Bits Bucket For September 10, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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The Dangers of Government Guarantees
by Fred Thompson
So Congress passed laws that made it easier for hopeful home-buyers to buy houses … even when they couldn’t afford them. Then the Fed and other regulators helped, in the form of easy money and loose credit standards for mortgages.
Not surprisingly demand for houses grew, home prices rose, lenders financed additional questionable mortgages, fueling even higher prices and so on. You get the picture. This is called a bubble.
http://townhall.com/columnists/FredThompson/2008/09/08/the_dangers_of_government_guarantees
“I hate to burst another bubble, but our government simply doesn’t have the authority or the capability to be the guarantor or insurer of our every need or desire.”
What a load of BS. Undoing the regulations that were designed to prevent a second GD and putting industry insiders in charge of “enforcing any remaining regulations has been a disaster. The problem isn’t necessarily government, but instead putting people in charge of government that want to make it fail so that they gain privately at the expense of everyone else.
I prefer this Thompson, Hunter S.
“We are turning into a nation of whimpering slaves to Fear — fear of war, fear of poverty, fear of random terrorism, fear of getting down-sized or fired because of the plunging economy, fear of getting evicted for bad debts, or suddenly getting locked up in a military detention camp on vague charges of being a Terrorist sympathizer.”
There are things to legitimately fear, but many of our fears are misplaced. The average person seems little better at risk assessment than our financial institutions. We often have much greater fear for things that have a very low probability of occurrence while ignoring other risks that are much more likely to occur and would definitely be noticed if they did. Would you like your pink slip wrapped in plastic sheeting and duct tape?
Greg, you are right: think of all the people who are more fearful of global warming than the impending economic collapse.
RE: I prefer this Thompson, Hunter S.
Your on the money early, ‘Sane!
I prefer this parting remark from Hunter Thompson, “BANG.”
We thought that terrorist
were the USA’s biggest threat ,
But it turned out to be flippers ,
and they ain’t through yet .
The Realtors said real estate was a sure bet ,
and Greenspan said he wouldn’t raise the rates yet .
So they marketed homes as if they were potatoes ,
and than they gave loans to people who aren’t able .
When the market crashed came Paulson with the crooked finger ,
Now hes putting us all in a ringer .
He works the weekend ,and he ain’t through yet ,
Hes telling Congress take-over the sure bet .
The Commies bought all that debt ,
but they made a deal and they ain’t through yet .
The name of the game is WE OWN YOU ,
so bye bye America ,you done ,your through.
This is my little attempt at being a rapper he he he he .
Fear mongering is a key strategy in the War on Terror.
The philosopher Krishnamurti describes how fear is the only true emotion. Everything else is just a measure or lack of fear.
I wish more people were afraid of getting evicted for bad debts. Maybe we wouldn’t be in this mess.
This is the main reason I want to see the Dems take the WH this year — to effect a change in the administration of the Fed gov’t.
I don’t particularly like or loathe either candidate — but the Bush cronies in all levels of gov’t have basically backed the Humvees up to the loading dock and stolen all the wealth, and/or run things so dismally as to materially undermine faith in our nation.
Again, I don’t think either will do well legislatively, or even with the economy, but the hubris and incompetence of the crooks running gov’t agencies is simply offensive to me. I lived in Austin when Bush was governor and there was the same feeling of white collar looters running amuck as there was in Washington during his presidency.
Don’t underestimate this feeling of loss of faith in the people in charge to create the preconditions for either civil unrest or widespread despair, which fuels a spiral into economic depression. When Americans feel America has abandoned them, the fabric of the society is at its most vulnerable.
On the other hand, if we felt the people in charge were in the same boat as us, and had their oars in the water, we could get on with the business of fixing the many real problems we now face.
Many excellent observations, Frank.
“Don’t underestimate this feeling of loss of faith in the people in charge to create the preconditions for either civil unrest or widespread despair, which fuels a spiral into economic depression. When Americans feel America has abandoned them, the fabric of the society is at its most vulnerable.”
My concern is not so much about the economic impact of a depression, in spite of the potential pain, but instead of the response of the people. We were very fortunate to not go down the road to totalitarianism as happened in a number of other countries in the 30’s. Will we be so fortunate in the event of a second GD? If the leaders are still looting and living in penthouses, what will be the response of the masses?
We did go down the road of totalitarianism with Social Security, Confiscating Gold, and a whole host of other unconstitutional laws that formed the foundation of our current totalitarian government.
Totalitarianism (or totalitarian rule) is a concept used to describe political systems where a state regulates nearly every aspect of public and private life…
We have just had a much slower slide because the people had to be dumbed down over time before they would be docile enough for a police state.
Wow
Comparing social security with totalitarianism, that made me laugh out loud. I’d suggest a history book.
“Don’t underestimate this feeling of loss of faith in the people in charge to create the preconditions for either civil unrest or widespread despair, which fuels a spiral into economic depression. When Americans feel America has abandoned them, the fabric of the society is at its most vulnerable.”
Bingo, if the elite don’t follow the rules why should I.
People always call the USA a melting pot. I think financial wealth,a middle class, and laws are what makes this possible. The middle class is being raped by the elite and the gov has had a major hand in it. No wealth, No middle class, No laws, No peace.
” I’d suggest a history book.”
Bahh humbug. The anti-intellectual fascists prefer to keep everyone in perpetual stupidity and cynical.
Weez don’t need wun of dem dar dam edumucations.
And this just in…
Wide-Ranging Ethics Scandal Emerges at Interior Dept.
All the millions add up to billions.
I wrote statements of work for the government. I’d be under the jail cell if I tried to get away with such actions.
I’m to frustrated to type.
Leigh
http://www.nytimes.com/2008/09/11/washington/11royalty.html?em
The problem isn’t necessarily government, but instead …
No doubt if you or your team had been running the show, everything would be great, sickness and poverty would be stories from the past and we’d all be out playing golf or sipping martinis by the pool.
…putting people in charge of government that want to…gain privately at the expense of everyone else.
Isn’t that pretty much the end result of every large central govt in history? At what point do we concede that large central govt is inherently flawed? It can’t be “done right.” No one is virtuous enough to run the whole thing.
FDR did a pretty good job of it, and he was regarded as a “traitor to his class” for doing so.
Both Teddy & Franklin Roosevelt were held in much contempt by the moneyed ones…
We could use a Roosevelt right now.
FDR burned food while people were hungry. He used strong-arm tactics to prop up prices at a time when a lot of common people couldn’t afford shoes or a meal. Who was he really working for? Your folk heros aren’t.
Would you have preferred us having Benito or Adolf in lieu of Franklin?
Your question makes me wonder why we haven’t seen more from William Weld, the former Rep MA governor that took the state from “Taxachusetts” to the “The Massachusetts Miracle”.
from Wikipedia:
“William Weld became the first Republican Governor of Massachusetts since Francis W. Sargent left office in 1975. He was elected during a tumultuous time when the state’s bond rating was near junk status, unemployment was nearly 10%, and the state had continuously borrowed money to close large operating deficits.
During his governorship, Weld ended the state’s borrowing, controlled Medicaid spending, reduced property taxes and balanced seven budgets in a row (in a state where a balanced budget is constitutionally mandated) while passing 19 tax cuts and never raising taxes. The business community reacted strongly to Weld’s leadership. In a 1994 survey of chief executives conducted by the Massachusetts High Technology Council, 83% of those polled rated the state’s business climate as good or excellent–up from only 33% at the beginning of his term. Proponents might claim that Weld’s leadership changed the minds of 50% of the CEO’s surveyed while others would note the national economic trends or other factors might play a part. Weld also reaped the benefits of the 1990s prosperity, as the state’s unemployment rate fell by more than 3 percentage points during his first term, from 9.6% in 1991 to 6.4% in 1994.
Other accomplishments touted by Weld’s supporters include:
Reforming Medicaid to control its annual rate of growth from an average of 17.4% per year between 1987 and 1991, to 3.8% between 1991 and 1997.
Overhauling the antiquated workers’ compensation system, and significantly reduced the size of state government. When Weld left office in 1997, it took 15,000 fewer state employees to run the government’s operations than it had in 1988.”
I would prefer none of the above.
The real question you should be asking, is why those are the only options?
And as you might infer from my original post, my primary concern is not “who” but “what/how”. Adolf isn’t so bad without all the power. There have been lots of people in the world throughout history who have no compunction about mass murder. Most of them you have never heard of and have had (and will have) no impact on your life.
As long as the central authority is available to be manipulated, it will be.
If you recall the “bankers” were against the Federal Reserve Act… only they weren’t.
If you have no respect for the constitution, private property, and the free market then perhaps you can say FDR or Roosevelt were “good”, but in my opinion they are the ones responsible for most of the mess today.
Without them you wouldn’t have the SS debt and the people may still hold on to their GOLD. Because Roosevelt was the one who made it illegal to hold gold.
The farmers made up a large portion of those going hungry during the Depression. After gearing up and taking loans for WWI worldwide food needs, the bottom dropped out of their market. While others prospered, many farms suffered through the 20s trying to pay off loans with contracting income. By the time the economy turned sour for everyone farmers were in a dire predicament. IE: Wheat prices dropped precipitously. By burning food and allowing prices to rise FDR was helping that sector.
I understand you might argue he should have trucked it somewhere to feed the cities’ hungry. But that alters demand which affects price. In a face off, it appears the Democrat erred on the side of capitalism hoping to aid at least one struggling industry and its workers.
Bluprint, as a German, this comment gives me the creeps. Adolf not being so bad: you know, this is what people said, back then. In the beginning. Autobahns and such. Law and order. A renewed pride for the Aryan people. Shoving everything in his path aside. And the power, he got from the multinationals.
“Adolf isn’t so bad without all the power.”
Do you mean, as a painter? Yeah… he was just OK.
I like bluprint’s revisionist history about Adolf…
8 years ago I was in Prague with my family, and my father pointed towards a certain wall and told me that when he was 15, the Nazis lined up all the political leaders and shot them, as he watched from about 100 yards away.
The meaning I took from bluprint’s statement was that there are a lot of potential Adolfs in the world, but without power nothing ever comes of it. It’s not always possible to spot them before they get into power, but one thing we can do is minimize the amount of power any one individual can have in a given society.
Sagese, as a person of German descent, thats not what blueprint saying and you know it. He was responding to atadinsane’s absurd question of “what would you prefer?”.
“And above all, Fascism, the more it considers and observes the future and the development of humanity quite apart from political considerations of the moment, believes neither in the possibility nor the utility of perpetual peace… War alone brings up to its highest tension all human energy and puts the stamp of nobility upon the people who have the courage to meet it.”
Benito Mussolini
When people take positions of power, their attributes are amplified in proportion to the amount of power they hold.
I understand you might argue he should have trucked it somewhere to feed the cities’ hungry.
I’m not saying that at all. I have two primary concerns in regard to the GD if it were to be “done over”:
1) The central monetary system allowed a great expansion to happen that HAD to be followed by the bust. The bust is painful indeed, but less so without the irresponsible monetary policy that preceded it (to the extent that their might be some “natural” amount of business cycle).
2) To the extent that monetary damage was already done, the best option would have been to let the economy contract. FDR prolonged the pain (for political reasons, naturally). Deflationary environments suck for those in debt (and sh!tty monetary policy helped fuel the magnitude of that effect by ensuring that lots of people were in debt, as in the farmers you site), but attempting to prop up prices isn’t a cure. The contraction is going to happen. Making things harder to buy just makes the experience worse.
The interesting thing here is that most people understand that for inflation to be somewhat “ok”, there needs to be an appropriate amount of wage inflation to allow regular folks to be able to pay the bills. But many of those same people would argue that higher prices relative to wages is ok when it’s on the delfationary side, but they create the same kind of condition.
On the way down, wage deflation occurs easily enough (despite attempts to prop it up), but to the extent FDR was successful in attempting to prop up other prices via the blue eagle program and similar things, FDR created the same condition as exists when inflation occurs everywhere except wages. High prices but relatively low wages. People couldn’t afford stuff and you have mass surpluses of goods.
