Bits Bucket For October 24, 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.
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Name:Ben Jones
Location:Northern Arizona, United States
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Futures are limit down. Fasten your seatbelts. Expect turbulence. Objects may fall further than expected. You’re watching the Great Greenspan Unraveling. Warning! Warning!
futures were limit up yesterday, but nobody considered using the brakes
–
“You’re watching the Great Greenspan Unraveling.”
No, we are watching the beginnings of the Greater Depression forecast years ago. Bigger the “bankers’ mischief” bigger the depression! Bankers have never behaved as recklessly, in all of recorded history, as in recent years. No? Greenspan and Bernanke head the list.
Jas
Greenspan and Bernanke are puppets. The true demon puppet masters are hidden in the shadows.
Perhaps for the puppetmasters wielding the strings, this is…
“The Great Entanglement”
ZOG, the Rapture, 666, end of the Mayan calendar, dogs and cats living together, etc, etc…I feel like the wingnuts are going to have a field day with this stuff for months, if not years.
Might be worth browsing through some of the “alternative media” for a few giggles.
I hope you realize that this blog right here is “alternate media”.
Just checkin’ that you understand.
When I’d recommend the HBB to friends, they’d joke about tinfoil hats and doom and gloom. At least, they used to. Now they can’t say much.
Alt, eh?
The HBB is a tabloid? Cool!
So when do we get to discuss Brangelina’s marriage, aliens giving birth, Jebus’ image in the tree bark, and the Chocolate Chip Cookie and milkshake diet?
Inquiring minds want to know!
I feel like the wingnuts are going to have a field day
So just whom are the real “wingnuts”?
“So just whom are the real “wingnuts”?”
Go Red Wings!!!
The true wingnuts are the sheep that believed, “buy now or be priced out forever”. Their threads are obviously stripped.
Not to mention:
Stocks for the long-term.
Buy and hold.
DCA into your fund.
Efficient markets.
Everyone behind the woodshed. There’s a wood-chipper waiting for you.
“Stocks for the long-term.
Buy and hold.
DCA into your fund.
Efficient markets.”
BiM — I think this would be an appropriate time for you to chip in.
And that reminds me, what happened to all the Peak Oil theorists who were posting here last year? They seem to be in very short supply these days…
Wait, I’m one…just not an alarmist. It might happen ten years from now, but it might take me ten years to set up with the canned peas and AK-47.
“And that reminds me, what happened to all the Peak Oil theorists who were posting here last year? They seem to be in very short supply these days…”
The supply situation still looks ugly as covered by Financial Sense. The demand side will ease some if the global economy contracts enough which appears to be happening. The price shocks a few years down the line could be disastrous as the global economy recovers if we don’t change the way we consume energy.
If we want any type of a sustainable recovery, we are going to have to build a sustainable economy and one that operates on less energy and increasingly less oil. This is a much different scenario than post-GD I.
Geez, well I just want to clarify that I don’t think this collapse was caused by Jews, Arabs, Jesus, pre-Columbian deities, Gozer the Gozarian, or any other supposedly omnipotent, mythical or supernatural forces.
I think it was caused by human greed, stupidity, and a
partybunch of powerful idealogues who truly believed free markets can efficiently regulate themselves.Greed wasn’t good.
NSO, we never had free-markets in the monetary system.
Peter Schiff made the best point in this regard, in that greed is normally tempered with fear, but govt has removed the fear, leaving greed to run rampant.
When you have huge GSE’s (and other financial institutions) backed against failure by govt, how do you figure that to be a “free market”?
Govt forgiving tax on income from forgiven debt, providing tax breaks to favor certain assets, bailing out financial institutions for misallocation of resources, providing below-market loans for financial institutions, making policy to promote increased house ownership among special classes, providing below-market loans for house purchases…
And still your criticism is for the “free market”? Seriously?
And still your criticism is for the “free market”? Seriously?
And you still think the GSEs, CRA, and bailouts caused this financial crisis? Seriously? Clearly, you didn’t watch Congress roast Greenspin’s nuts over the fire yesterday.
I know what Rush Limbaugh, Alan Greenspan and Phil Gramm say caused this debacle…but as an HBBer I would have thought you’d throw in unregulated derivatives markets, incestuous credit rating agencies, artificially low Central Bank rates, and a Contract-on-America Congress that dismantled all the 70 year old safeguards put in place after the Great Depression that were making Wall Street “less competitive”.
A little historical revisionism was bound to happen, but this is a bit much!
I didn’t want to list everything (lest my post get too long)…I was pointing out some examples. (and I specifically mentioned below-market loans to financial institutions, I thought it was implied they came from the central bank)
When I said “bailing out financial institutions” that one item includes bailing out from all the things those institutions were doing (listening to ratings agencies, the complex derivitives with which those insititutions were leveraged to the hilt, etc).
My point was that govt consistantly provides incentive for otherwise “private” enterprise to do stupid things en mass and to a huge extent. This amplifies the volatile expansion/contraction swings coming from monetary policy and makes for the mess we have now.
I’m not saying the free market is perfect and never deserving of social criticism (although I do think it is a bit odd to critize an entity that doesn’t really exist as a single entity), but this calamity starts with the government established monetary system and the knowledge among Wall Street that as long as they all act in concert, they will make money on the upside and be bailed out on the downside, which is really no longer anything resembling a free market. Just because all the players (e.g. goldman sachs, et al) aren’t govt employees doesn’t mean that they constitute a free market.
One point about regulation, if there is some reason prevelent in the free market that requires regulation (due to greed or human character or whatever) all those same problems still exist in the formation of the regulating body, since it is (obviously) run by the same type of humans. Further, b/c of the scope and power of govt, those attributes are now amplified and have increased ability to do harm.
And you still think the GSEs, CRA, and bailouts caused this financial crisis?
I think the govt largely caused it and those were two of the tools they used to do so. Monetary policy via our govt-created central bank is the main culprit to cause the wild monetary/credit cycle but bad govt policy (like the GSE’s) help amplify the swings. None of that is representative of free market.
The propensity for govt to bail out financial institutions (in the past) also helps, WS knows if they all act in concert (follow the herd) that if anything really bad happens, the govt will bail them out. Sweet gig if you can get it, make money on the way up and get bailed out on the way down. This type of policy has a large macroeconomic effect of misallocation of resources. It also represents a dostortion of free markets, and the resulting chaos should not be attributed to the “inability of the free market to regulate itself”, the only thing needing regulation (preferably in the form of dissolution) here is the govt pandering to the financial mukety-mucks.
I would have thought you’d throw in unregulated derivatives markets…
You can’t consider the effect of derivatives markets without considering how expected govt intervention caused those unregulated markets behave badly. Without that expected intervention/bailout, those markets would have been greatly dampened and priced to risk a hell of a lot more appropriately. Again, govt intervention distorting markets.
As to your other ponts, I specifically mentioned below-market loans to institutions, I thought it was understood those came from the central bank. But generally I agree with the problems you list (I didn’t list EVERYTHING only some examples), its just that those things for one reason or another aren’t representative of free markets.
I’m making an argument about language, not really policy, I think we mostly agree on that. Where we don’t agree evidently, is the idea that very little about this whole thing represents a free market.
Applause!
Applause!
-
It’s easier to blame the little brown men.
After all, nobody else had a sense of entitlement right?
Retry…
And you still think the GSEs, CRA, and bailouts caused this financial crisis?
I think the govt largely caused it and those were two of the tools they used to do so. Monetary policy via our govt-created central bank is the main culprit to cause the wild monetary/credit cycle but bad govt policy (like the GSE’s) help amplify the swings. None of that is representative of free market.
The propensity for govt to bail out financial institutions (in the past) also helps, WS knows if they all act in concert (follow the herd) that if anything really bad happens, the govt will bail them out. Sweet gig if you can get it, make money on the way up and get bailed out on the way down. This type of policy has a large macroeconomic effect of misallocation of resources. It also represents a dostortion of free markets, and the resulting chaos should not be attributed to the “inability of the free market to regulate itself”, the only thing needing regulation (preferably in the form of dissolution) here is the govt pandering to the financial mukety-mucks.
I would have thought you’d throw in unregulated derivatives markets…
You can’t consider the effect of derivatives markets without considering how expected govt intervention caused those unregulated markets behave badly. Without that expected intervention/bailout, those markets would have been greatly dampened and priced to risk a hell of a lot more appropriately. Again, govt intervention distorting markets.
As to your other ponts, I specifically mentioned below-market loans to institutions, I thought it was understood those came from the central bank. But generally I agree with the problems you list (I didn’t list EVERYTHING only some examples), its just that those things for one reason or another aren’t representative of free markets.
I’m making an argument about language, not really policy, I think we mostly agree on that. Where we don’t agree evidently, is the idea that very little about this whole thing represents a free market.
The charts say it all, mate. Too much interference from 87 to present, culminating with Tech, Housing, and Commodities bubbles. There is nothing left to blow.
The last great bubble will go next. The Treasury bonds.
“There is nothing left to blow.”
I beg to differ.
we can always go back to speculating in tulip bulbs, or other speculative objects from more than a generation ago, because nobody remembers or reads books these days. You would think that after the 1635 bubble, Dutchies would never speculate in tulip bulbs again, but around 2000 many Dutch investors lost millions by speculating in a tulip bubble fund.
no bubbles left to blow? I wouldn’t be too sure about it, I don’t doubt that the people that organised the greatest pyramid game ever are already working on the next game (or maybe even the next round of the housing bubble game, with even more government/taxpayer support).
“the people that organised the greatest pyramid game ever are already working on the next game”
Slavery Gets Shit Done — Awesome t-shirt design, makes me laugh every time.
A bubble needs two things to grow, capital and leverage. The end result of a bubble is the destruction of capital. THe larger the bubble the more capital is destroyed.
By capital I refer to “physical capital” not some fiat “accounting capital” We have so throughly destroyed our real capital base and people are so indebted that it will be next to impossible to “blow another bubble” because bubbles are blown by consuming capital.
Sure some prices may go up do to speculation, but nothing financed by a huge degree of leverage.
Now maybe in 20 years there will be another bubble… but nothing in the next 5 and nothing that will mask the effects of this bubble like the housing bubble did for the .com bubble.
“we can always go back to speculating in tulip bulbs, or other speculative objects from more than a generation ago”
I’m taking my money out of the stock market and putting it all into Beanie Babies. Remember how those bean stuffed critters became high priced collectables just weeks after production? I think they were big in the late ’90s, during the tech bubble days.
http://www.ty.com/BeanieBabies_home
ByeFL, that you, boy? You back?
Comment by Lost in Utah
2008-10-24 08:49:19
“ByeFL, that you, boy? You back?”
-
Oh, Utah
Thank you!
Lostie,
I just choked.
Excellent.
I feel like the wingnuts are going to have a field day with this stuff for months, if not years.
we are
This scene always made me laugh a bit. It wasn’t until the last few years I realized this “joke” has a possibility of truth to it.
http://www.youtube.com/watch?v=TPMS6tGOACo
@NYCityBoy: Greenspan and Bernanke are puppets. The true demon puppet masters are hidden in the shadows.
“Permit me to issue and control the money of a nation, and I care not who makes its laws”
~ Mayer Anselm Rothschild
Banker
“We are grateful to the Washington Post, the New York Times, Time magazine and other great publications whose directors have attended our meetings and respected the promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world-government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National autodetermination practiced in past centuries”
David Rockefeller in an address to a Trilateral Commission meeting in June of 1991
Limit up / limit down / whatever. I believe that at this point, we are seeing tsunami wave amplitudes which exceed circuit breaker limits. Consequently, the equilibrium adjustment process is spilling over multiple sessions (which explains why I believe this is capitulation
dayquarter).If Greenspan was like totally shocked at the state of affairs yesterday, I hope he is taking his meds today. Damn. No one could have seen this storm coming. Nobody.
