Bits Bucket For December 1, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
December 1, 2008
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Wow, who could have seen this coming? Probably on one, this stuff is just so complex! The idea of having to cut back, why that’s just not fair. We’ll need a bailout.
Government coffers feel drop in auto sales…
“It has definitely affected us,” said Nault, adding that collections from the auto center were on pace to be off 20% for the year. And with industrywide vehicle sales falling even more sharply in recent months, the revenue shortfall could be substantially greater, forcing Nault to consider capital-spending cuts, a freeze on salary increases, reductions in travel and, perhaps for the first time in the city’s history, layoffs.
“It’s pretty frightening,” said Nault, who has managed the city’s finances for 28 years. “This is a bridge we’ve never had to cross.”
http://www.latimes.com/business/la-fi-dealers1-2008dec01,0,6804146.story
Oh those local gov’ts, they drank the koolaide real good. They spent based off the rosy projections of every local chamber of commerce/REIC huckster that could bend their ear. How many got favorable zoning or other incentives to build new stores, condos, houses - all based on fairytale forecasted contributions to the local tax base?
I wonder of the DC bunch is even aware of their presence in the ever lengthening bailout que?
This is what always ticked me off builders would clear every tree they could find then put houses condozes right in the path of direct sunlight.
I saw that a lot in Charleston sc before i left just before hugo…So many beautiful forests old trails just clear cut…and bulldozed over
And i can remember my father who was a bricklayer showing me houses he built with a driveway sandwiched between all the tall full lush trees in Fairfield county CT.
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How many got favorable zoning or other incentives to build new stores, condos, houses
they’ll have to plant less trees !!
and big time stuff like that
Well, My town in Northern California had its fair share of losses from auto sales and business tax: The Local Chrysler, Chevy, and Toyota dealer ALL went out of business this year. Some like the Chevy dealer had been around since the 40’s. The city is reeling with the financial situation. These closures certainly didn’t help.
But I thought everyone wanted a Toyota!
Big time auto dealer Bill Heard shut down 13 locations, including the Scottsdale one where I had my former Chevy serviced. 2700 workers let go. I heard a radio talk show caller say that there were a lot of loans from that company to people who were high credit risks. So sometimes businesses deserve to go bankrupt.
“It’s pretty frightening,” said Nault, who has managed the city’s finances for 28 years. “This is a bridge we’ve never had to cross.”
Greaaat, so he’s basically admitting he’s never really run a real budget… all he’s ever done is determine who gets what.
So I guess that’s the proof that government spending is never cut.
Ben, if you’re reading, I have a question about your post on the foreclosed homes that you toured. You mentioned there were issues with chemicals at some of the properties and I wanted to know what you meant by that. Are you referring to chemicals exuded by unfinished building materials? Or what?
Things like paint, anti-freeze, chemicals left in unmarked containers. There are various definitions of health hazards, depending on which lender is involved.
Thanks. So, mostly stuff that people have left behind that may or may not have permeated the air of the house, or the contents spilled somehow. Never thought of that one. I recently toured an abandoned “squat”, a fairly new home, but as you mentioned about the foreclosures you saw, it was missing most if not all of its original fixtures. Appliances and lighting, all gone. The toilets were still there, though.
In college my roommate and I built a 383 Chevy in the dining room of our rental house (and we had an engine test stand in the garage which used a milk jug for a fuel reservoir - we’re lucky to be alive honestly). I feel sorry for the owner because that place smelled like a garage when we left - i slept with the windows open even in the summer in Texas because I was worried about the fumes, probably knocked 10 years off my life.
Isn’t that normal behavior for Texas? Did it go into a sweet El Camino or Vega hotrod?
Trans Am (91 GTA just like Dwight’s from the office). The guy across the street already had an El Camino so I guess we had to be different (seriously).
I’ve always had a little redneck streak… just a little more educated and worldly than your typical mullet.
ben, those wouldent have been cook house’s would they? I missed the thread, I’ve been busy all weekend.
Palmie:
IMO, if you find a house with buried trash, unmarked cans of whatever lying around, paint in the yard, weird smells, etc, then you need to hire an environmental geologist to come out and take soil samples, etc to make sure the place isn’t polluted. I have dealt with more than one landlord who thought it was perfectly OK to pollute the ground with his toxic waste. It’s much easier for them to bury it out back at the rental than it is to dispose of it properly. They seriously do. not. care. about environmental/health issues, as long as it’s not in their own yard.
I was reading some of yesterdays posts (have been working nights the last 2 weeks and woke up at 2:30 am), and I was thinking about how a lot of people have the income to actually buy a house in most areas of the country (CA coastal, parts of NE excepted), the problem is they lack the fiscal discipline to save up a down payment and/or reduce their consumption to the level required to own a home given the current lending/economic climate. I see a lot of my high-income peers effectively lighting Benjamins on fire with their spending habits (now a disclaimer is I live in Texas where Houses never got too inflated, at least in the suburbs, but these things apply anywhere):
$5 a cup coffee: just brew it yourself - even high end stuff is pennies a cup if you make it yourself.
New SUV or “sport sedan” every 3-5 years: a rebuilt tranny for the beater is still only a few months of payments on a new car, and that’s without even considering stuff like insurance rates.
New Ipod/Laptop every couple years: I’m typing this on a ~6 year old computer and it works just fine; might get Mrs JRM a new RCA mp3 player from Wal*Mart for Christmas and I bet it plays the songs just as well as the Apple.
Casual dining 3-4 times a week: learn to cook (I do like a nice night out but not several times a week).
$100+++ Cable TV packages: The best HD (uncompressed 1080p) is received with a pair of rabbit ears, and TV is mostly corporate mind control anyway so why pay those scumbags for it (get Netflix for the cable shows you want to watch and head to a sports bar if there is a game you can’t miss on ESPN).
I do have to admit, I have a bit of smugness here, but this stuff seems pretty obvious to me. I do get a smug little kick out of driving one of my fleet of paid-off Detroit Iron to work and wondering what the others think of me when I say that I am a year behind on some show because I don’t have cable…
“…and I was thinking about how a lot of people have the income to actually buy a house in most areas of the country…”
Yes, but in this observation of yours you are noting conditions as they are in the very recent past. Your argument about the effectiveness of thrift will only remain valid if unemployment has peaked and there will no more job losses.
While I agree with your overall sentiment, we may be nearing a point where the large swaths of the populace lose control of their financial destiny altogether and buying a house won’t even be a possibility.
You have a point, we recently had (well we’re still kinda going through it) a medical emergency with my wife and if we didn’t have good insurance it would have bankrupted us, its pretty scary to think about.
The older I get (still slightly <30) the more I realize that the 80s/90s sitcoms I grew up on were lying, life is not easy or fair and it doesn’t all work out in the end, even if you’re smart and hard working and frugal.
… we recently had (well we’re still kinda going through it) a medical emergency with my wife and if we didn’t have good insurance it would have bankrupted us, its pretty scary to think about.
I hope you and your wife make it through OK. That kind of medical event is scary.
I’ve been thinking about this issue a lot lately, as my partner and I recently had a baby who arrived six weeks early. The lad spent about 10 days in the hospital, along with a week for mom. (Everyone’s healthy and doing really well.)
Thank Gawd we have good insurance — we still haven’t received all the bills yet, but the pre-insurance “retail” cost (which always seems somewhat inflated, like a new car price … but still) is north of $50K and still climbing as the bills trickle in. We’re on the hook for about 3 percent of that so far, which is not a big deal.
Without insurance? This not-that-unusual event would bankrupt or seriously set back most people if they had to foot the entire bill.
Not if you were an undocumented alien. The cost would have been $0.
I recently had surgery for a hernia. Total time in the hospital: 3 hours. Total time with surgeon, including office visits: 4 hours. I had general anesthesia. 1 attending physician & 2 nurses. Total cost $16,000.
Now, assume the surgeon makes $500/hour, attending surgeon makes $400, 2 nurses $100 combined. 2 actual hours of surgery = $2000. Materials maybe another $1000.
The hospital building is old and long since paid off.
So where does the other $13,000 go? When your overhead costs are 80%, something is horribly, horribly wrong.
Hospitals have other costs besides doctors and nurses, lol. There are technicians, lab people, clerks, maintenance people, maintenance costs, modern equipment costs ( ever price out an MRI machine - like several million dollars ) ? Plus all hospitals have to service people with little or no insurance. Medicaid is a joke - pays about 18 cents on the dollar, and I think Medicare pays about a whopping 39 cents on the dollar. Who do you think subsidizes all of that care ? You, me, Aetna & Blue Cross.
You have a legal right to a full detailed accounting of all charges then you can dispute the one by one.
Less total charges means less co-pay too.
———————————-
So where does the other $13,000 go? When your overhead costs are 80%, something is horribly, horribly wrong.
