The Housing Bubble

The Yellow Goddess is testing the sacred 200DMA dome of her temple. If she breaks through the ceiling she will zoom to the sky and dominate the world for all time to come, the broken sundial soothsayers say. If she falls, the second floor will give way and many doubters will join the club of the 700. Her shinning white attendant Silver has lost momentum and cannot follow her to the 200DMA. So come ye all faithful and present your tithes and living bodies as a sacrifice to strengthen the Yellow Goddess.

The white bearded Fathers, Platinum and Palladium have left the high battle plain of the temple with their remnant. The coming of the second age of PM was not in the cards for them and their legions. “And thy heaven that is over thy heads shall be brass.”

Goodbye Sunshine Mine. I reluctantly sold you at $4.25. R.I.P.

Behold the Pivot.

I just heard that the financial sector in New York City has lost 120,000 jobs (NPR). They also discussed how this impacts the loss of other jobs. That number seems high but I’m sure it’s a high number. But don’t worry Manhattan real estate won’t take a hit at all. “Where are those darn foreigners? Has anybody seen the foreigners? They need to start buying.”

And for all of you Brooklynites, don’t worry. Brooklyn is the new Manhattan. Somehow, I don’t think that is a good thing any more. If I hear about Park Slope or Williamsburg one more time I might just puke.

Will the mother of all bailouts “work,” given that myriad others to date have failed? Why is the risk of failure never discussed, not to mention that a more reasoned and less knee-jerk approach may deliver a more effective and equitable outcome?

All those foriegn huddled masses are billionares. All of them. Just ask (fun)Yun and HorseTeeth Corcoran.

What are the voter approval ratings on the bailout? Are they even as high as ten percent?

September 24, 2008, 12:01 AM EST
The Bailout: Public Anger, Private Talks

Congress has one eye on angry voters, but behind the scenes a compromise appears to be in the works to rescue Wall Street

The hedge fund industry could be destroyed by the collapse of Lehman Brothers. Administrators for the US investment bank said hundreds of finance companies, many of them hedge funds, are demanding the return of funds frozen since its collapse last week.

http://www.guardian.co.uk/business/2008/sep/24/lehmanbrothers.banking

I’ve got NYCBoy’s anger this morning….

$700 Billion and not one pothole will be fixed!

I hit one last night 2nd ave around 77th st, scared me s&tless the car bottomed out i almost hit the roof of my car i thought my axle was going to break off and i would be hit in the rear backing up traffic for miles.

The semi in front hit the same hole, I couldn’t see it…. and I still dont have health insurance i can afford, but Illegals do!

Now they are papering over $30 Billion in overseas money market funds

http://biz.yahoo.com/ap/080924/fed_credit_crisis.html

The only “good” news is maybe they will demand Moz and all the crooks to return their golden parachute money, or at least be denied from here on out..

I tried to post these last night and before I fell asleep saw one come up on the Cali thread. Thought I’d try again. It seems foreigners have some pretty pointed ideas about this bail-out.

http://www.spiegel.de/international/business/0,1518,579880,00.html

From the Germans:

“As they see it, in the long run, those responsible for the crisis — who have been cashed out with high salaries and bonuses for years — will not be penalized for billions “but will be let off the hook like everyone else,” says Carsten Meier of the Kiel Institute for the World Economy (IfW). According to Meier, by injecting capital into the market, the US government is putting everyone who speculated and lost back on their feet and thereby standing in the way of a market cleanup.”

http://www.atimes.com/atimes/Global_Economy/JI24Dj03.html

From the Asia Times:

“….the main architects of the MFI, Messrs Henry Paulson and Ben Bernanke, Treasury Secretary and Federal Reserve chairman respectively, are determined to protect Wall Street. They have decidedly transformed the US budget and the US central bank into vehicles that only care for the welfare of Wall Street and divert public resources to bankers, under the guise of protecting the economy and averting systemic risk.

Albeit evidence of a systemic risk has not been established, vast public resources have so far been devoted to bailouts at the expense of growth-generating spending. The Fed has been pouring billions of dollars into financial institutions, buying worthless paper, and incurring huge losses. To quote Paulson “I am convinced that this bold approach [that is creation of the MFI] will cost American families far less than the alternative - a continuing series of financial-institution failures and frozen credit markets unable to fund economic expansion.”

The wrong question to ask: Will an economic disaster ensue if the current bailout plan is not adopted?

The right question to ask: If the smartest guys in the room really had a plan that could prevent an economic disaster from ensuing, why did they not propose it in August 2007, or at least by the end of the year of 2007?

Congress balks at Treasury’s plan for Wall Street
By Maura Reynolds, Richard Simon and Peter G. Gosselin, Los Angeles Times Staff Writers

10:41 PM PDT, September 23, 2008

WASHINGTON — In its first formal presentation to Congress, the Bush administration’s $700-billion plan to rescue the financial system was strafed from left, right and center Tuesday, with critics demanding to know why overburdened taxpayers should bail out the Wall Street firms that created the crisis.

But the storm of indignation left unanswered the question of whether Congress would dare to kill or seriously delay the only plan on the table — and, if it did, would an economic debacle ensue?

How does one separate political theater from reality?

