing about story math questions is how the important details are usually omitted. For example, Jim A., what COLOR is the Honda Civic? And who’s driving, when it makes impact? And what’s the tractor trailer hauling when it hits? Have it be toasters! That’d be dramatic. Or, crates of Barbies. And one of the drivers is named, umm…Brad.
Okay, now we’re cooking.
Oly, watch it with those food references. Your comment caused me to dang-near choke on my smoothie.
Memo to self: Do not read the HBB while eating, drinking, or needing to heed the call of nature.
If you replace all the top leadership, the new guys will have an incentive to uncover all the losses the old guys created so they don’t get blamed for them. But you have to be careful about giving them stock options or other equity interests in their compensation package, or they may have too much incentive to maintain share value over cleaning things up quickly.
Would the Fed consider forcing Freddie/Fannie to merge when the bail them out? Both organizations are extremely fat, and the resulting organization could RIF probably 75% of the employees and 75% of the real estate assets.
I am/will enjoy seeing these organizations brought to their knees.
My initial thinking would be that whichever one was NOT the first to fail would be forced to bail out the failure, ala Bear Sterns, now I’m not so sure.
I am starting to think one of the main reasons this whole thing got out of hand is that America’s executive class doesn’t understand the concept of families with sub-six figure incomes.
That loans were made based on absurd valuations and unrealistic payments didn’t occur to people who themselves lived in 750K-plus housing, take home over $10,000 a month in after tax income and have luxurious benefit vacation and expense packages.
I know there are people here who work in finance, and/or have high paying jobs, and you also know that it becomes easy to forget what it’s like to live on 30K-80K per year. And I think there are some here who will admit that there are those who can’t even grasp the concept.
This may be a soft point, but I am really starting to believe the housing bubble was due, in part, to the disconnect between the wealthy and the working class.
That’s a fair point, Frank. But, most of the wealthy elite who were in charge are fairly well educated, and had every bit of statistical information at their fingertips that they would ever need. They chose to ignore the facts for one reason; greed.
One reason
No risk, they sold most of the risk and knew the gov would take most of what remained.
Put it all on black and spin that wheel.
I have shared this before, but I will do it again:
Years ago during an NFL strike a Denve sportswriter was chatting with John Elway, who was confused as to why the fans didn’t support the players demands for even more $$$. The writer explained to Elway that the players were coming across as greedy, and that fans resented their stratospheric compenstation. Elway didn’t get it, so the writer challenged him to guess his salary. Elway was off by about a factor of 5, and was shocked to learn how little the Denver paper journalist was paid. They guy pretty much thought that anybody who wasn’t a bum made 200-300K. Of course when you think about it, anybody big John rubbed elbows with probably made that kind of money. Therefore, everybody does.
I was thinking of your anecdote, among others, when I was reading that Fannie article, so thanks for re-submitting it for those who’ve never seen it. I’ve had conversations with people who make 300K-1.5 million a year and the disconnect is astounding.
I returned to Long Island recently after more than 10 years away, and when I saw houses in working class neighborhoods going for 350K-600K, it blew my mind — because the demographics, and thus the income of these areas hadn’t changed. They should be going for 150K-200K.
After being an HBBer for over a year, almost 2, I now tell people that the last decade was an anomaly and all gains will be wiped out — so I am now in the 1998 and lower price camp. If wages haven’t grown more than inflation the last decade, sorry, those prices were anomalous and will disappear.
However, since the debt was committed on these loans, and the government is about to become the largest owner of residential real estate on Planet Earth, I am now also believing the only way out will be the homesteading concept I’ve posted about previously — in other words, before this is over and the gov’t will have to figure out how to fill millions of houses, there are going to be free homes available.
By free I mean, no cost for the structure, but taxes and liens and home improvement loans will have to be taken out.
Think about it — these houses are rotting. I have been in them and many, many need over $100,000 worth of work to make them habitable. The new gov’t entity will make loans based on the total cost of habitation, and will recapitalize itself with the new paper, after having written off 100% of the previous debt.
I was talking with my mother last night and she mentioned her friend that had sold her house in Long Island ( Jefferson Station I think or close to there) for $300k this past year. She paid $22k for her house in 1969.
RE: so I am now in the 1998 and lower price camp.
I am with ya on this one, Frank.
and…” — these houses are rotting. I have been in them and many, many need over $100,000 worth of work to make them habitable.
Absolutely…and this is why this government bail-out incites me to fury. So much of housing stock serving in this country is obsolete, worn out junk!
And any appraiser who noted as such so in a report to a bank got black-listed.
Good posts, brother!
Nah, knock them down and give the land to transportation infrastructure like in the 1800’s.
In those places where the foreclosures aren’t straight enough for train tracks, make helicopter pads for future flying cars, or maybe parking lots.
As Oil Giants Lose Influence, Supply Drops
http://www.nytimes.com/2008/08/19/business/19oil.html?_r=1&adxnnl=1&oref=slogin&ref=business&adxnnlx=1219143645-Avxz0uidTmSTy9HXZ8u0JA
“We are going to depend on the Venezuelan, the Nigerian or the Iranian oil companies for the future of our oil supplies,” said Bruce Bullock, the director of the energy institute at Southern Methodist University. “This is a troubling trend.”
Even drilling offshore and at ANWR would change that fact, but the majority of our fearless leaders are loath to mention conservation, renewables or improved CAFE since that would require effort.
Offshore and Anwar drilling would only decrease the price of gas 3 cents per gallon ten years from now. Even if you throw away the environmental concerns, it’s hardly worth it when we could be spending the time reducing usage and improving technologies.
American oil looks exactly like Arab, Nigerian, Russian or Venezuelan oil, once it’s refined.
Why use our resources when other sources are willing and able to deplete theirs, for our benefit?
The key word in that last sentence is “when”. There’s your answer.
Precisely, lad. I actually believe that the best “strategic petroleum reserve” is to leave our oil in the ground until such time as it becomes really scarce.
————
Why use our resources when other sources are willing and able to deplete theirs, for our benefit?
It is not as much about price as it is about controlling a source of supply.
We need to develop our sources of supply to protect ourselve from ‘oil blackmail’ as we, hopefully, work to develop a replacement energy source.
It’s all about price…
We were the largest producer of oil until around 1970.
The lion’s share of what we sold, got us around $3 a barrel (about 1/40th of current price) and if we had used up other sources first, that oil would still be in the 1st National Bank of the Ground, earning interest.
I tend to think of ANWAR as the REALLY strategic petroleum reserve.
Develope what we have but it isn’t going to make much of a dent in imports.
Conservation could dramatically cut our dependence and could make a difference immediately.
Cut the speed limit to 55
Tax gas and return the money as a cut in income taxes
and we could immediately reduce our consumption 10-15%.
Have gov buy gas guzzlers for blue book + give a 10-20% credit that can be used to purchase a new car that gets over 35-40mpg thus helping car makers
As people get rid of their gas hogs we drop our consumption anogher 20-25%. That would be huge and the price of oil would fall offsetting the tax. Then you adjust the tax to keep gas at say 5 bucks a gallon.
Greg Mankew a GOP economist has recommended this, but politicians hate it because Exxon hates it and people in the US are so short sighted.
“Have gov buy gas guzzlers for blue book + give a 10-20% credit that can be used to purchase a new car that gets over 35-40mpg thus helping car makers”
Screw that!! Why should I subsidize people who were stupid enough to buy bas guzzlers?
Let Mr. Market and high fuel costs show them the error of their ways instead. It’s already starting to get people’s attention.
I’m starting to think offshore is the way to go. But not for the oil, just to put some hideous large rigs off the coast with big oil trucks constantly rumbling through the quaint coastal towns. That will a great reminder to everyone, this is another cost of the oil you use. Then maybe we’d start to see some serious conserving.
