Bits Bucket For September 11, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Supply of Homes for Sale Declines in Metro Areas
http://online.wsj.com/article/SB122108889848921269.html?mod=googlenews_wsj
The supply of homes available for sale in 29 major metropolitan areas in August was down 2.6% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all listings of single-family homes, condominiums and town houses on local multiple-listing services in metro areas where the firm operates.
Big surprise. It’s the end of the spring selling season…look at the YoY number to get a better idea of the situation.
I believe the supply picture would change considerably with a full accounting for latent inventory (foreclosures, walkaways, short sales, REO inventory). Foreclosures are happening much faster than the homes can be marketed.
That’s what I was thinking. Like that story from Manteca yesterday, about the squatters having sex in an a crapped-in abandoned house that wasn’t on any foreclosure list. If banks either can’t keep up with the foreclosures, or if they are purposely dragging their feet to act, that messes up the real figures.
Figures don’t lie, but liars figure out how to game the system.
And when they’re liars’ figures…
Extraordinary Measures Today, a Financial Funeral Tomorrow
By: Kurt Kasun
Many have written that our children will be paying for the extravagance of the baby-boomers for the rest of their lives. I disagree. I now think that we are close to a reckoning event that will impose austerity, economic pain and suffering on the vast majority of Americans. This will be difficult to endure and could last a while. The US Government and consumers will be forced to make major adjustments. Lifestyle changes will be revolutionary. But on the positive side, it could restore some of the bedrock principles this country was founded, built, and thrived upon (thrift over profligacy, savings over consumption, and discipline over excess). This will hopefully place us back onto the path of responsibility and sustained growth.
http://www.istockanalyst.com/article/viewarticle+articleid_2601171.html
“If the dollar does in fact rally above 80, then I think that the deflation trade will accelerate further and takedown US equities this time in a major whiff of asset deflation which takes down almost all asset classes except US treasuries. If it continues unabated it will result in a major deflationary depression. Gold will eventually rise in value amidst the chaos and removal of the paper currencies, but not after first declining significantly. If, on the other hand, the US dollar begins to decline back below the 74-73-level, I think that investors will need to consider repositioning for the inflation trade. While the dollar stays in the 75-80 range we can expect big gyrations, but little real movement or investment direction.”
The odds of avoiding a depression seem to be decreasing. The unknown seems to be what form it will take.
Not really.
A hyperinflationary depression is quite possible.
IMHO, there is no way to avoid a depression at this point. All the Masters of the Universe can do is fiddle with the length and severity, but all options will be bad for us as they finish up their looting and move on to a different host to bleed dry.
By The Mogambo Guru
“”The government (in our case, through its proxy the Federal Reserve) creates excessive amounts of money and credit, and all of this money chases a fixed-in-the-short-term supply of goods and services, thus driving up their prices, and thus the poor must consume less, and the money they spend flows to the rich guys who borrowed the money in the first place!
We’re essentially robbing the poor to give to the rich because the Federal Reserve is creating so much money! And the poor are being robbed at a faster and faster pace, as prices are soaring for all kinds of things, as I note from the CRB index being up 9.2% year-to-date. And the Goldman Sachs Commodities Index is up a whopping 16.1% since January 1, and up a terrifying 43% over the last 12 months!
The latest Economist magazine’s table of “Economic and financial indicators” shows that “All-Items” have gone up by 25% in the last year, and that the category of “Food” is up 41% in the last year! And the prices of commodities are not finished rising because the central banks of the world are not finished increasing the money supply.”"
See you at the bottom with 15% mortgage interest rates!
And it will do wonders for our waistline!
Wow so the dollar is skyrocketing - index shot above 80 yesterday. Commodities way down.
I expected it for oil, but must say I’m surprised about PMs, given the financial turbulence going on. This says to me that the overwhelming majority of demand for PMs is not as a SHTF hedge, but as a luxury item.
Also it’s interesting given that the commodities spike recently was supposedly driven by people moving money out of stocks; thus commodities went up as the stock market went down. No commodities are plummeting while the stock market is flat. Interesting.
Thoughts?
Packman - Despite all the talk about inflation, THIS is what deflation looks like. Everything goes down. Oil, PM’s, housing, autos. Once the jobs report gets worse we will start seeing salaries goind DOWN as well…hoarding of cash is going on. ML, LEH, C, B of A - they’re all selling stuff to raise “capital” (cough - cash! - cough) as their “writedowns” (losses) continue.
I wonder what the Chinese plant manufacturer manager thinks when he see’s stacks of St. Joseph statues pile up as demand fall off the cliff? Perhaps an unintended consequence will be a surge of converts to Catholicism (Communist Chinese style of course) by some entrepreneurial Chinese businessman…lol….
Note to Chinese manufacturers of all junk…American’s have no more money! But thanks for all the great stuff!
Deflation! Less is the new black!
what about the next stimulus package? and the next? and the one after that…. when there is a will, there will be a way..
Compare the stimulus package from the government (a few hundred dollars) to the stimulus package of the prior 5 years (tens of thousands of dollars of HELOCs and cash out refinancings, etc., etc., etc.).
The stimulus packages won’t be enough to counter the deleveraging of the system.
The Deflation thing you mention, it ain’t pretty.
35 or so years ago, before I went to college to get an engineering degree, I brought home $250 cash a week, making chlorine gas out of salt water. Gas was something like 35c per gallon. A nice enough house was something like 20 grand. I’ve never earned that much since, in real terms. But I’ve saved.
Inflation was a pain. This Deflation thing is going to be a bitch, for some.
Bring it on BITCH!
with some luck we can be back to gas at 35c and you making 250 a week! Would not that be great! And houses at 20 grand. I will make sure I keep that pocket change around in paper money just in case we get there…I would not mind some deflation, but the computers I guy and the food I buy, they just went up again… What is your everyday experience?
To paraphrase Mr. Carl Sagan:
Claims of deflation are veridically worthless.
Blue Skye;…You and I appear to be about the same age…I see you recall the 1974-75 period…
Can we make those dollars we shipped them worthless more quickly than the the cr@p they shipped us falls apart? Tune in and see.
We’ve been shipping them product from Fannie and Freddie.
So I think you have your answer.
The Chinese sold us lead based toys and we sold them financial lead zeppelins…
Call it a wash.
It’ll be interesting to see this month’s CPI report, due out next week I think. Up until now the official CPI at least has been very high. Might this month’s be negative?
No
Any temporary respite from the commodity selling off will not be seen in numbers for months.
Plus, now that overall inflation may be slowing a bit due to oil’s decrease,they will forget that they only focus on “core” inflation (no food or energy in it) and change what measure they emphasize and report as the true measure of inflation ….
Most utilities have very quietly stated that consumer electricity costs will be going up 20-25%, when the new year comes along…
Sounds just a tad inflationary~
Sounds just a tad inflationary
Sounds speculationary, actually. Once the speculation from the past year in energy markets works its way through the system, then we’ll start to see price drops.
I predict by next spring that energy demand will drop slowly and energy stocks will start to take a beating, until the financial sector stabilizes. Of course, that won’t happen until the housing sector stabilizes…2011 maybe?
Most utilities have very quietly stated that consumer electricity costs will be going up 20-25%, when the new year comes along ??
Exactly Aladinsane….You and I traded a few comments yesterday about this…The muni’s will raise taxes in area’s that you cannot avoid…Does not do any good to raise impact fee’s when no permits are being pulled…They will never stop..In the worst of times they just maintain the status quo…In good times they expand…They NEVER contract unless (Like Vallejo Cali.) they go broke…
I know in MA, and am guessing that in most states, the utility charges for residential service must be approved by the state as part of regulation process. I think this tends to tamp down their requests a bit though getting a large increase request thru the system is certainly possible.
Southern California Edison went from coal being their main source of generation of electricity last year, to natural gas this year.
Inflation is baked in…
if you are not vertically integrated in natgas.
you’re left behind.
thanks for coming out.
Any deflation we experience will be temporary because deflation leads to bank failure and bank failure leads to FDIC bailout which negates a lot of deflation. Further more, F&F losses which use to contribute to “deflation” will now result in new treasury notes and therefore that “deflation (destruction of money)” will stop.
The whole system is setup to monetize debt once deflation crosses a certain thresh hold.
Earlier I posted that I expected the national debt to double in the next 5 years… well, the F&F bailout has already put us 25% of the way there (assuming 50% loss on 5.3T)
If income taxes stay flat then the interest on our debt would be approaching 2-25% of tax revenue. If deflation sets in then our tax revenue will fall pushing interest as a percent of revenue north of 30-40%. It will not be long until interest + mandatory federal spending exceeds the ability to tax. This will mark the start of hyperinflation.
So buy up the deflated goods while you can and don’t be caught flat-footed when the trend changes.
Deflation? Sure, and a loaf of bread will be a nickel, and gas 50 cents. Not deflation but disinflation is what we have now; temporary.
True. The best we can hope for is disinflation for a few months.
As I posted last night on the Bits, the YOY of Chinese import prices was up 17.8%.
Or to put it in terms that all should understand, that is huge inflation; WalMart sold fewer items at increased prices to achieve their numbers.
“put it in terms that all should understand”
“the YOY of Chinese import prices was up 17.8%.”
hoz,
I have to apologize for still playing the dunce. Aren’t those higher import prices backward looking and based on a timeframe when wholesale numbers on base materials and shipping were at their peak? …..and now that commodity prices and shipping has reversed wouldn’t import prices in subsequent reports reflect that same downward trend?
Please be kind to the curious housefrau.
I try to be kind to everybody, and I am truly sorry if I have ever hurt anyone’s feelings. (except hurting those financially that are subject to Availability Bias, Confirmation Bias, Disconfirmation Bias, Fundamental Attribution Error, Status Quo Bias, Deformation Professionelle, Illusion of Control and about 50 other Cognitive Biases.)
So Carrie -curious hausfrau- Ann, Import prices paid by the US to China are FOB China from June and July. These are for this Christmas and some Valentine and Easter sales for next year! These prices are not posted in the stores yet. The prices posted in the stores reflect the shipments from March and April which were up 7% or so.
Import prices lead the market by 3 -9months.
Dank u de vriendelijke heer.
Carrie-curious hausfrau-Ann
he really is golden,
he’s the one guy I can talk to.
Bingo!
And just wait until we have tax hikes AND “stimulus checks” each month. Hyperinflation is on the way. It may be stupid, but it protects the kleptocrats, so there you go.
Just keep an eye on the interest on the national debt as a percentage of potential revenue. Note falling revenue due to recession/deflation and rising debt due to bailouts and entitlements.
Some time soon (next few years) it will reach a point that will trigger hyperinflation.
(my more detailed post appears to have been eaten by the server)
Yes. Combotechie would have done well up to this point or whereabouts… but I call a bottom to cash is king as of now or very soon. Especially as to its purchasing power to PM sector. As for the stock market, I would not know or want to get involved. I got tired getting screwed and paying for corporate dinners…. But Combo is a smart man, and he might choose assets that would do well in an inflation situation or have a decent management… I have a steady cash flow, so I have no problem throwing in the towel on my saved cash and taking the year off from reading financial news. I am more of a generational trader than anything else…
Good points Hoz & VTDan…Particularly your point on reduced revenue over the next few years…Tax man is comming…
And how will we have hyperinflation unless we have significant wage inflation? That is the missing link, IMHO.
Virtually nobody in the USA has any idea how hyper-inflation works…
Wages will go up and the proles will consider it a victory of sorts, because they are making more money.
Imagine minimum wage being $21 an hour, and gas $14 a gallon?
Hyperinflation has NOTHING to do with wages going up or down and everything to do with the number of dollars in circulation. If US citizens are not making more money then all it says is that they are not producing goods for foreign consumption. It also means that they will be taking pay cuts in real terms because they are not competitive on the WORLD market.
The reality is that serving each other (service economy) will not put food on the table or gas in the car unless people with food / gas want our services.
Wages always lag inflation. Zimbabwe is a prime example. They have huge wage inflation, but have real wage cuts (pennies per day real terms).
To sell hyper-inflation, it would be necessary to initially have wages go up somewhat in tandem with the costs of things…
I’m talking about a stop-gap measure that would last until 11:59.59 on January 19, 2009.
There is no “selling hyperinflation” to the public.. the government always blames companies, business men, speculators, and everyone else. Otherwise they would have to admit that they are responsible for todays gas and food prices.
“…A government spending expansion, regardless of the form, will tend to raise the marginal utility of goods and services while lowering the marginal utility of government liabilities. It’s very true that the major hyperinflations in history have been triggered by currency expansion, but as long as a government appropriates goods and services to itself in return for pieces of paper that compete as stores of value and means of exchange in the portfolios of investors, you’ll get inflation….”
Mr. John Hussman
Alad:
That’s what i said a few weeks ago…Min wage will be $18.95 hr then a $400K home….becomes affordable to most people
—————————————————
Imagine minimum wage being $21 an hour, and gas $14 a gallon?
Why stop at that? Let’s give everyone a minimum wage of $100 per hour! Seriously, $100 per hour or $1000 per hour minimum wage is no more ridiculous than a minimum wage of $6.55 per hour.
rental watch is seeking wage inflation.
think about it.
its difficult to justify yourself.
I wonder what the Chinese plant manufacturer manager thinks when he see’s stacks of St. Joseph statues pile up as demand fall off the cliff? Perhaps an unintended consequence will be a surge of converts to Catholicism (Communist Chinese style of course) by some entrepreneurial Chinese businessman…lol….
You know thats gotta be worrying the Central Committee…if the factory managers lay off a couple of million workers, will the workers be content with going back to the farms?
After a taste of city life, I bet most would be very unhappy with farm life and not want to move back. But you can’t have unemployed and unhappy people living in cities with a lot of spare time on their hands.
The traditional answer to large numbers of people, particularly males, suddenly unemployed is to start a war. I hear that China is big on tradition…
“But thanks for all the great stuff!”
Unless your sarcasm hat was on, I ask you: what’s so great about all the Cheap Chinese Chit? The lead, the toxins, the crappy quality, the warm fuzzy feeling one gets for subsidizing the erasure of the middle class?
Talk about pissing into the wind. Has anyone ever actually tried to NOT purchase any Chinese Chit? Unless you shop at an Amish gift store, you’d be hard pressed. But then, times they are a changin’ . . . .