I am lumping all of those costs into “overhead” and stating that if only 20% of your actual costs are actually performing the function you are there to perform something is way out of whack.
I get that we are subsidizing medicare & medicaid. And I think that is wrong. I would rather the gov raise my taxes and my company provide me a corresponding increase in pay because of the lowered health insurance premiums. That at least keeps everyone honest.
I get that we are subsidizing medicare & medicaid.
And Medicare is due to run out of money in 2 or 3 years. Freaky.
Health Care: the next great bubble to burst. (My life is like soda water - so many bubbles, so little time…) Education is soon after, I think.
I’m guessing the higher ed bubble will burst next year. It just takes some time for the tax/budget cycle to reset, we’re still on last year’s budget.
The Univ. I’m at has already cut their budget by 5% due to a recent enrollment drop. Watch out when the state decides to commit less to the Uni.
It may take a while to get layoffs, and it may never happen, but it wouldn’t be a half bad idea to start finding ways to short that market, like companies who rely on higher ed for revenues.
She is doing fine. She had breast cancer at 27, but is clear now. Bills were north of $100k but we’ve only had to pay maybe $2-3k, and luckily Wal*Mart has Tamoxifen for $10 for a 90 day supply, less that our insurance copay! I’m a worrier though and I always know there is the possibility that it could come back, but I guess it doesn’t help anything to worry about it.
She is tough as nails and never had to even spend the night in a hospital (only puked once through chemo) and the bills were that high. I can’t image what happens to folks that have to stay for weeks or months in the hostpital.
What do we mean by a Healthcare bubble and what happens when/if it bursts?
What do we mean by a Healthcare bubble and what happens when/if it bursts?
I don’t know what everyone else means.
What I mean the endless and unsustainable spiral upward of health care costs. The almost insane accounting hospitals are forced to do because of free and Medicare/Medicaid patients. The drug store on every street corner because we’re all on something to make us thin, happy (or sane) or improve our love lives.
As I mentioned Medicare runs out of money in 2 years (or really, runs in the red). Many company are trying to move to health savings plan model, where us end consumers are forced to feel some of the pain, especially of chronic illness. The party is already starting to run out of spiked punch and I suspect we will some some rationing of health care within my lifetime.
So that’s Vermontergal’s health care bubble. I just don’t see how we all end up with top notch health care, billizon dollar cat scans and the like if we continue on as is. It’s the same as thinking we’re all goin be rich by selling each other houses.
We DONT have a health care industry we ave a sickness industry
Why dont we all have yearly check ups and blood tests.. say $100..we can all afford $100…even section 8 people can find $100…..or even cat scans a few dollars today prevents 10 times the cost later
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I just don’t see how we all end up with top notch health care, billizon dollar cat scans and the like if we continue on as i
“Education is soon after, I think.”
Kunstler wrote about this a few month’s ago. I have prepositioned myself for this bubble as well.
I also avoided the dotcom but and the associated ripple on media/production.
I have been good at sprinting through the minefield thus far.
jrm,
I am so sorry to hear about your wife’s illness. You guys are in my thoughts and prayers.
It’s good to hear you have good insurance, as it’s imperative in situations like yours.
My #1 wish in the whole universe is to find a cure for cancer. Hopefully, that day is coming soon!
Worse yet, you were brainwashed at an early age by all those crappy cartoons on Saturday morning.
Coyote vs. Road Runner has more to do with real life than anything shown in the 80-90s. You had to admire Wile E. Coyote’s perseverance and optimism, in spite of all the serious injuries he received…..
Computer games don’t affect kids, I mean if Pac Man affected us as kids, we’d all be running around in darkened rooms munching magic pills and listening to repetitive music.
Don’t forget the malpractice insurance and the attorney’s that are on the hospital retainer, the cost of disposing of medical waste, hiring and retention of world class MD’s and nurses, plus keeping an up to date and educated staff.
But the biggest cost is paying for all the uninsured, under insured, medicaid, medicare and people that do not pay their percentage. Is medical care a right? or a privilege? Somebody has to pay…..
we may be nearing a point where the large swaths of the populace lose control of their financial destiny altogether and buying a house won’t even be a possibility
And then everyone will be dependent upon government hand-outs to survive… perhaps the plan all along?
But hey, when we’re waiting in line for soup, I am sure some ex-realtor will be there telling us how “it is a great time to buy or sell a home!”
HAR! *chortle* I’m typing on Windows ME!!
When she conks I’ll purchase another simple machine.
Leigh
Windows 3.1
You’re kidding right? You aren’t really reading this on Windows 3.1?
I’d be surprised if Netscape 2.0 or whatever is available for Windows 3.1 could render this page. I could be wrong, though.
I used Mac OS 8 until I couldn’t load modern web pages with the web 2.0 and CSS and all that junk.
I’m using a 2001 vintage Dell, which I propose to keep running for many years more. It came with ME installed and a free upgrade to XP when you mailed in a coupon. I’ve added memory over the years and last month installed a new disk drive - more because the old one was 7+ years old than because I needed a bigger one and because I wanted to transfer a disk image from a still-working disk to the new one. A new 80 GB WD disk ran me $35. The old one sits on the shelf now as one more “backup”.
The only moving parts in a computer are the disk and a couple of fans, so I feel I’m good-to-go for many more years.
A 1995 Gateway here! I’ve opened her up and stuck in a few extra goodies here and there & added/replaced hard drives over the years, however.
DH has wanted a new one for two years now. I suspect its not so much that I need one, but it bothers him that this computer doesn’t like him.
Mine is a 2004 vintage. But I got it “refurbished”. $1,200 new,My price: $500 refurbished. Only difference is one was barely used then sent back for some sort of repair, then sent back and re-sold at Fry’s. So far so good.
Hope you’re working behind a hardware firewall appliance.
He’s probably still on dial up.
Luckily, no one is writing viruses for Win 3.1 anymore
Hi all!
A bit off topic but since we r talking about computers…. does anyone know how to get rid of that freakin’ about:blank virux - I’m using Windows XP. I can’t stomach spending $199 to have geek squad come out and tell me I’ve got a virus - duh! but everything I’ve tried hasn’t worked.
Any advice?! Thanks!
Jenn
DR DOS and my 2800 baud modem.
Dot matrix printer with that outfit?
;>
Hi Leigh,
I’ve been around for awhile but don’t post often, I usually don’t believe I have that much to add to the conversation. I’ll make an exception this time.
When you’re ready, go to your local Fry’s electronics, or whatever you have locally (I believe you are in the white Christmas part of the mid-west), and get a basic box with preferably an XP operating system (Mac users don’t beat me up, it’s still a PC world, and I’m not sold on Vista yet. Any operating system that requires a gig of RAM is a pig and prone to problems). Just make sure it has an ATX case so you can easily update it in the future. Your existing monitor, keyboard, printer, etc. will plug right in and I’m estimating you can get a half way decent system for about $300. It won’t be great, but if the backbone is there, you can do whatever you want in the future.
My system started life as a 486/100. It has gone thru a number of upgrades over time, but only the parts I wanted got upgraded at the time I chose. There isn’t a single original part left, but one piece at a time is quite a bit painless to the budget. The advantage of a Suzanne’s Ex brand computer (aka S.Exy), is that I can do whatever I want to at a very reasonable price. I don’t need to buy a whole new system to upgrade from CD to DVD.
The latest upgrade was a little trickier. Got the new motherboard, CPU, RAM, fan, etc., started to put it all together and discovered that there was a new secondary power connector on the ATX board, and it only had SATA connectors for the hard drive (not IDE). Bummer. Had to go back to the store and get a new power supply and an adapter for the hard drive (4 screws for the power supply and the adapter just plugged in). Of coarse the off-white case didn’t match the black monitor and keyboard, so I had to get a loan for a $5.00 can of spray paint. It all added up to under $300 to transform an OK machine to a something very respectable that is completely upgradeable at any time (if you are a serious gamer it is still just as doable but the price goes up).
If the above terms got your head spinning, there is an easy solution. Offer the neighbor teen $50 to go shopping with you and put it all together. The hardware is easy, there are only 10 or 12 parts that generally have unique connectors that make it tough to screw up. The challenging part after a major upgrade is to get all the software and drivers reloaded. Challenging is the wrong word, time-consuming is better, but if you are buying a ready to go box this is less of a problem.
If you, or a number of the regulars here that I feel like I know were in SoCal, I would gladly do this for you. It really is that easy.
Come on guys, give up the Wind0ze nonesene and other M$FT crud and install Ubuntu Linux. Cheap (Free?) easy to install, simpler then Windows for sure and it will run on your old hardware.
