Bits Bucket For September 1, 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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Jewish World Review August 27, 2008 / 26 Menachem-Av 5768
Is College Worth It?
By Walter Williams
http://www.JewishWorldReview.com | As parents pack their youngsters off to college, they might ask themselves whether it’s worth both the money they will spend and their children’s time. JWR contributor Dr. Marty Nemko has researched that question in an article aptly titled “America’s Most Over-rated Product: Higher Education.”
The U.S. Department of Education statistics show that 76 out of 100 students who graduate in the bottom 40 percent of their high school class do not graduate from college, even if they spend eight and a half years in college. That’s even with colleges having dumbed down classes to accommodate such students. Only 23 percent of the 1.3 million students who took the ACT college entrance examinations in 2007 were prepared to do college-level study in math, English and science. Even though a majority of students are grossly under-prepared to do college-level work, each year colleges admit hundreds of thousands of such students.
http://jewishworldreview.com/cols/williams082708.php3
As long as those kids are armed with a boatload of loans and financial aid the colleges don’t really care. It’s nothing personal. It’s business.
Ain’t that the truth…….
NYC was forced to have open enrollment in city colleges, and of course had to offer remedial classes so the “high school gradi8zs” could pass.
Of course nobody can think that having remedial classes to enter a city college after getting a HS diploma is a FAILURE…..nope
I worked for 10 years in a large suburban NYC junior college. It is the same all over, and has been forever. A good third of the math courses were pre-Math 101. (MAT 001,002,and 100). I know that there are some popular courses which come *before* those. I can only guess they teach how to make change.
Funny when i grad HS…from a poor blue collar HS in Norwalk CT….we had the best shop class in state
I had drafting printing electronics wood shop and was assistant photographer of the yearbook….i had no problems passing the entrance exam for college..
my have times changed.
Going to a reputable and/or prestigious college still provides value. It’s much easier to get into professional school, enter the executive ranks and meet other high income people. College isn’t for everyone, I agree, but don’t discount the value of degree from a large flagship state school or Tier II or higher private school.
Yes and this is why age sex discrimination lawsuits will be rampant against law firms when people realize law firms are the worst business i have found for EEOC violations
UHH Recent college grads…..you mean i am disqualified from applying because i graduated 20 years ago…..hmmmm
Must graduate from a good school….law firms are just itching for lawsuits
There were tons of them a month ago 2008 grads welcome…at law firms!!!!!
Real Estate Legal Secretary/Assistant - Recent College Grads Pls Apply (Midtown East)
Reply to: ScottEisenbergLawFirm@gmail.com
Date: 2008-08-03, 4:09PM EDT
Don’t get me started on education.
It was much better when they geared students to a skilled blue collar career who were… not ready for college. Should we work on higher education? Sure! But 40%+ of the kids aren’t ready.
We also need to go back to failing kids. Too many have high school degrees that mean nothing. Let’s return the high school degree to being an accomplishment rather than an entitlement. Many firms require a ‘good school’ four year degree just to make sure they have a literate applicant!
Let me rant on the last. My corporation now has to give a literacy test to all applicants with high school and 2 year college degrees; we can no longer assume they can solve minor word problems! 60% fail! Sigh… Its testing to see if they can read, calculate, and otherwise operate at a mid-10th grade level. Yes… 2 year community college degrees sometimes fail too (rare… but it happens too often to exclude that group).
Got Popcorn?
Neil
Neil
I am running into the opposite problem, most of the people in HR are illiterate and dumb, and when someone smart like me applies they find ways to say no….we need someone like us to hire eq “Good school”
——————————
Many firms require a ‘good school’ four year degree just to make sure they have a literate applicant!
Ok, we can all accept the facts that certain careers are going to require degrees of some sort (medical, law, engineering, sciences, etc). But my pet peeve nowadays is it seems like alot of employers now want a degree for every freaking job position (jobs that, in the past, employers did not require a degree for), regardless of whether or not the degree has any relation to that particular job whatsoever! Seriously, does that glorified paper pushing secretary job need a degree nowadays? And is it really worth it for someone to get a $40k degree (paid for with student loans of course) for a job that only pays $20K a year? Or, even worse, for them to shell out money for a useless degree, and then having to go back to work at a non degree’d service job like everyone else who didn’t go to college?
Seriously, I only see a few groups profiting from the majority of these degrees. One, colleges obviously. Second, student loan lending companies.
It makes you stop and think who really comes out ahead these days… the few high school graduates who didn’t go to college, got a service sector job straight out of high school (or went on to an apprenticeship program in something useful, like plumbing), worked full time and saved their money while their college bound peers went off for even more education, and didn’t have to start out their young adult lives burdened down with student loan debt, or the kids that were pressured into going to college by high school counselors, disillusioned parents, and well meaning teachers, even if they weren’t capable or ready for it.
dj, are you looking for a job in the HR field? If so, then you may be right.
But if you’re looking for a job elsewhere within a company, then it’s just an excuse that the HR people are “too dumb” to consider a smart guy like yourself. They are looking for key words and some minimum relevant experience in your resume, as specified by the person who you’d actually work for. If there’s any doubt, HR will forward your resume to that person (pass the buck) rather than make the decision themselves.
Oh how i wish that were true…you need to get out in the world of seriously dumbed down people.
No they toss the resume, if they have any questions….seriously why do i have so many problems finding a job?
I mean working at Court TV during OJ, and on Johnny Cochran and Nancy Grace’s TV qualify for at least a Wow, that must have been an interesting job?
Not if the clueless Paris Hilton fluff bunny is looking at my resume
The new version of age discrimination is telling people they are overqualified for a job or that there is no where for them to “grow” in this job. It would be interesting to see how many resumes that the HR drones throw out are thrown out because of “over” qualification, aka experience and age.
Nothing ever fails and everything only goes up!
Now, get out there and buy something you can’t afford today!
Sheople parents continue to be sheople parents and ignore the obvious. You get more bang for the buck at a state college. Better yet, a 2 year community college followed by 2 years in a state college to finish up the degree.
It’s up to the individual student to get value from the classes. There have been and are very good text books and teachers at community colleges.
“Sheople parents continue to be sheople parents and ignore the obvious. You get more bang for the buck at a state college. Better yet, a 2 year community college followed by 2 years in a state college to finish up the degree.”
Good point.
I tried to reason with my girlfriend on this. She insists on spending her hard earned dollars on an overpriced private college for her Son.
I told her how statistically, students who go to CC’s then transfer have overall higher GPA’s. She comes back at me with “well, maybe those students would have done just as good at a four-year instead of going to CC!” My response, “maybe, but the only difference is, they’ll pay up to 10X as much or more for tuition and exit college with a huge loan balance.” She doesn’t get it. It’s like trying to reason with her that a $400.00 “Coach” handbag (that’ll end up in the closet) is a complete waste of money.
DOC
Better yet, a 2 year community college followed by 2 years in a state college to finish up the degree.
——————-
Couldn’t agree more with you, Bill.
It’s my goal to have our kids attend the local JC and transfer to a local state university. Of course, my husband and his family (none of whom have a college degree) think we should pay for our kids to go out-of-state. I’m fighting this with everything I can.
Also, agree with the notion that we should NOT force kids into college. I’ve known plenty of people who did not get degrees, but ended up being far more successful than the rest of us degreed kids.
I do think kids need to find a specialty and focus on that, though. It could be music, plumbing, electrical, woodworking, etc…whatever, but they need to find what they’re good at (they tend to be good at things they enjoy) and work to be the best at whatever that is.
Formal education and actual intelligence and wisdom are often not that related, sadly. I’ve seen far too many people who have a degree in a complex field and yet are astoundingly clueless when it comes to anything outside that field… those same people buying overpriced McMansions for 5 times their gross income is one example that comes to mind…
But hey, if everyone went to school to learn how to do something they loved, where would the debt-pushers be? You wouldn’t be toiling to pay off student loans, or spending large amounts of money on “retail therapy” to balance out your white-collar job that you hate… and we can’t have that. Gotta keep the sheeple confused, frustrated, and in debt!
I have met soooooooo many people educated beyond their intelligence. I’ve yet to read a book that tells me how to process information. Plus my lips get tired when I read
I was reading a SV business journal some time ago. The main story was about the most influential CEO’s in the valley. Each CEO was profiled, showing their accomplishments and educational background. Most of them had an Ivy League pedigree.
Then I get to Steve Jobs, who has no peer in my opinion, and his education says…………………….
Homestead High! This guy has just got it.
I guess my point is I think you’re born with “it” or without “it” to varying degrees.
As judge Smales said in Caddyshack “The world needs ditchdiggers”
Mike
I agree SV Guy with one caveat…Some parents force feed their children education from day one so although some are social misfits by the time they are twenty they get 1350 on their SAT’s…
“As judge Smales said in Caddyshack “The world needs ditchdiggers””
LOL!
“Now I know why Leopards eat their young!”
“Fifty bucks says the Smales kid eats it!”
“You buy a hat like that I bet you get a free bowl of soup…OH, but it looks good on you!”
Couldn’t resist. One of my all-time faves…
DOC
Michael Dell, Bill Gates…
Is America Going Out of Business???
Banks are not lending and everything is slowing while very leveraged. As loans default, bank assets decrease weakening banks’ ability to lend further.
Bush sees signs of improvement while Darling says worst in 60 years?
We may be “well prepared” for a downturn, but what if this is not just a downturn?
The Tory leader went on: “I think it’s extraordinary that the chancellor said it, because – remember – a chancellor of the exchequer has got to think not only ‘I must tell the truth at all times’ but also ‘I must use my words carefully, so that I don’t actually create a situation that’s even worse, that creates a crisis of confidence’.”
http://www.guardian.co.uk/politics/2008/sep/01/economy.alistairdarling
Use words carefully? What does that mean?
It is called being economical with the truth.
Friend working for IRS in Ohio says he’s very concerned at the rapidly increasing number of high earners ( $100K - $500K/anum ) coming in asking for monthly payment plans for their overdue taxes. Says high paying jobs seem to be evaporating in industry and finance.
Neighbor finished a 3 day snap garage/house sale; seems to have just pushed everything out into the garage and driveway. Very unorganized but tremendous bargains…from kid’s toys, computer games, bikes, to high end furniture and baby grand piano. Her younger kids did not look very happy.
The candidates visited the western part of the state; heard about barbecues but nothing about jobs for the masses .
Could the high earnings be from short sales and foreclosures? The bank reporting earnings that didnt happen.
Nope. That debt has been temporarily excluded from income.
http://www.irs.gov/newsroom/article/0,,id=174034,00.html
Sorry. That debt *forgiveness* has been temporarily excluded from income.
Sheesh. And I call myself a tax lawyer. Link is correct. All I did was google “irs.gov short sale.”
Cash continues to be sucked out of the economy because banks need cash to replenish their reserves. This makes cash scarce, thus precious, as your post demonstrates.
