Bits Bucket For October 19, 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
-
April 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
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
The vendors at the local farmers markets have noticed a drop off in business this year. Several of them have mentioned non-monetary Christmas seasons this year.
A local rental car company has not noticed any drop off.
where’s local
DC area hums along on your tax dollars
get angry cagw.org or ……..
Seattle area
Seattle was last in the tank
escapees from Ca keep it going , I guess
The yuppie resturants and bars in Belltown and Kirkand are still going strong - very annoying, but it will hopefully change (perhaps early in the new year).
Lots of new agencies to staff up - the times might get even better for DC. Gotta pay top dollar to get the best talent, ya know.
Democrats are bad for metro DC. I’ve said so in the research reports I write.
Republicans spend money on government agencies and contractors in and around DC. The Bush years were a jobs and contract bonanza.
Now imagine cuts in those categories to pay for national health care. Money comes in, money goes out, the actual spending is on health care workers everywhere in the U.S. Or, if health care spending is unchanged, the savings are spent everywhere in the U.S.
“Dick Cheney for President, of the f___ing Universe.”
- Tony Soprano
Imagine our Secretary of Treasury spending billions on Wall Street. The DC area is toast anyway, New York City is the new hotness for government spending.
to WT economist
I would like to see universal health care like the more progressive countries have and instead of creating ‘war machine’ jobs it would be nice to create health care jobs and other more meaningful and fruitful jobs that are growth instead of destruction. Destruction jobs are destroying the planet and murdering people around the globe
“Dick Cheney for President, of the f___ing Universe.”
——————————————————————-
w, cheney, rumsfield and their neocon and wall street partners in crime need to receive the “Fat Tony” treatment ASAP.
I would like to see universal health care like the more progressive countries have and instead of creating ‘war machine’ jobs it would be nice to create health care jobs and other more meaningful and fruitful jobs that are growth instead of destruction.
These so-called more progressive countries have the luxury of universal health care because Imperial America is seeing to their protection, at an enormous cost to us.
WT, who funds your research? Any public money?
Investors in and underwriters of real estate.
I left the public sector after 20 years. The stuff I would write there would get filed and never see the light of day. Getting “off the tit” was the most positive thing I ever accomplished for my community.
I write a blog on public policy issues for free, in my spare time.
“These so-called more progressive countries have the luxury of universal health care because Imperial America is seeing to their protection, at an enormous cost to us.”
*****
“So called” is right.
And, of course, one of our greatest exports is defense “services”.
The “progressive” countries, such as Canada, don’t have “war machine” jobs, because they rely on the United States to provide for their security.
“Progressive” naivete always proves amusing.
like the new deal and great society
those are real money savers
bama will hire zillions
my property will go up while yours goes down
So why are you complaining?
We are still doing pretty well at work. But the bosses are getting awful nervous. I am expecting that they pull back some of the money that was going to go to bonuses. We will definitely get less. This is B.S. for several reasons but it will probably happen.
This won’t affect my Christmas spending much. We don’t generally have a Christmas budget. We get what we want but it is usually nothing extravagant. If they cut down bonuses it will affect probably 50% or more of the people where I work. I would bet on it.
What are the bonuses at Lehman lookin’ like?
BWAHAHAHAHHAHAHHAHAHHAHAHHAHAHAHHHHHHHHHHHHH!!!
Lehman bonus row will fuel Wall Street backlash
Bank goes bust. Shareholders get wiped out. Creditors stand to lose over $100bn. Bankruptcy causes further crisis of confidence in entire financial system, requiring potential $700bn bailout funded by taxpayers. Employees get $3.5bn bonuses.
Lehman bonus row will fuel Wall Street backlash
The more I learn about Wall Street, the less I like all of them.
The holidays are stressful enough for many, can’t even think what it must be like for the highrollin’ financial types. Sounds like a lot of potential malcontented domestic behavior is about to be unleashed.
golddigger - bonus = goldschlager + wh*reshagger
I love doing math in the morning.
I thought you were conjugating.
I love the three R’s : reading, rhyming and ‘rithmetic.
I also like saying “ARRRRRRRRRRRRRRR, you’ve just been sh*gged by the market, matey!”
I think he was reciprocating.
“The holidays are stressful enough for many”
I have never understood this. I can’t think of a single Christmas where I was stressed. I love the snow and the lights. I love hearing the Christmas carols. The thought of turkey and ham makes me happy. I always get some Christmas candies to have around. The family that I don’t like, I don’t go around (most of it). I don’t really care what I receive, now that I’m older. It is fun to give stuff, especially to little kids. And of course I love watching The Grinch and It’s a Wonderful Life.
The idiots that stress at Christmas time are the same idiots that are stressed out the rest of the year. They bring it on themselves. Christmas is just their December excuse. What is their July excuse? Bastille Day?
I used to stress out as xmas approached, as I march to the beat of my own drummer, not some little drummer boy, pa rum pum pum pum…
We like to spend the holidays in other countries, where xmas is celebrated more in the spirit of Thanksgiving, not gift giving.
We’ve had low-key xmas’s in Mexico, Portugal, New Zealand, Spain and Germany.
Ahh… then you have been extremely lucky.
For a while, the relatives I didn’t like showed up and stayed with us during the Christmas holidays and insisted that our kids pay more attention to them then us, their parents.
As the “woman in charge” of making it all happen (and trust me ,we don’t go nutty…) December very quickly turns into a blur of buying presents and extra housework.
And yeah, it’s fun to buy little kids presents. What’s even better is realize on December 26th that all of your realtives agreed and now you’ve got to find places for all these toys your kids didn’t need in the first place. (Because what they really needed was cash in their college fund…)
We’ve been in declutter mode for several years and December always brings in a flood of clutter. I’ve tried convincing my other local relatives to pare down adult gifts and/or give to charity for the holidays. But no, my father still thinks I need some random object to unwrap or it won’t be Christmas. *sigh*
So I’m a little Grichish and stressed out during December. I do what I do for the kids, I like the songs and the decorations, but the rest of it lost it’s charm ages ago.
I’ve had low-key Christmases in Minnesota, North Carolina and New York. What do you care what anybody thinks? F— the Joneses. No offense, Ben.
It’s pretty easy for a single guy without commitments to say ‘christmas isn’t stressful.’ It isn’t stressful for me, either.
But for people who ‘run the house’ and want to make everyone in their family happy, it can be very stressful. There are strong feelings of living up to expectations, visiting far-flung relatives, etc. My experience has been that the actual purchasing of presents is not the stressful part.
NYCityBoy,
Like you, I’m mystified as why most people would need to stress about the holidays. Those losing their jobs or in dire financial straits are an exception, of course. But for the rest of us, most stress can be avoided by a few simple choices, like, say, choosing not to do the things that are going to stress you out.
In my extended family we don’t buy presents for eachother. Rather, we focus on the kids, with an emphasis on getting quality gifts, not mass-marketed Chinese-made crap. Fewer, but better. We usually plan our get-togethers in October, avoiding holiday traveling nightmares. My kids are still young enough to appreciate the magical quality of Christmas, with simple traditions and religious observances rather than the greedfest and comsumerist orgy, promoted by Madison Avenue, that is the antithesis of the true meaning of Christmas.
We like keeping it simple and keeping it real. Stressing because you can’t buy afford to buy little Josh his Playstation3 and the latest games, or the full Hannah Montana line for little Tifany, is a pathetic statement on today’s priorities and parenting.
Well put Sammy!
“But for people who ‘run the house’ and want to make everyone in their family happy, it can be very stressful.”
I try to remember these two facts to keep the stress level down during the Holidays:
A.) I’m not responsible for making anyone else happy
B.) Material things don’t make them happy either.
C.) I’m doing the best I can, and that’s good enough for me.
DOC
Doc, you forgot:
D) If they don’t like it, they can go f— themselves.
I pick option D most of the time.
It works too.
The most well off are the ones whining the loudest, IMHO. They’re all freakin’ that their spa lifestyles are at risk, and bellowing about cutting back their spending since their porffolio now only shows 20 million, not 30. What about the Trickle Down? Come on rich folk, trickle, trickle, pee in our damn beggar’s cup of an economy.
I have never understood the whole spend on Christmas until it hurts mentality. I think I will end up spending a little more on the holidays this year, but mostly because I’m going to get my borther and his family one of their museum memberships and it is more expensive than I would normally spend on the three of them - plus I will certainly get something for my niece since she is way too young not to get something to open and hold in her hands. Buying for people who live in NYC co-ops is an art form in terms of not filling up their spaces with junk.
As for the other spending, I am going to go strategic in trying to support local businesses, like a gift certificate for a nice farm based restaurant for relatives in northern Vermont, that sort of thing.
I predicted it last year and I’ll go with it this year too. I predict a lot of gift cards for this holiday season, and people will give the ones for stores where the recipients can buy groceries if they choose - like Walmart and Target
“Buying for people who live in NYC co-ops is an art form in terms of not filling up their spaces with junk.”
If you can’t eat it, drink it or f–k it, you don’t need it.
I had one Aunt that would send me tickets to Christian amusement parks and festivals as a child. I felt horrible accepting them because she was not a wealthy woman and I knew I would not use them. I always asked my Mom if I could return them, and Mom sad it would not be appropriate. I also have a bible collection from that side of the family, up to about 25 I think. I would throw them out but, although I am not religous, I worry if throwing them in the trash would have any ramifications. Unless the person specifically requests it, in my experience, most ppl hate getting gifts that are more reflective of how the giver would like them to see them spend their time, rather than how they really want to spend it.
most ppl hate getting gifts that are more reflective of how the giver would like them to see them spend their time, rather than how they really want to spend it.
I agree. I’ve always disliked gifts like this, which is why I don’t like the ritulized giving that Christmas represents. I’d rather give something spontaneously (like paying for dinner) than give something I have no idea they’d like.
And recycle or burn (respectfully) the Bibles. My take is that a supreme being worth reading about/praying to/worshiping is going to get that you’ll only be reading 1 copy of a holy book.
Same here - most xmas days I’ll do a big xmas dinner with all the trimmings and booze for my friends. Feed and water the adults and have coloring books and xbox for the kids. Its my gift to all of them.
I hate buying presents (as Tim points out, they’re much more a reflection of the giver than the givee) so they get the gift of my time, effort, attention and resources for a day.
So far, no one has complained (at least within my earshot) about my lack of gift giving. And it means we can all have a fun day with each other, and helps reduce the rendundency of several families doing the same thing, separately
If you can’t eat it, drink it or f–k it, you don’t need it.
With an apple pie you can do two of the above.
With a goat you can do all three.
So you’re gonna pick up a goat outside the former Lehman building (now the Barclays building), right?
a whole turkey or chicken off the deli shelf will surely do all of the above if you like chicken/turkey soup.
I hate shopping, and never know what ppl want. I feel like a sucker buying a gift cards because I have seen numbers that 30% of the amount thereof is never expended, and I dont like to promote stores that sell products as a general rule. Thus, I send a check. They always clear in a week and I know that my gift is not stuck in a closet or lost in a desk somewhere. Most will probably clear the same day this year.
Me too. We do get gift cards because the people I know keep track of them and use them. However, none of the people I know actually need anything and I don’t even pretend to know their tastes in stuff.
Give ca$h. Accepted everywhere, and they can get what they want.
Gift cards only really benefit the merchants. Somehow we are expected to believe that a gift card is elegant and cash is tacky.
Write “Merry Christmas” on three one-dollar bills. That way your loved one gets the full cash value of that greeting card / postage you were going to waste money on.
Take Christmas back from the middlemen that add value only to themselves.
I now send my Mom a “Universal Gift Certificate” with detailed instructions on how to redeem it. The instructions and fancy wording are not needed. But, it makes a banal thing (cash) fancy — which is the Christmas spirit.
Be careful with gift cards when so many retailers are going into BK. Cash probably is best.
My favorite gifts to receive always rhyme with “Jack Daniels”.
NYCB,
I fed-exed you a couple of cocker spaniels, merry xmas.
Be careful with gift cards when so many retailers are going into BK.
I think this comment is worth amplifying. Lot’s of bankruptcies are going to happen after a crappy retail xmas season. Don’t let your money go up in smoke.
And I hope you like my gift–a coupla software manuals.
Happy holidays.
IAT
‘ I worry if throwing them in the trash would have any ramifications.’
Tim, I asked Sweet Baby Jeebus about this. He said He’d rather you recycled His and His Dad’s pamphlets, as that is less wasteful of the wonderful trees He likes so much. He also suggested that you could take those Bibles and stack them by the door and then the next time someone super boring comes over you can soon interrupt their tedious drivel by saying ‘Have you accepted the miracle of Christ in your life?’ and then start reading out of it in loud, emotional tones, while scooting closer and closer to them on the couch.
Either:
1–They’ll get converted and become one of the saved and live in Heaven when they die, where they will probably still be boring.
or:
2–They’ll never ever come over to your house again.
Jeebus says the second option is normally the one selected, but He is fine with either one.
See, this is why I always like to talk to Sweet Baby Jeebus, because He always has such good ideas.
I’ll take the opportunity in this thread to put in a plug for Judaism.
Though some people participate in vulgar gift-giving during Chanukkah (a minor festival), this is generally not done for other than the most assimilated, non-observant Jews.
Holiday gift giving consists of home baked items on Rosh Hashanah, Purim, and Sukkot. Chocolate coins, for some reason, are popular on Chanukkah.
We never had any big gift giving holiday growing up. On Purim, for example, we’d bake things and give little gift baskets of what we made to neighbors and relatives.
(Plus you can throw away those so-called “New Testaments” without any guilty feelings.)
Christmas used to stress me out. I have seven neices & nephews, so that’s a lot of shopping and running around if I am to get each one of them something they “want”. And it wasn’t the money so much as the crowds. Last year I saved up all those credit card points (bills 100% paid in full every month) and turned them in for Barnes and Noble gift cards. I did the same this year. Problem solved, holiday stress cut significantly.
If B&N goes out of business before they can redeem their cards or their parents just can’t make it to the store within two years of receiving the gift card, well as of 12/26 that’s their problem, not mine.
He also suggested that you could take those Bibles and stack them by the door and then the next time someone super boring comes over you can soon interrupt their tedious drivel by saying ‘Have you accepted the miracle of Christ in your life?’ and then start reading out of it in loud, emotional tones, while scooting closer and closer to them on the couch.
Olympiagal,
I’ve hit upon an even more foolproof way of getting rid of boring/unwanted guests. I tell them I’d like to play some of my own musical compositions on the piano. [Disclaimer: My sister in law, who fancies herself a talented amateur musician, wrote these ear-abusing abominations.] The hardiest or most polite of them can stand it for about eight minutes; then they make their excuses and flee into the night.
Create your own gift certificates.
A gift certificate for a weekend babysitting so a couple can get away for a couple of days, a gift certificate to clean someone’s house that may need help, a gift certificate to clean someone’s yard, a gift certificate for buying and cooking a meal, a gift certificate to drive someone around and help them with their errands. I’ve created some of these gift certificates and they have been greatly appreciated.
‘I tell them I’d like to play some of my own musical compositions on the piano. [Disclaimer: My sister in law, who fancies herself a talented amateur musician, wrote these ear-abusing abominations.] The hardiest or most polite of them can stand it for about eight minutes; then they make their excuses and flee into the night.’
Hahahahaha! Thanks, Sammy. I’ll make a note of it.
My wife and I never exchange gifts for birhdays or Christmas. More $ to spend on others with cash or gift cards (especially TJs and 99 Cent store).
Today at a local mall where Steve & Barry’s is closing, we got my wife three pairs of earrings for $4 each and a very nice baseball cap for $3.48. High fives and wider smile than something too costly and less appreciated at what would first seem to be the appropriate time.
Earlier today enjoyed seeing Mervyn’s is still seeking new credit card applicants while still in the throes of complete liquidation. Yesterday we went to Linen ‘N Things. Ten to thirty percent off (highest suggested list) and the sheeple had carts. Had to dodge the hordes. Drove by a massive, closed Wickes furniture store across the street from a long ago shut-down Delta battery manufacturing facility (in the OC, no less!), and thought about Levitz and Payless plastic shoes and PetSmart and my 201k.
Lots of schadenfreude variants now available. Thanks to this blog, we have suffered less damage than we likely would have otherwise. One longtime friend’s wife’s 401k was $214k a year ago. Now $157k, and the loss is not, of course, tax deductible. Not in their league, thank God.
Tuesday we got a notice of a national partner’s meeting tomorrow to discuss “the state of the firm.” I used to leave around 7 pm unless I was really busy, and would see many ppl still at their desks. Now I leave around 5:30 because all my work is done, and by that time, there is little chance a client will call me with an emergency. Recently, on my way to the elevator it looks like a ghost town and everyone’s office looks so neat and tidy. Cleaning one’s office is usually the last item on anyone’s to do list. Friday, we got an e-mail that attendance is mandatory and if anyone is not planning on attending they need to send an e-mail to the managing partner explaining the circumstances. Last Winter the associates were so excited about the across the board pay raises. At that level they still don’t know how the game works, much like homebuyers in 2005 cheering as they got huge amounts for their home which they used to spend on crap and a down payment on an even larger home. For those that know how the system works, that just means if work slows down terminations are sooner rather than later, and mediocre work is not acceptable. No more being nice or waiting around to see if the employee improves. There will be less smiles this Winter.
Real assets to possess during an economic slowdown:
1) No debt
2) An emergency fund
3) Flexibility to move if a new opportunity arises
4) A good job
5) THE ABILITY TO TAKE A PAY CUT if necessary
Tim,
Is this a law firm or an accounting firm?
It is a law firm, with a heavy focus on finance - bonds, securitizations, corporate, etc.
Good luck on Friday. It has been my experience that most desks only get cleaned up whenever there is nothing else to do. You clean up your desk and organize your things to try to look busy.
Things must be a little bit slow there right now huh?
I work on financing real estate projects through bonds, tax-credits, debt/equity sales, etc. I haven’t seen any new deals in the last 3 months. As soon as someone big goes under or is about to go under, I have a flurry of work to try to get new trades/financing in place or try to figure out how to resolve the default de jour. Not as time consuming as new deals, and the mindset is very different. Everyone is pissed and wants things done yesterday, and no one wants to pay the bill.
