Bits Bucket For August 28, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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I went back to prosper.com last night to see how they are doing. Prosper is the website that lets you lend directly to people looking for loans. If anything, it’s interesting. It’s a lot of people looking to pay down credit card debt, start a business, remodel a room, etc.
I checked to see how loans originated in 2006 loans were doing. Not well. They have a page for checking loan performance, http://www.prosper.com/lend/performance.aspx
For loans originated in 2006, the Net charge-off %s in 2007 and 2008 were:
Rating/2007 /2008
AA/ 2.01/ 6.13
A/ 4.08/ 10.22
B/ 6.91/ 14.11
C/ 7.28/ 18.37
D/ 9.01/ 21.67
E/ 16.02/ 31.32
HR/ 26.32/ 44.85
I just find it incredible that people would “invest” money lending it out on prosper. Am I missing something? They’d have to hold me at gunpoint to take part in that. And that was before seeing those default rates you posted.
i dunno. it’s a worthwhile experiment, and if it fails maybe a second or third generation version will work better. if anything, it unwraps a little of the “professional” veneer from investing. how is it different in principal from buying a CDO? perhaps the CDO has greater loan diversification, or (in theory) a set of seniority rules that allow for more predictable pay-down rates. But at the end of the day it’s still someone out there weighing the merits of paying you back.
If the big fancy banks and underwriters make you feel better about buying their CDO “investment,” that’s fine. to me it just says they are taking their cut along the way.
that said, I haven’t lent to anyone at Prosper… ha ha.
You can diversify fairly easily. If you have $2000, you can do 40 $50 loans. Borrowers get a loan comprised of many amounts from many lenders.
I agree that it’s a great experiment. At my bank’s savings account I get 2.5% interest, while they lend at 6.5%. Prosper.com takes a shot at getting that some of that 4% difference back to me. I appreciate that.
it works just fine for many people. there is at least one other frequent poster here who has used it with good success.
The thing I found interesting in the data was that they are actually doing a fairly good job of credit-grading. The net charge-offs showed a stair-step increase pattern across diminishing credit grades.
In other words, they’re pretty good at prediction, and given the right rates and sufficient diversification to reduce risk, there is the potential for the model to work.
Last updated August 27, 2008 5:05 p.m. PT
Credit Crisis: Government role?
SEATTLE POST-INTELLIGENCER EDITORIAL BOARD
How far should the government go when it comes to bailing out the housing mess?
A week ago that question might have focused on the private concerns that carry implicit government “guarantees” — the mortgage giants Fannie Mae and Freddie Mac. The answer to that problem is one we’re not sure about. We don’t like the idea of saving individual investors, but we recognize that the mortgage twins are essential for the flow of credit to ordinary homeowners.
But what’s beyond debate: Making certain that Federal Deposit Insurance Corp. has the resources it needs for the job ahead.
From ‘The Market Ticker’,
“”This morning Harvey Rosenblum of the Dallas Fed (Executive VP) said something on CNBC that truly astounded me - The Federal Reserve is in business to create Moral Hazard.
Now let’s think about this for a minute, and go back to a relatively simple example - a lender makes a mortgage loan to a person who is unqualified, on an objective basis, to pay that mortgage down to completion and take clean title to the house. Now realize that when a bad loan is made the loss happens at that point in time. Just like a stock you buy that immediately implodes the indisputable fact is that loss has occurred, and we are reduced to arguing over who gets to eat it and when we admit to it.
The Federal Reserve, as a consequence of how its mission is defined and how it chooses to discharge that mission, shifts costs and losses away from those people responsible for them and onto those people who have been and are prudent - that is, the American Public at large.
In short, what Rosenblum admitted - on national television - is that The Fed as currently constituted and operated exists to rob the taxpaying public to cover the losses of wealthy investment and commercial bankers, allowing them to take risks that they would never take were they instead forced to operate in a prudent fashion. When do you finally wake up and realize that the Federal Reserve is in fact in business to rob you, and the Dallas Fed’s VP just admitted the truth on national television!”"
They feel free to admit the truth on TV because the average American has no understanding about what’s going on.
I tell people again and again how inflation is a tax levied on everyone who gets a pay check. You can’t hedge your paycheck. I get blank looks. This tax along with the alternative minimum tax has been used to provide a dividend and capital gains tax cut to the elite and to bale out rich investment banks who made money hand over fist on the way up. The top 0.5% are stripping the wealth from the bottom 99.5%.
Who Will Suffer Least From a Depression?
John Browne
Aug 28, 2008
“”For two years I have warned readers of a severe, real estate led recession and encouraged extreme asset allocations to cash, particularly short-term, hard currency government bonds, and gold. Last year, I urged short positions in financials and U.S. stock markets. Some ridiculed me. The financials are currently down some 84 percent. Apparently, the real estate crash is biting deeper than just about any market “expert” had imagined.
The differential may become magnified as America’s government hyper-inflates. Investors will then increasingly dump dollar paper assets and buy hard currencies, government bonds of ‘producer’ nations and gold. Investors ahead of this depression curve will likely suffer least!”"
You can only protect yourself and family.
Best Wishes!
MEaston,
I have to confess i’m giving you a blank look right now. Doesn’t time have to pass between you receiving your paycheck and spending it for inflation to hurt you much? And in general, i’d guess the richer you are, the more time passes between those two events.
i see how it works in retirement accounts and whatnot, but for people i know living paycheck to paycheck… as long as inflation also means wage inflation, what’s the problem?
“”as long as inflation also means wage inflation, what’s the problem?”"
Ha Ha Ha Ha Ha Ha Ha
You funny man!
“as long as inflation also means wage inflation, what’s the problem?”
That IS the problem!!
(and, hence, the blank looks. or were you joking?)
“You can’t hedge your paycheck.”
Oh yes you can. Save some of it and invest it in inflation hedges (I recommended physical gold)…
A friend has been trying to sell their house here, for almost 2 years now…
Finally, somebody came through and wants to put $80k down on a $500k+ house. The would-be buyer is retired from the military, excellent credit, has plenty of dough in the bank, but the deal isn’t flying.
The bank/lenders want more, like 30% down.
At this point of the game in the California real estate market, narrowing the field down to those that have $150k+ to put for a down payment, means there is no viable market.
In our part of Florida, I’m seeing a lot of the smaller, infestor owned places asking cash or hard money. LOL! All “mortgages” will be hard money loans sooner or later.
Seeing a lot of capitulation in Miami, especially in the slums. Places that sold for around $200K at peak are now going for $40-80K, cash only. Banks won’t lend any money on those places since they usually require a major rehab. Banks won’t touch that with a 10 ft pole.
Declines haven’t been as vicious in the nicer neighborhoods or the condo market. With a 36+ month supply out there it’s just a matter of time.
Recently I put in a $144K offer on a decent triplex close to where I work. N’hood is borderline but nothing really scary. The place was offered (but never sold) at $380K in 2006.
The current asking price is $170K. They came down to $160 but no deal. Time is on my side, oh yes it is!
My home was offered (but never sold) at $1 billion last year. I’m not going to give it away.
Exactly Tresho, and now the assh*les expect a reasonable lowball offer based upon the astronomical and completely unreasonable asking price of $1 billion (to use your extreme example) which has no foundation in reality and was arrived at by fishing around in their pants and pulling it out from their backside region. At least that is the game being played around my area.
you should offer a HUGE price cut.
maybe from 1 billion to 200 million.
that will do it.
Thresho’s joke is only slightly away from the truth. Some “investor” who bought a lot (some number of acres) next to some land I own in Florida had it listed for 8 Million Dollars! The lot was only worth about 50K at most. (What it would have gone for in the 90s)
He had it listed in MLS as having a house–to-be-built–on it. There was even a drawing of the imaginary house on Realtor.com and similar sites. Not even the lot was prepared for a house. It was just swampland.
I chatted with this guy, and he really envisioned himself as a multi-millionaire because he took a 50K lot and listed it for $8Million dollars!
Plenty of that going on around here (western WA). Infestor purchases small acreage for inflated bubble price of say $200k, then turns right around and slaps some million dollar fantasy price on it. I don’t believe anyone even looks at these. Since the banks were doing stated income loans with minimal down payments on land, I expect they’re going to be the not so proud new owners of LOTS of dirt.
tresho -
I was thinking of lowballing you at $500M, but I didn’t want to insult you..
“Places that sold for around $200K at peak are now going for $40-80K, cash only.”
Yep, same here. One infestor had bought up a bunch of duplexes in South Hillsborough, only to realize after the fact that the neighborhood was severly gang and illegal populated and he started dumping them as fast as he could, selling the “American Dream” of living in one side and renting the other to “cover the mortgage”. He actually had a number of takers, too, from the immigrant population. So it ain’t over here yet. There’s gonna be some secondary knife-catcher defaults around the corner.
“severly”
SeverEly. Sheesh. More cawfee.
I looked at several of those places. They really need to be demolished. Even after a full rehab of $40-50K they would suck. Land value is maybe $20-30K minus the cost to demolish of about $5K. That leaves about $20K fair market value, if that much.
Palmetto…
Appreciate your posts, since I lived in those environs some time ago.
I wondered what the demand for the low-end housing would be if the U.S. Border Patrol swept through and deported the paperless population.
Pretty darn small, I’d imagine. Of course, the tomato growers are well-connected, and the chance of that happening are slim.
Maybe construction has halted near Myakka State Park. That would be a good thing.
Recently I put in a $144K offer on a decent triplex close to where I work… The place was offered (but never sold) at $380K in 2006. The current asking price is $170K. They came down to $160 but no deal. Time is on my side, oh yes it is!
In a few months you can make another offer, this time at $135K.
