Bits Bucket For November 3, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Good morning everyone, it’s not often I suggest praying, but pray you don’t get the flu this season. It’s bad, real bad.
As for my reason for posting: I just learned that an acquaintance bought another home in another county. This is bothersome for many reasons
1. He owes back taxes
2. He does not maintain his property
3. He works in construction
4. He has horrible credit
So there you have it. Expect another year or so of “buy and bail.” This is going to be a seriously long ride to the bottom.
Somewhat related, it looks like my wife and I will be leaving in 3-4 months to move back to NYS. Should we buy or rent?
“but pray you don’t get the flu this season. It’s bad, real bad.”
Muggy, do you know how long this particular flu has been around and what the deal is? Because I had some bug a few weeks back and it was the worst I’ve ever had, seriously. Didn’t go to the doc, just decided to tough it out, but it hung on for a long time and I usually recover quickly. It was one of those things where you’re not afraid you’re gonna die, you’re afraid you won’t die. Worst. Illness. Ever.
Saturday afternoon was the onset. This morning was the first time I could get up and walk around. I thought about going to the hospital yesterday, but my wife calmed me down. I have no idea what’s up and I hadn’t seen or heard anything on the news (you know, the talking heads we all love).
Yeah, I really felt like I wasn’t going to make it. That was a first for me.
My theory is someone from the Au/Industrial Complex poisoned me. That or I fell ill after dining on some Orlando-style souffle. Nyuk.
“I really felt like I wasn’t going to make it. That was a first for me.”
Sounds like what I had. Couldn’t hardly breathe, at one point. Hey, but you’re lucky if it was only since Saturday and you’re up and about now. Wish my little bout had been as brief. Be careful, I thought I was OK and then it was back with a vengeance.
Sorry to get completely off topic, but I really feel I gotta say something here. We kept our house very cold last year to save money and everyone got sick. I later found out that flu thrives in cold environments.
Here’s a link: http://www.sciencedaily.com/releases/2008/03/080330203401.htm
And here’s a quote that sums up what I’m talking about:
“At winter temperatures, the virus’s outer covering, or envelope, hardens to a rubbery gel that could shield the virus as it passes from person to person, the researchers have found. At warmer temperatures, however, the protective gel melts to a liquid phase. But this liquid phase apparently isn’t tough enough to protect the virus against the elements, and so the virus loses its ability to spread from person to person.”
Later in the article they say 60 degrees is where the coating starts to melt.
Is this flu covered by this year’s flu vaccine? I’m getting my flu shot this week.
Great.. And Palmy, I know your in FL, so; I’m O-so-happy to hear that it’s going around down here as well.
I was in a home yesterday talking to a RE agent (who told me everything is getting much better, and I better make an offer because this one won’t last long…sigh…) who told me they were still able to get people loans at 7X income.
We’ve still got a long way to go down.
“it’s going around down here as well.”
Michael, I wish I knew what the hell I had. Probably should have gone to the doc. If it was the flu, hurrah, then I shouldn’t have to worry for the rest of the season. All this lax immigration crap is exposing the US to stuff we’d thought we’d heard the end of long ago. Polio, anyone?
Ebola perhaps?
In all seriousness, the best to you and Muggy, hope you feel better soon. I’ve been very lucky for the past few years, not really come down with any bad flu (which is surprising, I travel quite a bit for work).
Now if that stupid Mutabo virus would just pass…
I’m Ok now, but it took a long time and that’s unusual for me. Ah, the joys of globalization combined with political correctness.
On another note, how’s your local gov’t dealing with the bubble burst? I recall when you posted here about how some who worked in your local gov’t were pitting their shants over possible cutbacks. Is PB county cutting back? Because Hillsborough has a little bit, but is trying mightily to hang onto bubble value taxation.
Yikes all! That flu bug sounds awful! We’re planning on all getting our flu shots on Wednesday.
BTW, last February we all got the RSV virus, which was the worst cold virus ever. My daugher got croup, my son and my dad got pneumonia (my son had to stay in the hospital for 3 days). Mine apparently developed into a viral infection that affected the nerves in my legs really bad. And it seems to have aggrivated my mom’s arthritis.
Palmy,
In Atlanta many of the school districts have a new rule that if a child misses more than 5 days total (not consecutively) in a school year, a truant officer is sent out to visit the parents. This means that many kids go to school sick, they get the other kids sick, the kids get the parents sick, the parents have limited sick days or sick/vacation days combined into just a few days off, so they go to work sick, and then get their co-workers sick. Add in Lots-O-Immigrants in food handling jobs & their illiness that we have no built-in immunity for. Top it off with many folks who have no health care insurance. And the result is that pretty much year round, everyone in Atlanta is sick with some kind of cold or with strep. It sucks.
if you can spend 3-6 months looking , by passing the realtor commision and getting a true REO it might be good
Muggy, here are the housing starts numbers from Rochester. What I have seen is that excluding the down payment, it costs about as much to rent as buy in the Rochester area.
Area housing starts down 10% in 2008
http://www.democratandchronicle.com/apps/pbcs.dll/article?AID=2008810290352
This is an interesting buy v. rent article:
http://www.realestatejournal.com/buysell/tactics/20070313-crook.html
Good luck with your move.
The thing is, if we leave Florida, we’re going to live in Monroe County for (at least) the next 20 years or so. I know where all of the good schools and neighborhoods are, so it’s not like I need to rent to get a feel for the landscape. I also know where all of my friends and family are, and where the good schools are and all that.
A lot of upstaters deny overbuilding, but I can tell that just about every cornfield I shot up with my BB gun as a kid is now a fresh row of McMansions. Prices seem to be about the same as when I left.
We’ll probably rent somewhere in Fairport for a year or two.
Muggy,
We’ve discussed the asynchronicity of the bust. Based on my observations, the bubble in NY had a number of phases. The market began heating up before 9/11 roughly 1998 was the genesis. From 9/11 to late 2004 it was clear that a real mania had developed. 2005 was an odd year. The market appeared to seize up in first half of 2005 and sales appeared to stall. Then it seemed like some put a match to it all over again in July/August2005 and continued unabaited until mid 2007. There wasn’t even a concern that a bubble existed as recently as 2007. There was even denial about the crazy mortgage stuff until 2007. It was late 2007 when my family members conceded by email “I see you were right about the mortgage mess”. My own anecdotal obervations are that the northeast is way behind FL, CA, VA, MD, DE, etc.
‘but I can tell that just about every cornfield I shot up with my BB gun as a kid is now a fresh row of McMansions’
Frowny face for me! Frowny frown.
“Frowny face for me! Frowny frown.”
Wait, because of the development, or that I was a gun-nut as a youngster?
Because of the development, of course! Sheesh. Why would I EVER object to gun-nuttiness?! Heckfire, guns is super! I’d be holding one right now, ‘cept it would get in the way of typing and holding a frosted donut.
I remember reading that article. My dad bought in da ‘burbs 1982 (I think) and sold in 2004. The 4% mentioned in the article didn’t factor in all of the repairs he had to spend money on.
My sister bought a McMansion in Henrietta a few years ago and many of her neighbors are Jersey folk that cashed out and bought upstate.
If I were going to move anywhere else, I would no doubt rent, but there may be an argument for buying in Rochester if you’re going to stay long-term.
“Should we buy or rent?”
Muggy,
Sounds like you still have something of a fever. Hope you get over it soon. They say that prices will never go down in WNYS, because they never went up!
I do wonder though, that the largest rising tide in our lifetimes couldn’t bouy prices in this area, what they would be if there hadn’t been a universal mania (what they will be when universal depression sets in). Trust me, people had the same mania here, it masked the ugly truth that NYS has been in a depression for decades. Nice properties aren’t selling, only crappy ones. The employment base is continuing to crumble.
Time will tell.
This is an excellent point Skye, I am only seeing really crappy homes moving here in Florida as well. What happens when prices stablize and J6P realizes his $150k fixer-upper is really a tear-down in normal times. That’s a whole ‘nother round of jingle mail.
I’ll probably rent for a year or two, but I need to adjust my entire frame of reference, not on price, but neighborhood quality. It’s very hard to find a stable ‘hood in Florida. There are neighborhoods (most of them, actually) in Monroe County that haven’t changed since I was 5 years old.
I don’t mind buying too early if it’s in a ‘hood that will retain in positives…
I like to tie up in Fairport, when I’m cruising on the Erie Canal.
I think we will get whacked on RE taxes out here from the loss of the Wall Street subsidy, on top of everything else.
I’ll be surprised if the state keeps up the canal too. It is purely a recreational luxury. 2009 will be the “cruise of a lifetime” window of opportunity. $2.50 gas would suit me just fine.
A lot of canalside Mansions have popped up, where small camps once ruled. It will be awful for them if the locks close. Ditchfront property anyone?
According to the NY Times, its booming business on the Erie:
http://www.nytimes.com/2008/11/03/nyregion/03erie.html?em
Article in the New York Times yesterday about a slight increase in commercial shipping on the Erie Canal. “The canal still remains the most fuel-efficient way to ship goods between the East Coast and the upper Midwest. One gallon of diesel pulls one ton of cargo 59 miles by truck, 202 miles by train and 514 miles by canal barge. A single barge can carry 3,000 tons, enough to replace 100 trucks.”
You can’t get much more stable than Fairport, or even Pittsford or Perinton. The property taxes are still the killer and that’s not likely to change. A good friend of mine lives in Fairport and they love it. Fairport is one of the more walking friendly towns and the canal is a bennie during the summer. Good luck. I know a couple of local real estate sales people that are familiar with the east side and aren’t thieves or liars in the event you don’t know any realtors here.
Too late, I’ve already got it…knocked me on my butt all weekend. Still not over it.
Oddly enough (because I don’t think they are the slightest bit related), I had a more severe reaction than normal to my flu shot this year. It wasn’t just a vaguely sore arm for a few hours, my arm hurt rather badly for several days and I felt, not ill, but a little off for a day or two. Worst reaction I ever had to the shot. Nice to know it wasn’t for nothing.
But are you sure it was actually this year’s flu virus you got? It doesn’t usually hit the US in full force until later in the season. Has anyone heard news reports? If this is going to be a bad season and it is hitting early, we may have to deal with vaccine shortages again. Reporters love the visuals on people waiting in line for flu shots.
You may have previously had a flu virus similar to this years strain. It will cause a more severe reaction because of pre-existing immunity.
Cool. Learned something today, and I always appreciate that.
Where in New York State (upstate and downstate have little to do with one another)? Do you plan to stay permanently? And how safe is your job?
Upstate, if you plan to stay, you may want to buy.
In the NY Metro, where the Kook Aide is just starting to wear off, you certainly want to rent even if the move is permanent. That includes the “telecommuter zone” where Manhattan-linked people have second homes.
I’ve been somewhat sick for a week, with one day in bed. I passed on the flue shot, since I’m still below age 50. If it’s that bad, I hope I either don’t get it or have already had it.
“Upstate, if you plan to stay, you may want to buy.”
Why?
(Why own?)
So you can do what you want with your property, don’t have to worry about moving if you don’t want to, and live in an area with neighbors who are likely to stick around.
And if you pay off your mortgage, your housing costs go down.
I really do believe in homeownership, abset a housing bubble, for those settling down.
I didn’t suggest there is anything wrong with owning. I would NOT buy right now. It appears the bust is just starting in the northeast. We’re a minimum 16 months behind those states that are leading the bust.
FYI, my parents just bought a townhouse in Fairport. It’s roughly 2x the sq. footage of my joint in Florida. Their monthly nut is the same as my rent, and it is $200/mo less than they paid to rent the previous townhouse.
And Michagin is cheaper than NY. Is RE in Michigan not falling apart?
I get what you’re saying, but what I am saying is this: if I am willing to live long-term in a townhouse similar to what my parents are living in for X dollars/mo., am I really not going to buy beciase prices will go down say, 25%?
I agree the NE is behind and will get hammered, but I truly believe there are some differences, the biggest difference being that Rochester is not a transient area. So whereas Florida may see 70% off peak, I do not believe that will happen in upstate.
25%(200k)=$50k…. If you’re willing to toss that away, it’s your funeral.
Considering upstate experienced 100-300% price increases during the bubble years, a 70% decline isn’t out of the question coupled with the fact that upstate saw a 50% price decline during the last housing bust of 1991-2000.
Exeter, I don’t disagree with you at all. This is precisely why one has to pull out a pencil and do the math.
If that decline takes four to five years, then it’s a wash if I am
A. In a house I value
B. Long term
C. with good neighbs
D. In a good area
E. with good schools
I mean upstate like the real upstate, like between Rochester and Syracuse… cornfields, deer hunters, ma and pa diners packed at 5:30 a.m., not that wussy upstate y’all city folk like to think of where they make custom choppers and the pigmen keep their second homes “in the country.” Lol…
Bank flue season is when hot air conveys free money, shafting the system…
==================================================
“Treasury and banking regulators say as many as 1,800 publicly held institutions could apply for government investments in coming weeks … thousands more private banks could apply for government capital as well, a Treasury spokeswoman said Sunday.”
from WSJ
I have failed to get a flu shot twice the past decade, and instead got the flu both times. Never again, so far as I am able to avoid this mistake…
I got hammered with the flu in Dec. ‘99 and have gotten a flu shot every year since except the one year it wasn’t available two or three years ago due to shortages. That year I also got the flu. I plan on getting a flu shot every year unless they’re not available.