It’s not just politicians government types that used that line, management used it at our partners’ meeting this week. Because of the slow down in my workload, I had to swallow the blood quietly as my teeth dug into my tongue to prevent any sudden outbursts.
That’s funny…I would have thought that EVERYONE was gonna say that they knew it was inevitable and, oh mother of Mary, why didn’t anyone listen to them?
Denial is the first stage of grief. The next phase is anger, and I’m hoping that after Jan. 20 2009 they sharpen the guillotine blades.
Robespierre, you ain’t seen nothin’ yet…
In Dresden during the war, the gestapo had an electronic guillotine, lopping off heads with utmost efficiency…
RE: the gestapo had an electronic guillotine, lopping off heads with utmost efficiency…
And they made sure any type of resistence fighter always got to look face up to what was coming when put on the gurney.
…..we still have to make it past the brownshirts battling to control election results.
“…management used it at our partners’ meeting this week.”
Curious whether you interpreted that as an honest admission they were blindsided, or CYA maneuver?
I think it was a bit of both. Ppl are worried about their 401ks and staff recently hired is being cut, and if it doesnt pick up soon associate layoffs and partner point reductions and requests for resignation will follow. I think they were trying to prevent panic, but they looked a bit foolish in the process. It is a law firm that specializes in finacial services for crying out loud. I also note that most of the management is older and hasnt moved recently. It seems to me that unless you have been in the market for a house over the last decade and seen home prices increase much faster than your ability to save, you were more likely to gloss over the signs. On the other hand, if you are renter making 75k and seeing home prices in the price range you are looking at go up 50k or more per year, it is very hard to deny that something very, very wrong is going on.
Thanks. Your comments about being a renter versus owner definitely hit a chord with me. I don’t talk about the housing market much with my boss these days. One of the last times we did talk was a couple of years ago when I politely suggested he consider selling some of his investment properties. He did not think it would have been worth the effort. I will never ask whether he eventually changed his mind, despite my deep curiosity.
I also later heard through the grape vine that although my boss acted as though he concurred with points I raised about real estate, he was secretly skeptical that things would get nearly as bad as I suggested. The present reality in the U.S. real estate and stock market situation is much worse than I anticipated, and I was hardly an optimist at any point over the past five years.
That’s because you had to see the flip side in the ABSURD “derivatives bubble” and realize that there was no “investment bank” model besides rolling debt into larger debt to pay off previous debt.
Interest rates can only go from 18% to 1% once, and these guys were leveraged 30:1.
True. I was going to move to the DC office two years ago. They accepted my request. I visited for a weekend, and on my return home sent them a letter that said - thank you, but after careful consideration, in light of the high home prices, liklihood of a recession, and the uncertain future of my securitization and derivative products clients, I do not feel a move is in my best interests at this time.
They acted like I was crazy.
“They acted like I was crazy.”
I’m dealing with the same thing. I’ve turned down numerous offers to move out of our rural settings and go back into real paying work because, given the cost of living in most areas, it’s a lateral at best WRT cost of living. And then, I’m back on the treadmill and what happens if things don’t work out with my new employer? Been known to happen. I damn sure wouldn’t become an FB (thanks to this blog) but I’d still be F.
Well at least you had a good decade. Imagine the fear in a second-year associate, even in a V3 firm. It’ll take me until I’m about 33 to hit zero net worth (150k of student loans). Well, at least I’m in litigation.
Hopefully you rent and will be better of than those that bought pre-peak.
Not only that, but I also live with a roommate in Jersey.
I’m sort of in the opposite situation. I rent but live in the SF bay area. Our rent is cheap, we make great money, and have saved for years. If the market really implodes and we lose our jobs, I’m probably going to be heading back to my rural origins. I figure that I now have enough to buy a small home in the sticks, perhaps get some sort of boring joe job, and just live somewhat modestly- which is the way I’ve lived here as well except we rent instead.
My Boss keeps saying that this winter will be the best time to buy. The prices here are still ludicrous. Buying anytime soon here would in my opinion be perilous. Hence my likely plan to move somewhere less “desireable” and cheaper.
Nice. I have no doubt that if you are a saver, can keep your job, invest steadily over the next five years, and look for a house in 2010-2012 (if that is your thing), you will actually come out ahead based on historical norms. The end of a big recession or depression is the greatest time to be young and moving up. Even if you lose your job, you are young enough to find a decent job in a few years and still have 30 years of income to play with and plan your retirement during a period that should more closely match historic norms than the last 10 years.
Firms and partnership are going to be the death track for most lawyers.
Now is the time to cut your reliance on others and get out and practice for your clients.
I suspect that many who have believed in the wood and leather image of BIG LAW are about to discover the vinyl and particle board reality behind the veneer.
Many of the people I went to law school with (class of ‘02) have spent 6 years kissing the asses above them and are now getting pushed out into the cold, and most have no concept of how to find and serve a client of any kind.
Which is why so many lawyers drop out of the practice and never return. Especially women.
Not a lawyer here (far from!) but seeing what you describe in some of my lawyer friends.
They’re older, busted ass, didn’t make partner (or firm folded), and scrambling around.
Of course, they also lived like capital-L lawyers so they have the debt-noose hanging around them.
The higher the salary initially, the faster you are likely to be replaced by one of your own breed fresh out of school. Why this is not totally obvious to these bright young things is a mystery.
“My Boss keeps saying that this winter will be the best time to buy. The prices here are still ludicrous.”
A word to the wise: Ignore your boss’s suggestion about the time to buy. If you read here, you are likely better informed than he is. And I have yet to see a shard of evidence that there needs to be any urgency at the bottom of a real estate cycle. Having bought twice before at a cyclical bottom, I speak from experience. When it seems like there is an unbelievable choice of reasonably priced homes from which to choose at the same point when most people who pretend to know something are cautioning you that real estate is a good way to lose your shirt, that is a good signal to start looking around. We are not there yet — not even past the denial stage of the housing bust (not to mention the denial regarding the disappearance of the Wall Street investment banking sector).
“The higher the salary initially, the faster you are likely to be replaced by one of your own breed fresh out of school. Why this is not totally obvious to these bright young things is a mystery.”
Also, the higher the salary, and the higher the standard of living, the quicker your whole world can implode due to a job loss. It’s not easy to jump right back into a high paying job after losing one.
RE: If Greenspan was like totally shocked at the state of affairs yesterday, I hope he is taking his meds today.
He looked liked the ravaged, palsy stricken, Hitler shown in those old Gobbels propaganda clips shaking the hands of his new 13YO conscripts outside his subterranean Berlin bunker as the Russian hordes were blasting their way down the street.
A most appropriate analogy.
I like your’s better, but this is still funny;
Steve Goldstein at MarketWatch finds it “hard to believe Greenspan’s disbelief,” and wins Paul Krugman’s praise for this line: “For a man who was once remarkably hard to decipher, Alan Greenspan is now as clear as an empty Lehman Brothers office.”
Is this Capitulation Day???
It’s probably a continuation of the selling we saw earlier this month, down sideways after some consolidation. It’s also possible we could turn. The fundamentals are awful and the technicals unconvincing, however. This is a major doom moment. Expect timeouts.
How does one best corner the market on markets being sent to the corner?
RE: Major doom moment…
The best is yet to come!
1000 pt. drop on Inauguration Day.
http://www.nypost.com/seven/10132008/postopinion/opedcolumnists/an_obama_panic__133374.htm
Wong Chow no got it wight. You go Biggie Guy!
USA Numba #1, GI!
It’s capitulation quarter.
It is somehow comforting to realize that I am not the only handwringer out here. Now where is that bottle of lotion?
Greenspan shaken by crisis
House panel hammers former Fed chief over run-up to financial turmoil
By Edmund L. Andrews
NEW YORK TIMES NEWS SERVICE
October 24, 2008
…
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.
P.S. It is hardly in a manager’s self-interest to protect shareholder’s equity when he gets to play heads-I-win (take home seven-figure bonuses at year-end), tails-you-lose (leave company after cashing in stock options and walk off with gold parachute worth $100m’s). As John Nash once astutely pointed out, the invisible hand does not always work in noncooperative games.
Standard agency problem.
Same with the “structured products” (= complex derivatives) people who designed these time bombs.
I note that I got nearly got tossed out of a rather “high level” meeting when I brought up this rather obvious point.
“Standard agency problem.”
Exactly. Was it by accident or design? One could have a field day pointing out all the corporate governance mechanisms which have the appearance of creating heads-we-win / tails-you-lose payoff structures.
Well, both. These are not mutually exclusive.
The system is broken. You can’t fix it from the inside and you can’t fix it from the outside. So it must implode under the weight of its own contradictions.
Sound familiar?
“Sound familiar?”
Sounds like both the U.S. housing market and the U.S. stock market.
Maybe the invisible hand is working fine, just not doing what the policy makers would like.
lol
When you set out a big bowl of candy, the invisible hand takes all it can get.
In fairness to Adam Smith, opaque accounting systems and a corporate landscape dominated by a small number of too-big-to-fail corporate behemoths were not among the conditions under which his invisible hand would be expected to function very well.
The problem was, the invisible hand tried to grab confectionary with a clenched fist, and couldn’t extract itself out of the bowl’s mouth.
Where were the Board of Directors?
It was their job to look out for shareholders.
I guess in the end, we learned nothing from Enron.
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief”
-Alan Greenspan
“Those who cannot remember the past, are condemned to repeat it”
-George Santayana
I look at you in a state of shocked disbelief, Greenspan, as I marvel at your irrational exhuberence. Practitioners of palm reading are subject to more rigorous standards than Central Bank Chairmen, it is becoming evident.
Ok, so by logical extension, should not these institutions be in complete violation of their FDIC obligations to depositors?
When are the indictments coming?
What depositors?
The “investment banks” were not deposit-taking institutions.
You guys are overly pessimistic. You speak as though the market operates without intervention. Of course the Working Group stands ready with liquidity fire hose in hand to limit the size of a one-day selloff.
NVESTOR ALERT
Sell-off spans globe
October 24, 2008 11:01 A.M.ET
BULLETIN
Less bad than feared
Trader in Mumbai reacts as stocks plunge 11%.
GLOBAL MARKETS
• Asia’s bloodbath | Korea crushed
• Frankfurt down more than 9%
• Contracting GDP spooks London
• Recession likely in U.K., euro zone
• Asian reassurances | Crisis fund
Stock-market bears pass the baton from Asia to Europe — and then along to North America, where stocks dive at the open — if significantly less than had been feared. Financials, GM shares pace U.S. slide.
Yes, of course.
That’s why the most dramatic part of the market downturn is being drawn out over weeks, or perhaps months, rather than a crushing week that would have taken the Dow rather quickly to 6K or so.
The PPT, apparently, is simply delaying the bottom.
It is critically important at the moment just as it was when the Titanic sunk to make sure all the rich folks first have ample time to get into the life boats.
Stock futures trading frozen, circuit breaker tripped. Should be an interesting day.
The sun is shining here in New York City. But a cloud hangs over Wall Street. Is there any chance that we avoid a “Black Friday” situation today? It doesn’t look like it. Asia and Europe have both been hammered. This might be the 1,000 point day.
Have a good weekend everybody.
I wonder if this will have any impact on all the foreign investors desiring to snatch up great housing deals in Miami, Vegas and San Fran.
The Europeans are coming.
The Chindians are coming.