“. . . just to put some hideous large rigs off the coast with big oil trucks constantly rumbling through the quaint coastal towns. That will a great reminder to everyone, this is another cost of the oil you use. Then maybe we’d start to see some serious conserving.”
As long as it’s not in their backyard J6P won’t give a rat’s @$$. The MSM media won’t cover it. Since tree huggers have already been marginalized, when push comes to shoving more oil into their SUVs, J6P et al will vote their short-term self-interest and worry about the consequences . . . tomorrow.
I suppose this point has already been raised, but so long as the oil companies get the *socialized* benefit of carrier groups and US Marines, where’s the incentive to devoting their *private* funds to finding new reserves, utilizing domestic capacity and developing alternative energy sources?
Wouldn’t forcing builders by law to double the R factor in walls and attics more then make up for all the offshore drilling in alaska, and the coast combined?
We have tens of millions of homes just leaking energy…
My prediction for salvation for America…find a way to make solar panels so efficient that $2-5000 per home would take a house off the grid for 9-10 months a year, and only use electricity in the hottest and coldest times.
The SUV’s, McMansions, and suburban sprawl with an outdated transportation plan have to end immediately or the United States will be effectively extinct in 20 years. All this talk of Anwar and sucking the Middle East dry is ludicrous. Oil is too valuable to burn.
Did you know?
The Department of Energy that was created by Carter and its sole purpose was to lessen our dependence on foreign oil?
It has a annual budget of 25 billion and like 16000 employee’s and 50 contract employee’s.
I say if you cant beat em, join em. Time to get gov jobs my friends. they will be one of the last one’s standing…
Google ron paul.
Super-insulating houses can be risky, particularly with trapping dangerous gasses (such as radon).
I don’t understand why politicians in Washington think it’s okay to drill for oil in the Middle East and ship the oil here, but environmentally evil to drill for it here. If drilling harms the environment, it does so no matter where it takes place. And what risks are taken every time a ship full of oil crosses seas and oceans? Do American politicians think a spill off Africa is preferable, environmentally, to one off America?
It’s like buying imaginary carbon credits to offset ones own excessive energy use. If Mr. X is “allowed” to produce a hundred whatevers of carbon dioxide, but only produces ten, and if Mr. Y is “allowed” to produce a hundred whatevers of carbon dioxide, but actually produces a hundred and fifty, buying forty of Mr. X’s unusued whatevers doesn’t offset Mr. Y’s excesses, though it make technically balance the account. Mr. Y is still “polluting” the planet with forty excess whatevevers of carbon dioxide that Mr. X would never have produced to begin with.
Mr. Gore apparently believes it’s okay to fly around in a private jet and live a megamansion using vast amounts of electricity–all the while telling us to fly coach and live in unairconditioned tents–because he buys somebody elses unused imaginary carbon credits to supplement his own imaginary quota. If he really believed what he preaches, and if he really had a conscience, he would drastically reduce his energy consumption, not buy imaginary carbon credits from someone who wasn’t using them. In the Middle Ages, the Church sold “indulgences” to people, allowing them to sin all they wanted if they could afford these passkeys. Since the very wealthy can afford to buy unlimited imaginary carbon credits, they can seemingly pollute as much as they want.
Either the environment is in danger or it isn’t from the drilling and harvesting of fossil fuels, but foisting the risks and potential consequences off on others, whether individuals or entire nations, is ridiculous. Washington isn’t protecting the environment or its inhabitants by blocking drilling in oil-rich areas: It’s just shifting the mess elsewhere for someone else to deal with.
Several megawatt solar power plants will be coming online in CA. by 2010. These initial plants will power over 1 million homes. Forget offshore drilling. Invest in clean solar power.
The problem with solar is that there are too many people that are tied into the oil and gas community. These people do not want us to put solar panels on our roofs. Once that occurs there will be no more utility bill and if done right no gasoline bill either.
They know that the best part of solar power is that after it is installed the energy that it creates is FREE! And the panels will last for 25 years or more. The first solar cell that was ever created way back in the late 1940’s is still generating electricity.
I agree. It’s not the technology that’s the problem, it’s the big oil and gas players fighting it.
Should have read: Even drilling offshore and at ANWR wouldn’t change that fact,
Nobody will depend on Nigeria.. Nigeria’s total output is less than the margin of error in world supply.
We need to burn up all the oil as fast as possible. Only when it’s all gone will we be forced into alternatives. Since economics and politics oppose alternatives energies, force certainly will be required imho.
Which alternative energy sources are acceptable?
Wind? Greens fight the installation of windmill generators because they kill birds and now it seems they affect the human nervous system. The greens also don’t want new transmission lines to deliver that power from the windmills to the cities and towns where it’s needed.
Solar? What happens when the sun goes down and all the electric cars need to be recharged overnight?
Hydrogen? That’s not an energy source. For every watt-hour of electricity that can be delivered by hydrogen, it takes considerably more than a watt-hour to free it (usually from water), package it (compress it) and deliver it to the end user.
There must be other alternatives I have missed. Help me out here.
“Solar? What happens when the sun goes down and all the electric cars need to be recharged overnight?”
Well known to sun-seekers the world over, Germany has solared up in a big way, with the help of government financial assistance, much to their benefit.
Someday the frigid steppes of the American Southwest will catch as much Sun as the Germans have been able to do…
if you’re asking me what’s acceptable, they are all acceptable.. oil, nuclear, solar, hydroelectric, geothermal and anything else we can come up with. However, from a practical political/economic view, I agree.. none of them, including existing forms, are currently acceptable.
My message is to the greenies.. burn up all the oil as quickly as possible. Only then will we move to an alternative.
This might be what you are looking for?
http://web.mit.edu/newsoffice/2008/oxygen-0731.html
Beautiful exchange…
joey has no solution other than full speed ahead, use it as quick as you can, while auger-inn comes up with the nitty gritty of the fruits of science.
i read that article.. It looks like everyday highschool electrolysis to me, but there’s some sort of “green” connection. Maybe they are proud of finding those catalysts ..
I’d appreciate it if someone who knows physics would explain where the breakthrough is. That article seems to be missing something.
Great…
The dumboise is now belittling the efforts of M.I.T., in yet another attack from the far right, on intelligent design.
sure, I don’t see anything really new there (I did research related to photosynthesis about 25 years ago). It says nothing about cost, efficiency, power capacity etc. There are loads of ‘new technologies’ for storage of electricity, and up to now none of them is practical/economical for widespread use (but I guess we will get there, someday).
Nature developed this capacity more than 1 billion years ago, works around room temperature just the same
Surely some of you here can remember the first cell phones. I had one in 1995 and it weighed 9.5 pounds. Most of that weight was in the battery. My two year old cell phone has a battery that weighs less then .5 pound. New cell phones have even smaller batteries. Talk to folks who cell solar panels and you will find that they also sell batteries to store excess solar energy. And yes these batteries are getting smaller and smaller and also cheaper.
The other thing that needs to be done is to upgrade the national grid. We currently lose more electricity then we use. If we upgrade the grid we should be able to generate energy in the southwest deserts and use it in NY City.
Lets get creative on alternative energy and save this planet for our children and grandchildren.
upgrading the grid? along the lines of JoeyinCalif it might be better to NOT upgrade the grid and let it desintegrate into local grids. That would provide another boost for local energy production with renewables, and other nail in the coffin of Big Oil.
joey, do you understand that after the oil’s “all gone” from your “burn it as fast as we can” plan, the “alternatives” will almost certainly involve something like a 50-70% rapid (a decade or less) decrease in the world’s population?
I don’t like most people much either, but I’m not really interested in deliberately starving 4 billion people to death.
LA Wallflower, I haven’t heard that one..
i have faith in our ability to adapt. We relied on whale oil until that got quite scarce and expensive. Alternatives were found. Nobody starved.
China, short of resources and long on bodies, promulgated an ill conceived experiment in its allocation of manpower; tens of millions starved. This was within the last 50 years. Dont dismiss mass human misery due to similar miscues in the future, and, not only for the Chinese.
