Bits Bucket For November 4, 2008
Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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I’m going to be out of the office today on business in the Prescott area. Lots of foreclosures in Yavapai county. BTW, I had the HBB forum built for days like this. I see long, thought-out posts in the bits bucket that get mixed in with hundreds of non-related things, that nobody sees after a few hours. The same post could go into a catagory at the forum and the thread could last for months. I pay out of my pocket so you guys can have that forum, and I only have one guide about it’s existence; use it or lose it.
Anyway, I’ll find some wifi in Prescott and check in from time to time. I should be back in the saddle tomorrow.
“Use it or lose it”
That’s true. I can only guess it’s not as popular because the format has a different feel and old dogs have trouble with the new tricks. Voting with my feet I guess, but I’ll try once more to see if I can make it a more regular part of my HBB experience for the reasons you mentioned.
By the way Ben, no endorsements for the election between mainstream candidates? Just curious, given you are an Arizonan.
I really really like the forum, but I am a bit dissapointed people don’t go there and discuss the topics.
The bit buckets is really messy and hard to follow at times.
I prefer the forum because it’s a lot more organized.
I’ve not been able to read the forum because this blog continues to exist. For many of us, there is just a lack of time to read hundreds of Bits Bucket comments, plus all of Ben’s excellent posts, and any comments we can get to in the other posts. It could literally take hours (esp if you’re on the west coast, and read at the end of the day).
Also, we still had all the awesome comments over here, so didn’t want to just read the forum and miss what’s going on at our old blog.
It’s just a matter of time management, IMHO.
old dogs new tricks
That is the problem exactly. Reminds me of when I taught one class of Jr HS kids (in retarded FL) to convert fractions to percents as follows: multiply numerator by 100%, then divide by denominator. The other class I taught: Divide denominator into 100%, then multiply by numerator.
THEN I taught each class the opposite way. Each class thought the way they learned first was MUCH better.
Many many many moons ago, we were taught percentages in school.
The teacher being “old school” was like a/b x 100 and that’s the answer and we all understood that “percent” meant out of 100 so there was an implicit “divide by 100″ in there.
Bad luck struck precisely 2 weeks after we were taught. They emphasized the ‘new math” where you had to do a/b x 100/100 and carry the second hundred around in the denominator to “emphasize the percent part”.
Being the young whippersnapper that I was I asked why bother when the answer comes out the same?
That got me into some serious trouble for being a “troublemaker”.
Shades of the housing bubble eons before the fall!
Is it possible to put some navigational tools there now, as there are six pages of posts? Like NE, SE, Europe, etc?
I’ve tried to read posts there, but the ads cover half of the first post in every case.
Yeah, I have the same problem, using Safari on the Mac. Glad to know it’s not just me!
Try firefox. It’s been less problematic in general for Mac.
unfortunately, in the past firefox has choked on large threads on the blog. That’s why I changed to Safari in the first place. Used to use FF, but it’d die on large bits bucket posts/comments.
I for one would like all discussions about gold to take place in the forum. Getting tired of seeing them here, like listening to a scratched 78 rpm record over and over and over …
Heya Ben, a suggestion. On the SMF forum, under the heading “Housing Bubble News - Local, Regional or Global” rename “New Board” to something like “United States” or North America, then create a few more (could have one per continent, or popular countries, etc).
Same with Wall Street, Washington, Personal Finance. Could have a subtopic for each under that heading. Wall Street Issues, Personal Finance Issues, and Politics or what have you.
One last suggestion. This one hurts (I’ve got a few SMF deployments, my favorite forum platform by far). It would probably be helpful if the table that contains the forum is the full width (say of the header, taking out the advertisement on the right). Maybe go to horizontal ads?
I’m superstitious about it, Ben….
ahansen, glad you are here!
Ditto. Always great to hear from Allena!
We wish you nothing but the best.
Hope you and the canines are in good spirits!
Ben, am interested(6mo-1yr) in prop Prescott, will appreciate your input via foreclosures, prices/links etc. will view on the HBB.
Thanks,
Fed coin melt bars are turning up in Europe and the Middle East.
For those who don’t know what they are, Fed coin-melt bars were produced from the gold that was seized by FDR in 1933 and the bars were safe-kept in West Point, NY.
These bars are .899 gold, which makes them inferior quality gold on the world market. It is thought that this is an indication that the Fed is running out of physical gold and the coin-melt bars represent scraping the bottom of the barrel in the price suppression efforts.
Interesting.
I just got back last week from a driving trip to see family. I checked with several coin dealers in two states. Most were out of bullion, and most made statements that they normally have a fair amount. A couple had just a couple of pieces (only one with one-ouncers), but wouldn’t part with them for less than about $100-150 over spot.
Silver - whoo - the only one who had silver would only let it go for $20 - double the spot price.
One dealer seemed to be tied in fairly well with the wholesale markets and ETF trading and such (said he paid big bucks for the access). He told me some things that were interesting, though most over my head. Something to the effect that the banks are trading way more PM options than they normally do, or than they should be, and that this was contributing to holding down spot prices. He said a large portion are expiring this week - and we may see some wild price movements as a result, particularly in silver, this week and coming weeks.
Yes, Packman…
Its because the hedge funds are deleveraging and using their gold stores for cash to make redemptions for their investors who want to cash-out. Couple that with consumer demand for gold coins and you have shortages (demand) along with an increase in sales due to the deleveraging which results in the situation you post.
~Misstrial
“… and the coin-melt bars represent scraping the bottom of the barrel in the price suppression efforts.”
“… in the price suppression efforts.”
Yeah, right. Everything that happens in the world is because of one huge conspiracy. Lol.
“What a fool cannot learn he laughs at, thinking that by his laughter he shows superiority instead of latent idiocy.”
- Marie Corelli
‘…thinking that by his laughter he shows superiority instead of latent idiocy.”
Well, jeeze, maybe it’s funny. Or maybe the fool is drunk, is all.
People need to know that someone is in control. These “price suppression efforts” seem to be working pretty well. With all the loans the IMF is making, I wonder how long it will be before they join the effort in a large way, in a scramble to raise cash.
Blue Skye,
Right, and just as the Fed/Treasury, they’re WAY outside their normal function. I can see lending to Hungary or S. Korea ( to buy OUR products ) but now it’s just charity.
Its not “someone is in control” its the hedge funds that are deleveraging their gold reserves to go liquid for investor redemptions.
The whole thing is out of control which is why the demand for gold is huge and yet with the hedgie deleveraging, the price is dropping for gold, silver and platinum.
~Misstrial
So that being the case, would you say:
- The deleveraging is via things like selling PM ETF’s?
- There is a limit to this deleveraging (e.g. when ETFs are held mostly without margin by people who don’t intend to sell them)?
- When that time comes, there’s a good chance the prices will skyrocket?
“Yeah, right. Everything that happens in the world is because of one huge conspiracy. Lol.”
No, I don’t believe that. I just believe there are massive efforts from on-high to mislead and confuse, on many issues.
IMHO, most of what happens to most of us day to day has much more to do with what we have done as individuals, rather than any conspiracy theory.
However, to trivialize the massive interventions in the markets by the Fed and their friends, or to minimalize the intended effects, on the U.S. DOLLAR, is naive.
You can bet your last freaking dollar that the PTB do not intend to make it EASY for anyone to neutralize or circumvent their self-seving policy decisions.
When you stand with a sack full of Kold KIng Kash on a slippery slope, the gradient of the slope and the size of the drop-off should concern you. Especially after sundown when the light of day and obvious potential courses of safe travel are absent.
Check out this slope if you want to see a black diamond run…rumors the FED will bailout CIT,and even GE goty a stock bump today..we just sent 30 billion each to Brazil,Mexico,Korea billions flowing like water…no, no chance of inflation..blah, blah. we shall see..
http://www.kitco.com/ind/degraaf/nov032008.html
I’m really have no opinion on gold (pro or con), but IMHO, the current price action makes sense. This is deflation folks, in case you haven’t noticed, everything is getting cheaper. Gold gets cheaper in a deflation as well, it’s only in inflationary environments where gold shoots up in value (because the dollar plunges).
What we are seeing, imho, is the biggest deflation of any of our lifetimes. Home values will fall about 30-40% (in real terms) before they reach bottom, that puts a massive deflationary pressure on the economy. We’ve all accepted that there is really nothing that can be done to fix this problem; which, imho, points to cash as the best store of value.
If you believe there is something that can/will be done to inflate the problem away, get into gold. Otherwise, cash is your friend.
Which price action makes sense, the rising physical price or the falling paper price? And when did the price of something fall when there is no supply available? I can’t recall any such time.
Hank and Ben are doing everything in their powers to inflate the problem away.
The question is: will they be successful, or not?
The correct question is: has anything they have done succeeded so far?
So… In the deflation associated with the Great Depression, how come gold didn’t get cheaper then?
The dollar was pegged to gold, apples and oranges.
Wheat dropped from $1.50 a bushel to a Quarter a bushel in the 1930’s, and Gold went up from $20 to $35 an ounce all the while…
Somebody please do the math.
Gold bugs regularly state, on this blog including, that gold is not a way to speculate and get rich quick, but it is the ultimate way of wealth preservation. If this is the case, than the price of gold should go down in deflation (or disinflation as Hoz likes to call it). I do not understand why gold bugs are upset about it.
“Somebody please do the math.”
I’ll bite. 1.50/.25 = 6
Wheat is going to 65c.
Gold is going to $167.
Math is beyond you. Anybody else care to figure?
7?
I really don’t expect to see wheat at 65c. $2 seems pretty reasonable, but you never know.
I’d also be surprised if gold fell below $250. By your math, gold would go from the longterm $400 to $700. I guess we’ve seen that. I called it for you a few months ago and you weren’t a believer.
See you at $650. There will be some support there, but it won’t hold. Your get rich easy model is busted. What’s plan D?
The dollar was pegged to gold, the peg was adjusted. The dollar (and gold) rose in value due to the deflation and the government adjusted the peg to allow printing additional dollars.
Figure what?
The dollar was devalued by 43% when they changed the peg rate.
Before: 13.3 bushels of wheat per oz of mellow yellow
After: 140 bushels
So, value of gold and dollar both went up when compared to wheat.
Dollar went up by a factor of six and gold by a factor of 10.5 (which matches back to the 43% drop in dollar to gold from the peg change).
I’m guessing now I’m supposed to ignore the fact that, in contrast to modern times, it was impossible* for gold to be in a bubble in terms of dollars since they were pegged?
Gold was money back then, now it’s not so much.
*Someone with a better understanding of historical monetary functions than I have (I’m guess FPSS probably fits) will likely point out that it was still possible for financial institutions to have more promisory notes than they really had gold. At least I *think* that has happened in U.S. history. But in any case in comparison to modern times with the dollar completely unhinged from gold, assuming away such a thing is probably safe for this conversation.
There were 5 different kinds of U.S. Banknotes in circulation before we went off the Gold Standard, but the only ones exchangeable for Gold Coins, were Gold Certificates.
Legal Tender Banknotes, National Banknotes, Silver Certificate Banknotes & Legal Tender Banknotes couldn’t be exchanged for mellow yellow.
Gold Certificate Banknotes were but a tiny amount of currency in circulation…
Did someone move the PEG?
where is the peg now?
Yeah, combo - what you said.
Goldbugs sure do abandon logic.
For ~40 years, gold has traded $300~$400. The only exceptions were two short-lived spikes: 1980/82 and today. The common denominator: extreme financial shifts.
I’ve heard explanations ranging from inflation to fiat currency to paper vs tangible prices.
Talk about over complicating things (hint: if gold moved with inflation, then it wouldn’t always trade $300~$400).
Anyone looking at a 5 year price chart for gold and any commodity (wheat, iron, copper, oil, etc) would come to the same conclusion: these suckers all raced up the same amount at the same time. It was supply/demand and esay money. It was Tulipmania for all assets.
But to acknowledge something so basic means that gold isn’t special.
If gold has traded between $300 and $400
for 40 years, why is it $756 now?
Gold is at all time highs in most currencies, the dollar being an exception.
The exception is probably due to the fact that many TRILLIONS of $$$ worth of deleveraging has to occur in $$$, a temporary situation by definition.
If you want $$$ vs Au, no problem, your call. All the gold I own is on my left hand, between pinky and middle finger. I like silver better at current prices.
Selective observation can bite you.
This temporary thing you mention, it’s just getting started.
Who’s saying gold moves with inflation?
I beg to differ on lumping together all the commodities, to some extent at least. Oil and grains are down about 50% just the past few months - gold is only down 15% (when you can get it).
People fail to understand that the “commodity” component of PM’s is very small. Their primary component is as a currency, and in fact more specifically as an insurance currency. Thus they doesn’t follow the rules of other commodities in chaotic economic times, because their demand is not driven by consumption the way that other commodities are. People don’t consume PM’s, except a very small portion used for electronics and such. People do consume grains, cotton, oil, etc. etc.