OTOH I have never gotten a flu shot (I’m old enough to be retired) and haven’t had a really bad case of the flu for at least the last 15 years.
Here Also Bill…Last year I got it real bad and it has me questioning if I should go get the shot this year…
Ditto. I don’t get ‘em (cus I’m a tin-foil type) and I’ve had the flu once in the past 25 years.
The only years I get sick are the years I get the shot. I can count the number of times I’ve been so sick that I couldn’t get out of bed on one hand. I’ve been very lucky in that regard. I could buy 999 of 1000 tickets on every raffle that comes down the pike and lose every time…but I don’t get sick.
I hardly ever get sick, and therefore have no opportunity to practice stoicism or patience, so when I do finally manage to catch a bug I behave disgracefully.
Whiny and moany and I complain incessantly and refuse to anything but gallons of ice-cream and noodle soup, and I call up my mom and petulantly demand she sing songs to me over the phone, stuff like that.
My theory is that Sweet Baby Jeebus gave me a hearty constitution in order to spare others as much as possible the complete annoyance that is a sickly Olygal.
I can’t even remember the last time I had the flu. It must have been as a child, and over 30 years ago. Every year I wonder, “what is this flu thing, and who are all these people that get it?” I have allergies, not pleasant, but they don’t require that I miss time at work, etc.
Same here. My high school got shut down once because so many kids were out with flu and I still didn’t get it. Have gotten a nasty 24-hour virus thingy a few times though when hanging out with my nieces and nephews.
Same here! No shots for me, either. Our kids are so healthy the peds doc complains she never sees them. Good old probiotics, blue-green algae, flax oil and Emergen-C does the trick.
I did hear, though, that if you catch the flu this year it should last about a week. If you get the flu shot–the wonderful, wonderful, savior of Mankind, how did humanity ever survive without it, flu shot–you can only expect to be sick about seven days . . . .
Is there any actual evidence that flu shots are effective at all?
Yes, there is. The problem is that most people confuse bad colds or other viral illnesses with the flu. The flu is a serious illness that will put an otherwise healthy adult flat on his back for 3-5 days minimum and sick for several days beyond that. It includes a fairly high fever and joint and muscle aches. Flu is not a stuffy head that moves into your lungs and and makes you cough for a week or two after you are better. It is also not a 1-3 day illness that causes vomiting and then is over (that is usually food poisoning). Older or younger or less healthy people can die from secondary infections related to the flu.
However, as you age, your body’s immune response to the shot is less and less active, so older adults get much less protection that younger people. Japan has had a lot of success in preventing the flu in older adults by giving the vaccine to all young children. Also, since it takes something like 9 months to develop and grow the vaccine, scientists have to do some educated guessing about which strains are going to affect humans each year and some years they get it spectacularly wrong and the shot is not effective at all.
I am so sick of people calling every little thing the flu for enhanced respectability. Esp if it’s just some food poisoning and they claim they had “the 24-hr flu.” No such thing.
Like you say, the flu really lays you out. I had Asian flu years ago and like to have died. The only way I could work was on round-the-clock aspirin. It was terrible, with a long and icky aftermath.
“Esp if it’s just some food poisoning and they claim they had “the 24-hr flu.””
Food poisening- a big reason why I am not super fond of eating out. Have never been sickened by food cooked at home by myself, or any family, friends, etc. Restaurants, on the other hand, have sickened me a handful of times.
It’s important to remember that influenza is not the throw-up kind. It’s respiratory and includes horrible aches and pain plus high fever. Everybody, please get a flu shot. Maybe I’m just lucky because I haven’t had the flu since 1979, the year I started getting the shots. Had one last Tuesday. It doesn’t even hurt anymore.
Last time I had the flu was 1978 and I had to take two weeks off from work.
“1. He owes back taxes
2. He does not maintain his property
3. He works in construction
4. He has horrible credit”
Sounds a lot like D. Trump. He may be wealthy, but many folks who have dealt with him say one reason is, he doesn’t pay a lot of his bills. Uses lawyers, file complaints instead of paying, or the usual, just fashion a corporate shell to strategically go BK.
Wow, our worries are over concerning the stock market. Ass. Press says stocks can only go up no matter who’s the Prez in ‘09:
http://biz.yahoo.com/ap/081102/election_stock_market.html
MSM as leading shill, S.O.S.
Discord on Economies In a World Of Trouble…
Key European allies are pushing for broad new roles for international organizations, empowering them to monitor everything from the global derivatives trade to the way major banks are regulated across borders. But the Bush administration has signaled reluctance to go that far. In the past, it has resisted similar proposals as potentially co-opting the independence of the U.S. financial system or compromising free markets.
Some economists and policymakers say the summit could launch important reforms. But others predict it could turn into an economic tower of Babel, with weak political leaders promoting solutions fundamentally at odds with one another. And if leaders cannot bridge their differences, they could risk another bout of financial disarray.
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/01/AR2008110102207.html
compromising free markets? does Shrub want to suggest that there are any free markets left in the USSA?
I don’t expect much of the summit, but I think the credit ratings agencies will get a serious downgrade. Many EU politicians are blaming them (and some of the US regulatory commissions with lax oversight) for the crisis.
Hey NHZ: I just got back from a week in Amsterdam.
This was my first visit in 10 years.
Is it me, or do things seem quite different than they did 10 years ago? Most of the dutch that I talked to seemed only marginally employed, if at all. I talked to a fellow that works in an ice cream shop 6 months out of the year, and collects unemployment for the other six.
Also talked to a cab driver that said housing was effectively socialized in amsterdam, no one could afford to buy, but the government would provide you with an apartment according to your family size. He also said out of 18 M dutch, only 5 M worked.
Is this true? Is this different than 10 years ago? I was also much younger 10 years ago, and perhaps not looking for these things.
I also found it amusing that one out of two restaraunts seemed to be argentinian beef.
I think your observations are mostly correct, but Amsterdam is not representative for the whole country. Socialised housing is at least 75% of the housing stock there (which means total disaster). Even most politicians agree that the Dutch housing market is a total disaster (both the owned and the rental system) and Amsterdam is one of the worst areas. But nobody dares to make changes.
There are more unemployed / marginally employed people in Amsterdam than on average (you can do well on social security in Netherlands, especially if you add a parttime unofficial jobs). Official unemployment is quite low in Netherlands, something like 4% I think, although our statistics are cooked just like those from the BLS. But the 5 million worker number is definitely way too low.
As for the beef, the preferences shift every few years; I haven’t been in Amsterdam for some years, could be that Argentinian is now the favorite. Guess that makes the Dutch well prepared for what is coming
Thanks for the information. Still a wonderful visit. I worked for the first few days, which made it a free trip. Spent the evenings and the remaining days walking around the city. Next time we go I hope to see more of the Netherlands, rather than just Amsterdam.
One other thing which I found quite amusing…..in the evening, we watched BBC television station..our hotel had only one channel, with the same inane snippets repeated every 15 minutes. BBC seems to have copied the US news format and dumbed it down even further! The channel seemed dedicated to two British radio fellows that were in trouble because of some stupid prank phone call. All the political commentary was equally bad…they concentrated on US presidential election, but only interviewed the craziest McCain supporters that they could find. They also talked about economic stimulus, but it all sounded like Reaganomics!
The conclusion that I came up with is that either US has exported its stupidity to Britain, or else people are just stupid everywhere.
I lived and worked in Amsterdam for a year and what you say is true. The ones that do work are getting truly fed-up that they work and pay for those that don’t. There is no incentive to work. Why get a good job, only to pay higher taxes, to the point of 52% for some. I heard over and over, why I should I work to pay for the lazy.
It is a downward spiral for sure. Less and less folks working, so those who continue to work get taxed more and more. Hence more quit and put the burden on those that stay. Kind of like HOA fees in condos that folks quit paying on.
My Amsterdam trips vary.
My last and only trip to Holland was with my soccer team as a 16 year old. My team went, as did a girls team of the same age. We stayed with a club team in Alkmaar. You can only imagine the stories we had after being in a foreign country, away from Mom and Dad, able to drink Amstel freely with a bunch of girls the same age….
Ya gotta admire folks who write books about their investment strategies, only to soon find wild success with them.
Wall Street Journal
* NOVEMBER 3, 2008
October Pain Was ‘Black Swan’ Gain
By SCOTT PATTERSON
For most of October, it seemed nearly everything that could go wrong with the markets did. But the rout turned into a jackpot for author and investor Nassim Nicholas Taleb.
Mr. Taleb last year published “The Black Swan,” a best-selling book about the impact of extreme events on the world and the financial markets.
Better to hawk theories than to try to implement them, cf., Empirica Kurtosis.
The book just came up in a motor racing themed TV talk show… it has arrived.
Was playing golf this weekend and one of the guys in the group was a mutual fund manager. Says he has been mananging stocks for 40 years and has never seen anything like this. One of the UW in my office bought 1000 shares of AIG at 1.36. His comment - sell it! Doesn’t think AIG is going to make it. He thinks the market will go up after the election and then take a big dive. That’s my thinking as well.
What is everyone else thinking out there in blog land?
AZgolfer,
I think the real bad news comes out after the coronation.
Mike
The commercial construction market is now rolling over…The unemployment and under employment numbers are going to get ugly…I have been through a number of these…They are no fun no matter what financial position you may be in
RE: I have been through a number of these…They are no fun no matter what financial position you may be in
1973 thru ‘75…
1981 thru ‘83…
1989 thru ‘91…
Legions of baby boomers were able to muddle thru these periods because they were at points in their physical ages whereby there was time left to financially reorganize and recover.
Not much recovery time in your 50’s and 60’s, especially when your country has already seen it’s finest economic hour.
Ditto here. As soon as the market goes up a little, I’m moving some 401K stock into guaranteed bonds. I need to rebalance anyway. But I don’t want to do too much — I still have a lot of years to go. As long as a company doesn’t go down completely, they will go up again, even if it takes 25 years.
Market will rise on Wednesday if O wins. If O loses, some of his supporters are already promising blood in the streets. That would not be a positive for the market.
Long-term it’s still a bear market regardless of who wins.
Who has been promising this?
Erica Jong and Jane Fonda, neither famous for intelligence. The Drudge Report keeps up with such verbal boners, for those who love all news dramatic.
Aren’t they both in their 70’s?
I wouldn’t be too worried about them doing anything other than yelling at kids to get off their lawn.
I think they were trying to scare everyone into voting for their way, but all they had to do was show their faces to cause worldwide fear and panic.
Didn’t Fonda “convert” to Christianity several years ago? From what I’ve heard from her on television the past few years, she seems as demented and trashy as ever. A crone talking about servicing herself sexually is not my cup of tea.
I heard a great quote when she divorced Ted T.
“She found god, and Ted found out it wasn’t him”
Funny fo sho.
Mike
I’m going to go against the grain here. I think that there’s enough people anticipating a brief rise followed by an eventual downturn - that we actually won’t get the brief rise. I think the market’s going to be down almost right from the start on Wednesday.
Just a prediction.
(This counters my earlier prediction actually of a brief rise lasting until about the turn of the year, which may happen too - who knows).
Paulson’s Swindle Revealed
“The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson’s transaction, the taxpayers were taken for a ride–a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public’s money was a straight-out gift to Wall Street, for which taxpayers got nothing in return. ”
http://www.thenation.com/doc/20081110/greider2
It’s not a swindle — it’s a valiant rescue of the American banking system in the wake of a crisis. Please get your facts straight.
Yes, and voted for by both sides of the aisle yet we the people want to pretend that “our guys” are the good guys. If could just get rid of the evil Rep/Dems we’d be A-OK… as we ride the Titantic to the bottom.
“”But, if you look more closely at Paulson’s transaction”"
As if he is a lone ranger. Are we really that easy? The good cop /bad cop routine out of DC and the MSM is more then I can stand.
What did you expect? The American banking system was going to collapse into abject chaos if we didn’t do something…right…now…!
Kinda funny that it is still collapsing. Even funnier that Paulson had no plan and no idea it was happening, but when it did he needed Czar-like powers to rescue it, with no oversight or second guessing by Congress or anyone else.
It’s so funny it almost brings tears to my eyes.
Isn’t government manipulation of the stock market unconstitutional?
Since the Supreme Court long ago decided that corporations were “persons,” couldn’t competing “persons” harmed by such favortism mount a legal challenge?
And if this manipulation explains the wild ups and downs last week, can any increase in be regarded as legitimate?
Just asking.
Well, they wouldn’t be able to afford to pay year end bonuses if they didn’t get all that extra money!
I have a suggestion for owners of white elephants that won’t sell: Use them to house high maintenance, unpleasant courtiers.
Wall Street Journal
* REAL ESTATE
* OCTOBER 31, 2008
The Stampede of White Elephants
Slowing Sales of Luxury Properties Reveal ‘Trophy Homes’ Weighing Owners Down
By CHRISTINA S.N. LEWIS
As the luxury real-estate market slows to a snail’s pace, real-estate brokers find themselves struggling to sell a growing number of “trophy homes” that are quietly gaining a new title: white elephants.