Tim,
Hope you are not affected by any restructuring or downsizing.
Wishing you and everyone else here the best as we work our way through the financial madness.
No adult gifts = less stress = lower expenses = less fuel = less wasted time = a more enjoyable holiday season.
Rather than rushing out to buy tons of junky Chinese toys for the kids, it’s better to contribute to their college funds- The gift that keeps on giving. Merry Christmas!
What if the kids are little morons and you know there is no way in he!! that they will ever go to college? Then what?
Then save the money for yourself and give ‘em black coal.
My sister didn’t go to college 10 years ago, and wisely chose a trade instead. Her college fund bought her first (used) car and is now her retire-at-40 fund. She is pleased.
N Ohio metals business slowing down but still see a lot of pipe and what looks like military work; heavy pipe; I salute the receiving dock every morning.
Same here in NYC.
Simple solution = drop prices.
The whole “organic” thing is gonna get taken behind the backshed and shot in the head. Which is kinda sad. But inevitable.
I walk over, from time-to-time, to the little farmers market by us on Saturday mornings. They have decent looking stuff and we do buy from them. But I always make sure to carry a canister of K-Y over there with me.
Their gas costs must be huge to drive that stuff into the City. You would think prices would be lower having cut out 12 middle-men. But I think “organic” is Latin for, “bend over and smile”.
We buy all our produce from Carpinito Bros. down in Kent. They own a bunch of farms in the Kent valley and in Eastern WA (and orchards). Like the farmer’s market, but they still have the “produce stand” mentality instead of the “organic” mentality. Which is to say people go there because it’s cheap not because it’s “green” and “trendy”. Which means the produce is amazing but the prices are 1/2 of what the grocery stores charge.
I was in Whole Foods the other day. Let me just say, I’m looking forward to the woodshed time for them. So many people, dropping 100’s of dollars on crap at a place like that; and the economy is in trouble?
Whole Foods (and places like it) are a total fad, they will be destroyed as the credit/money continues to get tighter. Who honestly believes that “Organic” cereal (that costs 3X what Rasin Bran costs) is better?
We shop at farmer’s markets whenever we can, but the whole organic thing is pretty meaningless to me. I’ll take locally grown non-organic produce any day over the expensive certified organic crap I see in the “health-food” supermarket chains.
The best thing about locally grown is that the stuff is usually picked that day instead of 2-3 weeks ago, and as a result you can get the tastier varieties that don’t keep when transported long distances. And of course you’re supporting people in your local region that are still trying to actually produce something of value for a living.
And yeah, I’ll pay more for the local-grown stuff. Life’s too short not to treat yourself to a few basic pleasures, particularly ones where I can appreciate the value. On the other hand, often the market produce is much cheaper, when a particular crop is at harvest peak and there’s more than enough to go around.
Why is it sad? Actually, I think this whole organic food extravanganza is little more than a needlessly expensive crock of post-yuppie elitist shit.
Want fresh, chemical-free food? Grow it yourself in your backyard. It’s easy to do and burns off flab.
It’s called division of labor, and I suggest you re-read your Ricardo.
But I do agree you that the whole extravaganza is gonna end in tears.
I don’t have to re-read anything…at least this time around.
Again - why is it sad? Division of labor? Say whaaaat? If division of labor is adversely affected due to the erosion of organic yuppie elitist farming, then so be it.
There are other, more important “divisions of labor” than organic yuppie elistist farming. Such nonsense industries as that arise as a result of sloth more than anything else. Set up a veggie or fruit stand on the side of the road someplace and sell the stuff - or barter for it.
Meanwhile, maybe these yuppie organic food eaters could realign themselves into Yuppie Elitist Nuclear Power Plant Builders.
Instead of concerning themselves with the post-colitic joy of organic feces-gazing, maybe such individuals could spend their time and money doing something that might be of actual use to subsequent generations.
And the smells and tastes from growing your own food is wonderful.
A neighbor friend 5 miles down the road sells ornamental plants at the Olympia market and reported that sales were off substantially this year. Many of the vendors were complaining. Somebody mentioned fuel costs to transport to the market. Her diesel box truck was using $1200 of fuel per month this summer. She closed her nursery down early this year, too.
Ground is shifting under empires of Russian oligarchs…MOSCOW: Are the Russian oligarchs going bust?
In the global financial crisis, perhaps no community of the affluent has fallen as hard, or as fast, as the brash Kremlin-connected insiders whose wealth was tied up in the overlapping bubbles of the Russian stock market, commodity prices and easy credit.
Oleg Deripaska, the richest person in Russia, the nuclear physicist turned post-Soviet corporate raider, has already ceded more than a billion dollars in assets to jittery creditors as his aluminum-to-automobile empire reels.
“Half the Russians could fall off the Forbes list” of wealthiest individuals by next year, Maxim Kashulinsky, the editor of the Russian edition of the magazine, said in an interview.
The crisis is also upending the rules by which the tight coterie of businessmen and the Kremlin do business.
http://www.iht.com/articles/2008/10/17/business/oligarchs.php
I will light a candle and say a prayer for these great men. They do not deserve such treatment. They have done so much for their country.
I was talking to a coin dealer friend, and older collectible numismatic coins from Russia & China have been in feverish demand for about the last 10 years, as well-heeled collectors in both locales have raised prices to the moon.
He told there has been a rather sudden drop-off in interest in most everything, all of the sudden in the past month…
Collectibles are by definition wants, not needs…
“He told me there has been a rather sudden drop-off in interest in most everything, all of the sudden in the past month …”
Lol. The erosion of the Beanie-Baby Effect, maybe?
“Collectables are by definition wants, not needs …”
Lol. So are gold coins.
A silver Ruble coin of Peter the Great in excellent condition dated around 1725, has about $8 worth of metal, in content, and might be worth a few thousand Dollars, to tens of thousands…
There’s a world of difference between collectible coins and Gold bullion, king.
Yeah, and it’s all psychological.
Tell that to the people of Iceland.
Lol. So are gold coins.
There are also two types of gold/silver coin buyer
- Buying coins with little or no “numismatic” value. (Very worn “junk silver”, krugerrands, etc.)
- Coins with “Numismatic” value
The Numismatic Value of coins is essentially a complete manipulation. And the relatively recent trend to “slabbed” graded coins just compounds the problem. They tried to make a coin exchange that trades like a stock market.
These Firefighters Are Pyromaniacs!
America’s pyromaniacs still have a ways to go. There are 150 basis points between the Fed’s current key rate and zero…and the US budget deficit is expected to quadruple – reaching $2 trillion in 2009. In the resulting roast, we predict, even the devil will sweat.
http://www.lewrockwell.com/bonner/bonner350.html
My, My How fast things change, why it seems like only yesterday the hound from hell wanted into the auto business…
Worries grow as GM-Chrysler talks gain momentum
Saturday October 18, 4:13 pm ET
By Tom Krisher, AP Auto Writer
Motor City worries Chrysler will be wiped out as talks of takeover by GM gain momentum
DETROIT (AP) — In the doomsday scenario raising anxiety around the Motor City, General Motors Corp. makes a deal for Chrysler LLC, keeps Jeep and the minivans, and vaporizes the rest of the company.
Tens of thousands of Chrysler’s 66,409 employees lose their jobs as cash-desperate GM swiftly cuts redundant operations and sheds unprofitable models. Factories and dealerships are closed, and the lights go out at Chrysler’s gleaming corporate headquarters campus in the northern suburb of Auburn Hills.
Cerberus wants out of the auto business, and as the credit markets have dried up, GM, worried about running too low on cash before the U.S. auto market rebounds, wants Chrysler’s currency stockpile.
http://biz.yahoo.com/ap/081018/gm_chrysler_merger_talks.html?.v=4
I think Cerberus is convinced they will not qualify for a fed bailout, so talks must already be underway to bailout GM & Ford.
Mervyn’s is dead because their customers are dead.
It’s time for a new Bretton Woods…
The system worked until the US tried to wage an expensive war without raising taxes to pay for it. (Why does that sound familiar?) The first sign of stress was when the US dropped silver out of our coinage in 1965 and went to slugs. We fought a long and expensive war in South East Asia without raising taxes to pay for it. Holding the world’s reserve currency, the US was in the enviable position of writing checks without the intent or the ability to pay for them. The chickens have come home to roost.
The world now faces an economic crisis larger than any in history. A basic lack of financial discipline has lead to the creation of a derivatives monster ten times the size of the world’s economy. It’s no less than a giant crap game with the players taking real money off the table when they win and paying in Monopoly money when they crap out.
http://www.321gold.com/editorials/moriarty/moriarty102008.html
http://www.nytimes.com/2008/10/19/business/19cisneros.html?hp
There is way to much of this kind of thing that goes on in all areas of government. Government officials go from a cabinet agency or a regulatory agency to an area of the private sector directly related to their former responsibilities.
From the article:
“As the Clinton administration’s top housing official in the mid-1990s, Mr. Cisneros loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before. Then, capitalizing on a housing expansion he helped unleash, he joined the boards of a major builder, KB Home, and the largest mortgage lender in the nation, Countrywide Financial — two companies that rode the housing boom, drawing criticism along the way for abusive business practices.”
“And Mr. Cisneros became a developer himself. The Lago Vista development here in his hometown once stood as a testament to his life’s work. Joining with KB, he built 428 homes for low-income buyers in what was a neglected, industrial neighborhood. He often made the trip from downtown to ask residents if they were happy.”
“People bought here because of Cisneros,” says Celia Morales, a Lago Vista resident. “There was a feeling of, ‘He’s got our back.’ ”
“But Mr. Cisneros rarely comes around anymore. Lago Vista, like many communities born in the housing boom, is now under stress. Scores of homes have been foreclosed, including one in five over the last six years on the community’s longest street, Sunbend Falls, according to property records.”
What about the ex senator/republican from Mississippi, Trent Lott who took his retirement early last year before the law made it a 5 yr ‘noncompete’ kind of situation to go into Lobbying.
Well, now, you see these guys doing this all the time.
A good place to ride out a recession? Would you believe…Buffalo?
http://www.buffalonews.com/home/story/467679.html
Big national banks are failing or needing bailouts to stay afloat. Our locally based banks are in good financial shape, and many have been going out of their way to let consumers know they’re still making loans.
The country has been losing jobs for nine straight months. Our job market is growing. Very slowly, granted. But it’s growing.
Our situation caught BusinessWeek’s attention when it named Buffalo one of the top 20 communities in the United States to ride out a recession, highlighting the area’s diverse employment base.
But Palumbo, the Canisius economist, says this is no time to gloat.
“I can’t tell you that autos are going to be OK. I can’t tell you that financial services are going to be OK,” he says. “If people are gloating because we’re doing better than other places, it’s not that we can’t fall.”
I thought that you non western NYers needed to know where to relocate to safely ride out the financial storm. I guess if you are always living in a recession, then a coming recession isn’t a big deal, it’s just a bigger recession.
I met a homeless guy on the beach in San Diego. He had quite the setup there for his daytime activities, packed it all in a cart in the evening and came back the next day. Horseshoes, feeding the birds, making little figures out of palm leaves.
Looked like more fun than living under a bridge in Buffalo in the winter.
Certainly, unless you are paying for housing. A broke person is more likely to be homeless in SD than Buffalo.
A homeless person is more likely to be comfortable in San Diego than Buffalo.
Some camper lived in the bushes outside my apartment house in Seattle briefly one fall. Frightened the tiny female manager.
Luckily, approaching winter and turning on the sprinklers at odd times moved him on.
Cleaning out his (literal) shit and broken bottles would be unwise for the committed liberal. Can’t abide homeless too stupid or crazy not to live in San Diego
“Our situation caught BusinessWeek’s attention when it named Buffalo one of the top 20 communities in the United States to ride out a recession, highlighting the area’s diverse employment base.”
This insane logic that Buffalo is destination for *anything* but misery is mind numbing. It’s like saying is great that my daughter got a D in english because the rest of the students got an F. Who ever is floating this idea that Buffalo is somehow an economically viable city needs to pull his head out of his a$$.
The only thing Buffalo has going for it is that even in a depression, things can’t get much worse!
Buffalo (suburbs) is a great place to live. The city itself is a burned out hellhole ex-industrial wasteland. The area surrounding it is wonderful. There’s plenty to do. Plenty to see.
That said, you’d better not want to get a good job or buy a house. No jobs and taxes on everything are a killer. As Bizarro pointed out, this area has been in recession for 20-30 years. Nothing new here…
Another easy week for the Bills. Two weeks to prepare for a very average Chargers team. Good thing the Cardinals didn’t come back… KO hehehe
UB up next?
Buffalo is best admired from a distance, on tv. (5-1, looking good…)
everyone talking about the “crisis” here in nyc
have seen drop off in some cases but the city is packed every night
with lots of parties and plenty of spending
the fact that people are shocked about these developments is telling
just an observation but rents are trending down in nyc and that is good as we will be looking for a new place come this spring
-as a side note- i have mentioned many times about my good friend who is a big wig at cerberus partners.
i spoke to his wife this week and she told me he has made sure they have cash on hand (in the house) just in case
and i thought i was the only one with an emergency plan
he has been working 18hr days 6-7 days a week
well you know what so have i
good day to all
“i spoke to his wife this week and she told me he has made sure they have cash on hand (in the house) just in case”
In case of what? Is this guy Tony Soprano, with his stash of AK-47s and Krugerands hidden in the ceiling tiles? I guess the big boys are afraid of that midnight knock on the door. Lambing it should be great fun for these guys.
Not sure the cash on hand thing is a new phenomenon.
A lot of New Yorkers who were here for 9/11 and the black out have some cash on hand - being unable to use the debit card when you need batteries for the flashlight was a revelation for some.
CAMP DAVID, Md. (AP) — President Bush, looking for answers to an global economic emergency with just three months left in office, will host an international summit to discuss ways to fix the world financial system but warned on Saturday against reforms that threaten capitalism.
Bush, meeting with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso, did not announce a date or site for the summit. But Sarkozy suggested it be held in the shadow of Wall Street before the end of November.
“Insofar as the crisis began in New York, then the global solution must be found to this crisis in New York,” Sarkozy said. Fix the world financial system? International summit? Sounds like Bretton Woods all over again, except the big meeting won’t be held in New England. In 1944 the delegates to the international monetary conference in New Hampshire placed their faith in the U.S. dollar, which was backed by gold. Since 1971 it has been backed by nothing.
What’s coming? A one-world currency? Will all the nations call in all private gold upon which to establish a new monetary system? (Gold Confiscation.) Public debt repudiation? There are lots of possible schemes, but the fact that a world-crisis has been declared promises of substantial change in money systems around the globe. NOTE: It’s being called a “financial crisis.” It is actually a “monetary crisis” brought on by fiat currency and reckless human behavior.
“will host an international summit to discuss ways to fix the world financial system but warned on Saturday against reforms that threaten capitalism.”
Go away. For god’s sake, won’t you just go away? You have done enough damage. Please just go away.
I don’t like Sarkozy’s socialism in general (he loves the printing press just like his friends in the US), but he has some valid points that shrub is afraid off: seems Europe is going to get tough on the bunch of criminals at the ratings agencies, and the taxpayer-provided ever-bigger bonuses for the Wall Street guild of thieves.
Paulson and his gang have made clear that they are not going to do anything about it (except for ‘read my lips’ service), but maybe some pressure from Old Europe can help.
I don’t think it is just a financial/monetary crisis, it definitely is an economic crisis because - mostly thanks to the USA and its ‘innovative’ economic model - the world has been spending much of its time and effort on totally useless (or even counterproductive, regarding pollution, wealth distribution etc.) activity over the last 20 years or so.
Bush has been the biggest disaster this nation has ever had. It’s too bad this country is loaded with morons that couldn’t see this one coming back in 2000 or 2004.
I proudly never voted for this idiot.
Interesting footage on Bush
http://www.youtube.com/watch?v=_aEURwsrUSQ
IAT
As always, the French want everyone to polish their turd.
It would be a shame if the French got away with pretending that only NYC banks are culpable, given the breadth and depth of international complicity in the financial debacle.
We went through the military museum in Les Invalides the Friday before last. It was really cool. The entire visit took us about 2 hours. To get through the part of the museum that dealt with the French contribution to World War II took about 19 seconds.
Built too many bunkers in the suburbs, got foreclosed on, moved out.
Here is an insightful article which dates back to the onset of the insolvency crisis…
BNP Paribas Weighs Europe down 2%
Author: Elena Todorova
123jump.com
Last Update: 1:29 PM EDT August 09 2007
European stock markets closed steeply in the red on Thursday on growing concerns of slowing global economy due to troubles in U.S. credit markets. The subprime jitters were sparked by news that French bank BNP Paribus will suspend redemptions from three U.S. security backed funds because it was unable to properly value their assets. France led decliners with a drop of 2.2%, followed by Germany, down 2%, and the U.K. losing 1.9%.
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/18/AR2008101800191.html
Is it possible that there will be some downward pressure on college tuition? Even state schools have become ridiculously expensive. Rutgers for a NJ state resident is $21k a year for room and board. Those kind of prices are only sustainable through the availability of credit and government subsidies.
Yes.
I sure hope so. I’ve been wanting to go back to school, but it’s cost prohibitive. I’m not interested in massive loan balances.
Student loans did to college costs what 100% financing did to house prices. Take away the silly financing and what happens?
1) Tuition falls.
2) Faculty salaries fall.
3) Faculty find more consulting gigs to supplant pay cuts.
IIRC, tuition pays about 1/3 of faculty salaries, even at public schools. The remainder comes from grants faculty obtain (the “overhead” that gets spread around), endowment, and state government budgets. So, if tuition falls, faculty salaries won’t (at least not nominally). They’ll just shift more from those other sources to make up the difference.