Burning potatos and killing pigs was the answer one would give with a superficial understanding of events. It’s also the kind of thing I expect from most politicians because it sounds reasonable to a lot of voters and makes it look like you are “doing something”.
The one thing that you omit in your analysis is what happens to society when there are a large number of unemployed people with starving families.
Crime
Riots
Social decay
I’m all for gov preventing these things.
I hate the concept of wellfare, but I’m A OK with gov works programs like the New Deal.
100% agreement here.
“Isn’t that pretty much the end result of every large central govt in history? At what point do we concede that large central govt is inherently flawed? It can’t be “done right.” No one is virtuous enough to run the whole thing.”
Government can serve as a useful counterbalance against large private sector organizations. There is nothing inherently harmful nor beneficial with either. Having mechanisms to keep each in check is helpful in protecting the interests of the individual and the public interest.
Large private sector organizations cannot form without the support of privileges granted by the government.
Remove all of the laws and regulations associated with health care and the prices would plummet. Every industry from the railroad, to steal, to gas/oil, to Microsfot is propped up by the government and would fall if free-market competition was available.
Every industry ANYONE ever complains about being out of control, too big, and a “threat” if left “unchecked” is only sustainable with the intervention of government.
I would prefer none of the above.
The real question you should be asking, is why those are the only options?
Whoever the options are (were), they had to have the means and ability to consolidate power and lead, whether democratically or autocratically. That rules out fairy tale hypotheticals and elven princes.
I dunno, VTD. Whenever anybody bases their argument on a causal chain setting prices at a certain level, I always get the feeling they are just arbitrarily stopping at the link that supports their own political bias.
You say remove health care legislation and prices will plummet? OK, then those providing care have less purchasing power to buy other goods/services, demand falls, prices plummet… recession? I don’t know.
But price is an abstract idea that only makes sense within the context of the economy around it. The changes you suggest change the shape of the economy so fundamentally, that it becomes specious to discuss prices before and after. If fact the only reason to do so would be to arbitrarily grandstand for a certain political position. SDGreg is pointing out that different methods have (and I will say ALWAYS have) relative merits and drawbacks. Unless you fundy market types abandon your religion, your always receding horizon of the perfect free market utopia, you aren’t really having a discussion - you are just pontificating.
VTD is correct on MSFT. Clearly they are a govt. granted monopoly through copyright protection. The feds made MSFT what they are through legal means no different that cell carriers who supposedly bought our fequency bands and airwaves.
Health insurance is a need, not a want and it is in the financial interests of HMO’s to *ration healthcare*. HMO’s have brought rationing to a new level over the last 27 years.
The only fairy tale being espoused here is that “when my team runs the show” things will be so much better.
Considering the unmitigated failure that is your team, I’ll take the alternative.
but bluprint, you can’t put yourself outside that game.
… i have a serious question for the Ron Paulies here:
if the Fed “printing money” and injecting it into circulation creates a pernicious “inflation tax,” how do massive tax cuts and the resulting infusion of money into circulation avoid the same problem?
“Health insurance is a need, not a want and it is in the financial interests of HMO’s to *ration healthcare*. HMO’s have brought rationing to a new level over the last 27 years.”
******
You think you’ve seen rationed healthcare? Give me a break.
Just wait until the Federal government becomes even more involved in that business - you’ll really get to see rationing because it will be in their “financial interests” to limit care.
Considering the unmitigated failure that is your team, I’ll take the alternative.
What team is that? The demopublican party has been in control my whole life.
but bluprint, you can’t put yourself outside that game.
We’re all outside the game. There a players (a relative few…not you or I), cheeleaders and fans, and observant spectators. You pretty much get to choose between cheerleader/fan or spectator. For example, Ex is a rabid cheerleader (as with the Scots, I wonder what’s they wear under the skirt).
“You can support the good guys or you can support the bad guys, as long as you support the WWE”
how do massive tax cuts and the resulting infusion of money into circulation avoid the same problem
Tax cuts don’t create money. The money supply is pretty well defined (M1, M2, etc). None of the components of the money supply includes “tax cuts”.
The only fairy tale being espoused here is that “when my team runs the show” things will be so much better.
Seems to me that you’re quite enamored with imaginary scenarios.
The “team that ran the show” (Are you quite sure I’m a team member?) during the timespan in question did a fairly good job, all things considered, in stark contrast to the team who managed that other famous Runup To Nowhere then promptly soiled their trousers.
Maybe you read the historical narrative differently — which is fine with me, but misguided nonetheless.
“You think you’ve seen rationed healthcare?”
Yes absolutely without question. When the dollars that were previously directed toward medical services that now go to highly profitable HMO’s, nobody has to wonder why medical services are rationed the way they are.
Making apologies for the “free market” induced HMO rationed medical system is rather pointless.
What imaginary scenario am I enamored with? Please elaborate. It’s well documented that FDR did the things I describe.
How did he/they do a “fairly good job”? The factors surrounding the GD are pretty convoluted, especially when hero worship gets thrown in, but there is pretty solid evidence (some of which I’ve discussed above) that FDR prolonged the severity and length of the gd. Now, perhaps you think the other team would have done worse, but I don’t see how anyone in that time period (or the current one for that matter) gets a pass “given the circumstances.” Is it really just a matter of “at least he’s not as bad as adolf?” If that’s the standard by which we measure service, then I digress. FDR certainly was not as bad.
“When the dollars that were previously directed toward medical services that now go to highly profitable HMO’s, nobody has to wonder why medical services are rationed the way they are.”
*****
Earth to exeter!!
Let’s try this again, pretending it is some future date in which various governments control all medical services (you know, the same people who run the IRS, the Post Office, the DMV’s and those who serve in Congress), so that you can understand what I’m saying:
“When significant dollars that were previously directed toward medical services of those who paid at least in part for their care now go to those who pay nothing… nobody has to wonder why services are being rationed by the government the way they are.”
Jack you don’t have to like the fact that HMO’s have rationed medical services for the last 27 years nor does it change that truth.
But the truth is your team has been running the show and they’ve failed in every way from every perspective.
“Undoing the regulations that were designed to prevent a second GD and putting industry insiders in charge of “enforcing any remaining regulations has been a disaster.”
Have you ever heard of the Federal Register? This is a publication of typically about 100 pages of fine print that comes out EVERY DAY, filled with new regulations that the Federal gov’t has come out with just that day. Regulations are almost NEVER repealed.
The number and complexity of laws, regulations, interpretations, rulings, etc., etc., that issue forth from the U.S. Federal Government is literally beyond human comprehension. People make entire careers out of trying to interpret just one 2-page subsection of the Securities Exchange Act. Ask polly.
The problem is government attempting to guarantee everything and fix everything and make everybody happy. The problem is people looking at the government as God and wanting it to fix every problem in life.
I believe that soon everything that is not forbidden will be mandatory.
It will make life soo much simpler.
awesome… maybe then i’ll finally get a date.
Amen to that flurry.
You are on the money, Greg, and HP has tried to hand the torch to subsequent generations of policymakers for a bigger, stronger, more interventionist Fed than the big, strong, interventionist one that brought us to the point we are today.
‘Undoing the regulations that were designed to prevent a second GD and putting industry insiders in charge of “enforcing any remaining regulations has been a disaster.’
A key part of the Fed’s crisis management program is to pretend that economic catastrophes drop out of the sky like some kind of alien invasion. This approach avoids the need for a close look through the rear view mirror, which might bring to light past policy errors that brought about the current mess.
PB, I’m confident that the insiders knew how this going to play out well in advance.
The financial markets are a confidence game, so they have to keep up the happy talk, to maintain the confidence.
But I’ve been reading about how BoFA and Countrywide and various other players have significantly benefited from this. I’m sure they knew the score.
Also, everything financial is about making money in the short term. Certainly the wizards knew problems were afoot. I was talking to an account early in 2007, and he was saying that it was not clear how the various insurances and other financial structures would weather a financial meltdown.
The “OMG, we had no idea” is completely crap. They were looking to make money for the next quarter, and knew eventually that the piper would have to be paid. But they would have gotten theirs (ultimately courtesy of the taxpayer), and that’s the ultimate bottom line.
The big players won the game. The taxpayers will now dutifully transfer wealth to them. And we just wait until the next bubble.
Freddy Thompson=Gucci-clad Washington lobbyist millionaire fraud Hollywood suit.
It is kind of hilarious to remember this guy was the great hope of the gop, and then he got negative-zero votes, and plus he quit his tv show from which he earned millions and millions every year, and now he’s forced to be a K Street Lobbyist again, with his latest wife.
“Of the $6.84 Trillion in US bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
Every penny has been swept out and lent out (10 times over) thanks to the Greenspan Fed and fractional reserve lending. What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.”
See you at the bottom with 15% mortgage interest rates!
Do your part in not helping the theives by taking your money out of their banks…
For every Dollar you deny them, there’s 30 more they can’t manipulate by using leverage.
You know actors get residuals from TV shows, right?
Gold drops through significant support at $780. The unwind continues.
In other news, Combotechie was seen frolicking naked through the streets of San Francisco shouting, “cash is my god. Cash is my god.” It took six police officers, three circus clowns and a gallon of tequila to bring him under control.
Wouldn’t a gallon of Goldschläger be more appropriate?
Combotechie is in the LA area.
And good morning Allena, hope you are feeling better!
But San Francisco seems more appropriate for a naked frolic.
are you speaking from experience?
“But San Francisco seems more appropriate for a naked frolic.”
Culturally, maybe, climatologically not so much.
Culturally, Berkeley might be better, don’t you think, since they never quite left the Age of Aquarius?
A little chilly right now for combo to be frolicking naked in San Fran.
Allena is plotting to take the world by storm - via book and film - telling her story. Ben, you’ll be in charge of the HBB party scene for the film when she makes her debut as a star.
You think I jest, just give her a year or so…
Lost
Where are you parking yourself these days?
At this moment, I’m in my camper in the timber at 8000 ft in the Ouray Valley. Snow just a few thousand feet above me - yikes! Good cell phone reception here, that’s what I run off of with my little modem. Will head to town soon, though.
Trying to get back to Moab before the snow hits, but I’m too late, guess I’ll just die up here…what a place, fall colors and all…
Thanks for asking, I need extras for my Canyonland film, let me know if you’re interested…the pay is really good, you’ll get paid in coyote calls, starry nights, and lots of cowboy coffee. And I really for sure did give up on a house, in case Prof Bear asks.
Hey there Ben, Gang!
Peeking out from under the covers here, I noticed gold had dropped precipitously. Naturally, I turned to HBB to see what was going on, and sure enough. Combo called it, and there’s Ben with a cyber shout-out.
Thanks so much to all of you for your good thoughts and $upport the last two months. I used your generous donations to buy a laptop computer of my very own–which I’m putting to good use writing about my recent wildlife misadventure vis a vis our most interesting American times.
If I can get my mind around some sort of tie-in with the ongoing global economic unraveling, “The Bear Market” may morph into my own personal…um, bull session.
In any case, it’s good diversion while my face and head resettle themselves into something recognizably human. I’m told it will be a year before any reconstruction can begin, so I’m using this time as an enforced spiritual reorganization.
Very seriously, the amazing response of the HBB was instrumental in convincing me to put forth the effort to stick around a while longer and see what could possibly go weird next. I was rewarded with Sara Palin. What next? Gold <$500? Ben moving to San Francisco and buying a spec condo?
I don’t discount ANYTHING anymore.
Blessings on you all. I love you guys. I really do. THANK YOU!!!
p.s.
I’m told that “Inside Edition” may be airing the interview I did with them tonight. I don’t get broadcast television, so if anyone happens to catch it, let me know if my kid remembered to tuck his shirt in, okay?
So glad you are back and feeling perkier.
Loved your observations.