Combo, I see the same things Around here in california. Almost every where I go, people are paying with credit cards. At the family business we are seeing less and less cash coming in. Last week a customer paid with a cc for a $1.23 invoice. I can say that business did start to pick-up last week, but not one person paid with cash.
We for one went to using a credit card for gas and groceries ‘cuz it’s one of those cash back cards. 3% rebate for such purchases up to $600 in purchases each month. Then it drops to 1%. Every few months I go on line and request a check (minimum $50). Works just fine AS LONG A YOU PAY THE FULL BALANCE EACH MONTH.
CC’s are a convenient accounting service also…
No joke…lot of CC bashers on this blog but if it weren’t for CCs I wouldn’t have any clue at all what my wife was spending all our money on =P
“Works just fine AS LONG A YOU PAY THE FULL BALANCE EACH MONTH.”
Ah yess, there’s the rub my friends. Cash back, free flying miles and all the other perks are ok when you can budget and exert self-control. BUT, how many people do you know really have that kind of control and/or actually pay their balances in full every month?
Crickets chirping…
Credit cards are great tools for reserving rooms, vacations, emergencies (real), etc. But for me, that’s it.
Always better to make purchases with cash, IMO. Budgeted cash in our wallets makes us THINK before impulse buying and puts perspective on shopping in general.
The whole idea of “budgeting” is totally doable with cash and checks you have to write. You simply budget-out your monthly alloted limits for expenses, then that’s it. How the f**k is the average sheeple able to really budget with credit cards anyway? Ain’t gonna happen, and THE BANKS KNOW THIS.
Sometimes just having a minute to ask ourselves, “do I really need this?” is the kicker to saving. Having to peel out money we actually see and touch can bring us back to sanity and help us change our minds instead of mindlessly swiping away.
Another consideration: What about FRAUD as economic times get tougher? Why up the anty to FRAUD by using CC’s for EVERYTHING? A Tool in a convenience store in Sacramento, Ca. was “swiping” people’s CC’s on his own electronic reader attached to his belt loop. Hundreds got scammed.
Credit Card rant off…
DOC
Ah yess, there’s the rub my friends. Cash back, free flying miles and all the other perks are ok when you can budget and exert self-control. BUT, how many people do you know really have that kind of control and/or actually pay their balances in full every month?
That would be me. I’ve racked up hundreds of thousands of frequent flyer miles/hotel points by taking advantage of these deals. The European vacation we didn’t quite take this summer (for a number of reasons, none of them financial) would have cost about $2000, including first-class airfare and a fancy hotel, by using those points and miles. Retail value: about $35,000.
That would be funny as sh$t to see the look on those kids’ faces as some other kids walk off with their Playstation 3, Wii, iPods, digital cameras, bikes and TV sets. Oh, the laughter I could have. Can you give me the address for this sale? I will bring a flask and some gummie bears and have a great time enjoying the misery.
On a serious note, although that would be a lot of fun, these lessons are going to serve these kids more than anything else that could happen to them. These will be lessons they never forget. Looking at all the little snots walking around this city, I can tell you that society will be better off if the little brats take a kick or two from reality.
Let us not forget an age old rule. “Adversity creates men (and women). Good fortune creates monsters.”
And if you carry cash, do it in denomination of 20s. I get the suspicious look when I pull out the 50 or 100 dollar bill, and end up having to wait for the cashier to do the marker/lighting check.
“The candidates visited the western part of the state; heard about barbecues but nothing about jobs for the masses” .
Having been self-employed for nearly 30 years now, I can say without any doubt that ‘Government’ has been a far greater hindrance, than a help.
“The candidates visited the western part of the state; heard about barbecues but nothing about jobs for the masses .”
Well, Mr. “Weekend at Bernie’s” McCain told the people to get over it, those jobs aren’t coming back. What a nasty old prick. You’d think elected officials would want to do something for the people, but that’s the thanks we get for electing them. Outsourcing, offshoring, illegal immigration. If people don’t think this isn’t being done deliberately, they’re whistling past the graveyard.
LOL, here it is, “Labor Day”.
So true, palmetto!
Palmetto, if he had said those jobs are coming back, he would have been lying. The offshoring phenomenon is entirely a Wall Street creation. The “global economy” concept which has assumed the patina of gospel is entirely a Wall Street phenomenon. Heavy manufacture in this country is dead for the next couple of generations. It will take that long to build the infrastructure back up, and for heaven’s sake, when we do, let’s skip the intervening technologies and go straight to the bleeding edge.
This is one of the reasons why the Pacific Rim got so adept at high tech, so quickly: they did not suffer through the learning curve. They simply adopted third generation technology, became adept at it, and started from there. No white elephants to protect.
Say again, what is the good man to do? Look the ugly facts in the face, and lie? To make you FEEL GOOD? You want to keep eating pablum? Then you get the electorate you deserve. That goes for me too, and for all the rest of us.
I applaud the man for having the courage to state an ugly truth.
Ugly truth, maybe… but I have yet to hear anyone explain how we are going to sustain an “economy” based upon 70% consumption and 20% glorified paper-shuffling Ponzi scams when there are no real jobs?
Everyone wants Americans to spend lots of money, but nobody wants to pay the wages needed for that type of consumer spending. So, what’s next now that the magical Housing ATM is broken?
I hope your neighbor doesn’t pay her mortgage with the yard sale money but uses it to find a new place to live….or what happens next month?
No cash and nothing to sell..
“I hope your neighbor doesn’t pay her mortgage with the yard sale money …”
I hope she does. The more money the neighbor pays to the bank the less money us taxpayers will need to fork over.
And I hope that some destitute street bum steals your most prized possessions, aNYCdj.
Afterall, someone obviously royally screwed that street bum. It’s only right that he gets some of what you earned.
Even those who make $150K annually cannot reasonably afford a $400K + house. Buy what you can’t afford and eventually you lose your shirt.
This is just another example of how it’s not just the low-income peon class that bit off far more than they could chew.
Wait until high income earners realize their MediCare welfare subsidies will be curtailed considerably by 2018.
“Even those who make $150K annually cannot reasonably afford a $400K + house. Buy what you can’t afford and eventually you lose your shirt.”
By conditional metrics they can. The 20% down leaves a mortgage of $320K, which is little more than double the annual income. The traditional measure was 2 1/2 to three times.
The traditional metrics assumed you stretch to buy the house, that then becomes more affordable due to inflation — your pay goes up, the rent you would have had to pay goes up.
The question is, how many $150K earners are there relative to the number of $400K houses? And is the $150K relatively secure.
Not to be presumptuous but I think Eudemon meant that people making $150k still can’t afford a $400k mortgage. I hope I didn’t get too presumptuous but I think that’s what he meant. And I would agree with that statement, especially in a place like NYC where we are raped on taxes.
And here in Fantasyland the supply of $150k earners has been vastly overestimated, in my humble opinion. I have heard rumors that if New York City starts getting hit too badly they will sell the naming rights of the city to Mastercard. This City is built on credit. Welcome to New Mastercard City!
This is where math becomes fun.. To answer your question, about 5% of the country makes >150K (household, which is a decent number for determining home affordability):
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
Now, take my area (which, to add some gas to the fire, is a below average earning area; ie, the median is a bit lower here, but let’s just forget that fact), Palm Beach, FL, where the median home price at the peak was ~400K (actually, a bit over).
That means that 50% of the homes in this area cost over 400K. And that <5% of the people in this area (or just about any other) could afford to pay 400K for a home. So, 50% of the homes are affordable only to 5% of the population! That’s an incredible statistic; it’s just absolutely mind boggling that it got that far out of whack!
And, for most people, buying a 400K home in Palm Beach on a 150K HH income is risky; taxes are very high, and insurance is incredible. HOAs are the rule at that price point. The total monthly outlay for a 400K home is going to approach 3.5-4K a month, which, with a 150K salary, is just barely affordable. FL will always have lower home prices because of the very high fixed costs associated with home ownership.
50% of the homes affordable to only 5% of the population. Absolutely incredible.
In a place like Palm Beach, I’ll bet quite a few of those high-end homes and condos are owned by people who live elsewhere most of the time. They aren’t counted when it comes to calculating median household income.
Hmm.. Blog is hungry?
Sorry if double posted.
This is where math becomes fun.. To answer your question, about 5% of the country makes >150K (household, which is a decent number for determining home affordability):
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
Now, take my area (which, to add some gas to the fire, is a below average earning area; ie, the median is a bit lower here, but let’s just forget that fact), Palm Beach, FL, where the median home price at the peak was ~400K (actually, a bit over).
That means that 50% of the homes in this area cost over 400K. And that <5% of the people in this area (or just about any other) could afford to pay 400K for a home. So, 50% of the homes are affordable only to 5% of the population! That’s an incredible statistic; it’s just absolutely mind boggling that it got that far out of whack!
And, for most people, buying a 400K home in Palm Beach on a 150K HH income is risky; taxes are very high, and insurance is incredible. HOAs are the rule at that price point. The total monthly outlay for a 400K home is going to approach 3.5-4K a month, which, with a 150K salary, is just barely affordable. FL will always have lower home prices because of the very high fixed costs associated with home ownership.
50% of the homes affordable to only 5% of the population. Absolutely incredible.
Interesting, but I am still snickering over: down payments, wages increasing, and the concept of job security in a high-paying job!
Impossible! $400,000 is an “affordable starter home” here in Maryland… and people are lucky to make $100,000 a year as median household income is only around $65,000 for the state.
But there’s no problems here… nope, none at all!
I’ve always worried more about ever-growing high property taxes instead of high home prices. My logic was that the mortgage could be on a fixed loan which was under my control while my annual property tax amount was always at the mercy of the city/state government. Would love to buy another house but if I could not afford the property tax later when I was on fixed income (which is many years away) then that home was not a consideration.
fixed loan which was under my control while my annual property tax amount was always at the mercy of the city/state government ??
Exactly why Prop. #13 passed in California and IMO will never be changed…Put a stop to the Greedy Hand of Govmit…
Dave,
Don’t you remember, Prop. 13 is baaaad. Think of the children.
Tongue firmly in cheek,
Mike
http://ap.google.com/article/ALeqM5hksHDv1i55R2qYI6dkmMm10uxZ0AD92TCQLO0
All in the name of National Security. Freedom of the press and now the right to assemble and protest.
It is going to get worse.
***********************************************************
Whether it is greedy gobmint or just plain oppression…
Didn’t the voters vote in Prop 13?
Just like we voted overwhelmingly to overturn Insurance rises and the Insurance lobby still has it in appeals, FROZEN.
Doesn’t matter what “we vote for” the gov and lobbys will freeze it dead in their tracks if it isn’t in THEIR interest.
Exactly why Prop. #13 passed in California and IMO will never be changed…Put a stop to the Greedy Hand of Govmit…
———————–
Precisely!!!
Allowing the govt (and flippers with Monopoly money) determine your tax rate is just as bad as getting a neg-am, no-doc loan. If you can’t fix your costs, you can’t determine whether or not something is affordable
Prop 13 is the best thing that happened to California!!!
