Bits Bucket For November 13, 2008
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Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Michael Lewis of “Liar’s Poker” has done it again, explaining the deceptions of Wall Street and why the bull is dead. Gotta love it. Bit of a long read, but very entertaining.
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?print=true
I read that last night. It was long but nearly all of us will relate to him. We were saying the same things to the people around us.
“We were saying the same things to the people around us.”
But the people around us couldn’t understand for the reasons stated in the other article by Chris Hedges that I posted below. You may not realize this, NYCboy, but many of the people around you are functionally illiterate, which is why you might as well be speaking some other language when you talk to them.
One thing that impresses me about this blog is the higher level of literacy and understanding that most of the posters have. Especially those who are smart enough to know that they don’t know, and look for clarification.
BTW, auger-inn, if you’re out there, howdy from the palmster.
“You may not realize this, NYCboy, but many of the people around you are functionally illiterate”
Bulls–t. I realize it every day.
“You may not realize this, NYCboy, but many of the people around you are functionally illiterate”
lol. I’m with NYCityboy, most people I know are boob tube babies who don’t understand squat. They can not do the math required to understand what’s going on and they have no understanding of history, cycles, nor any other fundamental background.
The US has become anti-Intellectual. Its one of the reasons this will be a longer recession than prior ones (less innovation to pull us out). Oh, there is still innovation, but less of the ’sweat of genius.’
Got Popcorn?
Neil
When I have a taste for watching the vast underground of functional illiterates, I always make a beeline for Denny’s, ground-zero.
How many other restaurants do you know of that have photos of each and every food item on their menu?
I can think of a few Thai spots that SHOULD have fotos of the food
No no Neil, Papa government will pull us out of this.
Actually restaurants in Japan not only have photos of menu items but have plastic/wax mockups too.
DennisN,
Yeah, i’ve been in plenty of those restaurants in the far east-especially in Japan.
It’s always weird when you see somewhat life-like plastic meals in toto for the very first time in the front window, it makes for most excellent Gaijin gawking…
“You may not realize this, NYCboy, but many of the people around you are functionally illiterate”
70 % of CA and 90% of LA are either functionally illiterate or just plain stupid. Ca is now 28 billion in the red yet the moronic pupulation just passed 7 new initiatives for more bond spending on such beauties as high speed rail and more new school construction.
In LA half the population are freeloaders existing off the gov’t dole. To many suckling pigs squeezing on the big CA teat here.
‘How many other restaurants do you know of that have photos of each and every food item on their menu?’
Well, just last night I had a SUPERB dinner at a little El Salvadorean eatery downtown and there was a color photo of each dish, with a couple of glorious close ups of various tamales. I’ve noticed that many small restaurants of that variety around here do this. It could be so their illegal and perhaps not over-schooled clientele can just point to what they want, or else so starving gringas can slobber over the photos while they wait impatiently and guzzle Pacificos.
There was a noisy soccer match playing on the teevee, closely watched by latinos shouting at it in Spanish, and bouncy mariachi music playing, and the absolutely requisite large image of the Virgin of Guadalupe on the wall. I personally would never eat in a Mexican restaurant that didn’t have a large image of the Virgin on the wall. That would be intolerable, and wrong.
Man, it was delicious! Made by cute little midget Latina illegal aliens in colorful dresses, which is just exactly how I like my tamales made.
It looks like much of the American FINANCIAL Dream that amazingly plods along is a semi functioning illusion.
When hard money economic reality bites…shes a real Bit$h!
Pass the popcorn and praise the FDIC…if you Dare
I am envious Olympia!
Well, come on over, Muir, and we’ll see who can eat the most tamales and drink the most cerveza* and sing the prettiest songs in Spanish that they just made up on the spot.**
*Hint: It’ll be me. I don’t care how big you are, or how much you like tamales, it’ll still be me.
** But I will allow as how you could possibly be the prettier singer of Spanish songs.
Ah!!! You are taking me back. Now I am starting to savor and want some pupusas!!!!
We need to go to Denver for that now at a place right off Federal.
Now I am hungry!!!
” ** But I will allow as how you could possibly be the prettier singer of Spanish songs.”
-
Of course, I give you the cervezas and tamales as a given, I can mount no serious challange there.
But, (hint) I am of Spanish decent (Asturias, all grandfathers) so as to the Spanish songs….
Oh, and revolutions, you can count on me too.
Though we did lose fighting the fascist pigs we made some great songs.
1. ‘Of course, I give you the cervezas and tamales as a given, I can mount no serious challange there.’
Well, that’s right, baybee. I inherited a mingled German/Russian/Swedish liver, and there is not its equal in the land. Not above ground, anyhow.
And as for the stomach, maybe I got that from a distant ancestor too, perhaps Galacticus, Devourer of Worlds*, because otherwise there’s no explanation.
2. ‘But, (hint) I am of Spanish decent (Asturias, all grandfathers) so as to the Spanish songs….’
Well, then, you can sing, I admit it. I feel respect.
3. Those d*amn fascist pigs! How I hate them!
*Yes, I KNOW Galacticus is a comic book character. But maybe he also really exists, like he lives in Des Moines and is in disguise as a pizza deliveryman.
Is what I heard.
Neil,
you are right that most people won’t do math. CA is facing a huge budget crisis and cutting education; class size reduction may be on the chopping block, which would mean going from classes of 20 to 30 or more in grades K-3. One third of grade K-3 teachers would be laid off; this would mean 400 in my district. Yet none of the young teachers at my school seem at all concerned– why? Because no one has come out and told them their jobs are at stake. These teachers all bought houses in 2005- 2006, the year after they were hired.
Lewis presents a great insider’s perspective. Brings things into sharper focus. Interesting to note that they had doubts as to how it would all end when they knew it had to end. Sort of like right now.
Their models couldn’t even accept a negative number on house price apprecation. And the fallacy lives on that these guys are smart? Take away their ability to lie, cheat and steal and they couldn’t make a nickel.
After asking Pig Men and hedgies here on the HBB “how’s your model lookin’” all through the summer of 2007, I described a similar conversation here with an analytics guy (employed by Pig Men) in September or October of the same year.
He couldn not explain the trouble they were having and told me about their fancy models that used data that “went back 15 years.”
It must always be good on Wall Street to begin a data series after the last near real recession (if the ‘91 one counts).
What a bunch of clowns.
“In case of a FIRE EMERGENCY, break glass and Dial 911 to the FED”
Unfortunately, their ability to lie, cheat, and steal won’t be going away anytime soon, so they’ll still be making money at our expense.
Yeah, I was stunned that they couldn’t plug in negative numbers (and hence possibilities) as well. Even in the well-worn Milton Bradley game of Life, when you buy real estate, the back of the card indicates that the trailer or opulent woodsy retreat may decline in value over time. You spin the wheel, you take your chances. The Life cards weren’t entirely realistic, since they limited housing declines to maybe 20 percent.
But even in the child’s game, losses were described. The concept exists, and they have minus signs for good measure.
It’s also possible to play/live the game without owning.
FWIW
superb article, by the way.
The retirement calculator from my 401(k) provider won’t take negative returns either.
“He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. ‘They were just assuming home prices would keep going up,’ Eisman says.”
That one made me laugh out loud…literally unable to accept what is otherwise a perfectly rational possibility, that the value of a thing can do down.
When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle. He was out of the game.
Here’s the real crux of the matter, imo. The nature of a corp. is to more or less shield the executives/board from accountability. Everything else, all the regulations and such, are an attempt to regulate a huge frankenstein. If the people on the hill were smart enough to run all the corps. they wouldn’t be on capital hill. Better just to do away with the corporate form.
Anyone catch the Lee Atwater documentary on Frontline last night, Boogie Man? He was the progenitor of Karl Rove and his cast of clones. With the “win at all cost” strategy you can see how this set the tone for corporate/Wall Street piggery.
Sounds interesting but I didn’t see it. But greed has a long and storied history, I don’t think you can lay that at the feet of one party or the other.
Peter Schiff pointed out that in a free market, greed is tempered with fear.
Corps largely remove the fear component. The above article makes the point that there is no way in hades a partnership gets leveraged 50x.
Great read! I’m forwarding this on to all the nimrods who can’t understand what has happened. They all laughed when I pulled out of the market in 3/07, but they’re not laughing now. I tried my best to warn everyone who would listen starting in ‘04 when I had my moment of enlightenment that the carnage would be horrible and that the system was unsustainable. I was called the “Grim Reaper” or “old doom and gloom”. Now they come to me for advice. Problem is we’re all f*cked now, just some more than others.
That’s great! I have a friend who started calling me the “Grim Reaper” a couple years back as well. At first it had a slightly disparaging ring to it, but recently the tone of it has a note of respect. Maybe only to my ear, but…
Somebody called me the “Grin Reaper” as it’s best to include your pearly whites and a bit of comedy, when foretelling things nobody wants to hear.
great article.
Palmetto,
Great article, good post.
Thanks for posting that. It was incredible. When he got to the portion about reinvesting the short money in new CDOs, my jaw dropped. I’ve often felt the ponzi scheme was bad but this is beyond my wildest imagination.
Here comes some ‘change’ you can believe in!
Obama Pushes for $50 Billion for Automakers, Oversight Czar
Nov. 13 (Bloomberg) — President-elect Barack Obama is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies, a move that would require President George W. Bush’s support, people familiar with the matter said.
Obama’s economic advisers are now convinced that if General Motors Corp. doesn’t get a financial lifeline soon, it will have to file for bankruptcy by the end of January. And if the companies don’t get almost $50 billion, Obama will be dealing with the issue again by next summer.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBlCucXR33Jw&refer=home
And even if they get $ 50 billion, won’t he be dealing with the same problem again next summer, if not sooner. D*mned if you do, d*mned if you don’t.
Can we ask GM what exactly the money will be used for and how it will move them to profitability?
Is GM simply “waiting” for the market to turn around?
Pretty much. It’s the “wait and hope” strategy and if it doesn’t work, well who could’ve predicted it, right?
..
GM is going through all the machinations of a Cargo Cult.
“Waiting for the market to return”:)
..
The automobile market’s not dead, it’s pining for the Fords. (ducks, runs away)
Ha Les Pendens-
I get it. You must have an anthropological background.
Vanuatu!
Maybe they can ship all of their unsold H2s to the South Pacific, and they can be deified instead of driven.
All hail the mighty H2!
So even if they are put on life support so what? The Escalade crowd is up sh*t creek. Who will they sell to? Foreigners (many of whom now have their own struggling indistries to deal with)?
Yeah, let’s start a trade war too!
Say, isn’t all this proposed assistance in violation of free trade? How is this different from Japan or Korea subsidizing rice farmers?
…who could’ve predicted it, right?
Funny how that turns out to be the prevailing strategy on wall street.
“As long as I’m doing more or less what everyone else is doing I’ll be fine. Money to be made on the upside and if the sh!t hits the fan, the gubmnt will be along to bail us out.”
When I was in high school/college I thought these people were really, really smart and there was no way I could compete. The longer I live, the more I realize most people don’t know sh!t, especially the ones that appear the most informed.
I see this all the time in IT, someone running their mouth about some technology. All I gotta do is ask a few simple questions (well, how does THAT work?). Works everytime*, turns out that fool was repeating some crap he read on a blog that he didn’t even understand.
I think I should have gone into finance, I really thought no way I could hack it, now I see things a bit more clearly.
*Well, not EVERY time. There are some genuinely smart people out there. And I’m more excited when my questions reveal one of those to me than when I reveal a meathead.
GM wants the 50 billion for one last retirement party for the union boyz and upper mgmt. They know they will never pay back that kind of money unless the unions agree to minimum wage for the next century. Unless a Taurus goes for about 100K next year……
I read somewhere that the average union line wage for a GM worker was $78 an hour.
It’s going to be real hard to justify that while the REST of America goes into a major recession or even depression
When my dad retired from GM, he was making $23 or $24 and hour plus benefits. And he was at the top of the pay scale, having over 25 years seniority.
UAW helped my dad to raise us in a working-class, blue color fashion. We had no luxuries, but had health care and the necessities.
Today’s working class is poor and we are paying for their really bad health care with our tax dollars.
Anyhow, it’s totally bogus to say that a GM union worker makes $78. Nothing but a lie.
“Unless a Taurus goes for about 100K next year……”
With hyperinflation (the intended goal of all these efforts), anything is possible…
Its not going to work unless they also scrap the UAW at the same time, and pay unskilled labor the $12-18/hr that is reasonable (and is a living wage in the midwest). Even if GM sold Toyota’s lineup they would be bankrupted by the UAW. That’s not to say I am a GM hater (I own two myself, along with a Ford), but in the new mainstream market which excludes trucks and body-on-frame SUV’s they are toast. I love my LS1 camaro and it is a beast, but not everyone is a “car guy” and will put up with something so brutal to drive on a daily basis.
But even if they had civics and camrys to sell they can’t possibly make money paying $150k to people to torque bolts and take breaks all day; I would love to see how much more the average assembly line worker makes than the average GM engineer, which is pathetic because the engineers actually went to college and are probably literate. The engineers did something to educate and improve themselves and I bet the vast majority of them don’t make as much as the line workers (I know that was the case when I was a young engineer at a defense contractor - all the middle age techs made way more money than me despite being tight deer-shirt wearing rednecks).
I understand the new UAW contracts allow for new hires in at $12.
I think GMs problem is the 450,000 retirees being supported by a workforce that has shrunk dramatically in the past 30 years.
Canceling retiree medical in January for mgmt employees will help alot.
Re-negotiating the Union contracts to allow them to cancel retiree medical for non-mgmt just might do the trick.
Toyota doesn’t pay for retiree medical, so they are already there.
Canceling retiree medical will probably lead to higher mortality and reduced pension payouts. Its a win-win.
“Canceling retiree medical will probably lead to higher mortality and reduced pension payouts. Its a win-win.”
That sounds more to me like win-lose, but anyway…
“Canceling retiree medical in January for mgmt employees will help alot.”
A little OT here, but DH’s health insurance company tried to raise his company rates 21% for 2009. After some negotiation, they got it down to a 7% increase.
Not meaning to be insulting to “Young engineers”, but did no one ever tell you that (much like my original Airframe and Powerplant license) all you had was “a licsense to learn”?
Middle age A&Ps can make six figures plus, because they have worked in the industry 20-25 years and haven’t killed anybody or destroyed an airplane, and can bill out their time @$125/hour.
There is a huge difference between an A&P mechanic and an assembly line worker, I am a commercial pilot as well and have no problem with you making that kind of money, because you have to use judgement in your job and people’s lives are on the line. The problem I have is with people who have just been putting doors on cars and are making that kind of money.
I also have no problem with car mechanics making good money either, because their job also requires problem solving skills and judgement, and safety of the owners (unlike assy line workers with the possible exception of safety - but even there they have quality people checking their work)…. and I wasn’t complaining about my salary when I started out, just saying that it wasn’t much better than a UAW wage; it was certainly a lot of money for a 22 year old kid, and I’ve gotten good raises since then as well, maybe I came off wrong.
I’m not as grumpy as I appear
I share your frustration with the people at the UAW not wanting to deal with reality. It seems that a lot of them would rather watch the Big 3 go down the crap chute, instead of reading the writing on the wall, and giving ANYTHING back at the bargaining table.
I can only contrast it with the way the Aerospace manufacturers and their unions do things. They still have strikes, but it seems that they can always reach a contract that most of them can live with.
Boeing’s spinoff of it’s ICT operations to Spirit Aerosystems is an example…….the skilled/highly trained ex-Boeing workers are doing pretty well. It’s the unskilled, $40/hr parts runners that took the biggest hit.
What will the money be used for?
- The Chevy Volt, an amazing idea that will cost a fortune to be sold to people with no money. Also, if I recall, it is loaded with platinum, so thieves will have a field day with it if true.
- Paying big bonuses to managers for “Mission Accomplished!” in ruining the company
- Paying full salaries to retired workers who left 10+ years ago.
- Building the next round of Super SUV’s since “gas is cheap again” and, of course, gas will always stay cheap since “gas prices always go down.” or something…
“President-elect Barack Obama is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies,”
Is this what The Lad fantasized about?
Continued support of Corporate America is exactly what Obama is up to. Lots of votes in it.
Which is really funny, as he was labeled anti-business during the elections.
Obama is merely pinning the tale on the donkey er-republican. Nothing is going to get done, as evidenced by our disgraced leader wanting more money to go to Colombia in exchange for money going to the motor city.
’ssshrubery is in an enviable position right now. He has no legacy to worry about, and his only pressing matter is just how long his pardon list is going to be. (yellow-pages?)
Hair. Steaming. Angry.
BusinessWeek
Bush: I’ll Trade You Detroit for Colombia?
Posted by: David Kiley on November 11
If news reports this morning are correct, the Bush Administration is willing to trade a loan bailout for Detroit, which it has opposed, for a Congressional cave-in on a trade deal that will benefit the country of Colombia.
…
Labor unions, a reliable Democratic voting bloc opposes the change. Opposition to the Colombia deal is not rooted in organized labor’s fear of lost jobs, the issue behind unions’ opposition to past trade deals like Nafta. It is over the killings of labor advocates and leaders in more than two decades of Colombia’s long civil wars.
According to the National Labor School, a research organization in Colombia, more than 2,500 union members have been killed since 1985, with fewer than 100 cases resulting in convictions.
…
The election is over. Obama and House speaker Pelosi have long stood against the Columbia pact. But given the enormous impact of a GM or Chrysler banktruptcy on organized labor, the unions may just give the Democrats the cover they need to get a bill passed next week to save Detroit, even if it does wind up helping Colombia.
Sigh,
Leigh
The Democrats completely fail to understand the geopolitcs of Colombia, and SoAma.
Right now it is the ONLY ally that the US has in SoAma…If you look at a map, it is surrounded by Venezuela, Brasil, Ecuador, Peru, and Panama.