And by the way, Ben Bernanke is not a Bush administration official, as we have an independent central bank in the U.S.

today’s papers: A summary of what’s in the major U.S. newspapers.
Looking Back in Anger
By Daniel Politi
Posted Wednesday, Sept. 24, 2008, at 6:19 AM ET

The Los Angeles Times, New York Times, and USA Today lead with the continuing bailout politics as the Bush administration sent some of its top officials to Capitol Hill yesterday in an effort to convince lawmakers they need to pass the $700-billion plan as soon as possible. Instead of falling in line as many had expected, Congressional opposition to the bailout seems to be growing every day. The men of the hour, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, appeared before the Senate Banking Committee to push lawmakers toward action. In what USAT calls perhaps his “darkest economic assessment” since becoming chairman, Bernanke warned that the current crisis is unlike anything the country has ever seen and failing to approve the bailout would have “significant adverse consequences for the average person.” Despite these dire predictions, Congressional opposition, particularly from Republicans in the House, was so strong that by last night “it was no longer certain that a version of the Paulson-Bernanke plan could win passage,” the LAT declares.

Unfortunately I can only manage to find the leader on this.

Paulson’s plan was not a true solution to the crisis
By Martin Wolf

Published: September 23 2008 19:38 | Last updated: September 23 2008 19:38

Desperate times call for desperate measures. But remember, no less, that decisions taken in haste may shape the financial system for a generation. Speed is essential. But it is no less essential to get any new regime right.

A reason the current presidential candidates might want to tread slowly on the ‘emergency’ bailout measure: Future fiscal handcuffs may result if another $1t gets poured down the gaping crater in the financial system left behind by the imploding housing market.

Dollar rally halted on debt concerns
Published: September 23 2008 18:28 | Last updated: September 23 2008 18:28

The US dollar weathered the financial storm surprisingly well last week. This is no longer the case, it seems. Investors are questioning the longer-term outlook for the US. The fiscal position, in particular, has come under closer scrutiny.

The de facto nationalisation of Fannie Mae and Freddie Mac made implicit guarantees explicit and doubled the US government’s gross liabilities, to just over 80 per cent of gross domestic product. This is substantial, even compared with highly indebted Europe and Japan.

A huge budget deficit is set to raise federal debt further. Among other rescue measures, the $85bn cost for the American International Group bail-out and the $700bn for the proposed fund to buy up toxic assets will weigh on federal debt. Yet the overall cost of the crisis to US taxpayers is not known, nor is there any alternative to government intervention at this juncture. An enormous bill looks likely.

In the long run, however, the net impact on federal debt will be much smaller than the gross sums, as few of the assets now purchased will prove worthless. Nevertheless, government finances will be more constrained than previously expected. Proposed tax cuts and spending plans by the presidential candidates look more implausible by the day.

Rates rise, mortgage applications fall: MBA
By Amy Hoak, MarketWatch
Last update: 7:00 a.m. EDT Sept. 24, 2008
CHICAGO (MarketWatch) –

Applications filed for mortgages last week decreased a seasonally adjusted 10.6% compared to a week earlier, while interest rates charged on fixed- and adjustable-rate mortgages rose, the Mortgage Bankers Association said on Wednesday.

Application volume also fell for the week ended Sept. 19 from the same week in 2007, down 9.3%, according to the Washington-based MBA’s weekly survey. The survey covers about half of all U.S. retail residential mortgage applications.

Filings to refinance existing mortgages decreased 11.2% on a week-to-week before. Applications to purchase a home decreased a seasonally adjusted 10.0% last week.

deregulation my asz
Community Reinvestment Act of 1977(CRA), Financial Services Modernization Act of 1999, and then finally American Dream Downpayment Initiative(ADDI) of 2003,

This was a monumental failure of touchy feely NEW DEAL liberalism.

Brother, can you spare 7 Trillion Dimes?

–
Jas Jain Plan for Revival of Main Street America

Every American should get premium prices from the US govt for all the junk that he, or she, has accumulated over the years.

We would have some $3Tr. in readily spendable money and there will no longer be any need for any bailout program for Wall Street. Let the Main Street drive Wall Street and not vice versa.

For full disclosure, Jas Jain will sell all his US Treasuries and close all short positions in the Scam Market before the Plan is publicly proposed and considered by the US Congress.

Jas Jain

PS: Needless to say, Pawnbrokers of America would lobby against the plan.

During this crisis, the rich and powerful will be doing the looting. Looks like they are already getting in line at the Buffet of Continentals. According to Winter:

Hamilton’s Treasury Department bought up the Continentals with dollars at face value and issued new government bonds to cover it.

Hamilton’s stated purpose was to design a byzantine financial system which would be difficult for ordinary citizens to understand, larded with British monetary lingo that even lawyers would find difficult. It would also give those in charge of issuing credit a powerful ability to influence the country’s unruly citizens with discretionary credit — the so-called “mother’s milk” of politics….

Financial experts agree many alternatives might be better
By Anthony Faiola and David Cho
THE WASHINGTON POST

September 24, 2008

WASHINGTON – To hear Henry Paulson and Ben Bernanke tell it, there is only one plan to save the economy – use $700 billion in taxpayer money to take the worst of Wall Street’s assets off its books.

Leading economists and financial thinkers argue that there are a host of alternatives that would reduce taxpayers’ liabilities and perhaps more effectively address the crisis in financial markets. Although these experts concede that the clock is ticking, they say different approaches have been dismissed too quickly.