The real effect will be larger classes, because fewer faculty will be hired, and more TAs will be hired–TAs being cheaper than faculty. So, the quality of education will decline (if you believe interacting with faculty rather than slightly older students produces better education). The effect on faculty will be slight–once you are teaching a class of 100 students with 2 TAs, teaching a class of 200 with 4 TAs is no big deal. I hear.
IAT
“The real effect will be larger classes, because fewer faculty will be hired, and more TAs will be hired–TAs being cheaper than faculty.”
Also more temporary lecturers teaching larger classes. Adjuncts save departments the high price tag of hiring and retaining more tenure track faculty, and the quality of instruction is potentially higher, as underperforming temps are easily replaced, while tenure track faculty who don’t teach well cannot be fired.
But the quality of instruction is also potentially lower, because if the person is piecing together one job by teaching at 4 different places, so they are running around from campus to campus, they probably won’t have time to stay abreast of the latest pedagogical, methodological, substantive, and theoretical developments in the field. Plus, one of the things you get as a student is access to people who will write letters of recommendation. How will you get such a letter if the person is long-gone a semester later?
Any way you slice it, employing people who have little investment in the institution is not likely to be a recipe for better quality.
IAT
Don’t forget staff salaries, Bear.
I do a good job for my school, but I am *way* overpaid according to the true value I produce. Recognizing that schools benefited in the same way as the housing market, but perhaps would last a year or two longer, I elected to go into higher education after graduate school. Life’s been great as an administrator (after just a couple years as a mid-level manager I moved up to a directorship).
I have a great job, interesting work, and love the campus. But I am saving everything I make because I recognize that my salary will *have* to be cut after demand for education at the ~$50k/year level drops off a cliff.
4) Faculty throw in the towel and go into industry.
Indeed. Colorado State in Ft. Collins has been steadily raising tuition while they keep building new facilitates, like the new Computer Science building (even though CS and IT enrollment is down almost 80%). The state gov’t has frozen funds for new construction, so CSU is thinking about adding even more junk fees to pay for the white elephants.
I suppose they figure that while they might lose lower income students (let them eat Community College), they probably figure that they will score more higher income students that will be fleeing the super expensive private schools.
My favorite part of the article:
“Drexel and Clarion universities, both in Pennsylvania, were high on her list. But if she doesn’t get enough financial aid and scholarships, she will probably end up at the University of Maryland at College Park. “To stay in Maryland would be devastating to me,” she said.”
Poor baby, she’s gonna have to settle for State U and live at home. Boo hoo hoo.
I work in engineering with many people from the crappy state university - which basically takes anyone. Guess what, they’re great. They finally explained to me how it’s done (at least here). While they’ll take anyone, once in each student is on his own…and they could care less if 80% of the students drop out of the program (I don’t know the number). The expectations are as high as any world-class school, and if you cannot cut it…find another line.
First or second year drop-outs never see engineering classes because they usually get washed-out in Calculus and Physics.
Yep, those are known as “weed-out” classes.
Awww….it ain’t all bad. At least Mom and Dad can cut their fuel costs tremendously as they’ll no longer have to fuel up their helicopters. They can oversee and advise their daughter’s every move right from their easy chairs.
Maryland is a perfectly fine school, particularly for business, sciences and engineering (notwithstanding the fact that it conferred a doctorate upon Lawrence Yun — but who knew he couldn’t be trusted with it?).
She’s unwittingly doing herself a favor, IMO.
Maybe these schools will stop paying coaches $3 million a year and put about $2.96 million of that towards real faculty. I love college football but the idea that a football coach should make that kind of money is sickening.
Strategies For Rebuiding Cleveland: What can be learned from other cities
http://blog.cleveland.com/metro/2008/10/strategies_for_rebuiding_cleve.html
Facing the kinds of job losses and abandonment known to Cleveland, Schenectady pursued a creative solution. It introduced itself to an immigrant group in New York City, lured curious couples north to view its impossibly cheap homes, and let capitalism and immigrant dreams run their course.
In less than a decade, people who hail from the South American nation of Guyana have become about 10 percent of the city of 62,000, and streets once considered worthless now stir with fussy homeowners.
“They breathed new life into this town,” said Albert P. Jurczynski, the former mayor who marketed his city with bus tours and his mother-in-law’s homemade cookies. “They changed Schenectady. And they never asked for a dime from anyone.”
Even upstate NY looks good if you are living in Cleveland. At least the people who stay in or relocate to these hardscrabble towns are not in it for the money or the weather.
I understand the former mayor wanted to take credit for this, but they need to dig further, and then extrapolate the results to the article’s subject, Cleveland.
Like, what would make Africans want to move to Cleveland? jobs? Weather like the old country?
I noticed in Utica that Bosnians are doing the same thing. They are buying up the old houses, for next to nothing, and fixing them up. It is nice to see.
That is until you look at NY taxes; I keep a few old pay stubs from my days of a job assignment in Niagara Falls just to remind me how outrageous the locusts are in that state. No mercy.
do these immigrants really work for a living, or do they live on social welfare or unofficial work (without paying taxes)? This strategy has been used in some parts of Europe, but I think there are easier ways to spend tax money …
Read the article nhz: “They changed Schenectady. And they never asked for a dime from anyone.” I am assuming that unlike your European experience, they are typical American immigrants who look forward to having the freedom to work, legally.
Schenectady is a hell hole, not much to proud of there….
IIRC, it is the mormon fundamentalist polygamists that are all on the dole. All those ladies with one husband, and all the kids, welfare recipients.
“We will work to strengthen and modernize our nations’ financial systems so we can help ensure that this crisis doesn’t happen again,” Bush said at the Camp David presidential retreat.”
Oh, God, please NOOOOOOO! God, I can’t stand this moron ANY. LONGER.
At what point will W anoint Ben Bernanke Economic Czar of the Planet, as a first step in fixing the crisis?
Is it just me, or is Sarkozy one scary muddereffer? Seven years ago congress couldn’t even eat a French Fry - now this cat’s calling the shots with the decider in tow?
Seven years ago the U.S. financial system was the envy of the world.
… as long as you were willing to overlook the WorldCom and Enron-style accounting, the dot-com crash, the imminent Dow crash, and the comatose job market.
Even worse, it still is.
don’t forget that Sarkozy has exactly the right kind of friends in the most influencial positions in the USA; I’m sure US politicians will have to listen to him.
Visiting my bro in Fla. He seems to have no fear of muni bonds despite the newly-revealed uselessness of ambac and mbia. He seems to believe in AAA ratings despite the fact (I can attest to) that the govt of Iceland was AAA. What do you guys think about muni bonds (a) in general (b) in California (c) states vs cities. ???
Everything is cross-contaminated and there’s no vaccine to stop the spread of it…
Iceland was just a taste of what wickedness we can expect in the not too distant future.
Laddie,
Why are you so spooked? What caused your level of mistrust in the system?
It’s so much bigger of a mess than we can comprehend, and the system has been running on empty morally and ethically for so long, that we think it’s normal…
Just read “The Great Bust Ahead”. Recommends long term and intermediate government bonds, however, suggests staying away from state and corporate bonds as there’s a real chance they’ll defualt.
(a) in general they suck.
(b) in california they generally suck.
(c) in most states and cities they suck.
Debt sucks, at least for now.
Being IN debt sucks; I can’t agree that every note one can own is “sucky.” My individual mortgage clients are paying reliably. The difference between them and municipalities is, the mortgage clients lose their mobile home and lot if they default. Also, most of them have Social Security or some similarly reliable income source.
Clearly the world agrees that munis and states are a worse risk than they were…that’s why the rates they are paying to borrow are much higher than “normal.” My question to you guys is, is it worth the risk, to avoid Fed taxes. Your answer seems to be “no.”
I think there that eventually there will be a choice between ruinous tax increases and the collapse of public services, or widespread Chapter 9 and defaults on debts and pensions.
It’s a matter of political power — rich people who hold tax-free bonds and public employee unions who get tax-free pensions, and everyone else.
The crunch time comes when it is impossible to borrow anymore. At that point, the threat that default will make it impossible to borrow in the future loses potency.
Former Mayor Koch was shilling for NY Metropolitan Transportation Authority bonds on the radio, but the Authority still couldn’t sell out its issue. The agency is $24+ (it goes up so fast I can’t keep track) billion in debt, and debt and retirees are set to absorb more than half the budget. I am in favor of default.
Fresno/Clovis is the big metropolis around here, and in my travels around the housing bubble that is the Central Valley, it looks just as woefully overbuilt and under occupied as anywhere else.
Every new home built represented a $50-75k windfall for the local government, in fees to be spent on building new roads, schools, etc.
Corporate America was a-ok with mark-to-model accounting, so why wouldn’t city governments have used the same method, and spent like the money was in the bag?
What this means is, probably the lion’s share of cities in this fair land that encouraged overbuilding, will go bankrupt.
Where in the mountains are you, Alad? My best friend grew up in Fresno part time, and his family has an awesome old rustic cabin at Shaver. Really cool place, with lots of giant Sequoias towering overhead. I do love the Sierras. It’s a shame what the bubble did to a lot of those quaint old areas.
I live on just the other side of nowhere, somewhere in the Sierra…
“The agency is $24+ (it goes up so fast I can’t keep track) billion in debt, and debt and retirees are set to absorb more than half the budget. I am in favor of default.”
If we could just get rid of those damn retirees. I ‘m thinking a combination of “Logan’s run” and “Soylent Green”.
Be nice to those TWU workers. They work very hard, and are very polite to customers. They earn every penny of those ridiculously sweet pensions they get. You have to pay big bucks for talent like that. Please excuse me while I step away from my computer. It should be exploding any second.
“If we could just get rid of those damn retirees.”
The stock market is getting rid of a lot of potential retirees.
Several people I work with have postponed their imminent retirement due to massive losses in their 401Ks. I suspect this phenom is widespread.
This a good thing for companies with underfunded pension plans, and may help solve the Social Security underfunding problem.
The down side is the less people retireing the less replacement jobs will be opening up.
Well, that should keep SS shored up.
BWAHAHAHHAHAHAHHAHAHHAHAHH!!!
“Several people I work with have postponed their imminent retirement due to massive losses in their 401Ks. I suspect this phenom is widespread.”
I don’t get this. I don’t get this. Is everybody that dumb (rhetorical)? If the words “imminent” and “retirement” can be uttered in the same sentence then these troglodytic in-breeders should not be in the stock market. They should have shrugged off the disaster of the last few weeks as being non-events. It’s their own f—ing fault. I hope they enjoy working until the knacker arrives with his wagon.
They got sh*gged the bigtime by those “retirement calculators” which tell them that they’re gonna be 30 years longer so they should put their worth in stocks.
Stocks for the long term? Efficient markets? Rational expectations?!?
Meet Austrian economics and the credit cycle, bee-yatches! It’s a wipeout.
“Is everybody that dumb (rhetorical)?”
Not everybody, but close to everybody.
Suzanne in real estate (who researched it) has a counterpart as a Retirement Investment Advisor. This Suzanne will promise those who attend her seminars a 10-12% lifetime return on their retirement money if they’ll turn over to her their 401K and cashed-out pensions. No amount of reason can counter this Suzanne’s magic just as no amount of reason could counter the real estate Suzane’s magic.
“If God did not want them sheared He would not have made them sheep.”
The Beat goes on.
Replacement jobs don’t always “open up”. High paying jobs tend to disappear, rather then waiting for someone to fill the void.
Not to be callous or anything, but do people really just sit by while their 401k’s drop like that? Don’t most plans have a cash-equiv escape hatch?
Or, if they’re so game they would just let it roll like that, why not acknowledge that the funds will go back up someday? It’s not “lost” until they cash out, and even then there are other similarly depressed assets to invest in..if they’re close to retirement they should have been keeping part in mmkt for their first withdrawals anyway.
It just doesn’t add up, and I’m just getting sick of all this helpless hapless “lost retirement” talk in the media. I feel another bailout coming on.
I don’t get the whole “retirement” thing. Pre-WWII, It used to be that one kept on working until their body or mind simply gave out.
IMO, if one can find an occupation built around a hobby or interest that is truly enjoyable then a traditional age-65 bingo/shuffleboard/old folks cruise/rocking chair retirement is no longer necessary or even desireable.
Even though I have managed to save well over the years and could retire early I plan to keep on working on what I like doing until my body or brain isn’t able to do it any longer. My two cents.
didn’t you know? we all have a god-given right to a 20+ year vacation at the end of our lives. on someone else’s dime even.
Back in 2000 when I worked as a wage slave for a Fortune 500 company, I recall an older couple who had to postpone retirement because of the stock crash. I was shocked when the man told admitted he and his wife were mostly in stocks. Their greed, their fault. If they were near retirement in the first place, they would have parked most of their money into bonds. If I was within ten years of retirement I would be increasing my asset allocation by 5% per year every year into bonds and decreasing the same amount yearly from stocks in my portfolio.
“IMO, if one can find an occupation built around a hobby or interest that is truly enjoyable”
Yeah I know people who opened bike shops or music stores because that’s what they “loved.” It can turn to hate real quick. I played in bands for a living but after 30 years that got old too.
“If they were near retirement in the first place, they would have parked most of their money into bonds.”
Probably wouldn’t save them in today’s market—-don’t you think bonds will go off a cliff when it becomes clear how many companies will fail over the next 3yrs?
“I don’t get the whole “retirement” thing. Pre-WWII, It used to be that one kept on working until their body or mind simply gave out.”
Retirement via social security was invented in order to lower the unemployment numbers.
I’m the opposite. I can’t understand the whole ‘work ’til you drop dead’ idea.
I’ve a list of around 200 things I’d like to do repeatedly in life…things I can’t do until I stop working.
None of them involve earning money.
This is a basic faulty assumption of both economists, management gurus and CEO’s.
Most people first decide what’s important in life, and then they go about arranging their economic arrangements to make that happen.
Not the other way around. Most people don’t give a cr@p (and they shouldn’t!)
Once you figure this out, it’s a lot easier to “manage” people.
That having been said, your basic attitude of “why work” is a product of having won the “birth sweepstakes” and being born in a rich country. Most people around the globe. and certainly most people from the beginning of time to the present would not have been able to cop this attitude of “why work at all?”
Not at all. In my case at least, you’re quite mistaken, Faster.
You see, I’m more than satisfied to spend my old age living in a trailer. Perhaps not even a doublewide.
I also have the expectation that I might live to be about 80 (if I’m lucky) and that I won’t be able to afford most healthcare procedures. And that’s not due to lack of hard work on my part, or lack of living beneath my means. I’ve ALWAYS lived beneath my means since earning my first paycheck at age 16. That was 28 years ago.
Faster, I’ve spent the past 10-15 years re-evaluating my life, thinking about what I can control and what I can’t control.
My conclusion is that the chances of someone my age having any the assets to live like today’s 60-90-year-olds do is close to nil. Social programs are beginning to wipe us out. You - being 10 years younger - should actually fare better than today’s 45-year-old. Demographics are key…you simply haven’t faced the competition for jobs and wages that those just older than you have faced throughout their working lives. When the Boomers retire in masse in 10 years, you will have a wage bonanza on your hands.
Today’s 25-year-olds should do quite well - better than you. They are at the leading edge of Boomer Generation II. They will concoct the next generational Ponzi scheme and benefit hugely from it. They’ll get big wages from the start…and comparatively cheap houses.
All that said, the 200 or so things I want to do I can do whilst living in a trailer. Or while traveling and seeing the world. And that can be done on the cheap.
Get it? I do. It’s a lifestyle that many born from 1954-1970 will live in their golden years. They won’t have a choice.
“live in a trailer”
Eudemon, you may come to me for a loan any time!
–az_lender, specializing in loans secured by mobile homes and the underlying lots. (No rental park stuff.)
I will keep that in mind - you never know.
Luxury trailer parks are going to be a big thing in 20 years.
Sounds like “The Road” to me.
A transit agency with $24B of debt - that’s a stunning example. Yeah, it sure seems like something’s gotta give. Going forward it’ll be an increasingly tough sell to convince a $10/hr. worker that they must pay higher taxes/fares to fund someone else’s generous pension.
I’m sure New Yorkers won’t mind to pay some more taxes to help the people that stand in a cage and say, “use the machines” to have a really pleasant and rewarding retirement.
Well, maybe we should charge automobile drivers a convenience fee; transit keeps cars off the road and reduces traffic. Imagine the Long Island Expressway if the Long Island Railroad shut down (both carry crooks from Long Island to Wall Street).
Public employee pensions are ridiculous. The only reason the unions have gotten this far is that there has not been a sustained outcry. There will be and it will be ugly.
Newsday is having lots of fun investigating pension abuses in Long Island schools and the Long Island Railroad. They are doing a true service to society.
Since the wall street bros preach a “buy and hold” strategy when buying stocks but actually practice the opposite there needs to be a “short term tax” when stocks are sold when they are held for less than 1 year. “Investing for the future” is what wall street preaches anyway. The govt ought to subsidize “long term investing” instead of the present day flipping done by wall street.
The govt already does penalize short-term profits vs long-term. The capital gain tax on assets held longer than a year is much lower than the ordinary income tax for middle and high earners, whereas the short-term capital gain tax is the same as ordinary income tax.
Well that’s it WT
Pensions, and the unintended consequences of all the non smoking campaigns that lead to a longer life while not adjusting the time frame say from 20 to 30-35 years at full pension…all compounded to the point of bankruptcy
The Era of 20 year and retirement aka military is finished, Civil service should never pay out until you are at least 65yers old
massive radical changes need be done asap, or else. So yes i support Bloomer’s 3rd term…he will be the only person to lay down the figures to the unions and demand they like it or move to another city with better benefits.
I am going to form a 3rd party that is in favor of abortion, assisted suicide, non-assisted suicide, capital punishment, relaxed safety standards on all motorized vehicles and reduced medical coverage for anybody over 65. Both the liberals and conservatives might hate us, for different reasons, but we will balance the budget.
Don’t forget re-legalizing smoking everywhere!
Also free trade agreement to import milk, toothpaste and all other stuff from China, without inspections.
Take away baby restraints, crash helmets, seat belts, no walk/don’t walk signs, no crash cushions/those car thingies, and for gosh sakes get rid of those AMD’s (auto defribulators).
