Bits Bucket For October 11, 2008
Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
May 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Don’t pan!c. I have a plan.
General Jack D. Ripper: Group Captain, the plans are not gonna be recalled. My attack orders have been issued, and the orders stand.
Jeezily I say unto you, your economy is going to hell in a handbasket!
Surely you wouldn’t threaten a brother officer with a gun?
Group Capt. Lionel Mandrake: If you don’t put that gun away and stop this stupid nonsense, the court of Enquiry on this’ll give you such a pranging, you’ll be lucky if you end up wearing the uniform of a bloody toilet attendant.
If this doesn’t work, you know who your going to have to answer to?
The coca-cola people.
It’s not another stupid canal, is it?
(a man, a plan, a canal or however that goes…)
Ok, sorry.
It’s a comprehensive plan. It will work. We’re working on it. Hang in there. It’s coming soon. It’s a great plan. We’re in this together.
I’ll have my people call your people and they’ll do lunch and hash out a plan.
Get back to me if it doesn’t work out for some reason…
Ciao
We recognize there’s a problem. Stay put and don’t do anything, and for pete’s sake, stay away from the stock market, OK?
The exact quote from our fear(less) leader was ” The American people are intelligent, industrious, and resiliant. ” I’m sure that gives all of us hope and a plan. One thing you can depend on Bush for is platitudes. He has such a knack for stating the obvious, and then he doesn’t have to think about it anymore. God in Heaven, what an idiot.
Oh, by the way Mandrake, you(Fr-Fme) have to buy $40 billion of sub-prime Alt A and stated per month. What a great plan NOT. Where’s the ropes, the trees, and the horses?
brother can you spare a dime?
Keep an eye on New Zealand…
They are a kissin’-cousin of Iceland, and like that other island country, they financed their boom on the backs of overseas banks, going from NZ$31.6 Billion borrowed 10 years ago, to NZ$126.8 Billion, as of August of this year.
like Iceland, NZ was a mainstay of the carry-trade phenomenon, and we could have opened CD’s @ 10-11% interest @ the uninsured bank of our choice, when we were there in Feb-March.
They also had a housing bubble going on, where virtually every house appreciated 300-400% over the past 10 years.
The key to keeping the carry-trade going is not allowing the little guy’s currency to falter, and the NZ $ has been getting whacked against the Japanese Yen, even more so than against our $.
When we were there, the NZ $ was worth 77 Cents U.S., it has since dropped to 61 Cents, similar to the plunge in the Iceland Kronur, just before they imploded.
New Zealand’s just a tiny country with 4 million people, why would it matter to me you might ask?
80% of the NZ banks are owned by larger Aussie banks, and little NZ, which is such a David to other nations Goliaths in a sporting sense, might take down the Lucky Country and then some, all by it’s loan sum.
Test
test
Leighsong’s shortest post ever?
I have: Lehman, Ford, WaMu, Chesapeake energy, and TollBros. Tell me Cramer, am I devsified?
test
Haaaaaaaaaaaaaaaaaaaaaaaaaay.
Made me chuckle
My post are flushing down the server poop toilet!
Grrr…
Leigh
(Yes, I know it’s hey - LOL).
Illinois, Michigan Banks Shut by Regulators; Toll Climbs to 15
By Alison Vekshin and Ian Katz
Oct. 11 (Bloomberg) — Illinois and Michigan banks with $123 million in deposits were closed by state regulators as tightening credit and a deepening real-estate slump pushes failures this year to 15, the most since 1993. (Cont’d)
Uh Oh
Leigh
http://www.bloomberg.com/apps/news?pid=20601087&sid=aqNGxkgoO5Hc&refer=home
Is it safe to buy the dip yet?
Ever been to a Meskin’ restaurant where they make guacamole dip in a little cart, right by your table, about as fresh as fresh gets?
delish!
The thought of all those delicious taquerias in California makes we deliriously happy.
Can we leverage all the various salsas?
We should not focus on the stock market as a measure of success or failure in handling this crisis. If the government intervenes and dilutes, shouldn’t share prices fall? What’s more, the government may request dividend suspension and other capital raising measures.
I see Dow at 7500 as a sign to put my tow in the water. We have gone from the US congress to the G7 jokers to solve the insolvent institution crisis. What we have is “too many cooks to spoil the broth” strategy. I am expecting a short rally with a steep decline again.
Please enlighten me. Dot com bubble 2001, Recession bubble 2008….and you still want to take your hard earned money and play in this rigged game. Walls Street makes Vegas look like saints.
Fool me once, shame on you. Fool me twice shame on me.
My question for the next expert that tells me to invest in stocks for the long haul is “How many more bubbles do you expect to pop in the long haul” since we’ve only had 2 wipeouts in 7 years.
I went all cash back in August 07. My brother who works in Structured finance called and said professionals were sh*ing in their pants when the market started to tumble. I am inclined to say lots of the pros went into cash also. At this stage of the game buying good companies with good earnings on a small scale might be a good start. It is just my opinion.
What do you think?
My sentiment exactly. We would anyone want to circle around this corpse for another round? It seems rather unseemly to strategize about how to make another buck as this thing called a stock market lays dying. “Making” money pushing around numbers is what got us into this mess. I just got my 401K statement, I’d have been better off putting my money in the bank 10 years ago. Playing the stock market is mental masturbation. Yeah, I’m bitter. I actually worked (how old-fashioned) to earn the money that my broker “invested” so I could buy Spa treatments for some fat-assed AIG creep.
And you’re still paying. That $700B is ALSO being liquidated from your accounts and given to the ‘pros who positioned themselves to take advantage of you yet again.
Whaddaya think of that? Still like McCain and/or Obama? They’re in on it, too. So is all of Congress.
What all the financial pros don’t yet realize is that their industry is largely toast for the next 20-30 years. All the *suckers* who worked hard and put their money in stocks won’t be letting the pros screw them over again anytime soon.
No, all you lawyers out there….no need to fret…you’ll still be able to screw people out of their money like you always have. ‘Tis a shame there’ll never be a such thing as a Lawyer Bubble.
PB, even I am ready to part with some t-bills just to buy this dip.
Should we have a G-20 meeting in SD?
Should we have a G-20 meeting in SD?
———————
Yes!
BTW, which mobile home park were you talking about yesterday? See something interesting out there?
See?
This is why I do NOT tip liquid, solid, or let cats help me type when reading the HBB!
Er…well, sometimes cat(s) do what they do - they are cat(s), but I hide their little eyes!
Lest the HBB (er…me) torment a keyboard or screen to ruin; nor the cat(s) a warm lap to kneed upon, nor shall I be deprived of hardy laughter!
Me keyboard and screen lives another day to taunt the gods of spewing juices.
Haaaaaahaahaaahaaha!
Leigh
The government has changed the rules so much that I think most people are just getting out of the game. How can you play the game and win if you don’t know the rules?
The thing to bear in mind is that policy uncertainty drives a gap between bid and asked prices. This tends to exacerbate market selloffs. When policy is once again on a stable footing at some future point, the bid-asked spread will settle down again.
I am interested in loading up on 12 american sectors. Who else?
This point is probably correct, but at the same time strikes me as completely insane and an indicator of the madness that grips our culture. Does the government changing the rules of investment actually apply to any productive activity that matters? Most sectors are engaged in intense competition for customers that might ease up, but don’t necessarily have the option of leaving the market.
For some examples, has the government changed the rules on air travel? Southwest continues to rake in the money even though the traditional hub oriented companies left over from regulation are flailing. Direct flights are taking over from hub organization throughout the travel industry and yet we should believe there is nothing to invest in? Drug developments will soon treat or cure many debilitating diseases that have been until now not understood or beyond treatment. Still nothing to invest in? Exploding demand for organic and free range produce is causing a whole range of shifts in food producting infrastructure. Still nothing to invest in? Plastics have been critical to production of all manner of devices and packaging of all kinds of other products, especially food, and now the basic resins used to make plastics, their sources, processing, and later reprocessing are all being redesigned to use cheaper and environmentally safer alternatives to oil with superior potential for recycling and biodegradation. Still nothing to invest in?
There’s mountains more. Everything is changing, and faster all the time. Just because the financial industry is for now not up to the task of setting up transparent funding mechanisms for getting involved doesn’t mean you can’t do some research and put some cash directly into stocks that really matter. Many companies that have been around for a while are going to scale back or go away because the products they make have yielded market share to superior recent developments, and this process continues to accelerate. There are lots of good places for your money, and having to look around for them yourself can also be seen as a good thing.
I disagree with nothing you say, except that I am too lazy and interested in other things besides investing to spend my time trying to become the next Peter Lynch or Warren Buffett. I plan to just keep dribbling money into index funds from now until the time when I retire (30 years?), keeping my faith that no amount of govt effort to undermine the power of the U.S. economy to drive innovation and produce wealth is likely to succeed over the long run. As Malkiel, Bogle and others have pointed out, even professional fund managers have a poor track record against dumb investing over time in broad stock market indexes.
You are much younger than your words.
Mr. Mole,
This post is an excellent example of why you are one of my favorite commentators on this blog. What a breathe of fresh aire, ye be when all around be freakin.
That said, when your lead scientist is losing his house, or no one is taking those direct flights to do business, or organic produce is what comes out of your scrubby little backyard because the shelves on the grocery story are bare, investing in stocks is the last thing on your mind.
I’m already seeing micro-investing where I live…people like AZ-owner who lend locally to carefully screened clients; I.E. personal loans sealed by personal bond. As traditional banking resources dry up for us dumfuks, this may become our de facto system of finance for a while. (That’s how BofA started in SanFran.)
America has gone so institutional in everything from our food supply to our mega churches that Nikita Khruschev must be giggling in his grave.
What we’re seeing right now is not the collapse of capitalism, it is the collapse of a socialist oligarchy. Personally, I share your optimism that this shake up will bring us back to a more reality-based economy…and perhaps a more democratic society.
Ahansen,
Was that you spittin’ on American soldiers when they came back from ‘nam?
ahansen,
An economist won a Nobel Prize a couple of years ago for his “microlending” concept (Grameen Bank & founder Yunus). My thought was, “Didn’t A.P. Giannini innovate this idea over 100 years ago?”
“Drug developments will soon treat or cure many debilitating diseases that have been until now not understood or beyond treatment. Still nothing to invest in? ”
I do wonder where you get this information. Can you please be more specific in terms of the diseases of which you speak, and the drugs that are the “cure”?
“Plastics have been critical to production of all manner of devices and packaging of all kinds of other products, especially food, and now the basic resins used to make plastics, their sources, processing, and later reprocessing are all being redesigned to use cheaper and environmentally safer alternatives to oil with superior potential for recycling and biodegradation. Still nothing to invest in?”
It’s my belief that these plastics you speak of are largely responsible for many of the diseases and cancers which require the aforementioned drugs as part of the treatment. For the most part, drugs are a band-aid used to treat symptoms, rather than a cure, not much different than the $700 billion bailout; a financial band-aid which would have never been needed had there been regulation or “prevention”. Let’s get rid of the plastics, then we don’t need as many drugs. They both represent a sort of evil, IMHO.
I actually picked some up friday morning at 40% less than I sold for, not a great amount nor because I believe the ride is over, but I alway try to remain hedged to profit in any scenario.
Banks, currencies, governments, financial markets, countries even are crumbling around the globe. Who-would-have-thunk a bunch of Realtors and flippers would bring down the entire global financial system?
It’s really clever how the housing bubble got us to where we are at now, isn’t it?
For me and other financial detectives on the case, it was simply a matter of following the money.
But isn’t that always the case?
One can follow the real money trail right to the CEO’s and pols yachts, mansions, travels, etc…
This is a really common attitude, but way off. People were paying long time residents of my community a half million, a million, or even more just to get out and yield their properties. The housing bubble money circulated all through the economy. That is why so many idiots got trapped in badly thought out flip attempts. Early on plenty of idiots made lots of money with nonsense flips, and a small percentage were smart enough to walk away with it. It would be nice to think that this was a CEO’s game, but the spirit of the bubble went right to our consumer base. This was a full blown mania, and lots of ordinary folks were involved. No small number made good money during this time, even if their only involvement was what might be considered humble work. The reason there was so much humble work available was anything but humble.
It’s my opinion that you’re way off. The ones who truly got “wealthy” were those in charge. The ones making all the decisions and tens, if not hundreds, of millions of dollars.
BanteringBear,
I agree. The Hank Paulson’s, Angelo Mozillo’s and Dick Fuld’s of the world got ridiculously wealthy, by recognizing and pairing up the greed of the multitude of “flippers” against the need for international investors to invest in “safe” AAA-rated MBS’s and CDS’s…
The ones in charge designed the system to enrich them but also to leave them with plausable denial. If you set up a system with few checks and balances tht rewards criminal activity then you are ultimately responsible for the outcome not the pawns that did your bidding.