Hmm, I wouldn’t call the stock market flat. There’s been some serious blood letting last week. Probably more to come once Lehman and WaMu go belly up. Lots of commodities/PM got traded on the futures market, easy in, easy out. PM are still in short supply if you actually want to take delivery of bullion. I think individuals and some foreign central banks are still taking delivery while speculators mostly exit the PM market. Same goes for oil. Demand down, prices down. That leads speculators to panic selling which drives prices down even more in the short term.
Also domestic natural gas production has been slightly increasing for about a year. Increasing supply combined with decreasing demand doesn’t bode well for profits.
The commodities bear market will last until this recession runs its course. Then it’s off to the races again as oil supplies become increasingly constricted.
Right now cash is king. Enjoy the show but keep an eye out for oportunities.
Waiting for the Chinese market to show signs of stabilizing. They’re down 65% (!!!) from peak while profits are up about 10%. IF China doesn’t catch a bad case of the recession they’ll be a bargain.
Why buy the entire Chinese market when you can get some companies on the extreme cheap (2.5-5x earnings, with ‘quickly growing’ earnings)?
(note: Any or possibly all of the below companies could be committing accounting fraud, so be careful)
Like these:
QXM
CHCG
FFHL
CAST
Do your own research, but I’d rather buy a small stake in each of these than a large stake in the entire market.
Oil brokers sex scandal may affect drilling debate
http://biz.yahoo.com/ap/080911/interior_oil_scandal.html
The two-year, $5.3 million investigation by Interior’s inspector general found workers at the Minerals Management Service’s royalty collection office in Denver partying, having sex, using drugs and accepting gifts and ski trips and golf outings from energy company representatives with whom they did government business.
The investigations exposed “a culture of ethical failure” and an agency rife with conflicts of interest, Inspector General Earl E. Devaney said.
Ethical failure and the Bush administration? Say it ain’t so! How could these God fearing, life affirming, honest brokers of truth be part of a sex scandal? This must have been a set up by Ralph Nader to steal the election. I am sure that they merely discussed family values at these sex parties.
Elmer Gantry has nothing on George W. Bush…
“When fascism comes to America it will be wrapped in the flag and carrying a cross.”
Sinclair Lewis
–
“When fascism comes to America?”
Are we there yet?
Jas
“Coitenly!” - Curly
Without pictures this story is worthless.
Liberal pinko!
How dare you attack our leader in this time of war.
God bless America.
(and may a hurricane wash over your house, even if your house is in Alaska the Lord will provide)
–
“How dare you attack our leader in this time of war.”
One very good reason why America must be at war. The next best thing is financial emergency.
Jas
Yeah, lets start another war, woo hooo.
Yeah, fix the economic problem.
Raise rates, call a christian a muslim when he is not,
distort the truth, tell lies, wrap it in a flag and christianity and call it a day.
Send more men/women to be slaughtered.
Wooooo hoooo.
More war parades, oops, no parades lately.
Take away more of our civil liberties, our constitutional rights. Yeah baby, lets do it. I am all for war.
Lets go, come one lets all get on the neocon bandwagon.
Whoop whoop whoop.
Just got an email from a delusional highschool chum who is spewing the most agregious lies. Amazing.
So, lets send her sons in law off to war. That is what they want. More church going folks off to war,
Onward christian soldiers, marching off to war, with the cross of jebus…
hip hooray, hip hip hoooray.
There is a song in here somewhere, maybe two.
Hope you knew that was sarcasm Jas.
I’m afraid sarcasm is not Jas’s long suit.
I’ll add to your thoughts, desertdweller.
[To paraphrase Sinclair Lewis and sprinkle in a bit of Carlin]
“Are you smarter than a 5th grader wrapped in the flag and carrying a cross?”
Even if you were–would you dare admit it?
Let’s have a war!
Jack up the Dow Jones!
Let’s have a war!
It can start in New Jersey!
Let’s have a war!
Blame it on the middle-class!
Let’s have a war!
We’re like rats in a cage!
It already started in the city!
Suburbia will be just as easy!
[Chorus]
Let’s have a war!
Sell the rights to the networks!
Let’s have a war!
Let our wallets get fat like last time!
Let’s have a war!
Give guns to the queers!
Let’s have a war!
The enemy’s within!
Let’s have a war!
Jack up the Dow Jones!
Let’s have a war!
It can start in New Jersey!
Let’s have a war!
Blame it on the middle-class!
Let’s have a war!
We’re like rats in a cage!
It already started in the city!
Suburbia will be just as easy!
[Chorus]
Let’s have a war!
Sell the rights to the networks!
Let’s have a war!
Let our wallets get fat like last time!
Let’s have a war!
Give guns to the queers!
Let’s have a war!
The enemy’s within!
Fear, in the early 1980s. From the Repo Man soundtrack.
Yeah war. In 1939 there was no “multiculturalism” PC BS in America. So it was easy for FDR to get us to rally beyond the wars, one of which, he (oops) failed to warn us about but knew the Japanese were going to attack P.H. Oh well, crack a few eggs to make an omelete, right?
Fast forward to 2008. No unified culture in America. No substance, whatsoever. A bunch of bellyachers who want their fit next door neighbor to pay for their own fat selves’ health care caused by wretched excess, whining for more bailouts. The soft underbelly of America has been exposed very long. I’m surprised the terrorists have not done 100 times more damage on or since September 11, 2001. The American public has been very passive and nonjudgemental, for fear of making someone upset.
We won’t unite in a war that the next Pres. will throw us into, at least not for 15 years. Yeah it could be a deeper depression than 1929-1952, but again, everyone assumes the human brain will shut down and there will be no more Steve Wozniaks, no more Penicillin cures, no more inventions on the scale of aspirin.
My negativity stops earlier than most of the HBBers. I’m the only one acknowledging human creativity. Maybe because there is no other atheist capitalist on this blog.
Is Ben’s spam filter malfunctioning today?
Yez guys, in the future I’ll use smiley faces [
]and “/sarcasm” switches. Thought it was pretty obvious. I mean really?!
The dollar is not doing well against the Yen or most Asian currencies. The US methods of tracking the dollar is against Euro nations, including Poland and Eastern European nations. This skews the results.
Europe is toast. The Euro is the most overvalued currency in the world. The most undervalued large traded currency is the Yen.
BOJ will not allow yen to rise. They are determined to crush Japanese savers to support carry trade.
Maybe, but not as likely as the past. Asia has grown so fast that a 20% drop in Japan’s exports to the US causes a 0.5% drop in Japanese GDP because of Japan’s major exports to China, Malaysia, Korea, Vietnam, Australia etc. . The US is not a major player.
Japan is more concerned about the price of oil and has been letting its currency appreciate to keep imports low.
The Japanese have been through this before. Unlike us, they learned their lesson.
I’ve been relatively surprised by the commodity unwinding but as as a pimple on the ass of a flea on giant fiancial dog all I have been able to do is try to play both sides of the ‘flations’.
Aside from a few short plays in the market that paid off ok and the pummeling I took on VMware for not selling when I should have (got attached emotionally duh), I have been 50/50 cash and metals.
The stock and bond markets make no sense to me anymore. Unless your Bill Gross getting a reach around from Uncle Sam you’re pretty much SOL in this environment.
“The stock and bond markets make no sense to me anymore.”
Yesterday, Hoz posted some comments(in the Ca. thread) from Mark Cuban’s blog about stocks and mutual funds, Cuban’s implication being that it was all just a massive ponzi scheme, a confidence game like no other…
We watched the price of F & F shares go from $60 each, to the under a buck value menu over the past year, and there are legions of stocks that will experience similar losses.
Every aspect of our consumer economy is under siege, not just financial & real estate oriented stocks, everything.
Holding cash seems prudent at this point of the game, but we’ve come to that crossroads where there’s a fork in the road and we have a choice which path to follow.
If we let things continue on in the same fashion, a 1929-style Depression is a mortal lock, but if we start printing money like mad, the initial reaction of the populace will be, “oh happy day, we’re in the money” and as politicians always like the fast fix, when their bacon is getting uncomfortably close to the fire, combined with a reckless presidency that still has unfinished aims (attack on Iran), I suspect they’ll go the easy way out financially, and run the printing presses 24/7.
Our leadership both politically and financially has repeatedly let us down, and why should this trend stop all of the sudden?
Certainly plausible to just start sending everyone $3000 checks every year or hell every month. You run the risk then of either inducing massive inflation or alternatively creating a soviet style structure where there is no impetus to work except by the persuasion of the gun muzzle pointed at your head.
The system has been gamed too much to ever work properly again in this form. Throw your black boxes into the fire, drain the dark pools and start again. It’s fanciful and fascinating that people will go so far to protect ephemeral dreams.
“Aside from a few short plays in the market that paid off ok and the pummeling I took on VMware for not selling when I should have (got attached emotionally duh), I have been 50/50 cash and metals.”
Too bad; VMware publishes good code.
They do publish good code. But that doesn’t mean they can’t be over-valued. See also: AAPL, GOOG.
“…the overwhelming majority of demand for PMs is not as a SHTF hedge, but as a luxury item.”
Insurance is a luxury item, and hence one of the first to go when the SHTF.
“Thoughts?”
Cash is king. People need cash more than they need PMs.
Cash is disappearing into the coffers of banks as banks are keeping cash to replenish their depleted reserves, making cash in circulation scarce. This scarcity of circulating cash induces holders of cash to keep possession of it rather than spend it.
Substitute ‘credit’ for cash.
If some one offered me me a free gold coin I certainly wouldn’t turn them away.
Some observations from Bill Fleckenstein:
http://tinyurl.com/6gncjl
“I don’t know when the reality of our hobbled economy will dawn on the “denialists.” But when it does, I anticipate chaos in the stock and currency markets. In fact, that process of recognition may have begun last week, when a large rally early Tuesday reversed itself and Wednesday and Thursday saw further declines in the S&P 500. Those were followed by Friday’s weak action in the wake of a large jump in the unemployment rate. I don’t want to make too much out of a few days of market action, but I do think folks should be on red alert for a rapid change in psychology and its ramifications.”
“As for those folks who are continually making the case that stocks are no longer expensive, it’s worth noting that because of pressures on profit margins, earnings losses, etc., the S&P 500 is now trading at more than 25 times earnings, a multiple previously exceeded only in 2000. That’s another point that gets overlooked by bulls: Earnings estimates can be too high, and stocks can be more expensive than first appears.”
Many folks bought PMs to effectively short the dollar. And now the mother of all short squeezes is leading many of the same folks to sell gold, thereby lifting the value of the dollar.
Professor…
Paper PM’s are being sold, not the real deal.
I talked to my buddy that owns one of the largest retail bullion stores in L.A. yesterday, and he says he’s buying 1 ounce of Gold for every 4 that go out over the counter.
The real deal is too heavy and illiquid for me to hold in any more than limited quantities.
illiquid?
You could take the real deal and sell it anywhere in the world, as the language of wealth needs no interpretation…
I can’t buy groceries with it or gas at my local station. For most of us, it still requires a premium to buy and to convert back to cash so we can buy what we need … not to mention its falling value at the present time. As a practical matter it is illiquid without a huge transaction fee (% wise) from my local gold buyer….. What is the going spread between buying actual gold locally and the market price? How about me buying physical gold locally and then selling it back, I am betting I take a 10-20% loss even if the PM market price is stable?
The retail spread on a 1 oz Gold coin right now is around $25 between the buy and sell price.
About 3%.
And it’s not hard to sell pm’s.
Just walk in a coin store with a tube of 10 Krugerrands and walk out with cash or a check, about 10 minutes later.
Thanks for the info, I am going to see what the spread would be here in semi-rural America from the buy/sell gold shop that opened a few months ago and which I would have to use. I hope they require a license and background check for those dealers….
“I hope they require a license and background check for those dealers….”
Why would this be necessary?
Everything that goes on in a retail coin shop is based upon physical metal, not pieces of paper that masquerade as such.
You walk in with cash or cashiers check and walk out with your precious metal.
Coin dealers look like saints in comparison to anything that goes on, on Wall Street.
“Paper PM’s are being sold, not the real deal.”
Real wealth doesn’t panic.
Debt panics. The paper PM market is debt based, not wealth based. The debts are unwinding.
Remember just a few months ago, when someone (nhz?) asked “Where did all the deflationists go?”
How long will it be until we are talking about the unsustainable dollar bubble?
I think it is more about the collapse of the Euro than a dollar bubble though the effect may be the same.
What is happening now is we are in a simultaneously inflationary and deflationary environment.
Inflation:
We are currently importing foreign inflation from China and India, but this is only a temporary situation. Before this year, food/commodity/energy prices from being artificially held down by Americans buying cheap imports based on an artificially strong dollar.
Deflation:
How can a market where cash is keeping its value more than any other investment not be deflationary? Once the foreign exporters start to feel the effects of slowing markets, then they’ll start to import our deflation. Those who try to raise their prices over the next few years will see that it is unsustainable, and they’ll back down.
PMs were inflationary only for the short term, primarily as a hedge against financial market uncertainty. Now we know which way the financial markets are going–down. The long term trend is deflationary.
The markets have by now accepted the coming govermental takeover of the US financial system. With the federal bailout of Fannie and Freddie, half of the nation’s residential inventory is now owned by the government. (That’s not just socialism–that’s communism.) There was little that could have been done about this given the reluctance of Americans to participate, intelligently, in their political process. As China and Russia have moved towards a state-capitalism mixed economy from one end of the spectrum, the US is doing so from another end of the spectrum, a laissez-faire free market. (Ironically, the free market cheerleaders precipitated this event in America with their incessant implementation of deregulation.) All systems, even socio-economic systems, eventually increase in entropy (their differences dissipate), and that is all we are seeing here.
We have no idea when the pendulum will stop its swing towards collectivism. Systems generally tend to overcompensate. Healthcare is likely to be nationalized next. Education will be further nationalized. (See Federal Student Loan Program.) Get yourself a job with a municipal, state, or federal organization if you want to guarantee your income stream. We are all Bolsheviks now. Thank you Alan Greenspan.
“When you are skinning your customers, you should leave some skin on to heal, so that you can skin them again.”
Nikita Khrushchev
I’m not sure I agree with you, but it’s an interesting comment nonetheless.
This, particularly, is food for thought:
As China and Russia have moved towards a state-capitalism mixed economy from one end of the spectrum, the US is doing so from another end of the spectrum, a laissez-faire free market. (Ironically, the free market cheerleaders precipitated this event in America with their incessant implementation of deregulation.) All systems, even socio-economic systems, eventually increase in entropy (their differences dissipate), and that is all we are seeing here.