You store the excess energy generated during the day in large lithium-ion batteries. The power that most people use after the sun goes down is also goes down greatly. Not too many people use electricity while they are sleeping!
check out the cost of Li-Ion batteries for home use and report back (you can start with investigating the cost structure of the Tesla roadster). Besides the cost, there would be serious environmental issues when everyone needs the equivalent of hundreds of camcorder batteries.
Li-Ion is too expensive for the masses.
Electrical power use during the night depends strongly on the location; in Europe peaks in power use certainly don’t match up with peaks in solar energy production (electrical power consumption is now switching more to daytime because of increased use of big airconditioners).
Come to Texas in August and you will find a lot of people that enjoy running their air conditioner while they sleep. Plus, a lot of people like to keep their refrigerator running all night long as well.
Wind? Greens fight the installation of windmill generators because they kill birds and now it seems they affect the human nervous system. The greens also don’t want new transmission lines to deliver that power from the windmills to the cities and towns where it’s needed.
FWIW, here in Colorado “greens” are for windmill power.
Wind? Greens fight the installation of windmill generators because they kill birds and now it seems they affect the human nervous system. The greens also don’t want new transmission lines to deliver that power from the windmills to the cities and towns where it’s needed.
Great way to lump all greens together, I think NIMBYism is not a republican or democratic problem. All humans suffer from it. I doubt you want a nuclear dump in your back yard. When the problem get’s big enough NIMBYism will be overcome
You’re missing geothermal. They’re working on new methods that work in a multitude of locations where the earth’s crust isn’t that thick.
Pump water into the earth, capture the steam that comes back up, generating electricity that powers the pumps that push the water back down, plus much, much more.
We’ll see if they can get it right (without causing earthquakes, dealing with corrosion, etc.), but I think I saw where MIT estimated that, if accessed, this geothermal power could power the world for 30k years. That ought to give us time to figure out fusion…
Fast transportation is a severe energy storage problem. That’s why hydrogen is not very useful for airplanes and first stage rockets. The energy density is too low for use in the atmosphere where too large a volume costs too much to push through.
I hope you’ve stocked up on canned peas and AK-47’s then. “Forced” is likely to look like James Kunstler’s writings, not pleasant.
Several megawatt solar power plants will be coming online by 2010 or sooner. These initial pla
Yeah San luis obispo county has one 800 megawatt one being built right now. The cost of this power to be delivered is not going to be free like some people think. I could see it end up costing the same as my PG&E bill. Solar power plants we still be in the business in making money, they only difference will be it will be cleaner profits.
So Cal Edison generates around 50% of their electricity from natural gas.
Instead of building prisons hidden away from the public’s vision, as a profit vehicle, why not stick giant arrays of solar panels hidden away from the public’s view, as a profit vehicle?
So Cal Edison generates around 50% of their electricity from natural gas.
Tell me about it. Our NatGas used to be super cheap until they opened a pipeline to SoCal a few years ago. Then our prices suddenly doubled (still way cheaper than heating oil)
As cash becomes more and more worthless locking in energy conservation will look smarter and smarter.
Yep solar looks expensive now, but in a few years when coal and gas prices go to the moon because dollars are worthless. The solar panels, insulation, and energy conservation technology you purchase today will look like an incredible bargain.
To put this number in perspective, the current US power usage is more than 1,000,000 megawatts.
A Dorchester real estate attorney, Nina Nguyen, has seen two types of buyers: investors and first-time homebuyers. “Savvy real estate investors have money and now it is a great opportunity for them to buy,” Nguyen said.
If they are buying now… Just how savvy can they be?
http://www.boston.com/realestate/news/articles/2008/08/19/the_upside_of_home_foreclosure/
Having money and buying property makes you an investor just as having a knife and cutting someone open makes you a surgeon.
–
Never underestimate the power of the Great American Propaganda Machine to sell anything. One needs to read how KKK was sold in Indiana (very few balcks)) during 1920s in a very short time. It is fascinating what and how the language is used and what buttons are pushed.
Jas
Such fruitcakes
I was always taught investing in real estate means you are cash flow positive.
Silly me, people who lose $1000 month and hope to make it up on the back end by appreciation was always a speculation….
I guess we lost something in the translation the last few years..
Approximatly 20% savvier than than FBs who bought last year. But it’s as easy to drown in 12′ of water as 30′.
I’ll say this again: Be thankful these knifecatchers are around. The more they commit their own money to the system the better for the rest of us.
And be thankful that the NAR is encouraging them.
“When robbery is done in open daylight by sanction of the law, as it is done today, then any act of honor or restitution has to be hidden underground.”
Ragnar Danneskjold
There is a level of cowardice lower than that of the conformist: the fashionable non-conformist.
I know how you so adore the idea of a 4-front war, so here’s some words of warning not heeded in the first 2 fronts, from Winston Churchill:
“Never, never, never believe any war will be smooth and easy, or that anyone who embarks on the strange voyage can measure the tides and hurricanes he will encounter. The statesman who yields to war fever must realise that once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events.”
The man who lets a leader prescribe his course is a wreck being towed to the scrap heap.
I veered away long ago from the wreck that is our leader.
He’s bloody enough Aladin. Let him crawl.
That is unreasonably negative by a long way. Even Nouriel Roubini sees a boom at the end of this bust, and strength in economic sectors outside housing and finance. Back in the day construction, lending, and insurance were easily a quarter of the market or more, but now even together they are somewhere between ten and twenty percent, probably closer to the low end of that. By most uses of the term that is significant, but the idea that this sector cratering will nullify all other contributions isn’t very useful.
A better lesson is how thoroughly this mess cost those involved money. These industries can be nicely and sustainably profitable if well managed. Instead, in the absence of needed regulation and oversight the business cycle turned into a wildfire blowout that has damaged the outlook for this sector. Chasing high returns led to zero returns just as speeding or careless driving may prevent reaching the destination. Simple disclosure rules could have limited this explosion of fraud, but we are too proud of our markets for that, and now they are damaged because of that misplaced pride.
Old Shanghaiing: The American term shanghaied refers to the practice of conscripting men as sailors by coercive techniques such as trickery, intimidation, or violence.
New Shanghaiing: Investing in the Shanghai stock market.
An amusing (unrelated) snippet - tickets for the 110m hurdles were going for 10,000 RMB (~ $1500) before Chinese gold medal favorite - Liu Xiang - pulled out due to an injury. Now, they’re going for 2,000 RMB, but nobody wants them. Nationalism is definitely China’s state religion.
The San Diego surge is not working, as new foreclosures outpace the rate of foreclosure sales.
Housing prices sink
Sales surge, but real estate market is still in decline
By Roger Showley
STAFF WRITER
August 19, 2008
Propelled by low-cost foreclosure sales and accelerating price drops, more San Diego County homes were sold last month than at any time in more than a year, MDA DataQuick reported yesterday.
There were 3,431 sales in July, up 11.5 percent from June and 10.5 percent higher than a year earlier – the first time in 49 months that the year-over-year sales count has increased.
The overall median price was $364,000, down $6,000 from June and off $125,000 from July 2007. The 25.6 percent year-over-year decline was the highest for any month in the 20 years of DataQuick record-keeping.
But the upsurge in sales did not signal a bottoming of the market, experts said. They pointed to the record 40.8 percent of the sales involving homes foreclosed in the previous 12 months and the fact that new foreclosures are outnumbering the sales of foreclosed properties. July’s 1,259 foreclosure sales compared to June’s 1,838 foreclosures.
I cannot forecast to you the action of Tijuana-adjacent. It is a riddle wrapped in a mystery inside an enigma.
Who needs a forecast when home prices are dropping $6000/month? The future is now.
“He predicted that San Diego prices would drop another $75,000 from their present median level, which would reduce them to their December 2001 level of $287,000.”