Condo-hotel king no longer reigns
http://www.heraldtribune.com/article/20080901/ARTICLE/809010333/-1/newssitemap
Today, the king’s realm is nearly bankrupt. In Miami Beach, two hotels in the high-gloss South Beach neighborhood that he planned to market under Nicky Hilton’s name became the haunts of squatters and were auctioned in the spring. Another Miami Beach hotel, the Royal Palm, also slipped from his grasp, in 2007.
All the wants you waste
All the things youve chased
Then it all crashes down
And you break your crown
And you point your finger, but there’s no one around
Just want one thing
Just to play the king
But the castles crumbled and you’re left with just a name
Where’s your crown, king nothing?
Where’s your crown?
Metallica 1996
Laboring longer is growing trend for Americans.
http://biz.yahoo.com/ap/080831/working_longer.html
At hand is the solution to the Social Security underfunding problem.
You are absolutely right combo.
The article seems to be sympathetic to the 64 year old that must continue to work. We have a 72 year old who has worked his entire life and is running for President and a 65 year old used car salesman running for VP. Everything will work out just fine.
72 yr old who was Keating Five and his wife who was secretary ” I dont’ know what happened to the receipts”.
The 65 yr old didn’t commit adultery.
dont forget the Trailer trash Mom VP and her 17 year old preggo unmarried daughter
so much for conservative values
Bring back John Edwards! And his 28000 sq ft. mansion. No trailer trash, they.
Hey libbies who frequent this board: Are you about done with your political commentary? It’s petty and it’s getting old. Take it elsewhere, please. Or keep it on whatever politico board you freThanks.
IKE
Seems to me that McCain and Biden have had exactly the same job for the past 25 years.
Aug 28, 2008
Foreign spigot off for US consumers
By Max Fraad Wolff
As US public attention shifts from the Olympics to running mates and the celebrity “news” de jour, the infrastructure beneath your house is termite-infested. Just beneath the nicely painted exterior and behind all the new appliances, doubt is boring through the beams, gnawing at the studs.
Alongside falling prices, rising mortgage rates, stricter credit conditions and general malaise, the structure that supports American home ownership is being condemned by market valuation. Fannie Mae and Freddie Mac have nose dived and been downgraded toward a smaller future - and these are more important names for your future than Joe, Sam, Kathy, Mitt, Meg …
I wonder what the strength of the dollar will do to help the economy, other than continue to subsidize our consumption of foreign goods and vacations? I’m still not sure what it will do to gas prices after Hurricane Gustav. Our GDP growth the last 2 quarters supposedly was from exports. Maybe now it will actually be negative enough to call our recession a ‘recession’.
Oil down $WTI CRUDE FUTURE (USD/bbl.) 111.380 -4.080 -3.53 10:39
The only reason that GDP grew (other than the stimulus checks) is because inflation is running at 10%+ per annum. Thus, the real GDP is more like -7%, which seems much more believable.
For Lehman, More Cuts and Anxiety
By JENNY ANDERSON and ERIC DASH
Published: August 28, 2008
On Wall Street, the ax keeps falling again and again.
As the financial industry limps from one bleak quarter to the next, bankers and traders who dodged painful layoffs in the past year wonder if their luck is running out.
The issue gained new urgency on Thursday, as Lehman Brothers, Wall Street’s most troubled firm, prepared to lay off up to 1,500 people in its fourth round of cutbacks this year. Those layoffs, which would amount to about 6 percent of Lehman’s work force, are likely to come before the firm reports third-quarter results in mid-September, according to a person briefed on the plan.
The grim news at Lehman underscores not only the precarious state of that once-proud firm but also the pain afflicting the whole of Wall Street. Banks and securities firms have shed more than 101,000 jobs this year, according to Bloomberg News, as the mortgage crisis and struggling economy brought an abrupt end to years of prosperity for the financial industry. Few think the bloodletting will end there.
“We’re not done seeing headcount reductions on Wall Street in this cycle,” said Jeff Harte, a securities industry analyst at Sandler O’Neill.
“What?! You can’t do that to us! We’re the Lehman Brothers; we’ve been part of Wall Street for (??) years!”
“Turn those machines back on!”
Bill,
That was a great movie.
And Jamie Lee wasn’t to shabby back then!
Mike
http://www.greenvilleonline.com/apps/pbcs.dll/article?AID=/20080831/NEWS01/808310304/1001
By one national measure, 20 percent of foreclosures include some element of fraud, said Charles Knight, staff attorney for the state Department of Consumer Affairs. The department’s mortgage fraud hotline, which opened in June, fielded 180 calls in its first six weeks.
Assistant U.S. Attorney Kevin McDonald said his office has prosecuted between 80 and 90 people for mortgage fraud in the last five years, including one case in Greenville against business owner Kyle Wimmer, who has pleaded guilty to bank fraud and money laundering, court records show.
Poor fraudsters. At least for this neglected minority the housing bailout bill will likely include quite a bit of fraudster bailout, too.
What’s sad is that so few are being prosecuted, the guilty can reasonably whine that they were “unfairly” targeted because so many are getting off. (Similar: Immigration lawyers incensed that a Texas hospital turned an illegal immigrant with false SSN into the police to be arrested and deported when “they weren’t required to”.)
Hey fellow HHBer I kinda need ur advice. I had a talk with a friend of mine a young aspiring bureaucrat in Sacramento. He just got married and said he is looking to buy a house in a year or two cause they want one for when they have kids.
Okay kids is fair,on,wanting a home nothing wrong with that, fallowing key words I picked up that seemed good. plain vanilla mortgage, saving for 20% down good.
But then I heard these words that set off bells. “curb appeal” “sweat equity” “homes are a good investment”
Once more he is in a position to see whats going on and does. He says that the price of houses are now equal to labor and material the developers are eating the utility/infrastructure cost and he is shocked they arent selling.
now for all you have delt with others whether friends, family, or co workers that drank the cool aid, whats the next step after you get them to see the bubble?
Namely i dont want to sh!i on his wanting a home, but I really hate the talk of investment, my family made its money in real estate in bakersfield, and the name of the game is clash flow. A investment in real estate the way I grew up with it is buying a run down house or building and cleaning it then renting it.
When I spoke with him about his moms house (she is always remodeling) I asked why they didnt tear down a wall and open up a room more. and he explained the lose of a room would lower the value of the house. What the hell I thought your home was your home a place you live your castle, to make and do with as you see fit.
So any idea how to break it to him that a house can be viewed as 1 property and 2 investment with the latter mostly being a place you dont live. and that fusion of these ideas is what created this mess/
The reality is what is in your own mind. The rest is all an illusion. Your friend’s reality is different than yours. Good luck trying to change some ones reality.
Oh god, So you mean all those wall street banks, and realtors arent lying to do people, that all this fraud was merely a divergence of reality? tisk tisk I thought I escaped such sophistry when i finished philosophy 101
My experience has been that it is a futile enterprise to try to stop someone from buying a house once they have made up their mind. I think even those who read this blog on a regular basis have underestimated how deep the delusions about real estate run. In your friend’s case I would say the best you could do would be to encourage him to stay within a reasonable price to income ratio.
My first bit of advice would be to learn to use complete sentences in the english language.
Seems to me that your friend wants a house for his family to live in. Sacramento has some houses (in some neighborhoods) that you can buy for less than the cost of renting. If he is planning to settle down for ten years, I see no harm in his buying a place, as long as he finds one for a low price.
Bailout rumors just may keep the Wall Street cargo cult’s hopes up indefinitely.
News August 27, 2008, 6:57PM EST text size: TT
Wall Street’s Big Sell-Off
Even after deep discounting, Lehman Brothers’ assets may go without buyers. Is an S&L-style bailout in the offing?
by David Henry and Matthew Goldstein
Lehman Brothers (LEH) might as well have a tattered and faded sign reading “liquidation sale” hanging from its Times Square headquarters. For months, the fourth-largest investment bank has been trying to sell assets—good and bad—to stay alive. It dumped $140 billion of holdings in the first quarter. Now Lehman is actively shopping its crown jewel, money manager Neuberger Berman, and it may be looking to unload some commercial real estate securities.
Lehman’s air of desperation is the most potent form of fear wafting through Wall Street and Europe’s financial capitals these days. Big banks are steeling themselves for another round of losses, which could prompt the biggest sale of assets since the credit crisis began more than a year ago. The potential size of the fire sales: roughly $2 trillion. Lehman declined to comment.
Vulture investors are raising record amounts, but there still may not be enough money to devour those assets. And if they hope to find a buyer at all, banks may be forced to cut their asking prices to the bone, which would batter their balance sheets even more. “The money is not there,” says Joseph Mason, a professor at Louisiana State University. “We’re going to see failed sales.”
…
Son of RTC (Resolution Trust Corp.) is coming, as predicted over a year ago now.
Lehman Brothers is still standing, but its foundations look shakier every day
And Fannie Mae and Freddie Mac are doomed, writes Heather Connon
* Heather Connon
* The Observer,
* Sunday August 31 2008
Omitted part of the Business Week economist’s story:
Part Zero will be a continued drop in housing prices until they reach a level at which buyers are willing and able to pay for the homes which currently represent an inventory glut. Until the inventory glut clears out, there will be no turn around in the home construction industry.
Business Outlook August 28, 2008, 5:00PM EST text size: TT
Housing’s Stiff Headwinds
BusinessWeek economist James Cooper points out that financial market strains will keep recoveries in housing and the economy at bay for a long time
by James Cooper
BW Magazine
The end of the housing slump is easy to map out; getting there is the hard part. Even under normal circumstances, working through the current glut of overbuilding would be a drawn-out affair, with painful consequences for the economy. What’s not normal is that this housing debacle has ripped the economy’s financial fabric, with growing fear that more damage lies ahead.
This “financial storm,” as Federal Reserve Chairman Ben Bernanke described it on Aug. 22, has made it harder not only to take out a mortgage but also to get any kind of loan. “Its effects on the broader economy,” he noted, “are becoming apparent in the form of softer economic activity and rising unemployment.” It’s a vicious cycle: A stronger economy depends on housing, but the housing slump is eroding financial conditions, which are in turn undermining recoveries in both housing and the economy.
Think of a housing turnaround as a two-part story. Part One will be an upturn in construction of new homes. That’s crucial to ending the direct drag on the economy, which has subtracted a full percentage point from growth in real gross domestic product over the past year. Part Two will be a firming of prices in the existing home market. That’s the key to restoring stability in the credit markets and stanching the losses in consumer wealth.
IMO, Part 2 must come before Part 1.
I took the “firming of prices” mentioned in Part Two to mean a firming near current levels, rather than a continued decline to affordable levels envisioned in my Part Zero scenario.
From the link:
A stronger economy depends on housing, but the housing slump is eroding financial conditions, which are in turn undermining recoveries in both housing and the economy.