$100+++ Cable TV packages: The best HD (uncompressed 1080p) is received with a pair of rabbit ears, and TV is mostly corporate mind control anyway so why pay those scumbags for it (get Netflix for the cable shows you want to watch and head to a sports bar if there is a game you can’t miss on ESPN).
Except that the area that you can pick up a digital signal with a set-top antenna is smaller than the area that you can pick up a tolerable analog signal. And of course that rabbit ears are for VHF, not UHF wich is where all the new, HD channels are. So we’re talking about a bowtie or loop instead of rabbit ears.
To further nit-pick, broadcast OTA DTV only goes up to 720p or 1080i. The only present source of 1080p is a Blu-Ray Disc.
Hey my OTA towers are 20+ miles away but on a mountain top 5,000 feet above the plain here in Boise. So I get great line-of-sight to them. I got a $35 “rooftop” antenna from Home Despot and put it in the crawlspace over the garage. Wired into my home’s pre-installed RG6 “cable” distribution, I see little reason to pay any cable service.
From what I understand there is no 1080p OTA programming yet but the capability is there. I may be wrong as I only researched this stuff for a week or two right before I bought a digital TV, which was a year or so ago.
Maybe you’re right about that, but I haven’t had any trouble with the $20 set I got at Wal*Mart. Strangely, it works better with the preamp off (not plugged in) but maybe I’m too close to the towers and that makes the signal too hot for my TV.
My cell phone is over nine years old and my wife’s is almost that old. We’re keeping them running ‘cuz Verizon won’t continue to give us the promotional rate ($30 every 60 days for each phone) on the prepaid plan once they die and we need new ones. Over the years we have built up a rather large balance of minutes on the phones.
Our home phone is about $25 a month without any of the expensive add-ons such as caller ID and call waiting. Yes, people can actually get a busy signal if they call us at the wrong moment. Outgoing toll calls are from our cell phones.
Our internet is via DSL Lite from the phone company, $19.95 a month for 768 kbps. Not into movie downloads so it is plenty fast.
We have a flat screen HDTV, but continue to get the cable company’s expanded basic ($50 including taxes). It includes the five local channels in HD.
That’s about $125 a month for TV, internet, home phone and cell phone (2 phones) service. Limbo contest time– how low can you go?
I dropped my landline 1 1/2 years ago. Don’t miss it at all.
I ditched mine earlier this year. Am now using VoIP.
That is impressive about the phone. I just had to get a new one but my last one was 7 years old; Hurricane Ike finally killed it when I couldn’t recharge it for a week. After that the battery would not hold a charge for more than 2 or 3 minutes. Bought the same brand again, though (Sanyo).
I have it on my bookshelf now in a place of honor, it was a good friend for a long time … hehe
“My cell phone is over nine years old and my wife’s is almost that old.”
I kept a Nokia 5180 since 2002, and finally ported the number to a nice new phone two months ago after lugging this thing around since then. It was great, but it just looks enormous compared to newer stuff and was much heavier. Many people seem to break their phones and upgrade at that point, but I never did. A leather and plastic form-fitted case works wonders in absorbing the occasional drop to the ground.
You sound just like us.
No cable.
No snob-coffee.
No plasma TV.
No 300K McMansion.
No granite.
Old computers (you can add memory, for God’s sake.)
Few restaurant meals.
No mortgage.
No car loans.
No debt.
Few worries.
Wow. what do you do for fun? Seriously, I am starting to think there are lots of blogges here that live in the middle of nowhere and grow their own food
Not that there is anything wrong with that but I would go out of my mind.
I love TV/Movies and want the best picture I can get without breaking the bank so I have been shopping LCD’s to replace my old projection hgtv. Cable…gotta have it. Using rabbit ears does not work that great and I am close to the towers. Plus my older TV does not have a tuner so there is another problem if I want HGTV.
I have a 5 year old computer that I built myself. I use mine for everything including gaming but next year will be it’s last as minimum specs are beyond what I can upgrade. I need a new chip and mobo.
Cars. I actually don’t mind having a car payment and lease a new car every 2 to three years. Consider it convenience (kinda snobbish but hey its my money). I never have to take it to the shop, and other than oil changes and possibly a tire rotation, no maintenance. I don’t mind making a car payment knowing that my car will always run. I guess you can say I have a car payment and have no worries. Of course I am not breaking the bank either. No SUV for me.
To each his own I guess. I save money elsewhere. But entertainment is not one of them. I will wear ratty clothes and cut my own hair (do this already) before giving up my HD.
“I don’t mind making a car payment knowing that my car will always run. I guess you can say I have a car payment and have no worries.”
Point taken, but then again…
I buy a low-mileage used car all cash every 7 years or so (about $10 to $15k a pop). I have em’ checked out big time and have never had major overhauls (knock on wood, current vehicle 130k and rollin’)
Anyway, IMO buying outright and spending say 45k to 55k over 20 years on transpo compared to the 100k I would’ve spent leasing ($400 p/month) is a no-brainer. I’ve preferred to put that saved/extra 45k+ to work elsewhere. But then again, I can understand the love for that new car smell…my Dad had it big time. Spent a fortune on cars. Loved em.
DOC
you forgot to tell us how much you spend on Prozac to get though it all. Life is short, indulge a little. Did you forget to study hard in school?
A new laptop is $399 for heavens sake!
“…you forgot to tell us how much you spend on Prozac to get though it all. Life is short, indulge a little.”
Prozac? Who needs that when we have great neighbors, have a pontoon boat on the nearby lovely lake, play lots of tennis except during the few cold months, and play golf for about $40 a round (for two, with cart).
Also, no mortgage or other debt, and our SWAN (sleep well at night) savings and investments haven’t lost a dime. Must admit they didn’t make much this year either!
jrm1493,
I generally agree with you but but one thin about putting a new trannie in a car;
One of the kids is driving a an Audi with about 150K miles on it, and the trannie is going out. Cost to replace? $7,000.
Hopefully he has learned his lesson about Audis.
German cars are sometimes cool, until you have to pay to fix them.
Audis sucked 25 years ago……..sort of comforting to see that nothing changes…….
Well, I wasn’t counting fancy stuff like a DSG or anything, just good old fashioned gearboxes and slushboxes. I know I can get a rebuild on my Tremec T-56 for around $1k and my father in law recently got a full rebuild on his 94 Dodge Intrepid for around $1800.
I spend some time on car boards and apparently the new Nissan GTR is nuking its DSG 7-speed tranny left and right and they are $20k (thats right, $20,000) to replace and they’re not being covered under warranty because they only fail when you enable “launch control” (basically holds the revs at 5k and dumps the clutch when you take your foot off the brake). Probably some sort of class action suit coming because they are discontinuing the “launch control” feature for 2010 model year.
All racers should know that sticky tires and clutch dumps do not promote drivetrain longevity.
apparently the new Nissan GTR is nuking its DSG 7-speed tranny left and right and they are $20k
Nothing surprising there… it’s a limited production flagship vehicle that sticker’s almost $80K new and shares nothing with the Nissan/Infiniti lineup. I’m sure the idiots who are hammering the tranny playing Fast & Furious, doing 1/4 miles and such, figured it was under warranty so what the heck…
Mitsubishi and Subaru have the same issue with the WRX and EVO in terms of warranty coverage.
Some of old timers who have experience with Chrysler A-833s, Ford Top Loaders, and Dana 60s, don’t think that all these front drivers running around with 400 hp and pot metal transaxles are a sign of progress.
Some of old timers who have experience with Chrysler A-833s, Ford Top Loaders, and Dana 60s, don’t think that all these front drivers running around with 400 hp and pot metal transaxles are a sign of progress
Lol GSfixer, now I know you’re an old-timer (not that there’s anything wrong with that). The Nissan GT-R is 480hp and all-wheel drive. Most of the Japanese sports cars these days are all-wheel drive, including the Subaru WRX, STi, and Mitsubishi Lancer Evolution.
The Honda S2000 and Nissan 350Z (and soon the 370Z) are rear-wheel drive…
Hey GS, count me as a “modern” old timer, my car does have a computer controlled motor, but it still has pushrods, lopes a bit at idle and goes like a r*ped ape. No fancy driver assistance like the Nissans and Subarus, just some 315’s out back with a posi and close ratio 6-speed.
$5 a cup coffee: just brew it yourself - even high end stuff is pennies a cup if you make it yourself.
I’m not into those sort of places either, but I’ve heard it explained to me like this: it’s not really the coffee; it’s the chance to get out of the house and socialize with people for an hour or two. So, it’s sort of like the mark up on beer at a bar. You’re also paying for the environment.
New SUV or “sport sedan” every 3-5 years: a rebuilt tranny for the beater is still only a few months of payments on a new car, and that’s without even considering stuff like insurance rates.
Absolutely, even if you’re a car person buying something just a year or two old saves you a great big load of cash. I know there’s something magical about new things, but the payments go on long after that magical feeling has worn off.