Nice post…
Excerpt from pay site for what it’s worth, probably just a partial explanation: …..”A few weeks ago as indicated by Ted Butler two large US banks increased their short positions several fold, which in turn triggered stops of various hedge funds, thereby causing them to liquidate these and other positions to cover losses. Since hedge funds in the US control around 2 trillion dollars, this is a lot of money, especially knowing that all of the gold and silver stocks are around $200 billion as a collective. Throw in the fact all of the gold mined to date is worth just shy of $3.5 trillion dollars with gold at $750/ounce, this amount of money can warp the fabric of the market on the upside and the downside.”…..
This will continue until election day. And then . . . .Oh Boy!
Has it not become blatantly obvious that it is the US gummint that is behind this price drop? The US manipulated the dollar rise as well as the crash of gold and silver. They have done the same for oil. The dollar has risen dramatically against the horrible fundamentals of this currency, just as gold and silver have fallen 45% against rampant inflation. Now we have oil plummeting against improving fundamentals. It’s time to wake up and see financial fascism for what it is. There are no more free markets, only manipulated markets. But not to worry, this whole hollowed out economy will soon come crashing down. As Rick Santelli put this AM, “This economy is a room full of mousetraps into which a couple golf balls have been tossed. Do you really think the Fed can catch them all?”
Best Wishes!
Lots of hedgies and such having to unburden themselves of value to save their overleveraged necks
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Consumer debt defaults looming large
As more Americans lose jobs, credit cards, loans won’t be paid
By Rachel Beck | Associated Press
September 11, 2008
The government doesn’t want Fannie Mae or Freddie Mac to go broke, but it better start thinking about what happens if the rest of us do.
The latest data on the job market paint an ugly picture: The unemployment rate shot to a five-year high in August, and payrolls are being cut at an alarming rate.
With more people out of work, that likely means many are having a tougher time paying their bills. If that leads to a surge in defaults on debt assets beyond just mortgages, such as credit cards, auto loans and more, we can forget about the credit crisis being over any time soon.
http://www.chicagotribune.com/business/chi-thu-credit-problems-sep11,0,2948320.story
That quote is right on the mark. If the average joe goes broke then then trickle up economics will bring down more big players.
This is already happening as we see our major financial institutions taken down like dominoes.
There were many on this blog that thought concern would shift from the housing crash to the broader economy by around the end of this
year. That seems to be on target.
That’s why I’m shortin’ Capitol One.
Mike
Real Estate Woes Spread to China
http://www.nytimes.com/2008/09/11/business/worldbusiness/11yuan.html?hp
But unlike the subprime meltdown in the United States, and the resulting credit crisis, weaknesses in China’s real estate market do not at this point appear to pose a threat to the vitality or stability of the financial system.
One reason is that Chinese banks require down payments of at least 30 percent, giving banks an ample cushion of cash against losses. American banks frequently did not require down payments. Foreclosures are also rare here, and many Chinese still pay cash for their homes, particularly in rural areas.
“It’s collapsing; it’s unbelievable, and most of it is from mortgages — I don’t see how the housing sector is going at all,” said Nicholas R. Lardy, a specialist in Chinese finance at the Peterson Institute for International Economics in Washington.
He added that the decline was so precipitous that it had to reflect weaker demand for housing, and not just regulatory restrictions on credit.
China needs a Yun type character to reassure the Chinese that this is just a temporary slump, but as a whole real estate is just fine and should be accumulated rapidly before there is no more land in China to build.
“but as a whole real estate is just fine and should be accumulated rapidly before there is “no more land in China to build”.
Absolutely… I recently read they are facing a critical land shortage, and may run out any minute now!
“Of course, China is running out of land. All of those stories you have heard about the Chinese government building completely new cities, moving people of Han descent to places such as Inner Mongolia, Xinjang, and Tibet, and Chinese immigration to Siberia due to Dongbei (Northeastern China, formerly known as Manchuria) being equivalent to the American rust belt are completely untrue. Ignore the fact that if China was really running out of land, the Chinese government would at the very least be in talks to buy various chunks of Siberia from the Russians. You better buy land now or else you won’t have a place to stand (literally) in China.”
-Chinese version of Lawrence Yun
In some areas of Beijing, new construction apartment built by semi-private company (for lack of better descriptor), you must pay 100 (100) percent to buy. Meaning you pay in full first; then they build. The reverse of If We Build It, They Will Come mindset in these United States.
I asked the financial columnist at the Washington Post why reserve requirements at commercial banks are static since the implications in a serious downturn are….well…all around us. I thought it was too boring a question to get answered with everyone talking about Fannie and Freddie non-stop. He didn’t.
Rockville, Md.: Why is the reserve requirement for commercial banks a static percent? Shouldn’t they be required to build up additional reserves when business is good and it won’t hurt too much to deleverage a bit, and be allowed to use up that extra reserve when times are bad and the collective actions of all of them reducing exposure threatens to causes a credit crunch? If they are going to dip under the required percentage whenever a moderate number of loans go bad, the spiraling down is nearly inevitable.
Steven Pearlstein: Absolutely it makes sense. It is a great idea. Regulators thibnk it is a good idea. the only problem is that when they try to enforce it during good times, the companies bring all sorts of political pressure and Congress forces them to back off. This is a perfect way to take the froth off irrational exuberance while providing a rainy day fund for when the boom turns to bust. unfortunately, the knuckleheads who run the financial services industry can’t help themselves when times are good. They begin to believe their own press releases about their own brillance and think the last thing they need is for some pointy-headed government bureaucrat to tell them how to behave. You can just hear them now in the country club locker room, can’t you? Well, guess what. It turns out that they do need pointy-headed government bureaucrats telling them how to protect tthe interests of their shareholdesr and lenders and employees.
I guess that mirrors the Keynesian idea that taxes should be higher when times are good and lower when things aren’t going so well. To some, cutting taxes is ALWAYS the answer, the only thing that changes is the justification.
That may be part of it, but I actually think his primary point was that banks should save up an emergency fund when times are good just like a human being should save up an emergency fund when you have a job so there is something to live on if you get laid off. For them, reducing leverage is the emergency fund.
Ya, well the gubmints are just as freaking dumb sometimes. They have the audacity to believe that the good times will last forever and put forth spending plans that ALWAYS have static or increasing revenues going forward. When the cuts inevitably come, the bigs boys keep their toys and everyone else can go pound sand and be happy about it.
Linear thinking is a real bitch.
Plus ca change and all that….
“To some, cutting taxes is ALWAYS the answer, the only thing that changes is the justification.”
While to others, RAISING taxes (only on the wealthy of course)is ALWAYS the answer, the only thing that changes is the justification.
“While to others, RAISING taxes (only on the wealthy of course)is ALWAYS the answer”
But instead you’d prefer to shoulder the burden being on the lower end of the scale.
Now you’re thinkin!
“To some, cutting taxes is ALWAYS the answer, the only thing that changes is the justification.”
This plan is only viable so long as your printing press is in good working order.
Oh-oh…
Everything goes down. Oil, PM’s, housing, autos
I’ve been looking at buying a car. We’ve been renting them often enough lately that it is coming closer to being financially worth it. Plus, I’m not sure I want to depend on any of the local rental places should the economy get really bad.
Had my eye on a used Audi station wagon. Been at a local dealer for over a month now. I was getting ready to go check it out, but then they went and raised the price by $5,000. Navermind. I’ll go find a car at a dealership that is serious about selling cars.
Buy now or be priced out forever!
Or “they’re not making any more cars!!”
my mechanic hates used audis. you have been warned. only good for a few years…
I own a VW specific scan tool (VAG-COM). Not the generic gov’t codes; but the serious VW-only codes too.
$250, but I’ve made it back in beer from VW and Audi owners I do a free scan for.
I type this at a slow Subaru dealership where wagon awaits 10k oil change. The deal will take two plus hours, I now learn. Why I am at dealer is beyond me. Service lady says they are down a tech. I’ll? I inquire. No, she says, business off.
Gimme a Bug and a wrench and a driveway.
No, scratch that fantasy.
No AC cept’n the cute wing windows.
Anyway, good luck with car hunt.
I lived in NYC from 7/01 to 6/02, and just looking at the date today makes me literally sick to my stomach. Nothing will ever compare to that terrible day, especially if you lived in NYC or DC. It was the last time the world seemed united in purpose and vision. Now we’re facing the biggest potential economic disaster in our lifetimes. I hope we can achieve the impossible and work together to overcome it. I’m not holding my breath though.
I had a view of the WTC from my picture window in queens
I was also on the Greenpoint ave exit ramp taking pictures as it was burning and then the collapse…
I was hiking in the French Alps when 9/11 happened…
We didn’t even know about it until a few days after the fact (my first glimpse was a French tabloid front cover newspaper photo of the 2nd plane about to hit the WTC) and as our outbound tickets had us coming back to the states in late September, we spent 2 weeks traveling around France, Austria & Italy.
I’ve been to Europe more times than I can count, and Europeans tend to ignore Americans whenever possible, quite frankly.
Not during those 2 weeks however…
Anytime i’d open my mouth and my accent gave me away, complete strangers would tell me how sorry they were about what happened, and we ran into oh so many ad hoc street memorials as well, it was amazing.
Upon arriving back @ LAX and driving home on the freeway, I saw what our response to 9/11 was.
Plastic American flags in window jams of cars…
I’ve been to Europe more times than I can count, and Europeans tend to ignore Americans whenever possible, quite frankly.
i simply diasagree with that statement.
I stand by my statement…
I am of course talking about rank & file tourists, based upon my powers of observation spread out over 25 years and perhaps 30 trips back and forth.
maybe it’s just you then.
I’ve told you my story based upon my observations and all you can come up with is “I disagree”.
Not much substance there, is there?
i have been to europe a few times. i have friends who have been there many many times and lived there. i have relatives who have lived there.
my wife travels there for work allot. they are a “lazy” bunch (they called her the slave driver for trying to get 40 hrs a week out of them) - not intended to be a dig - just a different cultual work ethic.
but my experience and the experience of the people around me have been completley different from yours. the europeans have always been polite, gracious and interested in our experiences.
You are talking about friendships, not tourists on a 10 day swing through 9 countries, where they manage to see lots of nothing.
Nope, Lad is pretty accurate on the observation re: europeans observations of americans.
Been there lots of times on business.
Until you get to know a few. And if, during the past 8 yrs you mention you did not vote for W, well heck, I sure got alot more attention, and service. It was much nicer after that. They would always wonder why “we” let these things happen.
Irish love us, Brits too.
I, and a close friend, were on one of the first international flights back into the US after 9/11.
The day of the attack I was in the Canadian sub-arctic Caribou hunting. Actually I had bagged my second critter the day before. I was listening to my shortwave radio after breakfast the morning of. I located VOA. The first words I heard were “and prime minister Tony Blair condems the attack”. I thought “holy shiite”, something’s going on. I had actually joked a few days before that we were so far from anywhere that there could be a nuclear attack and we wouldn’t know. Anyway, you know the rest of that story.
As far as the the plane ride home. My friend and I were the only passengers in first class. NOBODY else in the forward compartment showed up. We each had our own stewardess. Excellent service! As I said to my stewardess “People amaze me. This flight going home post 9/11 is more secure than the pre 9/11 arrival flight.” We all agreed.
A day I’ll never forget.
Mike
Hey but that was some quality Chinese product there!
One of the biggest shames of this administration is that we wasted all the good will and opportunity we had at the time and spent it to go to war.
I agree.
2nd has to be watching all the people loot the museums in Baghdad while our soldiers watched.
Yeah, everybody loves a victim.
Aladinsane,
I’ve been silently reading all the posts here for years, but didn’t feel compelled to respond until reading your post on 9/11.
FYI, my wife and I were also backpacking in europe (Bavaria), when we found out about the Twin Towers being hit on 9/11. We had just arrived in a town near Neuschwanstein, and some people near the train stop said that America had just been hit by terrorists.
We then went to the local TI and they were closing, but because we were Americans they let us read the news on the internet. The news on the internet site was limited due to confusion, but all they could say is that the twin towers had been hit by an airplane.
I’ll never forget the surreal moment when I hit a refresh on the computer, and the next moment the article had been updated to state specifically that both of the “twin towers had collapsed” to a pile of rubble. Reading the information over the computer, it reminded me of the days when one accidentally hit the delete button instead of saving. But this time it was real, irreversible, and involving the unimaginable.
Having just come off an assignment in NYC several months early, I use to go to the 107th floor of the Twin Towers regularly. Every Friday/Saturday night I would go to Windows of the World for live swing dancing and some mai tais. I was even at the Twin Towers 4 weeks earlier to see the band the Brooklyn Bums whip the crowd into a frenzy.
When the shock of the news hit us. I started tearing (not much of a man I guess). The TI escourted us outside as they closed for day at 5pm. We slumped 10 yards (meters) away from the TI at a street waterfountain and just cried our hearts out, not knowing what to make of it, and what was happening to our world, and the full extent of the attack.
The sun started to go down and we hadn’t even sought out a room in our gloom. It took us awhile to regroup. Eventually, we checked in, and we went directly to some internet cafes to email some relatives in the DC area to make certain everything was okay. They said there was chaos after Pearl Harbor, the information sources in europe after 9/11 was even worse despite the information revolution.
A kind german barmaid invited us to her apartment to use her international cable TV to find out news until 3am. We were relieved to find out that the damage was minimal. If one considers 3,000 dead americans burned and crushed to death minimal. (People may not be aware that the twin towers can hold up to 50,000 people, and it was a miracle that the building was mostly empty from the early morning attack and the quick evacuation of the building from years of rehearsing after the 93 attack).
Eventually my wife and I continued on our backpacking trip through Austria, Italy, & France. We were scared and hurt. The european people we met were KIND and VERY supportive, lending truth to the saying that most people in the world are the same and good natured at heart (just their politics and governments suck).
Suprisingly, most of the european newspapers and politicians were not, stating openly with a glee that they thought it was great that America finally had to deal with terrorism like they had been for years.
As we finally arrived in France, it was shocking to see all the policemen littered at the train stations with machine guns and body armor. It’s a freedom that I know I’ve taken for granted.
GOD BLESS AMERICA ON THIS 911 ANNIVERSARY. SHE’S THE BEST!!!…And much thanks to everyone for making the posts here very educational, informative, thought-provoking, constructive, and enjoyable.