The term hails from a legend that Siamese royalty gave albino elephants — revered but financially ruinous to maintain — to unpleasant courtiers. Today, the financial burden of carrying an overly big, overly unique manse is being shared by many wealthy owners, who are finding out the hard way that not everyone is willing to pay up for their vision of a dream home. Realtors concede a growing number of these pricey pachyderms are sitting unsold for months and selling at steep discounts, if at all.
“I’ve seen the elephant”
California Gold Rush phrase meaning you are giving up and going back home from whence you came…
PB, more likely they’ll be used to house unpleasant Section 8 renters, with no maintenance to speak of. Unlike the grand turn-of-the-last-century Victorians which fell into rooming houses and were later restored, these houses will be left to fall apart.
“…unpleasant Section 8 renters,…”
Not mutually exclusive with courtesans…
Buncha talking head foolz on NBC gabbin’ about, “don’t stop putting money away” even though college 529 plans are getting obliterated.
Why are people choosing “aggressive” mutual funds for their children when the sales pitch of these plans is that they are tax free?
http://www.delawareonline.com/article/20081103/BUSINESS/811030303/1003
Wow, there sure is a lot of competition for old Joe’s meager paycheck nowadays.
1. The boyz want him to keep contributing to his 401k and 529 plans so they can play with his money
2. The stores desperately need him to buy just so they can stay open
3. The automakers need him to replace his three year old vehicle
4. And soon his local gov’t will come aknockin’
How can old Joe ever live up to all these demands and make everyone happy?
3. The automakers need him to replace his three year old vehicle
I expect there will be a gov’t push to ban older cars from the road, in order to create demand. The auto industry is already pushing their concept of getting gov’t to ban older vehicles from the fleet due to “environmental concerns” [cue the bwaha] and ultimately it will go through — probably as a negative incentive, ie., a polluter tax on anything older than 12-15 years old.
FWIW, I have traveled and lived in 7 of our states and have noticed much laxer emissions laws in certain areas, to compensate for the relative poverty — as in, poor people can’t afford to buy new cars, so the tailpipe police are on a shorter leash.
This is going to be balanced with the need to goose sales, though, and I expect my 1992 VW Golf will be sedana non grata.
Interesting theory, and sounds plausible…sure hope it doesn’t turn out that way, though.
It would be nice if Joe paid his taxes once in a while.
How can old Joe ever live up to all these demands and make everyone happy?
Especially since he hasn’t had a raise in 5 years and inflation is eating him alive.
I suppose that this year’s Davos topic/theme will be “how to get J6P to consume more without giving him a pay raise nor lending him more money”.
“How can old Joe ever live up to all these demands and make everyone happy?”
Stop paying his mortgage and credit card bills?
The storm depicted in a cartoon that accompanies this story shows a credit twister bearing down on a frightened investor, a metaphor I have occasionally used on this blog.
Trading Strategies
FIGHT OR FLIGHT
After an October that rattled even the most confident investor, here are 12 ways to take shelter from the storm.
The problem with Joe the Plumbing Infestor™ is that he doesn’t realize that are 4 buttons on his Investment Playstation™, namely:
[1] buy,
[2] sell (long),
[3] sell short,
[4] do nothing.
In a world where all responses track only categories [1] and [4], bad things inevitably happen. (I’m willing to accept [4] as a substitute for [3] for people who are not comfortable with it.)
EU bubble update:
Spanish car sales plunged 40% yoy, proving there is serious trouble in Spain as a result of the leaking bubble (up to now car sales seem to suffer much harder than the building mob itself!). For all of Europe car sales are down 4.4% yoy.
In Netherlands the debate about state savings guarantees and housing bubble support is heating up. The ‘FDIC’ limit for savings was increased from 20K tot 100K euro just a month ago, but some top bankers are now lobbying to discard this insurance as soon as possible because it creates unfair competition. It is clear that this new government rule is stimulating risky (foreign) banks to attract more savings through their Dutch offices at the risk of the Dutch taxpayer.
After the first tiny crack in the Dutch housing bubble (quarterly homeprices down 0.3%, the first decline in nearly 20 years) there is an allout lobby from the RE/building mob. There is pressure on government to raise the national mortgage insurance to 360K euro, or even back ALL Dutch mortgages for the full amount. Builders and developers asked for full state guarantees this weekend, ‘otherwise building activity could decline severely’.
RE professionals and homeowners are complaining that credit is far too tight and government has to step in because homes are no longer selling like hotcakes (you can still get 0% down, 8-10x income loans here so tight credit is nonsense; maybe it has something to do with skyhigh wishing prices?).
Spain bubble bailout update, shape of things to come in Europe I’m afraid:
from january 1, 2009 the Spanish government will pay 50% of the mortgage cost for all homeowners that are in trouble. The plan is limited to mortgages up to 170.000 euros, but with the average Spanish mortgage debt at 130.000 euros it should apply to a big chunk of the population …
I think the ECB will have to print lots of funny money for this.
Now let’s wait for the damage claims from all the equity locusts in Spain that feel severely disadvantaged by this new plan; I would not be surprised if the EU forces the Spanish government to bail out all the specuvestors as well (at least up to this 170K ceiling).
I’d like to read more about this. Does anyone have a link?
Spanish car sales plunged 40% yoy ??
I heard over the weekend that Volvo’s commercial line was off 90%…
115 trucks total in a 3 month quarter(down from 41,970 3rd quarter 2007).
It works out to be a drop of 99.7.
Volvo delivered over 20,000 trucks on existing orders. They also had a ton of cancellations but they also had enough new orders to be ok and keep the factories running. So the drop in new truck sales didn’t worry me as much as…
A 40% drop in car sales is brutal. That scares me as it means near immediate layoffs which will reinforce this cycle.
Got Popcorn?
Neil
I guess it is all relative … maybe Spain has to go back to second/third hand cars, like they were used to just ten years ago or so.
Briton denies Spanish mayor role
Mr Lewis campaigned last year on an anti-corruption ticket
A British man named in media reports as the “accidental mayor” of a town on the Costa Blanca, has denied that he has taken up the position.
Mark Lewis was said to have taken over the reins in San Fulgencio after the mayor, the deputy and four councillors were arrested over alleged corruption.
http://news.bbc.co.uk/2/hi/europe/7701551.stm
Why yes, there was a property developer involved.
My county has a referendum question this year that proposes to make all council votes to increase property taxes above “approved” amounts unanimous (instead of the current 7 out of 9). I’m tempted to vote for it, though half the world (teachers union, league of women voters, etc.) has come out against it. The whole “this could mean larger class sizes, shorter library hours, longer EMS response times, and few services for seniors” thing is turning me off. I wonder if they can raise the county portion of the state income tax collection without 100% approval or if that requires permission from the state or a referendum? I doubt it will pass, but maybe I should vote for it just to send a signal.
PS - I love the long library hours, but they are more generous than any place I have ever lived in my life. The world wouldn’t end if they didn’t have late hours nearly every night of the week, especially since they have an after hours drop off slot.
Anyone else have an opinion about “question B” in Montgomery County, Maryland?
conflicted- taxes are how you get paid
County property taxes have nothing to do with my paycheck. Though, like I said, I wonder if we deny them the right to raise property taxes, they will just raise the income taxes instead. I’m not sure what the procedure is for raising the county portion of the income tax. This is a change to the procedures for raising property taxes.
Counties just come up with new taxing mechanisms. Disclaimer: I work for a County in Florida. County Commissioners here refuse to increase the millage rate on property (all of ours are Republicans) so they quietly raise “usage fees”. For example, used to be that the Fire Department was 100% property tax based. Started getting real expensive to house all those firemen & EMT’s to hang out at the station all day. So they took the fire side off the property taxes, raised usage fees on property for the difference and declared that they lowered the millage!
Sleazy but effective. Everybody loves firefighters so no one wants to fight a special assessment for them.
If any solidified groups are against a referendum, it means to vote the opposite way.
Groups only care about the power of the corporate body and never about the individuals inside or outside of the group. Unions, leagues, councils and boards are all anti-individual, especially if you’re not a member. Even if you’re a member.
That means vote the opposite of the groups.
To break it down:
1. Larger class sizes = more work for the unionized nannies. Have you met the morons in public school lately? Terrible drivel is being graduated.
2. Shorter library hours = get your books online, used, and resell them. The library is quickly becoming a huge waste of taxpayer dollars. I’m in favor of knocking our public library out, refunding the taxpayers, so they can just buy their own PC and cheap web connection.
3. Longer EMS response times = and? If it costs more for EMS to respond, the insurers and private payers should cover those costs, not the taxpayers.
4. Fewer services for seniors = the law is supposed to be equal across the board. Giving seniors, or juniors, or the poor, or the wealthy, more or better access is akin to prejudism, and it is contraconstitutional.
While I refuse to vote, I do support the idea of kicking the tax increases out, and hampering the ability of the tyrants to rule as they wish.
ABDada, I believe there is a country that really resonates with your views about government. It’s called Somalia.
LOL! Good one, yensoy.
The book and recording industries are very much in support of closing libraries.
They would much like to stop selling books/music and start selling non-transferable licenses. One person - one license.
our county has spent on schools at 10 x times enrollment
A.B. Dada,
Go spend some time in a third world country that has few public services and then come back and tell us how you like it.
Maybe before you do that, take a couple of weeks and volunteer in your local public school. I’d like to see you manage AND teach a class of 20-30 middle schoolers (or kindergartners, for that matter).
I dare you.
Then again, maybe A.B Dada is right, who needs libraries and schools?
F#$*ck it, who needs books at all?
Democracy will do just fine with more TV and a nation of illiterates.
“You don’t have to burn books to destroy a culture. Just get people to stop reading them.”
-Ray Bradbury
The Captain: Go on, Montag, all this philosophy, let’s get rid of it. It’s even worse than the novels. Thinkers and philosophers, all of them saying exactly the same thing: “Only I am right! The others are all idiots!”
That a pretty apples to oranges comparison there. The US minus welfare, libraries and various social programs = 3rd world? Not by a longshot.
NOW you know why i am so desperate for work…employers will not hire smart people today…..They think i would not “fit in” with the morons
——————————————
1. Larger class sizes = more work for the unionized nannies. Have you met the morons in public school lately? Terrible drivel is being graduated.
You should definitely throw the home-pawners under the bus (although you will pay some fraction of it embedded in your rent.)
Self-interest argues that you should totally soak them.
See, I think the home owners are getting thrown under the bus either way, or that is at least part of the arguement. Vote agains it, and they will have ever increasing property taxes. Vote for it, and services will go down and hurt their values (good for me if I decide to buy sometime and don’t care about most of the services that would be impacted). Oh, and the most recent piece of junk mail claims that the county’s bond rating will go down if we vote for it. No quote from anyone who actually knows anything, just a threat.
Again, I am tempted to vote for it just as a protest. With that many organized groups telling people to vote against it, it is never going to pass in a well attended election. If they were really serious about passing the bill, they would have brought it up in a low impact local election where turnout is under 20%. That is how you win local referenda when the big organizations are against you.
I lost track of who votes for what.
Let’s analyze the bond situation. Bonds are paid out of general revenues (think: “income taxes” or “property taxes”) or specific revenues (think “tolls”.)
If you restrict the increase in general revenues, then the bonds that are paid out of general revenues MUST hurt because you are basically saying that if you renege later, there’s not a whole lot of recourse so that risk must be compensated for. It also hurts ALL new bonds that are issued after that passes because the risk goes up.
I don’t know your state’s specific situation but the general principle holds.
Oh, I agree that the general idea is a sound one since this would put the property tax portion of the revenue stream at risk if even one council member was against it, but I don’t know enough about the county to know if we are close enough to a downgrade that this would put us over the edge. And I don’t know how much debt the county is currently carrying so no idea how badly a downgrade would hurt the budget on a percentage basis - or even how much the budget has gone up in the past few years, what sort of contract the public employees have, how badly underfunded the public employee retirement fund is, etc.
I knew a lot more about local budgets when I was a kid and my mother was on the school committee. Just not a top priority now.
Got to tell you, though, I could deal with them firing the county employees that keep telling my landlord that it deserves a rent increase despite the hundreds of new (and still empty) units that came on the market this year.
Anyone else have an opinion about “question B” ??
We did it in Cali with prop #13…
And how’s that working out for you?
Very well, thank you!
Now, if only they could deport the illegal immigrants in California, we’d be swimming in money.
Right now I’m so glad I didn’t take on 40K worth of student loans to get my MLS (Librarian) degree. I’m a little bummed since it’s a field I love, and I think I’d be pretty good at it, but I think the public libraries are going to get slammed by budget cuts while the academic ones are going to be hurt by falling enrollments. Corporate ones, of course, have long since fallen by the wayside.
Reuters
Fed’s Lacker says U.S. in a recession
Mon Nov 3, 2008
6:48am EST
…
“We are in a contraction. Up until the summer it was a fairly mild recession,” Lacker, who will become a voting member of the Fed’s interest rate-setting committee next year, told reporters after a speech at the Hebrew University of Jerusalem.
I love how “mild recessions” turn into “recessions” which turn into “contractions” which are soon going to turn into a full-blown Cat-5 “depression”.
These people make astrologers look really really good.
Yes, but there is no way on earth anyone could have seen any of this trouble coming.