The Boomers are coming.
BWAHAHAHAHHAHAHHAHAHHAHAHHHHHHHHHHHHHHHH!!!
US real estate just got 25% more expensive for Europeans in the last few months. But maybe Hank can help and arrange pricing of their FL mortgages in dollars (or Krona, forints or some other stable currency).
Same for the Canadians.
Maybe we’ll guarantee mortgages for foreigners too.
Don’t forget about all the rich foreigners buying up condos in Manhattan and Brooklyn. I’ve heard that one soooooo many times. The Euro is at $1.25. So much for the Europeans buying it all up. “What is Plan B? What do you mean there is no Plan B? There must be a Plan B.”
No Europeans. CHECK.
No Russians. CHECK.
No Chindians. CHECK.
No jobs. CHECK.
No bonuses on Wall St. CHECK.
BWAHAHAHAHAHHAHAHHAHAHHAHHHHHHHHHHH!!!
I can see it now….
“Honey, with all this market turmoil I think it’s time to lower the asking price on the condo.
Let’s drop it by $3K.”
no bonuses?? I read this week that the bonus/salary pool for WallStreet and London City banksters is at least as big as last year (which was an alltime high I guess).
Dutch newspapers today report that hours before the nationalisation of Fortis, they gave about 2000 higher managers a huge bonus. And even after the official takeover they were feverishly arranging golden parachutes for the biggest crooks. All perfectly legal of course, they were protecting taxpayer interest as otherwise the crooks would have fled to greener pastures.
Now Dutch financial giant ING is also protecting the management income stream by going for nationalisation (not official yet, but just look at the stock value and you see it coming). I predict more ‘nationalisations’ of big multinationals, so the bonuses can stay intact despite their companies being deeply in thered.
I had originally typed in NYC as well but deleted it because it is my understanding that the NYC market has been just flat rather than down 40%, so no Realtor proclaimed “bargains” there yet. Im thinking NYC will be in the top 10 list of decliner cities next year for annualized rate of depreciation.
“We’re #1. We’re #1. We’re #1.” I expect to be chanting those words next year.
“Im thinking NYC will be in the top 10 list of decliner cities next year for annualized rate of depreciation.”
I’m thinking when that happens, the psychological ripple effect across the rest of the country will be immense, as everyone knew it was different in NYC (even more different there than in Coastal CA).
People forget that NYC co-op’s went down about 40% in the early 90’s. Knew lots of people who were stuck in place. Those who had to move, due to divorce or similar, were lucky if they only lost their downpayments…
One friend had to declare bankruptcy because former spouse defaulted on a Park Avenue South condo (name was still on the mortgage) and the bank sold it for less than they owed on it. (And this was in the days of down payments.)
Others were stuck in one bedroom apartments with children until they nearly went crazy.
Telling any of these stories in recent years (and showing NY Times articles about declining prices) were met with disbelief and comments that those individuals must have made bad decisions, because of course “real estate never goes down”….
People forget that you could get a “classic six” on Park Ave. in 1994 if you bothered to go down to City Hall and pay the “back taxes”.
But, why would you pay the absurdly inflated taxes? Renting was far cheaper.
Nobody in the right mind expected that the Fed would blow the “mother of all bubbles” a little over a decade later.
RE: “We’re #1. We’re #1. We’re #1.” I expect to be chanting those words next year.
WUNG CHOW GET IT ALL WRONG…YOU GO BIG GUY!
USA NUMBA #1, GI!
I think a lot of RE agents just won’t have what it takes to put on their makeup this morning.
For their safety they should put on camouflage.
Global markets are kicking RE off the deck of the TurdTantic like the flotsam and jetsam that we’ve known it to be for years.
A note to all things RealTard: EAT IT BISH
time to put the Mcdonalds cashier hat back on.
Please pull up and pay at the first window, because they don’t trust me doing financials anymore…
David Lereah minions will look just fine wearing polyester smocks and hair nets.
Better check that order and count your change before you drive off. It’ll be f**d up for sure.
Might need an escrow agent and title insurance before you can safely close on that cheese burger.
Canucks got priced out recently. Like last week.
Neither the dollar nor stock markets (U.S. domestic or foreign) are moving in directions that would favor foreign infestment in U.S. real estate. Perhaps foreign infestors who were prescient enough to buy dollars or T-bonds could go shopping for devalued U.S. real estate.
Conversely…
The spot price of Gold is at an all-time high, in the country where my physical position is being held.
This is not a good thing.
Better make sure they don’t take it all away, and by “they” I don’t mean government but your precious “private” owners.
Gold appreciating steeply in any currency is a really bad sign.
what, me worry?
“This might be the 1,000 point day.”
How close might it come to the daily cap this quarter of 3300?
From Wikipedia:
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
“The initial crash occurred on Black Thursday (October 24, 1929), but it was the catastrophic downturn of Black Monday and Tuesday (October 28 and 29, 1929) that precipitated widespread panic and the onset of unprecedented and long-lasting consequences for the United States. The collapse continued for a month.”
Will be hit the all-time high on comments today?
Let’s go, folks!
Bits Buckets over/under in Las Vegas is currently at 463.
Is that for the entire day, or just by noon?
They priced the pan!c. They didn’t price the pain.
You need to TM that!
Agree.
Agreed.
Count Rugen: “Beautiful isn’t it? It took me half a lifetime to invent it. I’m sure you’ve discovered my deep and abiding interest in pain. Presently I’m writing the definitive work on the subject, so I want you to be totally honest with me on how the machine makes you feel. This being our first try, I’ll use the lowest setting.”
..
LOL.:)
..
Classic.
That statement has a very Hulk Hogan ring to it. If you add a growl at the end, it really takes off.
If, like me, you are a stock market/finance neophyte here is a breakdown on “linit down” mode.
http://www.247wallst.com/2008/10/quick-cheat-she.html
Welcome to the jungle, folks!
What you saw earlier wasn’t a crash. This is a crash.
S&P futures are “lock limit down”. That means no bids from market makers.
Lots of margin calls going out today.
If they attempt an emergency cut, the market will panic for sure.
5500 down. 3500 more to go. Dow 5000 here we come.
Can you imagine the sheer panic that is taking place, right now, with the locks in place? I should walk down to my old neighborhood to see if you can sense the tension on Broad Street, Water Street and Wall Street. If I owned a bar down there, I would have opened it at 7:00 a.m. You would make a fortune today.
Yeah, and I’m lovin’ it!!!
Margin calls going out. Lots of funds won’t even exist on Monday.
The results are coming in, and they are showing that I was actually an Optimist. I underestimated the carnage.
The damage is so large and so widespread that there is very little the government can do at this point but try to prevent a complete total meltdown. There is still a lot of pain between now and total meltdown.
Its called capitulation. For those who actually (think they) know the market and are waiting for a bottom, they have held off getting back in waiting for a true capitulation and a test of the recent 7,800 intra-day low. For them, today will be a good day as it could serve as a foundation for a shorter term rally…. They have been waiting for this day and pain to come it is necessary to put in a short term bottom. I am not saying I believe it, but I think they will be unhappy but it may also be a welcomed event and not a crash by any means. What I do think is that anyone who sells at the open or in the first hour or so will regret it as they will be able to get out in a better position next week or possible even around lunch time or towards the close…. At this point, just take your medicine
Nasdaq broke support yesterday. Was it a good time to buy or sell?
“but I think they will be unhappy but it may also be a welcomed event and not a crash by any means”
Sometimes you look into an abyss and there is nothing there.
dead calm on EU markets right now, while the inspiration from the good old SP500 futures is missing.
You could invent a drink for it. Something with all bottom shelf liquor…but at top shelf prices….
Subprime cocktail with a dash of bitters?
Updated On 10/23/08 at 02:52PM
CBRE cuts staff in New York
By Adam Pincus
In response to market conditions, global commercial real estate giant CB Richard Ellis has made staff cuts in New York City, and the company, along with its competitor Cushman and Wakefield, is making cuts across the board, according to spokesmen from both organizations.
“We have been in a cost containment mode all year, and as part of that had a modest head count reduction nationally. In terms of New York, those reductions have been minimal,” the CBRE spokesman said. In response to a question about the timing of the cuts, he said they were made within the past month. CBRE has 29,000 employees worldwide as of 2007, according to the company Web site. Asked whether the company was planning to make more staff reductions, he declined to speculate.
At Cushman and Wakefield, a spokesman declined to confirm the details of yesterday’s report that said 200 jobs were eliminated at the firm, in a company that has a worldwide staff of approximately 15,000 employees.
“I can confirm that we are implementing a small percentage of job reductions. I can tell you in some markets we are reducing and in some markets we continue to add staff,” the Cushman spokesman said. Asked if more cuts were expected, he said “not at this time.”
The cuts follow news that commercial brokerage Massey Knakal Realty Services had reduced its staff by about 25 percent.
Real estate insiders said they expect layoffs at other firms to come.
——–
NYCboy and the William Beaver house is starting to close very soon, yeah how many will?? with horrible layouts and a tiny hotel room kitchen sink, all for $750K
I think the William Beaver House is a monument to the Housing Mania. On one corner it is across the street from Delmonico’s, the famed steakhouse. On another corner it is across from a homeless shelter. What could be more appropriate in this Age of Debt and Greed?
Hey, those are places I might have considered going if my small real estate research company folds!
Better ask the treasurer how the cash situation is next time he walks by my cube.
Hrm, CBRE have space in my building….
Ever wonder what Wall St. would look like after detonating a neutron bomb?
Pretty?!?
The buildings are gorgeous. Have you ever been there?
No, living in Az most of my life, that is regarded as the “far east”. Actually, anything east of Albuquerque is “the east”.
I have not visited NY for fear of vermin. But a neutron bomb would, in my opinion, make it a tourist attraction.
I prefer my Manhattan neutron bomb-less.
Years ago, my favorite was the Seagram Building; apropos a lower shelf occupant.
To increase your reading enjoyment today, my I suggest blasting this song in the background?
Welcome to the jungle
It gets worse here everyday
Ya learn to live like an animal
In the jungle where we play
If you got a hunger for what you see
You’ll take it eventually
You can have anything you want
But you better not take it from me
I like Van Morrison’s “Naked in the Jungle”
Ya na na na na, ya na na na na, ya na na na na,
Ha ha ha ha
Big fish eat the little fish, and the rabbit’s on the run
Big fish eat the little fish, and the rabbit’s on the run
Some folks gettin’ too much, other just ain’t gettin’ none
Naked in the jungle, naked to the world
Naked in the jungle, naked to the world
Well, you gotta keep ‘em humble, else you’ll come unfurled
I’m still humming PB’s pick from yesterday:
I’m fixin’ a hole where the fear settles in, that stops my mind from wandering. Where it will go…
Hell i was singing it all morning. ann’s new morning is 4am or there abouts.
Sorry — those Beatle memes are hard to expurgate (hopefully you enjoy them as much as I do!)…
Norwegian wood…
http://www.youtube.com/watch?v=Ft9LVWoLSwQ
I like Tom Petty “Free Falling”:
http://www.metrolyrics.com/free-falling-lyrics-tom-petty.html
Can’t the market makers just bid ridiculously low if nothing else?? Just trying to learn something here.
That’s what causes the “gap down” in stocks.
Three stages of financial “investment”:
[1] It’s a great investment.
[2] I’m in it for the long-term.
[3] Somebody, anybody, please give me a bid.
LOL that’s funny.
It’s a oldie classic.
I am guessing no bids means no price formation? Going long in this sort of market is kinda like staring down into an unlit bottomless pit, and wondering whether there would be a soft landing if you jumped… Step right up, bulls!!!