Now, about those “Union members” that were killed, most of them also belonged to the FARC. The FARC uses the ruse all the time as it uses the unions to strong arm companies to pay them extortion money (one recent example is the Oxy when it paid to get some protection) and when a union member is killed in combat, it immediately turns around and says that they have murdered a union member…. The FARC also uses a Nancy pelosi contact in Colombia called Piedad Cordoba to feed all kinds of crap into her head… There is a reason that the runaway bride is completely opposed to that trade agreement…
Pinch-a-penny
“The Democrats completely fail to understand the geopolitcs of Colombia, and SoAma.
Right now it is the ONLY ally that the US has in SoAma”
-
Actually, it is you that completely fails to understand the geopolitcs of Colombia, and South Amarica.
The US has no allies in South America.
Deservedly so.
Really Muir, and what do you base your knowledge on?
I happened to live in Bogota for a very long time, and most of the people there tend to favor good relationships with the US, and prefer to have the US on their side. They seldom agree with Hugo Chavez, or his political counterparts in Ecuador, Bolivia, Argentina, Brazil, etc…
I also happen to travel there a lot, and the US has a massive presence, not only military but counterinsurgency wise in the county. The president of the country, Alvaro Uribe is a close ally to the US, so, please tell me what information you have that I do not? All the local newspapers, (and it would require you to read and understand spanish) have been in favor of a free trade agreement with the US, and lament the democrats’ stalling on this.
Now, of course the left wing moonbats headed by the runaway bride would bristle at the notion of having a well run, popular president (approval ratings for Uribe border 90%) that is not giving the house away a la chavez!
Muir:
For Your Entertainment:
http://www.radiosantafe.com/2007/07/19/sindicalistas-colombianos-firman-manifiesto-con-las-farc-y-eln-230-pm/
Hope that you know what the FARC and ELN do…
Our relations with Latin America were pretty good say, eight or 10 years ago.
I wonder what changed since then? (That’s rhetorical.)
It’s not the Dems who “completely fail to understand the geopolitics” of South America, it’s The Deciderer and his trusty sidekick Nosferatu.
As someone who traveled extensively in Central and South America during the ’90s and has friends and family who continue to do so regularly, my circle of contacts has noticed a remarkable and disconcerting change in how the US foreign policy is perceived down there — and I’m speaking of Ecuador, Argentina, Peru, Brazil, etc.
Hopefully the ice will thaw soon.
“and it would require you to read and understand spanish”
-
Hmmm…. well, not that it makes a difference to the points being discussed, but yes, Spanish is one of the languages that I speak fluently and am able to read with some proficiency.
-
“I happened to live in Bogota for a very long time”
-
Hmmm….well, again, not that it matters, but I have lived in various places in SA, that includes Ecuador, Argentina, Chile and, yes, Columbia.
-
What does matter are two things which are obvious from your post:
1. You have a limited circle of acquaintances in these Countries. Your groups only reinforce your beliefs.
2. You have either not studied, or chose to ignore as propaganda, the History of US intervention in SA.
-
So what do I base my statements on:
1. First hand observations.
2. Conversations with many groups antipathetic to US presence.
3. Study of the History of US interventions going back quite a while.
-
Therefore, my statement stands:
“The US has no allies in South America.
Deservedly so.”
-
Whatever they say publicly or to your face, let me reassure you, they spit in your face as they say these things.
Either because they are in power (I’ve meet these) and are scornful of your willful ignorance but desire your money/arms or, they wait patiently for your demise but it suits them for the time being to play dumb.
Muir:
For Your Entertainment:
http://www.radiosantafe.com/2007/07/19/sindicalistas-colombianos-firman-manifiesto-con-las-farc-y-eln-230-pm/
Hope that you know what the FARC and ELN do…
-
“El vicepresidente envió la comunicación igualmente a líderes demócratas del congreso de los Estados Unidos y a la organización sindical AFL-CIO.”
-
Yes, I do.
They do have sense of humor.
As the above quote shows.
-
I still recommend you get out more amongst different groups.
If you behave with humility you may yet learn something other than the propaganda from the newspapers.
I am talking about having a president in Colombia that happens to be an ally to the US. I also happen to say that the free trade agreements with the US are in their, and our best interests.
Yes, my circle of friends in these countries is limited to hard working professional classes, and to those who have businesses. As far as US interventionism in the continent, I can name tons of abuses by US corporations, starting with “la masacre bananera” where the Colombian government killed or maimed hundreds in order to stifle an uprising, or the take over by the US of Honduras (the original Banana Republic).
What you fail to understand is the level of frustration at the extreme leftist ideals that 40 years of armed conflict has left in Colombia. They, and I mean most of the population, are sick and tired of insurgent groups that kill, maim, mine, destroy, rape, pillage, and extort money for their leftist ideals. Talk to any person about the FARC or the ELN, and you will hear disdain in their voice, and hatred in their actions. There is a reason that a rightist president in Colombia has such a high approval. He has shown them that it is possible to succeed against leftist insurgents, propped up by Chavez, and Fidel Castro…
No, I think that you do not quite grasp the hatred for these groups in Colombia, as you are the one talking in the wrong circles… Maybe in the bolivarian revolutionary circles that are so common in Venezuela, Ecuador, Bolivia, Argentina….
No, I do have in depth knowledge of latin american history, all the way from the Conquistadores, to the revolutionary wars in 1810, 1815, to the modern day social issues (and believe me there are many) that drive a lot of violence in these countries…
Here are some links that level the field, shall we say…
http://www.eltiempo.com/archivo/documento/CMS-3943495
That was a march against leftist rebels that had hundreds of thousands of protesters, not only in Colombian but around the world! it happened the 4th of February..
http://www.elespectador.com/noticias/politica/articulo-popularidad-de-uribe-llego-al-84-ciento
That article refers to an 84% acceptance rate within the country for a right leaning president.
http://www.elpais.com/articulo/internacional/Ingrid/Betancourt/asegura/liberacion/senal/paz/Colombia/elpepuint/20080702elpepuint_25/Tes
Kidnapping of people by “leftist freedom fighters” and rescue of hostages by the goverment.
WARNING, all of these are in spanish.
I think we can agree to disagree.
My original statement was:
“The US has no allies in South America.
Deservedly so.”
-
I stand by that statement
He may as well complete the job of killing the Repub Party. He’s almost there.
I don’t understand your points on Obama.
Obama is in a win-win situation…
If ’ssshrubery does nothing and the big 3 go away, it’ll be his bad, but if he caves and throws $50 Billion away-it’s almost as if Barack is acting President already.
I’d prefer that he gets a running start instead of having to wait a few months for pomp & circumstance to have it’s day.
He has no legacy to worry about, and his only pressing matter is just how long his pardon list is going to be.
On the contrary, he is worried about his legacy (as laughable as that may seem), and he’s issuing executive and regulatory orders left and right in an attempt to preemptively hamstring future executives, especially in terms of environmental regs.
The regulatory orders can be tough to overturn if implemented properly, but it looks like the WH staff didn’t do its homework on oversight of executive regulatory orders.
I’d like to see an old-fashioned Western necktie party for some of the BLM* officials who are trying to push gas/oil leasing right smack at the borders of our national parks, very highly visible and very destructive to fragile desert habitat. This country was explored in the 40s and 50s with technology good enough to determine there’s no oil/gas, it’s simply a ploy to get money from a new generation of oilmen and to harass the park. There’s always been a level of contention between the BLM and the Park Service, and we locals have known for years that the BLM is totally corrupt. Obama will hopefully shut this nonsense down. We’ve watched the BLM run unchecked over everything, doing whatever they wanted, ever since the Bushwhackers came into power. One of their favorite games is to chain entire forests of trees for wildlife habitat (redefining cattle as wildlife, the fools hoping no one would notice). Good riddance, shut the whole dang bureau down, they’re nothing but a tool for the gas/oil/cattle businesses.
*Bureau of Lost Minds
/rant
‘We’ve watched the BLM run unchecked over everything, doing whatever they wanted, ever since the Bushwhackers came into power…shut the whole dang bureau down, they’re nothing but a tool for the gas/oil/cattle businesses.’
Testify! TESTIFYYYYYYY! Boy, I hear you, sistah!
Although, losty, I’d like it if you sprinkled your rants with various blasphemies and curse words, judiciously applied. That’s the only possible improvement to this rant, and future rants, that could be made. I mean, what are you, a Mormon or something? Hahahahaahaha!
*Olygal sits back and stares at the keyboard expectantly*
OK, how’s this (someone pointed out yesterday that ByeFL was probably about 12, don’t want to offend any youngsters here):
Let us pray that God burns and blasts out every one of these blasphemous gubmint liars. And while he’s at it, have him take out our sacrilegious BLM fiends, I mean friends, backsliders from the Church of Our Holy Redrock, who would undoubtedly sell us to hell for a mere shekel of silver, whatever the H-E-doublehockeysticks that is. Here we sit, smack in the middle of country God created as a tribute to Himself. If those of us who live in the middle of God’s Cathedral can’t find it within ourselves to give a rats-ass about it, then who in H-E-doublehockeysticks will? Are we so wicked that we’ll condone (heck, even aid and abet) a damn money-changer right in the Temple? Even a frog’s smart enough to not piss in his own pond.
OK, is that even a little better? pretty mild for me, but I AM in Utarrr
OK, I just now had a pretty good rant going, but I guess the filter didn’t like all that cussin’.
Bring back the monkeywrenchers!!
They never went away.
That reference being to my neighbor, of course. he was one of the original Earth First! founders. At least he says that on his resume…
‘They never went away.’
Hahaha. Grinny grin. Say, losty, how DID your last picnic in the wilderness go? Did you wander for 40 days and nights? Did the ravens come and feed you, verily? Did you remember what wires went where? Verily?
hey, Oly, I’m looking for a bird trainer if you know any…
ravens in particular…
I was one of those MW’s back in high school, but I got in a heap of trouble for it. I don’t have a whole lot of respect for Edward Abbey these days. The environment needs cooler heads if you really want to make a difference.
Automaker bailouts are a quid pro quo for winning Michigan. If these bailouts are going to happen, then at least Obama is taking the right approach and requiring government oversight of how the companies use that money…as opposed to Bush and Paulson (Republicans, in case you forgot) who are giving bailout money to their buds, no strings.
One has to wonder if bailouts are violations of the WTO or NAFTA…I see the potential for lots of lawsuits in the future.
“violations”
Interesting wrinkle..? Do as I say, not as I do.
One has to wonder if bailouts are violations of the WTO or NAFTA…I see the potential for lots of lawsuits in the future.
That’s an interesting question.
The issue of violating free trade agreements will likely become even more convoluted as more domestic sectors clamor for a piece of Bailout Pie, and the world says “Us too.”
What stipulations will be attached to all that moolah?
Well, since we will probably never know exactly where the money went, the chances of a successful lawsuit are pretty small.
If the Big 3 get a bailout then the government needs to apologize profusely to John DeLorean.
Well we’re bailing out the cokeheads who were running the financial companies….
Rahm Emmanual kept talking about “retooling” Detroit for a new energy economy (GEMs?), which can’t kick in until Bush is gone. Maybe it’s cheaper to keep GM on life support than to pay for the BK process and start-up.
The heck if I know. Where IS Obama, anyway? Nobody’s minding the store…
Senator Obama’s decoder ring doesn’t arrive until January 20th.
The heck if I know. Where IS Obama, anyway? Nobody’s minding the store…
He spends most of his day across the street from me. The security is getting ridiculous. The alley next to our building is blocked off and box trucks are being strongly discouraged from driving on this block. The guy delivering water for the water coolers had to park his truck 3 blocks away and wheel all the containers down the sidewalk to get to us. And then a bomb dog had to sniff everything to make sure it was water. LOL.
I went in to the burrito place next door the other day and a guy in a suit with an ear piece stared at me like I was the unabomber. Being a white male in need of a haircut is like being Islamic in an airport. I really wish Palin didn’t rile up all the rural idiots - it would make my life a lot easier.
It’s hard to imagine that Harry Truman took daily walks of a few miles in Washington D.C., with just a couple g men for protection, circa 1950.
get the damn haircut
Did you hear that DeLoreans are banned in California? They keep sniffing up all the white lines.
(I used to want a DMC-12, but these days I’d rather have a M3).
Backwardation To The Future
DeLeoreans were made in Ireland, not the USA.
I think Northern Ireland
These auto companies need to be kept afloat in the interests of national security. We need factories within our borders to crank out the vehicles of war.
This is the primary reason GM is getting bailed out, not appeasement of the UAW or Michigan voters. Obama isn’t different from any other politician in this regard.
Perhaps, but the likelihood of a large scale conventional war that requires a WW II scale of vehicle production is pretty much nil.
In modern warfare we have essentially two choices:
1. assymetrical proxy wars - what we have now
2. you don’t want to know
Smaller manufacturers can more than produce the vehicles we need in option #1. The Big 3 do not need to be kept alive for that.
we have two choices:
1. assymetrical proxy wars - what we have now
2. you don’t want to know
I don’t and don’t want to
Even if there is a likely hood, the chances of being able to retool a factory line and get it to producing like in WWII is zero.
We currently, can only build 8-12 fighter planes a month.
We once launched a Liberty ship a day in WWII.Ships take years to build.
Tanks? It would take a year to set up a line to produce a single tank. GM takes 5 years from design board to production on compact car.
“These auto companies need to be kept afloat in the interests of national security. We need factories within our borders to crank out the vehicles of war.”
Not really true. We have other car companies that could be retooled for military use. But if it’s that important then let the Big 3 go BK. Then the government can buy only the facilities they need for pennies on the dollar and pay some ex-UAW workers low wages to polish the idle machines until we need them.
Exactly. BK doesn’t mean the factories all go away. They can be bought cheaply if they are of any use.
That’s true, but then that’s why there is no bailout package for Toyota or Mitsubishi, who also maintain factories in the US and didn’t make the same mistake of making gas-guzzling urban tanks.
Once again, smart behavior is penalized and stupidity and lack of foresight is handsomely rewarded. Welcome to the United Socialist States of America under #43.
Toyota makes all sorts of gas guzzling trucks and SUVs.
No, the big 3 pandered to a market. People were buying those road hogs hand over fist and the big 3 willingly accomodated. Toyota luckily was late playing follow the leader with its huge Tundra. Mitsubishi makes crappier cars than the big 3, why even bring them up unless you are one of those fast and furious street racing dorks.
LOL about the USSA comment. I wonder how much bigger it will get under #44 and the masses that he panders to?
They were late to the market because the US had a huge tariff on V-8s (which was why they were so profitable for Detroit to build).
“Didn’t make the same mistake of making gas-guzzling urban tanks..”
Oh yeah? The Nissan Titan and it’s SUV derivatives are not Urban Tanks?
And ask Toyota how that new Tundra factory in San Antonio is working out for them. At least the Big 3 weren’t stupid enough to spend multi-gazillion dollars on a brand-spanking new factory to build full-size trucks, just in time for the market for those trucks to melt down like Chernobyl.
There appears to be a rift between the Obama camp, who want a near-term bailout of Detroit, and some behind-the-scenes voices who are dropping hints that bankruptcy may be the only path back to economic viability for the Big 2. I note that Chrysler was bailed out in the early 1980s, and came back as a poor competitor in the international arena to Japanese rivals. Of course, one can never know what might have happened if Lee Iacocca had not secured a bailout for Chrysler in the early 1980s.
I saw a KIA (the most unfortunate name in the auto industry?) on the road a few days ago, and man it looked sharp-and the same thing goes for Hyundais, plus both makes have excellent warranties and reviews…
Compared to the mid 80’s, when Hyundais were acclaimed by wrecking yards-as being the car that fell apart the soonest.
The key thing about our auto industry is we don’t do anything any different than the rest of the world does, and the rest of the world does it better and cheaper than we do.
It’s time for us to be innovative once again, and re-invent the wheel.
I have been waiting for that Swatch Car. The Smart is a POS.
“The key thing about our auto industry is we don’t do anything any different than the rest of the world does, and the rest of the world does it better and cheaper than we do.”
I think the problem is deeper than product quality and product mix. I think the bigger problem, at least for the next few years, is going to be excess capacity. If demand drops 20-30 percent a year or more, you no longer need at least one of the formerly big three and maybe none of them. The housing and credit bubbles distorted many things including the demand for vehicles.
SDGreg,
Good post as always. Just to build on that, it took GM so long to realize that their worst competitor was… GM!
Just look at how many ( largely identical ) SUV’s they cranked out? The Trailblazer, Yukon, Tahoe, Suburban ( somebody stop me any minute here? )
It goes on and on w/ their other product lines as well.
SDGreg,
I agree, nobody is buying ANY kind of cars right now. And the number of cars already in existence in the US will keep us on the road for years and years. Frequent purchase of new cars was one of those non-necessities foisted on everyone by advertising and by BS “buy America” campaigns.
Come on man - if Lee hadn’t gotten that big loan, we never would have gotten the K car. That in itself was worth it.
Here’s my question - why the F are the automakers’ jobs any more important than the telecom workers, the concrete makers, the TV makers, the software writers, the furniture makers, etc. etc.? There are 4 million people unemployed, and we’re going to spend $50 Billion to keep a few tens of thousands employed? That would be on the order of about $1 million spent per head.
Thanks, O.
(Though it’s not like Bushie’s doing the same kind of thing)
I mean “it’s not like Bushies not doing the same kind of thing.” Dang double-negatives.
A friend has fond memories of pulling in $180K in a year working for a US auto MFG. They closed down the plant. Granted, he worked insane hours, but admits he didn’t have to really do that much. After getting laid off got a degree in finance/economics. Another friend got a job making around $60K with his MBA, and the ex-Ford guy was in shock. He acknowledges that the line workers will never, ever, be able to find the $70K-$80K they were making. But when friends are quick to point out how overpaid the Ford people were, I like to remind them that if US corps shared the true fruit of the employee’s labor with the employees then lots of Americans would earn much better income. Are they really underpaid, or is everyone else just underpaid.
Err Are they really overpaid, or is everyone else just underpaid.
“But when friends are quick to point out how overpaid the Ford people were, I like to remind them that if US corps shared the true fruit of the employee’s labor with the employees then lots of Americans would earn much better income. Are they really underpaid, or is everyone else just underpaid.”