US manufacturing crashes to 26-year low
By Reuters November 3
US factory activity contracted sharply in October, falling to its lowest in 26 years as the financial crisis ravaged the world’s largest economy, an industry report showed on Monday.
”Pretty grim. It means we’re in a recession, it’s as simple as that … a pretty solid manufacturing recession,” said Robert Macintosh, chief economist at Eaton Vance Corp in Boston, adding:
Financial Times
US car sales worst in 25 years
By Bernard Simon in Toronto
Published: November 3 2008 19:54 | Last updated: November 3 2008 21:40
Sales of light vehicles in the US sank to their lowest level in a quarter of a century last month, with generous discounts failing to offset evaporating consumer confidence and scarce credit.
“This is clearly a severe, severe recession in the US auto industry,” said Mike DiGiovanni, General Motors’ sales analyst. “We’re much more concerned than we were a month ago.”
latest news
[F] Ford U.S. sales fall 30.2% in October
MARKETWATCH FIRST TAKE
Manufacturing screeching to a halt
Commentary: Plunging demand for U.S. exports kicks out last support
By MarketWatch
Last update: 11:04 a.m. EST Nov. 3, 2008
WASHINGTON (MarketWatch) — In the clearest evidence yet that the economy has fallen into a deep recession, U.S. manufacturing firms are offering their grimmest views on the economy since the early 1980s.
Auto-Errorotic-Asphyxiation?
I personally see no real estate recovery (or bottoming out in home prices) until at least the end of this mo-fo of a recession we have entered…
SPECIAL REPORT AMERICA’S MONEY CRISIS
Economists see recession through 2009
Survey finds that falling consumer demand, rising unemployment and ongoing credit crunch will fuel downturn through end of next year.
By David Goldman, CNNMoney.com staff writer
November 3, 2008: 3:52 AM ET
AMERICA’S MONEY CRISIS
NEW YORK (CNNMoney.com) — A survey of top economists released Monday shows that the vast majority of them believe the economy has fallen into a recession that will continue throughout all of 2009.
The Associated Press
November 3, 2008, 1:25PM ET
NABE survey shows business conditions worsened
NEW YORK
U.S. business conditions worsened in the third quarter and are likely to deteriorate further, according to an industry study released Monday.
The National Association For Business Economics said more respondents in its quarterly survey of business conditions reported declining demand than rising demand — the first time since 2001 that has happened.
“Every time since 1982 that this indicator has turned negative, the economy has later proved to be in a recession,” said Ken Simonson, chief economist at the Associated General Contractors of America.
Construction spending springs a leak
Real estate brief
By Inman News, Monday, November 3, 2008.
The souring economy clipped spending on residential construction projects in September to a seasonally adjusted annual rate of $344.4 billion, the U.S. Census Bureau reported today.
At that rate, spending on private and public residential projects was down 1.3 percent from August ($348.8 billion) and 27.1 percent from a year ago ($472.4 billion). This rate is a projection of a monthly spending total over a 12-month period, adjusted to account for typical seasonal fluctuations in construction activity.
Op-Ed Columnist
When Consumers Capitulate
By PAUL KRUGMAN
Published: October 31, 2008
The long-feared capitulation of American consumers has arrived. According to Thursday’s G.D.P. report, real consumer spending fell at an annual rate of 3.1 percent in the third quarter; real spending on durable goods (stuff like cars and TVs) fell at an annual rate of 14 percent.
To appreciate the significance of these numbers, you need to know that American consumers almost never cut spending. Consumer demand kept rising right through the 2001 recession; the last time it fell even for a single quarter was in 1991, and there hasn’t been a decline this steep since 1980, when the economy was suffering from a severe recession combined with double-digit inflation.
Concern over shipping derivatives losses
By Robert Wright in London
Published: November 3 2008 23:31 | Last updated: November 3 2008 23:31
Fears are growing in the shipping industry over the potentially big losses that could emerge this week on derivatives triggered by the October collapse in rates to charter dry bulk ships.
Since short-term dry bulk charter rates fell 71.9 per cent in October, traders and shipowners have worried that traders might be caught out by the speed and severity of the fall.
Traders in forward freight agreements – derivatives based on short-term charter rates – could owe significant sums if they were betting on a rise in charter rates for ships carrying coal, iron ore and other commodities.
The sector’s Baltic Dry Index of charter rates started the month at 3,025 points and closed on Friday at 851. The 80 per cent of trades made through clearing houses were being settled on Monday, while traders who bought cash-settled products through private transactions, known as over-the-counter trades, have until Friday to settle.
NOL warns of severity of shipping downturn
By Robert Wright, Transport Correspondent
Published: October 29 2008 11:55 | Last updated: October 29 2008 17:29
The container shipping industry faces a deeper, longer downturn than expected, Ron Widdows, the chief executive of Singapore’s Neptune Orient Lines warned, as the line announced reduced third-quarter profits and said that it would lose money in the final three months of this year.
Credit `Tsunami’ Swamps Trade as Banks Curtail Loans (Update2)
By Michael Janofsky, Mark Drajem and Alaric Nightingale
Oct. 29 (Bloomberg)
…
Suppliers of oil, coal, grains and consumer products from Chicago to Mumbai are losing sales as the credit crisis spreads beyond financial institutions, and banks refuse financing or increase the fees for buyers. Coupled with declining demand, the credit squeeze is threatening international trade, one of the lone bright spots in the global economy.
“It’s like standing on a beach watching a tsunami, knowing that it’s coming,” said Scott Stevenson, manager of the International Finance Corp.’s Global Trade Finance Program. IFC is the World Bank’s private lending arm.
Wall Street Journal
* NOVEMBER 4, 2008
Bank Clampdown Dogs Economy
Lending Standards Keep Tightening, Increasing the Risk of a Prolonged Recession
By KELLY EVANS
Banks continue to tighten lending terms for the nation’s consumers and businesses, hamstringing the economy and raising the risk of a protracted recession.
The Federal Reserve’s latest survey of banks’ senior loan officers showed that a large majority of the 76 U.S. and foreign-based respondents clamped down on lending in the past three months amid mounting losses and concern about the nation’s economy. Also, separate reports Monday showed manufacturing activity slowed, and construction spending fell, though not as steeply as expected.
“It means the downturn is likely to be deep and will last longer than anything we’ve seen in a long time,” said Michael Darda, chief economist at Stamford, Conn.-based MKM Partners. “There’s still a lot of pain in front of us.”
…
“There’s more and more evidence that this recession will be as bad as the early 1980s,” said Harm Bandholz, a New York-based economist with UniCredit. Mr. Bandholz expects layoffs and unemployment to increase in coming months, with a further 200,000 job losses in October, the most so far this year, when the government reports its tally on Friday.
Rear-view mirror hindsight is 20-20. There was clearly no way to anticipate in advance the nature of bailout needs which would predictably arise in the wake of policy announcements regarding a resolute intent to intervene as necessary. Perhaps the Fed should publish a too-big-to-fail list so market participants can know in advance which institutions will qualify for government rescue packages should the need arise, and which will be cast to the wolves.
November 3, 2008, 2:45 am
Lacker: Mixed U.S. Signals May Have Added to Market Woes
The government’s mixed signals about rescuing financial institutions may have added to market turmoil in recent months, a Federal Reserve policy maker said Monday.
In remarks to a conference in Israel, Federal Reserve Bank of Richmond President Jeffrey Lacker said the “disparate” government responses to potential failures at major firms created uncertainty and “may have made it difficult for market participants to forecast whether and in what form official support would be forthcoming for a given counterparty.”
“Shifts in expectations regarding official intervention may have added volatility to financial asset markets that were already roiled by an increasingly uncertain growth outlook,” Mr. Lacker said at a conference at Hebrew University of Jerusalem, according to his prepared text released by the Richmond Fed.
ben, i’ve taken a position long on gold ,and short on the dow and snp…think i got a shota?
yours,
crush
Why do folks who go long in gold so often feel compelled to share their genius for investing?
some also share their doubt.
Because it’s “gold”, dude. It’s the One-and-Only™. It’s the fount of all wisdom; the Precious™.
Everything else is for rubes and retards who will forever languish in the wilderness, crying into their hands while they are homeless and ruing the day they didn’t listen to the soothsayers.
Lol.
I love a good conspiracy theory as much as the next guy, possibly even more than the next guy since the next guy is likely to be Joe the Plumbing Sixpack with his fake-blonde inamorata with “enhanced” double-D’s but I need just a teeny tiny bit of evidence to go along with that.
And those double-D’s are deflating faster than the mellow yellow!
Yes, and furthermore - how is that advice any different from the family member, coworker, or friend telling someone to buy the biggest house possible?
to get Crush’ed?
Bro, we’re gonna totally crush it!
Here we gold again.
every dlog has it’s day.
This is not good enough.
You need to think of the day now not “some day”.
Just for the record, I am not “dissing” gold in the language of the yoof of this nation. I’m at best neutral on the subject.
Have owned it, and undoubtedly will own it again. Probably inherit some too. No biggie, it’s just yet-another-place to stick your hard-earned savings.
I will take a shot at answering the question they raise: YES.
Behind AIG’s Fall, Risk Models
Failed to Pass Real-World Test
A look at AIG’s risk-management operations raises questions about the run-up to the financial crisis: Did firms like AIG put too much faith in computer models to assess dangers?
I will just note that there is a significant difference between gauging “mortality statistics” and the kinda “VaR statistics” they are doing.
You can’t “invent” new people born in 1975. We have a precise idea of how many were born, and how many of those have died since, and hence, since we are all pretty good at subtraction, we can figure out how many are left.
Compared to that, the kinda statistics they do on “modeling company failure” are a joke. A quick look at the balance sheet of a company would pretty much tell me “roughly” whether or not they will fail. That’s not what they do, and generally companies “appear” healthiest right when they are headed down the abyss. It’s all f*ckin’ correlations and that kinda h*rseshit.
Somewhere intermediate to these two extremes is stuff like weather, etc. but still it’s a bit of art not a “science”.
‘…“mortality statistics” and the kinda “VaR statistics”…’
Mortality tends to be far more exogenous than investment risk, unless one includes tail events (for the wealthy western countries) such as war and famine.
Well, the idea that you can evaluate your tail risk to precisely 8.219% rather than 12% or 47% seems to be pure, unadulterated charlatanism.
As a general rule in finance, if you’re within 20% you’re doing a decent job; 10% you’re doing an unbelievably marvelous job; and at 5% you’re the Second Coming of the Sweet Baby Jeebus™ himself.
Precision is a bit of a waste here. I’d rather focus on accuracy instead.
(Insert boring first-year engineering discussion of the distinction between accuracy and precision right HERE.)
You didn’t need a computer to know that they simply didn’t expect to see AAA securities failing. They were drinking the same koolaid everybody else was.
That was a human error.
Dave Bowman: Open the pod bay doors, HAL.
HAL: I’m sorry Dave, I’m afraid I can’t do that.
Dave Bowman: What’s the problem?
HAL: I think you know what the problem is just as well as I do.
Dave Bowman: What are you talking about, HAL?
HAL: This mission is too important for me to allow you to jeopardize it.
They figured out the answer that they wanted and then finagled the inputs to the computer model to arrive at that same answer. I’ve seen it done all the time.
Jim Rodgers on Bloomberg this AM about 6:15PST was blasting Paulson and all politicos on the bailout.
He was saying Bernanke doesn’t understand markets, economics, or currency.
He said B & P have been wrong 100 weeks in a row, why do we keep listening to them?
Hear, Hear, Jim.
Rogers has been calling it right for several years now…
He’s called many things right - except now it’s appearing he was quite wrong on both commodities and Asia.
… and wrong on the dollar.
Also I don’t understand his claims that RICI is up a few hundred %. His RICI funds in Europe are all lower then when they were introduced (in early 2005 or so).
still, longterm (5-10 years) I think he will be proven right on most points.
I think he is a clown. He used to be on CNBC all the time. For me, he is like the example of a broken clock, sure he’s right twice a day
He’s one of the few that have been right, so calling him a clown says more about you than it does about him.
JMHO
He’s only been right if you pick the time periods selectively and stop right there. He’s been very negative for a long time and very anti-American and pro-commodities. Over time, his track record isn’t that great. We will see if his huge Asia and commodity calls were right. Over the Summer, he was genius, now I think him a clown. I don’t doubt that the dollar will fall and commodities are a good long term play, he just fails to forecast what happens in between. Sorry if we see this one differently….
Pointing out the failed policies of the Chimp admin isn’t anti-American. It’s anti-stupid.
Nobody is 100% right, but Jimmy is better than most. Also, it is the way he comes up with his conclusions that matters most. Logic. Putting 2 and 2 together. It is the method that matters.
Jimmy is better than most.
“For me, he is like the example of a broken clock, sure he’s right twice a day”
I would agree. I remember back in the mid-ninties he said treasuries were the best investment one could make.
Granted 9 months is a short time span, but I am VERY glad that with the exception of some GLD I didn’t take his sage advice as it has been almost completely wrong since he gave it.
Feb. 28, 2008 - Mr Rogers told delegates to the CLSA investment forum that the prices of all agricultural products would “explode” in coming years and that the price of gold, which hit an all-time high of $964 an ounce yesterday, will continue its surge to as much as $3,500 an ounce.