Just talked to a Bullion Brahmin in L.A.
He says there’s no physical supply of the precious available on the wholesale market, with the exception of a few Kilos (32.15 oz) @ $20 over spot per oz.
Nobody wants Kilos, as you get 1099′d on them when you sell em’ and unlike owning 32 1 oz eagles, you have to sell it all in one fell swoop.
Azman, here is some gold tidbits:
Gold was $35 in 1972: i.e 36 years ago.
(FDR pegged gold in 1933 after gold was made illegal to hold in USA, basically FDR confiscated gold at $20/oz and after confiscation he made it $35). From 1933 to 1972 gold remained at $35/oz.
From 1972 to 1980 gold went from $35 to $850. Then it busted.
And went down to $500-600. Then in 1998-1999 it was $272/oz.
Goldbugs speculate that gold might reach its former 1980 peak of 1980: in todays dollars it is ~$2000/oz, ($850*2.3=$1955/oz).
Another goldbug wisdom: normally in the days like these 1 unit of Dow is equals 1 oz of gold, and one average USA house (priced ~200K today is equals 100 oz of gold).
This is when you sell gold and buy Dow or house.
If you buy this simple logic: buy gold, if not keep your cash.
An older standard was one ounce Au = a month’s wages. That would be $2K by my son’s gauge. He’d be pretty screwed if they tried to pay him an ounce of gold for a month’s work.
One cannot afford to be a gold bug if one has practical obligations in today’s world.
Even worse for silver!
Skye,
You appear to be losing it, as evidenced by your mish-mash of vitriol against the precious…
Such a weak effort, I really expected more out of you.
Along the same lines, I have a question for the anti-gold crowd (PB et al).
While I can understand the deflationist viewpoint both in theory and by history, current events make me wonder if this time “it will be different.”
Peter Schiff has said sarcastically on numerous occasions, the government could “solve” much of our current ills but just giving every US citizen a $250,000 check. They could then pay their mortgage, tuition, buy stuff, etc. Now if that happened, would the deflationists then become PM bulls?
Well, the government hasn’t gone that far…yet. According to John Maudlin’s stats, Mortgage equity withdrawals were 693B in 2005, 686B in 2006, and 469B in 2007. Obviously it has got to be falling to 0 in 2008. If this “wealth” is to be replaced, the only source will be the government since house ATMs are history - we will need a lot of TARPS and rebate checks to replace this money stream. So a $1 trillion TARP & stim package in 2008 will just be the beginning and we may get even closer to what Peter Schiff sarcastically suggests. Many predict a $1 trillion deficit in the current fiscal year BEFORE the new administration does anything!
I believe holding precious metals is your only insurance against currency debasement which will grow worse regardless of who is in the White House.
You’d crash the dollar instantaneously, and with it the innumerous contracts written with a nominal figure in mind.
Not only all legal contracts would become “worthless” but you’d see SPECTACTULAR blowups in all derivatives contracts all over the place. The sum total of all blowups would be soooooooo powerfully deflationary that you’d pretty much reboot the entire world.
Everything from going to the movies to taking a ride on an airline would come to a standstill at the drop of a hat.
Theoretically, is this possible? Of course.
Would I lose any sleep over it? Not really.
mariner22,
To take it a back further, there has been 4.4T taken out of home equity since 2000. In my mind anyway, that IS “the number” if we’re to talk about filling holes?
Oh and did anyone notice the autos are squawking about making auto loan int. tax deductible again? Ah… the more things change..?
Frankly, ALL interest should either be deductible or non-deductible. It would be much better if MTG interest lost it’s “special” status; there’s no logical reason for it other then the govt’s desire to inflate home prices. I’d be happy if all interest was put in as a straight write off (no need to get above the std deduction), that’s really where it all belongs (which would also help housing a bit, and in a way I think we would all agree would be reasonably acceptable, nobody likes paying interest).
The RE mob got their grubby paws on that law change many years ago; it never made any sense (you can move debt from MTG debt to unsecured with the stroke of a pen, why should one be deductible and the other not??).
Michael Fink,
Right, and it’s those same grubby paws that moved ALL consumption… to “MEW-based” consumption. Prior to the change in the tax code ( mid 80’s? ) subprime loans basically didn’t exist. Most Americans were on a path toward true home ownership.
Since the changes, paying off your home is for suckers. As for the status quo, I think they’re on thin ice here as they’re blurring the distinction between a W-2 filer and a 1099 filer?
IMO, Mortgage interest deduction will not be eliminated but I can see it being severely curtailed or indexed according to some median…
I like your question Mariner. If PMs are our best insurance against currency default, then we should have some in our locker. Disaster insurance is rarely an effective “only strategy”. We need to check our charts, see how the wind is blowing, ans set our sails accordingly. If you put out the anchors, take down your sails and batten all the hatches while the sun is shining, you won’t make any headway. Ever.
I have a really big anchor as insurance, but I don’t go “all in” when I’m trying to make way.
A defaltionary wind is blowing strong and steady. The Real Asset ship is sinking and debt is an anchor rode around the neck. One only has to take their head out of their cockpit to see this.
Mariner22,
I agree that if the feds decided to start putting a few trillion in the pockets of the consuming public, deflation would become a nice roaring inflation and gold would be a great investment.
That would be one heck of a gutsy bet though.
“According to John Maudlin’s stats, Mortgage equity withdrawals were 693B in 2005, 686B in 2006, and 469B in 2007. Obviously it has got to be falling to 0 in 2008.”
I read somewhere that for the first half of 2008, MEW was 62B (1st qtr 53B, 2nd qtr 9B). Not zero, but ouch.
RE: the government could “solve” much of our current ills but just giving every US citizen a $250,000 check.
No bling for the hoi poli, but billions of Fed money for Pigmen bonuses.
What are your references for this info?
Why can’t the Fed print more dollars and use them to buy more gold, especially while the dollar price of gold is falling as it has recently?
Because gold isn’t the only commodity. If they printed enough dollars, and used it to buy all the different types of “inflation fighting” instruments; yes, that could work. But the scope/size of such an arragement is beyond even what the Fed can manage. It’s a global market, they would have to buy up (and remove from circulation, thereby driving prices higher) all the different types of instruments that people use to fight inflation.
And, honestly, I’m not even sure if (academically) that would work. It would preserve the value of commodities vs. the dollar, but would crater the dollar in terms of other countries currency. Hmm… Perhaps someone with a few more clock cycles to spend on it can figure it out. What happens if the Fed starts on a massive campaign to buy (and destroy/remove from market) commodities (to prop up the prices)?
PB - forgive me if I am missing any sarcasm, but why should the government care what the price of gold is? The government WANTS you to think the dollar is king. The government NEEDS you to think the dollar is king. Schiff’s whole point is that the dollar is an IOU being rapidly debased by the US mint, and the world will figure this out soon enough. Granted the dollar index keeps rising and many of Peter’s clients have lost more than US indexes, but it does seem illogical that the dollar will remain King as long as we continue increasing our deficit.
Gold is the insurance policy. Many have argued it is a stupid and historically unneeded policy, but we aren’t all that far from the US Government just printing tens (hundreds?) of thousands of dollars and just handing it to citzens to keep them in their homes. Sound far fetched? What would you say to $750 billion given to banks and AIG so they can keep paying dividends bonuses?
“Gold is the insurance policy.”
So are credit default swamps.
Wouldn’t the act of holding $’s tied to the Credit Default Swamp lay everybody waste deep in big muddy?
PB - a credit default swap is only good if the counterparty is solvent. Do you really think the US taxpayer is going to fund more and more of AIG’s payouts? They aren’t the only counterparty out there that will need a bailout eventually. Sooner or later the US treasury is going to say enough. Why give trillions of dollars to support bonuses and dividends? If we are going to be a socialist state, we may as well give it to the people (i.e. voters). CNBC is talking about companies’ TARPing, like Reagan used to talk about welfare moms driving up in a Cadillac.
This house of cards is going to fall sooner or later.
Had gold been retained as a component of bank capital, credit-default swaps would have never been invented.
A.E. Fekete
You are correct to note that the USD price of gold has fallen (on paper). AU remains at record highs in almost every other currency which begs the question is the USD or AU giving a false signal? IMO Buck has topped out; confirmation would be a break below 80 on the index.
Oh yeah, just inflate the currency a little bit more while we’re at it - as if we haven’t done enough of that already. Jesus Christ.
Boy, I’d sure love it if any of my posts would ever show up around here.
The interesting thing about these Federal coin-melt bars (.900 fine was the standard alloy of every Gold coin ever minted by the U.S. 1795-1933) is that it if you have the proper refining equipment (as our government must surely have?) it’s pretty easy to refine the metal back to it’s pure state-24K-which is also the standard purity in the marketplace, and has been for a long time now…
Why would you allow these bars onto the marketplace, as they could only come from one place (nobody does .900 fine Gold bars except us) and it shows a bit of desperation, combined with not covering up easily hidden tracks?
But then again, i’m not surprised by anything our ersatz leadership does, nowadays…
Which is why I have a REALLY hard time believing our gov’t is secretly exporting gold overseas …. Why and though they have pulled a lot of cr** lately this sounds absurd.
Happy Long Lines Voting Day!
In line ~#20 5:45am, out ~ 1 hour later.
I voted early. Glad I got it over. Go, Nader! (LOL, me and my conscience)
I’m not going to throw MY vote away! I voted for the Boston Tea Party…
http://www.bostontea.us
Same here pal…Nader is the only one talking about the real issues,
Like a few years ago sometime i go to $hitibank and pay cash on my credit card and it gets credited instantly. Well my due date fell on a holiday, so i went in the next day and paid it.
Lo and behold a few days later i get my bill and they charged me a default rate of 28%.
I hit the roof, now here it gets worse, they couldn’t readjust my rate back to its original rate and credit my account because the computer thinks i didnt pay my last months bill in FULL.
So I had to pay the default rate, and then they would credit me back the money in 5 business days…..which they didn’t so i had to do this all over again untill $hittbank finally admitted they screwed up.
Nader would have had a consumers bill of rights so CC companies could not do this on a whim. Or even worse jack up your rates because your credit score dropped but they wont tell you why..so you can dispute rf fix the problem….uh privacy issues yeah right
About 4 years ago I decided that I wanted to use one of my CC’s on-line and asked that it’s limit of $5K be reduced to $300. They said that the lowest they could go was down to $750, to which I reluctantly agreed. When I got my statement the interest rate on the card had gone from 8.9% up to 13%. Gotta lov them bankers! Of course I get the last laugh because I always pay it off.
Cut off your nose to spite your face?
Lowering your credit limit lowers your credit score.
And most (all?) CC companies offer one-time use credit card numbers for online transactions. Regardless, you aren’t even liable for any fraud that takes place on the $5K limit card.
“Go Nader”
Amen to that. Have only voted for a mainstream candidate once in my lifetime and cannot bring myself to make that mistake again. As Ralph says we have a one-party system, the corporate party and both candidates are owned outright by big corporations of one stripe or another. Too bad we don’t have a more parliamentary type of system with 10 parties or so. It’d be much more expensive for the PTB to buy all the candidates then.
For the first time, I voted third party (Nader). I felt as if I were finally voting FOR someone, instead of against someone! It felt great! I’ve always like Nader, but you know, it was that bogus “wasting your vote” BS.
You know what would be super-sweet (to me, at least)? If third party candidates took away a substantial chunk of the vote from the Dems and Reps. What a perfect way to relay a message of “no confidence.”
The hubby voted third party as well.
Grrrr…..I like Nader but everyone checking him off is essentially voting for President Palin.
I have a strong feeling a lot of these Nader voters would have gone for McCain otherwise. So their vote for Nader is a good thing!
I voted Barr, Libertarian Party.
“I voted Barr, Libertarian Party.”
You mean the guy that has Wayne Root as his VP Candidate ?
The Wayne Root of Las Vegas Sportsbook fame ? The ex-bookie ?:)
LOL
..
Much better an overt bookie than a covert bookie.
In the case of this year’s election - much, much better.
I’m voting for Barr/Root as the lesser of many evils. Being in a swing state - Virginia - I really have to grit my teeth to avoid having to vote for McCain, to try and keep that scumbag Obama out of office, but I’m doing it nonetheless.
At least a bookie would recognize what a credit default swap really is.
Ron Paul understands the issues better than Nader, and I voted for Nader in 2000. Listen to him lighting up Bernanke and then the archives of him lighting up Greenspan. I get $#it for voting third party but supporting more of the same is just as bad, if not worse, my conscience is clean.
Scumbag? Seek help….. quickly.
Perhaps the the word “scumbag” was harsh, but… google “Obama” and “civilian national security force” for a taste of what I’m talking about (there’s a youtube video).