Now I am guessing the Fed will supply liquidity and such to make sure the market keeps functioning properly, so perhaps we are getting overly dramatic here.
This is why banning short-selling is such a bad idea.
It’s the short sellers who provide liquidity on the bid side.
If you were one who shorted before the ban, would you cover now? Heck, no!!!
BTW, Fed can’t provide liquidity. The number of sell orders is gonna swamp all systems (CME, NYSE, Nasdaq, BATS, options markets, everything.)
This bee-yatch, she be going down hard!
I am hoping to cover some of my stock shorts!
I have stupid bids entered e.g. $8 on Citigroup. $15 on Bank America etc. 700 on SPZs
Fine, same here.
RE: This bee-yatch, she be going down hard!
“Wreck of the Paulson Fitzgerald”
by
Greenie Lightfoot
The Treasury and FDIC keep talking about investing in mortgage guarantees to keep owners from getting foreclosed; presumably these are not free. Wouldn’t it be more beneficial to guarantee stock prices, as many, many retirees pensions depend on the value of stocks? For that matter, why not just guarantee all asset prices, period, to make everyone better off? There really is no macroeconomic budget limit; I checked some reputable text books just to make sure.
There seem to be an awful lot of guarantees but no productivity and wages to back them up.
This bee-yatch, she be going down.
Sure buddy, I can “guarantee” anything you want!
`Out of Control’ Wall Street Chiefs Spurned Warnings at Davos lets party…
http://www.bloomberg.com/apps/news?pid=20601109&sid=a5JnfkstutpI&refer=home
a small neutron bomb on the next WEF party might be the best first step in improving the worlds economic situation.
You know it’s a serious financial meeting when Sharon Stone is on site. Good lord!
I concur
It’s going to be a lovely fall day here in Winnipeg.
Good call last week to buy Yen.
“Things got worse and worse. Finally there came the awful day of reckoning for the bulls and the optimists and the wishful thinkers and those vast hordes that, dreading the pain of a small loss at the beginning, were now about to suffer total amputation-without anaesthetics. A day I shall never forget, October 24, 1907.”
Jesse Livermore
The House of Representatives is gonna look like a bunch of smacked asses, after their lame attempt to get Greenscum, Cox, et al to take any responsibility yesterday. Couldn’t see it coming. I’m shocked, I tell you, shocked!
Well, at least filling the old tankeroo doesn’t hurt as much these days.
Do you mean to say that $2.399/gal. isnt an obscene price to pay? I do agree with the “hurt as much” part, however.
Thanks for this totally apposite quote!
apposites subtract
Apposites attract.
Robert A. Heinlein put it this way in To Sail Beyond the Sunset (1987):
“The America of my time line is a laboratory example of what can happen to democracies, what has eventually happened to all perfect democracies throughout all histories. A perfect democracy, a “warm body” democracy in which every adult may vote and all votes count equally, has no internal feedback for self-correction…. [O]nce a state extends the franchise to every warm body, be he producer or parasite, that day marks the beginning of the end of the state. For when the plebs discover that they can vote themselves bread and circuses without limit and that the productive members of the body politic cannot stop them, they will do so, until the state bleeds to death, or in its weakened condition the state succumbs to an invader — the barbarians enter Rome.”
What are these other democracies I hear people speak of? It’s not like there were many democracies before the US. Basically just Rome.
What are the other democracies?
Stock Futures all limit down to start the day. Wide bid ask spreads in individual equities. Just remember, all trades have both a buyer and a seller. This is where market makers make their money. Sellers never outnumber buyers, and buyers never outnumber sellers. They are ALWAYS equal.
International markets down 10%. Don’t expect US markets to fall further than that, with a possibility for an intra-day rally off the lows. Stocks aren’t going to go to ZERO.
“If you find yourself alone riding in green fields with the sun on your face, do not be troubled, for you are in Elysium and you are already DEAD!!”
So the Dow is going to drop ‘300′ points today?
Down 1,000, down 500, down 1200, down 700 down 200, up 300, close down 300. I don’t know. Mr. Toad’s Wild Ride. Just remember every ticker price is showing both a buyer and a seller. You can’t sell for any price without a buyer. You can’t buy for any price without a seller.
If you put in sell orders before the open, rest assured your stocks will sell. And there will be trader market makers in the stock pits making millions of dollars today. We’re not going down 50% today.
“Sellers never outnumber buyers, and buyers never outnumber sellers. They are ALWAYS equal.”
Tell that to anyone trying to sell a house the past couple of years.
“Stocks aren’t going to go to ZERO.”
Pets.com
“Sellers never outnumber buyers, and buyers never outnumber sellers. They are ALWAYS equal.”
What happens when Sellers = Buyers = 0, because no buyer is willing to pay any seller’s list (asking) price?
My hypothesis: Unless the market is artificially manipulated (say by liquidity injections) to jury rig the bid and asked price distributions, the only way for equilibrium to resolve is in the direction of the bid distribution.
“What happens when Sellers = Buyers = 0, because no buyer is willing to pay any seller’s list (asking) price?”
Then you are in the housing market, not the stock market.
Remember the people who talk about the Great Depression, have no clue what nonsense they are spewing. The Great Depression was caused by killing trade, the Smoot-Hawley Tariff, and plenty of big government destruction and taxation.
The stock market isn’t in a bubble anymore. Sure there may be volatility, even swings of +/- 50%. But stocks are not obscenely over priced the way houses are.
People making comparisons to the great depression are accurately pointing out that deflation led to prices falling and the government attempted to keep those prices from falling.
We are witnessing the same thing today. Those who realize that the only way to keep the system afloat will lead to hyperinflation also realize that the great depression was a cake walk compared to what this will become.
The stock market is in a bubble compared to future earnings.
I agree with you. The stock market has corrected by far more than the housing market at this point, which is not at all surprising given that the big players in stocks are far more informed than Joe the Plumber/homeowner about where prices have been and where they are going.
That’s right. Remember, both Stocks and Income did not originally double and triple like Housing prices.
This is still a fundamental play between Housing prices and Income. It’s illiquid real estate that’s going to be devastated. Expect the stock market to be much more resilient. Though be nimble, and have cash on the sideline to take advantage of bargain opportunities. Stocks might have worst case scenario downside risk of 25%, but real estate still has worst case scenario downside risk of 75%.
Remember the Mayan story of how the Universe was destroyed three times. Originally, the people built huts in the valley. There was a flood which washed all the houses away. So the people built their homes in the trees. Then a fire destroyed all the homes. So the people built their houses out of stone in the mountains. Then an earthquake destroyed their homes.
Don’t look for the stock market to repeat the 1929-33 price movement action. This is about housing. And sacrificing helicopter loads of money to the volcano god.
Some stocks are still currently overpriced. Some are not. Learn how to tell the difference and you’ll do quite well.
CrookCounty — Welcome to the blog, pal! I love those posts
CrookCounty,
how do you know the stock market isn’t in a bubble anymore? In 1982 the P/E ratio was 8, now, even after the selloff it’s in the mid- to upper-teens.
If history is any guide, you are quite wrong.
Well theoretically that means that everyone is happy with the status quo. The prospective seller would rather keep the asset than sell at a price the prospective buyer is willing to pay. The prospective buyer would rather keep his money than pay a price acceptable to the prospective seller. At some level a “broken market” equals “everyone is happy(er) with the status quo. Of course things get more complicated when you put a lender with a security interest into the equation.
The problem with this scenario is that the currency is always more valuable than the ask value of the untradeable security. You can’t buy bread with the security in question, and the ask side is more unhappy than the bid side.
I was listening to a trader today saying that” Although looking cheap now the earning coming up will be 40% lower so after factoring that in their is more room to fall” That being said, sure there are bargains if you pick the right horse. Who would have thought Bear, and Lehman would be kaput 6 months ago….more heads to roll for sure.
…but to another point I am trying to figure out the bond market. Am told that is the mother of all bubbles. 10x the equity market with everyone jumping in the US$ end of the boat. I would like to hear some educated discussion on that possible unwind. Trader saying early Nov. will have another boat load of Treasuries to sell,and who will be buying?
Eh, fiat currency is the biggest bubble of them all. So I go back to basic fundamental economic principles. Everything is subjectively valued. All value is 100% extrinsic and 0% intrinsic.
I agree the bond market is going to be absolutely killed. You have masses of old and cautious people fleeing like sheep into perceived “safety” at all time low historical interest rates. At this point it’s probably as big as the real estate bubble at peak prices, maybe bigger. I would not touch “AAA” Treasury bonds at 10%, let alone dinky low single digits.
This is completely new territory. The big X Factor is you have a world-wide paper fiat currency system backed by grains of sand. And I think, at the end of the day, hard assets, including stocks, are going to trade for more than grains of sand.
You are making a fundamental mistake if you try to measure “value” by how many dollars trade for something. The quickest, and only, way out of this mess is to get houses trading for no more than 3.5x incomes. It seems absurd to me that fiat currencies are going to gain value against all asset classes: precious metals, stocks, bonds, houses, commodities.
So eliminating fiat currencies from the picture, in terms of strict relative value between precious metals, stocks, houses, and commodities, I think stocks, not the broad indexes, but selective solid good valued quality companies, represent the best relative safe haven.
Go ahead and diversify if you want, but I would not touch real estate, bonds, or currencies. Unfortunately, that doesn’t make precious metals or stocks bullish. I just think it makes them the least bearish, until this short term “cash is kind” forced contractual debt deleveraging runs its course.
At the end of the day we are a division of labor society that trades different goods which are specialized produced. Stick with the basic needs.
Linus says the “Great Pumpkin Patch” will have standing room only this year…B.Y.O.B. & a hay bale to sit on.
Speaking of the Great Pumpkin, what ever happened to our buddy Angelo Mozilo? Didn’t he bail out with a golden parachute before getting shot down by the Sopwith Camel?
Ah, found a quote in Wikipedia about him:
“Perhaps more than any single individual, Mozilo has come to symbolize, and bear the blame for, the subprime mortgage crisis.
In a New York Times feature on October 20, 2008, Henry G. Cisneros, a former HUD chairman and member of the Countrywide board of directors, describes Mr. Mozilo as “sick with stress — the final chapter of his life is the infamy that’s been brought on him, or that he brought on himself.” CNN named Mozilo as one of the “Ten Most Wanted: Culprits” of the 2008 financial collapse in the United States.”
RE: CNN named Mozilo as one of the “Ten Most Wanted: Culprits” of the 2008 financial collapse in the United States.”
Anybody got the rest of the list?
From least worst to worst:
10. Cassano (AIG)
9. Fuld
8. Cox
7. Gramm
6. Greenspan
5. McCarthy (Beazer CEO)
4. Mozillo
3. Cayne
2. Raines
1. YOU! The braindead, dumb*** consumer.
With the exception of McCarthy (Why not Toll, Karatz, Hovnanian, etc?), the list is spot on. I had been following this since last week when AC360 began covering it and naming names. Also appropriate that they left Bernanke off the list, he’s just the clean up man. BTW, I despise when us Americans are refered to in the media as “consumers”. Wasn’t their a time not so long ago that we were still “citizens”? Did anyone get that memo? I sure as hell didn’t. Rant off.
One notable omission from your list is Hank Paulson…
WBBR announced a forecasted additional 100k wall street layoffs…. that’s in addition to the 110k already laid off.
boo hoo hoo.
This reminds me to report that right here in the Alt-A Bay I personally witnessed a verbal confrontation between a recently unemployed Pig Man and a simple citizen yesterday.
Quite interesting, to say the least.
Soon, there will be verbal confrontations between recently unemployed Pig Men and recently unemployed simple citizens.