The dollar may have declined recently, he added, “but you ain’t seen nothing yet”.
Talking to a room almost exclusively populated with Japan-focused equity investors, Mr Rogers recommended an immediate language course in Mandarin and a switch into commodities — the second-biggest market in the world behind foreign exchange.
Mr Rogers said that historic drains on wheat, corn and other soft commodity inventories have created market dynamics that could lead to severe food shortages.
… ” except now it’s appearing he was quite wrong on both commodities and Asia. ”
The market took a swan dive in one months so now he’s wrong? Give it another month ,or so,and lets check back.
Almost ALL the experts never saw that downturn..Buffet, Kerkorian, Redstone etc… Go look at a fed money reflation chart..Absolute rocket to the moon “never before seen.” Let’s talk after Dec. and see who holds the smarter hand….
For the same reasons we listened to W and Cheney. Instead of a governing philosophy they just fly by the seat of their pants. As long as their friends are making money, it’s all good…until it isn’t.
Instead of a nation of great minds from different backgrounds with different life experiences, we are dragged down by so-called “real Americans” who only vote for demagogues cut from the same cloth that they are, and spread fear and disinformation about anyone else.
Excellent NSO…I am going to cut and paste and send to a neo friend of mine….
Marc Faber said: “…Goldman sent their clerk to the Treasury..” and
“I would not hire Bernanke as my gardener, because he does not understand economics.” Lol.
If I am reading this graph correctly, the Iowa elections futures market is pricing in 9:1 odds against a McCain win.
On Thursday, June 1, 2006, at 1:15pm CDT, the Iowa Electronic Market (IEM) will open trading in a winner-takes-all market based on the 2008 U.S. Presidential election.
The payoffs in this market will be based on the popular vote received by the official Democratic and Republican nominees in the 2008 U.S. Presidential election. Payoffs are NOT affected by votes received by nominees from other parties, the outcome of the electoral college or any vote taken by the House of Representatives should such a vote be necessary.
NY Times
Debt Linked to Buyouts Tightens the Economic Vise
By ANDREW ROSS SORKIN and MICHAEL J. de la MERCED
Published: November 2, 2008
Private equity firms embarked on one of the biggest spending sprees in corporate history for nearly three years, using borrowed money to gobble up huge swaths of industries and some of the biggest names — Neiman Marcus, Metro-Goldwyn-Mayer and Toys “R” Us.
Linens ’n Things, a big retailer owned by the private equity firm Apollo Management, filed for bankruptcy protection this year.
The new owners then saddled the companies with the billions of dollars of debt used to buy them. But now many of the loans and bonds sold to finance the deals are about to come due at the worst possible time.
So, like homeowners with an adjustable rate mortgage that just went up, some of private equity’s titans are facing a huge squeeze. And that is coming at the same time consumers are staying home with their wallets closed.
Already this year, big retailers backed by private equity, like Linens ’n Things, Mervyn’s and Steve & Barry’s, have filed for bankruptcy.
Good riddance to the evil evangs that took this country down, later-day McCarthyists.
“Good riddance to the evil evangs that took this country down, later-day McCarthyists.”
Thank you jesus, I’ll second that.
And they do cling to their guns and religion because that’s all their ignorance permits.
Lets be accurate and precise. There is nothing evangelical or Christian about the religious wrong. They are the modern day pharisees mated with the corporatist/fascism element that brought us here. Not evangs.
Exeter…Well said…
Horsehockey!!
h
Further, there is nothing Christian about evangelicals.
And there’s not much republican left in the republican party to which I used to belong….
I disagree yensoy. Billy Graham is an evangelical who is also a perfect example of a genuine Christian. I’ll admit there aren’t many out there.
Lad, it must suck to be you. So unhappy all the time.
What can lift the spirit of the Godless?
There is nothing inherently wrong with being “godless” any more than being “godly”.
What bothers me about the whole thing is that people on both sides won’t mind their own business.
I give you the Godly George W. Bush (aka Alfred E. Newman) and Osama bin Laden (aka Dead or Alive You’re Coming With Me) as some current examples of those godly people who can’t MYOB.
I present you Stalin, Hitler, and Mao, as past examples of those godless types who can’t MYOB.
There is a lot to be said for going home and watching TV and leaving people alone.
Roidy
righty-tighty-deity rules no longer apply here, go screw up some other country, please.
p.s.
Mark Twain expressed pretty much how I feel about war and religion, in a short story entitled:
The War Prayer
It’s posted in yesterday’s bits bucket, go have yourself a read…
The same sorts of things that lift the spirits of the godfull (minus going to church, of course). We’re not very different. Personally, I just never felt anything special going into a church or reading the bible. Just bored and mildly confused. I’d rather be out in the sticks somewhere camping.
The sorrow is lifting, as my country realizes that reason is what made us the greatest country ever, not forced dogma.
My inner Cheshire Cat persona is all smiles, i’ll assure you.
Odd then, that the MSM falls all over itself to assure us of the depth of its favorite candidates’ religious beliefs– see for example, Newsweek’s July 21 cover story, “What He Believes”. Apparently “reason” is not enough of a reason to vote for someone.
Of course, when any Republican starts talking about God, they shriek about separation of church and state.
The evangs used fear as their bully pulpit, and it worked like a charm for them for far too long…
The ride is going to be over soon.
An utterly twisted religion gets to go back into the dank whole from which it emerged 8 years ago.
“The evangs used fear as their bully pulpit”
Got a chuckle out of that one. Talk about the pot calling the kettle black!
“So unhappy all the time.”
Anyone with half a brain would be unhappy watching their government surrender itself to the ravings of fecund and self-besotted lemmings rushing blissfully towards their Heaven, blinded by the light of the Holy Rapture.
government surrender itself ??
As painful as it was (at least for me) I do not fear that it could happen again at least in my life time…I do wish there was a path to elect someone like Ron Paul…I just don’t see how it could happen barring another real depression (25% unemployment) that would likely bring on uncontrollable class warfare….
Lad,
keep going man, you are doing great job here.
I noticed your posts are taking a lot of beating recently.
I appreciate your intelligence and historical breadth.
I bring it on myself of course, by baiting them in, as I have wanted to see what makes an evang mind tick, but not wanting to get too close, the internet is the perfect venue. I also wanted to attract keener minds to attack me, and so far-so good.
I can’t wait to see what happens to their mega-churches, with their gospel of prosperity ethos being cast asunder, and the preacher-man’s hollow words falling on an congregation suddenly running on empty.
You may be truly happy, but most of us here don’t relish in the thought of man himself going bust. You’re position is just as sick as war-profiteering.
It’s one thing to take a contrarian position, it’s entirely different, what you’re doing (or at least wishing for).
Do you really want to be the last guy standing on Easter Island? Because you know what that guy did to feed himself, right?
Speak for yourself Muggy.
This had nothing to do with the precious.
I too am happy to seee the Rapture happy crowd squirm.
The utter conceit, arrogance and ignorance of those people, yes, I love to see the utter fear in their eyes. And, I relish the moment.
Schedenfreud, it’s not just for the FB.
-
Muir, there is a huge difference between me buying some FBs Carolina Skiff at auction and me having to shoot people trying to steal water bottles from my garage.
Please tell me you understand this difference.
“I can’t wait to see what happens to their mega-churches, with their gospel of prosperity ethos being cast asunder, and the preacher-man’s hollow words falling on an congregation suddenly running on empty.”
Lad,
I’ve thought about the same thing. I don’t belive the preacher-man, or the congregation, of the mega-church of Eternal Prosperity is going to have a very Christian attitude toward members who come to them hat in hand, asking “Brother can you spare a dime.” I think sadly the response will be the same as W’s during Katrina to the women who told him they had lost everything–the Salvation Army is for people like you.
“I appreciate your intelligence and historical breadth.”
Why does historical breadth matter if one *believes* we are doomed to repeat our mistakes regardless?
It gives you an idea of what the future will hold so that you can better prepare for it. It also makes it easier to keep a sense of humor about things. No sense in being miserable about things you can’t change. We’ve probably walked off this exact same cliff dozens of times over the course of human history.
You’re missing the point.
There is a wide spectrum of posters here. I would call myself a bubble-believing Wall St. hater, but that’s it.
Some people regularly post things like, “I can’t wait to for my municipalities pension fund to go BK so the police can go on strike so I can tomahawk my neighbors skull so I can steal his bananas.” This is not a position I endorse. I believe many others here feel similarly. I have no issue with members here becoming rich off the bust, but there are some who really want society to fail. This position is bizarre and more than just your average JBB’ers daily dose of of the freude.
I have a sense of humor, as evidenced by my repeated usage of the phrase, “globe trotting with satchels of mellow strapped about your thong.”
Muggy,
Your mind can’t imagine the future, because you (like most Americans) probably have no past experience of what happens when things go dreadfully wrong all of the sudden, as many on here can attest to happening, in many a nook and cranny, all over the world…
Learn from our experiences about what to expect, when the unexpected shows up.
I do not want to see the pain and suffering that some are predicting, but there are some essential of our culture/lifestyle that we would all be better off without:
1. Mindless consumerism
2. Car culture (and I love cars, used to be an auto mechanic)
3. Growth at any cost
4. Massive inequality of wealth
5. Pollution and trashing the planet, extinction of many many species, global warming, etc.
We cannot keep on using and consuming resources indefinitely. Capitalism is sustainable, and even efficient, for small populations, but the sheer size of our markets and the number of people on the planet make it unworkable, eventually.
Not too many folks out there talking about “no growth economies”, and that may not happen in my lifetime, but I think by the time my kids are grown up we’ll all be hearing about it.
Flame on.
Muggy,
Twice you do this.
“I believe many others here feel similarly.”
” but most of us here don’t….”
-
Just speak for yourself and don’t cloud your personal opinions in
“others” and “most.”
-
It’s cowardly.
sfrenter,
Well written.
Unsustainability, is a workable concept.
-
This by the way, this was sneered at by Evangelicals when I asked them about it.
Their reply: God will provide.
It’s a misallocation of resources, surely God would not provide the resources necessary for his creation.
People are either freely trading with each other or they are not. There’s no “third possibility” substitution. Every instance of trade occurs because it makes both sides better off wealthier. Therefore, growth will never end until everyone is so utterly in a state of constant blissful paradise happiness that there are no actions, or movements whatsoever, as any such movement or action would by definition be action or movement away from pure happiness.
One species shit is another species food.
“It’s cowardly”
Courage! What makes a king out of a slave? Courage! What makes the flag on the mast to wave? Courage! What makes the elephant charge his tusk in the misty mist, or the dusky dusk? What makes the muskrat guard his musk? Courage! What makes the sphinx the seventh wonder? Courage! What makes the dawn come up like thunder? Courage! What makes the Hottentot so hot? What puts the “ape” in apricot?
What have they got that I ain’t got?
‘This by the way, this was sneered at by Evangelicals when I asked them about it.
Their reply: God will provide.
It’s a misallocation of resources, surely God would not provide the resources necessary for his creation.’
A few years ago I was home in Utarr for Christmas and my mom’s Mormon bishop stopped by. I normally avoid those tards whenever it’s at all possible, since I prefer to be snow-mobiling full speed through the orchards, jumping off the goat shed onto haystack, or else missing and not hitting the haystack, running around the giant bonfire, drinking spiked egg-nog, criticizing my sisters helpfully—you know, fun Holiday stuff. Rather than be bored out of my buzzling noggin by fundamentalist slobber. But seeing as it was Christmas, I asked the bishop what he thought Sweet Baby Jeebus’s position on conservation was. His answer: ‘When you say ‘there might not be enough water and good soil to go around’, that’s like a slap in Heavenly Father’s face.’
I just stared at him mutely with my mouth open, while the logjam of potential snarky/anecdotally contradictory answers filled up my head. Finally I just went away and put some cordial cherries and rum in my mouth, so it could shut again.* I mean, what do you SAY to something like that? Nothing. It’d be a waste of breath, breath that could be better employed to whoop loudly from the top of the goat shed.
Man, I’m getting excited about Christmas! I’m a gonna’ sing some carols right now!
*Also, because it was Christmas time, and I didn’t want to anger Baby Jeebus, I didn’t kill the retard at all, or even maim him.
I’m glad you didn’t maim/kill the retard.
That is, unless you had a foolproof alibi and no DNA evidence.
Otherwise, I would never read your posts.
I’m so glad I’m an Atheist/Humanist. I just have to worry about the here-and-now, instead of the hereafter…. It’s quite liberating, actually.
Yeah, it’s all kumbaya while we’re talking economy, but bring Jeebus into the picture and it’s hog boilin’ time.
It’s never a good idea to let people that believe in space gods run the country.
What’s the expression? “We are all atheists. I just believe in one less god than you believe in.”
I’m gonna’ tell Hanuman you said that, Jon. Boy, won’t you be regretful when the Giant Magic Monkey jumps out of a tree and lands on you like a ton of angry bricks and steals your banana! I expect that will show you, yessirree.
Being a born again Agnostic, I cant help but be amused by the angst displayed by all sides; my take is I hope that all of my PMs become laughable trinkets to be passed on to bemused grandchildren at holiday time. Until then, they’re in a safe place, ready to do their job along with the rest of the nasty mechanical trinkets I hope never to have to use again. Oh, one more thing. A truism to keep in the back of you mind as the uber religious are flogged: They say there are no atheists in a fox hole.
