Bits Bucket For August 20, 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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The next credit crunch…
Our easy access to plastic is about to dry up - and with it our ability to fake living the good life.
(Fortune Magazine) — We made it through the bursting of the Internet bubble and now the bursting of the real estate bubble. Next we may be approaching the end of the most worrisome bubble of all: the standard-of-living bubble.
That conclusion comes from the latest data on credit card debt. It’s growing fast, but the problem is bigger than that - and to understand what it means, we have to take a few steps back.
http://money.cnn.com/2008/08/18/news/economy/Colvin_next_credit_crunch.fortune/index.htm
“Creditcard Holders Bill of Rights?!?!?!”
Huxley and Orwell are overrated!
As for wage inflation - good luck. Don’t count too quickly on retiring Boomers. Except for the World Wars - when has there been a shortage of workers in America? Don’t discount immigration incentives either.
While working in aviation last decade they kept telling us about a dearth of skilled mechanics to be caused by retiring Korean War-era Vets. That shortage never really materialized and when 9/11 came along there were still layoffs aplenty. Then there was the dot bomb-era - in which the MSM endlessly harped on a whole new shortage of web talent - and how did that work out?
The PTB is globalizing wages and credit cards were the Astroglide.
“The PTB is globalizing wages and credit cards were the Astroglide.”
Absolutely, clearwater john. That’s why housing has no choice but to come down. The one segment of the economy that is uncertain in mind, is the higher skill levels in medicine.
Sorry, “edgewater john”. I need a coffee IV.
Even those can be practised almost anywhere. I have heard of trips to India to get an open heart operation for about 20% of the cost of one here, and most doctors are severely limited in the “approved” procedures that they can perform here without being sued.
I think that some procedures will have to be done outside the US due to restrictions, and some really advanced research will also have to be done outside the US due to fundy interference…
So, no, not even higher medicine is safe. The only thing that we can do, is not to buy from companies that outsource. I have stopped buying Dell computers and servers for that reason. I will only buy (ironically) made in US products, even if they carry a foreign name. I drive a Honda Element, that is 90% made in South Carolina, and is one of the best cars I have had, compared to my shitty Montecarlo, made in Canada…
RE: I drive a Honda Element, that is 90% made in South Carolina,
My best bud bought one after wandering car lots for a couple weeks and noting how totally abysmal the build quality relative to the pricing of domestics have become.
I thought it a pretty neat rig myself, what with a 100k maintenance schedule, 4×4, and 5sp manual @ 24mpg.
But as he said, “this ain’t no chick magnet!”
Great. Made in South Carolina. But all the profits go to Tokyo.
Yes, the profits went to tokyo, but at least some money made it to the south carolina workers that actually built a pretty decent product, unlike the big three’s profits…. ooops, nope, no profit there, and their jobs…. ooops, offshored to Mexico and Canada….
The big 3 are getting killed by really, really dismal management on one hand, and really bad unions on the other. Sad to see it, but we will be better off once they are finally killed off, and some new, exciting young company comes along to take their place.
Here is hoping, but after the 1980’s chrysler debacle where they were deemed to “large to fail” I think that we are stuck with ugly, mediocre, badly build domestic cars.
Bronco- As opposed to the losses going to Detriot?
It doesn’t matter as no corporation pays profits on it anyhow. It is the velocity of money that matters. If $’s are being paid in S.Carolina, that get recirculated in that economy.
The supply chain in Honda also supports US companies and the velocity of money in that region.
Believe me, I am not defending the American automakers by any means, just saying that the impact of decisions is not as direct as one would like.
Great. Made in South Carolina. But all the profits go to Tokyo.
Not really. Some of those profits come back into my Roth IRA. Some might come back to your own 401k if your mutual funds own any HMC, which is pretty likely.
If the profits go to japan thats fine, I`d rather have the jobs, they are better than corp. profits for this country. Look at alot of american companys, like stanley tools are based in off shore with alot of other U.S. companys.
Lane
the profit doesn’t necessary go to Tokyo, get a piece of the action yourself, buy NYSE: HMC. At 117B market cap, I would expect more American money at stake in HMC than GM @ a pitiful 5.68B.
I hear what your are saying, but Dell sells a shitload of computers in other countries, why should they not be allowed to offshore production business to those same countries they sell to?
Dell makes the best computers with the least amount of problems and they have great support. Thats what counts. HP and Compaq sucked before they merged and they suck even worse now.
Of the few American cars I have owned, they all broke down. I have never had a problem with my Toyota’s. Ever.
My point is, pandering to the Big 3 just to be “American” does more harm than good. Buy the best product at your price point no matter who makes it will force the bad companies to die so better ones can move in.
Speaking of wars - ran across this the other day - can’t resist sharing -from the U.S. DDR (U.S. Department of Doomed to Repeat):
On Interventionism - Excerpt from a speech delivered in 1933, by Major General Smedley Butler, USMC.
“War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses.
I believe in adequate defense at the coastline and nothing else. If a nation comes over here to fight, then we’ll fight. The trouble with America is that when the dollar only earns 6 percent over here, then it gets restless and goes overseas to get 100 percent. Then the flag follows the dollar and the soldiers follow the flag.
I wouldn’t go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.
There isn’t a trick in the racketeering bag that the military gang is blind to. It has its “finger men” to point out enemies, its “muscle men” to destroy enemies, its “brain men” to plan war preparations, and a “Big Boss” Super-Nationalistic-Capitalism.
It may seem odd for me, a military man to adopt such a comparison. Truthfulness compels me to. I spent thirty-three years and four months in active military service as a member of this country’s most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle- man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism.
I suspected I was just part of a racket at the time. Now I am sure of it. Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service.
I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912 (where have I heard that name before?). I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.
During those years, I had, as the boys in the back room would say, a swell racket. Looking back on it, I feel that I could have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”
Damn good post.
Excellent post…
I recommend “Confessions Of An Economic Hit-Man” to see the business side of the arrangement in practice, circa 1970-1980’s
http://www.amazon.com/Confessions-Economic-Hit-John-Perkins/dp/1576753018
That was a great post housegeek.
I went to Wikipedia to learn more about the Major General and also learned about this which is frightening in itself:
“The Business Plot (also the Plot Against FDR and the White House Putsch) was a political conspiracy in 1933 wherein wealthy businessmen and corporations plotted a coup d’état to overthrow U.S. President Franklin D. Roosevelt. In 1934, the Business Plot was publicly revealed by retired Marine Corps Major General Smedley Butler testifying to the McCormack-Dickstein Congressional Committee. [1] In his testimony, Butler claimed that a group of men had approached him as part of a plot to overthrow Roosevelt in a military coup. One of the alleged plotters, Gerald MacGuire, vehemently denied any such plot. In their final report, the Congressional committee supported Butler’s allegations of the existence of the plot,[2] but no prosecutions or further investigations followed, and the matter was mostly forgotten.”
Congress found the accusations true but nothing was done?
“Congress found the accusations true but nothing was done?”
There was no need to, FDR towed the line and the “state” survived one of its greatest crises.
Not to defend, etc, but A. Harriman & Co didn’t merge with Brown Brothers until 1931, bringing the Harriman-Bush line into the picture. But have always loved that quote and reference it when explaining the term Banana Republic.
RE: I was a racketeer, a gangster for capitalism.
Pretty heady stuff, housegeek
You should be writing a book.
Your perspectives are very applicable to the times.
Damn this is a great blog!
I can see his point. But how do you keep a military that’s up to the job of home defense without a little “practice” now and then? Seems like it’s all or nothing. We were barely able to pull ourselves together for WWII.
Machiavelli said it was stupid to let wars come to your shores before you start to fight. Fight them somewhere else. But I don’t like this level of entanglement either. Wish we could find a happy medium.
Today, this guy would be held for treason, branded as unpatriotic, and never see the light of day in a court of justice…but hey, Cheney-Shrub, now there’s a patriotic legacy, their “legacy wars” have nothing to do with military supply corporations or oil, that’s just a coincidence…their goal is simple… make Islamic people around the world live & behave like Christians…seems like a worthwhile endeavor…how much American taxpayer money is readily available for this effort & for how long? Hey Condi, how is that eternal “Middle East Peace” agreement going?
I believe in adequate defense at the coastline and nothing else. If a nation comes over here to fight, then we’ll fight.
that was in 1933
it’s not coming back
Outstanding Post !!!
Wow ,what a post that was . So ,what do people think about us getting involved in World War 2 ,after all Japan did attack
our shores . Also ,some people could say that 9-11 was a attack on our shores .
The idea that Americans can change other Countries into Christian Nations is the part that seems so foolish to me . While America was the envy of the World for a number of decades ,it never seems like other Countries want to adapt our Constitution ,
or our Bill of Rights as much as they want to adapt our standard of living .The original concept of freedom from oppression from the government and right to the pursuit of happiness went a long way toward the creation of the strong middle class in this Country .Wall Street is becoming very oppressive with it’s demands for taxing their loss .
The general wrote/spoke those words in 1933. That was before cruise missiles, ICBMs, nuclear warheads, stealth aircraft, and aerial refueling. Oh, and no aircraft carriers either.
Times have changed.
Absolutely excellent post! Wow.
I can get a multifunction/page web site, made,hosted for a year, registered for $ 200
Visa and Mastercard are Too Big To Fail! The 5% of Americans who actually add value to raw materials, provide jobs, and/or save money will have to bail out folks whose entire source of “income” is lines of unsecured credit! America depends on it!
(And I’m not joking. Sadly, I’d bet that this will happen. It’s already happened indirecly, because nobody seems to distinguish FBs who went on a HELOC spending spree from the few percent who had only one mortgage and may have actually been bamboozled by a loan agent.)