Your personal ‘bear market’ has been instrumental
in encouraging my pal in Montana, to not
pick huckleberries without her dogs alongside.
Wish you no pain while recovering.
ahansen,
Glad to hear you are feeling a bit better~
Nice to see you back in stride on here…
Ahansen,
Keep fighting the good fight!
Extended quiet time with yourself kind of puts everything in perspective, doesn’t it. (I mean except the voices
)
Mike
The teaser for your segment is already on the web:
http://www.insideedition.com/
First part = Allena, Second part = swimwear
I wish I were kidding, and I hesitated to post this because of that stupid combo. God knows what was going through the producer’s head when he put those two together.
But at least folks can find out when your segment broadcasts in their local area.
Anyway, good healing upon you and hope that things are suitably quiet for a while.
Allena, are you going to the ‘Rondevoux’ next weekend abouve Kernville? Should be a bit cooler than Caliente. Keg beer and home made lemoncello for the bretheren. Satisfactory ! hehehehehehe.
ahansen! Glad to hear you are alive and well. Laptop is good decision. Blow a kiss to your dogs. Look forward to your journey over the next year.
You need the time anyway for your battle with the system.
Also glad to hear you are healing. Your story inspires me.
It was fun while it lasted. Next time bring more than just one gallon of tequila.
‘It took six police officers, three circus clowns and a gallon of tequila to bring him under control.’
Not everyone parties like YOU do, NYCityboy. More’s the pity.
Time for a silver update:
Sunshine mint, who make blanks for U.S. Mint’s Silver Eagles, says all new orders have an estimated lead time of 5 months, out to February. Johnson Matthey refinery stopped taking orders for 100 oz. bars. The last I heard was a 6 month delay for delivery.
The Great Divergence continues. As the paper price of silver drops an average of 4% daily the metal price holds firm.
Example: You could have bought Maples from a large dealer for $14.40 ($1.49 over spot) on that first big drop from $15 to below $13. Today in same quantities (500) Maples at the same dealer are $14.31 ($2.79 over spot) so while the price of paper silver has dropped 11% the metal price has hardly moved. I hold only physical so I am not losing but Mormon Tea must be taking a beating.
The cost to produce silver is north of $5 per ounce. At this rate the silver mines will be mothballed in a month, and I am interested to see where industrial users, Mints, etc. will get supply.
Maybe the “buy high, sell low” crowd will fill the supply gap for a while.
watcher, surely at some future point, SLV will reflect the street price more accurately… right?
Holders of the SLV are losing out, as premiums for real silver rise. Investors in the SLV who bought an equivalent of 100 ounces of silver cannot buy 100 ounces of real silver for the same price anymore.
I hope so. The other alternative is that SLV will just default. I’d certainly welcome a discussion of the divergence of physical vs. paper prices.
Disclosure: long significant physical silver, long moderate SLV
IMO the silver shorts WILL default, and they would rather default at a low price. Then the .gov can step in and say they can settle in cash, and the shorts will close out and make a killing, never having delivered the metal.
Watcher, I failed to see encouragement from the Ask of silver diverging from the Bid, what good is having to pay a lot more than spot if you have to sell at or near spot? I haven’t found any dealers who will give much more than spot (for some foreign coins like Kooks I’ve been offered under spot). With outrageous ebay/pp fees soon to be enacted, even selling 20% over spot on ebay is still breakeven. (disclaimer: I’ve got a large hoard of physical)
apmex and bd nucleo is bidding well over spot for eagles and maples as we speak.
doesn’t help if maples and eagles are selling $2 over spot if you’re holding 500oz of bars, foreign silver, etc. that you paid $5-10 over the current spot price for. LOL
That’s why you shouldn’t buy kooks.
I just posted, and here is more appropriate…Apmex.com is out of bars, 90% bags, and almost everything but high graded coins, and odd medals…No silver bullion !
…and back above $780 again.
but I think we need a good washout to at least $720 or so before we have a solid bottom.
did anyone else notice that the gold-euro exchange rate is extremely stable amids all the turmoil in the financial markets, like the pluging euro/dollar exchange rate etc. Strange … (or maybe a should say suggestive of intervention?).
“Gold drops through significant support at $780. The unwind continues.”
When I think of dropping through significant support, Fannie Mae or Freddie Mac come to mind…
I hear they can go from $60 and stop on a Dime.
Significant support for F&F at Zero.
Now is the time to buy. If I had gambling money, I would buy long-term out-of-the-money calls on F&F.
Gold drops through significant support at $780. The unwind continues.
Anybody know what the situation is with gold coins? Availability?
Should this be considered a buying opportunity (i.e., buy the dip)?
Oof…
Check out Apmex, They are absolutely out of everything silver..not even 90% bags ! Only have some numismatic coins, and odd medals…No bars, Bullion , or bags !
Get it while you can…
MARK HULBERT
Heads I win, tails you lose
Commentary: Gold bugs’ arguments sometimes involve disingenuous logic
By Mark Hulbert, MarketWatch
Last update: 11:24 p.m. EDT Sept. 9, 2008
If you thought corruption in the loan industry was/is rampant…wait until the federal government becomes entrenched in the mortgage biz.
Mozilla with his “VIP” program crapola will be a piker compared to whats coming.
http://www.ft.com/cms/s/0/e30472a6-7e79-11dd-b1af-000077b07658.html
I think it can’t be long before the US gets a National Mortgage Insurance just like the Netherlands, a free housing market put option to insure that no one ever looses money by owning/selling a home. All future losses will be for the taxpayer, so rush and buy a home while you can still get them, price is irrelevant.
Have you ever flown from coast-to-coast over the US in daytime? Did you look out the window?
This is not the Netherlands.
Any attempt to hold housing prices above market clearing levels in the US will result in a vast amount of empty housing being built, due to the amount of available land and relative lack of development restrictions. God knows there’s enough of it already.
Government intervention to support house prices in the US simply cannot work.
That’s precisely my point.
you mean we are not running ot of land?
but my realturd told me………
“God knows there’s enough of it already.”
I haven’t yet heard any serious attempt to address this basic ground level reality from any top economic policymakers; have you? As long as they don’t acknowledge the status quo, they can pretend it does not exist and go on with crony capitalist business as usual, rewarding the building industry with incentives to build more housing before the extant glut is cleared out.
P.S. The silver lining of building industry punchbowl respiking operations: By the time we are all dead, our children may be able to obtain free housing.
FPSS — I have tried to explain this to nhz for years now, to no avail.
I feel compelled to nhz that many of us were right where he was wrong about the effect of massive overbuilding in driving down U.S. real estate prices. We will see if a Treasury-run F&F can turn the tide on this, though the answer may lie years into the future.
you assume that the US bubble is different from all other bubbles and that this ‘overbuilding’ was the reason for the crash. Total nonsense, you should check the history books and look around in the world. All bubbles revert to normal and then some; only the trajectory is very different depending on the situation (e.g. amount of gov. interference with the market). Maybe overbuilding speeded up the process in case of the US, that’s all (I have never doubted that).
The Dutch housing bubble of the seventies (only 100% price gain with zero overbuilding) corrected within 1.5 years with a -40% price crash. The UK market has no overbuilding either and it has started to correct seriously.
The current Dutch bubble (+600-1000% pricegains) will correct just the same, because current prices are unsustainable in the long run (e.g. because the government is quickly running out of money for the HMD tax deductions). I’m sure the current bubble will correct without significant overbuilding; it just takes a bit longer.
nhz,
I did not mean to suggest overbuilding was the sole cause of the bubble crashing, but rather that it is harder to keep a bubble propped up indefinitely on an overpriced asset that trades in decentralized markets when unaffordable pricing, a supply glut, and virtually no limit on potential new supply are all in play than in a case where supply is relatively more limited. But your main point is well taken — even in land-locked and -limited Japan, a shortage of land was not enough to keep a bubble indefinitely aloft.
11% of the Netherlands is built area (that includes all cities, industrial areas, roads etc. etc.), most of the other 89% is farm/wasteland. Increasing the built area to 12% would solve any need for housing space into the indefinite future (as the population is starting to decline over here).
In my area there is farmland everywhere, and despite that fact homeprices climbed more than 1000% over the last 15-20 years. So: it is not about a lack of land here, the only trouble is zoning laws (our ‘grondpolitiek’) that protect the entitlement of every farmer to be an instant multi-millionaire.
“”It’s official: John McCain and Sarah Palin are up in the latest polls now that the conventions are over. This is a positive development. It will give the Obama-Biden campaign incentive to get serious. It would have been a disaster for Obama-Biden to come out of this past week ahead. It might have prompted them to kick back and be complacent.
McCain-Palin have nowhere to go now but down, and I will tell you exactly how this will happen. They can run away from President Bush, but they can’t run away from the Republican Party. The Republicans will be regarded from now on as “the party that wrecked America.” Over the weeks ahead, as carnage in the economy and the financial markets ramps up, it will become increasingly clear. It is important that this meme be spread through the internet. I urge all commentators to adopt and spread the idea that the Republicans are “the party that wrecked America.” It will work because it is the truth. Use it freely. Just spread the word. Get the meme going.”"
Best Wishes!
The meme of desparation, so quickly?
Sorry wrong number I think you meant to dial the dailykos.
LOL
Most people I talk to think it is the whole club that has caused the wreckage. The shirts vs. skins thing is just a stupid distraction.
And they would be CORRECT! IMHO.
I thought the evil-doers of Al Quaida wrecked America.
“The Republicans will be regarded from now on as “the party that wrecked America.”
With some help.
From their former employee, OBL.
Yeah, and if Obama/Biden get in they will finish the job!
As a Democrat, I disagree. He has no monetary experience, he has no governing experience and he has no individual track record in the Senate. His message is about change. Do you really think that these presidents have the power to do anything? We have a government of checks and balances. Democrats and republicans. If God were president, the only legislation he would be able to pass, would have to be acceptable to both parties, and then, if it were illegal, the courts would kill it. Where have the democrats been for the last 8 years? I wrote senator Kohl, from Wisconsin last year, asking him what the hell he did for a living. His answer was a joke. He stated that the congress moved slowly and deliberately. He was actually insulted by by comment.If Obama gets elected, nothing is going to change…they lie…they all lie to get elected.
Geez, where have you been the last 8 years? The Bush/Cheney duo have managed quite well to override Congress with executive orders, signing statements, and partisan Dept. of Justice and Dept of Defense hacks eviscerating our constitution and system of check and balances. Give the GOP another 4 years and they’ll have their “mandate” to finish the hatchet job.
“the party that wrecked America.”
I thought that was Greenspan?
I think it’s this party:
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
Add Nouriel Roubini to those slamming the FF bailout:
http://tinyurl.com/5seoce
“Today instead the US has performed the greatest nationalization in the history of humanity. By nationalizing Fannie and Freddie the US has increased its public assets by almost $6 trillion and has increased its public debt/liabilities by another $6 trillion. The US has also turned itself into the largest government-owned hedge fund in the world: by injecting a likely $200 billion of capital into Fannie and Freddie and taking on almost $6 trillion of liabilities of such GSEs the US has also undertaken the biggest and most levered LBO (“leveraged buy-out”) in human history that has a debt to equity ratio of 30 ($6,000 billion of debt against $200 billion of equity).”
“Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA. Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don’t run the biggest economy in the world. But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage.”
He’s on CNBC this morning. When I first sat down about 7am he was sporting a huge smile.
Roubini smiling. Vindication must be sweet.
“Roubini smiling. Vindication must be sweet.”
He’s endured a lot of grief over his forecasts. For getting more of it right than many others, he must be smiling. However, you can get it right and not be pleased with the outcome of that which was correctly forecast.
I wish Mr. Roubini would stop the sugar-coating and just tell us how he really feels.
Cheney-Shrub Legacy List item # 87: Putting their “shine” on helping the “poor”… while distancing themselves from Carlye Group cocktail parties.