Which means that 10% down with PMI is only $28K saved, and by the traditional metric of being able to afford three times the mortgage, an income of $86K would buy the average house.
To me, that sounds like a good thing.
Except how many end users who might want to get into the market have $28K saved? (Maybe more than I realize, actually — I have no idea…)
Did anybody take a hard look at last month’s IndyMac bank run?
The people waiting in line to get their money were some of the few Americans with savings.
Most every consumer gobot watching the spectacle on tv, only wished they had $100k to be concerned about…
How many of your friends and family could come up with $5k in cold hard cash, tomorrow?
All of my immediate family members, only because we are all foolish savers (not residents of Richistan).
Maybe I should call the consumers @ large:
“Goboughts”
(tip of the hat to Karel Čapek)
“How many of your friends and family could come up with $5k in cold hard cash, tommorow?”
Are you advocating cash, perchance?
It is still useful, for the time being.
“It’s still useful, for the time being.”
Useful? Would you agree that cash is the Ultimate Solution in solving one’s financial problems?
Every god has his day.
We can argue about exchange rate fluctuations between different forms of cash, but gold, FOREX and Uncle Buck are all cash in my asset classification system (although gold and FOREX must generally both be converted into dollars in order to spend these forms of cash).
“(although gold and FOREX must be generally both be converted into dollars in order to spend these forms of cash)”
Dollars seem to be the only currency not needed to be converted into dollars in order to be spent. Everything else must endure this conversion process. That sort of makes cash the king, does it not?
A lot of the IndyMac customers standing in line in fact did NOT have over $100K in their accounts, they are just being completely spooked and wanting to take their FDIC-made-good money and throw it into another bank that has not been FDIC-made-good, thinking that it will be safer, despite the obvious contradiction as I pointed out when I posted that I have a $50K CD at IndyMac. Funny thing is some customer was quoted as saying she wanted to take her money and open an account at ….. WaMu.
Talk about not doing your homework.
Depose something happens?
“Except how many end users who might want to get into the market have $28K saved? (Maybe more than I realize, actually — I have no idea…)”
IMO the next round of buyers is people who have graduated, or will graduate, college after 2005. This group of people who haven’t bought yet (for the most part) are having the *crap* scared out of them by this crash. My though is that they’re learning how important it is to save, and they will start doing so, if not already. Then when the true bottom hits - starting about 3-4 years or so from now, they will tentatively start buying, and they will have saved the 20k-50k or so for downpayments.
Student loans are like a later-day Yap Stone around the necks of many…
http://www.antoranz.net/CURIOSA/ZBIOR3/C0310/10-QZC08007_ART27-18-182_Yap-stone-money.jpg
When you’re $50k in the hole after they turn your tassel, it’s hard to imagine having $20k to 50k for a down payment anytime soon?
Unless they have student loans.
Which they all do.
Yeha, school loans kill that idea. I feel that I’mtypica of the next round of buyers … but very tentatively. I’ve been paying the school loan payments for so long, I’ve been forced to live below my means. I’ve never bought a home and am finally moving up in my career and saving money (keeping my spending the same as before as much as I can). Finally finally finally feeling like my head is above water. But it’s going to take a low price to get me to bite.
Don’t think the majority of folks have much in savings and the ones inline at Indymac sure didn’t look affluent enough, just really concerned about the $ they had.
Clerk at a dept store kept marketing the dept cc and I refused,said I only used debit/Cash and the marketing continued..but but but you will save an extra 20%.Many this person was good, but I held firm.Nope, just cash. If I don’t have it, I don’t buy it.
OPINION
Inflation Is a Clear and Present Danger
By BRIAN WESBURY
August 19, 2008; Page A17
The most painful and frustrating economic policy blunder of the past 50 years was the Great Inflation of the 1970s. Painful, because it was the catalyst for three damaging recessions (1973-75, 1980, 1981-82), all the while eroding living standards and seriously undermining confidence in America.
It was also deeply frustrating. Despite the teaching of Milton Friedman — which clearly explained that inflation was caused by too much money chasing too few goods — a combination of bad economic models, denial and political expediency allowed it to happen.
One would think that the odds of a repeat were low, and for 20 years, after Ronald Reagan and his Fed Chairman Paul Volcker had the courage to get inflation under control with tight money and tax cuts, this was true. Unfortunately, the lessons seem to be fading. Today, the U.S. (and through it the world) faces its greatest threat from inflation in 30 years. And as in the past, this threat is being met with denial and political expediency.
Inflation May Linger a Little Longer
“Two major ingredients are missing from the recipe that kept inflation so hot for so long in the 1970s: The Fed is more diligent, and organized labor is much less able to win higher wages.”
Is the Fed really more diligent than it was in the ’70s, or just more likely to hem and haw and gnash their teeth? Do they simply have more data points to snow us with?
in Europe organised labor IS able to win higher wages, despite wage competition from Asia etc. Wage increases were around 3-5% last year (slightly above official inflation), and in my country unions have already announced 4.5-6% demands for next year, while official inflation is just over 3%.
This cannot go on much longer (e.g. there is now a big clash on the horizon between unions and renters/people on social security), but only a few years of this is enough to make a good start on the road to Weimar.
In Europe the inflation problem is denied just like in the US (both in politics and at the ECB).
The Fed is only more diligent in that it sees the inflation and lets it happen provided none of the Big Players get hurt. That is the only thing they care about.
I also fail to see how skyrocketing prices with no wage increases doesn’t equal a serious problem. Oh, but since the only form of “inflation” is “wage inflation” I guess we’re fine if prices go up 15% a year on most things for years on end. Using their insane logic, everyone becoming poor is fine since it is not “inflation.”
And they wonder why nobody takes them seriously!
Never underestimate the power of the internet and somewhat instant learned reaction, which would have not been possible in previous depressions or recessions.
And this is the only time that we the public, have had the ability to say whatever we damn well pleased, as opposed to…
(say it was 1981 and I didn’t like what was happening in the economy. I could send a letter to the editor of my local newspaper, and he may or may not publish it, and reserved the right to shorten my thoughts…)
latest news
U.S. July building permits sink 17.7% to 937,000 pace
INDICATIONS
U.S. stock futures extend drop after economic data
By Steve Goldstein, MarketWatch
Last update: 8:42 a.m. EDT Aug. 19, 2008
LONDON (MarketWatch) — U.S. stock futures extended declines on Tuesday after housing starts dropped to a 17-year low and wholesale inflation rose more than forecast, underlying the twin tensions of faltering growth at the same time of rising prices.
…
The Labor Department reported Tuesday that U.S. producer prices rose by a bigger-than-expected 1.2% in July. Economists surveyed by MarketWatch were looking for an increase of 0.3% in July.
I cannot imagine that houses will stop dropping in value when they are still building almost a million a year!
Volker was Carters Fed Chairman. I love history rewrites.
Here’s the solution from Greenscum. We need more immigration.
http://www.nysun.com/editorials/greenspans-solution/84056/
Yeah, there you go, bring in even more immigrants. That’s the LAST thing this country needs. The absolutely massive numbers of unemployed current immigrants is staggering to say the least. I think Greenspan is suffering from senility, or worse.
He actually is advocating only bringing in H1-Bs to work in the hitech field (no huddled masses yearning to breathe free for Greeny!).
They obviously, will move to silicon valley, get jobs with google and purchase $700k homes. Thereby saving Northern Cali and the rest of the nation.
Fully Agree BB, Greenspan needs to retreat into irrational obscurity.
Agree. Greenspan ought to go flop his wobbly-chinned self down in a nursing home and mumble at the walls. Then the white-clad and ill-paid attendant–a grouchy illegal alien/former FB who just got foreclosed on–can take away his porridge and then slap Easy Al around with his colostomy bag, while shouting ‘No me gusta!’
That’s MY dream.
“Volker was Carters Fed Chairman. I love history rewrites.”
You are correct. Rewrites are attempted by clueless sloths only when convenient.
