Bits Bucket For October 8, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Looks like the Keystone Cops lowered interest rates again. It’s only making the situation worse, but it makes them look like they’re doing something!
Now we get to see how much a bounce they can eke out before the next batch bails. Lookin’ at the European charts ~4 a.m. EDT - they must have been staring into the abyss (again).
If you go by the futures markets, this bounce was literally measured in minutes …
got gold?
What would you have them do?
Not much.
Why do we always have to “do something”? What is wrong with letting things take their natural course sometimes? I think there is a good existential argument in here somewhere about the actions of man and the determinism of the universe, but I prefer to quote Einstein:
“Only two things are infinite: the universe and human stupidity; and I’m not sure about the the universe.”
A little INaction is a good thing sometimes. God knows the government was extremely good at it when the Bubble was expanding all of those years.
Exactly. Government interference is why I refuse to invest in this market. I have no reasonable way of picking winners and losers, it’s all the whim of Bernanke and Paulson.
The message from the media is always to DOOOOO something..they show some sad sack, some fat family that “can’t afford to eat” blah blah. Of course whenever the interview someone in trouble, 99% of the time the subject will say someone oughtta DOOOO something to help them.
The biggest lie is that after the ‘29 crash, Hoover didn’t DOOOO anything, which is a lie because he ran around DOOOOin everything he could think of, an approach that FDR continued x10. Just all lies, bad histories and half-assed memories from the media & academe.
Why do we always have to “do something”?
Its the corner stone of our culture. We reward “doers” and not “thinkers”.
As the Nike slogan says: “Just do it!”
NKE is down 20% off its highs. I think the “Just Do It” boys are going have to do it with less…
As I often have to tell clients on the verge of risky financial and legal schemes:
“Don’t just do something - Stand There!”
The problem lies in the wrong diagnosis as to why we are here. It lies with the lack of risk compensation in interest rates to compensate for defaults. It lies in thinking that the problem with the economy is that the price of housing is going down, instead of realizing that the problem was associated with the irrational increase in house prices.
The other thing that might clue them in, is that they have been lowering rates for a while with no apparent success, and an increase in the speed of the credit deterioration. Albert Einsetein once said that insanity is repeating the same thing over and over, expecting a different result (ad-lib).
Now, what would happen, if they would pull a Volcker, and raise rates, to compensate banks for the risk of lending money?
And even McCain talked about putting a floor under falling house prices yesterday. He wanted direct government interaction to do this. We all know this will fail for many reasons, the biggest one being that you simply can’t have house prices out of wack with salaries for any sustained period.
The only way for prices to stabilize, much less rise, is for the next generation of legit first-time buyers to build up again. That won’t happen for 7-8 years at least, so the only buyer left if Kash&Karry.
Either that, or someone will have to physically destroy supply. (Although, maybe the McStuccoBoxes will destroy themselves.)
“The only way for prices to stabilize, much less rise, is for the next generation of legit first-time buyers to build up again. That won’t happen for 7-8 years at least, so the only buyer left if Kash&Karry…Either that, or someone will have to physically destroy supply. (Although, maybe the McStuccoBoxes will destroy themselves.)”
Further, as reuven mentions, prices HAVE to represent what the locals in any given market can afford to pay. It actually doesn’t matter if you destroy inventory, because what’s remaining would still have to be affordable or nobody could qualify. Unless, of course, lending standards dropped again. I can’t imagine that happening.
The real shame in all of this is that our “leaders” are completely missing the boat. They should be focused on job and wage growth, and corporate reform, and everything else would take care of itself. Instead, they’re foolishly meddling in markets they cannot control.
Through extremely poor choices over the course of the past few decades, we’ve ended up with the worst leadership we’ve ever had as a country, and it shows. Everybody should vote out their reps this election. Get rid of ALL of them.
A politician who advocates liquidation of overpriced housing will not be elected.
“McCain talked about putting a floor under falling house prices”
I just wanna see a floor under McCain’s arse.
Want to see some truly wacky logic:
Watch this video
http://www.dpagroundswell.org/
In it “Hip Hop Mogul” Russell Simmons argues that because house prices are falling (?) they need DOWNPAYMENT ASSISTANCE now more than ever! This is the scam where there’s a seller-financed kick back. The IRS just ruled this whole thing to be one big scam.
Not only that, but: elderly people are losing their homes! Their loans are unaffordable! They own more on the mortgage than the house is worth!
Gosh John, this is pretty much the definition of irresponsible borrowing: people with unaffordable loans (who weren’t intending to sell).
Headlines in my web email advertising portal:
——————————————————
McCain pledges balanced budget, criticizes Obama (AP)
Pelosi says $150B economic stimulus plan needed (AP)
Then McCain in the debate (apparently) 300B immediately to buy failed mortages
Like an old Heinlein joke about organized religion:
If you can belive all three of these things simultaneously, then we need to talk about this bridge I’m selling.
I wonder if these are some of the bad mortgages McCain wants the tax payers to buy?
http://kfyi.com/pages/local_news.html?feed=118695&article=4364653
“Albert Einsetein once said that insanity is repeating the same thing over and over, expecting a different result”
I always dislike this quote. Doing same thing over and over, expecting a different result is STUPIDITY, not insanity. Insanity is hearing god tell you to kill people, believing you were abducted by aliens or that your dentist implanted a mind-reading bug in one of your teeth.
What if two out of the three have happened to me?
I have always suspected the evil Dr. Taylor…
When I was a lad, he’d torture me on the modern-day equivalent of a rack (the dentist office) and when I was uncomfortably numb and he was done, he’d lead me to the promised land, a wicker basket full of 10 Cent toys, where I could select one.
“Doing same thing over and over, expecting a different result is STUPIDITY, not insanity.”
Great. You just downgraded my sex life from inadequate to stupid….
At least he did not lead you to the candy…
He was next to a salt-water taffy store on one side and a jujube store on the other.
My childhood dentist’s name was (I kid you not) Dr. Payne.
Doing same thing over and over, expecting a different result is STUPIDITY…
It’s also the definition of “persistence”.
My wife’s Dentist is named is Dr. Weiner.
Dr. Weiner once told her to never let me get a vasectamy because after he had his, he “was never the same.”
I gave him a nickname for his first name. Soft.
True story. Dr. Weiner is complaining about is weiner.
Actually, I think it was Freud who defined “neurosis” as doing the same thing over and over and expecting a different result…”
Has anyone in charge of trying to fix this mess admitted that the fundamental problem is that housing is still 40% overvalued? I see them dance around the issue by talking about risky loans, easy credit, pointing fingers at vague boogymen like securitizations because how could a voter be pissed at that as it doesnt imply their own constituents’ ignorant actions are blameworthy, etc., but until we face this there is no hope. If you dont know what healthy vital signs are, the patient will not likely survive surgery.
No, because that’s not what the sheeple who “own” those 40% overvalued homes want to hear. It might be the truth, but it sure as hell wouldn’t get anyone elected. Used to be that the Fed Chairman could speak such truth from a relative position of tenure. No more.
They don’t even understand the concept of value. They think there really isn’t one except what the yahoos are willing to pay at any given time.
I have a co-worker who keeps yammering about “wealth creation” in real estate. He thinks the prices right now are reasonable and A-OK, and attributes the stock market crash to “negative thinking”.
Wreckcreation…
ha ha
I’m convinced that the pols are doing everything in their power to prop up their own, as well as wealthy friends and families, property values. They could care less about the “little people”.
And to take my assertion a little further, they realize that the stock market is in the dumps and likely won’t recover until housing bottoms. These greedheads, no doubt, have a lot riding on stocks. They’re desperate to save their own.
I’m not sure that it matters WHAT rate the government sets. The TED spread, the difference between the Fed rate and LIBOR is exploding. Lower rates won’t convince banks that they’ll get their money back if the loan.
Just as the RE bubble will be used in textbooks as a classic example of a speculative bubble, these alphabet soup attempts to fix the financial system will be the examples given of “pushing on a string.”
So my question is, will houseowners finally cut prices aggressively now that they know that the stock market can fall 30% in 9 months?
No, houseowners will be continue to be greedy.
Barbara Boxer was on the radio the other day babbling the same thing, “…until we put/get a floor under housing” kind of thing and trying to defend adding an extra $100 billion plus to the bailout while admitting that the majority of her constituents (and all of America) were against it.
Anybody know, is there a list online somewhere showing who voted for the bailout and who voted against?
The roll call for both the House and Senate has been posted several times already but here you go:
The Senate vote (sortable, which is nice)
The House vote
After reading about the execs at AIG spending bailout money on a retreat to an expensive resort, I realized that Congress had failed put any restraints on what that money could be used for.
Of the $700 Billion, I am thinking some of it will be returned to Congress in the form of campaign contributions. Probably a small amount, but a small amount of $700 Billion is still a lot of money.
I think that is the reason why Congress was soo eager to ignore the will of 90% of its constituents .
Do note that the only declared Socialist in the US Congress, Senator Bernie Sanders of Vermont, voted NAY.
Sanders stands for socialism for everyone, not just the big guys. Whether you agree with that or not, at least he’s honest about it.
My write in ballot of Ron Paul / Dennis Kucinich: both Nays
Go out and buy $700bn worth of beer and go on a bender.
Oh, wait, that is what they’re doing.
Lowering interest rates in a market where every loan looks like a bad risk, is like lowering the cost of admission to an amusement park to a Nickel, but you can’t get in, because the gates are locked…
I’d say a more apt analogy is at the county fair - lowering the price of a roller coaster ride from 4 tickets down to 2 tickets, after the last coaster just went flying off the tracks and everyone died.
Takeout the trash: Separate the solvents from the insolvents then start over.
Take out the papers and the trash
Or you don’t get no spendin’ cash
If you don’t scrub that kitchen floor
You ain’t gonna rock and roll no more
Yackety Yak (don’t talk back)
How about a poll about when we get another “bank holiday,” like the one FDR instituted?
Bank Vacation, is more apt.
How can they institute a bank holiday in a gloabalized 24/7 b*llz to the wall world?
One must remember - Chinese restaurants are open on Christmas Day. Good luck getting gloabl cooperation on this one.
Weekend at Bernanke’s, anyone? You can prop the dead market up on water skis and tow it around the bay to hilarious effect…
Then take it to an AIG party and pretend all is well…
“Takeout the trash”
This is exactly what Roubini says is missing and very needed in the current situation.
It appears that the Fed is willing to bail out the whole world. I think the Fed should pull the levers of the economy that can help stabilize it. There is a risk and reward equation in every business. At some point the Fed should let the market forces play out. The Fed is over doing this intervention thing and it will backfire.
IMHO the Fed should stop micro managing the economy. Time will tell
The Fed is running out of bullets. Maybe 1 more rate cut is all BB has left in his pea shooter.
japan !
It is simply hubris that Bernanke and our friends in the gov think they can actually solve the problem. While in fact, they are only delaying the inevitable at this, and making it far worse. If Ben had let this thing crash a year ago, we would probably be heading towards recovery by now. More easy credit is not the answer right now!
How about a WPA like project to lower the unemployment rate and put people back to work? Double bonus: better roads, bridges and public transportation.
Lowering interest rates is a quick fix that won’t work and will probably have more negative consequences like higher inflation and lowering the value of the dollar.
In 1933 our government was the world’s largest creditor. (today’s China)
75 years later, we are the world’s largest debtor.
Who’s gonna pay for the new TVA, the Grand Coulee, the CCC’s, the WPA, etc?
We’re going to pay for works programs with inflation.
Personally I don’t want the crime and extreme poverty that comes with doing nothing. We should have let the banks collapse and put the unemployed back to work with that 700 billion we borrowed.
I think we’re too late to stem the tide of increased crime. Central Florida is getting extremely bad.
“We should have let the banks collapse and put the unemployed back to work with that 700 billion we borrowed.”
+1
Here’s one cite for Florida:
http://www.local6.com/news/17544726/detail.html
Juvenile crime up, including a 70% increase in homicides, and a 130% increase in attempted homicides.
(You wouldn’t expect the children of failed houseflippers to be honest citizens, would you?)
And yet, which is worse: to be the person who borrowed money and can’t pay it back or the person who lent money and won’t get it back.
Reuven, you are right on point. There are going to be real consequences of this economic fallout that aren’t being considered. If I were advising these candidates I would tell them to lay out 3 priorities for their first month in office:
1) Food: Anticipate food shortages and a breakdown in the agricultural industry. It may not happen, but a contingency plan here should be in place now. They should demand that FEMA have a national emergency food distribution plan in place.
2) Shelter: Tell HUD and other agencies to place their focus on rental assistance and emergency housing assistance for the coming unenployment boom. Stop worrying about the ownership society and focus on the roof-over-your-head society.
3) Safety: Prepare the domestic security infrastructure (police, FBI, etc) for the fallout of econimic desperation. An increase in property and violent crimes will absolutely follow economic downturn.
I’m no doomsday prophet here, but I’d like to see some honest leadership. When we look back at the great depression we think mostly of the human strife (starvation and homelessness). A real leader would be preparing himself and the country for this possibility. Instead, we’ll skip headlong into the abyss, whistling a polyanna ditty, too afraid to acknowledge the real issues for fear of sounding pessimistic during a campaign.
Exactly right, Marcus!
Additionally, they need to enact a work program.
All the money going to banks/financial companies right now will disappear into a black hole…right when we need it most.
RE: How about a WPA like project to lower the unemployment rate and put people back to work? Double bonus: better roads, bridges and public transportation.
Hate to blow your bridges (no pun intended-CynGirl…but
it isn’t gonna happen.
The hardest job I ever had in my life was in a DOT bridge maintenance crew.
Ain’t no way, this “something for nothing” welfare state has a WPA work ethic anymore.
However, you can sign me up to be the $40.00 per hour flagman positions.
How many fit people do we have to do this kind of work?
I’m sure there are plenty of illegals willing to do the job…
I have many friends that have worked on trail crews in National Parks all across the country.
Some have been at it since the early 1970’s, many have been doing it for 10-20 years.
They re-build trails, build walls, crush rock, build bridges, blow up the occasional offending 12,000 pound piece of granite, or fallen tree, on trails, and camp in the back of beyond for 3+ months, earning around $10-14 an hour.
It might be the only honest work left in our government…
RE: I’m sure there are plenty of illegals willing to do the job…
These people couldn’t hit a stud with a nailgun on a plumb line.
You’d trust them to weld a gusset plate correctly on a bridge that you’d be travelling over everyday?