Reuven : From what I understand, Visa and Mastercard don’t issue the debt. It is the banks or other financial institutions that hold it. If someone defaults on their card, the banks take the hit. Visa and Mastercard are middle men.
Visa/Mastercard will never fall. First will be C, then BAC and JPM.
Back in the 70s, they were saying “There’s going to be a shortage of mechanics when the WWII guys retire………”
Four hundred years from now, there’s going to be some recruiter sitting on Titan or Europa, (or some planet out there) saying, “Yeah, there’s going to be a mechanic shortage when all those guys from the Alpha Centauri-Romulan Clone War retire…….”
IMMEDIATE HELP PLEASE !!!!
I’m renting a place in Martinsburg, WV. I used to be on yearly lease but went on month to month for the past 6 month. We are a family of 4 and have been in the house for 3+ years.
The landlord has been pressing hard for me to buy for the last year or so but would not reduce the price. Now looks like the bank is foreclosing and may be putting it for auction at the courthouse.
It means I’ll have to vacate the house or I can stay for another 3-4 months and then move in my own house. I can pay the rent to bank also. I was told that a letter may be coming by the weekedn with 15 days notice to vacate. Where do I go with kids in 15 days?
I’ve been paying my rent and all dues religiously. Maybe the landlord was pocketing it and not paying the bank.
Please advise.
Stop paying rent immediately.
I agree, stop paying rent. Obviously you have lost whatever security deposit you have. Start looking for another place to live.
Spend $200 (or probably less) and talk to a local knowledgeable real estate lawyer. You very well may be able to drag it out long enough to give yourself time to do a normal move instead of being forced out by the sheriff.
And you should probably start getting ready to pack up, just in case.
Move
Please note that you did not hurt yourself by going month to month. The lease is between you and the landlord, not you and the property, so even if you had had a lease, you would have been in the same situation. A lot of people on this board agree that the renter should be able to stay in a house if they have a lease and the bank forecloses and isn’t going to sell it immediately, but I don’t know of any state where that is the law. Just wanted to make sure you don’t feel guilty about not renewing the lease. It wouldn’t have fixed this.
There should be a lot of places for rent out in your area, though many of them may be on the verge of forclosure too. Look for an older place that the owner has been using as rental property for a long time (a decade or more would be best). People will be delighted to find someone repsonsible. Checking with a lawyer is good, but check craig’s list for rentals too. You may be able to get yourself a good deal. But you will be in a better bargaining position when you know that the sheriff isn’t going to put your furniture on the curb in 15 days. Do it. If nothing else, a local real estate lawyer will know how backed up the sheriff is with forclosures. Even if the court order is effective immediately (unlikely), it could be months before they get to you.
offer to pay into escrow ,but only to the bank
rents are falling fast too
..
I bet your scumbag landlord is a WVU fan/grad.
GO HERD !!!
..
Marshall is the herd; WVU are mountaineers. This does sound like something a Marshall alum would pull.
MM,
This is a link to WV legal aid. You might be able to find out more about your rights from a quick call. I’m sure you’re not the first person to have this happen.
http://www.lawv.net/Home/PublicWeb/About
They have an office in Martinsburg.
If that doesn’t work, a call to all the local/regional newspapers and tell them your story, the bank may not want that negative publicity.
I don’t know what the laws are in WV, but 15 days seems ridiculous.
I can pay the rent to bank also. I was told that a letter may be coming by the weekedn with 15 days notice to vacate.
you can stay and pay rent to the bank (How do you know that?) while a letter threatening 15 days to vacate also came..
Who sent that letter?
“IMMEDIATE HELP PLEASE !!!!”
If everything else fails and you are forced to move right away, pack your stuff in a POD and stay with family or friends or at an extended stay hotel or corporate apartment until you find another place. It sucks in the short run and will probably cost you more than you bargained. However, it’s much cheaper than getting stucco.
This is what COURT is for to present your case the landlord STOLE your security deposit…
I agree stop paying rent asap……The landlord can not lock you out or cut off your utilities Its ILLEGAL in all 50 states call the police on him asap…and have him arrested….
But DONT spend the money…..
It would be wise to look for a new place to live, and move asap….but the landlord stole your deposit…so no hurry.
Remember if he harasses you or threatens to forcibly evict you…the POLICE are your best friends.
I guess what i am saying is
we live in AMERICA and after the 15 day notice they would have to sue you in court, you get a court date and let a 3rd party a judge decide the outcome
You know Banks might just PAY YOU to move..no kidding, just leave the place clean and nice so they can show it
Just make sure the landlord doesn’t turn into a drunken redneck and tries to lock you out or cut off the water
It is Illegal…no if ands or buts
To be forcibly evicted you need to LOSE in court and a Sheriff or Marshal with a court order to evict in hand…then you are skreeewed!
I don’t have much advice to give you apart from contact a lawyer to find out where you stand. It is unclear if you have 15 days or 3-4 months.
The other thing you may want to consider is go public. Get a TV crew to give bad PR to the bank.
If you have months, stop paying rent and look for another place. Your landlord has f***ed you but you’ll have to accept it and move on. (You may also get cash for keys from the bank..)
I doubt anyone here has the knowledge to properly advise you so I wouldn’t give what anyone says here much weight. I don’t know the laws in your state. In Cali if you pay the bank rent or the new owner they are obligated to return your deposit. My opinion, consult an attorney or go to the official WV website and find out the landlord tenant laws for your state.
the next bubble is “provenance” on antiques road show.
Headed For Stagflation
How do you unwind close to $3 trillion in bad debt, and who eats the loss?
If its “the taxpayer”, are you willing to pay 30-50% more for everything - forever?
Oh, your wages won’t go up either. If your purchasing power deteriorates by another 30-50%, will you be able to feed, clothe and keep your family and yourself warm in the winter?
Best Wishes!
P.S. 15% interest rates are in the bag
But here’s the cool part - doubling the price on everything won’t affect the kleptocrats, so that is the path we’ll take.
As for the commoners, I think the response from on-high will be “let them eat cake if they have no bread.”
Stagflation is inflation without wage increases to maintain the public’s buying power!
Got food and energy?
Best Wishes
I believe wjk is new here because he appears not to know that we’re entering a period of DEflation.
One of my short positions is COF (Capitol One Financial). The credit cards defaults will be the other shoe that drops.
This will be realized when the mob appears outside your door and asks “what’s in your wallet?”.
To which you reply “Not a god damn thing”.
Sitting and waiting…………….
Mike
I’m short COF as well - been so for some time, so fairly much ahead at this point, but anticipating even more.
As CC limits are lowered defaults will become more common, because people will find that they have to use their own money to buy things, and when they do they’ll find that they all of the sudden have nothing left in their checking account - and then whoops - just got that big CC bill that we just can’t pay. Wait - you mean credit card debt isn’t secured? If I default then I don’t lose anything - just a hit on my credit rating (which is already shot due to my recent foreclosure)??? Sign me up!!! (rrrriiipppp)
Exactly. Once someone walks away from a mortgage, everything else looks easy. And even if bankruptcy is no longer available to them, how are banks going to enforce millions upon millions of small judgments? It can not be practicable to chase down five million people and attempt to attach their wages…
Marking unsecured debt to market - a really scary idea.
Plenty of collection outfits that will hound them until judgment day. Future credit card borrowers will pay, too.
There were people complaining recently about their credit card limits being dropped unexpectedly, screwing up their plans to finance little Ashley’s expensive preschool at 25%.
If you can’t live the high life anyway, why be house poor too?
Could there be a sudden crystallization of thought coming where the folly of too much debt becomes so crystal clear to even the debt bingers that they suddenly see the light? (Causing another cascade of foreclosures, defaults, and whining: Our culture made me do it!)
my credit cards having been giving me more money lately
BOA just raised my limit again
then again i charge quite a bit and pay it off every month
the thing is even if my credit cards were terminated i could still live my current lifestyle no problem
not many can i believe
I used to employ my shredder 3 to 5 times a week, with credit card offerings, but I haven’t got one single cc offer in months!
I still get 1 or 2 everyday…
I recently contacted Capital One to get a credit card, without having received an offer in the mail. They seemed confused by this. Apparently the only way people get credit cards is when they mindlessly respond to an offering, as apposed to doing research and making an informed choice.
When the roving hoards of starving masses arrive at my door I will meet them with pitchfork in one hand, oil torch in the other. Together we will march down to the better part of town to vent our frustration, only to be dispersed by teargas, returning home to eat cold beans from a can. Mmmm, beans.
We of the better ancient suburbs will be out scouting rioters kitchens. Look dear: beans!
Others, armed with ready cash at hand, will offer to buy, for pennies-on-the-dollar, the worldly goods of the pitchfork bearers as they search for ways of paying for those cans of beans.
Those worldly goods, which were so desirable not so long ago, might make one the subject of contempt amongst pitchfork bearers.
During the Great Depression, those that had wealth went to great effort to act as if they didn’t…
It is excellent cover to be in the roaving hoard; hence my enthusiastic pitchfork motions.
My beat up chariot looks just like their loan jalopies…
I can’t help but imagine this performed by a young John Cleese & company.
***********
When the roving hoards of starving masses arrive at my door I will meet them with pitchfork in one hand, oil torch in the other. Together we will march down to the better part of town to vent our frustration, only to be dispersed by teargas, returning home to eat cold beans from a can. Mmmm, beans.
I heard there’s a twinkie factory in Natick if you get sick of beans.
Nice Family Guy reference!
I keep dreaming of the day that Capital One goes belly up. An end to those damned commercials for one thing.