Volker was first appointed chair in August 1979. The term is only four years which means he was appointed by someone not-Carter in 83.
Paul Volcker, a Democrat[3], was appointed Chairman of the Federal Reserve in August 1979 by President Jimmy Carter and reappointed in 1983 by President Ronald Reagan.[4] Volcker’s Fed is widely credited with ending the United States’ stagflation crisis of the 1970s by limiting the growth of the money supply, abandoning the previous policy of targeting interest rates. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983. [1]
However, the change in policy contributed to the significant recession the U.S. economy experienced in the early 1980s, which included the highest unemployment levels since the Great Depression, and Volcker’s Fed also elicited the strongest political attacks and most wide-spread protests in the history of the Federal Reserve (unlike any protests experienced since 1922), due to the effects of the high interest rates on the construction and farming sectors, culminating in indebted farmers driving their tractors onto C Street and blockading the Eccles Building.[5]
Oh my word. Those facts are just plain…….. factual.
Got an email yesterday from my young go-getter relative. He’s buying up tax deeds in Fort Worth, and is looking for investors. Rehabs and then sells… Possible .09 to .30 on the dollar! He had some luck in Dallas earlier this year. Moved from SoCal last summer.
Not really tempted but I hope he does okay. How’s his timing?
Buy when everyone else is selling…
Better yet, buy when everyone else is panic selling…
I think it depends on each state’s law dealing with tax deeds. Some state tax sales wipes out all mortgage on the said property and can be a good way to get hold of properties, provided one does his homework adequately. So technically it is possible to buy a $5,000 tax deed sale on a $200K mortgaged property and be free and clear of all mortgage liens, if the bank doesn’t show up to bid for it. How often that happens in real life, I do not know.
that’s what I was wondering because he doesn’t say anything about mortgage liens. He says all the action is on the mortgage foreclosures, with tax foreclosures off the radar.
I’m reluctant to ask him directly because he might talk me into it…LOL.
I remember that scam from back in the early 90’s. IRC, you attended the introductory seminar for free, then had to come up with $1k for the 2 day workshop and books on how to do it.
This isn’t that formal. He’s just looking for money, LOL. Good kid though.
Question for deflationistas; why hasn’t deflation set in in Zimbabwae, when the economy (demand) has imploded?
HARARE (AFP) - Zimbabwe’s annual inflation rate soared to 11.2 million percent in June, state media reported on Tuesday quoting figures from the central statistical agency.
http://news.yahoo.com/s/afp/20080819/bs_afp/zimbabweeconomyinflation_080819072746
Because there is a massive difference between “printing more money”, and “lowering the price of money to below its free-market rate”.
The former is actual “inflation”; the latter is trying to “expand credit” which behaves like the former but is different.
Why is it different?
Credit can default. Newly printed money can’t default.
Hope this terse 101 lesson is clear enough.
Seems like they should have gone to a logarthmic currency system a couple of years ago.
In January 2007, as years of loose mortgage lending were about to send the nation’s housing market into devastating decline, Fannie Mae chief executive Daniel H. Mudd wrote a confidential memo to his board.
Discussing the company’s successes, Mudd said one of Fannie Mae’s achievements in 2006 was expanding its involvement in the market for subprime and other nontraditional mortgages. He called it a step “toward optimizing our business’
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081802111.html
“Discussing the company’s successes, …”
I wonder how that success looks through the lens of the rear view mirror?
I prefer the far-side mirror view…
(Objects in mirror are closer than they appear)
If it really was a private company, wouldn’t he be out the door already? In December 2006, there were estimates floating around of 20% defaults in subprime loans. Dec 18, 2006: 101 civil counts against the former leaders, and the board picked this guy? Why weren’t they gutted too?
The level of arrogant blindness here is… staggering.
BULLETIN
U.S. HOUSING STARTS DOWN 11% IN JULY, LOWEST LEVEL IN 17 YEARS
ECONOMIC REPORT
Single-family housing permits fall to 26-year low
Housing starts plunge 11%, payback for temporary NYC surge in June
By Rex Nutting, MarketWatch
Last update: 8:30 a.m. EDT Aug. 19, 2008
WASHINGTON (MarketWatch) - U.S. home builders sharply reduced the number of new homes started in July and dropped the number of new single-family permits to the lowest level in 26 years, the Commerce Department estimated Tuesday.
Housing starts fell 11% to a seasonally adjusted annual rate of 965,000 in July, close to the 960,000 expected by economists surveyed by MarketWatch. See Economic Calendar. It’s the lowest level in 17 years. June’s starts were revised higher to a 1.084 million annual pace.
Housing starts are down 29.6% in the past year.
Futures down sizeably this morning. And (gasp) - Reuters must have read my post yesterday since they used the headline “Futures fall on credit, financial sector woes” rather than “Futures fall on credit, financial sector worries”.
http://www.reuters.com/article/marketsNews/idCAN1952250220080819?rpc=44
The people selling the home down the block from where i rent claim they have a signed contract
buyers are paying 515k for a 2 bedroom 16ft wide attached on both sides
she said they are getting a fha loan and only putting down 10-15k
how is this possible? piti on a 30 year fixed will be $3500 a month easy plus utilities
you can rent for half of that
i will watch this one closely
MG:
Even if it was a 2 family for $515K would they find long term tenants to pay $1750 to rent it?
Unless they are going to convert the garage in front into an illegal apartment..it doesn’t make any sense.
The garage is in back and it is a small one family
people are really stupid
and the kicker is after these people have been trying to sell this dump for 2.5 years they are planning to buy another house right away in westchester
you guessed it gov’t employees!
That sounds like BS. I may be wrong but I thought FHA only went up to $471,000. Even if they can get an FHA loan that requires 3% down which is over 15k. Then there is 1.875 points for PMI (I think) along with the usual 1 -1.5 points on any mortgage. I would calculate the down money needed just for these items at over 26k. Add in taxes and reserves and total needed is probably over 30k.
Did anyone else hear the Morning Edtion story about resort towns, especially Flagstaff? Completely unironic statements about real estate doubling in 8 years (and implications that it will keep going that way because of all the baby boomers moving in) and there not being any jobs available that allow people to afford to live there. Evidently the retirees are going to live there without any public or private services. Amazing.
Sound or text here:
http://www.npr.org/templates/story/story.php?storyId=93709452
That sounds like it was written in 2005. I trust Ben’s opinion on what is actually happening in Flag way more than anything I read in that article.
When I lived there 15 years ago, there was a noticeable gap between pay rates and housing prices. I can’t imagine what it’s like now.
Other than NAU, government and Gore, are there any jobs besides tourism/retail?
If real estate prices doubled every 8 years the house I grew up in would currently be worth about $800,000. If put on the market today it would probably fetch about $160,000. I think my abacus dropped a bead or two on this one.
If real estate prices doubled every 8 years, the family house, built in the 1950s, would be currently worth almost $4 million. Even at the height of the boom, about 2 years ago, it wouldn’t have gotten even 10% of that price.
My parents house doubled at a period of about 11.1 years over the last 43 years. (10.4k to around 150k)
A bit of a cheat since that went through the 1970s, still… That kind of experience is why boomers know that housing “always goes up.”
yes I heard it it was like a time warp back to 2006. I see lots of foreclosed properties in Flag so I don’t know what the real deal is up there?
Don’t worry! Here in Maryland, it is not uncommon for houses in the wealthier counties (Montgomery, etc.) to sell for 10x the income of the police, firefighters, etc. Yep, we’ll just have whole states full of “rich” people swapping overpriced houses back and forth. Let’s see how well that is working out!
I heard that story. I kept asking my radio when Ben Jones would be interviewed.
WASHINGTON (AP) — Wholesale inflation surged in July, leaving prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.
The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.
http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD92LC5I00
10% inflation and the 10 year yielding 3.8%. So a real yield of -7%. Amazing.