Then again, government couldn’t do any worse than the $13 billion cost over-run “Big Dig” project which is a leaking sieve constructed with high dollar union labor.
RE: that have worked on trail crews in National Parks all across the country.
It’s one thing to be out in a forest with a big blue sky,surrounded by natural beauty; and quite another to be stuck under a sandblasting helmet when it’s 100 degrees, while walking on an access plank strung out 200 feet above treacherous tidal currents. If you slip-maybe you fall into the safety net and maybe you don’t.
I’ll take the trail duty anyday.
It was an attempt at sarcasm
If the illegals qualified for welfare, they wouldn’t work either.
“How many fit people do we have to do this kind of work?”
I went thru a 3 month fed jobs retraining program this summer in basic construction and environment safety certification. I am 53 and in decent shape but doing infrastructure building work such as road/home construction/refinery work/concrete work is indeed physically demanding and not for out of work salespersons and UE financial cubicle workers.
I am currently doing volunteer work for habitat for humanity and work with some older retirees. They can do this outdoor work at a slow but steady rate, relying on their past accumulated skills. They also have extensive past construction backgrounds and so are in better shape that a lot of younger folks without experience in doing outdoor construction work.
The older workers have more heart and put a lot more effort than the 20 somethings i trained in my summer construction class, who simply in many cases lack motivation and are often lazy to boot or lacking in the work ethic.
?Que es su problema con (migrant workers). Tu estes razas.
Su casa mi casa, amigo!!
Not all is bad, I have been able to raise my rents in Oklahoma!! Wooo hoo.
The problem would be that a lot of the money used to pay illegals would be sent to Mexico so you would lose any kind of multiplier effect.
I have many friends that have worked on trail crews in National Parks all across the country …
It might be the only honest work left in our government …
I ran into a lot of these folks in my younger days as a field assistant for biologists. Tough work, trail maintenance.
I always thought the annual treeplanting jobs in Canada sounded interesting … and grueling.
I have volunteered with older construction workers at Habitat Tucson projects and in areas damaged by Hurricane Katrina. To a man (and they were mostly male), they were slow, but thoughtful, in their work. I learned a lot from them.
However, a quick look across the Habitat jobsite showed a different story. Some of Habitat’s work was done by companies that hired what had to be illegal aliens. No other way around it. I noticed that those fellows were very fast workers, but, boy, were they sloppy and careless.
I am sorry, but if my family is starving due to inflation caused by spending 700B on roads and other “make work” programs then I will be quite pissed. It doesn’t matter where you spend the money the only thing government can do is steal from one group of people and give to another. Large scale theft destroys the motivation of the real producers and shrinks the overall pie. In the end you just get more malinvestment.
I am sure many people think that improved roads are a good idea, but improved ANYTHING is a “good idea”. The problem always comes back to limited resources. Right now we need to focus on conservation and careful allocation of resources on an INDIVIDUAL level.
I know that in hard financial times the last thing I would spend my money on is repairing my quarter mile paved driveway (even if it would “put me to work” and generate “real value”).
As long as we accept the fallacy that “spending” drives economic growth we will continue to squander valuable resources.
Ultimately each of us has to produce something someone else wants and trade with others. In an economic collapse people must learn what the real demands are of the people, not make up “demands” by government spending.
There is ALWAYS work for those who are willing to think outside the box. There just may not be “employment” because of the lack of large pools of capital (that have been squandered). As a society we have to work to rebuild large pools of capital via savings before we can start increasing traditional “employment”.
Either nothing, or raise rates.
Raise rates, but the die is cast, they will not do that.
Haven’t they done enough already? At least they could kiss me.
“What would you have them do?”
They haven’t tried a bake sale or carnival yet . . .
Instead of a kissing booth, I’d sell tickets for $100 each to kick W in the nads.
I’d like to buy $600 worth, please.
Let the bidding process begin. I’ll take 1000 tickets.
So is THAT the next bubble?
Nope. Unlike housing, we’re aren’t gonna run out of buyers.
Kick W. a 1,000 times in the nads and the next big bubble is in his pants.
Lol!!!!!!!!
LOL!
what a thought.
I think I’d go broke.
Instead of a kissing booth, I’d sell tickets for $100 each to kick W in the nads.
“Ow, my balls!”
Ahhh, but they did it together!
Imagine you and me, I do. I think about you day and night, it’s only right…
This seems like a good enviroment to get some seed money and start a new bank with a clean balance sheet. Put out a charter that says leverage on the bank will be very constrained (less than 2:1). Have large cash reserves and security.
I bet that would suck up a lot of business in the flight to safety enviroment.
That would help bring this crisis to a quick conclusion.
Heck I’d start a bank with ZERO leverage. Advertise in bold print - WE DON’T LEND MONEY UNTIL SOMEONE ACTUALLY DEPOSITS IT FOR US TO LEND.
Such a bank would do VERY well right now IMO.
Maybe follow that up with:
AND WHEN WE DO LEND IT - WE ONLY LEND THAT AMOUNT, TO JUST ONE PERSON OR COMPANY, WITH NO THIRD PARTIES INVOLVED. AND IF THEY DEFAULT, WE’LL GIVE YOU A GUN TO GO AFTER THEM.
This can’t be don right now. We discussed the idea of opening a full reserve bank with 3 friends of mine who actually DO own banks in Illinois. You can’t do it, legally.
Here’s the reason: the CRA demands that you loan money out to deadbeats and irresponsible morons and the unemployed and mentally deficient. Because of this, your spread on risk is raised about 25%, which means you’d have to charge people 4-5% on their short term deposit accounts just to break even. Forget it.
Your government, the ones you idiot voters keep putting in office, have destroyed the ability for me to offer you a truly full reserve bank. Thanks, suckers. Go and vote for McCain or Obama, and you’ll get more of the same.
I, on the other hand, will use the full reserve bank that I created myself, for my own purposes, and be more than happy with the return I get on my investments. You can keep shifting your money in CDs, which goes directly to fund more inflationary credit expansion. Nice job, suckers.
you just nailed the principle of the original Savings and Loans. it worked too, until they got greedy!
Deregulated and greedy.
Remember the Keating Five.
It’s the same problem all over again, in a different way.
What happens when you take in $100 in deposits, lend out $90 to a homebuyer, and then your depositor wants $50 to buy something?
You can’t get them the $50 back. You then need to borrow it from somewhere short term to replace the $50 for your depositors.
The problem is with poor lending standards and excessive leverage, not the leverage itself. You can’t have long term financing (longer than a few days) AND liquidity in the banking system without the willingness and ability to have SOME leverage.
Granted, my example is extreme, but the only way to protect around it is to keep the loan amount low relative to deposits, and even then you don’t completely eliminate the problem, you just make it far less likely…
Well.
The idea here was a bank with zero leverage unless you made deposits specifically to be lent out.
So, you’d specify that the money could be lent out and assume some risk. Then you get a percentage as a return.
Otherwise, you are not getting any interest on your money but don’t have to worry about having a safe in your house, can write checks exc.
Yes, James.
You would match the loan duration to the deposit durations.
IOW, you deposit money into a 3-month CD (or some other name) and the bank makes a loan on that exact amount for 3 months.
If you should need your money sooner, the bank could sell the loan to another buyer (depositor) and you could get your money (minus fees, etc.).
Ultimately, we would end up having to pay to keep “risk-free” deposits at the bank, as banks may or may not be able to make enough money on the spreads between the borrowers and lenders.
I agree that a full-reserve bank would do exceptionally well right now.
Rate cuts at this point are lipstick on a pig.
It appears that the rate cut actually accelerated a decline today. What is poor Bernanke to do now?
MORE RATE CUTS! QUICK!
Boxes of money for everyone!
It would appear that way. As someone said above, the pea shooter is almost empty. We’re really getting down to the last few bullets here.
“Rate cuts at this point are lipstick on a pig.”
More like lip gloss, as their effect is transparent.
Exeter, Don’t know if you saw this or not but the AMD chip plant which I thought was dead, and you swore would never be built, is going to be built, albeit with foreign/oil money.
AMD deal marks a ‘new dawn’
Financing, manufacturing shift expected to take chip maker off “death watch”
By LARRY RULISON, Business writer, Albany Times Union
First published in print: Wednesday, October 8, 2008
MALTA — Advanced Micro Devices Inc. said Tuesday it will move forward with plans for a multibillion-dollar computer-chip factory in Saratoga County after securing a $6 billion investment from the government of Abu Dhabi. The deal assures much-needed capital for financially struggling AMD, which appeared too hobbled by its knock-down battle with rival Intel Corp. to build the high-tech facility first proposed two years ago….
“They had to do this to survive,” said Silicon Valley technology analyst Rob Enderle. “They were pretty much on death watch. This takes them off death watch, It’s absolutely huge for New York.” In addition to expanding in Germany, The Foundry Co. plans to build a $4.6 billion chip fab at Luther Forest Technology Campus in Malta…..
At least one real estate agent expects the announcement alone to end the slumping housing market. “The biggest problem we have is that people’s confidence is very low, because people are scared,” said Miguel Berger, president of TechValley Homes Real Estate LLC in Colonie. “This will change that.”
• The Foundry Co., plans to spend $4.6 billion on the new factory in Saratoga County. • The fab will employ 1,465 people; its annual payroll will be $88 million.
• AMD estimates 4,300 construction jobs will be created during the two-year building window, with an annual payroll of $210 million
• Also, it’s estimated another 5,050 jobs will be created in the local economy to support and serve the fab. The collective payrolls would top $200 million.
Interesting and it certainly can’t hurt, but I am not sure it is the savior they are looking for though it sure puts a few more buyers in the market if I ever go to sell our cottage up there!
That whole town only has about 12,000 people. It’s been built up a lot in the last five years. Every time I go visit relatives there, I’m shocked and wonder where everyone works.
Thems with the moneys rule.
Good US businesses will be able to get financing. The other 65% are walking dead.
You and Darwin have much in common. The fact that we are trying to preserve an economy built on toxic waste tells me that political cronyism has triumphed over common sense.
Evolve or die…
I’m worried there won’t be any candle shops left standing, then what will I don when I just have to have a candle dammit!
Skeptic, I’ll believe it when I see material contracts, RFQ’s/RFP’s hitting the street. And if it ever happens, and I’m still very doubtful that it will, it’s impact might extend out a 10 mile radius from Malta. I cannot see any impact outside of Albany/Schenectady/Troy.
Hopefully if the jobs materialize they can help to net out the next round of State worker layoffs in that area……
I am told by a (mostly) reliable source over there that the terms of the investment REQUIRE that the plant be built and not used (for more than a certain percentage) to supplement operating expenses. Its seems they want hard assets and not just a cash infusion into a dying company.
Local news on our NPR station yesterday announced this deal, in the context of some Austin employees of AMD getting transfered to New York, and I think some to Silicon Valley, and an unknown number to be laid off.
RE: in the context of some Austin employees of AMD getting transfered to New York,
Now there’s a bit of culture shock coming for a few people!
Culture shock isn’t even the beginning of it. Wait until they see Fort Edward or Greenwich (NY not CT)….. But if any of them want a nice cottage at low 2005 prices within walking distance to a crystal clear Adirondack lake, I have the perfect place them
Or they can’t wait and get it for half what you paid. You don’t want to hear that but neither do the rest of them. Nobody likes getting duped.
RE: Culture shock isn’t even the beginning of it. Wait until they see Fort Edward or Greenwich (NY not CT)….. But if any of them want a nice cottage at low 2005 prices within walking distance to a crystal clear Adirondack lake, I have the perfect place them
Leather Stocking, “Last of the Mohicans” country.
More like “last of what GE left behind after they totally polluted the place, left town and and closed the factories” country….
RE: More like “last of what GE left behind after they totally polluted the place, left town and and closed the factories” country….
Yup… I have got to say when I’ve been roamin’ around lookin’ for various French & Indian War and American Revolution battle sites, I am always dismayed to see the pathetic rotting signage and general unkempt nature of the places-save for Fort Ticonderoga and the grounds of Saratoga.
bbbbbut Generous Electric is still in operation in Fort Edward. They employ a whole 200! They are such good neighbors.
I have been watching current events with a mixed sense of awe and “see I told you so”.
One of the interesting things to come out of this, is that in effect millions of 401k’s were turned into a form of tax and the money lost, Folks housing piggy bank is raided, and offshoring keeps our wages stagnant.
Iceland is virtually bankrupt as a nation, almost overnight, and most of the major banks in UK were just nationalized.
What bothers me is that the bailout was like bringing a sword to a nuclear war in terms of it’s scope and innefectiveness.
Apart from the obvious who is to blame, I am seeing a rapid acceleration out of control. This is a runaway train.
Globalism. It’s what’s for breakfast!
How many points of light can you see?
RE: Apart from the obvious who is to blame, I am seeing a rapid acceleration out of control. This is a runaway train.
Kevin Phillips in his book, “Bad Money” notes that when the economies of Hapsburg Spain, the maritime Dutch Republic, imperial Enland, and now the US, allowed themselves to “LUXURIATE IN FINANCE” to the exclusion of the productive pursuits of harvesting, manufacturing and transporting.
The result was that their global empires became doomed.
Fast forward to the “Age of Computer Finance” and the capacity for disasters of unimaginable scale are expontentially increased.
Your perceptions are not that far-fetched.
At some level finance operates like “leverage” on the productive economy. When times are good, they’re very good and when they’re bad they’re very bad.
This reminds me of an old Warner Bros cartoon.
In the cartoon, Sylvester has just inherited a large sum of money, and of course he wants to spend it all with his alley cat friends.
Granny did leave a trustee in charge of the fortune (I think it was Elmer Fudd). He plays a movie for Sylvester to understand the finance system. Silvester watches it, and his alley cat friends watch from a window.
The movie chonicles how by investing and reinvesting into productive industry that society as a whole benefits. Production of tangible goods increases and everyone’s standard of living rises.
Just before the movie ends Sylvester snacthes the bag full of his inheritance loot and runs to the window yelling “I got it”. His alley cat friends angrily tell him to put it back.
This cartoon was probably an educational cartoon, which is likely why I haven’t seen it in decades. Maybe we need to show this to today’s kids, so that they can understand that money doesn’t grow on trees (or flipped houses).
I remember that one. I find the educational/agitprop cartoons interesting. Victory through Airpower, Our friend the atom….. etc.
someone told me they pulled the bugs bunny cartoons off the air due to the violence in them? but look at what they replaced them with, alot more violent ones than those!
I doubt they were pulled off the air for violence; today its more likely because many of the old classic Warner Bros. cartoons are not considered “politically correct” anymore.
