Bits Bucket For September 21, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Treasury Secretary Henry M. Paulson Jr. has called the fund the “troubled asset relief program.” I’ll just call it TARP for short (you know, the kind of thing they spread over muddy fields so you don’t soil your Guccis).
http://www.nytimes.com/2008/09/21/business/21gret.html?_r=1&ref=business&oref=slogin
Bloomberg is on Meet the Press. I know people on this blog don’t like him but I just heard more common sense from his mouth, in 2 minutes, than you will hear from 600 other politicians in a lifetime. He basically said everybody wants something for nothing and it can’t last.
But now they are having their panel discussion on MTP. That twat Erin Burnett and that tool Stevee Lisman are on there. Both of these Criminal Network Broadcast Channel (CNBC) fools are spewing nonsense. What a joke. Tom Brokaw strikes me as a tool.
Well, I have to retract my criticism of Bloomberg as a humorless prick. While I may not like his occasional finger-wagging nannyism, I have to say he did make sense this AM, except for his support of Paulson. That, however, may be political and not reflective of his actual view.
Brokaw should be the spokesman for AARP with all that crap about the Greatest Generation he spews forth. I guess he has never heard the term “laying it on a little thick”. Thankfully he doesn’t work at Magnolia’s or else there would be way too much frosting on the cupcakes.
Say what you will about Bloomberg, but Napoleon has nothing on this guy. The War of 1812 would have had a different outcome with Bloomberg at the helm.
You should have seen the rubes hanging outside of Magnolia last night. We walked by and I always laugh. I always mutter, “they’re overrated” when I walk by that place. If you want to see sheep, go to Magnolia Bakery on Bleecker Street, any night of the week. You will see sheep acting like sheep and there will be no question why we are in the mess we are in.
OMG, that’s like soooooooooooo awsum! Like, you know, it’s the bomb.
Same on the UWS.
My friend who’s an excellent (professional) baker crosses the street so that he won’t have to walk past it.
I assume the both of you aren’t big fans of Serendipity over there on the uppper/midtown east side either.
As for cupcakes, they should be light and fluffy, not that brick they produce. I had them once and I must confess my colon felt like a 300lb person was sitting on it. I think I shat out a diamond the next day…it must have had a lot of carbon in it.
Well, I’m not a dessert person. I’m rather neutral on the subject. I prefer savory or spicy stuff.
Odd, I know, but you’re born with whatever palate you are given. Given a choice between dessert and savory, I’ll pick the latter every single time.
However, from a purely culinary perspective, they suck interminably. Even my non-dessert nature allows me to grasp that from a technical culinary angle, this dessert is pure unadulterated cr*pola (and the losers like it?)
Sigh.
As far as Seren. is concerned, don’t forget the health dept. violations.
Another Paulson Gem
Paulson and President Bush have argued that the alternative would be credit markets that remain frozen, meaning that businesses will fail because they can’t get the loans they need to operate and the economy will grind to a halt because consumers, who account for two-thirds of economic activity, won’t be able to get the credit they need to keep spending.
Not everyone needs credit to carry on with their lives.
Wouldn’t it be fully rational for banks to hold on to toxic assets as long as possible if they had reasons to believe a bailout measure would eventually be passed to purchase them at above-market prices? Small wonder liquidity completely evaporated.
While watching one of the Senate hearings the other day, a panel of bankers actually admitted that they are holding-off on foreclosing in anticipation of future “programs” from the FHA.
Surprise, surprise, the LAST thing they want to do us go with the “Hope for Homeowners” (??) program which requires them to write-down the principal amount — something I’ve advocated for a long time, IF we are to have any kind of “bailout”.
IOW, it is a FACT. The banks are sitting on foreclosures waiting to unload them onto the taxpayers.
You can see it on C-SPAN (Wednesday, House Financial Services Cmte. Hearing on Mortgage Industry Delaying Foreclosures)
http://www.c-span.org/Recent/Default.aspx
Just posted something about banks sitting on foreclosures as they wait for Congress to dump them onto the taxpayers.
Hope it goes through, but if not, see C-span on Wednesday’s program with Barney Frank.
Too bad all the large investment banks essentially folded their operations before their hopes were realized.
Why not extend credit directly to the business? Why reward the CEO’s of the banking sector for bad behavior?
Political campaign contribution payback
“I’ll just call it TARP for short (you know, the kind of thing they spread over muddy fields so you don’t soil your Guccis).”
I’ll just call it the No Banker Left Behind Act, because I think it most accurately describes what it is (even if the acronym isn’t catchy).
good one.
How about Not Any Mad Banker Loses Anything, if you want a catchy acronym.
OK, I’m weighing in from a long way away, but IMHO it would be better if the acronym stood for TOXIC asset relief program, and was a straight deck-clearing exercise at a low (and initially VERY low) face-percentage.
Assume the face-percentage was initially set at 20%, and the TARP called for offers at UP TO that price. Assume also the offers would be limited to actual mortgages or non-equity tranches of EXISTING pools of actual mortgages (so no second/third level CDO’s and no “entrepreneurial” creation of new MBS’s to take advantage of this offer such as is being seen in the UK).
Yes; the TARP would be offered the worst of the worst. That would be the whole point of the exercise. Do a quick triage of the dreck offered, and buy SOME of it. (Maybe even buy most of it, but definitely not all, and be especially suspicious of the items offered at very close to 20%. You have to make offerers think hard about their pricing, and also avoid trying to second-guess the market.)
Next period (week, fortnight, whatever is most suitable), call for offers at up to 25% of face, and go through the same exercise again. You will probably see most of the stuff you didn’t buy the first time around offered again (and perhaps at a more realistic price), plus some new items.
Following period, up to 30% of face and so on until you get to a PREDETERMINED percentage chosen to be low enough to still give a fair haircut.
To our host and fellow HBBers, this one has my hair on fire.
I’m trying not to panic, as we are prepared.
Leigh
Paulson: Foreign banks can use U.S. rescue plan
Sun Sep 21, 2008 1:07pm EDT
By Mark Felsenthal
WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis.
“Yes, and they should. Because … if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution,” Paulson said on ABC television’s “This Week with George Stephanopolous.” (cont’d)
http://www.reuters.com/article/ousiv/idUSN2148303920080921?sp=true
Sounds as though we are becoming the global banking system’s toxic asset waste dump.
There is no way this bailout will work. There is a newton’s law of phisics “energy dossn’t desapear , it turns from one form to the other…” By pumping money to the free market you can’t help it , for a long prospective it will create much bigger bubble than this housing BUBBLE we have…
Does a national debt bubble count?
But what do we give them in return, except for more US dollars??
What good does that do a bank in China?
Paulson is mad…and I don’t mean angry.
What can the populace do to stop him? I watched the Glenn Beck / Ron Paul video where Paul told Beck that this is totally unconstitutional because only Congress can ok budget appropriations.
http://www.youtube.com/watch?v=sZwPkTmqfpg
And what is going on in Congress that they are sitting on their thumbs through this allowing one man to steamroll the checks and balances in the system?
The populace can stop Paulson if they flood the Congress and the White House with mail.
The public does not want a bailout but they are too afraid. Paulson, Princeton-educated, who is good friends with Barney Frank and has the complete trust of President George W. Bush has enough of a coalition of Demopublican politico-statist thugs from both sides to scare the populace into submission and passivity. This is the work of shock and awe on the American people. But it’s all pretense. The “authorities” are going to make the problem much worse than it is. We know that.
I go into silent rage anytime I see Darkmouth Hank lying through his teeth, which is a given.
WMD’s, toxic loans: same fear-mongering shell game. Frighten Congress and citizens into submission, and then have free reign to do whatever you want outside of powers vested by the Constitution. There were no consequences for the WMD/invade Iraq debacle which lined the pockets of war profiteers, and so the moral hazard continues…
Executive Order -
Tools will get this done one way or another (I feel a song coming on, not appropriate).
Hangs head in shame.
Leigh
What was that line about democracies always ending in tyranny?
Another day, another acronym that will be forgotten sooner, rather than later.
t.a.r.p. = totally asinine republican plan
For
Useless
Consumers to
Keep
Escalating
Debt
Good One!
I suggest REAM = Real Estate Asset Makeover
LOL
In its latest guidance on the bad-debt fund, the Treasury said firms that are headquartered outside the U.S. will now be eligible.
Huh bail out the world ? This is getting sureal
I am pretty sure the Fed will do its part to encourage other nations facing similar housing problems to run their printing presses to paper over the bad debt. Bailouts for everyone!
http://www.federalreserve.gov/newsevents/press/bcreg/20080921a.htm
Release Date: September 21, 2008
For release at 9:30 p.m. EDT
The Federal Reserve Board on Sunday approved, pending a statutory five-day antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley to become bank holding companies.
To provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Federal Reserve Board authorized the Federal Reserve Bank of New York to extend credit to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley against all types of collateral that may be pledged at the Federal Reserve’s primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility (PDCF); the Federal Reserve has also made these collateral arrangements available to the broker-dealer subsidiary of Merrill Lynch. In addition, the Board also authorized the Federal Reserve Bank of New York to extend credit to the London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley, and Merrill Lynch against collateral that would be eligible to be pledged at the PDCF.
This will end well.
Leigh
P.S. Ya ain’t seen nothing yet, baybee…
Another nugget -
YIKES! (If it’s true).
SEPTEMBER 22, 2008 Short-Sale Ban Spreads Around Globe
Australia, Taiwan, Netherlands Join Push to Keep Investors From Betting on Decline
By KARA SCANNELL
WASHINGTON — The effort to quash short selling gained momentum around the globe Sunday as Australia, Taiwan and the Netherlands announced restrictions to prevent investors from betting that stocks will decline.
The Securities and Exchange Commission and the U.K.’s Financial Services Authority clamped down on the practice, which they blamed for the declines of financial stocks, late last week.
Sunday, Australia banned placing short sales on any stock, taking it further than its decision Friday to tighten such rules. Taiwan will ban short selling of 150 of the market’s heavyweights when they trade below the previous session’s closing levels for …(Cont’d)
Subscription
Lawd, the blind leading the blind.
Ladies and Gents, this is global.
Leigh
Note to self:
E-mail Sir Hoz.
“There is a difference between our strike and all those you’ve practiced for centuries: our strike consists, not of making demands, but of granting them. We are evil, according to your morality. We have chosen not to harm you any longer. We are useless, according to your economics. We have chosen not to exploit you any longer. We are dangerous and to be shackled, according to your politics. We have chosen not to endanger you, nor to wear the shackles any longer. We are only an illusion, according to your philosophy. We have chosen not to blind you any longer and have left you free to face reality — the reality you wanted, the world as you see it now, a world without mind.”
John Galt
====================================================
Please join me and others in our strike against tyranny by removing the monetary ammunition from their arsenals.
1.) Take every last Cent out of their banks, stock exchanges and bond mechanisms. Hit them where it hurts, right in the pocketbook.
2.) Buy as much physical gold as possible with the proceeds.
3.) If you live in a big city, you are in ground zero for the societal collapse we all know is coming. Small town America is mellow, welcoming and neighborly. What’s not to like?
Would John Galt vote for Obama? I know the answer. Are you willing to answer?
Yes, I say, to hasten the inevitable.
That would be Ayn Rand’s answer, but I am not sure it would be John Galt’s answer. Remember, Galt revolted against the American government and helped up his own government within America. Ayn Rand advocated revolution through the ballot box.
I would guess, “no”. Did I pass?
Yes. He would not vote for the lesser of two evils. In fact, I think John Galt would not vote at all.
From my readings of the October 2008 issue of Bloomberg Magazine about Paulson (Republican camp), Penny Pritzker (billionaire fundraiser in the Democrat camp), and Republican supporter (and scamster) Edra Blixseth, I could not understand how anyone could determine if McCain is less evil than Obama or Obama is less evil than McCain.
Why give sanction to either camp?
Warren Buffet backs Obama, but what does he know? A fictional character’s vote by a writer with a fictional name (Ayn Rand, born Alissa Zinovievna Rosenbaum) is much more meaningful.
Smart with his cash. Not so smart with his vote.
B.i.M.,
The presidential race is but a mere sideshow now, and both candidates are seriously lacking in financial acumen, and it shows.
Barack is still my pick, because I place a very high value on inherent intelligence, and he has it in spades, a quick learner.
Sorry to disappoint you that i’m not as absolutist as you appear to be about things…
B.i.M.,
You tend to be think in absolutist terms, as in everything is black or white with no exceptions.
I would hate to burden myself in the same fashion…
Caused my eyes to blink here. A Rand quoter who obviously agrees with John Galt and D’Anconia. I think this one comment you made here is facetious. Or “Shirley” you can’t be serious?
There are no absolutes you say! Good one Alad! Good one!
The root word of dogmatic is dogma, and your dogma is tiresome, quite frankly.
Thanks. You demonstrated that you can quote Atlas Shrugged for the context, but you also demonstrated you did not comprehend the book.
Pot, meet kettle.
B.i.M. seems to think that Atlas Shrugged is the only book i’ve read that’s had an impact on me, and sorry to disappoint, but…
There’s many thousands of other books that have contributed to my education, and I hope to read a few thousand more, as long as my faculties allow it so.
Small town America is mellow, welcoming and neighborly. What’s not to like?
1. Whatever jobs there are in the small towns pay far less than what a white collar professional can earn in the city. After taxes and expenses, the city profesional has a lot more money left over.
2. People such as myself with bad aim cannot defend themselves in the small towns. Law enforcement is hours away, not minutes.
3. Emergency medical care takes longer to get. The time difference is a lot and could settle the question easily - life or death?