“We cannot continue to rely only on our military in order to achieve the national security objectives that we’ve set,” he said Wednesday. “We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well funded.”
Sound familiar?
Sorry, but America is in for a rude awakening IMO.
Will they have their own fleet of black helicopters?
“Happy Long Lines Voting Day!”
Why do I have a sinking feeling its really all about the free Starbucks coffee you get if you show up with your “I voted” sticker?
For FBs and struggling Used House Salespeople, this is a treat.
I hope some of the regular posters on this site will go back to commenting on the real estate bubble after this election is over, but I doubt it. Will you now point your cynical, superior, capitalism hating rhetoric at your own nanny messiah? I wonder. Happy Election Day!
How’s that bitterness working out for you?
I’d say its working out better than stupidity is working out for you. Your posts are asinine, and I’m not even considering the political crap.
And watching the goldbugs dream of armegeddon fade rapidly.
schweet!
Strike a nerve? LOL @ you…
And you’re gonna love us even more tomorrow.
Evidently, for today at least, Chicago is at the center of the universe.
The big local story of course is tonight’s rally in Grant Park. Last week the mayor vigorously encouraged all to come down and celebrate. Over the past few days, however, his underlings have tempered that message and are now trying to subtly retract his blanket invite.
Downtown businesses must be really desperate since I’ve read how businesses ranging from florists to restaurants to even jewelry stores are staying open extra late thinking the crowds will boost their sales - if only for a day.
Meanwhile hotels have packed up with foreign journalists and local urban elites who booked suites overlooking the park. Quotes in the local press show that the latter group hope to share a JFK-like moment with their children.
Usually early November here is rather boring…and cold.
Well, hopefully it will be a “JFK-like” moment, and not a “DNC 1968-like” moment or a “1992 Bulls victory-like” moment!
Once the pack mentality takes hold, it becomes a doozey.
My voting station was jammed at a little after 7 a.m. — and the supervisor told me there were people waiting for him to unlock the doors at 6!
No matter who or what you believe in [even the gold standard] cast a vote and participate in your country!
On a lighter note, while driving this a.m., a car swerved a little in front of me, enough to catch my eye. I noticed a big puff of smoke come out of the driver’s side window — and a few seconds later I caught a little contact high as the stoner’s marijuana exhalation came through my vents and exposed me to the unmistakable smell of mary jane. Wake and bake, Election Day Edition!
I woke, I baked, I voted.
Lucky man.
Vote early. Vote often.
Yeah, always vote thrice. Preferably for different candidates.
A republican’s vote fifty cents and a wink
A democrat’s vote a dollar and a drink
If I vote for ‘em both, I’ll do better I think
And I might break even this year
-Lee Hazlewood
Democracy is the worship of jackals by jackasses.
- H. L. Mencken
“I’m against fishing in the rain.”
-Bocephus
Vote as a toke(n) of your appreciation in being eligible.
We do it by mail here in Oregon. You all should, too. Ask for it.
PA required me to have a good excuse to use mail. My excuse was, I expected to be in FL looking at flipper house I planned to finance. But I did that two weeks ago, so am in Maine. PA is just a wonderful place to pay state income tax without drawing the scrutiny focused on persons who pay none at all.
Yep, you can kick back on the sofa, research the candidates and measures, and place your votes.
10 min drive to the dropoff site, 5-10 min line o’ cars (at 11:30AM)….done….or mail-in if you can get into the mail on time (and aren’t a procrastinator like me).
About 50 people in line (if that) at the elections office.
Good system, all things considered.
In my area the lines were out the door and wrapped around the building at 7am. However it slowly worked its way down and now it’s down to zero wait.
Early/mid-afternoon (after lunch rush) is the best time to vote, if you can get out of work then.
On the lookout for The Great Decoupling:
AP
Oil prices fall as US economic woes mount
Tuesday November 4, 6:50 am ET
By George Jahn, Associated Press Writer
Oil prices fall on new evidence of US recession
“The latest set of economic data out of China suggests a much more severe economic slowdown is under way there. Hopes of even a slightly decoupled China in 2009 are fading fast,” the investment bank (Credit Suisse) said in a report.
“Oil industry analysts had believed he booming economies of India and China would pick up any slackening of demand if Western nations went into recession. That view has weakened in recent months, as the economic crisis in the United States spread across the globe.”
Main stream economists seem to think there is some “magic” to supply and demand and “paper money”. The demand in Asia cannot increase unless their income increases or savings decreases.
Thank goodness this election cycle is over! I was about to blow a head gasket!
Check out this immigrant story on NPR.
Housing Dream Backfires For Immigrant
(Professional, but $20K yr salary/16 properties)
http://www.npr.org/templates/story/story.php?storyId=96487190
I heard that story on NPR yesterday. The “owner” was delusional. He believes that the housing bubbles return is imminent and “this time” he’s “going to do it right”.
The delusion runs deep folks.
“The delusion runs deep folks.”
Good, keep feeding it. The economy needs the money flow coming from these delusional folks.
Besides, one man’s delusion is another man’s optimism.
Why don’t people call this situation fraud?
IT IS FRAUD, and these people should go to prision
“IT IS FRAUD, and these people should go to prision”
Those who led while this fraud took place need prison time to set an example.
“IT IS FRAUD, and these people should go to prision”
Agreed, but this is the land of Happy Meals TM. OTOH, I don’t see how the next president can avoid this issue; it’ll be addressed before long, IMHO. There will be several large class-action lawsuits in the hardest hit states that will set precedent giving direction to lower courts.
Brett …..I am also tired of outright Fraud being accepted as
OK just because someone wants the American dream
of wealth . Your not excused of Fraud just because some
crooked real estate agent and loan agent helped you out .These people usually recorded loans at the same time so Banks wouldn’t know what their holdings were ,(if the Lenders
even checked ). Until this Country starts viewing a good percentage of real estate transaction as criminal speculator greed ,along with the Bank or Investment House they were dealing with, the problems will continue .
I’m sick of the poor homeowner BS . Everybody got a false market because of these loan criminals ,and the Banks breached their duty to prevent fraud ,and the lenders agents even encouraged Fraud ,along with the real estate people .
Wall Street had no right to create a false market that in large part did take fraud in order to pull it off . We would not be having these problems if people even came close to qualifying for their home loans . What a joke that the economy was financed by loan fraud and faulty debt ratios .Maybe the Powers will start thinking in terms of having a real economy that actually produces something .
Housing Wizard,
Correct, that “strategy” was even advocated at seminars for the likes of a million Casey Serins’. By applying for multiple loans simultaneously you “can increase your leverage exponentially!” ( becuase that’s what real estate investing is all about, right? )
Where I happen to differ is that class action suits should be authorized for non-bubble states/non-participants against offender states. *Not “Kool-Aid States” against the lenders they helped dupe. Remember, each state has their own regulatory body that was ’supposed’ to oversee the underwriting process of these loans. That’s where it started.
One man’s fraud is another man’s free market.
Yeah, but those target states are all going bankrupt!
“Why don’t people call this situation fraud?
IT IS FRAUD, and these people should go to prision”
–
Nice thought, but due to the amount of people you would have to put in jail, millions, it would not be a profitable use of resources.
–
Agreed, let’s send them to work camps.
From the “trickle down theory”, free trade is good, weapons of mass destruction, to the wall street bailout, to the housing bubble NINJA loans the mantra is…FRAUD IS GOOD.
RE: The delusion runs deep folks.
C’mon Exeter, get with the program.
Look at this little gal…She’s all set for her free gasoline and mortgage payment
http://www.youtube.com/watch?v=P36×8rTb3jI
Oy, I like the euphemisms they use today:
“As the value of the homes he owned shot higher, he pulled equity out to buy other homes.”
He didn’t pull anything out of his homes. Instead he took out loans, using as collateral, money that didn’t exist. Maybe that’s a bit too harsh: he borrowed money on the assumption that, if needed, he could sell his houses to pay off his loans. The only reason he could make that assumption was that the houses prices were inflated. It’s turtles all the way down.
Not to mention that this is PG county.
Stock Futures Rise Ahead Of Presidential Election
NEW YORK (Reuters) - Stock index futures climbed on Tuesday as Americans headed to the polls to vote in the race for the White House, while an interest rate cut from Australia raised hopes of further aggressive global moves to ease an economic slowdown.
http://www.nytimes.com/reuters/business/business-us-markets-stocks.html
Futures up big this morning. No reason given other than the election.
I’m still going with my prediction of a flat to down market over the course of this week. Today may be up, but I think the rest of the week will be down - I think the “hope” gains are already built in.
It’s because the markets anticipate an Obama victory, and they are also anticipating more regulation and fiscal discipline, something the Bush Administration (and presumably a future McCain one) lacks.
Perhaps they are also looking forward to looking up to America again after 4 years of “cowboy diplomacy”.
It’s curious given that October GM car sales fell by 45% YOY yesterday (Chrysler/Ford sales off 30+%), Circuit City announced it was closing a fifth of its stores, new manufacturing orders were much lower than expected, etc.
As usual, the fundamentals are terrible but the manipulated markets keep heading for the sky.
The markets are dysfundamentional for sure.
Julius,
I just don’t think there were any surprises there? Besides, like many, I’ve predicted a rather large downsizing from these electronics retailers for years. Not only is there no real break-through technology ( on the consumer front ) but I also feel the avg. American is starting to see all that technology as an “instrusion” in their life.
They’ve saturated the youth market w/ gadgets and everyone in the country ( that doesn’t post here ) already has a big screen/Hi-Def TV! I got a flyer yesterday for DishNet for $19.95 a month ( and there’s STILL nothing to watch! )
The continuing failure of the American auto industry should certainly be bad news to most investors. Aside from the jobs/real estate/capital/etc. tied up directly in the Big Three, it can’t be forgotten that a great deal of the Rust Belt’s economy involves manufacturing various parts for the Big Three + Caterpillar, John Deere, and other heavy industry manufacturers. If those companies’ products are selling poorly, that means bad news for an awful lot of people employed in middle America.
Julius,
Oh I agree, it’s just that at 49 years old I’m trying to think of a time when the autos *weren’t* struggling? The Onion did a beautiful video piece on “The right to have a cr@ppy job” that was absolutely hysterical!
It’s not just ‘our’ auto mfrs. that are struggling. It’s a saturated and mature market on a global basis. I remember when Tower Automotive went under and they were around almost as long as John Deere! The Heavies are a different story, but that doesn’t excuse MW’s reliance on them?
Back when I was a University of Michigan student, the auto industry’s downward slide was underway. And that was during the late 1970s.
The car companies had lost a good bit of that “cool job” appeal. You didn’t want to admit that you were considering a job with them. Instead, the hip new field to go into was computers. Matter of fact, one of my classmates went that way and became a multimillionaire.
“I’m still going with my prediction of a flat to down market over the course of this week. Today may be up, but I think the rest of the week will be down - I think the “hope” gains are already built in.”
That’s my guess too, Packman: once the election is settled, we’ll see some profit taking.
SKF and EEV could do well. I’ve been tempted all morning.
my guess same. Oops, three goods can equal a bad, like three doubles in Parcheesi?
I had an order in for SKF at 110.20, but it didn’t get filled. Tomorrow I will probably be wishing I could buy it for 111 (the after-hours price). Still, in all the times I’ve traded it this year, I’ve only held it overnight once. I don’t make as much, but I can sleep.
Libor going down and credit markets easing up. Wonder why?
http://biz.yahoo.com/cnnm/081104/110408_credit_market.html
“Libor rates have been trending downward since mid-October, when the Fed took the unprecedented move to flood 13 central banks around the globe with unlimited amounts of dollars.”
Unlimited dollars = zero value…..danger, Will Robinson!
Lending rates fall to pre-Lehman levels
Less than a month ago, 3-month Libor was at 4.82%, and the overnight rate was at an all-time high of 6.88%. Lower rates are a major boost for the strangled credit market because more than $350 trillion in assets are tied to Libor.
http://biz.yahoo.com/cnnm/081104/110408_credit_market.html
Does anyone else find it odd that the $ amount of assets tied to libor keeps getting dramatically larger with each article?
Another take on the silver lining to the current economic scene:
http://news.silverseek.com/SilverSeek/1225695000.php
Comment by aladinsane 2008-11-03 12:40:34 (yesterday)
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.
Storm and stress! How best to expose the true nature of the world?
“past experience of what happens when things go dreadfully wrong”
The Depression gave my family many stories that stay with us. To summarize briefly, my family scraped by on the old farmstead growing food and selling butter and eggs to educated people in town. The lesson we took from this was not that the farm was a good refuge, but that lacking an education meant being left on the bottom of the social ladder and on the fringe of social networks.