Many of the old Warner Bros. cartoons I watched as a child were about past wars that had stereotypical Japanese and German characters that would be considered outright offensive and racist by most modern Americans. One of my favorites, was called “Gremlins from the Kremlin” and was about gremlins torturing Hitler and causing his plane to crash. No way would a cartoon starring Hitler as one of the main characters ever be shown on today’s public TV!
And the Sylvester cartoon where he gets investment advice from Elmer Fudd regarding his inheritance…I don’t remember watching that one. Now I’m going to have to scour my local library’s classic cartoon collection to see if I can find it.
Phillips’ book was excellent. I highly recommend it.
I love the smell of market mayhem in the morning!
they better be careful. They are running out of ammo.
shouldn’t they save the last round for themselves?
“When playing Russian roulette the fact that the first shot got off safely is little comfort for the next.”
Richard Feynman
Had to check out this $9,900/month craiglist rental and see if it was for sale. I’ve seen high asking rental prices, but never this high in this area.
http://boston.craigslist.org/bmw/abo/870634425.html
According to ZipRealty, it’s been for sale for 338 days. The price has been reduced from $3.3. million to $2.5 million, making it a ’steal’ at $372/foot.
OK, now McCain is proposing to allow homeowners with negative equity to renegotiate their mortgages to the reduced value of their homes. Aside from the fact that this proposal doesn’t sound like it would come from a Republican, let’s discuss the ramifications of such a move.
McCain bums me out and I have always voted republican. These politicians already know people were pissed about the 700 billion bailout. To hear your neighbor will get his mortgage reduced because he’s a loser??
I hope he was talking his political smack and wasn’t serious.
He was trying to take credit for a bailout provision that is already passed
My thoughts exactly, PB - after going wha? ‘I thought ‘isn’t that what the Bailout Bill proposed to do? Like, buy all that bad paper from the banks at firesale prices?’
Word is, his more conservative followers are furious at his blatant play towards Socialism…
You described my thoughts exactly. I’ve always voted Republican, but I think I might sit this election out. I’m honestly beginning to wonder if the Republicans are trying to lose, as they know the next President is going to be in hell. Obama probably already has 98% of the underwater-housing-I’ve-been-taken-advantage-of voters locked up, so all McCain did here was to anger his base. It makes no sense.
all McCain did here was to anger his base
Yep. This, to me, says 2 things:
McCain is desparate
McCain has no fundamental belief in conservative financial values
I’ll take no fundamental belief for $100, renter.
“McCain bums me out and I have always voted republican.”
Yep, same here. Right off the bat he proposes buying bad mortgages and renegotiating directly with people (if I heard it right). Imagine the govmint hiring needed for that and the losses taxpayers would absorb if that happened.
I think he was totally serious……that’s the problem.
Blano, the choice presented is two socialists. Why not go with Ron Paul, a true traditional rebublican?
Can’t say that I know a whole lot about him, but I’ve liked some of the things he says, financially anyways.
With these electronic voting machines, is it even possible to write in a candidate??
My vote is even more useless this year than usual, so I may not even bother.
Obama is going to win your state anyway so it is not like you are ‘throwing your vote away.’ Its time to make a statement.
What Bronco said,
Vote 3rd party or write in. A small satisfaction, I know, but at least it’s something.
There is just so much detail that’s not in his proposal. For example, does the part that’s written off become taxable income? Does the funds for this buyout come from the 700B or somewhere else? Who is going to manage this fiasco? Who will qualify?
McCain likes to shoot from the hip. IMO, this time he shot himself in the foot.
I’ll take a shot:
1.) the CDOs which contain those mortgages blow up
2.) the Credit Default Swaps (CDSs) that insure those CDOs also blow up.
3.) everybody who still has a mortgage, stops paying it in hopes of getting the same sweet deal
4.) interest rates skyrocket because banks and mortgage brokers no longer want to lend to people who take out mortgages.
5.) John “Maverick” McCain becomes the last Republican president, ever.
The proposal is Pareto inferior for somebody — either the bank or the taxpayer.
It was already approved by Congress. Next idea.
I guess that won’t stop McCain from taking credit. And didn’t he also broker the bailout, staying in Washington until they got it done?
BTW, my first reaction was that this move will not help the homeowner who bought a house for $500K with a 2/28 loan and watched his house drop in value to $400K. Many of those buyers could not afford more than a $200K home (with a conventional loan) in the first place.
What Mik KaneoH wont legalize gay marriage so us in the Wedding business can get more JOBS!!
Boy is he getting old or what?..OhBahmo isnt much better…
MARKETWATCH FIRST TAKE
McCain’s bold new mortgage plan isn’t new
Commentary: Sounds like he still hasn’t read the Paulson plan
By MarketWatch
Last update: 11:58 p.m. EDT Oct. 7, 2008
WASHINGTON (MarketWatch) — John McCain proposed a bold new idea to save America from the worst financial crisis in 70 years: Have the federal government buy bad mortgages and modify them to keep people in their homes.
Except his idea isn’t so new; it’s part of the $700 billion bailout package approved by the Senate and signed by the president last week.
I believe the biggest problem the “modify loans” idea has, is everyone who is upsidedown will stop paying and demand a loan break. Right now only a small percentage of upside-down loans have gone bad. Law of unintended consequences.
Law of poorly designed incentives.
“… let’s discuss the ramifications for this move.”
It will offer hope to the FBs. As long as the FBs have hope they will struggle to keep their home.
If FBs abandon hope then they will abandon their home.
I think you hit the nail right on the head. It’s about keeping the debt slaves from walking.
There are only two ways to rescue this crumbling financial edifice:
(1) Increase wages so that people can pay their debts.
(2) Nationalize debts and garnish wages to pay them
Proposal #1 is never gonna happen except to increase the money supply, which would destroy the dollar.
Proposal #2 is already happening, and the garnishment of wages is called “taxes”. Can’t increase taxes too much, because it is the only thing that would inspire a revolution of the J6Ps of the world against the Powers that Be.
Therefore, we are doomed to the death of a thousand cuts…
There are a number of “first-home” owners that received a hefty down payment from their parents. These parents have been following the forty-year script for success, but now that formula doesn’t apply. These older folks will be adjusting to a new paradigm reality that will hit ‘em like a Gestalt shift when their immediate progeny decide to “walk away” from that down payment because they are too “upside-down”, and the parents finally realize that providing additional support doesn’t make financial sense. Next phase, anger!
I think we should refund any money spent on lottery tickets that did not win , that have been purchased within the last five years. We must renegotiate all car loans that are upside down , forgive all student loans for people who have not received a degree and secured a job making at least $249,000 a year. We must take the written down dollar amount and give a tax deduction in that dollar amount to Angelo Mozzillo and any CEO who`s company has needed a federal bailout. We must also extend unemployment benefits to 40 years or until the unemployed person secures a job paying $249,000. We must also replay last years superbowl because it is not fair that an undefeated team was defeated.
I second all your proposals — and I’d like to add that the Cubbies should automatically win the World Series (perhaps three times in a row), as it’s been a 100-year drought for Cub fans, and that just ain’t fair.
dont forget the losses suffered by the 401K’ers we must repay all their losses to.
If I was current on my payments, and my deadbeat neighbor with his HELOC’d Hummer and Granite countertops got a cramdown (tax free income, to boot, because nobody will dare tax the cramdown as income) I’d either walk away from my house, or shoot my neighbor.
Thou shalt not covet thy neighbours cramdown
Thou shalt not shoot thy neighbor
Unless he caught you in the act of coveting his cramdown , then you might have to shoot him in self defence.
There’s also “THOU SHALL NOT STEAL”.
One thing that perpetually bothers me: NOBODY ever suggests that they’d only bail out 100% fraud-free mortgage holders that don’t have second mortgages or HELOCs. They’ll end up paying for peoples cars and TVs before its all over.
And remember, some neighbors are alive only because it’s illegal to kill them.
It cracks me up because it’s not Republican-like!
I also enjoy how he says he is for de-regulation in one breath and then keep the govt off our back in the next.
Doesn’t he understand there’s a happy medium?
Deregulation and keeping govt off our backs are consistent goals.
I mis-typed. Make that REGULATION, not deregulation.
Deregulation and keeping govt off our backs are consistent goals.
How’s that deregulation working so far?
He’s also for a balanced budget.
what they need to do is cut the government size and budget by a minium of 25%. State, Local, Federal…..start living in their means along with the masses. That is the true long term fix. I hope everyone is excited that we just keep printing money to prop up the ponzi scheme that Wall St became. When hyper inflation hits in a year or so the 5-6 % you may get in your 401K will be dwarfed. You cant eat stocks and mutual funds!!!
BABA:
Reduce govmnt….THAT is the Most dangerous 3rd rail in America
We need to force guvmint workers to abide by rules you and I live by at their jobs.
We don’t need to have mass firings just yet but we need to make it easier to fire bad workers. You know in most decent size companies you get 2 warnings and the 3rd time you are FIRED…..unless it really bad offense then its the first time.
Why should it take months of UNION appeals and delays to get rid of a bad worker?
I agree. Keep government workers in their current jobs but cut their benefits WAAAAAY back. Make them pay for (contribute to) their own pensions health care, etc. It totally sucks that we have this one priveleged class of society that gets pay and benefits that is way out of proportion to what they contribute.
Thank you…
as a govt worker, I can tell you that we have to pay for healthcare, etc … new workers now do not have the same benefits the older workers have.
hi Jen,
Few know this.
Few know military pay taxes.
Far few, know we pay our own way…
Old daaaaawg,
Leigh
and we pay for our retirement, at least here in Oregon, it comes out of wages paid
Yes, lots of mis-information about govt workers.
Here’s another one: govt workers can indeed be fired!
The fact that the union tries to protect innocent (and occasional non-innocents) is a good protection that should be instituted in private industry.
All too often, people can be fired for personal reasons. The protections in public employment are meant to discourage that.
Getting tired of the “third rail” comparison. If you touch the third rail you die period. Cutting government won’t kill you.
The time is now. I think the voters will welcome a candidate who states frankly that we need to cut programs across the board.
Actually, you’d only die if you were grounded. If you were insulated from ground you could probably touch the 3rd rail without injury.
In 1977 there was a famous court case here stemming from a fella peeing on the 3rd rail. I worked on the subway for a while myself - 600 VDC is nasty, nasty.
They have these things called “stingers”. It’s basically a pole with juice - you put it on the pick up shoe and literally walk a car into the shop. It’s crucial, however, not to take the stinger on or off whilst the car is drawing power. The arc can be awful.
Look at california…..Health care for illegal aliens, cradle to grave pensions for their overpaid workers, high taxes that drive out business, bubble housing market that bankrupted the world…..and Now they want a $7 billion dollar bailout….CUT THEIR SPENDING NOWWWWWWWWWWWWW!!!!!! Sheesh why cant their be any common sense in this country?
Look at NY Illegal kids can get free health care and Americans can’t because you make too much money at $10hour…no kidding!
—————————————
Look at california…..Health care for illegal aliens
Anyone seen that letter sent to Sen. Sarbanes? The one where an over-burdened American taxpayer asked how he could be reclassified as an illegal alien?
Yep, I think you got all that right.
Here’s an idea that would save California a huge amount of money.
Isn’t a big % of the California prison population illegals? Well instead of spending 100k a year each (or whatever) keeping them locked up, why doesn’t Arnie just commute their sentences and send them back where they came from?
[rhetoric] I mean, who would object to such a plan? [/rhetoric]
” I mean, who would object to such a plan?”
I’ve been to a dry cleaner, somewhere here in the Empire’s city limits, where every 13th garment whirling around the electronic rack, was somebody that worked in California state prisons.
That’s who might object…
I would love to see 100.000 police offices laid off due to lack of work…
Maybe legalize the possession of drugs….and only put sellers in jail….as well as confiscate any ill gotten gains
——————————————-
That’s who might object…
RE: Look at california…..Health care for illegal aliens, cradle to grave pensions for their overpaid workers, high taxes that drive out business, bubble housing market that bankrupted the world…..and Now they want a $7 billion dollar bailout
Ted Kennedy country, MAZZ-Land of the highway department busting “Big Dig” and $150k flagger-detail, small town beat cop, is right behind them in the hand-out line.
my county has a dept of wymins affairs
plants trees
paved bike paths
We have women, trees, and paved bike paths here in Olympia, too.
So far they’re all working out great.
thank god for women
I like Olympia. Tell me more about it’s women?
Got Greater Depression?
Throughout these last couple of years, mentally I’ll make the following predictions, just comparing with past predictions. They’re looking worse all the time.
Probability of:
No recession: 0% (was 10-20% at one time)
Mild recession: 0% (was 40-50% at one time)
Bad recession: 20% (was 40-50% at one time)
Mild depression: 30% (was 10-20% at various times)
Bad depression (greater depression): 30% (was 10%)
Total obliteration of our financial system: 20% (was 0-10%)
I’ll go with #5.
Doing guess work:
2008 receipts: 2.4 trillion (same as last year)
2008 interest payments: .3 trillion (10 trillion a 3%)
2008 receipts after interest: 2.1 trillion
Other government spending: 2.6 trillion (based on submitted budget)
A cut of around 20% is required to break even. And this means 20% of military, social security, medicare and everything else. That leaves 5%, or about 130 billion to start paying down the debt (or account for an overly generous estimate on receipts and a low estimate on interest payments).
Looks like 25% is the ticket. Which candidate was promising this?
only 25%?!
Government workers are also the Senate, Representatives, President, Supreme Court Justices, and the armed services.
“One of the hardest tasks of the business-section editor, whether in print or online, is choosing the right stock photo of a trader to accompany a “market tanks!” story. It all depends on the magnitude of the crash. Herewith, some guidelines. …”
Lorem ipsum dolor sit amet …”
http://www.thebandarlog.com/arch/arch54.html#10_7_2008_10_46_22_AM
Good photos. Funny I recall looking like the down 25% guy.
My favorite shot is missing — it features a trader looking up in the sky as though he sees a giant asteroid about to strike the earth.
http://sadguysontradingfloors.tumblr.com/
Take your pick.
THE NOURIEL ROUBINI HALLOWEEN FACEMASK (a free gift from IKN)
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THE NOURIEL ROUBINI HALLOWEEN FACEMASK
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* IT NEVER SMILES
* IT’S NEVER WRONG
* IT STILL WON’T SMILE
Instructions: Click to enlarge your mask, print out and cut out with scissors. Then do what Larry Krudblow has wanted to do for a long time and poke his eyes out with a stick. You’re now ready to be the spookiest academic on the block.