Futures down 500+. Emergency rate cut coming?
They are meeting soon (next week?)so I suspect they’ll hold off until then. We may see a .50% cut then, maybe more? Too bad the HELOC crowd doesn’t have any money yet, they could play the interest rate vs. yield spread on companies like GE…..
Oct 29th. Two-day meeting too.
Oil in the 60’s, Gold in the 600’s, Silver in the 8.00’s. Is there any place left to hide other than the yen, or God forbid the dollar????
Gold and silver are up against all stock markets. They are up against all currencies but the dollar and the yen. Go to Nucleo Exchange, or another site where you can actually sell physical metals. You will see the true price of these things. You can get $16.00 + for silver eagles, right now. You can get $875 for gold buffaloes, right now. I wouldn’t trust anything electronic right now. Anything you can’t hold in your hand is being manipulated like crazy right now.
“Anything you can’t hold in your hand is being manipulated like crazy right now.”
Wall Street’s auto-neurotic-asphyxiation habit, for instance?
Here are you bids/ask on Nucleo right now. I don’t think it is a fair market to judgment but and quantity/size of the lots and spread on bid/ask also make me wonder about it. Those folks withe $1,000+ asks must be smokin’ some good stuff. I had another post and not sure if it is lost in space or not but will wait to repost:
GCAB100
American Buffalo Gold Coin (1.00 oz.)
BIDS
Quantity @ Price each
1 $870.00
1 $860.00
1 $850.00
1 $825.00
3 $810.00
1 $801.00
1 $800.00
10 $800.00
500 $746.00
1 $699.00
2 other Bids
Asks
3 $950.00
2 $1000.00
1 $1100.00
1 $1150.00
1 $1500.00
1 $1500.00
Also, not as a flame in any way whatsoever, but to say the PM’s are “up” against the stock market may be technically true but just b/c they have only lost 30% vs the 40% of the markets in the last 30-45 days doesn’t say much. I guess my house is “up” vs Gold over that same period.
Isn’t APMEX (or TULVING if you meet the mins.) the “true” price since both post a price and immediate or near immediate delivery from a generally reliable, national source? Seems much more reliable than Nucleo with its single digit volume and wide spreads?
‘near immediate’ doesn’t count in a financial meltdown, as your money will be cheerfully refunded, “so sorry, sold out”
How much can you buy on an immediate basis?
That’s all that matters right now…
“Anything you can’t hold in your hand is being manipulated like crazy right now.”
I wonder if that is your conclusion simply because you don’t think what is happening is rational. There are simple possible explanations that don’t need a big conspiracy theory to play out.
Such as; Penny ante guys like us can scoop up the tiny inventory of the vest pocket coin dealers, and it hardly has an impact on the deals real money is making on contracts of tens of tons the stuff.
obviously, the powers that be want everyone to hide in the US dollar before they set off the detonation
There has never been a better time to diversify!
Indian rupee, at 50 to the $ and 10+% interest, if you can stomach it. I would consider the PHP in the same category. Honest economies - loans are mostly hard to get despite recent excesses (therefore the interest rates are high), vocally democratic - the kind of mockery seen in the US will lead to street rioting which makes the government a little less inclined to neo-con policies. These countries have always been in the red, so lower oil & commodity prices will only help. They are also strongly on the growth path and will remain so because of demographics. Hyperinflation is not much of a threat, because hyperinflation affects a large section of the population who get mighty pissed which means the government is reluctant to print its way out. But basic inflation is a given (and more honestly reported).
Risk is sudden currency devaluation, which is a low probability event but could result in a wipeout of no more than 20-40% of value (unlike Argentina). So on the whole, 10% interest and a small probability (1 in 20 over a year) of a 40% devaluation makes it worth it.
AUD is great at 69c to the dollar.
You’d be demented to invest in India at the moment.
They will devalue.
“They will devalue.”
Relative to what?
Injecting a little levity:
NEW STOCK MARKET TERMS
CEO –Chief Embezzlement Officer.
CFO– Corporate Fraud Officer.
BULL MARKET — A random market movement causing an investor to mistake
himself for a financial genius.
BEAR MARKET — A 6 to 18 month period when the kids get no allowance,
the wife gets no jewelry, and the husband gets no sex.
VALUE INVESTING — The art of buying low and selling lower.
P/E RATIO — The percentage of investors wetting their pants as the
market keeps crashing.
BROKER — What my broker has made me.
STANDARD & POOR — Your life in a nutshell.
STOCK ANALYST — Idiot who just downgraded your stock.
STOCK SPLIT — When your ex-wife and her lawyer split your assets
equally between themselves.
FINANCIAL PLANNER — A guy whose phone has been disconnected.
MARKET CORRECTION — The day after you buy stocks.
CASH FLOW– The movement your money makes as it disappears down the toilet.
YAHOO — What you yell after selling it to some poor sucker for $240 per share.
WINDOWS — What you jump out of when you’re the sucker who bought
Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.
PROFIT — An archaic word no longer in use
You forgot the CDS, Credit Default Swap = transferring debt from one credit card to another.
Brilliant!
When does inter-connectivity take down the money market funds?
MMF’s are guaranteed by Uncle Hank and Ben aren’t they????
They pretty much guarantee anything and everything they want to these days.
I am wondering if you signal you are willing and able to guarantee almost everything, doesn’t this somewhat erode the value of existing guarantees?
Absolutely.
I have yet to hear them guarantee the dollar will maintain its purchasing power.
In other words, everyone will be made “whole” in nominals dollars, but not in real value.
It doesn’t.
And so it begins. Congrats to all on Ben’s blog. What started as a bit of shadenfruede has turned into the logical call of the greatest financial disaster of anyone’s lifetime who is still operating with neurons still firing in the old noggin. I think stocks are going to be a raging buy soon, but I’d love to call this low accurately. I’m still waiting on my web for the juiciest fly to blunder along.
Wait a Year or so.
What he said. At least, a year.
Look at the credit spreads. Until they completely blow out annihilating all the “grace-hopers”, don’t bother!
‘Twas the week before Halloween, when all through the floor
Not a trader was stirring, not even the usual whores
The stocks were hung out to dry, by investors without care
In hopes that liquidity soon would be there…
And up on the spoof to my tears did appear
In hopes of Hank Paulson would soon be there
On ben b, on kashie, on cataclysim and more
Stock up on your mirth, food and willpower
and never forget Ben jones man o’ the hour…
Ben the check is in the mail.
Hans Redeker, currency chief at BNP Paribas, said markets no longer believe Russia is strong enough to guarantee the estimated $530bn of foreign debts accumulated by its companies during the break-neck expansion of the oil boom. “The surge in Russian CDS spreads is paralysing the whole system. The government can offer very little help to the banks at this point because its own sovereign debt is in question,” he said.
Telegraph: Ambrose Evans-Pritchard - Russian default risk tops Iceland
Here we go again. Didn’t we visit this only a decade ago?
Emerging markets are in meltdown b/c of the inability to offer comparative Western guarantees, capital flight.
Like noone saw that coming, or it’s even hard.
I posted this a few months ago, and then again two weeks ago:
BWAHAHAHAHHAHAHHAHAHHAHHHHHHHHHHHHHHHHH!!!
That’s quite the galore of puuuuurfect prognostications, pussy.
It’s the curse of being a financial geek.
Not that I’m complaining.
take a bow, please.
I think it is time for the Russians to consult some US experts like Ben and Hank for how to get rid of foreign debts without any pain. If Putin wants to stir up some trouble, this looks like a good opportunity to drop the default bomb
Dr. Strangehank, or how I learned to stop worrying and love the default bomb.
Man, you’re on a roll today.
Alad is on a roll every day
AdamCO,
Yesterday, in response to my post about the diminished crowds in Italy during my recent vacation, you mentioned that it was late in the season and questioned when I visited last year. I can assure you that I was comparing apples to apples since we were there during the first 2 weeks of October each year for the past five years. Although I failed to mention it yesterday, I particularly noticed the difference in the size of the crowds at the funicular (cable car transport from the marina to the town) ticket office on Capri. Last year, we waited in line with hundreds of others. This year we walked right up and purchased our tickets. No wait. It was the same everywhere we went. Crowds were noticeably thinner.
“Crowds were noticeably thinner.”
Did you have any sense of any changes in the mix of who was there or was it so much thinner that it was hard to tell?
It’s hard to tell. Visually and verbally it seemed to be the same mix, just fewer of them.
Black swan,
Thanks for the update. Truly an apples-to-apples comparison.
Here in my CO tourist-town, visitors were down about 25% from last year. Sales tax revenues flat to down slightly. Business owners are very nervous (as a town of less than a thousand and few jobs really can’t support 15 restaurants…the tourists are needed for that) but the bottom hasn’t fallen out and things are still chugging along okay.
A word about all these “guarantees”
A friend who i’ve been explaining the ongoing debacle to, asked yesterday what it meant by every country guaranteeing everything?
He owes around $125k on his house, so I told him:
Imagine yourself broke and looking down @ a bottomless pit of debt owed that can never be paid off, oh, and you’ve lost your job and your wife has lost hers as well.
At this point you announce that you guarantee that you’ll pay the remaining due on your mortgage…
Oh oh, looks like it’s time for McCain to roll up his sleves and take charge.
BTW where’s Dick Cheney these days?
..
He’s in Uruguay, fluffing up the pillows and planting flowers at his high-security, 25,000 acre ranch.
..
McCain is to suspend his campaign for two days to solve this problem.
“BTW where’s Dick Cheney these days?”
Last I saw, he was “released” from the hospital after yet another problem with his ticker. I dunno how this guy is still standing. I speculated he’s gonna bite the biscuit just after the election, or the swearing in. I like to think that he’s so out of it these days he has no idea what’s going on. I hope, anyway.
Some people have very destructive goals. When they haven’t reached those goals, they have a very strong drive that seems to keep them going in pursuit of those goals. I think that’s what keeps folks like Cheney and Kissinger alive, despite the odds. Those two should have been long gone.
I speculated he’s gonna bite the biscuit just after the election, or the swearing in.
God I hope not. I want to see him presiding over the Electoral College when it declares Obama to be the official winner of the election.
Al Gore, revenge is yours.
“BTW where’s Dick Cheney these days?”
Quietly working on volume 39: “Cheney-Shrub Legacy List item #11…The “Shadow Gov’t Operations”
” I told Condi…see that paddle hanging on the wall, next to my self-portrait…it looks a bit worn right? Well now, let me tell ya a thing or two about how it got that way…”
LOL!
Slightly OT, but I received an email yesterday from my alma mater (University of Texas) in which they asked me to participate in a survey. A lot of the questions were aimed at measuring how well the education I received prepared me for my future career, and also some questions that touched on the trade-off between taking on tens of thousands of dollars in student loan debt in my early 20s with the hope/assumption that, in the end, the education/degree will allow me to earn a larger income over the course of my career.
I don’t think it’s a coincidence that the university is conducting this survey during this very uncertain period, and leads me to believe that many colleges/universities are beginning to see the writing on the wall that many middle-class folks are going to balk at the idea of paying $20K a year or higher for a college education if there is a good chance that there won’t be many high paying jobs available to recent grads.
A lot more kids will be staying home and attending local gov’t schools. State U and Community College will be the new black.
They are “confirming your contact information,” which is code for hitting you up for alumni cash.
My private, expensive alma mater sent a notice out informing alumni that it would be replacing 100% of student loans with grants for all undergraduate students.
There was a good show on foreclosures in general plus the guys getting paid to clean out foreclosed homes on PBS yesterday evening. I can’t find it on the website to provide a link and can’t remember the name…anybody else catch it?