War has thankfully not contributed directly to my family history, but there are some events that make for useful comparisons: New England ice storms are, or at least were, more common and more devastating than similar weather events elsewhere. At first such storms seem much like any others. Rains start things off by melting accumulated show and ice, but then it gets just cold enough for rain to freeze as it falls and it stays that way. The meltwater from the start of the storm freezes into a slick layer. After a few hours the situation becomes difficult. Roofs creak, tree limbs break, roads become impassible except to specially equipped vehicles. Then it keeps getting worse as ice continues to form on everything layer after layer. Even well constructed walkways become so slick one cannot even stand or walk on them. Wires come down, and pipes freeze or burst or both. Even the best equipped vehicles end up stuck on the side of the road. This goes on through the night and continues all the next day. After a couple days of this society as it was known comes completely apart. Almost nothing man made works anymore, and no one can get around.
It is at that time when everything has come apart that people band together. Climbing gear gets used to build rope bridges all around town. Able people form groups and methodically visit stranded neighbors and trade necessities. Those who do the best are the well known and respected people in town. Those who do the worst are older people living out of town who have few if any social contacts. Education, town living, and social networks serve everyone best. Those in the city are able to withstand the storm the best–far better than those a short commute away because they have more stored, and have the broadest networks that provide the most opportunities for assistance and sharing.
The lessons our family took from this have to do with the nature of value and wealth. The old woman with almost nothing who smiled and waved at everyone had volunteers from all over town looking in on her and donating food and supplies even though pretty much all she ever had was her home, a small savings kept in a local bank, and a positive attitude. The bitter tax evaders that lived well outside town didn’t get any visits or donations and some watched helplessly as their homes burned down to the ice on the ground.
“imagine the future”
It is always difficult to discern the difference between the future and its enemies. One of the keys is to always remember that the future, the real future, is always something beyond what we can imagine. It takes more than imagination to see the way forward. It also takes a disciplined look back and a finger on the pulse of today and a willingness to accept that history always rhymes, but never actually repeats.
“what to expect, when the unexpected shows up”
That is exactly the problem. The truly unexpected always looks strange when it first shows up.
The recommendation that storing gold and living on a farm outside of town means safety is something that I can understand, but not relate to. Rural situations are not particularly safe for minority members, especially in trying times. Gold tends to be useless in a crisis. If anyone knows you have any, then your house is almost certain to be broken into. Growing food is easy and most suburbanites, who are a majority of the population, can grow enough for themselves and a surplus rather easily. Distribution turns out to be a more important and difficult problem when times are really tough.
So, aladinsane keeps insisting that the way to go is to hoard metals and live a self-sufficient, rural lifestyle. My alternative approach, which I think is based on more applicable experience and logic, is to store only some necessities while living an educated, urban, and heavily networked lifestyle. There are probably other approaches that are worth consideration because we are all only ever guessing about the nature of the future.
Probably the most important thing, is that you at least think about it. You can’t be prepared unless you’ve done some consideration. I would prefer the rural environment, but I can understand that people more accustomed to an urban environment would prefer that, there is something to be said about staying in the environment you know best.
Rural situations are not particularly safe for minority members,
Frankly, this isn’t true, or it’s a severe overstatement. It’s like saying urban situations are not safe for white people, also a severe overstatement.
It’s true that my skin is too light to be in certain urban environments (especially during certain economic times in which crime rates are higher), but to say I should completely stay out of NYC is absurd.
Similarly, I know of certain rural areas that dark skinned people probably shouldn’t go (or at least keep passing through), but to say that’s true of all (or even a majority) of rural areas is equally absurd.
Most places are populated by people, and most of us are mostly the same. Even in areas where one or another racial group might be advised not to travel, it’s not b/c of most of the people there, but really b/c of a few clowns.
Being a stranger would probably be worse than living in either a rural or urban area. Having deep roots and knowing people who you live with is probably most important, even if you are the only person in the area of a particular color.
I have started watching reruns of McGyver so I can learn some tips on survival.
I have stocked up on string, bubble gum, and what is the other stuff he uses?…
I wave and smile to everyone I can. I hope they vote for me, or give me a hand someday!
“and what is the other stuff he uses?”
Duh, Swiss Army Knife and a mullet!
Clearly you will die if we steer into MacGyver territory.
Duct tape, don’t forget the duct tape. And the occasional chocolate bar, vinegar, and some phenolphthalein.
thanks, duct tape- check,
chocolate bar- check.
lots of chocolate bars- check check check
and some vinegar-check
and that pheno stuff- still looking!
I have to agree about the “town” thing. Winter 06-07 I left my stuff in a way-out-town-house on the shore, so had to have a roommate to make me feel my stuff was safe. This winter my stuff will be left in the middle of a small Maine town, in an apartment in a 5-unit building, where three of the other four tenants know me to varying degrees, and we have all been cordial. My lock is eminently breakable but I don’t think I’m going to worry about it.
RE: This winter my stuff will be left in the middle of a small Maine town
AZ_Lender…out of curiosity-where you hangin’ at in ME?
“So, aladinsane keeps insisting that the way to go is to hoard metals and live a self-sufficient, rural lifestyle. My alternative approach, which I think is based on more applicable experience and logic, is to store only some necessities while living an educated, urban, and heavily networked lifestyle.”
This end of world BS is insane but for $hits and giggles, I would not want to go it alone. Surviving hard times requires interdependencies not found in the Ted Kazinski Handbook for the Lunatic Fringe. Introspectiveness shouldn’t be confused with a Gilligans island scenario as none of us are a rock, island or superman.
Self-sufficiency can only get you so far…
We had a 2 hour meeting with our neighbors last night, and combined-our strengths are amazing, with little overlapping.
One neighbor is quite simply the finest hands on engineer i’ve ever seen and can fix anything and his wife has quite a green thumb, another neighbor & his wife have lived here forever-and literally know everybody in town. We have real wealth (not here, stored overseas), as my neighbors are now finding out-is better than perceived wealth and their 401k retirement hopes and dreams are fading bad. One of our neighbors said his is down 45%, in just 5 months time. We’ve clued them in to the real likelihood that the U.S. Dollar might not be worth much sometime soon, as well.
My wife and I decided that we should be the financial glue
in our tight little neighborhood in the back of beyond when push meets shove, and with most excellent neighbors (one has a fully developed orchard with all trees around 10 years old and all bear fruit) that have paid-off houses-just like we do, and we’ve had years to get to know one-another, it’s a great fit.
We aren’t one-trick-ponies either, in that we bring extensive backcountry experience (along with requisite survival skills-naturally) honed after decades of walking & climbing all over the High Sierra, imagine having Survivorman for a neighbor?
================================================
Do you any of you really think big cities are the place to be when the hunger pangs of false entitlement bear their fangs?
There’s still time to get away and find yourself a little piece of America…
Still time for Ex to buy my cabin in the woods….
Why bother buying it today when one of my brothers/uncles/cousins will “save” you tomorrow? Besides, I’d wager they already have your money from the first transaction.
“Do you any of you really think big cities are the place to be when the hunger pangs of false entitlement bear their fangs?”
If you will truly help your neighbs as you’ve described, right on…
As for the above quote, I think you’re viewing the world through your L.A. filter. Post 9/11 NYC was an incredibly caring and loving place for 3 weeks straight.
It was beautiful.
No looting, no riots… just friends hanging out, strangers caring for each other, bar owners feeding emergency workers.
There will be an incredibly caring and loving 3 week period @ the start of world-wide depression that lasts many years?
“Growing food is easy and most suburbanites [...] can grow enough for themselves and a surplus rather easily.”
I think you are seriously overly optimistic on this point. Maybe during the growing season, sure. But how many of these folks are prepared to store enough food to get through a winter? I could learn, but I’m woefully unprepared for that, and I have the benefit of having watched my mother do some canning/freezing as a child.
Your points about the importance of community make good sense, though. But I would point out that is also something that is entirely missing in many cities.
“….So, aladinsane keeps insisting that the way to go is to hoard metals and live a self-sufficient, rural lifestyle. My alternative approach, which I think is based on more applicable experience and logic, is to store only some necessities while living an educated, urban, and heavily networked lifestyle. There are probably other approaches that are worth consideration because we are all only ever guessing about the nature of the future.”
I agree. I once asked an elderly woman how she made it through the Great Depression in San Mateo (Bay Area, CA) - well, she said she and her husband had a few chickens in the backyard, a vegetable garden, had some fruit trees and both lived below their means and were debt-free.
Folks today can make it by shopping at farmer’s markets and getting to personally know the people who grow your food. Over the hill on the way to Half Moon Bay, you can get free spring water out of a pipe next to the road. Shopping at used book stores, especially for how-to books and magazines. Brewing your own coffee. Walking to perform errands if you live near downtown (like Palo Altoans, for example). At the very least, getting a sewing kit and making your own clothing repairs so that your clothes last longer; maybe even sewing your own clothes with an old Bernina sewing machine and serger for knits. Learn to do the things our parents did: auto repair, home haircutting, cooking at home, etc.
Urban people can do it. The thing is to be adaptable and willing to do things you’ve never done before. Even if you have no gold coins.
~Misstrial
“So, aladinsane keeps insisting that the way to go is to hoard metals and live a self-sufficient, rural lifestyle.”
Incorrect. Aladinsane’s plan is safe passage to a private island in the Pacific where he can swim about his gold, by himself, like Scrooge… and not the Dickens Scrooge, but the Disney Scrooge.
You know the cartoon duck guy with the eye piece?
And, if all goes to plan, nice normal people will be reduced minions of hell a la Event Horizon while he profits from their death through his shit-eating, Cheshire grin.
It’s just another play in the asshole’s guide to the post-bubble apocalypse. But hey, at least he’ll have gold while the rest of us plod on with friends and family.
When I was a kid, I used to think one day I’m gonna collect enough money and have it all in coins (silver would have been fine, I wasn’t picky) and swim around in them like Uncle Scrooge.
Thoughtful post as always, Moleman. Thanks.
“…Rural situations are not particularly safe for minority members,”
Gotta call BS on this one, though. Locals are locals.
And no, you can’t grow a cow in a suburban backyard– and fruits and vegetables are seasonal at best. Grains take a lot of land/water, and you’ll get sick of eggs in a hurry.
If you’re at the mercy of your utility companies, you’re in trouble when they stop delivering. (This includes cell phones during and after EM pulse events. Also your puters and the contents of their memories.) Water is always nice, adequate sewage/trash disposal is even nicer.
As our greedy little friends in creative finance have discovered, it’s best to hedge. Friends in the city, a good pair of hiking boots, friends with acreages and resources…. Keep all your options open, maintain a variety of skills and contacts, and have something to barter. Then just enjoy your life wherever it leads you and stop worrying about “the future.” Because, (all together now…)
Every-body-gets-it-in-the-end!
Uneffing believable!
Records show Boseman owns property in foreclosure
By Gareth McGrath & Veronica Gonzalez
Staff Writers
Published: Monday, November 3, 2008 at 9:03 p.m.
Last Modified: Monday, November 3, 2008 at 10:15 p.m.
Winnabow | In public records, it is state Sen. Julia Boseman who owns a white, double-wide trailer with mismatched-colored shutters in Brunswick County – a property under foreclosure.
Javier Castillo and his wife, Maria, live at 2096 Old Mill Creek Road, and they believe they’ve owned the property since January 2005. Moreover, they have documents to prove Boseman was in the process of selling it to them.
A spokesman for Boseman’s campaign said the New Hanover County Democrat hopes to work out a deal with the bank to retain ownership of the property about 20 miles from Wilmington and says the senator has done nothing wrong.
“She is confident she can work something out and that the family can continue to live there,” said Tom Keating, Boseman’s campaign manager.
But he said he was concerned about details of a private financial matter involving Boseman coming out on Election Day and had questions about how the matter came to light. (Cont’d)
A NC state senator!
Hoping fellow NC HBBers see this before they vote!
Leigh
http://www.starnewsonline.com/article/20081103/ARTICLES/811030258/1015/NEWS0101?Title=Records_show_Boseman_owns_property_in_foreclosure
‘Mismatched-colored shutters?’
The Horror…
Anybody still wondering why the politicians are trying so desperately to prop up house prices?
In the past month, lower prices are gaining momentum in backwater WNY. I see more “price reduced” and “priced to sell” listings, noticably off peak wish, some at 60% of assessment. One in my target description, 1500 sqft ranch with garage and 16 stall barn (new roof too) on 5 acres on main road, in the $60K range. Amazing, almost like a glimpse of the 1990s.
Raw land around the lake that never freezes doesn’t seem to trade at all.
General Electric orders 25 China-made jetliners
Deal seen as solidifying its role in aircraft leasing services, engine supplier.
ok wingnuts. why does GE purchase Chinese aircraft then leaseback to Chinese airlines?
short answers please.
GE Aircraft Engine deal? It makes sense in that GE designs the gas turbine specific to the airframe and then maintains plane.
another hidden gem, sometimes I wonder about the intertubes and obfuscation.
To avoid taxes while getting a government bailout?