Nouriel is this bubble’s undertaker, and seems to have formaldehyde coursing through his veins…
I have actually been wondering if any people will dress up as the dow jones, or similar. It would be a pretty easy costume. But it might make people cry more than scared?
Each day now the politicians try to manipulate the markets up, but it does not work for long, if at all.
But soon, they will be out of ammunition, as in Japan, where the key rate is at 0,5% and has been there or lower for many years now.
I don’t like Keynesian economics, but he called this situation ‘liquidity trap’. In Japan, nobody wanted to borrow, in the US and in Europe, those who want to borrow can’t, and those who can don’t want.
I guess we need another rate cut… or another bailout…or something.
Negative interest - the government pays you to take out a loan!
You laugh, but in fact that’s precisely what is going on: the Fed is lending at below normal rate to banks who are then depositing “their” new money with the Fed, which is paying them interest. This is not a joke.
If I heard correctly last night, John McCain said at least twice that he would “buy up all the bad mortgages.” ( To add to his fourteen…?) This is amazing stuff. I don’t WANT a bad mortgage. Let alone two million of them. That’s why I don’t HAVE one. Please make this person go away?
You heard him right. Hope you’re feeling ok, BTW.
Relax, after last night, I think he’ll be gone in a few weeks.
“I think he’ll be gone in a few weeks.”
I think so, too. The economy is ringing the death knell, he’s far too aligned and associated with an administration that has all but destroyed the US.
I don’t necessarily believe that. I don’t trust the intelligence of a nation that elected this severely dysfunctional POTUS twice, and put up Kerry as the alternative for round 2.
very true! just when you think there is no way it can happen, it happens
Except in this case, it is the economy we’re talking about here. People are pissed in a way the Iraq debacle couldn’t stir them up, go figure. I have no dog in this race, I’m voting Paul or Nader. I just think McCain ain’t gonna make it. He’s got too much of the stink of Bush. People can take a lot, but when you start hitting them in the pocketbook big time, that’s it.
Are you SURE we elected him?
Even once?
I think they put up Kerry in order to throw the election.
Seriously, he was totally unelectable, even for most Democrats. IMO, all by design…
Anyone who was paying attention knew what was coming in 2004-2008, and didn’t want to be in the WH during that term.
While listening to McCain, I was tempted to start a “My Friends” drinking game. The rules: Whenever he addresses us as “My Friends,” take a good, long swig of anything alcoholic.
Thanks to $700 bn, subprime debt is rallying, while bailout costs are increasing by the minute.
I don’t get why the writer says this was “unlikely,” as it seems entirely predictable.
Wall Street Journal p. C20
HEARD ON THE STREET
OCTOBER 8, 2008
Subprime Stirs an Unlikely Rally
By GREGORY ZUCKERMAN
I just hope I can pay cash for a home, and get settled in before a Hyperinflationary Depression hits. I was targeting April-July ‘09 to buy back in. Everything is so surreal, even if you’ve got somewhat of a clue. Scary.
The Real Great Depression 1873- Commercial R E trigger
http://itulip.com/forums/showthread.php?p=52465#poststop
MarketWatch
October 8, 2008 9:02 A.M.ET
BULLETIN
Regimen of rate cuts
Fed cuts to 1.5%; central banks take coordinated action
Central banks around the world order interest-rate reductions in a synchronized move to fight the global credit crisis.
Do they give out medals for synchronized sinking?
Gold, silver & bronze rocks?
A half million dollar house in L.A., with tagging on the walls and numerous code violations? Oh, and only all-cash offers? Where do I sign up?
http://www.redfin.com/CA/LOS-ANGELES/5575-W-79TH-St-90045/home/6639681
House was unsecured, ignore the tagging. Located in an area with lots of appeal, just needs to be brought up to the neighborhood values. NOTE: Numerous code violations recorded against this property. ALL CASH only.
———————————————————————-
realtwhores are not yet extinct. Only Price: $549,900. blah….blah…bla. No mention of taxes and insurance. Like even if one can even get insurance in the hood.
the house is yours. just wire the moneys to our account at a bank in West Africa and we will send you the keys.
RE: A half million dollar house in L.A., with tagging on the walls and numerous code violations?
Exactly what kind of properties do you think are going to be held in the Federal government’s bail-out housing inventory?
The dreck of the dreck…
But not to worry-a new Federal oversight agency will be set up to determine whether the spray paint tagging represents “urban art expression” by a persecuted minority, and therefore making the property qualify for special government restoration and preservation funding.
“Exactly what kind of properties do you think are going to be held in the Federal government’s bail-out housing inventory”
To HD74,
I believe as you do that the gov’t will take over all these foclosed abandoned wreaks and make them avialable to minorities thru affordable homeownership programs targeted for minority ‘families’. It Is how things work in USA: gov’t agencies set up to provide cheap ‘affordable’ homes and morts to minorities.
I may as well get in line and get one of these cheap gov’t foreclosed wreaks as i can classify myself as an “oppressed victimized minority”. Get a cheap hud/ fha fixer and do the work of fixing it up . I smell an oportunity in getting cheap inner city properties and do not care if it is in some god- forsaken ghetto as i am used to the LA ghetto and can even thrive in one.
Do something like LA investor girl is doing.
RE: I may as well get in line and get one of these cheap gov’t foreclosed wreaks as i can classify myself as an “oppressed victimized minority”. Get a cheap hud/ fha fixer and do the work of fixing it up . I smell an oportunity in getting cheap inner city properties and do not care if it is in some god- forsaken ghetto as i am used to the LA ghetto and can even thrive in one.
Pete M.~
If you are comfortable with a ghetto neighborhood, then go for it.
I will not argue the concept of “sweat equity”, because I have used it myself to get into homes with mortgage levels that I was comfortable with.
Be careful what you buy though…People go into re-hab project’s with stars in their eyes, and then get blind-sided by the cost to cure serious physical deficiencies, like lead paint, yard soil contamination, foundations, roof sub-structures, electrical, and defunct heating/cooling systems.
However, I will say this…you best be very confident that the bread truck will get thru everyday.
NO came unglued in 72 hours.
Right now, with the way things are, I’d opt for the mobility to go where I could get food if things really start to come apart.
I’d be more inclined to believe the guvmint will sell these jewels to crony contractors at “such a deal” prices….and shrug their shoulders with a sigh about the lost value.
The bailout goal is simply to get these wretched bonds off the bank balance sheets. What happens from there on out i doubt is of any concern to these banking parasites. It ain’t their $810,000,000,000
“A half million dollar house in L.A., with tagging on the walls and numerous code violations? Oh, and only all-cash offers? Where do I sign up?”
Folks in LA. especialy near ther coast, still have their head up their arse as far as putting values on coasta LA RE. This area is just north of lAX near inglewood, itself a crime ridden burg.
Nothing special about this area, only it is 2-3 miles from the beach but E. Westchester/LAX area pretty tacky and even nasty in spots.
LA coastal Re still priced in La la land, the owners and would-be sellers will consume their last credit resources and max out their shriveling heloc’s before lower their prices even an inch. Pure greed. By 2009 LA coastal high end RE will collapse-you heard it here. That includes Venice, playa vista, SM, marina del rey, mar vista, mahatten , hermosa, redondo,ect. Collapsing worldwide economy ,12-15% CA UE rate will be the killer along with Alt-A resets.
Sales History
Oct 02, 1995 $162,000 —
Oct 07, 2004 $650,000 16.7%/yr
Dec 01, 2005 $910,000 34.0%/yr
Oct 17, 2006 $1,035,000 15.8%/yr
Dec 28, 2007 $840,061 -16.0%/yr
Wow…
Unbelievable.
The money market announcement stemmed the stock market losses for half a day.
The rate cut had the futures in positive territory before I left for work, but they are down upon my arrival. The effect didn’t even last until the market opened!
Mr Market seems to have made up his mind about any and all potential future interventions.
I think J6P, who hasn’t panicked yet, is opening 401K statements all over America.
I have already heard a proposal for the federal government to buy out all 401Ks at AUGUST prices and replace them with guaranteed federal pensions.
Paid for by higher taxes on younger generations still working, of course? No, all our debts are “free” and young people are resiliant — don’t have to worry about them.
“Teresa Ghilarducci, a professor of economic policy at the New School for Social Research in New York, said Congress should let workers trade 401(k) assets to the government — perhaps valued at mid-August prices — for a retirement account composed of government bonds. She called the 401(k) a “failed experiment.”
http://online.wsj.com/article/SB122342685954113657.html
And, while you’re at it, the people who saved “too much” should give some up to help people who didn’t save enough!
from the article:
The Congressional Budget Office disclosed the figures at a hearing by the House Education and Labor Committee, prompting some legislators to question whether retirement-savings plans are inherently too risky. The $2 trillion figure includes 401(k) plans — which have become the primary savings vehicle for 60% of workers — as well as traditional pension plans.
i was talked into starting an IRA 15 years ago because of the tax benefits. it took me 4 years to figure out it wasent worth putting my money into it because i did not have the time to watch over it. i instead decided to put my money into the bank and just let it earn interest. when i would bring the 1099’s to my accountant, he would be impressed by the interest i was making and decided himself to follow my pattern. the markets are just like a casino, unless your the pitboss, the game is rigged to go against you.
how is it that 60% of these people couldent figure this out?
Well, you could have put your IRA money into CDs, Money Market Accounts, or Bonds, done the same thing, but with pre tax dollars and deferred tax on the dividends. You don’t HAVE to invest it in equities.
“You don’t HAVE to invest it in equities”
i know this now. when i asked my broker about CD’s he told me they dident qualify, i know now he lied to me. i was 22 at the time when i started the IRA and the internet dident exist to double check what i was told. thats what you call young and dumb, i’m just glad it only cost me 8k.
If they do this, this ‘younger person’ has earned his last taxable dollar. I’ll make a full time occupation of being a parasite.
Testify, Russ!
RE: If they do this, this ‘younger person’ has earned his last taxable dollar. I’ll make a full time occupation of being a parasite.
The US middle-class economy will be moving underground in a big way. Credibility in the “system” is shot.
Who is gonna pay for the parasites in the New World Order will be interesting.
Watch for tax receipts at all government levels to crash.
If Arnold thinks he’s got a problem now-wait until 3 years down the pike.
The AIG big-wigs lounging about, laughin’ in their drinks at their $500k tab hotel in LA-LA Land after the pols pony up $85bil to save their sorry azz pretty much gives you an indication where we are right now.
It’s a new paradigm. The bail-out was a ‘SELL-OUT”!
It’s no longer “government, “for the rich by the rich”, but rather-”every man for himself”.
Even J6P is gonna wake up to this fact. And as numb as a he is, even the average dude can get pretty wiley when it comes to self survival.
The Keynesian plan to perpetually “screw the next generation” is not sustainable.
P.S. I believe the buck stops with the late end of the baby boom cohort.
No one has any faith anymore that government action is going to do anything other than prolong the inevitable. There are things in motion now that cannot be undone. No one wants to throw good money after bad. This is one of those rare times that government inaction (at the level of monetary policy) might be better…there has to be a mechanism to rid the financial world of the weakest sisters.
Money markets seem like a poor investment in a deflationary environment, IMHO. Any thoughts on that?
“Money markets seem like a poor investment in a deflationary environment, IMHO.”
Think about what you just wrote. In a deflationary environment money increases its value.
Not when large investment banks are afraid to lend, and use the investment as capital to cover toxic level 3 assets. Not when the Glass Steagall Act has been dismantled.
I don’t know…nothing is working the way it is supposed to. Good to know you have faith in the strength and transparency of our financial institutions. I don’t.
Everyone wants out of everything.
And into cash.
The king just got shortened by a half inch. LOL.
Oh my word that is hilarious. Global rate cuts by central banks and the Dow falls 200+ points. This is beautiful.
It had been alternating big down and smaller up days. Now it’s big down days and smaller down days. And, as noted, the effect of any interventions is shrinking - now down to a few hours.
Pensacola, FL
Need a laugh this morning?
http://www.pensacolamls.com
Click -> Property
ML Number -> 355844
Click -> Search Now
Look at the last picture (the storm shelter). I think I would rather take my chances with the storm, than crawl in that hole!
I dunno, seems pretty okay to me. $80K cottage on a full acre of land. Needs lots of TLC, but livable as-is. I’d love to see it after an HGTV-like cleanup and renovation. Not great for “entertaining,” but perfect as a little homestead for a budding survivalist. (or would HGTV turn up its collective nose..)
Bail me out Bro
WASHINGTON (AP) — Days after it got a federal bailout, American International Group Inc. spent $440,000 on a posh California retreat for its executives, complete with spa treatments, banquets and golf outings, according to lawmakers investigating the company’s meltdown.
AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.
RE: AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.
Ballgame over…this is truly “let them eat cake” stuff from an out of control financial aristocracy.
And the government in it’s abysmal failure to reign in these jackels has lost it’s legtimacy as a protector of the people.
It’s really time to stop working or go underground for your income…
Nothing makes me more angry than reading this sort of stuff. Our government is a complete and total failure.
Funniest story is Dick Fuld being, pardon the phrase, cold-cocked at his gym.
All over the local morning show. This was mentioned in the debate, no? I got it confused with another deal where $400 million in bonuses is being given to execs while the rank and file employees are getting no severance pay or severance insurance or some such. I was thinking “$400 thousand, try $400 million.”
RE: Scratch a politico nowadays and you’ll find a socialist underneath.
“To all those who sat on the sidelines and acted in a prudent and fiscally responsible manner…here’s a big “FOOK YOU”
TO YOU ALL. And to stick it in your faces, I’ll use your tax dough for my agenda to boot, you stupid fools!”
(italics-mine)
WASHINGTON (AP) - Republican presidential candidate John McCain is proposing a $300 billion program for the federal government to buy up bad home mortgages and allow homeowners to keep their houses.
McCain said: “Until we stabilize home values in America, we’re never going to start turning around and creating jobs and fixing our economy and we’ve got to get some trust and confidence back to America.”
In an unusual step, McCain announced the plan during Tuesday’s debate. He said that as president he would direct the federal government to purchase mortgages directly from homeowners and mortgage providers. The loans would be replaced with fixed-rate mortgages, ostensibly at a loss to the government.
“Is it expensive? Yes,” McCain said.
Guess what Big Mac…think I’ll sit this one out on the sidelines, you pathetic panderer.
It’s crash and burn with O’Bama Boy now, baby.
Check out the 5-day chart for T-bond yields…
It’s time to move money into MM funds.