The city is a good contrarian survivalist place. If you have a garage, you can store dried food and glass water containers. They can last quite a long time. Specialization of labor makes barter far more easier than where markets are smaller. Unless you have a Porsche parked in your driveway (or any car over $30,000), people will think you are one of them and won’t know whether or not you have 500 ounces of gold in a safe inside your apartment or house.
I agree and have gone to great lengths to lower my profile. Heck, when biking/taking the bus to work I even where workman’s clothing/uniforms that I saved from my days as a mechanic. I am tickled pink if I look like I make $10/hr. I’ll let the yuppies take the hit when/if the rioting breaks out.
And it’s starting now! Note how Barack talks of “working people” and “wealthy people” priming the US for a revolution! (search youtube for his Las Vegas speech, where he promises to prop up their house prices).
Now according to Barack Obama, anyone in the top 5% is “wealthy” and the rest of the masses needs to get at their money!
The only way we’ll ever have true Democracy in this country is with a flat tax and a balanced budget amendment. If taxes ever “need” to go up, then EVERYONE’s go up!
The “wealty” in Obama-speak are those of us who make a decent big city professional salary, say 200K+, who have incidentally been priced out of buying a house for eight years and are now being called on to bail out Wall Street AND the subprime class.
I like aladinsane’s plan better.
$200k in Manhattan barely makes you middle class. But I’m sure Obama thinks $200k in Manhattan is the same as $200k in Cedar Rapids, Iowa.
I do understand why republicans have to demonize Barack. The alternative would be to accept the fact your party has…
1. Failed to protect the American people on 9/11.
2. Started and lost a disasterous war, predicated on lies
3. Showed amazing incompetence and racism during Katrina
4. Caused another great depression with your love of DEREGULATION
So I can completely understand your need to demonize Barack Obama. Why admit the massive failings of your party when you can just make shit up about Barack?
I demonize both parties.
“The only way we’ll ever have true Democracy in this country is with a flat tax and a balanced budget amendment.”
So long as the first $75k of any EARNED income is excluded, I’m sure the entire planet would agree with you.
“I demonize both parties”
I think that is a mistake. I agree the Democrats can be a pretty pathetic opposition party, but they have not really damaged this country in the last 100 years to anywhere near the degree Republicans have. When I think of republicans I think Great Depression 1 (and now 2). I think of Joseph McCarthy. I think of Nixon and Watergate. I think of Iran Contra. I think of the S&L implosion. I think of Iraq. I think of Katrina. I think of Enron. I think of our dollar, and our reputation around the globe.
Democrats are far from perfect, and i would love to vote for a real opposition party. But any reasonable person would conclude at this point the Republican party has been a disaster for America.
Again, I am not a big fan of the Democrats. But I cannot conclude they have been as bad as Republicans for this country.
I cannot lie to myself.
Disclosure: I was a Republican for many years.
“I demonize both parties.”
Do you think this bothers them? This leaves them to concentrate on the voters who might vote…against them. Worse, it leaves them to ingratiate themselves further with special interest groups.
A guy who votes is a drop in the ocean. A guy who doesn’t vote, but complains a lot, is a shrug.
Unless you’re campaigning for a third party, or running for office yourself, I am not too clear on what you hope to achieve with your demonizing ways.
BTW: I am not Demonizing Barack. I am a liberal democrat! Heck, I’ve even been Gay Married.
It’s Barack who’s demonizing me.
That’s OK
McCAin thinks anyone making less than 5 million a year is middle class????
Obama’s cutoff is 250k/year. That’s still a pretty good life in NY City.
I think they need to get away from a fixed #. What they have to target is CEO and Hedge fund pay. Options and capital gains should be taxed at the same rate as income. That’s what it is income. I’d be willing to say they get a lower rate if they agree to options and or stock that are exercised and sold in fixed 3-5 year intervals. ie CEO gets a fixed portion of his pay each month in the form of options that vest in exactly 3-5 years, ie given in Sept 2008 exercised and sold Sept 2011-15.
Here’s how the “Reuven 100% fair Flat Tax” works!
1. Take the total budget: $2.650 trillion
2. Divide by the population 300,000,000
You get $83,000 per person!
Pay that amount! Can’t afford it? Off to Jail!
I’ll be serious for a second here: Anyone paying less than $83,000 has NO RIGHT to complain about taxes! (They do have a right to complain about SPENDING.)
That would be $8300 … A bit more complicated though since many are children or elderly etc.. there is also the corporate taxes which by all rights are a lot lower than they should be.
Looks like a flat tax of 19% would replace the current tax scheme, assuming the tax is based solely on gross income without deductions and all the other complexities of tax. Thus a person earning $50,000 would pay $10000 in tax. One earning 10000 would pay $2000 etc.
A flat income tax all the way down to $1 earned income is inherently unfair and will never happen as everyone knows just how unfair it is. A flat tax on any income (not just wages) above some predetermined threshold where basic living needs have been met is entirely do-able. For instance, any income below 50 or 75k is non-taxable would work very well.
test,
Flat tax - er - Flat world?
Don’t know,
Leigh
B.i.M.,
Who do you suppose is going pay for law enforcement in the big cities when city governments go broke?
200 million handguns & private citizenry will pick up the slack, vigilante-style with ad hoc kangaroo courts rendering the decision of what is right and wrong…
That cannot be any worse than hordes of illegals controlling the countryside. I think of out in Arizona near the Mexico border, for instance: Douglas, Bisbee, Patagonia. Right now many ranchers are overwhelmed by illegals crossing over onto their land. It’s one rancher against dozens of illegals.
And it won’t be just illegals. It will be American citizens (3rd, 4th, 5th, 6th generation) who will take over the suburbs and terrorize the lone residents.
Like Edgewater John says - riding around town on a bike and perhaps living in a 1 bedroom apartment (with a garage for food storage and water storage), wearing cheap clothes, few people will pick on you. I like Tempe and south Scottsdale, where I could ride the greenbelt trail to work. Or I would take central Tucson, near the University of Arizona, maybe rent a room from a friend there (if he’s still alive - he is old and diabetic). I did that before.
When I was young and living in Fresno, I noticed a lot of men in their 50s riding cheap bicycles around town. They would wear drab clothes. Probably searching for aluminum cans? No one would ever assume they had money and consider it costly to bother them.
Back to AZ - unlike California, at least you can carry an unconcealed gun. It could certainly be like the outlaw days at first, but the armed society in the cities would quickly become polite society. It would take much longer for the countryside to become polite, IMO.
“That cannot be any worse than hordes of illegals controlling the countryside. I think of out in Arizona near the Mexico border, for instance: Douglas, Bisbee, Patagonia. Right now many ranchers are overwhelmed by illegals crossing over onto their land. It’s one rancher against dozens of illegals.”
Yep. And for more insight, check out the book “God’s Middle Finger” about the modern day Sierra Madre. Not working out so well in that “rural, small town” area.
On the other hand, gangs do tend to contral urban areas as well. So far, the devil spawn gangs have victimized their own. Wait’ll they start shaking down your average American small biz owner.
Wherever you live, get to know people of like mind and watch each other’s back. There’s safety in numbers.
I ask who’s gonna pay for law enforcement and you guys immediately go to the blame immigrants game, without missing a beat…
And the beat goes on.
Illegals are not the cause of anything, rather a symptom. Kind of like cancer being a symptom of pollutants or lifestyle or whatever.
So I don’t blame them, but it IS good to know how to innoculate oneself from them. But then again, I live in an area that happens to be the fastest growing area of the country for gang violence. Yessir, what a shock to find out Hillsborough County exceeds LA in that department.
We just had a would-be gang attempt to “take over” (their words) Apollo Beach, their first shot across the bow burglarizing a restaurant and raping two of the women that worked there. Oh yeah, I know American citizens are perfectly capable of that sort of crime. Doesn’t mean I want illegals to add to that.
Agreed Lad, they always go back to the illegals.
It isn’t the illegals that are problematic, how about looking at the gangs. They are the ones murdering folks/ or causing many to end up in hospitals/maimed for life. I dont’ hear you guys speaking up about gangs etc. They don’t even want a better life or give a sh about families.
At least illegals do. However many illegals seem to be going back south. Haven’t you noticed? Or are you still in the black/white movies?
dd:
Bullies always like to pick on those that can’t defend themselves from the accusations of a bully.
Illegal immigration is THE main cause of gang proliferation in the US, whether directly or indirectly.
Ostrich head, meet sand. Sand, meet ostrich head.
“Bullies always like to pick on those that can’t defend themselves from the accusations of a bully.”
And it is this natural but devious human reaction to all problems that the right wing nuts capitalize on. Blame, blame, blame and blame. Whatever happened to their campaign platform of integrity, honor and personal responsibility?
palmy…
How many illegal immigrants do you know of on a personal basis?
I’d suspect the number is quite low, if not none.
RE: The city is a good contrarian survivalist place.
Sorry, Bill.
The experience in NO after Katrina blows this perception out of the water.
Civil control to virtual anarchy in 72 hours once the water and food ran out, and the coppers threw away their badges rather than get sniped from a rooftop.
Relative to your bad aim…a 30 round clipped AK-47 can overcome a lot. Even just the visual will send the brigands to prey on some other hapless unarmed anti-NRA individual.
You are talking New Orleans, run by policians lenient on crime. I’m talking Sherrif Joe Arpaio, much as I don’t like his stance about keeping drugs and prostitution criminalized.
Back to Alad: How to fund law enforcement? There will still be people working.
In Fresno, unemployment rate is typically over 11% and has been so as long as I started reading the local paper there in junior high in the 1970s.
Brains are not going to shut their creativity down during the coming bad years. I challenge anyone to convince me otherwise. Myself, I intend to continue making regular investments into the stock market. When you all think jobs, you are thinking only candle-making, entertainment, manufacturing and construction. You stubbornly are shutting off your minds about other jobs that are still going to exist: health care, defense, space research, transportation, infrastructure, nuclear engineering, just to name a few.
I think that the US government will at one point reserve energy for the airline industry and order motorists to ration gas otherwise. I could even see the possibility of continuing my long distance air commutes and not rely on any single city for my location for my work.
If you have enough conservative investments to keep yourself living without a job for years, you may as well take each day as it comes, since we have not crossed the bridge of violent anarchy yet.
You are talking about New Orleans, policed BY criminals. Or anarchist. Or whatever.
Not to mention that 95% of the city had fled the hurricane.
If anything, NO demonstrated that the good citizens of a big city (who far outnumber the bad citizens) are what keeps the criminal element suppressed. Once they left, the police were nearly powerless.
If the police leave and the citizens stay, why would you expect things to go to hell?
Shotguns are for those people that can’t aim very well…
I don’t think you understand the gossip network in small towns and how aggressivley some people go after the information.
*****************************
Unless you have a Porsche parked in your driveway (or any car over $30,000), people will think you are one of them and won’t know whether or not you have 500 ounces of gold in a safe inside your apartment or house.
I do understand very well. Lived in one with a population well under 1,000 when I was a kid. My parents gripe about it was that everyone was nosy and knew each others’ business. On the good side, they had many life-long friends. Eventually everyone got too old to defend himself from crooks who drove up from Fresno.
Bill, my friend - only a few months ago you waxed poetic about the joys of safety in the city. Your local police department will rush to your aid upon request, as I recall, to lead the charge against the marauding hordes! At the very moment they descend upon your threshold!
I recall some disparagement directed at the skeptics among us, who may doubt the responsiveness of public servants during a crisis. And therefore plan for self help measures.
Never mind. Always good to have another Second Amendment advocate.
Um…
1) Cost of living is lower, as is the salary, but I bet the houses are cheaper unless one likes living in a slum.
2) The police are “hours away?!” Huh - we’re not talking about living 50 miles from the nearest person, and if the nearby cops fixed everything, inner cities would be models of peace… which they are not.
3) That one I’ll give you, but the other two points, not so much.
“If you live in a big city, you are in ground zero for the societal collapse we all know is coming. Small town America is mellow, welcoming and neighborly.”
Nah, I’ll make my stand here - no need to burden perfect strangers. Besides, if I grew up in a small town I’d be thinking about setting up roadblocks.
If I take all my money out and then buy gold, doesn’t that put my money right back into the system? To hurt “them”, the money must not re-enter the system.
Central bankers HATE gold, its rise signals a vote of no confidence in their system, also it can’t be manipulated and printed.
?? Hating gold has nothing to do with it. How is it any different from taking my money and buying some other thing that I’ll keep?
The point is that my money is still in the system. In some other bank than my own.
Who says you have to keep your metals in a bank?
I take money out of the bank, it hurts the bank because they’ve lent out much more on my initial deposit.
I buy something with that money, gold, a car, a house, whatever, then my money goes back into some different bank and they’re able to lend out much more than I deposited. Net effect of pulling out my money: nothing, because it went right back into somebody else’s bank.
I’m not sure why you think I said something about keeping my metals in a bank. I’m saying and continue to say that AInsane’s number 1 item only has effect if the money is put in a mattress. If it’s used to buy something, item 1 does nothing.
I see your point, but what if the dollar does collapse?
You must start using a different money in all of your transactions. They only have power so long as their money is used for transactions. This requires corporation of an entire community. Reduce demand for the dollar!
Visit Solari.com…..Catherine Austin Fitts backs a terrific way to pull money from the larger system….. Primarily it involves investing in your community/community leaders who own their own businesses….
You are absolutely correct.
By giving them back their fraudulent monetary instruments and turning the proceeds into Ne Plus Ultra, our financial system might last a few days longer than it should have.
Who cares at this point?
It’s every person for themselves…
RE: Small town America is mellow, welcoming and neighborly. What’s not to like
Sorry Sane, I have to collectively disagree.
Mazzlanders with their loud-mouth, haughty, urban-tourist arrogance are completely detested in the small town of central and northern New England.
It’s a sorry fact, but it’s what’s been allowed to happen in a Balkanized economic system.
We are no longer a unified America.