Hey Bill, was talking with customer a few days ago and he said there is a very nice place where you are…near clemson. Its a golf course very $$$ homes and he said they are selling faster than they could build them. Called Reserve or preserve or something lke that. I did not call BS on him because he is a customer. Have you heard of that place?
Lane
Nice work, Bill and good luck. A few months back I saw a 4-plex in my hometown in Midwest that was REO for $199K, then $179K. I believe it sold previously for $260K. I thought about offering $115K, but then didn’t submit an offer because I was “afraid” they wouldn’t accept it.
It sold for $116K.
The flip side is, I was afraid they WOULD accept it and I’d have to scramble to find someone to manage it, what with me being 2500 miles away and all…
It sounds like only hedge funds or REITs that can raise 30 pct downpayments from their investors should be buying in that market at this point.
REITs/commercial property….the next bubble to burst. Empty office buildings are sprouting up like weeds in my next of the woods (Chittenden county, VT) and they have no tenants meanwhile existing office space vacancy rates are at 10%+ and climbing. I can’t see how this market can’t help but collapse. I’m guessing it’s not much different elsewhere.
I just rented a new office for my business! 5 blocks north of my house, and $1.50/sq foot in Sunnyvale, California.
Here in the heart of Silicon Valley (I can walk to Apple HQ, and I’m a few minutes from Google, Yahoo, Intel, etc), there is a LOT of commercial space available, especially smaller buildings. I’ve seen some sitting empty for several years now.
We have a bunch of small, empty office buildings here in my area of Maryland. Still waiting for the “infinite growth forever” to “save” us!
Office Comm bldg /Farrell-Ramon, 3, 2 story.
Lots of vacancy since original owner/operator sold, and now the CORP that bought the places keeps raising rents, so people/businesses are vacating. The bldg is 30+ yrs old with no renovations since birth. Friends who had to move out of their unit said that over 40% is vacant for a long time.
So, here is my question when I see lots of For lease signs for years, do the corps that own these bldgs just had buttloads of money to waste on non performing units.
Gosh, if I were the owner, I would make damn sure I had a minimum 96% occupancy yr round.
And, when I did have rental houses, I took care of the tenants that paid on time and were good tenants.
I didn’t raise their rates just cause I could. Bird in the hand..so to speak.
150K down, after taxes. Sheesh, you’d have to make and save 215k in pretax earnings.
$300K?
I’m doing a 150k down payment at a tax rate of 30%.
150k/(1-30%).
Am I on Mars.
Nope. Sounds right to me. My last two tax statements to the federal and state (CA) show me around a 30% tax rate after it’s all said and done.
Don’t forget the employer “match” of SS, so add another 6.65%
OK, my take home on an incremental dollar is about 50%. Only 43% is taxes. Other is cough, er, alimony. Sorry.
RE: 30 pct downpmt requirement on a “$500K+ house”
That suggests the bank is willing to loan $350K on the property. Any chance your friend could live with a sale price of $430K (= $350K+$80K downpmt)? Perhaps your friend actually owns a $430K house, but hasn’t figured it out yet?
Real estate is moving somewhat, here on just the other side of nowhere…
Rich city people slowly buying up places to hide away, when metropolises turn violent~
“Rich city people slowly buying up places to hide away, when metropolises turn violent~”
Wait a minute. I thought everyone was going to abandon the “sticks” and move back to the cities and close-in suburbs because of gasoline costs. Has that movement already peaked?
The idea of being surrounded by millions of ex-middle class zombies in a big city setting, seems akin to being on the set of a horror movie…
Thriller video.
“At this point of the game in the California real estate market, narrowing the field down to those that have $150k+ to put for a down payment, means there is no viable market.”
Certainly the case for first-time buyers unless their parents are well-off.
Alad, what city?
Galt’s Gulch, Ca.
Next door to Ayn?
http://en.wikipedia.org/wiki/Gulching
So is there a geographic location, or is this a state(CA) of mind?
I live on just the other side of nowhere, somewhere.
Aladinsane,
Thanks for the link. Real interesting.
So, the banks are predicting another 30% to be shaved from the value of the homes, in that area, in the future? I mean, why else demand that… other than the fear of the owner quickly becoming under water and handing back the keys. CYA all the way!
‘Mornin all. I just made my first bike commute to work in years (a whole 4 minute ride). Moved to an apt right near my work and dumped the fancy-shmancy condo the wifey and I were renting. No more 45 min commute through gridlock. This is the most liberating feeling I’ve had in a long time. That’s all I have to say… just wanted to share my happiness on this glorious morning.
Congrats — I am jealous! (My most pleasant years of work experience were the two when I lived 2 mis from work and could bike in if I chose to do so… not a viable option today given coastal CA bubble prices.)
Smart move. Our most important asset is time.
Really? Then let’s make a deal: You pay me $1m dollars a minute, and I will quit my job and devote myself 60 hours a week to learning your job, with a plan to scale down to 40 hours a week going forward after I am up to speed.
Prof, hopefully you have a point in there that you are just not expressing very well. Just because someone says time is our most important asset, it doesn’t mean they have or are going to give you a million dollars a minute for anything . . .
I wouldn’t give away my family for any amount of money, but I would give my time for $1m or quite a bit less, for that matter, so unlike the rest of the human race, I do not consider time to be my most important asset without qualification.
It is said that the time necessary to become a “master” in any particular field is about 5000 - 8000 hours.
Nice! Living the dream!
It’s an awesome feeling isn’t it? I did the same thing (only my bike ride is 5 minutes; walk is about 20 minutes) beginning of April.
I fill up my car maybe once a month now.
I’m wondering if it had the same effect on you that it has on me beyond just the communte to work. Yesterday I biked to the grocery store (which is no closer now that it was in my old place). It’s like once you get over the hump and commit to a car-free lifestyle, you wonder what you could have been thinking all those years.
Thanks for the encouragement, as I am trying to design more of a car free daily lifestyle.
Do it, you won’t regret it. Been car free nine mos. now (hardly used for the 3 years before that). Biking to work takes care of exercise and the commute at the same time. More free time, more money - what’s not to like?
The money saved goes to good food, good drink, good music, and travel. My coworkers whine about gas prices while my “gas money” is all mine.
Cars, no matter how nice, are a p.i.t.a. Between gridlock, parking, and the cost, I am burnt out on a daily basis.
I was on the 101 and 405 for 2-3 hours a day, so that’s why I said time is our most valuble asset. Money can be replaced, people and time can’t be. Sorry Prof- didn’t clarify my statement. …And thank you edgewater john for your great feedback.
I’m definately exercising more, but somehow the area I moved to seems to have escaped the massive commercial build up, so I have to actually drive to get the groceries.
It’s probably for the best because I tend to go overboard when I go to Costco! Might make the bike ride back interesting…
Sounds like my situation. Close to work but a ways off for most shopping. Having said that, 300kms on the car in 3 months is not too shabby. As far as the trips to Costco go, think bike trailer.
I’m in the process of doing the same thing, and will be moving in a month. Not only do you save on gas, you get exercise, decrease your carbon footprint, and you provide less wear and tear on the highways (thus theoretically lowering your taxes). Not to mention the ‘coolness’ factor.
Not to put a damper on your day, but just something to think about for any rider. I’m looking into some bikes myself and a friend brought up the whole male seat/Erectile dysfunction issue which I’m not sure has been fully resolved. My guess is, like life, it’s about moderation.
A couple of articles from both sides
Won’t hurt
http://bicyclehabitat.com/page.cfm?PageID=97
Will Hurt
http://www.latimes.com/features/health/la-he-cycling9apr09,0,2162886.story
New seat designs.
http://www.treehugger.com/files/2008/01/x_seat_erectile_disfunction.php
I’m 56. It hasn’t hurt. Check back with me in a couple of decades.
90% of the Chinese population cycles
That pretty much settles it.
Yes, but it used by 99% and that number is getting smaller every day. Official govt. policy in china is to adopt a car culture. Why, I have no idea, but that is the policy.
This is why almost 600,000 new cars are sold in China each month.
I was alluding to the fact that 99% of China uses bikes and clearly don’t have fertility problems.
Ask Lance.
He seems to be doing swell in the dating dept.
Minus one testicle. Still gets the babes.
Proof there’s only one nut that women are really interested in.
As one of my co-bike-riders puts it, if you’re having problems with the “seat”, you’re not putting enough weight on the d*mn pedals!
But seriously, I commuted to work for almost 5 years via mountain bike and did lots of other biking on the side. No problems like that that I could ever notice, at least nothing that lasted more than, ahem, a few minutes even in the worst case.
Not to mention, you put your life and limb in jeopardy when you share the road with motorists. Biking can be fun and cheap, but not necessarily always healthy.
RE: LOL! All “mortgages” will be hard money loans sooner or late
Since all cash buyer’s represent like only 2% in any given market, a property’s value is worth only what somebody is willing to lend against it, as many will soon find out.
I did enjoy riding my bike to work when it was feasible a few years ago, until I got hit. Jerk opened car door in front of me and I flew over handlebars. Anyway, my advice:
1) definitely wear the helmet
2) Assume every car is trying to hit you
Be safe.
Getting doored is the worst.
I’ve known several Chicago riders who did serious hospital time after accidents like yours. One of them was doored by Victoria Lautman of local public radio fame, who had the temerity to call my friend’s wife (as he lay writhing on the ground) to tell her about the accident and ask if he’d been drinking that morning.
At any rate, I’m too chickensh!t to ride to work downtown in the big city, but I fully support those who are wily, brave or foolhardy enough to do it. I walk and take mass transit.
Used to bike in NYC only on weekends. And in the park.
Yep, I’ve been biking to work for a year, and I should have done it 20 years ago. It’s nine miles each way, and I didn’t think I could do it, but I can. Exercise, little extra time, and fun. Pretty much the best part of my day.