You should start the RYI, Real Yield Index. Bond investors might appreciate that.
Don’t forget that 3.8% is really closer to 2% after taxes.
It’s a continuing flush down the crapper for the Big 3.
Truly pathetic…USA no more NUMBA #1, GI!
http://www.boston.com/business/articles/2008/08/19/amid_rising_gas_costs_buyers_of_us_brand_cars_less_satisfied
“Redfin analyzed more than 9,000 single-family home sales between April 15 and June 15 in Fairfax County, Va. (Washington suburbs); King County, Wash. (Seattle); and Los Angeles County. Seeking homes that sold for “a lot” less than the asking price, the company found that even in this distressed market, relatively few sold for more than 10 percent off the asking price. One conclusion: If you’re “lowballing” the seller, you’re probably wasting your breath 90 percent of the time.”
http://www.chicagotribune.com/classified/realestate/news/chi-re-umberger-builder-study-08aug17,0,7800109.column
Looks like there’s still a large supply of greater fools & where are these loans coming from?
They should have analyzed Loudoun Co - one over from Fairfax, and another DC suburb but farther out. Sales prices percentage averaged between 88.5% and 92.0% from March to July. Thus about half sold for more than 10% off the asking price. Certainly not “relatively few”.
A pity, what an opportunity lost. They could have said that home prices were decimated and actually have used the word correctly, for once.
I think all that has happened is that the flow of illegals into the US has slowed down, but is still positive.
Why believe any analysis done by a realtor group?
When things get bad economically in a guest worker country, the guest workers go back home.
Any idea of how many folks have gone back down under to the other Estados Unidos?
no they are all in queens nyc waiting for work
Yeah drive down 69th st near queens blvd….lots of them standing on the corners…..
I’m still amazed at all the construction and tear downs still going on daily in Long Island City……
I read in the paper in Dallas that 2 million have left already.
How would they know? Since these people are not registered in any way they must use some sort of proxy to figure this out.
Insurgents fighting back in the war on savers.
http://www.msnbc.msn.com/id/26270443/
“Two giant mortgage companies get into hot water over risky investments. The government steps in to throw them a lifeline should they need it. Hundreds of thousands of Americans buy homes more expensive than they can afford. Congress approves a rescue package. Troubles erupt at a Wall Street investment firm that made bad bets on mortgage investments. The Federal Reserve steps in and provides financial backing for the company’s takeover.”
“Meanwhile, tens of millions of people pay their mortgages on time, don’t max out their credit cards and put money into retirement funds. They may even save a little extra on the side. In return, they get rates on their savings that don’t even keep up with inflation. They also are witnessing the horror of their nest eggs shrinking as the value of their homes plummets and the stock market tumbles.”
Savers contribute nothing to the fractional reserve derivative ponzi fiat carry trade. There is a bill in Congress now to send seniors to the glue factory since they don’t have the decency to maintain consumption levels without money; proceeds will be used to improve the off balance sheet position of a bulge bracket firm which shall remain nameless.
Here in Norfolk, VA the biggest, nicest condo building that has been completed to date just made the news. The owners are selling the space that is currently leased to the only downtown grocery store. The article also mentions that 1/3rd of the building never sold.
http://hamptonroads.com/2008/08/retail-space-sale-norfolks-harbor-heights
“What we cannot permit is a collapse in the price of oil.”
Now on to other world events…
…China to use Tide detergent to clean up streets after 2008 Olympics …
citizens can use run-off water to wash clothes before it enters local river.
Venezuela to push OPEC cut if oil prices fall:
http://www.reuters.com/article/ousiv/idUSN1933371020080819
“Venezuela to push OPEC cut if oil prices fall”
Good, I hope they succeed. Higher oil prices will force us to transition into other sources of energy; lower oil prices will kill such an incentive.
Plus, the less oil dollars we export to others the better off we will be.
Since no U.S. politician has the guts to impose the much-needed political will needed to force our stated goal of the Seventies of making our country energy self-sufficient, perhaps we are served best in attaining this worthy goal if it is imposed on us by guys like Chavez.
If one follows this line of thinking then one must conclude that ultimately Chavez is acting as a friend of the U.S., no?
Reminds me of yesterday’s post about how Xcel energy fought the renewable energy ballot initiative in Colorado tooth and nail. Then once it was placed into effect they were able to meet it 8 years ahead of schedule and are getting ready to go way beyond it.
What really gets to me is how our captains of industry are quick to tell the minions that they must “embrace change” (actually code for lower pay) but when it comes to them having to change, they must be dragged kicking and screaming into the future. Whether it be windmills, better mpgs for cars, etc., they resist change as much as possible. I suppose that is why these clowns are executives and not entrepreneurs.
Don’t let him make the decision. Repossess his oil infrastructure instead. Has the same effect, and cooler explosions.
That is the best news I have heard in months! I hope crude goes to $200 before the end of the year and even higher next year!
Well, the Statesman is finally getting the plot:
Darker Days Forecast for Austin Real Estate
http://www.statesman.com/business/content/business/stories/realestate/08/19/0819reca.html
At the same time, big investment money is on its way: Real Estate Firm with $250 Million to Invest Moving to Austin, Nephew of President Bush Part of Investment Group Moving From Fort Worth:
http://www.statesman.com/business/content/business/stories/realestate/08/19/0819pennybacker.html
Hang on to your wallets …
The ‘Play and Pray’ Solution
By Allan Sloan
“…But let me tell you a little secret, folks. Even though they’re scurrying around like everyone else in this game, I think the crisis managers at the Federal Reserve Board and the Treasury have quietly adopted a technique that has helped us deal with previous financial crises — what I call the “play and pray” approach.
They don’t teach it in Economics 101, and none of the players dealing with the current meltdown will talk about it on the record. But it’s a time-tested strategy. Think of the mortgage crisis of the late 1970s and early 1980s, the bank problems in the early 1990s and the Asian contagion of the late 1990s. The idea: You play for time by keeping things afloat long enough for your prayers to be answered by the markets’ turning in the right direction. …”
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081802278.html
Wait and Hope or Play and Pray, it is the traditional method of dealing with things beyond control
Mind if I prey along?
FRE is down again, after being down about 20% yesterday. The largest shareholder is Legg Mason, with over 50 million shares. I have to wonder…why? Bill Miller is no fool, and he took a horrific beating in the stock over the last year and THEN he doubled down. If the Feds really pull the plug on shareholders (and it looks like they will) he will lose everything. So why does a smart guy stay in such a position? Does he know something we don’t?
Why do mopes stay in mutual funds when they know the market is going down?
Why do people dollar cost average when they know it is the poorest form of investing?
In Mr. Miller’s case it appears to be ego. He has done everything wrong and without discipline. It was a bad buy when he started and it is a worse buy now.
It’s mostly force of habit.
It truly is hard to teach a person new tricks after they’re all grown up.
How is dollar-cost-averaging the poorest form of investing? It has to be better than what most people do: buy high-flying fad stocks at their peak and watch them go down.
Reuv,
People are stupid, a person is smart. DCA is a lie that costs billions and billions of dollars each and every year. One of the DCA lies is long term investing eventually goes up. A nice idea, but the S&P500 has a 20% turnover each and every year. Companies fall out, get taken over, go out of business or a small company grow so rapidly that it is in the elite group.
So even in the Vanguard S&P500 fund the turnover is huge. History has shown that if one were to invest in the S&P 500 stocks for 1988 and stayed with those stocks instead of adjusting for the turnover, you would have exceeded the S&P500 average by 100% over the last 20 years. Going back to 1957 this has been true for every year.
The mopes say the S&P 500 returned 12.3% annually from 1980-2005 but make no mention of the 70% LOSS after inflation that investors ate from 1965-1980. People are stupid. By a simple market timing “Buy when it snows, sell when it goes”, the return is up another 50%. Why DCA into anything?