One must adjust to small-town ways and manners, and leave the big city ways behind. It’s not that hard.
I left the big smoke 3 years ago, and it’s funny. People in L.A. were incredibly anonymous, many not knowing their immediate neighbors, even after years of living cheek by jowl.
Living in a small town is completely the opposite. Folks realize they need one-another, and conversations with complete strangers that live here, often turn into friendships and expand the trust of the community even more.
small is Beautiful…
. Folks realize they need one-another, and conversations with complete strangers that live here, often turn into friendships and expand the trust of the community even more.
Bwahahahahahahahahahahahahaah!!!!
I wish I had a nickle for everyone who shared w/me how miserable and isolated they felt in my last small town. And $1 for everyone who bought their dream home there but then moved back out w/in a year or two. I still remember the first person I met at the town pool. She was literally counting down the end of her 3 years when her husband would move her back out of there.
I think you overgeneralize this small town mystique. I’m glad you found a good one though, Alad. I lived in a nice small town when I was kid and have some great memories.
It’s all about picking the right small town…
I searched for many years, until I found mine.
Small town Americans love to have the city boys move into town and then point out all of the things they are doing wrong. They really enjoy this. I saw this in North Carolina where the Yankees would come rolling in and immediately try to turn every town into Yankeeville.
“Small town Americans love to have the city boys move into town and then point out all of the things they are doing wrong. They really enjoy this”.
LOL… Yep we love the “how we do things up North” statements, so much so that a popular bumper here sticker reads… “We Don’t Give A Shit, How You Did Things Up North”… & “North One, South Zero….Half Time “
And you can thank Rove/Bush/Cheney/Rove/Atwater, republicans for that. The massive attack for all these years have been Separating the US citizens from each other. Politically and otherwise.
When we had an opportunity to bring us all together, as in ww2, post 9/11, George did not do that. Instead all his speeches were littered with ,if you are not with us, you are unpatriotic. Furthering wedges between you and your neighbor.
The constant efforts on roves/cheney/rumsfeld=republicans part is and was to make us all suspect one another, hate one another and think the other guy is the bad guy.
When it was our “leaders” and back office thugs/hoods, such as Foley who just got off, not allowing the HD of his pcs to be looked at.
Now in what small town/big city would YOU or I have that opportunity to Shield your pc when you were suspected of child porn/child endangerment?
NO one that is who. Just the politicians with paid off cronies.
Worst Administration, Ever!
So it wasn’t widespread drug use, permissiveness on crime, grade inflation, multiculturalism, the sex revolution that changed our cultural landscape. But it was the last 8 years. No?
It was people like you Bill, that voted for the scoundrel in 2004, and allowed the thieves 4 more years to rape and pillage the country financially.
Don’t forget that this admin has been in place since Rayguns admin. Check out the hoodlums behind bush in photo ops.
So, along with continually voting to dismantle everything that has helped this nation to be strong, W gets his chance unfettered for 8 yrs +, don’t forget also that during the clinton tems, 1yr anda half after he was in office, the senate and congress became a majority of republican thieves and sidekicks that encouraged the rapid dismantling of our working nation.
Yep, it is easy for McC to say ” it is our working americans who are fundamentally strong etc” but what he leaves out is that the “working productive americans are losing their jobs, losing pay, losing insurance, and losing our patience.He left out alot when he kept saying
“we are fundamentally strong” he meant, he and Cindy and the “Have Mores”.
‘The sex revolution’? Sheesh, what century are we in?
What with ‘the illegals are stealing our jobs and our wimmin‘, BiM, you are obviously living in the Golden Era of the 1950’s.
Good luck with the nostalgia, I’ll take my chances in the ‘Noughties’ of the New Milllenia.
I appreciate your insights into housing and the economy, but when you venture into social issues, you sound like a dinosaur.
“Quit while you’re behind”, as my old Granny used to say
I’m not saying the sexual revolution was a bad thing. I’m a liberal and I don’t believe in marriage but believe in lotsa…well you know what and I haven’t dated within my race since the early 1990s. But you have to admit the social landscape changed.
I’m probably more liberal than people on this blog, and that I accept full responsibility for my actions is certainly not contraditory to my liberalism. Since I back legalized drug use, I also back traffic stops and laws against DUI. If you use drugs, it’s your business, but you get on the road and hurt someone, you should pay severe penalties.
My point is that we are divisive more by culture than by what Bush did the last 8 years. We have Rap music (espousing violence and abuse) put on the same pedestal as real music. We have spoiled anti-American sports stars and movie stars earning many times more than very good school teachers. We have messes on canvas any 3 year old can do marketed as Art and sold to rich suckers.
And all of this is Bush’s fault. Morons.
I blame the US citizen. We get the government we deserve.
What about other precious metals? Does silver count?
What about minimizing the withholding? I am sure most here already do that, but some may not. Increasing your deductions to reduce the amount withheld by both state and federal governments to as close to the amount you are being ripped off, er, ah, I mean legally obligated to contribute will also remove money from the system.
Reduce fees and any recurrent charges you pay to banks. Buy a safe and close out your safety deposit box at the bank. Get your checks printed at a discount elsewhere.
Acquire a gun and learn how to use it. When TSHTF it will get real ugly, real fast.
How else can those who no longer wish to play in a system that rewards the destroyers follow the lead of John Galt? We have to be realistic, many of us cannot disappear to Galt’s Gulch in any form. Many of us will be trapped within the system and have to continue working as part of that system until it collapses completely. At that time all bets are off. But until then some will need to accumulate PMs, minimize our contribution to a corrupt system and prepare for an exodus. Perhaps regional collaborative efforts to acquire and provision sanctuary properties is worth discussion.
Casey Jones, you’d better watch your speed ….
Galt’s Gulch - I’m here as we speak (Ann Rand based it loosely upon the valley near Ouray, Colorado).
Believe me, you don’t want to be here, cold and snow 7 months out of the year, a hard place to survive, though astonishingly beautiful.
Mid Ohio is perfect to get lost in. 40 inches of rain, can grow most anything. Fair amount of meat on the hoof. Mild winters, but, cold enough to discourage tent cities. Counties losing population or staying stable. Close to big cites for amenities if needed. Lots of gentleman farmers looking to sell their 40 acres because they’ve lost their auto job (but refuse to change their lifestyle). That’s next on my list.
I’ve been there Lost. I used to take my kid up to Durango every summer and a few times in winter. Brrrrrrrrr rabbit!
I think we need to hunker down in place if we can, but work on some sanctuary that is rural. From Orange County a small place in the San Bernadino Mtns may be ok, or some land in the desert with water. There are problems with each, namely the cold in the mtns and heat in the high desert. The point is to prepare for the worst case and hope for the best case.Now what the best case may be I really can’t say. I do know one thing. I have almost zero confidence that my interests as a fiscal conservative and prudent consumer have and are being adequately represented at any level of government. That said I have to ask the question, “why not let it collapse?” Oh, the horror! What happens if it all falls apart? What IS the downside? Just asking the rhetorical questions here, but considering that all of the money I contributed to Social Security may not be there for my retirement, and that people who cheated and lied to get into houses may get to keep them at a discount while prices remain propped up and I am punished for being a saver, why not let the PTB who set up this debacle and want it to continue lose control? This is not a partisan thing, this is beyond Republicrats or Democans, this is a hoax being pulled on the folks in this country who tried to do the right things when all about them were gaming the system. So stop the train Dagny, I want to get off. Even if that means I just hunker down in place.
In choosing a getaway spot, make sure it’s at least a tankful of gas away in distance, from the big smoke.
Laddie,
How much should a yellow buffalo cost right now?
As Olivia Newton-John says “let’s get physical…..”
And no, I don’t like the song.
Mike
1 oz Eagles/Buffalo coins will cost you around $50 over the spot price, if you can find any.
Why would I buy any gold or silver product minted in America? Like everything else, they are probably lying about the purity and/or contents. I’ll stick with Canadian Maple Leafs, thank you.
Which Anthony should we believe?
The one that pleads with us to sell @ the bottom of the market, or the one that tells us to buy cml’s right now?
==============================================
” Comment by Anthony
2008-09-06 11:05:31
Major stock market rally, I bet on Monday. Gold and commodities, as usual, will get trashed. Stronger dollar due to implied government guarantee. Sell your gold this weekend if you can!”
Lad,
I believe I was correct about PM’s getting trashed. After all, Au fell to $740 and silver to $10 within a few days of my prediction. Now, I do have some holdings in PMs (mainly Ag and Pd but also some Au). But the majority is in “worthless” cash. I would have thought with all these bailouts, the PMs should be much stronger than they are, irrespective of the Government’s obvious intervention.
What I am saying right now is why people are obsessed with buying American-minted PMs? If you can’t stand the establishment, why give the U.S. Mint any premium at all? I have about 15% of my net worth in PMs, mainly as an insurance policy, but, I am proud to say, none of it originated in America. Before long, this county will be placing RFIDs in gold so that the authorities can confiscate it.
Anthony,
If anybody followed your advice, they would have lost a bundle, and you were quite strident in your opinion and gave it repeatedly over the course of the weekend, 2 weeks ago…
Care to apologize?
1 oz Gold Eagles/Buffaloes are the only easily available bullion item to locate right now, because our government is still making them available to the dozen or so master wholesalers in our country, thus their popularity, as in it’s the only game in town pretty much…
Since the very 1st Silver coins were struck in 1794, and the 1st Gold coins in 1795, never EVER has the purity and weight of any United States coins been in question, and it remains so today.
I dare you to show one example of any USA Coin struck in Silver or Gold that was underweight or the purity not as specified…
Put up, or shut up.
Lad, if someone were trading on what I said, they would have made some money; hardly lost a bundle. I believe Silver was around $13 at the time I said that, and it dropped to $10. Gold was somewhere near $790 and it dropped to $740. Why should I apologize?
And, if you want to be a hypocrite, aren’t you the one who always says anything other than 24K is “junk”? Correct me if I’m wrong, but American Eagles are only 22K. So why are you recommending them now? Do you work for the mint?
Anthony,
If anybody took our shoddy advice, they would be sans metal right now, as in down a bundle based upon current prices. You were quite simply wrong.
I could care less what karat a given Gold coin is, but the Asians tend to prefer 24k. That’s reality.
Deal with it.
Lad,
We agree to disagree. Just do me a favor: stop commenting on “global warming” because you have no educational credentials to back yourself up and sound like a freakin’ fool even making your very uneducated comments on it. If you want a professional scientist’s opinion, consult me; if you want a poser’s opinion, they can contact you. Thank you.
Oh, and I wanted to correct something. You mention “down a bundle” I think silver is still below the price I said to sell it at, so there would have been a small profit (approx $13 compared to $12 now). At current prices, I would be underwater on gold by almost $70. But, tomorrow (and next week and next year), well, they are different days. I did notice when gold went from $1030 to $800 you were very quiet.
Anthony,
Your world is one where if you aren’t credentialed, you must not know anything.
I have walked perhaps 5,000 miles in the Sierra Nevada and know this good earth on an observational basis, combined with a book-smart learning. A good combination…
I have watched climate conditions change quite profoundly over the years and i’ll continue to contribute to the discussion about it, and it’s effect on us. The drought in California is all too real, but you are the one with your head in the sand, not me.
Anthony check out this link:
http://www.csmonitor.com/2004/1118/csmimg/p16a.jpg
and you can see how much ice has melted in the last 30 years.
I don’t see how that graph shows me how much ice has melted in the last 30 years. It appears to show how much ice somebody thinks will melt over the next 2-80 years. Maybe you pasted the wrong link?
I found 10 buffaloes for $932 yesterday.
They’re grazing in my general location as we speak.
Mike
Nice Herd!
Buffalo Gold coins are pretty cool looking, the design essentially being the same as the Buffalo Nickel, issued from 1913 to 1938.
I often see wacky prices listed online. I like this place. Their prices seem fair and I can visit their store and buy in person without sales tax.
http://www.ajpm.com/htbin/gold.cgi
Your mileage may vary.
This is funny.
Try to scare the bejeebers out of people so that they’ll take panic action, that just coincidentally raises the value of one’s own investments. And of course, cloak it in some greater morality in order to disguise that obvious fact.
Oldest trick in the book. The televangelists have created quite an industry doing just this. It’s worked great for Al Gore, as well.
Funny thing is, I made most of the same choices five years ago that you have, ‘cept for all the lusting over the shiny metal. I just don’t feel the need to preach at everyone else about, it, though. Who’s the evang here?
Oh, I can also say first hand, small towns aren’t all that they’re cracked up to be. Choose carefully.
shoe,
I have never endorsed anything other than the ownership of Gold. Never once have I made any recommendations as to whom to buy from.
And Gold is real, not a figment of your imagination like religion.
And you dare compare me to a tv evangelist and/or president…
Please, entertaining and well constructed as it is, Atlas Shrugged is a work of fiction. We get the point that greed should not be condemned outright and that it does have a certain motivating factor. We don’t, however, want to construct our financial policies around a fable.
Any modern economy is going to require a balance of both free market incentives and government regulation. We’ve been tilted heavily towards the laissez faire philosophy for the last twenty years, and whether by ballot and legislation or by current fiat the system must regain its balance.
Shout all you want about the injustice, but you’d be better off reading the text of the actual proposed legislation and urging your congressperson to remove the dictatorial powers of Sec 8:
“Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
Ive had it! This is the death star plan; park a massive black hole machine in orbit around our economy and threaten to unleash it unless they get what they want: Total immunity from anything, an incalculable upper limit to taxpaying citizens, no recourse to strip those responsible of their fraudulent gains.
Has any New York banker ever once proposed a plan to rescue any other part of the economy? At one tenth of the cost in money or jobs?