I did see it last night.
The report isn’t on the regular PBS website…the report was put together by a PBS affiliate and it’s on the affiliate site. lemme look…
A ha: http://www.kcet.org/socal/2008/09/foreclosure-alley.html
The cleanout segment begins about a minute into the video.
Thanks, I’d wanted to send it to some people.
Reuters has reported General Electric (GE) plans to use the Fed’s commercial paper lending facility.
The Wall Street Journal indicated AIG (AIG) has tapped the Fed for additional funds. According to the article, as of this last Wednesday AIG has borrowed $90.3 billion, which exceeds the original $85 billion rescue plan.
I thought GE said they dident need the money? They are starting to sound like those Investment Banks. Also, when is the FED going to cut-off AIG? This is getting a bit out of hand!
I believe the window is a lot cheaper for GE to turn to then the Commercial Paper market which is still, by historical standards, almost completely frozen and/or expensive. I am not sure of the spread, but I am sure someone hear can calculate it.
Like women shopping for their 26th pair of shoes.
GE says they don’t need the money, but why not pick up a few bil when it’s on sale? Maybe they’ll need it later..
CNBC is now reporting that the Fed/Treasury are considering bailing out Met Life and The Hartford (both insurance companies). I wonder if you looked at the policyholder lists for those companies, if there would be any conflicts-of-interest there?
Naw, couldn’t be…
Well it looks like my prediction of who every gets sworn in on Jan 20,2009 would have wished they didn’t win.
The most important thing of all, is that this happened on ’ssshrubery’s watch.
History will be so very harsh on him…
Yeah hell get the blame for what he did. And what he didn’t do. But he did enough that I don’t worry about that last part.
if stock markets keep plunging at this rate, they can only go up from the time that Obama is in office
Point of Maximum Financial Risk
Euphoria-Anxiety-Denial-Fear-Desperation-Panic-Capitulation-Despondency
I’d say we are at Panic today!!! Waiting for Capitualation.
Too many people still listening to Chales Schwab and Warren Buffett.
Warren did a heckuva job encouraging knife catchers to jump in early a few days back, didn’t he?
Totally.
Remember we called it correctly. We may not be Warren but we’ve been around a few bear markets.
120+ plus posts at oh sixhundred PST, lock limit down.
wlecome to black friday followed by black monday, and Tuesday….I dont need to tell you guys how this ends.
“This suckers goin down”
“This suckers goin down”
At least Bush will leave a quote for the history books that eloquently summarizes his presidential legacy.
He already summarized his legacy with “Brownie you’re doing a heckuva job.” <— Washington Post Quote of the Year, 2005.
Typical Ex California hippie commie Oregonian transplant by way of Arizona’s desert. To much sun.
It is almost time to buy!
“Buy when it snows, sell when it goes!” First blizzard expected next week.
Target commodities, oversold and cheap. some are trading at 3X next years depressed earnings with no debt. Avoid debt laden companies about 90% of them.
US government buying LT debt, not a good sign. Japan tried that route. Utter failure. A lot of repo failures by primary dealers last night. Oops
Euro is still overpriced, Yen is still cheap. Japan buying dollars? Don’t see it anymore.
“He who picks bottoms ends up with stinky fingers.” (Taking profits is sensible).
you crack me up.
it aint arizonia, its texican.
texican raised ex-cali hippie hawaiian tanned and oregon settled and yes, Im choctaw….. jeez hozie baby, I thought you new me
Mrs Voz got back from her Italian adventure last week, the shipping boxes of purses, shoes,scarves and assorted goodies are still in travel…I should hope to come back as Mrs Voz or at least Voz’s dog in my next life.
LOL
Do you think the Hamptons just might unravel - particularly given its dependence on the Wall Street jobs that are rapidly disappearing?
From today’s NY Times: http://tinyurl.com/5mbqol
“BTW where’s Dick Cheney these days?”
Perhaps he invited Paulson and Bernake to go hunting?
The single thing Ms. Palin has over Dickie is she’s clearly a better shot.
OK New Yorkers, I’m gonna be on your public radio station in 45 minutes. They said we’re going to talk about Greenspans testimony. I told them I quit listening to that guy a long time ago. We’ll see. But call in if you can:
The call-in number is 212-433-9692 (or 212 433 WNYC)
http://www.wnyc.org/shows/bl/
Good luck (if you have not already gone on the air). Will there be a transcript? If yes, please post a link…
you can listen live it appears
Nah — gotta gig that won’t allow it…
First select today’s show through the link below this heading, then select “Greenspan’s Blind Faith” from the top right list on the window that opens…
October 2008
Art and Politics
Friday, October 24, 2008
http://www.wnyc.org/shows/bl/episodes/2008/10
My high-speed is down so I tried to get transcripts. Are none. I hope they keep the link up long enough for me to get on and listen.
Give ‘em hell. Don’t take any prisoners. Name names.
Ben,
I’m listening to the program right now.
I wish I had seen this earlier. I missed it.
Cool station…they got a story on Charlie Brown!
Hey, I have a day off today and will be able to listen.
I never get through on these polls, but be sure and point out that the Northeast had a bubble in the late 1980s, and than many of your posters remembered that and saw it coming.
By Brooklyn rowhouse — identical model, bought in 1987 at $300K, bought by me seven years later for $209 K, recent sales for over $1 million, my estimate of real sustainable value $600K.
Oh cr*p! I guess I just missed you. More notice next time, please.
Way to go Ben! Listening to you now!
Contact me. Anytime you want a beer, my treat. I’m down the street.
Good job ben. I especially liked the “…they got a 17 year recession out of it.” at the end.
Yep, that was definitely my favorite part.
Good job, Ben!
I have this image in my head of a small bomb going off out there in radio land at the moment of that statement. Like all the listeners suddenly perk up like those prairie dogs: “wait…what?”
Do lemmings perk up similarly to prairie dogs?
lemming-drop-skid
Great! Knock them dead! Try not to laugh too heartily when someone asks, ‘Who could have seen this coming?’
I’m gonna’ go try to hear it.
I missed it, Ben! Boo hooo! How about someone gets it from archives or something and posts a link here to replay it? Hurry! One a you smarty-pantses do it! If I tried it I’d probably get all the commercials and fund-raisy crap mixed in, because I’m evidently not very good at parsing that stuff.
How about not in this thread, in a gallery section, then I won’t have to keep track but can just hear it at leisure
Kudos for the comment regarding Congressional hypocrites trying to publicly place the blame on Alan Greenspan.
“Take a look at yourselves in the mirror if you want to see who is to blame.”
OMGROFLMAO!!!!!!!
The interview must have really touched a nerve on some nasty trolls, judging from the stupid comments about the interview which were made on the linked web site.
I was able to hear the replay. Great job Ben!!! I like the fact that the host kept referring to you as one of the few who saw this early.
Nasdaq gaps down to 1494 melting through yesterdays intra low 1534.
Need to come here for some reinforcement. I watch my parent’s neighborhood of 5 streets – easy to monitor. Recently took heart when a house that sold for $425K at the end of 2004 just sold for $390K. This left 4 houses for sale and 1 piece of land.
However my dad called to tell my there is a SOLD sign on a house where the seller was asking $510K. I’m still waiting on the price, but I figured best based on the sale history of the neighborhood would be $400-430K. It’s assessed value is $380K and the town does try to keep, disregarding these past couple of years, the assessed value somewhat close to actual value. Even zillow estimates it as $318-394K. I cannot believe the seller would come done that far after ‘only’ 2 months on the market. The sale history of this house:
1994: 165K
1991: 145K (bank foreclosure)
1989: 215K
The owner had distributed a sales flyer to the neighborhood asking $500K, stating he would try to sell on his own for 2 weeks before going to an agent. They buyer should buy before it goes and save the broker’s fee. In the flyer, he listed some ‘upgrades.’ While some might have been upgrades, most others were probably maintenance necessary to be done to a home after living there for 14 years: new roof, vinyl siding, garage doors, vinyl windows, new electric boiler and oil tank (necessary), 2 finished basement rooms (possibly done since purchased), hardwoods (already existed), separate office (already existed), fireplace w/built-ins (already existed.)
I totally agree with lot’s of your comments. I also think some stuff people did is stupid and incredible at times. I agree the CEOs and executives or many companies did awful things.
I see you guys rejoicing when Wall Street falls, which I agree is to be expected. However, I cannot rejoice like many of you when I know so many people are going to lose their jobs.
Some innocent people are going to suffer a lot in this country and overseas in the upcoming months/years. I personally do not think it is fair to laugh at other’s people miseries.
Maybe I’m just not as cynical as some of you.
I wrote this yesterday, and I’ll repeat it:
Why are you lashing out at us for this carnage? I’m not the one going on CNBC/Bloomberg telling people to buy and hold stocks day in and day out regardless of unfolding economic reality. I’m not a member of the REIC encouraging people to buy homes with no money down arguing RE only goes up. Pick on them, the controllers. I’m a powerless tinfoil hatter, a Casandra. I control nothing.
Perhaps I cajoled a few of you to get rid of your stocks over the past few years, and my reward is your reward and vice versa…
Yeah, but you convinced my to buy some Gold and I want my $$$ back now!!!! j/k They say patience is a virtue.
I’ve stopped using the term “stock” when it comes to publicly-traded pieces of paper designating an imagined ownership percentage of said business.
Stock, to me, means that I get something for my buy: I get profit-shared, I get control over how the company spends its profits, I get some say-so in how the company is run in general.
When you buy “stock” in a publicly traded company, you get none of these things. You’re just buying a bet that the company associated with the bet will put more of its own profits into expansion and be more profitable in the future. So instead of stocks, let us call them Jeux, the French word for gambles or plays.
I’m glad you cajoled me into selling-out last Feb. Now if Gold got down below the $600 mark again, I might just have to get me some?
Thank you, Thank you!!!!!!
People that vote in these demopublican clowns who run the system are not innocent. This is what they voted for its what they get. Time for some responsibility.
You can’t teach a person to be responsible who believes that life is as simple as punching someone’s name on a ballot and they’ll take care of you.
We become adults the day that we realize our parents will not take care of us forever. I did it at 13. My friend hasn’t done it at 33. He’s in a world of hurt, too.
Responsibility comes when we say “I will take care of my own future.” To me, that means not using any banks, not using any Federal organizations if possible, and trying to switch to real money and convince our friends and bartering partners to accept it from us.
“We become adults the day that we realize our parents will not take care of us forever. I did it at 13.”
“Responsibility comes when we say “I will take care of my own future.”
If more people thought like this there would be no need for the government!
I left home at the age of 15 and never looked back! I am so much better off than everyone i know, Thanks to the life of hard knocks!
I agree, in my opinion you become an adult when your realize that neither your parents nor the government will take care of you forever AND you start taking responsibility for yourself. That insight will be very useful for teaching my own children.
Now that bit about not using any banks or federal organizations… that is VERY difficult because your market shrinks dramatically and it draws the attention of government which will attempt to get you for tax evasion, money laundering, etc. A nobel goal, I know.
One lie makes you larger
Another lie is good for us all
And the ones that Greenspan told us
Don’t do anything at all
Go ask Alan
When his tales grow tall
And if you go chasing returns
And you know you’re going to fall
Tell them an obfuscating octogenarian has given you the call
Recall Alan?
When we were all enthralled
When the men on the Fed board
Get up and tell you where to go
And you just had some kind of mushroom
And your mind is moving slow
Go ask Alan
I think he’ll know
When logic and proportion
Have fallen sleepy dead
And the white knight is talking backwards
And the red ink symbolizes dread
Remember what the ex-director said
Heed the Fed
Heed the Fed
http://www.youtube.com/watch?v=hwWzbD_9Nfo
Heed the Fed…
Heh heh this is great stuff!!!
