Bits Bucket For September 16, 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.
September 16, 2008
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Home prices to fall on liquidity concerns: “All this creates a recipe for meaningfully lower U.S. house prices,” Whitney said.
The magnitude of houseprice declines in the next few years could likely exceed expectations of both the markets and the companies, she wrote in a note issued late Monday.
http://biz.yahoo.com/rb/080916/usbanks_research_oppenheimer.html?.v=2
Well, what are you waiting for? Buy a house before you’re priced out forever.
BWAHAHAHAHAHHAHAHHAHAHAHHAHAHHHHHHHHHHHHHHHHH!!!
yeah, well that’s other places.
Bobthebanker is on our local RE website proclaiming the market is ready for a turnaround in Syracuse.
I see by the published numbers the sheeple are with him so I’m sure eveybodieeeeeeeee…..”It’s different here.”
/sarcasm off
Same stupidity continues in Rochester, but I’m seeing signs of cracking home prices, yet it’s a slow process. Once these sellers stop hallucinating this winter, I think the prices will crash in the spring. You know, CarrieAnn, it is different around here - the rest of the country has become aware of crashing home prices, but this area seems to reject that fact.
Try living in Seattle….
Or upstate NH. Oblivious to the world up here, still 2005.
All the “better” areas still have some wiggle room, largely because the peak buyers brought in large downpayments from the sales of other houses.
Once this “equity” is gone, and they are underwater as well, the higher end will fall just the same as the lower end, IMHO.
We know a number of people who did a final “cash-out” refi in 2006/2007 and are sitting on that cash to help them wait out the storm. Everybody is thinking this “dip” in prices is just a temporary thing.
I happen to think the new
“affordable” prices will be more permanent… Time will tell whether the bulls or bears are wrong. For now, we have to listen to the bulls bottom-call every couple of months. Eventually, they will shut up.
The Dundee Observer ran a front page article this week proclaiming that Yates county has cracked. Median price down to $102K from $140K same period last year. It isn’t different here anymore.
My landlord finally said “nice to be a renter now”.
Wow! Capitulation in Yates County. Do you think that is the 2nd home market leading the cratering Blue Skye?
The headline in the Syr Post Standard paper version this morning was that the NY Met’s AAA farm team that we were trying to lure here had chosen to go to Buffalo instead. The bank problems of yesterday were relegated to a paragraph in the sidebar. Even in the newspapers business section the unwinding of the overnight markets is not mentioned.
And a local acquaintance of mine said her daughter didn’t like her new location out of state because the people there are so provincial.
Bwaaaaaahahahahahahahhahahah! (nod to the master)
Carrie,
I think the market for vacation homes is what has crashed. The volume is still up while the average price droped. Houses in town are a lot cheaper than the second homes on the lake.
I wonder what will happen to NYC metropolitan area real estate now that 3/5 of the Big Investment Banks are now on their knees. No more zillion dollar
sheepcustomers to fleece.Has the last US real estate bubble finally popped? What does Barbara Corcoran have to say?
One can only hope.
I’ve bees listening to my friends in new york say that their market is immune (so much money here, foreign buyers, etc.) and up until very recently it’s been hard to argue with them. So i’ve just said “it’s a cycle and noone is immune for the cycle - something will come along”.
so i would be very curious to get a ground report from NY realtors as to what’s happening there.
“…could likely exceed expectations of both the markets and the companies…”
My personal expectation is that without subprime lending kingpins supporting brokers that made loans to people who obviously could never hope to repay them, home prices will continue declining until they sell at levels in line with local incomes. All real estate is local.
The silver lining in this mess will be an eventual return of housing affordability. The great irony will be that affordability only will come with the demise of the institutions whose mission was supposedly to provide it.
This hack has a grand idea: create a government agency which will buy ANY house up for sale, putting a floor under the prices declines, thus solving the current problems. He must have been hitting the sauce when he wrote this…
That guy needs a kick in the nutsack.
Hey, zero potential for fraud there, right? Right guys?
:::crickets chirping:::
A number of “economists” are making such suggestions.
My question is: what will they do once they own the houses?
-Keep them empty and just pay for the upkeep?
-Rent them out at negative cash-flow (and supress rental rates even more as they add these surplus houses to the rental market)?
-Try to sell them for the same amount (or lower) than what the REOs were going for?
The funny thing is that none of these bull idiots undestands that REOs are the market because they are the only ones pricing homes anywhere near the market price. Why do they keep trying to differentiate between REOs and standard sales? The buyers are the same for both, and generally know what they are willing to pay for certain homes.
Personally, I’m going to discount the price we’re willing to pay if the seller is a party to these “keep homes off-the-market” fools. I want them to lose their a$$es.
This guy reminds me of crackheads I see in the ER… mentally masturbating about how great the high was….never thinking about the consequnces and how they were whoring themsevles out to get it.
Central banks panicking in Sydney, Tokyo, India, London. Interbank lending rates shooting through the roof.
It’s all contained.
The two great sayings of our time.
“It’s contained” and “Mission accomplished.”
“Heckuva job, Brownie!”
Don’t forget “decoupling.”
“I’m the decider”
See you at the bottom with:
1. 15%+ mortgage interest rates
2. houses selling at 3X family incomes
3. 10%+ unemployment
4. Dow 5000
5. Gold 5000
Best wishes!
Isn’t actual unemployment already over 10%?
After considering the birth-death model shenanigans, the gave-up-looking unemployed, the unscheduled early retirements, and new graduates unable to land a job….
Here in the Central Valley, about a month ago…
A bank had 1 clerk teller position, and received 500 responses for that lone job.
The current US unemployment rate only tracts the number of workers receiving unemployment insurance payments.
See: ‘The Shadow Government Statistics’ website
Best Wishes!
No, unemployment is not over 10%. Granted the current unemployment number may not be absolutely correct, but its probably pretty close.
The unemployment rate is counted by the monthly Current Population Survey, NOT by who is receiving unemployment insurance. This is covered by snopes:
http://www.snopes.com/science/stats/unemploy.asp
The definition of unemployment comes from the International Labor Organization. It’s the same definition that everyone in the OECD uses for unemployment. The US government does collect various unemployment statistics called U1 to U6. U3 is the reported unemployment number since U3 is the ILO definition of unemployment. U4, U5, & U6 include people who are employed (underemployed, but employed none the less).
Yeah, but not every member of the OECD has 1% of the adult population in prison (and not considered unemployed).
Just one.
During the re-election campaign of ‘84, Reagan promised to lower unemployment if elected. After he was elected he had the formula changed to exclude the military and federal employees. Amazingly enough, the next day the unemployment rate fell 1%.
Thats shows what can happen when you have the right fella in the job with that “can-do” attitude!
I do not believe any government statistics on their face, all require explanations & qualifications to be understood.
Last month, 85,000 net jobs lost. 55,000 new jobs in health care. Means at least 140,000 jobs lost but still new jobs in industries that are needs, as opposed to wants. Health care, food, etc, are needs.
Healthcare was a net loss! Truly the greatest tragedy of this debacle.
Fact not your BS. There are now emergency fewer medical workers on the entire East coast than there were in just NYC on Sept 11, 2001.
27,000 gains in August for health care, not 55,000. I found the 55,000 figure in some other link. Here is BLS web site quote:
“Health care employment continued to grow in August (27,000), with more than
half of the gain in hospitals. Over the past 12 months, health care has added
367,000 jobs” http://www.bls.gov/news.release/empsit.nr0.htm
A different site said 29,000.
“The only sectors that continue to show healthy job gains are health care, which added another 26,900 jobs, and state and local governments, which added 18,000 jobs. Job growth in both of these sectors is likely to fade as state and local budget shortfalls force cutbacks.”
I saw a link where there were 55,000 jobs gained in health care. The one above is sourced in http://www.fourwinds10.com/siterun_data/business/economy/news.php?q=1220647823
BUT NOTE, MR. GLOOM AND DOOM HOZ, THAT HEALTH CARE ADDED OVER 360,000 JOBS THE LAST 12 MONTHS. FOREVER GLOOMY HOZ - HAHAHAHAHAHA
Also…I call BS on HOZ. You lied that Health care was a net loss. My link http://www.bls.gov/news.release/empsit.nr0.htm shows health care was a net gain!
You must be a Democrat because you spin black to white.
There is just too much week left for this crisis to expand (or, descend) ; maybe they’ll cancel Thursday and Friday. That way they’d have to get it all out of their system on Wednesday, which would be the new Black Friday, so, I guess that wouldnt help, much.
“Interbank lending rates shooting through the roof.”
It must be time for another Fed rate cut.
ZIRP, ZIRP, ZIRP!!!
Then what?
Negative interest rates, not just negative real rates but negative nominal ones. A tax on any bank or savings deposit in order to encourage people to spend.
You just go and buy non-perishables and store them.
There’s a reason zero is the lower bound.
They won’t go there (negative nominal rates), as that would be blatant theft. But they will go to negative real rates if deemed necessary.
Don’t we already have negative real rates set by the Fed? Transparency and “mark to market” will be the rising tide that lifts all boats.
“They won’t go there (negative nominal rates), as that would be blatant theft. But they will go to negative real rates if deemed necessary.”
WILL go? They’ve been there for quite some time now.
“They won’t go there (negative nominal rates) as that would be blatant theft”
It depends how desperate they get. You could also argue that taxation is blatant theft, a tax on savings is not much different to inheritance tax or tax on an unoccupied property.
“You just go and buy non-perishables and store them.”
Non-perishables like canned tuna or batteries? I don’t think so. If you mean gold, then yes. But then buying gold could always become illegal.
If they go into negative nominal rates, it’s an automatic run on all banks.
Bingo, Al!
To lucy, gold could become illegal. Then, you’ll buy silver. Make that illegal and you’ll buy something else.
You gonna outlaw all “stuff”? Gimme a break.
In many countries that experienced ravaging inflation, people would buy cars and park them.
I fear our government enough that ALL of my Gold is safely overseas, safe from over seize.
alad, are you sure that your overseas gold is really that safe? I think the decoupling theory has been put to bed, so we’re expecting other economies to hit the skids. If a foreign govt is trying to shore itself up, why not seize foreigners’ assets?
And Lucy, why not buy batteries, tuna, TP, clothing? Or other useful currencies like booze and cigarettes.
“A tax on any bank or savings deposit in order to encourage people to spend.”
It’s called the “Fair Tax”. They tax you again at 27% on the money you have already paid income tax on in your savings account for the privilege of spending it.
Al
It isn’t just our government I fear, it’s the 200 million handguns in the hands of desperate citizens as well.
Or other useful currencies like booze
I make my own. I guess that makes me a counterfieter.
Aladinsane wrote I fear our government enough that ALL of my Gold is safely overseas, safe from over seize
Broken record. I heard this over and over and over again.
My turn to get back atcha Alad. And I’M LOVING IT!
B.i.M,
I doubt very much that your grandfather’s wealth was taken away from him by first the nazis and then the soviets, as mine was.
Twice bitten, once shy…
I’m sorry about that situation. But you did not address the subject.
I’ll address it for you: It’s awful for me to repeat posts, but it is AWESOME for YOU to repeat posts.
LIBOOR doubles overnight
from Bloomberg today:
Sept. 16 (Bloomberg) — The cost of borrowing in dollars overnight more than doubled to 6.44 percent, its biggest jump, according to the British Bankers’ Association.
The London interbank offered rate, or Libor, increased 333 basis points from yesterday, the BBA said today.
******
On a side note, hubby who’s been letting me feed him the highlights up until now, sat down and watched CNBC’s special episode last night. As each additional AIG downgrade was announced and digested by the guests he remarked, “man you can see the fear in their eyes. You can almost taste it, I answered and he nodded in agreement.