Make ambulances have to stop at red lights just like all drivers, fire trucks too.
The list goes on. Or the beat goes on.
Bloomberg just cut a deal, passed by the state legislature and signed by Spitzer before Client 9 (January), to allow NYC teachers to retire at age 55 after working 25 years rather than 62 after working 30 years. He said it would cost nothing.
I’m not kidding. Google up NYC teacher 25 55 retirement or something like it.
What everyone wants to do to pay for this — lower pay and benefits FOR NEW HIRES AGAIN. That’s how we got $25 K per year cops with sky high taxes. It’s disgusting.
WT
That was before the sheeet hit the fan…January 08 times were still looking up….
“He said it would cost nothing.”
How do politicians always get away with pretending that insurance programs are free? To check the validity of such claims, try to obtain similar insurance free of charge from a private insurance company.
“The Era of 20 year and retirement aka military is finished…”
Military service is pretty harsh on the body if your MOS is in the combat arms. Not too many men in their fifties capable of the physical endurance required for soldiering.
With ruinous tax increase attempts, expect overwhelming taxpayer revolts, just as occured during the depression.
Taxpayers will wonder why they, who have no pension, must continue to fund well-paid public employees who get sweetheart pensions, and retiree health care to boot.
And taxpayers who have no pension will wonder why they must pay high taxes to the uber class which does. And taxpayers will then say no to tax increases.
While still demanding public services. Which of course is their right. Which means massive cuts in public spending, starting with the fabulous benefit packages.
Ronin are you that naive?
We must cut Library hours, pot hole repairs, we must cut all overtime and make road construction crews work during the day and especially at 5 pm on friday afternoons…so we can have 10 mile traffic backs ups while they “work” on the roads.
We must cut out painting of the roads, who cares if more people get maimed or die…we dont have the budget for paint we need it to fund our pensions
we must have predatory traffic police officers who if you try to avoid an accident inadvertently get stuck blocking a crosswalk, the rush out and give you a $150 ticket..
saw that the other day on 63rd and 2nd ave…
——————————–
starting with the fabulous benefit packages
Okay, this bashing has been going on in this thread long enough. It’s time for some information.
Like it or not, the person who just retired after 25 or 30 years on the job signed a contract 25 or 30 years ago. The terms of that contract cannot be unilaterally changed. They also signed contracts in the interim, as each contract ran out. Part of those deals were that pay increases might be small, but pensions would be large. NOW, it is time to pay.
You can thank your politicians for that, but stop bashing the person who took the deal. Would you have said, “No, sir, please don’t give me a pay raise, AND also I refuse to accept a cushy pension.” C’mon.
If you made a deal with someone that said they’d pay you an amount monthly for 30 years, except the last payment is 10 times larger, (kinda like mortgages with balloon payments), would you just say, “Hey, its okay, don’t make the last payment”? That’s what you are ranting and suggesting the pensioner do. You would send that homeloaner into foreclosure, as well you should.
Politicians try to postpone the day of reckoning until the next person has the office–thank you, term limits (talk about unintended consequences). But, the day of reckoning cannot be forever postponed.
Default on those pensions, and try getting anyone to trust any contract with the municipality again–not just unions, but contractors, too. It’ll be pay me now and then I’ll do the work. No city could survive that way–and I mean no city resident would be able to survive if that occurs.
So, look, vote out the politicians. Rant at the sadness or folly of the original contracts. But the workers, polite or not, signed a contract. If you void it, there’ll be hell to pay.
This is not like some bonus some Wall Street banker hands out. By definition, bonuses are extra. This is the final set of payments on a contract. It must be made, or the municipality will find itself unable to do anything. So, default, and then say goodbye to running water, trash pick-up, working traffic signals, everything. I certainly doubt anyone would be able to live in NYC or any other city if such occurred.
IAT
Here’s how City pensions have played out in SD:
http://www.signonsandiego.com/news/metro/pension/20060106-1613-bn06indict4.html
High % pensions were predicated on the locusts’ salaries remaining low; salaries ballooned thanx to unions and their locust loving politicians passing unconscionable raises. Now you have an immovable object meeting an unstopable force. Welcome to interesting times.
SaladSD, I don’t get it. Show me the system that is without fraud. The police officers steal drugs from drug deals. So we should shut down the police departments? The firefighters are often arsonists. So, we should close the fire departments? Supreme Court Justices mis-interpret the Constitution and force a jurisdiction to not count every vote! So, we should have no final court of appeals. Oval office occupants lie and send us to unnecessary wars. So, we should have no leadership?
If your point is there is corruption, who can disagree? But what that means for whether contracts should be honored, well, I certainly hope you don’t mean to suggest cities should default on their obligations to the rank-and-file because the leaders were caught with their hands in the cookie jar. That wouldn’t be socialism, that would be a big step to the Gulag.
IAT
“The terms of that contract cannot be unilaterally changed.”
Tell that to the retired pilots who now receive 1/3 of their contracted benefits from the PBGC.
Response to IAT:
The problem with the City of SD pension scenario is that the City manager and board members were self-dealing, agreeing to pension terms that directly benefited their own retirement and these pension terms were so egregious that they’ve basically bankrupt the City. Yes, city workers have been caught in the middle, but taxpayers are burdened with funding outrageous benefits, while infrastructure and services must be cut. As it turns out, These contracts were negotiated based on fraud, therefore I don’t see why they can’t be redrawn, fairly. Why should pensioners get an unearned windfall on the backs of taxpayers?
I am not a lawyer so I cannot say what is possible according to the law. I can say that any city that defaults on pensions will be in big trouble, and this will ultimately cost taxpayers. Bond ratings will decline, making borrowing money costlier. Contractors will require pay in advance. And so on.
Yes, there was corruption. The usual answer for that is fines of and prison for those involved, not fines of innocent bystanders. The rank-and-file were not party to the corruption, and they made financial decisions based on an expectation of a certain amount of retirement benefits from the city. You can’t go back now and pretend the city did not make those promises. Now, they may be civic-minded and allow some kind of renegotiation. But that is not the same as unilateral enforcement of lower benefits, which is, if I am not mistaken, what all the rants were suggesting the various city leaders do.
As for the police officers RMS describes, perhaps that, too is a sign of corruption in their union. If a unilateral change stands, they have only themselves to thank for it. If it was a re-negotiation, that’s another issue–see above.
Oh, pilots. Yeah. Their employing airlines went bankrupt without funding their pensions. So, the piggy-bank of last resort pays a fractional part of the pensions.
This is America. You should know that private companies can break all the rules and socialize the costs at will (while maintaining the profits for themselves–didn’t we just see this in the (first?) bailout).
For a city, though, the default on obligations cure would be worse than the high pension obligations disease.
IAT
Thank you for your common sense posts, IAT.
You understand the issues that other people do not.
What the people in private industry need to do is DEMAND the same benefits or work for the govt. There is nothing to stop them from doing so. We’ve allowed those at the top — in private industry — to take in massive profits at the expense of everyone else. Their employees chose not to fight it.
If they want to take the benefits away from new employees, I can assure you, they will not like the results. There would be far more corruption if the public workers had to deal with the same uncertainty as those in the private sector. Public employees are held to a much higher standard, no matter how much the whiners claim otherwise.
Cash Economy, the future.
Cash Economy, here and now.
“Cash Economy, here and now.”
+1
I think the NY Times had an article this week about a hospital putting off a new building or wing or some such thing because there was no way to raise money with tax free bonds. Very interesting. I don’t think they used to even think about the possibilty of their bond issues failing or of the interest rate being anything above 4%. Wait until the actual need to analyze something using real numbers and thinking about return on investment hits the cities building new stadia for their sports teams and “convention” centers to attract tourists.
Heads will implode at city halls all over the country.
muni bonds? Very risky. Probability of huge decrease in their value in California and Arizona for example. Even so, about 13% of my net worth is in two muni bond funds (same family, but one a class A fund and the other a class B fund). 13% is about the same amount as my stake in precious metals.
No asset is safe or risk free. Realizing that there is no consensus here on this board as to what the safest investment is (cash or gold?), it only leaves one with this approach: Invest in several asset classes to get a market neutral return.
I get hate posts here because I don’t invest in any one single area. My colleagues laughed at me 3 years ago for not being a home owner and for investing in “old man” assets, such as treasuries and savings bonds, and also investing in the sky is falling asset - precious metals. They are not laughing anymore.
Moderation is a virtue - except when it comes to Liberty, as the last American statesman Barry Goldwater said.
Comment by Bill in Maryland
2008-10-19 08:32:34
muni bonds? Very risky. Probability of huge decrease in their value in California and Arizona for example. Even so, about 13% of my net worth is in two muni bond funds (same family, but one a class A fund and the other a class B fund). 13% is about the same amount as my stake in precious metals.
Why is there so much discussion on a “housing bubble blog” of all kinds of investments other than housing?
I think it’a time for you to educate yourself on investment real estate, including rental of single family homes and small apartment buidlings. The demand in Los Angeles for rentals has never beem higher, and there are deals that actually make sense. But you have to know what you are doing, and trust no one. Just a reminder to think of real estate on the Housing blog”
Understood, however at the top of this blog subject line the phrase includes “post off-topic ideas…”
Until Ben changes that line to indicate “post off topic ideas, yet keep them related to real estate,” everything’s fair game.
bim, nobody hates you. it may be paranoia. some just disagree with you.
BiM, that’s very interesting (the 13%) — I’m down to 10% or less, but I’m jealous of my bro who paid so much less Fed tax last year than I did (and who has a much higher income) !
I don’t know if diversification helps at a time when all anybody wants is cash; but then again, it could be that tomorrow all anybody will want is smokes. “Life is a runaway train” as one of the currently popular tunes on the C-W stations says.
AZ,
Munis have been gettting hammered, especially revenue bonds. There is serioius de-leveraging happening in the muni world. I’m sure you’ve read about the Auction Rate Securities, but there is another time bomb called the auction rate preferreds. These are the preferred shares companies like Nuveen and Eaton Vance used to leverage up their muni funds. Well, now this is unwinding faster than anybody could imagine. Not only are the funds being forced to de-leverage into a soft market, but the cost of funds is rising on the preferreds and is eating into the returns of the funds. I read on Friday that there was a leverage preferred equity fund that suspended its dividend because the amount they were paying to borrow funds was more than the fund was earning. I’m not sure that is the case w/ these Nuveen funds that are in munis but it would not surprise me. There will be plenty of opportunities in muni land moving forward. I was a bit early w/ a small portion of funds, but I think within 12 mo’s or so could be some opportunities for individual names. Also, I think risk is being priced into these munis and they are de-coupling from the “bubble” in Treasuries.
I wouldn’t touch Treasuries for less than 20%.
“No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society.”
Karl Marx
I worked myself up from nothing to a state of extreme poverty.
Groucho Marx
The drought that has plagued the Deep South for more than a year is creeping northward, and officials in multiple states are restricting outdoor burning in the face of water shortages and forest fire risks from falling leaves and tinder-dry conditions.
Extreme drought conditions, the second-worst possible, have now spread into Kentucky, and severe conditions have returned to West Virginia and southwest Virginia, according to the U.S. Drought Monitor. “The last three months have sucked every bit of moisture we’ve had,” said Ben Webster, a fire staff assistant for the West Virginia Division of Forestry.
In eastern Kentucky, retailers are sending bottled water to drought-stricken Magoffin County after its primary water source, the Licking River, fell to low levels and residents were told to conserve tap water. The county’s school system is serving meals on disposable plates with plastic utensils. Lunch trays have been temporarily shelved to save on dishwashing.
http://www.cnn.com/2008/US/weather/10/18/drought.woes.ap/index.html
======================================
Got riparian rights?
Did you ever notice that in your world view, every incipient trend ultimately converges to a widespread catastrophe?
I merely call it as I see it…
We can act as if climate change isn’t happening, and effecting us gravely, the results of which take a long time to transpire.
A flood comes and goes in days, droughts are measured in years…
all droughts are local.
… and they can get rained out.
Not to worry Aladin… We’ll save a $10k house here in Buffalo for you. We have PLENTY of water here. Would you like it from Lake Erie or Ontario?
Actually, these mid latitudes are normally deserts if you check the globe ( think Reno, Las Vegas, Gobi Desert). The only reason we’re not is the frequent storms pumped up from the Gulf; or, the humid air pumped up from the Gulf meeting cold air from Canada. Quiet times in the normal climate cycles bring droughts to this region; no hurricanes, no water. Simple as that. Nice October here.
I was surprised that people grow prickly-pear cactus in Tennessee as part of their landscaping. Never would have imagined it. These were large, mature plants, so they weren’t put in recently because of “climate change” induced drought.
Interesting thought about the hurricanes and deserts. Some think they correlate with sunspot activity. Global cooling or warming, they can’t figure which, and sunspots or cowfarts, they don’t understand.
“(think Reno, Las Vegas, Gobi Desert)”
Think rain shadow and you’ve got the answer.
“….rain shadow…” Deserts can be found at these latitudes all around the globe. Also in Southern Hemisphere. Check out the Namib, Australia, etc. Has something to do with global upper atmospheric circulation rising at the equator and then returning at these latitudes sans moisture and much cooler.
The Bay Area has the same latitude as Reno. One’s wet, the other is dry. The mountains that seperate the two account for the difference.
Reno and the Bay Area are not on the same latitude.
Reno is to the north and east.
It rains 20 inches a year in SF and that’s not very wet.
Perpetual droughts are mitigated by human intervention (aka engineering).
We drove through 5-6 inches of rain three weeks ago in the Middle Atlantic on our trip back east. Eastern TN and Western NC were fairly dry, though the farms were still producing, as this year’s rainfall totals were much closer to normal than last.
I remember numerous droughts 35+ years ago while growing up in Central MD. Things dry out and get crunchy, and then the rains come back with a vengeance. It was always sad to see the corn crops that never made it more than 2-3 fit high in the dry years, because you knew that the farmers didn’t get any production that year. Always good to keep plenty in reserve for the drought years, no matter what kind of drought it is.
Lad, you really ought to check out those “Christian” end-times preacher/entertainers. They say all the same things that you do, with just a couple exceptions regarding how it’s all supposed to work out in the end…
The world isn’t ending anytime soon for those that have prepared for failure, but those that failed to prepare might take exception.
Ahh, the classic, timeless delusion that man is totally in control of his own destiny… How many times must we witness examples of individuals proven to be spectacularly wrong on this point, before giving up on it?
When people take this type of belief to an extreme, the results typically are not only weird, but end up being cause for great pity.
At least lad doesn’t tell us that the solution is to send him our money.
True. On the other hand, he does make fevered pitches from time to time, with heavy moral overtones, which if followed en masse would serve to drive up the price of his favorite investment. Much more subtle and crafty than the televangelist schtick, for sure.
I seriously doubt that he has a sufficient audience to have any market-moving ability… (sorry Lad).
Though I for one wish I had listened enough to buy a small physical position before it became essentially impossible.
“….5-6 inches of rain….” You drove thru the remnants of a hurricane (Ike, I believe). We here in N. Ohio got a 1/4 inch of rain but 80+ mph winds did a few hundred million in damage. Not much press coverage, I’m sure.
Nope, this was well after the hurricane. Just a regular ol’ storm, the first part of which behaved a bit like a nor’easter.
Bill –
Have you not yet figured out that aladinsane has an ulterior motive and has for many months now?
He’ll change his tune after November 4.
“Where observation is concerned, chance favors only the prepared mind.”
Louis Pasteur
It’s obvious to the most casual observer, dear aladinsane.
Take that as you will. Because that’s exactly as I mean it to be taken.
A week or so ago I was talking about how itchy my trigger finger was getting, as I was looking for a good re-entry point into the stock market (been out the last 18 or so months). You know, buy when everyone else is selling, etc.
However, I have since de-cocked the hammer and taken my finger out of the trigger guard. IMO, there’s more pain to come, and it will be shared by equities.
Got cash?
BTW, some folks I’ve talked to here have suggested that part of the selloff in equities is due to the fear that Obama and a congressional supermajority will be very unfriendly to anyone with a positive net worth. What’cha think?
It took 3 years for the last bull market to unwind. We are in the fifth quarter of this unwind. Even if you believe this is the bottom, why be first?
Japan’s stock market was near 40,000 in 1990 as a result of its housing bubble and massive credit expansion. It hovers around 8K today. We’ve just begun unwinding our massive credit expansion. I can hardly believe we’ve done it within one measly year.
Perfectly put.
Just because Japan’s stock market dropped by 80 percent doesn’t mean it can happen here. This is America, for Chrissakes!
Despite recent precedent (see NASDAQ circa 2000-2003), it’s absolutely different here. LOL!
I think it is ridiculous. He is getting a huge amount of support from relatively well off, educated, social liberals. If he punished too many of their pocket books, he’d get pilloried. He needs to leave them where they are and make sure the additional money comes from the people who truely have more than enough. That is why this whole Joe the Plumber thing is so stupid. I bet that if you looked into the financials of that business that “Joe” wants to buy from his retiring boss, it would not have anything near $250K of profits, especially once you take out the expense of paying Joe (who is an employee) his salary. Also, the income of the business will go down when the boss retires. Joe will have to hire someone with a plumber’s license to do the real work and that isn’t cheap.
The media keeps harping on all the crap about his real name not being Joe, or that he isn’t registered to vote, and NO ONE has bothered to check if the business actually has TAXABLE INCOME of over $250K as opposed to GROSS REVENUE of $250K. I’d bet my bonus, that as a two man operation, it doesn’t make it on taxable income and as a one man operation (without a licensed plumber) it wouldn’t come even close.
I followed a link from an Obama e-mail and checked out their analysis of my taxes under their plan and McCain’s plan. It told me I would have no change at all under either one. Of course, I don’t think that takes into account what would happen with the McCain change in health insurance taxation since there weren’t any questions about my coverage, but that proposal is about as likely to pass as I am to fly by flapping my arms and jumping off a roof.