Glad to make your acquaintances.
Thank you for sharing your story.
Howdy Elvis…
In many ways it was much more interesting being in Europe as events unfolded.
Security was certainly ramped up throughout Europe whilst we were there.
We were in Bolzano, Italy visiting the Iceman* and checked our bags @ the railway station, and 3 Carabinari went through them with a fine toothed comb.
* Way cool!
I was in one of the conference rooms at DOJ, the one with many many monitors lining the walls. A minion came in with a discreet message for the presiding Federal official. The official turned to all of us at the table, and said “We have had an incident”. The minion switched on three of the monitors. A lifetime later, we were similarly informed of an incident at the Pentagon. We watched the Pentagon smoke from the windows.
The streets were jammed with people walking methodically, carefully, in eerie silence. I was scrupulous not to touch my fellow travelers. Much later, I noticed others maintaining a similar space. The traffic was gridlocked for hours, with not a single accident and not a single horn sounding.
Three of my colleagues were at a meeting at the Pentagon. They perished. The firm commissioned a statue.
I will never forget that day. It changed me profoundly, and forever.
I was on a flight that morning out of Baltimore, and was in the air when the planes hit their targets. Since the media at that time didn’t know where the flights had originated, my wife was thinking the worst.
We visited Ground Zero over the Thanksgiving weekend that year, and the site was STILL smoking. Seeing all the memorials on the fence of St. Paul’s church (I think) nearby was heart-rending. But the faces in the crowds (still attracted to the site 10 weeks later) was what struck me most. Those who didn’t have tears in their eyes had very hard eyes and set jaws.
Nearer home, someone put a fireman’s coat and helmet, and a US flag, on his mailbox where it stayed for a few weeks. It was the most fitting of memorials.
I was in Moab, Utah, no TV, and received a call from my very pragmatic and calm dad, but this time he was pretty freaked. He started telling me about it, but he couldn’t continue. I felt shocked. I still to this day have never seen the video scenes of what happened, just thinking about it is disturbing enough.
Here’s to all those people who died today, as well as all the others involved helping. As my sister would have said, Oi Vey, Godalmighty.
On 9-11,here in California , I woke up out of a dead sleep about 2 minutes after the first plane hit and turned on the TV and started searching for a news program . I didn’t know why . I will never forget
what followed .I don’t know how much that event scared the
American people ,but after that the evidence shows that America went haywire in every way .
I played “Give Peace a Chance” by Mr. Lennon that day. The war drums were clearly pretty loud. Anyone who truly understands what happened that day is… in the minority, let’s say. I even saw a clip on television of some taxi driver yelling that “we’re gonna get you Saddam!”
I understand that the Saudis that did it simply hate us for our freedom, but what else was going on?
What do you think really happened that day? Other than a group of madmen crashing planes into towers filled with innocent people.
Frank, I wish you didn’t ask that question. I was there from 9/13 thru 9/15, the smell of jet fuel stayed on me for days after, the bitterness still remains.
I think one of the terrorist said the towers were not the target..but williamsburg with all the hassidic jews….imagine two planes crashing into williamsburg bedford street….thousands of homes destroyed in 2 big fireballs….
Nothing will ever compare to that terrible day ??
I just happened to watch “Midway” last night…
I was at work in north central Jersey. I lived in Jersey City. The first I knew something was wrong was when the internet slowed to a crawl and I couldn’t get onto any of the basic news sites. Some one in the office finally managed to get to The Wall Street Journal site and tell us what was going on. I avoided the TV the company set up in the cafeteria. Just the pictures on the news sites was more than I really wanted to see.
No one was allowed on trains going north, even if you weren’t going into New York. One of the accounting guys offered to give me a lift even though he needed to go in the other direction, but by then they had closed the highways too. Human resources reserved motel rooms for those of us who couldn’t get home (they must have just grabbed a large block early that morning). They sent a van to shuttle us over at 5:00 PM. The lot of us found a Chinese restaraunt that was open (most of the others were closed for lack of employees) and a drug store to pick up toiletries. I spent most of the evening talking to my brother and best friend. Slept in my clothes. I have never been without a t-shirt, tooth brush, etc at work since.
Next day I finally got an e-mail that another friend who worked in the towers was alive - and promply burst into tears in front of a co-worker. They restarted northbound train service that morning, but I didn’t want to leave until it had been up for at least an hour. Then I decided to wait until I had lunch and could buy something extra in case they suspended service again. My boss pretty much told me to leave whenever I wanted to.
Got home at about 3:00 PM September 12th. Checked phone machine and returned worried calls. Asked about giving blood, but they didn’t need any - besides there were almost no wounded. My synagogue had already found locations for all the people they had as “refugees” the previous night and most of them were headed home anyway. Ended up walking over to the mall, bought a few flags to tape up in my windows at the stationary store and then wandered. Everything was empty (though mostly open) until I got to the pet store. Lots of silent people standing in front of the cages staring at puppies. I joined them.
I was very lucky to be west and a little north of ground zero, the wind pushed all the fallout in the opposite direction. We could see the smoking hole in the ground, but couldn’t even smell it except for a day or two about a week and a half later. My windows were wide open that day. If the wind had been in the other direction, my apartment would have been uninhabitable. When I was first walking back to my place, I wenmt along the waterfront side instead of the highway. I stopped to rub the leaves of some bushes and when I could feel that they weren’t gritty, I knew my apartment was probably fine.
I hate this day. I’ve been getting more and more agitated all week. Couldn’t listen to NPR this morning. I had an internet access blip at about 8:45 AM for a minute or two and nearly freaked out. Last year I was in Canada on September 11th. Maybe that is the best way to go.
Wow, I have often wondered about people living in the City at the time of 9=11 and its amazing how a panic reaction didn’t seem to take place overall ,at least that what it looked like on the news.
Did you think that the whole City was under attack ,or did
you just think it was confined to the 2 towers ? Anyway, I applaud
New York City people for how they handled that attack on our
shores .
I wasn’t really out of touch for very long. I don’t remember thinking that a lot more was coming. Especially once they confirmed that the only other plane that was missing had crashed in Pennsylvania. The people who were actually unable to gather information during that day because the cell towers were out and they weren’t near a TV or computer must have had a very different experience.
When I think about that day, I mostly remember how much there was to do. My company made us all log off for a while so they could do an emergency back up that afternoon. My boss was supposed to be at a meeting in the city that day (obviously turned back) but she called worried I wouldn’t be able to get home and offered me a place to stay before HR came to the rescue. I contacted a friend who worked in Newark to see if he could give me a ride home if I could get from central Jersey to his office. Trying to figure out what was going on with the trains. Trying to figure out how close to home I had to get before it would be reasonable to walk the rest of the way. Calling people who worked downtown to make sure they hadn’t gotten stuck somewhere. Remember that the attacks were very early by NYC standards. Law firms don’t even open until 9:30. If the attacks had been an hour later, the death count would easily have been anywhere from 5 to 10 times as high.
I will admit that I came very close to having a panic attack the first time I took the PATH (subway system that connects mostly Newark, Jersey City and Hoboken to NYC) into the city. But I was determined to get my just about to turn 2 years old cousin a big yellow Tonka dump truck for his birthday. I didn’t want to order it through Amazon. I wanted to walk into a toy store, pick out a good solid big metal truck, wrap it, and mail it to him. So I did. But it was very very hard to do. He loved it.
So, that was really the hardest thing - the idea that a subway or train and tunnel attack was next. But then it didn’t happen. Then the anthrax scares started. It was not a fun fall.
I went into Manhattan the weekend after the attack (the PATH trains that did not go to the WTC were still running) to visit some friends. It was a surreal scene, almost no traffic on the streets because of all restrictions on cars coming in, very quiet, but the bars were full.
It was really a terrible time in this area. The police in Jersey City were restricting traffic to prevent gawkers from going down to the waterfront to look at the gaping hole in the ground. It was hard to get anywhere.
I had a friend who worked on the 103rd floor of the South tower. She had worked in the towers at the time of the first WTC bombing in 1993. When the first plane hit she was in a staff meeting, she immediately gathered up her things and got on the elevator down to the lobby. She did this despite the fact that the Port Authority was on the loudspeaker telling everyone to stay put. Many of the people she was in that meeting with heeded that advice and were killed. When the elevator she got in got to the lobby the second plane hit.
I have always wondered how many lives were saved by the fact that some people in the buildings had been there during the ‘93 bombing. I bet it is a lot. Just the fact that there were people who had actually used the stairs before would have been a big advantage. I don’t think I ever even knew where the stairs were in the NYC buildings I worked in. It was sort of a status thing to claim you were always too busy to participate in the drills.
In a situation like that I suppose there are a number of factors, but there were some who simply thought on their feet and saved a number of lives. Rick Rescorla was the head of security at Morgan Stanley that day. I saw a special on PBS about him after 9/11. According to one of the Morgan Stanley employees who was with him when he received a call from the Port Authority security telling him not to evacuate his people his response was “F…. You!!!”. God knows how much worse it could have been.
My wife and I were in Lower Manhattan on 9/11.
As bad as it was, remember that on the day of, and for weeks afterwards, knowledgable people (including me) believed that the loss of life, jobs, and infrastructure would be greater by a factor of 10.
The buildings falling was inconceivable. Also inconceivable, once they fell, was the idea that they would fall straight down rather than wrecking all of Lower Manhattan, and that most people would get out after it took all day to evacuate the place in the first bombing in 1993.
Knowing how may people worked in the buildings and those around, when I was asked that night how many were killed, I guessed 20,000 +/- 10,000. I said to pray for just 10,000 dead.
Do you know who was the first to get killed trying to save people?
The flight attendants.
I have two friends who were on those two American flights.
I have neighbors who had relatives/Crew working the United flight. I also lost (crew )friends on #587 JFK-SDQ who were initially my friends/neighbors, then became my clients.
We all recognize, rightly so, the firepersons/and policepersons who come to citizens aide whenever needed. We never acknowledge, especially on this date, that the flight attendants were the ones who were not only killed first, but called into American Airlines what was going on and gave details.
The pilots also, once the door was breached, would have done all they could, if they had known, to protect all the passengers, and the buildings they were being aimed towards.
If a pilot is alive, they do anything they can to avoid populated areas when an emergency is imminent.
Flight Attendants and pilots deserve our prayers at all times.
Especially today for them, their family and friends.
There was a weird 6 degrees of separation for me as well…
One of the pilots lived a few houses away from one of my sisters in Colorado, and another sister in Arizona knew 4 people (defense industry folks on the Boston flight) and when we were in Europe on a train reading the International Herald Tribune, they had a list of the passengers and my friend Michael who was with us, saw one of the names and reached for his wallet and pulled out a business card of somebody he’d just met 2 weeks before, and it was him.
SEX,DRUGS &….OIL! Nice lube job…
http://biz.yahoo.com/ap/080911/interior_oil_scandal.html
Not everything is going down.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/08/EDJE12QCRF.DTL\
“Pension spiking (e.g., retroactive increases in pension benefits or pre-retirement promotions that qualify workers for bigger pension benefits), has been a major trend in California since our dot-com boom. It has saddled state and local governments with serious fiscal problems ever since (e.g., Orange County has a $2.7 billion pension deficit, and a 2005 review of California’s biggest government agencies found pension, health care and workers’ comp commitments more than $100 billion under-funded), even leading to bankruptcy by the city of Vallejo.”
“In June, it was reported that San Pablo proposed reducing police officers’ retirement age from 55 to 50, with members supposedly to contribute 3.3 percent of their payroll to partly cover the costs. But four days after the pension deal, San Pablo’s new police contract included an additional 3.3 percent raise to offset the payroll deduction, making the pension spike free to employees. This is just one illustration of combining government union power with politicians’ short-term bias, due to re-election campaigns that come before all the effects of their policies become apparent.”
Pikers. NYC police officers can retire with full pensions and lifetime health insurance at age 42 or so, and that pension income is exempted from NY state and locla income taxes.
There is no way this can ever be tolerated again in America…maybe at 52 or 62 but not at 42
This is a bigger 3rd rail issue the Social security….Making it easier to fire bad government workers, and to change work rules so a janitor will never make $100K a year ever again…when his base pay is $40K.
——————————————————
Pikers. NYC police officers can retire with full pensions and lifetime health insurance at age 42 or so, and that pension income is exempted from NY state and locla income taxes
Pikers. NYC police officers can retire with full pensions and lifetime health insurance at age 42 or so, and that pension income is exempted from NY state and locla income taxes.
Cops generally aren’t around very long to enjoy their retirement. The average life expectancy of firefighters and police is significantly shorter than the rest of us.
Retired police Cheif next door to me is in his 70’s and knocking down $190,000. per year…Spends half his time here and the other half in his custom built home in Hawaii…
That story really bothers me considering firefighters here in upstate NY are volunteer. They don’t even get a break on their taxes for going into burning buildings. And despite how some on this site like to claim they aren’t in danger, we do lose people in building collapses.
The schools in the “better” districts don’t want the firefighters coming in their schools and recruiting. My former paster who rode w/the department shared this with me. He said the school looked down their nose at what was considered blue collar work.
Funny, they don’t mind “those people” coming into their home when there’s an emergency. I suppose concern for the public good is for the “little people”. We wouldn’t want to ask those on the “fasttrack” for equal sacrifice.
Meanwhile, current (younger) workers are being asked to do the jobs of 2-3 other people as they cut back on both public services and support staff…all to line the pockets of the retiring boomers.
It’s very common nowadays for retail clerks @ their cash registers to take phone calls from the public, as well.
Imagine employers getting a multi-tasking employee for $8 an hour, and if the employee doesn’t like the working conditions, there are dozens of other mopes that want the job?
Lehman down over 40% already in the premarket.
WAMU at $1.92
We’ve been getting cold calls from WaMu on our landline in the past week or so, offering all sorts of magic financial elixirs.
Desperation is in the air o’er there.
WM is $2 in the premarket. Here comes the flush.
and the worlds biggest insurer is on its knees. AIG
“and the worlds biggest insurer is on its knees. AIG”
Great news! Does Greenberg swallow?
aladinsane mentioned sensing something wicked this way coming.
I’m starting to get that sinking feeling also. Some serious sh!t is going to be going down soon.
WaMu is at deaths door. LEH is tanking. And that’s just scratching the surface. Where I live in VT numerous restaurants are closing and retailers are going begging. The perfect storm is upon us folks:
- Dead credit markets
- Insolvent Banks
- Strapped consumers (and those who aren’t are wisely cutting back spending)
- High commodity prices
- Unwinding housing prices
- Floundering equities
- Emergency bailouts of financial instutions.