The usually unflappable David Faber went after Larry Kudlow last night w/exasperation for ignorance. I never saw him have an emotional reaction before.
Won’t a doubling of Libor be a hammer blow to a lot of adjustable rate mortgages? Is that a byebye to Canadian real estate prices???
Looks like my comment here got eaten, so I’ll try again.
Most Canadian mortgages have a 5 year term, so even if they’re fixed, they are still adjustable in the medium time horizon. This will be a MAJOR blow to Canadian RE prices.
It’s that way in New Zealand also. Maximum fixed rate mortgage is five years.
Larry Kudlow and the rest of these borrow and spend supply liars and their apologists and benefactors better have a secure hiding place.
I just hit the mute button when Crudelow starts talking…
Home prices to fall on liquidity concerns: analyst
Tue Sep 16, 2008
6:56am EDT
(Reuters) - The collapse of Lehman Brothers Holdings Inc and takeover of Merrill Lynch & Co Inc will cause liquidity in the credit market to shrink, resulting in lower home prices, prominent U.S. banking analyst Meredith Whitney said.
The Oppenheimer & Co analyst also expects fewer mortgages to be available for prospective homeowners, as she sees no hope for the return of the mortgage securitization business.
“All this creates a recipe for meaningfully lower U.S. house prices,” Whitney said.
Have you noticed since lehman Brothers is out. The price of oil is going down. And rates are now lower. I see conspiracy!
I see failed speculation.
Yep….
Any chance people are cashing in their commodities positions to make margin calls elsewhere?
ya there goes the speculators bubble! Oil is really only worth 1/20 oz. of gold. per barrel.
Where’s that hack Paul “oil is not in a speculative bubble” Krugman? Does ANYONE ever question these guys statements in hindsight? I am sooo sick of these supposed “experts” getting away with their garbage passed along as insight.
I don’t recall Paul Krugman stating that oil is not a speculative bubble. Maybe you can provide us with that link.
I don’t recall Paul Krugman saying that either, but a link sure would be great.
Ask and you shall receive!
http://www.nytimes.com/2008/05/12/opinion/12krugman.html?_r=1&oref=slogin
Better still…
I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.
The New York Times
January 29, 2002
“The Great Divide”
By Paul Krugman
http://www.nytimes.com/2002/01/29/opinion/29KRUG.html
Yup, and the Hedge Fundies speculating on the commodities and oil markets, trying to recoup their RE losses, was discussed here endlessly by Ben’s stable of real experts, but no one seemed to pay much mind.
Same old same old, second verse, same as the first.
Lehman was never a giant commodity trader like Goldman or Morgan.
These two together has 70% of the the commodity market.
Which partially explains why Lehman is bankrupt and the other two are not. Tech bubble, real estate bubble and then commodity bubble, even us amatuers saw that.
I see deflation
No job, losses in real estate and stock market, means no purchases and no driving. Consumption is falling in the US.
The SUV sitting in the driveway is surprisingly efficient. I predict strong small car sales for the next several years. Not to mention hybrids.
Meanwhile all the small beater vehicles will be seeing extended use.
SUV’s: bad gas mileage for a car, great gas mileage for a house!
da bear
I personally see the distinction between owning mortgages and owning a security backed by a pool of similar mortgages as superficial. Can anyone please straighten me out if I am wrong on this?
11 hours ago
Will Wachovia Go Out Like Lehman?
Posted By:Tom Brennan
…
Some analysts, though, namely Oppenheimer & Co.’s Meredith Whitney, say that Wachovia [WB 10.71 -3.56 (-24.95%) ] is a bit too optimistic about its situation, particularly its California mortgage exposure. They say the bank needs to mark down its estimates for that portfolio.
Steel knows there can be a lot of assumptions about Wachovia’s holdings in this area, but he said the company merely tried to provide accurate data as to what those holdings were – right down the ZIP code. Conclusions would be left up to analysts like Whitney.
What these analysts are missing, though, Steel said, is that Wachovia doesn’t own mortgage-backed securities – they own mortgages. And this gives the bank plenty of leeway in terms of working with homeowners to find solutions to problems preventing them from making their payments.
“We have lots of flexibility to figure out how to do this,” Steel said. “If we just owned securities we would have two choices: hold or sell.”
According to a Reuters article last night, Wachovia is the largest holder of Option-ARM mortgages at $ 104 billion.
WaMu is the second largest holder at a little over $52 billion. It is thought that the Option-ARM is what is doing in WaMu.
Methinks Wachovia is next.
That should spread cheer throughout the South.
Here comes your date with destiny, and when destiny calls, your b*lls are gonna get nailed to the walls.
Hoz said yesterday that his models predicted that he should go long on WaMu (is that right Hoz?), so why is Wachovia considered a bigger risk than WaMu?
I think that the risk comes not from the amount of mortgage backed securities, as much as the diversity of the portfolio. Goldman diversified early enough to save itself, but Lehman waited too long (and couldn’t offload the toxic waste to a greater fool).
Wachovia does not have adequate reserves and had lower lending standards than WaMu. WaMu took writedowns and Wachovia did not take writedowns.
Mr. Steel was excellent at GS, but he took over a bad situation and his investment of $16MM in the bank does not look to good at this time. (Fortunately for Mr. Steel, it was only one years bonus.)
wamu had the 1% option arm. at least wachovia charged 4%. So when the rates go to 10% wachovia has more room to play.
It seriously worries me that Comrade Blair will take over Wamu and Wachovia and merely cut the principle on all those option ARMS to “keep people in their homes” like she is doing with Indy.
Ability to modify mortgages in a securitization could be limited by the trust indenture and pooling and servicing agreement. Whereas loans held on the books of a bank can be modified in many ways. As one example, WB could extend the time for an option ARM to reset, turn off the neg-am feature, and give the borrower a 2% coupon for the next five years. WB could then hold a mortgage that, in actuality, has a very impaired value at 100 cents on the dollar instead of recognizing the loss today. They hope the borrower will continue to pay and that RE recovers in 5 years. They are merely trying to spread losses out over time via accounting shenanigans.
“They hope the borrower will continue to pay and that RE recovers in 5 years.”
So do lots of gamblers. Is there any sign whatever this is a likely development?
No, but they don’t have to recognize the loss today if the borrower continues to pay a nominal payment. They can call the loan “current” and don’t have to impair the value today. Whereas, if they hold a mortgage security and it goes down in price, they have to recognize the mark to market today. Economics between securities and loans may be the same ultimately, but by holding loans WB has accounting games at its disposal to change the timing of loss recognition. They can take losses over time as they earn income from other businesses. WB’s future income is reduced as a result, maybe to zero, but they may survive. If they had to take the mark to market on their entire portfolio today they would be bankrupt.
“Economics between securities and loans may be the same ultimately, but by holding loans WB has accounting games at its disposal to change the timing of loss recognition.”
It is playing these accounting games which in large measure accounts for the problems Wall Street is currently facing.
Wall Street’s problems result from being over levered to assets that have declined massively in value. The accounting games are an offshoot used to project an image of solvency.
Agreed that leverage has amplified problems on the downside, but accounting gimmicks are spawning the mistrust which turns the Fed’s financial engineering measures into exercises in futility. Until trust is restored in the banking system, there can be no recovery.
So when the fool sees the same house across the street sells for 100k less then he paid and then his neighbor renting the same house next door tells him he pays $1500 per month less he will stay in the house for 5 years?
Not when you can just walk away!
Very true and WB will have to deal with the loss at that time, but maybe the FB doesn’t figure that out for 2 years. WB has deferred the loss until then. That is the name of the game today, spread out losses and attempt to survive. Very similar to the Japanese banking problem from 1990 to today. Keep the borrower paying, at any interest rate, even 0%, as you don’t want to take back collateral today and recognize losses of 50-70 cents on the dollar.
But they’ve been trying to hide the losses since 2003, IMO.
The mortgage market slowed to a grinding halt in Q3 of 2003, IIRC, as monthly payments reached the ceiling of what J6 could afford.
After that, they dropped rates again and started really pumping out the neg-ams with teaser rates and no-doc loans. All so the sheeple would refi again into more “affordable” loans (and take out more cash to boot).
At some point, these assets will have to be marked to their true value. The economy will NOT be able to recover until that is done.
Yes, that will mean bankruptcies and many bank failures. Pension plans will get hit and we’ll likely see municipal defaults as well.
It needs to be done. Time to take our medicine.
“”They are merely trying to spread losses out over time via accounting shenanigans.”"
Practically the whole economy is accounting shenanigans
Who’d a thunk it?
“Reuters
Home prices to fall on liquidity concerns: analyst
Tuesday September 16, 5:39 am ET
(Reuters) - The collapse of Lehman Brothers Holdings Inc (Pacific:LEH - News) and takeover of Merrill Lynch & Co Inc (NYSE:MER - News) will cause liquidity in the credit market to shrink, resulting in lower home prices, prominent U.S. banking analyst Meredith Whitney said.
ADVERTISEMENT
The Oppenheimer & Co analyst also expects fewer mortgages to be available for prospective homeowners, as she sees no hope for the return of the mortgage securitization business.
“All this creates a recipe for meaningfully lower U.S. house prices,” Whitney said.
The magnitude of houseprice declines in the next few years could likely exceed expectations of both the markets and the companies, she wrote in a note issued late Monday…”
a clear thinking analyst being quoted … nahhh
AIG needs a bridge loan to nowhere.
Brother, can you spare 750 Billion Dimes?
Are they real silver?
“”AIG is blowing all the policyholders protections. Right now, illegally and with the regulators watching and nodding in agreement as it happens, lot’s of bank deposits, life insurance savings and any unencumbered cash held in the system …. i.e. real life savings and earnings …. has suddenly been made available by the weekend rule changes by the Fed and US treasury. They are now being swept into accounts that hold the other side of the derivative trades.
The firewalls against fraud have been torn in expedience “to save the system from itself”. The fraud and incompetence is running rife and has just been taken up another notch. There will be nothing left but the empty husk when the locusts and other assorted parasites have finished.”"
Best Wishes!
Debt traders say AIG is finished.
AIG’s five-year credit default swaps rose to 52 percent upfront from 33 percent upfront at Monday’s close, plus 500 basis points annually, according to data from Phoenix Partners Group. That means it now costs $5.2 million in upfront payments, plus $500,000 a year to insure $10 million of AIG debt. For details see [ID:nLG44711].
This level indicates the credit derivative market is pricing in a 90-to-95 percent chance of AIG defaulting on its debt, said Tim Backshall, chief strategist at Credit Derivatives Research in Walnut Creek in California.
What’s good for AIG is good for the globalized economy.
It is in America’s interest to save AIG
By Maurice R. ‘Hank’ Greenberg
Published: September 16 2008 17:51 | Last updated: September 16 2008 22:19
AIG needs a bridge loan, not a bail-out. The company faces a liquidity crisis, not a solvency problem. Its core insurance operations, both in the US and abroad, are financially sound, and it can raise more than $20bn through orderly asset sales. For these reasons, a bridge loan – from the federal government if sufficient private capital is not forthcoming – will not mean a bail-out. A temporary bridge loan will prevent further rating agency downgrades, which would require AIG to post billions of dollars in additional collateral and which would likely prove fatal.
It is true that I spent most of my adult life building AIG, but that is not why I think federal assistance, should it be necessary, is appropriate. A federal bridge loan is appropriate because it is in our national interest to save AIG. AIG operates in approximately 130 countries and has more than 100,000 employees. It provides credit protection to tens of thousands of financial institutions and other companies around the world. Its failure would pose systemic risk to the US and international financial systems.
I need a bridge loan too…. only 1 billion for about 50 more years….. then you will get paid back….no, really….. What? No you say? How dare you imply a nefarious misrepresentation of my “temporary” needs.