While the government’s plan is built around buying troubled assets, other options offer sharply different visions.

Friend of mine bought a $450K condo in Flushing.

I’m sorry. I love Flushing for its food but the combination of $450K and Flushing is alien to me.

I have a headache already and it’s not even 9am.

I thunked Anderson said there would be no recession? Oops…

State economy ’stalled’; no relief near
UCLA report cites fallout from job losses far into ‘09
By Dean Calbreath
STAFF WRITER

September 24, 2008

The California economy has stalled out and will be in the doldrums for the next 18 to 24 months, or maybe even longer if the state’s fiscal problems worsen, according to a report released yesterday by UCLA’s Anderson Forecast.

The forecast, a quarterly report produced by the Anderson School of Management at the University of California Los Angeles, predicts that California will end 2008 with its first annual loss of jobs in five years and that unemployment will reach a quarterly average of 7.4 percent and hover there through most of 2009.

That would be the highest statewide unemployment rate in a dozen years, fueled largely by layoffs in construction, finance and retail.

The dire forecast contrasts with slightly rosier predictions the UCLA team of economists made earlier this year, before the collapse of mortgage giant IndyMac and cutbacks at other finance companies pushed the state unemployment rate higher.

“The amount of job loss in the finance sector has exceeded our expectations,” said Jerry Nickelsburg, an economist with the forecast. “Cash-strapped financial institutions are shedding jobs as fast as they prudently can. So our overall forecast of job growth and loss has been a bit too optimistic.”

So I was listening to right-tighty talk radio (KMJ in Fresno) yesterday, and the talking heads on there were telling the faithful how important the passing of this $700 Billion bailout was, and they said the problem was it was being “politicized by the democrats”. The host also offered up that if this bill didn’t pass, the credit card system might fail, and you wouldn’t want that, would you?

OPINION
SEPTEMBER 24, 2008
Lots of People Could Use a Cash Infusion
By TOM BROKAW

Barney “Big Un” Baumgartner of Windblown, Wyo., invited the Federal Reserve and the U.S. Treasury Department to take over his business, The Big Un 24 Hour Tow Service and Trophy Taxidermy.

In a handwritten press release, Mr. Baumgartner explained that with winter and hunting season coming on, the good citizens of Windblown would be without his vital services unless he found a way to deal with his escalating debts, fast.

“This is not just about me or my neighbors in Windblown. Heck, we get three or four tourists and out-of-state hunters here every 10 days or so. What if they need a tow or a trophy mount? The consequences are too great to contemplate,” Mr. Baumgartner explained.

He’d be willing to let the government have 80% of his business for a quick cash infusion. He thought something in the neighborhood of $1.8 million should do the trick. That would be enough to gas up his two tow trucks, get some new taxidermy stuffing and clean up that overdue account at the Number 10 Saloon and Casino over in Deadwood, S.D.

Treasury Department officials had no comment on Mr. Baumgartner’s request, but a source familiar with the response to the bailout of American International Group said Treasury has been inundated with similar requests.

Christopher Doob and his ilk make we want to puke. They just want a different sort of bailout: an over-stretched homedebtor bailout. Which is just a less-efficient bank bailout! But it makes their constituents happier.

He says “It does not make any sense that we will reward the banks first – who got us into this financial mess”, and I agree.

But! Why doesn’t anyone reward the folks who were doing the right thing? Why not, for example, immediately stop collecting tax on savings bank and CD dividends? Why not increase the amount people can put in their 401K accounts? Why not increase the amount of loss you can write off from stock losses in a year? I’d rather see tax dollars spent on these initiatives than bailing out either banks or homedebtors.

Of course, the reasons are obvious! Savers–and taxpayers–are now a minority of voters! And the spin on this bailout is it will “help house prices.” That’s all our debtor nation cares about. From today’s Sun Sentinel (Florida):

Stock prices soared, while mortgage rates fell roughly half a point, to about 6 percent. And the government’s intervention eventually could boost beleaguered housing prices by making it easier for people to buy, said Louis Spagnuolo, a vice president for WCS Lending in Boca Raton.

“It’ll absolutely be beneficial,” adds Jim Sahnger, a mortgage broker and vice president of Palm Beach Financial Network.

‘a kick in the teeth for taxpayers.’

I’m getting sick of this crap. Here, I’ll make you a deal. You pay your personal obligation that the US government ran up for you before the housing bubble existed, let me collect your social security, and I’ll pay any and all obligations further. That will be $500,000 please.

What? You say you don’t have half a million dollars? Why I guess your neighbor doesn’t either. So, these obligations will never get paid, especially since we are going into a recession and the entitlement programs are turning cash flow negative in 2012.

Here’s what I don’t get out of all this moaning and groaning; where the hell were you when the government ran up the first $50 trillion? Personally, I was volunteering for political candidates year after year, trying to stop it. But the damage is done, and all these poor taxpayers are going to stick it to the world.

Hows that for a kick in the teeth?

And one thing that is on my mind every day and has been for years; how am I gonna support myself when the world figures out we ain’t paying this debt back? That, IMO, is going to everybody’s main concern in this country in a few years.

(imaginary conversation from the me of 1932)

Things have gone really strange with our financial system, and of course the worry is a repeat of the hyper-inflation that did in Germany, less than a decade ago.