When inflation hits like the 70’s, your rising income will smack into Mohammad’s Horse’s spread-it-aroud plan; poetic justice.
aroud=around
Something I’m gleefully looking forward to is watching all the dupes who voted for Obama because they naively believe that the “change” The Messiah ushers in will actually be positive, as they become progressively more disillusioned, overtaxed, and enraged as the twin horrors of his presidency and the Democrat supermajority unfold. I understand voting for the man on the sole basis that the alternative, McCain, is even more abhorent, but not out any sincere conviction Obama will lead this country in the right direction.
“…watching all the dupes who voted for Obama…”
Some of the most well-spoken, intelligent people on this blog have expressed their intentions of voting for Obama. I’d hardly call them dupes. In fact, I’d reserve that expression for individuals who’ve taken the bait of the neo con fear mongers, and resorted to ridicule and name-calling, like a selfish insecure child who just lost a game.
Bantering Bear,
Don’t get me wrong - I make a distinction between those who vote for Obama with no realistic expectation that he can deliver on a fraction of what he’s promising, and the True Believers who look to him for salvation. I’m writing in Ron Paul, but if I had to choose between Obama and McCain, I’d choose Obama, as McCain [and "Shrub", our most ghastly President since Jimmy Carter] represents a complete betrayal of true Republican principles.
I take it, then, that you yourself are one of the neocons?
You sure sound just like them.
“I take it, then, that you yourself are one of the neocons?
You sure sound just like them.”
Because I merely pointed out their hypocrisy? Hah! You’ve got to have something better in your arsenal than that.
The neo-cons have been a blight on this country, and have completely hijacked the Republican Party. Between McCain’s craven kow-towing to the discredited holdovers from the Bush Administration - guys like Karl Rove - and his lunatic schemes to have the guv’mint [meaning: taxpayers like me] buy up all the bad mortgages, there’s no way that any true Republican could stand to see the guy win. With Obama, at least you expect to see him act like what he is: a liberal Democrat.
I welcome the upcoming OBama Presidency, pure Schadenfreude.
I will drink clicquot as I watch the returns and know that many in my little island (Jupiter Island, Fl) are closer to the coronary they so richly deserve.
Hey Bill,
I highly doubt that Obama will ever be able to get one dime of anyone’s net worth. Most Democrats in Congress are wealthy and they don’t like taxes either. They know that if they do not incur a capital gain, they won’t be taxed. They are after incomes, not net worth. Even Obama earns millions of dollars per year. Their fans Madonna own millions of dollars in stocks. Penny Pritzker, the billionaire socialist who is the single person behind the act of raising Obama to God status, is very favorable to avoiding taxes as much as possible (”Bloomberg Magazine, October 2008, pages 56 and 57). Best thing to do is invest like an elitist Obama supporter and you will pay very little taxes.
Obama won’t harm my net worth. I’m reducing my income markedly to avoid his socialist tax increases though. One term President.
or, like Teddy and Nancy, make sure that your gains are off-shore - teddy likes the Caymans, not sure about Nancy
Nasdaq 5,000!
You may be right.
Remember, the stocks boomed with a Democrat as President in the 1990s. However the Clintonistas conveniently forget that Congress was Republican-controlled from 1995 to 2000 and kept butting heads with the President.
There will be no gridlock in the next two years. Two weeks ago they swept through a huge taxpayer bailout, despite 9 out of 10 constituents e-mailing their representatives against any bailout. So it’s likely they will bulldoze through much more socialist measures the next two years.
The cure for the failed socialist policies and war policies of GWB and the Republican faithful? A worse poison instead of Ron Paul. Welcome to logic in America, 2008.
“wo weeks ago they swept through a huge taxpayer bailout, despite 9 out of 10 constituents e-mailing their representatives against any bailout.”
Was it really that high?
Yesterday the group was discussing the 44 y.o. trader from Chicago who took his own life on Friday. I don’t know if you’re all aware of this, but it is being reported here that he had just bought a $1.1M house in Oakbrook.
It’s sad because he went back to his old neighborhood in Berwyn to do the deed - possibly because it reminded him of happier times? He should have walked from the new house - no RE is worth a life.
And he’s on the level of hell where they have big screen TVs watching people laugh at him.
Who is buying homes now? Participants in a government-guaranteed knifecatcher encouragement program. If these loans later get foreclosed at a “higher-than-expected” rate, guess who gets to pay for any losses?
These programs illustrate why the government should stay out of the banking business, aside from playing a regulatory role to avoid the repeat of debacles like the subprime lending crisis. A private banker’s incentive is to offer loans to the best lending risks and underwrite credit away from those who are likely to default. The government, who thinks society is somehow collectively better off when everyone owns a home, inadvertently creates an adverse selection problem by offering loans to individuals with credit histories (and high default probabilities) such that private bankers would rationally deny their loan applications. To make it even worse, the government sweetens the deal with a taxpayer-funded guarantee. Unless I am missing something, the government equivalent of “Private Mortgage Insurance” premiums are (implicitly) borne by taxpayers, who bear the loss if the owner later is foreclosed.
Until the government stops undercutting private lenders with guaranteed loan offers to borrowers with poor credit histories, the private mortgage lending system is likely to stay effectively shut down. I sure hope that when the financial emergency finally ends, cooler heads prevail and think through the role of such massive government mortgage lending subsidies in creating the financial mess at hand.
NATION’S HOUSING
KENNETH HARNEY
No shortage of money for home mortgages
October 19, 2008
WASHINGTON – Credit squeeze, credit freeze, credit system seizures: Everybody knows how severe and painful the global financial breakdown has been – with banks unwilling to lend even to other banks.
But what about mortgages and real estate? Can you still get a home loan with less than a 20 percent or 30 percent down payment? Or with a credit score below 720?
Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there’s a lot more light there than in most other financial sectors. Consider these facts:
There is no shortage of money available for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the American mortgage market effectively has been federalized – at least for the time being. More than 90 percent of new loans now are being made through the Federal Housing Administration (FHA) insurance program, plus Fannie Mae and Freddie Mac. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservatorship. All three have unfettered access to global capital markets at rock-bottom costs because their borrowings are fully guaranteed by the Treasury. Ginnie Mae, which is FHA’s pipeline to the bond market, recorded an all-time high of $29 billion in new mortgage-backed securities issued in August.
Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on certain Fannie Mae and Freddie Mac loan programs with private mortgage insurance. FHA’s credit standards are generous and forgiving – the agency exists to help people with less-than-spotless credit histories. Fannie Mae and Freddie Mac have raised their credit score requirements over the past year, but buyers and refinancers with scores in the upper 600s can still qualify for loans carrying reasonable rates and fees.
A co-workers nephew, just bought a house in Florida with 100% financing. He had to sign a personal guarantee. I hear these kind of stories all the time.
The myth that’s there’s a lack of credit available, is just that, a myth.
I suspect that people who are complaining about not being able to get credit, are either trying to get approved for more than they can afford, or their credit is just horrible.
Reasonable credit standards, are being called restrictive.
The majority of people can get the credit the need and can reasonably afford.
I suspect the shortage at the moment is one of (1) qualified and willing buyers, and (2) sellers willing to part with their beloved home at a price that reflects current economic reality. Once prices have finished adjusting to affordable levels that reflect fundamental purchase demand, private sources of liquidity will return to the mortgage lending market. So long as the government works behind the scenes to prevent housing prices from reaching equilibrium, private sources of loanable funds would do best to stay on the sidelines with popcorn in hand.
Old friend said he and his stepbrother could get a house in the Inland Empire (trash of CA) as long as either of them had a job.
Period. According to a Realtor (TM).
I posted this last week as an update to my personal situation, but I do think it’s worth observing here as it might be more broadly applicable, and I think it’s worthwhile to try to extend the scope of such comments outside of CA, FL, and AZ.
I had two offers on my house the day it went on the market last Friday. One was all cash and the other was 20% down with a 30 year fixed mtg. So clearly there are some qualified buyers out there, though I’m sure the pool is considerably smaller now that loans are harder to come by and require substantial down payments (though it sounds like at least in TX one can still get away with putting as little as 5% down).
Unfortunately, I still have not uncovered the circumstances of my buyer. They live effectively around the corner in a house that is worth 2x as much as mine. Doubt they’d use this as a rental, so perhaps they’re buying the house to move their parents close by or some such. Will report once I get the information.
I do agree with your comments in general, and certainly don’t think Austin is any different than anywhere else (a large part of why I’m selling, among other circumstances in my life). But there is a pool of buyers out there who don’t need FHA and these new gov’t programs/tax “rebates”, etc, and banks seem willing to give them loans.
Buffett investing strategy: “If everyone on the planet follows my advice and buys what I buy, then whatever I buy will go up in price, and we will all look like financial geniuses.”
Sadly for the resident members of the Church of Gold, Buffett did not say he is buying precious yellow metal.
Equities is bet Buffett is making amid crisis
By Warren E. Buffett
October 19, 2008
Footnote: Needless to say, Warren would most likely trumpet the stock purchases he made yesterday…
If it was good advice when Mr. Buffett wrote this piece; it should be great advice now.
Why I’m not buying the U.S. dollar
America’s growing trade deficit is selling the nation out from under us. Here’s a way to fix the problem — and we need to do it now.
By Warren E. Buffett
Oct 26, 2003
“…Both as an American and as an investor, I actually hope these commitments prove to be a mistake. Any profits Berkshire might make from currency trading would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar.
But as head of Berkshire Hathaway, I am in charge of investing its money in ways that make sense. And my reason for finally putting my money where my mouth has been so long is that our trade deficit has greatly worsened, to the point that our country’s “net worth,” so to speak, is now being transferred abroad at an alarming rate.
A perpetuation of this transfer will lead to major trouble. …”
Fortune
Meltdown fear for debt-laden nations
By David Oakley, Capital Markets Correspondent
Published: October 18 2008 01:41 | Last updated: October 18 2008 01:41
As the credit crisis deepened this week, a clearer picture emerged of which countries are most at risk from the financial turmoil that saw markets around the world swing violently.
“The G7 nations may be suffering, but the US or the UK will always be able to raise money in the debt markets.”
MACBETH, Act 4, Scene 1
Thunder. Enter the three WITCHES.
First Witch
1 Thrice the brinded cat hath mew’d.
Second Witch
2 Thrice and once the hedge-pig whined.
Third Witch
3 Harpier cries “‘Tis time, ’tis time.”
First Witch
4 Round about the cauldron go;
5 In the poison’d entrails throw.
6 Toad, that under cold stone
7 Days and nights has thirty-one
8 Swelter’d venom sleeping got,
9 Boil thou first i’ the charmed pot.
ALL
10 Double, double toil and trouble;
11 Fire burn, and cauldron bubble.
…
Third Apparition
90 Be lion-mettled, proud; and take no care
91 Who chafes, who frets, or where conspirers are:
92 Macbeth shall never vanquish’d be until
93 Great Birnam wood to high Dunsinane hill
94 Shall come against him.
Descend.
MACBETH
That will never be.
95 Who can impress the forest, bid the tree
96 Unfix his earth-bound root? Sweet bodements! good!
97 Rebellious dead, rise never till the wood
98 Of Birnam rise, and our high-placed Macbeth
99 Shall live the lease of nature, pay his breath
100 To time and mortal custom.
…
SCENE V. Dunsinane. Within the castle.
Enter MACBETH, SEYTON, and Soldiers, with drum and colours
…
Messenger
Gracious my lord,
I should report that which I say I saw,
But know not how to do it.
MACBETH
Well, say, sir.
Messenger
As I did stand my watch upon the hill,
I look’d toward Birnam, and anon, methought,
The wood began to move.
MACBETH
Liar and slave!
Messenger
Let me endure your wrath, if’t be not so:
Within this three mile may you see it coming;
I say, a moving grove.
MACBETH
If thou speak’st false,
Upon the next tree shalt thou hang alive,
Till famine cling thee: if thy speech be sooth,
I care not if thou dost for me as much.
I pull in resolution, and begin
To doubt the equivocation of the fiend
That lies like truth: ‘Fear not, till Birnam wood
Do come to Dunsinane:’ and now a wood
Comes toward Dunsinane.
Let’s go shorting!!!
Although I agree with the quote “be fearful when others are greedy and be greedy when others are fearful,” I sold most of my BAC stock after Berkshire Hathaway bought $millions of BAC last summer.
The paranoid side of me is thinking that Buffett is following the example of Fransisco D’Anconia and trying to get wealthy people (who support the establishment mixed economy) to throw their money at companies that are heading to the dumpster. He’s also publicly supporting Democrat establishment politicians (Obama). All the marks of a closet “Frisco” D’Anconia, who was actually trying to hasten “Atlas Shrugging.”
Buffet is a fool. When he came to California to help der Terminator he stated that ‘you should pay more property tax’. Said property tax, Prop 13, was too low. Arnold shut him up in a hurry. Our problem in California is not with income, it is with spending.
He may generally be right, except I don’t see any mention in his article that the secular bear markets associated with panics don’t typically bottom out for twenty years or so (e.g. Japan may get there by 2010 or so, after the onset of their “Lost Decade” in 1990).
P.S. Happy 21st Black Monday Anniversary (Oct 19, 1987)
COMMON SENSE
Panics, bubbles have more in common than expected
By James B. Stewart
THE WALL STREET JOURNAL
October 19, 2008
What’s the inverse of a bubble? A panic.
That realization dawned on me as I watched otherwise rational people frantically selling stocks at any price. This was a panic, no doubt about it. But its uncanny resemblance to a bubble in all ways but the result may have struck me because the last bubble was so recent.
Just this summer, I was examining the bubble psychology in oil and commodity prices. When I reread what I had written, the comparison was striking. The following passage is exactly what I wrote in my August SmartMoney magazine column, except that I have substituted “panic” for “bubble,” “margin buyers” for “short sellers,” “pessimism” for “optimism,” and so on:
“What defines a panic? It starts with a development with far-reaching, perhaps unknowable, implications, like the collapse of mortgage-backed securities. Opinion may be sharply divided between optimists and pessimists, but pessimists gain the upper hand, driving prices lower. Margin buyers (optimists) get squeezed and are forced to cover, retreating to the sidelines. With pessimism unchecked and selling reinforced by ever-falling prices, stock values become detached from any rational criteria …
“Eventually, pessimism runs its course, prices turn up, and people step in to buy. Then prices surge.”
“He may generally be right, except I don’t see any mention in his article that the secular bear markets associated with panics don’t typically bottom out for twenty years or so (e.g. Japan may get there by 2010 or so, after the onset of their “Lost Decade” in 1990).”
I agree in nominal prices returns are non existent. The average secular bear market is 16 years in length. I believe we’re about eight years into this one. I am now buying some large, high quality, large cap stocks, with good dividend yields(4,5,6%). These will be in a IRA with a 20+ year time horizon( this account has been 100% cash for the last few years, except for a silver ETF bought at $11 and sold at $20.00).
For people with 10, 20,30 years to retirement, I think it is a reasonable strategy.
Point me to those stocks? Large-cap, high-quality, 4-6% yield?
These are some I like as long term holdings.
MO Altria
PM Philip Morris
KFT Kraft
CAG Con Agra
ED Con Ed
VZ Verizon
GE General Electic
UN Unilever
BMY Bristol Myers
WFC Wells Fargo
PFE Pfizer
SDY Spiders dividends
If you don’t look very hard, it won’t seem like much mortgage fraud is occurring.
FBI caught short of staff on financial fraud cases
Focus goes to national security, not fighting white-collar crime
By Eric Lichtblau David Johnston and Ron Nixon
NEW YORK TIMES NEWS SERVICE
October 19, 2008
WASHINGTON – The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis, current and former bureau officials said.
…
So depleted are the ranks of the FBI’s white-collar-crime investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible fraud of millions of dollars. Some companies victimized by fraud have begun turning to private investigators and accountants to do the legwork in the cases before turning their work over to the FBI.
Since 2004, FBI officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policymakers focused on counterterrorism as the chief financing priority.
According to previously undisclosed internal FBI data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes such as mortgage fraud, with a loss of 625 agents, or 36 percent of the 2001 levels.
Overall, the number of criminal cases that the FBI has brought to federal prosecutors – including a wide range of offenses such as drug trafficking and violent crime – dropped 26 percent in the past seven years, going from 11,029 cases to 8,187, Justice Department data showed.
“Clearly, we have felt the effects of moving resources from criminal investigations to national security,” said John Miller, the FBI’s assistant director. “In white-collar crime, while we initiated fewer cases overall, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims.”
Barn door was busted. Horses bolted. Barn was burnt down. They paved over the acreage with concrete and put up a parking lot.
Now the FBI is looking for “evidence” of hoofprints in that space.
Verily, this is most entertaining!
I guess they can always sift through the ashes to see what evidence they can find.
“The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis”
Of course! They are busy hunting tourists, I mean terrorists. God bless The Department of Homeland Insecurity. It really allowed the white collar trash to run wild.
Oh, I know, there are still those of you that think that 9/11 justifies all the stupidity of Homeland Security. I remember in 2002 watching a woman that looked like Mrs. Claus get wanded at DFW Airport. I just shook my head and cursed. I can’t tell you how many times I’ve seen 6 NYPD standing around a small table at a subway entrance. Does the phrase, “look at the jugs on that one?” really make us that much safer? If so, then we are good. Getting my wang grabbed while going into a Yankees game doesn’t to me seem like a necessity of Homeland Security. Maybe the guy thought I was a hot dog smuggler tied to Al Qaeda.
I am no conspiracy theorist but the whole thing seems so convenient. I do not think 9/11 was a government job. But I do think the elite thugs saw their opportunity to rape and pillage while the Bush Administration went wild on “security”. Too bad nobody was manning the turrets to watch over the demolition of our economy.
They were given a blank check by the people. Listening to the radio after September 2001 I could not begin to remember how many callers would gush…”you can’t pay first repsonders enough”, “give them whatever money they need to do the job”, “you can’t put a price on security” etc.
From 2001 until ~2006 they hid behind the decider’s apron - now they’ve decided there’s something even scarier out there and they’re looking for another apron to hide behind.