I stick to the side streets to avoid traffic hazards, use the right gear to avoid weather problems (if it’s pouring in the AM I don’t ride), and carry my business clothes on the back of a bike in a bag. No problem. There are almost zero days the weather prevents me from riding in NYC.
I’m saving money and the environment, of course, but the big thing is health and fitness. The subway, the alternative mode for me, is also cheap and environmentally a good thing.
how do you prevent (or minimize) your clothes getting wrinkled?
I roll them. They’re business casual and unwrinkled enough for me.
I don’t have to wear a suit at work, but my wife does, and now she’s started bike commuting too.
But she has a place where she can keep them in the office, and there is a dry cleaner next door. So I’ll be driving her downtown this weekend to put some her suits there, so she won’t have to carry them back and forth.
Speaking as a longtime get-around-by-bike person, I know that feeling of happiness very well.
In fact, I can remember past jobs when I was the only cheerful person arriving at work in the morning. Why was this? Because I’d arrived by bike, rather than by car.
How is a plan to hit the most at-risk banks up for higher FDIC premiums one year into the insolvency crisis likely to pan out?
Market Scan
FDIC Under Pressure
Carl Gutierrez, 08.27.08, 5:55 PM ET
The Federal Deposit Insurance Corp, the government’s designated spotter, is starting to sweat under the pressure of so many firms sitting in hot water.
The number of troubled U.S. banks rose to 117 in the second quarter, and it’ll get worse if the housing slump and credit crisis continue, according to the Federal Deposit Insurance Corp, commonly know as the FDIC. Specifically, t he number of “problem” lenders increased in the second quarter to 117, with $78.3 billion of assets, from 90 lenders with $26.3 billion of assets three months earlier.
…
“We don’t think the credit cycle has bottomed out yet,” Bair told a quarterly news conference, adding that U.S. banks will not return to high levels of earnings anytime soon. She also said that she anticipates that banks and thrifts will keep building up reserves for the next several quarters.
So far this year, nine U.S. banks have outright failed, perhaps most notably IndyMac Bancrop, which has put a serious strain on the FDIC’s Deposit Insurance Fund to repay the insured deposits at the failed banks. In a bid to replenish the $45.2 billion fund, Bair said the FDIC will consider a plan in October to raise the premium rates banks pay into the fund, a move that will further squeeze the industry.
I heard yesterday that they (FDIC) did this at the END of the Savings & Loan debacle… AFTER 1,140 thrifts failed…now they knocking on the $$$$$$$$$$$$$$$$$$$$$$$$$$$ replenishment door, after just 9 have failed… Greenspent to Schwartz on Hogan’s Heros: “I KNOW NOTHING!”
More “privatize profits, socialize losses” economic policy here…
From the WSJ Opinion pages
“”Reforms” of the deposit insurance fund in 1996 and again in 2005 required the FDIC to charge banks nothing, or close to it, when they’re flush with cash, and to dun them hardest when the tough times hit. The banks themselves also lobbied hard to keep their contributions low in the fat years. Now they’re screaming about having to pay more amid a nearly 20% increase in problem loans.”
“the perverse way that premiums are collected needs to be fixed by Congress — and regulators like Ms. Bair and Treasury Secretary Hank Paulson ought to be saying so…Ms. Bair could do the country a favor by making it clear that the FDIC is prepared to meet its obligations to depositors no matter what — and asking Congress for an appropriation to do so…taking money from banks that are going to fail anyway, only to pay it back to depositors after the fact — and still coming up short — is merely dumb.”
I did not know that Congress recently helped screw up the FDIC, but I guess I shouldn’t have been surprised.
“How is a plan to hit the most at-risk banks up for higher FDIC premiums one year into the insolvency crisis likely to pan out?”
I suspect it’ll work out about as well as it is going to work out for the local/state gov’ts which plan on raising taxes going into the teeth of a severe economic contraction in order to bailout their foolish spending decisions.
It is becoming more and more clear that the banks suffered from a lack of regulation, not too much of it. I have devised an ingenious multiple-choice test for the trickle-down free-marketeers to see if they finally get it:
a) a strong set of laws governing appropriate behavior
b) transparency
c) good enforcement of those laws
d) punishment with teeth
e) all of the above
How about bagging the whole FDIC (and Fed. Reserve) concept and let banks/bank clearinghouses/depositor groups sort things out for themselves?
I second that! You don’t need regulators unless you create moral hazard. Every regulation simply creates more moral hazard along with the moral hazard associated with the power given to the regulators.
Let each individual bear the risk of their decisions and everything will be fine.
Customers shouldn’t blindly trust the banking system or any individual bank. By backing all banks with some kind of “regulation” and taxpayer bailout, you have created the moral hazard of lazy citizens placing undue trust where there should be cautious investing.
You also encourage bankers to be more reckless because “as long as they follow the regulators they cannot be held responsible”.
If you regulate something then you take responsibility for the failure. By this reasoning the taxpayer supporting regulation should be on the hook when regulations fail. The taxpayer supporting deregulation shouldn’t be on the hook when the lack of regulations fail. There is only one reason a bank should fail and that is bank management making poor decisions… make them responsible and it will “sell regulate”.
“If you regulate something, then you take responsibility for the failure….”
Trouble is, Bush and Co. DIDN”T regulate anything, and we (as taxpayers) are STILL taking responsibility for the failure.
No.. the trouble is that the regulation was slanted toward the bankers. Regulations include:
Legal Tender Laws
Fractional Reserve Laws
The Income Tax Code
IRA/401K laws
Bankruptcy Laws
Outlawing Alt. Money such as the Liberty Dollar
FDIC
Licensing Banking
SEC
Time and time again the regulations are setup to enrich the established elite and block the free and independent business man.
This is an example of the moral hazard associated with giving a group “regulatory powers” because they can use the powers for both good and evil and often times the “regulators” are in bed with the industry they are “regulating”. The result is closing the market to competition helping monopolies. The regulations are designed to keep the little guys out. Think about it.. power, food, drugs, cars, banking, medical, insurance, roads, all of these things are regulated and little guys cannot get in the business!
The government is “responsible” for the failure because the government created the system that is failing and outlawed alternatives. Without the government “Legalizing fraud through regulation” the banking system as a whole would not be collapsing.
Normally when someone is responsible for the failure they are responsible for fixing it.
Unfortunately, the government has the power to make those who are not responsible pay for fixing it.
“She also said that she anticipates that banks and thrifts will keep building up reserves for the next several quarters.”
This “building up reserves” means banks will keep any money coming in rather than loaning it out again. This action removes money from the system.
The “next several quarters” she talks of extends well into next year. This is when money will really begin to get tight and scarce and thus pricy, IMO. Those eagar to lock up their money in bank CDs should be forewarned.
Didn’t the FDIC payout more than they had to for the first few failed banks by covering uninsured deposits as well? uh huh:
http://www.thestreet.com/s/indymac-bancorp-to-liquidate/newsanalysis/banking/10431578.html?puc=googlefi&cm_ven=GOOGLEFI&cm_cat=FREE&cm_ite=NA
“At the time of its government takeover on July 11, the FDIC said IndyMac Bank had as much as $1 billion in uninsured deposits held by approximately 10,000 depositors. Those unlucky patrons were set to meet with FDIC claims agents last month, but only promised an advance payment worth 50% of their uninsured funds.”
Maybe if they didn’t go paying out the uninsured deposits, they wouldn’t have to hike the premiums! or at least as much!
Maybe if they didn’t go paying out the uninsured deposits, there might be severe political repercussions. Some of the big depositors have political connections. A failure of the FDIC to pay insured deposits would probably bring out crowds with pitchforks, tar & feathers.
As evidenced by our negative savings rate, what percentage of Americans actually have money in the bank, to be concerned about losing it?
I’d guess that number is around 15%
The 1995 FDIC Reform, authored by Phil Graham, John McCain’s chief economic adviser. That’s fiscal conservatism in action.
Whiner!
Gramm quite after the “we are a nation of whiners” statement.
http://www.google.com/url?sa=t&source=web&ct=res&cd=3&url=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DdJVD9FaMQN4&ei=18O2SOz0LJqUsQPc-Pn-Ag&usg=AFQjCNFb7f1lavnRslc6f593U6M9VTZgXQ&sig2=aOtDHcHN3d30sJrO2xJS9A
But don’t worry, he is still employed by USB.
Cheney-Shrub “Legacy List Item” # 6:
We insist on permanent US military bases, personnel & equipment, so that we can protect the future Chinese & India oil fields that are being developed in the Iraqi desert over the next 22 years.
“As security improves, Iraq is trying to bring in foreign companies to help increase crude output from the current 2.5 million barrels a day to 3 million barrels a day by the end of 2008, and 4.5 million barrels a day by the end of 2013.”
China, Iraq reach $3 bln oil service deal:
http://news.yahoo.com/s/ap/20080828/ap_on_bi_ge/china_iraq_oil
I read today that they are trying to build a F******G ferris wheel in Baghdad right now to increase tourism.
http://www.usatoday.com/news/world/iraq/2008-08-27-Iraq-ferriswheel_N.htm?csp=34
That was my ‘Holy Sh!t Batman’ moment for this month when I realize how truly crazy this world is.
The Ferris wheel is a real Strangelovian moment, for sure.
Once again, I have trouble discerning real news from that of the Onion.
Agreed. My thought while shaking my head in disbelief was: “imagine how easy it will be for a sniper to see that thing from pretty much anywhere in the city.”
Wow. Just wow.
Cheney-Shrub “Legacy List Item” # 6:
yup.. Give credit where credit is due.
Things are looking good for Iraq. It’s people have escaped the Dark Ages as Iraq turns into a 21st Century country exhibiting all sorts of strange ideas and possibilities for growth and prosperity, like “tourism” and “foreign partnerships”. Everyone appreciates what America has helped them accomplish..