Shrub: “excuse me what was that question?..gasoline is over $4.00 a gallon?…our National deficit is beyond 450 Billion $$$$$$$$$$$$$$$$ USD?…there’s a hurricane headed for Texas?…Laura, where’s the bag of pretzels…I’ve got some serious decisions to make.”
“But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage.”
“…all for the benefit of the rich and the well connected.”
“But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage.”
You cannot have a central bank, fiat money, and a highly regulated (FDIC, legal tender laws, no alt currencies, money laundering laws, the entire tax code, etc) banking industry and call it laissez faire economics.
You cannot have a … and call it laissez faire economics.
Don’t forget deeply structuralized corporate welfare and a bullying stance on the international stage.
You must live in LA LA land, there isn’t a law or regulation that corporate attorneys haven’t chewed and spit out with a wink wink, Country First. Money laundering laws? Um, I guess the Cayman Islands didn’t get the memo.
I love that guy. The CNBC crowd calls him “Dr. Doom.”
Did Roubini really say all that? or are you attempting to deceive and manipulate? ” ..” who’s the hypocrite now?
Check the link. That was taken directly from Roubini’s site.
Must admit, even I was surprised by the venom…but he hit the nail on the head!
“So let them be shamed in public for their hypocrisy and zealotry”
Amen! Hypocrites and zealots. It’s what they’re all about. No substance, no thought. Only boogeymen, strawmen, lies and distortions.
How did we let crazy evangs bent on their own destruction, take over the reins of power in this country?
I’ll give you my take:
In the 1950’s, we had to be the polar opposite of the Soviet Union, in particular regarding religion.
As the Soviets had embraced atheism, we embraced christian evangelism, with Billy Graham as our bully pulpit…
Like a lot of introduced pests, this dogma spread far and wide throughout the country, dumbing down the populace, and because religion was so important during the cold war, the idea of questioning whether you believed in god or not became a litmus test.
If you didn’t believe, you were obviously a commie…
KUDZU, evangs are Kudzu.
You made a good point about how this evang stuff came about, we had to be the opposite of the USSR.
Now we can’t get a balance in the ecosystem of rational thinking Americans.
Kudzu.
“I do not believe in the creed professed by the Jewish church, by the Roman church, by the Greek church, by the Turkish church, by the Protestant church, nor by any church that I know of. My own mind is my own church.”
Thomas Paine
Well Empor, you would be like the Hbbers who
aren’t swayed, like the ones shown on tv.
RE: Have you ever flown from coast-to-coast over the US in daytime? Did you look out the window?
I always do…that’s why the “Green” Movement’s” blatherings about powering every home with solar and other renewables is total BS.
I live in a town where the average home was built in the 1700’s.
Most of these places are enormous energy pits and are owned by liberal NIMBY types, who would raise high holy hell if the historical, bucoli neighborhood ambience where ever impaired by the installation of a solar panel on a roof.
Solar is dead in my neck of the woods, no sun today and the San Juan Mountains have a fresh coat of new snow. And I’m camping at 8000 feet, time to get out the hot chocolate, except I don’t like chocolate. And I’m seriously thinking of going to the bank and getting all my cash out in, well, cash. That’d show ‘em.
Better get ready to stoke the furnace.
Old Farmers Almanac…Based on the same time-honored, complex calculations it uses to predict weather, the Almanac hits the newsstands on Tuesday saying a study of solar activity and corresponding records on ocean temperatures and climate point to a cooler, not warmer, climate, for perhaps the next half century.
http://www.usatoday.com/weather/news/2008-09-09-farmers-almanac_N.htm
If you get on their website (google Farmers’ Almanac Winter Predictions “Weather Chatter” with Peter Geigerst), you’ll read lots of anecdotal evidence from people all across the country on early winter, hard winter - things like bird/animal migrations 2 months early.
My furnace right now is stoked by hiking, movement, flailing my arms - ran outta propane during the night, just too darn chilly, I’m heading for the flatlands…
WHO owns the USA today?
guess that is who tells the “journalists” what to say about global warming.
Ignore my previous post Lost. I just came across where you are parking.
You don’t like Chocolate? Lost, we are meant to be friends, you can give me the chocolate, you are a woman from a different planet!!!
LOL!! You can have my share forever, now you have it in writing, print this out and carry it everywhere you go.
Saltboxes are ugly anyway.
RE: So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA
LMAO…And you give Pelosi, Reid, Frank, Dodd and the rest of those miserable 11% favorable rated Congressional clowns a pass?
Bush told these idiots to clean up the GSE’s.
And they chose to sit on their collective azzes and watch it all come crashing down. (which was probably their ultimate agenda anyway)
If this country’s voters had any ballz at all, they’d through ever damn incumbent out of office and intial legistlation to strip them of their pensions.
WTF? Obviously, any contract today can be nulified by executive fiat.
“Bush told these idiots to clean up the GSE’s.
And they chose to sit on their collective azzes and watch it all come crashing down.”
Did you catch the Brazilian president’s comment last Monday? He said about the same, that the world’s been watching and waiting for the US to act and instead we waited until it was too late. (Paraphrased)
“Obviously, any contract today can be nulified by executive fiat.”
This has been true since the nullified gold clauses in contracts in 1933.
We no longer have “rule of law” we have rotating dictators.
“Bush told these idiots to clean up the GSE’s. And they chose to sit on their collective azzes and watch it all come crashing down. (which was probably their ultimate agenda anyway)”
Early in my career I told the prime contractor to upsize a 24″ ductile iron pipe to 28″. They installed 24″ pipe anyways because I didn’t put it in writing.
DoughHead has no excuse. There is no written directive to reign in the GSE madness, even though he had every opportunity considering the house and senate were stacked in his favor. The only evidence to suggest he actually wanted to do something about the GSE’s is soundbytes and finger wagging rhetoric to satisfy the clueless fixed news viewer.
You know, Republicans had 6 years of control of the Presidency and both houses of Congress and they didn’t seem to get off of their collective azzes. What does Pelosi have to do with any of it?
Here is the point that most Americans don’t get, although the dems have just a few over the necessary majority, the greater portion of dems vote very conservatively against their own party desires, sort of like Lie-berman who votes with Gop but calls himself a dem, although he is an Independent.
The dems may have the #s for majority, but 1/2 the current dems are not voting dem. Therefore, we really are a republican congress still.
IN the senate it is evenly split
49 republican
49 democrat
2 independent, one is Lieberman who often votes republican.
Thus they don’t control the Senate or the WH.
“The US has also turned itself into the largest government-owned hedge fund in the world:”
Wow… truly depressing.
Lehman suffers nearly $4 billion loss
http://money.cnn.com/2008/09/10/news/companies/lehman/index.htm?postversion=2008091008
The worst is over. BWWWAAAAHHH!!!!!!!!!!!!!!
Let me show you how to do that.
BWAHAHAHAHAHHAHAHAHHHHHHHHHHHHHHHHHHHHH!!!
The rich get richer, no matter what. When you look at Fuld’s compensation package, you have to laugh at the idea that giving CEOs big slugs of equity aligns their interests with those of regular shareholders. Lehman’s stock was down some 60% for the year as Fortune went to press, but Fuld hasn’t been asked to return a single penny that he made from selling stock he received as compensation.
Old Wall Street saying: He who laughs last…laughs loudest!
By Fortune’s count, Fuld, a bond trader turned CEO, has realized almost half-a-billion dollars from cashing in stock options and restricted stock awards since Lehman (LEH, Fortune 500) went public in 1994. (I’m mentioning his stock swag but not his salary or bonus to show you how stock compensation can work out great for the Fulds of the world, but not so great for shareholders.) By our calculation, which Lehman declined to discuss, Fuld has knocked down $489.7 million (before taxes) from selling 14.4 million optioned and restricted shares. (He seems to have kept 2.7 million.) His best year was 2001, when he collected more than $100 million. Last year, when Lehman stock fell 16% as the debt markets seized up in the summer, he still realized $53 million.”
Lessons from the house of Lehman:
http://money.cnn.com/2008/06/20/magazines/fortune/sloan_lehman.fortune/index.htm?postversion=2008062312
“BWAHAHAHAHAHHAHAHAHHHHHHHHHHHHHHHHHHHHH!!!”
Do you keep this on a kind of copy & paste speed dial or do you type this out personally, by hand, each time, with gusto?
(- a question sponsored by the letters apple, ctrl & V)
I type out each time as a poster discovered here the hard way.
Ah, a good work ethic!
But they’re too big to fail.
As some authors have noticed, Lehman is larger than Bear Stearns was. And Bear was “too big to fail”. So add another bailout, and we still have the auto companies, and probably the airlines which will have their hands out again…
Washington Mutual is also on death watch. There’s definitely a morbid fascination taking over financial reporting. Where there’s carrion there’s flies…
You mean Lehman Bros ADMITS a $4 billion loss.
Is that weekly…or…bi-weekly?
lol -but who knows??
The “big bank economies of bail” business model seems to be in severe question at the moment. Perhaps when the dust has cleared on the current episode in financial history, the banking sector could adopt a leaner, more competitive business model than the one that assumed “the bigger, the more likely to be bailed out in a crisis.”
we have a bond bubble forming in mortgage backed securities - we can see it coming, will we stop it in its tracks?
“…Plain vanilla pass-through mortgage backed paper has taken a severe clubbing today. The paper has widened by about 16/32 to swaps….”
John Jansen
(these are not GSE mbs)
GSE paper tightened initially but it is widening by 4bps, not good for the Paulson plan.
There is a treasury bubble that is carrying a bunch of crap up with it. Flight to safety has always ended ugly.
High anxiety by superrich about gas prices?
http://www.nytimes.com/2008/09/10/business/businessspecial3/10PSYCH.html?ref=businessspecial3
This article is hysterical. I especially love the assertion that people are worried about their wealth because they fear having enough food to get through winter.
If you view this event as a “black swan” rather than totally inevitable given what led up to it, you’d be scared too.
Most people here clued in a long time ago, and they bought insurance when it was cheap not when the house was on fire (pun intended.)
???
“Psychologists and wealth advisers say that most wealthy worriers haven’t cut back on charitable giving.”
The NYT should have their head examined.
“its” head, I mean.
they mean “Whole Food”.
Wasn’t the timing of Silver State Bank being closed down by the FDIC quite interesting?
The fact that Andrew McCain (Board of Directors-Audit Committee) had obviously distanced himself from the debacle just 5 weeks before by resigning his position, hardly rated a mention in light of what was happening with Fannie & Freddie over the weekend.
I was a thinking along the same lines. Looking at SSB after the fact, the bank could have been closed last May. T+T=C Voltaire
Why should that shock anyone, when much of the media in this country is now wanna-be Pravda? I mean, the networks and newspapers and radios stations are redundant, with some exceptions.
Drudge’s big story for much of the past weekend, was Oprah not wanting Sarah Palin on her tv show.
Until y’all or Obama’s buddies in the media can find otherwise, and I’m sure someone is looking, one cannot rule out that he just didn’t like what he saw and didn’t want to be a part of it either.
So using your logic, if ’ssshrubery were to resign from the presidency because he didn’t like what he saw and didn’t want to be a part of it, you’d be ok with that?
Comparing a prez with a bank director is a rather poor analogy…you can do better than that.
Would a Dem do that?? Doubtful.
Answer the question, please.
If ’ssshrubery resigned and 5 weeks later the Presidency had to be shut down by Federal regulators, you’d be of the opinion that he was prescient in leaving?
Your question is silly on it’s face, as I pointed out. I’m sure you can come up with something more relevant AND still get a political jab in somewhere.
Well, Bush does have an MBA from an ivy league school and in 2000 promised to run this country like a business.
And drove it into the ground no different than Harkin Energy. Yep. DoughHead has the midas touch.
I was watching our dear leader on the PBS Newshour a few days ago, and Jim Lehrer was interviewing him about debating, and they showed some snippets of the 2000 debates, and said dear leader was cackling about how he used a certain phrase “Fuzzy Math”, to his advantage.
