The Housing Bubble

Thanks a lot. Didn’t the Nader vote in 2000 teach you a lesson? Even the WSJ (and bow-tie wearing George Will) thinks McCain is losing his marbles. Interesting New Yorker profile on wife Cindy, who was regaling the GOP crowds with her tale about meeting Mother Teresa at the orphanage where she first laid eyes on her adopted child, you know, McCain’s black baby. Anyway, turns out, Mother Teresa was no where near the orphanage when Miss Cindy was there. Don’t these people think we’ll find out this stuff?

Must be the demopublican votes of 2004, 2000, 1996, 1992, 1988, 1984, 1980, 1976, 1972, 1968, 1964, 1960, 1956, 1952, 1948, 1944, 1940, 1936, 1932, 1928, 1924, 1920, 1916, 1912, etc. have taught a bigger lesson.

I knew we’d eventually rescue the Professor off the island of doubt, now what about Ginger?

No, I still live on the island of doubt. It is you guys who are cock-sure that gold is going to be the only sensible investment going forward.

Got a better Plan G?

think the elastic was much much
different in the 70s 80s and now
it is the globalization that the corps
wanted so badly that will be the ruin.
But that said, give the ptb, paulson with
his major power grab without checks balances
and a free pass and after they get theirs …
we wont see them anymore, except on beaches worldwide.

Remember Snidley Whiplash?.That is exactly what we are seeing ..

And the sad thing about the power grab ongoing, is it hasn’t exactly been hidden from our view, has it?

It like watching the Keystone cops, and it all fun and games until you realize it isn’t a comedy act, but they are systematically looting the system…

And don’t forget to wear you Peril-sensitive sunglasses. You’re going to need them.

Bingo.

Yeah, well, a lot of things “should” happen. You keep holding your breath, I’ll be over there dealing with reality.

Man, this is like talking to my dad and uncles.

There’s always a few loose screws somewhere. They don’t spend the time understanding the mechanics of various things, and they spend their life b*tchin’ and mo*nin’ about the “goobermint” all day.

This is the system, for a heck of a lot of worse.

You have a choice. Are you gonna spend your time trying to hope for utopia, or are you gonna get your hands dirty and deal with reality, and see how you can make something of the opportunities that come your away?

Since you’re asking, I’m going to try and preserve what I have. I’m a heck of a lot smarter and more knowledgeable about accounting, economics and finance than most people I know. I have spent a fair amount of my time over the years since college trying to learn more. I doubt, for example, you’ll find many non-academics who have an inkling of what the Austrian model of the business cycle is and what it predicts.

I’m trying to learn more all the time, and I still don’t feel I can create money out of air like you guys do. Don’t get me wrong, I admire the ability, and maybe one day I’ll figure out how to do it.

Try as I might, I don’t see opportunities. I don’t know how to do what you do.

Since you’re asking, I’m going to try and preserve what I have.

There is nothing wrong with this. Really!

I hope it hasn’t escaped your notice that people are really struggling for cash. So hang on to what you have. The opportunities are coming, and how!

And most of us don’t make money out of “thin air” as it were. We’re providing a service. It’s called “liquidity provision” (or market-making), and we’re getting paid for it.

And trust me, I’ve had more than a few sleepless nights in my life. So nothing comes for free.

I disagree.

I think I read that Warren Buffet didn’t understand all of these financial dealings and said that Wall Street didn’t either.

I think these financial instruments were created by delusional and greedy people. To understand what they did, you too would have to be delusional.

bluprint, don’t you think your opinions about the economy will eventually become clear to the broader public, at which point they will be reflecting in stock prices? That’s what I’ve been assuming. So if the long-term trend-line is down, then I’ve felt fairly safe being short the market–getting in on rally’s, out on depair. And it’s been great.

Doesn’t that look like an opportunity to you???

Having an out-of-concensus opinion can be very valuable when the rest of the world will eventually be forced to share your point of view.

I think I read that Warren Buffet didn’t understand all of these financial dealings and said that Wall Street didn’t either.

You think a man as smart as Buffett tells you the truth about what he really thinks?

You’re not only naïve, you’re demented.

Buffett trades these things a plenty (like all other smart people.) He understands the game. He also understands the concept of “counterparty risk” and he makes sure he offloads it somehow (even to the taxpayer at times.)

Buffett is no fool.

I am in awe of the man (who isn’t?) but I am not so enamored by him that I don’t recognize when he’s doing a PR-job, and when he’s conveniently omitting details, and when he’s telling patently half-truths.

It’s called “liquidity provision” (or market-making), and we’re getting paid for it.

Yeah, I get that. I was just using a colloquialism and wasn’t intending to denigrate that activity.

Look, I appreciate the attitude of dealing with things as they are, and overall in my life I do that.