———————
It’s this kind of tripe that really gets to me.
A strong economy should NEVER depend on housing. Never, never, never!
This obsession with housing and housing prices is exactly what got us **into** this mess.
A truly strong economy is defined by plentiful, good JOBS…not high housing prices which force people to go further and further into debt.
Why do people say such stupid things?
A Recession for Christmas
By Bernhard Warner
Posted Friday, Aug. 29, 2008, at 6:43 AM ET
When is news of unexpected economic growth greeted with groans? When that report accompanies a prediction that the future looks grim.
As the New York Times reports Friday, yes, the U.S. economy grew by a surprisingly strong 3.3 percent in the second quarter, soundly beating previous estimates of 1.9 percent growth. But as Reuters bluntly points out, the economy is probably heading for a recession by year-end as the housing crisis worsens. “I see possibly a recession by the end of the year, but it will be a relatively short recession and a relatively mild recession,” Martin Regalia, vice president for economic policy at the U.S. Chamber of Commerce, tells Reuters.
CLICK!
We are in recession; Barron’s identified the source of the rectification:
The key here is the GDP deflator, which purports to adjust GDP for the impact of inflation; it’s a curious calculation in that, contrary to its moniker, it seems designed to do the exact opposite of deflating GDP.
Thus, according to this accommodating measure (accommodating, that is, if you’re determined to put a good face on a dreary report), inflation grew at an improbably restrained 1.33% in April-June. And maybe it did — but not in the good old U.S. of A. However, obviously more important than accuracy to those doing the calculating is this simple equation: The lower the deflator, the greater the growth of GDP.
http://online.barrons.com/article/SB122004938061284705.html?page=2
As we all know, the GDP includes govt. spending and the net of exports - imports, so the govt has more spinning room. Many sheeples haven’t a clue.
Who’d have thunk Wall Street’s problems would spill over into the fishing industry?
Long Island Charter Fishing Suffers From Fuel Costs, Job Cuts
By Adam L. Cataldo
Aug. 29 (Bloomberg) — This weekend will be Burt Prince’s last chance to salvage something from a summer fishing season wrecked by the surge in fuel prices and job losses on Wall Street.
As a charter fishing boat operator in Montauk, on New York’s Long Island, he makes most of his annual income between the American holidays Memorial Day at the end of May and Labor Day at the start of September. While the fish have been biting this year, the customers haven’t.
Prince’s revenue is down $30,000, or 40 percent, from a year ago, he says. He and other boat owners paid about 50 percent more this season for diesel fuel as they took vacationers on fishing trips. Meanwhile, $4-a-gallon gasoline and the decline in the economy kept customers away. Even in Montauk, the self-proclaimed sport fishing capital of the world, anglers stayed ashore.
“We are barely able to pay our mortgage,” said Prince, 41, who supports his wife and three children during the off-season as a commercial fisherman. “I am afraid of what is going to happen in winter.”
“Who’d have thunk Wall Street’s problems would spill over into the fishing industry?”
I, for one.
The sportfishing industry is dependent on discretionary consumer spending. As money tightens consumer spending will become restricted to basics, to necessities. Discretionay spending will trend down.
The discretionary spending is greatly affecting the DJ Why aren’t you kids throwing you a 25- 50th anniversary or a 50th 60th 65th retirement parties? or why aren’t you giving your spouse a 40th, or a 10-20 year anniversary party….
come on the NYC DJ needs work spend spend spend!
We oldsters are Lawrence Welksters. DJs (as is Trix) is for kids.
Man do i have so much big band swing music let alone hundreds of doo wop and oldies……its just very strange to be the youngest one n the room…
I guess i will have to get used to it real fast.
What turns me off about the club scene is the volume of the music, not the music itself (I was joking about Lawrence Welk).
I prefer an environment where listening to music and conversing without shouting can be both be done. I once was on an evening boat cruise in LA harbor that offered contemporary music played by a DJ at something less than 150 decibels. The experence was quite enjoyable and I look to doing something similar again.
Thats why Zydeco music will be the next big thing
http://www.youtube.com/user/aNYCdj
One of my tenants I was fortunate to rent to, was a DJ and had the most extensive collection of LPs. The entire collection took up the 2nd fl loft and was in such complete order with cross referencing. He had jazz, zydeco, Big Band and everything hiphop and in between.
DJs are good to rent to. Night people making no noise at your rental during the nights~!
I wish I had been able to keep him as a renter for another 2 yrs.
Along with his collection he was extraordinarily clean. When I went to clean that condo, the refrig was so clean you could eat off the shelves. The entire place, even a bachelors toilet was clean…..except the bathtub. But I was thankful that he had been a good tenant.
Good luck Nycdj for that job.
Anyone have a connection for him?
Dj, on Saturday we went to a 40th birthday bash were both husband and wife turned 40. Family from all over the world came to the event. They went all out with the food, etc. The only problem was the dj was too full of himself and would not play music you could dance to. I’m not picky, I’m OK with anything that will get me to dance: reggae, salsa, disco, eighties, oldies, whatever. It was strange to see the host and hostess approach the guy a couple of times to ask him to play different songs (he was into some undanceable electronic stuff), and the guy said “OK” and then kept playing his stuff. The guests were trying to make good and really tried to dance, but after some time the dancing floor was almost empty. Unbelievable. We needed you around….
Thanks…..I was taught it was a customer service job first ..and creative second.
I am there to create the ambiance so you can have fun, and get paid for doing so.
I guess its us old school guys that keep the business going….some of you like to relax by running, playing golf or tennis or working out in a gym…..i love watching people have a good time and do things they would never do outside of this party..( like lay on the floor like John belushi during Shout)…. I wish i could find a day job that could give me the same feeling.
Yep, if you don’t get referred because you gave a great DJ party, then that is tougher to find more jobs.
If you give a great Great dance party and mingle with the folks.. your gig calendar is full.
Good luck, and again, anyone got any referrals for Nycdj? Jus sayin!
Diversified business that sell services/products that are need based and want based will do fine. The businesses that sell needs will be okay. Business selling wants will get hurt in this downturn.
Japanese Prime Minister Fukuda quits
Announces resignation in face of low approval, economic turmoil
By William L. Watts, MarketWatch
Last update: 9:13 a.m. EDT Sept. 1, 2008
LONDON (MarketWatch) — Japanese Prime Minister Yasuo Fukuda unexpectedly announced his resignation Monday after less than a year in office.
Fukuda, beset by low approval ratings and an economy seen on the verge of recession, said efforts to overhaul the nation’s economy were unable to overcome a split parliament, according to news report accounts of his speech.
Fukuda said he decided it would be better for someone else to lead the nation through the turmoil, the report said.
Mr. Schwarzenegger, I’d like to introduce you to Mr. Fukuda. It appears you two have a lot in common.
Mr. Fukuda wasn’t elected because he played a tough guy in the movies to manage the 8th largest economy in the world. He has done a surprisingly good job, considering. I think a better comparison to Mr. Schwarzenegger is Ms. Palin.
Holy cripes. I certainly haven’t been following the situation - but isn’t that really big news - and something that bodes incredibly bad for the current economic situation?
“With joblessness at a 12-year high and expected to head higher, California’s fund for paying unemployment benefits is about to go broke.
The fund, sustained mainly by taxes on employers, is projected to be deeply in the red as soon as March.”
http://tinyurl.com/6o25st
“And the administration of Gov. Arnold Schwarzenegger is alarmed that it may have to keep the fund afloat by borrowing from the federal government and using state money to pay nearly $100 million in interest over two years.”
“At stake is the stability of a 73-year-old program that began during the Depression. In July, California paid unemployment benefits worth $567.4 million and received 267,000 new claims for jobless benefits.”
“According to the latest projections, which already appear optimistic, the hole in the fund could exceed $1.6 billion at the end of 2009 and $3.5 billion by December 2010 — unless the economy turns around dramatically.”
“With joblessness at a 12-year high and expected to head higher, California’s fund for paying unemployment benefits is about to go broke. The fund, sustained mainly by taxes on employers, is projected to be deeply in the red as soon as March.”
For those of you alive in the 1970s and 1980s, this is not high unemployment. If the fund is going broke, it is because of a business interest-union deal to increase unemployment benefits and cut unemployment employer contributions.
Like the one in New York.
Similar to the deals to increase public employee pensions but cut employer contributions so taxes can be cut.
Like the one in New York.
Let younger generations pay someday.
And YET we see the elected officials continue to have pay raises, ceos/execs getting monstrous bonuses and payouts to leave. So, frankly, I would much rather pay the
emergency room nurse to save my life than an elected official who will not give a sht whether I or you live or die.
I would rather pay a fireman to rescue me, which they did a few yrs ago, than a politician or CEo/exe who always get their pay and vacations. I would much rather pay a teacher to teach kids than the ceo/exec and politico who dont’ ADD anything.
About time somebody stuck up for the workers in this country. Obama will do that everyday thankfully!
About time somebody stuck up for the workers in this country. Obama will do that everyday thankfully!
Ha,Ha,Ha…. Now that’s funny!
I think Obama would stick up the people who work everyday.
Still, I think $200K/year firefighters and $150K/year beat cops is excessive. Only in California. Cut them!
Are you kidding?
What is your life worth?
Always amazes me when someone
says it is too expensive, those nurses, firepersons, medics, paramedics, cops
and yet you will be so damn thankful when
you finally need one to help you.
What IS your life worth, your wife, your
children, your parents?
But on a joking matter, dang I shoulda married a fireman. But I don’t really think they make that much in CA, really? I will ask my fire cptn friend.
What you don’t understand is that it is not the pay for the gov employes that are killing California, it is that they keep getting that same pay forever. The payout for retirement is out of control. To the point where it is more economical to have the retireed teacher come back to work without adding new benifits and retirements than to hire a new teacher at a starting salary. These babyboomers and their “I will take it all and let the younger generation pay for it while not allowing them to have a job” people suck. They didn’t save a dime and have to have the highest payout possible to feed their need for collecting every stupid thing that comes down the pike.
DD,
No, they do not make that much.
The numbers thrown around here are totally bogus ($300K nurses, $200K firefighters, etc.).
They take an example of someone who worked maybe 30 extra shifts (that would be 720 hours) and try to extrapolate that as the norm. If a firefighter/nurse/etc. is making this kind of money, they are working constantly and will NOT have a life outside of work. I think they are well worth what they earn, and then some.
I agree with you that our country is upside-down when athletes, entertainers, hedge-fund managers and CEOs are the ones making the big bucks when the people who actually make the economy go ’round are called “parasites.”
latest news
Japanese Prime Minister Fukuda resigns: reports
CURRENCIES
Pound tumbles on bleak British outlook
U.K.’s Darling sees worst conditions in 60 years
By William L. Watts, MarketWatch
Last update: 6:11 a.m. EDT Sept. 1, 2008
LONDON (MarketWatch) — The beleaguered British pound accelerated its recent fall, plunging 1.3% against the U.S. dollar to a level last seen in April 2006 after U.K. Chancellor of the Exchequer said the economic environment is the most difficult in 60 years.