I live close to their HQ in McLean VA, and that thing is a palace. They spared no expense when they put that thing up, and that all came from the jacked up interest rates and fees that they were charging people.
i hate capital one
they purchased my bank for checking (north fork bank)
and now thewy have replaced all the awnings and the city is filled with capitol one branches
they suck and when i move in the spring (to a new rental)
i will close my account and start with a new bank
atms always broken, long lines to do anything and crappy web site as well
capitol one can go suck wind
I’ve been known to write nasty things all over the papers that their offers come on. Then I use the postpaid envelope to send the whole kit and caboodle back to them.
I used to save them up and then switch them around and send them back in the post paid envelopes. citybank gets capital one offers , wamu gets countrytwide, etc.
I cant wait for HSBC to leave hope it happens. My wife and I are in a pissing match with them. They didnt post a payment on time and jumped the rate from 0 to 30%. That has stared a six month pissing match.
You will lose, guaranteed, google them. They are a real bunch of a-holes, they do this on purpose and don’t want to resolve the issue. They just want to tack on more fees. My daughter’s BF had a Best Buy credit card from HSBC. They are jackasses.
The percentage you’re paying
is too high-priced
while you’re living beyond all your means.
And the man in the suit
has just bought a new car
with the profit he’s made off your greens.
An awesome tune from Traffic, with a very apt lesson.
Great song, the source of my handle, and actually, my first post almost 2 years ago. So appropriate.
Favorite band. I have all their albums and no turn table.
Life seemed so much simpler @ 33 & a 1/3rd revolutions per minute.
The Vikings attacking Capital One offices…..sounds like a SNL skit!
What did people do back in the day (1960’s) before they were allowed to accrue substantial credit card debt that never went away?
Back then we had “Layaways”, a payment plan in which a buyer reserved an article of merchandise by placing a deposit with the retailer until the balance is paid in full.
Quaint, eh?
Actually paying for something in entirety, before you got possession of it…
I bought my first set of golf clubs at KMart on lay-away. 5 bucks a week for 6 months.
Did you have to go to the store to make the payments? If so, that would be a great way for the store to keep up foot traffic as well. People are tempted every time they go into a store.
Layaway, now that’s a memory from my childhood. My parents used it for back to school clothes. I would love to see it comeback. It taught me a simple lesson of sacrificing for a bigger cause. We were 4 kids, and didn’t have much $.
I remember my mother putting clothes for school on layaway in the 60s; bought them once a year. She did the same for Christmas presents as well.
I bought our wedding rings 3 years ago on layaway. It was actually really fun to go in and see them every couple weeks and chat. My friend recently bought some music equipment the same way. I think the mom and pops still operate this way in some places.
I agree, great lessons to be learned.
I’ve purchased musical equipment on layaway within the past decade.
“Quaint, eh?”
Hmmm. Cash is quaint. I like the sound of that.
I feel certain that your limited edition rectangular pieces of paper will emerge unscathed and retain their value in some form, be it a place to scribble notes on, or for making tiny paper airplanes, or the odd bit of origami.
Annnnndddd… the beat goes on.
During the 1990s, I worked in a bicycle shop that offered layaways. And, even during that heady era, people still knew what layaways were. And they used them.
I am not short COF. I won’t go into the balance sheet to try to explain, but it is in a stronger position than about 500 other firms.
On relative performance, buy COF short others. I am not long COF either.
Can you recommend some credit card shorts, hoz?
Mortgage fraud lands Chaska woman in federal prison
http://www.startribune.com/local/south/27156954.html?elr=KArks7PYDiaK7DUvDE7aL_V_BD77:DiiUiD3aPc:_Yyc:aUU
Hein knew about the secret escrow account. On Aug. 13, 2003, she wrote a check from the account for more than $134,000 and used it to purchase a home.
Hein was sentenced on July 14 to two years probation.
No mention of restitution, but I would think that stealing 134k would get more than 2 yrs probation. She must have been helpful to the conviction of her boss to get merely probation. Then again, our judicial system still takes it easy on most white collar criminal scum.
chaska con?
I am left wondering how they were caught.
Perhaps the boss complained to the police about his CFO stealing 134K from his secret escrow account
More NPR reports on resort towns like Flagstaff this morning. Evidently the way people will deal with workers not being able to afford to live in these places is by leaving the wealthy retirees to enjoy themselves and moving a few dozen miles out of town to the next nicest places. Story didn’t really mention costs of commuting. Oh, and medical professionals and college professors making six ficgures are included in the ones being priced out.
http://www.npr.org/templates/story/story.php?storyId=93769999
They also mentioned that it is Ron Paul’s birthday today.
Mine, too, but that wasn’t on the radio.
Polly-Happy Birthday to you.
If you’re not 39 yet, just remember this advice. Any birthday after 39, in technically an anniversary of your 39th. So 45 becomes the 6th anniversary of your 39th B-Day.
Hope your birthday is special.
Happy Birthday, Polly. I would guess age 32. Treat yourself to some cake. Hopefully by this time next year you can buy a nice house for $200K in D.C.
32? Aww…that’s nice. I look a bit younger than I am, but most women I know seem to. Maybe we just have outdated ideas of what a particulat age looks like. The only women I know who “look their age” are the ones with pale skin (blond or not) who spent a lot of time in the sun when they were younger (sports or lying on the beach). I’m less melanin-challenged than some and math team isn’t really an outdoor sport. My dad passed for a decade younger than he really was his entire time out in silicon valley. That was a little weird. He never hid that he had a daugther who was a lawyer or a younger son who was a PhD student/college professor. You’d think the folks in CA could count backwards to figure out that when mom talked about his upcoming “special” birthday, she was talking 60, not 50.
I just wish I had been as content with myself when I was 32 as I am now. That would have been awsome. I have decided that this is my year to collect some more good people in my life. Net friends are nice, but I’m settled in this area. Time for some roots. Please note, roots means people and activities, NOT a house. Not yet. Just ask pndering the mess. Montgomery county, MD has not capitulated.
Whoah! Happy B-day to you and RP. Twins?
No, I am substantially younger than that, though I have reached the “anniversary of 39″ stage. I’m 43.
Happy 43rd birthday to you. Enjoy some cake, because in your early 50’s, it becomes a cake eaten/treadmill time equation.
I was never a sun worshiper either, and I know what you mean. Not drinking or smoking helps a lot too. Evidently, the gene fairy was good to your family. Lucky you!
Anyway, HAPPY BIRTHDAY!
Polly,
Happy Birthday. It only gets better. I’m 52 and loving every minute.
I heard that NPR story too. Once again, I asked my radio where the Ben Jones interview was.
Happy Birthday, Polly!!!
”…to eat cold beans from a can.”
A bean in every can. The new and improved New Deal.
blah, blah, inflation, raise rates, blah, blah. Translation: as long as we are talking about inflation in trendy settings, we won’t be doing anything about it. Now, which was is the golf course?
ASPEN, Colo. (Reuters) - The U.S. Federal Reserve must be ready to take action if slowing economic growth fails to curb inflation stemming from higher food and energy prices, two top Fed policy-makers said on Tuesday, indicating that higher interest rates may be needed.
http://www.reuters.com/article/ousiv/idUSN1927367720080819
They should be required to give these speeches in places like East St. Louis, where the questions might be more pointed and the effects of inflation felt more keenly.
How many East St. Louis locals would be in the audience?
Who feels inflation more, residents of Aspen or ESL? It would be standing room only. And you would have to fight to get some pan-seared tuna.
DETROIT — Goodyear Tire & Rubber said it would close 12%, or 92, of its company-owned U.S. stores and cut 600 full- and part-time jobs as the U.S. economic downturn put more pressure on the company.
http://www.usatoday.com/money/companies/earnings/2008-08-19-goodyear-tire_N.htm
I loved this one (from reader responses): ‘According to my nephew “the greatest accomplishment of the Republicon party is that they can convince people who they harm economically to vote for them.”‘
Amen!
Financial conditions are continuing to worsen at Fannie Mae and Freddie Mac, leading some investors to prepare for a government bailout of the housing giants even as the Treasury Department and the companies say such government intervention will not be necessary.
http://www.nytimes.com/2008/08/20/business/20fannie.html?_r=1&ref=business&oref=slogin
This is one of those situations where less talk is better — walk softly, but carry a big (bailout) stick.
One thing is for certain: Fannie and Freddie share prices are nearing a bottom.
Fannie and Freddie crisis deepens
By James Politi in Washington and Saskia Scholtes in New York
Published: August 20 2008 19:23 | Last updated: August 20 2008 19:23
The US Treasury on Wednesday backed away from assurances that it would not have to rescue Fannie Mae and Freddie Mac, as the crisis surrounding the mortgage groups deepened with their shares falling for a third day.
Although it was granted new powers to extend its credit lines to Fannie and Freddie and invest in their equity last month, the Treasury has been adamant it does not expect to have to make use of the new authority.
But on Wednesday, a Treasury spokeswoman declined to repeat that assurance. Instead, she said Treasury was “vigilantly” monitoring market developments and was “focused on efforts that will encourage market stability, mortgage availability and protecting the taxpayer”.
The shift in emphasis towards a more open-ended statement may not mean that the Treasury is close to intervening to save Fannie and Freddie, since government funds would still only be used as a last resort.
But it highlights the pressure facing Hank Paulson, US Treasury secretary, as he confronts the return of unease surrounding Fannie and Freddie. A rise in the companies’ borrowing costs could translate into higher mortgage rates for prospective homebuyers, thereby prolonging the housing slump.
FRE 3.35 -19.66%
FNM 4.93 -17.97%
No matter how bad things get, at least I am not Bill Miller.
A Tax Revolt Is Quietly Brewing In Some States
http://online.wsj.com/article/SB121919392595755303.html?mod=googlenews_wsj
Critics of the proposal say passage would be a major blow. “It would be an absolute disaster for the state,” says Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a Boston public-policy research group funded primarily by employers.