New Ipod/Laptop every couple years: I’m typing this on a ~6 year old computer and it works just fine; might get Mrs JRM a new RCA mp3 player from Wal*Mart for Christmas and I bet it plays the songs just as well as the Apple.
I mostly agree here, even though I own an iPod. What can actually ruin some of them is that they have terrible software for moving songs on and off of them. The best non Apple players are the ones that just show up as hard drives when you plug them into the computer and you can just drag songs onto them (IMHO).
Casual dining 3-4 times a week: learn to cook (I do like a nice night out but not several times a week).
I’m completely, indefensibly guilty of this. And will probably continue to be. Although I like to cook too…
$100+++ Cable TV packages: The best HD (uncompressed 1080p) is received with a pair of rabbit ears, and TV is mostly corporate mind control anyway so why pay those scumbags for it (get Netflix for the cable shows you want to watch and head to a sports bar if there is a game you can’t miss on ESPN).
I agree. I’m not even a TV hater. It just doesn’t hold my attention.
I think what’s more here is that there are so many people who are conditioned to think that getting themselves into serious debt is a-ok and even healthy since everyone else does it. Me and my Wife actually make pretty good bank.We could afford with what we’ve saved and buy off a good chunk of a home here in the Bay Area, California. Even so, we still rent because prices are still ridiculous and the house we rent would cost 3-4 times as much to buy.
Even so, half of my friends- some who make signifigantly less- have bought or have their fingers on the trigger to buy. Several did so because of the same story you hear a lot in this area: Rich parents or relatives who give them a chunk of change, plus some sort of complex loan from the bank, plus the majority of their savings. In other words, they did get a house,but only by a shoe string.
I have many friends and even co-workers asking when we’re going to buy. If I tell them I’m waiting for more of a correction, I get the same story that the Bay Area is always a painful place to buy, hear a few stories about sleepless nights of the husband and Wife pacing the living room asking how they are going to pay off their newly won home, and so on. But their salvation is that ” Its worth it” just because its special and the Bay Area and all. Of course I never tell them my ‘evil’ plan of taking my savings and vacating the state.
But in any regards, people seem to think that having huge amounts of debt is a normal thing. I believe this recession will whip people back to reality.
jetson boy, you have hit the nail on the head with your rent-vs-buy comparison. I watch the Morro Bay prices, and it’s like watching paint dry…but people are still asking for the equivalent of 250 or 300 months of rent as a purchase price. If one buys for cash at this level, one’s taxes, insurance, and maintenance are almost as much as the rent. So the conclusion for now is, I rent.
I hate that we spend $130 on Internet and cable TV (comcast) and would gladly get rid of the cable but my SO insists that we need it for the sports.
I can’t stand the sound of baseball and football and basketball and all those talking heads droning on and on for hours on end.
Any other way to get sports without paying? Online?
Yes, I am a cheapskate.
You know, if cable companies ever dropped sports channels, I’m convinced that their subscriber base would drop by half at least 50%. I can’t tell you how people have casually told me they drop cable if it weren’t for the darn sports nut in their house.
Well, i am a big college football fan, and it can be hard to see all the games you want, but buffalo wild wings is a pretty fun place to go.
When I lived across the country from my team I listened to the games on internet radio; in some ways I enjoy the radio broadcasts more than TV, but I am kinda old school.
I also watch a lot of golf (I know what you’re thinking but I am a pretty hard core golfer) and that is pretty much all on broadcast and looks awesome in HD; if that ever went completely to the Golf channel I’d be upset, right now its no big deal because Golf channel only covers the Thurs/Fri rounds.
Its kinda funny; I think golf is kinda my one weakness where I waste some money. I don’t really buy new equipment (other than balls but I don’t lose too many) but I do play a nice course about once a month, and crappy courses several times a month. Probably spend $150/mo on it which maybe is a substitute for not having cable; in any case I can afford it.
Hey jrm1493,
My income has been above $200,000 each of the last 4 years. However, a consultant’s income is very unstable. So my rule of thumb is that I have to assume I earn 1/3 of that, about $67,000. I could anticipate a more secure job at that salary as a direct hire.
The problem is that it does not buy me anything within five miles of the California coast if you take $67,000 and multiply it by 2 and a half to get the amount I would need to borrow.
I have a disclaimer in my original post that excluded the Cali coast!
You are right about prices there, they are still completely out of control. My brother in law lives in LA and we were there in October and I am still blown away by the prices, you need a (steady) $150-200k income to reasonably afford a small house even now.
I notice that on Saturday and Sunday Target and Walmart was dead In Manassas Va and surrounding areas. Also my family ate at Bob Evans and I notice the place was dead (I had two coupon for my kids to eat free).
Malls packed to the gills down here in the midlands of S.C. Traffic galore, standing room only at some restaurants. Now, how much buying was going on I don’t know, but with the new multi-swipe credit card machines I would guess they will melt the numbers off. It’s different here you know, plus the Yankees will keep flocking south buying our RE.
Funny,
I was in Myrtle Beach, SC on Saturday at the Mall and tons of people were walking around but very few were actually carrying any bags. Most people who were carrying bags all appeared to be carrying bags from the Books A Million 3 for 2 calendar sale.
wmbz and buckspiper…If the weather where you are was as bad as it was here in fort mill s.c.that might bring the numbers up a good bit. My wife and I hate the mall and we were about to go the mall. cabin fever very bad.
Lane
No doubt the rainy weather had something to do with the crowds. Like you said could well have been cabin fever.
Weather in Greenville,SC was bad too. I had cabinfever on Sat, but hubby talked me out of going anywhere. Probably for the best since half the people around here can’t seem to drive in bad weather.
Dang, there appear to be quite a few SC bloggers here. Anyone want to have a HBB get-together?
Not a bad idea.
I’m in Charlotte, not too far from SC
I find it quite amusing that southerners snipe at the Yankees for “ruining” the old south (or whatever — just saw this in a Florida post a couple days ago). Oh, but southerners will take Yankee tourist dollars and sell them snowbird homes…y’all come back now, hear…
Let’em snipe. Names like Sexy Chambliss make it all worth it. lmao.
I don’t think your mother spanked you enough when you were a baby.
Oh sweetie, you’re just so funny today.
Too bad he’s not near as funny as his name.
My previous comment was directed at Saxby, by the way.
Brain injury in childhood right. I kinda figured.
Um…that comment was made by NYCBoy.
I don’t particularly blame “yankees”. I blame the local/city planners in these Southern states for not having enough fore site to actually plan growth and development. I’m from Knoxville, TN, and the sprawl there is AWFUL. Build a Mcmansion subdivision in the middle of a cow field next to the freeway, or next to Wal-Mart… doesn’t matter, they build these everywhere. That and every cloverleaf exit has the same exact stores.
But the community leaders think ALL growth is good growth because it brings fresh money from “up North”. Besides, I lived in Boston for 2 years, and if I had a family there and saw that 150k gets you a NICE home in TN versus absolutely nothing in most of the state of MA, or the East Coast for that matter, I don’t blame them for moving.
But I give the South about 10 more years before its just as bad, congested, and in places like Raleigh NC, just as expensive as the rest of the East Coast.
Southerners will continue to demand “Yankee” tax dollars to rebuild coastal real estate after each high octane hurricane season, even when insurers won’t cover them any longer.
I don’t think Southerners own any coastal property anymore. Almost all coastal property in my neck of the woods is now owned by Yankee and left coast equity locusts. So anyone demanding said tax dollars would be all the carpet baggers. And while we’re at it, I don’t ever see anyone ragging on mid-westerners every time a tornado rips through a town or gets flooded out or Californians when an earthquake, wildfire, mudslide hits. Yet I believe they always have a hand out for said tax dollars. I can’t think of many places in America that aren’t prone to some sort of natural disaster. As a matter of fact, most folks in my little slice of heaven all pull together and help each other after a hurricane hits. I know I’ve been through a bunch and have never asked the gubment for anything.
property in many Southern coastal areas is just as expensive as it is in California. My Wife’s Mom owns a rather crappy old house on the Outer Banks of NC. There is NOTHING around the area. No industry, no towns of any size… nothing. She bought hers 30+ years ago for not a whole lot. I don’t even think she has it insured. Last time we went, virtually EVERY other home was for sale there, and all with a minimum 900k asking price. Crazy. The locals live a bit inland in concrete and brick houses with substantial roofs. What’s more, it gets cheap FAST as soon as you leave the water. It isn’t even like the ocean there is all that great… murky, dirty water and sort of narrow beaches.
“I can’t think of many places in America that aren’t prone to some sort of natural disaster. ”
Try Idaho. That’s one reason I decided to retire here. No hurricanes, no tidal waves, no plagues of locusts, no termites, no earthquakes (outside the area around Mt. Borah), no floods.