The American consumer is DOA. I’m calling the great Depression II.
“I’m starting to get that sinking feeling also.”
starting? are you new here?
LOL! Darth’s been around for awhile, not a newbee.
I started getting this sinking feeling two years ago, but I think Lad’s right, the Black Swan is ruffling its feathers for flight. Oi vey (I don’t know exactly what that phrase means, but I like it, seems appropriate).
it would have happened a year ago had the fed not re-spiked the punchbowl.
the number of people around me celebrating those rate cuts was just mind boggling to me.
i would ask them “why is the solution to too much debt more debt?”
blank stare.
Housing and finance are in trouble and will certainly drag other things down sharply, but most of the rest of the economy is doing quite well. Sure, there will be some rough times, but airplanes, laptops, music players, biotech drug development, and nanotech devices are all doing extremely well, just to name a few. Technology and media, especially advertising, are not going away.
This bust is happening because housing units have a price to earnings ratio just like everything else, and the way most people were measuring that was way off. All other industries have price to earnings ratios as well, and there is no other industry that has hidden away so much nothing as the housing and finance industries. The dot com bust was kind of similar, but that was a while ago. Companies that have desirable products and manage their inventories well aren’t going to be going away just because consumers backed off from their uncontrolled spree.
Spot On! I am pleased that I’m not the only one who can point to positive signs in the economy.
The company I work for is a staffing company, mostly in health care. Some column was recently written in Yahoo Finance about my company that they are in a growth sector. Physicians, nurses, whatever, are in a severe shortage.
IMHO, there are way too many restaurants. More than a few people, Yours Truly included, recall childhoods when meals out were a once-a-year thing, if that. And we’re not THAT old.
Not to wax too sentimental, Slim, but I recall family vacations when my mom would pack the food we would eat for a two-day car trip from the Midwest to New England. Balogna sandwiches. Lots of warmish lemonade. Out of a possibility of six meals, we might have stopped for burgers once, just for a break. Graham crackers. Cracker Jacks. Cut apples. She knew how to pack. We thought the motels on the Pennsylvania Turnpike (love those tunnels) were paradise. Past 80, mom doesn’t travel any more due to rheumetoid (sp?) arthritis… and finds peace and comfort at home rather than trying to go places where she probably already has been.
I’m a native Pennsylvania, and, oh how we lo-o-o-ove our Turnpike tunnels!
Wamu and Leham are too broke to fix. They won’t be around as we know them much longer. This will bring down all those that bear behind the scenes risk through credit default swaps and other relationships, which is about most of the other big boys. The interesting part is that the bubble has not even deflated 50% yet. Although I am biased working in banking or finance, I dont have a single client that isnt scared to death. The next 18 months will be historical. What happens when trillions of dollars of debt that supported our economy for the the last 10 years is uncollectable? I guess we are about to find out. This is unlike any other bubble I have witnessed in my lifetime given the fact that pretty much everyone in the US has mortgage exposure whether they know it or not, whether directly through homeownership, or whether indirectly through their investments and retirement/pension funds. We are in the eye of the storm. There is dead silence out there. The first half of the year I was busy with refundings. There is nothing out there now. No refundings, no new deals, just fear and planning exit strategies.
I do want to thank everyone on here, however, for confirming some of my predictions and helping to convince me to go all cash last year. I wouldnt be sleeping at all otherwise.
Eye of the storm is a great metaphor for what has been going on this summer.
Mind if I ask….generally speaking, what kind of finance work do you do??
Securitizations and derivatives - representing investment banks. Mainly with munis (e.g., tax-exempt bonds).
I didnt work much with private mortgages, but debt is debt.
I can sense some reaching for their holy water.
I thought that holy water was the last thing that the devil wanted.
I’m thinking they are drinking holy bongwater…
I find it weird to think that by staying as long as I have in cash, I have done better than hedge fund managers who were paid billions to manage (and lose) other people’s money. Admittedly I can’t say whether this is because I am lucky or smart.
I would say a mix of both. Even smart people can lose playing a game in which the other players are not playing intelligently and the outcome relies heavily on the anticipation of others’ actions. Timing is difficult for even the brightest I know. Of course reality does impose some constraints eventually, such as cutting off credit to those who still wish to make dumb moves.
A modicum of understanding of noncooperative game theory goes a long way in anticipating what will happen in this kind of environment.
Smart.
There are three buttons on your Investment Playstation™ : buy, sell, and do nothing.
If you’re smart, you’ll be using the last button most of the time. The investment managers are not quite clued in to this concept.
The investment managers get to play with other people’s money, with no downside risk: Heads, they win billions, tails they merely win millions.
Mostly true but not always.
There are those who play with their own money and get burned. Not many but they do exist.
They just can’t resist the siren-song of pressing the buttons.
Maybe they should get one of those toy cell phones they make for toddlers? Those have nice shiny buttons, and you can press them all day and only waste a few batteries, not millions of dollars.
I have been taking the same route you have PB for a while now ,in spite of the low yields ,because it seemed the safest . Now
I do feel this next round is a little more tricky .
“…I can’t say whether this is because I am lucky or smart.”
why either / or? …maybe… your like the Chinese: Both
Thanks Tim:
I thought i was the only one with dead phones, no calls no inquiries, literally nothing this year……
I even lost a $200 dj gig 2 weeks ago some 40th birthday outside party …she called a few days before said she couldn’t even afford that….i never charged so low in my life…but it was a mile away..
The only good news i had 2 interviews both at a whopping $10hr, one is walkable from home, the other starts at 8 but i have to drive a few miles….at least its only M-F
————————————————————–
There is dead silence out there.
DJ, I’ve really enjoyed looking at your YouTube videos, but would you mind if I made a suggestion? Why don’t you put up a MySpace or a Facebook page, or, what the heck, even a blog page on Liberated Syndication and start podcasting? Show the world what you can do behind a turntable.
In the meantime, get a whatever job to keep yourself fed, sheltered, and happy. But keep pursuing the deejay thing. I know people who’ve done quite well with it.
ok slim that is next on my list……..
Gotta promote zydeco music….i only know one other New Orleans Mardi gras zydeco dj in all of NYC…and he is 70 years old!
Lots of good music and musicians that need exposure.
Ok, I was spooked at lad’s Something Wicked This Way Comes reference as I’ve been holding my breath for a few days too but, Tim, your post chilled me to the bone. We’re all cash too but people I care about aren’t. I e-mailed a copy of your post to them. I hope it works. I fear time may be running out.
I was looking at the market futures and they look bad. I wonder if bernake is thinking about another emergency rate cut?
Should we expect an announcement after COB on Friday?
If they make it that far, maybe.
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_lewis&sid=alHK1667H9f8
Some of the unintended consequences of the actions taken with Bear Stearns.
But Lehman is doomed for another reason: People are enjoying its failure. The pleasure and interest the markets now take in seeing it fail now exceeds their pleasure and interest in seeing it survive.
From the Article:
“This is one of the many unintended little side effects of the government bailout of Bear Stearns Cos.: to greatly reduce the interest of the people who do business with Lehman Brothers in the survival of Lehman Brothers. All those people whose affairs are intertwined with Lehman might have pressured them to handle their problems more briskly and intelligently — and might also be trying to keep it afloat. The U.S. government has made it possible for them to instead stand back and watch with some detachment and even pleasure as Lehman collapses.
After all, the Federal Reserve will give them their money back, re-insure their credit defaults, take another pile of these distressed assets out of the market. And when the dust settles they can go in and poach Lehman’s business and its smarter employees. “
This is a bad time for Lehman to hold on to $52 bn in falling knife real estate assets. Possible silver lining: Perhaps the firm will break up into manageable size pieces, and one bit of systemic risk will thereby disappear from Wall Street.
latest news
[LEH] Lehman Brothers shares off $2.76, or 38%, at $4.46
Lehman still exposed to real estate, leveraged loans
Firm has $52 billion of such assets, but plans to spin off roughly half of that
By Alistair Barr, MarketWatch
Last update: 5:20 p.m. EDT Sept. 10, 2008
SAN FRANCISCO (MarketWatch) — Lehman Brothers said on Wednesday that it slashed mortgage and leveraged-loan holdings in recent months, but the brokerage firm still has at least $52 billion of exposure to these assets.
Betcha Cramer sez “Buy Buy Buy!”
Cramer always says “buy houses - buy them all up! This is the bottom!” LOL.
Protecting Our Banks
“The Federal Deposit Insurance Corporation, the body that insures bank deposits up to $100,000, has raised the number of “troubled banks” to 117. What is being done to keep the banks from going bust?
Holding a money drive where community members are encouraged to bring all of their unused cash to a local bank
Heart-wrenching bank scene from It’s A Wonderful Life playing on a loop in the lobby
As morale boost, scent of cash pumped constantly through bank
Poorer customers now charged preemptive overdraft fees
FDIC
Oversized foam-core cutouts of $100 bills will be placed on easels in bank lobbies to allay patrons’ worries about their bank’s solvency
Holding a contest to give one lucky bank 30 minutes with a shopping cart inside the U.S. Treasury building
Planting a $5 bill in vault and seeing what happens
Introducing tough new criteria for prospective borrowers, such as having a job”
the Onion
Pay to go through the bank’s doors
Monthly fees against all CC’s and debit cards
Annual membership fees for all depositors, like Sam’s Club charges
Negative interest on all deposits
$50 check cashing fee on all checks drawn or deposited
I’ve been inside the Treasury Building. You’d be lucky to find anything to take in 30 minutes. Maybe some older computers or a few light bulbs. Office furniture is too big to fit in a shopping cart. Very dull. And the big empty plaza that you have to walk across to get to the door (after you check in at the little booth) is a bit of a turn off.
WaMu just brought back its 5% one year CD in an attempt to increase capital. It is now one of the few remaining 5%+ CD left in the country and supposedly ends on Sep 12th.
In the spirit of my ex-IndyMac CD, I will now go open a CD (< $100K) at WaMu and have FDIC take over later while still enjoying the 5% rate.
Anyone with me on this one?
Buyer beware!
Once the FDIC well runs dry the government might not be as forthcoming bailing out the average schmuck. I admit that the risk is low but it is still a possibility.
It is my believe that US Treasury would rather print money to kingdom’s come rather than let 1) FDIC fail or 2) Let US Treasury bond fail (money inflation rather than completely failure of the US banking and financial system). Call me naive but other than putting money or gold into my mattress, what choices are there? I heard people here saying take USD, convert to other currencies and ship it to some offshore account. You telling me there is no risk involved in that approach too?
Seems to me there is some risk in every approach at the moment.
But cash-on-hand, PMs, low/no debt, flexibility and the ability to think critically are all factors in the plus column.
I didn’t think FDIC insured interest, but only the principle.
Just hope that FDIC pays up quickly and the event doesn’t start a chain reaction…
It does insure interest, go to the FDIC website and you will see. Supposedly they changed this a few years ago to cover interest too. My ex-IndyMac CD was paid both principal and interest by FDIC.
cougar91
You are concerned about the return on your money, when you really ought to be concerned about the return of your money instead.
You lucked out when you were a F.O.F.I. (first out, first in) and the FDIC bailed you out on IndyMac bank, but why tempt fate and put your assets back in the fire?
I like living on the EDGE.
I look forward to reminding you of the clear and present danger that you so willingly disregard…
Yes, remind me when WaMu is taken over by FDIC (a certainty) and FDIC refused to honor my sub-100K CD. Then you have won and I have lost.
Shouldn’t be long now…
Well using your FIFO theory and the fact that WaMu is very likely the next big bank to fail after IndyMac, FIFO should cover me just fine. If I subscribe to your theory of major FDIC failures to come, then I would worry about having deposits at now-seemingly safe banks such as BoA and Capital One, since they don’t look like they are in any danger now but by the time the credit crisis hits them a year or two down the road FDIC runs out of $$$ and those depositors are then doomed since they are the last in.
Asa long as you are confident in the order of the banks being closed down, there’s nothing to worry about…
Cougar, if you like living on the edge, take your money and invest it in my new film company*.
*No guaranteed return.
What genre is it? Only one type of film consistently makes $$$ and that’s the adult kind.
guess it won’t make any money, then…
Lost is an adult, but does she and other adults have to do something uneducational?
Gosh, Wild Kingdom, hmm?
Been to a s.j. in Hollywood a few times (ahem). The topless gal told me that upstairs they do porn movies. She said her friend (another stripper) was a star in a movie filmed upstairs and invited her up there to watch the filming. My girl there said it was no turn on for her.
Guess I will have to pay her a visit to see if she still dances there when I move back to El Lay.
If I had any kind of monies like that, I think I might keep it close to home for now. Sounds like a happy problem though.
I am at WAMU…
Is any bank able to buy out WAMU at this point ? I thought WAMU got a 11 billion dollar injection recently .
House in near by neighborhood stopped watering lawn that they put in last year about 4 months ago. Last weekend they were vacating. Only thing left is an old car that they never moved parked in the driveway. Two doors away is another house sitting vacated that some RE took over to sell and finally turned on water and lights. Lights are left on 24/7. The water and electricity have to be costing them big time but I believe that both houses are probably ‘affordable housing’ and are less then 1500 sq.ft. Two years ago they were selling for about $649K and both had multi-families in them. Two house from them is another house being rented and turned into a multi-family with a lot of kids playing in the street, toys left in the street, and loud Mexican music blaring away into the evening. Two years ago these houses were well maintained but we are ghettolizing fast.
Another thing here are all the Bz’s and BMW’s encrusted with dirt. They just look like any other farm vehicle; maybe I should put together a little utube video, might help company sales for all those chasing labels.
“loud Mexican music blaring away into the evening. Two years ago these houses were well maintained but we are ghettolizing fast.”
its the same in my neighbor “hood”. my how times have changed, and we wonder what happened to america? here in CA these people are the throw away children of the eightys and ninetys. back then the welfare system paid handsomly, the more children you had, the more money you get. its a shame to see what the government caused by this idea of free handouts.
Interesting point….
Time to call the Border Patrol. 1-800-USBPHelp is the number.
It was 7 years ago today.
lol…what’s the difference between Waco, Texas & France?
In France…scientology is a cult.
what’s the difference between Waco, Texas & France?