Good god…how stupid do these people think we are.
On the same page with an article about the failing bank issues, a local builder (in Norfolk, Virginia) is planning to forward with a new condo project. Not only that, it uses that great “Workforce housing” line. The smallest units will be $150K, in a city where the median household income is probably less than $50K. There is over 1000 apartments coming online now (many under construction). Also, the city is shrinking. The jobs in the region aren’t that good, and the murder type crimes seem to be on the rise.
http://hamptonroads.com/2008/09/wards-corner-condo-project-take-place-apartments
“Wards Corner condo project to take the place of apartments”
In our small town that is otherwise at the bottom of the crime scales, I’ve received my third “sex offender in the neighborhood” notification since summer. Their victims: 5, 9 and 11 year olds.
I’m starting to have less and less of a problem w/vigilantism as I’m expecting the budgets for “the proper authorities” to be slashed to the bone.
There are too many of them, if you include financial sex offenders. This country has been screwing the younger generations for 25 years.
Hilarious….. sad and true, but f’ing hilarious
I’m starting to have less and less of a problem w/vigilantism as I’m expecting the budgets for “the proper authorities” to be slashed to the bone.
You can expect a swift response to vigilantism. The govt (like the mafia) don’t like competition.
I know many people who would not stand in the way of anyone (vigilantes) taking out these bankers. In fact, I am surprised we haven’t seen big CEO, banking, media, and political assassinations by the average man who has lost everything due to these thieves.
After what these guys have done to our country, they should be living in fear of the average man!
Maybe someday. Not yet. The average man relies on govt to perform that role still. From what I see, it won’t be anytime soon before the average man realizes that the party they support doesn’t return the favor.
These would be the same people that thought housing goes up forever, right?
Yeah, anyday soon, I’ll just go and hold my breath over there in the corner.
I did not mean to imply that I thought it would start any day now, only that it *should* be going on if people were smart enough to put 2 and 2 together.
Read Foucault’s “On Popular Justice” in Power/Knowledge, Pantheon, 1980. Street justice, including actual people’s courts (not the TV show), has taken root in the past. Foucault specifically references the tribunal at Lens (France) where the locals held court to determine management’s role in a deadly mining disaster.
I’d personally love to see Alan Greenspan, Phil Gramm, and Angelo Mozilo have to defend themselves in front of the American people and not the media toadies.
Not going to happen, as long as Americans think the greatest threat to their well-being comes from a handful of guys who need a shave on the other side of the world.
I was ruminating on this topic the other day. For instance, what kind of idiot would commit suicide over being wiped out and not have the good grace to take out the asshat that was running the scam, assuming there was a scam? I would think these bankers would be leaving the country right about now because someone is going to figure out that these mofo’s have torpedoed the country.
They already have their abode set up..Re: Bush family bought 80k acres in Paraguay a few years back. That was was of Jim Rogers 5 warning signs of the end of a economy. The leaders start setting up escape plans in friendly non-extradition countries. Of course his neighbor is Sun yung Moon so not sure what that says….
Has Central bank “market support” come to mean executing a Greenspan put?
Japan and Australia Join Central Bank Efforts to Calm Markets
By Shamim Adam and Mayumi Otsuma
Sept. 16 (Bloomberg) — Japan and Australia pumped cash into their financial systems as Asian central banks attempted to calm markets after Lehman Brothers Holdings Inc. filed for bankruptcy.
The Bank of Japan added 2.5 trillion yen ($24 billion) into the financial system, its biggest money-market operation since March, and the Reserve Bank of Australia injected A$1.85 billion ($1.5 billion), for a two-day total of nearly A$4 billion. South Korea said it’s ready to provide liquidity if needed.
…
“Central banks have to show they are ready to take action to ensure stability,” said Thomas Lam, an economist at United Overseas Bank Ltd. in Singapore. “Precautionary steps are high on their list to prevent any significant impact and support their markets.”
The Federal Reserve yesterday added $70 billion in reserves to the banking system, the most since the September 2001 terrorist attacks, and may cut its benchmark lending rate today. China lowered its key rate for the first time in six years late yesterday.
Rate futures show high chance Fed will cut rates
Mon Sep 15, 2008 3:52pm EDT
CHICAGO (Reuters) - U.S. short-term interest rate futures rose sharply on Monday to reflect higher prospects for a rate cut at or before Tuesday’s Federal Reserve policy meeting.
Home prices to fall on liquidity concerns: analyst
Tuesday September 16, 5:39 am ET
(Reuters) - The collapse of Lehman Brothers Holdings Inc (Pacific:LEH - News) and takeover of Merrill Lynch & Co Inc (NYSE:MER - News) will cause liquidity in the credit market to shrink, resulting in lower home prices, prominent U.S. banking analyst Meredith Whitney said.
The Oppenheimer & Co analyst also expects fewer mortgages to be available for prospective homeowners, as she sees no hope for the return of the mortgage securitization business.
“All this creates a recipe for meaningfully lower U.S. house prices,” Whitney said.
The magnitude of houseprice declines in the next few years could likely exceed expectations of both the markets and the companies, she wrote in a note issued late Monday.
“The fact that all banks under our coverage have unrealistic HPA (housing price appreciation) assumptions will in our opinion lead to a material and protracted writedown and capital pressure scenario for banks well into 2009,” Whitney said.
John McCain just said that he knows how to fix the economy. I’m so relieved.
John Hoover McBush also said he knows how to catch bin Laden… but we have to elect him or he won’t disclose this secret. This is quite disturbing and borders on treason.
Biden said on CNBC said this am they want judges to force banks let FB’s to keep their homes! No thanks. Not for me. eff the FB.
“Bailouts” for FB’ers that we all know will never happen or holding a a person responsible for an outlandish, borderline treasonous statement……. You gotta love the cluelessness of apologists.
Only if they forgive everyone’s mortgage!
McCain-Palin have nowhere to go now but down, and I will tell you exactly how this will happen. They can run away from President Bush, but they can’t run away from the Republican Party. The Republicans will be regarded from now on as “the party that wrecked America.” Over the weeks ahead, as carnage in the economy and the financial markets ramps up, it will become increasingly clear. It is important that this meme be spread through the internet. I urge all commentators to adopt and spread the idea that the Republicans are “the party that wrecked America.” It will work because it is the truth. Use it freely. Just spread the word. Get the meme going.
Ex-Republican
Nice. I like Kunsler.
No thanks.
Ex-Democrat.
With empty pockets and still don’t have sense enough to vote with your wallet.
I dont think you guys get American politics……. here is your education.
Dem and GOP TALK different but both ACT the same.
Now bend over and take it like a man from good old Uncle Sam. Ouch that hurts…more lube dammit!
Meanwhile, Obama blames bank failures on McCain.
What a circus.
Well has he not been in Congress for 26 years? Show me one meaningful bill that McCain has championed in his years in Congress that help the economy.
He has missed about the last ten votes on energy plans.
I’m still looking for anything meaningful in Biden’s 30+ years…
Imagine if Obama had selected Ron Paul to be VP instead of Biden?
RP is the only politician in D.C. that knows the score and is willing to talk about it.
Ron Paul is a Republican.
“RP is the only politician in D.C. that knows the score and is willing to talk about it.”
Amen, but obviously most people like what we have. Tweedle dee and Tweedle dumb.
Ron Paul is a Republican.
Ron Paul is a persona non grata within the GOP, that little R next to his name notwithstanding.
Biden: The Violence Against Women Act. Look it up
Amen. He’s too busy plagiarizing and telling paralyzed people to get up and walk.
Yeah, but Biden must have just slipped up again and thought that he himself was the Messiah, and not the other guy he’s running with. Now if *Obama* had asked Chuck Graham to stand up…
I do agree with you. What I find ironic is that both of these men are in Congress, and they point away from Congress. Obama says the policies of GWB caused this mess, and that McCain would continue those policies as President.
It’s the Congress, who run for office on the contributions of the bankers. If either one of these men said that Congress needs a house cleaning, they would have my support.
It’s a circus.
Without the repeal of the Glass-Steagal act none of this could have happened. And who can we thank for this? Ex Senator Gramm.
You mean McCain’s main Economic Adviser? Maybe McCain will appoint him to the commission to find out what happen to the economy:-D
Why do you guys use the name “Obama” ??
I have no clue why I asked that question…Too much beer last night watching the game I suppose…
McCain voted against minimum wage increases 19 x.
Also is hysterical against airline/airline employees, while his son is pilot for major airline.
And HE is the one running for President, not the vp candidates.
Then Desertdweller, I hope you run for Congress and win. Then you can vote each of us $150 per hour wages. Tell me why that is not nonsense. Please?
To be fair, McCain was a member of the Keating 5….
The only thing you can blame on McCain is skanky beer.
The question to be asked Senator McCain is how much of his families income came from selling beer to minors?
Where are his morals?
How did he blame bank failures on McCain? To paraphrase, he said that McCain is out of touch and will continue the same bad economic policies that led to the bank failures.
If you’re going to quote someone, at least be honest about what was actually said.
LOL! What act was repealed under Clinton that helped this all occur?
You Democrat and Republican fanboys are so blinded by the cult of personality it’s vomit inducing. Issues, and not slander, haven’t been important for campaigning and votes since 1796.
I’m not a Democrat or Republican fanboy. Disagreement is healthy. I just like to see people use truth when they argue.
Maybe issues don’t matter, but some of us pay attention and make the “best” choice, since there is no and never will be a “perfect” choice.
People who advocate not voting but flap your gums at those of us who do are a national embarrassment. My father and grandfather fought for that right, and I intend to exercise it.
I’m going to vote. I’m just not a happy party bot is all. Independent voters are going to be the most important bloc in this election. Which one of the parties are going to screw up and look like the bigger jerks going into the election is what will decide it.
Independents: We decide. We still lose.
Santacruzsux, I suspect that the majority of people on this site are independents — even if they lean one way or another.
Yes, Glass-Steagall was repealed in 1999 under Clinton, but it was a republican-led led effort. Democrats have to share the blame, but the fact is it was a massive mistake to repeal it and Obama is our best chance at fixing that mistake.
http://en.wikipedia.org/wiki/Glass-Steagall_Act :
The Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) in the United States and included banking reforms, some of which were designed to control speculation.[citation needed] Some provisions such as Regulation Q that allowed the Federal Reserve to regulate interest rates in savings accounts were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Other provisions which prohibit a bank holding company from owning other financial companies were repealed in 1999 by the Gramm-Leach-Bliley Act.[1]
*************************************************************
With Gramm, the author of the Glass- Steagall repeal bill, as one of McCain’s main advisors, we can be absolutely assured that no major reforms will take place if he is elected and the rampant fraud and corruption will continue.
Not a happy party bot either, but remember the senate and congress were dominated by repubicans with Newt, since 94, a yr and half only of clinton/dems, then it was all repub.
Nafta is a crime against the US citizen. Good for one or two corps only. And the congressmen who love going on “fact finding’ junkets, ie whore houses in foreign countries.
So, the bare republican majority couldn’t have been stopped by a veto with Clinton?
Democrats firmly against and bailouts?
They didn’t have enough guys in the senate to hold a fillabuster?
Aint nobody clean in all this. How many guys voted against the war in Iraq?
Now, its the choice between a big giant douche or a stinking pile of shit? I’m going sailing on election day and not voting for either of these bank owned lackeys.
Democrats in congress were all lined up behind nafta as well.
Now, its the choice between a big giant douche or a stinking pile of shit?
You killed Kenny!
“How many guys voted against the war in Iraq?”
Let’s be accurate. Which candidate voted for the Iraq debacle and which didn’t.