Blizzards
Forest fires
Drought
Southerns don’t have to demand, the nanny FED flies in and forces themselves and tax dollars down your throat.
Yes… Southerners suck the teet dry on those poor “Northerners”… Nevermind that almost all of the major investment and mortgage industry headquarters are in Northern states and just got a 700 Billion dollar bailout. I suppose that must not count then.
Comment disappeared, but I’ll repeat anyway. How are Southerner sucking Northern states dry when we just gave the biggest bailout in US history to financial firms, almost all of them located in Northern states? Yes- I know my argument is foolish. But so is this topic.
We did our part here In N. Ohio; newscasters say black friday up here was a bust. What did they expect? Gun store was jammed, though.
Saturday stopped with my kids on the way back from Thanksgiving family gathering in NJ. Crossings is a pretty big mall just into PA by the Delaware Water Gap. Lots of cars, but the stores were not crowded. High end stores with huge across the board discounts displayed in the windows. Most of the “shoppers” were empty handed or had one slim bag in hand. My daughter found one 60% off already discounted item and she was done shopping.
Crowds were very light in my neck of the woods. Had lunch at Old Chicago with the in-laws on Saturday in suburban Denver. It wasn’t even half full.
In regards to the Freehold and Monmouth Malls in NJ, per the gf and some others who went shopping (I’ve already fulfilled all my Xmas obligations), there were indeed crowds in some cases but the gf was FIRST in line when she actually BOUGHT something in one department store and was SECOND in the next one and was in and out in amazing time. Translation: No one was actually buying anything.
Airplanes, airports were packed, and even today-Monday-day after holiday wknd.
“Wisdom and foolishness are practically the same. Both are indifferent to the opinions of the world.”
Joseph Campbell
Campbell… a hero with a thousand faces, yes. But perhaps a bit preoccupied with myth and subconscious… as opposed to the here and now.
mythappens
“Let each man speak his own truth, and let the truth be commended unto Go(l)d.”
Gottfried Lessing
The news I’m hearing is that spending was up 7% this weekend over last year. Please forgive me if I am wrong, but isn’t it only 4 weekends between Thanksgiving and Christmas this year? And last year it was 5? Umm…the amount of increase would have to be a lot more than 7% to be on trend to make up the difference. Nevermind the change in profit with the steeper discounts, etc.
IIRC, last year the holiday season started with a bang too, but ended on a sour note when the final tally was in. I am a former member of The International Council Of Shopping Centers, having been through Management School, and I am skeptical of the PR hype.
I believe it’s “everyone else is doing it”.
Without seeming to out of touch, I’d tend to think that the type of folks who are likely to have less money this year, are also the type who wouldn’t mind lining up at 3:00 am to save the money and get their “bargains” (other then those who see shopping as sport). I’d never do that and would either spend the $$ or skip the present, but hey that’s me. Christmas and Hanukkah are also very close this year. I think the next few weeks will be very tough for retail and see major just before and after Christmas sales.
Reuters) – The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
“In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent.”
Ouch
Meh. I’ve got a credit card with something like a $25k limit. I never put more than about $2.5k on it and I pay it off every month. They could cut it down to $5k for all I care.
I agree, though, that we, collectively, are in a world of hurt - don’t get me wrong.
Bloomberg Radio did their weekly interview with retail trend guru Howard Davidowitz this morning. He said don’t be fooled by the uptick and sunny optimism of the retail sector. Much of their sales equal losses and this is the last big money grab by retail as a means to make good on their lines of credit before creditors let retailers collapse, post Christmas 2008.
If I thought i was going broke i’d go spend whatever I could on whatever I wanted and worry later.
ie. sony play station plus games for guys and for moms i guess lots of stuff for kids.
Kinda agree Ann. I think a lot of people that realize they are coming to the end of their financial rope are probably going to give the family one more big Christmas to remember and file Bankruptcy whenever the last of the credit is either maxed out or shut off.
What’s the difference if you file bankruptcy on 20k in credit card bills or 40k? I don’t think it makes much of a difference at all, and I would think that banks are probably coming to this conclusion as well and are changing their software to redflag these future charge offs ASAP.
That would’ve been true before 2005, but the amendments to the bankruptcy code enacted in that year include this little gem:
11 U.S.C. sec. 523. Exceptions to discharge.
. . . (2)(C)(i)(I) consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title [translation: the filing date] are presumed to be nondischrageable.
Toys, HDTVs, Xbox, trips to Disney and all the other consumer rot surely aren’t luxury goods, right? I mean, we’re not talking about Ferraris here. Well, read on . . .
(C)(ii)(II) the term “luxury goods or services” does not include goods or services reasonably necessary for the support or mintenance of the debtor . . .
[translation: if it does more than keep your tummy full or from dying of exposure, then it's a luxury good]
Some of these folks might be in for a surprise.
Well, they will just wait until the spring to file, which would be past the 90 day window to beat the system.
If they can hold out for that long. Meanwhile the calls keep coming, the suits get filed, etc.
Isn’t Howard Davidowitz deliciously honest. I really like that man.
Actually I find him sincerely spicy.
Some retailers have not even held out for the holiday season. At my fancy neighborhood mall, Century City in LA, the Ann Taylor has closed up shop. I was surprised to see they decided to close that one, since the mall is right underneath a bunch of office buildings and I always thought they had a nice setup there with the working women who would shop for office clothes at lunchtime. Talbot’s is also closing several shops. But I guess it makes sense. Speaking for myself, buying clothes is the first thing I let go of when I started to see this coming. I still buy clothes for my kids, though.
I’m not surprised (or sorry) to see Talbots go down since they changed their lineup. They used to have lots of business attire in conservative patterns. Now the stores are full of expensive casual attire or funky patterns that I can’t wear. Sorry, if I am going to pay $70 for a pair of pants, it had better be work-acceptable, not crop pants with little lobsters on them. Weekend basics is a job for JC Penney/Sears.
I think Coldwater Creek, Chico’s, White House /Black Market, Ann Taylor, and other pricey stores are going to go under. The International Council Of Shopping Centers revised their predictions to 144,000 retail stores to close, but I can’t recall the timeline.
As a woman who shops value (quality vs. price), I don’t over pay for anything, and most clothing is made out of this country. Another great, but over priced store is William Sonoma. Will their customer base keep them alive?
No Housing extractions to feed the illusion of upper middle class lifestyles.
Cheapskate here again.
I get all my clothes (except new Levis) at the Goodwill. Only take home labels like Banana Republic, REI, etc. Even found some super nice Diesel jeans recently.
Shoes I’ll buy new, too, but I love the thrill of finding a $30-60 piece of clothing for $3-6.
Talbots is for old ladies. Their pants are weird. No wonder they’re finally kicking the bucket.
I know, but my mom in law loved the stuff I got her there (on sale).
I worked on the IPO for Talbots. Had to go to the financial printers with the corporate lawyers and was the first to leave at about 5:00 AM. Tax partner called at 2 after waking up to do something with her kid. Didn’t even realize I was still there. I do NOT miss those days.
Hah, you worked on the glamor end of an IPO. How about having a weekend trashed (@ 3:00 p.m. on Friday, of course) and getting sent to a warehouse to pore over 50 year old real estate records to determine whether there were any breaks in the title chain of all these bungalow houses in Oakland, CA that were bought up to make way for an expansion of the factory owned by the issuer in the ’40s. Due diligence, of course.
There went that wknd w/ then GF in Chicago. Oh well, the other passengers in my row of the plane were probably glad that they could spread across my unused seat.
Looking for guesses here. Our former neighbor, a flipper “Buy ugly houses”, grifter type, moved a few months ago. We were told his house was going into foreclosure though he was still trying to sell it on Zillow. He and his family are living in a waterfront mansion, now. Some sort of crazy, confusing deal - like I said, a grifter.
He rented it out to a big family that stayed about a month, and now there’s a homemade sign offering it for $199, when a couple of years ago similar houses sold for about $375.
Here’s the the thing I’m curious about. A couple of weeks ago, a man with tools in a pickup was doing something with the house’s big front window. I assumed he was doing a repair, but the next time Iooked the space was bare, then covered with boards. Now the boards have been replaced by bigger, ground to roof boards. What the heck is going on? It’s not like the window was broken and the boards were put up temporarily. I’m just mystified.
a bay window repo ?
dang
mighta been dry-rot here and there around the window but as it turns out a roof leak was the source. So, you need to tear it out all the way up.
My guess is your flipper wouldn’t take on this sort of project voluntarily…
One of the things the guy did was roofing and he put on a new roof a couple of years ago. The house was the family house for years and years.