Buying high flying fad stocks is not the worst idea. The problem for all people is not knowing when to get out. To have success in the markets requires discipline. Plain and simple. Most people have no rules, no discipline. These mopes trust some manager and faulty logic. The faulty logic is the expected return from equities. By definition there is no more expected return from equities than from commodities or currencies.
Markets and market risks change, there is no single program that can absorb this risk. Sorry Reuv, I could go on but the DCAers will not change and will continue to believe their own lies.
I certainly agree with you wrt the big broad-market domestic funds! They are really no bargain, and they serve to inflate the broad-market! (Remember during dotcom 1.0 when legislatures were saying that the Social Security money should go into mutual funds! You know what kind of a stock bubble that would have fueled?!)
I don’t dollar cost average (except for metals!), and hold no domestic mutual funds. I prefer to hand-pick a set of low P/E dividend-paying stocks.
“It is the markets’ job to reallocate money from the ignorant to the intelligent, from the lazy to the hard working and studious; from the naive to the educated, and from the speculator to the investor.”
Mr. Barry Ritholtz
I agree.
And I certainly don’t think people “know” that DCA is the worst form of investing. Heck, they are being told by most mainstream advisors that it is the most appropriate for them.
Why do people dollar cost average when they know it is the poorest form of investing?
They don’t know.
I made a comment one day a few weeks ago about the dow tanking. A guy in my office started talking about how he didn’t care b/c he’s just gonna keep buying and buying (referring to his 401k…well actually it’s a school so a 403b) and the lower it goes that means he’ll be able to buy more shares with the same dollars. So when he retires, all those shares will have gone back up and he’ll have more shares b/c he was buying them when they were cheap and therefore retire with a lot more money as a result of stocks dropping now.
The people have been sold, primarily by our government leaders, that stocks are great and buying in all conditions is best.
Academics too.
Look at the number of crap papers on the subject of “dollar cost averaging”.
Plus, they don’t distinguish between the problems of saving via “cash flow” v. “lump sum”.
And yes, for the record, dumping money into the secondary market is saving not investing. In order to “invest”, you must play in the primary markets.
Try explaining that to the sheeple.
BWAHAHAHAHHAHAHHHHHHHHHHHHHHHHHHHH!!!
“The people have been sold, primarily by our government leaders, that stocks are great and buying in all conditions is best.”
Well, stocks and real estate too. If the stock market and the American Dream (when viewed as an investment) aren’t Ponzi schemes, I don’t know what is.
They both depend on masses of GFs to follow.
Well, stocks and real estate too. If the stock market and the American Dream (when viewed as an investment) aren’t Ponzi schemes, I don’t know what is.
Let’s be very clear here, long-term investing in real estate on a cash-flow basis is not a Ponzi scheme or part of the “Greater Fool” theory of investing.
We need to be careful with those broad statements… that’s how the sheeple become so ill-educated, when everything gets condensed into cliff-note format we lose something in the translation.
Legg Mason’s personel problems helped cost me the imagined value of several hundred thousand shares of stock once. (One of their guys decided to cross the street and try to take his clients with him.) Late 2002 was not the time to have a deal paralyzed.
Not my favorite company. Someone invite me to the weenie roast. I’ll bring my certificates.
Financial Data ‘on Steroids’
SEC to Junk Paper Filings, Require Interactive Online Reports
“…Within two years, the SEC will require all corporations and mutual funds to file using a technology called XBRL (extensible business reporting language) with the first wave beginning in December. This transition coincides with the agency’s plan to replace its document-based system, for collecting, analyzing and retrieving data, known as EDGAR, with an Internet-based platform, IDEA, short for Interactive Data Electronic Applications. …
To illustrate the system during a recent interview, Blaszkowsky sifted through volumes of financial information with a few clicks of his mouse, extracting data from several companies and creating a multicolor bar graph to compare the figures. Then he exported the data into an Excel spreadsheet. What took Blaszkowsky only seconds could have cost hours for a reader of current SEC filings. …”
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081802110.html
This will be of tremendous advantage and is sorely needed.
A stock screener in minutes instead of days of sifting through dark matter.
HAL: Let me put it this way, Mr. Amor. The 9000 series is the most reliable computer ever made. No 9000 computer has ever made a mistake or distorted information. We are all, by any practical definition of the words, foolproof and incapable of error.
It still seems like you’re going to have to do the legwork on the footnotes yourself. That’s where the gems are.
Still, any improvement is welcomed.
“…it is looking more likely that Lehman will have to write down the value of its mortgage and other investments to a degree that could wipe out all of the investment bank’s earnings.”
124 days ’till the Christmas Eve Company party…’tis the season to be jolly…
Lehman May Put a Prized Unit on the Block:
http://www.nytimes.com/2008/08/19/business/19lehman.html?em
GEEZ you are lucky I already had 2 of my long term clients say they are just going to give the employees a shopping day and some gift cards… 9 and 11 years ….and no official holiday party this year….that’s $1000 gone…and i’m hurting badly already
Most of us here got about $5k last year (and $10K the year before). Since we are on track for another year of record profits I can only assume that this year’s average bonus will be $2500.
Olympiagal,
IMHO, the sexiest hand gun in existence is the Thompson Contender. A single shot handgun with interchangeable barrels (.22 to .50, incl 357mg, 44mags and 410 shotgun). Fun to shoot and great to carry in the tractor. The only legal hand shotgun. Not legal in Cal, but it is so gorgeous that if you were to parade in just your shoes carrying this fine arm…aah a dream of beauty.
Does Olympiagal resemble Grace Jones?
http://www.virginmedia.com/microsites/tvradio/slideshow/tv_meltdowns/img_8.jpg
That’s what came to mind when I pulled up the Thompson Contender photo. Funny I pictured Olympiagal so differently.
lol
That would be very intimidating!
I sort of imagined this except with a Contender!
http://celluloidblonde.files.wordpress.com/2007/01/girl_wi_gun_left_5.png
Please don’t get mad Oly…..
“Comment by Olympiagal
2008-08-18 08:29:40
Oh, look at me. I’ve been deprived of trolls for so long that I’ve resorted to baiting fellow HBBers. Shameful, just shameful.
I’m sorry. Sort of sorry, anyway. Look, I’ll just go shoot someone, get it out of my system, and then come back in a better temper, okay? Okay.”
Comment by hoz
2008-08-18 08:35:55
“You know, I can’t think of nothin’ finer
than a fine naked woman holdin’ a gun.”
Franklin Figueroa aka ‘Frankie Figs’
Comment by Olympiagal
2008-08-18 18:00:54
Guess what? That’s right! I’m home again and sitting here and wearing silver 4 inch high-heels with rows of precious little rhinestones across the toes…..
Okay, here we go:
–Hoz, what KIND of gun? Be more specific…..
A fine naked woman in high heels with a Contender. My heart goes aflutter.
hoz:
Thompson Contender as “The only legal hand shotgun”? Not true.
Taurus Judge, .410 shotgun / 45 colt
Review:
http://www.gunblast.com/Taurus-UltraLiteJudge.htm
For sale:
http://www.impactguns.com/store/725327603177.html
Legal as any other handgun and does not require class III weapons license, etc..
-Danull
The Taurus Judge is kinda legal, but it is sold as a 45 that can chamber a 410. It does not have the shot disperser that makes the Contender so purty. The Contender is a shotgun that can chamber the 45, fire a shotgun shell with a beautiful 14″ vented rib and dispersal. Mine is the older one from 1968. I only have 6 of the available barrels.
I did not know about the Judge until you posted . Many thanks.
Interesting interactive spreadsheet in the WSJ
http://online.wsj.com/public/resources/documents/retro-HAGERTY.html
(Except I think the numbers are too conservative. I think it’s worse (or better in my book wrt falling house prices) than they show
Uncle Buck seems to have lost his sea legs. Foreign central bank buyers in absentia…day two.
the disconnect between supply and demand in gold and silver markets:
http://seekingalpha.com/article/91357-the-disconnect-between-supply-and-demand-in-gold-silver-markets
Just got off the phone with one of the more substantial retail coin dealers in L.A., and he barely had time for me, so swamped with customers was he.