“blaime” was my interpretation of the sentiment, not a quotation. What could be dishonest in having an opinion?
oops…”blame”
OK, but the choice of words in your post implies that he thinks John McCain is personally responsible for the bank failures. That is not an accurate representation of Obama’s view of cause and effect, nor anyone else’s.
Here’s what he said, for the record:
“I certainly don’t fault Senator John McCain for these problems, but I do fault the economic philosophy he subscribes to. It’s the same philosophy we’ve had for the last eight years — one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else.”
But Barack authored several bills during his stint in Congress.
Oh sorry, meant to say memoirs during his stint.
Kinda like Sarah Palin “fighting” pork barrel spending and getting all kinds of foreign policy experience by staring out her window at Russia?
At least Obama had the smarts to go to Harvard Law and his positions are transparent. Biden runs his mouth, but his gaffe’s have become passe, and he is sincere, well-known in Washington, and quite intelligent.
Palin’s journalism degree from the University of Idaho won’t help much. McSame graduated at the bottom of his class and wisely chose to forego further education, banking on his “experience” as a POW to shape foreign policy.
She is the governor of my state, however brief that has been. After hearing her speak on many many occasions, I can say with confidence that her mouth will be her own worst enemy during this campaign. Her popularity will last as long as they keep her shielded from the press.
Wouldn’t you think your VP choice would be fielded from a group of top people? This woman is shockingly unprepared to become president in the event of the worst case. McCain, a man beaten to smithereenies and chose honor instead of freedom 30 some years ago but all that has been overshadowed by this choice of Palin. This choice is a gimmick and a betrayal of his reputation and we the people.
Mc Cain, 894 out of 899 in his class.
sounds just like bush.
Mc Cain, jock pilot, crashed 5 x before finally being
caught.
A little humor..I believe that the Navy said ‘keep him, he is breaking to many of our planes’.
That is why he became pow.
Darn, if I had realized all those years ago , it was Mccain in there, I would have taken those POW stickers off my car ;/
I’m no Republican, but lemme tell you, there are many more qualified Republican women VP choices than Palin. For starters, why not Elizabeth Dole? Heck, the lady even ran for President a few years ago. If she’s not your speed, there’s Christine Todd Whitman, Olympia Snowe, Susan Collins, Kay Bailey Hutchinson, and, what the heck, why not Condolezza Rice?
I bet on Rice. Someone told me she said no.
Yeah I’d have wagered Rice. Someone in the rnc/gop has their head up their ass.
Condi is an evang, but not over-the-top enough, like Palin is.
“John McCain just said that he knows how to fix the economy.”
Mrs Vice president, Mr Secretary, the missiles are flying!
If the answer is to do nothing; I’d probably agree, at least from the government perspective.
Yeah, Glass seagull… look, at some point if people don’t trust the market they put their money elsewhere.
So, the market will get back into the trust buisness all on its own.
Or you can try to out scheme the scammers.
Good luck.
Both presidential candidates show little evidence they have a clue about economics, yet both are falling all over themselves to convince voters that they have the key to solve the challenges of the financial crisis at hand.
Meredith called for a 45% drop peak to trough drop during a CNBC interview yesterday. She’s been spot on for all of her calls since last year.
http://biz.yahoo.com/rb/080916/usbanks_research_oppenheimer.html
That’s just the beginning… wait til alt-a kicks in, but wait- the home owner will get a re-do… Uncle Sam’s re-fi circus is coming to a town near you! Complete with lower interest rates, low to no down payments, and forever rising values!!!
THANKS UNCLE SAM!!!
(Please make your check out to: In Debt 4 Ever, PO Box RE’s Toast, Ain’t coming back Lane, 9021bankrupt, USA)
Someone stop me.
THE FUTURE
Wall Street in crisis
Experts see plenty of painful changes in banking world
By Louise Story
and Edmund L. Andrews
NEW YORK TIMES NEWS SERVICE
September 16, 2008
Marriage to Merrill facing numerous financial obstacles
Fed taking steps to shore up sinking insurance concern
The old Wall Street is giving way to a new one.
As the tectonic shifts within the American financial industry shook the world’s markets yesterday, many experts predicted that events of the past 72 hours heralded a new period of painful change for Wall Street.
The predictions were sobering. Investment banks will be smaller. Their profits will be leaner. Jobs in finance will be scarcer. And the outsize role of Wall Street in the nation’s economy will shrink.
“And the outsize role of Wall Street in the nation’s economy will shrink.”
Thank Jeebus. Today, Wall Street. Tomorrow, the FED!
I couldn’t agree more.
“And the outsize role of Wall Street in the nation’s economy will shrink.”
Wall Street replaces Viagra with the pink slip virus.
“And the outsize role of Wall Street in the nation’s economy will shrink.”
This is a good thing.
“The old Wall Street is giving way to a new one.”
I think they should move Wall Street to Vegas, they have lots of shiny buildings and lots of gambling tables there, somehow I think it would be a good fit. And Vegas needs the biz.
Elvis in the pit, singing “You ain’t nuthun but a hound dog…howlin all the time…”
Pavlovegas is really big on prestidigitation, and Wall Street has plenty of experience with sleight of hand…
From Bloomberg:
Overnight Interest Rates double
I have a pile of cash idling at a meager 2.7% yield. Can we please get on with this so I get a decent rate?
Perhaps there are money-market-like funds that pay based on the LIBOR?
We are entering a “possession is 9/10’s of the law” economy, meaning trust nobody but yourself with your wealth.
Does this really seem like the right time to trust a domino with your money?
I just got a 7 month CD at 3.73 % . I’m figuring there’s not going to be a market upshoot in 7 months so its a decent play. In 7 months I will re-evaluate.
Of course 3.73% does not catch up to the 5% CPI numbers, but I’d rather lose in buying-power terms through the inflation tax than lose in absolute terms by parking my cash in a mutual fund or money market.
Hey, Washington Mutual will give you 5% for a 12 month!
Or maybe they’ll go bankrupt this week?
Not bankrupt, being taken over by FDIC and another bank. Probably not this week but in one month’s time, I think. I just opened the 5% CD last week at < 100K so that would be a good development for me.
Oh please just go down already.
Banking on the bank your dough is in going belly-up first seems like a fool’s errand…
The FDIC can take up to 7 years to return your money. Are you sure you want to wait that long?
> Banking on the bank your dough is in going belly-up first seems like a fool’s errand…
Hey I am just using your FIFO or FOFI theory and putting it in motion.
You only just opened your account @ WaMu and can get out with little penalty, or you can watch your money go away and not come back…
Decisions, decisions
The FDIC can take up to 7 years to return your money.
If they kept depositors waiting so much as 7 days that would provoke a run on all remaining banks that would make the Great Depression look tame.
Put away the tinfoil hat.
when IndyMac went under they gave the depositors waiting in line a cashiers check that wouldn’t be good for at least 30 days.
so, yeah, it’s over.
da bear
Fear is good. Fear works.
I can get you 13% on a commercial deal.
same risk, except my client has a good bond rating.
Are you selling something? Your post and link have a little fishy smell to them.
13%, same risk?
If it walks like a duck…
Hey gang, I’ll guarantee 100% on a film deal.
Zero risk, cause you get to come out and help film and you’ll get a good vacation out of the deal if nothing else.
Slot canyons, raging rivers, all that, but stay away from Phil, his deals are in real estate. Only a fool would come to this blog to sell real estate. ROFLMAO
Think he’s Armando?
same risk, except my client has a good bond rating.
You mean like Lehman Bros? A+ right up to the bankruptcy filing.
“Demand for short-term cash is surging even as central banks seek to revive lending through emergency cash injections.”
Yep.
LOL!!
Have to agree with you, combo (but I stay out of the fray on these blogs WRT gold).
Tuesday, September 16, 2008
Is AIG ‘too big to fail’?
Treasury Secretary Henry Paulson is saying enough is enough with government bailouts. So, what will happen with troubled insurance company AIG? Scott Jagow takes the question to the head of a British think tank.
Does anyone know what AIG policy holders can expect in the case of a bankruptcy? Specifically those with life insurance.
Well, given that the “regulators” have opened up the company to borrow from its subsidiaries, the answer is nada.
Why even bother having regulators if you allow such blatant theft?
Which regulator was that? State of NY?
I would be looking to replace any annuity or other insurance product in a hurry. There are still some mutuals out there that may have legitimately good bond ratings.
Yeah, everyone including the governor seems to be OK-ing the blatant transfer of funds from the subsidiaries.
Those policy-holders better get “real” on the double or else you’re gonna be holding one empty bag.
AIG is the largest E/O, errors and ommisions insurer..
holy cow.
AIG owns many insurers. If the insurer is “licensed” in your state then the policy is protected by a state “guarantee” fund. These have worked rather well in the past. The fund will pay any claims on your policy and assess other licensed insurers for the money.
Some property owners bought policies from an AIG company that is not licensed in many states. Lexington is one of those companies and it would not be protected by a guaranty fund. Given the hurricane that just hit Texas, there is some cause for concern with non-licensed AIG companies.
If New York has a guarantee fund, it will have already raided it to pay for pension enhancements.
Insurance Guy
Thanks for the insight. We have an AIG term life policy in a file here somewhere. It purports to provide death benefits if milkcrate gets covered with sand and moves and breathes no more.
Need to dig the dang policy out and read the fine print. I would *assume* they were licensed in Calif.
And just last week I was fretting, needlessly or not I still do not know, about some Wamu mutual fund holdings.
I need to go take a walk. Sheesh.
“Companies with a record for lying tend to find it hard to get money because nobody trusts them in a pinch…”
Tuesday, September 16, 2008
Lehman’s ‘mind-boggling’ debt
The Lehman Brothers debt is estimated at $600 billion — an unprecedented amount. Now that the company has filed for bankruptcy protection, the more valuable assets could go quickly. John Dimsdale reports.
Into the Valley of Debt, rode the $600 Billion…
This is where Korean Development Bank may step in and be a buyer.
After Fuld embarrassed them?
It would be just for that (ahem) gentleman.
Leigh
So by writing off 3 billion $$$$$$$$$$$$$$$ a month…it would take them…200 months for then to get their “house” in order?
Well, I guess a lot could happen in 200 months…
As the grammarians enter into heretofore uncharted waters, what is the proper number of ‘$’ for each value? Surely one million should warrant but one or two. An American billion (10^9) one or two more. But a trillion should certainly be entitled to several.
latest news [AIG] American Int’l Group shares fall 40% in pre-open, to $2.85
MARK HULBERT
Another “Black Monday”
Commentary: There are some parallels between Monday and the 1987 Crash
By Mark Hulbert, MarketWatch
Last update: 6:06 p.m. EDT Sept. 15, 2008
ANNANDALE. Va. (MarketWatch) -
Parallels to 1987?
…
If sentiment behaves according to the contrarian pattern, there will be a lot more pessimism when the bear market hits its final low.
Just back from a 4 day walkabout into the Range of Light, the Sierra Nevada…
This time I was in Sequoia National Park, home of Giant Sequoia trees, the largest living things on earth, aside from financial corporations~
The similarities between a Giant Sequoia and say Lehman or Merrill Lynch or AIG or WaMu are quite striking.
Giant Sequoias tend to live a long time and being largely fireproof, they lord over smaller trees susceptible to lightning strikes and resultant infernos that rage through the forest, taking out the not-so tall timber and giving the giants more room to expand.
Giant Sequoias tend to just topple over, once they become too top heavy (CEO’s and officers), or lean too much to the right or left (fraud, not straight and narrow), or on account of their shallow root system (debt) not being able to support the the upper part of the tree, anymore.
There are no half-measures as far as falling down (chapter 7) is concerned. Trees that poked 250 feet through the sky are quite suddenly laying 250 feet on the ground and it only takes an instant (bankruptcy) for this to occur…
Nice analogy. Who says trees don’t grow to the sky? Of course, a raging crown fire, like the one underway on Wall Street, can burn tall trees to the ground.