The few contrarians I know are busy turning their greenbacks into Gold specie, but there are a few tangles along the way.

The price of Gold per ounce has shot up to $27 to $28 in Europe, and as a $20 Gold Coin has 97/100’s of a troy ounce of pure gold, the financiers are sending everything in the vaults across the pond, as there’s a 25% profit to be made.

We have many different types of banknotes in circulation right now, Federal Reserve notes, National Bank notes, Legal Tender notes, Silver Certificates and Gold Certificates.

The only banknotes one can use to exchange for Gold are the Gold Certificates, and I had to pay 10% over face value for $180.00 worth of them, which I then exchanged for coin of the realm.

You know things are not right when the most trusted man in the country is a comedian.

Will Rogers speaks truth to power and makes us laugh at the same time. It’s a powerful combination, a 1-2 punch.

One of my favorites of his is:

“I am not a member of any organized political party. I am a Democrat.”

I hate to talk politics, but we must suffer with President Hoover until March 20th of next year.

Someday, they’ll move the inauguration date back a few months, so we won’t have to endure an ineffectual lame-duck leader for any longer than need necessary.

If this was a real crisis, an emergency, why is Congress going on vacation next week? You would think they’d want to stay on top of the situation, to make sure everything possible was being done to manage the crisis. Instead, these guys are going out to lunch. What’s more, they are leaving Dr. Evil and Mr. Magoo in charge.

http://www.youtube.com/watch?v=plyWxrHLE14

I went to an open house the other day. The gentlemen showing the home explained that the family was downsizing their collection. He explained some people collect Hummels, some people collect homes. Sometimes it was only used for family reunions. Other times, their children after marrying had access to this 2500 sq ft home on 3 acres.. The home listed for $379k (Assessed at $248,800). Taxes not listed on property sheet. (County records say $7700-wow, he’s gotta know someone. I know someone nearby w/a much older property paying $3k more)

Oooooh! Bonus- The owner does know someone special. The present owner only paid $1 for this home in 1993. Possibly a relative of the builder—a big name around these parts.

The rest of the story was that the youngest had gone off to Boston to make his mark on the world, and the family didn’t need that particular home anymore.

It was a beautiful lot. But the home was only slightly above average. I can’t imagine becoming this family’s GF bagholder w/an exploding tax bill when the assessor updated the bill to reflect the new owner was only an average schmoe.

I’ve been emailing all my congress critters the following. Have at it!

————-
Dear Senator XXXX,

I am extremely concerned about the Treasury departments ‘Rescue’ package that proposes to bailout Wall Street to the tune of $700 billion of Taxpayer dollars. I strongly urge you not to support this measure that is being railroaded through Congress in the guise of a panacea for an artificial financial crisis. This bill is intended to further centralize financial power in the hands of those who have created the problem to begin with. We the taxpayer do not support the rescue of Wall Street criminals who have gambled our investment dollars by betting on Mortgage Backed Securities, Credit Default Swaps and other financial ponzi schemes in an effort to fatten their already bloated wallets.

Also, I would like you to strongly analyze the actions of the Federal Reserve during the build up of this crisis. The Federal Reserve acts without oversight and desperately needs to be held far more accountable for its actions. I urge Congress to pursue dismantling the Feds power structure and replacing it with a financial body that is beholden to the American people and not Wall Street hooligans.

Sincerely,

Mr. DarthRealtor

I think the hoi polloi would rather endure a root canal, than try to understand economics…

But this $700 Billion bailout seems to have struck a nerve.

Step in with caution, as some vacuums are caused by tornadoes.

It seems pretty clear where Buffett stands with respect to the likelihood of the bailout measure’s passage, and its likely effect on GS’s bottom line.

September 24, 2008 10:23 A.M.ET
BULLETIN
Buyers step in to fill vacuum

Modest gains in the early going as investors digest Warren Buffett’s move to snap up as much as $10 billion in Goldman stock.

latest news
U.S. existing home sales down 10.7% in past year
U.S. August existing home sales down 2% to 4.91 mln pace
By Greg Robb
Last update: 10:08 a.m. EDT Sept. 24, 2008

WASHINGTON (MarketWatch) - Resales of U.S. single-family homes and condos fell 2.2% in August to a seasonally adjusted annual rate of 4.91 million, the National Association of Realtors reported Wednesday. Economists surveyed by MarketWatch had expected sales to hit 4.93 million.

BIS Working Papers
No 259
The housing meltdown:
Why did it happen in the
United States?
by Luci Ellis
Monetary and Economic

http://www.bis.org/publ/work259.pdf?noframes=1

Caution 36 pg pdf

No surprises, but a good summation of the US problem.

Some smart investors are patiently waiting for Congress to finish up with its histrionic objections to the bailout plan, and to get on with formalizing the backroom deal.

[$INDU] U.S. stock indexes turn mostly lower
Buffett sees some form of Paulson plan passing
By Greg Morcroft, MarketWatch
Last update: 9:55 a.m. EDT Sept. 24, 2008

NEW YORK (MarketWatch) — Billionaire investor Warren Buffett said Wednesday he believes some form of Treasury Secretary Henry Paulson’s rescue plan for the U.S. financial system will pass, adding that he wouldn’t have invested in Goldman Sachs this week otherwise.

Paulson has asked for authority to spend $700 billion of taxpayer money to buy soured assets in the U.S. financial system to allow it to recapitalize and begin lending again.