—————————————————————-
yea the french may have the scientologists but we in America have the demorats and the rethuglicans. the french are much better off.
Don’t forget, we also have the FLDS, cult city, plurals.
Not against the religion of LDS but the FLDS in its entirety is pretty damn scary. Hear about all the baby burial grounds?
ALL religions start out as cults. Only if they survive long enough do they become known as “religions.” But they’re still cults.
Misplaced post…sorry!
You sure had me scratching my head there, hwy.
Here is a devastatingly level headed view of life post F&F bailout.
I remain perpetually confused about how propping up prices squared with the GSE affordable housing mission. If the goal truly was to prop up prices, then wouldn’t the mission have been to provide unaffordable housing? Or is it that by driving prices to levels that almost nobody could afford and where overbuilding occurred on an unprecedented scale, the GSEs delivered a historic price crash which is only now beginning to provide affordable housing, despite an absence of lenders from the market?
COMMON SENSE
Bailout Is No Quick Fix For Housing-Market Woes
By JAMES B. STEWART
September 10, 2008; Page D2
…
Mr. Paulson said the companies will no longer be managed as though they had a fiduciary duty to shareholders. So in whose interests will they be managed? Those of the taxpayers, who are on the hook for billions in losses? Those of the banks who need Fannie and Freddie to keep buying mortgage securities? Those of real-estate agents and home builders, who want the companies to prop up real-estate values? Those of affordable-housing advocates, who want easier lending and underwriting policies so more people can own homes?
Unfortunately the answer cannot be all of the above, since too many of these interests are in conflict. Trying to serve all these masters is what got Fannie and Freddie into this mess. It’s a fiction that the companies ever were managed with a fiduciary duty to shareholders, as anyone unlucky enough to own their shares now realizes.
In their heydays, Fannie and Freddie certainly helped prop up home prices. Surely on that score none of their allies in Congress can complain. They were part and parcel of a system that fueled a real-estate bubble of historic proportions. The result was millions of people who bought houses for more than they were worth and at prices they couldn’t afford. Where’s the public benefit in that?
“…The result was millions of people who bought houses for more than they were worth and at prices they couldn’t afford. Where’s the public benefit in that?”
Carlye Group et al. : “Why does everything have to be for the “Public” benefit? …Why?”
This has puzzled me too. If they are for affordable housing, how is trying to keep prices sky-high, forcing people into indentured servitude to buy a house, supporting the mission of affordability?
This is like an organization that purports to try and keep oil affordable, yet tries to keep the price of oil high through massive government intervention.
What??
Of course, politicians received lots of money from high property taxes and from Fannie and Freddie, from NAR and the NAHB. So, in reality, this is why they like high prices and are doing so much to keep them high. Barney Frank and Chris Dodd, while members of the party purportedly concerned about the people, really are just one wing of the corporate party.
One thing about the F&F bailout: It sure did not seem to offer much encouragement to the Wall Street bull herd. Perhaps they perceive that this is the last bailout possible for the foreseeable future without sparking serious currency concerns?
September 11, 2008 9:38 A.M.ET
BULLETIN
FINANCIALS SLAMMED AS U.S. STOCKS OPEN LOWER; LEHMAN DOWN 40%, WAMU 22%, MERRILL 13%
Global gloom engulfs Street
Selling hits Lehman anew as U.S. stocks head squarely toward sharp losses. Financial worries and slowdown jitters call the tune.
you nailed it. without serious concerns… what happens when the FDIC runs dry?? what then??? let me tell you… serious currency concerns….
At that point, BB may have to reconsider the meaning of Friedman’s printing press theory.
The 9/11/01 photos of the WTC offer a fitting backdrop for this story of falling financials.
Photos here…
Maybe we should start printing the WTC on our money instead of that strange pyramid the conspiracy theorists like so much…
So based on your posts PB ,F&F is still going to making loans ,and
I am wondering where the money comes from ? Last night that question came up .
“I am wondering where the money comes from ?”
U.S. Treasury (aka taxpayers + Fed printing press) can directly purchase MBS.
I have some green crayons/ magic markers and white paper. I’ll even stay between the lines.
Anybody want some of my money?
Isn’t it basically the same deal from the gov?
d.d.
If your talent is as good as Boggs, you’ll be able to sell them for way over face value…
http://en.wikipedia.org/wiki/J._S._G._Boggs
“…because, in America..it’s not “politically” correct.”
McSame & McDame = Busch Lite & Virgin Margarita
What the difference between the Wasilla Alaska girls hockey team & the NHL?
Lipstick!
“…The McCain campaign immediately jumped on the comment, arguing that it was a sexist remark directed at Palin, the GOP’s first woman on a presidential ticket. In her acceptance speech last week, she had referred to herself in a joke about lipstick being the only difference between a hockey mom and a pit bull.”
Palin candidacy stokes debate among women:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/11/MNJD12RJRT.DTL
Filed under: “you bring the bait…I’ll bring the pole”
Even If Levi Johnston of Wasilla, Alaska Wasn’t Planning On Getting Married Last Week, You Better Believe He Is Now.:
http://tpmcafe.talkingpointsmemo.com/talk/2008/09/even-if-levi-johnston-of-wasil.php
“Besides his hard play on the ice, Levi Johnston was also a bit of hell-raiser off it - another reason Bristol may have been smitten.
State troopers popped Johnston last year for snagging some King salmon out of season in Moose Lake, records from Alaska wildlife enforcement show. He had to pay $370 bail.”
This election won’t be decided on issues. Expect another 4 years of “change”, sponsored by the same geniuses suckered into voting for Bush twice.
After it’s over we may (?) find out if racism is alive and well in America….
yea so will vote in a complete socialist radical without any executive experience in anything….makes sense to me. Ah higher taxes that will solve our fiscal problems.
i wish the libs would go back and listen to all the speeches by Kennedy (the original “American idol”), LBJ, Carter, Klinton…
They all call for more affordable housing, defeating poverty, etc etc. Its amazing with all the programs they have instituted and brag about “fully funding”m they are still giving the same speeches? It never seems to work…..Sounds like a “real” conspiracy to me.
Vote for anyone who will shrink gov’t in every way thats are only hope.
a complete socialist radical without any executive experience in anything
You mean Bernie Sanders ?
In countries which actually have viable socialist parties, Obama would hardly be regarded as a liberal, let alone a socialist. For starters, he’s not opposed to capital punishment, which not even the right in other Western countries supports any more.
And his health care proposals would be regarded as half-baked in Switzerland, never mind France.
“yea so will vote in a complete socialist radical without any executive experience in anything”
====================================
8 years ago we voted in a complete socialist radical with executive experience a’plenty, the results of which we are now seeing, vis a vis Fannie Mae and Freddie Mac.
I thought he was a facist?
Fascilist
Children!
All 4 candidates in the two parties are Conservative. Evidence? They support the status quo, which is bigger government and more meddling in our lives, stealing far more from Peter, pocketing far more, and giving less of Peter’s honestly earned money to the fool Paul.
Class warfare is the big part of this election and is merely a smokescreen to cover an even larger power grab.
I’m a real liberal, for total economic freedom and civil freedom. You cannot have economic freedom without civil freedom and you cannot have civil freedom without economic freedom.
You who argue Obama over McCain or McCain over Obama are just fools. Ron Paul made himself known and you just laughed at him. Have you no guilt?
I’ve been coming to this blog since the summer of 2005. The political mudslinging is starting to get very old and boring and it really detracts from the great information that is found here.
It appears some of Wall Street’s biggest firms are (allegedly) helping hedge funds rob the U.S. Treasury of billions of dollars. Is this story as big as it sounds?
Some Banks Are Accused of Aiding a Tax Dodge
By LYNNLEY BROWNING
Published: September 10, 2008
Wall Street investment banks are marketing and selling complex schemes meant to allow foreign investors, including offshore hedge funds, to avoid paying billions of dollars in dividend taxes illegally, according to a Senate subcommittee report released Wednesday.
The 77-page report, by the Senate Permanent Subcommittee on Investigations, is based on scores of internal data and documents and singles out Morgan Stanley, Lehman Brothers, Deutsche Bank, Merrill Lynch, UBS and Citigroup. The Senate subcommittee that prepared the report, led by its chairman, Carl Levin, Democrat of Michigan, has held extensive inquiries into tax and offshore abuses. It holds a hearing on the report’s findings on Thursday.
The report also names several hedge funds, including Moore Capital, Highbridge and Maverick Capital, as using the dividend-dodging products. Maverick improperly used the banks’ schemes, mostly ones sold by UBS, to illegally avoid tapping its own investors for $95 million in dividend taxes from 2000 through 2007, the report said.
So I guess Our Lord and Savior Goldman and the garbageman JPMorgan wasn’t part of this scheme? HA!
Here’s a question
What does a CEO of a large financial firm have to do to end up in jail??
What you mean is, what do they NOT have to do…
Maybe murder might land them in jail , but that’s questionable .
With all the news of the scandals ,and all the fraud in the financial and real estate sectors that we already know about ,one has to see that the rule of law ,and enforcement of those laws, has been a real joke in recent years .
When people have this little fear of punishment for their acts ,and other people who are ignorant of the law ,but they see so many people benefiting by white collar crime ,so they join the bandwagon ,we are doomed unless we restore law and order IMHO.
It’s clear to me that the government is trying to re-spike the punch bowl ,without much concern for the corruption in the system ,which was in serious need of a purging . So much of the problem of the excesses of the boom are due to crime ,false advertising ,get rich quick schemes ,a REIC that is about as corrupt as they come ,and so on . The one loan that cause a lot of default (Seller down payment assistance )that they tried to get rid of with the HOUSING BILL ,they are already trying to bring back .I guess the powers that be aren’t to concerned about some of the causes of foreclosures .
Shouldn’t business owners go to jail before employees? Or at least along side.
Of publicly traded companies? You think people who own stocks should be held criminally responsible for the way the companies are run?
Why should employees be held any more responsible (criminally) for company policy than owners? Owners certainly get the benefits when they don’t get caught.
“toys left in the street, and loud Mexican music blaring away into the evening. …ghetolizing fast…”
I feel for your neighborhood and you. We live this right now (sold home, renting, will re-buy) and it’s quite disenheartening to see what the culture has to offer. Disarray, no disipline, and filth.
Add cockfighting, which has come to the barrios of W. Colorado, once home to respectable ranchers, unrespectable ski bums, retired uranium miners who play steel guitar (Nobel brandname preferred), and the ubiquitous second home owner who brags they go heli skiing in Silverton when they really don’t (although their friend did once and it scared the bejeebers outta him, not the chopper, but the vertical runs).
Two unbelievable shows are:
Sons of Anarchy on FX Network and G’s to Gents on MTV. I guess G stands for gangster. I don’t know how networks get away with airing this kind of stuff.
Sons of Anarchy
From G’s to Gents
“I don’t know how networks get away with airing this kind of stuff.”
I do. It’s called free speech. It’s one of our bill of rights, along with our right to keep and bear arms.
We still have a (functioning) Bill of Rights?
Here’s something that Mean Old Whitey Slim did to the Mexican family next door.
There’s a young lady over there, and she’s in her teens. Since I’ve been over here at the Arizona Slim Ranch, she’s shown more than a passing interest in drugs, gangs, and that boom-thumpa car stereo “music.”
One fine morning in July, I was rousted out of my beauty sleep by that deep car stereo bass beat, and I wasn’t amused. I looked out of my front picture window, and what should I see but my young neighbor and a female friend.
The friend’s car was the source of this “entertainment,” and I really wasn’t in the mood to go out and yell at them to turn it down. (I’d done that a few weeks before.) After all, it was 5:30 a.m. and neighbors were still sleeping. Or trying to.
So, I dialed the magic three numbers, 9-1-1.
The thumpa-bumping continued, as was the makeout session between these two gals. (I think they’re part of the same girl gang, and from what I’ve heard, this is how members show allegiance to the gang.)
I went outside to sweep my driveway. And to get a good description of the vehicle. The cops still hadn’t shown up, and you know how they are about vehicle descriptions. They love ‘em.
Back inside to make more 9-1-1 calls. The first cop showed up shortly after 6:30 and he was joined by two more. The two lovebirds were busted for drugs.
The folks next door have been ignoring me ever since, but you know what? They’ve really cut way back on the loud music and the front yard parties. Me and my other neighbors really appreciate the lack of those things.
And I saw the young lady this morning as she was leaving the house to go to school. She hadn’t been doing the school thing since ‘05, and I think that’s part of her probation.
I also know, by way of a friend whose teenaged son got into some trouble, that probation officers will visit the school to check up on probationers without their knowing it. They check attendance records and class performance.
So, looks like some good may be coming out of this.
Good for you Slim,
Looks like you might be improving someones education and future!
The DJIA has miraculously stayed above the psychologically-important 11K level throughout the turmoil. 11K+ DJIA or bust?
is that the PPT in action?
The PPT has got to be working overtime to keep things afloat. How can the DOW stay above 11k with banks failing, LEH and WaMu teetering on failure, UE numbers worse than anticipated, a surging trade deficit and a hurricane headed for TX oil refineries? (and that’s just over the last week!)
If only we could somehow include O.J. Simpson in the saga, it would be complete.
That’s what America needs to keep it’s mind off of all the financial, ethical, energy, foreclosure, job loss, and war issues that it currently faces - another OJ trial! Ahhh… the good ol’ days of Monica and OJ.
Silver spread is now warping the bounds of space/time. On paper silver is $10.50 per oz. But in reality? American Eagle Silver Coins - US Mint Sealed Crate (500.00 oz.) $10599.00 at the only online dealer I could find who had any for immediate delivery. That is over $21 per oz. DOUBLE the paper price. Interesting times…
What? wow.
Doesn’t this spread open some kind of arbitrage opportunity? I suppose it reflects the reality that the paper silver is worth the value of the issuer’s promise to redeem it. History has showed that such promises are not always kept.
That’s the beauty of physical, and why government hates it. If you could arbitrage it the banksters would have control of it just like everything else. But you can’t.
Mints can arbitrage it. They can buy paper futures, stand for delivery, and coin it.
Why mints are not reducing the spread via this arbitrage, I do not understand.
A mint is only of use if you have the raw materials to make product…
To get your tit in a ringer over future delivery seems like a fool’s errand, based upon the shortages of Silver & Gold currently, which will only get worse, trust me.
As the mogambo guru has pointed out, there is far more paper PM than real PM.
Is the disconnect more severe because people favor American Eagles and there’s a backlog?