They say there is a larger, and older organism; the giant fungus (government). It lives underground and feeds off of the life of upright productive species (workers). Its tentacles are everywhere.
large underground Fungus, like Ghostbusters, the pink ooze that thrives off of negative-ness ie WS.
Hey Alad, next time try something really really real… like viewing the world as Wall Street does…eat some of those “silly” little mushrooms growing under the tree canopy and then gives us all a description & comparison.
“The internal dialogue is what grounds people in the daily world. The world is such and such or so and so, only because we talk to ourselves about its being such and such and so and so.”
Carlos Castaneda
I truly appreciate the insightful giant sequoia analogy, all the more so since we fell in love with SNP many years ago.
You forget to mention that once they fell, they tend to hollow out, leaving behind mere hint of their former glory.
But provide succour, nourishment, and height above the forest floor for the little ones to grow toward the sun.
Not really a market analogy, but a cool thing to reflect on.
Hoz,
Would you kindly remind me of the name of that reverse T-bond yield fund you recommended a while back? I think we may be nearing the time when that is a good move…
There’s RRPIX which is inverse 125% exposure to the 30-year T-bond.
RYDEX SERIES FDS, INVERSE GOVERNMENT
RYJUX (NYSE)
Just short the 2 yr and think of it as borrowing money at below inflation rates.
Japanese 2 yrs went to 0.58% last night, locked limit up. That would be like the US 10 yr went to 2.80% today.
The US dollar fell the most against the Japanese Yen in one day. Flight to safety = Japan.
Prof. Bear, If you are looking to short US long bonds check out TBT. It’s leveraged at about 1.5 inverse to the 10 year bond.
Offal men are doing awful things often lately.
Frick, this is out of control!
1. Ben, my apologies for flaming out a while back. If you’ll have me, I’d like to return.
2. NYCdj, nothing so far…
3. Dime, if you’re out there I might need you to appraise a house in Pinellas. I’d be willing to compensate you for the extra expense. It’s a real humdinger: it’s an underwater investment and the owner wants the appraisal as low as possible so he can get it off his back. He hasn’t found a qulaified buyer yet (that’s where I come in). How funny is this? Now we have realtors demanding appraisers hit a LOW number! Haha.
4. On a serious note, I have close friends that are spiraling towards BK. It’s sad to watch, but they’ve made some poor decisions and continue to make decisions based on faith, not facts.
5. I viewed an auction house recently… a complete distaster and completely stripped. The liability of that property exceeds the risk. It’s a new paradigm.
You want a low value????!!!!! That’s easy as all I have to do is use actual sales data.
I have a lender disputing my value right now. Downtown Orlando condo contracted in 2005 for $500,900 and the value is now….$325,000…actually it was last Thursday….could be $310,000 by now.
I could just update the value each week and you can stop me anytime you wish.
So you’re Ben Benanke. What do you do?
Go listen to Slayer’s Raining Blood?
“Awaiting the hour of reprisal
Your time slips away.”
Maybe some Doris Day as a chaser?
“Que, Sera Sera
Whatever will be, will be.”
He certainly seems the type to crack under pressure.
Funny Santacruz…
Que sera sera..
Wonder if he will crack, or just to unaware, still.
- Recognize you were dealt an awful hand.
- Stay the course.
- Keep trying out new, unexpected strategies to cope with the crisis.
Causing more collateral damage in the process worsening the problem that you were supposed to “fix”.
That’s the risk — that the doctor inadvertently fails to follow the Hypocratic oath:
“First do no harm.”
Relax, we start bombing in five minutes
How about the “We had to destroy the village to save it” strategy?
Bernanke is a tool.
When does the first politician give the speech saying that older generations have bankrupted the Untied States by living too high on borrowed money (with a little help from the more enterprising youth of today such as Casey Serin) and we are all going to be much poorer as a result?
When someone develops a tasty recipe for Soylent Green.
When does the first politician give the speech — whoever he is, he won’t be re-elected.
Bah, tax cuts without spending cuts and globalization bankrupted America. Everybody was in on that.
Agree, Jon.
Boomers and their fore-runners had nothing to do with this, IMO. Some of the younger generations are using them as scapegoats.
Focus on those who are responsible for ripping-off U.S. citizens — of all ages. That would be the banks, their puppet politicians and the Fed. Greenspan is particularly guity for our current mess.
Resign!
Follow the will of my masters and get a sweet job when I’m done.
“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank
to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when
you lost, you charged it to the [public] bank. You tell me that if I take the deposits from the bank and annul its
charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let
you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.”
-Andrew Jackson 1836, forced the closing of the Second Bank of the U.S. by revoking its charter
Is that quote real? It’s perfect!
Indeed. Please, a link!
http://quotes.liberty-tree.ca/quote/andrew_jackson_quote_4f92
Here’s another good one.
“It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society — the farmers, mechanics, and laborers — who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.”
“Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union. It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy.”
Transcribed and reverse-order proofread by T. Lloyd Benson, from Andrew Jackson, “Veto Message, Washington, July 10, 1832,” in Richardson, ed., Messages and Papers of the Presidents, II, 576-591.
http://facweb.furman.edu/~benson/docs/ajveto.htm
Great post! Thanks!
Abraham Lincoln managed to put much the same message into one sentence:
These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.
* Speech to Illinois legislature, (January 1837)
Can you imagine even someone like Ted Kennedy using that kind of language today, never mind a Republican (well except Ron Paul maybe, and I don’t think he uses the “c”-word).
Obama opportunity is a byproduct of Lincoln’s wrongheadedness…the historical mistake was in believing that Africans were people… instead of legal property. I guess that make him on the wrong side of history?
I think it would be safe to say that yesterday’s Lehman bankrupcy and the corresponding stock market crash will be the Autumn event that Neil predicted to precipitate a lower psychological level in the minds of sellers. Here’s where the true drops begin in desireable areas. Hold on at least one more year you trigger-happy buyers. This is where many of us can set ourselves up modestly for life with the proper patience and discretion.
“Here’s where the true drops begin in desireable areas.”
It would be about time. Here in the Tampa Bay area, I do see any number of houses at 2000 prices or better, except they’re in marginal areas of St. Pete, inner city Tampa, West Pasco County, etc. Places where I just wouldn’t want to live. Prices haven’t come to reality yet in South Hillsborough County and that used to bother me, but since all the gang-banger developments, I’ve decided to move on from this area. In fact, if idiots want to pay ridiculous prices to be surrounded by a bunch of gang-bangers, I wish them the joy of it.
I agree with you Palmetto. We are very happy being out of that quickly declining area. Riverbend asking prices are down 50% and they still can’t sell them.
Agreed. I felt the same way about S. Tampa. I have since decided to shoot for North Pinellas (Palm Harbor or Dunedin). The area seems much safer and has all the same amenities. I just hope the waiting game ends in the next two years so I can finally have a home of my own and stop renting.
Worse yet for those in my present area:
There are few homes for sale in the neighborhoods we want to live in. Older, well kept neighborhoods-2000 to 2500 sq foot homes w/good school system w/in 15 minutes to job. The owners appear to understand they’ve got a good thing going and aren’t going anywhere.
Luckily the bubbleville I left behind in 2002 is getting ready to drop precipitously. We’ve taken to scanning RE there.
Oil trading at $90 a barrel this morning!
Seems like demand destruction is really real after all (any BS about $200 oil by year’s end being spouted anymore?), and when people don’t have any money or anywhere to go, they don’t use gasoline, not to mention the business cutbacks.
Time to revise the predictions downwards again - oil at $84 by 9/30, instead of $99 (blew through that like Ike last week). If trends continue we’ll probably see $75 by late October - $2.69 gas.
Jeez - by year end could we see $1.99 gas again? Since nobody will have HELOC funny money to buy SUVs it’s possible that gas demand will just keep dropping…
Don’t forget refinery costs, competition from emerging economies, and shenanigans from OPEC and Russia, and saber-rattling by President McCain.
President McCain? Sweet Jeebus, I hope not!
At last, an intelligent post because IT IS NOT BIASED like the rest of the posters above who vote Repub because they are Repubs or vote Dumbo because they are Dumbos!
Thanks P.F.
Gas prices have been sticky out this way. Its been about 3.59 for 3 weeks now.
It may be due to hurricanes. In the SE, gas went up 30 to 50 cents a gallon and a lot of stations ran out of gas for the last few days. I had to drive out of my way to find a station that hadn’t run out.
$4.19/gal here in N. Ohio tonite; thanks, Ike.
latest news Sen. Biden says U.S. can’t bail out every institution
Central banks combat tight money markets
N.Y. Fed conducts large repo; major central banks intervene for second day
By William L. Watts, MarketWatch
Last update: 8:47 a.m. EDT Sept. 16, 2008LONDON (MarketWatch) —
Central banks around the world on Tuesday took steps for the second straight day to keep money markets from seizing up due to fears of further turmoil in the financial sector following the collapse of Lehman Brothers.
The New York Federal Reserve Bank on Tuesday added $50 billion in liquidity to money markets through overnight repurchase agreements, known as repos.
In addition, the regional Fed bank, which conducts open market operations on behalf of the Federal Reserve, said in a statement that it “stands ready to arrange further operations later in the day, as needed.”
They need to repo $500 billion. I guess we’ll get there by the end of the week and all will be saved.
50 billion is in, before lunch.
The stock market always goes up, even on catastrophic news!
fear: paplable
panic: observed
capitulation: significant
markets crash from oversold consitions. We have entered oversold condition red.
dont blink, or your gonna mis the fireworks….markets open in 3, 2, 1…
Capitulation? Not yet.
You’ve all been backed into a corner and there’s still one exit available, for the prudent & prescient, although supplies are strictly limited and may run out soon, as the entire world is now in the same boat financially, and there’s just so much physical Gold to go around…
Yeah, take your cash (assuming you have any) and buy gold. Lol.
We are on the verge of hyper-inflation, the coward’s way of dealing with awkward financial situations…
Cash’s reign as king will be over soon, jester.
Hyper inflation or financial collapse is a choice. How can we know what that choice will be?
Well, I’m trying to keep things lighter around here as the seams continue to burst, so perhaps Gozar the Gozarian could help us out on this one?
“Choose and perish!”
I choose default and create a Nuevo Dollar.
ACK! Dead.
I would choose the marshmallow man in order to beat a tasty retreat.
“Perhaps Gozar the Gozarian could help us out on this one?”
He will be present in Washington for the Fed meeting.
I predict they will go for the Stay-puff marshmellow man.
I predict they will go for the Stay-puff marshmellow man.
Ben can throw flaming piles of money at him.
Hyper inflation or financial collapse is a choice
Like hyperinflation isn’t a financial collapse?
Hyperinflation will not, I expect, happen without it being clear at least a few days in advance that such a choice is being made. Need to be liquid in order to quickly hedge. If cash equivalents get liquidity problems, you can get sucked under. Likewise, deflation can suck you under.
Rank & file Americans are dumber than a box of rocks, and by inflating the money supply, the proles will wrongly thing everything is a-ok for a few months, or just long enough for the republicans to prevail, possibly.
You have already had years of advance warning. What more do you need?
There is no choice but hyperinflation unless the government outright defaults on treasuries. An outright default would bring a sudden end to our empire, so we will go with a hyper-inflationary default which will allow the government to blame greedy business men for raising their prices and delay the collapse of our empire for another 12 months.
Hyperinflation is the only way to hold on to power and further consolidate wealth in the hands of the creators of money.
I can’t say that I’ve been entirely convinced by either camp — Cash Is King vs. Gold & Silver Are It, Baby — but I did bite the bullet and invest in physical gold and silver recently. (I have cash-on-hand as well.)