“[The times we're facing] are arguably the worst they’ve been in 60 years. And it’s going to be more profound and long-lasting than people thought,” Darling said in an interview published in Saturday’s Guardian newspaper.
The remarks painted a much gloomier picture of the economic outlook than had previously been portrayed by Darling or other government officials, including Prime Minister Gordon Brown.
A Dylan Classic (2nd & 4th verses omitted)
Come gather round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
Youll be drenched to the bone.
If your time to you
Is worth savin
Then you better start swimmin
Or you’ll sink like a stone
For the times they are a-changin’.
Come senators, congressmen
Please heed the call
Dont stand in the doorway
Dont block up the hall
For he that gets hurt
Will be he who has stalled
Theres a battle outside
And it’s ragin’.
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.
The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin’.
And the first one now
Will later be last
For the times they are a-changin’.
Thinking about a new bank. I am with Citi ever sense they bought Cal Fed, which bought Glendale Fed, which bought Redlands Fed which I liked. Question is are there any banks out there that were responsible in the Inland Empire? Or do I stay with Citi?
These days even Swiss banks are irresponisble.
I’d say no bank is worth keeping more than $100K in.
I think the most responsible banks have been the sperm banks.
Blood banks
Speaking of blood banks, there is a Transylvania County in North Carolina. Imagine working for the blood bank there. You’d want to be sure you leave before sunset each evening!
I take it you’re a regular contributor then.
They have great movies and magazines.
Apt. rents in Brooklyn lurched to a stop and are flat between this time 2007 and now; haven’t budged upward or downward all year. The developers are still in the scratching-their-heads phase. Thinking of one brand new large condo building in particular that has been sitting around finished out with floors and cabinets for at least a year and has been replied online on a local blog to be 45% to half bought up, yet nobody occupies the spaces reputedly purchased half a year later. None of the units “bought” half a year ago are furnished or lit up. Dark as doornails, and empty.
Am seeing maybe 20% more listing in the RE windows. Several REOs are also listed for the first time (maybe they’re no longer getting “snagged”).
Coffee house I frequent has a lot more customers in the mid-late mornings hanging out.
Don’t worry. The entire city, including the boroughs, is hosed. Every day I see proof of that. Yesterday we walked up 10th Ave. from the teens to 34th Street. It is amazing to see these luxury condos amidst the old housing projects. And those housing projects aren’t going anywhere. The amount of building is still astounding. You can say the same about all of the boroughs and even into New Jersey. The inventory is still increasing at a breakneck speed. Fantasyland is in huge danger and what is going on in California will be coming here, only in a different form.
But NYCB, what about the foreigners and Wall Streeters. It’s different here. NY RE never goes down!
Oh yeah, I forgot about that. Thank you for pointing that out. Feel free to disregard my last post. Please excuse me while I go and flush my brain down the toilet.
ed:
what would you and NYC boy do with these unused white elephants?
They are too luxury for section 8, they could be rented as short stay hotels, Maybe the lower floors could be used as commercial offices….
But the huge building on 14th st union square..i cant believe that is sold out…..whole paycheck downstairs
aNYCdj, look at LIC. There’s a bunch of new hotels going/gone up.
I know hunters point kondoze and no grocery stores close by…easy access to the 7 train…
This statement is quite true about queens and Nassau counties. The gross amount of money people have paid for run down shacks is astounding. Money has been pouring in from Asian countries for the past 25 years. I kept wondering when this insanity will stop. The more important question was why anybody in their right mind would want to live in queens
Having grown up in NYC I can safely say that when the money runs out, the city is not such a pretty place.
I’m sure that none of the 20 somethings coming from Penn and Brown now anything about how dangerous NYC is when unemployment is high and the real estate market is dead. They’ll figure it out after they get rolled coming back from one of their west side yuppie scum haunts on a Friday night. Good luck to em all!
One thing that is different about NYC, is that there is plenty of demand for housing, much of it suppressed by high prices and low vacancy. But at what price point?
Not at the prices lots of people are counting on. Far from being “hosed,” NY is benefitting from the greatest privately-financed “affordable housing” boom in 50 years!
Yes, when prices crash, due to the overbuilding, that should really be great. The City will probably hold parades and festivals to celebrate.
Manhattan alone has a boatload of brand new hotel rooms coming online in 2009. A new W needle is going up across the WS Highway from the Battery. Mid-price hotels places reaching for the sky on 28th all the way north into 100s. A new Hilton approaching completion near the Modern.
Then the apartment buildings: the amount of apartment buildings now just breaking ground in the last several months will yield in the 10s of millions of square feet. That doesn’t include the 30 million or so sf of stuff already up, skinned and getting interior finish outs.
Prospect Heights in central Brooklyn is littered with abandoned 5 story projects growing weeds behind weathered plywood street barriers. More in Crown Heights, but in both nabes many more 10 and 20 story buildings are better financed and rising to top out.
That’s not counting Park Slope and 4th Avenue. That’s not counting a new Skidmore Owings and Merrill high-rise already halfway up in downtown Brooklyn.
At the very least no more rent increases. The grads can’r find work, are doubling, tripling up in affordable neighborhoods on the outskirts while the luxury boxes are empty. Unemployment is rising fast. The Europeans (and soon the Canadians) are having finance troubles of their own. The spaces are going to go begging.
Florida bank lent to some big speculators. Plus, there appears to be an element of fraud. Now the bank’s in trouble. Surprise, surprise.
Will this be FDIC’s “Bank of the Week” this Friday?
http://www.heraldtribune.com/article/20080901/ARTICLE/809010316/2055/NEWS&title=Another_bank_is_deep_into_trouble_
What a refreshing change! Detailed reporting with facts behind the figures! We should all be cheering and sending congratulatory letters to the editor!
Wall Street’s paper boom is over. Most of the Fed’s actions to date have been directed at supporting Wall Street’s paper bust at the expense of Main Street’s nuts and bolts economy. It’s time to return to sound Main Street economic policies.
The articles are starting to roll in about this topic:
“Working longer a new trend for Americans”
http://tinyurl.com/6k9lnf
Methinks the great American Depression of 2009 may be postponed for ten years (2019). Reasons: With postponed retirement, consumption won’t drop significantly. Their spending will increase in health care, prevention, and longevity. More money to invest in tax deferred plans, so that they will not tap into their savings early.
Personal examples don’t matter, of course, but none of my three sisters are talking retirement. They are in their 50s. One of them says she will work until she drops. I intend to never retire, but shift my career at some point so that I can live in some coastal part of California and work in some area to keep my mind active.
Harry Dent predicted a Great Depression starting in 2009. He also predicted a big stock boom in the U.S. this decade. He did not predict the terrorist strike against the U.S. in 2001 though. Every 80 years there is some type of supercycle where there would be a depression, according to Dent. He made a good case. But all gurus seem to forget the disclaimer “all variables staying the same.” External events almost always happen that gurus don’t consider.
The Great Depression has started. We owe 9 trillion dollars to global rivals—one of whom (Russia in particular a few months ago) speaks openly of our country being in an economic depression. Credit markets are still gummed up after 12 months, and will get stickier
The news has contained only revelations of people raiding tax deferred accounts. They are trying to sell anything and everything they bought because of the Joneses over the past ten years—anticonsumption.
The only consumption: There will continue to be a large segment of the population that will go without food before selling their cars, and will pay any price—even resort to property crimes—in order to fuel up their rides in futile attempts to impress babes.
A deliberate decision was made several years ago to no longer report on M3 (our money supply), because it betrayed the devaluation of the dollar. Likewise the Labor Department found new ways to report on unemployment: harpers.org/archive/2008/05/0082023
The leftovers from my neighbors yard sale are a sad reminder of the absolute worthless junk that people accumulate. Stuff that she couldnt give away for a quarter a bagful; I see her 10 year old rummage around in it, putting most into boxes for the next sale. (Says they’re going to have another one). His mom said she thinks the baby grand is sold (waiting for the check?). She’d cut out the kid’s piano lessons because they didnt want to practice, “they’re into sports at school now”. Found out they own two houses in our community, the other, purchased two years, ago has been “going through a remodeling” . Just about floored me, I’ll have to drive by it and see what’s going on. I guess cash may really be king. I may have to rethink my ideas regarding inflation. This cant be happening in my neighborhood.
to impress babes
Don’t be sexist — I know at least two women who have given up cellphones, internet, etc, but will probably *die* before they give up their “big truck” — which they couldn’t afford to buy in the first place, and can’t afford to drive now.
I fail to see how this is in any way sexist. I can’t enumerate every reason why somebody would keep a vehicle. One reason is enough.
The problem is health insurance tied to place of employment. You get laid off in your 50s, when health care costs start to escalate, then small and mid-sized businesses with health insurance won’t touch you, because you’d have that big an effect on their premiums. You become employable again at 65, when Medicare picks up the slack.
And the data shows — labor force participation and employment falling for those age 55 to 64, rising for those over 65. That’s why.
McCain & Edwards had plans to pry health insurance loose from place of employment. I’m not sure about Obama — and not sure his people understand the problems the employer-linked system is closing.
What do you mean? My health inurance is not tied to my place of employment I don’t get health insurance from my employer. I buy it myself. $102 per month. http://www.ehealthinsurance.com
Bill in Maryland: The cost you quote sounds too good to be true, unless you are in your 20’s and in perfect health.
I am paying my own insurance through a professional group, and I’m paying many times that for decent coverage. I’m in my early 50’s.
Can you say anything about what sort of coverage you are getting for that price?
No problem - The secret is to have the highest deductible. Pay for your own medical expenses out of pocket and use the $5,000 deductible for catastrophic health care. I’m 49, non-smoker, 5′11″, and weigh 166 - lots of exercise (intense interval swimming will keep you much younger looking than your age). I don’t have any health issues. Just worried about auto accidents, which I have no control over.
I think my co-payment is $30 for a doctor visit.
You just have to watch your health insurance company when you get an ACH account with them. They sneak rate increases in from time to time. Once I had $120 per month insurance. A few months later they raised it to $250 per month and were about to go to $350 per month. I’ve been with my current one for over a year. Eternal vigilance is all you need.
Used to buy insurance through my job shop and when the insurance company warned us of a 63% increase in 4 months, that was it for me. I would have paid $450 per month.
Bill, your individual policy can be dropped at any time. And you WILL be dropped if you develop any kind of serious or chronic health problem. Then try getting replacement insurance.
For now that’s hypothetical.
Bill in Maryland:
I’m healthy, 56, very active, and pay $565 per month to Blue Cross of CA and will check out the ehealthinsurance web site.
I’m interested in your comments on one aspect: making sure that the insurer has a reasonably good chance of actually being around when it comes time to pay a claim. A lot of people have gotten screwed when their low-cost insurer goes out of business–when it was based on an economic model that was bound to fail. How have you gone about your due diligence to make sure you actually have coverage from someone who will be able to pay the claim?