He repeatedly peppered Al Gore with those 2 words, and you know how we love a catchy phrase that means nothing, so lets fast forward 8 years later and “Fuzzy Math” probably best describes all that’s gone wrong…
Well, in the interest of fairness, Biden’s son was a well paid lobbyist for MBNA (credit card company) during the time that Biden most enthusiastically voted for legislation that gave CC companies a stranglehold on the consumer.
The point is, partisanship is a game that is all played out. There’s really just one party now. And it has wiped out racial barriers in favor of one color: the long green.
The point is, partisanship is a game that is all played out. There’s really just one party now. And it has wiped out racial barriers in favor of one color: the long green.
I used to make that assertion, too.
But it’s difficult to make that argument when looking at the past eight years. Or the past 20 years, or the past 30 years. There are clearly some substantive differences in policy, both foreign and domestic.
Are those differences as drastic as I’d like? Hell, no. Are the two major parties fat and complacent? Hell, yes. I’d like to see a viable multi-party system in this country. But to suggest there’s an exact equivalency between the two major players is wrong.
They are equivalent on the only points that matter. Going back 10, 20 or 30 years and you could say they were different, but the dems/repubs of 10, 20 or 30 years are go are VERY different than the dems/repubs today.
Both will reduce your freedoms, both will spend money they don’t have, both support the federal reserve, and both support the concept of social security, medicaid, department of education, homeland security, patriot act, etc…
Any differences are superficial and designed to attract different segments of the population yet maintaining the important principles in common.
I beg to differ. GOPs brag they don’t operate in a reality based world. For them it’s all about the intestinal tract.
True enough.
But it sure doesn’t pass the smell test.
It makes total sense (to me anyways) if you don’t want to be responsible for financials that might stink to high heaven.
Blano, I see your point, but wasn’t he on the Audit committee? If so, his job is to correct things when they aren’t right. We’re not talking about some midlevel manager here.
It definately stinks.
Not that there’s any reason to be surprised. Apparently our new measuring stick to the greatness of a president is whether he is better than Adolf.(see above)
IIRC, yes, he was on the Audit Committee, and IIRC he was within days of having to actually sign and be responsible for audited statements.
I agree with the correct things when they aren’t right part, but if you can’t, and/or are overruled, then what?? I know I wouldn’t want to put my John Hancock on financials that I didn’t believe in.
Coincidentally, yesterday I had to tell the owner of our company that I wouldn’t cook his books for him while his divorce was going on. Thankfully, I still have a job (for now, lol).
To me, so far, this would be similar to the rare accounting firm who resigns from a client because they feel they can no longer be confident in the books they’re auditing. I’m sure someone is sniffing around looking for dirt and if it’s there, it’ll come out.
What makes you think McCain didn’t “sign off” on earlier ficticious math?
Silver State Bank was in trouble for a long time, not just in the past 5 weeks.
IIRC (sorry) he was only on the board for “months.” If I’m wrong, someone please find the time frame. Thanks.
Anything beyond a year on the Committee and he probably should have signed off on something. Short of that doesn’t give one time to sign off on much of anything.
Why are you apologizing for McCain’s son?
He was there 5 months, and i’ll guarantee you he must have put his John Hancock on something, in all that time, being on the Audit Committee.
Soft landing predicted for real estate
http://www.canada.com/montrealgazette/news/business/story.html?id=7adfaa31-8d11-4b46-8d72-a46c229bc8dc
“You could have a long period where house price growth is very low or even stagnant,” Somerville said. “To get house prices to fall, you need people who really want to sell and are willing to take price cuts, and that’s either lenders who have foreclosed on units, developers who have empty, unsold units or places where employment has plummeted.”
“Adjustments can be abrupt and painful or they can be gradual,” he said. “What we’re seeing in the U.S. is the former, and, in Canada, I think we’re going to see much more of the latter.”
A little news outside our borders. While lending may be a little different in CA, don’t other factors like buying a home for 3x yearly income, overbuilding, global recession problems and other economic realities apply north of the border or are they immune? CA still has the soft landing crowd, which was a loud bunch in the US a year ago, but they have slithered away to hide under rocks until the coast is clear to return.
in Netherlands the median home costs over 8.5x median income, and home prices are still rising - have been for about 20 years now. Longer duration for mortgages, stubborn sellers (probably with a bit more capital reserves than in the US), government intervention … there are so many factors that can keep markets levitating even after the bottom for homesales has fallen out
nhz: if only our Congress will learn from your country’s mistakes. But I doubt it.
I think they WILL learn, the bad way …
just like there seems to be some efforts underway to import the ‘innovative’ Dutch healthcare system to the US (despite all the peptalk from our politicians and government managers, our new healthcare system is a disaster and just as broken as our housing market).
We all live in a “different world”. My area of Western NY is always behind the curve. Just like Canada.
Check back in a year or two.
“You could have a long period where house price growth is very low or even stagnant”, Somerville said.
House prices are stagnant only at market bottoms when you have rent equivalence, dummy. It is not possible to have flat prices when they are 10x incomes or yields are at 2%, because of the high opportunity cost of holding RE.
I found this little gem this morning. W.Buffet says to his banks, no more insurance for accounts above the FDIC amount. This little gem came from the Reuters reporter in Bangalore India?
http://news.yahoo.com/s/nm/20080910/bs_nm/berkshirehathaway_insurance_dc;_ylt=AvBG81f_5wGWxCSCI5AsdZayBhIF
That’s a Bangalore Torpedo of a story, explosive news…
Warren obviously knows the gig is up, and he’s battening down the hatches.
http://en.wikipedia.org/wiki/Bangalore_torpedo
When I read this I thought it should be viewed similarly to when he sold his vacation home in 2005 at/near the RE top.
interesting timing now that it looks like FDIC coffers might be empty before end of the year …
still your FDIC is better (as long as it lasts) than the 20K euro deposit insurance we have in the eurozone.
Think about it, this means one of two things: either the books of banks have become so non-transparent that BH can make no reasonable guess on probable losses, or we’ve hit the point where presumed defaults will become pervasive enough that he declines to offer insurance at ANY price. Effectivly this probably means that the projected price for insurance would be higher than anyone would be willing to pay, say more than the interest earned.
More proof of deflation
TOKYO (AP) — Japan’s wholesale inflation remained near a 27-year high in August, the government said Wednesday, as the soaring costs of energy and raw materials continued to pressure businesses.
The index for domestic corporate goods prices rose 7.2 percent from a year ago, the Bank of Japan said.
Inflation in Japan at 27 year high
All of the worlds top 50 economies are now in inflation. Japan has the lowest rate of any of them.
If all the water in all the ponds all over the world gradually reaches a boiling point, none of the frogs in those ponds will have any other pond into which they can jump. Consequently, all the frogs will boil to death in perfect synchrony. The pigs who boiled them will enjoy a bacchanalian feast, only to all die shortly thereafter due to a lack of frogs to eat thereafter.
Sirius XM Having Trouble Paying Off Debt
“..Newly merged Sirius XM Radio said yesterday that it doesn’t have enough cash to pay back the $300 million in debt due early next year but that it has not looked into selling its Northeast Washington building to raise money.
Chief executive Mel Karmazin, addressing investors at Merrill Lynch’s 2008 Media Fall Preview conference in Marina del Ray, Calif., yesterday, said that the credit market crisis has made it more difficult to raise funds but that he is confident that the satellite radio provider will resolve its debt troubles through bank financing.
The company has more than $1.1 billion in debt that will come due in 2009, with $300 million in convertible senior notes due in February. …”
WaPo
Borrowing short term funds and hoping to be able to roll over was a nightmare waiting to happen, for the weaker firms such as Sirius this is effective BK.
There are hundreds of firms trying to rollover, some like Fannie/Freddie are 200B a quarter others are $30MM - but in all cases there is no private moneys available.
RE: Sirius XM Having Trouble Paying Off Debt
“..Newly merged Sirius XM Radio said yesterday that it doesn’t have enough cash to pay back the $300 million
I thought I read their $300mil is covered in the new $168 billion second stimulus bill which also covers $50 billion for the auto industry*.
(tongue now out of cheek)
I never understood the merger from the customer standpoint. They have two non-compatible systems and are going to shut down one of them at some point, right? Otherwise, what’s the point?
If I wanted to subscribe, I have to either buy a receiver that can tune into both systems, or choose one device and hope the other is the one that gets shut down.
I went over to crutchfield.com and can’t find any receivers that can tune both systems. So as far as I can tell, you still have to choose one or the other, and at some point they are going to tell millions of people that they have to buy a brand-new piece of equipment if they want to continue being a customer.
The hardware has always been the weak link in both services. When I had the car website I got hold of several review units and they are uniformly terrible, literally 3-5 years behind the design curve from the rest of the device market.
Sirius-XM is basically a software/media company that was forced to manufacture it’s own hardware. Imagine if Microsoft made PCs.
Despite not wanting to appear on the Apple cult bandwagon, this is why Jobs & Co. are going to win this overall battle. If I could pay Sirius for the service and use an Apple handset, I’d bite the bullet today. Apple remains the only company that does both hardware and software well enough to overcome price resistance.
I understand there is a Sirius hack for the iPhone, but I don’t believe it allows you full access to all the news channels, just the ones you can get over the Internet, which knocks out CNBC and other talk stations.
howard stern will lend him the money
sirius stock holder=man with little money
“We missed a golden opportunity that would have avoided a lot of the problems we’re facing now, if we hadn’t had such a firm ideological position at the White House and the Treasury and the Fed [in 2005].
All the handwringing and bedwetting is going on without remembering how the House stepped up on this. What did we get from the White House? We got a one-finger salute.”
former Congressman Mike Oxley (R-Ohio), Sept 9, 2009
This is not a step that the administration was anxious to take. And in fact, it is exactly the kind of event we’ve warned about and tried to prevent over the years. Remember that we have highlighted the systemic risk posed by Fannie Mae and Freddie Mac because of the very large role they play in housing markets, and because of their business practices.
And for years we have encouraged Congress to put in place a strong, independent regulator to oversee the institutions.
— Dana Perino, White House Press Secretary, Sept. 8
You see, the administration was right again. Who you gonna believe, Dana Perino or your lyin’ eyes?
Dana Parino would rather lie, even if telling the truth was easier…
I dunno ET. The lyin’ deceiving gop told us we’re all whiners and the shrinkin’ GDP is all imaginary.
Bush The Lesser: But if the economy really is in the sh!tter, it’s not our fault — we told you this would happen years ago. Hey, look over there, it’s Lindsay Lohan!
Hankzooka shot himself in the foot:
Sept. 9 (Bloomberg) — The cost of hedging against losses on Treasuries rose to a record on concern the U.S. government faces higher liabilities because of its rescue of mortgage companies Fannie Mae and Freddie Mac, credit-default swaps show.
Contracts on U.S. government debt increased 3.5 basis points to a record 18, up from 6 basis points in April, according to CMA Datavision prices for five-year credit-default swaps at 5 p.m. in London.
“The bailout of Freddie Mac and Fannie Mae is weakening the balance sheet of the U.S. and that is causing a deterioration of creditworthiness,” said Mehernosh Engineer, a credit strategist at BNP Paribas SA in London.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5yQoLaUYCsc&refer=worldwide
“…Tim Backshall, chief strategist at Credit Derivatives Research, said the price implied that the US was more likely to default on its obligations than Japan, Germany, France, Quebec, the Netherlands and several Scandinavian countries. Traders said the CDS market for US debt was illiquid and it was hard to see evidence of increased concern over US creditworthiness in broader market prices….”
FT
More likely to default than Quebec? rotflmao Japan, Germany, Netherland and Norway fer sure, but Quebec.
Time to review
Is the US Bankrupt
Laurence J. Kotlikoff
St Louis Federal Reserve
June 2006
“…Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve “being forced” to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country’s financial insolvency, they will start worrying about inflation and about being paid back in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they’ll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation—exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation….”