M2 has contracted for well over 6 months, and the spread between treasuries and the fed funds rate is too high.
I’m not trying to be a doofus, but I really don’t understand how that is a safe haven if the guarantors of the debt (i.e. the US Treasury via the FDIC) is in danger of losing its AAA rating. I just want a clearer explanation. Thanks.
If M2 is contracting then the remaining pile of M2 will become more precious due to its reduced supply. This will drive up its price.
The MM funds are in a grreat position to enjoy this price rise. While seemingly risky these MM funds are really not; the guvment will make sure there will be no runs because they have no other choice.
The so-called “debate” last night was truly depressing. Lotsa words, nothing of substance. I about messed myself when the Manchurian Candidate floated the idea of Meg Whitman (former CEO of Ebay) as Treasury Secretary. Anyone who has been following the maneuvers of Ebay and Paypal ought to be horrified. Manchu’s lauding of Ebay where “1.3 million people make their living” was sickening and shows how truly ill-informed and out of touch he is.
O’Bama looked and sounded good, like tapping a hollow shell.
Most interesting, though, was Tom Brokaw as the “moderator”. I thought he was going to pee his pants with impatience, he was sooo desperate to ask the candidates about how they were going to handle “unfunded entitlements”. LMAO! I truly despise Brokaw, with his Council on Foreign Relations viewpoint toward the US.
Brokaw is the heir apparent of Tim Russert, so he is eager to make the impression that he can fill those very big shoes…but I think the rest of the world thinks “not so much”.
McCain isn’t giving people that might want to vote for him any real reason to.
Obama looked good, sounded good and actually said a few things I agree with.
The election is over.
I thought it rather hilarious that McCain wouldn’t sit in his (high) chair because his legs dangled. One of those unforgetable visuals, wink wink. What you’all think of his proposal that the gov’t directly pay off homeowners’ mortgages?:
LATIMES:
Addressing the economic crisis, McCain offered one of his most significant proposals of the campaign, saying he would order the Treasury secretary to immediately “buy up the bad home loan mortgages in America and renegotiate . . . at the diminished value of those homes, and let people be able to make those . . . payments and stay in their homes.”
McCain’s $300-billion plan, a turnabout from an earlier position, would require a radical shift in the government’s approach. It raised several questions the McCain campaign could not immediately answer, including what its potential impact would be on efforts to remedy the global credit crisis.
McCain had a better performance in the first debate — even though last night’s faux town hall setting was allegedly the format he’s most comfortable in.
Last night, The Mav came across as an angry little penguin, not a leader.
And an OLD angry little penguin. Instead of conveying an impression of vitality or impassioned energy, he just seemed crotchety.
Nice phrase, by the way. May I borrow it?
Nice phrase, by the way. May I borrow it?
Oh, most certainly.
The penguins anger management issues are one of the many reasons I’d never vote for him.
Someone who proclaims themself to be cool is certainly not cool.
Likewise, someone who proclaims themself to be a maverick is certainly not one.
Now yer gettin all mavericky wit me, you betcha!
My posts are real late or not showing up, so let me try again…..
McCain isn’t giving folks who want to vote for him a real reason to.
Obama looked good, sounded good, and even said a few things I agree with.
IMHO, the election is over.
like it or not…the great decider lost this election for the republican nominee. McCain is most likely taking money under the table to be the scapegoat due to the fact he seems so nonchalant. The Great Decider, “Johnny, do this and you will be well taken care of like John Kerry was. No problem Mr. President. You can count on me.”
Nah. This 5′9″ a$$hat has an ego you couldn’t squeeze into a colisseum. I think he actually believes he has a right to the office.
My other guess is Palin was crammed down his reluctant throat by the RCC, in the belief she was so unqualified she would guarantee an Obama win, thus dumping this fiscal implosion onto the dumb dems.
I suspect the RCC’s collective mouth is hanging open as Palin, regardless of gaffes, of bigotry, of ignorance, enthralls the J6P of the conservative persuasion. Must startle even those cynics how stoopid large swathes of, uh, consumers are.
McCain missed an excellent opportunity to generate some excitement for his campaign, when he didn’t tell Brokaw to shut up. Honestly, two men running for President and getting lively at it, and this douchebag keeps injecting himself into the exchange.
Brokaw jumped the shark for me after that horrible ‘9/11 Tribute’ they showed at the RNCC - he was beside himself with patriotic glee at that.
Meanwhile, the rest of us were losing our dinners at the graphic pictures. Wondering how many more times they’ll drag this one out to terrify us,and sully the memories of the dead for political purposes.
I lost all my respect for Brokaw after that.
“I lost all my respect for Brokaw after that.”
If someone up and told me that Brokaw was some sort of totalitarian plant indoctrinated since childhood to contribute to the destruction of the US, I’d believe them and proudly wear a tinfoil hat. The man is garbage, in my book. When I saw that “special” he did to push shamnasty for illegals, I got the heebie-jeebies. There he was, in Colorado, just as the housing bubble was imploding, touting Colorado’s “vibrant” economy (as measured by building, of course) and how we need the illegals to keep it vibrant, doing a segment on how the American citizens the developer hired kept quitting (I’d quit, too, if I had to work with a bunch of illegals), glorifying an illegal woman sharing a house with seven illegal guy workers like she was the Virgin Mary. His message was that Americans were complete crap and should give it up to illegal immigrants.
Last night, he was so impatient to get his gleeful licks in, telling people their Social Security and Medicare were toast. And meanwhile, he glorifies the Greatest Generation. In other words, we got ours, screw you.
The sooner Brokaw moves on to that Great TelePrompter in the sky, the better we’ll all be. In the meantime, he should stay retired and muzzled.
RE: If someone up and told me that Brokaw was some sort of totalitarian plant indoctrinated since childhood to contribute to the destruction of the US, I’d believe them and proudly wear a tinfoil hat
Gotta say, Big ‘P”…You and “exeter” make this a special place, LOL.
If only Lingus would return!
Vote for the socialist or vote for the delusional pensioner. No thanks. I’m voting for Bob Barr.
If your average cost of Au is $750 oz, you would’ve paid 2 oz. for 1 S&P at the 10/10/07 peak. Now, one year later, you can almost buy 1 S&P at $970 with 1 oz Au at $920. Some think you’ll be able to buy one Dow at $4000 when they cross paths. I don’t but knock yourself out if you’re in that camp.
I had to turn off the debate after about an hour…
Neither gentlemen showed me anything.
I accidentally turned it on for ten seconds, before I realized the BBC News Hour had been preempted…
I didn’t watch. Thanks for confirming that I made the right call.
I hate drama, except as an escape from the grind of my daily life. The theatrics coming from those two is a very poor substitute for reality.
There wasn’t any drama. It was rather monotonous. These debates aren’t changing anything.
I put it in my TiVo buffer and fast forwarded through it on CNN.
The only thing of interest was watching the instant poll lines of independent voters throughout.
Ok! I guess I’m stupid! Explain to me again how if something has become cheaper it makes it less affordable!
You know that home values of retirees continues to decline and people are no longer able to afford their mortgage payments. As president of the United States, Alan, I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes — at the diminished value of those homes and let people be able to make those — be able to make those payments and stay in their homes.
Interestingly, this answer has been picked up by some as an example of racisim. See this:
http://thephoenix.com/BLOGS/talkingpolitics/archive/2008/10/08/mccain-s-racist-answer.aspx
There’s actually a valid point named here. The position that McCain took, above, is utterly inconsistent with his usual appeals to self-sufficiency over Big Government.
Can anyone who knows please remind me of how many months the capitulation played out in the 2001 stock market capitulation?
Fear appears to have upper hand
Some market analysts see ‘capitulation’ signs
By Vikas Bajaj
NEW YORK TIMES NEWS SERVICE
October 8, 2008
The technical term for it is “negative feedback loop.” The rest of us just call it a panic.
How else to explain yet another plunge in the stock market yesterday that sent the Standard & Poor’s 500-stock index to its lowest level in five years – particularly in the absence of another nasty surprise?
gold miners ? must be allot of copper in those mines as they seem to sck as gold zooms
what to buy
Mr. Market values finished ore, not embedded ore.
Don’t sell yourself short alad. Mining is poised to make a comeback- green mining. With the environment in mind… (insert rolling eyes) The monetary system is ka-PUT. It just may be a mad dash soon to see who can dig up new wealth.
I think of it this way:
1900- gold rush, expansion, excess/leverage, war
2000- war, excess/leverage, expansion, gold rush
it be time to crack opens them hills and get whats inside… to bad they aren’t filled with crack. That’d increase production.
Hard rock mining uses up a powerful amount of freshwater, which is in short supply, liquid gold.
Banks are walking dead men. Who needs a bank when you can go straight to the Fed for money, with no collateral required?
‘Zzzzzactly. If the frickin’ banks are so afraid of their shadows that they won’t lend to Main Street, then who needs ‘em? They can’t earn money if they won’t lend. Right now they’re all preoccupied with repairing their balance sheets, and have a tight grip on any money that’s coming in.
The Fed has truly become the “lender of last resort”…
SHANGHAI — Led by a massive selloff in Japan, Asian stock markets tumbled today in reaction to the persistent gloom on Wall Street and the growing realization that the global credit crunch and economic downturn will hammer export companies.
Japan’s Nikkei 225 stock index plunged 9.4% today, the biggest one-day drop since the 1987 market crash. The Nikkei has lost 17.5% in the last five trading sessions, and is now down to 9,203 — the lowest level in five years.
As a side note. The Nikkei is now down over 75% from its interday high over almost 20 years ago…
Oct. 8 (Bloomberg) — Russia, Indonesia, Ukraine and Romania shut their stock exchanges after shares plummeted in the worst week for emerging-markets in at least two decades.
Russia’s Micex Index dropped 14 percent, having already slumped 20 percent this week, before trading stopped at 11:05 a.m. in Moscow. The exchange won’t reopen until Oct. 10 unless the Federal Financial Markets Service says otherwise, Micex spokesman Alexei Gerasyuk said by phone. The Jakarta Composite index fell 21 percent in its biggest weekly slump in at least 25 years, according to data compiled by Bloomberg.
PPT to the rescue! Got to prop it up on the news that free money is now cheaper… when are they going to give money away for borrowing it? We are on the verge of that point.
When does 2=1?
When it is election time.
Say you just paid off your mortgage, the bank owes you the balance of the escrow account, and the bank fails. Is that money insured by the FDIC, or are you just screwed? (Since I’ve just paid off my mortgage with WaMu, this is not a purely academic question.)
I have no clue what the answer is, but as a side note - congratulations!! Wow that must feel good. Being out of debt is the place to be right now.
I LOVE SILVER DAYS!!!
I am probably long WAY more SLV than I should be.
BWHAH HA AHHAHA AH !!!
What a pity paper wafers will be just as cross-contaminated as everything computer derived financial instrument of torture…
I agree. They can close the ETFs with just a piece of paper signed by the Decider.
Doesn’t SLV actually own physical silver to back up the ETF. I thought that as the gist of it all….
You can’t cash in your shares for metal, only fiatscos.
The shares only trade when the stock market is open; you can trade physical whenever you want.
Also, given the recent disconnect between paper and physical price the futures market has been shown to be manipulated (see the link below).
Finally, the .gov can close the ETF at any time. That’s not the kind of protection most people want from PMs. The paper PM market is only good for speculators/gamblers and governments who want to control the price. Suppose you wanted to sell your ETF shares and hold physical metal. Today there is no retail silver available so you would be out of luck.
Who knows what’s up their SLeeVe?
We seem to be in “take the money and run” mode right now, and I sure wouldn’t want some nameless-faceless somebody somewhere in charge of my financial well-being, if you follow my drift…
Uh -huh
As if
Mormon Tea, don’t worry it can never happen here. Oh wait, it already did in the 30s. Never mind.
Nice move. AU is over 900 again too. And it looks like the cabal is losing control of the futures market:
Central banks all but stop lending bullion:
Central banks have all but stopped lending gold to commercial and investment banks and other participants in the precious metals market, in a move that on Tuesday sent the cost of borrowing bullion for one-month to more than twenty times its usual level.
The one-month gold lease rate rocketed to 2.649 per cent, its highest level since May 2001 and significantly above its five-year average of 0.12 per cent, according to data from the London Bullion Market Association.
Gold lease rates for two, three and six months and for a year also jumped to levels not seen in the last seven years.
Traders said the jump reflects the fact that central banks – mostly European – have almost completely stopped lending gold in the last few days and are not rolling forward old leases after maturity. This is because of fears that some borrowers might not repay their bullion loans if they are engulfed by the financial crisis.
“A number of central banks have been cutting back on their gold lending,” said Tom Kendall, a precious metals strategist at Mitsubishi in London.
John Reade, a commodities strategist at UBS, added that there had been a lot of talk about some central banks being unwilling to lend their gold because of a redoubled focus on the risk of borrowers not returning it.
http://money.ninemsn.com.au/article.aspx?id=643379
I will be taking some profit today and lowering my leverage. Buying in some short US stocks. I put moneys into China last night, I will put more moneys into China and Korea tonight. I am buying into Brazil today.
If you believe US stocks are cheap (I don’t) then you might buy into any frontier or emerging market for similar stocks at half the price. There are good emerging market etfs.
Voz, took half my position off in Euro/Yen. (Hopefully the Euro bounces to 1.43 and I can resell the worthless POS)
What I do is suitable for me, myself and I and unsuitable for any but the most insane investors.
Bovespa is open?
Yes and down for the day. But there are some really cheap stocks and I even took a flier again on the Real. Brazil is loaded with US dollars and if they don’t support their currency, it could be a loss for me. Petrobras was pricing below last years discovery. That is free oil. Like buying Exxon Mobil for $12/share. Vale dropped to ~$9/share and I was scalping it at 35 earlier this year.
Brazil’s story has yet to be told. I would go full dive if President Lulu DaSilva was to remain in office. As long as the successor follows fiscal responsibility, Brazil should do fine.
TMM, again.
risk return looks right at fitty cent, gotta be in it to win it.
I’ll bite. Into the gas account it goes.
Nothing wrong with your plan, but from where I sit the timing seems a little early but then I’m planning on a long position. I’ve had my finger on the trigger.
On 30/10/2007, the Hang Seng was at 31,638.
Today, it sits at 15,431.
Wall Street Journal
OCTOBER 8, 2008
Housing Pain Gauge: Nearly 1 in 6 Owners ‘Under Water’
More Defaults and Foreclosures Are Likely as Borrowers With Greater Debt Than Value in Their Homes Are Put in a Tight Spot
By JAMES R. HAGERTY and RUTH SIMON
The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults — the very misfortune that touched off the credit crisis last year.