I think you meant “are they really overpaid“. I’ve said it before, that I think a large majority of our population is grotesquely underpaid. While education and experience should have a lot to do with wages, there’s something that has been lost along the way, and that’s the value of each and every individuals time. It’s what is ultimately sacrificed for the company. We all have precious little time on this planet, and every worker leaves behind friends, families, pets- their loved ones each and every morning.
Low wages are a sign that companies don’t place much value on peoples time. I think it’s rotten. Henry Ford once said something about wanting his workers to be able to afford his products. As a society, we’ve moved away from that. It’s coming back to haunt us.
But how are senior corporate executives to make tens of millions of dollars per year, regardless of performance, if the company is forced to pay everyone a living wage? That doesn’t seem fair to them.
True.
Look up the Chris Rock clip on “minimum wage.” “What your boss is really trying to say, is I would pay you less if I could, but it’s ILLEGAL.”
Of course, the corollary to that is that the minimum wage makes it illegal to hire low skilled workers - at an economically viable wage.
All things being equal, an employee’s work must contribute more to the company’s bottom line than his gross hiring cost, or the company will fail.
There are distortions to this: Federal regulations, interlocking directorates, unions, non-owner management, etc. But there is always a gov’t bailout, and the Federal Reserve to keep the ball rollin’.
Its not just the employees of the big 3, it all the suppliers as well. The aggregate number I have seen quoted is 3 million jobs.
I think you are forgetting about the thousands of other jobs that are related to American auto manufacturing. Auto PARTS manufacturing has 3 times the employment base.
I don’t agree with the bailout either and there should be other options put on the table, but let’s look at your list.
Telecom worker = Grossly overpaid = offshored
Concrete makers = Primarily a local market but CEMEX is a player everywhere.
TV Makers = There hasn’t been a TV manufactured in America since the 90’s if I’m not mistaken.
Software writers = Grossly overpaid= offshored
Furniture makers = Unless it’s Stickley it’s Hecho en China!
Manufacturing has been gutted down to very low levels in this country. Many Americans have come to believe that a manufacturing economy is the bottom rung of a world economy. Well what do you do when your top rung (financial economy) breaks and you need to step down the ladder only to find your bottom rung missing? There’s a whole lotta air from the manufacturing rung to terra firma called subsistence economy.
The current best guesstimate is that a bankruptcy of the Big 2.5 would cost 3 million jobs almost immediately. (Big 3 employees, subcontractors and suppliers, car dealers, advertising, etc.)
Most of the suppliers sell parts to the other manufacturers plants (BMW, Mercedes, Honda, Toyota, etc.), so a wholesale shutdown of subcontractors means those people will be out of work, also.
Kiss your local newspaper goodbye…..look how much advertising your locak car dealers buy. Same with the major networks.
Many people think that the Big 3 can go down the tubes and nobody will even notice. I believe it will be as bigger disaster than the mortgage meltdown. with even more unintended consequences.
So be it. Time to take the medicine, then pick up the pieces and move on.
American idled.
NEW YORK (Reuters) - Foreclosure activity in October rose 25 percent from a year earlier, although filings in California fell by double-digit percentage points for the second consecutive month due to a state law slowing the foreclosure process, according to a monthly report by RealtyTrac.
Foreclosure filings — default notices, auction sales notices and bank repossessions — rose by 5 percent from September to 279,561 in October, according to Irvine, California-based research firm RealtyTrac.
That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.
http://www.reuters.com/article/ousiv/idUSTRE4AC10H20081113
“That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.”
Annualized, that’s one in every 38 housing units.
Um, I don’t think you can annualize that number.
It remains huge nonetheless and further proof that all the best laid plans for preventing foreclosures will ultimately fail.
ECON 101
“Um, I don’t think you can annualize that number.”
Um, why not, if we agree to annualize by taking a linear projection? This is obviously a gauge of the current annual rate at which foreclosures are occurring, no more nor less. It really has no predictive content.
If foreclosures continue to increase, it will understate future experience; if foreclosures decrease, it will prove to be an overstatement.
Because today’s default notice will be next month’s auction and the following month’s bank repo. You would be triple counting the same house and family unit.
Not sure I follow your logic? But I’m sure there are probably households getting multiple notices.
A couple of things:
1. I can annualize any number. It’s a math thing. It might be questionable statistically, the question is “should you”, not “can you”.
2. The data supports the conclusion. Via RealtyTrac:
1st Quarter - 1 in every 194 households received a notice.
2nd Quarter - 1 in every 171 households received a notice.
3rd Quarter - 1 in every 166 Households received a notice.
So far this year, 1 in 58 households received a notice.
That’s one in 35 houses with a mortgage.
1/(1/194+1/171+1/166) = 58.7 (i.e., 1 in 59)
I did not account for homes that do not have mortgages; i.e., 1 in 59 is the fraction of all homes that received a notice (this would be higher if one excluded homes w/o a mortgage, as Blue Skye suggests).
Crystal-clear math addict
Two of az_lender’s clients just received unilateral offers of lowered monthly payments. In one case, the client had made a remark last year that paying the mortgage was “hard.” The mortgage has in fact been paid on time every month, but my offer was just to lower the monthly payment from $405 to $380 in recognition that the loan has been slightly amortized. In the other case, the borrower is in fact LATE (by a month). My guess is, it’s an oversight (this person paid perfectly for five years)…here again, my offer is to lower the monthly payment from $620 to maybe $480 in recognition of the reduced principal.
If the latter offer is a NOD in sheep’s clothing, why not.
Chris Hedges has written an awesome article on “America the Illiterate”. This is the real reason we’re in such trouble today and why many of us can’t get through to our friends and neighbors. Sloganeering (real estate always goes up, for example) and feel good imagery rule, forget about actually reading anything.
http://www.truthdig.com/report/item/20081110_america_the_illiterate/
I think Orwell in Animal Farm essentially nailed it more than 50 years ago. I strongly urge anyone who hasn’t read Animal Farm to borrow a copy from the local library.
“Orwell in Animal Farm essentially nailed it more than 50 years ago.”
Indeed, he did. The book was required reading for me in seventh, eighth grade. However, even as I was posting the article, there was a program on the History Channel about the Dust Bowl (I’ve posted about it here before). Illiteracy in the US is nothing new. Back in the day, when education was supposed to be so much better, there was sloganeering about “Soil being an immutable resource”. How’d that work out? No one sought to question (maybe someone did, but was silenced) if it was wise to rip up the Plains and what the consequences could be. I’m sure that, like today, there was some industrial high priest who assured everyone that they had the correct science to prove there would be no problem.
Holeee jeebus, the more things change, the more things stay the same.
If you caught Jay Walking on Jay Leno last evening, one of the answers to what the Yukon was, an SUV. We are in trouble.
There’s a guy in Canada who has a show called “Those Wacky Americans” or something like that where he comes down to the states and asks the most outrageous questions.
Such as, “Canada is proposing changing it’s day to 25 hours from 24, do you support this idea?” Or “the Canadian government is proposing setting senior citizens loose on ice floes on their 80th birthday, what do you think?” The answers are as funny as they are scary.
Canadians love to poke fun at Americans, but can’t handle it when their dirty laundry gets aired or Canada gets “bashed”…especially by an American. I know, because I used to live there.
I have never known a country full of such self-congratulatory yet insecure people. Like how a battered wife towards her abuser, they both love and hate us.
I like to needle our northern friends when we meet on neutral ground somewhere else in the world…
If there’s more than 4 Maple Leafs visible on their luggage or person, I always like to ask them:
“What part of the states are you from?”
NoSingleOne,
Never lived there but played in numerous hockey tournaments and summer camps boarding w/ Canuck families. Absolutely true. I just hope they still love bashing us when their economy goes down the tubes along w/ ours?
This is actually pretty funny, a spoof on American stereotypes of Canadians (caution: if at work, use headphones):
http://www dot youtube dot com/watch?v=Rt1_6uz_sVU
Canadians love to poke fun at Americans, but can’t handle it when their dirty laundry gets aired or Canada gets “bashed”…especially by an American. I know, because I used to live there.
Heh. So true. And I know because I have English speaking relatives who live there.
Modern Canadians love to view themselves as the “non-violent and sophisticated” (ie better) version of the US. A Canadian history class is a real eye opener in that regard. For instance, some of the fiercest fighting units in WWI and WWII (WWI, especially) came from Canada. (Canada was in WWI as soon as G.B. entered…)
There’s a guy in Canada who has a show called “Those Wacky Americans” or something like that where he comes down to the states and asks the most outrageous questions.
Only IIIIIIII can disrespect and criticize and fulminate against my country. So this guy better not meet up with me, or there will be a new wacky question, such as: how far up his brown winker can his stupid pinhead be jammed by a grouchy American maiden as she sings ‘America the Beautiful?
Jay Leno has a similar routine, “Man on the Street.”
I am married to a Canadian. When we go up to visit his peeps, the conversation is dominated by American politics. It’s fascinating to me. I also was a little put off when Neil Young came out with “Impeach the President”, not that I didn’t completely agree with him. They’re all a bunch of wanna be’s.
“If you caught Jay Walking on Jay Leno last evening, one of the answers to what the Yukon was, an SUV. We are in trouble.”
That was Sarah Palin’s answer?
Well I’ll guess I’ll jump to our collective Canadian defence sort of. There’s a decent number of us Canucks that know the differences between the US and Ca are pretty small compared to the similarities. There are more that don’t.
I’d say the biggest similarity is that we’ve got the same illeteracy/stupidity problem that started this thread. Sound bites like “we’re better than those Americans because [insert small insignificant difference here]” are much more appealing than the facts to the masses. So politicians or other know-it-alls like to bash our big neighbour to the south. No Single One’s observation is based upon the Ca masses the same as Chris Hedges’ observation is of the US masses.
The show Blano mentioned is done by Rick Mercer and is called “Talking to Americans”. It’s based on 2 things. The first is the tendency of Ca to enjoy US bashing as mentioned above. This gives the show appeal. The second is the fact that most people would rather pretend they know what’s going on than admit they don’t. This makes the show possible. People just assume that a news anchor wouldn’t be asking stupid questions so they answer them without having a clue what they’re talking about.
And DinOR, I’m sure I’m not the only Canadian that knows we’re going down the tube. http://www.greaterfool.ca is about the closest equavalent to this site I’m aware of.
Lastly Alad, you may get a kick (or not) out of this. Travel agents will often advise us to have lots of Ca flags showing so we won’t be mistaken as Americans. The theory is that terrorists are less likely to attack or kidnap us than you. Total nonsense but many folks believe it.
I’m up to all your tricks, you in the land of the ‘chuk’ suffix…
ha ha
In defense of pretty much everybody………
Give me a camera, and the ability to pick and choose what I show and who I show, and the ability to edit the film after the fact, I guarantee you that I can make 100% of the people on this blog look like idiots, if it benefited me to do so.
Do it soon. Local libraries will be shutting down.
Thank goodness for the internets:
http://www.george-orwell.org/Animal_Farm/index.html
Save a trip to the library - read it online.
I’m doing a lot more reading lately, and I have always been a voracious reader. Haven’t (intentionally) been reading much fiction lately, though, as what passes for the truth has been so much better.
I’ve been loading up on used books @ Amazon and it’s funny…
Many books cost me just 1 Cent, but the shipping is valued @ 399x the value of the book.
Seems unfair.
Shipping charges are a source of income for many internet companies.
I figure the price of gas that I save by not driving down to the used book store. At $4/gallon it did not seem too bad.
“Alarm bells are ringing,” said Tom Fallon, head of emerging-market research at La Francaise des Placements in Paris, which manages $11 billion. “Weaker oil raises a number of issues for deterioration in terms of trade and budget assumptions which are now being seriously called into question.”
Oil reached a 21-month low as the International Energy Agency lowered its 2009 global oil demand estimate by 670,000 barrels a day, or 0.8 percent, and Germany became the biggest economy to enter a recession this year. Oil is approaching “worrying” levels that may cause the ruble to weaken by as much as 9 percent against the dollar by the end of the year, Igor Yurgens, an adviser to President Dmitry Medvedev, said in Bloomberg Television interview late yesterday.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajuitNRZh96I&refer=worldwide
So, Paulson’s Plan B:
Are we witnessing the moment where the REIC gets thrown under the bus in a mad dash to save what’s left of the broader economy?
This is high drama indeed.
What makes you think they have a plan? Has anything they’ve done worked so far?
This is too large. We know it, and they know it, and we know that they know it, … etc.
No capitulation until they show (or inadvertently reveal) they know it.
I have never seen so many folks in NYC smoking. Bloomberg cigarettes @ ten bucks a pack.
Fidgety smokers are the new black?
(Ten beans, for real? I thought we in Chicago/Cook Co. had the most onerous tobacco taxes in the land.)
Interesting observation.
Haven’t noticed it myself but this lies into the kind of observations that once someone states it, you start noticing it everywhere.
My observation: never seen so many sofas being tossed out on the sidewalks for the trash collectors. (Implication: folks are leaving and not coming back.)
Check out all of the closing businesses putty-tat. Walking down my Bleecker Street is an eye opener. It is all boutiques or empty storefronts. Good luck on those boutiques especially if the Euro continues to weaken.
I would love to see the landlords get beaten by the 2 x 4 of reality.
I was on Bleecker just day before yesterday and was walking around while waiting for friends.
The carnage was palpable.
Saw some Stockholm Syndrome action yesterday, a quorum’s worth.
It was during my hostage period @ the museum where I volunteer…
The Euros are still showing up here, as i’m sure they made travel plans a few months ago, back when the Euro was king.
‘The carnage was palpable.’
Give us details, man! I love to hear about carnage.
Well, there’s a butcher out there who specializes in wild game. Now normally he’s a surly curmudgeonly ol’ f*cker but the economic reality being what it is, he was forced to cover his natural surliness and veer in the direction of obsequiousness. This is both surreal and entertaining.
But I never argue with a man who wields a big knife.
(And there are the usual tales of “good things” being market down to half their price but that’s kinda boring, and I didn’t buy anything anyway. It’ll go down further.)
I typed out the details but it hasn’t appeared yet.
Thanks, Faster. But now I want to know about the wild game, like what kind of game, and how you prepare it yourself. Tell me allllll the details, how about, and be thorough, you know how I like, ahahahaha.
Now that gas doesn’t cost anything, maybe the NYC persons are getting their cigs in Albuquerque as I do. About $1.30/pack.
Didn’t the TARP start off as like 3 pages written hastily in crayon? And that was a year AFTER the problem started! More than anything else that shows that these cats are absolutely clueless. I really don’t believe these guys know how big the problem is, much less have any idea how to solve it.
But it really doesn’t matter for them. In the end, they’re very, very wealthy and will get along famously.
They had another expert panel on PBS early this week about Paulson’s plan to buy bank stock rather than bad assets. One of the experts was exhorting — repeatedly, I mean EVERY time he opened his mouth — that we give a tax credit for a house purchase. This would kill the inventory overhang, but make prices affordable even if prices are high. And it would prevent the next wave of forclosures on existing underwater homes.
This is preposterous! This expert conveniently forgets that over a 30 year mortgage, you pay TRIPLE the original cost. Yeah, I’ll get a $10K tax break now, but pay $20K interest for it later, not to mention $600 to a Realtor ™. How is this different from the Beemer-in-the-driveway gimmick?
Actually, given the state of the dollar, the Beemer is a safer bet…
oxide,
Very much agreed. The way we allowed the REIC to grab the bull by the horns in the early hours of this battle should not be forgotten. I suppose it’s easy for ‘us’ to say as we knew there was no saving home prices.
At a time when there wasn’t a moment to waste we squandered precious resources and time trying to keep over extended builders afloat? What a waste.
Heard the house loan seller on the radio tonight. They were talkking about how good it was and what good buys there out there. They asked about financing and the goon kept saying it was still “insane” but would likely soon get better. (I was happy to hear this until I finally figured out that this term meant to him that it was wasting his time to have to get three levels of approvals for all his no doc loans that they are still doing.)
Well, the tax credit could get CASH buyers to buy houses instead of sitting on cash. AZ_LENDER would buy a house if the tax credit were big enough, and if it were not a loan.
edgewaterjohn,
I made the same basic observation on our local Portland blog. I realize there have been comments to the contrary but this was the right move.
We wasted a lot of precious time by allowing NAR/NAHB to “frame the debate” around the support of home prices and continued… construction. The whole 1st Time Buyer Credit fandango. Look, I don’t know what the answers are at this point but it should have been obvious that supporting home prices ( read, the bank’s assets ) was counter productive and a total waste of valuable time.
Yeah, let’s put a floor on housing -
Reuters
Foreclosures up 25 percent: RealtyTrac
Thu Nov 13, 2008 8:12am EST
Foreclosure activity in October rose 25 percent from a year earlier, although filings in California fell by double-digit percentage points for the second consecutive month due to a state law slowing the foreclosure process, according to a monthly report by RealtyTrac.
…
That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.
…
“For most homeowners, these laws just delay the inevitable,” he said.”
…
The article continues on about how Fred and Fannie’s rescue plan.
This will end well.
Leigh
This is pretty interesting. In the last couple of downturns the prices dropped and quietly sales picked up signaling the market had turned.
Right now, sales had picked up but forclosure activity is still increasing exponentially.
We are in uncharted waters now, there be monster here.
I’m okay with a floor price on houses…. at say, 1996 or so levels.
The article continues on about how Fred and Fannie’s rescue plan will help homeowners.
Need co feee.
Leigh
With Paulson’s plan B, it is clear that we are beyond the problem of the housing bubble, or the effect of the deflation of the housing bubble on over-leveraged financial institutions.
The issue now is an entire world economy dependent on Americans spending more than they earn, falling deeper and deeper into debt, and selling out a future that has now arrived.
The question is what to do with generations that didn’t save for anything, feel entitled to everything, and are getting a rude shock. How much can the federal government promise the future earnings of younger Americans, who will earn far less, to give them what they “need?” And since soaring future taxes to pay for this mean those younger Americans will be impoverished and thus unable to spend, isn’t this self-defeating?