My husband wondered if there is such a thing as window repo. Maybe it’s the Federal Drapes thing. I’d never heard of that. I’ll probably find out for sure at the neighborhood Christmas party.
if there is such a thing as window repo
Help wanted: Window Repo Man. Must work quickly.
I heard that job can be a real pane.
(..ducks…)
Why use plywood when you can just use a TARP?
Maybe he sold the Bay window? Did you notice any copper pipe, light fixtures, or appliances going out the front or back door? Furnace and water heater could bring a few pennies as well.
In the old days we called those things “Federal Drapes” because standard practice at HUD was to cover the windows with plywood in order to secure the home from potential vandalism.
Excellent recall — they were also required to be painted gray, and we used a polaroid camera to take pics to provide proof of completion/security.
He stole the window! hahhahahahahah.
Age-restricted housing may be forced to allow younger people.
http://online.wsj.com/article/SB122809427244267951.html
The bust is going to set off a local government war in any place that banked on exclusivity, as FBs, banks and heirs living elsewhere seek to sell to someone, but the locals worry about who those locals might be.
In the case of age restricted housing, landlords are not permitted to exclude children from their developments, but there is an exception if everyone is required to be 55 and over. Local governments that didn’t want the cost of educating non-rich children in places like the Northeast, meanwhile, often exclude mult-family developments for that reason — but have made exceptions for “senior housing.” Now the senior housing is sitting empty.
This is an offshoot of the “exclusive” new developments where enterprising people would be happy to buy that 6,000-square-foot white elephant and turn it into five apartments — with cars, kids, trash that has to be picked up, sewage, etc. The seller is desperate.
We had the equivalent in NYC in the late 1980s bust. Couples with kids shoehorned into 1 BR co-ops they expected to sell at a profit to trade up, trying to get permission from the co-op board to rent it out so they could move somewhere bigger. Friends of ours were nailed.
“A liberatrian is a liberal who has been mugged by a co-op board” is my phrase from the time.
The really sad part is that here in Maryland, about the only affordable and reasonably sized (read “Non-McMansion”) houses built in the past 5 to 10 years are in age-restricted communities. I don’t want a glorified apartment (read “condo”), shoehorned townhouse, or grossly oversized McMansion on a tiny lot, each selling for 40%+ more than they should. But since I am not a senior, I am expected to pay some absurd premium for a house I don’t want… right…
The other funny part is that life an age-restricted community would probably be better: no 2AM parties, little crime, no bass-thumping G-rides cruising through the streets, etc.
There is a large area of apartments in central Dallas called The Village that was built in the 60s/70’s when you could exclude families/children.
Once the law was changed, the school district was caught short as they had not built any schools nearby and families with children swarmed in to rent 1/2 bedroom apartments.
How much longer can the Mephisto of Dollars types keep on keeping on?
Despite being in a liquidity trap of their making, they keep throwing combustible cash into the bonfire, thinking it will quell the flames, but it has just the opposite effect…
UN team warns of hard landing for dollar
By Harvey Morris in New York
Published: December 1 2008
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.
In their annual report on the world economy published on Monday, the economists said the dollar’s sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.
In depth: Global financial crisis
Comment: America must keep consumer liquidity flowing - Nov-30
Comment: Towards a more resilient financial system - Nov-30
Clive Crook: Bernanke and the risk of deflation - Nov-30
The overall trend remained a downward one, however, reflecting perceptions that the US debt position was approaching unsustainable levels. An accelerated fall of the dollar could bring new turmoil to financial markets.
“Investors might renew their flight to safety, though this time away from dollar-denominated assets, thereby forcing the US economy into a hard landing and pulling the global economy into a deeper recession,” the report said. …”
FT
The US treasury market is as dysfunctional as the CDO market or the CDS market.
When have they ever been right?
I’ll bet GBP and EUR have a serious crisis before the USD does.
In fiat we trusted and watch em’ all go busted.
It’s mutually assured monetary destruction and it doesn’t matter 1 iota who walks the plank first…
Not to bust on your gold position.
When all the fiat currencies collapse; isn’t the best investment property in the country along with staple goods and plenty of firepower?
You probably don’t want to be in California at all. Considering the rougue population of gangs and lack of water. Backwoods Michigan with the rest of the alad’ crew might be a better location.
Just wondering what you are thinking is going to happen.
Can’t fake the accent, i’d never pass for midwest.
I don’t think the Michiganders have any accent so to speak of. Just have to avoid saying “dude” and take the “no on prop 8′ sticker off your car.
the dude abides here, native son stuff & such.
If your desire to survive is enough where you can tolerate the clinging to guns and religion thing, just show up at our farm in west Michigan with some beer, and you’ll get along just fine.
Only if you raise the redemption price on cans and bottles way up, and allow out of state crates…
South Detroit suburbs, born and raised. Michiganders have a slight nasal, most prominently featured in the word ‘know’. As in, ‘Don’t ‘cha knooooooooow’.
You’re welcome.
“…..Michiganders have an accent…..”
They do to us Okies…….I call it “Minnesota-lite”. Must be some residual Scandinavian accent, filtered thru about four-five generations.
The best last look @ regional America before it went corporate is “Blue Highways” by William Least Heat-Moon…
Kerouac, updated.
Thanks to our ditzy governor, most Americans think Alaskans sound like “Minnesota-lite”. I have no idea where she picked up that accent, but what I used to find charming now just grates like fingernails on a chalkboard.
The winking during the Biden/Palin debate also got to me. I heard more complaints about it on WWJ and more DJ’s making fun of it the morning after. The general concensus was that she wasn’t taking the nation’s problems seriously and that she was acting like she was at a GOP fundraiser. ” And we don’t want taxes raised, because what is that ? Gasp ! Socialism. ” We all remember when Bush 41 raised taxes ( and I’m not saying he was wrong in doing it, just that he did ), so we were thinking that her definition made him a socialist too ? We all felt like she was talking down to us like she would have to one of her teenagers. Probably the pregnant one. We didn’t think she was too smart either, and she doesn’t know diddly about rustbelt states’ manufacturing problems. Not a big hit around here. Eh ?
Crates welcome too, Lad.
I hear there’s a new ETF to short the Euro - started up just last week.
Which fund is that?
Sh!t. I would have been all over that 6 months ago.
EUO - it’s a 200 percenter, so be careful.
Sorry, nhz - I just don’t have much faith in the Euro Zone.
Thanks and I will be very careful…
“When have they ever been right?”
LOL -Last year - read the first paragraph.
“…according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.”
It took a team of economists to predict that outcome last year?
You’re holding that up as an example of their financial bona fides?
Stunning.
They’re blinding me with science, yes indeed …
What I find amusing in these economists is that they think that the US will sink alone, and that the rest of the world is doing so much better.
If the US sinks, the rest of the world is tethered to it, and will sink in unison, oh, maybe not at the same time, but sink it will.
Amusing to think that Chindia can stand on its own….
Europe, might survive a bit longer, but so much of their own economy is messed up, that I doubt that they could hold out much longer.
We do live in interesting times.
+1 The Great Decoupling is b.s.
the european banks are highly exposed to investments in eastern europe and latin america. and the banks are highly leveraged so europe will have many problems from all the loans that are not repaid. the whole global system required the americans to buy europe and asia to sell and asia to provide the finance. now, everyone is pulling all the cash back and the debt needing to be rolledover is huge and coming due soon. think anyone besides the gov’t will loan that cash with the world economy in the tanks….euro to weaken more yen will get stronger until the japanese intervien to weaken it!
HONG KONG (MarketWatch) — China’s currency staged a record loss against the U.S. dollar Monday, falling to the lower end of its daily trading limit, in what some analysts said is a policy shift as authorities let the yuan depreciate against the greenback in an effort to help bolster the decelerating economy.
Hey Commie, stick with the Chinese Oregonian ex-California transplants~!
17% of China’s trade is with the US, but 35% is with the Euro nations. Since the Euro is toast and China will subsidize any industry that provides jobs expect further Yuan Renminbi devaluations. All this will be to support the exports to Europe.
Buy Yen.
Hoz…
Appreciate the posts but confused. Yen or yuan?
(diet Shasta without Aspershame yet to kick in…)
Japanese Yen. Yuan bonds are OK to hold. But China is trying (and successfully I add) to get the hot money out of China. Hot Money = WalMart paying $1 for an item in China, from a company it owns, that costs $0.50 and then converting the US Dollar into Yuan betting on an appreciation of the Yuan. An accounting entry that costs billions of dollars in lost US Tax revenue. If the Yuan forced devaluation, as is happening currently, continues; then the hot money has to flee. China wants the hot moneys gone.
The worst event for the US would be a sudden upward appreciation of the Yuan. The US trade deficit would go up about 45% overnight.
Hoz, are Wally world’s raw materials costs fixed by futures contracts that can’t be renegotiated?