If adopted, “this extreme measure would throw the finances of state and local governments into chaos and inevitably lead to major increases in property and sales taxes,” Mr. Widmer says.
One way or another people will pay. But the school administrators and teachers unions, the govt workers unions, and the prison industrial complex (to name a few) won’t stand for any cutbacks, so the cutbacks will be aimed at the poor and disabled, as usual.
Tax revolts are how we will get rid of all the deadweight politically on a local level, as politicians make themselves redundant, by hitting up their broke constituency for money that quite simply, isn’t there.
” … for money that quite simply isn’t there.”
Yep. That means those with money will rule the day.
Your needle is stuck in the groove again.
I think I’d rather take the money from the fed. Out of the hands of Paulson/Frank/Dodd.
I feel more confident I can make a bigger stink at the state level.
We need to get rid of income tax in California. Maybe I will start a prop for next election. that would scare the crap out of Sacramento.
I’d rather get rid of the federal payroll tax. Keep public education and infrastructure. Get rid of Social Security and Medicare. Younger generations won’t be getting it anyway.
you guys are almost LP.org
Massachusetts is a special case. I’ve lived all over the country and I’ve never seen the kinds of things MA thinks it can get away with at the state and local levels.
There are a lot of hardworking bureaucrats toiling away in the pits, but the more visible components of the pay scale really abuse, scam and milk the system. Again: free money.
The free money needs to be removed by voting Yes on 1.
My wealthy aunt moved to mass. and she’s been waiting three months to see a doctor about a horrible growth on her back. My mom says everybody must have health insurance and the doctors are too busy for the elderly. How is it really working?
If california has the same law, would illegals need to pay for their own health insurance?
Someone here posted that we could legalize assisted suicide in the future. I’m down with that. By the time I get feeble it will cost too much to live.
My mother recently experienced something that I think shows how doctors truly regard the elderly.
Mom was diagnosed with low thyroid hormone. She was put on some medication that caused such horrible coughing fits that she was barely able to have a conversation. My father and I pleaded with her to get off of this stuff, and she did.
It took a few weeks for her throat to heal, but it’s fine now. Her doctor *insisted* that the coughing fits had nothing to do with the medication.
I told Mom to find another doctor, and I sure hope she did. During one of our coughing-shortened conversations, she said that this doctor seemed like the type who would give older people a prescription so they’d go away.
BTW, one of Mom’s gym workout buddies told her that she was also put on thyroid meds, had problems with them, and, like my Mom, she discontinued them. Both Mom and her bud are doing just fine, TYVM.
“My mom says everybody must have health insurance and the doctors are too busy for the elderly.”
My parents live in MA and they’ve had no trouble getting in to see a doctor. They’re not on Medicare yet, however.
The school administrators and teachers unions and so on do not have much choice. The teachers are paid reasonably well, but not lavishly, except in a few town that can afford all the bells and whistles. Most school districts are so burdened by special ed requirements and unfunded federal mandates that there really are no discretionary cuts available.
Maybe people are foolish enough to take the schools out behind the barn and shoot them. If there are not enough decent schools in affordable towns, the remaining middle class will be gone. The state will empty out if that happens.
What’s the price now on that new Graham Gund-designed—and significantly state financed—high school in Newton?
http://www.wickedlocal.com/newton/archive/x513689335
The one that replaces already-existing Newton North? Because, like, it dates from the 1970s and doesn’t have enough natural light or something?
If we were to start over as a country, which parts of American capitalism would you keep, and which would you discard?
Keep:
Ebay
Discard:
Everything Else
Ebay has become exceptionally draconian as of late. Case in point their new feedback system which disallows sellers from posting negative feedback on bad bidders.
We need a better, more socialistic ebay.
Capitalism’s excesses would be fixed if we made fixes to how we’re governed. But at this point the only way meaningful changes can be made is via a constitutional convention or revolution.
The new federal constitution should have the same three features that many state constitutions have- initiative, recall and referendum.
In some ways post-war Germany and Japan had it easy, as both countries were utterly wrecked, and no decisions had to be made to save dubious business enterprises, and it’s a heck of a way to go about getting a fresh start, but it was very effective.
Instead of bombs laying waste to our cities, we just let them waste away…
and most of all, Germany and Japan didn’t have the entitlement attitude that is rampant in the US and even more so all over Europe.
House Sells for Just $1
Did capitalism fail us or did we fail capitalism?
Reading Jefferson this morning to write some unposted comment to a local website, I noticed he counted on the populace to stay engaged and to play its part. Do we?
How active and knowledgeable of its government is the general public? If we know something is horribly wrong what do we do about it? Or do we keep our head down and try not to notice?
Certainly the person who doesn’t make waves is by far the most valued in our society. That doesn’t do much for the readjustment expectations inherent in the original system.
I’ve been thinking about this a lot the past few days, actually, after watching “America: Freedom to Fascism” over the weekend. My peer group/friends are well-educated engineering folks. Most of them are blissfully ignorant. Some willfully so because it’s easier to be happy that way.
My experience has been those who are informed and care to be involved often get marginalized and written off as a little “crazy”.
This week I’ve been reading Ron Paul’s recent book, and he provides a pretty good overview of the history of government interference in certain “free markets” and the effects that intervention has had. I’d love to pass the book around to hopefully enlighten some of those around me, but I fear most would dismiss it outright and simply claim that capitalism and free markets have failed us, and we need more regulation/government interference to fix the problems that arguably the gov’t has created itself.
Like you say, the person who doesn’t make waves is the one best liked and most highly valued in our society. I’m thinking that’s not a good thing.
“Like you say, the person who doesn’t make waves is the one best liked and most highly valued in our society. I’m thinking that’s not a good thing.”
Now I understand why people are always suggesting that I go jump in the lake.
I think I saw this quote attributed to Jefferson years ago, but when I searched for it just now, it is apparently by someone else. However, I still think it is a great quote, not to mention true and scary at the same time.
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”– Alexander Tytler
Every government degenerates when trusted to the rulers of the people alone. The people themselves are its only safe depositories.
Thomas Jefferson
Do you want to know who you are? Don’t ask. Act! Action will delineate and define you.
Thomas Jefferson
Educate and inform the whole mass of the people… They are the only sure reliance for the preservation of our liberty.
Thomas Jefferson
Enlighten the people generally, and tyranny and oppressions of body and mind will vanish like evil spirits at the dawn of day.
Thomas Jefferson
Every generation needs a new revolution.
Thomas Jefferson
Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor.
Thomas Jefferson
Good quotes. I am a huge TJ fan.
Excellent quotes and topic, Carrie Ann.
I’ve encountered this first-hand when trying to rally people to attend a Community Reinvestment Task Force meeting some time ago. Posted multiple times on multiple housing blogs where everyone wants to whine.
Only four of us showed up, one of whom shows up regularly as she is one one of their commities or somesuch.
It was great to meet the four, but a bit disheartening that more weren’t willing to act instead of always complain.
You’d be surprised how many people haven’t even written their representatives.
tragedy of the commons?
“If we were to start over as a country, which parts of American capitalism would you keep, and which would you discard?”
Excellent question, lad.
Keep:
- Bill of Rights
- Private property (real & personal)
- English common law
Discard:
- Eminent domain
- Limited liability for corporate shareholders
- Gov’t-run post office and schools
- Unlimited police power of legislature (legislative acts should be merely guidance for courts, not binding, until ratified by referendum).
- Unlimited taxing power of legislature (per capita tax, set by annual referendum, in lieu of all other taxes)
I could go on …
I’d add “corporate personhood” to that list. Or, if we keep it, subject the corporation to the same rules/laws that individuals are. If the corporation is found to be in violation of the law, the corporation goes to “jail” like an individual would, and must cease operations for that time.
Personally, I’d rather see the individuals responsible for and complicit in the illegal behavior do the time themselves, but this whole “all the benefits” and “none of the downsides” of personhood for corporations irks me.
“I’d add “corporate personhood” to that list.”
Good point. The idea of a corporation as an “artificial person” is a legal fiction that needs to die. Only individuals can take actions, and only individuals have interests, rights, and obligations. The whole abstract notion of a corporation is simply a smoke-screen that some people hide behind when it suits their purposes.
Only individuals are scared of death, poverty, imprisonment, etc.
Corporations are also incapable of experiencing sympathy, compassion, understanding and other emotions/attributes that help us all live together.
The problem is not with capitalism or free markets. The problem is a lack of free markets and a lack of freedom to choose the central stewards of certain free markets. If we the people, including hard working savers, were free to choose our central stewards, things might be different. Instead, our savings are mischievously taxed and we are encouraged to make reckless investments just to stay even. If every dollar we save is worth 95 cents or less a year from today, are we really saving?
Alad, why re-invent the wheel? There’s another way:
We should model America after any one of the following (by the letter): China / Russia / India / Saudi Arabia / Dubai / Kuwait / Iraq / Afghanistan / Turkey / Algeria / Libya / South Africa / Congo / Pakistan / Vietnam / Philippines / Israel / Mexico / Brazil / Argentina / Panama / Nicaragua / Peru / Columbia / Cuba /Haiti / … or just take the best aspect of each…then add a sprinkle of: Australia & New Zealand & Canada & Sweden & Iceland & Denmark & Switzerland & Tonga & England & Ireland …Shake Well…swallow whole…take x2 aspirin & call Oprah in the morning.
Alad ….Keep capitalism ,but regulate the natural tendency toward monopoly or price fixing in the capitalist structure .It is natural in capitalism for corruption to take place in the lobbying of lawmakers
eventually . You can also have a monopoly on the media if capitalism
doesn’t have it’s check and balances and is allowed to go to far . A good example of this was during the housing boom the media was in
total support of a business cycle that was a bubble and the advertisers
had a monopoly on the information peddled as “news”.