I just don’t think one needs to necessarily be limited with only that thought. People are capable of maintaining multiple thoughts at one time. There’s nothing wrong with having a revolutionary spirit as well, or to be p!ssed about having to choose between gambling (that’s not a colloquialism, there is a large element of “gamble” in “investing”) or having it stolen by the Blue and the Red, who should primarily be involved in protecting property rights against theft, but spend their time doing anything and everything else.

On the other hand, the older I get the more I find my revolutionary side just wants another drink. I also find myself more and more thinking: phuk Joe 6 pack, if he want’s to keep supporting this sytem and the asshats who run it, let him have a big helping of exactly what he ordered. In the long run I’m smart enough to have as good a shot as anyone of getting out with my shirt.

I just don’t think one needs to necessarily be limited with only that thought. People are capable of maintaining multiple thoughts at one time. There’s nothing wrong with having a revolutionary spirit as well.

And you assume that I don’t have a strong does of all of the above because …?

On the other hand, the older I get the more I find my revolutionary side just wants another drink.

BWAHAHAHHAHAHHHHHHHHHH!!!

Come by sometime, I’m sure we have far more in common than you think we have. And I’ll provide both the food (I’m an excellent cook) and the drinks (copious amounts), and we’ll toast to the rubes and retards long into the night.

For the record, from what I can tell, you’re pretty sharp. Heck, the average denizen of this blog is several standard deviations outside the norm. I think we’ll basically do fine, not great probably but OK.

I’ll take those odds.

In my younger, more naive days, I used to think this country was run by ethical people trying to do the right thing the right way. I thought Ronald Reagan was the cat’s meow.

I went to work for a privately owned company with 100ish employees. Really admired the owner. Self made multi-millionaire.

At a Christmas party I had the opportunity to get a little face time with the owner, who was heavily working over a bottle of Scotch. One of the things he said to me I’ll never forget:

Boss (to me): “The difference between me and you are just 2 things: 1. I got a lot more money in my pocket than you and 2. I’ll eventually get what little you have in your pocket.”

Now I know the whole country is run by these people. Joe6pack doesn’t have a chance. Might as well join the crowd and take advantage.

Jon,

My friend, I feel your pain.

My experience was nowhere near as dramatic as yours. It was much more of a slow realization than a catastrophic encounter.

I should’ve been well primed for it given who I had worked for before (really!) However, it didn’t make it any better!

Sigh.

All cynics are failed romantic idealists. It’s how it works.

What most cynics are not is reborn pragmatists. That takes a special skill.

Come by sometime, I’m sure we have far more in common than you think we have. And I’ll provide both the food (I’m an excellent cook) and the drinks (copious amounts), and we’ll toast to the rubes and retards long into the night.

If this country boy is ever in the big apple again, I’ll take you up on that. Sounds like fun.

If this country boy is ever in the big apple again, I’ll take you up on that. Sounds like fun.

BWAHAHHAHAHHAHAHAHHAHAHHHHHHHHHHHHHHH!!!

I just knew it; I knew it.

Most people are more similar than they’d like to think they are. At the heart of it, they’re “evidence-based” or “scientific”.

As @sshole as I can be, I can live with them.

My tribe.

I agree. I’ve long since figured I could enjoy some time and drinks with many on this board. Probably all, really. I get along with pretty much anyone, although at times it requires tempering my mouth.

I think that the real cause of this is that college does not prepare you for the tedium of the real world. You can be very smart and be able to solve the difficult but well defined problems you face in class, but the real world is often ambiguous, tedious, and boring.

You can be very smart and be able to solve the difficult but well defined problems you face in class

I’m taking a stab here, but I don’t think that is what the above quoted professor was talking about.

In all the advanced math, science, and engineering classes I took in college (I switched from engineering to computer science halfway through - a very rewarding choice now that really hammered me during school), half of the solution was to define the problem well.

I can remember a particularly demonic physics professor whose multiple choice final exam had 10 choices per problem. The instructions said to choose the “best” answer. You see, none of the choices were exactly correct. None of the problems were all that vague, but there were a number of ways to go about tackling the problem - and each possible way gave you a number very close to one of your choices.

The only way to pass the exam was to turn each problem into a well-defined problem, apply the correct formula, and then figure out which option represented the best answer given all the unknowns in the universe. The professor was trying to figure out how well the student understood physics, not how well the student could work a calculator.

I’ve heard lots of knocks on college, but I’ve found most of what I learned in my schooling was pretty darned valuable. I learned the fundamentals of business and economics, and they function very well in the real world. I think too many grads forget the fundamentals as they progress in their careers; they focus on whatever the ‘new paradigm’ is. ie profits don’t matter for tech stocks, quality of loans is less important than quantity, the more leverage the better, etc.