Bingo:
I don’t talk about my hobbies unless you ask.
Why people insist on giving me a blow-by-blow on theirs is beyond me.
Linus waited all night Friday for The Great Pumpkin…meanwhile I’ve been waiting all year for signs of The Great Decoupling.
http://biz.yahoo.com/ap/081103/as_china_economy.html
Miami has its first murder-free month in decades!
http://www.miamiherald.com/news/breaking-news/story/752057.html
“Miami has its first murder-free month in decades”
That’s NAR propaganda…Miami is just hiding all the fresh bodies in an attempt to sell houses near the Crime Scenes
Similar to the foreclosures in CA and AZ they are not allowed to file the death certificates for 60 days now. We will see a large uptick in the months to come.
Circuit City is closing down 155 stores here in the states, and there’s a story in the L.A. Times about owners of factories in China just disappearing, leaving a suddenly-failed business & 4,000 employees in the lurch.
Virtually everything we purchase passes through a corporation, a faceless-mindless entity that knows only one scale of doing things, via Maximum-Overdrive, be it on the way up, or on the way down.
I’d like to say it’s no big deal, but the corps’e took out almost every mom & pop store all over America the past 25 years, and now it’s checking out, as well.
Suddenly stores stateside closing by the gross, as the factories that made the toys that we used to buy on credit, are being abandoned by their owners?
Nothing good can come of this…
Let the Corp(se) wither on the vine.
“Nothing good can come of this …”
Except opportunity for those armed with knowledge, information and cash.
“Nothing good can come of this …
Except opportunity for those armed with knowledge, information and cash.”
This is where I side with Combo. Right down the street from me a local restaurant took over a building from a bankrupted chain (Bennigan’s, I think). The last thing I would consider doing is opening a restaurant in Florida, but they’re doing quite well.
They did the math and they’re flowin’ cash.
A local chain just opened a branch nearby. They only offer a few things all of which are really really excellent, and the price is cheap.
Very high quality product, cheap prices, mostly takeout, and a great location.
They are printing mad money night and day even during this recession while all their competitors can only watch agape while they are getting crushed. Shows you there is opportunity everywhere.
I visited Santa Barbara recently, and there was a taqueria with the same philosophy. Same deal.
I love SB’s food! Milpas has some great stops, but my favorite is El Sitio!
Cheap and delicious!
Tell me more. I’m curious.
I always need to know more and more and more about food, glorious food.
Would any of you honestly want to open a business-using your own money, in this economic climate?
Sure, there’ll be a few winners, there always are.
But what if you fail, and your nest-egg goes away?
I would.
But only if I had the right idea and the right location. And I would build it up slowly not go in gangbusters, guns blazin’ without any thought to the problem.
However, many people don’t have much of a choice. It’s trying their hand at their own skills or starving. Not going to be very pleasant.
I ran a small retail business for many years, and I always wondered how the luggage store across the street made money, or what possessed somebody to open it in the first place?
The thing about owning our own business is, that it isn’t so much a matter of making more money, but being your own boss.
But being your own boss also means that you work 10-12 hour days, and have no boss to complain to about the long hours…
“Would any of you honestly want to open a business-using your own money, in this economic climate? Sure, there’ll be a few winners, there always are.But what if you fail, and your nest-egg goes away?”
Alad, I’ve learned something very valuable about myself in the last few years, I don’t do anything crazy with my money. So, I wouldn’t have opened a business during the boom either…
I’d like to pretend that I totally “predicted” the bubble, but it was mostly my aversion to big commitments that prevented me from signing on the line.
Wow.
It must be pretty rough living in such fear, I must say.
There’s ignorance, then there’s prudence, and then there’s fear. Life at either end is generally pretty miserable, most times.
One of those short commercials on XM has a guy, don’t remember his name, but he is selling business advice. I love his line about looking back 10 years and seeing if you have “built a business or just built yourself a job.” I’m guessing the luggage people just built themselves a job and not a business.
My cousin used to design kitchens for Pizzaria Uno’s. It wasn’t a cookie cutter thing because they all had different requirements based on the shape of the space, but, more importantly the items on the menu.
Seems that in the past, they would change the menu mix at tons of restaurants every year to try to tweak the combo to the population of the area, each change requiring they redo the kitchen to some extent. Well, now they are just living with the kitchens they already have and my cousin hasn’t had work from them in ages (she is a contractor). How on earth did any of the big chains make money if this is how they operated? By overcharging? Oh, you guys are so clever.
Seems that a local place that made just a few items and could live with its current kitchen set up forever would have a huge advantage over the big chain mindset.
There are MANY roads to success.
I recently helped a friend of a friend of a friend with his plan. He’s a kid (29-ish) trained as a pastry chef who is thinking of supplying restaurants, etc. with his pastries. He will make them in his own kitchen and deliver.
This is a plausible business model in New York given that he doesn’t live in the high-rent areas and has a large kitchen, and can “deliver on spec” rather than “make and hope for delivery”.
He’s also willing to make it on weekends first so that he keeps his “day job” in case this fails.
I can see this model working. I told him so.
Smart kid too. No unrealistic expectations. Very good (but not great) pastries (told him so too.)
I would be willing to provide capital for this enterprise (and he needs very little!)
“…a pastry chef who is thinking of supplying restaurants, etc. with his pastries. He will make them in his own kitchen and deliver.
This is a plausible business model…”
I’m very surprised that it’s legal. Here in WA, the health dept. will not allow such a thing.
After a little browsing, it seems New York is no different. He would have to produce it in a commercial kitchen which is subject to random, unannounced visits from the health dept. Otherwise, it’s illegal.
“…a pastry chef who is thinking of supplying restaurants, etc. with his pastries. He will make them in his own kitchen and deliver.
This is a plausible business model in New York given that he doesn’t live in the high-rent areas and has a large kitchen, and can “deliver on spec” rather than “make and hope for delivery”.”
This is NOT a plausible business model. After checking the regulations in NYC, he MUST pay to use a commercial kitchen, or lease his own, which is subject to random inspections by the health dept. The “MANY roads to success” are littered with rules and regulations, none of which are easy or free.
Lots of misinformation on the web. Found an article in the NYT saying certain baked goods CAN be produced in home kitchens for retail sale. If anything, he’ll need a big kitchen if he’s to be successful.
There are MANY businesses supplying office workers in midtown with “bento boxes” which you reserve on the web before 10pm or some such, and get the following day at lunchtime (thus allowing them to gauge the number exactly and make them.)
Typically, they are made in Queens. This is all perfectly legal and above board.
Same with the multiple carts that are all over the city. They are licensed and inspected. There is nothing sinister going on.
Even in places where there are regulations, like here, people still sell food items out of their own kitchens. Many espresso stands and small businesses sell cookies, etc. which are from the owners homes. Regs schmegs.
A group of 22 friends and myself in our Spanish class decided to have a get together and dinner at a “well known” Mexican restuarant in the Milwaukee suburbs last week.
Aside from the fact that it was designed to cater to the midwest gringo palates, the food and the quality of service was downright awful. To add insult to injury, our waiter, when we saw him, was arrogant, curt and nearly non responsive to the needs of his guests. They attempted to charge one guy $5 plus for a beer that he ordered and never recieved dispite asking the waiter for it twice. This upon the fact that they had just raised the built in gratuity from 15% to 18% for groups of 12 or more.
Needless to say, 22 people left that establishment after complaints to the manager and with the satisfaction that NONE of their friends, family or aquaintances would ever dine there without hearing the details of this horror story.
I hope that the recession kills this “well known” place for the common good
Name it Mike!
Please save me from this horrible place, as we go into the city at least twice a month.
Pretty please.
Leigh
Combo, how much cash do you actually have? Do you have a 5 figure at least? Or are you just looking for a good deal on a used 98 celica?
There’s a generic story about China’s mfg. contracting sharply today. I’d love to know what it’s really like on the ground over there - instead of the “Chindia” drivel tossed around by Murdoch this past week.
I just can’t buy into The Great Decoupling…at all.
Look at the 3 month FXP chart and let me know what you see
It s a China ultra short fund that is pretty easy pickings if you can follow it closely and feel comfortable moving in and out of it. Volatility may come down now, but I still like it, a lot.
RE: Nothing good can come of this…
Hope everybody has a deposit bottle and can law.
With a little walking on filthy streets combined with the potential for a couple of fights with the homeless for “turf”, you should be able to cover for a small salad and cup of chile on the dollar menu @ Wendy’s.
I know this is contrarian, but some of the “mom and pop” stores needed to go out of business.
From my observations, approx 50% give you service that you can’t get from the national chains.
The other 50% have no inventory, have crappy service, and constantly bombard you with “We’re locally owned, so you owe us your business” ads.
This is very surprising. I would have thought laying off your highest paid salesman and giving bonuses to upper management would have been the ticket to unfathomable profitability.
I’d like to say it’s no big deal, but the corps’e took out almost every mom & pop store all over America the past 25 years, and now it’s checking out, as well.
Suddenly stores stateside closing by the gross, as the factories that made the toys that we used to buy on credit, are being abandoned by their owners?
Nothing good can come of this…
This is the end game of trickle down economics and unregulated capitalism. Fewer and fewer companies making goods for fewer and fewer people who can afford them.
I learned my lesson about the short sighted pursuit of profits by mega-corporations as a small child. On the square in Marietta, GA there was a movie theatre called the Strand. It had been there for many years, and beside it was a tiny mom & pop place that sold the best fresh popcorn with real butter, hot caramel popcorn made to order, and fresh roasted peanuts. It was the big place to go to the movies, despite the difficultly in finding parking on the town square, because of the popcorn & peanuts. Then, the theatre was bought by a national chain. The chain corporation would not allow patrons to bring in the popcorn & peanuts from the mom & pop store. I remember the night they set up a big trash can next to the front door of the theatre, and everyone had to throw away their popcorn & peanuts before going into the lobby. And I distinctly remember the man who owned the popcorn & peanut store watching this happen with tears running down his face. The popcorn in the theatre was shipped in pre-made in cardboard boxes. It tasted like cardboard. My family immediately quit going to the movies there, but we would sometimes make the trip up there just to buy the popcorn from the mom & pop and eat it in the park. But sadly, the mom & pop couldn’t sustain itself on the few sales from the non-movie going customers, and closed. No one wanted to hassle with going to the movie theatre at that location without the good popcorn, so it closed as well. Both lost out because of the greed of one.
probably the goal of the purchasing corporation all along. They didn’t want the movie theater, they just wanted to shut it down.
— Once went to a theater like that when I was a kid. Brought my home made popcorn into the place in a plastic bag under my jacket.
Man, that’s a really terrible story. Any idea what the small store owners did afterwords?
Do not make the mistake of confusing capitalism and corporatism. Capitalism is something that does not exist. Corporatism is alive and well, and is the intended target of your comment.
Heard a radio ad for a local bank this morning…..
“My dad banked at (name of bank) through the Great Depression, and now I bank there……”
(When I sold my house in 2004, the buyer said they got their financing thru the same bank, and they mentioned how tough they were on checking assets, income verification, etc., the payoff for the borrower being that they had a lower interest rate)
This ones for Lad,
Bank of the Sierra sent me a flyer in the mail stating that, if I opened up a checking account they would give me a free baking set. It’s been quite along time since Banks have had to give away goodies to get business! The clocks ticking on these guys!
They are always giving away some tschotsky or another.
I liked Texas banks in the mid 80’s approach to business, the joke being:
They’d give you a free bank branch if you bought a toaster.
Care to mention the bank?
Throw us a bone. We’ve entertained you long enough.
Capital Federal Savings, Eastern Kansas.
CapFed is the only local/regional area bank I think that COULD make it without gov intervention/help over the next few years. VERY tough to get a home loan. I had hoops to jump through and was glad to comply, they were looking out for their best interests and mine.
Probably ING Direct. I got a liar loan from Country Wide in 05 to buy a rental. Then I sold my house and moved into the rental as I saw the tide turning. After moving in I re-fied in 4 mos with ING. Countrywide asked no questions, ING grilled me and wanted 30% equity. for their 7/1 ARM at 5.5%. Luckily, I got it and have done very well, as I bought it cheap (being a trashed rental and all). MY PITI is 20% less than what it would rent for today. Dont try that at home.
The CEO of ING was on CNBC last week (or so) they have a ridiculously low number of foreclosures, way less than .25 of 1%. Wonder why????
“Deutsche Bank magically reports a profit of $575 million for 2Q08. New accounting rules let it shift over $1 billion in losses from its trading accounts to its loan ledger - and loans are not ‘marked to market,’ but follow the American model of ‘mark to hope’.”
Jim Fitch
Yes you should see how the German media thinks how great this is. Mr. Ackermann conveniently is an advisor to Angie Merkel.
“Mark to hope”. Appropriate. We all know how hope works out as a business plan…
They have more foreclosures in my local paper than anyone else. Go figure.
Try to tell this to the German media. Which state / area is this ?
I’m guessing Cleveland.
They were the biggest player there.
Meanwhile, as the housing bubble implodes within the Orange Curtain, they are receiving “the dregs” of what’s left in reservoirs and aquifers, which are mostly at all-time record lows, or close to.