It seems to me that there is, under all economic systems, a tendency for corruption in government. I don’t see this as being unique in capitalism.
In fact, I would say that to the extent that free markets become less free (say, in individual markets or micoeconomies) over time that those markets which are now less free and implicitly then controlled (to a greater degree than before) by govt increases the power of govt, which increases the tendency for govt to become corrupt.
Increased central power is highly desirable to those who wish to be in control.
I think this is how those who wish to be the PTB manage to get centralized power (remember, without centralized power, there is nothing to control). They create some fear among the general population who then supports increased govt control of that microcosm of the economy. Then the govt steps in to “help out” and bang, they have now increased central power just a little.
That is the wrong question. American Capitalism continues to evolve. What we need is wiser regulation centered on disclosure of materials, workmanship, appraisals, sales, and loans.
I would tie risk and reward together.
If you want the protections of incorporation (no personal liability), then the top-earner’s wages (including bonuses, & all other remuneration) would be tied to the wages of the lowest-paid employee of the same company.
If you want unlimited earning potential, then you need to take unlimited risk. Start your own company as a sole proprietorship and if the company fails, you fail. You cannot make money from another venture until all your debts are paid.
I would eliminate corporate income tax, but impose fees on pollution, property taxes, etc.
There would be a progressive income tax, with no deductions (or credits) other than legitimate expenses and charity.
All income would be taxed at the same rate, whether married or now, at each level of income: i.e.: first $0-$50K @ 10%; $50K-$75K @ 13%; $75K-$100K @ 15%; etc.
Eliminate political campaigns (and the need for money). All candidates would have an entry in a “voters’ book” — compiled by a neutral party funded with public money — which would be available on-line and in paper form. Those who are willing to read it are the ones who should vote. No MTV ads getting our “youth” to just “get out the vote” or such nonsense. No lobbyists!!! No campaign contributions, and if anyone is caught taking bribes, instant jail sentence of no less than 5 years.
Is the housing situation improving?
http://www.economist.com/finance/displayStory.cfm?source=hptextfeature&story_id=11921704
“By the standards of previous cycles, residential construction should be nearing the bottom. Karl Case, a housing expert at Wellesley College and one of the creators of the S&P/Case-Shiller home-price indices, notes that in three previous housing cycles, residential investment peaked at about 5.5% of GDP and hit bottom at around 3.5%. In the latest cycle it peaked at 5.5% in 2006 and by the second quarter had fallen to 3.1% of GDP, below the troughs of 1975, 1982 and 1991. He does not expect much rebound. But like hitting yourself with a hammer, house building need only stop falling for the economy to feel better. Most forecasters expect construction to fall further in coming quarters but since that will be from a shrinking base, the impact on overall economic growth will diminish.
Finally, since home prices have dropped about 18% from their mid-2006 peak (based on the S&P/Case-Shiller composite of 20 cities) and incomes have steadily grown, homes are returning to more typical levels of affordability in some regions. Mr Case estimates that in Los Angeles, the ratio of home prices to annual income per person doubled from 2001-06 to 16, and has since fallen to 11. In Boston, it rose from nine to 12, and has since fallen back to nine.”
Incomes have steadily grown? They have? Umm….whose jobs? Where? Over what time period? Average which can be skewed by a few at the top or median?
Sounds like garbage to me. Also ignores the general credit crunch completely.
Two thumbs down on that one.
No kidding! There will be no meaningful wage inflation in this cycle!
gov, and that’s all
stagFLATION is a gov workers dream
Umm…hate to burst your bubble booty, but government workers increases (at least for the feds) isn’t tied to inflation of living expenses, just to what it costs to hire an equivalent worker in the private sector. If private sector wages stay entirely flat, federal wages are supposed to do the same even if there is inflation in prices of food, fuel, etc.
Now there is legislation that was established to catch federal employees up to their private sector equivalents. If it was ever allowed to work as written, the formula would give fed workers something like a 12-15% increase because that is how far behind fed workers are now. It is always overridden with the amount set way below the real catch up amount because allowing it to work as written would be too expensive.
Now there is plenty to complain about in the civil service wage scale - mostly that certain jobs are set at too high a pay grade for the responsibilities of the people who fill them. But don’t claim fed workers get pay increases based on price inflation. It just isn’t true. That is reserved for the retirees.
Yeah, that didn’t make much sense to me either. I have noticed from the quotes I have seen from Karl Case lately that he is desperate to find any positives in the housing market. You would think that some of these economists would take some care to safeguard their credibility.
I WOULD NEVER DISCARD ANYONE
Go to sleep Hal.
In Farm Country’s Boom, Hints of a Bubble
“BLAIR, Neb. — The trucks rumble down the main drag of this farm town all day long, the ones heading east brimming with grains of No. 2 Yellow Corn, the ones going west filled with Sweet Bran, a cattle feed that looks like breakfast cereal and smells like warm beer.
That eighteen-wheeled evidence of prosperity shows why the Plains states are a bright spot in the otherwise gloomy national economic picture. Here, the housing market is holding up just fine, the banks are making plenty of loans, and employers keep adding jobs.
The good times in farm country show the difficulty facing policymakers grappling with the nation’s economic distress, underscored yesterday by data indicating the steepest rise in monthly wholesale prices in 27 years and a 17 year low for new housing construction.
The numbers are gloomiest for Sun Belt states with eviscerated housing markets, and there, interest rate cuts and stimulus checks are helping ease the pain. But in the area stretching from the oilfields of Texas north to the Dakotas, where the economy is holding up fairly well, those government actions may prove unnecessary — and even contribute to new bubbles. …”
WaPo
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/19/AR2008081903150.html
I can’t believe I still read this piece of crap rag. They can’t find a bubble under their nose but look in Nebraska for bubbles in housing. A bubble involving 3% of the US population. what a joke.
“…interest rate cuts and stimulus checks are helping ease the pain.”
This is baldfaced propaganda - keep repeating it and that will make it so?
I’ll take a half a pound of interest rate baloney, with a stimulus chaser, on the rocks.
Dutch housing bubble update:
Dutch home prices are still rising, currently up 3% compared to same month last year. Inventory for sale keeps increasing, and sales numbers keep dropping, but the bubble still refuses to pop
I noticed some huge drops in asking prices in my area (down from outrageous levels, but new asking prices still ridiculous) but most homes still get sold, eventually (average sales time is many months). Of course, 30 billion yearly in homeowner subsidies helps a lot in keeping the Dutch bubble afloat while nearly all other RE markets are now stagnant or going down.
The other support factor is the rental market that is totally locked, a disaster thanks to years of heavy government intervention (and most of all thanks to the labour party). Some people are happily renting a nice home for 300 euro a month, while similar homes rent for 1200-1500 a month in the free market. The free rental market is tiny here, so the skyhigh asking prices are just as unrealistic as the low prices in the huge gov-controlled part of the rental market.
I often wonder if the Dutch housing bubble is propping up ING. That bank scares me. The wife loves it but their interest rates seem far too good to be true. They must own globs of MBSs.
IMHO, ING is a hedgefund pretending to be a bank ;-(
They are run by a bunch of economic wizzards who think they are on top of the world. ING still say their potential loss from US RE bust is irrelevant (less than 1%), while they have something like 50 billion invested in the US RE market. Something does not compute …
another note about Dutch ‘ARM’ problems. Todays newspaper reports about a problem similar to US ARMS, although less severe - but it might be the tip of the iceberg. Some industry experts are already using the ’subprime’ word in relation to these mortgages.
In 2002 the Dutch government discarded the minimum mortgage rate of 6% for mortgages with full mortgage insurance (the insurance comes from a semi-gov fund and works like a free put option for the homeowner). Mortgage shops started offering lower rates with full insurance, mostly courtesy of foreign banks like Bank of Scotland. Dutch banks quickly followed. Rates went down to around 3-4% for a 5-year fixed loan, effectively that means 1.5-2% because of the Dutch HMD. Many of these loans have to be turned over now, and the going rate is 5.5-6%, which means an increase of a few hundred euros a month for most homeowners. Next year 15-20% of all Dutch mortgages, about 1 million, will reset. Normally this wouldn’t be a problem as homeprices AND incomes were rising forever; but pricegrowth is pretty small by now and real incomes are declining for many.
The problem is that most people with these loans where already stretched to the max to begin with, because at that time income levels etc. were irrelevant and Dutch homeprices were already skyhigh (like 5-10x higher than 10 years earlier). Officials are hoping that declining rates, higher homeprices and increasing incomes will bridge the gap before the massive resets of 2009 set in; seems a bit of wishfull thinking to me …
Of course, 30 billion yearly in homeowner subsidies helps a lot in keeping the Dutch bubble afloat while nearly all other RE markets are now stagnant or going down.
Wow! It would take about 600 billion to provide the same subsidy in the US (20x the population)
yes, I’m pretty sure this is another Dutch world record. And because of that it can’t go on forever, especially if rates start rising because the subsidy will go up with the rates. At early nineties rates, HMD and related subsidies would eat the whole national budget (without even taking the future National Mortgage Insurance black hole into account). Politics knows this very well, and because of that it is strictly forbidden for politicians and gov workers to discuss the issue in public
It took the Dutch tulip bubble a heck of a long time to pop as well.
not at all, the tulip bubble popped in one week (about 90% down).
The political aftermath took a few years though, including the lynching of two politicians because politicis was unable to come to a ‘fair’ solution for the enormous debts that remained.