No 1 oz Gold Eagles being available has spooked a lot of ghouls into wanting physical metal even more than they wanted it last week.
(The Gold Window: 1975-2008)
I rushed down to Ye Olde Barbarous Relic and Buggy Whip Shoppe to try to take advantage of this decline in the price of silver. Slapping a wad of greasy fiastcos on the counter I demanded several of the establishments’ finest silver buggy whips, posthaste. The shopkeep stabbed his finger at empty cases and demanded to know where he should get buggy whips to sell to me, or anyone else. Why, from the Mint of course, I replied. He laughed heartily in my face and stated that the Mint was closed, indefinitely. Then he bid me begone and suggested I not darken his doorstep again.
Shoving my wad of greasy fiatscos back in my pocket I shuffled out; without the buggy whips, without my sense of smug self-satisfaction, but with the firm knowledge that we are so very, very scroomed. Scroomed, I tell ya.
“No 1 oz Gold Eagles being available has spooked a lot of ghouls into wanting physical metal even more than they wanted it last week.”
This was the same marketing strategy used by the promoters of Beanie Babies.
Still bitter about losing your kids’ college fund on a leveraged beanie baby bet? Get your rally cap on; maybe beanie babies will go up $25; AU just did.
This was the same marketing strategy used by the promoters of Beanie Babies.
Oh please. PMs are not being sold as “limited edition” collector items.
Much of the alure of Beanie Babies was their scarcity, was it not? Is scarcity not the allure of these coins?
It was their collectability. The artificial scarcity (and it was artificial because they could make a 1000 beanies for every person on earth) was supposed to add to the collectability
Once the fad passed beanies were consigned to the dustbin of history. PMs on the other hand, have endured the test of time. While their value fluctuates, they have never been worthless, an important difference if you ask me.
King,
You are such a plush toy jester…
That’s a useful comment. After all, a 1 oz gold coin is manufactured in a Chinese slave labor sweatshop by the millions at a cost of a few cents, just like beanie babies, right?
They’re not making any more beans and cloth, y’know.
Hey.. gold dealers gotta make a living too, ya know.
the diamond market does the same thing.. vaults overflowing with mountains of diamonds but not released for sale.
Yep.
But there is no gold cartel a la DeBeers, is there?
Just came across this beauty.
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080813/METRO/808130360/&imw=Y
“The fact that a home on the city’s east side (Detroit) was listed for $1 recently shows how depressed the real estate market has become in one of America’s poorest big cities. And it still took 19 days to find a buyer.”
“The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn’t long until “the vultures closed in,” Upshaw said. “The siding was the first to go. Then they took the fence. Then they broke in and took everything else.”
“So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer’s closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.”
“While selling a home for the amount of change most people could find between their couch cushions is unusual, some abandoned homes in Detroit sell for $100; vacant lots can be purchased for $300. “My 14-year-old son could buy a block of Detroit property,” said Ann Laciura, senior servicing specialist for the Bearing Group.”
Is this a bottom?
“The buyer agreed to pay the full list price of $1, and planned to pay cash.”
My wife won’t let me buy a car worth more than a house with any future lottery jackpot winnings. (The obvious solution of buying a bigger house won’t be really feasible anymore, alas.)
In a similar vein, I don’t think you should by property for less than it costs to do the title search.
An expert on CNBC stated “The strong dollar is helping US exports”.
A month ago, “A weak dollar is helping US exports.” Both statements are correct since the only things exported in quantity are raw materials. Welcome to the third world economy of the US.
Fed’s Lacker Clashes With Paulson on Fannie-Freddie Strategy
“For my money I would prefer to see them credibly and demonstrably privatized,” Lacker said today in an interview with Bloomberg Television.”
“He agreed with former Fed Chairman Alan Greenspan’s view that the two largest U.S. mortgage finance firms ought to be nationalized, then split up and sold off.”
Montana’s unaffordability is finally making headlines.
http://www.newwest.net/topic/article/montanas_housing_affordability_dilemma/C8/L8/#comments
Note positive realtor spin about last in, first out (as if!) actually counterposed to lender comment about all of the crappy loans that used to be available but are no longer being offered. And 30% of buyers from out of state. Wow! That’s a 30% decline in the market, right off the top.
Montana: The Last Best Place.
HOUSTON–(Business Wire)–
Rick’s Cabaret International, Inc., the premier operator of
upscale gentlemen’s clubs, today reported record revenues for its
third quarter ended June 30, 2008 of $16.28 million with net income of
$1.83 million, compared with $8.45 million and $1.03 million,
respectively, for the same period last year….
Eric Langan, President and CEO, said: “Both our internal growth
and expansion by acquisition programs continue on course and we are
looking forward to a strong performance at Rick’s Cabaret Minneapolis
in our fourth quarter, which should benefit from the Republican
National Convention in early September.” …
Reuters
The republican party in the twinkie cities brings hard profits with a strong performance to Rick’s Cabaret. Ah the wonderful hypocrisy of the politicians brings joy to my heart. Now to bribe them the old fashioned way with photos!
(This is neither a recommendation to buy this stock or to purchase the services the company performs - I have done no research on this company.)
Hey Vozzie don’t know if you saw this!
“…AIG is, in fact, a trainwreck, and the market is only just waking up to this.
A note from Goldman analysts this morning might just be the wake up call investors need. For an idea of tone, let’s flash through some of the headers:
Don’t buy AIG.
A dangerous balance sheet posing as an inexpensive entry point.
There’s nothing to be feared except fear itself…and mortgages.
Raising capital: Ultimate number too difficult to quantify….
The central tenet of our “Don’t buy AIG” argument is simple: the intricacies of AIG’s business are so complex that management may not even know the extent of the company’s ultimate exposures, let alone losses… Thus, if management cannot accurately assess its ultimate exposures or losses, then how can one expect the rating agencies to do so?…
Goldman won’t say it, but we will. AIG is going the way of the monolines… but on a much larger scale. ”
FT Alphaville
http://ftalphaville.ft.com/blog/2008/08/19/15211/calling-all-cash-please-report-to-aig-fp/
And so it spreads contaminating everything it touches, the blob.
OBAMA’S CHALLENGE: MORTGAGE EMERGENCY
Eds. Note: Founding Editor Bob Kuttner has just released a new book, Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency. It’s already receiving wide acclaim; Hendrik Hertzberg writes that it is “riveting, brilliant, and persuasive,” though he neglects to mention either Bob’s dashing good looks or air of mystery. In any case, Bob will be blogging about the book and on economic issues in the campaign until the election. We’ll bring you those posts here on TAPPED.
The Dodd-Frank bill to brake the collapse in housing values, signed by a reluctant President Bush just three weeks ago, is already far too weak to fix what’s broken. The latest statistics are staggering. According to the firm RealtyTrac, there were 271,171 foreclosures recorded just in July. The Congressional Budget Office estimates, not disputed by Senator Dodd and Congressman Frank, project that their bill, now law, will save just 400,000 homes from foreclosure over the next three years. Two to three million mortgages are projected to default this year along.
And the problem is not just the foreclosures, but the effect on the broader housing market and on consumer purchasing power. Since most of the net worth of middle income Americans is their home equity, innocent people are being wiped out financially.
Both Frank and Dodd tried for much stronger legislation, but were stymied both by Republican resistance and by opposition from the Democrats’ own Blue Dog Caucus of fiscal conservatives. Frank now says that much stronger medicine will be needed. More money to guarantee refinancings. More money for local governments and nonprofits to buy foreclosed properties, and get them re-occupied with first-time owners and renters, so that abandoned houses don’t drag down property values next door and in the surrounding neighborhoods.
Money here, money there, money grows on trees everywhere…