A monster box of Maple Leafs from NW Territorial Mint, for example, is currently $6,590.00 — a premium over the paper value, to be sure, but not the sky-highness that you’re reporting.
Silver Eagles are the mopes choice of metal, because in the past they were easy to get hold of, but as of late they’ve been rather scarce.
In essence they are just glorified 1 oz rounds, the only difference being that they have a face value of one Dollar. That’s it.
Just got off the phone with my friend that owns one of the largest retail bullion stores in L.A.
He told me that he started the week with 5,000 1 oz Silver rounds in inventory, and he’s down to 1,000 now.
He’s selling @ $2.25 over spot.
25% premium over ’spot’ price. And that is why silver eagles are better than rounds. The spread on eagles has held firm as rounds and bars slid. Eagles are legal tender and guaranteed in weight and composition by the .gov.
Silver is not just the poor mans’ gold. Unlike gold, most silver is used up, not kept around for all time. It’s also nicely divisible for small transactions. Take it from a mope, silver is nice to have.
There’s a really good reason Silver is 50% off it’s highs, while Gold is down around 25%.
Silver is more of an industrial metal than a precious metal, and Gold is more of an precious metal than an industrial metal.
Silver is also more of a drama queen than its big sister.
NWT Mint does not have the silver on hand. They will take your money in exchange for delivery in the unknown future. They are currently being sued by the state of Washington for their business practices. Google it.
Interesting. Thanks for the heads up.
May I ask who your preferred online dealer is?
I saw last night that APMEX had silver eagles for $3.50 over spot (now I’m doubting my memory and wondering if it was maples). They do have maples now for $3.30 over spot. It’s interesting watching the spread widen.
Someone “might” consider parking $ into http://www.goldmoney.com with their silver stored in Zurich. It gets the funds out of the US and into silver all at the same time. Should the premiums come back into balance then repatriate the funds, probably cost about 4% roundtrip or so but if the premiums come down from 25% then you’d potentially be ahead of the game while maintaining silver ownership/hedge. Just a thought.
Only a few problems I can see..
. Storage costs - not cheap (Au & Ag)
. Is it really there, if you don’t have it you don’t know? ( & never buy leveraged, as often encouraged. Dangerous to your w-health in a falling market)
.In a worst case scenario, at either end
now..controls set by either gvmt/s could stop/seize/confiscate/control.
.PM’s should be physical only.
.A problem with silver is volume to value, in that I mean, where do YOU store it in qantity?
.For that reason Gold better for consolidation.
Admit returns (IMO) will be better for Ag due to
abnormal (but who knows) spread.
We are in uncertain times now. I’m not an Au bug, but do read their blogs. They have predicted an up turn all the way down since 900.
My only comment is..
. Buy on way down
.Sell on way up.
.What is bottom? who knows, my guess as good as anyones’.
Cash is also king.
I trust James Turk far more than our financial crooks. All GoldMoney (au or ag) is bullion - not leveraged.
Spread between physical silver and paper silver is not nearly as high as watcher suggests (2x as expensive). Kitco has a 1000oz silver bar listed at $10,900, which is only $10.90 per ounce, nowhere near $21 per ounce.
Seems that perhaps the u.s. govt issued coins (Eagles, etc.) are, due to increased demand that is outpacing supply, starting to take on some numismatic value that was not present before. The U.S govt’s inability to keep up with demand does not necessarily reflect on the availability of the metals, but perhaps more on govt capacity and/or incompetence.
My friend with the retail coin store told me he bought 15 JM 100 oz bars for $1.75 over spot per oz. yesterday, on a wholesale basis, and he’ll get around $2.25 over spot selling them.
That’s reality.
You are comparing wholesale to retail. Apples and oranges.
He paid $1.75 over on a wholesale basis and will sell them for $2.25 over on a retail basis.
About $750 profit on a $25k deal.
If this wholesale/retail tale of two markets continues, shouldn’t the mint’s be making, uhmmm, a mint, I guess you could say? After all, they’re buying at paper prices and selling at presumably high premiums over spot.
Or is it the coin shops who are making coin by adding the high premium due to scarcity?
Are there any publicly-traded mints out there?
As one who has been following the Silver market you need to look for yourself, but there were shortages, and low supply when Silver was 19. now that it’s under 11 it is getting might scarce..even Apmex was out of common 90% coin bags..Flat out!..Never saw that in 10 years. As above there was 3 banks that shorted 175million oz of silver just before this latest drop.
Paper is paper…go makes some calls, but there’s not much physical silver out there.
Google Ted Butler, who’s been trying to wake the crooks running the CFTC ref monster shorts from just a couple of banks….as in, more shorted oz’s than are known to exist aboveground. Neat trick.
Lehman One-Year Default Swaps Trading at 11% Upfront, CMA Says
By Abigail Moses
Sept. 11 (Bloomberg) — Sellers of default protection on bonds sold by Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, started demanding upfront fees, according to data provider CMA Datavision.
Contracts protecting $10 million of Lehman debt for one year cost 11 percent upfront and 5 percent a year, according to CMA prices at 8:50 a.m. in New York. That’s up from 1,200 basis points at the close of trading yesterday. The price means it costs $1.1 million in advance and $500,000 a year to protect the bonds compared with $1.2 million a year yesterday. …”
Wall Street is curiously participating in a stock market rally as Lehman shares go down the drain. I guess Lehman’s demise is taken as good news on the Street?
Staff struggle to carry on as ‘tsunami’ builds
By Chris Hughes in London and Julie MacIntosh in New York
Published: September 11 2008 21:15 | Last updated: September 11 2008 21:15
Lehman Brothers employees around the world struggled to maintain a sense of business as usual on Thursday as the bank faced intensifying speculation about its future.
Inside and outside the company, rumours circulated that Lehman business heads had been taken to one side and told that its fate would be decided within 48 hours. Blogs and cable networks ticked off the names of potential buyers from Goldman Sachs and Bank of America
Even so, employees said that there was an attempt to keep serving clients. There remained a dedication to preserving the firm’s independence and its binding culture, rather than be swallowed “by some bitchy investment bank”.
McSame & McDame: Drill… Drill right now!
Austin Powers: “Yeah BaBeeeeeee”
Oil brokers sex scandal, conflicts of interest may affect offshore drilling debate:
“An Interior Department investigation describing a “culture of substance abuse and promiscuity” by workers at the agency that issues offshore drilling leases and collects royalties hit lawmakers Wednesday just as they prepared for votes next week on expanding offshore drilling.”
An Interior Department investigation describing a “culture of substance abuse and promiscuity” by workers at the agency that issues offshore drilling leases and collects royalties hit lawmakers Wednesday just as they prepared for votes next week on expanding offshore drilling.
“On the eve of Congress starting this big debate you’ve got a horror story of mismanagement and misconduct in programs that are going to be a key part of the discussion,” Sen. Ron Wyden, D-Ore., said in an interview, adding that it can’t help but influence the debate.
“…The two-year, $5.3 million investigation by Interior’s inspector general found workers at the Minerals Management Service’s royalty collection office in Denver partying, having sex, using drugs and accepting gifts and ski trips and golf outings from energy company representatives with whom they did government business.
The investigations exposed “a culture of ethical failure” and an agency rife with conflicts of interest, Inspector General Earl E. Devaney said.
Between 2002 and 2006, 19 oil marketers — nearly a third of the Denver office staff — received gifts and gratuities from oil and gas companies, including Chevron Corp., Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp., the investigators found.”
I think the only honest secretary Interior ever had was Udall. Out here in the WIld West, such shenanigans are expected, though not condoned, from such agencies.
Hang em all. Where’s Yosemite Sam?
Why do you assume the workers in this office are controlled by Republicans? Department of the Interior is definetely inhabited by lifelong beauracrats who would tend to be “big gov’t” types!!!! Lets try and cut back on these people and watch who defends em…….Yep…the LIBS!!! They love kickbacks they just get upset when there not in office to get their cronies the kickbacks.
Waaaaaiiiit! I’m a proud Liberal. Pure capitalist, pro-gun, against any welfare. Obama, Madonna, Gore, and Bono are very Conservative in a different sense than Jerry Fallwell and Rex Reed. They want to conserve their station in life.
The socialists stole “progressive” and “liberal” from the capitalists who love civil freedoms. Remember that. Google Frederic Bastiat and spread the word. Steal “liberal” back from the commies.
It’s been policy for the past 8 yrs to replace those “bureaucrats” with industry insiders in every possible situation. The Dept of Interior is notorious for it. Yes, this is what happens when people who loathe government “for the people” take over running one. FEMA professionals, FDA, you name it, and it’s “management” has been specifically designed to cripple its job. EPA, for another notorious example. Even the SEC is underfunded (not to mention run by another Chicago School moron) specifically to hinder regulators. Oh yeah - regulators - those evil folk whose activities are (were) designed to thwart the innovative activities of the morons who walked us into this horror show.
There used to be Republicans: You know, conservative folk, as in people who conserve, who invest rather than strip-and-indebt. Those sad imposters today wouldn’t know an ethic if it bit them in their private parts, and believe “for the people” is a joke, rather than an (unfortunately) necessary ballast to excess.
Quite a few of these employees became Energy consultants for those companies they were giving contracts.
Em, thieves all.
Small US banks defer hybrid debt payments
By Saskia Scholtes in New York
Published: September 10 2008 16:32 | Last updated: September 10 2008 22:23
Increasing numbers of small US banks and savings institutions are showing signs of stress by deferring their payments on so-called trust preferred securities, according to research by Fitch Ratings.
The ratings agency reported $1.7bn of deferrals and defaults by 38 small bank issuers of trust preferred securities during the last year. That compares with only $258.5m of such deferrals by 11 banks in the previous seven years.
Trust preferred securities are a form of hybrid debt and equity capital that allows issuers to defer payments for up to five years. These securities have been popular with financial institutions because they qualify for regulatory capital treatment.
Although issuers of trust preferred securities have a contractual right to defer on their payments, Fitch said deferral is a very negative signal. “[It] may even serve as a precursor to a holding company bankruptcy filing, a regulatory seizure or a recapitalisation,” said Nathan Flanders, analyst at Fitch Ratings. …”
FT
Is there no end to cunning financial scams offered by the banksters?
Bankers join flow to heart of investment boom
By Brooke Masters in London
Published: September 11 2008 03:00 | Last updated: September 11 2008 03:00
Faced with grim short-term prospects at home, investment banks are encouraging employees on all levels, from managing directors to young analysts, to consider a stint in the Gulf or nearby.
Many of them are jumping at the chance. Some are simply excited by getting into one of the few parts of the world where business is hot and prospects for bonuses remain high. Others are capitalising on family connections or language skills that give them an edge.
Although big banks have been announcing lay-offs in the US and Europe, the choice is rarely as stark as “move to Dubai or be fired”, because the banks want to send good people to an area that they hope will be a source of new clients and increased deal flow….”
FT
The time to have invested in Middle East banks was months ago. The time to get out may be now as American and European mopes go over there to f’k ‘em up.
right on!
Yea, read that a few weeks ago and it was basically the guys/gals previously to this financial boondoggle would never consider relocating offshore as
“NYC was where all the money action was” but
facing losing a job, they are relocating offshore in droves.
Singapore, Rio de Janiero, Dubai.. I mean, how hard can that be, really? Sheesh. They are still getting away with it.
One guy I know bought 2500 s.f house for 350k in early 2006 in FL. Same guy last week bought similar house for 165k in auction. His brilliant idea is to let first house go back to bank and keep second house. He put 20% down on first house, but took 50K equity on that house. He is telling, he is not loosing a penny in the first house. My question is, wont bank come after him for equity loan and/or try to take the second house also? Please share your comments.
At the very least, he’ll have to pay taxes on the amount owed minus the amount the bank eventually sells the 1st home for.
I think a lot of people do not realize that there might be a price to pay for foreclosure in the form of a tax penalty . Also,depending on your status on a property ,or if you took out a equity loan ,it might of created recourse for the lender to seek a deficiency . Your recourse and potential liabilities depend on what state you live in a
also .Lenders also have the potential to prove fraud on the loan documents if Lenders in the future go in that direction . I’m just saying that someone should know what they are doing ,rather than get a surprise down the road .
“At the very least, he’ll have to pay taxes on the amount owed minus the amount the bank eventually sells the 1st home for.”
He’ll get a 1099 for forgiven debt on the difference between what he owed and what the house sold for. The amount of that debt was used to initially purchase the house will not be taxed per a 2007 law by Congress.
The rest of the loss that occurred because of the HELOC he may owe taxes on unless 1.) he used the money to make improvements on the house (don’t quote me on this) or 2.) he is insolvent meaning his net worth was negative the day of the sale.
I did a tax return this spring for clients who did exactly this - bought another house before walking away from the first home they had HELOC’d and paid off credit cards with. $100,000 in forgiven debt - $60,000 in initial purchase, $40,000 in HELOC’d money. Their tax bill? $0. Initial debt not taxed. Their net worth on the date of sale was negative $100,000 plus (student loans.)
Odds are that if he is fiscally irresponsible and has a good tax preparer he will not have to pay a dime of tax on his forgiven debt. Wasn’t a lot of call for this for the 2007 tax season – among my tax prepping friends (we have fascinating conversations) I was the only one who did this and I had to do quite a but of research for it. But I suspect in 2008 everyone will be doing these and I’ll have some much more interesting stories for you.
Side note: It’s so much fun to prepare taxes for people who walk away from one house after buying another and have no consequences while I rent a dump and maintain a healthy net worth. Fortunately, they are very nice people if not financially smart, and I’d rather do it for them than some a-hole flipper.
What would happen if i don’t send my estimated tax on the 15th? Take that you crappy pappy.
Did anybody see allena on inside edition lastnight?
“Did anybody see allena on inside edition lastnight?”
no, but i hope she got paid the big $$$ for it!
What would happen if i don’t send my estimated tax on the 15th? If your 2008 net income goes down sufficiently, nothing will happen.
True, unless you are Irwin Schiff or some public entity. The eternal robbery service only hits the public protesters and not the quiet revolutionaries.
BTW: Thomas Jefferson wrote a good first paragraph in The Declaration of Independence” implying that we should have revolutions from time to time to put government back in its place.
Knowing that the elections seem to be rigged all the time, you are left to your imagination on how you can get around that rigging and help your revolution - personal, or via group.