One thing for sure — those younger Americans shouldn’t pay older generations a dime for their stocks, bonds and houses, unless it is for so low a price the forced redistribution of income is evened out.
Nobody in Washington has intergenerational equity concerns on their political radar screen, so far as I can tell. One advantage of managing by crisis is the avoidance of the need to ever discuss equity issues raised by the latest emergency management strategy.
One advantage of managing by crisis is the avoidance of the need to ever discuss equity issues raised by the latest emergency management strategy.
The current string-pullers, perhaps more than any string-pullers before them, are fond of Kick The Can Down The Road strategies.
Short-term benefits (for said string-pullers and their cronies), long-term pain (for those who must pay the check or clean up the mess).
Within the next 4 years we will see conscription in the form of either a draft or some form of mandatory work plan. Our youth will pay our debts through flesh and blood.
I also expect debtors prison/work camps to become in vogue within the next 10 years.
Meh, this whole country is a debtor’s prison. The non-debtors here are locked up for the treasonous act of not shopping on credit.
chop-shop
That’s spot on. Moreover, the prisoners are not only allowed to freely roam the streets, but they are actively encouraged to add to their debt burdens through hair-of-the-dog stimulus measures.
shop-chop
I see the day when it will become politically incorrect in China to buy cheap American goods made with slave labor. [Karma Runs Over Dogma]
That’s the glib response, but I disagree. Notice AmExs switch to a bank so it could qualify for TARP funds. They did this because nobody is buying their credit card backed securities hence they no longer have someone funding the American lifestyle of binge-purge bankruptcy.
Some major societal changes are in store for the good ole’ USA in the next few years.
Those societal changes have already been happening. The Boomers are the first (and hopefully last) generation in America that has chosen to prosper at the expense of their children. As long as those kids remain distracted and apathetic, the Great
Train RobberyWealth Transfer will continue.What is this “prosper at the expense of their children” of which you speak?
Let’s just list this “prosperity” that I’ve been fortunate enough to experience, since I turned 16…..
-1973 to 75….First oil shock and recession.
1975 to 79…..rampant inflation, with wages not keeping pace with expenses;beginning of the decline of the manufacturing economy,
1979…Oil Shock, part Deax.
1980-83….Recesssion
1987……Stock market crash
1990-94…..Recession (again)
2000-2003….Tech bubble collapse/recession (again). Great for the Tech and Venture Cap guys, for the rest of us……no benefit to speak
2004-2008….Real Estate bubble and collapse (great for Wall Street and the Realtwhores; but once again, no benefit to speak of for the rest of us)
We do have something in common, though….we knew back in 1981 that Social Security would be bankrupt before we saw any of it either.
If I could borrow 8 Trillion dollars by deficit spending and cut taxes for people to vote for me, then that is called ’stealing’ from future taxpayers by bribing the current ones.
What part of this don’t you understand?
Unless you think the money will magically not need to be paid back…the elephant party seems to think so, having caused the entire deficit (Bubba is the only president since 1980 to have reduced it somewhat).
After I posted this, I found this gem about credit card debt forgiveness.
http://news.yahoo.com/s/ap/20081113/ap_on_bi_ge/meltdown_credit_cards
“Travis Plunkett, legislative director of Consumer Federation, said that with the number of deeply indebted consumers growing dramatically, “we still hope to work with bank regulators or Congress to create an alternative” to bankruptcy for them.”
You poor indebted sheeple have no idea what pain you are in for. Dark times are ahead.
They’re shopping right up to the end. That’s why the drop offs are so dramatic. Sales measures that used to move a percent or two per annum are now swinging 10%, 25% at a time.
Hyper-consumerism = nihilism
de-nihilists
‘de-nihilists’
You are really in fine form today.
Why would you want an alternative to bankruptcy? Any alternative would be an equivalent to bankruptcy IMHO. I do advocate liberalizing bankruptcy laws, but the fundamental social construct really CAN’T change. In exchange for debt forgiveness, defaulting borrowers are “branded with the scarlet B” so that potential future lenders are warned of their proven propensity to borrow more than they can pay back. I don’t like whiners who want debt forgiveness without being labeled deadbeats.
There will ALWAYS be people willing to borrow themselves to the poorhouse. A large class of “debt peons” is a BAD thing. The best way to prevent this the fact that their ability to file for bankruptcy protection disincentivises lenders from lending them more money than they can afford to pay back.
Well I perhaps sounded a little too strident there. Bankruptcy also serves to protect the unlucky from their bad fortune. But it seems to me that people don’t realize how it serves to protect the prodigal from their own imprudence. This is why I so disliked the “bankruptcy reform” legislation of a few years ago. Sure people abused the system. But figuring out who has the ability and inclination to repay their debts is SUPPOSED to be the core competency of the CC companies. I saw little reason for the government to bail the debt pushers out of their bad business decisions.
While I agree completely, I think it would also be nice for banks that have a bent to lend money to deadbeats to also be branded with scarlett letter so that investors and savers will know who to stay away from.
Jon, bankruptcy isn’t just for individuals. Banks can play too… Oh wait, mean old Mr. Paulson won’t let them.
darthrealtor, I have no idea what you are talking about, actually, for once, the government makes sense. Probably because it is Office of the Comptroller of the Currency, the one agency that has demonstrated integrity at times.
-
An agency official said the government objects to allowing banks to defer losses for several years on the forgiven debt, as would occur in accounting by lenders under the special program.
The agency “does not consider any plan that defers the timely recognition of loss as prudent, and any such proposal cannot be viewed favorably by us,” Timothy Long, senior deputy comptroller for bank supervision policy, said in a letter to the two groups dated Monday and made public Wednesday.
Muir,
Additionally the OCC is the ONLY regulatory agency I’ve ever been able to get any satisfaction out of. It may take a little time but if you’ve had a complaint against a bank, they’re the only guys that actually follow up on it.
My only question is, why aren’t they being given a broader role in all of this?
My point, tongue in cheek is that I believe the fundamental manners in which the USA handles it’s individuals indebtedness will change dramatically in the not so distant future. No more magic wand to erase your debts and all that.
darth reator,
My bad.
Guess I needed that “/sarcasm” switch.
Slow in the morning.
“Within the next 4 years we will see conscription in the form of either a draft or some form of mandatory work plan. Our youth will pay our debts through flesh and blood.”
Already been announced by the Obama administration:
www dot change dot gov slash americaserves
“The American Dream” - where have we heard that before?
One interesting note - the wording on the main paragraph was changed recently. It used to read:
but was changed due to public outrage. Can you find the difference?
Packman,
“Life, liberty and all that ‘other’ stuff”?
I think everyone knows where I stand on this? I’m dead set against volunteering in nearly all forms! Not so much a matter of “You work, you should get paid!” ( Nothing like that )
The use ( and abuse ) of volunteers is just more “enabling” of defunct and unhealthy organizations. Now I’m not going to drive past a burning wreck but I don’t think it makes sense to have say… hospital “volunteers” when there are administrators making 250k a year. Sorry, don’t like it.
I’m with you, D, on the notion of not volunteering for outfits that pay their top people like royalty. That’s why I choose to direct my community service efforts to grassroots organizations where we’re all volunteers, and, if there’s a paid staff, they’re not knocking down six figures a year.
Arizona Slim,
I have absolutely NO problem w/ that. When your “boss” is wearing a hawaiian shirt, cargo shorts and sandals and drives up in a 1997 Ford Escort Station Wagon working as hard or harder than anyone else..!?
Our HOA treasurer gal ( gotta be closer to 80 than 70 ) got an “award” for volunteering 12 THOUSAND hours for our local hospital! An “award”. Gee, that’s funny b/c we have plenty of MD’s on the board ( that haven’t practiced in years! ) and I’m pretty sure they got more than an “award”?
Hey, who doesn’t like to feel all warm and fuzzy about themselves? Well how the hell am I ’supposed’ to feel warm & fuzzy about basically subsidizing someone else’s opulent lifestyle?
Who’s gonna’ be the new Ernst Rohm?
I posted some more info - some really interesting stuff - an interview from 2006 with Rahm Emanuel, but hasn’t shown up for some reason. Let me try again with just a link:
http://www.wnd.com/index.php?fa=PAGE.view&pageId=80829
That’ll knock your socks off. We’re jumping right past socialism into pure fascism.
A snippet:
“Somewhere between the age of 18 to 25 you will do three months of training. You can do it at some point in your college time,” he said. “There can be nothing wrong with all Americans having a joint, similar experience of what we call civil defense training or civil service.”
Emanuel said the planned requiring service “will give people a sense of what it means to be an American.”
Since all us older folks won’t be able to retire, how about a Volksstrum for us. “One Nation, One People, One Obama!”
Personally, I don’t have a problem with community service. Heck, I’ve been doing so in my community for many years. And I know plenty of other people who are doing the same thing.
I don’t have a problem with community service. It’s involuntary servitude I object to.
Same here. Community service is a great thing.
What I do have a problem with is goverment requiring community service, especially when obviously only certain organizations would be eligible to meet the requirements.
(Note - my post above was in err in that I didn’t correct post Obama’s original statement. I’ve posted it below.)
Also, for some reason my follow-up posts regarding an old interview with Rahm Emanuel (now Obama’s chief of staff) aren’t showing up. Maybe google it. It’s a very enlightening article about plans for this civilian service force, directly from Rahm’s mouth.
Hate to tell you this, but for high-school kids, this train has already left the station.
Colleges are giving admissions/scholarship priority to kids who “volunteer for community service”…..it being the sign of a “well-rounded student”, you see.
All the politically correct buzzwords, of course. And all “voluntary”, of course. But to me, if it acts like a draft, then it is a draft.
I’ve volunteered for various community organizations, and I DO have a problem with this mandatory “voluntary” community service that is being proposed.
When I was in high school, we had to do mandatory “voluntary” community service…24 hours requirement in order to graduate. This would not have been a bad thing except we could only go through certain organizations to do it. I did volunteer work all through junior high and high school over my summer breaks, and you can just imagine how ticked off I was to be told that my summers of unpaid, volunteer work in the snack bar of a peewee little league/softball team did not count as “community service!” Nor did all those afternoons working as a volunteer page in library shelving books count either. Nope, we had to go volunteer with huge programs like D.A.R.E. and the like, which consisted of us piling into a van, going to a poorer school district, and preaching the evils of using drugs to grade schoolers and pre-teens, while some local celebrities and politicians showed up, smiled and took some pictures, prattled on about the virtues of “community service and how they were volunteering too!” and then left after the cameras stopped rolling, all without doing any actual work. The best part about my mandatory “volunteer community service”? Watching some enraged junior highers (sons and daughters of crackheads and drug addicts) tip over the D.A.R.E. van and destroy it when we visited their school. And the local radio celebrity fleeing the scene in his expensive car when he realized they might come after him next.
And if I had to do something like a 100 hours of mandatory community service in college, I would of screamed. No way did I have time to volunteer during my college years…I was too busy going to school full time and working a paid job to pay for said school!
Like I said earlier, I have no problem doing community service…as long as I get to choose which organization I can work for (and not just a special, limited few) and I can set the amount of hours I can work. Anything else is community slavery, period.
I give up - what is the difference between the the two sections?
The Peace Corps is very very hard to get into.
Oops, I just realized I pasted the wrong thing in the second block - it is indeed the same as the first in my post. Doh.
The second part (earlier version), was supposed to be:
I’ve bolded the part that was later changed by the Obama administration.
Ironic that the first black president would be the one to propose reinstituting slavery.
LOLOLOL!!!!
“but was changed due to public outrage. Can you find the difference?”
I think you pasted the same text twice, packman…
Yep. See correction above.
SD Union Tribune
Pension shortfall has grown to $2.7 billion, analysis says
By Matthew T. Hall
STAFF WRITER
A new analysis of San Diego’s pension system shows the gap between promised benefits and money to pay them has widened to $2.7 billion, wiping out progress the city made toward shoring up a sagging retirement fund. The shortfall eclipses the $1.6 billion gap in 2005, at the peak of a city pension crisis that drew national attention. City leaders created the problem by boosting pension benefits in exchange for pension board approval of inadequate funding of the system.
P.S. I recall reading how the actuary for the SD City Pension plan used some variant on exotic financing to patch up the pension picture. How is that plan panning out?
Sure wish I could find the article that describes it…
“P.S. I recall reading how the actuary for the SD City Pension plan used some variant on exotic financing to patch up the pension picture. How is that plan panning out?”
The deficit was $1.2B two years ago, now $2.7B. It looks like it was patched up with an iceberg.
“City leaders created the problem by boosting pension benefits in exchange for pension board approval of inadequate funding of the system.”
All over the United States.
Seriously?
Yes, seriously.
I can speak most directly for NY and NJ. In NY they passed a pension enhancement at the peak of the bubble in 2000, after having cut employer contributions at the state level to zero and quite a bit for local government too. As part of the deal, employee contributions were cut and pensions were adjusted for inflation, in some cases massively for those already retired.
In NJ Christie Whitman borrowed against the pension plan and spent the money, saying stock market returns would pay it back. Unions went along in exchange for pension enhancements.
For the Chicago Transit Authority, they handed out all kinds of pension enhancements, particularly for those at the top, while “saving money” by draining the pension plan to pay for retiree health care.
City: We don’t have money for your pension, but if you don’t mind that we don’t have money for your pension, we promise you a higher pension! [you probably won't get either pension btw].
Pension board: Sign us up!
I’ve been trying to figure out why a city that doesn’t have the money now for pensions would magically have the money in 10 years from now.
Of course, that’s how every “Interest Only” mortgage of late was sold (and you’ll magically have more money through payraises..heh, heh, heh.). I guess I shouldn’t be too surprised.
For New York’s political class the answer is obvious: the future is when they and their backers expected to be living high on the hog in Florida, while the disaster was someone else’s problem.
They didn’t count on Florida going under too.
How could this happen in “America’s Finest City”?
How could it happen everywhere in the United States.
Here in New York, the public employee unions have an idea on how to tackle the budget crisis — let current workers with seniority retire several years early with full pensions!
If you don’t replace them, the only hit would be to public services, which the rich don’t need and the politically powerful get special access to what’s left. That and tax increases can close the budget deficit.
And you can pretend the cost is zero by getting union permission to defer additional spending for pensions and retiree health care into the future. That ensures that when the economy recovers, all the additional tax revenues will go to the retired and not to a recovery of public services or taxes, which will be permanently worse and higher respectivley.
Yep.
It will be interesting to see at what point the young (whom both the unions and the government are essentially abandoning with “retire early with full pension” schemes) stop playing along.
The other thing that’s important to realize is that the vast majority of those hitting retirement are not covered by pension plans.
How are they going to feel when told all they get is a stripped down version SS and oh, by the way, there’s not enough money to hire enough young police officers and to cover important city services like transportation?
I wouldn’t necessarily count on those full pensions lasting the lifetime of those currently retiring.
They’ve go the police and the courts, both of whom get the pensions. And how many of you made a decision who to vote for for state legislature, or even found two names on the ballot? They’ll cancel elections if they have to.
Companies that go bankrupt can’t fund pensions, and we’re going to see a lot of companies go bankrupt as the recession worsens. PBGC’s collapse is the next big looming bailout for Boomers at the expense of their children.
They’ve go the police and the courts, both of whom get the pensions. And how many of you made a decision who to vote for for state legislature, or even found two names on the ballot? They’ll cancel elections if they have to.
True. But at some point there will be a critical mass of police, especially, that will be part of the “abandoned” ranks. Meaning their world consists of no pay raises, no pensions, minimal benefits, and overworked due to lack of proper budget.
Which policemen do you place your bets on? Those who have everything to gain if their retired brethren lose pension benefits or those squawking on the sidelines about their “due”?
Today’s unions are nailing their own coffins by ignoring and abandoning their future members.
WT Economist,
You’ve described Oregon to the “t”. Back in the 90’s ( when the market was ‘rockin’ ) OPERS passed a measure assuring themselves of “no less than an 8% annual return”. ( I’m totally serious here )
When it became obvious in the early 2000’s that it was clearly unsustainable, services evaporated overnight! Then they quickly passed a “punch out” measure allowing ‘certain’ state employees to bail w/ full pensions and benefits, get this, no later than 2003! ( These guys can work fast when it’s in their own interest can’t they )
We’ve been living with bare bones service ever since. In short, I agree.
Its worse than that as a lot of companies are canceling their 401k matches. Younger people will be facing a retirement with a smaller 401k and no pension. I can’t see them agreeing to fund lavish retirements for other people.
Skip,
Pffftt, and neither can I! Think Roth?
In 1791 Thomas Jefferson said:
“If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied.”
John Danforth, Republican senator from Missouri, was reported in The Arizona Republic of April 21, 1992 as follows:
“I have never seen more senators express discontent with their jobs. …I think the major cause is that, deep down in our hearts, we have been accomplices to doing something terrible and unforgivable to this wonderful country. Deep down in our hearts, we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. …We have defrauded our country to get ourselves elected.”
The Federal Reserve Act was passed during the presidency of Woodrow Wilson. Just before he died Wilson is reported to have said that he had been deceived and “I have betrayed my country.” He also said:
“A great industrial nation is controlled by its system of credit. Our system of credit has been concentrated. The growth of the nation and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world - no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men.”
The new standard government lie that “No one could have seen this coming” would be high comedy were it not for the bold and blatant high crimes the lie is intended to hide.
“no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men.”
Jefferson, a strong advocate of separation of Church and State, would have also been disappointed that certain churches could bankroll political initiatives in California and still retain their tax-free status, or pressure government to install monuments to their religion in public parks while keeping other religions from doing the same.
The Constitution and principles of Confederation unravel in a number of ways…
The quote by Jefferson is not in the University of Virginia’s digital archive of his writings at http://etext.virginia.edu/jefferson/texts/
Could you give a source?
I think it was in the Money Masters video.
I didn’t attribute the quote to Jefferson, but the original poster didn’t provide a source, so I’m presuming the question is directed to her.