Hi: My name is Matt, and I bought more house than I needed as an “Investment”. Luckily, this was in 2001 and I lived simply enough to withstand several years of half my usual salary before jumping to safety and selling the investment to someone moving up from a house priced almost half as much. Good luck folks!
I’m kind of ashamed. On the good side though, we never got granite
mrktmaven-Don’t you want to include Easy money Al?
Ya, it is amazing.
Even more amazing are the perma-bulls who say things like, “We have to remember 95% of mortgages are still good and paid on time.”
All I can think is… if 5% of mortgages going bad caused this, what will happen at 7%, 10%, 15%?
Still a lot of delusion out there. One co-worker claims that the value of his condo hasn’t gone down cause they’re still listed at the same price. (Never mind that no condo has sold since June 2007).
Some people waking up… another co-worker asked me, “How do you buy gold?”
I have had that discussion with many people, considering that default rates were traditionally around 1% it is unbelievably large increase. When you put in terms of ,”yes but 5% is about 500% more than we have had in the past” sometimes you can get through to people.
I got together with some family earlier this week and was discussing one family member who is in the real estate industry and is having all kinds of financial problems. I was told, “yes, but when the market comes back he’ll be fine”. The delusions are still out there, although it doesn’t seem to be as bad as it was 6 months ago.
Keep the delusions alive and the deluded will struggle to keep up with their payments. Otherwise they’ll walk and leave the taxpayers stuck with the bill.
I would prefer that those who I care about not be part of that, unfortunately I have found that trying to convince members of my family to take prudent financial measures to be a losing battle. Even at this stage I still hear some of the same idiotic platitudes and denial that I’ve heard over the past few years.
“I would prefer that those who I care about not be a part of that …”
Those are my feelings as well.
But for everyone else I hope the delusions persist. That’s why I feel the NAR is the taxpayer’s friend; The NAR is spending their own money to keep the delusions alive. Ya gotta love the NAR for doing that.
“Even more amazing are the perma-bulls who say things like, “We have to remember 95% of mortgages are still good and paid on time.”
My coworker said that just yesterday. I was completely befuddled and amazed. I wanted to say “open your eyes asswipe!!!!! Are you blind?! but I just brushed it off as more denial by an individual who views housing as an investment first, shelter last.
RE: Who-would-have-thunk a bunch of Realtors and flippers would bring down the entire global financial system?
Front page story in the Beantown Glob noting the average European & Brit is some pizzed off at the US as an entire entity.
Looks like it’s back to the days of sewing a Canadian Maple Leaf patch on your backpack or windbreaker.
Have you looked at the British press? In one article, the Brits want to seize Icelandic property on British soil to pay for losses from Icelandic banks. In another article, Hungary and the rest of central and eastern Europe appear to be on the brink of default. What’s more, currencies are being tested. It’s a complete mess.
I hope this highlights the danger of having money in foreign currency and foriegn assets.
When the rules go out the window, bad things can happen.
Bad. Things.
Don’t worry, most Americans won’t afford a European vacation (and vice versa).
what happens if its a confederate flag instead?
“Looks like it’s back to the days of sewing a Canadian Maple Leaf patch on your backpack or windbreaker.”
To be today’s fake savvy Canadian traveler overseas, you need more authenticity.
I suggest buying t-shirts from institutions like Brock University, Nipissing University or Queen’s University, all with logo emblazoned on them.
Add a discrete Maple Leaf sticker on a piece of luggage, and you are good to go.
My sister snuck down to cuba with her boyfriend with a group of canadians. she told us she was going to the bahamas.
“Add a discrete Maple Leaf sticker on a piece of luggage, and you are good to go.”
America, if you are going to steal our identity, then please at least give us back our Hockey Night theme song.
We recently obliged a New Zealander family in London by taking their picture. “Where are you from?” they asked. “Canada,” we replied. “Ah, but you have to say that don’t you?” said Kiwi Mama. She thought were faking. If only I had thought to suggest she was actually Australian, ah well.
Note: I am Candian, and don’t own a stitch of maple. I am formally polite to strangers, have a quiet voice, and speak French. Thus, my Candian street cred is established.
As an American who spent nearly half a decade living in Canada, I can verify that Canadians are usually unfailingly polite and quieter than their American cousins. Speaking French (outside of QC and NB), not so much…but you are more likely to encounter bilingualism than in the US.
However, they are quite insistent on discussing politics with Americans and telling us how we should vote, whether you ask them or not. Also, they love to bash Americans, yet they know more about and slavishly follow every American fashion trend, celebrity rumor and American garbagey TV show than even most Americans do.
You folks are a funny lot.
Ode to Davis, Sammy.
Canada Man, hey Canada Man?
Who can take a accent, sprinkle it with eh’s
Cover it with a toque and a Maple Leaf or two
The Canada Man, oh the Canada Man can
The Canada Man can ’cause he mixes with their trust and makes the world feel good
Who can take an American, wrap em’ in a sign
Soaking in the sun and perpetuate a groovy lie?
The Canada Man, the Canada Man can
The Canada Man can ’cause he mixes with their trust and makes the world feel good
The Canada Man fakes everything he makes satisfying and delicious
Now you talk about your anti-American wishes, but i’m more of a faux-Montrealer, fond of knishes…
http://www.youtube.com/watch?v=rG2hW5oKyN0
Bonhomme, Bonhomme…on commence:
http://www.youtube.com/watch?v=btHmpklau50
RE: I suggest buying t-shirts from institutions like Brock University, Nipissing University or Queen’s University, all with logo emblazoned on them.
I think a #9 Guy LaFleur retro Montreal Canadians hockey hat and jersey will get me by.
It will at least confuse the drunk soccer hooligans
Eh, mate, and whot team is this?
I take it one step further and travel with Dave (The Hammer) Schultz as my personal bodyguard, when traveling overseas.
I’ve OPP T-Shirts and Muskoka ball caps, but I do recall the days when I had a Canadian flag sewn on my backpack.
Ha! Sorry, but the Realtors and flippers were just pawns in the game. Even the supposedly “key players” like Mozillo were just minor players (I would say knight or bishop - but that would be quite an insult to knights and bishops). The people who really drove this - the really key rooks and queens and such - were the bankers and their politician friends; the Paulsons, Bernankes, Harrisons, Franks, Blankfeins, etc. Let’s call Barney Frank the queen - seems appropriate. The King of course would be …. Alan Greenspan.
Didn’t AG argue central and eastern European savers new found wealth caused interest rates to stay low fueling the housing bubble? It appears, however, like us, they too relied heavily on innovative financing and foreign sources of capital to get their economies up and running.
Well of course - AG doesn’t want the finger pointed to himself.
Just one example (warning pdf) from early in the game in 2002:
http://www.house.gov/jec/hearings/11-13-02.pdf
So Greenspan deliberately lowered rates to encourage home equity extraction, which is exactly what got us where we are today.
AG is as useless as t!ts on a nun.
AG is as useless as t!ts on a nun….. Make that triple D t!ts on a nun
http://money.cnn.com/2008/10/09/news/companies/colvin_ge.fortune/index.htm?postversion=2008101015
Is it possible that GE is in serious trouble?
“The idea that GE might ever be desperate for cash would have seemed ludicrous a year ago and looked unworthy of concern even this past summer. After all, this is history’s most famously well-managed company. But now the stock trades for less than half its price 12 months ago. More than $200 billion of value has vaporized.”
“In its most recent earnings announcement, on Oct. 10, GE said profits fell 22% in the third quarter, driven down by a 38% drop in earnings from financial services; profits there should continue to decline, the company said. GE remains highly profitable; analysts expect it to earn about $20 billion this year, but that’s 10% less than last year, a sharp change from earlier forecasts of robust growth. And for the first time in memory, investors are pricing GE at a level that indicates that they expect it to shrink rather than grow, a surreal situation.”
GOOD NEWS FOR EAST BAY!!
OAKLAND — The East Bay economy may have to endure two more years of tough conditions before it fully rebounds, a disquieting new report predicts.
Even worse, a recovery for California’s housing market will lag even that distant timeline, economists Jon Haveman and Christopher Thornberg, partners with Beacon Economics, told a Bay Area Council Economic Institute meeting in downtown Oakland this week.
“The housing market will not resume growing until 2012,” Haveman said in an interview after his presentation. “Then it will just sit there for a few more years. We won’t see any significant appreciation in the housing market in the East Bay and California for five years.”
It will be the non-housing parts of the East Bay economy that will help the region extricate itself from a significant downturn.
But more pain looms ahead of the East Bay before that rebound occurs, according to the economists.
“The years 2007 and 2008 have been difficult years for the East Bay,” Thornberg and Haveman wrote in their report that was presented Wednesday night. “Our forecast is that 2009 and 2010 will be equally difficult, with an earnest recovery beginning in 2011.”
It’s not surprising that the housing market will struggle more than the overall economy of the East Bay, the economists said.
“Housing is the last to rise” in a recovery, Thornberg said, “and the first to fall” in a downturn.
Still, once the slump ends, the East Bay
Advertisement
will be potentially great shape in the recovery to follow.
“The future remains bright for the region,” the economists wrote in their report.
A world-class university, top-level airport and seaport facilities, affordable and plentiful office space, a skilled labor force, and cultural diversity make the East Bay a region with “significant economic potential,” the economists wrote.
The East Bay also could tap the growth of emerging technologies.
“This is evidenced by the flood of venture capital flowing into the region — perhaps making the East Bay the region’s Green Corridor — and by the significant quantify of foreign direct investment,” Thornberg and Haveman wrote.
We bought a condo in the East Bay in 1996 — five years after the official end of the early-1990s recession. Given that the CA economy has only recently begun recessing, it could be a long time before East Bay prices bottom out.
–
Commodities & Scams FLASH Depression; Why “Printing Money” IS Highly Deflationary!
We probably had the worst two weeks for commodities ever after the worst week in 50 years a week ago. At Friday’s low in Scams the 12-month deflation of Scams and Real Estate reached 100% of the GDP, something that has never happened. We are likely to see another 100% deflation in these two assets over the next 2 years. Scams had the worst week since 1933. You get the picture and that is what happens before the depression. Markets are the best leading indicators of recessions and depressions to come and not the econ-meisters and the Fed Chairmen.
Why “Printing Money” IS Highly Deflationary?
The increase in the US govt borrowing crowds out the private borrowing and, most importantly, private investments! Both are highly deflationary. The Japanese govt had borrowed like crazy during 1990s and we had deflation. Please remember that US govt borrowing went negative during the boom of late 1960s & late 1990s. The govt borrowing shoots up during very bad economic times and major wars (War On Iraq is not a major war) and NOT during good times.
When President Obama proposes the $5Tr. Fair Deal you would know that the US is already in depression. Stay tuned. The US has the worst govt that money can buy!
US Recession — > Commodities Bust (WE ARE HERE) — > Depression — > Deflation — > Greater Depression.
Jas
So a quick update on Austin before I run to obedience class (for my dog - no snarks!)
I mentioned before that I’m selling my house. Went on the market yesterday….
As of last night I have two offers - one for asking, and one for slightly over asking. The latter is a cash offer. The former is putting 20% down and getting a 30 year fixed at <=6%.
So apparently things are still moving here in Austin if you’re priced “right” and the house is in good condition. I’ve put a ton of work into this house (can post links to pics tomorrow if people are interested - probably won’t be able to respond in time today), so it’s updated and in pretty good shape.
For reference, I paid $171.5k for this house in May of 2005. I put maybe 15-20k + a lot of work into it,and had listed it at $220k. My intention was never to “flip”…just found a house with a floorplan I liked that happened to not been updated in any way since 1975. Selling because I’d rather have the certainty of cash in the bank and ability to move when needed rather than having the house acting as an anchor. At any rate, looks like I’ll be getting all of my money out of it plus a little for my time+effort, even after fees.
Just thought I’d share the anecdote.
J
Congrats!
Leigh
Drummin-Our in book, you came out WAY ahead. Nice going.
“In our” book. Damn caffeine hasn’t kicked in yet.
RE: Selling because I’d rather have the certainty of cash in the bank and ability to move when needed rather than having the house acting as an anchor
The new “American Dream”…
Cash in the bank and instant mobility
Best regards, J. You’re way ahead of the pack.
The prize for me is a tri-plex somewherze down in the San Clemente area. All Cash, and 10 minutes from my favorite surfing break - the San Onofre Cliffs.
It’s the last surf spot in Socal where you can be miles from another person. Thanks of course to the Marine base.
Move to Maine: Maine Is Not Part of America
Come next summer I will ask the retailers again, “How is business?” I might hear the same reply, “Busy! Good! Why do you ask?” At that, I will have confirmed that Maine is not part of America, that the locals who keep to themselves and towns, together with the Transplants who are here to escape other Northeastern states had the right notion of things all along.
http://tinyurl.com/4elmx8
RE: Michael T Bucci is a retired public relations executive from New Jersey now residing in Maine. He has authored nine books on practical spirituality including “White Book: Cerithous”
What a condesendingly quaint narrative.