“If I didn’t think the government was going to act, I wouldn’t have done anything,” Buffett said Wednesday during an interview with the CNBC news network.

Not only does he not know how many houses he owns, but he is also unaware of who butters his bread.

McCain aide’s firm was paid by Freddie Mac: NYT
By MarketWatch
Last update: 3:02 a.m. EDT Sept. 24, 2008

SAN FRANCISCO (MarketWatch) — Freddie Mac, one of the giant mortgage companies at the heart of the credit crisis, paid $15,000 a month from the end of 2005 through August to a firm owned by Sen. John McCain’s campaign manager, according to a media report Tuesday night.

The disclosure undercuts McCain’s remark on Sunday that the campaign manager, Rick Davis, had had no involvement with Freddie Mac for the past several years, the New York Times reported in its online edition.

Aspen:

Real estate sales (dollar volume) down 23 percent in July. Down 47 percent for the year. Numbers from Land Title Guarantee Co. in Aspen.

dead tree ed. “Telluride Watch” yesterday

My employer sent 2 letters to us on behalf of ING yesterday, one called “Market Conditions and ING”, and another called “Weathering the Storm”.

This line from the Market Conditions letter made me laugh:

Some plan sponsors and participants have been confused because our company’s name – ING – is similar sounding to the corporate name of AIG, the American International Group. As you know, AIG’s recent liquidity issues have been the focus of much recent publicity. Please be assured that ING Group and AIG are entirely separate companies and are not affiliated in any way.

Then this from the Storm letter, (underneath an image of a sailboat on the water under cloudy sky):

Stay calm in the face of an emergency. That is the rule of thumb in pretty much every situation in life, and it applies just as well to retirement planning in a stormy economy.

Pretty much? Like totally. Who wrote this Napoleon Dynamite?

Hearing going on with just the Fed Chairman right now , So far ,what BB has been saying proves that it was not a emergency .

The fatal flaw of the Paulsons and BB’s theory of removing the toxic waste from the banks will than create a situation that Banks will than go ahead and make easy money loans again in a contracting market is bunk .

I have seen this before ,the Banks start to hoard money and raise the price of money because they don’t really want to lend . BB doesn’t take any
lessons from the late 1970’s tight money market .

This is bunk that the Feds being the biggest buyer of toxic junk would than create more interested buyers at a auction will drive up the price .
The banks want a greater fool like the government to buy at top dollar ,or they would of got rid of the junk a long time ago .

you win when banks compete

The way I understand it the US Treasury Dept. will buy the lowest bid mortgage pool. (I have a link to an example of a mortgage pool but my post keeps getting blocked!) That is if lending institution A offers a mortgage pool for 50¢: on the dollar and if institution B offers another for 40¢ on the dollar then Treasury Dept will buy the pool from institution B at 40¢ on the dollar. This seems like a very good idea - possibility of fraud reduced if the financial officers have to swear to the performance record of the pool with criminal penalties.

You win when banks compete.

Ron Paul just blasted The Fed Chairman with the pric-fixing nature of
the Paulson Plan . He blasted him with the fact that that was one of the mistakes of the Great Depression .

One more Persidency like this and Mexico might need to buid a wall in a boarder to protect istelf from illigal immigrants from the North…

Friends, Romans, Americans…

I am here to save you (my Emperorship is only on Wednesdays, sorry I couldn’t come through until now…) from yourselves…

I have authorized unlimited amounts of cash of my realm to be printed out and have instructed the citizenry to accept them @ par, up to the amount of $700 Billion, or until you run out of ink or paper, whatever comes first.

Don’t worry, it’s all good…

I come from old money~

http://en.wikipedia.org/wiki/Image:Nort10d.jpg

2007: Funds of August

2008: Runs of September

M gal takes on the Missoulian and local realtors. http://www.missoulian.com/articles/2008/09/22/news/local/news03.txt

Note her diplomatic, yet firm, response to Mr. Realtor taking refuge in Montana’s non-disclosure laws and to Ms. Realtor’s crack about the paper “selling fear.”

Perhaps M Gal has a future as VP? Hell, send her to Washington to hand out the $700B.

Securitization and rating agencies and lac of regulation of the two lead to this bubble and collapse

http://bloomberg.com/apps/news?pid=20601109&sid=ah839IWTLP9s&refer=home

By a margin of 55 percent to 31 percent, Americans say it’s not the government’s responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy, according to the latest Bloomberg/Los Angeles Times poll

poll by the Pew Research Center for the People and the Press, asking a different question, found that Americans, by 57-30 percent, favored government action to save financial companies.

The Pew poll told respondents that the government is “potentially investing billions to try and keep financial institutions and markets secure” and asked whether that’s the right thing to do. The Bloomberg/Los Angeles Times poll asked whether “the government should use taxpayers’ dollars to rescue ailing private financial firms whose collapse could have adverse effects on the economy and market, or is it not the government’s responsibility to bail out private companies with taxpayers’ dollars?”

OK how is what the goverment propossing “investing” what a crap question by Pew research. The bailout is a guaranteed money looser thus it is not an investment its a give away and a bailout.

i keep hearing that if we dont give Paulson this money, then people wont be able to get mortgages. wasent that the purpose for the freddie and fannie bail-out? are they just using that excuse to get congress to rush through this handing over of money to wall street?