Not that Blue Cross is any great deal. I just assume, though, that I will have to pay a premium to be sure I have an insurer that is actually going to be around a while. All health insurance is is an unsecured promise to pay in the future, for which the member pays now. This does not inspire confidence.
Not that they necessarily will pay the bills: Blue Cross has been a leader here in CA of policy rescission, based on after the fact underwriting and the invention of an insignificant discrepancy in the original patient disclosures. It’s a brave new world we’re in. The ultimate answer, of course, is just not to get ill or injured :- )
It looks like the State of Cali has passed a law to crack down on the retroactive cancellation of policies when people get sick. Of course, it’s hard to say how effective it will be.
Bill In Maryland: I have a $10,000 annual deductible, and am still paying about $10K/year all in. I need to do some shopping, obviously, but I don’t want to end up in an HMO - I want real insurance that pays professional doctors, not gatekeepers and junior interns or nurses who are worked to death in clinics.
Wow! $10k per year, $825 per month? Wait a sec. I am single and no kids. Only paying for myself. Yes, just double checked my last monthly payment and it was $101.39
I don’t like the idea of HMOs either. I have PPO.
In California I had Pacific Care. It too, was $102 per month. Currently my insurance company is Assurant.
A few years back I felt as though I had chest pains. Had a heart ultra sound, EKG, and a treadmill test. No problems. Just a heart murmur I knew I had since 17. And I have been working out 5 days or more per week for more than 31 years. I realized the chest pain was from this some weight machine that you use for your lats and press your chest against some cushion. I habitually was pressing a lot of weight and my 40-something year old ribs could not take that weight.
I am unpopular with this viewpoint but I’ll make my point here: If most of you think that responsible savers should not bail out irresponsible spenders, how come you think people who take responsibility for their own health prevention must be financially responsible for the health care of the sedentary, the drug addicts, the obese? Last time I checked the Constitution it does not say the government is responsible for the health care of the U.S. citizen. Make health care completely free market.
If most of you think that responsible savers should not bail out irresponsible spenders, how come you think people who take responsibility for their own health prevention must be financially responsible for the health care of the sedentary, the drug addicts, the obese?
——————
Because irresponsible spenders (housing speculators, etc.) are 100% responsible for what happens to them. They made poor decisions, often against the advice of people who were trying to help them.
Contrary to your belief, I do not think we control what happens to our health.
I’ve seen too many organic-eating, daily-exercising, no-fat, people die YOUNG of cancer and heart attacks. Just heard about my FIRST overweight young person getting cancer a few months ago (specifically talking about young people…30s through 50s). Everyone else we know who have/had cancer at a young age is/was healthy, fit and all but one didn’t smoke.
We do not control our destiny where health is concerned, IMHO.
Harry Dent also predicted Dow at 40,000! Guess when that will happen. 2050?
Yeah. I resubscribe (no fee) to his website to check out his free newsletter for the one time subscription. His latest newsletter does not mention that he was wrong about the roaring 2000s. But he still sticks with his idea that the Great Depression is going to happen next year (2009).
I anticipate that I will be prepared for a depression by the Fall of 2009.
HS Dent gave me enough warning so that I would not have to be completely out of equities but could build up enough treasuries and municipal bonds to live on for a 10 year depression.
I am willing to live in a studio apartment in Tucson, if necessary. There are some reasonable places at $400 per month. I think I could live my current standard of living fifteen years with no job in that case.
Of course, I’d give up a car and use a bicycle while living in a studio. Similar to my lifestyle back in college. No baggage. Amazing how free you feel when you don’t rely on a car! Your money goes very far.
“Still a great yearly read along with Animal Farm. I think if Americans were forced to read these yearly even republicans would think twice about supporting a gov that has spied without judicial oversite, rendered people to other countries for torture, jailed US citizens without charges or access to a lawyer, and of course started wars to help their political and financial cause.”
I pulled that forward from yesterday’s thread. I wouldn’t be so confident about the ability of Orwell’s works to make Americans smarter. I remember a conversation I had at a party a couple of years after I left high school. A girl that had graduated a year ahead of me told me she was a Poly Sci major. I thought this was odd since she was known more for her funbags than for her brains. We got to the subject of Animal Farm and I said how great it was because it dealt with the Russian Revolution and World War II in such an interesting way.
She looked at me and said, “well, don’t you really think he was trying to say something about animal rights?” I just looked at her and said, “please excuse me. I need to go take a dump.”
All Animals are equal, some are just much stupider than others.
We read Animal Farm very early in ninth grade English when our world history class was still mucking around with the Greeks and Romans. The English teacher had NO time to give us a supplemental history lesson, so there was no chance that anyone was going to truly understand the Russian Revolution alegory (unless they read the cliff notes, which a bunch did), I can’t even imagine anyone thinking that Animal Farm had anything to do with animal rights. I mean, seriously. It just isn’t there. Did she think it was a commentay about how pigs regularly exploit draft horses? Did she think that sheep are generally coerced into social demonstrations?
I wish you had asked her to explain. I bet you would have found out she had never read the book at all or didn’t remember a single word.
At that point in my life I was probably too busy staring at her rack.
LOL at that one.
The great social equalizer.
Has anyone else noticed another round of food price increases? I think Trader Joe’s upped their prices on bread and a few other things last week.
Good thing I can walk to get groceries. Brakes got all squishy yesterday. Fortunately it happened BEFORE I got on the Beltway. Owners manual says the light means brake fluid is low, but I didn’t see any on the ground under the car. Damn. I hope this just needs to be tightened and the fluid topped off. I’m not in the mood for a full brake overhaul.
Was at TJs last week. Yes, some stuff is more.
At the local market I get sticker shock every time I go. Coffee up 50% over last year.
I haven’t noticed. I have stopped eating. I realized that eating is just throwing your money away.
If its not the fluid probably master cylinder.If your fluid got low then probably have to bleed the lines @ the wheel cylinders.
Is it the sort of thing Midas can handle?
It’s a 1997 Ford Taurus.
BTW, often the leak is very slow, and is at the wheel cylinder so you would see the fluid (if at all) as a streak on the inside of your tire.
How often do you take a look at the inside of your tire?
If it was my car I’d top off the brake fluid and drive it a bit to see if that didn’t get rid of the squishys. If it’s a slow leak you can ad brake fluid at $1.50/bottle for quite a while before you match the cost of master cylinder, caliper, rotor, and pads.
IMHO
Squishy brakes means there’s a brake fluid leak somewhere. Locate and fix the problem before you find yourself descending a hill with no/insufficient braking power.
Been there, done that.
Midas will sucker you into new calipers, rotors, etc.
If the fluid is low, add fluid, and yes, you could go to a shop and tell them you ONLY want the brakes bled. I guarantee they will try to upsell you stuff you don’t need.
Click and Clack have a recent episode that explain brakes in great detail. Probably a good thing to listen to before going to the mechanic. And yes, Midas and any number of other places will try and take you to the cleaners if they smell ignorance.
Companies are raising prices way beyond inflation just because they can. People will accept higher prices without hesitation in this economic climate. It is an easy way to increase revenues as well as profits. I think many companies will have their best year ever
Brooklyn boy here too,l4 and am renting in a new condo blding. building is full but I think a third or more are rentals. Also, I have heard of at least five cases where the owners are renting out the apts they own and then renting another smaller one for themselves. I think its cheaper to do this because rent is about half what mortgage would cost so you get help with your mortgage and you still live in the building. It shows how ridiculously overvalued they are though.
And its just the beginning here is Long island City Hunters point on the 7 train. so many new condoze and yet only 1 c-town grocery store that is not even walking distance. Plus there is no free parking do you think corporations would offer a free monthly parking space with the purchase of a $750,000 1 Bedroom?
Even for those of us who pay off our credit card balances every month, it is much easier to spend money when you charge something, then when cash actually has to be spent.
http://www.slate.com/id/2198942/
This shock to the system may further damage the already-fragile psychology of the consumer. Writing a check or deducting the price of a pair of shoes directly from your bank account packs a much more potent emotional punch than charging the pair of Allen Edmonds loafers on your American Express platinum card. Chalk it up to a concept called “the pain of paying,” said Dan Ariely, the author of Predictably Irrational. (It’s a concept the parents of his students at Duke University feel every semester.) Imagine that a restaurant, rather than charging $30 per meal, charged 50 cents per bite, with a waiter standing tableside collecting after each chomp. That would be an extremely unpleasant meal. But credit puts a safe distance between the ecstasy of consumption and the agony of payment, and thus makes us feel better. Said Ariely: “If it’s more difficult to get credit, it might make people feel more pain of paying and therefore spend less.”
Which ties directly into the grocery post I have just above. Would I have liked to get the $6 strawberries and/or the $7.50 clementines at Trader Joe’s Saturday? Yes, I would have. But, I was planning to splurge on a $3 pineapple at Safeway and I pay cash for my groceries, so I didn’t.
I will say that the best spending control mechanism I have is to have my pay deposited in a savings account and only transfer a set amount to checking each month. The rest is automatic savings. If I want to spend on something that will go on a credit card, I have to “build up” what I need in the checking account to cover the bill when it arrives. Probably not quite as effective as paying cash, but works pretty well. At least, I have not yet bought a flat panel TV and I’ve been using a 20 year old 19 incher since my larger CRT set died and that was over 18 months ago. That will require allocating “savings” money to the TV. Can’t quite make myself do it yet.
Stock up on strawberries and blueberries when they are cheap. They freeze very well and taste great in smoothies.
The freezer is full. I rent a one bedroom, so no extra freezer for the produce. If I had one, I would have gone to the orchard and picked my own blackberries until there wasn’t any room left. Sigh.
Do garage sales for great tvs at cheap prices now.
Have seen some Big screen tvs as of late for 50 asking.
As someone posted days ago, maybe Edgewater? or ET,
as soon as the better toys get flushed, they will be
waiting with cash as you will!
It’s impossibly hard, isn’t it?
It’s really hard to fork out that $4K or whatever for a tee-vee when you have a good memory of the blood-sweat-and-tears that it took to accumulate that money, isn’t it?
LOL
Polly,
I lived much of my earlier life exactly as you described. Always had cash for large purchases. Bought everything below retail, never bought on impulse.
I still live the same way except I don’t watch my cash flow like I used to, being married with a family.
I do watch my investments closely though.
Mike
Aug 29, 2008
Page 1 of 2
Central banks need a Basel lll
By Hossein Askari and Noureddine Krichene
Central banks were created to manage liquidity with fiat money, to preserve the value of their currency and to safeguard the stability of their national financial system. Their mandate was to control monetary aggregates, reinforce safety regulations over banks, and promote a stable and predictable monetary framework. In the 1907 financial panic, as well as in earlier panics, uncontrolled money creation by banks had led to financial instability and runs on bank, resulting in extensive unemployment and bankruptcies.