Spoken like a true flatlander from Tony Soprano Country.
Mike, you need to get outta RetireeVille on the Gold Coast.
Take a cruise up to the real “Maine” in Millinocket where 6,000 people used to work for the shuttered Great Northern Paper Co.
Or maybe even talk to local lobsterman who now can’t afford to untie his boat from the dock because the price of his catch is in the tank.
I think you’ll find there’s a fair number of natives who might not agree with your “Maine is perfect” perceptions.
Your perception of “perfection” is a “New Feudalism”, whereby the local “serfs” labor for the newly arrived, out-of-state retiree aristocracy because a Democratically controlled executive and legislative branch have run every functional biz right out out of the state.
It’s a perverted social order, Mike.
Behind your back, the natives hate yer guts.
Don’t ever forget it.
And watch out your house don’t burn down some dark winter night, when you’re off globe trotting.
Paybacks are a bitch.
“It’s a perverted social order, Mike.
Behind your back, the natives hate yer guts.
Don’t ever forget it.”
Wow, that’s heavy. I know a woman from Maine, Bar Harbor to be precise. I’d heard from her that I’d always be considered “from away” by the locals should I move there (I’ve been considering it for 5 years now). But, I didn’t know that the bitterness ran that deep. I’m not fond of that sort of hatred and intolerance,. Perhaps I wouldn’t like it there, after all.
Well you get flatlanders from Soprano land moving into lobstering towns for the quaintness and then passing noise ordinances so the lobstermen and fishermen can’t work at 5am. In Portland and the surrounding towns like Cape Elizabeth, it’s already so filled with transplants that there are hardly any locals left to resent them.
RE: Bar Harbor
BB~
Have no fear if you are moving to Bar Harbour.
BH is Martha Stuart and Jay Rockefeller county.
In fact one of the great local stories is when Martha went into the local convenience store in Southwest Harbour and thru a hissy fit because the local shop keeper told her to go use the payphone outside instead of the freebie in the office.
An aide had forgotten the official cellphone.
So as she was screechin’ at the gal behind the counter, “Don’t you know who I am?”, a gentleman overhearing the commotion came up and hands her a quarter.
So she turns and snarls at him-”Who the hell are you”?
“Why, I’m David Rockefeller. I don’t know you, but if you need some more change to make your call, just ask”.
True story…
Anyway…
There’s no locals left on the island, unless they inherited something.
Just don’t head up to Washington county (poorest region in New England).
Seems some local arsonist torched a half dozen summer McMansions last year. Law enforcement thinks it’s attributable to square footage envy.
But perhaps you are right…I overstate the case with the use of the word “hatred”…
It’s more like distaste and non-acceptance.
And the locals never voice their “distaste” of outsiders to their face.
It’s just a look and murmuring they’ll give you when you stand up to voice your opinion at the local town meeting and say to the assemblage you no longer want the smell of Farmer John’s cows, who have grazed in the same spot for 3 generations, wafting over your yuppie subdivision and that it’s time for a re-writing of local zoning ordinaces to accommodate the new residents of of higher refinement and culture.
Thanks for the info, hd. I’m not the kind of person to move into an area and make waves. More like “when in Rome, do as the Romans”. I’ll spend some time there somewhere in the next few years to get a feel for things.
Thanks for the posts about Maine.
Some of the nicest people I have ever had the pleasure of knowing - and the most beautiful and daunting edges of earth.
Maine-landers are a hardy sort.
A tiny piece of rock; rich in history; and framers of their own kind; out kind.
Yet, they are great Americans; a fabric from which the blood flows.
She is our sister of riches - languages; cuisine; history; and so much more.
How I wish to know you Maine!
Leigh
Maine must be REALLY pretty to put up with taxes like these:
http://www.taxfoundation.org/taxdata/topic/32.html
(Still, the LL Bean store was fun.. And NOTHING is more ass-end than Rhode Island…)
Good for you. I’m doing almost the same thing, but my house will be on the market in a few weeks. I’ve seen houses in my neighborhood sell in as soon as a week in the low 200k, which is about 5-10% below last year.
How did you decide on pricing? I’m planning on pricing maybe 10 to 20k below what I think it is worth, given recent sales.
My plan was to price below comps and below what the realtor suggested. I must admit I feel I got a bit greedy. I had simply looked at what had sold recently, and what was listed, and wanted to list noticably below them (not just $2k under), knowing that my house was probably one of the top condition-wise. I had asked the realtor what she would list it for, ignoring any psychological barriers ($25k increments are apparently important due to the search engines), and what she’d price it at to sell it in under 3 days. Her answers were “230-235″ and “200-205″. So I made a point to price below the first to move quickly, and be reasonably close to the second. My plan was to cut quickly within 7 days if there were no offers.
As I’ve watched the local listings in the area for the past few weeks, they’ve been dropping prices, so I was a little worried. But apparently I hit a good price where realtors/buyers felt it wouldn’t last and they needed to act.
That’s kind of what I am going to do. In my observations, a lower than comps prices house, without any significant negatives gets sold in a month my neighborhood. Renting vs. Buying cost roughly the same for my house, but I am still a little nervous. I have 50% equity so at least I have room to be flexible. I have been very lucky so far, but I am looking forward to renting for a few years. I really tired of remodeling and maintenance, and I’m envious of renters who can move with less hassle.
I am looking forward to renting for a few years. I really tired of remodeling and maintenance, and I’m envious of renters who can move with less hassle.
Yes, that’s about how I feel. It sucks to have put 3 years of work into the house just to sell it off when I’ve finished the major projects, but to be honest I’m sick of mowing every weekend, worrying about whether my trees are dying, feeling the need to do repairs, etc. I imagine it will be rough living in a place that isn’t as “mine” as I’m used to feeling, but I think the freedom is worth it.
I’m 30 and its time to figure out what the hell I want to do with my life. It’ll be a a lot easier without such a major responsibility.
The bottom is here!
Always said…you’ll know we’re nearer a bottom when even the bears, who’ve waited for years to buy a house, decide it’s just not worth it.
BTW, I don’t really think we are at the bottom, but the change in perception (from housing as the ultimate goal and “American Dream,” to “how can I get rid of this millstone around my neck”) is interesting. We are making progress.
Go get a law degree.
That’s basically my story. We sold at my price (10K less) a month later, rather than the wishing price the RE hooked my wife on. For 10K, my wife was entranced into paying an extra 2K/month + the new house payment and half our weekends spent driving 300 miles one way. The month when Fannie and Freddie were fracturing.
You make a good point that the sky is not falling and reasonable deals continue to be made. I do think however that even reasonable deals will get caught up in the market decline to some degree. Assuming your rent is around 1200 mo, you will virtually live rent-free over the next three years as prices decline. In gross income, that is 25K a year compliments of uncle sam.
Yes, I suppose that can be taken from this, at least in Austin. But of course, we didn’t have the 300% gains either, and our job market is holding up well so far.
I did find it of interest that one buyer was all cash and the other had 20% down. Obviously the best choice is the cash buyer (all other things be equal), but neither are at high risk of falling through due to higher lending/credit standards. Good for me, but surprising to get two on the first day!
J
Here in San Diego, the market is bustling when houses are priced well.
The housing market is not “frozen” by any means. Haven’t seen it this busy since 2004/2005. Seriously, multiple bids, multiple lookers at all houses we’re looking at. Must note that we are not even bothering too look at houses of the pie-in-the-sky/wishing price sellers. Nobody is looking at those, of course.
It’s late in the day, but some more info to share…
I just got the option and earnest money checks. It turns out the buyers live in the “nice” adjoining neighborhood (where houses are about 2x as much). I am curious whether they’re downsizing, or looking for a rental/investment property. I’ll have to inquire, as I’m very curious. There’s no contingency on the offer, so it doesn’t seem that they’re looking to sell their current house…
The ugly irony…. lots of homeless - lots of empty homes.
____________________________________
Fort Lauderdale officials concerned about growth of homeless population
Officials tired of seeing them overrun public places
By Brittany Wallman | South Florida Sun-Sentinel
October 11, 2008
FORT LAUDERDALE - When a homeless man uses the steps of the Women’s Club as a toilet, things have gotten out of control. When the historical society has to hire security to guard a party’s wedding cake from vagrants, something’s got to give. Fort Lauderdale officials said homeless people are overrunning public parks and tourist attractions like the beach, Riverwalk and Stranahan Park in front of the main library downtown. The city has to step in and do something, Commissioner Cindi Hutchinson urged this week, because it’s only going to get worse as the economy plunges. Commissioners agreed, saying Tuesday that they’ll consider new rules for groups who feed homeless people, requiring cleanup, and maybe even security and a permit. Even before a law is passed, the city will ask them to stop leaving garbage in their wake.====>
http://www.sun-sentinel.com/news/local/broward/sfl-flbhomeless1011sboct11,0,5959498.story
Don’t call the largest one-week stock market drop in history a crash, or else you might trigger a panic. The MSM discussion on the economic situation gets nuttier by the day. Some posters here spotted the onset of panic (at least in high-level economic policy circles) back when it started in the second half of 2007.
Stocks dropped, but was it a crash?
Some fear using term would trigger panic
By Ellen Simon
ASSOCIATED PRESS
October 11, 2008
Did stocks “crash”?
Some news organizations and investors are hesitating to use the word to describe Wall Street’s terrifying sell-off.
Comment by ahansen
2008-10-10 09:43:50
Professor Ayres was given 1997 Chicago’s
“Citizen of the Year” award by…wait for it…
Nixon apologist, WALTER ANNENBERG.
Ayres=maybe involved in bombing a bathroom.
McCain=Definitely involved in bombing numerous entire Vietnamese villages.
just sayin…
ahansen, was that you spittin’ on American troops coming home from ‘nam? Karma’s a bear.
just sayin…
The tin foil hat in me and the suspicious late-in-the-day run-ups lead me to believe there is a PPT. The logical part of me cannot see it though. Perhaps I’m being naive, but the only way the PPT could affect the stock price is by buying lots of stocks, isn’t it? So how does it ever sell them? When does it sell them? If they’re buying enough stock to raise the Dow Jones as much as it went up last Friday, wouldn’t the government be listed as a major shareholder or something? What’s the tin foil hat conspiracy theory for how the PPT is able to *sell* the stocks they buy to raise the market?
Wish I were seeing the huge drops in housing prices in my neck of the Oregon woods, but we don’t seem to be dropping very quickly. Nothing that I look at could possibly pencil out on a rental basis…will it ever?
On PBS Newshour a few nights ago, I forget who it was that said about the state of the stock market “it wasn’t like there was overwhelming selling pressure, there just weren’t many buyers”. Imagine what happens when the public makes a race for the exits, en masse?
An orderly stock market needs a like amount of buyers and sellers, or near enough.
Like anybody is thinking of investing in stocks @ this point in time?
PPT = Financial Maginot Line
As a matter of fact, I almost pulled the trigger and went all-in with the sidelined cash on Friday. Only being away from a phone or internet connection all afternoon kept me from doing so. I expect I will pull the trigger very soon, like next week.
Sell when everyone else is buying and buy when everyone else is selling.
I tend to agree with that, take a look at some of the companies that been pummeled. Not the financials, but good companies with substantial earnings that are trading at 52 week lows. There are a lot of opportunities for those with patience and readily available cash.
I was looking at my mom’s stocks yesterday, and the few that had been winners over the past year were now losers, and the losers over the last year redoubled their losses in most cases.
She has a very broad spectrum of about 30 stocks, and it pains me to see it all fall apart in real-time right before my very eyes.
I could care less about my eventual inheritance of next to nothing, as i’ve made other plans, but what of my siblings that may have counted on it being there?
Its why I bought. And I was just covering half my shorts. After 7 days down, there is always an opportunity to bargain hunt. I am looking for about a 20% rally from here and then whack a mole.
well i do own 1/3 of my moms 2 family house which is paid for…we did that 10 years ago….but i don’t expect anything else.
———————————–
I could care less about my eventual inheritance of next to nothing, as i’ve made other plans, but what of my siblings that may have counted on it being there?
I was a buyer yesterday.
RE: was looking at my mom’s stocks yesterday, and the few that had been winners over the past year were now losers, and the losers over the last year redoubled their losses in most cases.
She has a very broad spectrum of about 30 stocks, and it pains me to see it all fall apart in real-time right before my very eyes.
Well, ‘Sane for better or worse, we must be psychic twins.
Just did the same with my mother this morning.
Her portfolio is down 50%.All solid companies acquired over a lifetime-not a lick of junk.
So, ditto on all your observations.
Count me very pissed off.
I was a buyer yesterday.
stocks or house?