Geez, that is good news. I was afraid I would have to start looking for Made in China labels when I fly.
lol
GE is the exclusive engine supplier on the ARJ-21. I would bet that part of the deal was that GE’s aircraft leasing division buy a number. Since they alrleady have a Chinese customer, its a win-win for GE.
Do recall that GE is one of the big four aircraft leasors as well as the current #1 engine vendor. I believe the GE CF-34 win (that’s the engine on the ARJ-21 Chinese jet) was more political/business than a technical win.
With the MRJ coming out soon with much better economics, I do not see any Western orders for the ARJ-21. In quick summary it has the following faults:
1. High weight (which means elevate fuel burn) for its capabilities.
2. Relatively inefficient engines (the CF-34 was engineered as the first high-bypass turbofan for the A-10 Warthog! As the smaller fan TF-34.)
3. So-so baggage space (this is important on certain runs, e.g., to the carribean).
Its advantages are:
1. A very aerodynamic wing designed by the Russians
2. Excellent short field performance (mostly due to the wing/flaps).
But the Mitsubishi MRJ will also have excellent aerodynamics and good (but not quite as good) short field performance. The MRJ is also going to be much more efficient (partially due to the ‘Geared Turbo Fan’ Pratt engines that are far more modern than the CF-34’s). Also, the MRJ will be CFRP (carbon fiber), so it will be able to take more abuse between major services (this really cuts costs in this market).
The question is will the ARJ-21 be good enough to compete with Embraer’s current E175/E190 (powered by CF-34’s). From what I can see, the only advantage the Chinese jet has is short field performance. In overall performance, the E-jets are already superior to the Chinese design. (Weight savings on the Embraer more than make up for the new Russian Designed wing.)
How that for the wingnut answer?
Got Popcorn?
Neil
your post was hidden for the bulk of the day.
Chinese F.I.R.E. drill?
Yep. Leverage.
Like GE doesn’t have enough already!
Plus, I’m sure there are depreciation-based tax-boondoggles somewhere in our extraordinarily simple and elegant tax code.
I am obviously a wingnut, since I am answering to your post…
lol
same reason Citigroup sold its headquarters in NYC last year and leased it back.
hozzie baby,
I still got you straight square in the crosshairs.
Is kickbacks to management the right answer?
It could be that China is paying GM or bribing them with future business for the good PR.
China wants to sell its own planes but everyone knows that they are crap.
What better way to get a gold stamp of approval than to have them bought by a US company. There is no way that they will be used here, but folks don’t focus on details.
Scary thought, flying on a Chinese-made jet. If they can’t keep their powdered-milk industry straight, who can guess what corners will be cut in putting together a multi-million-dollar airplane?? I think I’d be inclined to wait twenty years or so and see how many fall out of the sky, before flying on one.
An acquaintance of mine, who had spent many years in the Far East in the USAF, then later as a consultant in both the civil and military areas, summed it up:
“In general, not enough generations between the water buffalo and the airplane.”
Gulfstreamfixer,
Awesome! That about sums it up. Not enough intermediate steps. For many years PAL ( Philippine Airlines ) had zero fatal accidents. I think since inception they’ve had (1) crash.
It’s all about being brought up in a certain “maint. culture”. When I was in the service the first thing they tell you is there’s no ‘unimportant’ part to that airplane! Even the wheel chocks are paramount! Every cotter pin could be sucked into the intake for crissakes! Assemble on the bow for a FOD Walkdown! It’s important for the boot camps to understand, this isn’t like a car ( you can’t just pull over to the side of the road! )
Maybe the spread on the gov’t (our!) money they can now access and what they can charge in the Lease makes $$$ sense? Wingnut out.
This is common in the airline business.
It basically allows an airline to “rent” their airplanes.
The lead time on an airplane purchase is many years and certain monies are due along the way. This allows the airline to only have to start paying for the aircraft when it enters its fleet rather than when it places the order.
What he said……
Airlines aren’t in the “airplane ownership” business anymore.
Most of them (other than AA) aren’t in the “airplane maintenance” business anymore, either.
They are in the ticket-selling and “operations” business.
They are also in the “derivatives” business as witnessed by the heavy speculation using futures. Putatively, they are “hedging” their fuel prices but they seem to be a doing a lot more than that.
nobody picked up GE making the engine.
value added.
the leaseback is Yuan gravy.
Leasing companies often have so many new model airplanes sown up that airlines are in the back of the line for desirable new models, hence they have to lease.
Sucks for the airframe makers if a large leasing order should collapse because then you have to sell them all over again.
I think if I tried to explain why certain posters are hidden from view, I would probably start scaring myself.
DEWEY DEFEATS TRUMAN !!!!
The Reckoning
From Midwest to M.T.A., Pain From Global Gamble
By CHARLES DUHIGG and CARTER DOUGHERTY
Published: November 1, 2008
“People come up to me in the grocery store and say, ‘How did we get suckered into this?’ ”
IN WISCONSIN “This is something I’ll regret until the day I die,” said Shawn Yde of the Whitefish Bay schools.
On a snowy day two years ago, the school board in Whitefish Bay, Wis., gathered to discuss a looming problem: how to plug a gaping hole in the teachers’ retirement plan.
It turned to David W. Noack, a trusted local investment banker, who proposed that the district borrow from overseas and use the money for a complex investment that offered big profits.
“Every three months you’re going to get a payment,” he promised, according to a tape of the meeting. But would it be risky? “There would need to be 15 Enrons” for the district to lose money, he said.
The city that thought it was immune to the housing bust, Vancouver BC, Canada, is now falling faster than any US market. Move over, Miami!
Down 10% from peak in 6 months
BULLETIN
U.S. FACTORY ORDERS RETREAT SHARPLY
U.S. Sept. factory orders down sharply for second month
By Greg Robb
Last update: 10:00 a.m. EST Nov. 4, 2008
WASHINGTON (MarketWatch) - U.S. and foreign businesses sharply cut back their demand for capital equipment for the second straight month in September, the Commerce Department reported Tuesday. Factory orders fell 2.5% in September, much weaker than the 0.2% fall expected by economists surveyed by MarketWatch.
It was only a dozen times worse than eCONomists figured.
What’s an order of magnitude between friends?
It looks like Wall Street has that already priced in?
“After a patch of slow growth, the economy should start to rebound in the second half of the year thanks in part to the government’s $150B economic stimulus package passed with bipartisan support in January.”
That’s sooooooooooo 1Q.
Financial Times
Wave of losses looms for shipping industry
By Robert Wright in London
Published: November 4 2008 02:00 | Last updated: November 4 2008 02:00
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 plunged 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 yesterday, while traders who bought cash-settled products through private transactions, known as over-the-counter trades, have until Friday to settle.
Imagine the good ship lollyprop having just 3 months worth of imported goods on hand here in the states, with no expectation of any to follow?
Consumer-Cargo-Cult
I don’t think you have what is happening with shipping in proper context. It is raw materials that is not shipping, Dry Bulk. The commodities bubble is burst. Hoarding is out.
Lack. of. Demand.
At least gold is holding up reasonably well (thus far)…
What comes first, the consumer without money to buy anything, or the ship not bringing stuff to buy?
If you are desirous of Chinese goods @ their lowest possible price ever and greatest selection imaginable…
The after xmas sales should be just about give-away time, and after this inventory is gone, most replacements will be totally AWOL, as the ships aren’t sailing much, and the few replacements that get through will be much more expensive in price.
Man………I thought we won the “Battle of the North Atlantic”
20th century warfare: Ships torpedoed by torpedos.
21st Century warfare: Ships torpedoed by “derivatives”….
The god of “unintended consequences” must be rolling in the aisle right about now.
Actually, the collapse of the Baltic Dry is basically the financial equivalent of Smoot-Hawley.
Which is ironic.
What comes first, the consumer without money to buy anything, or the ship not bringing stuff to buy?
Preceding these 2 steps was the first necessary step of lack of foolish lender willing to lend to FB leads to FB doesn’t have the credit (never had the cash) to buy toys; toystore doesn’t need to re-order as often so delivery ships aren’t going to be as busy as before the Great Credit Unwinding (or Return to Sane Lending Standards). Step 1 finally happened during 2008, steps 2-3 may play out for years (decade).
PortlandHomedebtor
Why the heck would this derivative be useful to anyone and why trade it? It is it a hedge for future shipping costs? If so, don’t the shippers know they are slow and should stay away from this, or is this just another example of the Wall Street types gambling with something they are clueless about? I don’t know squat about this market, but maybe they didn’t either
Here is some
usefuluseless information about gambling opportunities in dry bulk shipping.Mad Money Recap
Cramer’s ‘Mad Money’ Recap: Bulk Up on Dry Bulk Shippers
10/17/07 - 08:15 PM EDT
, DE (Action Alerts PLUS PICK) , FWLT , SLB , GNL , EBAY , UA , LULU , GME
TheStreet.com Staff
Investors will profit if they devote attention to the dry subject of dry shipping, Jim Cramer told viewers of his “Mad Money” TV show Wednesday.
Nobody talks about dry bulk shipping stocks because they’re boring. “I can’t throw pies or wear funny clothes when I talk about dry bulk shipping,” Cramer said. The money to be made on these stocks, however, is very exciting; they provide “huge and reliable dividends,” he said.
Dry bulk shipping stocks have risen enormously since July, when Cramer recommended them. “This industry is one of the great bull markets in the world right now,” he said.
…
Cramer finished discussion of dry cargo shippers by selecting two of his favorites. Of the conservative variety of dry shippers, Cramer selected Paragon (PRGN Quote - Cramer on PRGN - Stock Picks) over OceanFreight (OCNF Quote - Cramer on OCNF - Stock Picks), seeing bigger upside with Paragon.
Of the riskier shippers, Cramer selected Diana (DSX Quote - Cramer on DSX - Stock Picks) over Genco Shipping & Trading (GNK Quote - Cramer on GNK - Stock Picks). Diana is up 17% since July and offers a 6% yield, giving it an edge over Genco.
This is actually the origin of ALL futures trading and dates back to the Silk Road. Back in the day merchants had no way of knowing what the next caravan would bring so they developed a system to balance prices based on expectations for ‘future’ demand/supply.
The futures began trading the minute the last camel left.
I find this subject quite fascinating. And I have a great fondness for indexes which appear to be above the risk of political manipulation.
Two ugly charts for the price of 1. Baltic Dry and Crude. Very tight correlation as well.
http://investmenttools.com/futures/bdi_baltic_dry_index.htm
Thx for the awesome graphs. This one tells quite a story in and of itself:
“FXI & Baltic Exchange Dry Index (BDI)”
Glad to actually give you some useful info for a change PB This is a market I never knew about and I am very glad for that.
Was everything a bubble?
Yes.
The WH is in disarray about how best to rescue homeowners. It appears they may be a day late and a trillion dollars short.
Wall Street Journal
* NOVEMBER 4, 2008
Homeowners Wait as Relief Plan Drags
By DAMIAN PALETTA and DEBORAH SOLOMON
WASHINGTON — Disagreements over how to structure a federal foreclosure-prevention program are complicating and potentially delaying what is likely to be the Bush administration’s last attempt to forestall sliding home prices.
The White House and the Federal Deposit Insurance Corp. are at odds over basic questions about the effort’s size and breadth, several government officials said. The expectation that a new president could immediately redraw the design and scope of any plan has further delayed matters.
…
The FDIC’s plan was believed to be in advanced stages and some government officials felt it could have been unveiled last week. Several officials said the plan is strongly opposed by the White House, though officials there deny killing the idea.
“Anyone telling you that they know the White House position on any of the various foreclosure mitigation plans — plural — that we are reviewing is a liar,” White House spokesman Tony Fratto said.
Treasury Secretary Henry Paulson agrees with FDIC Chairman Sheila Bair that the administration needs to take additional steps to help homeowners, but has concerns with some aspects of Ms. Bair’s proposal, according to people familiar with the matter. Among his concerns is that sharing eventual losses with the government could give lenders an incentive to push homeowners into foreclosure.
P.S. When I said “a trillion dollars”, I was not being literal; I just wanted to throw out a large number (kinda like $700 bn).
If there has to be somebody from the White House that’s going to lie to us about the financial situation, i’d rather have Dana be the bearer of faux news, than some wiseguy named Tony Fratto…
I like to watch her on the telly, with the sound turned down.
Anecdotal evidence of a bad economy???? Twice in the last 2 weeks I took advantage of 30% off coupons at an online retailer. Normal time would be 6 days to my house. These orders both arrived in 3 days, 2 days ahead of the UPS expected delivery date they send with tracking info. My anecdotal conclusion: the company is hurting as (1) they are offering 30% off and (2) shipping the same day as you order (it used to take 1-2 days so my guess is the warehouse is slow?). UPS is also down as they are moving packages a full 2 days quicker, including a very fast in/out at a major sorting center and again in a matter of 2 hours in my region. I don’t know if it is significant or just BS, but it is very interesting.