–
Metropolitan Areas Hitting New Lows in PPSF Almost Daily & % Price Change Since Peak:
25 MSA Composite -17.61
Las Vegas, NV -35.66
Los Angeles, CA -28.23
Miami, FL -26.06
Phoenix, AZ -32.54
Sacramento, CA -39.05
San Diego, CA -34.34
San Fran, CA -27.19
San Jose, CA -19.04
Seattle, WA -9.45
Tampa, FL -23.58
Washington, DC -27.08
All 5 CA areas are making new lows and three of them are still the most expensive areas by PPSF in the country. The daily price for an area is calculated as price per Sq Ft for the purchase contracts signed over the latest 28-day period and were completed.
Jas
Canada, esp. Vancouver is finally seeing house price declines! A miracle. 4 percent on average in a few mos. Maybe the Olympics will save us. But then, maybe with 12 months of inventory, maybe not so much. Will we track the US exactly now? Worth some discussion?
Declines are always a miracle in every bubble market at first. Eventually all the UHS/economists there will go on and on about how unsustainable it all was and it had to fall.
“Eventually all the UHS/economists there will go on and on about how…”
they predicted it all along and warned everybody.
“Eventually all the UHS/economists there will go on and on about how…”
they predicted it all along and warned everybody.…
…and things will turn right around next month.
Well given the “recent” actions of the US Treasury/Goldman Sachs…has Mr. Duncan’s question below been given an answer by Mr. Paulson:
Re: “The Bailout Theory of Redemption”
Remember? (And as Prof Bear noted: include & add with that 34% group… those tax paying US of A renters!)
“Federal aid ‘would come at a cost,’ said Douglas Duncan, chief economist at the Mortgage Bankers Association. ‘It has to be paid for and the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?’”
Large multinational companies’ tax practices will fall under Congress’s scrutiny next year as the heads of the Senate Finance Committee pledge to “tackle tax reform in 2009″ following a report that businesses are increasingly shifting their operations — and their taxable income — outside the United States.
http://www.cfo.com/article.cfm/12080659/c_12201554?f=home_todayinfinance
Yesterday’s Salt Lake Tribune had an article where Zions Bank is seeking capital, bigtime (sltrib dot com). Didn’t they about go under once? Maybe they’re about to crash and burn again. I have a lot of money in an account with them (about $200), but I’m not worried.
More F&F “unintended” consequences, banks crashing.
Zions owns Nevada State Bank which bought the recently failed Silver State Bank.
OK, Watcher, now I’m worried, gonna go get my money out, have to drive to Utah, though, and that will take a bit of gas, maybe about $200 worth…
Well if you’re lucky crap only flows downhill.
Lost:
Explain a Utah mystery for me…
Why is most everything pluralized there?
i.e. Zions Bank
Empy (excuse the lack of decorum, but I am a Westerner and one of those who would just as soon hang the royalty as go fishin’, you excluded, of course, given how you came about your title)… now, where was I…ah, yes, the Innumerable Mysteries of the Pluralizations by Utahans.
It was started by Brigham, of course, who felt that everything was better in plural… it’s now become a cultural phenomenon, a tradition, that belies the…oh shoots, what the gotohecks, I dunno, I’m from Colorado…
So,
If somebody had more than one wife say, would it be called plurals wife?
OK, lad, now you’re testing my linguistic knowledge a bit…if you said plurals wife, that would maybe lead people to think there was some fellow named Plural, and believe me, Utah does have some great names like that, but usually they start with La, as in LaVar, LaDene, that sort of thing. Ironically, if you said plurals wives, everyone would know what you meant, some fellow named Plural who had plural wives, but by saying plural wives, that’s redundant…
What they’d like you to believe is that if anyone had more than one wife, it would be called illegal, but sometimes I wonder…Olygal, you out there???
OK, I need some mud, and I mean to drink, not as in the stuff under my truck wheels from all the rain…so don’t ask me anything else profound, cause I’m outta here…
Lost,
I hope you can answer a question for me…
My Father, born in Utah of the Mormon faith, died when I was young.
His first name was LaMont…what is the significance of “La” to the LDS faithfull?????
Thanks
Hey, I really don’t know, honest. But there are a lot of names starting with that. I suspect it has something to do with the adulation the conservative Mormons have for the wild and loose and crazy French culture.
Olygal…HELP!! Where are you???
Congress weighs reprieve for seller-funded gifts
http://www.inman.com/news/2008/09/10/congress-weighs-reprieve-seller-funded-gifts
I found the link at Calculated Risk and thought it would be useful here, too. Amazing how our elected clowns want this financial shenanigans party to continue. Buy with zero down, zero interest, zero credit score, and have zero financial responsibility if you can’t pay your mortgage. Just buy - please!!!!!
HR 6694, which would allow home builders to continue funneling down-payment assistance through nonprofit groups to home buyers using FHA loans, is certain to pass the House of Representatives and has the blessing of the Department of Housing and Urban Development, Rep. Barney Frank, D-Mass., said at a hearing on foreclosures this weekend.
The influential chairman of the House Financial Services Committee urged those attending a committee field hearing in Stockton Saturday to lobby the Senate — which shoehorned language banning seller-funded gifts into HR 3221, the sweeping housing bill signed into law July 30 — in support of the bill.
HR 6694 would automatically allow qualified borrowers with credit scores of 680 or above to use seller-funded down-payment assistance on FHA-backed loans, Frank said. Borrowers with scores between 620-680 who relied on seller-funded gifts might be subject to higher insurance premium fees.
Borrowers with scores below 620 would be excluded from using down-payment assistance until mid-2009, when HUD would be permitted to expand the program to include them if the Secretary of Housing determined it could be done without putting a dent in FHA’s insurance requiring taxpayer subsidies.
BTW, just a feets on the streets report, checking Craigslist throughout W. Colorado, am now seeing more and more distressed properties for rent, things like:
“We’re moving out of the area and would like someone to rent our house. It’s a 3 bedroom, 2 bathroom, 2 car garage house with a really nice floorplan. It’s less than 2 years old in great shape. Unfurnished. We’re not “landlord people.” This house is our only piece of property and we just want someone who will take good care of it. We’re very flexible on the payment of the security deposit, and we are very pet friendly. We want to rent this out ASAP!”
Am seeing more and more of this. However, rental prices have not come down any, but I’ve seen a number of ads where they’ll waive any deposits. This particular ad is for Pagosa Springs, a resort area, no jobs.
I’ve seen a lot of talk of the divergence between the paper metals versus the physical metals markets. But I don’t get how this can really occur.
Can someone please explain how the futures markets don’t address this divergence? Can’t you just go long and stand for delivery? Thx…
You need deep pockets and a strong back to take delivery of 1000oz COMEX bars.
There are many discussions on the subject online. It’s a long and complicated subject to go into here.
But if there is risk-free money to be had on the arbitrage of said 1000oz COMEX bar, I would expect someone with deep pockets to step up and take the free money. Their doing so until there is no money left in the trade should push the markets back into alignment.
I still don’t get it.
Can you at least provide to a point to a place where I can find such a discussion in more depth? Thx…
Go to GATA website.
I tried starting there, but still didn’t find any good discussions of this divergence.
I did read GATA’s recent Daily Dispatch linking to Jason Hommel’s site, and while I didn’t agree with his conclusions that this implies manipulation and an impending price explosion, it did make me think.
The one thing that occurred to me on reading his article was that maybe there is a disconnect between the TWO markets for silver: one market for retail/small purchases, and one market for wholesale/very-large purchases.
Thinking of those as two separate markets makes some sense to me, since they really have different market participants. However, there should still be some eventual equilibrium between those two markets, but it would be attained by DIFFERENT entities (those who mint coins from larger bars). They could certainly increase production of coins to take advantage of the increasing premium over spot, but I could see this being a slow process, since tooling up a new mint would presumably require a significant capital investment.
The fact that there is more trading of paper than exists physical production is interesting, though–that could certainly increase volatility on the paper side, and things could get interesting if the price disparity widened enought that _everyone_ stood for delivery.
But the volume itself just suggests to me that lots of players want to bet one way or the other, and are apparently perfectly happy with those bets being settled in cash.
The Parable of the Dagger
Once upon a time, there was a court jester who dabbled in logic.
The jester presented the king with two boxes. Upon the first box was inscribed:
“Either this box contains an angry frog, or the box with a false inscription contains an angry frog, but not both.”
On the second box was inscribed:
“Either this box contains gold and the box with a false inscription contains an angry frog, or this box contains an angry frog and the box with a true inscription contains gold.”
And the jester said to the king: “One box contains an angry frog, the other box gold; and one, and only one, of the inscriptions is true.”
The king opened the wrong box, and was savaged by an angry frog.
“You see,” the jester said, “let us hypothesize that the first inscription is the true one. Then suppose the first box contains gold. Then the other box would have an angry frog, while the box with a true inscription would contain gold, which would make the second statement true as well. Now hypothesize that the first inscription is false, and that the first box contains gold. Then the second inscription would be -”
The king ordered the jester thrown in the dungeons.
A day later, the jester was brought before the king in chains, and shown two boxes.
“One box contains a key,” said the king, “to unlock your chains; and if you find the key you are free. But the other box contains a dagger for your heart, if you fail.”
And the first box was inscribed:
“Either both inscriptions are true, or both inscriptions are false.”
And the second box was inscribed:
“This box contains the key.”
The jester reasoned thusly: “Suppose the first inscription is true. Then the second inscription must also be true. Now suppose the first inscription is false. Then again the second inscription must be true. So the second box must contain the key, if the first inscription is true, and also if the first inscription is false. Therefore, the second box must logically contain the key.”
The jester opened the second box, and found a dagger.
“How?!” cried the jester in horror, as he was dragged away. “It’s logically impossible!”
“It is entirely possible,” replied the king. “I merely wrote those inscriptions on two boxes, and then I put the dagger in the second one.”
Welcome to government by the Federal Reserve
I’ll have to think about this with x2 ice cubes & x3 shots of a nice single malt Scotch…dang you Hoz it’s not even 10am on the West coast.
I got stuck on the part “savaged by an angry frog” and could process no more.
I thought I was hearing the dialogue on
Princess Bride again.
“All successful revolutions are the kicking in of a rotten door. The violence of revolutions is the violence of men who charge into a vacuum.”
John Kenneth Galbraith
He’s an entertaining writer, but I’m not sure I’d take the words of a suicidal poly-substance abuser too seriously.
If you’re referring to Hunter T., he’s long gone, he shot in a rocket to the stars.
If you’re referring to Greenspan’s latest book, it’s entertaining, all right, but only if you’re a suicidal poly-substance abuser.
touche’
Listening to Marketplace this morning on the way to work and they had a little piece on how much mutual fund holders have lost individually in the wake of the F&F collapse (the host lost $447). A lot of big funds had 1 or 2% F&F, so a lot of small stakeholders lost a bit of their retirement. Two things struck me about this:
1. It seems unbelievably unfair to me that lots of little investors lose money on things like this, especially with the CEOs walking away with money like a bunch of Lou Pi’s. Now they’re talking about Lehman brothers and so on. Transferring all the risk onto the public is just so wrong. You can’t tell everyone to manage their pensions at their own risk and then rig the game and change the rules. This is a great recipe for even more cynicism and lottery mentality on the part of the public. At the end of the day, not everyone is cut out for investing, so there really needs to be some sort of stable savings option for people who are willing to live small, save big and have a more modest retirement if they have low risk tolerance.
2. Dodge & Cox just bought up a bunch of F&F because they were counting on a government bailout, but assumed the government would bailout the shareholders, too (see point #1). whoops. I am not a US citizen, so I couldn’t purchase Dodge & Cox, but when they began accepting new investors last year I nearly recommended them to American friends, because I had heard a lot about them. Luckily, I kept my mouth closed, realizing I still don’t know much. Phew, because they would have just lost a bundle. Note to self: do not recommend investments to friends.
“Transferring all the risk onto the public is just so wrong. You can’t tell everyone to manage their pensions at their own risk and then rig the game and change the rules.”
well thats what they are doing, the end result will be less investors in the stock market.