Stock. No news on the dingbat down the road.
I’m with Hoz, one of these days the markets will rally and it will rally good for maybe a couple weeks to a couple months. It will draw in all the suckers thinking we have THE bottom and they invest “all-in.” Even those who predicted the first big drop we had, or made money going short will be tempted to buy in on this one. Then it will turn down slowly at first, and then accelerate lower than where it is standing today, till the point we have true capitulation. It will be so ugly, that no common person will ever drop another dime in the market or 401k, not for another 20 years.
But I can’t even say that rally will happen for sure, because a few more bank failures and we might just skip it altogether.
Folks, this isn’t just about a housing problem or a few bad loans… by the gov intervening and placing itself as the guarantee of all things financial, we have put our solvency as a nation at risk. The 700 billion and FNM/FRE bailout alone will cost us trillions and with a global recession/depression coming, not even China will be able to fund an exploding gov deficit.
Two more articles I just saw Friday.
1. FNM will not require mortgage servicers (banks, lenders) to pay them the loan checks. The servicers will keep any mortgage payments to shore them up, FNM MBS they hold will get nothing, essentially become a 0.
2. FNM/FRE was also instructed to buy up 40 billion per month of MBS, this is in addition to the 700 billion from the bailout.
In a nutshell, FNM/FRE buy back or take MBS off the banks hands and give them cash… then the banks continue to collect mortgage payments from J6P and they just keep them. This is so absurd it can’t be true, right? Well folks, it just might be. Remember, taxpayers own FNM/FRE now, we pay for this mess.
http://www.marketwatch.com/News/Story/Story.aspx?guid={b9acbb03-9607-44fa-8ea4-110138703ca6}
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDjJYMSphyM0&refer=home
I stuck my toe in the water yesterday. I took a small position in the ETF that tracks the Dow Industrial Average (DIA) and got in around 8200. I’ll watch this and will bail out around 7500 on the downside.
I also bought a small position in a thinly traded preferred stock that I believe was way oversold.
I’m still keeping most of my powder dry.
Knifecatcher.
There’s a lot of bad news to come that can and will drive stocks lower but very little upcoming news to make stocks trend higher. Profits will be tanking as shellshocked consumers retrench and lick their wounds.
“Imagine what happens when the public makes a race for the exits, en masse?”
Ah, yes yes yes. I am patiently awaiting such a day. Bring it on.
Come down to southern Oregon and you’ll see a lot
of price slippage, even though the city itself is
operating as if the money tree still has leaves.
What City ??
Yes, tell us more, rancher. It has been utterly, completely dreadful to see what this bubble did to the lovely small towns in OR, especially along the coast.
Oregon used to be a place where an honest person could buy 5 acres of very affordable land, and create a nice life for themselves. Then the vultures descended…The consequences can only be described as horrific.
Say it ain’t so, Oly! I used to love driving the coast from Bandon to Astoria, which I did frequently ’bout 15 years ago. Have a particular soft spot for Lincoln City and the stretch between Garibaldi and Manzanita.
Love the Haystack Rocks, but Cannon Beach was always a terrible ripoff, though, even then.
Oregon coast is the best….
What are we really arguing about here? There is apparently no mystery about whether there is a Working Group on Financial Markets (affectionately known as the Plunge Protection Team), which has existed since 1988, or that they intervene in financial markets when they deem it in the national interest to do so (like pretty much the entire period since August 2007). So I guess we are talking about the nature, frequency and intensity of interventions?
IMHO it is high time for Congress to take a peek under the rug to see how this shadowy body’s activities may have contributed to the largest selloff in Wall Street history. I am guessing that with some gentle arm twisting, lots of smart economists would be willing to admit that a long-term policy of asset price support might eventually lead to overvalued asset prices. Some might even go so far as to suggest that such a policy makes eventual asset price crashes virtually inevitable, as eventually everyone and his dog can see that prices are unsustainably high.
The deeper and more lasting damage comes from debilitating the free market’s ability to discriminate between good and bad risks. Pretty soon, the entire economy can get bogged down with malinvestment in largely worthless projects (i.e., building McMansions priced in the $100Ks out in the middle of the southwest desert).
A second form of lasting damage comes from politicians with little understanding of economics but lots of understanding about blame games using “unfettered free markets” as a scapegoat for bad policies they sponsored, to deflect attention from their own culpability (Dodd, Frank and Schumer are three of the main culprits). Such policies impaired markets’ ability to function properly. Bad legislation which further hinders markets’ ability to function very well is a likely result. Stock market participants understand the implications of this, as evidenced by the recent year’s 40 pct drop in the DJIA. Rule number one of economic policy: DON’T KILL GEESE THAT LAY GOLDEN EGGS.
“Such policies impaired markets’ ability to function properly.”
Case in point: Late 1990s initiative to force traditionally conservative and financially stable GSEs to engorge themselves on subprime loans in order to increase minority home ownership. Ten years later, the consequences came home to roost.
You are backward. Huckabee says there are suspicious late in the day run downs… points to possible Financial Terorism, say his will-not-named-sources.
I find the idea of the terrorist’s financial advisor meeting funny:
(Religion_Neutral_Name (RNN) speaks first):
RNN: How is our plan going to destabilize the evil West?
F.Adv: (wipe brow), Uh, pretty pretty good RNN! We bought heavily as the market was dropping like a rock today after selling off last night. If we keep to the plan and sell late in the session, we will make most of that money back.
RNN: What? The revolution is broke? I KEEEEL YOU!
F.Adv: SELL! SELL! SELL!
I can see it, yup.
OK,
GOLD & SILVER!!!
Why are prices down and yet these metals are not available for sale at any price? I was told at two San Diego metal and coin dealers yesterday it was unlikely I would find any before January. Yet … Silver is down to $9.50. How is this a free market?
Does our govt not want folks running to metals and running up the price?
Liquid monies (gold and other forms of cash) are stuffed under mattresses world wide, but true believers in the Church of Gold only notice the former.
It is not really that there is a shortage of liquidity per se, but rather a shortage of liquidity owners who are willing to supply it to the market at currently depressed prices — quite analogous to homeowners who are waiting for prices to recover before they sell their homes. This is a normal phenomenon in a deflationary environment.
I read somewhere that sales of substantial sized safes (3,000 pound+) have gone up by 30-40%, most recently.
I would never keep anything of value in my home or on my property, because pretty soon the criminal element is going to figure out that because nobody trusts banks, everybody’s potentially got a stash at home, somewhere?
that Mossberg scattergun sure is a beauty.
No joke! If anyone ever tries to rob us, the first thing I will do is to try my best to convince them that we have no safe on the premises.
Prof, if a burgler bursts into your house, just quietly tell him it’s time to buy the dip.
He’ll either run off to do exactly that and thank you for the tip, or he’ll think you’re mad and leave.
Or, if you do have a safe then keep a small amount of cash in it and hide the rest somewhere else.
I know telephone company employees who carry mugging wallets when they work in South-Central LA. These are wallets that contain a fews dollars but no credit cards, drivers liscense, or anything else that they’d really hate to part with.
These are the wallets they carry on the job and will surrender in case they get mugged. Their real wallets they keep locked in their trucks.
I pity the poor bastard that tries to rob my house…He better have head to toe wire braded body armour…:)
I pity the poor bastard that tries to rob my house… If they want your stuff that bad, they can just set fire to the place & look through the debris for a safe. Do you live in a castle with a moat?
“Prof, if a burgler bursts into your house, just quietly tell him it’s time to buy the dip.”
My risk is that I might get shot for not having any goodies to hand them. I think I will fill a jar with coins to hand over should the need ever arise. I once had an apartment burglarized. Rather than stealing any of the $25K ($1990) in musical instruments that were lying around, they chose to run off with the $15 in change that I had in my piggy bank (true story!).
Take a bunch of 50 cent pieces and paint them gold, put in jar, put some rocks in the bottom to make it heavy.
Hey, maybe this would sell in a package along with the fake wallets mentioned, the ones you give the burgler.
Prof Bear’s Diversionary Economics Plan
Professor Bear makes a good point. If crap really hits the fan to the point where home invasion robberies become a common occurance, what will happen if the victims have nothing to give over to the burglars? There are plenty of us who own valuable stuff that doesn’t look so valuable to the common thief. Other than one large TV that would take a couple men to move, I really don’t have anything that the common home invasionist would want. Or could carry off (don’t think they’re going to run off with my heavy, expensive furniture). We too run the risk of getting shot for not having anything “valuable” (i.e. easily fenceable/pawnable) to hand over. And me and hubby aren’t poor, unlike other people. Imagine how pissed a home invasion robber would be if they broke into some FBer’s McMansion that hadn’t been foreclosed on yet to find that the occupants owned nothing but a mattress, TV, and a fridge in there!
Yeah, I’m going to take your advice and put a large change jar on my counter, filled with pennies.
My house has been broken into twice. Span about 3-5 years between both house robberies. Probably was the same people, because the broke into our house in the same place. We live in an area where everyone goes to work, and on a busy street. The thieves took only what they could see on the dressers and what they found in the first drawers in our dressers. Didn’t bother to take the television, vcr, computer or stereo.
After the second time we got ourselves a security system, and got to know our neighbors alot better. Haven’t had a break-in for over ten years now.
live in a castle with a moat ??
Kinda….At the end of a very large culdasac with the entire neighborhood retired except for me…Anyone comming into the court has 16 pairs of eys on them imeadiatly…We watch out for eachother…As far as the house being burned down, are you fricken kidding me !!! We have a fire station on just about on every corner in this city filled with those $800. + per day firemen besides, its nearly impossible to start a fire from the outside of a brick & Stucco house with a concrete slate roof and if they try it from inside thats when the wire braded body armour will be needed because they will not get past thye entry way before they are mauled by my two dogs…
Gunshow today in Medina, Ohio was jammed. Plenty of everything availableat as yet reasonable prices; many listed as “Obamma Special”’s. Have several picked out and priced; just need to test fire them at the local range. Was surprised at the number of new handgun varmint load ammunition for personal at home use. Havent been to a show in 15 years. There’s still time to buy.
There are a lot of theories out there on this ranging from central bank manipulation to hedge fund explosions with margin calls and deleveraging. At any rate, there is a huge gap between the price of “paper gold” and physical.
If you’re looking for physical, its likely that most major dealers are either sold out or selling at huge premiums. Try to find those dealers that are off the radar, the ones you can only find by foot work.
Another theory (not sure if this one is in broad circulation):
Policy uncertainty widens the bid-asked spread. Thus the bid price (willingness-to-pay) is far below the asked price (willingness-to-accept). The latter is the price required to get gold hoarders to take some of their stash out from under the mattress and sell it. The bid-asked gap is a natural consequence of policy volatility, where all the old rules of capitalism can be summarily changed where it is deemed politically expedient to do so.
A similar gap between bid- and asked- prices currently exists in both the MBS market and in the housing market. In the MBS case, owners expecting a bailout have been holding out for the higher price they anticipate the Treasury will pay relative to current market value (for an idea of the latter, look at the ABX Indexes on Markit.com, many of which are priced at below $0.10 to the dollar). The natural inclination will be for financial institutions holding MBS to unload the most severely devalued MBS on the government, particularly if they are offered a taxpayer-funded premium to market value for adversely selected assets.
In the housing example, owners who are underwater on their mortgages or just down from what they believe to be their homes’ true values are holding out until the market returns to 2005 prices, at which there are few if any qualified and willing sellers (AKA people with buckets of money and boxes of stupid). For a San Diego housing example, the median sale price (”bid”) of single family homes in our zip code (92127 San Diego) was $700,000 in August 2008, down 24.7 pct in one year (DataQuick), while as of today the median single family home list price (”asked”) on the MLS stands at $1,325,000. Tellingly, the median-priced home is explicitly advertised as a short sale!
The housing example is less clean than the gold example, as homes are quality differentiated while gold is less so, but nonetheless I claim a large bid-asked spread exists in both markets, even after adjusting for quality. How these gaps resolve is anyone’s guess, but the bid-asked chasm coupled with a dearth of liquidity will not persist forever, as anything that cannot go on forever will stop.
Personal hunch: Given the credit crunch, the natural direction of resolution is downwards. Economic gravity rules.
My local coin dealer will buy 100oz silver bars for $1500 and he says he has no problem selling them for $2000. Mint silver eagles are buy/sell for $15/$20; at the same time the spot price of silver is $10.50. He says he doesnt give a damm about the spot price, these are the prices he can buy and sell for and make a decent profit.
What does this mean when comex thinks silver is $10.50 and the street value is $17.50. I think we are allready at the point where the markets have come completly unglued to reality, and are just a charade for the powers in charge.
Sounds like more mania.