Today, it seems that central banks have learned very little from history. Many have renounced their fundamental monetary mandate, have become political instruments, and have adopted a new mandate of managing the economy, promoting full employment and financing fiscal deficits. As a result, they have all but abandoned the control of money, credit, and supervision of the banking system, and have instead decided to control interest rates, which is after all a form of price control, with attendant inefficiencies and distortions.
More like Basil Fawlty actually.
http://en.wikipedia.org/wiki/Fawlty_Towers
Let’s say the monthly number of foreclosure proceedings initiated in the U.S. is a round 200,000. That adds up to 12*200,000 = 2.4m new foreclosure proceedings at an annual rate. How does that figure square with the 0.4m = 400,000 households who are supposed to be “rescued” by the Mortgage Rescue Plan? (My answer: It looks like it is six times as high, and that is only one year’s worth of foreclosure proceedings.)
Floyd Norris
Notions on High and Low Finance
August 31, 2008, 9:27 pm
Prime Foreclosures
Here’s a milestone: There are now more foreclosures on prime mortgages than on subprime ones.
The Hope Now alliance — the lenders group put together at the urging of Treasury Secretary Henry Paulson — estimates the numbers of foreclosure proceedings that begin nationally in each month.
The latest figures, for July, put the number at 197,000, the highest for any month since they started keeping track in July 2007.
Of those, 105,000 were prime mortgages, and 92,000 subprime. The June numbers also showed more prime foreclosures initiated.
The Hope Now people report that completed foreclosure sales are still higher for subprime, but that gap is narrowing.
‘Liar loans’ threaten to prolong mortgage crisis
By ALAN ZIBEL – Aug 18, 2008
In the mortgage industry, they are called “liar loans” — mortgages approved without requiring proof of the borrower’s income or assets. The worst of them earn the nickname “ninja loans,” short for “no income, no job, and (no) assets.”
The nation’s struggling housing market, already awash in subprime foreclosures, is now getting hit with a second wave of losses as homeowners with liar loans default in record numbers. In some parts of the country, the loans are threatening to drag out the mortgage crisis for another two years.
“Those loans are going to perform very badly,” said Thomas Lawler, a Virginia housing economist. “They’re heavily concentrated in states where home prices are plummeting” such as California, Florida, Nevada and Arizona.
Many homeowners with liar loans are stuck. They can’t refinance because housing prices in those markets have nose-dived, and lenders are now demanding full documentation of income and assets.
Losses on liar loans could total $100 billion, according to Moody’s Economy.com. That’s on top of the $400 billion in expected losses from subprime loans.
Fannie Mae and Freddie Mac, the nation’s largest buyers and backers of mortgages, lost a combined $3.1 billion between April and June. Half of their credit losses came from sour liar loans, which are officially called Alternative-A loans (Alt-A for short) because they are seen as a step below A-credit, or prime, borrowers.
Many of the lenders that specialized in such loans are now defunct — banks such as American Home Mortgage, Bear Stearns and IndyMac Bank. More lenders may follow.
The mortgage bankers and brokers who survived were more cautious, but acknowledge they too were swept up in the housing hysteria to some extent.
“Everybody drank the Kool-Aid” said David Zugheri, co-founder of Texas-based lender First Houston Mortgage. They knew if they didn’t give the borrower the loan they wanted, the borrower “could go down the street and get that loan somewhere else.”
I think the below link provides good examples to support the theory that many on this blog have espoused that the decline in sales prices actually understates what is happening in this market. Many are simply following the market down and even at this point refusing to accept the situation for what it is.
http://www.nytimes.com/2008/09/01/us/01miami.html?pagewanted=1&_r=2
Homeowners trying to compete say they often feel flabbergasted by the competition. Alexandra Swanberg said she reduced the price of her 1,482-square-foot town house to $245,000, from $287,000 last year, to keep up with the dozens of for-sale signs sprouting throughout her middle-class South Miami neighborhood.
“Everyone has been in a panic,” Ms. Swanberg said. “The Realtors are crazy; they want you to drop the price really low.”
Ms. Swanberg, 52, acknowledged that she could afford it. Like many homeowners, the losses of the last few months have not erased the gains of two decades. She said she bought the house 19 years ago for $60,000, and she plans to move to the Orlando area simply because she feels it is time to move on. But when a real estate agent recently told her to cut the price to $225,000, she angrily refused.
“It’s a large unit, three huge bedrooms, large windows,” she said. “This is not something you want to give away.”
Uh, ’scuse me Mr. Cisneros, but didn’t you hear about the Mortgage Rescue Package that was just signed into law last month? How much stimulus does the housing sector get before it appears that this industry is receiving distortionary subidies?
Former HUD Secretary Cisneros Cites Housing Decline as Unprecedented Drag on US Economy; Calls for New Stimulus Package With Strong Housing Measures
Last update: 7:46 p.m. EDT Aug. 27, 2008
DENVER, Aug 27, 2008 /PRNewswire-USNewswire via COMTEX/ — Henry Cisneros, former secretary of the US Department of Housing and Urban Development (HUD), declared today that the housing industry is in a “truly dangerous place” and that significant steps must be taken by the next administration to address the mounting problems.
Mr. Cisneros spoke at a housing forum at the Democratic National Convention that was hosted by the Federal Home Loan Bank of San Francisco (FHLBank San Francisco). Mr. Cisneros said the stakes are high because housing “is so embedded in the overall economy,” and the situation “continues to get worse.”
“Today, we cannot say how it will turn out,” Mr. Cisneros told the gathering at the Colorado Convention Center. Joining him on the panel were Marc H. Morial, president and CEO of the National Urban League, and Maurice Jourdain-Earl, managing director of Compliance Technologies. The panelists reflected their personal views during the forum, and those views were not necessarily endorsed by the FHLBank San Francisco.
Dwight Alexander, vice president of legislative affairs at FHLBank San Francisco, set the stage for the discussion by noting that the housing industry has been beset with foreclosures related to sub-prime loans, depreciation of property values, tight credit by the banks and problems at the mortgage giants, Fannie Mae and Freddie Mac, which are suffering millions of dollars in losses each quarter.
Clueless beyond belief. This is what leads us. The problem is that government has stuck its nose way too far into housing. This buffoon thinks the solution is for the government to stick its nose in even further. Cisneros must be Greek for “f-cking retard”.
“…beset with foreclosures related to sub-prime loans, depreciation of property values, tight credit by the banks and problems at the mortgage giants, Fannie Mae and Freddie Mac, which are suffering millions of dollars in losses each quarter.”
——————
All these supposed causes for the foreclosures, but the real cause is never mentioned, not even once…
The houses were TOO DAMN EXPENSIVE, and these moronic borrowers took on more debt than they could ever hope to repay in order to pay those TOO-HIGH PRICES.
Propping up prices is exactly what we should NOT do!!!!!
Panning for gold in the sewers of Dhaka.
Interesting. What is also interesting, tv, I believe it was/is Calcutta has a huge sewer swamp that apparently provides all the drinking water, and fishing just outside of the city.
The sewage goes to this swamp, the solids sink, the algae/greens clean the water, the fish swim in the top, an entire eco system that apparently works really really well for the millions that live nearby. And then they drain the swamps and the bottom ’soot’ goes to fertilizing crops.. and according to the show, it is amazingly clean operation and results.
US sub-prime crisis: IndyMac and the case of the Senator’s letter
* John Sterlicchi
* guardian.co.uk,
* Friday August 22 2008 12:46 BST
* Article history
As a US government programme kicks in to help mortgage holders hit by the country’s biggest bank failure in more than 20 years, the collapse of IndyMac Bancorp has become embroiled in an alleged smear campaign targeting a Democratic politician.
…
In the meantime questions are being asked about what caused the run on the bank. California’s attorney general, former Democratic Governor, Jerry Brown, is reviewing a request by former employees of IndyMac to investigate whether a letter from New York senator, Chuck Schumer, to the FDIC questioning the bank’s viability triggered its collapse.
In the letter to Jerry Brown 51 former IndyMac workers wrote: “From the day (Schumer’s) letter was made public on June 26 until the closure of the bank, a run on the bank took place and the failure became inevitable.”
Brown’s office is reviewing the letter and a decision on whether to act on it may be made next week.
I think they will find that legislators have zero liability for anything they say in the process of doing their job as legislators. Zero. Like judges. If another person made the letter public when it was written for a process that is supposed to be private, then that person might have some fault, but they make almost everything public as a matter of policy/law.
Interesting way to try to pin the blame on something other than managerial incompetance, but pretty useless if you ask me.
“I think they will find that legislators have zero liability for anything they say in the process of doing their job as legislators.”
Legislators certainly have political liability for whatever they say in public, but they also have spin doctors whose job it is to make the political liability go away.
Why would the voters in NY care about him running IndyMac into the ground? Wasn’t that mostly a Califirnia bank?
Good point. I forgot that New Yawkers don’t pay much attention to anything that occurs outside their back yards.
Oh no, they’ve evicted Club Remax!
Washington Post.
In the back of the cavernous office, the movers find the remains of a nightclub/party room, with stereo speakers, flat-screen TVs, cocktail tables and what looks to be a dance floor. Behind the bar, a sign hangs on the wall with a picture of a palm tree: Club ReMax.
Not to be outdone by the Democrats arresting reporters in Denver,
The Republicans go for mass arrests in the Twinkie cities apparently house searching without warrants. No surprise here.
Anti-war protest may be hampered by arrests
By AMY FORLITI – 23 hours ago
ST. PAUL, Minn. (AP) — The largest anti-war protest planned for the Republican National Convention could be hampered by arrests over the weekend….
Some of those arrested in the police sweep — which started Friday night and included raids on a meeting space and four homes in Minneapolis and St. Paul — were organizers for the RNC Welcoming Committee, Nestor said….
It appears the police timed the arrests to keep the organizers out of commission during the protest, Nestor said. One of those arrested was detained on Friday but set free, and then arrested on Saturday, apparently in a move to keep him in jail until after the protest, he said.
Another anti-war march was being held on Sunday. The Red Wing chapter of Veterans for Peace planned to march in silence except for a beating drum and carry tombstones picturing civilians or soldiers killed in Iraq, march organizer David Harris said.”
Associated Press
http://ap.google.com/article/ALeqM5hksHDv1i55R2qYI6dkmMm10uxZ0AD92TCQLO0
All in the name of National Security. Freedom of the press and now the right to assemble and protest.
It is going to get worse.
nobody move, nobody get hurt.
perhaps the continued movements by and between nameless and faceless create even greater mechanisms of outrage and discontent, enjoying the greatness?
The intentions a tastier goodness of qualled demonstrations when served up may finish well at the ” National Security for the Freedom of the Republicans Assembly of Protest Convention”, but still an ail served too cold.
is 10am on Labor day too early for a cold beverage?
It’s 5:00 P.M. in Tokyo.
Mike
sake it to me then.
herse’s one you can run with hoz.
I have recently read how difficult it once was to aquire, read, digest, and form an opinion regarding the health of financial institutions.