What about when they wand someone who is obviously a celebrity of some sort, oh say someone recognizable as Sarah the red head Duchess, you know, someone you see on WeightWatchers ads and tv all over the place.
As well as those toddery old folks that can barely stand up much less walk through a security machine.
Again, 1-2 summers ago, the retention on TSA checkers was 40% attrition, and they were offering bonuses if you would stay through the summer.
And the recent news expose that the DHS is not keeping track of ID’s and uniforms of TSA emps that quit. Nice one.
Why do they have metal badges now? Just so they can walk around the metal detectors? Was there a black market in old cloth badges?
in Netherlands, the justice department openly admits they have about zero personnel available for investigating mortgage fraud; they have other priorities (like collecting speeding / parking tickets, and of course eavesdropping on about 100.000 potential islamic terrorists).
Many mortgage fraud schemes (some involving tens of high profile white collar officials) have emerged over the last years, mostly as a result of big losses at the banks. Up to now no one has been convicted; most banks don’t even file a case because it involves lots of work, the justice department does nothing with it anyway and they might get huge damage claims from the white collar criminals that are involved.
And most importantly, up to now it is convenient for the elite to look the other way.
Credit crunch will last into ‘09, economists say
By Dean Calbreath
STAFF WRITER
October 19, 2008
…
“The big issue is how to restore confidence,” said Rafael Bostic, a former senior economist at the Federal Reserve who is now an economics professor at the University of Southern California. “Right now, there’s still a bit of frenzy and chaos in the marketplace.”
So far as the Fed world view is concerned, there is no real economy, households have no budget limits (particularly the kind that relates household income to how expensive a home they can afford), and every financial crisis can be averted by restoring confidence to the game.
When you are a Serfer under a monstrous crushing wave of debt, no amount of happy talk enables you to borrow more. You are going to take a pounding and you know it.
They are confusing confidence with ignorant bliss which cannot be so easily restored once it is taken from you.
What shall we label the mountain debt left after the crunch: Legacy debt? HBB debt? Sucker debt? Serfer debt?
Hang ten.
The choice of the next Treasury Secretary may pose a conundrum: Is it better to go with an outsider of dubious qualifications, or an insider whose connections may create the appearance of myriad conflicts of interest?
I admit to not having investigated this deeply, but aren’t Whitman and Fiorina both Silly Valley drop outs? Aside from their gender, what superior qualifications do either of them have to be Treasury Secretary? By contrast, former Treasury Secretaries Rubin and Summers are highly consummated insiders.
Economic crisis to boost stress load of next treasury chief
By Tom Raum
ASSOCIATED PRESS
October 19, 2008
WASHINGTON – The next president’s choice of a treasury secretary may well be the most important appointment he’ll make – someone to grab the reins of a trillion-dollar-plus program to shore up the world’s largest economy, probably in the middle of a severe recession, and at the right hand of a chief executive who’ll be a rookie himself.
In normal times, the job can be demanding enough. In an economic crisis, as now, it can be one of the most powerful and stressful jobs in the government. Just ask Henry Paulson, the former investment banker who’s made it clear that he’s not interested in keeping the title.
If not Paulson, then who?
Meg Whitman
Carly Fiorina
Robert Rubin
Lawrence Summers
Just when you think Iceland couldn’t behave more m*ronically: Iceland fixes crown at different rate to market.
BWAAAAAAHAHAHAHAHHAHAHAHHAHAHHAHAHHHHHHHHHHHHHHHHH!!!
they are bankrupt anyway, so why bother? I think they will continue to party as much as possible over the next weeks, until it really hits them. Foreigners will pay 99% of the bill, why worry about the additional 1% …
Colin Powell endorses Obama. He is talking to Brokaw right now. I don’t know if you know this but I have a tendency to be a little cynical. But I still really like, and respect, this guy. The rest are a cauldron of bums.
I would like to see Obama add him to his admin. Powell’s problem was he was a military man, so he knew how to take orders. In the Chimp admin that was deadly.
But Powell is a decent and honorable man IMO. He had no place in that den of thieves.
Your concept of “honor” should include the ability to speak out against, or refuse to follow, dishonorable orders.
Amen, Bub. Powell may once have been honorable, but he blew it completely. He did the really dirty work of the admin before the UN, no matter what his “second thoughts” were. He’s angling for a job with O’Bama.
Bub,
Not only honor, but also courage.
“Not only honor, but also courage.”
+1
Just an observation:
I live on a quiet street in SF in an “up and coming” neighborhood - meaning that the graffiti and drug dealing have slowly been replaced with Mercedes, people walking dogs, kids running around, local cafe flourishing. It’s been nice to witness. Almost all the houses on our street have gone through some form of renovation. One brand new structure went up where a garage once stood - so, a lot of change and growth and pretty damn quick.
But now it appears the brakes have been put on. One place which was in bad shape was gutted, the exterior and interior revamped, but unfinished. And that’s where it’s stayed now for about 3 months. Still some boards covering the foundation, electrics missing… no activity for quite some time. Same with the house next door to it, the people were evicted (a foreclosure) and now it’s been sitting empty waiting for the people that bought it to start the renovation. Nada…
I like the silence - seems like I’ve heard hammering or scaffolding or saws every single day since I moved in to this house several years ago. Now, it’s dead quiet.
A sign o the times? In the heart of San Francisco? I thought it was different here ;).
I would like to respond to something that was in yesterday’s thread.
Statement: “They are not failing because of incompetence. They are failing because certain ppl decided to max out and retire early or move on.”
Response: “Here I would tend to disagree with you. The system is failing due to the systematic risk built in by lending people money against depreciating assets without doing the brain check to make sure people could pay back the money. There’s incompetence everywhere I look.”
The problem was that these ppl didn’t expect long time job security, and were paid on commission. As such, their lack of due diligence in many cases had more to do without giving a damn about the long term, and maximizing the bonuses today, than to do with inability to examine risk to the company. Those with huge deal volume were rewarded with large compensation, while those that were conservative and turned away bad deals were canned. I would argue it was a short term business strategy to get in and grab what you can before you get out. While publicly saying the ride would never end, they were secretly putting together exit strategies, at least those with a clue were. Yes, there were certain ppl serving as instrumentalities that didn’t pick up on the game, but that doesn’t mean the game wasn’t being played. I don’t know a single top level investment banker that didn’t have an exit strategy at the peak.
deletion of defined benefit plans for 401k type retirement plans allows management to take risks at the expense of the company. If you can walk away with 50 mil+ in your pocket, why do you care if the company survives?
Defined benefit plans had their own problems. Companies could potentially concentrate pension fund investments procyclical assets — the kind that outperform during boom years and plummet during bust years. So long as the good times rolled, companies could let outsized investment returns on high-risk assets supplant contribution requirements. In case the economy turned south and the company went out of business, the plan could be dumped onto the PBGC (taxpayer-funded pension plan insurer of last resort). Under this scenario, taxpayers and retirees get left holding the bag, while corporado CEOs enjoy the good life on the beach, living off their golden parachute pension loot.
I am not suggesting this generally describes how defined benefit pensions work(ed), but rather illustrates a form of moral hazard for how they could fail to serve their officially intended purpose.
The problem is a group of under-regulated investment banks on Wall Street were allowed to print their own money via credit instruments. Things were going so well the SEC allowed them to increase their leverage ratios to accommodate the printing. Regulated banks set up special entities outside the regulatory framework to compete. F&F broke timeless rules to join the party. As a result, there was too much money competing to fund too few assets.
Tim -
Hi! I think we mostly agree.
I totally agree that the people actually orchestrating the whole thing knew what was going down. I do doubt, though, that offering them a long term stable position against immediate wealth would have changed much. What would you take - “You won the lottery” or “you’ll be rich in 20 years”? *grin*
Yes, there were certain ppl serving as instrumentalities that didn’t pick up on the game, but that doesn’t mean the game wasn’t being played.
That’s the incompetence I’m talking about. Who bought those toxic waste bonds? How compentent was the SEC in breaking rules from the 30’s? How compentent has the media been in predicting and understanding what’s happening? How competence were the toxic mortgage holders?
Manias and panics require mass greed and incompentence. Greed and competence means you get out out the top.
As always, you rock.
Went into Carmel and Monterey yesterday, more businesses going out of business. Day started out with rain so I thought that foot traffic would be light, wrong. Lot’s of people out shopping and buying, locals. Others walking around looking like zombies.
One gentleman in the Carmel has been trying to sell a 2002 retro t-bird and has been lowering the price by $5 per month.
Hearing more stories about people worried about their retirement accounts than property values, but these people bought their houses long ago and didn’t refi.
Seeing more trailers unloading furniture into houses already occupied by one family, looks like older kids returning to the nest but with spouse in tow.
“Went into Carmel and Monterey yesterday, more businesses going out of business.”
I was in Carmel last thing. Saw a few empty store fronts on Ocean Avenue. There were quite a few tourists walking around, but very few had shopping bags…lots of looking but very little buying is what I saw.
Monterery was having a bit of a seizure when I visited a few weeks ago.
Lots of “sales”. Not much selling. It was entertaining.
What triggered the bubble? I’ve had this question running around in my head lately. Was it one thing, like easy money, or was it a combination of events.
I kown that in So Cal the proliferation of construction defect litigation completely shut down the building of any new condo projects, and without this “first step” to home ownership the cost of all homes was elevated.
Maybe it would be fun to try make a list of all factors which led to be bubble and try to rank them.
Just thinking out loud….thanks for your time.
After the dot com implosion, everyone around me lost faith in the stock market and everyone wanted to invest in something tangible, Real Estate. Despite the recession, shocks of 9/11, and incipient Iraq war, people continued pouring money into the RE market. Wall Street and other lenders spotted the trend and grew increasingly accommodating leaving long held lending rules by the way. With more money pouring into the RE market than it could reasonably hold, prices started going up and up, and it became a self-fulfilling prophesy.
I got slammed a few weeks ago for misapropriating the game of Monopoly to the Depression– I know, I know, I read the New Yorker article that talked about its origins to some 19th century game called the Landlord or some such thing, but here’s a totally cool interative version of Monopoly, called Econoply:
http://www.washingtonpost.com/wp-srv/opinions/interactives/econopoly/index.html?hpid=opinionsbox1
without this “first step” to home ownership the cost of all homes was elevated.
That doesn’t make sense. If first time buyers can’t buy condos, only houses, houses will have to be cheap enough for first time buyers to afford. Otherwise …drum roll… there won’t be anyone to buy them.
I think Greenspan’s lowering of the interest rates made housing more affordable, and thus, housing prices went up as they should have. The increase in prices lead to speculation and various products were created to allow ppl to tap into and exploit the equity ppl had. Those well positioned to benefit from this were making so much money they never wanted the party to end. Thus, to prevent stabilization upon reaching the new market equilibrium in light of lower rates, once rates flattened out, the only way they could keep it alive was by lowering lending standards to the point of lunacy. As I have pointed out elsewhere, this was not incompetence, but a group of ppl saying well why don’t I get as much as I can before I get out. This maximation of profits to fund exit strategies led to practices that no one would ever think about doing if the long term viability of their company was the concern, and occurred at a time that regulation was unheard of.
Agree.
Additionally, it didn’t hurt that regulations were loosened througout the 90s.
People were pretentious long before the real estate bubble. They were pretentious during the stock bubble of the 1990s. Easy money!
I hope this RE bubble burst is the last of the asset class bubbles for several decades.
It will take a generation of the general populace living debt-free to develop the culture of humility that my parents and their generation (Bob Hope generation) had.
There is a lot of fun to be had by living simply. It’s peace of mind. When you have nothing to worry about you give yourself more time to think about having a good time while living within your means. Living simply automatically makes you pay less in taxes, and you don’t even have to be aware of it. Just don’t incur any capital gains as long as we have this trend to serfdom.
“People were pretentious long before the real estate bubble. They were pretentious during the stock bubble of the 1990s. Easy money!”
Conspicuous consumption is a term used to describe the lavish spending on goods and services acquired mainly for the purpose of displaying income or wealth. In the mind of a conspicuous consumer, such display serves as a means of attaining or maintaining social status. A very similar but more colloquial term is “keeping up with the Joneses“.
History and evolution of the term
The term conspicuous consumption was introduced by Norwegian American economist and sociologist Thorstein Veblen in his 1899 book The Theory of the Leisure Class. Veblen used the term to depict the behavioral characteristic of the nouveau riche, a class emerging in the 19th century as a result of the accumulation of wealth during the Second Industrial Revolution. In this context, the application of the term should be narrowed to the elements of the upper class who use their enormous wealth to manifest social power, whether real or perceived.
Worst decision ever by the Univ. of Chicago : not giving Veblen tenure.
His book is amazing and highly recommended.
think outside the USA … the housing bubble was already in full swing in most of Europe before the dotcom bubble burst and the housing bubble started in the US. The fundamentals are the same everywhere: easy money, and all the bad government policies that go with it.
Got a hot date with a 1,500 year old, adios.
We all know how much you love playing with wood.
Hahahahaha! Comical!
NYCity, you are really on a roll today.
Have fun out there.
I prefer the 2,300 year old set. They’ve lost more on top, but are even more shapely.
Back from the forest for the trees.
S&P 500 earnings estimates over the last 18 months:
2008 earnings estimates
Mar 2007 $92
Dec 2007 $84
Feb 2008 $71.20
Jun 1, 2008 $68.93
July 25, 2008 $$72.01
Spe 30, 2008 $60
Oct 15, 2008 $54.82
2009 Earnings estimates
Mar 2008 $81.52
Apr 9, 2008 $72.60
Jun 25, 2008 $70.13
Aug 29, 2008 $64.66
Sep 10, 2008 $58.87
Oct 14, 2008 $48.52
It would be surprising if earnings estimates aren’t still to high.
I didn’t think things like earnings mattered?
Oh they don’t. The only thing that matters is that investors are confident.
Well, they’re gonna get a lot more confident soon.
Anyone watch the Barrett-Jackson car auction out of LV? Amazing to see the prices people throw at ‘collectible’ cars; something that must be stored, insured and will be hard to off-load in hard times. I drove or road in a lot of those cars in their time, and I appreciate all of the safety features of the modern car. I must admit that I miss the simplicity of being able to maintain and work on the earlier autos.
I can tell you that the prices at those auctions are also dropping rapidly. At the Palm Springs auction a car in worse condition than mine but an identical model sold for 140k. Four months later in Palm Beach I got 87k. I was happy to get out at that price with the firm knowledge that deleveraging was already beginning to occur. People around me were shocked at the time. I just shrugged and smiled thinking about 87k reinvested for the next 20 years for my retirement.
Just for giggles, I went to the Kruse auto auctions in Auburn, IN in September. It was the first time that I’d been to one of those auctions. So many of those cars had “AC that blows ice cold”.
It was eye opening to see the gaps in prices for desirable collectibles and other old cars just as nice but not hot collectibles.
10-13-08
Their Great Depression and Ours: Part 2
By James Livingston
“Last time out, I asked five questions that would allow us to answer this one: Does the current economic turmoil bear the comparisons to the Great Depression we hear every day, every hour? On my way to these questions, I noticed that mainstream economists’ explanations of the Great Depression converge on the idea that a “credit contraction” engineered by the hapless Fed was the “underlying cause” of that debacle. They converge, that is, on the explanation offered by Milton Friedman and Anna Jacobson Schwartz in 1963 in A Monetary History of the United States, 1867-1960. In this sense, the presiding spirit of contemporary thinking about our current economic plight—from Niall Ferguson to Henry Paulson and Ben Bernanke—is Friedman’s passionate faith in free markets…..”
http://hnn.us/articles/55614.html
A different way of looking at what caused the Great Depression.
Nice reading Hoz.
“So the Bush tax cuts merely fueled the housing bubble—they did not, and could not, lead to increased productive investment. And that is the consistent lesson to be drawn from fiscal policy that corroborates the larger shift to profits, away from wages and consumption. There is no correlation whatsoever between lower taxes on corporate or personal income, increased net investment, and job growth.
For example, the 50 corporations with the largest benefits from Reagan’s tax cuts of 1981 reduced their investments over the next two years. Meanwhile, the share of national income from wages and salaries declined 5 percent between 1978 and 1986, while the share from investment (profits, dividends, rent) rose 27 percent, as per the demands of supply-side theory—but net investment kept falling through the 1980s. In 1987, Peter G. Peterson, the Blackstone founder who was then chairman of the Council on Foreign Relations, called this performance “by far the weakest net investment effort in our postwar history.”
The responsible fiscal policy for the foreseeable future is, then, to raise taxes on the wealthy and to make net contributions to consumer expenditures out of federal deficits if necessary. When asked why he wants to make these moves, Barack Obama doesn’t have to retreat to the “fairness” line of defense Joe Biden used when pressed by Sarah Palin in debate—and not just by the lunatic fringe where hockey Moms and supply-siders congregate. The leader of the liberal media, the New York Times itself, has also admonished the Democratic candidate on his proposed fiscal policy: “Mr. Obama has said that he would raise taxes on the wealthy, starting next year, to help restore fairness to the tax code and to pay for his spending plans. With the economy tanking, however, it’s hard to imagine how he could prudently do that.”
What complete and utter rubbish… claiming that tax cuts don’t help the economy is like claiming that increasing freedom is bad and thereby arguing for less financial freedom where the politicians decide where money should be spent.
All I can say is that these brain dead economic and governmental policies will only accelerate the decline of our country and total wealth.
No, what’s rubbish is Reagan’s trickle down theories.
Anyways, I am sure that many of the the ultra rich where I live are glad that you have their best interests in mind.
Here’s the deal.
Taxes, bad. Meat inspections, good.
Taxes, bad. Air traffic control, good.
Taxes, bad. Nuclear waste disposal, good.
Taxes, bad. Police officers, good.
Taxes, bad. Firefighters, good.
Taxes, bad. Medical clinics, good.
Taxes, bad. Food inspectors, good.
Taxes, bad. Road signs, good.
Taxes, bad. HazMat teams, good.
Taxes, bad. Lifeguards, good.
Taxes, bad. 18-Wheeler safety inspections, good.
Get the picture.
IAT
I may have missed the /sarcasm switch.