I’m seeing the same thing in northern VA, at least supplies-wise. I haven’t bought in a few months. When I did buy a few months ago in July there was still a decent supply of things available, and still at the same premium above spot ($16 for eagles, $8 for K-rands, etc.). However now there are none in the shop - things are going out the door within an hour or two after they come in - gold, silver, and platinum. I can’t say what they’re going for price wise, but this is the first time I’ve seen them constantly sold out. This is one of the bigger shops in the DC area.
To me all this definitely points to artificial spot prices.
Think of precious metals in the same genre as cigars were a decade ago, with one big difference.
People paid a big premium for a want that was in short supply because of our embargo of all things Cuban, but imagine what they’ll pay for a need?, that is the subject of it’s very own economic embargo, quickly distancing itself from paper metals, by depending upon the law of supply & demand to set prices, not the whims of traders that have never touched the stuff.
Second difference: Ya can’t grow gold in a field.
Ya can’t eat, live in, or wear it either.
…”Ya can’t eat, live in, or wear it either “….
but you can sure any of things at a nice advantage if you got the gold.
…and me thinks with a couple more trillion in the que, it will buy much more in the not so distant future…
http://www.marketoracle.co.uk/Article6724.html
I found this article the other day, suggesting that the initial sharp drop in gold had to do with the downfall of Bear Sterns, which had a heavy long position in gold, and manipulation by jp morgan.
Who knows. I’ve been in the position of buying gold when it was starting to break out, only to have it plummet. I’m waiting to see if it falls before I consider buying again.
Contrarily, the supply has loosened up at my favorite LA bullion dealer. That could be temporary though.
Wait until gold makes its first decisive break down (the kind that shows little hope of ever bringing the price back up to $1000). At that point, the heavens will rain gold.
Whatchy’all think of the plan of buying a new home while renting out your old one until the market comes back?
First thought: What if the residential real estate market doesn’t come back for more than 15 years, as in Japan (18 years and counting)? Baby boomer demographics lend support to this scenario’s likelihood, as coastal empty nesters are looking for the chance to leave their family-sized homes behind and relocate inland where prices are lower and the living is easier.
Second thought: If you think coastal California homes lost value quickly in the past year, just wait until you see how fast they lose value going forward, during a recession, a credit squeeze and in the wake of the worst one-week stock market drop in Wall Street history.
Good luck with the two-homes-are-better-than-one amateur-landlord plan.
New lender rules on ‘buy-and-bail’ to help, and hurt
By Roger Showley
STAFF WRITER
October 11, 2008
A crackdown by mortgage lenders on a fraudulent practice known as “buy-and-bail” could make it more difficult for law-abiding homeowners to take advantage of today’s depressed market.
The scheme involves owners telling the lender on a new home that they plan to keep their old one as an investment. After escrow closes, they stop making payments on the first house and let it fall into foreclosure.
The scheme has caught on in recent months, as owners with unaffordable payments saw that they could buy a comparable home and pay less per month. Now lenders are adding restrictions to make it tougher to qualify for a mortgage if you plan to keep your old home as a rental property.
The new rules will potentially penalize honest buyers who don’t plan to defraud their old lender but simply want to rent out their old property while waiting for it to regain value.
Have you decided whether to vote for the leadership candidate or the fear monger candidate? (I leave it to you smart folks to figure out which is which…)
Hint: Republicans = fear-monger party
P.S. Sorry, Ben, I know you don’t like partisan politics. My hand slipped.
There are many different types of fear mongering. Republican tends to be more overt political/military fear-mongering, and Democrat tends to be passive-aggressive socioeconomic fear-mongering. I’m a bit dismayed that you don’t seem to see the latter.
It’d be quite a deep philosophical exercise to try and discuss which is worse, so I won’t even attempt. I’ll just say - don’t pretend that the latter doesn’t exist, and don’t pretend that your candidate’s “leadership” qualities are in large part exactly that as well - fear-mongering. He’s just really good at suger-coating it with his oratory skills.
Personally I’ll have none of either. My candidate certainly will not get elected, but that’s OK by me.
I am with you, pack. an example of lefty fear mongering is global warming.
Prof. Bear:
I do not believe you are concerned about fear mongering. The HBB has decried the very policies that led to the housing price bubble we have discussed to death over the last couple of years. The Dems and Obama are forensically tied to all of these mistakes. Tell us what policies of Obama and the Dems you are defending.
I’m getting a kick out of this. PB used to say “Demo-rats.”
I am not a partisan. I respond to what I see, and right now I see McCain behaving like a cornered badger showing his teeth in a most unpleasant manner. And, as J M Keynes adroitly stated, “When the facts change, I change my mind.”
It is interesting that quite a few here seem to refuse to vote for either of the candidates whose policy will ultimately affect them severely; they will have no license to crab about who sits it the White House, but, Im sure they will.
This is BS. I’m not going to vote for either clown, and you can be darn sure I won’t be to blame for either one getting elected. I’ll be voting for someone who if everyone who says they supported him actually voted for him would probably get elected (Ron Paul).
I think the evang-right’s gambit is going to fail miserably, as ’ssshrubery is already attached @ the hip to the them, and there’s plenty of guilt by association to go around, comes around.
McCain is showing his fear monger stripes more by the day, which is doing little to distract from questions about whether he is too old to qualify, or whether his running mate is too ignorant and inexperienced. Attack politics will only go so far towards covering up a candidate’s shortcomings.
I want the current GOP crushed so badly that they become irrelevent in political policy making ever again…Only then, can a true republican rise out of the ashes..(see; Ron Paul)…
scdave –
Spot on. I find myself more and more leaning towards conservative political principles as I get older, but it is harder and harder to find a qualified candidate who represents them.
You guys must have read the Washington Post this morning.
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/10/AR2008101003048.html
FWIW I *really* agree with you on McCain. That really struck me on the first debate - his fear-mongering.
It’s really sad that Obama is the main alternative. Really, really sad.
“You guys must have read the Washington Post this morning.”
No. But glad to hear the Washington Post is awake to this situation.
I’m going to vote for the candidate we deserve.
Please don’t do that. We need a much better leadership than we deserve.
“A country never gets a better government than it deserves,” somebody said.
One of the next “bubbles” to be burst is the Obama bubble, and it can get quite bubbly in here. Just for the record I can’t stand McCain either, but it’s going to be fun watching all the Obamabots as they realize that Barry can’t walk on water and ain’t gonna’ be able to change jacksh*t, and that at the end of the day all it’s gonna’ be is the same as it ever was. Not trying to start a flame war, just pointing out obvious. Maybe in the future we can clone a Jefferson or Adams from their DNA.
I think you are going to be correct. McCain is too lame to become the next President. And I blame the Republican mainstream for killing the Goldwater side of the party and making it the same entitlement party as the Democrat Party.
That said, there are enough people here who agree that there are another 3 or 4 years left of the price drops in real estate. The financial pundits on TV and in politics think that if we stabilize house prices now and keep them overpriced, then we will get out of this financial mess. What they don’t talk about is “what if” they fail to stop the price slide the next 4 years?
That will make the next president a single term President. No better than Jimmy Carter and no better than GW Bush.
You may be right about the walking-on-water bubble, but nonetheless he is by far the superior choice by my reckoning. Nobody could start off with the current hand and come out looking like he was dealt a royal flush.
He also chose qualified running mate, instead of making a desperation choice. The choice of running mate seems like a reasonable indicator of the potential quality of future decisions made in office.
I agree. It don’t look good when you get booed at your own rally. And if he is mulatto, arab or whatever it don’t matter because smart wins over stupid every time.
I agree completely. And I will vote for Obama as a Republican. It is not the man its the system.
What scares me about Obama is that he will probably rubber stamp everything that Pelosi gives him to pass into law.
Obama doesnt scare me but Pelosi does.
I don’t think so. Has Nancy Pelosi ever sat down to have a conversation with Paul Volcker? One sign of a good candidate is a willingness to talk with big thinkers, regardless of party affiliation (Volcker is a conservative Republican, and an economic adviser to Obama).
If Obama could resist being strong-armed into naming Hillary for his VP, I’m sure he can handle Pelosi. Don’t be such a scaredy-cat.
My guess is Pelosi won’t last….Too Divisive for Barrack….Just what he does not like…He is looking for some unity…Hilary is a possible suitor…
You’re in good company. William F. Buckley’s son just announced he’s voting for Obama. And I don’t think Obama believes he walks on water. All parties attract simple-minded voters who must believe in absolutes and don’t do nuance, how else to explain Bush getting 2 terms? I’m confident Obama will have both Dems and Repubs in his Cabinet, which I think should be comforting to those of you who worry we’re heading into some kind of one party rule.
The New York Times Editorial hits it right on the head
“…But Senator John McCain and Gov. Sarah Palin have been running one of the most appalling campaigns we can remember.
They have gone far beyond the usual fare of quotes taken out of context and distortions of an opponent’s record — into the dark territory of race-baiting and xenophobia….”
NYT
Wednesday
Oct 8
I really wish Ms. Palin would resign. She is unqualified to hold a position of this importance. I worry about the possibility of her becoming president.
Amen hoz…I agree…It scares me really….
give me a break….Gov Palin would be a huge improvement over what currently resides in the White House.
She is a liar, a cheat and a thief. We already have that in the White House. She abused her power as Mayor of a small village, she is now accused of abusing her power as Governor of the largest resource state. In every one of her elected positions, she has clearly evinced incompetence.
These are the facts.
And you think she is qualified?
Sen McCain I could live with, Ms. Palin is a serious danger.
partial repost if original fails to show.
Ms Palin is a liar, thief and a cheat as well as incompetent.
These are facts based on her actions, not opinions.
what, just because she looks good on camera? Apart from that there’s not much difference as far as I can tell at this point.
Hear, hear, Hoz.
I saw a list of the books she tried to ban at her small-town library. Appalling.
Palin gets the “Viagra vote”. She’s HOTTT!
@Lost -
The book ban thing made up. Search it on Snopes dot com…
What scares me is that “None of the above” seems like the only option available for 8 more years.
Palin resign so that the man who positioned her has a better chance of being elected?
“…But Senator John McCain and Gov. Sarah Palin have been running one of the most appalling campaigns we can remember.
They have gone far beyond the usual fare of quotes taken out of context and distortions of an opponent’s record — into the dark territory of race-baiting and xenophobia….”
It’s a shame, really, that this is the state of a presidential campaign in the US in 2008. I’ve been unfortunate enough to hear a few really ugly racial slurs towards Obama. I’ve lost all respect for a few people I know along the way. Thankfully, they were not friends. That someone is still judged by skin color in this day and age is appalling. Racism is fear and ignorance, something Rove and his buddies are happy to ride to victory, if at all possible.
IMO. its too late. Humpty Dumpty fell off the wall and is broke and shattered. The dems and repubs can spend all the cash they want but will not be able to fix something that is broke.
we can hope tens of millions will throw in the towel YELL “UNCLE” and vote for Ralph Nader…just out of spite
Bad news for you guys.
They’ve tried their best, but could not defeat Palin. She WILL be our president in 2012, once people have a taste of Obama’s designs on this country.
Hamptons Real Estate is a Reliable Investment (WHAT BS!!!!!!!!)
http://www.hamptons.com/detail.ihtml?id=5009&apid=10218&sid=27&cid=54&hm=1&iv=1&townflag=
“While buyers who need mortgages may be stymied, those holding
cash hope to capitalize on the current market conditions.
“Since Lehman went under,” McGann said, referring to the demise of Lehman Brothers, a major Wall Street firm hard hit by the crisis, “we have had people calling asking if any employees at Lehman are interested in selling. Deals have been made this week. It’s always a little quiet before a national election. In all the years I’ve been doing this, I have never seen prices go down,’ McGann said, noting buyers are attracted to the value of Hamptons real estate as a reliable investment. “Now it seems like an even better place to put their money especially in view of what is happening in the stock market.”
Will the last person left please turn out the lights? Oh, I’m sorry, I didn’t realize the electric company already turned off your electricity.
Two more banks fail.
2nd post. I’ll try without link.
Illinois, Michigan Banks Shut by Regulators; Toll Climbs to 15 Bloomberg
Leigh
So - at what point does a bailout of FDIC start making the news? I’m surprised it hasn’t already.
“Two more banks fail..
Illinois, Michigan Banks Shut by Regulators; Toll Climbs to 15 Bloomberg”
Funny but it dosen’t even make a dent in the MSM or even economic blogsite headlines anymore what with this worldwide economic meldown/conflageration, thou the US bank failures are indeed one of the major symptoms of this worldwide global fimancial panic .
I say that the Lehman Bro hedge fund/CDO event is way more bigger in terms of worldwide financial negative impact than 2 more US regional banks failures.
Bush Pledges ‘Serious Global Response’ to Economic Crisis
President Meets With G-7 Finance Leaders, Urges Cooperation Among Nations
http://tinyurl.com/546r6l
(emphasis mine)
That, my friends, is the tag line for the entire government contribution to the economic bubble and current crisis.