The number of underwater households, in the article, was 12 million.
What’s up with this 700 billion number?? Just from last night……
700 billion bailout/rescue.
700 billion of US moneys held by China.
700 billion we send overseas annually to people who don’t like us for oil.
One heckuva coincidence.
lucky 7’s
…for bears
“…people who don’t like us…”
You mean the Saudis don’t like us? Get out!
edge,
Funny - our son does not like (middle east)free(d) oil.
Yet he calls B.S. on the upcoming (Jas) “Greater Depression”.
As if we’re making this up.
Ya just can’t make this stuff up!
Leigh
trouble always comes in threes.
700 Billion is the new 23?
[T]he market has become a case study in the psychology of crowds…. In normal times, it runs on a healthy mix of fear and greed. But fear now seems to rule, with investors often exhibiting a Wall Street version of the fight-or-flight mechanism — they are selling first, and asking questions later.
“What’s happening is people are crawling into a bunker and pulling an iron sheet over their heads because they think the sky is falling,” said William Ackman, a prominent hedge fund manager in New York.
Vikas Bajaj, NYT: Good stuff
Just read “The Crowd” by Gustave Le Bon, and you’ll understand everything…
“The most striking peculiarity presented by a psychological crowd is the following: Whoever be the individuals that compose it, however like or unlike be their mode of life, their occupations, their character, or their intelligence, the fact that they have been transformed into a crowd puts them in possession of a sort of collective mind which makes them feel, think, and act in a manner quite different from that in which each individual of them would feel, think, and act were he in a state of isolation. There are certain ideas and feelings which do not come into being, or do not transform themselves into acts except in the case of individuals forming a crowd.”
Is he related to Simon Le Bon of Duran Duran?
If so, he prob’ly looks good in leather pants.
not so much…
http://en.wikipedia.org/wiki/Image:Gustave_Le_Bon.jpg
At least back in the day…
(Simon’s day that is)
the passed couple of years i performed an experiment so to speak on the “herd” mentality.
i have never been a huge sports fan of any kind. when washington d.c. got the nationals i decided to share season tickets. i have never been a baseball fan but have always resprected the sport if not the athletes. i jumped in feet first…buying jerseys and hats…going to games. the feeling of “belonging” to something can be quite intoxicating to say the least.
my awareness of what i was doing is probably the only thing that differentiated me from the rest of the fans.
it was/is interesting…i still don’t let it get the best of me though.
Crowd behavior as the market crashes
1. Anxiety Temporary setback “I’m a long term investor”
2. Denial
3. Fear
4. Desperation
5. Panic
6. Capitualtion “How could I have been so wrong”
7. Despondency
Just read “The Crowd” by Gustave Le Bon, and you’ll understand everything…
Ah, Alad -
Group Think?
Eurphoria?
Herd?
Leigh
Just read “The Crowd” by Gustave Le Bon, and you’ll understand everything
Ah, Alad -
Group Think?
Eurphoria?
Herd?
Er…YES!
Community
Leigh
Wow…the gang is up early today. You guys must just roost on your laptops whike listening to the hum of the internet and clutching your beloved mouse
I used to have a LED scrolling sign in the living room that showed the housing bubble blog headlines from the RSS feed. I cut it off though, as good friends would come over and I didn’t want to hurt friendships.
Where… oh… where art thou “Box index’? Is thoueth hiding under the rug with thy lover M3?
“Congressman Ron Paul claimed that “M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation.”
Shrub: “Cheney and I believe in a “strong” dollar…in fact, we told Treasury that the US Dollar is so “strong” they should make a Trillion ton more of them…heheheeehheehhehhe”
I’m Shrub…I have an MBA…I approved this message on behalf of McSame / McVague.
http://en.wikipedia.org/wiki/Money_supply
The problem with M3 is that the Treasury refuses to measure it. I guess Ron Paul made that quote trying to state that making decisions about inflation vs. deflation are pointless without it.
My guess is that M3 is actually decreasing, just like M2. ‘Round these parts, we call that deflation.
Well crap, i sprang out of bed to post a cool graph and a half hour later it ain’t showed.
Anyway i had fun reading bits from the bottom up.
Pending Home Sales up Strongly
http://www.realtor.org/press_room/news_releases/2008/pending_home_sales_up
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in August, jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July, and is 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4.
Lawrence Yun, NAR chief economist, said home buyers were responding to improved affordability. “What we’re seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region,” he said. 2 “The improvement also reflects the drop in mortgage interest rates after the government takeover of Freddie Mac and Fannie Mae. It’s unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we’re hopeful most of the increase will translate into closed existing-home sales.”
In related future news - look for September and October sales contract cancellations to go through the friggin roof. Seriously.
There’s no more a fulfilling feeling that getting laid off while living in your own house!
Mmmm, savor the flavor of wage slavery.
There’s no more a fulfilling feeling that getting laid off while living in your own house!
———————————————————————-
I would agree if the house is paid off otherwise that is one expensive lay.
how long before these are added to the pending home forclosures list?
Its easy to sign a contract. Let’s see them get a loan!
45 minutes later…
Repeat post from late last night in BB:
Hoz,
I’ve been trying to get my tiny brain to understand this whole currency issue, with my sticking point being why the Yen over the dollar?
Will the Chinese be buying Japanese treasuries instead of US treasuries at some point? Otherwise wouldn’t the maxim, “buy what China buys”, mean I should be buying dollars?
And a follow up, does the Swiss franc serve the same purpose in your eyes as the Yen, or is it subject to the same forces that are going to decimate the Euro?
The difference between the Yen and the dollar:
The Yen is capitalized the dollar is lower case.
No seriously, the central bank of Japan has a mandate to prevent asset bubbles. Thus the Yen is closest fiat currency to real value.
There are three Trillion more dollars today than there were 4 months ago.
“There are three Trillion more dollars today than there were 4 months ago.”
Pssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss…
(the air being let out of deflationistas balloons)
Thanks, so there is something, or a greater percentage of something, backing the Yen.
Swiss franc? And is the Yen where the Chinese go when they tire of dollar devaluation? In other words, are the chinese just quietly trying to be the first ones to the exits before the mad dash?
The Bush gang keeps reacting to the crisis by spreading it. They took the subprime crisis and made it a banking crisis with the Indy Mac debacle. Then they take the banking crisis and make it a credit crisis with the appeal for the bailout of the banks and all the fear that was expressed. Then they take the credit crisis and make it a stock market crisis by explaining that if the credit crisis is not address, then the economy will decline.
Now with the massive Fed interventions they are going to spread the crisis to the US currency. When they no longer can sell all those Fed bonds the bottom will fall out of the dollar.
It is all just madness and it was all preventable.
It was preventable, but now it’s unstoppable.
I can still see the “young repubicans” pounding on the glass doors of the poor folks doing the recount in Flori-duh:
Yelling! Screaming! :
“Stop the recount! Stop the recount!”
Cheney-Shrub Legacy List Item #86: The “No 401-K left behind” contract with America Plan.
The Bush gang didn’t make any of this happen as you propose. They (regulators in general) failed to stop irresponsible lending, and after that destiny ran it’s course.
Cheney-Shrub…they be the “Deciders”
“The Constitution refers to these officials when it authorizes the President, in Article II, section 2, to “require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices.” In brief, they and their organizations are the administrative arms of the president.”
Departments :
Treasury
Defense
Justice
Interior
Agriculture
Commerce
Labor
Health and Human Services
Housing and Urban Development
Transportation
Energy
Education
Veterans Affairs
Homeland Security
Of course we must remember the Decider replaced prior heads of virtually all departments with the former employees/lobbyists of the industries the departments are designed to oversee.
Government madness is bad enough on its own, but when commanded/commandeered by folk who loathe goverment in any guise, we reap what they sowed….absolute chaos.
Poor curious George. Never held accountable for his policies by his loyal but diminishing cast of clowns yet praised for anything and all decent, moral and and altruistic.
“One thing for sure: the American public is about to undergo a severe mood adjustment. There will be fewer American Idol fans and worshippers of Donald Trump by the close of business on Friday.”
~James Howard Kunstler
Next on deck…
CRE/Retail.
Every week now, on our Saturday morning walks, were counting up closed businesses. This week - an antique store and another restaurant.
Greasy Spoons are doing well - Asian Fusion is getting pounded.
It’s rough in our neck o’ the woods, where the taxes are onerous and the commercial real estate is overpriced.
Lots of small businesses struggling. The greasy spoons, taquerias and bodegas are doing bang-up business; the overpriced mommy boutiques and metrosexual shoe stores, not so much.
A good burrito is a day’s worth of food!
Last week, I went to Homecoming at the University of Michigan in Ann Arbor. Flew to and from Detroit on Southwest Airlines. All four of my flights were packed.
On the ground, both the Chicago Midway and Detroit Metro airports were full of travelers. Matter of fact, I had to wander around for several minutes before I could find a place to sit in the Chicago Midway food court.
So, all of this talk about “how bad the economy is” doesn’t resonate with me. Out here in The Real World, life as we know it is going on.
MDW is a discount airline haven and Southwest is the Greyhound of the skies. The most affordable domestic airfares still available will take many through MDW. On the other hand, four weeks ago I flew in/out of ORD - international terminal was dead when it should have been busy.
Folks are still visiting grandma, but tourism is another story.
I’ll bet those televised poker tournaments will also go away.
there are alot of shows i would like to see go away. is the reality show era over yet? i hope so!
oh, i hope so. since when is poker considered “travel?” though it dominates the travel channel.
I’ve got your picture of me and you
You wrote “I love you” I wrote “me too”
I sit there staring and there’s nothing else to do
Oh it’s in color Your hair is brown
Your eyes are hazel And soft as clouds
I often kiss you when there’s no one else around
I’ve got your picture, I’ve got your picture
I’d like a million of you all round my cell
I want a doctor to take your picture
So I can look at you from inside as well
You’ve got me turning up and turning down
And turning in and turning ’round
I’m turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
I’m turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
I’ve got your picture, I’ve got your picture
I’d like a million of them all round my cell
I want the doctor to take a picture
So I can look at you from inside as well
You’ve got me turning up and turning down and turning in and turning ’round
I’m turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
I’m turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
No sex, no drugs, no wine, no women
No fun, no sin, no you, no wonder it’s dark
Everyone around me is a total stranger
Everyone avoids me like a cyclone ranger
That’s why I’m turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
I’m turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese
I think I’m turning Japanese
I really think so
(think so think so think so)
Turning Japanese
I think I’m turning Japanese
I really think so
The stock market is flirting with the 8,000’s and mellow yellow is flirting with the 1,000’s.
It’s a matter of anti-matter meeting matter…
With the PM window closed most Americans will be on the outside looking in as the next phase of the PM bull moves into high gear. Expect a bounty to be paid to those members of the Roaving Hoardes of Starving Masses who turn in their neighbors with PM stashes. Time to run silent, run deep.
Too funny watcher. Will the Hoard turn us in for our stash of beans as well? Who “hoarded” these neighbors anyway?
Ooooh, I love beans. I was just 15 minutes ago looking around online for local mills, because I used the last of my 25 lb bag of garbanzos. Having a few big bags of beans stacked in my pantry would be a cheery sort of getting-ready-for-winter thing. My nearest neighbors are a bunch of frogs, so they probably won’t eat me, turn me in, or steal my beans. I’ll just have to trust them in this matter.
“Time to run silent, run deep.”
Exactly.
How do you know the monopoly buyer of last resort is not snapping up bullion, only to dump it back on the market as needed to keep the gold spot price in its trading range between $750 and $1000 an ounce? (That is what I would be doing if I were the monopoly buyer of last resort.)
Holy @rap!
Looked at the screen before the commercial break - DOW =+140
Looked at the screen after the commercial break - DOW = -58
I know the DOW doesn’t really mean anything, but its sure giving me motion sickness this morning.
“In the days leading up to Black Tuesday (1929), the market was severely unstable. Periods of selling and high volumes of trading were interspersed with brief periods of rising prices and recovery.”
I’m having a ball watching that stock market today. Does anyone think maybe we’ll break below the 9000 mark? Film at 11.
Today it’ll probably hold over 9,000 but tomorrow look out below. The PTB need to let go and let the markets find their true value.
From the field- As an appraiser we are challenged to say the least. Making sense of the current market data is no easy task and a lot of statistics are coming to play.
One which is striking is that if they leave the market alone it is pulling itself down and rather rapidly. Now with this so called asset bailout the banks are holding off on short sales thinking they can whammy the guvmint for a better deal. So basically this “bailout” has stopped the very process the market uses to cleanse itself.
Reminds me of a military operation.
Fahrenheit $911
Current asking price for immediate delivery at PM auction site:
Ounce gold eagle - $950
Buffalo - $1050
Maple -$955
Krug -$955
Bar -$943
Ounce silver eagle -$18
Ounce silver maple-$17
Ounce silver bar -$19
A widening bid-asked spread reflects growing uncertainty about the gold price.
That is one of my issues. By the time I get physically delivery, the price could have swung wildly. By the time I could redeem it for dollars, the same thing. I’d rather take my chances on the ETF with low transaction costs and the ability to get in and out at a moments notice with very low transaction costs. I know that’s not how the physical gold folks view it, but I’m sticking to my story….
Just don’t get caught bending over while the tide goes out.
Like I tell my kids when we are hiking and talking about bears, I don’t have to be the fastest, just faster then them!!
Tell that to Alena’s dogs.
It is surely getting interesting! She is bumping up against the cieling again, trying to break through after a tiring downsideways grind. If she can loft from here, it is going to be one funny “sunken head” and shoulders pattern. Strange stuff.
The last 2 $911’s on the way up, you could buy as much physical as your heart desired.
Not this time…
So true! Rumors of the same in Europe.
Guess it’s down to the poker players.
MetLife to cut jobs; shares plungeOctober 8, 2008 10:49 AM ET
I have a small life insurance policy my father took out 30 years ago with MetLife. I am cashing it in.
Never say never…
Against this tumultuous backdrop, Haarde vowed Tuesday that ordinary Icelanders would not pay the price for this spending spree and that his country will not default on its debt.