“…Everyone appreciates what America has helped them accomplish”
Especially, the communist Chinese. We’re they one of our “coalition partners” helping out on the battle field?
Nothing is stopping Iraq from doing business with China or whoever they please. It’s a common practice among sovereign nations.
Iraqis exercising their newfound freedoms in ways that might not align with US policy has gotta be a huge disappointment to the anti-war, anti-Bush league, along with all those who’ve insisted that the “imperialist” USA’s efforts have been aimed at empire building..
REVIEW & OUTLOOK
Calling Hank Paulson
August 28, 2008; Page A14
The good news about the year-old credit crunch is that we are finally getting to the main event, which is the condition of the banking system. The bad news is that federal regulators are still trailing events, and prolonging financial trouble and uncertainty in the bargain.
Exhibit A is the revelation by Federal Deposit Insurance Corp. Chairman Sheila Bair that her $45 billion deposit insurance fund may not be adequate to pay off account holders as banks continue to fail. This has been inevitable for months, but neither Ms. Bair nor Treasury wanted to admit the truth in public for obvious political reasons. Yet now we learn that the insurance fund shrank by $7.6 billion in the second quarter, bringing its reserve ratio well below the minimum required by Congress.
Banks are supposed to pay premiums into that fund, with riskier banks paying higher premiums. But for most of the past decade most banks were paying no premiums at all, as bank failures were few and the living was easy. Last year the FDIC started charging again, but bank failures — and insurance payouts — are up sharply.
And the American population will get the raw end of the deal as it figures out that FDIC insurance is just sticker insurance.
By the end of the debacle, the FDIC will disappear.
Your mattress is probably safer than most banks right now.
the American population will get the raw end of the deal as it figures out that FDIC insurance is just sticker insurance. I doubt it.
I _really_ don’t think they can afford to let the FDIC fail. It will get a bailout out with gov funds. In other words, they will socialize the risk now that the banks have already pocketed the profits.
I actually think that is the right thing to do with where we’re at now. The “real” right thing would have been to have maintained the insurance premiums at a reasonable level even when bank failures were low.
Agreed.
Though I’m strongly opposed to any bailouts, the FDIC is one entity that NEEDS to be back-stopped.
Of course, there’s the SIPC and PBGC that will probably need to be bailed out, too.
If I could, I’d be shorting pension funds right now. They are done, IMHO.
But for most of the past decade most banks were paying no premiums at all, as bank failures were few and the living was easy.
Lmfao. Sometimes I wonder, could govt be more incompetent if they tried?
By the end of the debacle, the FDIC will disappear.
Only to be replaced by something else. Which really means it’ll just be renamed to act as a scapegoat and make it look like the pols are busy “doing something”.
I would argue that the government is very competent at doing what it wants for those who actually control the government.
It is only incompetent if you assume that it is benevolent and actually trying to protect the average man. The government is an agent of the rich/bankers to rob the average man under color of law. They are very good at what they do.
Privatize the profits, socialize the losses..
Good point.
“Lmfao. Sometimes I wonder, could govt be more incompetent if they tried?”
Of course they tried. The whole point to to allow the banks to walk off with as much taxpayer money as possible. As is so often repeated here “Privatize profits and socialize the risk.” If you’re wealthy enough to buy politicians to protect you.
Professor Bear limit your underlining to a short phrase - seven words or less
but for most of the past decade most banks were paying no premiums at all
holy cow!
He forgot to close the hyperlink tag, that’s all.
“‘Reforms’ of the deposit insurance fund in 1996 and again in 2005 required the FDIC to charge banks nothing, or close to it, when they’re flush with cash, and to dun them hardest when the tough times hit.”
Who was responsible for those “reforms”?
Congress makes laws, and the President signs them into law, or vetoes them. Basic US government.
President in 1996?
President in 2005?
not always true. The Executive can change policies within the different federal agencies without the consent of Congress, and these can be material. The Congress can always investigate/hold hearings on the policies, but I think that is merely bluster, without legal force. I think it takes someone actually suing the President/deputy for some alleged constitutional violation in the policy to get the Judiciary to check the Executive. I’m not an expert.
I dunno about anyone else, but I’m sick already of the Democratic convention. I listen to parts of the speeches, and everything sounds just a little too forced for me, especially the unity stuff.
The local business mantra is that things will get better AFTER the election. I really doubt it. Whoever “wins”, really can’t do much, considering the shape that CONgress is in. Something’s gotta give.
I can’t watch it — too much aging v@g!na power.
In it’s current guise, both donkey and elephant conventions seem about as important as a junior high school graduation, in relevance.
“In it’s current guise, both donkey and elephant conventions seem about as important as a junior high school graduation, in relevance.”
Bingo!
Ignore the ‘white noise’ - a lot of important changes are happening behind the scenes.
Dems Make Their Case: Obama Will Help Banks
Lawmakers at DNC cite a pragmatic approach to reforms
“…”We are going to work together and I’ve talked to him,” said House Financial Services Committee Chairman Barney Frank. “He supports the kind of market-friendly regulation we’re talking about.”
Rep. Rahm Emanuel, the House Democratic Caucus chairman, said he would expect significant changes to the regulatory structure under a President Obama.
“There is going to be reform and there should be reform, because what’s in place didn’t work,” Rep. Emanuel said. “More transparency, more accountability, so we don’t have this opaqueness where nobody knows who owns what and where the bottom is.”…
Regulatory restructuring, the next long-range topic in financial services matters, is an example of where Rep. Frank said he does not trust Mr. Gramm’s point of view.
“One issue, you extend some kind of supervision to the investment banks. That’s what Ben Bernanke just said. That’s the total antithesis to what was done in Gramm-Leach-Bliley, which made sure they could get into business without that,” Rep. Frank said.
Not every lawmaker was so negative. Rep. Dennis Moore, the policy chairman at the Blue Dog coalition, a group of Democrats who support balancing the budget, said he had “great respect for John McCain.”
But he said Sen. Obama was still the better choice.
“Obama would work closer with us on some financial services issues,” Rep. Moore said….”
American Banker
Well they behave like high schoolers so it all makes sense.
My mom (78 y.o.) rhetorically asked me yesterday how they could show so many drunk people on TV whilst this country has men and women on the field of battle.
Bless her (Norman) Rockwellian innocence.
Conventions = Rome’s most ambitious orgies.
What angers me is that both parties cite declining home prices as a problem!
America has a new core value! Motherhood, Apple Pie, God, and Home Equity!
Don’t forget GMAC (er, Chevy)
i can’t stand all the talk about fixing the economy… w/o discussing the national debit and the future obligations of our social programs. we are bankrupt.
I’m just waiting for the masses to realize we had a semi-functional moron run the country for 8 years. Before that we had a small time thug in the white house for 8 years. After a brief 4 yr break we had an actor run the country for 8 years.
There is some kind of implication in all of that.
Just think about it for a little while.
RE: I can’t watch it — too much aging v@g!na power.
Yes, ProfessorB-’tis a most grotesque spectacle.
Not even close. Take a look at the male specimens that are attending the convention.
I didn’t mean to slight the viagra slurpers by failing to mention them in my post above.
Hopefully you mean Viagra PB correct? Otherwise, that sounded a little on the sexist side.
I was trying my hardest to be politically incorrect. Sorry if I cannot quite achieve NYCityBoy’s or Sammy Schadenfreude’s high standards.
actually, you did. when I first read your post, i thought I read “vgina slurpers” which is suitably crass.
Wow, P-Bear, for an almost venerated member of a diverse and largely respectful online community that’s a rather crude and sexist line. If you were truly a professor that would have cost you your tenure.
I thoughtcrimes were more along the lines of stealing, thievery or the like, but double-spoken words are now in the boundary lines, apparently.
PB’s comments were doubleunplusgood, weren’t they?
Let’s report him to the thought police, quick!
The D-rat convention is so d@mn dreary, I thought a lame stab at a little off-color humor might brighten the picture a bit.
“I beg the company’s pardon if I have neglected to offend anybody this evening.”
- Johannes Brahms, on leaving a party
“I beg the company’s pardon if I have neglected to offend anybody this evening.”
- Johannes Brahms, on leaving a party
Bravo! Encore!!!!
I keeping scanning the crowds faces… hoping to see Ann Coulter dressed up as Dennis Rodman.
But Henry Cisneros wants the next stimulus package to throw more money at the problem. He concludes that we need to increase homeownership, especially for minorities. Wasn’t it that attitude that got us into this colossal mess. These people all suck. I didn’t have the stomach to paste a link to the article. I hate them all and that includes Obama, McCain and anyone else that you can name. You partisans may think otherwise. Partisans are tools.
Palmetto, I wasn’t speaking of you as a partisan. I was speaking of partisans in general. Between this Cisneros moron and the idiotic stuff on TV I am in a really bad mood this morning. This country is screwed and that’s a hard realization to reach.
“I hate them all and that includes Obama, McCain and anyone else that you can name.”
Testify, brothah! I feel the same way. My blood pressure must have risen about 100pts listening to all the anal sock of crap drivel about “The American Dream”. What a bunch of knob sucking phonies. “Si, se puede”. To that I say “No, no pudenda”.
Regarding “Si se puede” (It can be done):
If they really feel that way, why not just go back to the old country and fix it?
Or are they using another translation, say “let’s bleed the system dry”
We in Arizona agree with you, In Colorado.
‘I hate them all and that includes Obama, McCain and anyone else that you can name. You partisans may think otherwise. Partisans are tools.’
You’re my new favorite poster. My loathing for the system has grown by leaps and bounds over the past few years as I’ve grown to realize that all these a$$holes (Dems, Reps) are paid to spout the same worthless garbage by the same corporations (FED, CFR, Coke, GE, etc).