I do a fair amount of ordering myself for work, and posted just last week that my shipping notifications are coming the same day I place an order when in the not too recent past they usually took a handful of days to pop into my inbox. Stuff is most certainly arriving faster.
I ordered my Halloween costume a couple weeks ago and the order came the next day! (It was a bear face mask ’cause I went as a housing bear which no one got but that’s another story.) So to me it appeared that both the costume company and UPS were dead enough to offer expediated service. Granted it was only coming from Irvine, but still ordered, packed and shipped on the same day, delived the next day without next day delivery fees.
Look at it as a positive.
As short-handed as most companies have tried to operate lately, maybe the demand has shrunk to the point that the system can efficiently handle it.
I haven’t experienced merchandise arriving early. So far things have arrived when UPS predicted they would, not earlier.
I mailed a priority package Saturday morning 10 am here in Long Island city and they received it on Monday at noon
in DENVER………..that’s almost overnight delivery!
Just bought SKF @ 116. Callin’ the top on this bailout rally. You can call me an idiot if I am wrong. Going off to vote for Ron Paul today.
During periods of low inflation the stock market will be over-valued.
Modigliani and Cohn (1979), “Inflation, Rational Valuation and the Market” Financial Analysts Journal.
the spread in stock yields to bond yields is the narrowest it has been since 1963. The question is will the stock/bond yield go back to where it was from 1873 - 1958. (Stocks had a larger yield than Treasuries since there was more risk).
http://www.safehaven.com/article-11751.htm
“During periods of low inflation the stock market will be over-valued. ” Compared to bonds ?
Stocks were thought to be riskier than bonds so paid a higher dividend back before 1958. Then a growth era started maybe thats over ? What that means for inflation verus deflation ?
Bonds don’t like inflation. During inflation I would guess investors would sell bonds and buy stocks driving stock yields lower. During deflation investors will buy bonds and sell stocks so dividend yeild would go up on stocks and down on bonds like it was back in 1958. If you think inflation is coming back then I would guess it won’t cross back. And if it does cross then Deflation is back like in the 1930’s. Back when stocks were riskier than bonds
what do you think ?
Deflation.
No matter what, the underlying current is most definitely deflation (in a BIG way).
The only way inflation can occur is if the Fed and Treasury work together to pump more money than deflation is taking away — which they are doing.
It’s possible, and that’s probably exactly what they are trying to do. Not saying they are wrong, but they are going about it the wrong way, IMHO.
When you go to vote today, just remember: IT’S THE ECONOMY, STUPID.
Downbeat economic news expected on Election Day
By MARTIN CRUTSINGER – 11 hours ago
WASHINGTON (AP) — After months rife with uncertainty and unprecedented events that have roiled and reshaped Wall Street, at least one major unknown should be cleared up Tuesday — who will be the country’s next president.
Investors are likely to focused more on the presidential vote — and what the winner will do to deal with the nation’s biggest financial crisis since the 1930s — than the latest batch of downbeat economic data due out Tuesday.
…
An economic report Tuesday will only add fresh detail to the economy’s bleak picture.
Wall Street economists expect the Commerce Department to report that September factory orders declined for the second straight month, as consumers and businesses cut spending in the wake of the economic slowdown.
And the day before voters set out to elect the 44th president, economic reports brought more bad news Monday.
The widely watched Institute of Supply Management gauge of manufacturing activity plunged in October to its lowest level since the country’s last deep recession, the 1981-82 downturn.
And automakers reported terrible October sales figures. Sales sank 45 percent at General Motors Corp., 30 percent at Ford Motor Co., 25 percent at Honda Motor Co. and 23 percent at Toyota Motor Corp.
The Commerce Department’s report on construction spending Monday showed a 0.3 percent decline in September, the third drop in the past four months.
“We are now deep in the belly of the recession beast,” said Bernard Baumohl, managing director of the Economic Outlook Group.
No, no, no!
It’s gay marriage, abortion and flag burning, PB! Can’t have the Pinko Commies running this place!
Sheesh, you’d think some people around here would get their priorities straight.
Roubini on the sinking symbiosis. This was a highly predictable development, IMO. (I predicted it quite a few times myself right here!)
The Rising Risk of a Hard Landing in China: The Two Engines of Global Growth – U.S. and China – are Now Stalling
Nouriel Roubini | Nov 4, 2008
For the last few years the global economy has been running on two engines, the U.S. on the consumption side and China on the production side, both lifting the entire global economy. The U.S. has been the consumer of first and last resort spending more than its income and running large current account deficits while China (and other emerging market economies) has been the producer of first and last resort, spending less than its income and running ever larger current account surpluses.
Nobody in their right mind believed the “decoupling” argument.
This sucka’s going down hard.
I figured the sole purpose of the decoupling argument was to lure greater fools to purchase assets at peak bubble valuation prices.
You attribute too much “purpose” to these clowns.
I’d just go with “wishful thinking” with a free serving of suckerage on the side.
You are probably right
Never attribute to malice that which can be adequately explained by stupidity.
Basically, that was my gist.
Today looks like a great opportunity to get some FXP.
FPSS: yep, I know. And I like your modern-day re-statement of the classic.
(What’s FXP? Thanks.)
FXP = 2x-leveraged short FTSE/Xinhua 25 ETF
I you loved it at 170, you’ll really love it at 60.
Yeah, I think we’re gonna get it on the cheap at 70 or less.
Same for SKF, EEV, EFU, SDS, and their cohorts (at different prices, of course.)
Too many people believing in magic. This bear market has claws so wait for the monkies to take it up, and ride it down one last time.
Yeah, I think we’re gonna get it on the cheap at 70 or less.
Same for SKF, EEV, EFU, SDS, and their cohorts (at different prices, of course.)
You pretty much got your wish today. SKF scares me with all of the massive interventions, but I’m fine with the others.
You’ll have more chances. This bear market rally also has some legs.
I hear you loud and clear on the SKF (and agree with you.)
FPSS, what do you think about DUG? It looks pretty cheap to me at prices below 35.
Commodity prices are outside what I understand (or even commodity traders understand.)
No good trader trades the price. They trade the basis.
I can explain to you how DUG works. I can explain the mechanics of how it works. However, since I have no clue about where oil is headed, I can’t have an opinion on its price.
Contrary to popular opinion, I don’t have an opinion on all subjects.
I answered your question but I’m guessing Ben’s blog replies need approval. So it didn’t come through.
Come back, Ben. We need you.
Just be careful with DUG, it is ultra short oil and oil service stocks and not crude oil and has been decoupling a bit.
FXP @ 65 seems like a great entry point, its where my order is in… though I don’t think getting your feet wet today is going to hurt you.
Market rally days without corresponding motion in the bond markets always smell funny to me. Anyone else?
This rally has a skunky smell to it, sweet & sour.
I agree; just got some index puts, so I’m hoping it’s a ephemeral as it looks to me!
sounds like a good plan, maybe I will too
Recall that Obama has called for a higher capital gains tax.
That provided an incentive to sell anything that was ahead before next year, to get the lower 15% rate. Some may already be buying back in, with more to come next year.
Of course if the rate increase goes through, there will be an incentive to sell losers — but not if there are no winners, since only a small amount can be offset against ordinary income.
After all the political stuff, we get back to the fundamentals.
Great shorting opportunity up ahead. Observe the convergence of 50 day moving average and the indexes during the overall downtrend. Wait for it.
There we go! Finally things are moving.
How does it look to you guys now that bonds have rallied?
Anyone hear this on NPR this morning?
School in Wisconsin, leveraged to the hilt, are losing thier a$$.
My favorite part,
As the sun rose, Mr. Yde searched for explanations by the light of his computer screen. He Googled “C.D.O.’s.”
Well Mr. Yde, maybe you should google “C.D.O.’s” BEFORE you drop two-hundred mill, most of which is borrowed money, on them.
lmao
That’s from the Times — all the TP that’s fit to print. Let’s skip to the classic section:
“I’ve never read the prospectus,” said Marc Hujik, a local financial adviser and a member of the Kenosha school board who spent 13 years on Wall Street. “We had all our questions answered satisfactorily by Dave Noack, so I wasn’t worried.”
You know a brighter bulb wouldn’t have given that quote to a national newspaper given the inevitable lawsuits? Those banker lawyers are gonna make mincemeat out of him.
The sheep are truly sheep. They never learn, do they?
That stood out to me as well.
Since the story we had here the other day about the financial advisor adding and subtracting yearly percentage gains/losses, I’m now operating under the impression that anyone baring the “financial advisor” label is a step above a retard and two steps above a realtor.
Hey Dave, we gonna make money on this deal?
You betcha! You guys are gonna look like geniuses!
Dang Dave, you sure do give satisfactory answers. Lets go get a beer!
I had occassion last week to appraise a house whose owner is a Capt. on an oil tanker.
He is a very talkative type. Too many years at sea I guess. At any rate he was telling me that tankers are moored all over the coast empty. He also said that the ship mooring is regulated by the oil dudes and are often held offshore until the market makes a move in their favor. Thus, market manipulation. I was not surprised in the least as this is simple business but at the same time I wondered how many billions were simple B$ maneuvering.
He also stated that the oil companies move their ships around and have this or that done while fully loaded so as to keep them out of the refinery line as they have to report who is in port etc. He stated that they would havhe him dock here for awhile then pull out and go back to sea for a few days and then back to offload. This is costing us $30,000 a day in fuel costs.
Apparently that $30 k is paultry compared to a full load at a higher price.
Interesting, DD.
Having absolutely no knowledge of the oil industry, I would have thought the refineries agreed to a price ahead of shipment. From what you say, it sounds like they negotiate the price at delivery. Doesn’t sound very smart, but who knows?
Lad, skunky? As in sour diesel?
“Landsbanki Debt Settles at 1 Cent on the Dollar
What happens to unsecured bondholders when a financial institution goes bust? A good place to start is to look at the settlement price in CDS auctions. Fannie and Freddie settled in the high 90s: yes, there was a credit event, but from a bondholder perspective there were few if any losses. WaMu settled at 57%: a much more painful outcome for fixed-income investors. Lehman, of course, settled at a gruesome 8.6%, leaving unsecured bondholders pretty much wiped out. But even that seems like a wonderful outcome compared to the result of today’s Landsbanki Islands auction: the final settlement price was just 1.25%….”
Felix Salmon
Poof and all cuz of cod wars with England.
Impressive.
Looks like Labor won their own “Falklands War”!
1-1 and it ain’t even half-time.
Who’s next?
Uncle Buck is giving up. Now down over 2.5%.
Good time to be diversified into gold or FOREX.
I wouldn’t go long any currency where they are cutting rates and/or the carry trade is imploding.
Not yet anyway.
For the record, I like gold. Just not yet.
Its going to be fun to watch the Obama supports switch from negative mode to happy economy mode once the election passes.
This election wreaks of a false choice.
Real Estate Markets Most Likely To Rebound
The Urban Land Institute recently asked 700 real estate professionals to name the best (and worst) places to invest in commercial real estate in the coming year. Those surveyed included private developers, Realtors and Real Estate Investment Trust executives.
These traits landed Seattle the No. 1 spot on the list. No city scored above a 6.15 on a scale of one to nine (one being an abysmal place to invest and nine being excellent).
Seattle is “a diversified market, has a good base of business and is becoming a 24-hour city,” says Stephen Blank, senior resident fellow, finance, of the Urban Land Institute. “It’s going to be in a good position to come back.”
Although the city is suffering from the loss of Washington Mutual (nyse: WM - news - people ) and the downsizing of Starbucks (nasdaq: SBUX - news - people ), Boeing (nyse: BA - news - people ) and Microsoft (nasdaq: MSFT - news - people ) are still relatively strong. Apartment vacancies are low and there aren’t too many new buildings going up, meaning the market won’t be oversupplied. The same is true in the retail space.
San Francisco comes in second with a 6.12. The City by the Bay learned from the tech crash of 2001 not to overbuild. There is a reasonable supply of office and apartment space, which should limit vacancies. San Francisco’s port is also expected to help the city during the downturn as Americans continue to rely on Asian imports.
Washington, D.C., New York and Los Angeles round out the top five.
Of course, there’s no guarantee that an improved commercial market will lead to an improved home market. However, investors have a better chance of seeing home prices rise in fundamentally strong markets like Seattle than in struggling cities like Detroit.
Odds (and bettors) are on electoral favorites
Not believing the polls? Check out the call made by political-futures markets
By William Spain, MarketWatch
Last update: 9:15 p.m. EST Nov. 2, 2008
CHICAGO (MarketWatch) — If you want to pooh-pooh the pundits and polls and get the real scoop on the likely outcome of Tuesday’s presidential election, it’s worth taking a look at what political-futures markets — or even Britain’s myriad bookmakers — are saying about the best shot at calling the winner.