“Iceland has never defaulted on sovereign debt and won’t,” he said.
http://biz.yahoo.com/ap/081008/eu_iceland_meltdown.html
SEC head asks for reins on credit default swaps
http://biz.yahoo.com/ap/081008/meltdown_credit_default_swaps.html?.v=1
It took all morning to come up with this thought:
what if the only people who can afford a home are the ones who have gold…
Are you, Aladinsane and Watcher conspiring to corner the gold market and snap up all the houses when all the fiatsco currencies become worthless?
Fundraising breakdown for 12 Calif. measures
http://biz.yahoo.com/ap/081008/ca_campaign_finance_glance.html?.v=1
a billion here, a billion there, so many ideas and no money to pay for it!
Got a call from L.A.nded gentry down south in the city of angles, where all the pyramids are exactly 401 degrees, on all sides.
Trapezoided, he was.
I’ve been able so far to fight off tiny Iceland’s advances, as they are looking for an Emperor or Duchy or the like, to come and give them a King’s ransom worth of karats for their hyper-inflated Krona, but I don’t need a crown that bad…
Maybe JP Morgan can buy them out for pennies on the dollar if the FED back s the deal and covers potential losses.
They decided upon an Economic Czar already, comrades.
Like Cold Play said “Who would ever want to be king?”
http://www.reuters.com/article/marketsNews/idCAN0853200420081008?rpc=44
Isn’t it quaint how some news outlets are still talking about “recession fears”? Sorry but that train left the station some time ago - the next available train is now “depression fears”.
Excerpts about second hand stores from a slightly whacky column in the small-town newspaper of Ouray (ouraynews dot com) (the Telluride Freebox is where lots of people go for free clothes, etc., Montrose is about an hour from Telluride, with Ridgway between the two):
Mighty Montrose is in bloom for the new cruel economy
Now that the Telluride Town Council is eyeing the deletion of public funds for the “Freebox” as the economic hub for unwanted n’er do wells who are trying to just hang on in that gated community, perhaps seeking to close that major tourist attraction for the Four Corners once and for all, there just may be a major shift in the regional barter economy toward the north.
For an area that doesn’t produce much more than snow, ice and second homes at an astronomical price, there isn’t a whole lot else the region really grows or manufactures, other than really great corn and feral cats, but it will still likely do an excellent job of recycling what previously existed.
The Second Chance re-sale store in Ridgway, then, will likely serve as a vital server of immediate needs for utilitarian items that cannot be found anywhere else in Ouray and San Miguel counties.
Indeed, any day of the week, the shop is bustling. It’s a really fashion setter, in fact.
But actually, if the current “depression” continues (Yes, that’s what it should be called, though the actual term, just like they avoided using the term “civil war” when describing Iraq, will no doubt be called something more palatable during an election year), these second hand stores and consignment shops stand to become buttresses to the economic bust at hand.
As a parallel replacement for goods that are getting ever more expensive, one might do well to pay attention to the real cheap, cheap behemoth that’s all set to emerge in this crisis: Montrose.
For decades Montrose has been building up to this. Not with the big boxes on the south end of town. That’s the old economy. Soon, the way things are going, the goods from China and Taiwan and Vietnam and India that are currently sold in those stores might be as hard to find as Dutch tulips.
Though it’s behind the curve for the greed and corruption of the Front Range, the unchecked blight of development on the Western Slope is showing a lot of potential.
But in Montrose, the dogged persistance of the Salvation Army store, the folksy antique shops and other kinds of re-sale centers shows how the long-time toughness of a cow town can soften the blows of the new cruel realties of the corporate economy.
The exchange economy seems to be booming everywhere, in fact, but Montrose is ahead of the game.
Short of what you might find in Aurora, east of Denver, along Colfax Avenue, where the re-sale store is the only mom-and-pop shop thriving, Montrose is all set to become the big flea market outside the castle walls of the entire semi-civilized San Juans.
The Germans have a word for it: Naturalwirtschaft, or, natural economy. It actually is derived from the Middle Ages, prior to the invention of money.
But now that our economy seems to have been converted into a long, long series of zeroes, one might do well to go to your local consignment shop and pick out a few books on the medieval period of human history.
I would recommend “A Distant Mirror,” by Barbara Tuchman, a historian who had a gift for depicting the cruelties of feudal society.
Because in all likelihood, considering the corporate and institutional sharks in these waters, name of that thing will be downright “handy.”
LOVE ‘A Distant Mirror’! I’ve read it about 3 times now.
The chapter on the Black Death gives me shivers every time I read it, because the people who lived through it really couldn’t tell if the world would recover or not.
Who needs horror when you can have history?
I wonder what effect the credit disruptions on Wall Street and the international banking panic will have on home sales? D’oh…
latest news
Paulson to hold a press conference at 3:00 pm eastern
ECONOMIC REPORT
Pending home sales index rises 7.4% in August: NAR
By Ruth Mantell, MarketWatch
Last update: 10:18 a.m. EDT Oct. 8, 2008
WASHINGTON (MarketWatch) — Despite the credit crunch gripping the U.S. economy, the National Association of Realtors reported Wednesday that an index of sales contracts on previously owned homes rose 7.4% in August from the prior month.
The index, considered a leading indicator of existing-home sales, was up 8.8% from August 2007. It’s unclear to what extent contract activity will be affected by the credit disruptions on Wall Street, said Lawrence Yun, NAR’s chief economist, in a statement.
When I interviewed for a museum job (this one was in Utah), one of the questions I asked was “where does your funding come from?” and was assured their funding was direct from the state and wouldn’t be touched, they were a high priority item for tourism and state image.
Just found out they’ve been handed huge budget cuts.
You know, sometimes reading this blog makes me look very sage and prescient to other people who don’t pay attention.
Alas,
I applied at The Museum of Natural History in Chicago as a volunteer and was told “you aren’t dead yet; but when you die, we’ll display your body.”
Housing News:
Effective today, the Cook County (Chicago & burbs) Sheriff is suspending evictions. Announced an hour ago - this move cited the ongoing “national foreclosure crisis”.
Well, there goes the foreclosure market to end this thing any time soon (at least in Cook Co.). Just think, we all could be living rent-free in Richie Daley’s backyard right now.
I guess that’s “change you can believe in.”
Can opener: check
Can of worms: check
I think it might be a result of the budget. Too much overtime. Chicago has a financial problem. What city doesn’t?
The way the Sheriff has positioned this is interesting — the move is to protect renters, not owners.
(For those not in the Midwest, we have very pro-tenant laws on the books already. It’s fairly difficult to evict someone in Chicago, and it’s fairly easy to get one’s deposit back unless you’re a complete barbarian.)
From the release:
Cook County Sheriff Thomas J. Dart announced Wednesday he is suspending all foreclosure evictions.
The move comes as a result of the growing number of evictions that involve renters — most of whom are dutifully paying their rent every month, only to later learn their landlord has fallen behind on mortgage payments and the building has gone into foreclosure. While mortgage companies are supposed to conduct a basic due diligence investigation before requesting an eviction — identifying all occupants — sheriff’s deputies are regularly finding no work done by the mortgage company in advance, leaving the identifying work to deputies working at taxpayer expense.
“These mortgage companies only see pieces of paper, not people, and don’t care who’s in the building,” Dart said. “They simply want their money and don’t care who gets hurt along the way. On top of it all, they want taxpayers to fund their investigative work for them. We’re not going to do their jobs for them anymore. We’re just not going to evict innocent tenants. It stops today.”
Do we know if he/she is elected or appointed? This is likely to really pi$$ of the banks and landlords. Sounds like a great reelection plan in depressed areas. VOte for me and you can stay, for free, 4vr!!!
IIRC most are elected unless they’re appointed to finish a term.
Link? I’ve just gotta see this. Guess all the homedebtors can stop paying their mortgages now.
Here’s the link on the Sheriff’s site
Thanks! Looking forward to the next announcement that banks either won’t be lending in this area, or if they do, it will be at higher interest rates than surrounding counties.
Don’t these people think???
“it’s fairly easy to get one’s deposit back unless you’re a complete barbarian”
Just got our deposit back from our old landlord, with a whopping $1.86 interest. LOL
HEY WAIT A MINUTE GUYS ………………..
If this was a DEFAULT Eviction and the sheriff shows up and people are living there….shouldn’t we ask if they are renters?
They were never served properly and should have been in court……then an Order to show cause would be a good step……
The sheriff is doing the right thing……………if they lost in court the judge will reaffirm the eviction order…..so i buys a couple of days….at the least
OR if they were not served properly, the judge should toss out the order and the bank will have to start over.
FTSE 100 4,366.69 -238.53 -5.18
DAX 30 5,013.62 -313.01 -5.88
CAC 40 3,496.89 -235.33 -6.31
Despite rate cut! Source — Bloomberg: EU page
Dumb question. Will the PPT bring massive fire power into the stock market when big Hank speaks today, just to prove that his talk had the intended confidence-building effect? Now might be a good time for dips to buy, er, I mean, to buy the dip…
“Now might be a good time for dips to buy, er, I mean, to buy the dip…”
Lol!!!! PB, i love your sence of humor!!!!!!
Well PB,
Looks like it’s working before HP speaks. The DJIA is in positive territory right now.
“…into the stock market when big Hank speaks today,”
I suspect that when the details come out…that Paulson has a compensation package based on how many words he uses & how many times he gives an “emergency” press meeting. Bonus pay if he uses “irrational exuberance on the downside” or ” SEC shorting conundrum”
Have central banks lost their Pavlovian bite?
Dow up 85…fake rally before a sell off?
I’m sure there’s some people out there that see the slide of the last few days as a “buying opportunity.” I was guessing that the market might end up going slightly upward today.
Dow down 75 less than 10 minutes to close. Where’s the PPT?
Dow, staggering into close, down $140+ late!
WOW, what a slide! Amazing volatility! Dow dropping over 200 points in minutes, closing at a more than 200 decline. Unbelievable!
I can’t recall seeing a last-minute collapse like that before. Wasn’t Paulson just blathering on about something or other on CNN a half-hour ago? Just call him “The Cooler”.
“I can’t recall seeing a last-minute collapse like that before.”
Then you haven’t been paying attention for the last week. The last ten minutes, for the most part, is where most of the action has been just about every day.
i wonder what kind of sell-off were going to see tomarrow? all hope for a turn around (according to CNBC talking heads) was in the global rate cut scenario, and that turned out to be a Big Flop.
what will they think-up next to raise everyones hopes upon?
CNBC is my new reverse indicator. They scream soup lines and depression and horror stories. The Federal Reserve has spent $3t. If they need to spend $6T more, they will. (If they need to spend $6T more, figure hyper inflation in 1 year.)
Grain shipments stalled in credit drought
John Greenwood, Financial Post Published: Tuesday, October 07, 2008
The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.
Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don’t trust the financial institution named in the buyer’s letter of credit, analysts said.
“There’s all kinds of stuff stacked up on docks right now that can’t be shipped because people can’t get letters of credit,” said Bill Gary, president of Commodity Information Systems in Oklahoma City. “The problem is not demand, and it’s not supply because we have plenty of supply. It’s finding anyone who can come up with the credit to buy.”
So far the problem is mostly being felt in U.S. and South American ports, but observers say it is only a matter of time before it hits Canada.
Richard Fuld, MMA style??
http://www.wnbc.com/money/17641953/detail.html
Lehman Bros. CEO Richard S. Fuld Jr. was reportedly attacked at the company gym shortly after it was announced that the 158-year-old company was going bankrupt last month, according to CNBC and The Telegraph of London.
The Telegraph, sourcing CNBC, said “two very senior sources - one incredibly senior source” had confirmed the rumors of the attack.
According to reports, Fuld was running on the treadmill when a man who was pumping iron in the corner of the gym came over and knocked him out cold.
I thunk the expression was “Try not to catch yerself a falling knife.”
MARKETWATCH FIRST TAKE
British government finds it can’t catch a falling knife
Commentary: Worldwide bazookas not making much headway
By MarketWatch
Last update: 5:22 a.m. EDT Oct. 8, 2008
LONDON (MarketWatch) — One of the silly phrases that gets tossed around markets and yet still rings true is that it’s hard to catch a falling knife.
Ben Stein, How To Ruin the U.S. Economy (finance dot yahoo dot com) - a couple of days old but interesting.
9) Scare Americans into putting up $750 billion of their hard earned money to bail out the billionaires and their friends who created the market for loans to poor credit risks (The “subprime” market) and the unbelievably large side bets on those loans, promising that such a bailout would save the retirement savings of Americans, then allow the immense hedge funds to make the market crater immediately afterwards.
I thunk it was $850 bn ($700 bn in rescue monies + $150 bn in Congressional lard). But what’s $100 bn between friends?
I call BS on this theory that banks will recapitalize by borrowing at below-market rates offered by central banks and reinvesting at the long end of the yield curve. Why would a greedy banker not just stuff monies borrowed at below-market rates under the mattress, rather than loaning them out again, at a risk of having one’s long-term commitments blown away by higher-than-expected inflation down the road? By contrast, it would be nice to have lots of money stuffed under the mattress in case of future asset fire sales.
The cavalry arrives
Published: October 8 2008 09:50 | Last updated: October 8 2008 15:17
Three steps have been required to staunch the credit crisis. The first was greater government willingness to buy risky assets and in some cases take stakes in troubled banks. This is now being done. The second is to keep the world’s financial infrastructure intact through the provision of ample liquidity. Ditto. That left the third step – a sharp drop in interest rates. This was finally met on Wednesday, with a co-ordinated 50 basis point cut by the Federal Reserve, Bank of England, European Central Bank, Canada and Sweden (and 25bp cuts by Switzerland and 27bp by China too).
…
The aim of the rate cuts is to help stop recession turning into depression. But how? They are not meant to encourage borrowers to perpetuate the credit boom. Nor will cuts, of themselves, unblock the world’s clogged money markets. What they will do is generate a positively-sloped yield curve on government bonds. Crucially, this will help banks recapitalise themselves as they borrow at the short end, lend to governments at longer maturities, and pocket the spread. This, in turn, will boost bank demand for government bonds, which is just as well given that the need to finance growing budget deficits will be huge.
Lov the latest where banks and CU’s don’t want to repo vehicles and have them (falling assets) on the books. Now not only can you stay in a house without paying for months, you can drive the hell out of that vehicle free on monthly charges too! Charge up that CC too because you’ll probably get a free ride there too.
I had lunch with an atty friend who is defending a foreclosure action by a lender.
Their defense- The foreclosure is unenforceable due to the recent adoption of the changes in contract law promulgated by the federal government. Essentially, financial instruments are voidable at the option of either party.
Go pound sand. Supreme court here we come. I want to read that opinion when the justices expound on the changing times and how right and wrong may be interchangeable dependant upon the social consequences of each at a given point in time with the public good at stake.