Half of me wakes up scared some mornings that the whole crappy system will collapse and the other half can’t wait for that glorious day when these scumbags get theirs.
“…things will get better AFTER the election.”
Forgive them Palmy, it’s all they have left to believe in right now.
Oh yeah, hurricane(s) ahoy! So much for those declining gasoline prices. Crude’s one thing - but the refineries are THE weakest link.
edgewater, I hafta say, you always have some of the most incisive posts on this blog. My hat’s off to ya.
That’s my beef about offshore drilling. Way too unstable.
Just expecting the unexpected Palmy. History just doesn’t come all neat and tidy - these election theatrics are meaningless.
Twelve states, including New York, are suing the Environmental Protection Agency over greenhouse gas emissions from oil refineries. They want to place more restrictions on oil refining (meaning raise the cost to consumers). Maybe the next administration will just ban all domestic oil drilling and refining.
p.s.
Both conventions have much in common with the Academy Awards…
Carefully orchestrated self-congratulatory pomp & circumstance.
“Carefully orchestrated self-congratulatory pomp & circumstance.”
Oh, gawd, ain’t it da trute. It’s sickening enough to want to lay in a supply of barf bags. It’d be more honest and far less costly if they just did an all-inclusive circle jerk and posted it on You Tube.
What gets under my skin is that any of these pols even THINK they have anything to offer the American people, other than empty rhetoric.
The conventions are good things to ignore these days. Everything is choreographed and pre-planned. Announcements and speeches are blanded-down to the mass audience.
I’d fall out of my chair if anything really new came out of either convention, especially one where even the VP choice is already known in advance.
Turn off the TV and check in again about mid-September when they might maybe start talking about real issues in detail. (Hey, we can always hope, right?)
My biggest beef is the $50,000,000 each host city is getting. That’s $100m handout they all agreed to and tacked on to an emergency spending bill, What a load of cr@@. They are all the same so I can’t watch either convention.
Never arrested at the Academy Awards?
ABC Reporter Arrested in Denver Taking Pictures of Senators, Big Donors
“DENVER — Police in Denver arrested an ABC News producer today as he and a camera crew were attempting to take pictures on a public sidewalk of Democratic senators and VIP donors leaving a private meeting at the Brown Palace Hotel.
Police on the scene refused to tell ABC lawyers the charges against the producer, Asa Eslocker, who works with the ABC News investigative unit. …”
ABC News
So much for Freedom of the Press in the US.
Freedom is just another word for nothing left to lose…
Hey old buddy, these freedom loving reps just wanted to spend 30 minutes and some viagra on some femmes.
Airlines are doing a booming business from LA & Vegas to Denver and preflight bookings to Minneapolis from Vegas and LA are way, way up - mostly young women with such picturesque names as Charity and Faith. All for the spiritual revival no doubt.
Check out RISK Q2 statement on Q3 earnings expectations from their strip club in Minneapolis. lol
I saw that last night hoz.
ABC has been reporting about how our lawmakers are using the loopholes to justify attending these private paries with companies and lobbyists since Monday. Just made me sick to my stomach to see what some of the Demos were doing to get money. They are also going to the Republican convention to report the same issue.
Did you see where one of the police officer’s had grabbed the reporter by the neck. All on a public sidewalk. Just made my blood boil also.
Its Denver, after all, what did you expect?
It’s wrong no matter who does it, of course — but let’s not forget that the current administration has made High Art of dissembling, preemptive arresting, obfuscating, name-calling, lying and playing hide-the-accountability-salami.
In that sense it’s a race to the bottom, courtesy of the Head Cretin and his Puppetmaster.
I think this one is beyond partisan crud.
I hear the Tijuana donkey-show will be performing tonight at the other donkey-show, in Denver.
as Protector of Mexico, is Emperor Norton III going to rescue that donkey?
I tried to watch a little of the convention but it’s hard to find a channel where I won’t hear commentary so stupid that it actually makes me stupider for having heard it. I settled on PBS which is not so bad. The other day I was getting new tires and the waiting room tv was running MSNBC and there was no remote. It was like bein in hell (I imagine) and it was pouring outside so I was trapped!
Last night one of my local PBS stations was broadcasting the exact same convention coverage on both of its digital channels, X.1 and X.2. There’s no excuse for that. One of the benefits of the new digital technology is that a station can broadcast two completely different programs simultaneously. I was hoping to watch something scenic about animals, but no luck. I was reduced to watching “Don Francisco” on Univision, and I don’t speak Spanish.
“I was hoping to watch something scenic about animals, but no luck.”
I agree completely. Watching elephants f-cking would be a lot more interesting and informative.
That’s next week.
Elephantine is an island in the river of denial.
http://en.wikipedia.org/wiki/Elephantine
lol
I was watching CSPAN and while the crowd was giving Bill to standing O before his speech the camera panned to Obama’s wife in the crowd and she was giving Bill the death stare. No smile just pure hate for the man.
I saw a couple of shots of the same thing while Hillary was talking. On the other hand, that’s gotta be a tough scene for her. If she smiles, she could be interpreted as smirking about bringing the Clintons to heel. If she doesn’t smile, then she doesn’t look properly grateful for the support.
Gotta have been a bitter pill for the Clintons to swallow, too.
Wow, you can read minds? I bet you believe that if someone smiles warmly that they must like you and be trustworthy…I know a few RE agents you would just love!
just pure hate for the man Makes me wonder who else she hates & what that will lead to.
She probably just was noticing that your tin-foil hat is waaaay too tight.
Wow you must have been watching something different. I saw the same speech and I noticed Michelle was smiling at times during Bill-o’s speech.
PBS online has an eye opening documentary, “Sick Around The World”, Frontline show. It’s on 5 countries who have universal heathcare. Canada isn’t covered. Really interesting. I also like their railroad history (and Grand Central Terminal) on their American Experience show (online, again). We don’t even own a TV.
Regardinng Canadian health care:
My daughter was given a prescripton for Allegra-D. It turns out that our insurance won’t cover it, and it costs amost $140 for a 1 month supply.
Online Canadian pharmacies have it for about $25
$140/mo is ef-ing highway robbery. Regarding health insurance companies, and prescription costs, they need to be regulated. We need a solution. This so called “free market” isn’t working.
Even though I’m a “fiscal conservative” I’m all for universal health care! I actually think it would stimulate business, because it would let people feel more comfortable quitting their jobs to start businesses, and would let small businesses not have to worry about providing health care.
Health care prices are extremely inflated in the US because people have no idea what they cost.
There’s only two solutions I see:
1. A pure socialized system. Health insurance companies would no longer be needed (except for some small fraction of people who may want to be able to use a private doctor for extraordinary events.)
2. A universal “$3000 deductible” insurance system. (We figure out the deductible amount that would make it so 95% of people between 18 and 65 wouldn’t exceed it per year.) Everyone has to buy it. Poor people get it subsidized.
I actually prefer #2, because people will start being price conscious! You’d see Wal*Mart clinics offering $59 mammograms, etc. And drug prices would plummet. And still, if you get hit by a bus or get cancer, you’ll only pay $3000
Barack Obama’s plan to give away $2500 to each “family” will simply raise the amount that insurance companies charge by $2500/year.
It ain’t no free market — Big Pharma aggressively protects its patent and IP rights to control prices and access.
Generic formulations of some of their star drugs could go for pennies on the dollar if IP wasn’t an issue. Or, alternatively, we could simply mandate that Big Pharma not be allowed to crap all over the American citizenry with its insanely usurious pricing.
While we’re on the subject, I’d like all those $#@& erectile dysfunction ads outlawed, too.
Health care prices are extremely inflated in the US because people have no idea what they cost.
No, that’s not why health care prices are inflated in the US. Health care prices in the US are sky-high because we have allowed corporations to run roughshod over both the government and the citizenry in their quest for profits.
The US healthcare industry needs a good long spanking.
(I do agree with your argument that universal healthcare would stimulate business growth, however. The Big Three would be in much better shape right now, for sure.)
In Colorado
I find Costco’s drug prices are the best and are worth the membership cost alone. I think you might get the price of Allegra under a $100 for a 50 count.
Here’s a link you might find helpful.
pharmacychecker.com
You know you can buy that stuff over the counter at Wal*Mart for $5?
Sure, its not the patented version, but the previous versions, all works the same( it does contain pseudoephedrine so you will have to proffer up a drivers license and sign an affidavit to assist in the global war on drugs).
What I don’t like to see are the “Yeast Infection” ads WHILE I’M EATING DINNER. That’s just gross! (I think I’ll write a letter to my Congresswoman (Anna Eshoo) right now!)
we have allowed corporations to run roughshod over both the government and the citizenry
While I generally agree with the direction you are going, I would say that the government isn’t be “run over” but rather is a complicit partner in crime.
And lets not forget the artificial supply limits for medical school (and by inference, doctors) put in place by the govt on behalf of the AMA, an institution whose primary goal is to maximize the wealth of its members.
There’s no way you can be a fiscal conservative and still believe in “free” health care. Might as well believe in the tooth fairy while you’re at it.
A true conservative believes in paying for what he uses, and spending no more than what he needs.
“Fascism should rightly be called Corporatism, as it is the merger of corporate and government power.”
Benito Mussolini
I would say that the government isn’t be “run over” but rather is a complicit partner in crime.
I agree with you — but the complicity occurs when well-intentioned or reform-minded legislators are outnumbered or outflanked by legislators paid off by one or more appendages of the many-armed healthcare octopus — thus “run over.”
A true conservative believes in paying for what he uses, and spending no more than what he needs.
Silly me. These days I thought that a true conservative believes that large coprorations are always right. You know, like granting monopolies to the health care industry and socializing losses for others sectors.