Step 1: Don’t invest in mutual funds if you can’t afford the mutual fund to go down by 1-2%. Invest in US Treasuries.
Step 2: Make it easier for shareholders to vote on executive compensation.
Step 3: Don’t make every CEO risk going to jail every quarter by personally signing financial statements where there is NO WAY IN THE WORLD they could actually know enough detail to feel comfortable doing so–you gotta pay someone a lot of money to do that.
People act as though being CEO of a public company is some great job with a giant paycheck. Most smart, successful, wealthy people I know wouldn’t want the job if it was offered to them. There is FAR too much personal risk on the line.
Oh, I never said anyone should go to jail. (Unless they knowingly commit fraud or pump & dump).
Like many things, quality varies from CEO to CEO. Let’s just say their pay went up a lot in the last decade, and I am personally unsure of what the “extra” is that they’re producing. I’m not going to get into that right now (I have a deadline). For what it’s worth I am the CEO of a private company and I’m working my tail off today.
What I am saying is that if you lead your company into the ground, to the point where the public has to bail you out, I don’t think you should get to walk away with compensation & bonus intact. I’m sure it’s legal, it’s just wrong and it sends a terrible message.
Also: WHY is the F&F bailout socialism? Wouldn’t that be if the profits were taken from the private owners and given to the public (in the form of taxes or otherwise). This seems a lot closer to fascism to me, no?
From brittanica: “Although fascist parties and movements differed significantly from each other, they had many characteristics in common, including extreme militaristic nationalism, contempt for electoral democracy and political and cultural liberalism, a belief in natural social hierarchy and the rule of elites, and the desire to create a Volksgemeinschaft (German: “people’s community”), in which individual interests would be subordinated to the good of the nation.”
Further: “In theory, the corporatist model represented a “third way” between capitalism and communism, allowing for the harmonious cooperation of workers and employers for the good of the nation as a whole. In practice, fascist corporatism was used to destroy labour movements and suppress political dissent.”
Just for the record, I’m not comparing anybody to Hitler or the Nazis. I think the Italian fascist party is much more interesting to look at for contemporary comparisons. (I actually find it really annoying when people throw around Nazi comparisons and insults - with the exception of examining propaganda techniques, because they were really pioneers in figuring out how to manipulate large groups of people.)
Bull pucky to the last portion of your post.
They have/can finagle their way out with
all the attys around, and do.
“Step 3: Don’t make every CEO risk going to jail every quarter by personally signing financial statements where there is NO WAY IN THE WORLD they could actually know enough detail to feel comfortable doing so–you gotta pay someone a lot of money to do that.”
AND if they don’t know what is going on, then maybe they shouldn’t be the ceo. etc.
They may “finagle their way out with all the attys”, but it’s not guaranteed. The fact is that they put themselves at great personal risk every quarter by certifying those financial statements. It is naive to believe that any single human being could know enough detail about any of the Fortune 500’s financial statements to certify their correctness–and do so KNOWING them to be correct.
Do you honestly think that Steve Ballmer knows enough about how revenue is recognized on all MSFT’s license agreements, goodwill is amortized, etc., to be able to CERTIFY personally to the correctness of those statements every three months? Not a chance in hell. What about Steve Jobs? What about Jeffrey Immelt? John Chambers? They all rely on the folks below them–they have to. Yet, Sarbanes Oxley places the burden on the CEO personally. For that personal risk, they should be paid handsomely.
Some are paid appropriately, IMHO–Immelt’s salary was $3.3MM in 2007, with ~$11MM of bonus/performance pay, which is appropriate for such a large company. Some are underpaid, but have large stock options (Jobs’ salary at $1). Other’s are ridiculously high for what they bring to the team (Mozillo, anyone?).
Shareholders should have a say in all these guy’s pay package one way or another, but, all else equal, the CEO should be paid more for taking such personal risk.
From the looks of things, (management shake up, stock chart) it looks like this Friday or next we’ll see the creation of Washington Mutual Federal Bank.
That has a nice ring to it. I’m not moving any money, I’m well below FDIC limits in all my banks.
My money is on this Friday, and then if I’m not mistaken we’ll have a new reigning champeen for largest gov. takeover. (Well, if you don’t count mae and mac)
Hey all! I went to the Billings housing auction mentioned yesterday, and here’s my report.
Kenmark sets new comps
Kenmark Construction held the first mass real-estate auction in Billings in recent memory. The auction was on Tuesday, September 9. I attended.
This auction was well publicized, and approximately 350 people showed up! The large room in the new College of Technology building was filled up, standing room only.
So how was it? You can read the Gazette write up, but that doesn’t tell you much in terms of what actually went on and what it means for the market. That’s what I’m here for.
First off, all 13 properties actually sold! That’s pretty amazing; I’ve watched other auctions around the country, and usually few if any properties sell. Kenmark’s success was in part due to fairly low reserves on the properties, and in part due to reasonably strong bidding in a Billings market that has not entirely gone bust yet.
Second of all, Kenmark let these properties go for pretty low prices. Bids came in at around 70% of the original asking price. I checked asking prices on comparable non-Kenmark properties. Kenmark’s original asking prices were high, but the final bids were still a good 20% off of current asking prices for similar properties.
Also, according to a cursory glance at county records, some properties sold at near or below Kenmark’s original construction loans. And that doesn’t include land prices.
I’ve put together a spreadsheet showing the hard data for all of these properties. Please note that this is a rough take, and all data are preliminary.
Thank you for your observations!
“The announcement means that the cartel will be reducing oil allotments by roughly 520,000 barrels per day, because… member countries often break the contract and produce… more oil than they are allotted.”
OPEC: Hey everyone…did you all cut back on your oil quotas?
Venezuela oil minister: Yes, absolutely!
Libya oil minister: Yes, absolutely!
Kuwait oil minister: Yes, absolutely!
Iraq oil minister: Yes, absolutely!
Iran oil minister: Yes, absolutely!
Ecuador oil minister: Yes, absolutely!
Qatar oil minister: Yes, absolutely!
Nigeria oil minister: Yes, absolutely!
United Arabs oil minister: Yes, absolutely!
Algeria oil minister: Yes, absolutely!
Angola oil minister: Yes, absolutely!
Someone send Goldman Sachs & JP Morgan a memo:
The revenue from your oil “storage facilities” is going to be a tad lower..given the “forward looking” assessment of production. You’d better not let go of any of that $147.00 per oil barrel you still have left.
Rumor of the day:
Joe Isuzu & Baghdad Bob… have been hired as consultants for OPEC!
I was thinking about signals one can use for when it’s time to buy again, and I thought of one that is dolt simple to calculate, and may help some whop have the same question I do.
Take the price at which your last home sold, or the median price at the time you conciously decided there was a bubble, thus putting off purchase.
Subtract from that the current wishing price of the median home in the same zip code of the same number of beds/baths. This gives your gross theoretical gain(loss). Divide this number by the number of months since sale or realization of the bubble and you have your gross monthly theoretical gain(loss).
It’s a pretty easy number to come by, and remember, and IMHO as long as that number is moving to the positive month by month, there is no reason to think about buying.
My patience factor? $3246/mo.
5357/mo
My math is much simpler. How much do I save after tax by renting the home I live in as opposed to buying it.
The number is $5k+/month, WITHOUT taking into account the opportunity cost of the down payment.
That’s not even taking into account falling home prices, but instead is the fundamental reason FOR falling home prices…
How do you use that to make your buy/no buy decision?
Median housing prices in an area less than 3X area median incomes and less than 120X rents (100X rents if you really want to get the rock bottom price).
Those are regression to mean numbers. The real bottom will have overshoot.
If I had my druthers I’d get a house paid in cash without borrowing from retirement funds. At that point my only concern will be repeal of prop 13.
If you are renting a house for close to 5 k, there is probably little benefit in terms of taxes as you are obviously hit by the alternative minimum tax.
So we are at the intersection of push meets shove…
The only way out (it’s all about pushing this mess onto the next president) is to print money like there’s no tommorow.
But how do we go about doing it?
Paper money has virtually vanished from circulation. There are even tv commercials that portray what a loser you are if you don’t have a credit or debit card.
I think the only way out of this is to have the Treasury, not the Fed, print paper money. Send it out in the form of checks redeemable in cash at your local bank (that way cash isn’t floating around the mail system).
Do it as a tax rebate but only to certain people. And do real money. $1000/month but only to people who pay off their credit cards every month, whose mortgage payment is less than 20% of income, who save at least 10% a year and can show 1 year’s income in cash or highly liquid instruments. Oh and you have to show 2 consecutive years of full employment.
Create a culture of work and saving. Keep going until the asset deflation stops. At the end, everyone in paragraph 2 will own said assets, as they should.
After reading all the posts above ,I am recalling 3 Senators so far ,(and there might be more )saying that that the government does not have the authority or the ability to be a insurer on F&F . While these Senators say this and Jim Bunnings said yesterday word to the effect that Paulson exceeded the authority that was given by Congress and the Senate ,than why isn’t this viewed as treason ,or exceeding authority ,or a perjury to Congress by Paulson ,and a demand for resignation by our government bodies ?
Instead ,Congress and the Senate are gearing up to bring back the
seller assistance in down payments ,(which that program has some of the biggest default rates and has been proven to be a corrupt scheme loan ).
The real estate people and the builders are screaming for their corrupt
no down loan assistance loan program ,and Congress wants to entertain
re-writing the Housing Bill already in response ,in spite of the fact that
the eliminating of that program was a response to curtailing loan
loss. So , for all the people that think that the intention of the government is to provide regulations or loan underwriting changes that would curtail the very easy money factors that brought on the unheard of amount of foreclosures to begin with ,apparently a clean -up of factors that cause foreclosures was not the real intent of the policy makers .
Ron paul still rocks.
WASHINGTON - Ron Paul says he rejected John McCain’s appeal for his endorsement.
At a news conference Wednesday, Paul said he received a surprise call from McCain’s campaign on Tuesday asking for his endorsement. Paul turned them down.
Paul said: “The idea was that he would do less harm than the other candidate.”
he is the only principled guy left
i recieved a letter wanting donations for McCain’s campaign last week, and i sent it back with a note saying “any money i donate will go to Ron Paul!” i hope they got the message.
WASHINGTON — Representative Charles B. Rangel said on Wednesday that “cultural and language barriers” prevented him from understanding the finances of his Dominican Republic beachfront house, and vowed to repay several thousand dollars in federal taxes he owes after failing to report $75,000 in rental income from the villa.
http://www.nytimes.com/2008/09/11/nyregion/11rangel.html?hp
HAHAHAHAHA!!!!!!!
Language barriers?? What’s the matter, does ol’ Charlie speak Ebonics rather than English??? Gimme a freakin’ break.
RALEIGH - A Wake County Superior Court judge has halted a real-estate scheme that misled people into buying rental properties in the Triangle and Fayetteville.
Dozens of investors were left with loans they cannot afford and rental properties worth far less than what they paid, Attorney General Roy Cooper announced in a statement released this morning.
http://www.newsobserver.com/front/story/1213657.html
Implications of the ‘Bread and Peace’ Model for the 2008 US Presidential Election
Douglas A. Hibbs, Jr.
abstract
Presidential election outcomes are well explained by just two objectively measured fundamental determinants: (1) weighted-average growth of per capita real personal disposable income over the term, and (2) cumulative US military fatalities owing to unprovoked, hostile deployments of American armed forces in foreign conflicts. The US economy weakened at the beginning of 2008 and average per capita real income growth probably will be only around 0.75% at Election Day. Moreover cumulative US military fatalities in Iraq will reach 4,300 or more. Given those fundamental conditions, the Bread and Peace model predicts a Republican two-party vote share centered on 48.2%.
http://douglas-hibbs.com/Election2008/2008Election.htm
June 2008
“…Most of us would like to think that the US has matured enough that candidate race (or gender) as such are of no electoral consequence. Most of us are also realistic enough to know that this untested proposition is at best uncertain and, in fact, is probably wrong. Pure race (or gender) effects will cut both ways in 2008 but on balance they likely will hurt the Democratic Party candidate – more so Obama (the presumptive nominee)[13] than Clinton if one believes, as I do, that nowadays race prejudice substantially exceeds gender bias among US voters with a taste for discrimination….”
true
I came to my senses this morning, as a left coaster…slept right through LEH news and conference call….thank goodness, that idea is behind me. futures ramped so hard, that I was unwilling to even get involved in any sort of specalatin.