These symptoms of crummy water are the very same concerns my friends from just outside of Melbourne, Australia related to me a few years ago, as their drought intensified…
===================================================
“Bathers may need more soap. Spots may stick to glasses. And cars may look a little filmy after being washed. That’s because Orange County’s water is harder these days.”
http://www.ocregister.com/articles/water-district-county-2214407-state-need
I just heard Joe Biden say 700,000 jobs had been lost , and 2,000,000 houses have been foreclosed on. My question is , how did the other 1.3 million people who didn`t lose their jobs lose their houses ?
If Joe Biden said it, then there is a 100% certainty he has it all f@#ked up!
TREASURY OFFERING ANNOUNCEMENT
Term and Type of Security 77-Day Bill
Security Description Cash Management Bill
Offering Amount $30,000,000,000
Auction Date November 05, 2008
TREASURY OFFERING ANNOUNCEMENT
Term and Type of Security 238-Day Bill
Offering Amount $40,000,000,000
Currently Outstanding $17,005,000,000
Auction Date November 04, 2008
There are bushel baskets of Treasuries that not only are going to be issued before the end of the year and unfortunately most are short term and will have to be rolled.
TARP financing???
A day before the election, and I sure wish there was a more reasonable candidate for POTUS.
McCain did suffer greatly as a P.O.W.
He deserves his pension and medals and ribbons.
But whether he is still suffering from PTSD or whatever he seems to have big anger issues. Not good for the CIC.
Obama is lately seeming much more O.K., as in Originally Kenyan. If elected he and the Democrats might truly face election fraud charges or a call for impeachment. Why does his grandmother insist she was there when he was born in Kenya? Grandmas tend to remember things like that.
Ron Paul drummed out early by the MSM and PTB, no wonder. There was grand larceny to complete, and they needed ringers.
“A day before the election, and I sure wish there was a more reasonable candidate for POTUS.”
Me too.
There is a vp candidate who may not have been pregnant a week before her son was born.
“America needs a president who is grounded in patriotism, not drowning in ambition.”
~Bartle Bull, former aide to Rob’t F. Kennedy.
I think a dead rat dangling from a stick would be an improvement on the last POTUS. I’ll take ‘that one’ with the Harvard Law degree and the ability to bring the most qualified people in to solve problems over the one who is erratic and finished in the bottom 1% of his class.
I’ll take McCain over any lawyer, especially for the SHTF days that lie ahead.
I look forward to all the backpedaling in 2012. I can’t wait to see what these folks have to say about Obama then..
Fact is, it isn’t going to make much difference who is in there. It just changes the methodology in which we are fleeced.
Luckily for McCain there is that clause in the Constitution that makes Panama an official state.
…..Foreign official purchases of Treasuries fell by more than half in August, to a net $4.8 billion, from $10.1 billion in July, and an average of $7.5 billion in the preceding 12 months, according to the Treasury Department. Japan, the top holder, sold a net $7.5 billion.
U.S. `Needs Help’
“The U.S. Treasury Secretary is trying to convince other countries, including China and Japan, to buy its government bonds,” said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., the nation’s biggest stock underwriter. “This is the first time a developed country needs help from developing countries to ride out its crisis.” ….
Bloomberg
You buy, or else ???
“Vote for the bailout, or everything will shut down.”
Wow. IMO that’s huge news, given the meteoric rise in new bonds that will need to be sold over the next few years.
I need to check out TBT double short 20 year treasury ETF
A month or two ago I said I was mostly in safe treasury mm and CD’s so far so good but in the future I can’t see any way treasuries can pay such low interest rates.
why shouldnt the treasury yields remain under pressure, and dividend yields decrease….
there is no safety in numbers.
From the radio interview Palin got pranked…
…
MASKED AVENGERS: Thank you very much. You know my wife Carla would love to meet you, you know, even though you know she was a bit jealous that I was supposed to speak to you today. (Laughs.)
GOV. PALIN: Well, give her a big hug for me.
MASKED AVENGERS: You know my wife is a popular singer and a former top model and she’s so hot in bed. She even wrote a song for you.
GOV. PALIN: Oh my goodness, I didn’t know that.
MASKED AVENGERS: Yes, in French it’s called de rouge a levre sur un cochon, or if you prefer in English, Joe the Plumber…(singing) it’s his life, Joe the Plumber.
[Translation: Lipstick for a pig.]
GOV. PALIN: Maybe she understands some of the unfair criticism but I bet you she is such a hard worker, too, and she realizes you just plow through that criticism.
MASKED AVENGERS: I just want to be sure. That phenomenon Joe the Plumber. That’s not your husband, right?
GOV. PALIN: That’s not my husband but he’s a normal American who just works hard and doesn’t want government to take his money.
MASKED AVENGERS: Yes, yes, I understand we have the equivalent of the Joe the Plumber in France. It’s called Marcel, the guy with bread under his armpit, oui.
GOV. PALIN: Right, that’s what it’s all about, the middle class and government needing to work for them. You’re a very good example for us here.
MASKED AVENGERS: I see a bit about NBC, even Fox News wasn’t an ally, an ally, sorry as much as usual. ….”
http://www.talkingpointsmemo.com/talk/blogs/astral66/2008/11/palin-gets-prank-called-by-the.php
The interview is on You tube and the link gives the youtube and transcript of the interview. She is so friggin stupid, it is scary.
Getting pranked is not stupid; the person doing the prank is stupid (and vicious). You could pull the same stunt on anyone not inclined to dishonesty (and thus trusting).
Have you ever watched “Scare Tactics?” I think it’s appalling, but obviously a lot of people think it’s hilarious. I wonder how may of those punked refuse to sign a release, and how much money or how many promises of fame it takes to get the others to sign one. Setting out to embarrass someone or make him or her took bad is not intelligent, it’s simply nasty.
The prank aside: Has the media reported on the Alaska Independence Party and her affiliations with it? Have they reported on her affiliations with a racist prayer group (forgot the name)?
Stupidity combined with zealotry and that conviction of being superior, no thanks.
Plus, where are her medical records.
In the 80’s I totally adored “Spitting Images”.
Have you seen it? Ruthless beyond ruthless.
What’s being done to her barely even registers on that scale.
“Toughen up, Palin-woman; you’re in politics not popping out your worthless devil spawn in your born-again bathtub.”
Her worthless devil-spawn in her born-again bathtub? Are you calling her Downs Syndrom baby worthless devil-spawn?
Your comments here have long been nasty beyond belief; I can’t imagine that you actually have friends, except other cranks with nothing better to do that tear everyone else down, and wish misery on all but yourself. And no, your endless sexual references and innuendos aren’t cute or funny; they’re pitiful.
Sorry to double-post, if the other thing shows up.
This quotation is horrible. Do you honestly think her handicapped child is worthless? Are you as unfeeling as you appear?
I listened to the punk tape. The joke may actually be on the radio audience. Whether the tape is real, clearly the person answering the questions had no idea what the caller was talking about, or pretended to have no idea what the caller was talking about. I think it highly doubtful that Mrs. Palin was actually reached, but if she was, her responses indicate appropriate politeness, not supidity.
FPSS.
when the backlash gets like this…. tone it down, or you go jas on the plebes.
LOL
Never thought I’d be compared to Jas or accused of going “nucular” on the plebs.
Citigroup says it lost $1.44 billion in 3Q selling bonds backed by credit cards
Citigroup Inc. lost $1.44 billion during the third quarter from packaging credit card debt and selling it as bonds, the banking company says.
http://biz.yahoo.com/ap/081103/citigroup_credit_cards.html?.v=1
How do you lose money selling Bonds?
I see that Circuit City is closing 155 stores, and before Christmas. This is sweet music to my ears, as I HATE Circuit City. Years ago, more than 10, I had a credit card with First North American National Bank. They owned CC, or vice versa. They did something evil, like raised my rate when I had a small balance. I swore I would never transact business with them again, and I remember paying off and closing the card, then telling them to rot in hell. It looks like they’re on their way. Sweet music to my ears!
About 10 years ago, my wife and ventured into a Circuit City to buy a walkman…
When we got out of the car to go into the store, I told her not to be surprised by my sudden sobbing-that was to be set off, when sahib tried pushing an lifetime warrantee down my throat-insistently.
We agreed that she would tell the warrantee-pusher-man that I had only 6 months to live, after I had sobbed sufficiently.
Our ruse worked to perfection, and we left the store laughing…
LOL
I need to try that one. I’ve been looking for a new shtick. This is pure gold.
The two near me are closing. I’ll be checking out their sales. I always preferred Circuit City over Best Buy because the checkout lines were always much, much shorter. Also, once when I had a computer emergency that I couldn’t fix myself, they were able to fix it within 24 hours vs. 3 days by the Geek Squad. So I am disappointed to see them go.
May they rot in hell.
Hahahaha. Your emotion is hilarious.
I actually second your motion that they rot in hell after how they screwed their employees a year or two ago, though I do feel bad for the current employees who will be out of work.
Ford Oct U.S. vehicle sales off adj. 31.9 pct
http://www.reuters.com/article/marketsNews/idINN0333154820081103?rpc=44
Volvo Oct U.S. vehicle sales off adj. 53.9 pct
http://www.reuters.com/article/marketsNews/idUSN0333192920081103?rpc=44
Asleep at the Wheel
The US Becomes What It Wasn’t
Interesting Fred Reed piece on the U.S. Military:
“The economy also has been militarized. Although the United States has no national enemies, it spends phenomenally on a martial empire whose only purpose is to be a martial empire. Add up the “defense” budget (it was last used for defense in 1945), the war bills, black programs, Veterans Administration’s budget, on and on, and you reach a trillion dollars a year. A country in decline cannot long waste so much money. Perhaps as important, the military cannot spend so much without gaining great if unnoticed political power. In particular, the production of hugely pricey weapons has been woven into the economy to such an extent that it cannot be brought under control. Cancel the F22, the JSF, and suchlike, and the economies of politically powerful states go into recession. None dare do it. Close big bases? Whole towns would shut down. ”
link - http://www.fredoneverything.net/FOE_Frame_Column.htm
Close big bases? Whole towns would shut down. If Americans lived within their means and saved a sufficient amount of money to retire on, their consumption-based economy would shut down.
If wishes were horses, then beggars would ride.
“Close big bases? Whole towns would shut down.”
Has Fred been living in a cave or something?
Reckoning Day Is Here
Bill Bonner - Mon 03 Nov, 2008
“The D-word is back,” says this morning’s Financial Times…
London, England
“The D-word is back,” says this morning’s Financial Times. “Could deflation be the next big shock to the financial system?”
Where has the FT been? The world has never seen so much deflation. Stock markets around the world have deflated by about $10 trillion. US housing has deflated by about $5 trillion. Oil has deflated to only half its high; it closed at $64 on Friday. Gold, down $13 on Friday, has deflated about 25%. Bear Stearns deflated to nearly zero.
…
One thing that is sinking to the very bottom of the sea is the cost of sea-borne transport. The Baltic Dry Index measures shipping costs…and gauges the health of the globalized marketplace. Shipping prices rise when orders are being placed…and delivered. When orders decline, so does the index. Well, based on the index, there is no need for Misters Smoot and Hawley. World trade is collapsing without them. The index has gone down 14 days in a row, so that shipping barely costs 10% of what it cost a few weeks ago.
Deflation? What does that remind you of, dear reader?
Japan! Of course. This is the trend your editor saw coming 10 years too soon — a Japan-like slump.
“A deep and prolonged recession could raise the spectre of deflation of the sort that long plagued the Japanese economy,” says a fellow at the American Enterprise Institute.
I have news for these people.
We’ve been in deflation for a year.
See those home price drops? Compare that to the miniscule “printing” by the Fed and the ECB.
latest news
U.S. Oct. ISM manufacturing index 38.9% vs 43.5% in Sept.
ECONOMIC REPORT
Factory sector weakens sharply in October
ISM index hits 38.9%, lowest since 1982, marking second straight big drop
By Greg Robb, MarketWatch
Last update: 11:54 a.m. EST Nov. 3, 2008
WASHINGTON (MarketWatch) — The nation’s manufacturing firms reported the worst level of output in 26 years, further evidence that the economy is slumping sharply, according to a closely followed survey of top executives released Monday.
The Institute for Supply Management index fell to 38.9% from 43.5% in September, below the 41.5% expected by economists surveyed by MarketWatch.
We sliced through the 40’s like it was melted butter…
If anyone’s looking for a good laugh, just pull up your local mls and look at raw land listings, specifically small acreage. If the prices don’t make you roar with laughter, the volume of listings will. And almost nothing is selling.
Important question: Is it possible yet to buy raw land and higher builders to build a made-to-order home for less than the price tag on comparable existing homes currently on the market? If yes, I may soon be in the market for a new home…
higherhireExcellant choice PB.
I have the same idea.
Let me know who you use to for higher builders.
materials are getting cheaper for sure, and subs are getting hungry.
Land prices around here (Ark) are pretty sticky, I imagine the same is true elsewhere. People that own land seem to be even more determined to get their wish price than home owners. Maybe you could find a developer desperate to get rid of a subdivision-type lot if you’re into that kind of thing.
Still, I think it’s going to get better if you can wait. If not, I would guess that building is still better (cheaper) than buying.