Things are hairy out there, and I’m surprised that there hasn’t been another huge run-up in PMs.
Actually, I should amend that slightly — my girlfriend and I own a fair amount of PMs in the form of vintage jewelry and decorative pieces, but this is our first foray into bullion.
Can we really have hyper inflation at this point? In order to create money there has to be borrowers. I don’t think the demand is there.
Can we really have hyper inflation at this point? In order to create money there has to be borrowers. I don’t think the demand is there.
Never underestimate Uncle Sam’s ability to borrow and spend.
How would you pull off hyperinflation in the U.S.? The only way I can see it happening is the gov printing money and sending huge piles of it to the general population in the form of recurring “stimulous” checks.
It’s being pulled off right now, moving computer blips to and fro.
Where do you think the Feds are going to come up with $75 Billion to save AIG?
If you want to be painfully obvious about it, you’d go the route of Zimbabwe and print like mad, but we aren’t that stupid. (or are we?)
Jon,
Hyperinflation is nothing but a series of small steps. When you start down the path the destination is not obvious. The key thing to remember is that during the German hyperinflation the rate at which prices increased far exceeded the rate at which money was being printed. Furthermore, in the years before the hyperinflation the rate at which money was being created far exceeded the rate of price increases.
From this it should be VERY clear that hyperinflation is directly linked to printing money, but that the link has some time-lag. It should also be clear that DEMAND DESTRUCTION can be far more powerful than supply augmentation.
Once people come to expect more inflation they start switching to other currencies where less inflation is expected. This becomes a self-reinforcing cycle until the dollar is destroyed.
Also, once interest on debt exceeds income then hyperinflation is inevitable.
Further, a large portion of treasuries are in short-term debt, if they have to be refinanced to higher rates our government could be the next victim of their own “ARM reset”.
I am coming to think that inflation expectations are only tied to (a) how much a gallon of gas costs and (b) what you can get on the $1 value meal. Isn’t Europe in at least as much trouble as we are, just a little behind our beautiful curve? What about the BRIC countries?
Remember to have hyperinflation, people need money to fill up their wheelbarrow with.
I don’t know any companies handing out 10-20% raises to workers, so until that becomes common place, hyperinflation is a no-go.
You don’t understand inflation.
Wages are immaterial to inflation.
Inflation is mucho dinero chasing the same goods. It matters not if you have a job. Look at Zimbabwe, do you think the average person has work?
“…although supplies are strictly limited and may run out soon”
What are the waterfalls @ Niagra down to a trickle now? Is the Sun turning into a red gaint? Is the Wall Street in Manhattan only used now for keeping out wild destructive pigs?
Lions, Tigers & Bears, Oh my!
Historically, Gold would be soaring in this type of environment, why has it decoupled as the safe haven play? If I told you BS,and LB were gone, ML has been bought cheap, F&F had been taken over and AIG was on the verge of failing, I would bet my life you would have predicted Gold well is excess of $1,000, yet it is $785 or so and obviously not the safe haven play it had been in the past. I know you might say physical Gold is different than paper Gold, yet it is that market that drives what I can buy and sell gold for. (FWIW, I did follow-up on your post about spreads to buy/sell Gold and in Boston MA I would loss 10% or so on the buy/sell spread to convert physical Gold. I am sure it can be done cheaper on line or if I had access or knew better sources….) I am not trying to be argumentative, just trying to understand why Gold isn’t going thru the roof under these amazingly uncertain and unprecedented times. If not now, when and if demand destruction takes place, due to a collapsing economy, shouldn’t the value of Gold fall?
Once Gold is decoupled from it’s ersatz cousins on-line, is when you’ll see what it can do…
The window of opportunity is wide open for a precious few.
I think the question that needs to be asked is: “Do the markets in their current form actually function correctly in terms of price discovery?”
At this point, I truly do not know. I’m just an observer now.
Same here… financial markets are too chaotic to predict much at the moment.
Except the housing market has further to drop in order to bottom out.
Price discovery only works when real resources are traded in an open market without regulation.
If the government can print up as much money as it wants to buy securities (stocks, bonds, etc) now that the Fed takes them as collateral… then ALL prices will be heavily biased toward what the government wants them to be valued at because they can create as much or as little demand as necessary.
Anyone who wants to use charts to predict the actions of an independent actor must be crazy.
When markets get to this point the end is near, they must collapse because speculators will spend more time guessing what the government will do than on trying to predict the real needs/demands of society.
“…they must collapse…”
Did you miss the memo that the PPT is working hard to avoid allowing markets to collapse?
PPT. There is a few letters missing…
ppppppppppttttttttthhhhhh. And people wonder why PM are down. The gig is up. Anyone try to locate physical silver lately? Price it on eBay? $22/oz
(Kitco says $10.50+/- )
Gold however is EVERYWHERE. I can’t find much silver bullion- and what I find is $5 over spot. Some coin shops are paying $1-2 OVER SPOT for silver. When was the last time that happened?
Professor Bear,
When I say collapse, I mean complete melt down of the entire system including the currency. The PPT cannot deny the market forces for ever and the harder the try the more that will come down when it finally crashes.
De-leveraging… I think a lot of people (HF being the primary culprit) bought a ton of commodity on the way up, including gold and are now forced to sell due to margin calls and withdrawls (Oct being the usual HF redemption time for the year).
That’s my 2 cents.
Shizo, You’re wasting your breath. Anyone who sees the opportunity has been trying to find silver for the past few weeks. It is almost sold out everywhere. Spot prices are down because funds are dumping options to raise quick cash to pay margin calls. The physical in your hand Silver is sold out for the most part on Kitco, Apmex, but yes you can $16 or more on ebay. Just like the early housing market 2006 , most couldn’t fathom, or didn’t want to hear about the collapse.
America to Cheney-Shrub:
“You boys is doin’ a heckva job!”
Anyone got the latest “approval” ratings for the “Decider”?
Shrub better put on his swamp boots, get in his Ford 650 superduty, an head on down to Galveston… start getting some dirt under his finger nails… a little mud on the White Ford might give a good appearance as well. Bring back some lumber… so Cheney can build Shrub a “Duck blind”.
Never a good move to make oneself appear stupider than the stupid person one is calling stupid.
As Aristotle probably says somewhere in his lectures on rhetoric.
Not stupid,…nix, nix, nix…my preference would be this english word:
Lame:
This I would use to describe Shrub currently:
noun
1. someone who doesn’t understand what is going on
This I would use when he chews pretzels:
3. weak; inadequate; unsatisfactory; clumsy: a lame excuse.
http://dictionary.reference.com/browse/lame
Oh, I forgot…he’s a “lame duck” president…does Cheney realize this?
You reminded me - when is Obama going duck hunting in Ohio, like John Kerry did.
Will O saunter into a Walmart and say “Can I get me a huntin’ license here?” like JK did too - you know - to “relate” to the common man by using their language?
Will O wear blaze orange or the woodland camo?
But you’re right that Bush should head to the coast for some manual labor off camera - for the next 7 weeks. I wonder if he can take 9% Pelosi with him too - can she handle a front-end loader?
Houston is in bad shape. Galveston has been almost wiped off the map. They’ll rebuild the million dollar homes in no time.
My web guy’s in Kemah and I finally heard from him, he’s a friend also, so we write some. Kemah is midway between Galv. and Houst. on the bay. His house lost its roof and got flooded bad. He basically lost everything, but he’s in good spirits, as he’s hale and whole. He evacuated, but was there in time to see the surge, said it was something else.
All hail the mountains and desert, no hurricanes here, though we have other stuff (like this giant black ant that fell out of this juniper tree right onto my dog’s tail just now, this should get interesting).
Ratings cuts are good for WaMu’s share price. Is HP reconsidering his no-bailout policy?
latest news
[AIG] AIG insurance companies ‘doing fine,’ Greenberg says
S&P downgrades WaMu ratings on financial turmoil
By Wallace Witkowski
Last update: 4:36 p.m. EDT Sept. 15, 2008
SAN FRANCISCO (MarketWatch) — Standard & Poor’s said late Monday it downgraded the ratings of Washington Mutual Inc. (WM: Last: 2.40+0.40+20.00%) and Washington Mutual Bank because of increased market turmoil. S&P cut the counterparty credit rating on Washington Mutual Inc. to BB-/B from BBB-/A-3, and the rating on Washington Mutual Bank to BBB-/A-3 from BBB/A-2. The outlook is negative.
Ratings are on the bonds for investment purposes. It has no bearing until its rated junk on the stock price.
As to ratings, 60%+ of all corporate debt is currently rated junk.
The credit default swaps are up today.
Morgan Stanleys CDS are trading at 630bps up 135 from yesterday.
The weird trade is that even though the US Treasuries are up as a result of flight to quality, the F & F bonds are not acting well. Swaps are higher and GSE debt is going up 10/32 for each 32/32 increase in US Treasuries. Both guaranteed by the same government. Just strange.
maybe b/c f&f is backed by some asset (houses, which mostly should have some value > 0) while treasury debt isn’t backed by anything physical?
If that were the case, the yield on GSE debt would be _lower_ than treasuries. Seems unlikely.
Isn’t that what hoz is saying? The yield on US goes up 32, but the GSE only goes up 10. So the relative yield has lowered for the GSE.
Now that the guarantee is explicit rather than implicit, why should Treasuries and GSE debt have any spread at all? They’re the same thing; makes sense that they should converge.
You are right, the spread should narrow, not widen. The spread is widening again.
All right people, I’ve got some good stuff. Hold on to your hats.
Apparently, our first week of school down here in North OC has been poorly attended. Apparently, the attendance ladies have been on the phone to parents all week, querying as to the whereabouts of children registered to attend our school. Several parents, when asked when their children will be showing up, have answered, “Oh, in a few days.”
The reason?
The KIDS ARE AT WORK.
More noteworthy: one of our school counselors told me, in private, that she’s seen a handful of older kids waiting in the parking lot at our local Home Depot to be picked up as day laborers.
Welcome to the New Depression.
(BTW: Holy comments, Batman! 151 already?)
“The KIDS ARE AT WORK.”
Would these be the children of illegals, or is this a more widespread phenomenon?
BTW, this sort of thing was not unusual in the US many decades ago. Children didn’t attend school when crops had to be harvested, etc. Also children worked in factories prior to child labor laws.
Its still the case in more remote parts of the British Isles - noticably the isle of Arran in the lower Hebrides.
Kids get a truncated xmas and easter break (a week each)- and over 9 weeks in the summer, which extends till the end of september/early october. Partly to help their parents bring in the harvest, and - more commonly nowadays - to help out with the summer tourism influx.
I have no way of knowing their status. My guess is that probably would apply many of them.
My rental’s gardner’s boy is back in school.
I tipped that kid I was so impressed.
Tiny eleven year old and a nice kid.
The KIDS ARE AT WORK.
Given that there are only menial jobs available for them when they finish HS, they are probably doing the right thing. Who knows? Maybe by the time they are 18 they will have risen to the position of interim assistant night shift manager at the local Pollo Loco.
Second:
My dad’s friend (a contractor who USED to specialize in high end renos on the Newport Coast) works foreclosure rehabs for Chase and is apparently pretty well connected to one of the Veeps.
According to him, the dudes in the uper echelons of Chase management have decided to forgive — wait for it — $250,000 of a $1,000,000 mortgage if the loan-owner can refi with somebody else and take the paper off Chase’s hands.
They’re willing to take a 25% hit in order to afford foreclosure.
Neither my father nor I believe that many of the maxed out wannabes along the OC Coast will be able to take advantage of that offer.
With mucho love and respect to my hero, Faster Pussycat (whose pantry I’d love a peek into — and no, I’m not speaking metaphorically)I will steal his oft-repeated: BWAAAAAAAAHAHAHAHAHAHAHAHAHAHAHAHAAAA and add a snort of my own!