Al, in college, you must not have been like the kids today, stoned or ‘don’t care’, to have learned those lessons. Today, if it isnät an ipod with earplugs, or a thumbthingz ie blackberrz, then thez will never learn.

sorrz bout the tzping. using a european kezboard.
dang where are those other letters…

I feel your pain DD. Last spring I had spent a week on the Costa Brava in Catalunya without wifi. I arrived in Berlin to civilization only to find everything I typed on the blog was coming out gibberish.

Thanks for bringing back the fond memory.

Amazing and depressing statistics:

“Ray is one of more than 7.5 million people — almost 15 percent of American homeowners with a mortgage — who are spending half of their income or more on housing costs, according to 2007 data released Tuesday by the U.S. Census Bureau. That is up from nearly 7.1 million the year before.

Traditionally, the government and most lenders consider a homeowner spending 30 percent or more of their income on housing costs to be financially burdened. But that definition now covers almost 38 percent of American homeowners with a mortgage — 19 million of them.”

RE: Millions spend half of income on housing:

The laid off engineering dude is the perfect example as to why the American dream of home ownership is toast.

ONe job loss with anywhere from 1/3 years to find another?

Audios, to your financial integrity, MF.

The whims of offshoring this country’s economy has completely and utterly destablized the job market.

Gotta get out of town in a hurry?

Good luck with the dead albatross of an enormously taxed house or condo hanging around your head.

Instant mobility is the new wealth in this current world order.

Which is why I laugh when I hear the politicians talk about how important it is to “keep people in their homes”. That’s the LAST thing a lot of these FBs want. Even if they get a re-write on the terms of their mortgage, who wants to be chained to an overprices POS in some half-occupied HOA where the gang tagging decorates the “gated walls”?

Then they shouldn’t have done stupid things.

It’s depressing but entirely predictable.

Labor?

Bill Clinton was on Letterman last night. I don’t EVER want to hear that the politicos had no idea what was going on and that they couldn’t see the “crisis” until it was upon us. Bullfriggindinky. Clinton summed things up VERY succintly. He’s no dummy, but it just proves HE knew, and he kept blabbering about how if people had listened to Hillary and tax credits had been given to start green energy companies, we’d have an economy. Sheesh.

Then Chris Rock came on after Clinton left and remarked how difficult it seemed to be for Clinton to say “Barack Obama”. He pointed out “Hillary ain’t runnin’!”

Meh, everyone is a genius with hindsight.

Lots of people here have been pointing this out for years.

Bill wasn’t screaming about the Fed and money policy for the past 16 years. Like some of us.

I was a big Clinton fan during his stay in the White House. His legacy has since tarnished badly since in my opinion.

NAFTA is his legacy.

Ross Perot had it right when he talked about the “giant sucking sound”.

And I’m not talking about the negative atmospheric pressure being created by ms. Lewinski in the oval office

Mike

We’ll never know how Al Gore would’ve been as president, as that hummer peeled rubber and left a skid-mark on his chances.

RE: We must lock up the thieves that have led to this mess.

Fat chance…

These chucks have loaded up their Gulfstream’s to go hide on their foreign island get-a-aways.

Their money is all tucked away in a Cayman offshore account, and they’ll all be laughing around the pool this weekend with some big busted floozie, scotch in hand, laughing at the Congressional yokels who made it all possible.

“Of course I’d say the first thing that needs to be done is abolish the Fed but that would classify me as a total nutcase.”

And isn’t it a travesty when the sane folks like yourself get branded a “nutcase” by the criminally insane.

Many people just blabber whatever they’ve been told by the MSM. I had a fellow tell me the other day that he thought Ron Paul was a good guy but “of course he’s a total nutcase”. I asked “Why?” Fellow couldn’t answer. I could have answered. Because some lickspittle media pundit said so.

Bank Heist of the 20th Century: Brinks Job

Bank Heist of the 21st Century: Paulson Plan

These chucks have loaded up their Gulfstream’s to go hide on their foreign island get-a-aways ??

And the beat goes on…..Same story different day…It really sucks….

“Bank Heist of the 21st Century: Paulson Plan”

Well put, Aladin…

I had a fellow tell me the other day that he thought Ron Paul was a good guy but “of course he’s a total nutcase”. I asked “Why?” Fellow couldn’t answer. I could have answered. Because some lickspittle media pundit said so

I too have had that conversation with about a dozen people. All agreed Ron Paul was a nutcase but yet none of them could give a reason why.

I think Ron Paul really made a lot of people uncomfortable by saying the truths that nobody wanted spoken.

Makes me wonder when the owners of those Gulfstreams will start finding stray nuts and bolts in the intake, or sugar in the gas tanks.

Not that I would suggest anyone do anything illegal, but sometimes people get careless when they feel they have not been treated fairly.

“Their money is all tucked away in a Cayman offshore account, and they’ll all be laughing around the pool this weekend with some big busted floozie, scotch in hand, laughing at the Congressional yokels who made it all possible.”

Not Barney Frank!