I did take a flyer though. SSO at a skosh over the double nickel, trickle downs in a pickle….sorry for being so fickle.
go ahead kitty cat, scratch me.
the headline caught my attention, and what he has to say is mind blowing. (click link below). its crazy, everyone is so afraid of missing out on the upswing.
Calling a Bottom: It’s Time To Party
http://seekingalpha.com/article/94898-calling-a-bottom-it-s-time-to-party?source=yahoo
http://www.reuters.com/article/marketsNews/idINN1058111220080910?rpc=44
ummm…what does this mean?
“Perhaps the most disturbing chart is what you see below. Current supply relative to the number of households is nowhere near previous cycle bottoms. In fact, we are still at a 25 year high and have only come down 40% from the peak seen in July of 2006 and need a further 35.5% drop in the ratio from current levels to reach previous housing cycle lows. ..
The big picture message of the chart above clearly illustrates that we are not out of the woods in this housing depression, not by any stretch of the imagination. Supply simply has to come down sharply or we need to import households by the thousands to create new demand to bring down supply.Clearly the latter isn’t about to happen, and with foreclosures continuing to mount, we could be in for a much longer correction in the housing market than most anticipate. With an ongoing correction in housing and declining home prices, financial losses on mortgages and real estate backed securities will continue to plague financial institutions and the market.”
http://financialsense.com/Market/daily/wednesday.htm
Mark Cuban’s Weblog
Talking Stocks
Sep 8th 2008 1:27PM
Over the years I have written about the stock market several times. I thought given the up and downs of the market, now would be a good time to replay some of those posts
The Stock Market
Apr 13th 2004 11:20AM
“…For years on end a company’s price can have less to do with a company’s real prospects than with the excitement it and its supporters are able to generate among investors. That lesson was reinforced as I saw the Gandalf experience repeated with many different stocks over the next 10 years. Brokers and bankers market and sell stocks. Unless demand can be manufactured, the stock will decline….
Savvy investors? I was shocked. Of the 63 companies and 400-plus participants we visited, I would be exaggerating if I said we got 10 good questions about our business and how it worked. The vast majority of people in the meetings had no clue who we were or what we did. They just knew that there were a lot of people talking about the company and they should be there…..
Price-earnings ratios, price-sales, the present value of future cash flows, pick one. Fundamentals are merely metrics created to help stockbrokers sell stocks, and to give buyers reassurance when buying stocks. Even how profits are calculated is manipulated to give confidence to buyers….
If you really think of it, when a stock doesn’t pay dividends, there really isn’t a whole lot of difference between a share of stock and a baseball card….”
http://www.blogmaverick.com/2008/09/08/talking-stocks-and-money/
This is an excellent read for any investor. I hope most of you see this.
As always, thank you, Hoz!
Just a real fine explanation of stocks and investing
trying to repost hope it works this time.
http://www.blogmaverick.com/2008/09/08/talking-stocks-and-money/
“…A well-informed economist in China told Reuters that his country “has bought a lot of asset-backed securities, and there might be short-term improvement in price…” If the U.S. Treasury issues new debt to fund its Freddie-Fannie bailout scheme, “should China be a buyer or not?” Reuters asks. Its source noted: “For China, whether or not you buy the new Treasuries, there will be losses: if you buy them, you’re getting deeper in the hole; if you don’t buy, your existing holdings will lose value….”
SFGate
And a couple of tales out of China:
Hundreds of enraged home buyers in Hangzhou, the capital city of coastal Zhejiang Province, stormed a developer’s office and demanded to have their money refunded after the developer slashed prices, reports today’s Chinese Business View. …
…Reportedly, the price per square meter in some apartment buildings dropped from [18,000] yuan to 14,000 yuan within a period of months after the building was put on the market, infuriating buyers who bought early on….”
Danwei
Chinese media, advertising, and urban life.
and from
ChinaStakes
“…The real estate market is a pillar of local economies, and a major income source for local governments and officials. With many industrial firms seeing shrinking profits, and some going bust, a slumping real estate market casts heavy financial pressure on local economies. Xi’an is only one of many cities to support the real estate market. In early July, the Nanjing Bureau of Land and Resources suggested reducing land transfer fees for a single piece of land, and payment term for lands with high transfer fee.
Local governments are trying everything they can think of to support developers. Some allow people who have already bought apartments to protest against developers lowering prices, requiring refunds if they do. Some are also seeking to maintain high land price by reducing supply and cooperating with developers.
Xiamen and Fuzhou, of Southeast China’s Fujian Province, have adjusted conditions for land transference and reduce the required percentage of apartments smaller than 90 square meters in new construction. The Fuzhou city government said it would allow bargaining over the land transfer fee. It is rumored Guangzhou will also adjust limits on housing area and postpone the launch of low-price apartments. …”
“…Yesterday’s Bureau of Statistics release also included trade data. Imports grew last month at a 23.1% in August, down sharply from 33.7% in July. It would be easy to credit the slowdown in growth to a decline in world commodity prices, but Mark Williams claims that the decline in commodity prices only accounts for half of the slowdown in growth. The Olympics may have distorted the numbers, so it would be risky to draw conclusions with too much confidence, but the reduction in import growth may reflect a decline in domestic demand growth, something that I have been expecting….
Export growth also slowed, to 21.1% year on year in August from 26.9% in July. That left the trade surplus for August at a record $28.7 billion – a number which will help ensure that China’s money supply will continue expanding sharply in August.”
piaohaoreport
China Financial Markets
PBoC is losing money because of the dollar depreciating against the Renminbi, not as likely that China will continue to allow the currency to rise. What will they do with their US Dollars?
San Diego Craigslist has over 1400 postings in their furniture section for Wednesday, Sept. 10.
1400!!!
Including such gems as this:
http://sandiego.craigslist.org/csd/fuo/836013727.html
LMFAO!!!
(even though it means that I can’t sell my 100 yr old furniture that I got through trash hauling…sigh…)
An interesting, though some may thinkt tin foil hatted, take on the Fannie / Freddie bailout,
http://tinyurl.com/5go6qk
“With their right hand, elite bankers, investors and brokers can well afford to take on all the risk they desire, knowing that their left hand can get into the U.S. treasury to bail themselves out when they hit the financial brick wall.”
We have many times voiced concerns about the socialization of the risks. This article goes one step further and explores the Wall Street angle and the chess game that included Paulson’s placement as Sec Treas.
Ill share just a quick personal note:
almost two years ago, I bought a house after reading this blog for about 6 months. At the time , some poster asked if I liked to drown puppies.
In that same time frame:
2006ish. I convinced my best friend to sell his condo in California for 190k gain. At the same time, I convinced another close personal friend to walk from 15k earnest money on a 650k condo in Canada. AdditionalIy, I convinced a personal family friend to sell his Chrysler dealership in Texas for 1.8 million dollars (gotta have the pinky at the corner of your mouth)
…today…
they are all vibrant and moving forward on new business and new jobs. In fact, the one who walked from the Canada condo, has been asking me about the Bay area….its getting interesting again, Im gonna help him “drown a puppy”.
The only point Im trying to make is:
you have times in your life to do the right thing, recognizing a situation that is best suited to your personal position, and if you are learning, listening, growing, and doing…..you can achieve anything.
I have personally pulled a 54 year old family owned business here in Oregon from the brink of bankruptcy…..with hard work, diligence, and prudence….
BECOME EXEMPLARY!!!
More power to you. With an army of Americans like you who think and act prudently, we might be able to turn around the course we are currently taking.
This is just plain Gross.
REVIEW & OUTLOOK
Bailout for Billionaires
September 11, 2008
Although Congress created the moral hazard that has become the taxpayer rescue of Fannie Mae and Freddie Mac, the Members plan to hold hearings to opine about it anyway. They should put themselves at the witness table. But since they won’t, the least they can do is ask Treasury to explain its bailout for billionaire subordinated debt holders.
We’re referring to the holders of some $11 billion in Fannie and $4 billion in Freddie subordinated debentures. In structuring his rescue, Treasury Secretary Henry Paulson gave a haircut to holders of both common and preferred stock. In the process, he socked it to many small banks that had much of their capital in Fan or Fred shares. He was right to do so, and he should have wiped them out given how much those holders had profited over the years from a government guarantee. But, strangely, Mr. Paulson also decided to give Fan and Fred’s subordinated debt holders an entirely free pass. Why? And who are these guys?
…
Both Treasury and the Federal Housing Finance Agency said they don’t know who now holds Fan and Fred sub debt. But it’s a fair guess it is mostly some of the world’s richest people and largest financial institutions. Pimco’s Bill Gross, who manages the world’s biggest bond fund, had been agitating for weeks for a bailout. Asked about his Fannie and Freddie positions, a spokesman told us, “we don’t discuss our holdings.” Our guess is Mr. Gross is a lot richer after the bailout than he was last week. Ditto for Goldman Sachs, which also declined comment and where Mr. Paulson used to work.
We hope someone on Capitol Hill asks Mr. Paulson for a list of these big winners, so taxpayers can understand who is getting richer on their dime.
Any thoughts on which bank is up for a surprise announcement after the closing bell this Friday?
Lehman Struggles To Shore Up Confidence
Plan to Shrink Firm Is Late, Critics Say; Fuld Fights Rumors
By SUSANNE CRAIG
September 11, 2008; Page A1
As Lehman Brothers Holdings Inc. stock teetered in recent weeks, Chairman and Chief Executive Richard Fuld Jr. called Wall Street executives to make sure they were still trading with his embattled firm and offering it credit. Rumors about the firm’s health kept popping up, he groused to other executives.
“I feel like I’m playing whack-a-mole every day,” Mr. Fuld said, according to people familiar with the calls.
Enough with the crony communism already!
Take this weekend off, Hank
By John Gapper
Published: September 10 2008 19:15 | Last updated: September 10 2008 19:15
I do not know what plans Hank Paulson, the US Treasury secretary, has for the weekend. Bird-watching, perhaps. Whatever they are, may I suggest that he sticks to them?
Mr Paulson is a keen ornithologist but he is also an energetic intervener in financial markets and, when he has worked on weekends recently, the US taxpayer has paid dearly.
In March, it was a line of funding to steer Bear Stearns, the investment bank, into the hands of JPMorgan Chase. On Sunday, it was the bail-out of Fannie Mae and Freddie Mac, the quasi-public mortgage lenders, which could cost the US government $200bn (€143bn, £114bn) or more.
It is only Thursday and, already, others seem to be preparing to interrupt his days of rest again.
Weidner’s memory is also short. The bailout culture has its roots circa 1913, when the Fed was established.
latest news
Hong Kong plunges further in the afternoon
David Weidner
DAVID WEIDNER’S WRITING ON THE WALL
The bailout culture turns 10
Commentary: Today’s bailouts find roots in the Fed’s handling of LTCM
By David Weidner, MarketWatch
Last update: 12:01 a.m. EDT Sept. 11, 2008
NEW YORK (MarketWatch) — In less than two weeks, Wall Street will pass a milestone that on the surface probably doesn’t seem to have much relevance today: the 10th anniversary of the bailout of Long-Term Capital Management.
But the LTCM near-collapse and rescue set in motion Wall Street’s unchecked rush to risk during the decade by signaling to the market that the government would ultimately come to the rescue.
Wall Street is a kids’ game, so let’s refresh our memories. Everyone born before 1990 can skip ahead a couple of paragraphs.