Another HBB exclusive!!!
You just can’t FIND that kind of humor in the NY Times
TEST
-crikey!
You fail with flying colors.
October 24th
Ben is on WNYC right now. Available on AM 820 in NYC or on the internet. Brian Lehrer show.
Yo Ben, you sure have a regional accept (you’d probably say the same about me).
Are you amazed to hear “New York is different?” Actually, the theory going around is that highly built up, slow-growth places like NY are MORE vulnerable to price bubbles. In Austin if demand goes up construction goes up, though perhaps too much.
In NY, what goes up is price, because it takes a high price to justify the cost of construction here.
When demand goes down, you get a crash.
If you have relatively inelastic supply and demand, you get volitle prices, just like oil.
WTF… They’re talking about something else…. no Ben.
Gold Heads for Biggest Weekly Drop in Over 28 Years on Dollar
For those who say gold is up against all markets except the yen and dollar….well I live the United States and so far holding cash has been a better investment than holding gold. Maybe that will change, but so far using the same logic as above, I am “up” 30% on holding cash over gold by waiting rather than overpaying.
OCMetro: I am talking with a bunch of gold dealers in my area about starting a new website dedicated to entering buy/sell prices for gold, silver, platinum and other bullion.
There is NO connection between spot and reality. Silver is at $9.01 right now, but 1oz coins are $19.50 near me. I pay $16.75 at the same dealers, when they have them.
I tried to buy 5 ounces of Platinum today, but they were out of stock. 30 day delivery wait, no guarantees of delivery. Forget it.
Last night, I sold somewhere in the realm of 105 pre-64 dimes ($0.90 spot value) for a total take of about $180. That’s almost double the spot value, in line with what $1 eagles are selling for. If I had more dimes on me, I bet I’d have sold 5x as much, there was that much demand.
My asking price for my gold bullion, including shot, is around 25% over the current spot price, and people are paying it.
I can’t believe people are desperate enough to buy shot. I wouldn’t touch it because you have no idea what the metal actually is, the purity, etc.
I refuse to pay the 80-90% over spot for small amounts so I am taking delivery of 1000 oz bar next week. Paint it brown and stick it in the flower bed…just another railroad tie. Heh.
The one benefit of the ’spot’ fraud is to disabuse people of the idea that they can buy paper PMs. Paper doesn’t behave like metal, as the Mormon Teas of the world are finding out.
Hi Watcher,
What I have learned so far is that massive liquidation and manipulation can gyrate markets. Did you know that in your lifetime, from these levels, silver can multiply many times in value?
I don’t expect anything out of the SLV for many moons, I also have physical, I don’t have any leverage, and the LIQUIDATION of anything I hold won’t happen.
Evidently there is more in my money-market accounts than some countries treasuries.
I admit silver has been a terrible investment for the past nine months.
I also have a 42,000 share long position in SLV.
I rent.
The wholesale bid-ask price on Extremely Fine $20.00 Liberty Head Gold coins (97/100’s of an oz pure Gold) is currently:
$940 @ $990.
These coins have around $710.00 in content @ spot value.
I here ya about platinum. I’d like to buy some given it is the same price as gold now. Palladium is unbelievably cheap. You can buy Pd Maples at Apmex…at $125 over spot. Or take delivery of a 100 ounce palladium bar from Russia!
The past 2 months have been unbelievably crazy for me. I have not been this busy in over a decade. 3 of my businesses are already 30% over our annual expectations, and I usually put a stop-limit on expansion (to 15% per year), so that means more profit-taking and higher taxes for myself and my employee-stockholders.
The market boom for us comes solely because our client base, across all my markets, are savers instead of borrowers. In the past, during the boom phases, I turned down 4 out of 5 possible clients because they were debt-expanders instead of savings-expanders. Now, my clients with cash in the bank are reaping huge benefits in a market that isn’t shrinking, it’s growing. They, too, generally don’t work with clients who operate on debt, because it is those clients who go belly-up the minute the spigot is turned off or just limited even slightly.
Because of this rush madness, I’ve looked to acquire a few extra hands and brains. There is a dearth of intelligent, business and profit-minded individuals in Chicago. I would be shocked if I needed two hands to count the number of individuals I’ve looked over, out of hundreds, that I would even consider bringing on.
Here’s a mini-novel story, I hope it makes it past the filters. These are the complaints I get from wannabes who want to work for me:
What do you mean I’d only make minimum wage? After a short-term trial period (at a market-rate salary), I generally try to pay employees minimum wage plus a large bonus on their job profitability. Then, I offer them a percentage of the business as a buy-in that they can take advantage of in order to reap the dividend tax break like I do. I know that making $7 per hour sounds terrible if you used to make $42, but you also get a large chunk of profit, so most people make more and work less. If they question it more than a little, they’re not hired.
But I have an MBA/pick your letters Lovely. Most of my employees have no college degree, and one didn’t finish high school. What exactly can you tell me that you learned in 4-5 years of school? Other than the 5 figure debt you’re still deferring, what exactly should I be impressed by? College is a state-sanctioned party palace, with the tenured socialist professors making the only gain in those walls. Yes, there are some education markets that I do believe need college, but for business? No way. You learn by starting at the bottom, at a young age (say, 15), and then learning everything you can as you climb the ladder and switch mentors (bosses).
What about health insurance? We don’t offer it. None of my current employees want it from the company, because they know their own profit-sharing gets cut significantly when they have to pay for the medical problems of others. Instead, we teach our employees to save, a LOT of money, when they’re young and go out and buy a very high deductible health plan. That means you don’t get co-payments, but you pay cash on the barrel for a doctor’s visit. You don’t get birthing coverage (save $20,000 before having a kid, you morons). You don’t get prescription coverage (WalMart has $4/month deal on acyclovir and other drugs that everyone seems to need). You get coverage for the drastic, terrible things that happen. Homeowner’s insurance is not to cover having your carpet vacuumed, it’s there for when your roof implodes.
What about expenses? Pay them yourself, freak. If you need to spend money on a client, work it out with the client to cover it. If they don’t, figure out what your return would be on spending that money before you do, because I sure as heck am not going to share one penny with you when you’re pulling 70% of profitability on a job. My 30% cut comes from collecting that money, and I won’t cover your little lunches or your run to Vicky’s Secret for underwear for your mistress, wife, girlfriend and friend with benefits (yes, one of my employees has all 4).
In the end, I hired one guy. He showed up late to his first 2 meetings. After the 90 day trial period, his security card won’t work, and his email box will have a simple email: “Thanks for trying your hand with us, unfortunately your history has not met with our rigorous standards.” Bu-bye.
Where are the intelligent, business-minded individuals who want to make themselves a small fortune? Honestly. Does everyone want to work 40 hours a week in a cubicle for 1/3 the income they could be making?
You are a delusional jokester.
I bet you have the best boiler-room going based on your description and education envy.
People that can read and do math see what your kind of “opportunity” is all about.
Thanks for the laugh!
Two questions:
What exactly is your line of business?
Are you hiring?
According to the post above, it sounds like he is in the web development business.
‘What exactly is your line of business?’
‘Are you hiring?’
Answer to Cassandra:
1. AbbaBabba often talks about printing. But then he ALSO says he is involved in many other ventures. This particular post could be one of those other ventures, because no presses are mentioned.
2. No, because you suck.*
*You don’t really suck, Cassandra. I was just being AbbaBdabba right now, because he is busy telling other people that THEY suck.
I won’t cover your little lunches or your run to Vicky’s Secret for underwear for your mistress, wife, girlfriend and friend with benefits (yes, one of my employees has all 4).
I’m surprised that guy is able to make it to work at all.
What exactly can you tell me that you learned in 4-5 years of school?
I’ve got a buddy that’s an entrepreneurial type. Growing up we usually balanced each other well. I was the more thoughtful, deliberate one and he one more to act on impulse. We took different paths, I went to school and he went to work.
He has owned a couple differents biz’s in different forms over the years. He’s got a night club now that’s doing real good, I think in that sense he finally made it. He’s opening a restaraunt that may do very well, it’s in a dry county/town and he’s got a liqour license. We’ll see.
A few years ago, he went into business with a guy in a general partnership. That guy defaulted on some personal loans which have now (because of the business structure) become my friends problem. Large amounts of debt, he can’t sell assets, it sucks.
Meanwhile, I was busy in school learning, among other things, not to go into business with people as a general partnership. You might get stuck with their baggage.
I think altogether, I paid less than he did for that piece of knowledge.
AB:
You sound like the 500 a day here on CL….same line…work for FReeeeEE make $100K the first year…..
That is the big thing you have going against you….massive competition for Free workers
You forget one thing AB:
IF YOU PAY FLUKY FLAKY WAGES YOU GET FLUKY FLAKY EMPLOYEES
I think you are skipping the part where you ask for their credit card number.
Ooops, can’t believe I missed it. I must be slowing down in my old age.
“Then, I offer them a percentage of the business as a buy-in that they can take advantage of in order to reap the dividend tax break like I do.”
This “buy-in” is where you get your flash money back and clean out the marks bank accounts? Nice play, plenty of suckers to fall for that one.
I remember my first contact with “real” con men. (Maybe you are, maybe you aren’t, I don’t care either way)
He came into a bar/restaurant I was working at as a youngster. The place was for sale and after getting in with some of the more money’d regulars talked them into pooling money to buy it.
Long story short, he split town with all the money, detectives found that his car was leased and he never made any payments, and the expensive hotel he was staying at was looking for him because he didn’t pay the bill.
The bar was out his bar tab as he even convenced the manager/owner to let him(the only person ever) run a tab.
The marks were out a lot of money. A real eye opener as to what people are capable of doing. Sad to see people get that burned. First is was desperation to find him, then they realized they got taken, then just outright depression.(yes grown men cried)
He could have put an ad in the paper or something for the time spent on that rant.
Let’s see he a)has no benefits, b)offers no salary, and c)makes people pay him to get actually join the company. It sounds like starting your own company ‘cept he gets 30% of the cut. And he wonders, exactly why he has a hard time finding people to work for him.
Since I’m generally such a helpful person, I’ll be happy to help connect the dots here.
“The Hint” - *ahem*: If someone wants to start a business, they’ll do it on their own, thanks and keep 100% of the “profitability”.
yen strong like bull:
Oct. 24 (Bloomberg) — The yen climbed to a 13-year high against the dollar as the prospect of a global recession prompted investors to dump higher-yielding assets funded in Japan. The dollar rose to a two-year high versus the euro.
http://www.bloomberg.com/apps/news?pid=20601083&sid=aN6FgIA3dZvg&refer=currency
It’s just the carry trade unwinding.
Judging from the crash in the Baltic Dry Index, 1.5m barrels will not do the job of propping up oil prices.
OPEC to cut production by 1.5 million barrels a day
By Steve Goldstein, MarketWatch
Last update: 10:28 a.m. EDT Oct. 24, 2008
LONDON (MarketWatch) — The Organization of Petroleum Exporting Countries on Friday said it was slashing 1.5 million barrels of oil a day in production as the world’s financial crisis dampened demand for energy.
“This slowdown in oil demand is serving to exacerbate the situation in a market which has been over-supplied with crude for some time, an observation which the Organization has been making since earlier this year. Moreover, forecasts indicate that the fall in demand will deepen, despite the approach of winter in the northern hemisphere,” the oil cartel said.
The BDI being down is basically Smoot-Hawley with some serious amphetamines.