Infrastructure is an interesting game - the winning team needs a strong portfolio of engineering skills, management skills, access to a large pool of cost-effective (i.e. low wage) skilled/semi-skilled labor, experience at cost-effective infrastructure development especially in developing economies, access to lots of cheap credit, access to inventory, a relatively long time horizon and a stomach for adverse conditions. Some of these require a strong backing from individual governments (Japan and Singapore strike me as governments that have an effective infrastructure development regime). For the most part, the US isn’t competitive.

China buys a lot of engineering services from Europe, particularly Germany, and from Japan & Singapore. India buys a lot of engineering services from all these, and from China :-).

I keep feeling there is this humanitarian crisis in China because large numbers of people do not have access to reasonable clean power. Not green power, just somewhat safe.

They use coal to heat their homes and that causes carbon monoixde to build up. The carbon monoxide leaches away calcium from people bones and causes something like osteriposis. They have a building crisis for tens of millions.

Not to mention that coal smoke is radioactive.

Much of our 1930’s to 1950’s infrastructure is falling apart, and yet to simply rebuild it for automobiles sake seems silly.

Silly? Apparently you haven’t been listening to Georgie, Dickie and Lil’ Johnny Maverick.

Fundamentals: strong.
Dollar: strong.
Infrastructure: best in the world.
Oil: useful, delicious, and so pretty when spilled in the sun.

“Oil: useful, delicious, and so pretty when spilled in the sun.”

Completely OT, but didjya know that BHT, BHTQ and artificial colors are made from petroleum?

But the kleptocrats will be living large on their private islands, so nobody really cares…

You just described my mother, CincyDad. She hails from Buffalo. Tough as nails and has an attitude to match.

Many have been the times that I’ve called her and my dad to see how they’re faring after a large snowstorm. (The folks live in eastern PA.) Her response? “It’s winter here and it snows. What else is new?”

you mean like Olygal?

Now dat’s one tough broad!

“like early frontier women - strong and hard working.”

wellllllll…..most women I meet are loathe to sweat or get dirty so I don’t think we’re talking about the same ones. But being a NH girl who used to change the oil in her own vehicle and that shot so accurately at the age of 11 that her adult neighbor once walked off pissed at himself at the comparison, I might know the type.

I need to find me more of those women.

Muir -

That’s awesome. I’d be content to “suffer” through that too.

We’d have a pretty great deal, too, if it weren’t for a landlady with issues and a set of marginal tenants.

I’m hopeful for our next rental. I’ve promised myself and my husband, though, that if we land in the same situation with a weird landlord, we’re going back to owning it, even if it’s a shack.

I’m getting ready to rent a beautiful brand new resort house for 1400/month, was listed for 2000/month. Surrounded by pasture and big trees, great views, beautiful cherry wood floors, beautiful kitchen, 3 bed 3 baths, custom pine ceiling, huge decks, horse barn, and can have pets, close to hiking trails, great neighbors. I could never afford to buy this house, even at prices 10 years past. It’s too much house for one person, so I’m looking for a housemate which will reduce the cost even more. And built green, very energy efficient. I’m starting to really like being a renter.

I thought you were still being a nomad?

Sometimes reality interferes with your fantasies…have to get my cats from the catsitter (my niece).

And I want to be able to make a nice polenta lasagna with a glass of wine by a cozy fireplace…

actually, I just need a shower.

That sounds like an awesome house, Utah!

Congratulations on finding it.

Renting, especially if one doesn’t have kids (schools, friends, etc.), is probably one of the most liberating things a person can do right now.

oops, got called away and hit send too soon –

I told my pal maybe I am interested when that house is 2-3 times my income.

He got angry and said, “if you are such a real estate genius, why are you still renting?”

I think his new vacation home in Palm Springs must have taken a nose dive.

Same guy who 6 months ago insisted that prices never go down in San Francisco.

11% down and counting.

He got angry and said, “if you are such a real estate genius, why are you still renting?”
_________________________________________________

Your reply: BECAUSE I’m a real estate genius!

“Anyway she also liked to get roaring drunk and do anyone who came along. When her boyfriend found out he was so mad he wrote “whore” in the hallway outside our room, stabbed her closet door with a steak knife and finally defecated on her desk.”

Got any photos?

I have been a resident of Manhattan for 25 years. I was raised in suburban New Jersey and suburban Chicago. Long Island people frighten me more than any others I have met. The level of contempt for civil behavior is outrageous. The acceptance of corruption is outrageous. I just haven’t figured out why this is so? Anyone care to enlighten me?

This housing bubble, possibly the greatest misallocation of wealth in human history, was caused by a the government enabled fractional-reserve banking and fiat money.

Without fiat money there must exist savings for every dollar loaned.

Blaming lack of oversight for the problems is like creating Frankenstein and then blaming “lack of oversight and regulation” for the death and destruction that follows.