Yen… oh that currency that sponsored the carry trade for almost 15 years. The guys with the zero interest rate.
That has to be the best currency bet ever.
I don’t know Hoz. I like a lot of what you say and you provide great insight on things. I definitely appreciate your posts. But if I understand you correctly, I think you’re incorrect on China. You’ve been saying “buy what China buys and sell what China sells” for a while and I may have misunderstood you, but I think you tend to believe China is a good place to invest. I’m not so sure. I think China’s stock market has had the worst 1 year return in the whole world. This article “Trouble in China” just came out and I tend to agree. Thoughts?
http://www.cnbc.com/id/28002786/
“The real source of today’s stock market plunge is a collapse of China’s purchasing managers index, which fell to 40.9 in November from 45.2 in October, its fourth straight monthly drop. Inside the index, export orders fell significantly. All of this suggests big cuts in China production, employment, and investment, including infrastructure investment.”
My previous post hasn’t shown up, but if all goes well it will. I want to clarify that I’m not agreeing with the article’s ideas in general about solutions to the US financial problems, I’m just agreeing with the article specifically on the point that China is in trouble.
try again:
I don’t know Hoz. I like a lot of what you say and you provide great insight on things. I definitely appreciate your articles. But if I understand you correctly, I think you’re incorrect on China. You’ve been saying “buy what China buys and sell what China sells” for a while and I may have misunderstood you, but I think you tend to believe China is a good place to invest. I’m not so sure. I think China’s stock market has had the worst 1 year return in the whole world. This article “Trouble in China” just came out and I tend to agree:
http://www.cnbc.com/id/28002786/
“The real source of today’s stock market plunge is a collapse of China’s purchasing managers index, which fell to 40.9 in November from 45.2 in October, its fourth straight monthly drop. Inside the index, export orders fell significantly. All of this suggests big cuts in China production, employment, and investment, including infrastructure investment.”
If people are fleeing to the dollar, then how does it make any sense to say that people “perceive” the dollar’s position to be bad? The way I see it, the liquidity injections are very quickly being converted into hoarding injections. The dragon has its stash of gold, and you’d better bring a pretty big sword if you want to get any.
The Fed has been trying as hard as it can for 50 years to devalue the $$ in order to finance debt and keep the banks going. As it appears, however, you just can’t control this stuff. The dollar has a value that the Fed cannot manipulate, try as it may. I guess we’re getting back up there now.
I don’t know, maybe I’m just seeing what I want to see because, as you all know, all I really have to my name is a bunch of dollars and some pretty sweet new clothes and shoes. On the other hand, the Great Depression did in fact push the dollar back up to its natural value, so I don’t think it’s unreasonable to think it may happen again.
Cash is becoming scarce .. hang onto it if you have any.
RE: they keep throwing combustible cash into the bonfire, thinking it will quell the flames, but it has just the opposite effect
Welcome to the People’s Socialist States of Amerika
http://www.msnbc.msn.com/id/27989275/
“Welcome to the People’s Socialist States of Amerika”
Maybe I got the wrong link, but how is increased homeland defence spending socialist?
Re: encroaching socialism in America. If it was a socialist movement, the government would be either taking money from industry & financial institutions (rather than giving) or buying a stake in the banks (to get a profit later) which would be put into social programs. You may find that a horrible idea as well, but in the meantime, America is not exactly Norway.
The current situation is more like Neverland under siege by Cap’n Hook.
If you were down 400K because you HELOC’d your house (-140) to speculate on two other houses (-130*2), what would you do? The husband and wife say it’s o-kay because they keep the RE business separate from their regular income; so, it doesn’t impact their lifestyle and spending habits.
I wouldn’t do it in the first place, but if the couple had gone and done it, they should be worrying about it. A lot. As long as they keep up their minimum HELOC payments, though, I guess they’ll still have a place to live, until it and the 1st mortgage adjust to astronomical heights ( anybody this dumb would have to have adjustable rates on both ).
They’ve been using the HELOC to pay the HELOC. The interest only ARMs on the specuvestments have not reset yet….
The current situation is not affecting their lifestyle because they’ve isolated the problem — the economy, banks, and housing market are affecting the business. In their minds, they have separated themselves from the business. The Id is overruling reality once more. Sadly, all good manias must come to an end.
They think they isolated the “business”, but they didn’t. Even if they purchased the 2 specs under a corporation, and then they filed corporate BK, then they would still be on the hook for the HELOC. If it had been a business loan, then they might have done better. Then again, they probably wouldn’t have gotten a business loan along those lines. I guess that’s why they didn’t get one.
In the UK, people on the telly that tell the news, are called ‘newsreaders’, which is an honest way of describing their abilities, isn’t it?
We call them ‘anchors’ or other such tomfoolery. Many of them have read the news to us for a long time, and many local legends in their own minds are being shown the door, as paying $250k a year for familiarity ain’t all that, all of the sudden…
===================================================
“In October, three weeks after Ernie Bjorkman, an institution in Colorado television, signed a new annual contract worth close to a quarter of a million dollars, he was told he was being let go by KWGN, the CW affiliate in Denver, a victim of consolidation with another station.”
http://www.nytimes.com/2008/12/01/business/media/01anchor.html?ref=todayspaper
Wall Street Journal
* DECEMBER 1, 2008
How to Combat a Banking Crisis: First, Round Up the Pessimists
Latvian Agents Detain a Gloomy Economist; ‘It Is a Form of Deterrence’
By ANDREW HIGGINS
RIGA, Latvia — Hammered by economic woe, this former Soviet republic recently took a novel step to contain the crisis. Its counterespionage agency busted an economist for being too downbeat.
“All I did was say what everyone knows,” says Dmitrijs Smirnovs, a 32-year-old university lecturer detained by Latvia’s Security Police. The force is responsible for hunting down spies, terrorists and other threats to this Baltic nation of 2.3 million people and 26 banks.
Now free after two days of questioning, Mr. Smirnovs hasn’t been charged. But he is still under investigation for bad-mouthing the stability of Latvia’s banks and the national currency, the lat. Investigators suspect him of spreading “untruthful information.” They’ve ordered him not to leave the country and seized his computer.
Wish him into the cornfield…
http://www.youtube.com/watch?v=Db3v9BBYeQc
Well, that will solve the problem of a an economy downturn.
If I were him, I’d be happy that nothing worse happened.
Thoughtcrime… how nice!
As a NATO ally, we are sworn to protect that regime at all costs should the 20% Russian population launch a revolution.
We have always been at peace with Latvia.
(Pounding on virtual door) Hey you in HBB, quit with the dialog of truth, you are makink peoples nervous with real insights and all this A is A stuff. New gubmint coming soon so get with party line. Saving and spendink frugally is not good for economy. Must get back on debt bandwagon. You be quiet, let MSM bamboozle Joseph SixPackski. You be sorry if not.
(HBB) What are you gonna do? penalize us for being fiscally conservative - done that, print more fiat currency and diminish the value of our savings - done that, manipulate the PM prices to mask speculation and supply issues - done that, overspend, underfund, and mismanage our tax dollars? you can’t help but do that. Reward fools and socialize risk - done that comrade …. take a hike you cheesy traitorous commies masquerading as representatives of the people!
Meet the Tarps
Published: December 1 2008
Forget rabbits. Programmes at the US Treasury seem to be multiplying faster than any small, furry critter could manage. Last week, the Treasury quietly posted a description of the “systemically significant failing institutions programme” on its website dedicated to all matters concerning the Emergency Economic Stabilisation Act. That is the legal grand-daddy of the Treasury’s fast-growing litter, under which the troubled asset relief programme was brought into being.
In one sense, the Treasury’s incessant breeding is simply the result of legal requirements to make promptly public the guidelines of its rescue missions. That does not, of course, make it any less confusing. The SSFIP, then, is the framework behind the restructuring aid to AIG, including a $40bn equity injection - official recognition that the insurer was too intertwined with its counterparties to fail. AIG did not qualify for help under the $250bn capital purchase programme, announced in October, which funnels funds to those (federally regulated) banks and thrifts deemed healthy. Thus another programme was born.
There will be more. The consumer lending facility, whereby the Treasury levers up $20bn in the Federal Reserve’s facility to lend against asset-backed securities, was this week another newcomer to the Tarp family. Meanwhile, Citigroup’s latest bail-out package will require yet another programme. That is because the extra $25bn in Tarp aid falls between the CPP and the SSFIP - specialist treatment, if you will, but not intensive care. Beyond that, quite possibly past the horizon of this administration, a variant of the CPP has been suggested that targets non-bank financial institutions. That could enable the likes of GMAC or ResCap to tap Treasury funds.