I hope somebody sent flowers to their funerals…
I guess there were loads of fiery red tulips available at a decent price by that time
A Scottsdale home builder recognized two years ago as an up-and-coming business has collapsed in the weak market, leaving in its wake lawsuits by investors, lenders and contractors.
Charlevoix Homes, which has restructured as Copperleaf Communities, is trying to salvage its stalled communities, find new lenders and pay off investors, said Keith Hendricks, an attorney representing company founder Michael Roberts.
Meanwhile, Roberts has filed for a Chapter 7 personal bankruptcy, listing up to $50 million in liabilities and more than 100 creditors. Creditors in the case met Tuesday morning.
Charlevoix Homes LLC filed for Chapter 7 bankruptcy on Monday.
http://www.azcentral.com/arizonarepublic/business/articles/2008/08/20/20080820biz-failedbuilder0820.html
Well, as you might expect, the silver-giveaway had to end, so yesterday we added at 12.77.
Good luck to all, Silver is going to a thousand.
Please explain.
Somebody’s been drinking Mushroom_Tea, perhaps?
You found physical at that price?
Good luck to all, Silver is going to a thousand.
Why only capitize the “S”? Do like the GOLDbugs:
SILVER..
..and following with a few exclaimation marks won’t hurt.. SILVER!!!
#79 laughs last.
“Don’t forget to say your prayers before you go to bed, honey.”
“OK, daddy.”
Dear Lord,
Please tell daddy to stop spending so much time counting his gold.. he gets this look in his eye that really scares me. And he’s always talking about the terrible things that will soon happen to everyone except us, but it still makes me afraid. Can you fix that too? Amen.
I think it’s time for the HBB Cage Match. i’ll bring the beer.
We prefer the term ‘barbarous relic’ or ‘buggy whips’. Learn the lingo.
barbarous relic..buggy whips.. #79..
That’s so cool.. the gold cult’s having a pet names for it is almost like being a Trekkie or LOTR or harry potter geek. Are there secret hand signals too?
Can’t we all just get along?
Why only capitize the “S”? Do like the GOLDbugs:
SILVER..
..and following with a few exclaimation marks won’t hurt.. SILVER!!!
Reminds me of the old Rudolf Christmas special where the prospector character yells “GOOLLDDD!!!” and the earth trembles.
Good luck to all, Silver is going to a thousand.
It already is well over a thousand…….US pennies. Someday soon it might go over a thousand…..US nickels, too.
I hold physical gold and silver, but let’s be honest here. Any statement like the one above is useless without a time frame and a unit of measure. Assuming what was meant was one thousand US dollars and in the near-term….umm…don’t bogart the bong, man — pass it over here!
Rather hold my “money” in PM’s instead of FED iou’s..The dollar should be rising as soon as a few more banks, investment houses, and RE market keep crashing..Not.
Go search APMEX, KITCO etc etc..They are plum out of most everything…Sure you can order,and wait 6-8 weeks,but …nah everythings fine.. The dollar is solid ,and I’m gonna invest in FNM..
yeh right…
Security Bank Corporation Announces Suspension of Quarterly Dividends
Wednesday August 20,
“…Based in Macon, Georgia, Security Bank Corporation is a multi-bank holding company with assets of $2.9 billion at June 30, 2008. Security Bank Corporation operates six community banks with offices located throughout middle Georgia, coastal Georgia and north metropolitan Atlanta….”
Yahoo news
Almost without notice, the drought in California continues to take it’s toll…
What’s a house worth when you turn on the faucet, and nothing comes out?
========================================
An important California reservoir is nearing its lowest level in 30 years, and other state reservoirs also are very low – more evidence of a gathering water crisis that could lead to mandatory rationing in Southern California by next year, state officials say.
The Oroville Reservoir in Northern California, a major supply reservoir for water that eventually flows into the Southern California region, is down to 38 percent of its capacity, according to the state Department of Water Resources.
By Sept. 30, Oroville, about 75 miles north of Sacramento, is expected to hit its lowest level since 1977, and by year’s end, the lowest level since records have been kept, said Wendy Martin, the statewide drought coordinator.
The agency’s Web site says precipitation statewide was 30 percent of average in April, May and June, the sixth driest of 114 years on record – powerfully affecting the Sierra snow pack, which melts and drains into Oroville.
http://www.ocregister.com/articles/water-state-california-2129414-rationing-reservoir
Hey lad, all those oil fields around Bakersfield and Coalinga - are they still active?
I can only speak for my Empire, but the oil wells are going full blast around B’field, which brings up an interesting thought?
Many of these marginal wells teetered on the EROEI line @ $30 a barrel, but are quite the breadwinners @ $115 a barrel…
Oilmen owe much to ’ssshrubery for making their business his business.
The water racket.
Build infrastructure to serve population plus 10%.
As population reaches capacity of infrastructure, scare populace into financing another round of dams and pipelines so developers can shoehorn more people into the desert. Bonus to developers: existing populace pays cost of new infrastructure!!
Lather, rinse, repeat. Same thing has been happening since LA fear-mongered the population into building the LA Aqueduct.
I’ll start saving water when my city council stops approving development. As a fifth generation Californian, I’ve already paid enough taxes for the damn water infrastructure. And I know the city council doesn’t have the huevos to charge the true market value of water so that I’d stop using based on the economic cost.
And for those concerned about the smelt and salmon, a new dam isn’t going to result in the water czars allowing the Delta to return to its former marshy state or bring down the dams that block the passage to the headwaters for every single Central Valley River except the Cosumnes.
Rant Off.
Also, a backwardation market can erupt at any time a severely paper-short banks implode to the FDIC over housing anyway.
Triangle home sales sank in July, again. Prices dropped, too.
The sales slide wasn’t as bad as in June, which posted the largest decline since the effect of the nationwide housing slump hit the Triangle in late 2006. And the price decline reflects sellers’ willingness to negotiate, which could help loosen a logjam of unsold homes.
http://www.newsobserver.com/business/story/1185589.html
I’m a little familiar with the Raleigh area. I was visiting friends there about 3 months ago and was surprised and at the amount of building that was still going on. The area is full of people from the Northeast who think they got great deals because they bought decent size houses for $300-400K. They never took into consideration that incomes in NC simply won’t support those prices long term.
One logjam, heading downstream…
Sounds like the Norfolk - Virginia Beach area!
Frank, they you go again being rational.
Pressure on Fannie and Freddie is increased
“…The interim rescue plan for the two US government-sponsored mortgage financiers has come under severe market strain in recent weeks. Prices for Fannie and Freddie’s debt and equity securities have delivered conflicting signals about investor confidence in the US Treasury’s commitment to an intervention for the two beleaguered mortgage companies.
The reasoning behind the rescue plan unveiled on July 13 was that investors would be reassured by the Treasury obtaining authority to invest in Fannie and Freddie, thereby reducing the likelihood that the government would actually have to bail them out. Instead, equity investors are betting on the near certainty of a bail-out, while debt investors appear far from reassured….
Spreads have in part continued to widen because the traditional buyers of mortgage products have scaled back their participation in the market….”
FT
http://www.ft.com/cms/s/0/4fe85660-6e50-11dd-b5df-0000779fd18c.html
Traditional buyers = Foreign (primarily China and Middle East)
They are not only not buying but they have been sellers.
“…As investors doubt whether the GSEs can increase their portfolios in the current climate, they are selling mortgages, agency debt and swaps. Beyond the safety of US Treasuries, this threatens a cascade of fire sales across fixed income markets and many areas are near the worst levels seen in March, when Bear Stearns collapsed….”
Not seeing fire sales yet, but they should happen with these new marks.
sorry hoz. I just cant stop myself.
Regulators prepare for Freddie capitol injection due to Fannie spread widening.
Scumbaggery is the new black.
Reads like financial pRon. Is the HBB rated PG-13?
pron is much lower on the thread.
Where is NYCityBoy when you need him?
Ah Voz, Tis all a game that will not effect the little people.
I love financial ink, so fun to decipher. Spreading Fannie. Dirty old man!
hoz, I turned off my AMD trade today and put all the winnings into FRE at 3 bucks. I loves the jeopardy.
I do not have the stomach to tap Fannie.
I could not sleep knowing my moneys (even if profit were long FRE). That is a braver man than I. I am a coward, sure, simple and low risk.
Good luck Voz. There is one el cheapo bank stock that I am looking at acquiring. The numbers are right, the price is right, just waiting for FDIC Q2 data next week before I pull trigger.
Did you mean to say “will not infect the little people”?
It is amazing to me that the headline stock market indexes can shrug off the continued decline in GSE share prices.
“…The crisis of the agencies and the entire financial debacle operating under the rubric of subprime crisis brings to mind the great American novel by John Steinbeck, the Grapes of Wrath.
It is the story of the Joad family in Depression era America’s dust Bowl. They leave their home in Oklahoma and seek a better life in California. The story is one of a continuing series of episodes of bitter failure and disappointment followed by a brief period of hope and elation. The story ends very sadly for the Joad family as circumstances and the system crush their hope and yearning for a better life.
That is the chronicle of the bond market this last year. It is one of bitter disappointments and crisis followed by brief periods of elation which end in another episode of crisis….
FNMA and Freddie Mac CDS are 290/300 which is about 60 basis points tighter than where they closed yesterday. I want someone to let me know how the stock can be down nearly 30 percent while these things improve. There is some very loud cognitive dissonance at work there.”
John Jansen
3:14pm EST
August 20
The FT editors are not mincing words on their vision of the ideal future for the twin twisters…
No more need for Freddie and Fannie
Published: August 20 2008 19:53 | Last updated: August 20 2008 19:53
Freddie Mac and Fannie Mae are the platypuses of the financial world. As shareholder-owned companies which rely on state guarantees, the two government-sponsored enterprises are neither public fish nor private fowl. They are also evolutionary relics from another time. The US Treasury looks increasingly likely to bail out the two mortgage giants. But before it does so, Hank Paulson, the Treasury secretary, must think about an intelligent design for what he would like the GSEs to evolve into.