Tomorrow I will begin to exchange all….read that 100 percent…..of my remaining dollar assets to gold or silver. I could care less if they lose 90 percent of their value. Ive given up being concerned that the value of our money will fall. Its obvious that those in charge of it dont care. Please, spare me the hand wringing and tears over banks that cant fail. I will refuse to hang on to a dollar any longer than it takes me to turn it into a silver dime. Go ahead, fuel up those helicopters. I could care less!!
http://www.humanevents.com/article.php?id=28616
Pat Buchanan…the party’s over, our Empire is failing.
Failing or failed?
I think I meant falling, or should I have said “has fallen”?
What the Greatest Generation handed down to us — the richest, most powerful, most self-sufficient republic in history, with the highest standard of living any nation had ever achieved — the baby boomers, oblivious and self-indulgent to the end, have frittered away.
The dumbest generation.
And their kids
THE MORON GENERATION
IMHO that’s what would happen to Rand’s Galt’s Gulch after a few generations. Success is about a hunger that doesn’t get passed through DNA.
“Now that the federal government has bailed out Fannie and Freddie, who’s going to bail out the federal government?”
http://tinyurl.com/5uxvfx
“The real liability facing our government is $70 trillion. This represents the present value difference between all the government’s projected future spending obligations and all its projected future tax receipts. This fiscal gap takes into account Uncle Sam’s need to service official debt–outstanding U.S. government bonds. But it also recognizes all our government’s unofficial debts, including its obligation to the soon-to-be-retired baby boomers to pay their Social Security and Medicare benefits.”
“The earthquake will come via a collapse in the market for U.S. government bonds as domestic and foreign investors realize that the only way Uncle Sam can meet his future spending obligations is to print massive quantities of money. The result will be sky-high inflation and interest rates and, most surely, a prolonged reduction in output and employment. This could happen today. It could happen tomorrow. But it will happen here just as it has happened in every other country that tried to spend far beyond its ability to pay.”
As massive amounts of money are printed and inflation goes sky-high, won’t the stock market rise in proportion?
MV,
It worked like a charm on the Zimbabwe stock exchange, so why not here?
Must have worked for a little while, at least :
The Zimbabwe Stocks Exchange {ZSE} has ballooned to phenomenal levels as a result of the bullish patterns dominating the stock market this year. Most of the counters in ZSE have recorded enormous gains with the mainstream industrial index growing by over 600 percent.
Despite the big economic crisis that has been facing Zimbabwe; the ZSE has managed to post very impressive performance two years in a row, 2005 and 2006, beating the high inflation rate that plagues the country according to The Africa Stock Exchanges Association (ASEA). Thanks to the on going stocks rally, the ZSE market is now worth a staggering Z$405 trillion in market capitalization, after rising a steep 275 percent in just three days this week.
I have no idea what word is preventing my post (an article on the Zimbabwe stock exchange, I keep modifying to remove words) to come through, but the Zimbabwe stock exchange has a mighty run.
The Zimbabwe Stocks Exchange has ballooned to phenomenal levels as a result of the bullish patterns dominating the stock market this year. Most of the counters in the exchange have recorded enormous gains with the mainstream industrial index growing by over 600 percent.
Despite the big economic crisis that has been facing Zimbabwe; the exchange has managed to post very impressive performance two years in a row, 2005 and 2006, beating the high inflation rate that plagues the country according to The Africa Stock Exchanges Association. Thanks to the on going stocks rally, the zimbabwe market is now worth a staggering Z$405 trillion in market capitalization, after rising a steep 275 percent in just three days this week.
Yes it did, actually. I can’t seem to post an article and I have no idea which word is tripping up Ben’s filter. Try this link
http://www.africanexecutive.com/modules/magazine/articles.php?article=2190
As I’ve said before, this debt will never be paid back by any of us. It’s mathematically impossible. I don’t see how some proposal to spend a few hundred billion is anything more than pissing in the wind. The real event at hand is the collapse of the housing bubble. And in a hundred years nobody will remember these little government efforts to forestall the bust.
I was talking with a young man last night, and he told me how his great grandfather made millions, legally and ethically, during the great depression. Will your family recount the wealth you accumulated during the great housing bust of this era?
Agreed.
Yep, it’s the best (and only) way to cope with these annoying and antagonizing headlines.
So yesterday on CNN the Trump was saying that now is a great time to buy Real Estate, a one in a lifetime opportunity.
Today, Forbes on MSNBC said that the only problem with Lehman, Bear and AIG was that the “stupid” accounting rules of market to market in conjunction with the “only” winners in this turmoil, the short traders, had driven these otherwise money making, “cash flow positive” companies into the ground. He stated that market to market rules should be suspended.
See? We, oops sorry meant, “you” were all wrong all along.
Changing a technical rule like “mark-to-market” does not change the fundamentals.
Do you genuinely believe that bankrupt companies can continue to function just because you don’t mark-to-market?
If so, why hasn’t this been tried out in world history before?
Gimme a break. This is precisely as dumb as it sounds.
Pussy, by now, I sincerely hope you know when I jest.
However, they did say this.
Sigh.
I guess my disgust at the Toup&ecute;e-Man™ clouded my sense of humor.
Oh well! Happens sometimes.
There are probably more than a few of you on this blog that have no business being on here pontificating, as your financial houses aren’t in order, and you’ve got “VICTIM” stamped on your foreheads, but you don’t know it.
We have entered the endgame of the proceedings and catastrophic changes are afoot, and you must protect yourself from the carnage now, not a week from now.
Ben is correct, the few that thought things out and invested to the beat of a different drummer will do just fine.
What color is your financial parachute?
A long time ago I did a skydiving adventure. It was a static line jump, not a free fall. To do a static line jump you have to actually hang on the wing of the little plane before letting go. That takes a little fortitude to climb out on the wing of a plane at 3,000 feet.
I had full faith in my parachute when I was on that wing. I had no other option. They had told us, “once you are on that wing, there is no coming back in. You are jumping, one way or another.” Knowing there was no going back I let go of that wing and put myself in the hands of that parachute. Was it blind faith? Perhaps. But the damn thing opened, just like it was supposed to open. I floated down nice and safe to the ground. It was one of the greatest things I’ve ever done. I owed it all to a well placed parachute.
Later that day I joked with my girlfriend about how they told us that nobody would remember what color their parachute had been. So, my girlfriend said, “do you remember the color of your parachute?”
I’m a pretty sharp guy, I think. I wasn’t going to be some goofball that couldn’t remember the color of a parachute. I said, “of course. It was blue and yellow.” It was a really pretty parachute. Several days later I got back the photos and they proved me correct. My parachute had indeed been a beautiful purple and gray. I don’t know if there is a lesson to be had from that story but I like stories.
LOL.
When you retell the story, you should make it “gold and blue”. It goes better with an extra shot of paranoia on the side too.
It’s great theater, however. One year ago, chief B said this thing will cost 50 billion and was containable. Today, Dr. Evil says, if he does not immediately buy ONE Trillion Dollars worth of dodgy assets, the entire global financial system will collapse — 401-ks will disappear, money markets will collapse, the world as we know it, despite strong fundamentals and system wide redundancies, will change forever. Oh, the humanity!
“…despite strong fundamentals…”
Yeah, so which is it? A crisis or no big thang?
Not three months ago the decider pointed to this economy’s “strong underpinnings”. So why all the rush?
Inquiring minds would like to know were they competent then and are they competent now? Were they misleading then or are they misleading now? In a Republic there should be open debate so we can make these determinations. Why the sudden rush and lack of transparency? They knew something big was brewing over 12 months ago.
“Why the sudden rush and lack of transparency?”
Rhetorical question. Right?
Clearly.
Don’t these people realize that the failure of all these crooked, incompetent investment banks is actually a plus?
Ben,
I believe the real story that will be looked back upon and studied as part of our (ugly) history is not the bursting of the housing bubble, it’s the creation of it, and specifically, the human traits and weaknesses that created it and allowed it to go unchecked for so long. Yes, this will be a lesson in human psychology as much or more than anything else… more than finance and math.
I disagree… ask today’s public “What was the cause of the Great Depression?” Years from now, all that will be remembered is the collapse.
The Great Depression was caused by slavery. Same thing caused the Greater Depression.
The anarchy has to be a bit over-blown. It will be nipped in the bud.
Slavery to slovenly accounting practices was the root cause in both cases…
OK Ben, why not have a thread on how to make millions legally and ethically during the upcoming decade or so? Seriously, I’d like to see the suggestions from posters on this blog as to how to do that, exactly. I’m nowhere near as savvy as hoz or pussycat, I wouldn’t mind advice from them (very basic, baby steps sort of stuff) on where to start.
I have a friend back east whose company makes residential “security bars” for windows. His business is booming!
Excellent, reuven. That’s exactly what I’m looking for, suggestions.
Get in the REPO business. Going great guns or open a PAWN shop. Collection bureau. All three are good businesses. Pawn shop takes a lot of capital. Remember Ray Charles in ‘The Blues Brothers’ ? Bail Bonds.
Same here.
Good idea. For me, not knowing if gold is the answer or high quality (albeit low yield) government bonds are the answer, I have both. Paper series I savings bonds and EE savings bonds. I have them in three different cities tucked away.
My plan in crunch time will be to consolidate them in one place. Any one of the three categories, I could live off of for a few years without a job. I don’t have much material possessions so I have the ability to downsize from 2 bedroom apt to 1 bedroom.
There are enough self-help resources for survivalism in urban areas. Since it’s cheaper to cool a place than to heat a place, Tucson and Phoenix are top on my list.
Oh, and it helps a lot if you are in such a large metro area where you can find a certified precious metals dealer who will buy your coins for cash. - Add that to another reason for living in a large metro area and not a small town.
My grandfather got very rich during the depression selling music - at that time, sheet music. He went on to run the music department at one of the big movie studios. Cheap entertainment sells in bad times, but I’m not sure you could make any money anymore. You have to be able to provide a service that someone needs and is willing and able to pay for.
Ben, I disagree.
That old guy millionaire had a democratic government the #1 super power in the world to support his capitalistic ambitions and build his wealth. The future from this point forward will have none of that. Real-estate will be a poor investment for many years. I think maybe 25-30 years till the demographics change and we have a true positive birth rate >2.1 that will support fundamental population growth and increasing values.
I was wondering which way this economic collapse would end up, like Japan or like Argentina? It looks like the Japan model right now with one big difference will be the crash in the US long bond over the next few years.
There is always money to be made in any big economic event. It makes no difference to me if some want to crawl in a hole and do nothing. I’m not going to follow.
Well, let’s have the suggestions as to how to do this. I’ve no doubt there’s opportunity, but since I’m not some savvy trader, what would be best for me? Reuven gave a good example. People are fearful, thus the need for security bars. What else?
I like solutions, suggestions, that are useful.
Ben ,I’m trying to figure out how is the best way to protect my money or make money also . How does one figure out this
investment landscape when at anytime the government changes the rules after the fact .
Many of the people on this blog are younger ,so I guess they
can take more risks on the investments opportunity with these changing tides ,but I’m to old as you know . I agree with you many smart people made money during the last big Depression ,
but aren’t you concerned about just how far the government will go with trying to control markets or interfere ? I have never been a great investor because I never liked to much risk,so I guess I will never be rich .
No, no, no don’t crawl into a hole! There is real wealth being crushed to the tune of trillions of dollars right now I’m just saying housing will offer slim rewards for your long term investments. I think raw land and natural resources/infrastructure will retain value better than commercial or residential real-estate. What do you know about shorting US bonds? Got any ideas on playing this short position? Seems like a good bet to me.
Create/distribute/sell things people will need or think they need.
Create methods to teach people the skills they need.
Create products that make people feel optimistic, like they can make it though, and I’m not talking sleazy crap, there’s already tons of that out there, it’s part of the problem. I’m talking real optimism, not false hope or denial. How to move towards hope, how to take a modicum of control over your life.
People who go into panic mode are fools, who the heck needs guns? Jeeze, c’mon, you guys, if you think it’s going to be that bad, get out of the city, for crying out loud. Panic just makes you ripe for making poor decisions. Yeah, I have guns, but I’m not even sure where they are, somewhere in storage.
And yeah, like I posted above, I’m in Galt’s Gulch already, a nice place, but I’m leaving soon.
You know, I have a friend who was getting worried and then he said he figiured it all out. He grew up in a fundamentalist church and was worried about Armageddon. What’s the solution, I asked? You know, he said, we’re going to die anyway, that’s what makes people act like fools, is worrying about that. So what, big deal.
OK, off to photograph some autumn colors. Quit worrying, you guys. Enjoy what you have, hug your loved ones, go fishin’.
“Create methods to teach people the skills they need.”
I think this will be huge. People farmed out lots of work instead of doing it themselves. Now they’re clueless how to take care of their own assets. I think they’ll invest in a little education.
You know ..I sew a lot - it’s my hobby. And people always ask me why I don’t sell what I make. I tell them I can’t compete with the low cost of chinese goods at local stores. But I’m thinking … when people can’t buy those goods anymore, maybe they’ll need to know how to sew themselves. So while I might not be able to sell completed goods, I can probably sell the skill.
“made millions in the great depresion”
I grasped the concept of the housing bubble. I grasped the concept of the greatest credit expansion in the history of the universe. I grasp that the party is over (except for the drunks vomiting in the corner). I grasp survival skills. I grasp diversification and contingency plans.
I do wonder though, how one profits from a collapse. I have spent my life building and fixing “things” and don’t have a flair for making millions. Now I have money (in various forms) in a world awash in debt. I would like to be wise enough to deploy that money productively, but my instinct is to preserve it. I hope for insight into what activities will be productive in what will be a whole new game.
RE: how his great grandfather made millions, legally and ethically, during the great depression.
America still made shit in the 30’s.
As one poster here noted the US economy has been outsourced.
And I don’t think the quasi-literate MTV Rapper/Gangsta Gen is gonna pick up the slack.