From online “predictive markets” like Intrade or the Iowa Electronic Markets to the betting parlors of London, traders and odds makers alike have compiled astonishingly accurate records of predicting outcomes in U.S. elections, from the presidential race all the way down to the state contests.
And business is brisk.
MCcain wins today and the world is saved at the last minute! thank god.
Department of Economics
Discussion Paper 2007-08
On the Efficiency of AC/DC: Bon Scott
versus Brian Johnson*
Robert J. Oxoby
Department of Economics
University of Calgary
Calgary, AB T2N 1N4
“…Among musicologists, researchers of popular culture, and rock and roll lovers of all ages there exists a common debate. That is, with respect to the rock band AC/DC, who is the better vocalist: Bon Scott or Brian Johnson? The band’s original vocalist, Scott, performed on seven of the band’s albums (excluding live albums and compilations), passing away in 1980. Brian Johnson joined the band in 1980, serving as vocalist on nine albums (excluding live albums and compilations). Since 1980, there has been near constant contention regarding who was the better singer.
In this paper, we explore this issue. Since it is difficult to ascertain which vocalist was better given the heterogeneity of musical tastes, our analysis does not focus on the aural or sonic quality of the vocalists’ performances. Rather, using tools from the field of experimental economics, and we consider which vocalist results in individuals arriving at more efficient outcomes in a simple bargaining game. Our results suggest that having participants listen to songs by AC/DC in which Brian Johnson served as vocalist results in participants realizing more efficient outcomes. Thus, in terms of a singer’s ability to implement efficient behavioral outcomes among listeners, our results suggest that Brian Johnson was a better vocalist than Bon Scott.”
http://www.econ.ucalgary.ca/fac-files/rjo/wp0807.pdf
I am a Rolling Stones fan, but that is because Mr. Mick Jagger went to the London School of Economics. Currencies are collapsing, trade is shutting down, corporations are failing and an economics department writes a paper on who sounds better. Another fit article for the Journal of Irreproducible Results.
jir dot com
If the crisis gets bad enough, I expect irrelevant research to lose its govt subsidy.
I’d so much sooner throw good money on bad research than on bailouts.
No harm done. No particular consequences. You get to laugh too. It’s like paying for a comedy club.
I’m a huge AC/DC fan. Their last GREAT album was Back in Black.
Anybody with functioning eardrums picks Bon, hands down.
Mike
Crude futures climb past $70 to touch a 2-week high
CURRENCIES
Dollar falls sharply vs. euro, other rivals as U.S. voters head to the polls
By Polya Lesova & William L. Watts, MarketWatch
Last update: 12:33 p.m. EST Nov. 4, 2008
NEW YORK (MarketWatch) — The dollar fell sharply against the euro and other major currencies Tuesday, as equity markets surged on a further bounce in risk appetite and commodities rallied across the board.
The dollar index (DXY 84.66, -1.70, -2.0%) , a measure of the greenback against a trade-weighted basket of six currencies, fell 1.6% to 84.51, down from 86.350 late Monday.
The euro surged 3.4% to $1.3012, up from $1.2641 in North American trade late Monday. Earlier Tuesday, the euro hit an intraday high of $1.3027.
“We are in the midst of what looks like a dollar correction lower,” wrote currency strategists at Brown Brothers Harriman.
“Implied volatility has continued to fall, suggesting the euro could move higher in coming days with market participants likely to look past today’s U.S. presidential elections toward what could be horrendous jobs numbers on Friday,” they said.
“…You may be interested to know that global warming, earthquakes, hurricanes, and other natural disasters are a direct effect of the shrinking numbers of Pirates since the 1800s. For your interest, I have included a graph of the approximate number of pirates versus the average global temperature over the last 200 years. As you can see, there is a statistically significant inverse relationship between pirates and global temperature….”
from Open letter to the Kansas School Board
http://www.venganza.org/about/open-letter/
Religion of the Flying Spaghetti Monster!!!
My homies, dude, you’re talking about my homies.
I’ve always disliked the Pastafari movement. Their approach does little to further their cause; satire does not work on the population that needs to understand evolution.
We may also explain the difference between science and ID and why ID is not science and vice versa. Pastafarians don’t want this, they just want to laugh at people and insult them.
Yes, I have a sense of humor, and the letter is funny, but if you live in the SE you know that the issue deserves more than an Onion-like treatment.
Naah, this is the same as the Scopes monkey trial.
You remember Spencer Tracy and Katherine Hepburn in Adam’s Rib?
Well, you the monkey, nigg@@, and this be the Spokes Monkey Trial. Those Pastafarians be eatin’ the Kansas fools for lunch just like Spencer.
This is the most fun you should have at the expense of your “fellow” Americans.
I’m glad that the election is over and can’t wait for the big hangover starts. The MSM has done a great job telling us how the next President is going to solve all our problems, now it’s going to start the big soft back peddling to mitigate expectations that can’t be delivered. More and more jobs are going to be lost going into the holiday season, more and more hopes are going to be dashed. More high paying jobs and union jobs will be lost and any health care reform will lower the health care to those who can’t afford a supp. policy.That old saying about be careful what you wish for is coming home to roost.
As for me, any stimulus package is always welcome for investment into foreign market stock or commodities market.
Nah, there are still 70 something days to keep blaming everything on Bush.
Heck, the first two years, Bush will still get the blame for everything.
Is this the New Real estate scam? Read carefully:
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=260302030766&category=0
Nah, I have watched these types of auctions on ebay for a few years, and you have to read the fine print to see the Down payment is the auction.
But I almost did bid on a 2 different houses that went for 40k and one for 13k, the second you just had to move it. I wouldn’t have bid unless I did due diligence, but they sure looked good on “paper”.
Clever and slippery ones!
Down payment vs price - ah the deception.
Great catch,
Leigh
The newest trend in commercial businesses will be to put all their property (mortar and brick) into a new corporation and sell REITS on the corporation and then lease back the property.
How well do you think those will sell?
That could be the catalyst to help CRE start moving lower, which it should eventually and dramatically. In the face of a sharp economic slowdown, the demand should drop significantly, carrying rents down right along with it.
on TARGET
not a new trend. an old game. False transaction process, in order to create margin maintenance.
Mccain wins! and it’s all obama’s I mean bush’s fault.. dodged a big mess~ smiles everyone smiles!
Note regarding short sale of a stock that is ‘obviously’ destined to crash: It can take over four years for Mr Market to finish bottoming out, with head fake rallies along the way down.
(scratches head)
OK you lost me on that one.
- SBUX has crashed already, and it’s only taken two years not four.
- Short sellers typically don’t wait for full-blown crashes, at least that I’m aware of. I don’t at least - I shorted SBUX at 24 and covered at 19 just a few weeks later.
I am however waiting patiently for the ultimate downfall of many homebuilders :-). Been short in many of them since ‘06. They’re a… persistent… lot.
I don’t think many short sellers do that much though (thus the term “short”).
Here I had thought the problems in the housing market were caused by a very long duration, but ultimately unsustainable, series of government interventions to falsely inflate U.S. housing demand. I stand corrected.
Financial Times
Keynes had no sure cure for slumps
By Edmund Phelps
Published: November 4 2008 19:10 | Last updated: November 4 2008 19:10
What theory can we use to get us out of the impending slump quickly and reliably? To use the “new classical” theory of fluctuations begun at Chicago in the 1970s – the theory in which the “risk management” models are embedded – is unthinkable, since it is precisely the theory falsified by the asset price collapse. The thoughts of some have turned to John Maynard Keynes. His insights into uncertainty and speculation were deep. Yet his employment theory was problematic and the “Keynesian” policy solutions are questionable at best.
Banks spoke of the downturn in house prices as an effect of some sort of shock. In their models, random shocks are forever knocking asset prices from forecast values. In fact, no quake or drought or other exogenous force caused prices to drop. The prime cause was forecasting with badly mistaken models. Speculators and home buyers, thinking that rentals or building costs would go up, bet on higher house prices in future, which also raised the price of existing houses. But over the years neither rentals nor costs (in real terms) budged. If they did not rise, (real) prices would sooner or later have to go back down.
“…random shocks are forever knocking asset prices from forecast values. In fact, no quake or drought or other exogenous force caused prices to drop.”
Is collective stupidity classified as random in this framework?
Exactomundo. When the government gets involved, with their “help”, all models can be thrown out the window.
Just got back from town, and I see that a gallon of regular is $2.39 down at the Island Market fuel pumps.
Say, does anyone think that coloring my entire person blue for all of tonight’s victory parties is over-the-top?
What’s that you all say? You all think that’s a good idea?
Me, too! I’m gonna use Magic Markers!
Only if we get pictures out of it.
Preferably with a Lereah/Yun/Paulson/Bernanke effigy somewhere in the background.
coloring my entire person blue for all of tonight’s victory parties is over-the-top?
Maybe if paint is all you wear.
Gas $1.97/gal N. Idaho…. move over taters!
Just eat some green meat, instead.
Checking out CNN election coverage online, and they were talking to two “undecided” voters. How freaking stupid is someone, to not have figured out who they’re voting for after this unbelievably long, drawn out campaign? Do us all a favor and DON’T VOTE!
Its easy to remain undecided when you dislike both candidates as much as I do. If I were in a state that “mattered”, I very well might be in that category.
As a volunteer poll watcher/precinct cptn, I have spoken with some lovely people, and recently one that was clueless. Lawdy, help us.
FSPP, what do you think about DUG? It look pretty cheap to me at prices below 35.
Saw a bank communique’ sent to a deadbeat who can’t pay any of his debt. The bank had closed out his account 60 days ago but the communique said that they would forgo fees, etc and grant a 24% reduction in principle if he would pay the remaining balance within 20 days. Bank, WaMu!
On the other hand I bought a piece of art that I’ve been wanting this past weekend (been waiting for more than a year) at a savings of 30%. Great time for cash.
I think I figured out why the dow was up today. The election is rigged and the network of hedgie buyers just got the signal that the fix is really in the bag. McCain wins the election!
No he’s lost the election.
Although you are correct about the hedge funds. Most of them, particularly George Soros (Soros Capital Management), support Obama. Why?
They believe he will redistribute your wealth so that they won’t have to part with theirs.
~Misstrial
Financial Times
Deflation risk boosts inflation target case
By Krishna Guha in Washington
Published: November 4 2008 20:22 | Last updated: November 4 2008 20:22
The risk of deflation could lead Ben Bernanke to approach the new administration and Congress next year about adopting an inflation target at the Federal Reserve, some experts believe.
The Fed chairman thinks it is unlikely the US will actually experience deflation – he judges that the starting level of inflation is too high, expectations too well grounded and the policy response to the financial crisis too vigorous for that to happen.
It just don’t matter, sweetheart, it just don’t matter.
It’s called J-O-B’s and I assure your sweet economist @ss that Bernanke can have NO possible impact on that situation.
If he inflates beyond belief (which is the empty threat), we wil not only have the mother of all depressions but a total financial collapse. We might have to meet in person in some other country.
But they know the drill as well as I do if not better, so a buncha clueless journalists aside, I wouldn’t get my knickers in a knot about it.
Where’s the booze, dude, I ask you, where’s the fuckin’ booze?
I am feeling OK, actually. The more I think about it, the more I realize that California would do OK in autarky. We have crops, we have wine, we have fish and we don’t really need much of the crap that gets unloaded off those Chinese container ships in the ports of Oakland and LA. Now I admit that Japanese automobiles come in handy, but we already have some of those out in the garage.
http://2.bp.blogspot.com/_H2DePAZe2gA/SRBf9TUGbkI/AAAAAAAAGRY/5USD2Xb22T8/s1600-h/usdxjy110108.png
I dont know if this is gonna post, but look at the tail waggin the dog.
I say, this is the indicator of choice for contrarian investors.
since my last post got knoced down.
try FXY:SPY on the chart.
97.50 will get tested…..
We are at a game changing momment.
YES WE CAN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Bob the Builder?
AND YOU CAN, TOO!!!!
Ok Clue as I ponder the early returns and realize that a black man will be POTUS or since the most pressing problems will be cleaning up after 8 yrs of garbage maybe he should be Janitor In Chief. Pretty soon, they might even let an Oregonian transplant of Native American ancestry via California, Texas or Arizona (Marty Robbins was from Arizona and he wrote his best songs about Texas) vote. Hippie commie etc. etc.
Meanwhile back at the oasis the arabs were eating their dates. Rereading ‘Ender’s Game’, looking for something to buy or sell. Long Japan - no reason to sell - blown out of all my currency positions - hit stops. Maybe I’ll buy a bank and ask the G for a loan and pay myself a bonus. Pay my taxes and go to Rio.
I hope it isn’t just a “now its our turn to feed at the trough’ election. I loved the Farmers Labor Party - the best beer.
So some mopey economists a few weeks ago write a paper in the Fed that the credit crisis is a myth - typical Minneapolis research.