And a good conservative will always celebrate that his masters are always getting richer, while he is barely keeping his head above water. Just like our CEO told us that $9B profit is not enough and that we are shafting our shareholders.
Reminds me of a cartoon I saw in a Mexican paper when Carlos Slim Helu passed Bill Gates to become the richest man in the world. A Mexican J6P tells his wife: Too bad we can’t afford to go out for dinner to celebrate his accomplishment.
I agree with you — but the complicity occurs when well-intentioned or reform-minded legislators are outnumbered or outflanked by legislators paid off by one or more appendages of the many-armed healthcare octopus — thus “run over.”
I see what you mean. The problem I have with that is that by using the term “run over” in general, you are being apologetic for the government as a whole. e.g “If only that institution weren’t run over, it would be ok”.
That attitude, imo, excludes the possibility that the form of the institution is inherently flawed to promote the “bad” legislators over the good.
Aside from the term “run over”, when the bad (I’m just using the term “good”/”bad” for simplicity sake) legislators outnumber the good ones by a margin of 98-2 (or more), that reinforces my previous point that maybe there is just something wrong with the whole thing.
To use the fox/henhouse analogy, I interpret your point as being akin to saying “We just need a different fox.”
“There’s no way you can be a fiscal conservative and still believe in “free” health care. Might as well believe in the tooth fairy while you’re at it.
A true conservative believes in paying for what he uses, and spending no more than what he needs.”
Fiscal conservatism advocates smaller government, lower taxes, less spending, and less debt. It does NOT believe in “paying for what he uses!”
IMO this means one can be both fiscally conservative AND believe in universal health care. Why? Because health is simply too important to leave to chance. That chance being that you or a loved one could at any moment be diagnosed with a disease or be hit by a truck, etc.
To be a fiscal conservative in your sense suggests that only the rich/rulers will be able to afford to keep themselves healthy.
As a Canadian, I can personally attest to this. Anyone on this blog would have been financially destroyed for going through what my wife and I have had to endure with our son. Even with insurance, there would have been far too many ‘little things’ that ‘are not covered by your policy’.
Also from personal experience, the doctors are no longer feeling any pressure to push the patient out the door to reduce costs. Instead they have been free to treat the patient until cured or healthy enough. If they were to set my son loose too soon, the cost down the road may again be astronomical. Instead they want right now to cure him as completely as possible.
Think about that before you mouth off about what YOU think a fiscal conservative is NoSingleOne…
Great thread on our dysfunction healthcare system in the U.S. For those of you who want to learn how Japan has a $98 cap on MRI’s and the mfg. are involved, and how Taiwan set theirs up (#1 in the world in universal healthcare-they studied the failures in all universal healthcare countries, and made changes) watch this online PBS documentary
“Sick Around The World”
http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/
Its broken into 5 parts, each country is about 12 minutes.
…as a Canadian, I can personally attest to this”
LOL!!! I’ve lived in your country for 4 years, Mr. Canadian. I think you guys are good at mouthing off about what a wonderful health care system you have, while your doctors, nurses, and provincial governments slowly hemorrage money, expertise and manpower to this country. I’ve seen a lot of Canadians suffer needlessly and even die because of outdated equipment, long lines, and ignorant imported physicians.
But go ahead and lecture me about how superior you are and obfuscate the argument with your son’s tragedy. I’ll take your advice to heart when I see Canada manage its own affairs properly before telling Americans how to manage theirs.
You need a TV-B-Gone! I don’t go anywhere without mine
http://www.tvbgone.com/cfe_tvbg_main.php
(Someone got banned from the Consumer Electronics Tradeshow for bringing one, so use it responsibly)
Thank You reuven avram. Was CES crowded this year? We couldn’t make it.
It was ok. Will you be at IBC next week (in Amsterdam?)
From the mind of Limpbaughs:
“Operation Chaos”:
“The dream end of this is that this keeps up to the convention and we have a replay of Chicago 1968 with burning cars, protests, fires, literal riots, and all of that. That’s that’s the objective here.”
“Listen to me…you don’t even have to think..I’ll do that for you…I’m right 99.8% of the time”
Bugs: “Eh, I don’t think so Doc,”
Gustav makes landfall near New Orleans during other convention.
Last night, I was at the Tucson meeting of Green Drinks. This is a monthly gathering of people who work in the environmental field and those of us who’d like to do business with the first group.
The bar TV was tuned to the Democratic Convention, and you’d think that our group, being green and all that, would have been sitting there, watching with rapt attention.
But you would be wrong.
The TV’s sound was turned off, and very few people even gave it a passing glance. We were too busy talking, eating, and drinking to notice what was happening in Denver.
I see John McCain is on the front page asking us to invest in his victory. My only question is, do the holders of the common stock get the same dividend as the corporations that hold the preferred stock?
No, in that particular corporation the dividend goes to the executives for their “expertise” in both simultaneously decreasing revenue and increasing expenditures, while they pull an Arthur Andersen-style hand-waving trick to tell the stockholders that the company is even stronger than ever…
But hey, you get a really bright and pretty prospectus for all your trouble!
What sort of return could I expect to get out of my $25 “investment” in Geritol Johnny?
Can we short sell his victory?
Forget your vanishing bank profits, GSE insolvency issues, FDIC funding problems, and plummeting Case-Shiller home price index levels. Those stories are so yesterday. The big news is that consumer durables and GDP are growing faster than expected. Look for a bull run on Wall Street to carry us straight through election season.
August 28, 2008 8:44 A.M.ET
BULLETIN
SECOND-QUARTER U.S. ECONOMIC GROWTH REVISED UPWARD
GDP pushed to 3.3%
Growth rate revised upward
The second quarter, on second thought, was quite strong, government statistics show. Talk emerges that it could represent high-water mark.
“government statistics show”
Government statistics show whatever the government wants you to believe. They can cook the books just as well as ENRON or anybody else.
They make Enron look like a Girl Scout troop.
“Look for a bull run on Wall Street to carry us straight through election season.”
Now, if one were “looking” for a “crash” - this is precisely the sentiment one would like to see dominate for the next 6 to 8 weeks.
Just sayin’.
Pre-cisely!
I’m looking to increase my short positions on the way up.
There is often a fly in the after-hours ointment…
BULLETIN
DELL REPORTS 17% DECLINE IN EARNINGS; SHARES FALL 9% AFTER HOURS
ECONOMIC REPORT
Second-quarter growth revised significantly higher
Expansion in U.S. GDP pegged at 3.3%, could be strongest for some time
Check out the
blowback on these REIC share prices in the first few minutes after closing…
MADRID (Dow Jones)–Spanish home sale transactions fell sharply in June in another sign that Spain’s former growth motor is faltering and driving the whole economy into a potential recession.
Home sale transactions fell at an annual rate of 29.6% in June, data released Thursday by Spain’s National Statistics Institute, or INE, showed….In May, annual home sales transactions plunged 34.3% and new mortgages fell by 36.2%. ”
It is all contained.
Nobody ever expects the Spanish Liquidation!
Que lights
Que the music
The liquidations here we go
The liquidations what a show
We know you you’re wishin that hedge funds go away.
But the liquidations here and its here tooo Stayyyyy.
Hey Aladinsane whatya say?
Just got back from the Perth Mint today.
Perth Mint today, whats the Perth Mint today?
Its what you aught not to do, but you do anyway….
(apologies to mr brookes.)
Seems like the Perthect crime, giving somebody your do re mi, allowing an accomplice with nary a name or face, to be in charge of your financial destiny…
Do, the fear, psychotic fear.
Re, a futuristic gun.
Mi, myself, eccentric force.
Fa, a place to hide my coin.
So, don’t confiscate my gold.
La, the place that has no soul.
Ti, the smoke for jams, deadhead.
That brings us back to, DOH!
Stock to be long, ‘equity du jour’, for the next month.
DSL A lot less risky than buying WB.
Haven’t finished with WAMUs #s yet, but they look a lot better.
sir, are you mistaking me for some sort of foolish fellow who would take hard earned moneys and gamble them away on nothing more than a name of parts unknown? Surely you must be confusing me with some sort of risk taker who would lead the charge into the fray of Freddies Fannie? thanks hoz, always like your comments.
Im not picking on you Laddy, its because I enjoy your posts…
Bring out your lead.
voz:
Excellent off-take of the von trapp door singers.
**blushes***
I aquiesce:
proverbial producer of pithy puns -aladinsane.
the Puns of August…
Having just returned from the infamous Dew Drop Inn where I and my fellow beer imbibing comrades managed to watch some football and baseball in between glasses from Brad’s sometimes washed tap, I see you boys are at it again!
Arrette, arrette! The gendarme mewled (in Paris, they mewl).
Vozzie: DSL is trading at 6% of book. And more importantly the bleeding seems to have stopped (at least for the 2nd Quarter). Somebody will buy them at 40% of book value. Drat some mope goes on TV and opines that WB will go for book and GS is a buyer (only in someone’s dreams and a great opportunity to short) and the stock goes up a couple of bucks or that Lehman is going to be bought by Koreans (not possible but another great reason to short). And I have given you my trade du jour and you scoff.. My heart beats peanut butter. I shall have to go to Oregon and Face Plant you on Mt Hood. LOL
conquistadolores
Too good for words!
Yes, it IS all contained–to the globe.
We should not expect to see any inter-galactic contagion.
Report of US currency rescue plan
By Krishna Guha in Washington
Published: August 28 2008
“…Prior to March, US and European officials were at odds over currencies, with eurozone officials concerned about the decline of the dollar against the euro, but US officials broadly welcoming this as a prop to growth.
However, following the April 11 G7 meeting, US and European officials told the FT they were united in their support for a stronger dollar. Ben Bernanke, Federal Reserve chairman, joined Mr Paulson in talking in public about the US currency.