$60/k year is removed from the private sector, that money cannot be used by the private sector to create a $60/k year job. Therefore, a job is removed from the private sector for each job added by the government.

The 60K is returned to the private sector when the “goobermint” employee spends his 60K, where it creates a 60K job. Inflation and deflation aren’t a function of the amount of money in an economy (fiat or not), it is a function of the velocity of money in the economy.

The 60K is lost only if it isn’t spent.

You cannot think in terms of dollars in existence because you ignore opportunity cost. By your own logic government could tax/spend an unlimited amount without any effect on private jobs because the government “spends the money” back into circulation.

If you tax $60K to hire Joe Schmoe then the general population looses that capital and Joe Schmoe gains it. Joe Schmoe performs work at the direction of the state (instead of in demand of the market).

That $60K may have been used by the free market in some way that makes a return of $80K… say by purchasing more energy efficient tools. Instead it gets consumed by Joe Schmoe who buys trash from China.

Joe Schmoe could have been hired in the private sector performing some job that would make return and where losses are private. Instead he is hired in the public sector performing “make work” and any investment losses are socialized.

Think in terms of raw resources and labor time. If you burn $60 worth of gas you have reduced the wealth of society EVEN THOUGH the $60 is still in circulation.

You cannot get something for nothing; therefore, a government job must come at the expense of other employment and capital investment opportunities in the private sector.

I suggest you read Is velocity like magic?[mises.org] Then you will see the fallacy that is the velocity of money.

Are Milton and Rose Friedman still around?

I’d rather have the govt take that $60K and hire a worker who (contrary to your personal beliefs) performs work that is beneficial to society.

At the end of the day, that worker is more likely to spend the money and put it back into circulation — PERMANENTLY, and with no strings attached — than some capitalist pig who will hoard it and loan it out with the expectation that it be returned with interest (often at usurious rates).

BTW, all of my personal income is derived from investments, and even I can see the logic of spreading the wealth around so power/money does not become too concentrated…the same concentration that leads us to the very problems we have today.

There you have it.

The guy is brutal. First he totally cashes out from GS and then uses his cash to bankroll his political career and gets “born again” (not in the religious sense) and forgets that he was one of the evilest type of people he now rails against on TV. I’m betting he didn’t return all the bonuses or any portion of them he got!

Didn’t Corzine lose a power struggle with Paulson and get pushed out of the firm?

Reporting the “surge” in oil prices yesterday was irresponsible and inaccurate. On the last day of the contract there was a short squeeze on very low volume. The contract that came into effect this morning was $12 lower and oil is predictably down today. It makes me livid when supposedly reliable new sources scare folks and give dissinformation by simply reporting what is true, but not accurate.

Agree with you on NPR being useless. I used to be a devout listener. But, as the local NPR affiliate began stuffing talk, talk, and more talk into their schedule, I started looking for alternatives.

And I’ve found a dandy alternative. KXCI-FM 91.3. Community radio from Tucson, Arizona. Plays just about any kind of music you can think of, 24/7. And most of the deejays and staff are volunteers.

Actually the ’surge’ in oil prices was quite legit. It was the forward selling driving down the prices prior to expiration day that was manipulation. Then the shorts expected the longs to close out their contracts but longs stood for delivery. So there really is physical demand for oil at a higher price than the current futures price. That’s the story that you won’t hear reported, though.

Good point watcher. There must be a seller AND a buyer on each trade, no? Somebody took delivery.

“and can you also provide something of equivalent value to those people?”

I can insult them. What will they pay for that?

I can insult them. What will they pay for that? Don Rickles used to make his living doing that.

“many of the guberment’s IOUs never will be paid back”

Of course not. The banking cartel doesn’t want us to pay back the debt, only that we continue to pay the interest.

RE: silly if you call Russia attacking the USA silly, I call it war on a scale never before seen

Those who forget history are doomed to repeat it.

The economic hangover from the Depression was ended by the industrial ramp-up to win WW II.

I’ve never believed the Cold War has ever been over.

And now that our moral structure, finances, and manufacturing sector are in a shambles, it’s the perfect time for a major “distract the masses from the realization they’re all now relegated to pauper-hood” confrontation.

We’ll see the nukes come out before all this ends.
During WW II we were 80% energy self-reliant. Today, it’s 20%.

With the theft of our manufacturing base, the Chinese have set us up perfectly, for…

We are Wal-Mart Nation.

I don’t see Russia attacking America. Of course McCain and Palin have both said that we should attack Russia over Georgia. so….

“We’ll see the nukes come out before all this ends”

I dunno. I think most nations still fear the retaliation. Has anything changed on that front?

“We’ll see the nukes come out before all this ends”

I dunno. I think most nations still fear the retaliation. Has anything changed on that front?

YES.