For years it seemed we commented here on how Wall Street and Main Street had decoupled. What happened???
Bad-news litany continues driving Wall Street down
Trillion-dollar loss over past three days
By Sara Lepro
ASSOCIATED PRESS
November 13, 2008
NEW YORK – An increasingly despondent Wall Street fell for the third straight session yesterday as investors absorbed another series of dismal corporate reports and news that the government won’t buy banks’ soured mortgage assets after all. The Dow Jones industrials dropped more than 410 points, and all the major indexes lost more than 4 percent.
The stock market has lost about $1 trillion over the past three days, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks.
“The stock market has lost about $1 trillion over the past three days”
LMAO! It’s like all that tasty “equity” in their homes going poof that people have been complaining about. Now you see it, now you don’t.
Now investors get to pick up the tab for all those seven-figure bonuses paid to investment bankers over the past several years.
I had a big argument last night where I was arguing that stock prices should be based on anticipated dividends, and not the anticipated future rise in the price. “But some stocks don’t even issue dividends, and almost none of them have big enough dividends to justify the price.” That was my point, allmost all of them are overpriced.
BINGO! Senior managements job should be to boost corporate profits and thereby the dividend, NOT the actual stock price.
So simple yet so complicated.
But their options are based on the stock price and not on profits.
You have an agency problem.
Yup. So you remove options as part of CEO compensation. Oh wait, that would mean no one would take the crummy job. Riggghhhhttt….
Actually, as Buffett points out, you can always adjust the options to reflect “retained earnings”. It’s hardly a difficult calculation — I think it involves one division and one addition.
But, of course, there is no incentive to do this.
Agency problem. It’s not going away any way you cut it.
Well arguably it’s easier for them to game the profits through fradulend accounting than the stock price. Fraudulent accounting DOES affect the stock price indirectly, but since potential buyers have in interest in NOT overpaying, they have in interest in questioning the books.
Jim A.
I’m not disagreeing but the reality is since the 90’s the function of the “rockstar” CEO is to ‘manage’ the stock price ( not the company! )
Tell you what, you just go manage the company and we’ll tell ya’ what the stock is worth, fair enough?
Well said CEO is, at some level, working for the owners (stockholders) whose first priority usually IS the current stock price, not the long term viability of the company. I’m just not sure how there interests are served by overcompensating the CEO. The money comes direcly out of their pockets. And don’t get me started on the stupidity of “But if we tax the rich, all those CEOs won’t be as motivated to perfrom as well.”
Jim A,
No one need wind up my spring on ‘that’ either. If you look back at the 90’s we had CEO’s from soup companies being brought on board telecom co’s. Why? Their “expertise”? No, ( because they had great reputations for bringing gonzo compensation packages to the board! )
Btw, what does Bob Nardelli know about running a car company? Just curious.
And of course arguably the REASON that stockholders and therefore boards of directors and therefore CEOs are more interested in stock price than long-term profitibility is that prices ARE speculattive. If you think that dividends will bring you the return on investment that you seek, then you’re interested in making sure that they continue by having the company well run. But if you just want to have some appreciation and sell, than financial shenanigins to pump up the stock price ARE what you want.
Jim A,
Exactly, hence the term “rockstar”. I’m just old enough to remember having parents and relatives that bought a stock simply for the dividends.
By the late 90’s CEO’s didn’t NEED to pay dividends as investors were falling all over themselves to pump up their stock price just based on ( what we later learned ) fabricated press releases and interviews!
Jim : I totally agree with this.
The whole market relies on appreciation which in turn is supposidly based on continually revenue / profit growth. How can they grow forever?
I predict that someday, shareholder value will be out of fashion. Stocks will go back to being based on cashflow. If you buy a stock, you expect dividends.
There are far too many stocks listed on the exchange. All are competing for you attention. Too many are not viable business so why should you want to own them.
Well I understand if a company -really- IS doing innovative things and are working on cutting edge technology ( but let’s talk about the o-t-h-e-r 95% of companies ) shall we?
Microsoft was reluctant to pay a dividend because that would mean they were no longer a “growth” company? I suppose in ways you ‘could’ assert that their investing in other, younger companies was your “dividend” but I’m fine with cash. No, really I am, cash is fine.
TCRAP = Troubled Consumer Relief Assistance Plan?
Treasury changes bailout’s blueprint
By Edmund L. Andrews
NEW YORK TIMES NEWS SERVICE
November 13, 2008
WASHINGTON – The Treasury Department yesterday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system, as Bush administration officials acknowledged that banks and other institutions were as unwilling as ever to lend to consumers.
Treasury Secretary Henry Paulson abandoned the idea of using bailout money to buy toxic assets and is working on a plan to help consumers.
With a little more than two months left before President Bush leaves office, Treasury Secretary Henry Paulson is hoping to put in place a major new lending program that would be run by the Federal Reserve and aimed at unlocking the frozen consumer credit market.
The program, still in the planning stages, would for the first-time use bailout funds specifically to help consumers instead of banks, savings and loans and Wall Street firms.
Despite the massive amount of money that Congress has authorized the Treasury to spend – $350 billion immediately and $350 billion that Congress would approve under a fast-track procedure – Paulson is running short of money and time.
Here is my bail-out plan. Looking for comment.
Objectives: deleverage the entire economy as quickly as possible while flooding it with enough cash to stave off deflation/depression.
Part 1:
Instead of pouring cash into banks, step in and force them into bankruptcy and sell off their assets for pennies on the dollar. We need special laws so the process will take a week at the most for any particular bank. Also force banks to cram down mortgages to an amount that reflects traditional income/mortgage ratios. If someone still can’t afford the mortgage, foreclose on them and get them out asap. If the bank takes a loss, see the first sentence.
Part 2:
Now with trillions of $$$ evaporating from the economy, provide govt issued debit cards to all employed Americans who have a reasonable mortgage and little to no credit card debt (or just the folks on this board if they are essentially the same population). Put $1000/month on the debit card, but only if it is spent the previous month on American made products (paying your mortgage is also acceptable). Just print the money, no need to add to the federal debt. Actually, tax the $1000/month and use the tax to pay down the federal debt. Do this for however long it takes to get demand and employment moving in the right direction. Start cutting back when inflation starts heating up.
Voila, debt gone, no moral hazard, responsible behavior rewarded, depression part deux avoided.
V
HAR! *snort*
Forbes
The Treasury Secretary
Trust Me, Again
Joshua Zumbrun, 11.13.08, 06:00 AM EST
Right or wrong, Treasury Secretary Paulson’s shifting strategies put his most valuable asset–his credibility–at risk.
(Credibility?! Yeah)
Paulson says he would like to use much of the remaining $350 billion to support consumer debt–the credit cards, auto loans and student loans that in regular times fuel much of the nation’s spending but have since ground to a halt. The Treasury is now exploring, along with the Federal Reserve, a possible “liquidity facility” for highly rated asset-backed securities.
…
In the face of the criticism, Paulson defended his actions Wednesday. “I will never apologize for changing a strategy or an approach if the facts change,” Paulson said.
Fair enough. But maybe it’s time to let everyone in on what, exactly, that strategy really is.
There is much more in the article —
Leigh
Leigh,
Priceless!
Bailout: $700Billion
Credibility? Worthless!
The strategy was to get his buddies a 2008 bonus.
Got Popcorn?
Neil
ANALYSIS
The case against GM bailout
Bankruptcy may be better option, some analysts say
By Micheline Maynard
NEW YORK TIMES NEWS SERVICE
November 13, 2008
DETROIT – Momentum is building in Washington for a rescue package for the auto industry to head off a possible bankruptcy filing by General Motors, which is rapidly running low on cash.
But not everyone agrees that GM filing for Chapter 11 would be the disaster that many fear. Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps GM needs to take to become a stronger, leaner company.
Supposedly, there are few lenders willing to provide DIP financing. I would prefer to see a Ch 11 and the Treasury to be the DIP financier vs. an injection today. Might be too logical though.
They had three decades to avoid this situation. What individual, I ask, gets the benefit of three decades to correct past mistakes?
The fact that: A. these companies are even in this predicatment, and B. that congress is making such a fuss - is a global embarassment.
The world is looking to us for leadership and all they can come up with are plans to recreate a long-dead past?
edgewaterjohn,
That much I ‘thought’ was obvious? Or who gets 3 decades of “living the dream” and THEN have others atone for their mistakes?
I heard on the TV, in passing, that GM is looking to sell assets and supplier operations to raise capital (AC Delco etc.) Problem is nobody wants to buy these operations from them, because, without knowing the direction GM is headed, there is no way to value them. Nobody wants to buy a business if there’s not going to be a market for your goods and services.
How can a profession whose forecasts almost always appear irrationally exuberant through the rear view mirror maintain its credibility?
WSJ
* NOVEMBER 13, 2008, 8:41 A.M. ET
Jobless Claims Hit 7-Year High
Trade Deficit Narrows as Imports, Exports Slow
By BRIAN BLACKSTONE and JEFF BATER
WASHINGTON — The number of U.S. workers filing new claims for state unemployment benefits unexpectedly soared past the half-million mark last week for the first time in over seven years.
…
The weekly jobless-claims data, which included a 25-year high level of total claims lasting more than one week, suggest further big drops in employment that threaten consumer spending ahead of the critical holiday spending season.
Initial claims for jobless benefits jumped 32,000 to a seasonally adjusted 516,000 in the week ended Nov. 8, the Labor Department said Thursday. That’s the highest since Sept. 29, 2001. Economists surveyed by Dow Jones Newswires had expected claims to only rise 4,000.
What credibility is there to maintain? You can’t lose what you never had.
Good point.
Paulson didn’t have real credibility. He only had the ILLUSION of credibility, and the lack of said credibility was sadly on display yesterday…
“The number of U.S. workers filing new claims for state unemployment benefits unexpectedly soared past the half-million mark last week for the first time in over seven years.”
US has 4 mil UE? Here in Ca we have 1.4 mil unemployed out of 18 mil in the labor force. Ca reported an UE rate of 7.7 % as of sept 08. These are ‘official’ stats put out by the CA Employmet development dept( EDD), which of course are to be taken with a grain of salt, along with any gov’t agency stat.
The real UE rate is way higher if u count total U-6 UE. IT is probably over 12%. To many of the labor force who have simply given up or are discouraged workers, starving contractors, off the books illegals, sales Independent contractors, and are not reported and do not file for UE or are not eligible. Who knows what the real CA UE rate is ? I bet it is at 15% now if u count all the part- timers working 15-30 hrs a week .
CA U-6 UE rate will be at over 20% by spring 2009. CA and the US are in deep doo-doo.
“unexpectedly.” Are we ever going to see the word expectedly or expected used?
The DJIA and the Nikkei are only separated by less than 50 points at this point in time…
When was the last time the DJIA was higher? Must have been 20 years ago.
remember… invest for the “long term”!
DJIA just docked with the Nikkei in outer orbit…
Both are expected to come back to Earth soon
And burn up upon rentry like a big ball of BS…
Asian Stocks Tumble, Extend Global Rout, on U.S. Treasury Shift
Nov. 13 (Bloomberg) — Asian stocks fell, extending a global rout, as the U.S. Treasury scrapped plans to buy mortgage assets, Commonwealth Bank of Australia said bad debts may double and China’s industrial output missed estimates.
Commonwealth Bank slumped 6 percent as Treasury Secretary Henry Paulson shifted the focus of the government’s $700 billion bailout plan to consumer credit. BHP Billiton Ltd., the world’s largest mining company, dropped 12 percent after oil and metals prices sank. LG Display Co. and Sharp Corp. tumbled after being fined for price fixing and as Intel Corp. lowered its sales forecast. China Construction Bank Corp. fell 4.7 percent in Hong Kong after the nation’s factory production slowed.
“Investors had expected corporate earnings and economic data to be bad, but the figures keep getting worse,” said Seo Jung Ho, who helps oversee $2.2 billion at UBS Hana Asset Management Co. in Seoul. “Paulson’s change in plans is making people wonder if our fears are coming true, that the financial crisis in the mortgage sphere is spreading to consumers.”
The MSCI Asia Pacific Index fell 4.8 percent to 82.32 at 7:32 p.m. in Tokyo. The stock index has declined 48 percent this year, valuing it at 9.8 times reported earnings. That compares to 18 times for the Standard & Poor’s 500 Index, and 8.9 times for Europe’s Dow Jones Stoxx 600 Index.
Washington’s $5 Trillion Tab (and counting…)
Fighting the financial crisis has put the U.S. on the hook for some $5 trillion a report says. So far.
For all the fury over Treasury Secretary Henry Paulson’s $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government’s response to the credit crisis.
According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system.
The estimate includes many of the various solutions cooked up by Paulson and his counterparts Ben Bernanke at the Federal Reserve and Sheila Bair at the Federal Deposit Insurance Corp., as the credit crisis continues to plague banks and the broader markets.
The Fed has taken on much of that total, including lending a cumulative $1 trillion in overnight or short-term loans since March to primary dealers through its emergency discount window and making a cumulative $1.8 trillion available through its term auction facility, a series of short-term transactions it began making available twice a month in January. It should be noted that a portion of the funds lent in these programs has been repaid and that the totals represent what has been made available.
The Fed has signaled a willingness to prop up whatever part of the economy it sees fit as part of the rescue plan, yet no matter how much money they commit to the rescue, there never seems to be enough to meet the needs.
Quite a conundrum…
My analogy about the bailout: You know there’s a 500 year flood coming because the snowpack is melting in the middle of the pouring rain and your ankles are already wet. You’ve decided to spend the remaining time between now and the main flood putting up a 2 ft high row of sandbags on a few short parts of the river so it looks like you’re doing something.
Of course, the time would have been better spent getting as many people as possible to high ground.
(I’m hoping I’m on the high ground…)
Qualcomm Inc. Chief Executive Officer Paul Jacobs said yesterday that he’s stopped hiring and is eliminating some research projects after a “dramatic” contraction in orders from mobile-phone makers. San Diego-based Qualcomm is the world’s largest maker of mobile-phones chips.
And they want to know why I don’t buy a house ?
“Can you hear me now?” may be changed to “I can’t hear you anymore”
“Can you hear me now?” may be changed to Mayday! Mayday!
Dear money distributors…
I’m an American Express cardholder and by power of osmosis, I feel I too should be afforded the same opportunity to become a bank that gets money for free.
Is it possible to overwater a money-tree?
I don’t think it is water.
Is Az_lender declaring herself a bank also?
Yes, Laddie, it’s definitely possible to over-water a money-tree. Many more house-plants die due to over-watering than under-watering.
I’m in favor of naming the homeless encampments springing up all over the country, “Bush Leagues”…
I never met a double entendre I didn’t like.
After January 20th, you won’t see a single article in the MSM about the homeless.
Same thing happened between Jan 1993 and Jan 2001.
Yup, they all got Bushwhacked.
“09:15 am : S&P futures vs fair value: +5.90. Nasdaq futures vs fair value: -6.50. Stock futures improve with just minutes remaining before the session’s opening bell. The change in tone comes despite downbeat jobless claims data and a dour outlook from a couple of economic bellwethers.”
Sell. Every. Rally. TM MMVIII MormonTeaCo
I actually prefer this melody:
Shoooort every rally,
Close on every trough,
Follow every rainbow,
Til you find your dream…
(Seems to be working; 5% closer to FI this week.
)
Game on!
“Shopping at Nordstrom in Miami this month, Maria Kakouris indulged herself with a $200 pair of satin-and-snakeskin pumps. Then came a spasm of buyer’s remorse. “Those shoes — they are still in my car with the receipt,” said Ms. Kakouris, a real estate agent. “I’m thinking, where am I going to wear them?”
http://www.nytimes.com/2008/11/13/business/13RETURNS.htm
What happened to the Wal-Mart rally?
Can someone please explain the volume graph on the GDOW? I am wondering whether that is a sort of financial tsunami rolling through, or just some kind of glitch in the chart?
The 5 year is even more interesting.
It’s just a momentary breach, a great buying opportunity. Buy with both hands. Go on, DCAs. It’s always a great time to buy.
The DCA advantage gets better by the day, as today’s dollar buys more shares than yesterday’s did.
Run DMCA? (dumb move cost averaging)
DCAs assume it’s always a great time to buy and prices always go up no matter what they paid. It’s ironic watching the housing bubble implode; these were the very same assumptions used by FBs and GFs.
That was quick. Oh, well. Snooze you loose.
Equity premium puzzle solved?
BULLETIN
U.S. STOCKS START THURSDAY WITH MODEST GAINS
Mark Hulbert
MARK HULBERT
Irrational exuberance redux
Commentary: Stocks now lag T-bills for the trailing 12-year period
By Mark Hulbert, MarketWatch
Last update: 10:14 p.m. EST Nov. 12, 2008
ANNANDALE, Va. (MarketWatch) — It was almost exactly a dozen years ago that Yale University finance professor Robert Shiller bent Alan Greenspan’s ear, prompting the Fed chairman to give his famous “irrational exuberance” speech.
Shiller and Greenspan both had to endure a lot of ridicule for what at the time seemed like an overabundance of caution, especially as the stock market continued to skyrocket for several years thereafter.
But, with the past dozen years now under our belt, Shiller’s and Greenspan’s concerns appear to have been remarkably well founded.
Consider two hypothetical individuals who started investing at the beginning of November 1996. The first put everything in the stock market, while the second put everything into 90-day Treasury bills.
The second investor, who has been sleeping like a baby for the last 12 years, was sporting a 3.6% annualized gain as of Wednesday night. The investor who put everything in the stock market, in contrast, was sitting on a 2.9% annualized return. (To calculate the stock market’s return I used the Dow Jones Wilshire 5000 index (Last: 8,497.33-39.15-0.46%) and included dividends.)
In other words, the stock investor’s return is 0.7 percentage points lower on an annualized basis than the return of 90-day T-Bills.
Whitehead sees slump worse than Depression
NEW YORK (Reuters) - The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead, said at the Reuters Global Finance Summit on Wednesday.
Whitehead, 86, said the prospect of worsening consumer credit woes combined with an overtaxed federal government make him fear that the current slump is far from over.