Policymakers believe a crisis at a financial institution is less likely to trigger a run on the dollar in an environment of general dollar strength. A stronger dollar also helps to curb oil and inflation, and support confidence in US assets.
Without another Bear Stearns-style crisis, currency intervention is unlikely, but if a similar crisis were to occur again and the dollar were to weaken precipitously, co-ordinated intervention is possible.”
FT
http://www.ft.com/cms/s/0/946c7b1a-7498-11dd-bc91-0000779fd18c.html
The PPT embraces Globalization!
“…The Office of Thrift Supervision, which supervises savings associations and their holding companies, has warned institutions that if they curtail or terminate a home equity line of credit, the action must comply with federal laws and rules designed to protect customers, including regulations covered in the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act and the OTS nondiscrimination rule.
“We just wanted to give our institutions a heads-up that our examiners will be focusing on how the institutions are handling cutbacks in home equity lines of credit,” said OTS spokesman William Ruberry.
For example, with limited exceptions, Regulation Z of the Truth in Lending Act prohibits creditors from terminating a home equity line of credit and then accelerating repayment of the outstanding balance. Exceptions include situations in which the borrower fraudulently got the loan or failed to repay according to the terms of the loan. …”
So now the banks won’t be able to close as many unused existing Helocs. Let the law suits begin.
Washigton Post
Michelle Singletary’s column
The key there is terminating the line of credit *AND* accelerating repayment. If they don’t do the latter, and I haven’t heard that to be a problem, are the lenders still facing problems with Reg Z? Just terminating the line of credit alone might be perfectly legal.
Perfectly legal, as long as its done in a non-discriminatory manner. I could see them taking issue with red-lining particular neighborhoods (e.g. possibly racially-inequitable, like the insurance red-lining suits of the 90s).
If anything, this might encourage banks to trim back across the board, to avoid any charges of discrimination.
I can’t imagine that the banks are unable to trim unused helocs if they have doubts as to the value of the underlying collateral. And 2nds are the ones getting wiped-out in FCs.
OFHEO HPI data is out for Q2. I’ve been keeping track of a bunch of interesting areas, including graphing out a comparison of price index changes vs. a relatively normal (though still somewhat aggressive) 5% annual price growth.
There’s quite a variance between areas - with some areas in CA, FL, etc. being extremely bubbly (peaking way above the 5% line), and some areas such as the rust belt being not bubbly at all (staying below the 5% line).
Of the really bubbly areas - I’ve been curious to see which particular metropolitan area would be the first to drop back down to the 5%. And the winner is - Merced. The price drops over the last couple of quarters for Merced have been shocking, to say the least. Merced dropped 34% this past year including a 16% drop in just this last quarter. The total drop there is now 40% off peak. And the declines are still accelerating, both in absolute terms and in percentage terms.
2006 1 321.65
2006 2 323.61
2006 3 322.59
2006 4 316.28
2007 1 308.56
2007 2 293.80
2007 3 273.79
2007 4 253.59
2008 1 228.82
2008 2 192.39
Side note - a few months ago I made the case for the Florida west coast being “ground zero” for the bubble - i.e. the hardest hit. I was wrong - the California central valley has west Florida beat, at least at this point.
It’s funny how the British press have zeroed in on ground-zero (future value?) of the housing bubble, but aside from the 60 Minutes piece 6 months ago on Stockton, our press has been as quiet as a canary with it’s vocal cords severed.
This should be in the Cal section but it is mostly cheerleading.
RealShare EXCLUSIVE Last updated: August 28, 2008 09:24am
Conference: IE Shadowed by Dark Economy
“ONTARIO, CA-If you’re looking for the bottom of the economic downturn, you may find it here in the Inland Empire–it’s just that the “when” is another matter. Experts voiced some bleak near-term outlooks Wednesday at the third annual RealShare Inland Empire conference at the Ontario Convention Center, where more than 250 owners, investors, developers, brokers, lenders, service providers and others connected with the commercial real estate industry came to share their views and network….
Green also said educational attainment in the area is lacking. “The Inland Empire lags Southern California, it lags the state of California, it lags the United States as a whole,” he added. According to Green, the percentage of high school students taking college prep classes in Los Angeles County is 37%, slightly above California’s 35.3%, while in Riverside the number is 31.8% and in San Bernardino it’s is 25.5%.
That’s a bad sign for the Inland Empire because educational attainment is a good measure of future incomes, Green said. “This is a good projection of how incomes grow,” he said.
Following Green, a Town Hall Meeting tackled the question, “How Will the Inland Empire Fare in 2009?” The topics covered ranged from the impact of high fuel prices, the credit crisis, the housing slump, flat job growth–and how real estate professionals find and capitalize on opportunities in a confused market….”
http://www.globest.com/news/1233_1233/inlandempire/173391-1.html
I’ll have to save that quote: “The Inland Empire lags Southern California, it lags the state of California, it lags the United States as a whole” truly a classic.
http://oceansideterraces.com/floorplans.asp
I thought these were condotels.
But they are ocean condos for sale. I was walking around them yesterday and nobody was living in them yet.
condotel?
i prefer “ho-miniums”.
Yesterday someone said they put a substantial amount of money in a CD in Amtrust bank, and insinuated that that is also where their home loan is held. I thought it might be useful to share a conversation I had with the NCUA (the credit union equivalent to the FDIC) regarding situations when a person is a creditor to a bank (has a CD) and the bank is a creditor to them (has a loan).
I wrote in a letter:
I am writing to see if you could answer a question about how obligations
to a failed credit union might interact with deposits in excess of the
insured amount. For instance, consider that I have deposits in excess of
the insured amount by $30,000. Now also consider that I have a loan at
the bank with a balance of $30,000. I am a creditor to the bank for
$30,000, but the bank is a creditor to me for the same. In this case,
would the debts be canceled (best case)? Or would the loan be sold off
to another institution as a bank asset and I would have to hope the fire
sale of the bank’s assets in aggregate were able to pay off all
creditors completely (worst case because it’s not likely)?
An analyst wrote me back and said that debts don’t get canceled, and that I would still owe, even through we owe each other $30,000. Thus, get your insurance as high as you can using Payable on Death beneficiaries.
NPR was interviewing people about the candidates. I was stunned to hear how people think.
One family, with a combined income of $100,000, said that the government should GIVE THEM MONEY to offset rising costs.
We do it for corporations. Why not for people?
Exactly. Reagrdless if you are lower, middle or upper middle class, the policies of the government and quasi gov’t agencies are leaving you nice and bruised.
The analyst’s answer may be correct depending on your state, however the issue is complex. Below is the link to the FDIC’s advisory opinion on the subject:
American Economic History Introductory Lecture (August 27, 2008): Administration and Overview
American Economic History Introductory Lecture (August 27, 2008): Administration and Overview
Lecture Audio:
http://www.j-bradford-delong.net/2008_mov/20080827.mp3
Economics 113 is an upper-division economics course in the study of the history of the U.S. economy that satisfies the political economy historical context requirement. We will survey over three hundred years of history, but inevitably focus more intensely on those incidents that the instructor finds particularly interesting. This is an economics course: we will spend most of our time looking at events, factors, and explanations, using economics to understand history and history to understand economics. Economics 113 must be taken for a grade if it is to be used toward the requirements for the political economy or the economics major.
We have a textbook–Walton and Rockoff’s big book. We have two auxilliary books: Blinder and Yellen, and Friedman. We have a bunch of articles and web readings.
For those unfamiliar with U.S. history, Marty Olney recommends John Faragher et al (2005), Out of Many (New York: Prentice-Hall)
* Administrivia
* Overview of Course
* Why Are We Here?
o The Role of the University
o Relevance of Economic History
o Studying Economic History
o Framework: Economic Growth & Development
* Assignments and Cleanup
Administrivia:
* Course webpage http://tinyurl.com/43sufu http://delong.typepad.com/american_economic_history/
* Staff
o J. Bradford DeLong delong@econ.berkeley.edu Evans 601:
o Andrej Milivojevic andrej@berkeley.edu: Sections: T4-5 87 Dwinelle, W8-9 61 Evans
o Marc Gersen mgersen@econ.berkeley.edu: Sections: F2-3 55 Evans, F3-4 55 Evans
o Matthew Sargent sargent@berkeley.edu: Sections: M9-10 85 Evans, Th1-2 45 Evans
* Final exam: Th Dec 18 8-11…
Damn, I love the fact that I can audit classes that I dream about taking without ever leaving the barn!
Berkeley has quite a few on audio and some on video.
Awesome!
October 6th’s lecture looks to be particularly interesting. And perhaps we’ll even have another good panic to discuss between now and then.
M Oct 6: Depressions and Panics, 1840-1933
Lecture Notes:
Required Readings: Walton and Rockoff, “Industrial Expansion and Concentration,” Money, Prices, and Finance in the Post-Bellum Era,” “The Great Depression”; ; Eugene White (1990), “The Stock Market Boom and the Crash of 1929,” Journal of Economic Perspectives 4:2 (Spring), pp. 67-83; Martha L. Olney (1999), “Avoiding Default: The Role of Credit in the Consumption Collapse of 1930.” Quarterly Journal of Economics CXIV (February 1999): 319-335. Christina Romer (1993) “The Nation in Depression.” Journal of Economic Perspectives 7 (Spring 1993): 19-39
Thanks hoz. I just looked at the budgets of six families and that hooked me. I’ll be checking this out for sure.
Brad DeLong muses on why he lectures…
“Yet the Lecture Remains: Why? Four Possible Reasons:
* Budget stringency: lectures are cheap for the university relative to seminars, and even if they are markedly less effective they do soak up students’ time
* Alternative information channel: The ears are wired to the brain differently than the eyes, and there is value in not only reading something but also hearing something in producing the synaptic changes that we want to see happen in college.