…
The lumbering GSEs are too big to fail several times over. If Mr Paulson needs to save them, he may need to act very quickly. But he should not be thinking about simply keeping them as they are but on tighter regulatory leashes. The GSEs are set up to socialise losses and privatise profits. This is clearly ridiculous. In the short term it would be better to nationalise them to align risk and reward. In the long run, the government should get rid of Fannie and Freddie.
If H-P is beckoning the bulls, then how come stocks are dropping like a lead weight dropped out of an airplane?
August 20, 2008 9:49 A.M.ET
BULLETIN
H-P report beckons the bulls
Quarterly results from Silicon Valley pioneer Hewlett-Packard are mainly upbeat yet struggle to deflect attention from financial-sector woes.
In spite of its streak record quarters, HP’s stock has been stuck in the mid 40’s, and its P/E has been slowly but steadily dropping (its about 14 now).
Are You Better Off Than a Year Ago? The Answer Is Probably ‘No’ as Bank Stocks Remain Hammered, 30-Year Mortgage Rate Has Barely Budged
By David Gaffen
“A commonly heard question in election years is, are you better off than you were four years ago? Veterans of the credit crunch may be trying to discern whether they are better off than they were a year ago.
The answer is probably “no,” unless one is talking to an aggressive short-seller of financial stocks. The Dow industrials have lost more than 12%, bank stocks have been hammered, the 30-year mortgage rate has barely budged despite massive cuts in official interest rates…”
WSJ
“It was a great year in the bank stocks,” said Tom shortly.
Am I better off that 1 year ago? Yep.
I was able to refi last Feb to 15-year mortgage at 4.75%. I was able to roll most of my 10% cc debt onto cards at 3% to 5%, fixed until paid off. I’m a year closer to being done with my $1000 a month child-support.
By going to Treasuries last July (2007), and back to stocks for 3 months (Mar-May) after the Bear (really, JP Morgan) bailout, then back to Treasuires before June, my 401K is up close to 20% YoY… 25% for 18 months.
I got a pretty good cost of living increase, but since I work 7 miles from work and work-from-home a couple days a week, my actual costs aren’t up nearly as much. I go 2-3 weeks, on average, on my 15 gallon tank of gas. Of course, it sucks that govt. took 40% of that raise.
Region out of housing cellar
San Diego’s affordability improvement may be temporary, local experts say
San Diego’s affordability improvement may continue for another couple of years, tinfoil-hat-wearing blogger says
By Roger Showley
and Dean Calbreath
STAFF WRITERS
There’s a silver lining in San Diego’s slumping housing market: improved affordability. The National Association of Home Builders yesterday ranked San Diego County as the nation’s 20th least affordable metro area, a major improvement from four years ago, when the region was ranked the most unaffordable market in the nation.
Note to would-be renters: If you don’t have a copy of the lease, you may not be renting.
Would-be renter says she lost $4,500 in scheme
By Matthew Rodriguez
STAFF WRITER
August 20, 2008
…
In what may be yet another wrinkle in the collapse of the housing market, prosecutors allege that Alexander Braslavsky, 34, and Anthony Patrick Marshall, 38, posted ads on Craigslist for five foreclosed homes in Carlsbad, Corona and Stanton and rented them to people like Smith.
The two Orange County men pleaded not guilty Monday in Vista Superior Court to four counts of felony grand theft, one count of felony conspiracy, and one count of felony attempted grand theft. Prosecutors say the pair took in about $16,500.
The men were convincing, Smith said. One explained the lease to her “really methodically” and they gave her three keys that worked.
But there were red flags she ignored in her eagerness. The men never asked to check her credit, didn’t know where the valves for the sprinklers or gas were and didn’t give her a copy of the lease.
Felony charges…great! “Kill the Beast” & those that nourish off its flesh.
Real estate has kinda turned into a “D’ rated horror movie ain’t it?
One of those guys has to be my last landlord.
I wonder who he is scamming now because it ain’t me.
Sounds like he may soon be attempting to scam the prison warden.
CHUCK JAFFE
Crunch time
Commentary: Even the best borrowers will feel the brunt of the credit crisis
By Chuck Jaffe, MarketWatch
Last update: 7:29 p.m. EDT Aug. 19, 2008
BOSTON (MarketWatch) — Some bad news headlines hit home more than others.
Gas prices and inflation, for example, are tough to avoid. Falling real estate prices may not be an immediate concern — assuming you are not trying to sell your property into a sinking market — but they clearly have an impact on net worth.
The credit crunch is the one area that many consumers think they can sidestep if their financial situation is not perilous. After all, the term “credit crunch” was just put into the Concise Oxford English Dictionary, defined as “a severe shortage of money or credit,” so anyone with decent credit or stable cash flow is likely to believe that credit headlines represent someone else’s problems.
Unfortunately, the same pervasive situation that made “credit crunch” a household term has also made it a household problem, in ways that many consumers don’t immediately see.
Excellent article..
“Sustainable increases in living standards have to be earned, not borrowed, and that means performing ever higher value work that can’t be outsourced. We haven’t been meeting that challenge very well; doing so will probably require much more and better education for millions of Americans, which takes time and money. ”
http://money.cnn.com/2008/08/18/news/economy/Colvin_next_credit_crunch.fortune/index.htm?postversion=2008082004
and that means performing ever higher value work that can’t be outsourced
There is no such thing, which is why so many have been jumping on get rich quick schemes.
doesnt sitting in the cube in the office with the trader feed twitter bangin out short positions and capitalizing on debt spread arbitrage count as “higher value work?”
A job that requires either a full security clearance or at least a security background check - US citizenship mandatory.
In other words: DoD or a gov’t contarctor.
I was referring to the private sector when I said nothing of value is safe from offshoring.
Public or private, curbside garbage pickup and sewerage is safe from offshoring until teleportation is invented.
Andthose jobs will be insourced to illegals for minumum wage.
What jobs? Houston doesn’t even bother to charge extra for garbage pickup. They use one guy in a truck with an automated crane. They say it promotes better employee health and saves money on back injury claims.
August 20, 2008
by FT
US house prices: when will they stop falling?
by Mickey Levy
Banking industry economist fallacy numero uno: Since home prices have fallen by a lot already, a bottom must be close at hand.
Falling home prices beget more inventory, as incentives for owners to walk away from massive unrecoverable principle balances on their mortgages increase with each ten percent decline in home prices.
THE RATINGS GAME
Goldman sees more pain for banks, brokers
Analysts cut profit estimates and warn of more write-downs, asset sales
By John Spence, MarketWatch
Last update: 11:23 a.m. EDT Aug. 20, 2008
BOSTON (MarketWatch) — Goldman Sachs analysts became the latest to chop their profit estimates on bank and brokerage stocks on the expectation of more ugly write-downs triggered by the ongoing tumult in credit markets.
“We expect third-quarter results will be hampered by declining global equity markets, further deterioration in mortgage assets, and slower levels of corporate and institutional activity,” wrote Goldman analysts led by William Tanona in a research note sent Wednesday.
Also, Goldman said although banks are aggressively unloading assets to raise capital and shoring up their balance sheets, things aren’t likely to improve anytime soon. Any significant recovery “is still a few quarters away, as we anticipate additional asset sales and write-downs in coming quarters throughout the financial-services sector.”
My California posts are not showing up, which I take as a good sign that Ben is saving up for a whopper of a California thread later today
McSame: Drill for oil right now!
The boys & girls down under have a Non-Republican idea:
They get everything upside down & bassackwards don’t they?
Australian “hot rocks” offer 26,000 yrs of power:
http://www.reuters.com/article/environmentNews/idUSSYD30694020080820
“…The researchers also reviewed scientific and medical journals for studies on autopsies conducted on influenza victims from the 1918 pandemic, in which between 50 million and 100 million people died around the world over 18 months.”
Jib-Jab or Limpbaughs as a fear monger?
Bacteria a big killer in 1918 flu pandemic:
http://www.reuters.com/article/scienceNews/idUSN1647217720080819
I just had a Mae & Mac for lunch…
Less than $8 for the combo, but not very filling.
It looks like Congress’s GSE backstop is working out really well…if the goal was to administer a Death Eater’s kiss to these mugblood companies.
Fannie bailout? Hold on a second
The stocks are swooning, but the feds are understandably in no hurry to own the whole U.S. mortgage business.
By Colin Barr, senior writer
August 20, 2008: 1:39 PM EDT
…
Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) shares tumbled for the fourth straight day Wednesday, a day after Freddie paid its biggest premium in a decade to sell $3 billion of five-year reference notes. The companies’ shares hit their lowest levels in nearly 20 years, dropping below the levels they bottomed out at last month in the panic that led Treasury Secretary Henry Paulson to propose a government-funded backstop that was later passed into law by Congress.
just wait a few weeks and if the trend holds a little longer, we can buy the twins for pocket change (if we want to …).
3 bucks for a piece of Fanny dont get ya all fired up?
Spitzer paid at least double that.
From the mind of Limpbaughs:
Republicans are true believes of American Free Speech…if you look like me & talk like me & think like me…your free to speak. If not, you’re not a “true” patriot & should be subject to government investigation & scrutiny, along with everyone you “associate” with, …for example, try wearing a Molly Ivins t-shirt and getting into a Cheney-Shrub Halliburton company sponsored “public” gov’t press conference.
“…But why were the arrests made in the first place?
That morning, two groups gathered on West 56th Street, outside the offices of an affiliate of the Carlyle Group, a private equity firm that has holdings in defense industries and employs many world figures, including the first President Bush.