Somebody posted similar stuff in the UK a few months ago. We agreed that it seemed rather proactive and prescient.
Chase is too late on this one.
Let’s hear a big:
BWAHAHAHAHAHHAHAHAHAHHHHHHHHHHHHHHHHHHHHHHHH!!!
Err… that is, they’re willing to discount $250,000 to avoid taking the house into foreclosure.
Whoops.
I guess they are just marking to market. Oh no, that would more like a 50%+ haircut.
Nice Lehman water jug for sale, never used:
http://cgi.ebay.com/Lehman-Brothers-Nalgene-Water-Bottle-never-used_W0QQitemZ220281899988QQihZ012QQcategoryZ62132QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
Today is Mexican Independence day. I’m not sure how their markets have weathered this fiasco. I do know that the peso is starting to slip back to 11 for a dollar.
Moral Haphazards seem not to faze the Fedophiles…
Another bit of sunshine: HP announced that it will be eliminating 25k jobs in its combined EDs/Services division. I wouldn’t be surprised to see more coming later down the road, especially in the printer division.
Then HP and epson should have kept ink toner and paper at a price that is not $120.00 for five colors and $50.00 for fine paper.
I shake when I go into Staples for staples.
The age of personal printing is over. All the printer vendors are struggling with finding ways to convince people to print. The big hope that people would print their photos at home turned out to be a big bust. Since snapping photos is essentially free the volume of photos taken has skyrocketed. Young people have no problem with the notion that photos are disposible. You snap them, put them on your myspace page, and replace them with new shots next week. People aren’t even bothering to save them on discs. Print them? Forget it! That costs money!
I gave up on home color printing years ago. When I really want a color print (maybe every 2 years or so), I email it to Kinko’s or the UPS store & pick it up in an hour.
lol. let’s see Bernanke print money with ink prices as high as they are. are they just gonna print blank pieces of paper? lol
da bear
Hath hell frozen over?
I agreed with Dennis Kneale not once, but twice this morning on CNBC. I view this as a sure sign of the apocalypse.
What went wrong with AIG from a April 11,2005 article from Business Week . Apparently they were cooking their books to goose their financial performance .
Are the Feds questioning their books now again ?
http://wwwbusinessweek.com/magazine/content/05/_15/b3928042_mz011.htm
That link isn’t working . Its under Business Week articles of
April 11,2005 .
Silver update:
Paper silver is down 4.5% today. But the metal? I received a mass email from an online dealer.
Dear Valued Customer,
XXX is actively looking to buy product from any and all resources to help satisfy the needs of the current market.
Right now, for a limited time, XXX is buying to replenish our depleted silver inventories.
These are the current items we are buying at increased prices…the only requirement we have is that you sell at least 100 ounces to us.
1 oz Silver American Eagles 2008 $2.50 Over Spot
1 oz Silver American Eagles (Back Dates) $2.00 Over Spot
100 oz Silver Bars $0.80 Over Spot
10 oz Silver Bars $0.80 Over Spot
1 oz Silver Rounds $0.60 Over Spot
So you have national online dealers, not locals, begging for you to sell them a measly 100 oz of silver. The shortage is severe in the extreme so again I ask; when have you ever seen the price of something drop 5% a day while supply is unobtainable and dealers beg to buy from you at increasing prices?
Why is there a premium on the newest mintage? Is it just because it’s (probably) uncirculated?
I’ve wondered that for a while.
Less time for counterfeit product to contaminate the supply?
It’s because people buy them as gifts for Christmas, graduation, new baby, etc. They want the current date(2008). Demand is always greater for the current year Eagles.
It is based on speculation that this may be the last year for them as they are hard to find due to demand. It has been said that when commercial demand for silver gets too big, the US gov’t will stop coining silver as to not compete w/ commercial uses. Since it is so hard to find silver right now, I’m guessing that they are betting 2008-9 will be the end of silver eagles.
watcher, how do you predict the bad paper that’s forcing down the gold/silver markets gets resolved?
Do those financial institutions finally buy enough metal to cover their obligations pushing the price back up? Does it just “go bad” (maybe by govt edict or bankruptcy or whatever) and the holders eat it?
IMO the (paper) silver shorts will default on the contracts. They never intended to deliver the metal; they just sold contracts until the price collapsed. Then the government will step in and make everyone settle in cash at the collapsed price since they can’t deliver. Highway robbery, and a good reason to stay out of paper PMs.
So why hasn’t a spread opened up between paper metal and real metal, or are you the only person on the planet who has figured this out?
The spread has opened up. Silver Eagles are selling on ebay for $340 per roll and up. This is not asking price, it is actual selling price. That’s $17 per coin and up, a premium of $6.50 per ounce over spot and up.
The reason this isn’t big news is less than 5% of the population invests in silver coins or even knows what they are.
News of the boom in commodities reaches the man on the street long after the train has left the station.
Isn’t there a parallel here to sentiment in the housing market? Housing believers continued to pound on the table for a couple of years after the peak.
I like silver. I have a collection of coin silver spoons from the 18th century. They carry a premium over spot and are hard to find. I have a collection of Morgan overdates. They have become hard to find also. That doesn’t mean silver is always going to go up.
That doesn’t mean silver is always going to go up.” Spot is 10.50. Severe shortages..US mint stopped producing Silver Eagles 3 months ago. Cost of mining? forgetaboutit…There has been a deficit in silver supply for 5 years..Mostly recycling, scrap selling…That slowed last year.Where’s the physical going? If you were in China with 12T in US dollars what would you buy ?
I got an email from APMEX this morning offering to purchase 2008 silver eagles at $2.50 over spot. Other years at $2.00 over spot.
I’d say that is a fairly good indicator of which way the PM market is heading.
By Patrick Wood, Editor
September 15, 2008
The immediate aftermath of the Lehman Brothers bankruptcy will be a massive and manic flight to liquidity and withdrawal of funds and credit from banks, S&L’s, insurance companies and brokerages, leading to more failures.
Nothing can stop it at this point.
The stunning magnitude of debt owed by Lehman Brothers - $613 billion — comes to light because of their public bankruptcy filing. No wonder that Barclays, Bank of America and other potential buyers took a few sniffs at Lehman’s books and walked away.
The Lehman Brothers bankruptcy is the largest in the history of the world.
Banks around the world who lent money to Lehman must absorb immediate and huge losses of capital and liquidity. Even if they eventually recover some of their money, they won’t have access to it until the bankruptcy is completed.
Insurance companies (like AIG) who issue insurance contracts against financial failure and non-performance are next on the chopping block. Policyholder claims could quickly overrun their ability to make good…
…American investors and politicians laughed at Fortis Bank when it released this report on June 28, 2008:
Quote:
BRUSSELS/AMSTERDAM - Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. “We have been saved just in time. The situation in the US is much worse than we thought”, says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US”
American sentiment is rapidly changing: Six thousand banks is a long way to go!
When chickens discover a blemish on an otherwise healthy chicken, they will immediately attack it and peck it to death.
The global financial market players are just as merciless.
http://www.augustreview.com/news_com…n!_2008091599/
Just had lunch with coworkers who think that all is well and that these problems will just blow over (plus its different here).
“Even if they eventually recover some of their money, they won’t have access to it until the bankruptcy is completed.”
And what’s been lost in translation in the last 48 hours?
Lawyers & lawsuits = An American growth industry for the next 5 years
What do you call 6,000+ banks in bankruptcy? 38,000 legal secretaries working/billing overtime.
If this screen were a seismograph, I would conclude it is showing signs of a major earthquake having just occurred.
Too-big-to-fail bets are currently undergoing stress tests.
Bill Gross’s Fund Guaranteed $760 Million of AIG Debt (Update1)
By Miles Weiss
Sept. 16 (Bloomberg) — Bill Gross, manager of the world’s largest bond fund, guaranteed $760 million of debt issued by American International Group Inc. as of June 30, obligations that may prove costly if the insurer fails to stay afloat.
Pimco Total Return Fund, which oversees $132 billion in assets, backed the bonds by selling credit default swaps to investors that pay off if AIG defaults, according to a filing with the U.S. Securities and Exchange Commission last month. The fund had sold insurance on $7.7 billion of bonds, including $4.8 billion issued by financial-services companies, as of the end of June.
The swaps are part of a larger bet by Gross that some beaten-down corporate bonds will recover because they are too important for the U.S. government to let fail, analysts said. That theory was tested yesterday as Lehman Brothers Holdings Inc. filed for bankruptcy protection and AIG’s request for $40 billion in loans was rebuffed by the Federal Reserve.
Drudge is so predictably righty-tighty, and he decided that Babs Streisand getting around $30k a plate for an Obama fundraiser was definitely the most important financial story today…
ha ha
latest news
[AIG] AIG recovers slightly on report of possible Fed support
TODD HARRISON
The upside of anger
Commentary: Will the market recovery arrive after cancer or a car crash?
By Todd Harrison
Last update: 3:08 p.m. EDT Sept. 16, 2008
NEW YORK (MarketWatch) — My grandfather taught me that what goes around comes around. It isn’t always pleasant, but it typically proves true.
We’re at a painful place in world history. It isn’t something one would wish for or even something anyone wants to discuss. Avoidance isn’t a viable solution. It is, in many ways, how we arrived here in the first place.
Whoever said ignorance is bliss surely wasn’t involved in financial markets.
Nobody wanted to examine the cumulative imbalances as they built but now that they’ve burst, everyone is placing blame.
Main Street is wagging fingers at Wall Street.
Wall Street is looking to Washington.
The government is passing the burden back to the population.
It’s a vicious circle that has come home to roost.
We, the people, are paying the price and our children will share the tab.
Societal acrimony is percolating, global tensions are rising and the world has forever changed.
There are no easy answers or quick fixes.
I’ve long said that to get through this, we must go through it. We’re going through it now and as unpleasant as it is, it’s a step in the right direction.
the last sentence reminds me of my dad. when he found out his kidneys were shutting down thats exactly what he said “well, we just gotta get through this.” i’m sad to say he dident make it, but he sure did put up one hell of a fight!
Bigger they come the harder we fall
Published: September 16 2008 19:16 | Last updated: September 16 2008 19:16
American International Group is the latest concern in the crisis on Wall Street. Allowing AIG to fail to meet its commitments would, however, be far more dangerous than allowing Lehman to do so. A responsible government has to ensure an orderly resolution. But this crisis makes effective reform of US financial regulation even more pressing.
AIG’s problems stem from its $441bn exposure to credit-default swaps and other derivatives. Losses on these contracts have driven AIG into a vicious downwards spiral in which it needs ever more cash to remain a highly-rated counterparty. JPMorgan and Goldman Sachs have been charged by the government with finding as much as $75bn from private sources in order to rescue the situation.
Finance & Economics
AIG
Bail-out or bust?
Sep 16th 2008
From Economist.com
AIG could be the next casualty of the credit crisis, unless the authorities step in
AP
BARRY RITHOLTZ, a prominent financial pundit, writes with tongue not entirely in cheek that the first lesson from the government’s bail-out of Bear Stearns in March was to “Go Big”. “Don’t just risk your company, risk the entire world of finance. Modest incompetence is insufficient—if you merely destroy your own company, you won’t get rescued. You have to threaten to bring down the entire global financial system.”
Solar power update…
We put in our solar array last year and it costs us $3000 per year on a fixed heloc loan.
The bill came in today ($1.22) and we’ve used just under $3,000 worth of energy January to September.
We will save around $1500 this year, vs. paying the electric company.
If any of you are on the fence about getting er’ done, what are you waiting for, exactly?
What do the local utilities charge for a Kilowatt hour and for a therm of nat gas?