* A self-discipline device: if people have to show up at a certain place at a certain time to accomplish a task or be disciplined, they are more likely to do so. Lecture as a way of solving our self-command and self-control problems.
o But why not then just have a study hall? Everyone reads the book, and the monitor circulates and answers quetions?
* A sociological event: East African Plains Apes like to do things in groups that involve language–that is just who we are–and the lecture is just another example of this
All four of these surely play some role. But I have no idea of the relative balance between them–and neither, it seems, does anybody else I can find…”
$100,000- is a respectabe income. These folks need a reality check. What chutzpah!
If by “reality check” you mean a beating, then I agree.
The people who bought into the Orpheum Lofts condo in downtown PHX were “promised” parking, but apparently the developer carelessly forgot to note that fact in any of the purchase documents they signed. When the developer sold the lot next door that they had been using for parking, the buyer graciously agreed to let the owners keep parking there. He’s being less gracious lately–two days ago he booted them all out, and now they either have to park on the street or rent garage space blocks away. This small development pretty much renders the condos unsellable, and, for all practical purposes, unrentable as well. Amusing comments follow the article.
http://www.azcentral.com/business/articles/2008/08/27/20080827biz-orpheum0827.html
Where does it say that about the contract? I didn’t see that. The parking wasn’t expressly included in the agreements?
LOL
“They could be made to accept the most flagrant violations of reality, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening.”
George Orwell
“It’s not a lie, if you believe it” - George Costanza
No Soylent Green for you!!
There’s that word “reality” again.
“I substitute my reality for your reality.”
-JAMIE HYNEMAN
Greatest quote I’ve come across.
Quarterly Banking Profile
Federal Deposit Insurance Corporation All FDIC-Insured Institutions
Second Quarter 2008
INSURED INSTITUTION PERFORMANCE
• Industry Net Income Falls to $5 Billion
• Quarterly Loss Provisions Surpass $50 Billion
• Asset Quality Indicators Continue to Deteriorate
• Industry Assets Post First Decline in Six Years
Second-Quarter Earnings Are 87 Percent Below Year-Earlier
http://www4.fdic.gov/qbp/2008jun/qbp.pdf
There is a lot of meat in this report. Caution pdf.
He’s making a list
checking it twice
going to hide from the public which banks are naughty or nice
http://biz.yahoo.com/cnnm/080828/082808_fdic_banks.html
Since the failure of IndyMac in mid-July, however, speculation has emerged that regulators may have exercised some discretion about which institutions they put on the confidential list.
The FDIC’s first-quarter problem list, released at the end of May, clearly did not have IndyMac on it. That’s because the FDIC reported that the 90 banks on the list had a combined $26.3 billion in assets - less than the size of IndyMac. That suggested that the only problem banks at the time were smaller community banks.
Experts say that if IndyMac had been on the list, the total asset size of troubled banks would have been much higher. That might have prompted a witch hunt of sorts, with the market looking for which bank was in trouble and possibly causing a run on that institution.
Even their secret list is BS
The miracle of the free market
How is the FDIC reminiscent of the free market? That’s your govt at work buddy.
Government money, government banks, government lists, government regulation. A big ol’ helping of just what you ordered, and they served it to you all the while making you think it was something else. lol
I enjoy re-writing history and stretching the truth as much as the next guy, but the fact is there was no opportunity to put Indymac on the FDIC watch list.
Schumer’s loose lips caused a 10-day $1.3 Billion dollar run on the bank. .. wham bam, thank you mam insufficient funds.
20 years ago ferreting the information from the FDIC was not feasible, today a mope with a computer can get the information, plug the data into a spread sheet and compare against know banks. Of course the FDIC is going to prevent anybody from determining which banks are on the list. They should prevent mopes from finding out which banks are vulnerable. Just because a bank is vulnerable, does not mean it is insolvent.
The FDIC does provide enough information for simulated CAMEL analysis. That number shows over 600 banks in trouble maybe as many as 1000. Since these numbers are not from the FDIC…trade at your own risk.
“Every war when it comes, or before it comes, is represented not as a war but as an act of self-defense against a homicidal maniac.”
“War against a foreign country only happens when the moneyed classes think they are going to profit from it.”
George Orwell
OMG that’s on the money. Sounds almost prescient in the context of Iraq. Is that from 1984?
..as if anyone needs more Orwellism..
“For a creative writer possession of the ”truth” is less important than emotional sincerity.”
When in England , at a fairly large conference, Colin Powell was asked by the Archbishop of Canterbury if our plans for Iraq were just an example of empire building’ by George Bush.
He answered by saying, ‘Over the years, the United States has sent many of its fine young men and women into great peril to fight for freedom beyond our borders. The only amount of land we have ever asked for in return is enough to bury those that did not return.
—–
for those who are unable play the game, and would rather lay the blame. The world is is desperately longing for LEADERSHIP ….Lead by example, become exemplary.
The only amount of land we have ever asked for in return is enough to bury those that did not return.
and some contracts for the fat cats in halliburton….
Citibank’s penny-pinching efforts are in full swing now…
Is there something bizarrely weird about bending over to pick up Cents, when you are hemorrhaging Billions of Dollars like a hemophiliac with 1,000 open wounds?
Here’s another way to pay a mortgage. Fake a robbery!
http://www.yahoo.com/s/943990
I agree with Weidner and White. The Fed should stop wringing its hands over a nonexistent panic and focus its efforts on its core mission of containing inflation (especially in housing prices).
DAVID WEIDNER’S WRITING ON THE WALL
Chicken Littles and the U.S. banks
Commentary: Enough with the panic — the facts don’t support ‘crisis’ label
By David Weidner, MarketWatch
Last update: 12:00 a.m. EDT Aug. 28, 2008
NEW YORK (MarketWatch) — We’ve all heard the panic: Banks aren’t lending. They’re teetering on the edge of collapse. The government can’t afford to bail them out. You can’t trust what banks say about the quality of their assets.
OK, there’s some truth in all of those statements. This certainly isn’t a golden age for U.S. banks. On Aug. 25, regulators shut down another bank, the ninth this year, Columbian Bank & Trust of Topeka, Kan. That failure will draw down another $60 million from the Federal Deposit Insurance Corp. fund to make depositors whole.
Not good indeed. But are the Columbian Banks of the world really going to be the end of the U.S. banking system? Are we going to see massive failures? Will the taxpayers be forced to bail out the system? Is it time to put our money in the mattress?
Today’s turmoil “just doesn’t strike me as anything coming close to the period of 1982 to 1993, when thousands of S&Ls and banks had to be closed,” said Lawrence White, who served on the Federal Home Loan Bank Board from 1986 to 1989. That period witnessed the failure of more than 1,000 banks or savings and loans with close to $200 billion in assets on the books.
Compared to that era, “this is relatively small,” White said. “I have a hard time calling this a crisis.”
Funny, the data released from the FDIC this week shows this is the worst financial crisis since 1982 - 1993 and we have just started. We are already surpassing some 1993 peak numbers.
** Q2 loan loss provisions consumed nearly one third of operating income for the banking industry, the highest proportion of income transferred to loss reserves since 1989. Loss rates increased 30% from Q1 and the shape of the loss curve suggests we are still relatively early in the adjustment cycle.
** Q2 charge off rates at 132bp for the industry are at highest rates since Q4 1991. The industry continues to put aside $2 in provisions for future loss for every $1 in current defaults, suggesting that the credit outlook remains negative. Part of the reason: industry loan loss reserve coverage for NPLs at 88.5% is the lowest in 15 years. The banking industry may need to continue diverting significant portions of income to reserves for several more quarters/years.
** The number of problem banks reported by the FDIC increased from 90 to 117 during the quarter.
We aint seen the bottom.
“1982 - 1993″
You are looking at far too long a time horizon to relate it to any discussion on MarketWatch.com.
One of the things that I hate about the internet is that history seems to only start at about Y2K.
House of horrors
Published: August 28 2008 09:25 | Last updated: August 28 2008 13:07
How bad can it get? Nationwide’s August figures showed house prices down almost 2 per cent since July, producing the UK’s first double-digit, year-on-year decline since 1992. The annualised quarter-on-quarter rate of decline, meanwhile, is touching 17 per cent. It is now likely that the eventual peak-to-trough fall will end up being more severe – in real and nominal terms – than the corrections of the early 1990s and mid-1970s.
Prices are already 11.5 per cent down from last October’s high in nominal terms. This sudden collapse reflects, in order of significance, ludicrous earlier valuations, a shift in buyer psychology, and credit withdrawal by lenders. Economists forecasting 30 per cent-plus peak-to-trough nominal falls, once ridiculed as attention-seeking outliers, are now two-a-penny.
Bank of China flees Fannie-Freddie
By Saskia Scholtes in New York and James Politi in Washington
Published: August 28 2008 23:33 | Last updated: August 28 2008 23:33
Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae and Freddie Mac by a quarter since the end of June.
The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.
So.
They just announced a stimulus, whatya thinks gonna happen? Maybe its a sign that they dont know WTF to do. Go beyond the headline.
Ever think about this?
The Chinese have developed a manufacturing base for a mythological US and EU customer base? Now tell me about decoupling. Ever listen to Hoz talkin about China creating jobs? Jobs for what.. to build/grow/consume stuff, for who? Then why the stimulus? Why more money?
Cash burn people… IF the housing market shuts down, FRE and FNM are cash burn propositions, almost like some sort of dividend capture stock fund…its not possible to burn through the cash and everyone get everything they want. Who goes without and why?
The necessities of energy use/consumption diversification are the driving force.
Wages.
Unemployment.
Interest Rates..
Thats the solution set, and energy use. EROEI
cmon people, kick-start the solution set.
ITS NOT JUST CHANGE< AND IT CANNOT BE MORE OF THE BLAME.