One group of about 10 people planned to commit civil disobedience by sitting in front of the building, on the south side of 56th Street. The other group, of about 100 people, stood on the north side of the street, chanting.
Sarah Kunstler, 31, a lawyer, a filmmaker and the daughter of the renowned lawyer, said she had gone to see if there were possibilities of making a film about war protests. “I found out I could get arrested for absolutely no reason,” Ms. Kunstler said.”
One Protest, 52 Arrests and a $2 Million Payout:
http://www.nytimes.com/2008/08/20/nyregion/20about.html?bl&ex=1219377600&en=04d1c05c6f53a27f&ei=5087%0A
Now this is a beer commercial!!!
http://www.youtube.com/watch?v=GH7bjIajc0A
I even used three exclamation points.
Are you trying to get me fired?
Guinness is good for you, laddie. To sound like a Scot you ‘ave to trill your arrse.
twirl me this:
(_____@_____)
I’m an ex-Scot (now living in Australia).
If you try to trill MY arrse you’ll shortly be eating with a straw.
Is that a bottle of that new lady-friendly beer?
Real estate obsession hindering American economic growth
What the author fails to aknowledge is that our lifestyle is now based on being able to spend 10% per year, more than we make.
If I can’t get that extra money from borrowing against my house, and my credit cards are pushing their limits…. How the heck am I supposed to spend 10% more than I make?
Besides, I want to get rich quick without really working… and everyone knows that Real Estate is the only way.
Can we hope that the collapse of this housing bubble causes some of our political leaders to at least think about eliminating subsidies for housing? I doubt it.
Last night I turned on the tube to watch the US women/Japanese women softball game. I was early and had the misfortune to see Mr. James Cramer chatting with Mr. John Stumpf of Wells Fargo. Mr. Cramer was trying to be perceptive and said he would ask hard questions including the “issue of Wells Fargo’s reserves”.
So much for the hard questions. I feel sorry for individuals that buy Wells based on the Cramer interview. I don’t think Wells is going under but I think they are going into severe stress. It is fine and well to give a dog and pony show to impress people, but people unfortunately invest based on Mr. Cramer and that was the sloppiest material interview on a bank I have seen in years. Ms. Sheila Bair and the SEC should investigate that for pump and dump. Wells Fargo reserves are inadequate in a falling RE market.
The ‘Wait and Hope’ or ‘Play and Pray’ mentality is not easily countermanded by facts. The banks in the US have never been as at much risk as they are today. Few are immune. AS of last week most risks are still on bank books. And for banks the amount of cash, they need to survive, is rising every day.
for a decent read on the problem:
Banks’ losses and capital: The new version of the paradox of Achilles and the tortoise
Marco Onado
19 August 2008
“…As Greenlaw et al put it, the crisis will abate once one or more of three conditions are met:
* Banks (both commercial and investment banks) contract their balance sheets until their capital cushion is once again large enough to support their balance sheets;
* Banks raise sufficient new equity capital to restore the capital cushion to a size large enough to support their balance sheets;
* The perceptions of risk change to a more benign outlook so that the current level of leverage can once again be supported with existing capital.
http://www.voxeu.org/index.php?q=node/1555
As for the version of Achilles and the Tortoise I learned.
A physicist and an engineer were discussing who was more practical in the real world. Their friend a mathematician created a problem to solve.
“There is a naked Co-Ed against the wall, to get to her you must go half the distance and half of each subsequent distance. The first one to get the girl wins.
The physicist thought for a few seconds and said “I can never get there.” The engineer smiled and went half way forward and said “I can get close enough”…
The last I read about Wells Fargo was that they had a 65 Billion 2nd mortgage book centered primarily on the west coast with about a 28 Billion capitalization and several billion in cash reserves. The national housing bill doesn’t throw a lifeline to 2nd mortgages, they are wiped out in any foreclosure or mortgage reset process since they are in second position (that’s my understanding).
Anyone think that California housing has dropped by 20% or more?
I don’t think we even need to concern ourselves with their other mortgage books, the math is pretty clear. Anyone else heard something to the contrary?
Auger-inn,
I concur..as I have heard the same data and nothing to repute it.
My family has been in California since 1860 and my ancestors used to own/run a stagecoach stop outside of Los Angeles.
I might be the one generation that sees the coaches of WF cease to exist.
This bank has survived a hell of alot, but this just might have made the horses go to pasture or the rendering plant in France.
So last night I was watching all the brightest and best corporate tv commercials, when on occasion there would be a break in the action and they’d show a little olympics.
get a dvr
There seems to be a growing consensus that the way forward for the GSEs is to make the agencies’ creditors whole while throwing the shareholders under the bus. Judging by their recent share price movements, Mr Market appears to approve the plan.
The Short View: GSEs and US banks
By John Authers, Investment Editor
Published: August 19 2008 18:27 | Last updated: August 19 2008 18:27
Fannie Mae and Freddie Mac are back on deathwatch. Their reprieve after the sell-off they suffered last month is over and they are back at 18-year lows.
The renewed alarm over the US mortgage market appears also to be squeezing the life out of the latest rally within the bear market of the last year.
…
Fannie’s shares had given up almost all of their 112 per cent bounce before the naked short ban was lifted. And the cost of insuring against default by the agencies, while historically high, remains below its crisis highs.
So a plausible explanation is that the market is betting that Fannie and Freddie shareholders will be thrown to the wolves while the agencies’ creditors are bailed out by the government.
This scenario would not mean disaster for commercial banks. It might even be the best way forward. A default by the agencies cannot be allowed. But to retain any chance of averting irresponsible risk-taking in future, their shareholders, who once seemed to have a risk-free bet backed by Uncle Sam, need to suffer.
Freddie, Fannie stock slide picks up pace
By Greg Morcroft, MarketWatch
Last update: 4:09 p.m. EDT Aug. 20, 2008Comments: 79NEW YORK
(MarketWatch) — Shares of Fannie Mae and Freddie Mac each fell more than 20% on Wednesday as the chorus of pessimists reached a crescendo and market consensus solidified that the government will have to bail them out.
Freddie and Fannie both touched session lows that haven’t been seen in nearly 20 years.
On Wednesday, Bloomberg News reported that the government’s decision to bail out the firms will likely depend on whether or not the firms can pay off bonds coming due this month.
If the firms are unable to roll over the debt, or find new lenders, then the government will be forced to act.
Now the MSM bailout handwringers are putting my bailout handwringing of a few months back to shame…Is there a growing lotion shortage?
Investor Jitters Deflate Fannie, Freddie Shares
Drop to 20-Year Low Follows Speculation About a Rescue
By Jeffrey H. Birnbaum
Washington Post Staff Writer
Thursday, August 21, 2008; Page D01
Shares of Fannie Mae and Freddie Mac tumbled more than 20 percent yesterday, hitting their lowest levels in nearly two decades, as investors fled out of fear that a government initiative to save the ailing mortgage giants could render their stock worthless.
The stock sell-off came a day after Freddie Mac was forced to pay an unusually high interest rate on five-year notes to entice investors to purchase its debt.
While the companies continue to insist that their fundamental finances are sound, investor confidence in Fannie Mae and Freddie Mac has taken a pounding this week as speculation about a federal government bailout has gained pace in the news media and among market analysts.
“Perception creates its own reality,” said Howard Shapiro, an industry analyst for Fox-Pitt Kelton Cochran Caronia Waller. “I don’t think we can rule out a government intervention. Fannie and Freddie are crucial to stabilizing the housing market, and the housing market is crucial to stabilizing the banks and the financial services industry.”
Source: auction-rate probe focuses on 3 banks
By JOE BEL BRUNO – 4 hours ago
NEW YORK (AP) — New York Attorney General Andrew Cuomo will intensify his probe into auction-rate securities by focusing on Bank of America Corp., Goldman Sachs Group Inc. and Deutsche Bank AG, a person close to the investigation said Wednesday.
The banks are the three biggest players in the auction-rate securities market that have not already reached a settlement with Cuomo, who is seeking deals on behalf of regulators and state authorities. Five major Wall Street firms including Citigroup Inc. and Switzerland’s UBS AG have agreed to $42 billion in settlements.
For the next phase, Cuomo has directed staff to spend more time gathering facts and talking to the three banks about the sale of the risky securities, said a person inside the attorney general’s office who asked not to be identified by name because he was not authorized to speak publicly about it.
The investigators are examining how brokerages sold auction-rate securities before the $330 billion market collapsed in February. No one that has settled has admitted wrongdoing.
Trickle down effects of the housing bust…
REAL ESTATE
Housing Slump Blamed As Home to Shut Its Doors
By RUSSELL ADAMS
August 21, 2008
The housing crisis has moved to the magazine rack.
…
On Wednesday, Lagardère SCA’s Hachette Filipacchi Media U.S, publisher of Elle, Woman’s Day and Car and Driver, as well as several shelter and enthusiast titles, said it is pulling the plug on its struggling Home magazine. The closure of Home comes less than a year after the demise of Condé Nast Publications Inc.’s House & Garden magazine and Martha Stewart Living Omnimedia Inc.’s Blueprint. Jack Kliger, president and chief executive officer of HFM U.S., cited sharp declines in the “mid-market home sector” for the decision to close Home, which posted a 47% decline in ad pages in the second quarter, according to the Publishers Information Bureau.
“Obviously, this is a tough time for the shelter magazine category,” said Andy Sareyan, president of Meredith Corp.’s Better Homes & Gardens, which he said was less vulnerable than competitors because of its broader focus on lifestyle. “When people do less buying and selling of homes and less remodeling, there is less need for the advertising categories that support the businesses to spend their money.”