I fear for our future - really, really fear for our future. Not so much economically any more, but politically. We are now very rapidly moving towards a one-world socialistic government. While some people may not view that as a bad thing, I personally do.
The Washington Post has been chock full of articles the last few months about how the free market has failed us, and about how a coordinated effort between nations is necessary to fix this thing. I realize the WaPo is about as conservative as say Barack Obama, but still it is the most widely-read publication in the most key political city in the world, thus is very important in driving public opinion.
“The moral hazards have to be dealt with at a later stage. That’s my sense,”
This is the take-home message for future generations of financiers when they contemplate the likely policy response to the next mania.
The pain in Spain
Spain approves 50 bln euro fund, banks want more
http://www.guardian.co.uk/business/feedarticle/7848728
Ireland doing to the dogs
(DUBLIN, Ireland) Davey McKeever was down to his last bet slip of the night, crumpled in a sweaty fist, at the Shelbourne Park greyhound track. The remnants of McKeever’s first unemployment check would rise or fall on the ironically named Nest Egg.
When the jet-black greyhound fell behind at the bend, the recently laid-off plasterer found it too painful to watch. He bowed his head. He looked up again just as Nest Egg crossed the line a frothy-mouthed winner — two lengths ahead of an underdog named So Your Crazy.
“I am going crazy,” a flushed, visibly shaking McKeever said as he collected his winnings without pausing for a celebratory pint of Guinness with his friends. His $170 win was already destined for his 35-year mortgage on an apartment bought at market’s peak two years ago.
http://www.newsweek.com/id/163417
The credit crunch has started to affect people around me. The house just down the road from me has now been on the market for twelve months a number of windows in its conservatory are broken and the garden is developing into a jungle. The neighbours are not impressed that just doesn’t happen here, strange how delusions of grandeur affect people, realistically it’s a lower middle class neighbourhood but not in their world.
At football training a couple of dads where discussing the building trade. The Alpha male was telling the struggling plaster to get across to Dublin, “loads of work there, economy booming, not like London where work had dried up”, it struck me he is jumping out of the frying pan into the fire, but my take that Ireland was toast was seen as the ranting of a fool. The Alpha male then advised anyone with money to buy Iraqi dinars “You’ll make a fortune when the dinar floats”.
At swimming practice a fellow IT worker informed me that his employer would be making staff redundant at the end of the month, two months ago they where setting up a new office in Poland
frankie…
Thanks for the insights~
“At football training a couple of dads where discussing the building trade. The Alpha male was telling the struggling plaster to get across to Dublin, “loads of work there, economy booming, not like London where work had dried up”
Just replace Dublin with Las Vegas, and doesn’t it sound like the same wishful thinking of the sun always shining a little brighter somewhere else, across the pond?
making staff redundant, terminating people
I love all these euphemisms people use to make firing someone seem less personal.
Kind of like when you kill an animal, you put it to sleep, or when someone dies, they pass on.
Framing. How our minds thereby alter reality.
“Kind of like when you kill an animal, you put it to sleep, or when someone dies, they pass on.”
When we were in New Zealand earlier in the year, we were watching the tv news, and they had a story about the problem with feral cats, and how the de-sexing van was out on the road, looking for customers.
We say ‘neuter’ or ’spay’, they call it de-sexing, and Kiwis inflect the most on ‘e’s, so it sounded like deee-seeexing van.
Deep-sixing, eh?
Having these vans could do wonders for Africa and India..
We are planning on retiring to the South Island, Queenstown NZ. It is one of the most beautiful places in the world. I like hiking in the Mount Cook region. Christchurch is good for cricket and concerts
We’re thinking along the same lines…
As overvalued as the NZ housing market is, if there is a sudden devaluation of their currency, ala Iceland, prices would be really reasonable converted into Yankee Dollars.
I can’t help but wonder if natives, both indigenous and otherwise, will harbor deep resentment or even show hostility towards wealthy Americans retiring to their incredibly beautiful, yet economically troubled country.
It all depends upon what sort of baggage you bring with you…
p.s.
There are very few Maoris living on the South Island
There are very few Americans mostly Europeans immigrate to NZ It’s a remote Island mostly sheep farming. An eco granola hiking nature loving life style is not very attractive for most over weight Americans looking for Florida type of habitat.
But it might do them some good.
My favorite is “right-sized” Ugh…. that’s so insulting to those who are in the cross-hairs of being laid-off.
Richard Branson was on TV today and mentioned how Virgin Atlantic had 1B somethings in a German bank potentially going down. This was money paid ahead by customers for trips, etc. They decided to get their money out of this bank. The bank showed them the fine print that said they didn’t have to give it to them (then).
Luckily, a deal was brokered and the bank was bought or something, allowing the airline to retrieve its funds. Branson basically said if that bank had failed, they might have lost the airline.
Big banks and big customers are being saved, thankfully.
however, expecting that the collateral damage of these events to be zero is asking for a lot. A lot of damage is and will be done before things stop shaking until it settles out at a lower plateau.
Meanwhile, the world governments are playing Atlas and trying to shoulder the world’s debt to keep things at a higher plateau. Good luck with that.
“While buyers who need mortgages may be stymied, those holding
cash hope to capitalize on the current market conditions.
“Since Lehman went under,” McGann said, referring to the demise of Lehman Brothers, a major Wall Street firm hard hit by the crisis, “we have had people calling asking if any employees at Lehman are interested in selling. Deals have been made this week. It’s always a little quiet before a national election. In all the years I’ve been doing this, I have never seen prices go down,’ McGann said, noting buyers are attracted to the value of Hamptons real estate as a reliable investment. “Now it seems like an even better place to put their money especially in view of what is happening in the stock market.”
http://tinyurl.com/3wncal
Will the last person left please turn out the lights? Oh, I’m sorry, I didn’t realize the electric company already turned off your electricity.
You’re kiddin’, right?
Trophy properties in the Hamptons are the ultimate disposable asset. You don’t need them.
They will fall so hard just like last time (1991-1992) that they will crater completely.
“Trophy properties in the Hamptons are the ultimate disposable asset. You don’t need them.They will fall so hard just like last time (1991-1992) that they will crater completely.”
Does the same go for Tahoe, Aspen, and Jackson Hole retreats? Personally I’ve come to believe so, but perhaps there are other opinions?
Absolutely kidding. I think many a BMW driver will be switching over to used Kia’s sooner than later. Not only do these clowns have the nation’s housing problem - they now have large numbers of grossly overextended people who have lost their jobs on Wall Street.
We’re at that fork in the road now, aren’t we?
pitchfork in the road.
Hey alad. I noticed the gold supply is loosening up at my favorite Los Angeles dealer. Actually has one ounce American eagles available again, and half ounce buffalos.
Is the US mint producing Eagles and Buffalos still?
I’m on the phone with a bullion brahmin, and he doesn’t have any Eagles/Buffalos for sale.
He does have 40-50 1 oz Maple Leafs he’d sell @ $996.
He has 7 or 8 100 oz JM Silver Bars he’d sell @ $15 per oz.
He has a few thousand 1 oz Silver Eagles he’d sell @ $19 per.
Just hit my local antique dealer (big BIG place with about 100 renters) and hit the lucky draw: an antique coin dealer has been out of the country on a buy for 3 months, and after digging in his pile of “Proof sets” I found a miracle of miracles: over 100 mercury dime sets that each contained 40-50 dimes.
The guy was trying to sell anything old, so he had a sale: 50% off anything from 1900 to 1950. Guess what the years on the mercuries were? Yup, inckuded in the sale.
Each set was priced at $59. Got them for $29.50. For 40+ coins per sheet. Total cash out price was $3510.50.
Took about an hour to coin the mercuries, total count was 5107 coins. Found around 50 of numismatic value, so my total take when I turn them around on Tuesday will probably be around $2000. If I time it right, I could walk with $3000 profit in less than 3 hours of work, including counting and cataloging.
Very, very lucky, but that’s how it goes.
My boarder found quarters (1900-1920) for $3.00 a piece at another antique store in Wisconsin. Bought about $1000 worth, and he’ll easily get $4.50 a piece in the condition they’re in. He probably made $500 profit in 2 hours of work. I might buy some from him, since they’re excellent quality, heavy for their age/denomnation, and I’m short on quarters as I liquidated my quarter holding 2 months ago.
Oh, for those who don’t believe there’s money to be made in silver buy/sell right now, my average hourly income on antique store searching comes to just over $233 per hour. That’s averaging ALL time spent home-door to home-door, subtracting gas, vehicle maintenance, and extraneous costs. I give $20 to the regular staff of the best antique shops for a head’s up when someone pops in with coins of certain years and denominations. I use the profits only to beef up my own supply of PMs, so this year I’m close to paying zero for the PMs I’ve added to my collection.
The downside is close to 80% of my visits end up with zilch or minimal buys. It is so tedious that most buy/sellers don’t bother. But when you hit, you hit big, and it makes the previous 4 visits worthwhile.
Lucky buys @ antiques stores that randomly have coins are nice, but the exception to the rule.
I suspect within a fortnight, people will start putting away Bouillon Cubes, in lieu of bullion.
Normally, I always check the antique stores (especially the larger multi-seller ones) for coins. I’ll make a note of the range of prices for typical .9 silver coins. I stick it in a database.
Most dealers that sell old coins also sell other stuff: toys, dolls, furniture, etc. Most of them price their coins once, and then generally forget about them.
This one store has had dimes prices at $0.90-$1.25 for awhile, with sellers movng inventory in and out. I find the reasonable prices, and pounce.
This hit was pure luck. I bet the seller’s workers probably brought the coin sets in, which weren’t there 2 months ago, just to clear out their warehouse of junk. I got VERY lucky. My normally strike at a large antique store will generally be $500 worth of coins.
Economy as roller coaster - remember that people usually PAY for the thrilling rides at the amusement park. Be JOYOUS when your portfolio is on a rocket rides to Hades. SWOON with the crashes; EXULT in the dead-cat bounces!
Cash is King, but there is a problem for some Kings.
The House of King Dollar is built on very very soft ground. In some places, the foundation of King Dollar’s castle has nothing under it. Just so much air, blue sky. Doesn’t really support anything. It can’t. It is in perpetual crumble mode.
Not all Kings are created equal. King Cash Dollar
is an old drug addict with a rickety shack for a castle. He might be King in his neighborhood for a while, who knows. But don’t be surprised if some bad guys do a number on King Cash Dollar soon.
Like break in the castle, and drag him down the staircase feet first with his proud King Cash Dollar skull bouncing and splitting and leaving blood and brains on the steps all the way down the staircase and out the door, into the moat.
Old Kings are often deposed with “extreme prejudice”.
Interview with Christina and David Romer
Douglas Clement - Editor, The Region
September 2008
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4048
“In times of financial turmoil, it is comforting—or at a minimum, illuminating—to receive counsel from those with long-term perspective. Tempered with the lessons of history, their views extract true trend from distracting noise. Guided by precedent, shaped by narrative, checked against data, the conclusions of economic historians are formed slowly and carefully….”
Well worth reading.
Hoz, now should we feel guilty for dissing Bernanke?
Well worth reading.
My brain hurts. Inflation, deflation, conflation, multiplication. ack. I will keep trying…
“We’re now in a nasty period. Ben Bernanke has been dealt just a rotten hand; there are awful shocks hitting the U.S. macroeconomy. The issue is going to be, What do we do from here? There’s no way, confronted with some of these things, that you can have low inflation and 4 percent real growth every year.
What we don’t have to do is what they did in the 1970s, which is to compound bad shocks with bad policy. The Fed ran massively expansionary monetary policy at a time when conditions didn’t warrant it. The result was very high inflation, followed by massively high unemployment to get it down.
So I think the real question is going to be, What’s the line we walk from here? Think about the action we saw just today [June 25], where the FOMC didn’t keep lowering the federal funds rate. It said, “We’re probably through the worst in the financial markets; we had to fight that fire, but now we’re going to look at what’s happening to inflation. There are benefits to low inflation, and so we’re going to have to think about how much we stimulate the real economy and how much we’re concerned about inflation.” The fact that the FOMC is thinking this way suggests that even if they don’t do everything exactly right, they’re not going to make the sorts of huge mistakes policymakers made in the 1970s.”
Is this being borne out?
I’v been reading the book Hoz recommended, Reminiscences of a Stock Operator (you can download it free at www dot scribd dot com/doc/7923/Reminiscences-of-a-Stock-Operator).
It really is hard to put down, and I don’t even play the market. Makes you realize how much goes on behind the scenes, manipulation, that sort of thing. I think it’s a hard way to make money, but I guess so is what I’m currently doing (as little as possible).
cool, thanks.
” This is market is worse than a divorce. I’ve lost half my net worth, yet I still have my wife.”
— Source: Anonymous. (I was sent it today by someone who overheard it, but wants to remain unidentified.)