“I think it would be worse than the depression,” Whitehead said. “We’re talking about reducing the credit of the United States of America, which is the backbone of the economic system.” Whitehead encountered plenty of crises during his 38 years at the investment banking firm and was a young boy during the 1930s.
Whitehead warned the country’s financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans.
“I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America,” said Whitehead, who served as chairman of the Lower Manhattan Development Corp after the World Trade Center was destroyed during the September 11, 2001 attacks.
Pessimist.
Jas Jain — Will you share your opinion regarding when the chorus of gloomsters is chanting sufficiently loud to make purchasing stocks a sound investing strategy?
the chorus of gloomsters is chanting sufficiently loud to make purchasing stocks a sound investing strategy? You are making the art of stock investing seem like a primitive religion. Just add the drums, savages dancing around the fire, throw in an auto-da-fe, and you have the whole package.
In general, the herd is wrong. But I’m wondering whether when everyone agrees that depression is the likely scenario, that they are in fact correct—-because the actions everyone takes when they expect depression cannot produce anything other than a depression.
Will GDII be a self-fulfilling prophecy?
because the actions everyone takes when they expect depression cannot produce anything other than a depression. A counterexample: Nearly everybody took actions when they expected housing prices to go to the moon, and look how that turned out.
“–because the actions everyone takes when they expect depression cannot produce anything other than a depression.
Will GDII be a self-fulfilling prophecy?”
Grandpa bought stocks during GDI and made money over the long run. Whatever we are going through, I plan to buy stocks as well for the long run. ‘Buy when everyone is selling, sell when everyone is buying.’ Everyone is selling now.
I am 25 years old, and it’s VERY scary to think what the future will be like for my generation.
Useless college degrees, GEDs, spoiled kids that have to have everything, and a culture of spending instead of saving makes me wonder what the hell is going to happen to this country.
The government has all this freakin’ debt, and at some point, they are going to start paying for it.
We are gonna be screwed big time with taxes!
It realy sucks to be Generation Y
You bet. Now ask yourself, why did your parents (collectively) suck out as they could, instead of standing up for you, your siblings, your friends?
My conscience is clear, as I did all I could, ending with this final primal scream:
http://www.ipny.org/littlefield/
But the responsible members of several generations were in the minority.
http://www.r8ny.com/blog/larry_littlefield/generational_equity_and_the_legacy_of_today_s_politicians.html
actually, my parents are very responsible
they always taught me not to spend more than what I earned
they always told me: ‘if you want to buy something, save money and then buy it’
they lived in the same house for over 25 years, and downsized in 1999 paying cash
never pulled out equity, and they dont gamble in the stock market
my dad hates credit cards
and my mom’s only line of credit is at macy’s where she buys lotions for her face and gets good deals for being a member
Thanks to the Boomers, it sucks to be generation X too…Be afraid. Be VERY afraid!
I’m just another Boomer on the cusp, so sometimes it’s fun being an X Impersonator.
It’s a whole different set of angst.
p.s.
Tattoos seem to be the biggest challenge when i’m X dressing, and trying to pass.
You’ll very seldom see one on a Boomer…
Temporary tatoos. Like decals.
Alad, much easier for a borderline Xer to pass as a Boomer: just rent a Mercedes, wear Italian shoes, and feign ignorance of all things electronic. Having a Classic Rock station blaring in the background doesn’t hurt either.
Ow, some of that left a mark.
… rent a Mercedes, wear Italian shoes, and feign ignorance of all things electronic. Having a Classic Rock station blaring in the background doesn’t hurt either.
(Giggle.)
Don’t know why, but reading your post really made me clutch for a moment.
Gotta go crank some Foo Fighters and get a drink of Polygamy Beer and clear out the bad associations.
Smoke on the water; fire in the sky…
Anybody for a bong hit?
The Puddytat’s into bonging.
(Sorry, couldn’t resist, Puddytat.)
But at least he’ll wear a Santa hat, he says. That shows Christmas spirit. I approve of Christmas spirit.
LOL!!
NoSingleOne you forgot about wearing aTommy Bahama shirt.
In a sad Classic Rock note, drummer Mitch Mitchell of The Jimi Hendrix Experience died yesterday.
I knew I was getting old when the whole tattoo/piercing fad that started in the early 90’s when right over my head. I never could understand why you’d pay someone to put permanent graffiti on your body or pierce anything and everything on or in your body. I’m really hoping this fad is ending soon. I’m betting a tattoo removal franchise would do very well even in the GD part deux.
“Thanks to the Boomers, it sucks to be generation X too…Be afraid. Be VERY afraid!”
but for those of us that were aware of the coming carnage, there is a huge advantage over the clueless masses.
Not to worry. When I was your age gas cost 35 cents a gallon. Minimum wage was about 1.50 an hour. You’ll get used to the changes you’re generation voted for. Just think how nice it will be to be able to call yourself a millionaire.
Don’t let it be the “Y-me?” generation.
You are young and smart, you can do just fine. Approach your life with a strategy and you will be way ahead of the others.
Brett, it’s all happened before. The “Roaring ’20s” were a great time for most people. Then the GD came along. This recession/depression won’t last forever either.
The Greatest Generation didn’t have to bailout their parents and grandparents either. People at least lived within their means and sacrificed so that their children could do better than they did.
The situation today is 100% different. Gen X & Y was totally screwed by the Boomers, who masterminded the biggest Ponzi scheme in world history. It’s not going to be ok.
We were always worried when we boomers would get together for our secret meetings to take over the world, that pesky X & Y’s would find out, but they were too immersed in minutia make-believe to ever be wise to our scheme…
Technically speaking, the Boomers will also be on the short end of the stick and this wasn’t engineered by them.
The Boomers paid for the pensions and SS for their parents, both concepts were created and rolled out en masse right before and through WWII. The WWII generation’s parents were largely responsible for the creation of those programs and also somewhat were responsible for the conditions of the GD.
From a Boomer point of view, what’s happened is they paid their parent’s retirement tab in full and their are expecting their “due”. The problem is, of course, that neither pensions nor SS were actually designed to support mass retirements, especially when the following generation is roughly the same size as the retiring one.
Right now there’s just no way Generation X and Y can bailout their parents short of tax rates somewhere in the range of 75 or 80% (back of the envelope calculation) on income. Generation X and Y at least have some clue that SS will not be supporting their sorry butts in retirement. Most Boomers I’ve talked to personally have stuck their heads in the sand about SS and Medicare.
I suspect the “golden” years of the Boomers are going to be a slow long march into poverty for everyone as Boomers attempted to collect their due and the next generation somehow tries to survive, pay off their debts, and raise the next generation.
Brett, don’t play the game. Work under the table, refuse to pay federal taxes, and be your own man. Be frugal and follow your own drummer.
Lost in Utah,
…even here in the WUTT Capital of Orygone I’d be careful dishing out that brand of advice? Now, if you find WUTT then I suppose, fine, I’ll leave it to each man’s conscience but to advocate entire abandonment of “the system” could leave some high and dry when it comes to explaining just what you’ve been doing to support yourself all these many years?
Keep your day job Brett. Americans are restless and spoiled. We won’t put up with a recession a moment longer than necessary, as Bill in Carolina notes.
What the heck is WUTT?
Sorry, forgot to add:
Follow my advice at your own peril, even though it’s worked fine for many of my friends and associates, but you have to remember that we live in a different world, we’re in Utarrr.
Oh hey, I figured it out, WUTT, that is.
It’s how you Oregonians pronounce what, see, like WUTT the hey is WUTT???
BTW, over 30% of people here openly WUTT, if you can do such openly. But I didn’t say to abandon the entire system, just the feds. State and local taxes can provide some good things (like roads and other minor necessities). Also, I’m big on volunteering your time to help others however you see fit.
Refusing to pay federal taxes is just stealing from your fellow citizens. No different from stealing your neighbor’s car.
Fight the system. But not at the expense of your neighbors.
refusing to go along with the taxman’s extortion is not wrong. it is the taxman who is the evil doer.
dam dem dar eevul doours.
Brett,
I believe your generation will be OK. I think the generation that’s takes it prop. 8 style is mine. I’m 46 and considered to be at the tail end on the “boomer” generation. When this thing implodes, and I believe it will, those that have the most invested in the old system will be most greatly affected IMHO. Think of the starving Russian pensioners after their collapse. The younger generations will still have some time to rebuild. The old timers will not.
Mike
I am grateful that I somewhat understand what’s coming and have 2-3 decades on my elders to make sure my family and myself have some savings going into old age.
You are my screwed age. They took pensions away from us. Now they are taking health insurance away from our kids.
And Obama? “Yes we can?”
“We won’t let you!”
Is there something going on with the WB/WFC acquisition?
The options are diverging some today. They’ve been lockstep for weeks.
Tarp cancellation?
Well, this dynamic duo has been the only one thus far, it seems, for whom TARP has been working as a life preserver.
Maybe the fed guarantee of WFC loss on the deal may be going away? Why give that tax break to an evil bank that doesn’t lend the largess to the little guy?
Rule changers change rules.
Is WFC being supported by invisible wires or something? Are they the last “good” bank? They haven’t really budged an inch to the downside this year. Amazing.
“Those who booked a passage on the Titanic shouldn’t worry about opting for a 3rd class cabin”
The important thing to remember about the Titanic, is that 705 people survived.
Very seldom does a tragic misunderstanding take everybody down with the ship.
Another factoid is that they couldn’t fill the first lifeboats. Getting into a small boat in the middle of the cold North Atlantic didn’t look as safe as staying on deck. In most crises, there is an early period of insufficient concern until the panic sets in.
Jim A,
Like getting all hot and bothered about “supporting home prices” when efforts in just about ANY other direction would have proved more fruitful?
’round here you won’t find alot of argument with the proposition that our biggest problem isn’t that house prices are falling, it’s that they’re still too high.
Alad,
I am going to reply to you one of these days by posting early and exposing the fallacy of your reasoning.
Just not today.
please do. that could be a full-time job in itself.
Muir,
I’m all ears whenever you’re ready to divulge…
Also, I find it interesting that neither yesterday nor today are there shares of DZZ (double gold short) available to short. Yes, short the short. I’ve done it in the past with good results.
With this ETF rising steadily in the last week, why aren’t there shares for shorting? Either a tremendously successful short squeeze setup that leaves no shares to short where the shorts get whack on the move down to the mid 600s on the underlying; or TBTB are selling short whilst the suckkers are buying long, a golden bear trap.
Writing that made me dizzy, I hope it did the same for some of y’all, especially Oly.
You win!
Or nobody’s loaning those shares out through the “stock lending” mechanism.
They are so new that I suspect it’s something much more mundane like the IT people in all the banks didn’t add the ETF to their databases yet.
You overestimate their intelligence.
But I’ve done it before a number of times with this issue.
‘Yes, short the short’
dude, is it safe to be playing with both matter and anti-matter?
I hear they now are offering 3 X leverage ETF’s.
Is that like 5X Odds on Craps?
Only if you’re not the house.
(Acknowledging the rhetorical)
“is it safe ”
Shorting the short puts decay in my favor. It’s not safe, and no one should try it at home, but it makes good money in a deflationary environment.
Don’t explain things like decay to some of the crowd here.
Some only believe in Gold and Mad Max. They poo-pooh the notion that some people might actually understand some things.
‘Writing that made me dizzy, I hope it did the same for some of y’all, especially Oly.’
Yep. ‘Bout near puked, I was so confabulated.
Hey, where’s my flask? That’ll fix me.
We like short shorts!
Roidy
Oly, I knew that dizzy was one of your many fun flavors, so I thought of you whilst writing it.
You use ‘whilst’ in conversation! Hooray! Must be that big giant mutant brain you got there.
How’s that doing for you, anyway? Have you had to erect some sort of special scaffolding on your shoulders to support your head or else it flops over? Or do you just cunningly cloud the minds of observers with some sort of mental ray thingie, so as to walk around unnoticed?
How about you use your mental ray to tell me if I should eat a bag of Skittles, regular flavor, 16 oz., or else be more abstemious today and eat whatever I find in my purse.
What’s that you say? I should eat both?
Well, okay, then. Long as you’re quite sure.
Went to Gran Britain this spring and I liked it so much it stuck.
BTW, I finally got my shorts shorted, so gold should be dropping through the floor any minute now…
OG,
My large brain missed the part about the oversized coco. Are you theorizing I have a large cranium from my posts, or do you just remember my picture from ouro’s album?
I’ll be truly impressed if it’s due to the thread many moons back about IQ, and I’ll send you $20 if you remember what mine is. (no cheating)
Mayor: Atlanta needs a ‘rescue’[Needs a “federal rescue plan”]
Drastic measures: City workers’ hours, pay will drop 10% each week and hiring will freeze amid a budget shortfall.
Atlanta Mayor Shirley Franklin said Wednesday the city’s employees will have their hours —- and pay —- cut by 10 percent each week to help the city weather an expected budget shortfall of $50 million to $60 million.
The pay and hour cuts, which begin Dec. 1, affect 4,600 city employees.
Franklin also announced an immediate hiring freeze for most city agencies and said the city will have to cut back some services, dip into its reserves for about $12 million and make other personnel moves.
Blaming the shortfall on the nation’s economic crisis, Franklin said the city needs a “federal rescue plan” in addition to its cuts to balance the budget. In a letter Tuesday to U.S. Rep. Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee, she asked for federal investment in Atlanta’s —- and other cities’ —- infrastructure, public safety, and programs for job training and placement.
“The future prosperity of this country is tied directly to our ability to provide basic services and quality infrastructure to our citizens,” Franklin wrote. “We are at serious risk in failing in that most basic public responsibility.”
And if current economic conditions continue, she told the City Council’s Finance/Executive committee, “This will not be the last time you see me before the end of the fiscal year.”
“The future prosperity of this country is tied directly to our ability to provide basic services and quality infrastructure to our citizens,” Franklin wrote. “We are at serious risk in failing in that most basic public responsibility.”
They repeat the same old crap over and over to try and alarm people. Fact is they could and should cut way back. There are more made up BS ‘SERVICES’ it boggles the mind.
You mean pay debt service and pensions. There aren’t going to be public services.
My background is in public service (since left), and I have expertise in public finance. This is what kills me. It doesn’t matter how responsible you are, the fact that politicians did to all of us what the FBs did to themselves (and thus all of us) is taking us down. And those who benefitted have guaranteed money coming out at the top.
When private companies downsize, it is because there is no demand for their product or service. So it’s no loss. The demand for public services and benefits is going up, not down. And with one-third of the money or more going to the special deals of the past that no one will touch, a 10% decrease in revenues means a 20% decrease in services and benefits.
Exactly right. I’m in public service now, in Florida, watching the devastation. There are so many sacred cows that cuts get absorbed in increasingly smaller segments of the budget. Where some services are essentially wiped out.
What I’ve determined is that there is no real conspiracy. It is just incompetence from politicians. Apparently the skills necessary to get elected don’t always translate into being able to soundly manage a billion dollars of revenue.
Who woulda thunk it?
Sounds like a depression to me. Its got the quack and the walk, but, can it fly?
Sorry for not being an intellectual as I am just a me.
If I read this blog for three years straight do I get any credit?
Anyway, how many families are not going to grandma’s house this TG and Xmas? I suspect no waiting at the airports, no black friday and no after xmas sales.
I can envision people going to grandma’s, especially since they won’t be going to DisneyWorld or Hawaii. Grandma’s is the ultimate cheap vacation: free room and board. Add discounted airfares and its a good deal, and if she’s close enough you drive there.
Black Friday will definitely happen. Whether or not the mythical “consumer” actually buys anything is another matter.
I am going to VN for TG. That’s right, spending my money overseas.
‘If I read this blog for three years straight do I get any credit?’
You’ll get even better; you’ll get really super smart and know stuff. This will be thanks to Ben and all the seriously smart people who post here. Then you can either enrich yourself, or else just know stuff and sound smart when you argue.
But you have to read the HBB daily, and obsessively, like I do, and shun all other blogs, verily, as unworthy, because they are, and send offerings, and even pray. An altar might be going a tad too far, but you be the judge of that.
Why, I think back to the days before I found this blog and I just shake my head sadly at my iggerance.
Me and the Fam just got back to sunny Fla. Did the visitin’ last week while airfares were still cheap. Funny, we had a huge dinner and everything… it was just like the holidays without the stress. I think it will be a new family tradition. After all, I can celebrate the pilgrims and baby Jeebus whenever I damn well please.
Ann, as the last 8 years have proven…you don’t even have to be an intellectual to be president. All that book larnin’ crap is overrated.
Take it from someone who spent most of his life collecting various degrees and student loans, but not making a real salary until only 5 years ago.
Just remember: California real estate always goes up, in the long run.
WSJ
* REAL ESTATE
* NOVEMBER 13, 2008
Calpers Confronts Huge Housing Losses
Public Fund Faces Billions in Lost Value After Aggressive Push Into Real Estate
By MICHAEL CORKERY
The nation’s largest public pension fund, known as Calpers, is paying dearly for its ill-fated decision to become one of the most aggressive real-estate investors among public pensions.
Amid the rapid decline in the housing market, the value of Calpers’s investments in land and housing projects across the country had fallen 35%, to about $6 billion, as of June 30, according to recent performance results released Wednesday by the California Public Employees’ Retirement System.
The losses are likely to be larger now because the values were based on appraisals completed at the end of March. Since then, land values have cratered nationwide, as evidenced by the bankruptcy-protection filing of one high-profile Calpers undertaking, the LandSource land venture in California. An investment vehicle funded by Calpers sank $970 million in that venture, which holds 15,000 acres outside Los Angeles.
Calperfornians are so very screwed…
The losses are likely to be larger now because the values were based on appraisals completed at the end of March.
“likely”?
Where’s the puddy tat?
“Just remember: California real estate always goes up, in the long run.”
it does. in nominal terms. but long term could be 50 years…
What are the implications of the 10 yr T-bill dropping suddenly to 2.38 this AM?
That tells me the War on Savers has become a bigger national priority than Iraq or Afghanistan.