Nobody is accepting the letters of credit.
I read (or heard) somewhere that tankers full of oil are sitting in the Middle East, waiting for customers (or waiting for letters of credit to be properly approved).
So, where are we getting our oil? Last summer the Administration topped off the Strategic Petroleum Reserve, which if I remember correctly holds enough petroleum for about 33 days of constant usage by the U.S.
So, did the Administration top it off in anticipation of the credit crisis that we now find ourselves in? If so, then that pretty much blows the cover on the whole “nobody saw this coming” argument. If not, then we get to thank the alignment of the stars for our “dumb luck”.
Here is an inventory report for the SPR. Note that there were 5.4 million barrels withdrawn from the reserve during September/October due to hurricanes Gustav/Ike:
http://www.spr.doe.gov/dir/dir.html
And, here is a Wikipedia description of the SPR:
http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve
According to the inventory report, the SPR currently holds $44.2 billion worth of oil (assuming $63/barrel today’s price), and the cost basis of that oil is only $20.1 billion. So there’s a nice unrealized capital gain there of $24 billion if and when the gov’t decides to release that oil into the market. I doubt that happens anytime soon, though. This is (or should be) a “rainy day fund” of oil…
There is something reallllllly fishy about the market media today: nothing but hyperbolic catastrophic headlines, when the indexes didn’t even come close to the recent lows, and the opening drop not even bigger than the 700+, 800+ declines we’ve seen. Yahoo: “Wall Street plunges as investors furiously dump stocks…” ummm… Dow down 250 points?
The PPT Cruiser blew a tranny, so they’ll have to get another ride.
Blowing a tranny has a completely different meaning in the Emerald City.
Lol!!!!!
She’s/He’s so fine, my 409….
Rumors of a 75 rate cut. Hope springs eternal.
75 gets you to 75.
even money at best.
I dont like even moneys. I like better’n most.
S&P came within 12 points of Oct 10 lows of 1840. Nasdaq dropped 40 below yesterday’s new low of 1534.
This may be a stupid question but, why aren’t any of the news agencies reporting the “Limit Down” this morning? I can’t find it mentioned on Bloombergs or CNBC’s websites. I went to talk to my boss (we have regular conversations over coffee in the AM) and he said that the Today show made it seem like it never happened. I would have thought it was newsworthy given the fact that it rarely ever occurs. Is it to prevent panic on Main street? That seems kind of dumb considering everything else is out in the open.
Anytime something bad happened, (death of a leader-Chernobyl-space accidents, etc) the powers that be in the Soviet Union would play a steady diet of nothing but classical music, soothing music without words…
We give our people a steady diet of soothing words without music.
Salon’s “How the World Works” has it.
Being a rare event didn’t really seem to effect the market today much. I mean, it is down 4% but that is not that amazing considering recent volatility. Earlier today people were predicting another big down day like 1000 points, but thus far that hasn’t happened.
The period with no buyers was very short lived and obviously very short lived; however, I wouldn’t be surprised to see a big down move starting around 3PM as people make for the exits before the weekend.
I hate living in interesting times, just hate it.
Holding to my prediction of 4000.
If I were a fisherman (woman), I’d just go fishin’.
I go fishing a lot. Most of the time it ends up really being sitting by a lake and shooting the breeze.
that’s what the cops here in my little town shoot…
which is OK by me…
I like fishing. Those sticks of dynamite really bring up the fish.
Oh right, Hoz, like you can get them to detonate underwater with a wet wick…
LOL
I don’t think this posted before. Here are what some Democrats want to do with your 401(k). Essentially they want to end its tax-advantaged status because they “don’t want government subsidizing saving.” But, of course, they will continue to subsidize housing.
http://investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971
Some Democrats are nuts.
As are some Republicans who wanted to replace the 401K with a plan in which you pay less taxes but now (so they can be spent) and no taxes later. The thought of deferred gratification seems horrific to them.
Off topic but staying on the scary theme:
I just heard this rumbling inside rental and thought it was dj music but turns out I can see at least 24 black choppers flying in formation one at time heading south. I certainly have never seen that many at time and I got some shots.
In my neighborhood I’ve noticed a lot of flying spy devices disquised as pigeons.
It’s a battle between the bearish Bulls and bullish Bears. Better be late than broke.
I am definitely in the bullish Bear camp…
How long before you become Professor Bull?
It may not be much longer. Prices can only correct at the recent rate for so long before a fundamental bottom is in…
Hoz — Still waiting for an appropriate entry point on that reverse T-bond yield fund you suggested some time ago. Do you think there will be a good time soon?
U.S. 30-Year Yield Drops to Lowest Since Regular Sales Began
By Sandra Hernandez and Cordell Eddings
…
“There’s a total risk aversion that keeps getting ramped up that is resulting in liquidation of risk assets,” said Francis Mustaro, who heads a group managing about $500 million at J&W Seligman & Co. in New York. “Now we have some new risks that are being highlighted that are sovereign-related,” such as “plunging currencies.”
I am very short US Treasuries to finance my long Yen short Euro position (short EuroYen). If you look at a chart and I am not a technical analyst, the yields on the flight to safety have been rising.
As i posted above the only reason for flight to perceived safety in Treasuries is an unstable currency trade. The currency trade is going to stabilize shortly - there is to much data in the next 2 weeks to not stabilize. Whether they all go to purchasing power parity or not has yet to be determined. (PPP is 85 {sd: 83-87} yen to the dollar; $1.15 {sd: 1.12 - 1.18} to 1.00EU)
I would not like to be long Treasuries when they destabilize. The liquidity is already tight. On a nothing day -no fed, no news, the 10yr had a 38bps inter day move. That is huge. Liquidity is drying up rapidly, few buyers. And fewer buyers with each additional panic. Markets used to be 1000 contracts deep and you wouldn’t move the market, now the spreads are wide and thin.
go to cbot dot com and just look at charts of the days swings.
I do not think it matters when you get in a short position in Treasuries, as an example: Some people got long the Yen in the 120s, some in the 108s and some at 99. They are all winners.
hoz,
do you still like RYJUX to short Treasuries? Thanks…
I think that fund has reached a bottom. Blue skies await for the next decade.
latest news
Crude futures end at 17-month low, down 11.1% on week
BOND REPORT
Treasurys soar on safe-haven buying as stocks dive
U.S. debt among best investments this year
By Deborah Levine, MarketWatch
Last update: 2:12 p.m. EDT Oct. 24, 2008
NEW YORK (MarketWatch) — Treasury prices jumped upward Friday, pushing short-term yields lower, as stock markets around the world plunged and resurrected the attractiveness of U.S. government debt as a relatively safe alternative.
30 Yr Bonds 08Dec 116′305 -1′000
10 Yr Note 08Dec 115′040 -0′230
5 Yr Note 08Dec 113′262 -0′062
2 Yr Note 08Dec 107′155 -0′020
30 Yr Swap 08Dec 133′040 -3′145
10 Yr Swap 08Dec 114′260 -2′050
5 Yr Swap 08Dec 110′100 -1′040
A lot of red ink in the Treasuries today. Looks like the yields rose a lot. Flight to safety is over when the currencies stabilize - they are stabilizing now. Possibly/probably will stabilize in less than 2 weeks. Then who will be left to buy Treasuries?
I have every reason to believe that within 1 yr the 10 year will yield 5.5%.
A headline is running on The Wall Street Journal website indicating the Treasury is considering taking stakes in insurance companies. Such a decision would expand the TARP rescue plan so that an even broader range of financial institutions have access to capital.
They are spreading that money very thin by including more types of companys in their rescue sceme. How long before they beg Congress for 700bln more to stop the pleas comming from Wall Street?
Housing: More Doom & Gloom Ahead
10/24/2008
Home sales ticked up in September while prices fell, but a housing bottom, which will be bad, is still a long way off, says Ken Rosen, a real estate economist. Stacey Delo reports. (Oct. 24)
We are definitely in a beer market now…
BULLETIN
U.S. STOCKS’ LATE COMEBACK FALLS SHORT;
DOW INDUSTRIALS LOSE 320 POINTS
THE STOCKPICKERS
Recipe for tough times: beer & chocolate
Fund manager taps Molson, Hershey; banks on Lazard
By Greg Morcroft, MarketWatch
Last update: 6:32 p.m. EDT Oct. 23, 2008
NEW YORK (MarketWatch) — Mutual fund manager Kim Scott has been buying beer and chocolate lately, and not just to ward off the anxiety of the most turbulent markets in decades.
Warning!!! Puke Alert!!!!
`Out of Control’ CEOs Spurned Davos Warnings on Risk (Update1)
http://www.bloomberg.com/apps/news?pid=20601109&sid=a9wVqOPk.T_4&refer=home
Interesting opinion piece in the WSJ today in case anyone missed it.
It lays the commodity bubble at the feet of the fed: http://online.wsj.com/article/SB122480934587765107.html
Another Bubble Bursts -Subprime mortgages were just the beginning
Credit markets have started to thaw, yet stocks and the larger economy keep sliding. What’s going on? Among the problems are the reality of recession and the uncertainty over Barack Obama’s policies. But the larger story is that the global economy is fast popping its latest monetary bubble, the one over the last 14 months in commodity prices and non-dollar currencies.
…
Not to worry — it’s all guaranteed (isn’t it???)…
FT Home
COMMENT & ANALYSIS
Editorial comment
Low expectations could get lower
Published: October 24 2008 19:53 | Last updated: October 24 2008 19:53
When there was just a financial crisis, the problem was runs on banks. Now there is a real economy crisis, and the problem is runs on everything. The global economy is stalling and even low expectations are being dashed. Investors are now loath to hold anything. Currency trauma in Europe mean that part of the crisis’ real legacy may be a bigger euro area.
Economic activity across the world, everywhere from the US to China, has fallen back. In the UK, data released this week showed that gross domestic product fell by 0.5 per cent in the third quarter. This fall was much bigger than anticipated – but worse may follow. By any sensible definition, the UK is already in a recession. In the eurozone, recent surveys of puchasing managers suggest that the recession will be quite severe.
ben Im not even drunk yet…
cmon.
bye joe, one of my pontificating puns has been plundered, blasted… of no fault of yours ben Im sure.
Ill see if I can find the mood to really lay one out.
R U Sure?
Why I like PM’s in a nutshell:
http://www.nowandfutures.com/key_stats.html
Heh heh…
Manipulation
Shrewd or devious management, especially for one’s own advantage.
Yes, all markets are manipulated to a greater or lesser and that has been going on for all of recorded history. The point is both to “get over it” and then find who is doing it and get on board, assuming you want to invest in whatever is being manipulated. Getting on board is just another way of saying follow the correct trend.
Question:
Would it be possible for the DOW to plummet to nearly zero in the event of mass panic? Are there stops in place to prevent such a situation?
The only stops would be people like me with a lot of cash on the sidelines, who would see PE rations go below 0.1 and buy.
Ok Vozzie this is for you!
“A few months ago, many pundits like John McCain were telling us the fundamentals were fine. And some still are. The consensus today is that we are falling into a large black hole. This is good news, for those who make their fortunes tend to do so while the majority have their heads routed in the sand. Whilst the world turns to sandals and begging bowls, it is a brave person who drives around in a red Ferrari and wears a diamond encrusted watch.”
Fintag
Even my friends from the Dew Drop last night wondered what was going on. I explained it to them and Lars yelled over at the barmaid/owner and asked when she was going to lower the price of the beer. She said “When you pay Lars.” I said to Lars “That is disinflation, prices aren’t going up as fast.” Lars paying for a beer will never happen.
moniker change….
the world is different….
when you see clue, call me voz……same guy.