LOOKING BEHIND THE AGGREGATES:
A REPLY TO “FACTS AND MYTHS ABOUT THE FINANCIAL CRISIS OF 2008”
“Conclusion
Our analysis has shown that the claims regarding the financial markets and the mechanism through which they may affect the real economy are largely supported by looking behind the aggregates of publicly available data. Having said so, we would like to point out the need for a more thorough analysis than the simple plots we have provided here. After all, there are many other confounding factors that make interpretation of these numbers difficult. For example, it is hard to even understand what it means to observe a decrease in lending. Simple plots cannot help us disentangle the extent to which changes in new bank lending are caused by banks cutting lending or by decreased demand for loans due to a slow-down in the real economy.”
http://www.bos.frb.org/bankinfo/qau/wp/2008/qau0805.pdf
There are some neat graphs in this paper. Simple plots? maybe, but a lot of work. A long time ago in a galaxy far away….Fed Wars.
Denial will only get them so far before they become laughing stocks.
The credit crisis is actually the result of the true credit crisis. Bad decisions at banks and financial firms made a few years ago are having their impact now. I am looking forward to good decisions.
If an organization as large as the Fed did not have some pretty vigorous dissent, I would be truly frightened. They need people with a variety of outlooks to get it right. The Fed as an institution ignored the housing bubble until it was too late. They really could have used a few guys who read Ben’s blog and spent some time thinking about how to deal with this before the SHTF.
Congratulations America!
For what?
~Misstrial
For electing a new president. For not swallowing appeals to fear and suspicion. Time for someone else to pick up GW’s tab. Congrats to Prez. elect Obama, or should it be condolences?
Here’s a hip tip.
Expect everything to get MUCH WORSE under the ObamaNation administration. Everything you can imagine. Much. Worse.
Going from frying pan to fire is a CHANGE.
Change is coming alright. Enjoy.
Prepare to have your wallet picked even more as the controllers of Congress and the Oval office spread your wealth to the losers.
Your wallet was picked during the last 8 years of runaway spending on credit. Now it’s time to pay the bills. Blame all you want, but your government has to live within its means, and it’s going to hurt.
Bingo, knockwurst.
Can’t think of a time in recent history when we’ve been so financially raped by a president and his cohorts.
Thank God the sheeple woke up for this election. For the first time in many years, I actually feel happy about our (future) leadership.
Though the standards we’ve set for him are unrealistically high, I firmly believe President Obama will be one of the most successful and well-liked presidents in U.S. history. It’s an historic day, and there is finally hope for this country.
My wallet has been picked over the last 8 years with my wealth and my childrens futures given to criminals. Tax cuts that benefit the top 1%. Ceo’s and hedge fund managers raping their companies and customers and then cashing out with 15-20% tax rate on earnings ie about half what I pay. War profiteers wining no bid contracts and billions lost and unaccounted for in Iraq. National park land handed over for pennies on the dollar. I’ve paid for this with a collapsing economy and in the very near future massive inflation.
At least we won’t have to endure McCain’s socialistic plan to “buy up all the bad mortgages” now.
YES!!!
Tonight has renewed my faith in this country.
Savor the moment. I could not have foreseen it even a decade back.
Good luck, President Obama — you will need it, given the state of the nation you will inherit.
You are so NAIVE…….
Make solar panels so efficient you can use them 300+ days a year for less then $5000 per house…..no more imported oil.
Or better yet how about Iran wanting to end all aggression and to establish diplomatic relations with Israel?
THAT will restore my faith in America
“Make solar panels so efficient you can use them 300+ days a year for less then $5000 per house…..no more imported oil.”
If this is technically feasible, why isn’t some company making these and making buckets of money selling them?
not mine, we still elected from one of the corporate parties
Amen, Bronco! Meanwhile, I’m so glad we were able to accomodate Auntie Zeituni with publicly subsidized housing AND a small stipend for her “work” as a “public health advocate” (whatever that is) DESPITE the fact that she is not a citizen of the US. Come one, come all!
Wall Street Journal
NOVEMBER 5, 2008
Luxury Sales Drop Sharply
By JENNIFER SARANOW
In another sign that the luxury market is getting hit hard, MasterCard SpendingPulse says luxury sales dropped 20% in October from a year earlier.
Luxury “had been benefiting from some international tourism and that is starting to dry up,” said Michael McNamara, vice president of MasterCard SpendingPulse, a MasterCard Inc. service that tracks spending of all types. October’s decline was much steeper than the category’s 4.8% drop in September.
Shades of the mid-80s in the Texas oil patch?
Wall Street Journal
BUSINESS NOVEMBER 5, 2008
Texas Feels Economic Pinch As Oil-Price Drop Hits Home
By BEN CASSELMAN
FORT WORTH, Texas — The sudden end to the energy boom is sending a shock through resource-rich regions of the U.S. that until now had been bright spots amid the nation’s financial turmoil.
The torrid pace of oil and gas exploration pumped billions of dollars into regions such as North Texas, bringing stronger housing prices, lower unemployment and soaring tax revenue as drilling rigs rose in urban neighborhoods. Many residents benefited directly from royalty checks and land-lease payments that soared toward $30,000 an acre as recently as this summer.
“We were all sitting over here in a kind of blissful stupor enjoying a great market compared to the rest of the United States,” said commercial-real-estate broker Jack Huff. “Until 30 days ago, there was no feeling at all that anything going on in the rest of the country affected us.”
Not anymore.
BLUEPRINT
NOVEMBER 5, 2008 Los Angeles
Market Is Softening, But Analysts Think Worst Is Yet to Come
By MAURA WEBBER SADOVI | SPECIAL TO THE WSJ
The City of Angels’ property market is looking more earthbound, as the global financial crisis is beginning to play itself out in the region’s real estate.
Of course, real estate in and around the nation’s entertainment capital already has taken some hits this year as the region’s Countrywide Financial Corp. and IndyMac Bancorp Inc. were among the highest-profile casualties of the crisis. In addition, slumping imports into Los Angeles-area ports have hurt warehouse demand and housing prices have fallen.
Now brokers say the property market in and around the city is bracing for even tougher times as budget-conscious companies are looking to trim real-estate costs. Already-declining demand for office space in the Los Angeles region, one of the country’s largest office markets, is expected to accelerate, says Whitley Collins, senior managing director of the Los Angeles region brokerage for Jones Lang LaSalle Americas Inc.
He sees a worst-case scenario in which metropolitan area companies over the next 12 months could put as much as 10 million square feet of office space back on the market and rents could decline by as much as 25%. “We’re seeing a softening, but we’re not nearly seeing the softening we’ll see,” Mr. Collins says.
“He sees a worst-case scenario in which metropolitan area companies over the next 12 months could put as much as 10 million square feet of office space back on the market and rents could decline by as much as 25%. “We’re seeing a softening, but we’re not nearly seeing the softening we’ll see,” Mr. Collins says.”
The commercial real estate market is in for serious pain, and not just in LA. The overbuilding has been remarkable, and the vacancies and price declines should be as well.
Wall Street Journal
CREDIT MARKETS
NOVEMBER 5, 2008
Ahead of the Curve: Slump Looks Long
Steepening Yield Spread Points to Tough Recovery as Credit Markets Continue to Founder
By MIN ZENG
NEW YORK — An indicator of economic health, the yield curve, is signaling that the recovery in the developed world is going to take a long time.
The benchmark curve measures the gap between the yields on two- and 10-year government securities. When the economy is weak, the gap tends to widen as interest rates are cut to aid growth. Short-dated yields, the most sensitive to policy changes, fall more than their longer-dated counterparts. As the economy recovers and rates begin to rise again, the gap narrows.
With central banks around the developed world cutting rates to fend off a recession, the benchmark yield curve in major government-bond markets already has significantly steepened. It is a sign of just how troubled the economic outlook is that investors expect the curve to steepen further; in the U.S., they see it widening beyond the levels seen in 2003.
“The peak of the yield curve will be much higher this time,” said Steven Major, global head of fixed-income research at HSBC Holdings in London.
Can we call the economic situation a recession now that the election is behind us?
U.S. elects Obama as world gripped by economic crisis
Wed Nov 5, 2008 1:23am EST
By Kevin Plumberg
HONG KONG (Reuters) - Barack Obama’s convincing win in the U.S. presidential election ends a source of uncertainty for global investors but does not change the grim realities facing the world economy.
Asian shares hit a three-week high and the dollar extended its gains after Obama captured the White House over Republican rival John McCain at a time when the world’s biggest economy is likely in a recession.
That followed the biggest Election Day rally ever in U.S. stocks, but many investors said Obama’s victory didn’t change their outlook for markets or for central banks to keep cutting interest rates around the world to support struggling economies.
Doug Kass, founder and president of hedge fund Seabreeze Partners Management, said the Wall Street rally was an “Obama bounce, not an Obama rally.”
“It’s growing clear that the recession is going to have a shelf life unlike the last recessions in both scope and duration.“
When Obama speaks I always think of Dan Aykroyd in the movieTommy Boy who is a brake salesman “I make car parts for the American Working Man because that’s who I am and that’s who I care about.”
If you’ve never seen it, he plays a a ruthless business man who plays the role on his TV commercials.
Same BS…
Long time lurker… 3rd time poster.
Now that Obama has been elected Prez, and with his plans for bailout of FB, banks, states and cities. What field will be lucrative to make a small fortune, from all the gov’t monies his administration will be doling out?? I am very serious about this. I know the smucks in Los Angeles City go’vt will be handing out major renovation contracts to thier friends and familes.
Help me here people.
“…with his plans for bailout of FB, banks, states and cities.”
The current administration, together with the Fed, has been rolling out bailouts of this or that variety at a rate of one per week or so. Are Obama’s bailouts going to be special somehow compared to those that are already in place? In particular, do you anticipate him tapping into some kind of hitherto-undiscovered forest full of money trees that will help fund new bailout initiatives?
Sound advice here, IMHO.
Financial Times
Dear US president-elect
Published: November 4 2008 14:51 | Last updated: November 4 2008 22:53
Congratulations. After such a momentous night, let’s hope you caught a few hours sleep. Please grab all the rest you can before moving to the White House in January. With the global economy sinking into the mire, an incoming president has not faced such a great burden of expectation in many decades. That does not mean you have to rush. Times are never as desperate, nor as wonderful, as others will have you believe. As you survey this crisis, the crucial first step is to divide the problems into ones your administration can actually help to solve and those it cannot. Then you must move decisively. For the truth is you will have no better idea whether your plans will work than the rest of us – even Keynes had doubts about his slump-correcting theory. Still, as president, you must act like you do.
…
Unfortunately, Mr President, you can only influence house prices, corporate earnings, interest rates and jobs at the margin (unless your administration loses its head). But as these issues are politically charged, you will surely be pressed to do something. Resist. If you have to “act”, make your initiatives popular but harmless. Get the crucial things right and the cycle will ride to your rescue in the end.
Human factor undercut risk models
Wall Street ignored danger, analysts say
By Steve Lohr
NEW YORK TIMES NEWS SERVICE
November 5, 2008
Today’s economic turmoil, it seems, is an implicit indictment of the arcane field of financial engineering – a blend of mathematics, statistics and computing. Its practitioners devised not only the exotic, mortgage-backed securities that proved so troublesome, but also the mathematical models of risk that suggested these securities were safe.
What happened?
…
“Innovation can be a dangerous game,” said Andrew Lo, an economist and professor of finance at the Sloan School of Management of the Massachusetts Institute of Technology. “The technology got ahead of our ability to use it in responsible ways.”
That out-of-control innovation is reflected in the growth of securities intended to spread risk widely through the use of financial instruments called derivatives. Credit-default swaps, for example, originally were created to insure blue-chip bond investors against the risk of default. In recent years, these swap contracts have been used to insure all manner of instruments, including pools of subprime mortgage securities.
These swaps are contracts between two investors – typically banks, hedge funds and other institutions – and they are not traded on exchanges. The face value of the credit-default market has soared to an estimated $55 trillion.
Credit-default swaps, though intended to spread risk, have magnified the financial crisis because the market is unregulated, obscure and brimming with counterparty risk – that is, the risk that one embattled bank or firm will not be able to meet its payment obligations, and that trading with it will seize up.
The market for credit-default swaps has been at the center of the recent Wall Street banking failures and rescues, and these instruments embody the kinds of risks not easily captured in math formulas.
“Complexity, transparency, liquidity and leverage have all played a huge role in this crisis,” said Leslie Rahl, president of Capital Market Risk Advisors, a risk-management consulting firm. “And these are things that are not generally modeled as a quantifiable risk.”
While the finance wizards puzzle over what went wrong with the myriad arcane details of their mathematical models, I have a simpler suggestion: Consider the possible role of a fee structure which allows the hawkers of innovative financial products to book huge profits and pass the risk on to the next sucker down the chain.