What measures do we take to stop the mouse clicque crowd from bailing out the rats that hide in the Wall Street?

De facto hyper-inflation is what they are doing, bottom line.

Bail-out cost ‘impossible’ to estimate (Financial Times of London)
By James Politi in Washington
Published: September 24 2008 15:46 | Last updated: September 24 2008 15:46

The cost of the Treasury plan to save the US financial system from collapse cannot be estimated because it is too vague, Peter Orszag, head of the Congressional Budget Office, told legislators on Wednesday.

At a hearing before the House budget committee, Mr Orszag said: ”The secretary would have the authority to purchase virtually any asset, at any price, and sell it at any future date; the lack of specificity regarding how that authority would be implemented makes it impossible at this point to provide a quantitative analysis of the net cost to the federal government.”

Asian contagion! From the New York Times:

HONG KONG — Throngs of depositors lined up outside the headquarters and branches of the Bank of East Asia here on Wednesday to withdraw their money, underlining widespread anxiety in Asia that Wall Street’s recent difficulties might spread across the Pacific.

http://www.nytimes.com/2008/09/25/business/worldbusiness/25emerging.html

The PTB don’t want to admit we have an insolvency crisis. It wants us to pretend everything is a-o-kay.

Unlike other banking crises in other countries where the govt takes control of or makes loans to insolvent institutions and recapitalizes them, these guys are attempting to recapitalize with no strings attached. As a result, the plan will fail.

Lending institutions that do not need recapitalization and are solvent will participate in the rigged auction process and get stronger while weaker ones wither. As a result, a year from now we will be handing over another trillion to save weaker banks.

Mr. Realtor said: “Data in the state of Montana is limited b/c we’re a non-disclosure state, so sales data is not public record. Those websites are simply guessing.”

In other words, “You can’t get the data. Only we have the data. We say the market is fine. Trust us.”

Besides, he’s wrong. One of the data sources for the site was OFHEO, which uses real transaction values. They are absolutely *not* guessing!

I think I know you from NewWest, M Gal. Nice to see you.

I told you so!
lol

We will all be soon crossing the Rubicon, just past the point of no return of your money…

Coup d’fiat

There’s not a lot of reassurance having our glorious leader going on the telly tonight to tell us he’s trying to talk the economy down from the top of a Giant Sequoia Tree, and his plan seems to be that he wants to save the top part of said tree, and chop down the lower part.

Goodbye to all that…

You put your left leg in
They take your left leg out
You put your right leg in
And they shake it all about
You do the Hanky Panky and you run yourself aground
That’s what it’s all about…

Ode to Tommy James & the Shondels

My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky!

I saw him walking out on thin ice
You know I saw him for the very first time.
A man without a country standing all alone.
“Hey America, can I give away your home?”
I never saw why, never really saw why.

My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky,
My Hankie does the Hanky Panky!

http://www.youtube.com/watch?v=x69pjsvIB0g

Ben Bernake has proposed to buy back bad structured Debt at above fair market prices. this is less Deflationary than I first thought because its replacing money that should go away ( through bankrupcy or whatever )

I think the FED is trying mightly to keep as many dollars alive as possible. The problem is what will these banks do once they get re-capitalized ? Make more home loans? I doudt it.

This could be the start of another commodity boom if these banks decide to buy up commodities or invest in fast growing emerging ecomomies who will buy the stuff they need.

I am very safe in treasury money market accounts and GNMA funds waiting for deflation which is what should happen after a debt bubble is popped and has to be paid back.

I may have to change back to commodities if things work out Inflationary. I don’t see another US bubble anytime soon.

Tried to post this earlier, got a call today from a 30 year old woman in Arizona who was asking if my house near Ridgway was for rent (Colorado), I’ve moved out some time ago, so I didn’t think so.

Anyway, we got to talking. She and her husband have an excavating business, she says they have 6 friends who had similar construction-related companies there and all have gone under.

She and husband have 4 kids, a house they paid 330k for, the one just like it down the street just sold for 98k. They have now sold everything they can and are still 3 months behind on their mortgage.

They heard things are better here in Colorado so are moving up here to try an excavating business in Telluride. I told her it’s here, but a bit behind Arizona.

OK, this is one of thousands such stories, but it made me feel bad to talk to a real live FB, in pretty deep, 4 kids and a dog.

The great grapes of wrath migration #2 begins.

Oh, and I asked about the dog, she very vehemently said no way they would ever abandon it - yeah, I was worried about the dog.

Housing grim as financial rescue debate rages
Wednesday September 24, 2:41 pm ET

By Burton Frierson
NEW YORK (Reuters) - Prices of U.S. existing homes suffered a record drop in August and the rate of sales tumbled, offering little sign of improvement in the source of the financial crisis in the United States.

Deflation continues

These hearings are BS . Why is it that I get the feeling that Paulson has been turned into the agent for Wall Street ,when he is suppose to be the agent for the taxpayers ? Just because Paulson submitted some absurd
demand proposal ,asking for immunity and a blank check with no
over site claiming emergency ,does not mean the Politicians have to respond like this mad-hatter self-interested party even deserves respect.
This dude should of stepped down a long time ago because he is a conflict of interest party .

Its not what will please Paulson ,who is by the truth representing
Wall Street and the thugs .