No fat left in the shat, and people must be bailing out of the perception of danger in mass numbers, cashing in everything that isn’t nailed down, to deposit it in the perception of safe-t.
Lower interest rate on my NCB HELOC, not that I’ll use it.
It went back up.
Bush: Intervention Not ”cure-All” for Crisis
By THE ASSOCIATED PRESS
Published: November 13, 2008
”Government intervention is not a cure-all,” Bush was to say in New York, according to prepared remarks released in advance by the White House.
The president was delivering a vigorous defense of free-market capitalism and easier global trade from the heart of Wall Street, at the venerable Federal Hall that was home to the first Congress and is within shouting distance of New York Stock Exchange.
Bush called for reform to the global economy that will strengthen it long-term and said leaders would this weekend ”discuss specific actions we can take.” He laid out examples of action he would support, including:
–improving accounting rules for securities, ‘’so that investors around the world can understand the true value of the assets they purchase.”
–requiring that credit default swaps be processed through centralized clearinghouses instead of over-the-counter markets.
–taking ”a fresh look at the rules governing market manipulation and fraud.”
–better coordinating national laws and regulations between nations.
–modernizing the World Bank and the International Monetary Fund, including giving voting power to developing countries, making executive boards more representative and both institutions more transparent and accountable.
*************
This sounds exactly like what POTUS promised after the Enron debacle. The man can’t be trusted….burn me once, shame on you-burn me twice, shame on me.
Sure, and they won’t even tell us what assets they are buying for the American taxpayer.
Prestidigitation Bush
“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.”
no need to tell: today they are buying stocks
Reuters
Soros says deep recession inevitable, depression possible
Thursday November 13, 11:01 am ET
WASHINGTON (Reuters) - George Soros, chairman of Soros Fund Management, testified at a House Oversight and Government Reform Committee hearing on Thursday. Highlights:
* Said “a deep recession is now inevitable and the possibility of a depression cannot be ruled out.”
Last year when I told and wrote friends and family that a New Depression was coming, I was always reminded that “jobs were plentiful, real estate would come back strong, and there won’t be any global financial meltdown”.
Soros must be imagining things. Tinfoil hat crowd, gloom and doomers, conspiracy theorists; we just don’t get that the Government has a PLAN for everything.
“Soros must be imagining things. Tinfoil hat crowd, gloom and doomers, conspiracy theorists; we just don’t get that the Government has a PLAN for everything”.
Well according to that catchy childrens song they were singing in California….
‘Obama’s gonna change it, he’s gonna rearrange it, Obama’s gonna change the world”
I would guess ‘they’ will be mailing out the little blue guide books Jan 21st.
I’m afraid that “Obamanomics” is going to follow the Democratic message of ‘hope & change” ……change everything and hope something works.
You mean:
‘head shoulder knees and toes, knees and toes…’?
Is anyone else having trouble with their posts? Half mine aren’t coming through. Of course, this one will, reducing that to .49.
Yes.
And I haven’t been a-cussin’ today, either.
Yup. Homeland Security must be screening them.
Tis aggravating.
Ignore the new Nasdaq and SPX lows. It’s just a temporary sell-off. Buy, buy, buy…..
BUY,BUy, BUY!
Bye.
When the media announces new lows it’s like announcing a clearance sale. The masses come out to buy. After a couple weeks, the reaction changes, however. The masses start expecting prices to stay low or go lower and they put off buying until a future sale.
A little humor that says it all: an imaginary dinner in which all the players in the disaster blame each other.
http://www.bloomberg.com/apps/news?pid=20601039&sid=a1fW2P6H4W5U&refer=home
Did Bush finish speaking? The stock market is down again
Wow, just as I logged on a was sipping coffee the house got a jolt. It was a quick one but got your attention especially if you are on the second floor.
Santa Cruz home prices down 31% in October.
http://www.santacruzsentinel.com/localnews/ci_10966082
test
Ron, it was just an earthquake drill: reuters dot com
It was right next to you, a 3.2, check out the USGS website.
Ironic that they’re having a drill today.
supposed to nest under silansron above
Start with the premise that the value of stocks was false ,add to that the
real estate values were false . Add to that that both the stock values and the real estate value were propped up by a false debt economy that relied on real estate going up . Only answer is to go back to a real economy .A real economy has jobs for its citizens . A real economy has a manufacturing base . A real economy has fair wages ,but not to the point where retirement benefits would bankrupt the Company.
Government should spent money on jobs for needed public goods such as
energy development ,roads ,bridges , certainly not more houses . The market needs to figure out where it has need and that will create the
jobs. Government money spent in this direction will not be wasted .Government money spent on has been Ponzi schemes is wasted
money .
The public is pretty aware now that something is really wrong . The losses are huge . The truth will set everyone free and stop the wasted bail-outs that are in large part designed to save industries that are liable as well as not productive . Really bad loans can’t be bailed out and further bailing them out will create the moral hazard of more loans going bad .The gamblers will game the system every time . We are not dealing with sincere borrowers and we are not dealing will a sincere Wall Street ,or with sincere Politicians . We are dealing with gamblers that lost the bet and they will do anything to keep from paying for their gamble . The same parties that were on watch during the biggest investment scheme in history are the same parties that are coming up with the cover my ass answers . Sure government has to keep some banks going for a functioning system so Main Street can function ,but
no need to keep the most corrupt and insolvent going .
http://www.forbes.com/home/2008/11/12/recession-global-economy-oped-cx_nr_1113roubini.html
jas will like this article. for what its worth I think its pretty acurate
I loved that headline: “Dr. Doom: The Worst is Not Behind US”
Stagnation. Nice.
Bailout Lacks Oversight Despite Billions Pledged for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.
“It’s a mess,” said Eric M. Thorson, the Treasury Department’s inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. “I don’t think anyone understands right now how we’re going to do proper oversight of this thing.”
Some lawmakers and their aides fear that political squabbling on Capitol Hill and bureaucratic logjams could delay their work for months. Meanwhile, the Congressional Budget Office, which also has some oversight responsibilities, is worried about the difficulty of hiring people who can understand the intensely complicated financial work involved.
Leading congressional representatives, when asked to explain this critical omission in their performance, said “D’oh!”
DCAs are always buying and it’s great. You can sell to them at the top and rely on their support at the bottom. Their mindless lemming like steadfastness should be respected and appreciated.
The scam market, in the face of horrible news (particularly unemployment), and after being down more than 300 and under 8k, is rocketing up, now with a gain of nearly 400 points on the day. Hah!
This 552 close must be the Obama Bounce.
Or ding dong that Bush is gone?
Or been down so long it looks like up to me.
Or can I get a witness that I lived thru the market’s tinkering and dinkering.
It was a good day to sell. Of course, over the summer would have been better, but I wasn’t paying attention then. My bad.
Anyone know what would be a good way to short Dubai / UAE real estate, or even UAE companies in general? I searched for UAE companies that may be on the US exchanges, but couldn’t find any.
I think UAE is going to pop big time. I’m sure it’s starting already, but I think it’ll *really* pop - like worse than the US housing market.
Reason being that the main feeders of UAE wealth right now, from what I see, are:
- Oil (below $60 a barrel - strike one)
- Tourism (going bye-bye due to depression - strike two)
- Iraq buildup, e.g. Halliburton moving their headquarters there (about to be cut back due to Obama - strike three)
I think UAE’s going to crash really really hard.
Thoughts? Ways to profit?
I’d take a look at news stories from the past few years. They should contain names of connected corps. that have been getting lots of work. When the work dries up so do the profits.
I don’t think I’d be shorting UAE financials. Their money is hard.
The PPT Cruiser has been recalled due to sudden-acceleration tendencies…
mellow yellow touched 699.
must be forced selling.
It sprung off of that pretty quickly. That was the third bounce off 700.
Debt cat bounce
ditto.
Just. one. hit.
DOW up 550+ points… any guess as to where the $2T that came, poof, from nowhere went? I’m guessing Mr.future Pres O. told Bu$h and pals where to stick it as they have been trying to hand over some nasty shiz on the way out the door… Response: Market to the moon for an utter catastrophe come Jan.
Got to save xmas, bonuses are are on the line. Boy, summer 2009 is going to be UGLY.
Time out for a feel good story:
http://realestate.aol.com/article/_a/higher-fines-proposed-for-housing-code/20081113102609990001
Big hedge funds say US bank bailout a “sweet deal”
Thu Nov 13, 2008 4:46pm EST
By Karey Wutkowski
WASHINGTON, Nov 13 (Reuters) - Hedge fund managers, who rank among some of the world’s shrewdest dealmakers, told Congress the U.S. government’s bank capital injection program did not have enough strings attached.
“The current terms are overly generous to recipients,” said John Paulson, president of hedge fund Paulson & Co.
He was among five hedge fund managers questioned on Thursday by the U.S. House Oversight and Government Reform Committee about Treasury Secretary Henry Paulson’s management of a $700 billion bailout program to unfreeze credit markets through taxpayer investments in financial firms.
John Paulson — whose attack on the plan was dubbed “Paulson versus Paulson” by the lawmakers — said any bank receiving federal funds should halt cash dividends on common stock and restrict cash compensation to executives.
He also said the government should demand a higher dividend payment from participating banks, possibly around 10 percent instead of the 5 percent rate now in place.
James Simons, a mathematics professor-turned-investor who now heads Renaissance Technologies, called the bank injections “quite a sweet deal” for firms requesting the funds.
John Paulson, Philip Falcone, Kenneth Griffin, George Soros and Simons were called to testify at the hearing about the role of hedge funds, their tax status and regulation. Each executive earned, on average, more than $1 billion last year.
Soros, the billionaire chairman of Soros Fund Management and a prominent philanthropist, said the Treasury Department’s execution of the program “is not adequate or acceptable.”
Soros, who has longtime ties to Democrats, said the Treasury Department should have made the cost of capital more expensive for participating banks. That would give banks an incentive “to put it to good use to get a good return by actually lending,” he said.
Lawmakers, Investors Ask Fed for Lending Disclosure (Update2)
By Alison Fitzgerald
Nov. 13 (Bloomberg) — Members of Congress, taxpayers and investors urged the Federal Reserve to provide details of almost $2 trillion in emergency loans and the collateral it has accepted to protect against losses.
At least five Republican members of Congress yesterday called for the Fed to disclose which financial institutions are borrowing taxpayer money and what troubled assets the central bank is accepting as collateral. More than 300 more investors and taxpayers also pressed for more disclosure in e-mails and interviews with Bloomberg News.
“There cannot be accountability in government and in our financial institutions without transparency,” Texas Senator John Cornyn said in a statement. “Many of the financial problems we are facing today are the direct result of too much secrecy and too little accountability.”
House Republican leader John Boehner and Republican Representatives Jeb Hensarling of Texas, Scott Garrett of New Jersey and Walter Jones of North Carolina also are pressing Fed Chairman Ben S. Bernanke to elaborate on the Fed’s emergency lending. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in the separate $700 billion bailout of the banking system that was approved by Congress last month.
Bloomberg News has sought records of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.
Sorry, but it seems even our congress critters have no clue that the Fed doesn’t work for the government. Bernanke is smart enough not to splain it to them I guess.
United States
Hank Paulson’s latest response to the financial crisis
More rabbits from the hat
Nov 13th 2008 | WASHINGTON, DC
From Economist.com
As Hank Paulson buries one attempt to solve the financial crisis, he and regulators unveil two more
ONE of the most humbling features of the financial crisis is its ability to humiliate policymakers who, thinking that they have a bazooka in their closet, soon discover that it is a mere popgun. When Hank Paulson, the treasury secretary, first called for a $700 billion programme to buy troubled mortgage assets (the TARP), markets sensed salvation; when Congress first rejected it, panic ensued.
The programme passed but by then America’s mortgage crisis had become a global panic, dragging down banks and infecting all sorts of debt.
Guy on CNBC called him out today. It was kinda nice. Basically said that Paulson was one of many saying that we absolutely had to buy these bad assets and HP was so sure it that he knew the market would fail if we didn’t. Now he’s so sure that changing course is the right move.
This guy’s premise was that the market will be showing many more movements to the downside as long as they are so sure of things that they reverse course and try something else….something that they are also sure of.
the money is now a tool with which to manipulate not only banks but participants in the big game.
no tickey, no laundry.
the money is not the problem.
the oil?
the gold?
the people?
the food?
the water?
the guns?
the content?
the family?
the future?
what are we to do as a Nation of Nations to satisfy the global peoples?
The loudest voices at the G20 is not #G20 or G1 (G1 is the Euro). Its more like G#3 and the mean of G11-14.
but I digress.
I miss hoz.
a dollar a yen a frank a pound a Euro.
that’ll teach the Chinese a lesson that America wont soon forget.
Ladies and gentlemen, kindly place your bets.
latest news
[$INDU] Dow Jones Industrial Average up 556.18 points at 8,838.84
METALS STOCKS
Gold futures dip, then rally in electronic trade
Prices drop below $700 an ounce on Nymex for the first time in three weeks
By Myra P. Saefong, MarketWatch
Last update: 4:22 p.m. EST Nov. 13, 2008
SAN FRANCISCO (MarketWatch) — Gold futures dropped below $700 an ounce Thursday for the first time in three weeks, extending their losing streak to three sessions as recent weakness in the U.S. stock market prompted investors to take more money off the investment table.
But prices for the precious metal turned higher in electronic trading as the Dow Jones Industrial Average ($INDU 8,835.25, +552.59, +6.7%) rallied. The index climbed more than 500 points Thursday after touching a low below 8,000 for the first time since Oct. 10 and falling for three days in a row.
…
“We received additional news about the global recession, as Germany declared the country is in a recession,” said David Beahm, a vice president at precious metals retailer Blanchard & Co. said in emailed comments. “As the economic crisis sweeps the globe, the only option that central banks will have to save their economies will be to dump liquidity into the markets.”
And “as inflation rises across the world, investors will be looking for portfolio protection,” he said. “Gold will be the asset that protects and builds wealth during this period of what could be hyper-inflation.“
With so much volatility, it is better to hide beneath the table than to be playing the wheel.
I know.
It’s one thing to be out there when the surf’s up - there’s money to be made in the waves of volatility. Right now, though, there’s a hurricane whipping up the waves. I’m thinking I need to be more concerned with shelter then worrying about growing the nest egg.
Signs of turmoil grow as G20 looms
By FT reporters
Published: November 13 2008 21:05 | Last updated: November 13 2008 22:14
Evidence of global economic turmoil mounted on Thursday as leaders of the G-20 group of nations began to arrive in Washington for this weekend’s summit.
Germany plunged into recession after a steeper-than-expected 0.5 per cent fall in economic activity in the third quarter, new data showed. In the US, the government said the number of workers filing new claims for unemployment benefits rose last week to 516,000, its highest level since 2001. Meanwhile, China revealed that its industrial growth hit a seven-year low.
Dear Fellow HBB’ers:
My crime against humanity occurred last Saturday. I’ve tried to keep the secret, but the guilt about what I’ve done is really starting to keep me awake at nights. I’m not Catholic, but in this case a confession to to the ministers of the Church of Latter Day Thrift (Lessmans?) seems to be appropriate.
I have committed an unpardonable act:
I bought a 46 in 1080p LCD HDTV last weekend….
From Wal-Mart…
Using my Visa card…..
For $799.00……
I normally would have paid cash, but it’s been kind of a bad year, what with having to go to court again over the custody issue with my daughters, and getting them away from the pervert/lecher the ex- married…..it was expensive, but something I had to do.
That, and the money I had to send to the IRS. I would have used my “stimulus check” for it, but the Government didn’t think I needed a stimulus check. And I know extenuating circumstances don’t count.
It occurred to me that I was being punished for my moment of weakness by having my daughter’s boyfriend hanging around here all week……but then I realized that he was hanging around here BEFORE I bought the TV.
And I have found, much like beer-goggles, that most of the local news anchors were a lot more attractive on my old 19 inch TV, versus seeing their fine details in digital glory on the new one. Makes me wonder if I should ever buy a porn DVD…….
Therefore, I am asking the congregation to determine an appropriate punishment for my transgression. Please be merciful.
Sounds like you got a good deal.
Funny, I spent my stimmy on a new computer at 799.00 and I still do not know how to burn a disk on vista.
my new term:
Twenty One Chump street!
make only the minimum payment for the next 4 years. Say the pledge of alligance and hold your hand over your eyes with every online payment.
toobus enjoyus maximus.
you are exonerated.
fixer,
As a veteran parent, my advice is to punish the children. Also, defile something left around that your Ex cherished.
Blue Skye
Send me the TV. Thanks in advance.
Since my 12 year old 36″ Trinitron imploded last spring I’ve been eyeing the flats since. Why aren’t the prices collapsing on these piece of $hit? All the retailers are getting sliced and diced yet know slashing of prices? I’ll go without before I hand these money grubbing pukes 3x over their cost for manufactured junk.
Think positive ! “Housing market holding steady …The median price for a single-family home rose to $500,000 in October … but still sold for almost a third less than what houses were going for at this time last year.”
http://www.santacruzsentinel.com/localnews/ci_10972477
C-SPAN is currently running the Oversight Committee meeting today that produced the aforementioned quote from George Soros. There are four other guys there, all highly successful genius Americans (all in Forbes 400: lowest 165, highest 41. I think all self-made men). For instance number 41 is James Simons who’s worth over 7 billion dollars: started off a mathematician who cracked codes during the Vietnam War for the Defense Department. All founders of their funds: I think earlier they were announced as having made the most money for their funds last year, I assume from betting against the market for the most part. They’re describing the stuff we talk about all day (this are the actual people making the bets!), defending their parts in in, how they think it should be fixed, in their own words. Amazing watching for someone who reads this blog day in day out!
I noticed they defended
1. The fact that they pay 15% on income of a billion a year while school teachers firefighters engineers scientists factory workers pay 25% and up.
2. That they shouldn’t have to reveal their positions.
I say BS get the pitchforks.
They pay what they are told to pay, not a penny more. Same as us. They wish they could pay less, and are certainly not interested in paying more. Same as us.