Kinda like when your Dad said telling a lie hurt you more than it did him. Huh? Hell, gettin caught is what hurt, thereafter. But right is right, right?
Hope your lawyer friend doesn’t get sanctioned or fined when he/she gets nailed for such a lame claim. The parties didn’t change it, a validly passed federal law did. It’s been happening for years and in this case has no bearing on a foreclosure, it will never make it anywhere near the Supreme Court or your can have all of my worthless GLD. Now asserting the mortgage company can’t prove they actually own the mortgage, now that has a real chance of success these days.
I hear things are so dire in Iceland, that Vanilla Ice is more popular than Björk.
Fred is outraged!
See “HOME Plan”:
http://www.johnmccain.com/Issues/JobsforAmerica/relief.htm
Contingency planning includes hiding all assets, closing business, paying no taxes and buying arable land. Sorry folks, but we might as well stick our collective heads between our legs, and, well, you know what to do.
Looks like Minsky had his moment all over the stock market.
Are you sure it is not better described as a Maalox moment?
What’s up with Mr. P? Is the plan too BIG and comprehensive to implement? Or, are they still trying to figure out the loopholes? In times of crisis, you need to move quick and be decisive. He seems to be d..di..dith…dithering on the world’s stage. Hurry up, Sir. Everyone’s waiting.
The DJIA stuttered to a conclusion today…
Paulie’s calling 20 developed and developing nations to DC this Saturday.
Bretton Woods II…or just more fartin’ in the wind?
probably trying to figure out how he and his buddies can get more money from taxpayers - like AIG wanted a hand and then those poor tired executives had to go for spa treatments - this was appalling to start with and it get more appalling as we go - they are all trying to suck out what they can before leaving it in a shambles. Even those who get fired seem to get bunches of money
It is not that hard to figure out if you understand, and I don’t other than reading in lots of places, but Ben Jones and Patrick Killelea (patrick.net) seem to understand the dynamics of the problem economically here. We still have an elephant in the room and no one is willing to discuss.
“…they are all trying to suck out what they can before leaving it in a shambles.”
It’s already in a shambles. For some evidence, look at what shares of the U.S. investment banking sector or the subprime lending sector as they existed in 2005 are still in business. I am thinking the percentage is close to nil in both cases.
If i’m going to get lied to, i’d rather have Dana Perino do it to me.
“If the liberties of the American people are ever destroyed, they will fall by the hands of the clergy.”
“When the government violates the people’s rights, insurrection is, for the people and for each portion of the people, the most sacred of the rights and the most indispensible of duties.”
Marquis de Lafayette
Pssst! Don’t drink the kool-aid. Try the soup.
Chicken Little soup make you grow wise.
Chicken Little soup make you grow bold.
Chicken Little soup is mighty good for the soul.
What a slapping in the Treasury pits. Stealth government auctions that went over like a lead balloon. 4 unannounced treasury auctions today. “Find me a buyer,” Hank screamed with interest.
Has the global stock market died the death of a thousand rate cuts?
Financial Times
Markets shrug off rate cuts
By Krishna Guha in Washington, Gerrit Wiesmann in Frankfurt, Chris Hughes in London and Aline Van Duyn in New York
Published: October 8 2008 12:15 | Last updated: October 8 2008 21:18
In an unprecedented move, six of the world’s most important central banks, including the Federal Reserve, the European Central Bank and the Bank of England, on Wednesday announced simultaneous emergency interest rate cuts of half a percentage point, but the latest dramatic intervention to solve the global financial crisis had a limited impact on investor sentiment.
The historic piece of international co-ordination marks an effort to curb the risk that the intensification of the credit crisis could lead to a severe global recession. Policymakers hope the move will shore up confidence and help shock the credit markets back to life.
NY Times
February 15, 2008, 9:23 am
Pushing on a string
Paul Krugman
Ben Bernanke has cut interest rates a lot since last summer. But can he make a difference? Or is he just, as the old line has it, pushing on a string?
Pushing on a string (phrase)
From Wikipedia, the free encyclopedia
Jump to: navigation, search
Pushing on a string is a metaphor for influence that is more effective in moving things in one direction than another. If something is connected to you by a string, you can move it toward you by pulling on the string, but you can’t move it away from you by pushing on the string. It is often used in the context of economic policy, specifically the view that “Monetary policy [is] asymmetric; it being easier to stop an expansion than to end a severe contraction.”[1]
According to Roger G. Sandilans[1] and John Harold Wood[2] the phrase was introduced by Congressman T. Alan Goldsborough in 1935, supporting Federal Reserve chairman Marriner Eccles in Congressional hearings on the Banking Act of 1935:
Governor Eccles: Under present circumstances, there is very little, if any, that can be done.
Congressman Goldsborough: You mean you cannot push on a string.
Governor Eccles: That is a very good way to put it, one cannot push on a string. We are in the depths of a depression and… beyond creating an easy money situation through reduction of discount rates, there is very little, if anything, that the reserve organization can do to bring about recovery.[2]
The phrase is, however, often attributed to John Maynard Keynes: “As Keynes pointed out, it’s like pushing on a string…”[3], “This is what Keynes meant by the phrase ‘Pushing on a string.’”[4]
Does Olivier Blanchard claim to have better vision than Irving Fisher had?
IMF sees greatest shock since 1930s
By Alan Beattie in Washington
Published: October 8 2008 16:14 | Last updated: October 8 2008 16:14
The financial crisis will drive down global economic growth to its lowest since 2002 with a big risk it will drop even further, the International Monetary Fund has warned.
Though Olivier Blanchard, the fund’s chief economist, said that the chance of another Great Depression was “nearly nil”, the IMF said that the US and European economies were mainly already in or close to recession.
“The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s,” the IMF said. “The situation is exceptionally uncertain and subject to considerable downside risks.”
latest news
[AIG] Fed to lend to AIG’s insurance subsidiaries
MARKETWATCH FIRST TAKE
Ten things to love about the credit crunch
Commentary: Times may be rough, but there is an upside to it all
By MarketWatch
Last update: 9:49 a.m. EDT Oct. 8, 2008
LONDON (MarketWatch) — While the global credit crunch is clearly beginning to bite hard, there are some positives to the financial turmoil that it has wrought.
1.The U.S. election is no longer leading the news.
2. Whatever your brother-in-law’s brilliant financial move was last year probably looks pretty boneheaded now.
3. Wall Street bigwigs are exposed as blubbering hypocrites in congressional hearings.
4. You probably didn’t do anything as embarrassing as the head of Iceland’s central bank, who issued a statement announcing a 4 billion euro loan from Russia when Moscow hadn’t actually agreed to it.
5. The world will no longer have to spend trillions of dollars to cut carbon emissions since the crisis will do more to reduce greenhouse gases than all the government initiatives, wind farms and cap-and-trade schemes combined.
6. Capitol Hill bigwigs are exposed as blubbering hypocrites in congressional press conferences.
7. You probably didn’t do anything as embarrassing as Germany’s KfW Bankengrouppe, which transferred 300 million euros to Lehman Bros. just before the investment bank filed for bankruptcy.
8. Instead of foreign aid programs or the United Nations, your tax dollars will now go to fund assistance where it’s really needed — Wall Street.
9. Gasoline’s back down to merely extortionate prices from obscenely extortionate prices.
10. It’s as good a distraction as any from the Chicago Cubs’ abject playoff failure.
- Tom Bemis, assistant managing editor
End of Story
Iceland has around 1/11th as many people as their antipodean cousin in the carry-trade, New Zealand.
Iceland serviced Europeans looking for high interest rates, while NZ performed the same service for Asians.
Might one expect a similar conclusion as Iceland’s, down under?
But Iceland is bailed out! Russia has agreed to give them $4B in exchange for permission to use their harbors and marine facilities.
Serious.
There were gun emplacements around Auckland Harbor in the 1890’s, to guard against a possible threat from a Russian Navy’s sneak attack that never came…
I suppose China, not Russia, will come to the financial aid of NZ, when push meets shove sometime sooner than later.
9258
So far AIG has gone through $122 B of the $85 B borrowed. Oops
Just heard on CNN that the FED is giving another $38 billion to AIG.On top of the other $85 billion…
Guess those Spa Treatments turned out to be more pricey than they thought.
Wonder when the Treasury is going to run out of chocolate coins?
Er, that’s not chocolate.
Before spreading rumors, you should check your facts.
It so happens, that the Fed is the one doing the borrowing. The cash they gave AIG is collateral for the securities borrowed. AIG is sound. Go back to sleep.
I wanna know what interest the Fed will be paying AIG…
Surely you jest.
“Fed grants AIG $37.8 billion loan
The Federal Reserve on Wednesday agreed to provide insurance giant American International Group Inc. with a loan of up to $37.8 billion, on top of one made to the troubled company last month….”
AIG burned through it. AIG put up unmarketable securities at par. (Lars promissory notes?)
Beware of clowns posing as internet gurus!
Bill Cara “Comments and Outlook” September 24, 2008
Dow close 10,825
“Entry 2:42pm ET: In the Daily Report today, I give you a belated list of 36 stocks from the Cara 100 that I feel comfortable buying today. I would have been buying Monday afternoon amidst the market panic, but something special was happening.”
“Remember me when thinking about who called the bottom of this market. And look to the thousands of others who will lie to you when they too take credit.”
Bill Cara “Daily Report” September 26, 2008
“As I say, let’s get serious, and not miss this buying opportunity as equity markets transition from Bear to Bull. Today’s open will give you plenty of opportunity to buy into weakness. That’s what good traders do.”
Dow close 11,143
Bill Cara, “Comments” October 8, 2008
Dow close 9,258
In response to jacek, who worries that “It would be a shame if I was busted before the market turns the way Bill predicted”
[Bill Cara note:
Agreed, it would be a shame. But you would have had a life lesson that trading is risk management first and seeking opportunity second. You would have learned something about the need for patience and self-control whenever managing money. You would see that nobody in this world can pick tops or bottoms and those who try are clowns. You would see why I speak in terms of investing principles and never wanted to get into a stock picking contest with so-called internet gurus. You would see why I take this blog so seriously.]
Posted by: jacek at October 8, 2008 3:13 PM [link]
What are the odds that foreign governments will be adverse to buying American financial instruments after this current global financial morass pass like a kidney stone?
It’s not a kidney stone here, it’s a heart attack.
It was a Blarney stone, and they wont get past it anytime soon…
Sorry if double posted:
Bill Cara “Comments and Outlook” September 24, 2008
Dow close 10,825
“Entry 2:42pm ET: In the Daily Report today, I give you a belated list of 36 stocks from the Cara 100 that I feel comfortable buying today. I would have been buying Monday afternoon amidst the market panic but something special was happening.”…”Remember me when thinking about who called the bottom of this market. And look to the thousands of others who will lie to you when they too take credit.”
Bill Cara “Daily Report” September 26, 2008
“As I say, let’s get serious, and not miss this buying opportunity as equity markets transition from Bear to Bull. Today’s open will give you plenty of opportunity to buy into weakness. That’s what good traders do.”
Dow close 11,143
Bill Cara, “Comments” October 8, 2008
Dow close 9,258
In response to jacek, who worries that “It would be a shame if I was busted before the market turns the way Bill predicted”
[Bill Cara note:
Agreed, it would be a shame. But you would have had a life lesson that trading is risk management first and seeking opportunity second. You would have learned something about the need for patience and self-control whenever managing money. You would see that nobody in this world can pick tops or bottoms and those who try are clowns. You would see why I speak in terms of investing principles and never wanted to get into a stock picking contest with so-called internet gurus. You would see why I take this blog so seriously.]
Posted by: jacek at October 8, 2008 3:13 PM [link]
@jacek
IMO, you have correctly identified the serious nature of the financial crisis. It is indeed a perfect storm.
Follow your gut, and beware of Canadian expat clowns posing as internet gurus selling money management services from Bermuda. Sinclair isn’t trying to sell anything and strongly recommends removing all financial intermediaries between you and your money, probably including the above.
I’m not a TA guy but isn’t that a HUGE double top on the S&P 10 year weekly chart? It looks like a Dolly Parton aerial photo. Oh my…
Since all of the internet guru clowns are calling the bottom, Fred is going on record right here, right now, on the HBB blog!
The bottom will be found at or just a tad below 600 on the S&P, sometime on or before Friday, February 27th, 2009. It will be known as the crash of 2008 (or 2009 as the case may be), and historians will find this post and proclaim Fred the “oracle of the internet gurus”.
I saw a vintage western a while back with a young Dolly in it. She cast hardly a shadow. It’s all make believe.
What kind of family values is that?
Yes. That my friend would be a Dolly Parton - sized double top.
Politicians and industry commentators keep saying that it’s falling home prices that are the problem. But this ignores the 800lb gorilla in the room: the only reason home prices got so high was due to irresponsible lending and borrowing. And an entire economic ecosystem built up on that volcano. Then the volcano blew, and instead of trying to build a new, stable ecosystem on sustainable lending and borrowing, the commentators are trying to figure out how to build at the base of the volcano again, getting that nasty ash and lava out of there.
It’s like an alcoholic blaming lack of alcohol for his problems.
It isn’t the home loans. It is the commercial loans that have gone south. The home loans stretched the banks, the commercial loans broke the banks.
“It’s like an alcoholic blaming lack of alcohol for his problems.”
In the case of an alcoholic, a lack of alcohol is the problem. You see, if only they drank more they would die, and there would be no more problems.
Many of my’ne posts have been swallowed by the blog viper. Manana
HUGE JAPNESE REVERSAL OFF ARMAGEDDON LOWWWSSSSS
BWAAAAHHHHHAAAHAHAHAHHAAHA
(its only up 2 %, but off that open…..thats a vicory shot around the world)
Capitilation opens, and blowoff top closes……this will destroy the CDS…..thats why its going to happen this way, for now. This is a switch flipping momment. Black boxes have been warned in advance.
wild swings people!!!
Does anyone have any personal experience banking with Hudson City Bank? Did they really stay out the the subprime mess? This country needs a selection of ‘clean’ banks that have no exposure to toxic loans. Banks need to focus on deposits instead of loans.
yeah!
Summary!
Looks like the Keystone Cops lowered interest rates again. It’s only making the situation worse, but it makes them look like they’re doing something!
Does anyone have any personal experience banking with Hudson City Bank? Did they really stay out the the subprime mess? This country needs a selection of ‘clean’ banks that have no exposure to toxic loans. Banks need to focus on deposits instead of loans.