Are we witnessing something unprecedented in the age of information regarding: balance sheets having real time transparency and simplicity necessary for making an investment with a Graham & Dodd type “margin of safety.” Who knows what cheap really is in the absence of objective, verifiable data? This is the basis on which many purportedly “smart” investors have been deploying capital, much to curiousity of people like me. I have noted your call on the DSL, but still have concerns.
http://ap.google.com/article/ALeqM5hksHDv1i55R2qYI6dkmMm10uxZ0AD92TCQLO0
All in the name of National Security. Freedom of the press and now the right to assemble and protest.
It is going to get worse.
Hoz, yep it is apparently, some folks idea of smaller gov/ and non interference from gov..hmm. It ain’t happening,
Well you really have to like the judgment of John McCain. Sarah Palin shocked her fellow Alaskans when she said she was against the “bridge to nowhere”. Turns out she was a huge supporter when she was running for governor. Now we just learned that her 17 year old un-married daughter is 5 months pregnant. Oh she is also involved in a little problem concerning the firing of her former brother in law.
And on Tuesday last week McCain said the VP has to be ready to be the president on day 1. Heaven help us!
sweet jeebus, Palins a regular joe-anne, with faults of young age, short in years of service, limited magnitude of responsibility, Washington outsider….the list goes on and on…and a daughter with child…ohh, the humility and shame….gmme a break.
A salmon in every pot….Id rather have an outsider than deeply entrenched insider runnin the show for peasantry like myself.
At least by outward appearances, Palin’s daughter is not a lesbian, which raises other issues for Republican VPs.
I am fully convinced that all politicians have relative issues.
August 28, 2008
Business dealings of Biden family could be problematic for him
Scott Olson / Getty Images
Sen. Joe Biden fields questions as his son Hunter Biden looks on at a campaign stop in December, 2007, prior to the elder Biden’s dropping out of the race for the Democratic nomination.
His brother and sons have close ties to a law firm that has benefited from the senator’s congressional votes.
turns out she was also a member of secessionist party…
http://blogs.abcnews.com/politicalpunch/2008/09/members-of-frin.html
Running a hedge fund loses its allure
By Svea Herbst-Bayliss Reuters
Published: September 1, 2008
BOSTON: Running a hedge fund has long been considered one of the top jobs in finance, but this summer a growing number of managers have called it quits, unable or unwilling to keep going in what is turning out to be one of the industry’s worst years.
Last week, Dan Benton, whose savvy technology bets at Pequot Capital Management and Andor Capital Management catapulted him to star status, told investors he planned to shut down his fund in October. Last month, Ron Insana, a former anchor at the CNBC business network who later promised clients access to some of the world’s most famous hedge funds through his extensive contacts, told investors that it was “imprudent” to continue business. And before that, Jeff Dobbs announced plans to shut down Turnberry Capital Management after many of his investors had already asked for their money back.
“There certainly seems to be a bigger number of hedge fund managers going out of business right now than ever before,” said Brad Alford, founder of Alpha Capital Management, an advisory firm that invests in hedge funds.
INVESTING
Hedge funds face struggle for survival
LORI MCLEOD AND ANDREW WILLIS
September 1, 2008
Black clouds have been building over the hedge fund industry for much of the year, and a storm could break in coming weeks as investors receive their second set of lousy monthly results from funds that are meant to do well in good markets and bad.
A series of challenges, some unrelated to the hedge funds’ investment strategies, have combined to create lower returns and investor redemptions.
Industry experts expect some funds will be forced to close down as clients walk away.
The single biggest problem is performance. The most recent update of Scotia Capital Inc.’s hedge fund index shows the average fund was down 8.6 per cent in July, compared to a 1.74-per-cent decline in the S&P/TSX equity benchmark. Since its inception in 2005, the Scotia Capital hedge fund index averaged a 13.9-per-cent annual gain.
Results from August are also expected to be grim, reflecting a volatile market that’s been cruel to resource plays, favourite holdings of domestic funds.
…
The Goodwood Capital Fund, which has posted an annual 6.9-per-cent return since inception in 1999, is down 24.8 per cent, year to date.
“It’s really hard at a time like this, but you have to keep the faith in your strategy,” said Peter Puccetti, chairman and chief executive officer at Goodwood Inc. and a veteran of numerous market downturns.
“It’s always shocking to me how bad it can get, but it’s always shocking as well how quickly it can reverse,” Mr. Puccetti said. Value-focused Goodwood has about 3,000 clients, and Mr. Puccetti said their reaction ranges from sharp criticism to strong support for the fund’s approach.
Poor results are being compounded by industry-wide problems that can all be traced back to the credit crunch.
Globally, the hedge fund community has been in a tailspin since Bear Stearns Cos. Inc. went down earlier this year. The investment bank was one of the industry’s major players as a so-called “prime broker,” providing back office services and loans to funds.
Hedge funds saw their ability to borrow curtailed as fears about the health of financial institutions rocked Wall Street. Spooked investors began to take flight, and some funds were forced to sell investment positions to cover redemptions, sinking the value of holdings across the industry.
“The credit crunch starts, and as it progresses it becomes not so much an issue of business and relationships, but an issue of survival,” said James McGovern, managing director and CEO at Arrow Hedge Partners Inc., which runs a fund of different hedge funds.
Hedge fund Atticus loses more than $5 billion: source
Mon Sep 1, 2008 6:28am EDT
LONDON (Reuters) - U.S. activist hedge fund Atticus Capital has lost more than $5 billion this year, a source familiar with the matter told Reuters, after its funds were hit by heavy falls in financial stocks.
Atticus, a high-profile player in deals such as Barclays’ (BARC.L: Quote, Profile, Research, Stock Buzz) unsuccessful bid for ABN Amro last year, saw total assets under management fall to around $14 billion at end-July from more than $20 billion last year, the source said.
The losses were mainly due to a 32.9 percent loss in the $7 billion Atticus European fund from the start of the year to the end of August and a 25 percent fall in the Atticus Global fund.
The firm, which employs a variety of investor lock-ups, saw few investor redemptions.
“…diversification benefits of funds of hedge funds…” HUH???
This failed idea appears to presume that hedge fund managers are so clever that they will generally earn superior returns to Mr Market at large. Got CAPM?
I also seriously question the notion that “for every headline shocker there is a winner.” A few years back, it seemed as though anyone breathing could win at hedge fund investing. Now winners are few and far between, and it seems they mainly won by going short or betting against subprime.
Hedge fund returns
Published: September 1 2008 09:26 | Last updated: September 1 2008 14:46
You win a few (billion), you lose a few (idem). News that Atticus, the powerful hedge fund, has lost more than $5bn this year, will mean a lot to its investors. But for every headline shocker, there is a winner: remember John Paulson’s single biggest profit in the history of hedge funds with his inspired subprime bet. And not all strategies will thrive in current markets. Event-driven funds, with their bias towards unlocking value in beaten down stocks, are hardly well placed when dealmaking shrinks.
Even so, the July numbers for the Credit Suisse/Tremont Hedge fund index make for bad reading: down in every category save for those funds with a short bias. Monthly numbers are, by themselves, not particularly relevant, but it is striking how widespread the malaise is. Even multi-strategy, which investors probably hoped would combine some of the diversification benefits of funds of hedge funds with lower fees, has not escaped the market turn.
PB. the hedge funds are worse than any number Cat’oures howling the Gulf.
Do you ever wonder what these hedge fund investors, who do unlock money, whether ARS type of funds or whatever….are trying to do? As the ARS is paid off, hedge fund investors getting out, start moving on down the line, where’s it going?
The search for “WTF is money” to be continued…..fund of funds run continues as well, these are the bank runs.
Hedge Funds Are Caught in a Tight Spot
Flood of Money
Slows as Industry
Faces Withdrawals
By GREGORY ZUCKERMAN
September 2, 2008; Page C1
Some of the biggest hedge funds are having their worst years, and the flood of new money going into funds has slowed. That is pressuring an industry bracing for investor withdrawals and worrying about how to survive without lucrative performance fees.
Some investors willing to put new money in funds are even beginning to ask about better terms, a contrast to the situation just last year, when investors needed to beg to get into hot funds.
The hedge hogs are turning to cannibalism. Next thing you know, they will be eating their own young.
Citadel, SAC Capital Get Pick of Casualties as Carnage Worsens
By Katherine Burton
Sept. 2 (Bloomberg) — Balyasny Asset Management LP recruited more than 30 money managers and analysts from competing hedge funds in the first eight months of the year, exceeding its total for all of 2007.
“We have been aggressively looking for talent, and in a year like this, there are a lot more candidates out there,” said Barry Colvin, vice chairman of the Chicago-based firm, which oversees $2.5 billion. Hires came from New York-based Satellite Asset Management LP and Magnetar Capital LLC in Chicago, which have both lost money this year.
While more than 200 hedge funds shut down this year, Balyasny, SAC Capital Advisors LLC and Citadel Investment Group LLC are taking advantage of the industry’s worst performance in a decade to go on a hiring spree. Hedge funds, diminished by a scarcity of credit and enfeebled stock markets, fell by an average 4.7 percent as of Aug. 28, according to data compiled by Hedge Fund Research Inc. in Chicago.
Sixty-one percent of the 2,795 funds managing more than $100 million that are in New York-based HedgeFund.net’s database are losing money in 2008.
Most managers have what are known as high-water marks that prevent them from collecting performance fees, usually 20 percent of investment profits, until they recoup declines from peak fund values. That leaves a shrinking base of management fees, typically 2 percent of assets, to pay employees.
Reset loans add to US home woes
By Saskia Scholtes in New York
Monday Sep 1 2008 17:40
The stricken US mortgage market is set to suffer further setbacks in the next two years as $96bn of risky home loans sold with initial flexible payment options switch to more stringent terms.
These will raise borrowers’ monthly payments by about 60 per cent.
The changing terms could more than double the number of borrowers falling behind on so-called “option adjustable rate mortgages” issued between 2004 and 2007.
Retail investors in US equities hits low
By Deborah Brewster in New York
Published: September 1 2008 23:39 | Last updated: September 1 2008 23:39
Individual ownership of US stocks has fallen to a record low, underscoring the increasing importance of institutional investors in domestic equity markets, according to a report to be released today.
Retail investors owned 34 per cent of all shares and 24 per cent of stock in the top 1,000 companies at the end of 2006, the last year for which figures are available, said the Conference Board, an industry group. Both numbers are record lows.
There’s Always Next Year
By Tom Lauricella
Word Count: 1,313 | Companies Featured in This Article: Dell,
Macy’s, Darden Restaurants, Toyota Motor, Fannie Mae, Freddie Mac
Hopes have all but faded among investors that the stock market will be able to mount a much-anticipated second-half comeback.
Many now think a sustained rebound for stocks may not be in the cards until the middle of next year. Even then, their expectations are limited as the problems in the financial markets continue to spread rather than ease.