Lack of regulation created this once-in-a-lifetime situation, and those businessmen took their personal fortunes and indisputable genius. and bet against the flow. In a society that heralds the accumulation of wealth (I bet I’m part of a very small minority whose value system differs from that), then these guys are the supermen of the world.
I’m sure they’re all evil as the devil’s own spawn, but my hats off to anyone with the genius to earn as much in one year as a quarter of a million minimum wage earners.
I also say BS get the pitchforks. Just because these Hedge Fund guys
were more clever than the boobs that set up the Bogus Casino doesn’t let them off the hook .
First ,the politicians call in t 5 rich successful Hedge Fund guys for testimony . At least they could of had one guy on the panel that lost his shirt and his clients shirts with this meltdown .
One Hedge Fund guy in so many words said that it was the Rating Agencies fault . So,these guy are trying to say that they Knew the Casino was corrupt and bogus ,yet it was OK for them to play their
bets in the bogus Casino and make a fortune on shorting the goofs
that they knew would fail . That’s like a real estate agent saying it was ok to send a liar loan borrower to a loan agent because they were only making money off of somebody else committing loan fraud and they never signed the loan papers . Anybody that deals with other peoples money has some duty to be more than just a opportunist . Those smug bastards were treated like kings on the stand . When is Congress going to ever conduct investigations in which they ask people to testify who were victims of the
scheme ,rather than the guys who were pulling off the scheme .
Easy for them to try to make the Rating Agencies the scapegoat . No mention of the fact of the conflict of interest between the Rating Agencies and the Market Makers as well as how much the securities
makers were misrepresenting their product and risk . Why don’t they mention the risk model makers as being the culprits ,or the de-regulation policies that were at the heart of the Ponzi-scheme gaining life . Or how about how the lenders breached there duty to prevent fraud or underwrite the securities right before they diced them up into investment tranches ?
Not one of these Hedge Fund guys had any moral urge to report
these dealings that they were seeing in this Secondary market Casino, or sound out the bell about the house of cards that might of saved the World . They just sought to make money off of junk paper with the kind of side bets they make .
The rich guys on the stand didn’t want their taxes raised , and didn’t want their industry subjected to regulations and they felt they served the market by raising venture Capital at times . They bragged about bringing Companies out of BK and saving Jobs by that act .
I didn’t see the entire hearings ,but what I saw was Devils in expensive suits ,that sold their souls a long time ago with the rational of ,”‘Whats wrong with taking advantage of something fraudulent if you know when to short it .” Not these guys ,these
billion dollar Hedge fund profit guys are there to make money and lobby Politicians no doubt . Gordon Gekko’s from that movie Wall Street in real life was my impression .
When the Politicians asked them in essence why it was fair that
they only payed 15% tax on their Billions of earnings ,they came up with some rational that I didn’t catch the whole answer .
I’m not against venture capital ,or even the concept of Hedge Funds in a market ,but what is this deal where they made so much money betting on these fake real estate backed securities ? Later I heard a news reporter say that 70% of the Hedge Funds have not
been successful lately ,so why were they just interviewing the
successful ones ? I think the whole darn Wall Street Casino is reeking of insider trading anyway . Why doesn’t Congress conduct real investigations? Are these people objective ,what a joke .
George Soros casually refers to his company as his “family”, then says he “came out of retirement to protect his capital”. Then last year successfully did just that. He also mentioned that all his money is in his fund: same with Paulson. The others are the largest investors in theirs. They are all speaking “on the record”. Amazing.
We should all start watching this stuff (I say WE - I think this is my second post! But I read this every day - it doesn’t FEEL like lurking :-D) Much better than relying on the papers putting their insane slant on which quotations get selected (probably always the one with the most shock appeal).
These guys are like the rock stars of this blog! The Citadel founder looks the most shaken, and has admitted to his picks getting hammered in the past several weeks. He countered the questioning by noting that poor government regulation drove thousands of high-paying jobs to England. It made me imagine colonial “us vs. Europe” debates with the then government. I suppose this will all be in history books one day too.
The government folks (Reps from the House, I think) are behaving like cretins towards those men: posturing, asking them rudely to speak louder into the mike, and asking questions I’ve known the answer to for a long time thanks to this blog. These are the most highly compensated, probably most highly intelligent individuals that our country is currently producing. The govt folks were probably all secretly or even publicly praising their success just two or three years ago: these are the elected goverment hedge fund regulators. Now their trying to pass the blame. The billionaires all seem to say “don’t blame me, it’s your lack of regulation that created this financial world that I profit from. If it was set up different, I would invest in it different”.
Ironically, now that the govt. has changed it’s mind about how to spend the $700bln bailout money, they obviously don’t know what to do, and may even take some or all of this advice, and possibly leave the fate of our country on what’s being said right now as I type.
I’ll admit there’s reefer involved, but even without I think I’d find this all very fascinating!
I knew that one name sounded familiar: John “Paulson” is the guy who made $3.7 billion last year, probably the biggest one-year payday in Wall Street (maybe even American) history! I remember posts on here where his name was confused with Hank’s. Soros and Simons reportedly made 3 billion each: Simons claims to not even have bet against the market last year. That might even be the most amazing part of all- he’s 70! Not too many septuagenario-Americans going out and bringing home bacon like that!
Got this BS in an online NewsLetter from an area Realturd..It’s just NAR/CAR spin. Of course I shot of my
usaual type of reply. Don’t know why he doesn’t just delete me from his (short) list!!
Quote
What will the fabled “bottom of the
market” look like? Here are several
indicators likely to precede an increase
in housing prices and activity.
New home sales rise
New homes began experiencing a price correction several months before existing homes. Logically, one would also expect new home sales to start rebounding ahead of existing home sales. To provide a decent, albeit
unscientific, gauge of the market, find a few new home developments and monitor the prices in these neighborhoods. Project that action forward 6-12 months, and you should have a fairly good view of the future of existing home sales.
Alt-A borrowers continue to make payments
We all know the devastating effect that subprime mortgages had on residential home sales. Most analysts believe that the subprime foreclosures are coming to an end. However, Alt-A mortgages could provide a new wave of foreclosures. Alt-A mortgages are made to borrowers with high credit scores, who refuse to provide documentation of their income. Some analysts believe many of these borrowers exaggerated their incomes by up to 50%. Many of these mortgages (about 1/3) were
signed in 2006, with low teaser rates that reset in 3-5 years (beginning next year). This could provide a massive wave of new foreclosures, driving prices down further, or it could be much ado about nothing. Only time will tell.
Positive economic news.
Many analysts believe that the housing market is ready to rebound, but it is being suppressed by a torrent of negative financial news throughout the US economy–namely recent headlines suggesting unemployment and inflation are on the rise. When these factors begin to turn around, housing prices should follow.
End Quote.. Did Yun or L.A.Y write this Cr*p.
One graph sums it all up:
KAPOOM!!!!!!!!!!!!!!!!!!!!!!!!!!
FT graph documents the aptness of my preferred metaphor:
COLLAPSED CREDIT SUPER NOVA
Financial Times
Into the storm
By Chris Giles
Published: November 13 2008 21:27 | Last updated: November 13 2008 21:27
After the sudden end to a credit boom coincided with last year’s surge in commodity prices, the outlook for the world’s richest countries has not been worse in generations. Oil may again be cheaper but banks are in trauma. G20 leaders gathering in Washington know that big risks remain. Use the hyperlinks below to explore this FT guide to the causes and effects of the daunting, near-global recession that is taking hold.
2007 Q1-3 ABS $792 bn Non-agency MBS $601 bn
2008 Q1-3 ABS $153 bn Non-agency MBS $40 bn
2007-2008 YOY Percentage Decline (Q1-3):
ABS = (153/792-1)*100 = -80.7 percent
Non-agency MBS = (40/601-1)*100 = -93.3 percent
WSJ
* OPINION
* NOVEMBER 13, 2008, 11:47 P.M. ET
Stable Money Is the Key to Recovery
How the G-20 can rebuild the ‘capitalism of the future.’
By JUDY SHELTON
…
At the bottom of the world financial crisis is international monetary disorder. Ever since the post-World War II Bretton Woods system — anchored by a gold-convertible dollar — ended in August 1971, the cause of free trade has been compromised by sovereign monetary-policy indulgence.
Today, a soupy mix of currencies sloshes investment capital around the world, channeling it into stagnant pools while productive endeavor is left high and dry. Entrepreneurs in countries with overvalued currencies are unable to attract the foreign investment that should logically flow in their direction, while scam artists in countries with undervalued currencies lure global financial resources into brackish puddles.
To speak of “overvalued” or “undervalued” currencies is to raise the question: Why can’t we just have money that works — a meaningful unit of account to provide accurate price signals to producers and consumers across the globe?
WSJ
* REVIEW & OUTLOOK
* NOVEMBER 14, 2008
Targeting Your 401(k)
Congress has an eye on the tax break for your retirement.
…
At a hearing last month, Mr. Miller put the 401(k) system into play. Under the current system, employers match employee contributions that aren’t taxed until redeemed, an indirect subsidy worth some $80 billion today. “We have to start to think about in Congress . . . whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should,” Mr. Miller said. “For a taxpayer investment of this size, we must ensure that the structure of 401(k)s adequately protects the nest eggs of participating workers.”
It seems not everyone believes hair-of-the-dog stimulus monies grow on trees.
WSJ
* OPINION
* NOVEMBER 13, 2008, 11:17 P.M. ET
Why Spending Stimulus Plans Fail
What Congress gives to some it takes away from others.
By BRIAN RIEDL
Congressional Democrats are now demanding another economic stimulus package to “inject” as much as $300 billion into the economy. The package will fail — just like last year’s $333 billion in emergency spending and $150 billion in tax rebates failed. There’s a simple reason why.
Government stimulus bills are based on the idea that feeding new money into the economy will increase demand, and thus production. But where does government get this money? Congress doesn’t have its own stash. Every dollar it injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It’s merely redistributed from one group of people to another.
Of course, advocates of stimulus respond that redistributing money from “savers” to “spenders” will lead to additional spending. That assumes that savers store spare cash in their mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings (where it finances business investment) or deposit it in banks (which quickly lend it to others to spend). The money gets spent whether it is initially consumed or saved.
Governments don’t create new purchasing power out of thin air. If Congress funds new spending with taxes, it is redistributing existing income. If the money is borrowed from American investors, those investors will have that much less to invest or to spend in the private economy. If the money is borrowed from foreigners, the balance of payments must still balance. That means reducing net exports through exchange-rate adjustments, thereby leaving net spending on the economy unchanged.
Yet Congress will soon borrow $300 billion from one group of people and then give it to another group of people and tell us we’re all wealthier for it.
Lawmakers commit this fallacy repeatedly. They tout unemployment and food-stamp spending as stimulus without asking where the programs’ funding comes from. They hype a federal bailout of the states as stimulus, as if having Congress do the taxing and borrowing instead of state governments makes it a free lunch.
WSJ
* NOVEMBER 13, 2008, 4:58 P.M. ET
U.K.’s Brown Seeks Global Stimulus Plan
By ALISTAIR MACDONALD
U.K. Prime Minister Gordon Brown called on countries around the world to pass a coordinated round of fiscal stimulus efforts to help shore up the weakening global economy.
Mr. Brown said that any single nation’s boost, such as increased government spending or tax cuts, can only be truly effective if other countries are also taking steps to stoke consumer and business spending in their economies at the same time.
CalPERS’ housing portfolio drops $3.2 billion
By Dale Kasler
dkasler@sacbee.com
Published: Thursday, Nov. 13, 2008 | Page 1A
CalPERS disclosed a $3.2 billion decline in its housing portfolio Wednesday, the latest major setback for the big pension fund.
The California Public Employees’ Retirement System said an exhaustive appraisal of CalPERS-owned homes and lots across the United States revealed a 35 percent drop in value in a few short years, testament to the horrific collapse in the nation’s housing market.
The 288,000 lots and homes, spread across 20 states, are owned in partnerships with some of the nation’s leading developers and builders; 59 percent of the properties are in California, epicenter of the real estate crash.
“No one, including CalPERS, escaped the fall in housing,” said Ted Eliopoulos, the fund’s senior real estate investment officer.
Although the $3.2 billion decline represents just a sliver of the $184 billion in investments controlled by CalPERS, it’s another symbol of the turbulence that has gripped the big fund as the economy sinks and the financial markets slump.
‘“No one, including CalPERS, escaped the fall in housing,” said Ted Eliopoulos, the fund’s senior real estate investment officer.’
Many posters here (aka yesteryear’s bitter priced-out renters) might beg to differ with ya, Ted.
Really, the amazing thing is that the bets these guys were placing were being discussed every day on this blog. If I had the nerve to place bets suggested right here on Ben’s site, I would’ve had a pretty damn good year too! Is it too late to start the “HBB Investment Fund”?
I am sure those guys are board lurkers like me (with waay bigger cojones. And wallets, natch). They must monitor these sites: they certainly aren’t relying on mainstream media for updates and early trends. I’m sure the bets they made were the same ones suggested here. What does it feel like to provide George Soros with investment advice, Ben?
(BTW, I’ll be flying to Flagstaff in late December to help a friend move, & would be honored to hear your answer in person over a Burritos Fiesta taco, my treat! :-D)
Whereas those House committee reps probably DO rely on mainstream for guidance: think of all the posters describing futile attempts to warn their politicians about this inevitability. I forget his username, but there was a hbb poster who went on to set up a website to expose the mortgage fraud he was witnessing, and felt his personal well-being would be threatened? Or what about Casey Serin: have any of those Reps even heard the name?
I didn’t have the nerve to place the bets suggested here, but if my aunt had balls she’d be my uncle.
I did however do a lot of smart things to protect my modest wealth thanks to advice learned from this blog, one was following Aladdin’s sane suggestion of gold (fellow Ronson-era Bowie fan!). I even called a meeting with the management where I work, on the very day in September that the market was suddenly being referred to in mainstream media as having “crashed”. I work at a public utility and wanted to know what the SHTF plans were, both for the utility and for them. That was the first work meeting I think I’ve ever called in my life! 
I then went off, guided by a sense of moral obligation, honestly, to warn many of my co-workers (wish I didnt go so far down the evolutionary pecking order though, as it kind of bit me in the ass. I learned a lot from that day!). The ones who took my suggestions to move their deferred comp savings (many into the six figures) to a stable value fund have saved untold thousands or even tens of thousands of dollars (literally untold: I’m still waiting for any one of the ingrateful bastards to thank me!)
I heard only from one co-worker who opted to keep his money where it was, and admitted to subsequently having lost over $30k. He rode it out several weeks past my panicked, dire, completely out of character warnings to act IMMEDIATELY (actually drove another bus-riding coworker to his bank at one point), then made his poorly-timed switch and locked in those losses. He is very close to retirement, so that move will have a very significant impact on his future planning.
I never talk money- I’m just not the type- so even though I described everything that was happening to a tee, I don’t think they understood me enough to listen. This is a very specialized language being used on this blog: what’s familiar to me must’ve made everyone elses head spin. But I made the noble effort, and I did it intelligently and with confidence, thanks to the fine folks on this site. Bravo, friends!
…This all seems like terribly interesting stuff to write and read, but forgive a ‘first time/long time’er if it’s landed off the mark. TTFN.
P.S. What happened to that ideal-in-every-way woman, txchick?
I personally disagree with the notion that the Fed is the sole culprit. What about the fools in Congress who changed the rules to effectively transform financially sound GSEs into hedge funds? Or an administration that accompanied lower taxes with high levels of expenditure? The Fed was between Iraq and a hard place.
Obama and the Fed
By Cesar Conda and Dave Juday
Published: November 12 2008 18:22 | Last updated: November 12 2008 18:22
By far, the economy was the top issue in this year’s US presidential election. According to exit polling, 62 per cent of voters considered it the most important issue affecting their vote. Thus, the new Obama administration and Democratic-controlled Congress would be wise to consider the source of our economy’s problems: the Federal Reserve board’s failed monetary policy.
I want to add to my above post on the Hedge fund guys .
While Capitalism has a need for venture capital in the Market and shorting and all that jazz ,isn’t the line drawn when all the players are playing with bogus securities ,or securities that are a byproduct of a mass produced Ponzi-scheme and to few rules of the game?
Think about the fact that Wall Street games with leverage resulted in a
stock market crash in the 1920’s with a Great Depression following . In terms of regulations ,if we allow a system of gambling that has the potential of killing the economy and requiring massive bail-outs from the public regarding this gambling Casino and destroying the lives of millions ,than isn’t it really endorsing Ponzi-schemes that just a few smart cats benefit from it? Aren’t markets suppose to be regulated so the Kingpin Market Makers can’t set up a game were they fleece the public at any kind of unknown destructive outcome to the general welfare of the people ? How can any of these Market Makers say that Wall Street didn’t create the same circumstances they did in the 1920’s that they found they had to enact strong laws at the time to prevent a future unfair gambling casino .
The lobbyist have spent years trying to get the laws that were set up after the Great Depression off the books ,and finally they were successful ,and look what happened . In spite of those laws serving this Country well for 65 years ,these Bastards got the loose gambling Casino
they wanted ,which made for better fleecing and bubble making . False market making ,just like the 1920’s . Lets drive up fake prices and lure in the greater fools until the system fails ,right ,that’s a great model for business ,right ,that doesn’t deserve to be regulated .
The purpose of Wall Street is for people to invest in the potential of Companies and the yields of Companies and given fake values are not set up for Casino bets ,than the system works well for the Country to invest in Business .Many entities in the chain breached their duty to underwrite the securities and create a fair level playing field ,therefore apparently there was not enough regulation on requirements on underwriting products offered to the public . No question that the
Marker Makers failed in their duty to prevent fraud or underwrite loans or loan risk . Change risk models for your own benefit is another question about this meltdown . Can the sellers of a product be the same entities that determine the risk on a new product offered ? Can the product promoters be the same entities that can lend and leverage on
that product they are pushing? After the Great Depression ,Lawmakers sought to separate the world of investment and lending and saw the conflict of interest position .