What am I waiting for? I waiting for some other idiot to put it in the house that I want to buy for two-thirds less than what it cost him to buy, then it will be a ‘great deal’.
Lad, can you do the same thing for all your other utilities, like water?
Yesterday my gardener was using the hose to drown the gophers! I went nutz. My landlord is too self centered to update the sprinklers. I’m talking nine stations, ancient pipes and atrocious water bill. Four hours a week of watering sends me into orbit.
I hired him to keep painting the brown spots green every three months and still have under a hundred waterbill.
Drowning gophers?
Be grateful it isn’t a badger. They fight back and would rip the shit out of her.
Just use a small shotgun (20ga. is very nice) and they taste like squirrel.
Throw some sunflower seeds in the field by the gophers and when ‘they teeny heads’ pop out blast away.
ouro:
We have 3 sources of water, A well, a river and a creek.
And whatever water we use just filters back down into the aquifer eventually…
er……to once again own the place I live in
Fed has injected $140 billion in the last 24 hours. Is that a lot?
not when adjusted for inflation, lol
“The economy’s pretty bad, but people are still spending money on what they want,” said Harris, 20, an unemployed warehouse worker who lives with his parents in Weehawken, New Jersey. Referring to the Take-Two Interactive Software Inc. video game, he said, “I mean, `Grand Theft Auto’ did half a billion in seven days. So the economy’s not that bad.”
Where do they find these people?????
Filed under: How old was “Dickey Boy” Cheney…when “Tricky Dick” Nixon was president? … or… “The young Republicans learned a lot since 1973″
“It asks for an injunction prohibiting the Macomb County GOP, the Michigan Republican Party and the Republican National Committee or anyone connected with them from challenging Michigan voters whose homes are on foreclosure lists.
Macomb County Republican Party Chairman James Carabelli denied last week that he had told a writer for liberal website MichiganMessenger.com that he planned to make sure no one on a list of foreclosed homes voted in his county.
“The story is not true, and I never said those things,” he said. He demanded a retraction, but the writer stuck by her story.”
Mich. Dems file suit against GOP in Ohio:
http://www.usatoday.com/news/politics/election2008/2008-09-16-obama-foreclosure_N.htm
US STOCKS-Futures fall on report conservatorship eyed for AIG
The report, citing two people briefed on the talks, caused a 48 percent drop in AIG shares after the bell.
S&P 500 futures SPc2 fell 17.7 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc2 dropped 135 points.
http://www.reuters.com/article/marketsNews/idCAN1620074520080916?rpc=44
just when we thought the pig was comming back to life.
also, i wasent aware this could happen with a public insurance co.? someone please fill me in on this?
What I hope happens is that the Federal Reserve loans money to an entity that is able to loan money to AIG.
I do not wish to see AIG fail and I am net short financials. AIG covers everybody. If they fail half the S&P500 are at risk of 3 month failure. Will I get richer if they fail? Yes.
My friends will be out of work. Nobody should have to rely on the one good action that the Federal Reserve is capable of doing. We should never be in this position, but now we have to deal with the problem. Fail and watch companies fold or Fed intervention and worry about the dollar later.
but what about the poor me taxpayers?
isnt everyone demanding no more bailouts?
Oh yeah thats right.
LOANS ARE NOT BAILOUTS!!!
Im tellin ya right now, the idiots who are in panic mode are just now wondering “has my house really lost 200k in equity?”
GMAFB–
GMAFB ? = Grabbing My Auld Friggin B*tch? lol
AIG covers everybody. If they fail half the S&P500 are at risk of 3 month failure. Please elaborate or list a source.
I will elaborate, simplistically. (Although, it is much worse than I simplistically present)
AIG is not an home, health, life insurance company. They insure everything. They insure corporate bonds. These corporate bonds are pledged by companies to the banks in exchange for working capital. (The old DBL* turning junk to gold). The banks are willing to accept these crap bonds because they are insured by AIG.
If AIG is no good, there is no guarantee on these bonds and America shuts down. Working capital is pulled. Loans are called.
*DBL = Drexel Burnham Lambert - the masters of the junk bond universe with Mr. Michael Milken.
Thanks. You did a much better job explaining the situation than the MSM has done today.
You got your wish!
The Fedsury has now seized F&F + AIG. Whose seizure is next?
Banking free-fall not over
Wall Street left to fret: Who’s next to tumble?
By Greg Burns | Chicago Tribune correspondent
September 16, 2008
Wall Street’s meltdown sent the stock market reeling and left Main Street with one sobering thought: It isn’t over yet.
The record bankruptcy filing of Lehman Brothers Holdings Inc. on Monday and fire sale of Merrill Lynch & Co. to Bank of America Corp. raised the specter of further blowouts threatening the stability of an already battered financial system in the months ahead.
Unlike a stock market crash that hits all at once, the “agonizing and deep-seated” drumbeat of trouble seems certain to drag on, said market veteran Phil Hummer of Chicago’s Wayne Hummer Investments.
“I don’t see a snap back,” Hummer said. “I’ve been hoping we would see the turning point, but I think it could be a long, long process.”
But Hoz ,you telling me that AIG can’t pay on the insurance it extended . Why is a insurance company allowed to insure when it can’t pay . Aren’t there capital requirements for a insurance
company ? If the whole gig is that insurance companies don’t really have to have the capital to make good on their insurance ,than
what good are they ?
Plan B, please…
http://www.reuters.com/article/bondsNews/idUSWBT00972920080916“>
No federal power for AIG conservatorship: source
Tue Sep 16, 2008 5:50pm EDT
Reserve Primary Money Fund Falls Below $1 a Share
Sept. 16 (Bloomberg) — Reserve Primary Fund, a money-market mutual fund with $64.8 billion in assets as of Aug. 31, fell below $1 a share in net asset value because of losses on debt issued by Lehman Brothers Holdings Inc.
Investor redemptions will be delayed as long as seven days, the fund’s owner, New York-based Reserve Management Corp., said today in a statement. Withdrawals requested before 3 p.m. New York time today will be paid at $1 a share.
Bruce Bent, chairman of Reserve Management, opened the first money-market mutual fund in 1970. The only other money-market fund to inflict losses on shareholders was the Community Bankers Mutual Fund in Denver, which liquidated in 1994 because of investments in interest-rate derivatives.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5O2y1go1GRU&refer=home
I think this is one of the bigger developments.
If the sheeple hear that their money market accounts are in danger (however true or untrue it may be), they will start a run on the MMs at exactly the time when the financial firms need the capital the most.
Treasuries may see much lower yields (2% range on 10-yr?) if this spreads.
Well Ladies and Gents I truly believe that we are in one of the all time classic weeks of the stock markets. The perfect storm that aladinsane predicted is here. The global unwind has rechead critical mass.
The ruskie stock market just closed after dropping 17%.
http://www.ft.com/cms/s/0/6ff9306c-83f1-11dd-bf00-000077b07658.html
AIG is potentially preparing bankruptcy papers.
It’s also rumored that some MM funds are halting temporarily halting redeptions.
Good luck to all on this board in weathering the oncoming storm. I’ve been saving WSJ’ for my daughter so she can fully understand what sparks a depression. Dear lord, what an historical mess.
I believe relatively few people won’t be wiped out in entirety by the steamroller barreling down our path, as Americans tend to have their wealth in houses, stocks or cash, and seldom anywhere else.
In the 1930’s, those that were prudent and managed to keep their wealth, went to great lengths to not be showy or flashy in any way that would have been standard operating procedure in the 1920’s…
If entirely possible, get away from big city America, where a sense of false entitlement combined with unmet needs could be the recipe for social unrest in a big way.
If you are stuck in the big smoke, now is as good a time as any to get to know your neighbors, as you’ll need them more than you can imagine and vice versa. Don’t expect policemen and firemen to come to the rescue anymore either, as where exactly is the money going come from to pay them?
Can’t believe I missed all this HBB stuff this week by not having my “instant equity” (down payment) buried by Hurricane Ike storm surge. I’ve got very little damage and no real good stories to tell and no tee-shirt out of it. Welcome to Houston house ownership.
The secret to bailout-worthiness: the bigger, the better to bail. Judging from recent developments, BOA, Morgan Chase and Goldman Sachs may soon have achieved a license to gamble for the next three decades with the pot of gold awaiting during the next crisis in the form of a future bailout.
THE MONEY CULTURE
Daniel Gross
What, No Lehman Aid?
Why some financial institutions are more likely to be helped than others.
Sep 12, 2008 | Updated: 5:01 p.m. ET Sep 12, 2008
…
It’s a truism that the bigger you are, and the more you owe, the more forbearance you’re likely to get. In 1984, when Continential Illinois, whose reckless lending practices had catapulted it into the ranks of the nation’s 10 largest banks, ran into trouble, the government bought some of its loans and provided extraordinary compensation to depositors. “We have a new kind of bank,” complained Fernand St. Germain, a congressman from Rhode Island, “It is called too big to fail.” (St. Germain, who shepherded the bill that deregulated the savings-and-loan industry, would be blamed in part for the record-setting bailout of S&Ls later that decade).
But these days, size alone doesn’t matter. Earlier this decade, Enron, WorldCom, and Global Crossing, three gargantuan companies, went bust while the government looked the other way. Of course, when the aforementioned companies filed for Chapter 11, nobody lost electricity or was unable to make a phone call. “But if the government envisions that a failure will have a serious adverse consequence on the economy, it’s going to step in,” said Benton Gup, a professor of banking at the University of Alabama and editor of the collection Too Big To Fail: Policies and Practices in Government Bailouts.
How many rounds does Hank’s bazooka hold?
US to take control of AIG
By Francesco Guerrera in London, Aline van Duyn in New York and Krishna Guha in Washington
Published: September 16 2008 14:47 | Last updated: September 17 2008 03:43
The US Federal Reserve announced that it will lend AIG up to $85bn in emergency funds in return for a government stake of 79.9 per cent and effective control of the company - an extraordinary step meant to stave off a collapse of the giant insurer that plays a crucial role in the global financial system.
This cannot possibly be construed as good news. Unless you are the U.S. stock market, that is.
Lehman Brothers fall gives money markets a heart attack
By Philip Aldrick
Last Updated: 1:03am BST 16/09/2008
Just as jittery banks were hoping for signs of recovery, the credit crisis crashes back
Any bank harbouring hopes of an end to the credit crisis had a rude awakening yesterday. Lehman Brothers’ bankruptcy was another heart attack for the money markets, incapacitating them for who knows how long this time.
Since the crisis struck last year, the markets have suffered regular seizures but - with careful nursing by governments and central banks - they appeared to be on the slow road to recovery. No longer. Fears about other banks’ exposures to Lehman and renewed uncertainty as to where the crisis may strike next will freeze up the wholesale markets yet again.
The crisis is back with a vengeance.
latest news Bank of Japan holds interest rates steady at 0.5%
ASIA MARKETS
Tokyo rises, Hong Kong falls after AIG rescue
By V. Phani Kumar, MarketWatch
Last update: 12:36 a.m. EDT Sept. 17, 2008
HONG KONG (MarketWatch) — Asian markets were mixed Wednesday, with battered financial stocks such as Mitsubishi UFJ Financial Group leading an advance in Tokyo after the U.S. central bank rescued American International Group, averting a feared bankruptcy of the insurance giant.
But Hong Kong and Shanghai-listed shares dropped as investors considered the impact of the ongoing financial crisis on credit markets in the months ahead.
“This is a short-term relief for the market, but the credit crunch is going to continue. It may even worsen worldwide,” said Dale Tsang, managing director at Imperial Dragon Asset Management Co. in Hong Kong.
“Think about it. The credit market isn’t going to be the same as in the last few years,” Tsang said. “I think this is just the beginning. We still have a long way to go.”