“Will your family recount the wealth you accumulated during the great housing bust of this era?”
I doubt it. First, we are not wealthy. We make modest incomes ($130K/year) in quite secure jobs and have only about $200K saved in cash (not retirement). 10 years ago I would have thought this was a respectable income/cash position, but given all the funny money of the past several years, it seems quite a few people have far more (usually inherited or from scamming someone in RE). Anyway, the powers that be will see to it to continue to socialize losses as anyone with any cash will be a target. And, given how little RE has dropped in coastal NW California or in most of Hawaii (the places I live and/or wish to live), I don’t think my continually depreciating $200K is going to make me a multi-millionaire.
If this debt will never be paid back by anyone what does that imply?
1. Massive inflation to lessen the impact of the debt.
2. Declaration of bankruptcy by the Government.
3. Abandonment of the dollar.
“And in a hundred years nobody will remember these little government efforts to forestall the bust.”
I dunno. Seems quite a few of us are pretty well versed on what happened almost 80 years ago.
“But it also recognizes all our government’s unofficial debts, including its obligation to the soon-to-be-retired baby boomers to pay their Social Security and Medicare benefits.”
My prediction — the 1960s generation gets theirs, and those who follow are left to die in the street. That’s the plan, both for Republicans (Bush said those who are at and over 55 should be exempted from any cuts) and Democrats (Obama said taxes — only on wages — should increase to pay for Social Security — only a decade from now, when the 1960s generation has retired).
Those born in 1960 won’t be able to receive “full” SS benefits until 2027.
“Will your family recount the wealth you accumulated during the great housing bust of this era?”
Some thoughts? Aside from some holding of PM’s, and debts paid..what’s a luddite to do to protect what few honest dollars we have left?
Also: Where the heck in TxChick ? I read here when I can,and haven’t read any of her helpful insight in a while.
Hence, my ongoing, party-of-one rebellion in saying that Boomers were born from 1938 to 1954 or so. *Boomers* is a mindset, a demographic and a life condition all rolled into one. It’s not merely an esoteric set of years based on population statistics that mean nothing.
Boomers has and will continue to get theirs until the day they die. Anyone born after 1955-1958 or so will not. They are screwed forevermore.
the government could and will raise taxes don’t you think ?
And Social Security forget about it
A friend had a ink-stamp made up that says “TRAITOR”, and every Federal Reserve Note that passes through his hands gets stamped with that word, right over the title of “Secretary of the Treasurer”, and right below Henry Paulson’s signature…
It reads like a last ditch effort to save Hgeneral Enrique’s amigos from the wrath of the invisible hand. It’s a mockery. We must soak the sheeple to save the sheeple.
Now what if we all did that…?
OMG- He must know my brother in law in Las Vegas who does the same thing with his greenbacks.
LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY
“”This is a de-facto nationalization of the entire banking, insurance, and related financial system. Specifically:
“(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;”
That’s right - every bank and other financial institution in the United St@tes has just become a de-facto organ of the United St@tes Government, if Hank P@ulson thinks they should be, and he may order them to do virtually anything that he claims is in furtherance of this act.
This might include things like demanding that a bank or other financial institution sell him its paper, even if it forces that firm to collapse and be assumed by the FDIC!”"
from: market-ticker website
“”Bottom line: This bill gives P@ulson the ability to nationalize an UNLIMITED amount of private debt and force YOU AND YOUR CHILDREN to pay for it.Sec. 8. Review.Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.If you are a bank, investor, or other entity who is forcibly gang-r@ped by Secretary P@ulson due to his actions as “King” (crowned by C@ngress) under this law, you are unable to seek redress in the courts or by administrative action.”"
from: market-ticker website
There is no way this Bailout will work. According to Newton’s law of phisics energy doesn’t desapear it turns from one form to another… By pumping money into the free market you can’t make it work …in a long run it will created bigger BUBBLE rhan we have now…
“(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;”
You misread that. According to Liesman on Meet the Press this morning, it means giving financial firms the authority, using tax-borrower money, to buy the troubled securities in question. They are not setting up a separate agency to conduct these purchases. A group of chosen financial firms will be buying securities from other entities on behalf of el General.
I hate Lisman. He is repugnant beyond belief.
The MSM always marshalls up a formidable public awareness campaign if there is just a hint of trampling the Constitutional rights of an illegal or minority, or failing to observe due process for war prisoners rights, or tapping phone conversations of potential terrorist threat people.
In this case, there is minimal coverage and little or no outcry at this blatant declaration and approval by Congress that an arm of the Executive Branch can implement regulations, pacts, contracts on behalf of the USA and obligate for hundreds of billions of USA debt without Judicial Branch review. The Executive Branch has said it and Congress has (or will) concur so it must be so.
The eighth grade civics class I attended (circa 1958) would have understood this to be a blatant violation of the Constitution.
We are getting close to needing someone in the bell tower to sound one if by land, two if by sea.
The crises on Wall st is starting to affect Long Island. Wall st money ripples through the economy of Long Island. Although real estate sales have slowed quite a bit, prices have been stubborn. On an unusually negative story, on the local news, it was stated that until sellers drop their prices house will continue to not sell. A local economist , Irwin Keller, stated that prices needed to fall 30% to get in line with incomes.
On an anecdotal note, my wife went to her usual nail salon yesterday, customers were sparse for a Saturday after noon. She asked the woman, who does her nails, how business was. The woman stated that business was very slow. From there, a trip to the grocery store. The grocery store was very busy, especially for a Saturday afternoon with beautiful weather. It looks like people are cutting back on luxuries, such as manicures and eating out.
My brother in law works for a national department store chain. He stated that the amount of merchandise they are buying, for the Christmas holidays, is 25% less than last year. With a huge amount of consumer goods being purchased from overseas, I don’t think China is going to have a good Christmas, this year.
Inexpensive hair salons are empty, the “stylists” that I spoke with are undergoing debt relief. Not enough heads coming through the door for $15.
Methinks this is going badly already.
And driving through Temecula yesterday was a breeze. On a Saturday no less, it should have been packed/jammed. It was just a yr ago.
Your observations for your area are different then for those of us living here in Salinas. As businesses have moved out of the nearby shopping plaza four hair, nail, tanning salons have moved in and are continually busy. It’s the ethnic population here that feels the need to have these services regardless of cost. I get a good laugh because they spend the time on the hair, nails, tanning and do nothing to lose that 200lbs plus of excess weight.
People are nervous, withdrawing funds from money market accounts:
http://tinyurl.com/5y6f5h
“Marci Fenske, an air resources technician for the state of California, said she overheard a woman in a restaurant tell her friends that she redeemed all her assets and buried the money in her backyard.”
“Ruth May, 75, a retired travel agent in Laguna Woods, said whenever she feels panicky, she calls her financial adviser. “He tells me to calm down and take a walk with the cat,” she said.”
“Carbonaro said, “The biggest question I hear from my clients is, `Should we liquidate everything?”’ She said she has been so shaken by recent events on Wall Street that she wakes up in the middle of the night to check foreign markets.”
I guess they did not hear about the ad hoc federal guarantee of money market funds that were announced last week? That is understandable, given the deluge of financial news that rained down from the MSM.
Live Not By Lies
Alexander Solzhenitsyn
As printed in The Washington Post, p. A26
Monday, February 18, 1974
Following is the full text of Alexander Solzhenitsyn’s essay “Live Not By Lies.” It is perhaps the last thing he wrote on his native soil [before the collapse of the Soviet Union] and circulated among Moscow’s intellectuals [at that time]. The essay is dated Feb. 12, the day that secret police broke into his apartment and arrested him. The next day he was exiled to West Germany.
At one time we dared not even to whisper. Now we write and read samizdat, and sometimes when we gather in the smoking room at the Science Institute we complain frankly to one another: What kind of tricks are they playing on us, and where are they dragging us? gratuitous boasting of cosmic achievements while there is poverty and destruction at home. Propping up remote, uncivilized regimes. Fanning up civil war. And we recklessly fostered Mao Tse-tung at our expense– and it will be we who are sent to war against him, and will have to go. Is there any way out? And they put on trial anybody they want and they put sane people in asylums–always they, and we are powerless.
Things have almost reached rock bottom. A universal spiritual death has already touched us all, and physical death will soon flare up and consume us both and our children–but as before we still smile in a cowardly way and mumble without tounges tied. But what can we do to stop it? We haven’t the strength?
We have been so hopelessly dehumanized that for today’s modest ration of food we are willing to abandon all our principles, our souls, and all the efforts of our predecessors and all opportunities for our descendants–but just don’t disturb our fragile existence. We lack staunchness, pride and enthusiasm. We don’t even fear universal nuclear death, and we don’t fear a third world war. We have already taken refuge in the crevices. We just fear acts of civil courage.
http://www.columbia.edu/cu/augustine/arch/solzhenitsyn/livenotbylies.html
Friend of mine called to cancel dinner.
Turns out after everything I said, he bought a condo at the top in New York. Now, he’s getting fired. Did I mention he works in finance?
I told him that he was stark raving mad, insane, and a few other choice adjectives. He meekly responded that he knows.
Some days I just want to scream at the m*ronicity of the universe.
Pussycat, I don’t know if you saw my post yesterday, but I left one thanking you and hoz (amongst many others whom I’ve found helpful) for your insight into this mess. So… what the hell happens in the market in the near future? Is it going to be an unfettered rise to the moon? Or is this like all the other plans and, after a brief digestion, the market tanks? I had my ass handed to me with some SRS last week ($1 away from a sell… went from 99 to 68 in about 24 hours), so this is of interest to me. Thanks.
Everyone gets their @ss handed to them once in a while. It’s the nature of the beast.
Did the fundamentals change because they changed the rules?
No.
That’s all you need to understand.
Thanks, pussycat. I just told my wife that it’s certainly an indication of tough times when one takes solace in the advice of someone named Faster, Pussycat, Sell Sell.
I didn’t pick that name without giving it an extreme amount of thought, you know.
“Some days I just want to scream at the m*ronicity of the universe.”
Sigh, I hear ya. Reminds me of that old maxim about stress being the confusion caused when the mind overrides the bodies basic desire to choke the living $h*t out of someone that desperately needs it.
I experienced some severe stress yesterday while attending an estate sale and heard some real gomers talking about how the housing market was going to come back, the gov’s “plan” was needed and all would be well.
The second moment of stress came this AM when I found myself actually agreeing with something that William Kristol said. I scared myself. He said there was no need to rush into this “plan”.
Palmy, you’re looking at it wrong, you didn’t agree with HIM, he’s just finally coming around to your way of thinking.
Not just real gomers palmetto, even some normally sane people.
The Husband and I do a lot of talking on sunday mornings (its one of the few times in the week when we’re not tired or at work), and he mentioned that it seemed to him that the housing crash will be ‘better’ now.
Now that the govt has stepped in, the consensus of opinion is that pries will stop falling so fast.
Shamefully, despite all my schooling from HBB, I couldn’t really come up with a counterarguement.
Yeah, and now that the Cubs have clinched, my little corner of that universe will take leave of its senses for at least another two weeks. It’s too bad, because since coming home from vacation I’ve learned of several more distressed condo buildings in my immediate area. The bust is here - if anyone here would care to see it.
Ya know, before I got on that plane this week I was in the land of thigh high stockings and mini skirts. Now all I see are “women” with beer bellies 3X bigger than mine stuffed into Cubs’ shirts screaming at the tops of their lungs (yes, even three miles north of Wrigley).
“Ya know, before I got on that plane this week I was in the land of thigh high stockings and mini skirts.”
How did you manage to travel in time to the 1960s? Did you get to meet Twiggy in her younger days?
Tokyo, Palmy. Outside of Montreal I’ve never seen so many well dressed women. The 180 degree opposite of the Upper Midwest where t-shirts, pajama bottoms, and flip flops have escaped the college campus and become a citywide uniform.
Oh, and no - they don’t wear the pajama bottoms and flip flops to “look” poor.
Edge,
I’ve been to Montreal a few times and I must agree I’ve seen more beautiful women there than anywhere else.
Texas do OK as well but still nothing like Montreal.
Mike
Just have to interject…Yay Cubbies!! (I used to live at Clark and Cornelia - could hear the cheering from my window). They are the only team I will root against the Phillies for
As long as bonuses can still be paid on Wall Street, America is great.
As long as there is no fiscal responsibility, McCain can keep taxes low.
As long as the President ignores his generals in Iraq, the war is goin’ super.
As long as people watch American Idol et al, ignorance is bliss.
Thank god the bonuses are secure! What a great country.
“We’ll let our friends be the peacekeepers and the great country called America will be the pacemakers.” George W. Bush
Principiis obsta and Finem respice - ‘Resist the beginnings’ & ‘Consider the end.’
But one must foresee the end in order to resist, or even see, the beginnings. One must foresee the end, clearly and certainly. How is this to be done, by highly intelligent men,or even by extraordinarily intelligent men?
Things might have become not what things became.
Everyone counts on faith in that might.
They Thought They Were Free-Milton Mayer
as long as bounces can still be played on wall street, Amerika is overweight.
as long as there are no physical possibilities, the same can see taxes blown.
as long as the residents explore a lack of generalizaitons, the poor for supper.
as long as sheeple worship the tele idol, foregiveness REMIS does not exist.
Tanks bourses unsecured, Trains leaving on track four, all aboard!
fleecemakers-get the tradename while you can.
Thanks to NoSingleOne for his/her compliments last evening (and to Big V for hers), and to NoSingleOne for his/her question as to how I can help HBBer’s to distinguish me from az_owner. Hmm, maybe I need a slogan likes Neil’s “Got popcorn?”