Why are people getting sidetracked by this stupid compensation matter for CEO’s ,that is peanuts compared to the 700 billion dollar con job to buy toxic waste low value paper .

A senator at the hearings mentioned that banks were pulling back on small business loans and how is this bill going to help them . Of course Paulson goes into his BS line that the bailout will all of a sudden make these lender loan to business in a recessionary economy .

These lenders are not going to loan when they know the whole market was based on a fake Ponzi scheme . The gig is up ,the credit markets will not be fooled again . Its only the taxpayers that all being fooled in these hearing that the bail out will change risk that is now priced in, where before it wasn’t. The bill will not stimulate the economy as the Bill proposes
and its a big joke . IMHO of course .

Ok ,finally a lady Senator that I didn’t catch the name just brought up the point I have been trying to make . She said in so many words ,what would prevent the lenders from investing somewhere else other than Americans if their capital was freed up by buying the toxic loans . Than they broke to commercial .

IMHO ,the banks would not invest more easy money credit in the Americans because they have already extended to much debt and they would likely invest in world markets that carry less risk . That’s why the bail out would be pissing down a rat hole . Give broke people more credit …….yea sure …the banks are going to do that .

Goldman’s shares get suspicious boost pre-Buffett

http://biz.yahoo.com/rb/080924/business_us_goldmansachs_sharesbiz.html

An unusual surge in Goldman Sachs’ share price in the last 10 minutes of trading on Tuesday raised eyebrows on Wall Street, as it came two hours before news of Warren Buffett’s big investment in the bank.

And they wonder why main street is sick and tired of bailing out wall street.

can anybody out there make me feel better about going HUGE on precious metals on monday?

IMHO:

If the RTC2 is approved, the dollar drops 15% over the next 3 years. No sudden rush for the exit.

If the RTC2 is vetoed, the US loses its AAA rating (Another country that can not manage its financial debts), interest rates shoot up through the roof and the dollar collapses 15% overnight.

(As an aside, not sure that the US should be AAA rated. If I deposit money with them, I get lower relative purchasing power back. That is junk bond status.)

(While doing the “Cabbage Patch” dance)
Go Fannie! Go Fannie! It’s your birthday! Go Fannie!

http://finance.yahoo.com/echarts?s=FNM#chart1:symbol=fnm;range=5d;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

My cute little penny stock…you are so CUTE!

“Jeff Matthews on Buffett and Paulson

Jeff Matthews has nailed the essence of the Paulson plan and the Buffett buy in Goldman Sachs in one sentence:

“More seriously, we wonder this: how is it that Warren Buffett can cut a better deal with the best-run financial company in America than the U.S. Treasury can ask from the worst-run financial companies in America?”

And that is right. Buffett took preference shares and upside. Paulson does not plan to.

I would rather own Berkshire than be an American taxpayer.

Oh, I do own Berkshire - and I am not an American taxpayer.

And that is the sweetness in living in Bronte, Australia.”

Just you wait John the intelligence in Washington will prevail! All 2 of them.

Paulson Plan is bunk because of the following .

Paulson and BB have not been able to prove that a mania comes back in the short run in values ,so their plan is fraud speak based on even a observation of history . Therefore this is a bail out of Banks .

Japans real estate mania ….DIdn’t come back for 17 years and has still not fully recovered .
Crash of speculative real estate mania in Florida in 1926 . Did not come back until lately during the housing boom of 20003-2007.

Crash of the Great Depression in stocks which was a mania , that caused real estate to crash .
If you look at history eventually Job stimulation was the thing that brought us out of the Great Depression ,which of course included war and other job creation programs the government put forth .

The Paulson Plan assumes that the money freed up by the banks by these bail outs will be spent on giving loans to people who are not credit worthy and that tapped out people would be able to qualify . The banks would more likely invest in sure bets .

Paulson and BB do not address why the Feds can’t give direct loans to
the public ,now that they have F&F or why the Feds can’t evoke the FDIC emergency powers to inject liquidity into FDIC to prevent any loss
from a deposit holder at a bank .

Paulson or Crammer attempting to scare Pension holders by telling them that they will lose their Pensions tied to stocks . If you invest in stocks you know that risk is attached . If the federal government is saying by this plan that they are insuring that the stock market won’t correct in
recessionary economy ,than they should insure every investment in the world …get real . Smart people would make sure they had less exposure in the stock market Casino .

I love how the Market makers of Wall Street say it doesn’t matter who the parties at fault were . Isn’t that always what a criminal will say ,it doesn’t matter ,you can’t take back the crime . The Judicial system usually doesn’t feel that way and will punish for crimes . In addition the Judicial system attempts to determine who the liable party is .

Now the spin with the Cheerleaders is that the 700 billion dollar bail
out is investing in America . Fraud Speak to say that the bail-outs
are for anybody but fat cats and the parties that brought on the
fake housing prices that have already harmed Americans .

Also Paulson does not want to address any regulation until after the fact . Why give a bail out if you are not going to address the corrupt system that will benefit by the bail-outs instead of the American people .

Muni Bond Yields Rise to 6-Year High Amid Variable-Rate Squeeze

Lorain, Ohio, yesterday sold 20-year general obligation bonds rated Baa2 at a price to yield 7 percent, more than 2 percentage points higher than Aaa bonds at that maturity tracked by Municipal Market Advisors.