Born-again Evangelists who wish for the end of times/rapture as Presidents (or President in waiting-VP)

I don’t think the russians have the capability to conduct a large scale attack on the US. They lack the airforce, carrier groups, troup movement and communications networks to do this.

They are more interested in China and Europe than us.

Just looking at the Russia situation. Russia has about half of our population (140 Million) and twice our land area. So, its a big wide open country.

Secondly, they have death rate that wildly exceeds their birth rate meaning they are getting smaller.

Finally, the government is wildly disfunctional at many levels. So, if you think they are going to organize and produce high quality fighter aircraft, carrier fleets and radar systems… well, you are nuts.

Russia is just trying to saber rattle and act silly on an international scene as it slowly becomes less relavent.

China is more of a threat but they also lack the ability to take on the US.

If they teamed together it would still be a tough fight.

Finally, all of our economies are intertwined so it makes no dang sense for us to fight at all.

RE: I don’t think the russians have the capability to conduct a large scale attack on the US. They lack the airforce, carrier groups, troup movement and communications networks to do this.

It’s gonna be interesting how an oil scarce, bankrupt nation of deadbeat scratch lotto ticket junkies and MTV hip -hop gangsta’s with a collapsing infrastructure can finance a yearly $600 billion military tab.

Nukes will be the only big ticket weapon left in the arsenal.

We’ll have a “on the cheap” military so to speak.

Foreign policy will consist of bluster (aka reponse to Georgian invasion) and waving of a big ICBM.

It’s true 3rd world territory.

But Russia ain’t the worry. They didn’t steal our mfg’ing.

It’s the “Great Wait…ers” in China who are gonna want Mid-East oil.

Lack of oil & other raw resources… It’s what sent Japan on the warpath in the 40’s.

I also fear that there will be many silly wars during this meltdown
silly if you call Russia attacking the USA silly, I call it war on a scale never before seen

Russia has historically, never attacked anyone(even the Afghan war was initiated to fight the Taliban and bring Marxism to the people of Afghanistan). They have always been the one invaded. They have of course, taken actions in border countries that they consider part of their buffer to the rest of the world.

They might take action in Estonia/Latvia/Lithuania, which since those countries are NATO member would obligate us to to attack Russia.

So it would never be a direct attack on the US, but rather some insignificant war in some insignificant country that would draw us to war.

Nobody will read this but it will be a long long time before China has the resources to compete with us.

Secondly we have a huge advantage over China now. Huge.
Best guess is that it would take them 12 years to catch up.

What happens if they begin to build up? Japan/US/Australia build up forces in response.

Further have to state that if China/Russia/India aligned today we could take them. It would take us maybe a year or two but that is about how long they would last. I doubt we could hold that kind of area or face that kind of occupation but we could end their civilizations and they know it. Their potential to threaten our civilization would be over.

As for being broke/oil starved… we aren’t. We’d have to face significant shortages for a couple years but would take measures to work off internal reserves.

About the situation facing us now. We already have 10T in government debt. If they go through with this bailout we will have 11T in debt. I don’t see that as amazingly dire UNLESS you already thought 10T was enough to brake us. I’m also trying to figure out how that works with respect to GDP.

So, this is an inflationary move that sucks but shouldn’t break us completely.

“Redeem me Bonds, Redeem me!”

RE: I’m still having a “Red Dawn” moment when the Cubans are dropping into the schoolyard.

Your “RED DAWN” moment has already happened.

Just go look on the country of mfg. origin tags of all the crap on the shelves of Wal-Mart.

I’ll not rest until Havana Club Rum is on every shelf of every liquor store in Norte Americano!

viva LA Revolucion!

At least they produce for export a cash crop that is in high demand.

Oil?

I contend that the bubble/bust were contrived events and these guys know perfectly well that “jump starting housing” will require significantly lower prices.

“Contrived events” — interesting theory.

I guess I can’t put it past Al Greenspan, that wily old coot, but Paulson remains a member in good standing of The Gang That Can’t Never Ever Shoot Straight.

The pricing endgame, I think they’re aware of that — but that’s a Scenario That Dare Not Speak Its Name, huh?

Yeah thats just my opinion ET. If this was in fact pre-engineered as I contend, was the statement “subprime is contained” not true? Everyone knew what was going on for years, plugged their nose, looked the other way and then acted surprised when the SHTF. These guys are friggin pirates dude. They are sharks.

It all smacks of a highly orchestrated crisis, though the period immediately preceding a presidential election seems like a bad time to try to ramrod the largest financial bailout in history through Congress.

Yes, it looks to me like fearmongering so the dolts just “pass this legislation” quickly, without peeking behind the curtain.

If nobody buys our treasuries and we are forced to buy them from ourselves, how does that work, exactly?

Like this:

The Fed buys government bonds, and prints money to pay for them. ‘debt monetization’.