To poke fun at myself, I could choose some slogan that reflects my feelings of stupidity on the weekend of the 14th, when I was ****ing bricks over my $200K loan to Merrill Lynch the corporation after I’d spent three weeks arguing and schmarguing over an $8K difference with some poor schmoe in AZ who just wanted a loan for a place to live. At 10:30 pm on the 14th I received a phone call from a friend who said BofA was buying Merrill — thus implying the bondholders would be paid. Was I smart, or was I lucky?
If you can’t be smart be lucky!
- az_lender
az_
Now that you’ve dodged the $200k bullet, are you still confident with B of A continuing the confidence game, or have you parked your money elsewhere?
….Why isn’t there any more noise about BofA, a commercial bank, absorbing Merrill, one of the last standing investment banks? I thought much, if not most of this horror show evolved from combining/erasing the boundaries between the two?
Pearlstein:
“People are focusing on lots of people walked away wit…it’s hundreds of billions and trillions of dollars…we dont need to focus on lots of people walked away with millions.” Heh.
I saw that, too. He was as disgusting as the CNBC boobs. I guess that’s how the Hamptons crowd is able to look itself in the mirror with no remorse. Disgusting!
My “wacky letter writing” project for this week is to write letters-to-the-editor to all the CA papers urging businesses to run credit checks on prosective employees and NOT HIRE PEOPLE who FORECLOSED ON A HOUSE.
Give jobs to the Americans who deserve them, not the get-rich-quickers who ruined America.
prosPective. There’s too much cat hair in my keyboard
Didja cough up a hairball in a fit of spleen?
Good lord, Reuven, who the heck would that leave to hire?
Newsflash!!! The New York Times found an ‘expert’ who said you shouldn’t buy a home unless you planned to stay in it for 7 years!
http://www.nytimes.com/2008/09/21/realestate/21mort.html?ref=business
This is news? I thought this was standard advice. In fact, back in the old days, 7 years was thought to be the usual break-even point, what with the real estate agent’s fees, money you had to put in the house, moving costs, etc. You could plan on losing some money if you couldn’t stay in it for seven years.
Times haven’t changed. Harry Houseflipper just thought they did.
Bit late now, ol’ chap.
The train has left the station.
The NYT isn’t even worth its weight in toilet paper.
“I believe the real story that will be looked back upon and studied as part of our (ugly) history is not the bursting of the housing bubble, it’s the creation of it, and specifically, the human traits and weaknesses that created it and allowed it to go unchecked for so long.”
I agree that’s what should be studied. At a Brooklyn block party yesterday, everyone was telling me “everything you said would happen is coming true!” I said it was all perfectly obvious to anyone paying attention, especially if they live through the 1980s bubble and bust.
What I can’t believe is the bubble, the HELOCs the credit cards, all that debt that can never be paid back, the Option-Arms, the NINJAs, the phony appraisals. How did THAT happen?
Greed?
“What I can’t believe is the bubble, the HELOCs the credit cards, all that debt that can never be paid back.”
What’s worse, is that not only cannot past debts be paid back - but just think of how many future purchases cannot be made. It’s comical that so many think a mere wag of Hanky’s finger will refoliate the money tree and bring back the ravenous consumer spending that this charade absolutely depended upon.
Conceptually here’s the only “bailout” plan that would really work: give everyone whatever salary they think they should be earning - for life - and without the need to actually work.
“everything you said would happen is coming true!”
Just this weekend had a friend apologize for calling me negative in the past and asking my advice on the future.
Sort of a wierd feeling to not be the crazy one anymore…well, a bit less crazy than they thought, at least.
Congrats, lost, Good for you!
I got a phone call this week asking how I felt being right. I told them I never doubted myself so it was simply a waiting game. Nothing to be celebrated. She also thanked me for recommending Bloomberg for info. I told her I had recommended it 3 years ago and several times since but she had simply rolled her eyes. It took strident voices on the tellie to get her to consider what I was saying. At first she denied rolling her eyes. To let her off the hook I said I figured she didn’t want to hear about it. At this she decided it was ok to admit that she didn’t. She explained, “Why yes, I did feel that way. Why think about that when you can’t do anything about it?” When I told her I kept talking about it so she could take the necessary precautions to protect her nest egg which was much more sizable than ours I was met w/complete silence and then a change of subject.
(Sigh)
I’ve had the same experience at work. I’m old. 63. Not busy to my eyeballs raising infants. Work w/many who are. I’ve been raving at these sweet, bright young college grads for four years. Some listened, frightened. They are now saying “everything you told us has come true”. A few bought the party line, and are tied into mortgages way over their heads. Sigh.
The bad part is when they ask me “What’s going to happen now?” and I don’t have a crystal ball to give them a reasonable answer beyond 1)have no debt 2)save what you can and buy silver/gold 3)don’t even think about 42″ tv’s and the like.
Not much, but probably better than “arms over your head and dive under your desk”.
OK, I’m playing Devil’s Avocado just a leelte bit…. but I was watching Paulson on MTP this morning where he’s reiterating again and again how its so desperately important to prop up the banking system, because otherwise the world will end (my paraphrasing) and it will cost taxpayers much much more in the long run.
So A) why isn’t this guy getting his pink slip today? - if he’s in charge of this clusterf**k surely he had to see it coming?
B) will the world really end if we don’t give these bums a dime? Isn’t this supposed to be Free Market Capitalism? Like, you win, you win, but you lose, you lose too?
C) why will it cost more in the long run for taxpayers NOT to let this house of cards fall?
For the average Joe (and I count myself as one) the only ‘financial’ thing they have is their 401(k)s - almost no one has savings, small businesses are struggling anyway, due to almost no manufacturing base left, and employment is rising….what’s the ‘downside’?
As Rachael Maddow says - ’someone talk me down’ - what, in concrete terms, would it matter to the person on the street if the whole shebang went KABLOOIE?
I hope no one thinks this is too simplistic an answer - but I’ve always been a bit of a ‘Big Picture’ gal. Apols for being dense, but I’d really like some feedback on this.
I agree with your take on the 401k thing. Besides, folks ought to start worrying about getting to age 59 1/2 before they worry about life afterwards. Look around, for a lot of them 59 1/2 might as well be 109 1/2.
I blew out my 401k last year…
I didn’t need the money, but I didn’t want to lose it either.
I decided not to wait another 20 years for a lowered tax rate, the only carrot that was dangling in front of that cart.
As a control freak I just plain find 401ks revolting.
I agree with your sentiment and likewise question the inference that the implications to the “real economy” will be far-reaching.
If the financials collapse upon themselves and liquidity dries up, couldn’t the FED step in and perform the role they were created for? In other words, they could act as “lender of last resort” and provide liquidity to “real economy” businesses that need it to stay in business?
Cut the greedy bankers out of the middle and just lend directly from the FED to the corp’s who need it.
Like you, I ask myself: what am I missing?
p.s. - Ben, not sure if this will post or not. I have posted several times in the last 24 hours and none of them have made it through as of yet. Is someone (something?) censoring your incoming mail?
Unlikely.
I think Ben’s server is getting pounded by sp*m, and it’s taking him forever to sort out the real posts from the crud.
I wondered how all this would play out. How would the investment banks recoup these massive losses. My initial thought was, “If we can’t make your $100,000 house worth the $380,000 you paid for it, we’ll just have to make the $380,000 worth your house.”
I just wasn’t sure how they’d to that. Now I know.
In that case, you should rush out right now and buy a house.
Don’t let us stop you.
Go on then, why waste your time here among us rubes and retards?
Well, I am tempted. But it’s a temptation I will overcome.
However, the rubes and retards are not to be found here on HBB. Instead, the rubes and retards are all around me and now that the wolves are turned lose on the finacial markets, the sheep will begin to move again.
Do you disagree that the PTB are trying to make $380,000 worth your $100,000 house?
Pussycat, don’t be too hard on yourself. You’re not a rube. (one of those winky thingies)
I know it’s unlikely. But is it unfeasible (infeasible?) Tell me why it wouldn’t work? You seem to know more about Finance than I do, so I’d genuinely like to know why it won’t work.
I think the BEST thing we can do for ourselves as a country is allow those financial institutions which overleveraged themselves in a mad reach for riches, to fail.
Failure will weed out the weak, and make the strong institutions even stronger. If Goldman Sachs is the only investment bank to survive the current crisis, and they come out of this with an even greater market share than they had before (and they can do it without government help), I’m all for that.
That’s what our country needs, not some magical vaccine which innoculates all the bedridden financial institutions at once.
What would happen? His banker buddies would crash and burn. We’d learn to live without them, it might hurt while we learn to live within our means, we might even have a depression, but not like what’s coming.
It’s a case of simply trying to keep the status quo going, even after it’s in obvious crash and burn mode. Keep it going long enough for the gangsters to line their pockets and then bail, leaving the rest of us to crash and burn.
Divest yourself of as much of the system as you can. It’s another Hindenberg.
Argh!
‘employment’ = ‘unemployment’
‘answer’ = ‘question’
Teach me to post before coffee….
You should run for Congress.
I agree with this. Paulson keeps talking about the need to “protect” the taxpayer and how the “alternative” is worse. He doesn’t know WHAT the alternative is. He hasn’t a clue. I say, let’s find out. But he sure knows how to press that fear button, doesn’t he?
I remember when he first supposedly became aware of the “problem” a while back. I think it was in a post on this blog that quoted him as saying that he was hearing from his friends on Wall Street that people “weren’t paying their mortgages”. He was pretty pissed off, too. So my take is, he’s right now involved in a payback scheme to mess up Main Street for not paying off Wall Street.
I’m with you Palmetto, let’s find out. Hank has been saying all along everything was fine (obviously wrong or lying) so now he says it’s a crisis. Since he’s demonstrated his incompetence already why believe him now? Again, let’s find out…And yes, I’m willing to accept the consequences.
So am I, dave, so am I. I’ll take my chances.
Bottom line.
This administration of George is getting out now.
They want the mother of all bailouts to reshuffle all the money to their friends in finance.
This is their last real chance to make sure their friends are all taken care of.
This bailout plan is heinous and when anything is being forced upon the US FAST, then just say NO.
You / I am a fool if the “deal” looks too good to be true without doing due diligence, and if it is HURRY UP situation, well, sometimes that is a fools move.
Congress might grow a pair. Or they’re bluffing about protection for Main Street. Which ever way it goes, short of a civil war, we will be OK.
How much would it cost for FDIC to replace all deposits under 100k? I think it would be good to wipe out all wealth over 100k.
Gotta wonder if these fed bailouts are simply payback with interest for the J. P. Morgan and Rothschild gold bailout of the US government in 1895?
Taxpayer money goes to the treasury,
Congress takes money from the treasury and pays for stuff.
That Stuff is in China and Saudia Arabia, middle east.
The money that taxpayers pay into the
treasury, is not now ever going back to the taxpayer
in any form at all.
Every time George said he needed more money
for the war etc, it all went to foreign countries.
And a little bit to him and his cronies.
Halliburton, KBR(kellog burton andR)etc.
Before the financial world collapses, within a month, the current admininstration is sucking the money out of it, carving the insides like a pumpkin/jackolantern and leaving a hollow empty shell for us.
Buy Yen now, or be priced out forever.
Same banking management, same bonuses, same lack of personal responsibility, same problems. Different day, same old shit.
Phase 2 will be selling the assets back to the banks and investment houses for a 90% haircut. When the government offers these assets for sale, I will be a buyer. I want the 90% discount that will be offered to these banks.
“I want the 90% discount that will be offered to these banks.”
How do you get it? And will the general public be able to load up on borrowed monies from all the Fed’s special lending facilities at below-market interest rates so that all of us can participate in the upcoming fire sale?
The only way you’ll be able to play along in the fire sale is to have non-Dollar-denominated assets, otherwise you’re just another pawn on the outside looking in.
If I understand your logic, you are suggesting that since gold is dollar denominated, now is a good time to sell it in order to purchase something which is not. What do you suggest people should buy at this point? Houses? Chinese real estate?
Gold is denominated in whatever currency of whatever country you happen to be in, a true universal wealth instrument, not like Yanqui Dollars which are quickly losing favor elsewhere on this orb.
“Gold is denominated in whatever currency of whatever country you happen to be in,…”
Really? Here is a dollar exchange rate page. Could you please link a similar page for gold, as I would like to see the gold exchange rates of which you speak?
ever thought,
short EURO long OIL or is that so September 19th, 2008?
that’ll get the crisis fired up for the old country.
Sorry that I’m slow - does buying yen literally mean buying currency, or do you mean investing in japanese banks?
Buy Yen currency. Safer with less risk and most importantly ,widely traded.
Me thinks that those that make goods that they sell to the USA may wind up hurting quite a bit more than us.
thanks, hoz.
I believe that Hoz was being facetious.
he’s a straight shooter.
interesting fellow, whom I trust.
As an average person, how does one buy yen? Hopefully, it should pay the .5% interest rate (!) and be liquid. Possible?
Thanks in advance…
Occasionally I will purposely go read people that I have not visited in quite some time. In this instance, I read a short piece by Russ Winter regarding the current proposed legislation, TARP.
The strongest pingback signal I got from the piece was: the NASDQ is the next target for short sellers. Initial thought, be long nasdaq due to perception that the likes of GOOG, APPL, RIMM and other assorted high flyers WILL get the shorts lining up with slobbering mouths, scary teeth, and dollars signs bulging out the eyes. I say this because my personal perceptions regarding current earnings is they meet or exceed expectations, thus allowing a follow through on the current trend reversals. How can this make sense? Its not about logic. Its about perception.
IF the TARP plan has initial positive results, bullish sentiment returns across the board setting up another, “panic, capitulation, and fear mongering power grab momment”…..
Additionally, as the close of the third quarter approaches, and earnings season gets underway with quality companies exceeding headline numbers a “paint the quarter rally” placates the masses on the forthcoming 401k statements AFTER the turmoil and TV coverage of the last 2 weeks events.