Paul Kedrosky
Well, my nephew in Hawaii called last night. He told me I’ve been right about every single thing the past year (economically). (Thanks, Ben and fellow HBBers for making me smarter.) He then asked whether or not he should pay off his house free and clear (owes 180k). We then got in a bit of a friendly disagreement about how much his house is worth, he says the appraisal says 1.2 mil. He paid around 350k about 6 years ago but has added on. I heard the same old it’s different here mantra. It was an interesting look into the mind of the average brain-washed American - he watches too much CNN and was raised on sugar.
But…being older and wiser (and more stubborn), I finally got him to agree he’d be lucky if his house is worth 600k at this point. It was an important first step in getting him to start moving in the direction of survival (no HELOCs, at least) and start saving money.
The poor guy actually seemed appreciative when it was all done. (We’re actually pretty close, have done lots of hiking/camping together.) I think the average American is starting to be a bit worried. Oh, and he had no clue what had caused all this, so I gave him the short course about the Greatest Bubble of All Time, even though my version was a bit Monty Pythonesque.
even though my version was a bit Monty Pythonesque.
lol. Maybe that should be your first movie. “Monty Python’s Bubble Prick” or I guess in the interest of intellectual property, “LIU’s” instead of “MP’s”.
‘…so I gave him the short course about the Greatest Bubble of All Time, even though my version was a bit Monty Pythonesque.’
I’d really and truly like to see this. Seriously. How about you deliver it again, have someone video tape the performance, and post it here?
LOL - it’s, how do you say it…irreplaceable? Could never be duplicated.
Bad thing was, he didn’t laugh.
My film career is over before it even began.
Maybe he started to suspect you were actually sugar coating it and 600k was still a bit much…
Wow. Your nephew sounds exactly like my brotherin Hawaii… right down to the dollar amounts and years. Except my brother has chose to dig in his heels and hold onto the 2005 housing bubble bumper no matter what. My last words with him?
Let go or be dragged.
ex, maybe we’re related and don’t know it!
Waimanalo area
So, did your Monte Python version cover the Black Plague in the Middle Ages? Just wondering…
Yes, Bring out yer dead…but I’m not dead yet…
Question!
What is your safest long-term and short-term bet?
I will go first.
Long term: water
Short term: um, liquor?
(Basically, I’m liquid & I need some good news \^o^/ )
“Long term: water”
You should do well as long as water doesn’t fall from the sky as it’s been known to sometimes happen.
water infrastructure, desalination, rebuilding pipelines etc., should’ve said
…and you? Please play.
“… and you? Please play.”
Okay. Buy stock in a company that produces steady solid earnings and cash flow, has a durable competive advantage, and a strong balance sheet. This is a really a no brainer hence the prices of such companies are usually bid up to the extreme in normal markets.
But in abnormal markets these companies are dumped on the market en mass by panicked investors looking for safety. This is when a patient investor armed with information and cash should strike.
The names of these companies and the industries they dominate are unknown to me at this time because the time to strike is not at hand. When the time is right these companies will stand out from the crowd as screaming buys.
If one decides to make a commitment to build water infrasturcture during drought conditions then he is going to pay top dollar for this infrastructure. This will make the reward part of the risk/reward ratio unfavorable.
If the weather condtions change, meaning the drought is over, then the need for the water infrastructure diminishes, which makes the risk part of the risk/reward ratio unfavorable.
Hmmm, interesting point there. So…what’s your bet?
(Oh, whoops, didn’t see your posting above, combotechie. Thanks for playing.)
I think you’re on the right track, water and alcohol, if you’re pretty liquid.
(Funny how keeping your powder dry involves staying liquid.)
Carpe cerevisi.
cheers big ears!
Ella,
Warren Buffett said on TV a few months ago that the best investment to make is in yourself. He also said that eventually, when the dollar tanks and even if we are trading in “sea schells”, it’s good to have a lot of those sea schells.
Ah, this is the kind of investment advice I like! Off to the seashore for payday…what’s the saying, life’s a beach and then you buy?
How exactly do you invest in yourself? What does that mean?
Collateralize myself? Anybody wanna buy shares in my camper?
A quote from the Buddha: “Your job is to discover your world and then with all your heart give yourself to it.”
I like that quote, even though I’m a Jack Buddhist. I abandoned it when I realized it’s a bit self-centered and discriminatory, overweight people can’t study their navels…
I dunno, maybe that was one of those other religions I also quit…
OK, OK, I know, before I get flamed, Buddhism isn’t a religion, it’s a philosophy.
I got straight A’s in my grad philosophy classes (all on government grants, taxme).
And I still haven’t figured out what it all means. Enough said. (Sorry for the OT, Ben.)
I always assumed you were like me: an atheist/secular humanist, libertarian egghead… one of the godless liberal elite, you know. Apparently the type that are ruining this country.
Clearly the American electorate feels that religion, guns, intolerance and lack of education are the keys to national security.
Well, I guess I better get back to eating babies, torturing puppies, and trying to take over the world. We wants it, we needs it…must have the precioussss!
Well, I’m not the most atheist person around, I go to church every day. In fact I just got back (Church of the Holy Redrock, I’m in Utah for just that reason).
First start a company, 2nd put out a ‘press release’ stating your earnings are great! 3rd do a secondary stock offering to get cash! 4th Announce that you had an incredible quarter as a result of the cash to do another stock offering. You take all the cash received and buy CDOs at 6% of par and sell them to the government at 50% of par. Then you give yourself a huge bonus an increase in salary and finally liquidate the company . If you can’t keep 50% of the cash, you haven’t done a good job.
1. Borrow a million dollars.
2. Divide the million into ten equal parts.
3. Take two of these parts and delve into commodity futures, each part offseting the other (i.e. sell porkbellies with one part, buy porkbellies with the offsetting part).
5. Do the same thing with the other eight parts of the million dollars using different commodities.
6. Pick the one part with the highest return and keep this account open and close all the others and pay back what remains of the million dollars that you borrowed.
Now you have a commodity account with a proven track record and thus you can declare yourself a trading genius to gullible investors.
7. Establish an commodity trading fund and hire on a commission basis a roomful of yaks to tout it.
8. Relax as the sucker money comes pouring in.
How exactly do you invest in yourself? What does that mean?
I decided to get a masters. I think the additional knowledge, job opportunies and career option diversification I will get should provide a pretty good return.
In my case, I have a BS in computer science and a solid resume as a database developer and in information security.
The masters I’m working on is accounting, which allows a whole new set of career options (taxes, financial accounting, auditing). Additionally, my IT background complements the degree well in the area of information systems and security auditing and assurance.
*shrug* That’s what I done. I don’t got the cajones for the stock market thing, so I figure spending money on improving myself is an investment I can take with me.
Gigantic Swiss Banks Hold Steady — For Now
By Michael Soukup
The Swiss economy is dwarfed by the size of its leading banks, and there are growing worries about their health. The government says everything is fine, but some disagree….”
http://www.spiegel.de/international/business/0,1518,583181,00.html
I would be wary of the Swiss Franc as a haven.
The Swiss are a lot like the USA, only more so.
Both countries benefitted from being the last man standing, after World War 2, and banking there dwarfs tourism, watches and chocolate by a wide margin, A real Gnomewhere Land.
The Swiss are a lot like the USA
I have a hard time thinking of two more different cultures. Other than Emmenthal cheese, a cerain Miss, and an extended period of great typography in the middle of the last century there’s no ‘Swiss’ in America. In humour, spending habits, values…very different fish.
However, you’re right: in a global economic meltdown, I guess US and Suisse are two fish of a feather.
RE: The Swiss are a lot like the USA, only more so.
Gotta good bud who is a big KITCO blogger.
He told me this AM, there was an article talking about the Russkies making overtures to the Germans to cut the rag-tagger EU bankrupts loose and join up with them in a “mutual
economic pact”.
Russkie oil, gaz, and strategic minerals + German tech.
It’s the mating of the TigerI and T34, which Hitler botched.
If this is an example of the coming “New World Order”, we’re completely fooked.
Don’t think of it as being fracked, just think of it as Russia joining Nato
RE: just think of it as Russia joining Nato
And so how do a bunch of non-oil producing bankrupt’s run NATO?
Kind of reminds me of a German restaurant run by Russians over by Boulder I frequented one time.
Okay, I never “wrote in” anyone before for any election. But when I got back to Phoenix last night, my usual full mailbox included my early voting form.
Yes, there is a spot for every contested office to write in a name. For President, I just wrote in Ron Paul. On the Arizona ballot you just have to complete an arrow with dark ink.
The ballot is wierd. It says not to use red ink. Then in another spot to use black. Well I did not use red, but used blue. Hopefully they won’t throw out my ballot.
With the way the bungling government is going, trying to make credit much more available (and lax credit is what got us into this mess), we’re in for a much more serious time ahead.
I’m happy that my vote “won’t count.” It will only count for me and my conscience. And I will be able to say “don’t blame me, I voted for Ron Paul.” I certainly am going to have fun giving a lot of hell to people in 2 years whenever they admit the voted for the guy who won the office of the President this election year.
Major foreclosures on the way. Option ARM resets peak in 2011 and 2012. Plus the renters and responsible homeowners are maximum pissed, and mad as hell and won’t take another big bailout. The next President will be hated even more than George W. Bush. What’s Shrub’s popularity rating? 8% by now? That bastard. But the depths of this economic crisis will be during the 4 year term of the next president and maybe we will get B.J. Lawson for President in 2012. He’s “the next Ron Paul.”
Bloomberg magazine is saying that all the social programs the next party wants won’t be afforded. Nor will we be able to afford the massive tax cuts that McLame wants. So no socialized health insurance. Good!
On the bad side, Bloomberg mag predicts another $150 billion in bailouts are going to have to be made to bailout more bank failures.
I actually saw Ron Paul on the news being interviewed Saturday morning. And even worse, he didn’t seem as doom and gloom as most of the other commentators, or as strident as the boosters. That is actually kind of scary, since he was relegated to steerage for being a bit pessimistic about the course into the iceberg field.
The ‘don’t use red ink’ thing is that red doesn’t photocopy well. Its a hazy kind of grey on Xeroxes, so they discourage people from using it.
Still waiting on my voter registration to turn up.
C’mon Sacramento, I’ve only got 6 days to get it back to you…..
The same old game?
Or just what is the game now?
If you think this is the time to start buying into the stock market, let me ask you this:
Where will the $$$ come from for Joe and Jane Six-Pack to live their formerly subsidized middle class lives? Do you really see them buying a new Ford or Chevy or Stainless steel refrigerator anytime soon? Do you really see them depositing $75 grand in their local Savings and Loan anytime soon? Do you really see them crowding Starbux shops and Abercrombie & Fitch stores anytime soon? If you do, invest your $$$ in the stock market.
What I see is a Joe & Jane worried, frustrated, apprehensive, struggling, and mostly going broke.
Layoffs, right-sizing, plant closings, shift reductions, etc, etc, means only 1 thing to them.
LESS INCOME, MORE REASONS to SPEND LESS.
What I see is a nation that will DEFAULT on mortgages, home equity loans, car payments, credit card payments, student loans; and let health insurance drop, let auto insurance drop, let any financial obligation turn into SOMETHING ELSE WE DON’T PAY FOR ANYMORE.
Why should they? All the smartest guys in the world’s governments have told you NOBODY could see this coming. So it is hardly YOUR fault when you stop paying your bills. Let the Mint print King Kash notes by the quadrillions, and then THEY can pay the bills. After all, we are all Victims. Boo Hoo. But not to worry.
ObamaNation and Joe(plagiarize me)Biden will fix it all. BWHA HA HAH AHAH HAH!!! Dow 5000 coming up.
I’m predicting 4000.
All based on complex analysis developed with Hoz’s mentoring (though he doesn’t know it).
Your prediction will prove thisclose, Losty. The Dow will bottom out at 3994.
Is anybody writing this down for future reference?
I wanna be write.
And you’re gonna like MT.
Opinion & analysis
Time for a gold rouble?
“…In America, this basic culture of debt is aggravated by the fact that other countries use the dollar itself as a reserve. This means that the United States can export dollars in order to pay for its imports without the dollar losing value. Other states also need dollars to buy key commodities like oil. The USA can therefore export paper currency almost indefinitely - the famous “deficit without tears” analysed by the great French economist, Jacques Rueff. Naturally, if the state itself encourages such a culture of debt by issuing unredeemable paper currency to pay for imports, and by accumulating such mountains of debt, then it is no surprise if the American financial markets themselves operate on the same basis. But the collapse of those markets is only a symptom of a much deeper problem, the basic insolvency of the American state itself.