“We didn’t have a choice,” said Ron Mantini, auditor for Lorain, a city of about 70,000 west of Cleveland. “If there was any way, I would have pulled it off the market, given everything that has happened with the economy. We had to come up with $4.8 million to pay off” short-term debt coming due next week.

http://www.bloomberg.com/apps/news?pid=20602007&sid=a7TCuxaJcJDE&refer=govt_bonds

is this what everyone is afraid of? because people are having trouble finding money to borrow to pay off borrowed money?

Traders Sowing Seeds of Destruction Prompt Crackdown (Update2)

http://www.bloomberg.com/apps/news?pid=20602007&sid=armYizhiz5ZQ&refer=govt_bonds

Trivia question:

How many times will President Bush mention terrorism, terror or related terror connotations tonight?

I guess 27.

Any other guesstimates?

I win if he says an Al Quada (sp) inspired terrorist attack against the US financial system.

Not funny, sad.

Bush on tv, “blah, blah, blah…..blah, blah, blah, blah……”

What is he saying that we all don’t already know? The banks are not lending? What????? Maybe it’s bc they’re going back to the normal lending standards. You mean we can’t lie anymore?

Can’t believe I voted twice for this guy.

Let it crumble. The bigger you are, the harder the fall. I’ve got my pads on. I want to see these guys run for cover. When J6P get desperate, those who think that they’re so clever and mess with J6P lives should tread carefully.

President said housing market will return to normal. Sweet… it will continue to fall.

I trust her to solve all the economic problems, after all, she can see the Treasury and Federal Reserved buildings from where she is going to live in D.C

http://news.yahoo.com/s/ap/20080925/ap_on_el_pr/palin

President of course took no responsibility for the problem, no mention of rating firms, conflicts of interest, lac of regulation regarding securitization and CDS ect. Pure BS

The whole premiss of this bill is BS. The bottom line is they want to give the banks a pile of cash and they tell us this will lead to the banks lending money??? I don’t think so. Why are banks going to make risky loans in this environment? Securitization is dead so this is a one shot deal. Banks will sit on the cash and wait for the bottom just like all of us. They won’t make loans unless you put down a huge downpayment. This bill will not change that fact.

I think this bill has been put forward for political reasons and greed. If Dems accept it 700billion will be used to prop up markets until after the election, but the major problems will not be fixed so the market will eventually crash again. It just gives those stupid greedy elite who played musical chairs too long a while longer to find a chair, and likely gives Bushco one last chance to feed at the public trough. If dems vote no, then the market will crash sooner and they can say we tried to save you but the Dems voted no.

Wall Street Crisis
Seven Better Uses For $700 Billion
Matt Woolsey, 09.23.08, 8:00 PM ET

Wall Street’s crisis is about to become Main Street’s crisis, as bank credit freezes and loans dry up. The government’s fix: $700 billion to buy up the bad loans choking the system.

It’s a monster plan, but there’s little choice, according White House and Federal Reserve officials. Though much of the money may return to the nation’s coffers over time as the treasury sells off the mortgage-backed assets it will purchase, the bailout will severely limit what the government can afford to spend on health care, energy, infrastructure and education in the years ahead.

The greatest casualty of Republican bailout policy: Free market capitalism.

SEPTEMBER 25, 2008
Crisis Stirs Critics of Free Markets Around the World, Calls to Reconsider U.S.-Style Policies
By JASON DEAN in Beijing, MARCUS WALKER in Berlin, and EVAN RAMSTAD in Seoul

The turmoil in the U.S. financial sector is rippling through political debates around the world, giving ammunition to foreign officials who question American economic leadership and oppose policies that follow the U.S. model.

REVIEW & OUTLOOK
SEPTEMBER 25, 2008
Short on Common Sense

Securities and Exchange Commission Chairman Chris Cox knows what it’s like to be scapegoated after John McCain threw him under the Straight Talk Express last week. So why is Mr. Cox giving the same treatment to short sellers?

We’ve been in a panic already now for, what, 13 months, and Rip van W is just waking up to it.

“Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold,” Mr. Bush said in a 12-minute address in which he warned in stark language about the danger of delay. Mr. Bush endorsed several of the changes that have been demanded in recent days from the right and left. He said the bill “should be enacted as soon as possible.”

Te hee

Edlin, Aaron S. (2008) “Dr. StrangeLoan: or How I Learned to Stop Worrying and Love the Financial Collapse,” The Economists’ Voice: Vol. 5 : Iss. 5, Article 3.

Available at: http://www.bepress.com/ev/vol5/iss5/art3

News Flash
Palin has been blessed to be free of witchcraft

http://news.yahoo.com/s/ap/20080925/ap_on_el_pr/palin_witchcraft_blessing;_ylt=Agp5MyajmESSKoMsdpaALcVh24cA

I wonder if she will remove the witchcraft from the market with a similar blessing.

Oh God please banish the witches and sourcery that has threatened our realtors and God fearing CEO’s. Banish the evil press for saying truthful things to our people. ect ect.

If McCain drops dead this will inherit the white house.

Wow ,the cheerleader for the Bill are upset about Senator Shelby’s
announcement . Another Harvard professor just suggested that it would cost the taxpayers less if the bank just got capital injections .

I see that there is some objections about the Paulson Plan not being the most cost effective .Haste makes waste ,doesn’t it .