I currently have no short position, other than treasuries, and even thats based on the panic subsiding in the shorter term.
“quick and clean” describes killing, not helping. Quick, sign quick, like a used car dealer getting ready to rip someone off before they become aware of what a bad deal this really is. Its sick - ening.
For all those who supported going to war with Iraq;
As we look ahead in anguish at Congress passing this massive POS over our cries and protest.
You now know what it’s like to see your nation make a devastating decision in the face of obvious reasons not to.
I get to watch it happen twice.
It’s a little over a month before the election. Can Bush screw up anything else?
Europeans on left and right ridicule U.S. money meltdown
In an interview Thursday in the Italian newspaper Corriere della Sera, Tremonti drew a comparison to corruption-ridden Albania in 1997, when a nationwide pyramid scheme cost hundreds of thousands of people their savings and ignited anarchic civil conflict.
“The system is collapsing, exactly like the Albanian pyramids collapsed,” Tremonti said. “The idea is gaining ground that the way out of the crisis is mainly with large public investments. . . . The return of rules is accompanied by a return of the public sector.
http://www.latimes.com/business/la-fi-euromood20-2008sep20,0,7535469.story
=====================================================
I have made the Albanian pyramid scheme comparison repeatedly over the past few years on here.
Combine people that were wiped out financially, with lots of guns, and it’s a recipe for disaster…
=====================================================
The PYRAMID scheme phenomenon in Albania
is important because its scale relative to the size
of the economy was unprecedented, and because
the political and social consequences of the col-
lapse of the pyramid schemes were profound.At their peak,
the nominal value of the pyramid schemes’ liabilities
amounted to almost half of the country’s GDP. Many
Albanians—about two-thirds ofthe population—invested in
them. When the schemes collapsed, there was uncontained
rioting,the government fell,and the country descended into
anarchy and a near civil war in which some 2,000 people
were killed.Albania’s experience has significant implications
for other countries in which conditions are similar to those
that led to the schemes’rise in Albania,and others can learn
from the way the Albanian authorities handled—and
mishandled—the crisis.
http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm
might re-think the Swedbank short, Baltic blunder, currency pegged, bubbles floating around the old country?
nope,
me no blinky when fingers pointy.
Euro next, oil depleting.
gold to long, but just a teeny.
Six central banks, including the U.S. Federal Reserve, the Bank of Japan, the European Central Bank, and the Bank of England are discussing a potential rule change, the Nikkei said.
Nikkei said…..Who the f*ck is this Nikkei guy..
the players in panic:
US
JAPAN
the Euro?……thats now the wildcard.
England.
“cross-border collateral?”…..Sharikawa.
Calling the Yen?
Im not so sure here, carry trades on.
The Bills are huge this year, they ooze with confidence and Trent moved them down the field for a winning field goal, looking like Joe Montana, proving that there is no there, in Oakland Raiders football once again…
Yes, that was a VERY impressive win against The Mighty Oakland Raiders at home. (Yawn)
I wouldn’t bet too many doubloons on the Bills’ post season success..
History repeats itself.
In 1918 Republicans took control of Congress, and the Presidency. It took them exactly 11 years to wreck the country, and cause the first Great Depression. Because Republicans were largely blamed for causing the GD, they would not control Congress again until 1994. Basically, anyone alive when the Great Depression hit would not trust Republicans in Congress again. On average, 2/3 of Congress was Democratic for 50 years after the GD.
It took Republicans a little less time to cause the second Great Depression, if you consider they didn’t have total power until 2001. But I am hopeful they will be a minority party for a long time once the full impact of this disaster is felt.
Great Depression Score:
Republicans 2, Democrats 0
BTW, what I would really like to see is the Republican Party as we know it today completely disappear. I would like to see the return of the old GOP, which includes people like Chuck Hagel, who I completely respect and admire. He is the type of Republican I would vote for. Smart. Sane. Willing to negotiate. Doesn’t consider members across the aisle to be the enemy.
But the nutcases, i.e. the Boehners…they have to go. If you Republicans can clean house on your nutcases, and PROMISE never to do this shit again, I might consider giving you my vote if you decide to run Hagel. But you also have to stop running your dumbest candidates, like McCain, Bush, Reagan. That has got to stop. The results are disasterous.
President Clinton signed the bill in 1997 that allow Investment firms to act like banks (something they barred after the Great Depression to prevent a new one ). Clinton also signed the bill in 1998 allowing up to 500k in exclusions on capital gains on real estate every 2 years .
SEC. COX’S of the SEC in 2004 ,allowed greater leverage 30×1 or more
for the Investment Banks that were not regulated in spite of having Bank like abilities .
Those three acts listed above are the greatest blunders to pave the
the way for the Wall Street PONZI-SCHEME -housing crash .You might add Rating Agencies mis-pricing risk ,and Congress/Senate
being pawns for the financial sector . Don’t forget regulator sleeping on the job ,and Mr. Alan Greenspan with his low Fed rates .
Had the Real estate industry not turned crooked and brainwashed , or the borrowers refused to submit liar loans or buy more than they could afford ,than that would of stopped the WALL STREET market makers faulty loans .
Gramm-Leach-Bliley Financial Services Modernization Act.
53 Republican Senators plus one Democrat - AYE
44 Democrats no Republicans - NAY
Alan Greenspan - hired by Reagan, free market ideologue.
Yep, Democrat or Republican, it doesn’t matter.
WAKE UP and try using your brain for pete’s sake.
The bill you are referring to is the repeal of Glass-Steagall. Seeing as you are throwing Clinton under the bus for his signing, I guess you must be really fuming with McCain, who not only voted for it, but liked it so much he chose its author, Phil Gramm, to be his main economic adviser.
I would also like to point out that bills are passed by Congress, and this one was passed along party lines in the Senate, meaning 54 Republicans voted for it, and all 46 democrats voted against it. I would also like to note that the final bill sent to Clinton was veto proof, meaning he was required by law to sign it whether he wanted to our not.
I do think both parties could have done a lot more. But to somehow try to blame Clinton because he signed this is laughable. I would also hope that your outrage over this will disqualify McCain for you vote, as he did go along, and has Gramm on his team now.
Barack had nothing to do with any of this.
I would also like to note that the final bill sent to Clinton was veto proof, meaning he was required by law to sign it whether he wanted to our not. Please cite the law that requires a President to sign any legislation. AFAIK, there AIN’T one. All “veto-proof” means is that there was a 2/3 majority favorable vote in both chambers on the first go-round. Should the president veto any law, Congress can vote again, and THAT time a 2/3 majority vote puts the law into effect without the President’s agreement. The 2nd vote gives Congress a chance to reconsider its action.
If Pres. Clinton signed the law, he was in favor of it.
Was Barack still in school back then or something?
yes he did sign it. He also had a Majority republican senate/congress with Newt Gingrich leading the pack.The majority republican senate/congress were total corporatists and what they put togeher in bills etc are what we are suffering from, big time.
There is no way this Bailout will work. According to Newton’s law of phisics energy doesn’t desapear it turns from one form to another… By pumping money into the free market you can’t make it work …in a long run it will created bigger BUBBLE than we have now…
Considering how wrapped up they are in overt displays of fundamentalist religious piosity, it seems a bit surprising the Republicans would sponsor a Sunday afternoon poker game with $700,000,000,000 at stake.
Global financial crisis
High-stakes US rescue vote
By Krishna Guha, Harvey Morris and Daniel Dombey in Washington and George Parker in Manchester
Published: September 21 2008 19:13 | Last updated: September 21 2008 21:33
A high stakes game of political poker was under way in Washington on Sunday as Congress prepared to vote this week on a plan to create a $700bn fund to buy toxic assets from banks and thereby ease the credit squeeze.
Democratic legislators pressed for a housing programme to be added to the bill and demanded assurances that President George W. Bush would not veto a subsequent second stimulus bill.
The Bush administration was trying to hold out for a “clean” bill that dealt only with the financial rescue, while Republicans in Congress said they would fight a hasty compromise that included many add-ons.
from bloomberg:
The U.S. Treasury submitted revised guidance to Congress on its plan a day after first submitting it, as lawmakers and lobbyists push their own ideas. Officials now propose buying what they term troubled assets, without specifying the type, according to a document obtained by Bloomberg News and confirmed by a congressional aide.
The change suggests the inclusion of instruments such as car and student loans, credit-card debt and any other troubled asset. That may force an eventual increase in the size of the package as Democrats and Republicans in Congress negotiate the final legislation with the Bush administration, analysts said.
I spent time at the emergency room with my grand daughter this aft. She got bit this morning by a feral cat and is now undergoing rabies shots.
I’m going hunting tomorrow. If you let your cat outside and it doesn’t come back, I’m to blame.
sorry to here about that.
I am sure you are a wonderful arm to comfort her in a scary time….
hope you bag something on the hunt.
I’m very sorry to hear about your grand daughter, those rabies shots are tough.
Sorry to hear that, hoz.
I hope she does fine, Hoz. You’re a good grandpa.
Also watch out for regular bacterial infection from the cat bite, especially near a joint or tendon, cat bites are 6x likelier to put someone in the hospital than dog bites.
Sounds like the political game of bailout chicken is underway.
US $1 trillion bailout is under threat from political skirmishes
By Stephen Foley in New York and Margareta Pagano in London
Sunday, 21 September 2008
Cracks are opening up in the remarkable political consensus that allowed the US government to promise a solution to the year-old credit crisis, with Wall Street becoming nervous that partisan battles could delay vital plans to clean up banks’ toxic balance sheets.
Less than 48 hours after the Treasury Secretary Hank Paulson called together Congressional leaders from both sides of the aisle, Democrats are demanding that additional measures to boost the economy and prop up house prices be bolted on to legislation aimed at bailing out Wall Street.
Treasury and Congressional aides were huddled together over the weekend to finalise details of a government plan to buy, potentially, hundreds of billions of dollars of distressed mortgage assets – a scheme aimed at clearing out these assets and restoring confidence to the banking system.
Some analysts say the bail-out of the financial system could cost the US government up to $1 trillion, taking a heavy toll on the economy. This includes the rescue of Bear Stearns, Fannie Mae and Freddie Mac, as well as AIG.
Bush launches $700bn rescue plan and confesses he didn’t realise how severe problems were
This weekend, a plan is being put together that attempts – at a huge cost – to deal with the underlying causes of the financial crisis. Details are now starting to leak. David Randall reports
Sunday, 21 September 2008
I just took a 3 hour round trip ride to Walla Walla WA. During that trip my wife and I talked about first the bailout and decided that is was definitely not in the country’s best interest. We then talked about whether or not there could be a depression where 20% or more would lose their jobs. We tried to look at the parallels between the 1920’s and now. Back in the 1920’s we were a manufacturer powerhouse before the depression started. I think that the economy declined so much because as some people lost their jobs they could no longer buy goods made in the USA. Which would cause factory’s to layoff workers and than more would not be able to buy goods and soon the factory shut down. So the economy would continue to get worse and worse.
Today we don’t build that much, in fact most of are goods come from overseas. So when people stop buying now it will not cause a factory in this country to shut down. This means that we will not have anywhere near the number who were unemployed during the depression. So I cannot see the economy falling that much. Oh sure lots of people around financial centers will lose their jobs and probably should. Do we really need over 11,000 mutual funds? Do we need more then 5 credit card providers? Do we need 15 different car makers?
I think that we will see a very different USA in 3-5 years and not necessarily a worse USA.
What do you think about this? I look forward to reading your comments!
What do you think about this? It’s hard to predict the future, especially ahead of time.
There are two primary areas that are taking hits in terms of jobs and then there are secondary areas. The two primary sectors are real estate and finance. These are coupled because it was the dance of delusion between the two that led the prices higher and thus over leveraging by everyone in the chain from builders to buyers to used home sellers to banks to hedge funds to insurers. This sector has lost and, IMHO, will lose more jobs. But more importantly, the illusion of wealth that this sector has built up in the psyche of the American consumer has vaporized. And that will take it’s toll on the non housing sectors. The secondary areas are everything not directly related to housing. In response to your assertion that it will not be as bad because many of the manufacturing jobs are overseas my thinking is that it can still be as bad because the American consumer is spending less everywhere, in every sector. Even though we do not make the cell phones, we sell them and when sales drop people lose jobs. When people lose jobs that has a cascading effect because they can no longer consume at the levels they had prior to job loss. This spreads out to groceries, fuel, repairs, clothing, etc. And so it could potentially get as bad as 20%. Remember that many consumers were fueling spending with MEW and it looks like they shifted to credit cards when their equity ATM stopped working. This can only last so long and indeed the credit problems are in part due to higher defaults in both mortgages and credit card accounts.
I hope it does not get that bad, but it may.
I frankly have no way to tell whether this guy’s dire prediction is likely to come to pass. One must always consider that large-scale currency traders may be talking their book when they predict dire outcomes. But then there is something quite admirable about folks who are willing to put their money where their mouths are.
US dollar may get ‘crushed’ over bailout
September 22, 2008 - 8:39AM
Page 1 of 3 | Single page
US Treasury Secretary Henry Paulson’s plan to end the rout in US financial markets may derail the dollar’s three-month rally as investors weigh the costs of the rescue.
The combination of spending $US700 billion on soured mortgage- related assets and providing $US400 billion to guarantee money- market mutual funds will boost US borrowing as much as $US1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real US interest rates.
”As we get to the other side of this, the dollar will get crushed,” said John Taylor, chairman of New York-based International Foreign Exchange Concepts, the world’s biggest currency hedge-fund firm, which manages bout $US15 billion.
Australia bans short sales?
WTF is this?
cross border capital preservation based on currency debasement, market manipulation, and expectations management?
forget about shorting the phonebook, short humanity. Thats gonna hurt.