OK…, Gold and Silver. I have long bet against the dollar and hold probably enough to buy a family car. I am still up $200 on my gold but am at break even on silver after three years of supposed gains. I suspect major banks, perhaps even our treasury is dumping to keep the lights on??
My point, real estate and other comodoties float up and down with the tide, but where is safe haven for investment dollars today, given everything including out cash is heading down the drain??
RVs. They’re down for now, but when this housing thing really hits, people will be buying them up to live in year round. Start a used RV lot.
/sarcasm, kinda
Interesting read on China and oil. Watch out below for the oil bulls…
http://www.reuters.com/article/GCA-Oil/idUSSP2711720080909?sp=true
Anyone notice how ‘down’ Erin seemed today on the financial news. Must need Cramer in there to pick her up.
Also heard one pundit say that we can eliminate one year of the housing downturn by selling to foreigners; insanity is starting to pick up again. I’ve been bored for a while but the pot is starting to turn again; it should be an interesting fall with the daily election poll data to distract viewers from financial data while the stores start selling Xmas products this month.
Salina, that guy on cnbc really hates renters.
He wants us to be stuck outside looking in.
“Salina, that guy on cnbc really hates renters.
He wants us to be stuck outside looking in.”
Let me guess… he loves real estate “investors” but hates the renters they need in order to justify the purchase of the house. That guy rode the short bus.
Let me guess: He is a bitter loanowner sitting on top of an underwater housing asset?
CNBC is running low on Kool-aid.
“Also heard one pundit say that we can eliminate one year of the housing downturn by selling to foreigners; insanity is starting to pick up again.”
Too bad the dollar is moving against foreigners, just as their stock markets and housing markets are generally beginning to catch the American flu. Good luck on this theory!
“Also heard one pundit say that we can eliminate one year of the housing downturn by selling to foreigners.”
(Insert Rosanne Rosanna Danna voice here.)
“I agree with this. We must get rid of all those laws that say no foreigners can own American soil. The discrimination the hordes of Asians and Europeans and South Americans feel as they press their noses to the real estate office windows dreaming of being able to be just own a piece of the pie. And we laugh and insist upon seeing a passport and birth certificate and lapel flag pin proving they are one of us before they can buy. It must be stopped!!!”
(Whisper from offstage.)
“Huh?”
“What?”
“Never Mind.”
Speaking of inflation, the minimum inflation adjustment for NYC and NY State pensioners is plus 1% every year. So if we have deflation, they are guaranteed a 1% increase no matter what the consequences.
Voted in at the peak of the market in 2000, this enhancement cost NYC and NYS zero, because high stock market returns would pay for it all.
If mortgage rates are dropping, and you are buying a house…any ideas on how to get out of a locked in mortgage that you haven’t yet finalized? What penalties are there?
a buddy of mine has been trying to refinance for a month now. he was using a mortgage broker and was locked in. then the f&f bailout and the rates dropped. through his mortgage broker he locked in with the lower rate at another bank with no penalty.
maybe he wasn’t truly “locked” into the first rate but he seemed to have no trouble.
I was thinking about Contra Costa County being $116 million in arrears, as far as collecting property taxes…
@ $5,000 property tax per house, over 23,000 homes are in danger of being foreclosed on, for back taxes.
That’s just one county in the whole country…
Alad,
Don’t worry, it’s all contained!
I don’t know if this has been discussed her yet, but I saw this today:
http://nopawsleftbehind.org/
It’s an organization that try to help pet owners who are facing foreclosure, helping to make sure they do not leave their pets behind.
It’s pretty sad that it got to this.
So Pulte is declaring a regular dividend going forward, and is up 5% on that news. Now why would a company that’s had seven straight losing quarters declare a dividend? Hmmm….
So… is this all contained or what…?
Is the real estate market ok and still just have some “frothy” areas?
- U.S. Senate Banking Committee members urged Fannie Mae and Freddie Mac, the mortgage companies placed under federal control this week, to freeze foreclosures on loans in their portfolios for at least 90 days.
“This action would provide immediate relief to many homeowners” and let the companies “turn these non-performing loans into performing assets to minimize losses,”
Japan circa 1990, here we go…
As if 90 days would make any difference in the scheme of things?
The USA is adrift on the high seize, trying to bail out water, while twice as much is coming in…
Got Lifeboat?
“turn these non-performing loans into performing assets to minimize losses,”
And spin straw into Gold
The US is considering whether to fold Fannie Mae and Freddie Mac’s $5.2 trillion in debt into the federal budget, the White House budget office and the U.S. Treasury Department said.
What’s next ? Who thinks this wasn’t the master plan all along .
This sounds like a formalization of a done deal.
What budget?!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
BWAHAHAHAHAHAHAHAHAHAHAHAHAHA!
We are running 1/2 Trillion deficits/annum. Go ahead just add some debt.
Heck, the feds can go Cally. (We still don’t have a budget and the slide grows ever more. What is is now? 15, 16, 17 Bil. How does this state, let alone, country, continue to function economically?)
Not like we are ever gonna pay this down.
I think at this point, if this goes through, we are really sunk.
I guess the question is, at what point do foreigners stop buying our crap, er I mean, debt? Also, at what point do Americans stop buying Treasuries?
Heck, inflation on the necessities, no not sports memoribilia (SP?), is killing any of those t-bill returns. Also, who thinks the US will ever pay off this enormous debt? Taking on this kind of bill…
Good Grief!!!!!!!!!!!!!!!!!1
Um, the Fed doesn’t have a budget yet either. Not a single appropriations bill has been acted upon in the House. Pelosi’s doing a great job alright. New fiscal year starts October 1.
I believe this is a result of the CBO saying it was to be included in the budget. The side event is the inclusion of FanFreds $5.4T in assets (loans outstanding are assets to a bank). This will make the numbers look good!
Doesn’t BOA already have a plate full with Countrywide?
Bank of America potential Lehman Brothers suitor: report
By Wallace Witkowski
Last update: 4:13 p.m. EDT Sept. 11, 2008
SAN FRANCISCO (MarketWatch) — Lehman Brothers Holdings Inc. (LEH 4.22, -3.03, -41.8%) is actively shopping itself to potential buyers including Bank of America Corp. (BAC: 33.06+0.68+2.10%) , …
Are both Lehman and WaMu on the next-to-bail list at this point, or will only one of them meet the too-big-to-fail qualification hurdle?
Right Professor Bear ,and they just said on TV that WAMU went up 22 %.
I guess if the government injects capital into any deal and makes it sweet
than these companies can be sold or bailed out ,whats the difference ,the tab stills goes to the tax-payer .
Bailouts Will Push US into Depression: Manager
http://www.cnbc.com/id/26656750?__source=yahoo|related|story|text|&par=yahoo
“…If a tree falls in a forest and no one hears it, does it make a sound? One says, “Yes it does, for it makes vibrations in the air.” Another says, “No it does not, for there is no auditory processing in any brain.”…”
from Twelve Virtues of Rationality
Eliezer Yudkowsky
hoz.
I work, hard.
I enjoyed the dagger and the frog, you do that on occasion.
I continue to update, but Im thinking longer term right now.
I relaxed the daily movements.
market rallies. or maybe not so much…
I have a wide stance. not quite as wide as yours though.
US debt burden may swell to $5.3 trillion -Goldman
http://www.reuters.com/article/marketsNews/idINN1144411120080911?rpc=44&sp=true
“Goldman economists also upwardly revised their federal budget deficit outlook for the next two fiscal years by more than $100 billion each compared with their prior forecasts.”
Lemme guess: $100b for Fan and another $100b for Fred?
LOL
Nah 160 B for stimulus 1; 160B for stimulus 2; 260B for stimulus 3; and 500b for stimulus 4. Amortized over 10 yrs. with interest included.
Fannie now wants a 15% minimum down payment…
Here in the bigger cities of the Golden State, that’s around $75k you’ve got to come up with.
I’m thinking that if you took all the people seriously thinking of buying a house, and whittled it down to just those that can afford the down payment, there couldn’t be too many people that actually qualify, a tiny number.
They will not be able to keep Cali prices propped up with that kind of down payment requirement. The upside is that the U.S. taxpayer will be adequately protected against the risk the zombie GSEs go crazy with a reloosening of lending standards.
The downside is that the GSEs may be severely on the hook for undisclosed losses on California MBS they guarantee, thanks to 40+ pct price declines off the peak.
Don’t Rule Out Another Fed Rate Cut This Year
“Unless we have some sort of miraculous bounce in spending in August and September, we’re going to have the first decline in consumer spending in 17 years [on a quarterly basis],” says David Resler, chief economist at Nomura International. “Most of the fiscal stimulus went to paying for higher gasoline prices.”
Rupkey says it is extremely unlikely the Fed will cut rates any time soon. “If payrolls start declining 200,000 a month, then its possible,” he says, or if “payrolls are still declining seven-eight months from now, then they’ll be under pressure to cut rates.”
That or another event posing systemic risk. The Bear Stearns rescue is one such case and the Fed cut rates 75 basis points around that time.| The takeover of Fannie Mae and Freddie Mac apparently was not. The fate of Lehman Brothers| remains to be seen, but it begs the question of whether it falls into that category.
http://biz.yahoo.com/cnbc/080911/26656722.html
last i heard was the majority of the rebate checks were put in peoples bank accounts, so that rules out his gas theory. and what does he not understand about those rate cuts not helping the situation?
Drum roll: Banana Republic Awards Ceremony
And the winner for this Sunday’s Banana Republic Award for ‘The Bailout That Must be Done to Save the Economy’ goes to Lehman Bros.
Some milestones in their history, bought a seat on the Tokyo Stock Exchange in 1988 and became in 20 years the largest trader in the overseas markets.
I thought the last of the bailout monies were allocated last Sunday, but I guess not.
“The hottest places in hell are reserved for those who in times of great moral crises maintain their neutrality.”
Dante Alighieri
“Looking back at the worst times, it always seems that they were times in which there were people who believed with absolute faith and absolute dogmatism in something. And they were so serious in this matter that they insisted that the rest of the world agree with them. And then they would do things that were directly inconsistent with their own beliefs in order to maintain that what they said was true.”
Richard Feynman
“…it always seems that they were times in which there were people who believed with absolute faith and absolute dogmatism in something.”
Real estate always goes up.
Democrats call for foreclosure freeze
Clowns call for bad things happen freeze
From each according to his ability to each according to his means - Democrat justification for “progressive” taxation, which just “coincidentally” sounds like a Marxian slogan
Google “Money as Debt” !
The Federal Reserve released Foreign holdings of US securities today including GSE debt. Since the takeover of F & F, Foreign holdings of GSE Debt have dropped, again. No mad rush to buy… the only reason for the takeover. F & F = $200B needed by the end of the month.
In dubious honor of Lehman & WaMu…
http://www.youtube.com/watch?v=G6gWHWw73W8
They’re giving Lamonica the business again over on CNN:
http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/09/11/the-negative-bubble/
*sniff*….I’m so proud….*sniff*
Its possible if you are long WFC and BAC.
you are also the owner of LEH and WM.
you cant make this shit up.
two banks are gonna split a thift and an IB.
book it down.
HARD.
Ok Voz, I covered half my Wachovia yesterday at 15 and the balance today at 13. Average price of ownership in WaMu is thus 1.35.
I was incredibly long the Yen over the euro and it is a position I have had for months (and wrote about on the blog); The Euro is down; to hard to fast. I covered at 1.39 and change and will let it out again at 1.43 or so. The euro is still the most overpriced currency in the world, so I could be very wrong - it may tank with no bounce, but since May I have been playing with OPM.
Now on the bank spec side:
Wachovia will be merged into Wells Fargone or Wachovia will fail. WaMu’s balance sheet looks remarkably good to me, the Feds action last weekend should have helped the company. It is why I do not mind being long WaMu in my gas acount.
I am drinking piss water from Mexico - Corona and wish I had some real ale or beer. I played snooker like the table had a roll and missed and had to buy beers. I grow old, I grow old, I shall wear my trousers rolled. Now I want a new Quad and am thinking of a Polaris 850 and they offered me as much for my Grizzly as I paid new - over 4,500 miles ago - last year. I like cushy rides.
prescient posts are missing.
You have to read between the lines:
(between the lines)
The deflationistas are worried because the Fed has given them a BOHICA and they don’t know how to adjust. Bias rears its ugly head.
The long share holders are petrified with fright: Do I sell now , the market always comes back? Or do I buy, cuz the best profits are made at the bottom?
A lot of nervous Nellies out there. Scared for friends family and acquaintances.
They will do nothing, they have predisposed bias to believe and they want to believe. The easiest sell in the world.
This is now the race for survivors in the banks…
I think they come fast and furious….why else is the XLF holding up.
nobody knows the value of pain?
The meteorologist at Weather Underground is warning that Hurricane Ike could do $20-30 billion worth of damage in Texas. It will be interesting to see how the insurance companies are looking on Monday if the worst happens. Not such great timing financially…
But it means work for construction crews in the short term. Assuming that people are silly enough to rebuild near the coast in Galveston. A possible 22 foot storm surge, and 9 feet of water a mile inland may discourage a few.
http://www.wunderground.com/blog/JeffMasters/show.html
Good luck to everyone in south Texas - stay safe.
Credit Crisis Strains Government’s Options
By JON HILSENRATH, DAVID ENRICH and DEBORAH SOLOMON
September 12, 2008
A year into a credit crisis that started with troubled mortgages to sketchy borrowers, the financial system is reeling once again, casting a pall over a widening array of financial institutions just days after history-making efforts by policy makers to contain the problem.
QUESTION OF THE DAY
• Vote: What’s your outlook for the economy?
With the share prices of Lehman Brothers Holdings Inc., Merrill Lynch & Co. and other financial firms on a roller coaster, the crisis could be entering a critical stage.
The Federal Reserve has already slashed interest rates to counteract a deepening credit freeze and instituted its broadest expansion of lending facilities since the Great Depression to keep financial markets functioning. Over the weekend, the nation’s two main mortgage finance firms — Fannie Mae and Freddie Mac — were placed under government control.
Federal officials and market players are struggling with the same issues: Why haven’t the steps taken so far calmed the system? What can policy makers do next? Should the U.S. government let a big institution fail rather than stage another potentially costly bailout?
Now that Lehman is finished. Is Merrill Lynch next?
You decide.
http://finance.yahoo.com/echarts?s=LEH#chart1:symbol=leh;range=2y;compare=mer;indicator=bollinger+sma(200)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
I would not like to be long.