Alad -

When the Federal Reserve ‘monetizes’ debt, with a flick of the wrist they buy the debt with a deposit created out of nothing.

But I’m pretty sure you knew that already.

I’ll have a nothingburger and a cup of stone soup, to-go.

“If nobody buys our treasuries and we are forced to buy them from ourselves, how does that work, exactly?”

It’s called currency dilution. People like retirees whose wealth is denominated in fixed dollar payments are thrown under the bus in order to save Wall Street from the consequences of its own excesses.

Sort of like what happened to Soviet era retirees after that system fell apart?

Oh, they still got the 40 Rubles per month in retirement payments, but all it bought now was a cup of borscht.

You are right that they are pushing on a rope with respect to lending. And we do have money destruction at the same time.

I believe that technically there still is a 10% requirement, but they do have ways of getting around it… banks make money by lending and have no purpose if they do not lend. The question is who will be qualified to borrow?

Why does that put me first in line in front of TAXPAYERS?

I’m guessing everyone here is paid in US dollars by their employer.

The real question is are you going to gamble on a rigged game with your savings. I am guessing Warren Buffet is still clinging to the idea you invest in well run companies with good management and a solid bottom line.

This obsession with making millions off the downturn is unhealthy.

“Why does that put me first in line in front of TAXPAYERS?”

Politicians in this country try to avoid raising taxes like the plague — it is political anathema to do so.

Which is exactly why I said we all get paid in US dollars.

I don’t think it’s an obsession.

It just so happens that turbulent markets bring you opportunities and arbitrages that don’t occur in more placid times.

It’s just the way it is.

You can focus on the bailouts or you can focus on the opportunities.

The easy time to have built wealth based upon retail ventures is a thing of the past now, business is contracting as quick as it expanded…

Retail sails can’t be unfurled now that the rigging of the market has been exposed, on top of rudder-less leadership.

That is ridiculous. This isn’t an either or situation.

You can obviously focus on both… or at least I can… and in addition focus on my career and family and a host of other things.

“Which is exactly why I said we all get paid in US dollars.”

Yes but that doesn’t mean you have to save your money in the bank in US dollars.

You can obviously focus on both… or at least I can… and in addition focus on my career and family and a host of other things.

Fine, you focus on all of those things.

I’ll keep my eye firmly on the opportunities.

I don’t give a rat’s buttocks what you do. But I’m going to call a gambler a gambler.

I am going to call anyone who sticks their hard earned dollars into a “safe” savings account a fool.

Many fools and their money will soon be departed.

But I’m going to call a gambler a gambler.

To fools, that don’t understand thing, all gambles are created equal.

But they are not.

In a bet there is a fool and a thief. ~Proverb

You shoot the fools, and pay the minor thieves to rewrite history. — Thief Proverb.

I am in favour of gomboling.

Ok, I gotta ask…..given the casino the stock market seems to have become, why is that such bad advice?? Dollar devaluation and all that aside, maybe he was emphasizing safety (whatever that means these days).

Blano,

Just exactly how many stories about banks that are on the verge of collapse because of loans to homebuilders, have you missed?

People seem to think banks were aloof from bad loans, and that little red righting hood (Sheila Bair) will keep the wolves @ bay from their late dear departed deposits…

It’s a Grimm tale.

I wasn’t sure what angle you were coming from.

I’m aware plenty of banks are are getting dinged by bad loans, but I also don’t think the FDIC will be allowed to go belly up either and sacrifice that “guarantee”. Just my .02, adjusted for inflation.

The rules are constantly changing and some fool has lost the playbook, last seen in the general vicinity of 1600 Pennsylvania Avenue, and in lieu of law, the errantboy seems to be making up things as they go.

But I wouldn’t be worried…

God, you’re just Dripping with puns today!

It’s entertaining to listen to wrong side occasionally.

KMJ in Fresno, is the local mouthpiece for rush & sean & other neo-goebbels, and I like to catch 15 minutes snippets of what they are up to, which is always no good.

No doubt Ed.

At least GB’s given Peter Schiff, Nouriel Roubini and Ron Paul plenty of air time lately.

Peter Schiff’s been on his CNNHeadline News network show on an ongoing basis for at least a year.

For the first time ever, beginning on Monday I have turned on am radio while in the car because of all the turmoil. I wanted to hear what everyone is saying. I turned Glen Beck off quickly after his comments. Disclaimer: I am a registered independent. I watch CNN, MSNBC and Fox. I like to hear all sides. I must state that I hate Keith Olberman as much as others hate Glen Beck.

Why is it bad advice to take your money out of the stock market? Wow! Let’s see, pension plans are invested in the stock market, 401 k’s, insurance companies, cities and states…. a complete collapse of the stock market is fatal to our economy and will hurt even those folks who have no money in it.

Just a disclaimer, aside from 401k money I am not heavily invested in the stock market. Most of our savings including $ from the sale of our home is in muni funds.