I just watched bloomberg and one of the comments made was that a “guarantee” on the money market funds will actually create a run on the funds because of the limitations on the amount the FDIC can cover (100k). Did I understand that correctly? There may have been some points lost in translation, but does anyone know what he’s referring to?
Its means that money market funds are more flexible (you can pull your money out anytime usually),and they sometimes have higher yields ,verses regular term accounts like CD’s in which you have to leave the money in for the term or get a penalty and your insured only to 100k or 250k on some accounts .
So why tie up your money on a term fix account when you can get the same thing through a money market, now that its insured, and be more flexible . So that would force CD marketers to make them more attractive to compete
with money market accounts . In other words, money will flood out of CD’s to get into money markets . I don’t think the banks would like that to much . But for every action ,there is a reaction ,when you start messing with things .
Bloomberg: The US Treasury is just a step behind you: “In another change today, the Treasury said it would limit its $50 billion plan for insuring money-market funds to those held by investors as of Sept. 19, excluding any subsequent contributions.”
Now that an ad hoc bailout precedent has been established, why does the distinct treatment of past versus future contributions matter one iota?
Let me guess: It lowers the accounting cost of the bailout?
Australia just banned short selling of stocks in lockstep with the Dutch ban, Taiwan ban and other bans of brothers…
Finally, the whole world can agree on something!
Oooooooooooh, I’m having a moment.
Nothing says your bets are right until the government bans them.
“Les Cent Jours” (The 100 Days) was the beginning of the end for Napoleon Bonaparte, who met his Waterloo 111 days after coming back to power, from exile in Elba.
There’s just a few more than 111 days left in ’ssshrubery’s reign of error, a nouveau Les Cent Jours…
http://en.wikipedia.org/wiki/Hundred_Days
INVESTING
For traders, it’s time for hard look at magic wand
By Jason Zweig
THE WALL STREET JOURNAL
September 21, 2008
…
It seems like something right out of a Harry Potter novel: Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke don wizard robes, wave their wands, mutter “Wingardium leviosa,” and the moribund financial markets rise up from their crypt as hale and hearty as if subprime mortgages and credit-default swaps had never existed.
What makes otherwise intelligent investors believe such nonsense?
Just as the financial world wasn’t really coming to an end at the beginning of this week, it hasn’t been miraculously cured of all its ills by government intervention at the end of the week.
Ok, you heard it here first, my prediction. Not that I’m anyone.
This is going to end in a US Treasury default, for the first time in history. what is a treasury default? Its, for the first time ever, somebody goes to cash a Gub’mint bond or t-bill, to redeem something, and the answer is “you have to wait” or “a temporary delay”
So bottom line ,the government has become a sub-prime borrower .
LOL
If there were a finite amount of paper, you might be correct. But since the Treasury prints as much as they want now, the treasury cannot default.
It will not be however a first US central bank failure, nor a first US fiat money collapse.
A long shadow
By Niall Ferguson
Published: September 21 2008 18:56 | Last updated: September 21 2008 18:56
Alan Greenspan, that grandmaster of good timing, last week described the current financial crisis as “probably a once-in-a-century event”. The Great Depression began less than 80 years ago but, then again, we are in a different century. Whether or not this will be the worst such upheaval the world has to face between now and 2099, the fact that nothing as bad as the Depression occurred between the 1930s and now is in itself remarkable.
It was Hyman Minsky, one of the few economists of his generation to think seriously about financial crises, who observed in 1982 that the most significant economic event since the second world war “is something that has not happened: there has not been a deep and long-lasting depression”. Could it now, at long last, be happening?
I just had a long conversation with a friend of mine that worked for Lehman bros till Thursday. Not being too nosy, I asked some round about questions as to who what where and when. They actually had a computer model of the cdo scheme. They knew exactly when the bottom had sucked in all the fools. next, The real money was hedge against themselves in short buying. So, in effect, they made money, sucking in the fools, with fees and dicing, then they collected on the bad debt from AIG, then they bought short positions to bankrupt the stock….wow these guys were pros.
Australia blows up the hedge funds
Last update 6:17 AM, 22 Sep 2008
Australia’s stunning ban on all short-selling is a revolution that will likely flow around the world in a series of dominoes from tomorrow.
The global hedge fund industry will effectively be shut down overnight.
The business of securities lending will also shut down.
The way that equities markets have operated for more than a decade will suddenly and fundamentally change from this weekend.
Once the US Securities and Exchange Commission (SEC) banned all short-selling of financial stocks on Friday – naked and covered – the Australian market was facing an impending tsunami of short-selling by hedge funds looking to lay off long positions and take leveraged bets on the downside.
France, Germany, Ireland, Switzerland, Canada, and the UK have followed the US in banning all short-selling of financial stocks. They had little choice. Asian markets will also have little choice but to follow Australia tomorrow in extending the ban to all stocks.
The danger inherent in being the only market in which the world’s long-short hedge funds are allowed to operate is simply too great. It would be like being the only person with a bleeding cut swimming in shark-infested waters.
http://www.businessspectator.com.au/bs.nsf/Article/Australia-blows-up-the-hedge-funds-JPCC6?OpenDocument&src=sph
This is the weekend when everyone in government and business finally admitted that the U.S. may be headed to another Great Depression. I’m at a conference in Chicago with a lot of other physicians and only two people that I’ve talked to want to acknowledge what’s going on. The denial is chilling. I wish I was back home with my family, who are all fully on board with what is going on. I’m sitting in my hotel room, trolling for the latest news.
Just got off the phone with my sister in Arizona…
She’s pretty high up in the war machine business there, and in the past year i’ve had conversations with her devout neo-con husband, trying to convince him to convince my mom to get rid of her stocks, to no avail.
She and her husband managed to end up “owning” 3 houses, and probably owe around $750k on the trio.
We aren’t particularly close, and her life revolves around shopping and showing off, classic nouveau riche lifestyle version 2.008.
I asked if she was aware what’s going on financially, and she told me it was no big deal.
After about 5 minutes of ying and yang back and forth, I realized she knew nothing and would prefer knowing even less than nothing, if that option were available.
She got a little cranky that I even brought up the subject, so we said our goodbyes and hung up.
I now realize why economics is called the Dismal Science…
“I asked if she was aware what’s going on financially, and she told me it was no big deal.”
My wife and I were discussing yesterday the fact that three of our immediate siblings’ households (out of ten total) have an extra house in their possession which they need to sell. In each case, they have held on to these extra houses for a matter of months already, with no luck in finding willing buyers.
I wonder if it will dawn on any of them that the shuttering of the largest investment banks on Wall Street may indefinitely extend their ongoing inability to find buyers for their extra homes at anywhere near the prices for which they wanted to sell?
I’m hoping aladinsane or other gold bugs might help me out on this one. I have a Ron Paul picture over my fireplace, I’ve never met a conspiracy theory I didn’t like and I am convinced at this point that the fiat monetary system is going to go bust BIG TIME. But I’m confused about how exactly buying gold is going to help. Let’s say I’ve got my food & water (& firearms???), near anarchy is raging, the National Guard roams the streets to prevent complete disorder…
How do I actually go about turning my 20 European Philharmonics or American Buffalos into a meaningful way of obtaining goods and services? Go to a coin shop and get them exchanged for the cash value of that day? Wait for Martial Law to subside and then sell them back to Monex in Newport Beach??
HELP!!!!
The last best 1st world(ok, maybe 2nd world) episode of hyper-inflation happening was in Argentina in late 2001.
Their Peso was valued at par with the U.S. $.
Let’s say you bought a 1 oz Gold coin for 300 Pesos in July of 2001.
By late 2001 the Peso fell apart and was valued @ around 35 Cents U.S.
The 1 oz Gold coin is now worth 850 Pesos, because Gold is valued on the world stage, not valued solely in any one currency, as some people like to think.
Because you can easily turn that coin into Argentina Pesos, which you would be spending there, you have almost tripled your buying power almost overnight.
Real estate prices don’t go up in hyper-inflation, which is where you want to be spending those Pesos, er Dollars.
Simple stuff, really.
http://www.syracuse.com/news/index.ssf/2008/09/two_horses_sell_for_highest_pr.html
Two horses sell for highest prices ever at Morrisville
“Two horses sold Sunday for $80,000 and $75,000, the highest sale prices ever in the 19-year history of Morrisville State College’s annual yearling sale.”
“The sale is hosted by Morrisville’s Equine Science Institute and is the only yearling sale in New York state. It attracts more than 1,000 people from around the Northeast, Canada and Maryland. The auction Sunday sold 197 yearlings, or horses between one and two years old.”
So much for cutting back!
There’s a couple of new commercial banks in town:
The Federal Reserve said Sunday it had granted a request by the country’s last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.
The Fed announced that it had approved the request of the two investment banks. The change in status will allow them to create commercial banks that will be able to take deposits, bolstering the resources of both institutions.
Good stuff. Good stuff. Great stuff.
Let’s just say the Wall Street Era of the late 20th Century is history now, and the final curtain call took a mere three September Sundays to complete.
If the FED buys 1 trillon of bad loans for .20 cents on the dollar then .80 cents is gone, less money than before. The only way I see this as inflationary is if the sellers of the bad loans start lending money again up to and above what they lost by selling to the FED at a discount.
So far I see this as Deflationary being unable to believe the lenders now being made solvent will loan recklessly because now none will buy their new loans if they are junk. Fool me once, etc.
And the US government loaded up with bad loans which I don’t think they can sell will be forced to cut services and raise taxes. interest rates will go up because treasuries are now being sold in double the quanty to finance all this extra debt.
Destructive Inflation only if the government unable to pay back the debt it has assumed just prints money to pay creditors, doesn’t bother to sell treasuries but just prints extra money. Then I guess its war as the creditors enraged at being cheated retailiate. So if Ben’s right and we have no hope of paying the debt back and attempt to inflate out of debt then its war. at the very least trade war.
Sounds like it may be a few years before Wall Street is again enabled to gamble on financial innovations with taxpayer-provided guarantees.
latest news BMW shares down 1.4%
IRWIN KELLNER
Brave new world
Commentary: Not only markets, but capitalist system faces makeover
By Irwin Kellner, MarketWatch
Last update: 9:00 p.m. EDT Sept. 21, 2008
WASHINGTON, N.Y. (MarketWatch) — Before it gets a chance to embrace another round of irrational exuberance, the U.S. financial system will undergo a complete makeover.
Besides the cost to U.S. taxpayers, banks will find that the cost of the moral hazard provided by the past week’s massive government bailout will be more and tighter regulations. This will occur regardless of who is elected president or which party controls the Congress.
Coming down the pike is nothing less than a modification of our capitalist system. You remember capitalism; it says that you are free to enter — and free to exit — any business you may want to.
It also says that with reward comes risk.
It will first be noticed on Wall Street. Now that the chasm between commercial and investment banking is all but closed, look for much more of the Street to be subject to tighter controls.
Commercial banks have a conservative business model and are closely regulated, in order to safeguard people’s deposits.
SEPTEMBER 22, 2008
Lawmakers Battle Over Rescue Plan
By GREG HITT, DAMIAN PALETTA and DEBORAH SOLOMON
…
Last week, as deep new fissures opened in global financial markets, the U.S. Treasury unveiled a plan to spend up to $700 billion to buy soured mortgages and mortgage-related securities from financial institutions. In many respects, the financial sector last week all but ceased to function.
In discussions with lawmakers late Sunday, Treasury Secretary Henry Paulson prodded Congress to move forward, voicing worry about how financial markets will react Monday and whether those institutions still standing could be in for more turmoil, officials said. Since unveiling the plan, the administration has kept up pressure for rapid action, in hopes that relieving banks of their troublesome holdings will help lending markets to stabilize.
The bailout is raising thorny questions that could be tough to address as the bill speeds through Congress. Until this proposal, the government’s response to the worst financial crisis in 80 years had been led largely by the Treasury and the Federal Reserve, with Congress consulted often only after the fact. As a result, lawmakers view the bailout plan as a chance to reassert their authority. Many are unnerved by Treasury’s request for a blank check with few conditions.
The proposal has also stirred a populist backlash, with many members of Congress saying the bill needs to be better geared to Main Street than Wall Street.
“This is not in anyway to deprive [Treasury Secretary Paulson] the opportunity to act. We totally understand the gravity of the moment,” said Senate Banking Committee Chairman and Connecticut Democrat Chris Dodd. But, he added: “You cannot just turn over $700 billion of taxpayer money and not insist that that taxpayer is going to be protected in this.”
The Treasury’s latest draft, sent to Congress on Sunday, could let overseas firms participate. It also leaves the door open for hedge funds to sell distressed assets to the government.
Resisting Efforts
Congress and the Treasury Department appear to be in agreement on the big picture, namely the need and the cost. The differences lie on issues such as what, if anything, the government should extract in return for helping out struggling financial firms.
The Fallout Continues
Paulson is resisting efforts to limit the pay of executives whose firms participate in the program and plans to fight it “hard,” according to a person familiar with the matter. He fears that provision would render the program moot, since many firms might choose not to participate.
This is what I fine to be the fatal flaw of the Paulson and BB plan for recovery . To assume that the credit markets would turn around and lend a bunch of money to people who are already in debt up to their eyeballs
is absurd . They are acting like the problem is no money for loans ,when the real truth is no qualified buyers in which lending would not be extreme risk .So I predict ,that the credit markets would still not be loose after bad debt is taken off their hands .The world would not be interested in lending to people who are maxed out already and in fact are in the minus because of the fall of real estate prices .
The money would be better placed in creating jobs .
The public does not have income to support new debt . The public does not have real estate value to suppose new debt . The business world does not have customers with money to spend to support small business expansion without risk . The building industry has to many houses already to support
loans to that industry . So , this plead that the bad debt on the books of the banks is the reason why credit is not being extended is bunk .