-
Just in case, and you pay these things with___?
Yes, you missed the sarcasm. All those people ranting about taxes. They eat meat, they fly, they call the police in times of trouble, they go swimming, they drive over bridges, they demand that heads roll on Wall Street. BUT, amazingly, they believe that somehow, when it comes to government services, its all free.
So, yes, I was not espousing a coherent theory–I was copying the anti-tax zealots.
IAT
Yah, I’ll complain about taxes!
8,180 “public servants” in San Francisco make over $100,000 a year.
That’s right, EIGHT THOUSAND ONE HUNDRED.
One in every 99 residents is a City employee making more than $100K.
One of every three City workers is above that pay level.
The City budget of $6.4 billion means the GOVERNMENT spends more than $8,000 per resident per year.
The streets should be lined with **cking GOLD!
What do we get for your money?!
I ask again - what do we get for our money!?
It’s not that I don’t like what they do - it’s that I don’t like what they get paid… to do what they do.
They are underperforming for what they are paid. In a major way.
So, yes, I’m complaining about TAXES!!!
http://www.sfgate.com/webdb/sfpay/index.shtml
“They eat meat, they fly, they call the police in times of trouble, they go swimming, they drive over bridges…”
I love it. The gov’t monopolizes all this stuff, so people have no practical choice but to use gov’t services. Then they call us hypocrites for using the services while wanting to reduce the role of government.
As an aside..
Fairfax county public schools in NoVA had a larger budget than the entire FDA in FY2005. Thankfully they have gotten more money with all of these cases of tainted Chinese products, but not that much more.
You are welcome to open your own meat inspection/air traffic control/police department/life guard/engineering company. Go ahead.
Talk (and rants) are cheap. You think you can turn a profit? Go on. Try it. Make my day.
IAT
sf jack,
you pick one of the worst-managed cities in the country and rant about it. The problem isn’t not taxes, it’s asses. If I were you, I’d move. For a city its size (about 750,000) it has waaaayyyy more than its share of highly paid “public servants.” But, that’s the implementation. Taxes are a good thing but, like any good thing, they can be abused.
So complain away, and stay in sf. That’s surely a productive response.
IAT
Bill Maher uncovered what he called a good “kitchen sink” analogy about credit leading up to the Great Depression (the 1928 one
).
Maher: A statistic I just read said the income inequality…in 2005, the top 1% have the same amount of money they did in 1928 right before the Great Depression. It’s interesting…FDR’s Fed chairman in 1951, Marriner Ecccles, had an interesting comment after the Depression. He said it was largely because of income inequality. When the rich people have so much money, it screws up the system.
He said,”As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”
***
Gosh, Marriner Eccles is great name…if I didn’t already have a handle I would call myself Marriner Eccles and post a little sea shanty or pemmican recipe from time to time to keep up appearances.
“FDR’s Fed chairman in 1951, Marriner Ecccles, had an interesting comment after the Depression. He said it was largely because of income inequality. When the rich people have so much money, it screws up the system.”
Kudos to the Mormon Greenspan for that insight. I don’t recall AG or BB ever making a similar comment…
Purgatory loans sound rather unpleasant to me. When will Washington finally learn the lessons that Milton Friedman tried to teach, which is that a free market should be based on equality of opportunity, rather than equality of results, and that markets work best when the government limits its role to enforcing a rule of law and letting private individuals on both sides of a transaction make rational decisions in their mutual best interests?
Above all, subsidizing interest rates on supersized mortgage loans in order to encourage fools to buy homes they cannot afford appears to perpetuate the very policies which got us into the mortgage mess.
New midlevel mortgages get ‘purgatory’ rates
Dina ElBoghdady, Washington Post
Sunday, October 19, 2008
(10-19) 04:00 PDT Washington –
The federal government’s efforts to make jumbo mortgages more available to borrowers have created a three-tiered mortgage market in areas with expensive housing.
There are the standard loans that Fannie Mae and Freddie Mac buy from lenders and then sell to investors. For years, those loans could not exceed $417,000 for single-family homes.
There are the loans larger than that, or jumbos. It used to be those were the higher-interest loans that many borrowers in pricey areas had to use to finance their homes.
Now there’s a middle tier that falls between the $417,000-and-under loans and the jumbo ones.
“It’s kind of like purgatory,” said Gibran Nicholas of CMPS Institute in Ann Arbor, Mich., which trains mortgage bankers and brokers. “It’s not heaven, and it’s not hell. It’s somewhere in between as far as rates go.”
compared to pre-bubble times I’m sure all those loans still qualify as ‘heaven’. When rates get above 8-10% we are going to find out the real value of most of these properties.
Apparently the U.S. govt would rather keep the private mortgage lending industry in permanent shut down mode than let the market set rates at levels that reflect the risks.
“OPEC to cut oil production by 1 Million Barrels Per Day”
“Iranian officials have repeatedly said crude at $100 seems fair. Others, including Qatar’s oil minister and Venezuelan President Hugo Chavez, have pushed for levels closer to $80-90. ”
Ahh, the art of price fixing. You have 13 members in this organization who are basically the mafia. Who’s going to take orders from whom?
So the price of oil is tanking….let’s see if the Iranian and Venezualan president keep flapping their lips about how big and bad they are. They were riding high like housing but in this case, it was oil.
Now just imagine if the US gov increased taxes on oil and used the money to cut income taxes. The price of oil and these governments would collapse.
Is it really in the typical American taxpayer’s interest for the government to be funneling interest rate subsidies into the hands of people who are wealthy enough to afford homes that cost nearly 3/4 of a million dollars ($729,750+)? If I were a tax paying voter in flyover country looking at my scarce wealth getting funneled into the pockets of wealthy coastal homeowners, I would be livid.
When investors stopped buying jumbos, some lenders stopped offering them. Others raised the jumbo rates. The result: Jumbo rates spiked, meaning people who needed larger loans faced sharply higher costs.
Enter the federal government.
To bring rates down, the government earlier this year temporarily raised the limit for loans that Fannie Mae and Freddie Mac can buy to $729,750 in some of the nation’s priciest housing markets, including the Bay Area.
In those markets, that created that middle tier - generally called jumbo conforming - because Fannie and Freddie can now buy loans that fall between the old $417,000 limit and the new $729,750 cap.
That new cap expires Dec. 31.
At the start of next year, a lower cap - $625,500 - should take effect. Of course, all of this could change in a flash as the government tries out new ways to untangle the economic crisis.
Whatever.
Those homes will be under the limits next year if they aren’t there already.
It was a MANIA, people, a MANIA, and it’s over.
Follow the money.
The REIC is paying vast sums to politicians to help them stay in power. They expect a return on their investment via friendly policies.
I believe this is what we are seeing.
Follow the money. See who benefits. A quick and dirty heuristic. Not always absolutely accurate, but generally a very good rule of thumb.
The politicians are captured to protecting the special interests of their campaign contributers. And with the concentration of wealth in the hands of the few at the highest level since 1929 or so, the narrow desires of a few big campaign contributors who live in Richistan can easily outweigh the best interests of the other 99 pct or so of the citizenry.
You have to have a heart of stone to not love this story.
* Business
* Banking sector
So long, suckers. Millionaire hedge fund boss thanks ‘idiot’ traders and retires at 37
* Andrew Clark in New York
* The Guardian,
* Saturday October 18 2008
* Article history
The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged “idiots” and thanking “stupid” traders for making him rich.
Andrew Lahde’s $80m Los Angeles-based firm Lahde Capital Management in Los Angeles made a huge return last year by betting against subprime mortgages.
Yesterday the 37-year-old told his clients that he had hated the business and had only been in it for the money. And after declaring he would no longer manage money for other people, because he had enough of his own, Lahde said that instead he intended to repair his stress-damaged health; he made it clear he would not miss the financial world.
“The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking,” he wrote. “These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government,” he said.
“All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”
Heh.
First, I wish I had the brains to do this.
Second, I wish I had the guts to write a letter like this.
Lahde became one of the biggest names in the investment industry when one of his funds produced a return of 866% last year, largely by forecasting the US home loans industry would collapse.
In his farewell letter, which concluded with an appeal for the legalisation of marijuana, Lahde said he was happy with his rewards and did not envy those who had made even more money.
“I will let others try to amass nine, 10 or 11 figure net worths. Meanwhile, their lives suck,” he wrote, citing a life of back-to-back business appointments relieved only by a two-week annual holiday in which financiers are still “glued to their Blackberries”.
Lahde’s retirement came amid an implosion among the hedge fund industry - some 350 of the funds have liquidated this year, according to Hedge Fund Research.
His final words of advice? “Throw the Blackberry away and enjoy life.”
SPECIAL REPORT AMERICA’S MONEY CRISIS
Record declines in hedge funds
Industry report shows third quarter saw all-time highs in investor redemptions and asset shrinkage.
By Ryan Derousseau, CNNMoney.com contributing writer
Last Updated: October 17, 2008: 1:18 PM ET
* Former Lehman Brothers CEO subpoenaed
* U.S. subpeonas 12 Lehman execs
* Record declines in hedge funds
Quick Vote
How gloomy are you about the nation’s economy?
* This is the worst I’ve seen
* This is bad, but I’ve seen worse
* This isn’t so bad
NEW YORK (CNNMoney.com) — Nervous investors fled hedge funds as the market meltdown got underway, setting records for investor redemptions and asset declines in the third quarter, according to a report from an industry research firm issued Friday.
Hedge Fund Research, a Chicago-based firm, said investors took out more than $31 billion in the quarter, the largest net capital redemption in the industry history.
This redemption of capital by investors has contributed to a record $210 billion decline in industry assets during the quarter, most of it from investment losses. The quarterly drop was more than last year’s total record inflow of $194 billion.
“Investors in the current market conditions are eagerly looking to rush to cash,” said Kenneth Heinz, president of Hedge Fund Research.
“They’re so distraught by performance losses, not only by hedge funds, but wherever you are in financial markets,” said Heinz.
CNN Reader Poll
QUICK VOTE RESULTS Thanks For Your Vote!
1. How gloomy are you about the nation’s economy?
This is the worst I’ve seen 68%
This is bad, but I’ve seen worse 16%
This isn’t so bad 15%
“This isn’t so bad 15%”
Polls are just like the bond rating agencies that gave every bond AAA ratings. Any poll that can find 15% of the public saying this isn’t so bad is worthless. CNN should be ashamed to put their name of such crap
I agree the worst…its like everybody hit the brakes at the same time…the phones are dead…prices falling
We should have pity on people like me…Our country is telling smart people to GET LOST
we need airheads to fill the available jobs…
Recession Watch 2008
Slower growth, but no recession - forecast
404 Page Not Found
The page you’re looking for is not here. We apologize for the inconvenience.
There are several ways you can find the information you need:
Site map
Our site map lists all the sections and tools of CNNMoney.com
Search Enter search term(s) in the box provided above. Search the entire site, individual magazines, or the Internet.
E-mail us Let us know how we can help you.
E-mail us at errors@money.com
Home page Return to the CNNMoney.com home page
Ummm, PB….. You’re beginning to look like a Turing-Test-posting-bot. Which is impressive, cause I used to think you were real!
Did we really need to see that 404 Page Not Found, though??
Sorry, I guess my twisted humor is not for all. But I found it somehow hilarious that a link to a CNN story entitled “Slower growth, but no recession - forecast” takes one to a “404 Page Not Found” error. There sure as hell is a current recession in California and in San Diego, but perhaps it is different here?
It’s different everywhere particularly in Iceland, Hungary, and the Baltics.
WOOOOOOOOOO!!!
Party like it’s Argentina in 1999.
Or 2008.
All recessions are local.
White House aide says parts of US in recession
4 hours ago
WASHINGTON (AP) — One of President Bush’s top economic advisers said Sunday that parts of the country probably already are experiencing a recession and it could take a few months before the clogged credit system starts working again.
Many analysts predict the economy could contract over the final three months of this year and in the first 90 days of 2009. That would meet the classic definition of a recession — two consecutive quarters of economic contraction. Some economic analysts say the sagging economy already is in recession.
The White House has been loath to use that word, both because the technical definition has not been met and because it carries such negative weight.
Speaking in a broadcast interview Sunday from California, the chairman of the White House Council of Economic Advisers noted that national unemployment stands at 6.1 percent. Ed Lazear said some parts of the country, such as California, have even higher rates of people out of work.
“We are seeing what I think anyone would characterize as a recession in certain parts of the country,” Lazear said.
I write about regional economies all over the nation. The only ones that haven’t fallen into recession are those that never left (ie. Michigan).
“The only ones that haven’t fallen into recession are those that never left (ie. Michigan).”
That’s because Michigan is in a double-secret recession.
“One of President Bush’s top economic advisers said Sunday that parts of the country probably already are experiencing a recession…”
Off with his head!
Financial Times
US faces worst recession in 26 years
By Krishna Guha in Washington
Published: October 19 2008 22:23 | Last updated: October 19 2008 22:23
The US economy appears to be plunging into what many experts believe will be its worst recession since 1982.
Senior officials at the Treasury and Federal Reserve are confident that the rescue plan for US banks will succeed in preventing a financial system meltdown and ensure there will not be a repeat of the Great Depression. But they know that a sharp economic downturn is already baked in the cake. They do not,however, know how deep or protracted it will be.
AMERICA’S MONEY CRISIS
* Former Lehman Brothers CEO subpoenaed
* U.S. subpeonas 12 Lehman execs
The NY Times today has an article about Henry Cisneros, the Clinton Adminstration, and how the push to get mortgages for poor people led to this mess.
http://www.nytimes.com/2008/10/19/business/19cisneros.html?hp
However the Times stopped short about blaming these greedy deadbeats:
While Mr. Cisneros says he remains proud of his work, he has misgivings over what his passion has wrought. He insists that the worst problems developed only after “bad actors” hijacked his good intentions but acknowledges that “people came to homeownership who should not have been homeowners.”
They were lured [!] by “unscrupulous participants — bankers, brokers, secondary market people,” he says. “The country is paying for that, and families are hurt because we as a society did not draw a line.”
[...]
You think you have a finely tuned instrument that you can use to say: ‘Stop! We’re at 69 percent homeownership. We should not go further. There are people who should remain renters,’ ” he says. “But you really are just given a sledgehammer and an ax. They are blunt tools.”
From people dizzily drawing home equity loans out of increasingly valuable houses to banks racking up huge fees, few [at least he didn't say 'nobody'] wanted the party to end.
I hope you all can read the link without registration….
Giving money to people with money problems is as silly as giving alcohol to people with alcohol problems.
Don’t make me go ape-sh*t on your common-sense @ss, you hear me now!
From Times Online
October 16, 2008
Paulson: bailout for ‘regulated’ firms only
The US Treasury Secretary hints that he is unwilling to bailout hedge funds, only lending institutions and savings banks
Suzy Jagger, New York
Henry Paulson, the US Treasury Secretary, has hinted that he was unwilling to bailout hedge funds after indicating that his capital injections plans are only aimed at lending institutions and savings banks.
In an interview on Bloomberg television, the former chief executive of Goldman Sachs said: “Right now we’re focused on financial institutions, regulated financial institutions. The program right now is for banks and thrifts.”
The predicament of hedge funds was highlighted after Citadel Investment, one of the world’s most successful hedge funds, admitted that returns in September have dropped by 26 per cent to 30 per cent.
Citadel was forced to admit to its performance after rumours swept across Wall Street that its figures would be far worse. It is thought that wild speculation about a possible hedge fund collapse also helped to drag down the Dow Jones Industrial Average on Wednesday night.
This is not over before at least one “massive” hedge funds fails spectacularly.
Probably half of them will go kaput over the next five years.
But we need a big boy first.
How close do you think we are to having a big one fail?
In some news from across the pond:
Repossessions in Wales hit a 15-year high
http://www.walesonline.co.uk/news/wales-news/2008/10/19/repossessions-in-wales-hit-a-15-year-high-91466-22065729/
Tales of subprime mortgages, home prices 75% higher than 5 years ago, home prices rising much faster than incomes, and a suicidal borrower.
YAWN.
This blog has moved on to bigger and better things.
Yes, yes, I know the mandate, Ben, but surely we’ve seen this cr@pola so many times, we’re allowed a little ennui.
In some news from across the pond:
Repossessions in Wales hit a 15-year high
http://www.walesonline.co.uk/news/wales-news/2008/10/19/repossessions-in-wales-hit-a-15-year-high-91466-22065729/
Tales of subprime mortgages, home prices 75% higher than 5 years ago, home prices rising much faster than incomes, borrowing against equity to make home improvements and buy a car, and a suicidal borrower takes his life at the prospect of losing his home.
The stock market is still plagued by an excess of optimism and a shortage of hopelessness…
Fundamentally
Is the Catharsis Yet to Come?
By PAUL J. LIM
Published: October 17, 2008
BY at least one measure, investors late last week were more fearful than they had ever been before.
On Thursday, a main gauge of market anxiety, commonly known as the VIX — its formal name is the Chicago Board Options Exchange Volatility Index — shot up to more than 80 for the first time. That reading, of 81.2, was more than 50 percent higher than its peak during two previous severe downturns on Wall Street: the Asian currency crisis of the late 1990s and the market drop after Sept. 11, 2001.
“The markets reached their most extreme levels of panic and fear in modern times,” said David Kovacs, chief investment officer of quantitative strategies at Turner Investment Partners in Berwyn, Pa. “We’ve not seen anything like this since maybe the 1920s or ’30s.”
Based on the VIX alone, Mr. Kovacs said, you might conclude that “the markets have experienced meaningful capitulation,” defined as that state of hopelessness that is often said on Wall Street to be the prerequisite for a big rally. Yet he said it was too soon to tell if we have witnessed “final capitulation,” when the sense of despair among investors reaches such cathartic levels that it signals the end of a bear market.
…
Capitulation among retail-level investors, Mr. Ablin said, is likely to come later, once they “realize how hard this economic downturn could be.”
One group that doesn’t seem all that worried about a potential recession is Wall Street analysts, at least not yet.