What can Russia do about this? At first sight, Russia’s role in the international financial system does not seem very large. However, as a major exporter of hydrocarbons, her role in the world economy is actually very important. As the age of the dollar draws to a close, Russia will have to consider selling her oil and gas not in the devalued American currency, but instead in the euro used by most of her customers. It is surely unnatural for two geographical neighbours to do such large volumes of business using the currency of a distant and now ailing nation.
Second, the Russian leaders might also consider making their own currency, the rouble, convertible into gold. The idea of gold convertible currencies is extremely unpopular among most economists: they dismiss gold as a “barbarous relic” (to use the famous phrase of John Maynard Keynes) and suggest either the present regime of paper currencies or, at best, a link to a basket of commodities. …
…The contempt of the Keynesians notwithstanding, it is an indisputable fact that gold does remain the ultimate store of value, which is precisely why states own so much of it….”
John Laughland is a British historian and political analyst, and Director of Studies at the Institute of Democracy and Cooperation in Paris
http://www.en.rian.ru/analysis/20080924/117072937.html
Oil for gold? Hope OPEC doesn’t read this.
One by one, countries went off the Gold Standard in the 1920’s and 1930’s and one by one, they’ll come back to it out of necessity, not that they want to…
I doubt that central banks will go back to gold, ever. The central bank is, and will always be, more powerful tan the nuclear bomb or the voting booth.
That being said, I’ve introduced somewhere in the range of 500 people to hard metal money. Some of them are babies, buying only a few $20s worth of PMs each month. Others are hardcore about it. No matter what, though, even the $8/hour retail gal I know believes that money is not a denomination, but a valued asset that is liquid and fungible.
Even if the governments refuse to tie their currencies to a fungible, liquid asset, there’s nothing stopping us from teaching our friends, family, employees and collegues about real money versus fake money.
My 22 year old assistant mentioned to me today: “Wow, gas is finally under $0.30 silver per gallon again.” Yes, he knows.
My knowledge of economic theory is basically nothing, but going back to a global gold standard seems unlikely. I can’t imagine sending big tankers of gold all over the place again. I feel like a caveman giving a lecture on etiquette to Martha Stewart but, whatever. I’m not proud.
Anyway, if Russia adopted a gold standard, would that force the US and/or Europe to raise interest rates?
Keep an eye on New Zealand…
They are a kissin’-cousin of Iceland, and like that other island country, they financed their boom on the backs of overseas banks, going from NZ$31.6 Billion borrowed 10 years ago, to NZ$126.8 Billion, as of August of this year.
like Iceland, NZ was a mainstay of the carry-trade phenomenon, and we could have opened CD’s @ 10-11% interest @ the uninsured bank of our choice, when we were there in Feb-March.
The key to keeping the carry-trade going is not allowing the little guy’s currency to falter, and the NZ $ has been getting whacked against the Japanese Yen, even more so than against our $.
When we were there, the NZ $ was worth 77 Cents U.S., it has since dropped to 61 Cents, similar to the plunge in the Iceland Kronur, just before they imploded.
New Zealand’s just a tiny country with 4 million people, why would it matter to me you might ask?
80% of the NZ banks are owned by larger Aussie banks, and little NZ, which is such a David to other nations Goliaths in a sporting sense, might take down the Lucky Country and then some, all by it’s loan sum.
(2nd try @ posting)
Aladinsane,
Your posting is very insightful today. I have been watching the Australian dollar dive 2-4 cents per day all last week. I have been thinking that if its goes back to the .50-.57 cent trade range where it was for several years then my strategy would be to pick up some short term Australian CD’s. The bubble in Oceania seems to be even worse than the states so I would try to lock in a certain amount of foreign currency then perhaps buy a bargain property in another two years. The end result could be that a $100,000 beach condo may end being halved by falling currency exchange rates and halved again by the bubble bursting down around $25,000 in time.
“The U.S. government is acting, and we will continue to act, to resolve this crisis and return stability to our markets.” -Bush
“Now I’m getting nervous.” -Lost in Utah
Don’t worry lost,
President Bush has a plan to bailout the bailout.
So here we are after a few bad weeks in the market and some of you might be thinking, is it time to buy into the stock market? Don’t do it folks. This debt bubble took over 30 YEARS to inflate and you’re thinking this might be the bottom after just a few weeks? Maybe some sharp reversals as trillions of dollars rush from one sector to another but the TREND is down. Wait and buy only after average incomes start to rise, until them it’s a trap! I don’t see it yet. When cost of house = 2.5 times income then look around and pick only companies in monopoly positions, ie. Microsoft, Intel, ATT/Verizon and don’t allocate more than 1/3 of your investments in stocks.
I live on the west side of DFW and real-estate is stable to declining. Many empty small shops and wages are stagnant and unemployment is rising slightly. If it wasn’t for Lockheed and Barnett Gas fields we would be in recession already.
I agree with your basic premise (=too early yet) but markets hit bottom far before incomes start rising.
However, we’re not there yet, for the reasons explained above. Something that started in 1981-1983 can’t be over in a few weeks.
I guess you don’t believe in hair-of-the-dog plunge protection measures for sagging stock prices? They actually worked pretty well in the wake of the 1987 crash, but now that the stock market support policy has been in effect for 21 years or so, it may be losing some of its heft. Nonetheless, I note that the Fed has pumped billions and billions and billions of dollars into the banking system which is currently sitting under the banking industry’s equivalent of a matress, waiting to find a home in the asset market once convincing evidence shows that a bottom in.
Footnote: It is not essential for the stock market to reach a fundamental valuation bottom for plunge protection reflation measures to blow another bubble. It is trickier to do this in the housing market, where using top-down manipulation to prop up valuations can price out end users, keeping away potential new entrants to the local labor market. In San Diego, it is hard to even fill good paying managerial positions thanks to (still) exorbitant housing prices.
Not true.
You have two forces that are powerfully working against this:
[1] The company earnings are based on heavy leverage. With deleveraging, earnings fall. As earnings fall, the prices fall.
[2] The price multiples that people are willing to pay for earnings are based on leverage. As leverage falls, these multiples fall.
There is absolutely no chance of blowing a stock bubble against this particular macro backdrop.
Professor, tune in to the real world for a change sometime!
No, it has not hit bottom. What is happening is there are investors who don’t want to loose money. The sell and buy and sell and buy trying to stay ahead of loosing money, and so it is like a school of bait fish running from a shark. The shark is the hedge funds and the like selling holdings into a declining market to pay off redemptions when people capitulate. The bait is trying to stay ahead of this game and so they run from oil, to food, to stocks, to whatever, trying to find shelter.
Gee, I’m afraid there isn’t any place to hide.
Roidy
P.S. It’s too big, and it’s gonna hurt.
The shark is trapped in a gillnet called deleveraging, and is soon going to be pulled out of the water, cleaned, landed, processed and sold as steaks.
blue star,
that is a great tip about buying monopoly companies. How bout 3M?
got anymore monopoly ideas?
http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint
If you guys haven’t seen this, it’s pretty amazing — basically everything we’ve been talking about here (well, more like you guys - I’m a lurker
from elaborated from one of the biggest Silicon Valley venture capital firms.
In short: expect a long recession, cash is king, consequence of Americans spending way more than they’ve been earning & doing the home ATM + bling thing.
I find this presentation far too optimistic but I do agree that it’s new to the Silicon Valley crowd.
I spent a week in the Bay Area and a week recovering hiking in California. (I go to CA often.)
The delusion is evaporating rapidly. Watch out below!
Yeah. Was just back in Silicon Valley for a few days last month. People seemed to be in denial that areas like Cupertino, Palo Alto, etc, would fall in price - and lots of people working at really ridiculous startups that managed to pull in ten million bucks or so on basically vapor (facebook widgets, etc).
Presumably it’ll start being clearer that people across America who just lost HALF THEIR RETIREMENT SAVINGS in a matter of weeks may be less enthused about going out and spending their spare cash on $300-$500 iPod Touch gadgets or new computers. Not to mention that Google can’t make money on advertising if nobody’s buyin’ nothin’.
Wall Street Journal
* HEARD ON THE STREET
* OCTOBER 11, 2008
Time to Call Out the Big Guns for Banks
By DAVID REILLY
No more bazookas. This time Hank and Ben need to roll out the tanks.
But the Treasury and Federal Reserve also need to target the right problem — a lack of capital that has helped to erode confidence in the banking system.
…
Granted, it will take time for any solution to work. And even if the financial system stabilizes, the world still faces recession.
That promises to be deep and protracted because consumers and banks both need to cut their reliance on borrowed money. Assets at U.S. commercial banks have soared over the past decade and are now equal to about 79% of gross domestic product. That is the highest level in 20 years.
Yet any recession will be far worse, and credit losses even bigger, if the financial system isn’t righted soon. And for that to happen, governments need to accept that the problem is more than a liquidity crisis.
Investors and banks have money. But they are refusing to invest it because prices aren’t realistic. Alternatively, they feel that they can’t adequately assess real value because it is unclear which banks have enough capital to survive.
That is made worse by the fact that many banks still refuse to sell assets at market prices. They have fooled themselves into thinking that valuations will recover and the losses aren’t real. Banks have also failed, in too many cases, to adequately reflect losses on their books.
That has created a crisis of confidence. Investors can’t sort out who is solvent and who isn’t. So they head for the sidelines.
Autopsy results from banks already shaken out of the market have confirmed this as a rational response. No sooner had Citigroup and Wells Fargo started opening up Wachovia’s carcass than they found the banks’ loan portfolio was even worse than expected. When J.P. Morgan Chase bought the assets of Washington Mutual, it had to write down loans by $31 billion.
That underlines the need for more capital. Until investors can say with confidence who will avoid the coroner’s slab, it doesn’t make sense to lend to any bank.
It is funny that McCain supporters are ” afraid of …terrorists”, but not afraid of this current Washington administration, that brought more misery to this country then Ben Laden could dream about…
and this message is not approved by Barak Obama…
It is funny that McCain supporters are ” afraid of …terrorists”, but not afraid of this current Washington administration, that brought more misery to this country then Ben Laden could dream about…
Gal, bite your tongue. I was in DC on 9/11 and watched the Pentagon burn. I had worked with two of the people who were turned to ashes, and could do nothing other than watch. The current meltdown was not caused by the Administration, nor by the Congress, nor by any of the admittedly corrupt public servants in appointed positions who are flailing about. It had its roots in the benighted monetary policies enacted by Mr. Greenspan and his flunkies, which left an exploit the size of the Grand Canyon for the sc**bags on Wall Street to lever to advantage. It gathered momentum from people like you — and me — who drank up the kool aid msg “debt is equal to income”, and “you deserve it”, served up by smooth talking hacks with pinkie rings whom we wanted to emulate. The lesson here is that greed is not subject to stop loss orders. We are now at the point where fear - artificially kept out of the mix until now - has finally made its appearance. After the fact. I get out of sorts when people use this venue as a shilling platform.
On Gold. It all comes down to this. Anyone that buys gold is counting on the “good faith and credit of the United States” to die. I live in Canada. Last week I bought gold.
Saw a safe seller on TV, explaining that the noticible uptick in his business is from people wanting to store valuables at home instead of the bank. Gee, I hope his customer records are encrypted…
Maybe we are near bottom: is Trump about to go not-bankrupt again?
Trump Entertainment Resorts Inc. (TRMP)
YoY stock price down 96% to 0.74
market cap: $24M ;). For every three quarters you spend, the company loses about $7…
Oct. 11 (Bloomberg) — Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.
Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury’s $700 billion Troubled Asset Relief Program.
“The purchases would be separate from the U.S. Treasury’s $700 billion Troubled Asset Relief Program.”
$700 bn in taxpayer dollars for the TARP to buy troubled (presumably mortgage) assets, plus another $20 bn in ??? dollars for the GSEs to buy up all manner of other mortgage assets? Aren’t the GSEs also now part of the Federal balance sheet? Doesn’t Uncle Sam’s big move into mortgages effectively spread real estate losses over the entire monetary base, instead of containing them to the borrowers and investors responsible for creating the real estate crisis?
Oops — $20 bn + $20 bn = $40 bn / month = $480 bn /year in GSE rmortgage purchases? Plus another $700 bn for whatever the Treasury Secretary pleases? Who earns the windfall?
Maybe short sellers?
My FEELING is this is a secular bear market that will outlast most investors. “Buy the dip” will work if you sell the rally
I started investing in the early 1980’s and have never seen anything but a Secular bull market with occasional corrections. I think the bull ended in 2000 but was masked to a degree by the housing bubble? Well we’ll see
Gold down now may make a come back if or when the FED monetizes debt, meaning the fed won’t be able to sell treasuries at a good price, ha
ha and buys the treasuries with its own printed money
hit the enter key a little early on that one
“I think the bull ended in 2000 but was masked to a degree by the housing bubble?”
I have suggested the same here (though not recently — probably have to go back over a year to find a corroborating post). The secular bear dates to the tech stock crash, and one year ago began the second of two major down legs in the stock market correction.