No, it’s not (and I have the same idea, too).
Still waiting…
Wake me up when it gets back to $1000/acre max.
AP
Former UBS exec sentenced in NY
Monday November 3, 1:14 pm ET
NY judge sentences former UBS executive to 78 months in insider-trading scheme
http://biz.yahoo.com/ap/081103/securities_fraud.html
Homeowners “Lying” Their Way To A Better Mortgage?
http://www.cnbc.com/id/27519928
Imagine that!
/sarcasm off
Some astonishing price drops in New York City (where it used to be
different!)…and not just nickel-and-dime, either.
http://nymag.com/guides/cheap-living/buy-apt/
Please forgive if someone has previously posted.
“…juror who vanished during Alaska Sen. Ted Stevens’ corruption trial told the judge Monday she lied about her father dying and flew to California to see horse races.”
‘
In true BBC fashion, the last paragraph tells the rest of the story:
“…Hinnant, a licensed paralegal who works for a mortgage company, said she had returned to the District of Columbia on Oct. 27.”
http://www.salon.com/wires/ap/2008/11/03/D947JG380_stevens_trial/index.html
Looks like B.O. had the plug pulled on Granny, right on time!
http://www.reuters.com/article/newsOne/idUSTRE4A26GV20081103?sp=true
Bernanke Push for Lower Rates Drives U.S. Yields Up (Update2)
By Sandra Hernandez and Wes Goodman
Nov. 3 (Bloomberg) — Even as Ben S. Bernanke cuts borrowing costs to 50-year lows, taxpayers will likely be paying ever increasing interest rates on U.S. debt.
The next president may find foreign investors, the biggest creditors to the U.S., unable to absorb a growing supply of Treasury bonds as the financial crisis prompts nations to invest in their own banks and currencies. That would drive up yields just as a widening budget deficit pushes borrowing needs to a record $2 trillion, according to estimates by Goldman Sachs Group Inc. and Wrightson ICAP LLC.
S&P sez the world’s stock markets lost a combined $5.79T in October.
Monday, November 3, 2008
More and more banks want in on bailout
The Federal Reserve building in Washington, D.C.
If the bailout made some banks uneasy at first, they got over it. Thousands of banks are lining up for the funds now. Steve Henn reports the idea of using the money to buy other banks is a motivator.
More on The Economy, Wall Street, Fed. Budget/Govt. Spending, America’s Financial Crisis
Kai Ryssdal: The Federal Reserve reported today that bank lending has actually tightened since the bailout plan was passed. You know, back a month ago when the feds first unveiled their plan to use some of the bailout money to buy stakes in U.S. banks, it didn’t go over too well. A lot of the people running them thought that taking government cash would be seen as a sign of weakness. Well, not anymore. As Marketplace’s Steve Henn reports from Washington, the new fear is being left out.
I thunked we needed the bailout to get banks lending again. What happened?????
Another Bush bubble burst…
Vote for McCain
To get more of the same.
BwaHaHaHAHAHAHAAHAAAAAAAAA!!!!!!!!!!!!!!!
Monday, November 3, 2008
Is the ethanol industry tanking?
Corn cob held in a cornfield.
Ethanol’s future as alternative fuel isn’t looking so bright right now. Goldman Sachs has abandoned analysis of the industry and the largest publicly traded producer has filed for bankruptcy protection. Steve Henn has more.
Ummm, you did read the last paragraph, right? At least one of the candidates is from a Corn Belt state.
Monday, November 3, 2008
Credit card crisis on the horizon
Next up in financial crisis headlines: credit cards. Delinquencies on card payments are on the rise and consumers are cutting back on credit card use. Neither is good for the credit card companies. Rachel Dornhelm reports
I am happy to announce that the CPI will remain positive during the entire deflationary episode currently underway.
I should add that dividend yield will also decrease.
I look forward to the next four years.
Most likely going to be my greatest gains in my entire life.
make islands of good lives.
Debt Linked to Buyouts Tightens the Economic Vise
By ANDREW ROSS SORKIN and MICHAEL J. de la MERCED
Published: November 2, 2008
Private equity firms embarked on one of the biggest spending sprees in corporate history for nearly three years, using borrowed money to gobble up huge swaths of industries and some of the biggest names — Neiman Marcus, Metro-Goldwyn-Mayer and Toys “R” Us.
There are that signs investors think Harrah’s Entertainment may be close to default.
Linens ’n Things, a big retailer owned by the private equity firm Apollo Management, filed for bankruptcy protection this year.
The new owners then saddled the companies with the billions of dollars of debt used to buy them. But now many of the loans and bonds sold to finance the deals are about to come due at the worst possible time.
So, like homeowners with an adjustable rate mortgage that just went up, some of private equity’s titans are facing a huge squeeze. And that is coming at the same time consumers are staying home with their wallets closed.
Already this year, big retailers backed by private equity, like Linens ’n Things, Mervyn’s and Steve & Barry’s, have filed for bankruptcy.
Wall Street Journal
* NOVEMBER 4, 2008
U.S. Weighs Purchasing Stakes in More Firms
By DEBORAH SOLOMON
WASHINGTON — The Treasury Department is considering using more of its $700 billion rescue fund to buy stakes in a broad range of financial companies, not just banks and insurers, after tentative signs of the program’s success, according to people familiar with the matter.
In focus are companies that provide financing to the broad economy, including bond insurers and specialty finance firms such as General Electric Co.’s GE Capital unit, CIT Group Inc. and others, these people said.
The possible expansion shows how much Treasury’s rescue plan has morphed since it was first proposed in September. Treasury Secretary Henry Paulson originally unveiled a complex plan to buy up financial institutions’ hard-to-sell assets such as mortgage-backed securities.
More
That proposal has yet to get up and running, stymied by operational delays and beset by criticism. People familiar with the matter say Treasury may scrap part of that early plan — purchasing assets through an auction process — and instead purchase some of these distressed assets directly.
Of the original $700 billion made available to Treasury, officials set aside $250 billion for equity investments. It has already invested $163 billion in a range of banks including some of the nation’s largest, such as Goldman Sachs Group Inc. and Bank of America Corp. That number will likely expand at the expense of the asset-purchase plan, but by exactly how much is unknown.
“We are looking at many ideas for strengthening the financial system and for restoring lending,” said Jennifer Zuccarelli, a Treasury spokeswoman. “We are weighing ideas and have made no decisions.”
Wall Street
* OPINION
* NOVEMBER 4, 2008
Five Myths About the Great Depression
Herbert Hoover was no proponent of laissez-faire.
By ANDREW B. WILSON
The current financial crisis has revived powerful misconceptions about the Great Depression. Those who misinterpret the past are all too likely to repeat the exact same mistakes that made the Great Depression so deep and devastating.
Here are five interrelated and durable myths about the 1929-39 Depression:
- Herbert Hoover, elected president in 1928, was a doctrinaire, laissez-faire, look-the-other way Republican who clung to the idea that markets were basically self-correcting. The truth is more illuminating. Far from a free-market idealist, Hoover was an ardent believer in government intervention to support incomes and employment. This is critical to understanding the origins of the Great Depression. Franklin Roosevelt didn’t reverse course upon moving into the White House in 1933; he went further down the path that Hoover had blazed over the previous four years. That was the path to disaster.
Hoover, a one-time business whiz and a would-be all-purpose social problem-solver in the Lee Iacocca mold, was a bowling ball looking for pins to scatter. He was a government activist fixated on the idea of running the country as an energetic CEO might run a giant corporation.
That description reminds me of some high muckamuck today, but I can’t quite think of who…
I would go so far as to say that the actions policymakers are currently taking increase the likelihood we will soon enough get to enjoy a replay of the current episode. The current policy response will have the unfortunate consequence of baking moral hazard into the future.
Wall Street Journal
* OPINION
* NOVEMBER 4, 2008
Some Lessons of the Financial Crisis
Seven principles to guide reform, here and abroad.
By STEPHEN SCHWARZMAN
We are in the middle of the worst financial crisis in recent memory. Vast efforts are being made to extricate us from it, but there is little focus on preventing the next one.
Ha ha… I am in august company. I guess I am not the only one who has seen a version of this movie before.
Barron’s
MONDAY, NOVEMBER 3, 2008
INTERVIEW
A “Perma-Bear” Warms to Stocks
Steve Leuthold, Chairman, The Leuthold Group
By LAWRENCE C. STRAUSS | MORE ARTICLES BY AUTHOR
AN INTERVIEW WITH STEVE LEUTHOLD: A “perma-bear” joins the bull camp.
It’s an emergency! We can’t afford to honest accounting for the time being!!!
DAVID WEIDNER’S WRITING ON THE WALL
Mark-to-market manipulation
Commentary: Efforts to change accounting rules would set back reform
By David Weidner, MarketWatch
Last update: 12:01 a.m. EST Nov. 4, 2008
NEW YORK (MarketWatch) — Mark-to-market — or fair-value — accounting has one big problem: Some very powerful people are trying to change it.
A movement spurred by bankers including Aubrey Patterson, chief executive of Bancorpsouth Inc., and Wall Street power brokers including Blackstone Group Chief Stephen Schwarzman are arguing for at least a temporary suspension of Financial Accounting Standards Rule 157.
Went into CostCo tonight. There were maybe 6 people in line (at all the lines) when we checked out — least ever. Then over to Trader Joe’s — only three lines open, one customer per line. This sucker’s going down!
my daughter went into mervyns last weekend and told me they are closing all their stores by the end of the year. How many jobs will be lost with that one alone?
Manipulate this deflation indicator!!!
The Shipping News
The best economic indicator you’ve never heard of.
By Daniel Gross
Posted Friday, Oct. 24, 2003, at 5:11 PM ET
Baltic Dry Index: Not a Latvian deodorant Baltic Dry Index: Not a Latvian deodorant The leading economic indicators—which serve as the foundation of massively important political and economic decisions—can frustrate even the wisest economists. They quibble over whether the payroll or establishment employment numbers make more sense and wonder whether consumer confidence figures measure anything more than sentiment. The figures of the gross national product are consistently revised.
…
Baltic Dry isn’t a Latvian deodorant or an Estonian cocktail. Rather, it’s a number issued daily by the London-based Baltic Exchange, which traces its roots to the Virginia and Baltick coffeehouse in London’s financial district in 1744.
Every working day, the Baltic canvasses brokers around the world and asks how much it would cost to book various cargoes of raw materials on various routes—150,000 tons of iron ore going from Australia to China or 150,000 tons of coal from South Africa to Taiwan. Brokers are also asked to consider variables such as the type and speed of the ship and the length of the voyage.
The answers are melded into the BDI, which appears in shipping publications such as Lloyd’s List and on the screens of information vendors such as Reuters and Bloomberg. Because it provides “an assessment of the price of moving the major raw materials by sea,” as the Baltic puts it, it provides both a rare window into the highly opaque and diffuse shipping market and an accurate barometer of the volume of global trade.
The BDI is a good leading indicator for economic growth and production. After all, it doesn’t deal with container ships carrying finished goods. It deals with the precursors to production: bulk carriers carrying building materials, cement, grain, coal, and iron. Unlike stock and bond markets, the BDI “is totally devoid of speculative content,” says Howard Simons, an economist and columnist at TheStreet.com. People don’t book freighters unless they have cargo to move.
Baltic Dry Index Drops Below 1,000 for First Time in Six Years
By Alistair Holloway
Oct. 28 (Bloomberg) — The Baltic Dry Index, the benchmark for commodity shipping costs, fell below 1,000 for the first time in six years as the lack of credit curbed global trade and shipowners threatened to shun orders.
The index, watched by banks including UBS AG as an economic indicator, fell 66 points, or 6.3 percent, to 982 points, the lowest since Aug. 8, 2002. The gauge has dropped 89 percent this year, driving down the combined market capitalization of the 12- company Bloomberg Dry Ships Index, led by Athens-based Diana Shipping Inc., to $5.5 billion from $32 billion a year ago.
“You are getting very, very close to the cost of just crewing and running a ship,” Richard Haines, a senior director at London-based shipbroker Simpson, Spence & Young Ltd., said in an interview today.
“It can’t go much lower than this without owners deciding they don’t want their ships employed.”
How are “wet goods” faring?
FUTURES MOVERS
Oil falls below $64 a barrel as demand concerns prevail
By Myra P. Saefong & Polya Lesova, MarketWatch
Last update: 3:42 p.m. EST Nov. 3, 2008
WASHINGTON (MarketWatch) — Crude-oil futures fell nearly 6% Monday to close below $64 per barrel as traders continued to worry about the impact of a global economic slowdown on energy demand.
“Oil prices and [their] moves this year have reflected times of historic upheaval in the world economy,” said Phil Flynn, a vice president at Alaron Trading, in a note to clients. This is “all about the price of oil adjusting itself to a new world economic order and the price of oil adjusting to the fears and the constantly evolving economic crisis.”
Crude oil for December delivery fell $3.90, or 5.8%, to close at $63.91 per barrel on the New York Mercantile Exchange. It hasn’t traded or closed at a level that low since Oct. 28.
…
“On the bearish side, we suspect that any equity-induced gains in energy will start to fade late in the week and into next, as funds may choose to sell into the rallies given the recession realities that are still out there,” Meir said.