This raises another question: whether there is enough hopelessness in this market to say that true capitulation has been achieved. Ninety percent of money managers surveyed recently by Merrill Lynch now think that the domestic economy is likely to slip into recession in the next 12 months. Yet surprisingly, stock analysts are holding out hope that corporations remain healthy enough to increase their earnings substantially in the coming months and quarters.
According to a recent survey by Thomson Financial, Wall Street analysts are expecting earnings for companies in the Standard & Poor’s 500-stock index to soar 40 percent in the fourth quarter, versus the year-earlier quarter, and 20 percent in 2009, versus 2008. Even more astonishing, those consensus 2009 projections have remained fairly steady in recent months, despite growing fears among investors that a recession is unavoidable.
“Wall Street analysts are notorious for being overly optimistic,” said Christopher N. Orndorff, head of equity strategy at Payden & Rygel, the asset manager based in Los Angeles. “However, the cold, hard reality of disappointing earnings will be with us for some time longer.”
“The stock market is still plagued by an excess of optimism and a shortage of hopelessness…”
Patience.
“Maybe it’s true, good things in life take a long time.”
From “I’ve been searchin’” - Chicago
October 19, 2008 2:23 P.M.ET
BULLETIN
Old homes surviving crisis
Data likely to show latest existing-home sales still holding up
Despite the ongoing turmoil in the credit and housing markets, sales of pre-owned homes are doing surprisingly well over the past year, especially when compared with sales of new homes.
“holding up”? WTF. Did the Lereah/Yun Lying Machine write that piece? Sales are down 25% minimum no matter where I look. That spells doom for any other item but houses *must be different*.
Can I get some help here with terminology?
In an article about Venzuela discussing their credit situation is the following quote:
“Six months ago, Venezuela’s bonds were yielding between 7-9 percent depending on maturity. Currently yields have dropped to a range of 15 percent to 16 percent, indicating investors are increasingly nervous about getting paid back on the bonds.”
This is the second time I’ve seen this phrased this way, I think the first time was hoz or vozworth.
I understand the relationship between a bond’s price and yield. What confuses me is when the yield goes up, in this case from 7 percent to 15 percent, the author is saying “yields have dropped”.
Now, is this just a funny way that bond dealers/traders talk or am I missing something. In the above example, the yields have actually INCREASED, right? Which would imply the price dropped. Why are they saying “yields have dropped” instead of saying “prices have dropped” or “yields have increased”?
It looks to me like the author doesn’t know what he is talking about. Must be straight out of Harvard.
He’s clueless.
Yields soared = prices dropped precipitously.
He’s a journalist fer’ cryin’ out loud. He probably has trouble aiming his whiiz at the porcelain goddess.
Who doesn’t?
Interesting discussion with a friend today. He is 68 years old, and in dire straights financially. He gets most of his money from SS, but earns $400 per month working part-time. Turns out he has $25k in credit card debt, and was calling for advice because…get this..I am the only one he knows that seems sensible financially. What a huge change from only a couple years ago!
So he wants some advice. I am thinking about his situation, and I am not sure BK is the best way to go. Since most of his income comes from SS, I don’t think they can garnish that. And I believe California only allows 25% garnishment in total, so the worst thing that would happen to him is maybe $100 per month in garnishments. He now pays $700 in CC bills each month. I also think there may be a minimum amount someone needs to make before they can even take that.
I guess I am wondering why he should even consider the hassle of BK. With the new laws they would still make him pay it back a little at a time, so garnishment seems like a similar outcome, without going nuclear. He owns no assets, not even a car. So they have nothing to get from him.
Of course his credit will be damaged, but that is going to happen regardless at this point. As a bonus, he gets to stick it to 3 credit card companies, all of which had no business extending $15k credit limits on someone making that little money. They have it coming. I guess they jacked up his rate to 22% recently as well, even though he hasn’t missed any payments.
The way I see it, they bought our politicians so they could eliminate the usury laws. They extended the credit knowing the rules. They have been screwing us for far too long. I say screw the CC companies as much as possible, but I want the wisdom of the blog before going that route.
What do you guys think?
Credit cards are unsecured debt. Why file BK? Better off to just stop paying.
YES stop paying, 6 months it will be written off then bill collectors will call…and then they will sue him
once he gets a court date he will have to show up, the judge will toss it out due to the fact he is judgment proof…
a big Hassle but that is what caller id and shutting off the ringer is for…
also a little trick..set your phone on 5 rings to pick up…most auto dialers stop at the preset 4 rings….so they cant leave a message…neat kewl
You want our real opinion, or the whitewashed “decent person” variety, or both?
WWO: Call a bankruptcy lawyer.
RO: He’s f*cked six-ways-from-Sunday with a rusty 18-inch dildo.
But these are actually the same opinion. What can one do, eh?
Whoa….KINKY!!!!
Stick em’ with 5 more CCs!
BK
Tell him to look for a job on Wall Street. Anybody that has the ability to leverage himself up like that would be a great addition to any hedge fund or investment house.
SS payments can not be attached. I called several banks for a friend who four different banks lent money to without even checking his credit and told them that they were going to eat it. They put him in collections but can’t collect a dime.
Ok guys and gals, thanks for the advice. I will relay it. Screw the CC companies. They can eat the $25k.
Sweet justice IMO.
Dutch banking and insurance company ING is to receive a 10bn euro ($13.4bn; £7.7bn) cash injection from the Netherlands government.
The deal was agreed between ING, the finance ministry and the central bank.
http://news.bbc.co.uk/1/hi/business/7679021.stm
Received via email, important update on Japanese banks.
Following the problems with Lehmann Bros and in the sub-prime lending market in America and the run on Northern Rock, HBOS and Bradford & Bingley in the UK, uncertainty has now hit Japan.
In the last 7 days Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches. Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song, while today shares in Kamikaze Bank were suspended after they nose-dived.
While Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a hit, but they remain in the black.
Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal.
Alright. Here’s a blow against the Republicans and also you cannot say that I am blind to Repub misdoings:
http://biz.yahoo.com/ap/081019/the_influence_game_housing.html
AP
AP IMPACT: Mortgage firm arranged stealth campaign
Sunday October 19, 5:46 pm ET
By Pete Yost, Associated Press Writer
AP IMPACT: Mortgage giant, GOP firm targeted Republican senators for defeat of regulatory bill
WASHINGTON (AP) — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.
… for more, just read the link.
Exeter will still find a reason to bring up Larry Craig and Mark Foley, while ignoring Foley’s successor. Just be patient.
His successor and his party don’t run on a “family values” platform. Someday you’ll understand this.
Foley’s successor (Mahoney) is actually a lifelong Republican. He only switched from Republican to Democratic affiliation in 2004. The guy’s a total jerk no matter which coat he puts on, and the most recent revelations about him only confirm that fact…
“Foley’s successor (Mahoney) is actually a lifelong Republican.”
What a surprise.
Ailing U.S. economy may cost Republicans big
Sun Oct 19, 2008 8:31am EDT
By Thomas Ferraro
WASHINGTON (Reuters) - Fear and anger about the U.S. economy may cost the Republicans big-time in next month’s election — and give Democrats a 60-seat majority in the 100-member U.S. Senate for the first time 30 years.
With their polls rising, Democrats have a plausible shot at gaining nine seats to hit 60, which could provide the votes needed to clear Republican procedural hurdles and move quickly to keep campaign promises.
“Imagine what we can accomplish with a filibuster-proof Senate majority,” Democratic presidential nominee Barack Obama, who polls show is leading Republican rival John McCain, wrote in a fund-raising appeal last week.
Forbes
The Hedge Fund Apocalypse
Liz Moyer, 10.17.08, 3:50 PM ET
Billionaire investor Warren Buffett wants his fellow Americans to buy stocks, but the Greenwich, Conn., set couldn’t take his advice if they wanted to. As investors scream for their money back, hedge fund managers are as paralyzed as the rest of Wall Street.
Hedge fund assets shrank by $210 billion in the third quarter, hit by volatility, higher borrowing costs and $31 billion in redemptions after a wave of investor panic.
The carnage is the worst in the industry’s history, surpassing the jolts in 1998, 2002 and 2005, according to Chicago’s Hedge Fund Research, which has tracked fund assets and performance since 1990. Funds are scrambling to meet the withdrawal requests, helping to push the major stock averages down in the last few days, and many won’t be able to continue in business.
So far this year, 350 funds have closed shop, but that doesn’t count the third quarter, when most of the bloodletting has taken place. Ken Heinz, the president of Hedge Fund Research, says he wouldn’t be surprised to see 1100 funds liquidate this year.
That would be three times greater than in 1998, when $4 billion Long-Term Capital Management had to be rescued. “We’ve never seen it happen in this magnitude,” Heinz said.
In Warren’s defense….well he has to sell his stock to someone…..ditto for bill gates….we got any takers out there?
“… we got any takers out there?”
I’m one, but not ’till prices become more interesting.
“Like it or not, the person who just retired after 25 or 30 years on the job signed a contract 25 or 30 years ago. The terms of that contract cannot be unilaterally changed. They also signed contracts in the interim, as each contract ran out.”
Public employee pensions are unilaterally sweetened every year, retroactively. If people hired 25 or 30 years ago has the same pension benefits as the day we were hired, we’d only have half the problem we do now in NYC.
The other half is that as part of the same deal to sweeten the pensions, they typically CUT the contributions!
contracts are broken all the time….just take a gander at what the airlines did to their employees’ pensions.
Anybody who believes any contract over 5 years deserves what’s coming to them.
See my comment above.
Private companies and public municipalities are not the same thing.
Also, aren’t 30-year mortgages contracts that are over 5 years. Are you, FPSS suggesting people should stop making mortgage payments after five years because “anyone who signs a contract over five years gets what they deserve”?
IAT
The Oakland Raiders almost snatched defeat from the jaws of victory and somehow prevailed in spite of themselves, and as far as i’m concerned…
Raider Nation is most emblematic of the financial trajectory of our country, for those of you keeping score.
Since 2005(height of the housing bubble)
The Raiders have amassed 12 wins, against 41 losses
Almost? They just did in OT.
I don’t hate the Raiders… but their fans… ugh.
Yes, the Raiders’ fans can be difficult.
I’m not one of them, but I do note the below statistic.
Super Bowl victories:
Raiders 3
Bills ZERO
Superb “KING OF THE HILL” tonight, on as we speak.
Neighbor dies, property sold, turned into McMansion, fragile construction “your shoddy McMansion” as per Hank. Nearly clobbers the neighbors during a storm.
Housing bubble/bust indeed MSM’d
regards
-evil
More from it…
“Are you aware of eminent domain”.
“Yes. Supposedly the gov’t buys your property to put to good public use, but in reality represents usually a kickback from wealthy buyer in order to build lucrative development”.
… indeed.
-d
Anyone notice how 20 years or so ago, it became popular to lease cars rather than buy them? This allowed people to buy more car than they otherwise could. There’s a nice comparison to the housing bubble here, I think.
Financial Times of London
Job losses spread in Silicon Valley
By Richard Waters and Chris Nuttall in San Francisco
Published: October 19 2008 23:29 | Last updated: October 19 2008 23:29
A wave of job losses has started to spread across California’s Silicon Valley as the trademark optimism of the region’s technology start-ups has turned to pessimism amid the financial market rout.
The rapid reversal in mood has reawakened memories of the dotcom bust in 2001.
Drying up of Venture Capital, maybe?
The Financial Times of London
The view isn’t pretty as the banking crisis dust settles
By Tony Jackson
Published: October 19 2008 17:00 | Last updated: October 19 2008 17:00
As the hullabaloo of the banking crisis fades, it seems increasingly to have been a kind of distraction from the wider topic. Investors are now once more contemplating the non-financial corporate world. It is not a pretty sight.
As an apparently minor sign of distress, take the Baltic Dry Index, which measures bulk shipping rates. It has halved this month, and is down more than 90 per cent from its peak in May.
The Reckoning
Building Flawed American Dreams
By DAVID STREITFELD and GRETCHEN MORGENSON
Published: October 18, 2008
SAN ANTONIO — A grandson of Mexican immigrants and a former mayor of this town, Henry G. Cisneros has spent years trying to make the dream of homeownership come true for low-income families.
Inflating the Bubble
THE DEVELOPER Henry Cisneros in his office in San Antonio with Sylvia Arce-Garcia, an executive assistant. He is the head of CityView, a developer.
As the Clinton administration’s top housing official in the mid-1990s, Mr. Cisneros loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before.
Then, capitalizing on a housing expansion he helped unleash, he joined the boards of a major builder, KB Home, and the largest mortgage lender in the nation, Countrywide Financial — two companies that rode the housing boom, drawing criticism along the way for abusive business practices.
And Mr. Cisneros became a developer himself. The Lago Vista development here in his hometown once stood as a testament to his life’s work.
Joining with KB, he built 428 homes for low-income buyers in what was a neglected, industrial neighborhood. He often made the trip from downtown to ask residents if they were happy.
“People bought here because of Cisneros,” says Celia Morales, a Lago Vista resident. “There was a feeling of, ‘He’s got our back.’ ”
But Mr. Cisneros rarely comes around anymore. Lago Vista, like many communities born in the housing boom, is now under stress. Scores of homes have been foreclosed, including one in five over the last six years on the community’s longest street, Sunbend Falls, according to property records.
While Mr. Cisneros says he remains proud of his work, he has misgivings over what his passion has wrought. He insists that the worst problems developed only after “bad actors” hijacked his good intentions but acknowledges that “people came to homeownership who should not have been homeowners.”
Is Jimbo soon to go the way of Gary Watts and David Lereah, never to be heard from again?
The Media Equation
Jim Cramer Retreats Along With the Dow
A somewhat milder Jim Cramer, host of CNBC’s “Mad Money,” tries to find the right tone in a time when building stock wealth seems like a thing of the past.
By DAVID CARR
Published: October 19, 2008
Last Friday afternoon, Jim Cramer, CNBC’s star stock-picker, took time before taping his hourlong show, “Mad Money,” to talk to a visitor in the cable network’s headquarters in Englewood Cliffs, N.J.
After weeks of dreadful performance, it looked as if the Dow was finally giving investors a chance to exhale, up some 200 points during the day, though it later ended down 127 points. He chatted for a few minutes about how the market’s volatility was testing everyone, then he happened to glance at the computer screen in his office.
“We’re now down a hundred just since we started talking,” he said, shaking his head in disbelief. “Wow, what a terrible market.”
So terrible that Jim Cramer, the happy warrior who cheered the Dow on his cable show surrounded by his menagerie of stuffed animals, sound effects and bobble-heads has traded the pom-poms for a votive candle, praying that the market finds a way to right itself — and maybe restore some of the luster to his chosen profession.
After years of selling the stock market as a reliable path to riches, Mr. Cramer came in for some brutal criticism recently from viewers and competitors.
In March, he said Bear Stearns “is not in trouble.” After Bear Stearns tipped over, he wrote in his New York magazine column that the bottom had finally come. “I feel the bear has been tamed, and the worst of the clawing is over,” he said. And on Sept. 15, he hosted his friend Robert Steel, chief executive of Wachovia, and suggested that its $10.71 share price was a bargain. Two weeks later, it was at $1.84.
On Oct. 6, he went on the “Today” show on NBC (which, like CNBC, is owned by NBC Universal) and said, “Whatever money you may need for the next five years, please take it out of the stock market. Right now. This week,” he told a surprised Ann Curry. “I do not believe that you should risk those assets in the stock markets.”
The Dow dropped 18 percent in the week that followed. In a follow-up visit to “Today,” one of the viewers wrote in to accuse him of shouting fire in a crowded building. (His reply: “But what happens if there is a fire in the building?”) When the Dow zoomed up 936 points on the following Monday, he was accused of leaving his loyal viewers standing on the sidelines.
He says he has tried to make amends for Bear Stearns and Wachovia.
“I apologized to my viewers,” he said. “I apologized on the ‘Today’ show. It is a completely humbling market.” But he won’t apologize for his five-year comment.
“It was one of the greatest calls of my life,” he said, “and I’ve been pilloried for it.”
I was reading about OC bank robberies being up 50% and it reminded me of Bonnie and Clyde, and how they became very popular in the 1930s during their bank robbery run. People were so pissed off at what they saw as big business and the political establishment screwing America, they were actually rooting for Bonnie and Clyde.
Will we get another Bonnie and Clyde? If the bank robbery numbers are any indication, there are a lot of new wanna be’s in training!
A proposal to the pro-tax side:
Gov inspections of meat have failed me plenty. Now I read the gov stops meat packers from testing their products themselves more thoroughly. As in real estate, a person is better off using a private inspector, preferably someone you know.
A McD’s drive-thru runs better than a State DMV or Fed TSA airport screen. It seems as though a private company could run Air traffic quite well. Think UPS here.
Nuclear is a lab.
Police officers & firefighters are great private company potential - remove the gov. monopoly & create opportunity. Security is a personal responsibility.
Medical clinics are labs.
We have far too many road signs, some countries even have none, I think. Local businesses could maintain road signs.
HazMat, for the labs?
Lifeguards are hand-holders - enter at your own risk - or hire a private lifeguard.
!8-wheeler safety inspections are just like food inspections, they fail now - as things are currently. A private company could easily do this & probably with less corruption.
Pay a private company a toll to cross the bridge, no problem.
If this were done, safety would improve, jobs would become more secure, efficient, and less flawed overall.
And then… opportunity would be huge - Inspectors, security personnel, medics, lifeguards, and firemen could start their own businesses. People could have some connection to their world, so unlike today’s, hollow, no money down - nothing else in it -world.
Heh- We don’t want your so-called free government services, and stop taking our money. If government had to ask each of us for the money, & we could say no, things might be alright for everyone.
/dream off.
A great comparison to the railroads & the Panic of 1873 with the Bursting of the housing bubble today, Title: The Panic of 2008 and Financial Socialization, by Michael S. Rozeff
A great comparison to the railroads & the Panic of 1873 with the Bursting of the housing bubble today, The Panic of 2008 and Financial Socialization, by Michael S. Rozeff
http://www.lewrockwell.com/rozeff/rozeff231.html