Keith Olbermann is a weirdo and he makes me laugh when he impersonates Rupert Murdoch, sorry.

I listen to all sorts of things on the internet. I tried listening to Dave Ramsey, and all the crazy people who call him after they spent their money in crazy ways. Then he started talking about politics, blech. Then he told everyone to go buy a house over the weekend. Goodbye, Dave.

I like This American Life and I like On Point. I don’t like shows where people go on big self-righteous rants. It tires me out.

Glenn Beck has been the only anchor/commentator who has been 100% on this financial situation for a long while.

He sounds like he is from these blogs.

Not sure what others are hearing to make them think he doesn’t get it???

Agreed, I consider myself to be a VERY conservative investor.

About 30% of my net worth is in retirement account over which I have no control, short of quitting my job and rolling them out, and I like my job.

Another 10% is raw land purchased before the bubble. I had 10% in PMs that has since grown to about 25%. I have 15-20% in FDIC cash or equivalent, and the rest is my spec. money.

I disagree that my specs. are gambling. I seldom if ever use margin, and for the last three years it has been tough to be wrong as a short over a period much longer than 3 months or so. I expect this will hold true all the way to the bottom.

As Hoz frequently states, “bottom pickers get sticky fingers”. I’ll not go long again until I see clear signs of a positive turn in the general condition of the economy as a whole, and we ain’t seen that yet.

In the meantime, I’ve easily doubled my spec funds in the last few years, and both my PMs and cash will buy me about double of the RE they are intended to purchase at some point. If only I could find a good vein of platinum ore on the ranch LOL!

To those who wonder how to make money on this I give this advice. Read the bits bucket daily, do so religiously. You can skip over the partisan crap if you like. At some point it will become clear what you can do to take advantage of this opportunity.

My goal? I want to use a portion of my liquid assets at some point to buy a nice house on acreage for less than the price for which I sold my east Palmdale tract home. At that point I declare myself independent of the machine.

“prices quadrupled in upstate”

Well, not here. We started looking here in 1998 before we bought our first home in MA. So I have a 10 year time frame. Being a major packrat I still have the sheets on some houses we looked at as well as the realtor books. They only doubled and that was in the most desirable areas. Plus at that time there were a lot of empty houses due to a major lay-off at Carrier so if there weren’t so many corporate owned 10 years ago prices wouldn’t have been even that low.

Not adjusting for a new walkway and landscaping my neighbors’ house (a banker) went from $180k to $250k in 7 years. Mine was $165k to $205k in 6 years and we replaced and redid almost everything in the house. The only thing left to do was landscaping and upstairs bathroom updates. Not so glamorous a picture, huh?

In consideration of your neighbors house, it appreciated at a rate of nearly 5%/yr. Can anyone point to any fundamental that would support an appreciation rate that outpaces inflation(or 3% yearly appreciation) by 66% while the economic conditions there were deteriorating rapidly? It seems to me that nominal prices should have been falling, not figuring in inflation so I’m skeptical of your numbers. I’m not real familiar Syracuse and can confidently comment on areas west and north of the Hudson and across VT. I can tell you than nominal prices in that area fell for years beginning in 1991.

Turnips. Ramen is for closers.

“Not to mention keep that Prop 13 tax basis…”

You have ONE move where you carry the tax basis with you.

Here’s a link to the video menu page:

http://www.c-span.org/Watch/C-SPAN3_wm.aspx

I was quoting average price for the 80525 zip code. For Fort Collins the prices are very similar to Loveland I think it’s around $230k, but then the average household income drops too. For Larimer county the median house is about 7x median household income.

My wife is from St. Pete. She prefers Fort Collins as well. I’m from rural Michigan and I like the rougher more western feel of Loveland or Wellington.

In Loveland it appears to be about 4x (220K/55K), but then I think that all employment numbers are suspect these days.

They keep saying that unemployment here is low, but an $8/hr PT job at the library will draw dozens of applicants.

I’m not well versed on some details of Fed loans. As I recall, borrowing directly from the Fed requires a great deal of transparency, I remember that being one of the primary reasons banks don’t like (or at least used to they didn’t) to do it.

It seems if the banks are defaulting on Fed loans, we would have heard about it. But your questions are reasonable ones.

Blueprint …..My understanding was that at some point the Feds were taking any kind of junk loan paper as security for these Fed short term loans at a high market value price
from almost any bank or investment firm . I remember saying to myself at the time that it was a big mistake to do that .

What if the banks and investment firm started defaulting on those short term loans ? At least it would explain why they know the exact amount they need of 700 billion immediately.
It’s the ultimate same thing as the homeowners walking and leaving the lender in a lurch .

I’m just saying the way Paulson and BB have proposed this bill ,its like a parties who already know what price they paid.
That would explain why Paulson and BB have no tolerance for any change in their proposals .