Those funds are running thin. The total tally of allocated cash is now just $15bn shy of Hank Paulson’s initial cap of $350bn. Circumstances may yet dictate that he returns to Congress for more. There are, after all, so many mouths to feed.”
FT - Lex
It’s as if we can fix things by introducing an ever bigger-bettor financial invasive species into the mix…
All we’re doing is killing off the host, right?
por que GOLD
the prez elect says he’s going to spend away and budget be darned, so why isn’t gold responding
?redemptions ?
I think the private market and bond market turmoil are larger than the government proposed spending. Also the international problems are pushing investment back into the dollar. Getting something might be better than getting nothing from China/Russia/Europe… who all have a history of @ucking investors.
So, could be credit is turning to dust faster than the government is creating it. Also figure the Fed is sitting on a huge pile of bad debt. Not sure what effect that has.
Speaking of Europe,
They are headed tword some kind of ban on forclosures.
Acorn is appearing in the OC and making more noise.
So… things are getting more interesting.
Here’s a good one: A civil rights complaint targeting Wall Street ratings firms.
http://www.latimes.com/classified/realestate/news/la-fi-harney30-2008nov30,0,5247646.story
“Had subprime loans been distributed equitably,” the complaint estimates, “losses for whites would be 44.5% higher and losses for people of color would be about 24% lower.”
Now, how would that have worked, exactly? Would there have been some sort of lottery based on race or color? If you drew the short straw, would you have received a subprime loan to fill the quota from your given ethnic division? Gimme a break. Redlining in reverse.
I wonder if the lawsuit is maybe some sort of shakedown, however, where the ratings agencies quietly settle out of court with the “coalition”. Don’t get me wrong, I’m no fan of the ratings agencies, they deserve what’s coming to them. But the above quote about subprime not being “equitably distributed” is a real hoot. I mean, I don’t care what color or ethnicity you are, unless you’ve got a birth defect, you’ve got a mouth that can articulate the words “No Thanks”. If you’ve got legs, you can walk out of the closing. You don’t have to sign your name to anything you don’t want to.
How about if the ratings agencies decided to countersue the coalition on behalf of their clients for bringing down the financial system and not complying with contract law? That’d bring about some “finacial literacy” in a hurry if every deadbeat subprimer thought they’d be on the hook for the rest of their lives.
Here’s two crappy groups of sh*theads, going at it with each other.
Funny, funny. Subprime loans were given to people with LOW CREDIT SCORES, regardless of their race. I’ll bet young people and guys were more likely to get them than old people and chicks. So young white guys should probably sue too.
BigV,
Young white guys are not a protected minority. We are a plague upon humanity.
What were you thinking.
I don’t want to touch Palmetto’s post with a 10′ pole. I’ve still got flame marks from the Obama and reperations posts.
People just have no sense of humor.
“Subprime loans were given to people with LOW CREDIT SCORES, regardless of their race.”
From what I’ve been reading, not entirely. There were some who had good credit scores, but not much intelligence or resistance, who allowed theselves to be pressured into subprime loans, due to the high commissions and fees attached to those loans, when they could have insisted on traditional fixed rate loans. Could have been greed, too. Low teaser rates with the promise of being able to re-finance or sell at a higher price.
So, subprime loans were given to people who could be talked into them, regardless of credit score. They were “beaktims”, so now “the man” must pay.
RE: Young white guys are not a protected minority. We are a plague upon humanity.
YWG’s are merely piker’s when compared to TOXIC WIVES
http://www.telegraph.co.uk/finance/financetopics/recession/3527803/Recession-When-the-money-goes-so-does-the-toxic-wife.html
Certainly not redemptions at coin dealers, I can say. Maybe in the commodities markets or something. I think the true answer is the price is being manipulated - but then I don’t have enough visibility to know that for sure.
I think it’s all a conspiracy related to forged birth certificates, Aliens, Bigfoot, Al-Qaeda, and liberals.
Could it be that heggies and other traders were buying gold and gold ETFs on margin just like every other stinking commodity?
Yep!
I think it’s all a conspiracy related to forged birth certificates, Aliens, Bigfoot, Al-Qaeda, and liberals.
Hey, I resemble that remark, at least the “Bigfoot” part.
Credit card industry may cut $2 trillion of lines: analyst
(Reuters) - The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
“In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent.”
Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said….”
‘The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.’
================================
It’s worth pointing out that the credit card didn’t exist during the Great Depression, as in cash and carry.
“…the first being jobs…”
This reality is bad news for the REIC in so many ways.
“…To the German radio presenter, the real news about the measures announced by Washington on Tuesday to jolt banks into lending again was not so much the astronomical costs, but a little-noticed comment in Hank Paulson’s statement.
“Millions of Americans,” croaked the US Treasury secretary, were being denied credit or facing rising credit card rates, “making it more expensive for families to finance everyday purchases”. The notion that families should finance everyday purchases on credit, the anchor commented, “suggests Washington has still to understand what brought us there in the first place”….”
FT
ugh, and Bob Moon on Marketplace listed Ben Bernanke and Hank Paulson on his list of Thanksgiving things to be grateful for this year. The same show talked about how great increased refinancing opportunities are for the economy.
However, they did interview a model in LA who had bought $400 silver platform sandals on layaway rather than credit, saying “credit cards are crazy” in reference to how much extra things cost on a credit card. It is a small, silver-platformed step forward.
I think this is going to be a painful adjustment out of the 20th century.
However, they did interview a model in LA who had bought $400 silver platform sandals on layaway rather than credit, saying “credit cards are crazy”
LOL - I don’t know how to feel about this.
Jobs and then credit card…what about HELOC cash? That was a sizable chunk of consumer spending if I recall the graph correctly.
Jobs are a source of “liquidity”? Oh, I thought that was my “income”. Then again, I’m just a peasant, so I was probably mistaken.
What’s down with gold this morning?
Falling down a flight of stairs, and the bounces continue to disappoint the hopeful.
Lots of profit taking and other types of selling this morning, all across the board. Big bright sell signals abound.
This may come as a shock, but I shorted quite a bit of mellow yellow last week, when the oil-gas ratio went out of whack so much last week.
It was over 400 gallons of dinosaur juice to the ounce…
Over the last 75 years or so, it’s been around 125-225 gallons.
Wow……hell hath indeed frozen over.
Aladinsane I know you live in the sierras. Do you pan for the yellow stuff. I am going up to Rock Creek above Toms place as soon as the fishing season starts. Wondering if it is a good place to pan. Thanks
Supposedly, not too far from Tom’s Place is where the “Lost Cement Mine” lays, or so said Said Samuel Clemens…
It got it’s name, because nuggets were embedded in what looked like cement, as opposed to the usual quartz.
Hope you find it!
(p.s. I like to pan in Downieville, Ca.)
You shorted gold during the week Comex was facing judgment day? You’re quite a guy!
Quite often there is very useful information relayed here if your eyes are wide open. This tip came from an insider perhaps?
============================================
Comment by Château d’If
2008-11-26 10:57:33
The Oil-Gold ratio is all out of whack…
It’s been around 200-225 gallons per ounce for years, and now it’s closer to 400 gallons.
alad:
Your prediction of a short squeeze in metals nov 28 wasnt entirely wrong. Friday was the two week high for both gold and silver.
Now that the paper players dont have to worry about physical deliveries for another month gold and silver are down 7% and 10% today.
But alad, I thought you were a gold bug til death? Do you think it’ll break the $680 support from last month?
My opinions are always subject to change, aren’t yours?
“This may come as a shock, but I shorted quite a bit of mellow yellow last week”
That _is_ a bit of a shock, considering that it was only last week that you were saying it would go through the roof at COMEX expiration. I would think you of all people would have wanted to be long when you had forecast it would go through the roof.
Lather, rinse, repeat?
Methinks it was divine information from Abbé Faria that allowed me to think differently, to change course.
It sounds like he is doing a paired trade. Shorting gold while going long an equivalent amount of oil. The gold short is just a hedge against US$ manipulations to protect the oil longs.
If alad was truthful in his previous revelations, he hasn’t the cash to take a short position of consequence. A long position in oil for him is filling the gas tank. Investing dollars would be, well, sacreligious. Good joke alad.
People are so gullible.
hmmm…
Perhaps it was Edmond Dantès that plied us with precious information?
Excellent point, Blue Skye…
He would need a sizable chunk of marginable securities in order to short a sizable chunk of the “precious”…
I still have my oil refining stock certificates, if anyone is buying.
Or they may end up in some antique store in the next century as “securities certificates.”
Dam(n), the market was violent today.
Do you suppose the great refi boom of 2009 will help alleviate problem or cause a bigger problem?
RE: “great refi boom of 2009″
I’d love to know three things:
1. The number applying for refi
2. The actual # getting approved
3. The terms of the typical refi deal circa NOV 2008 as opposed to NOV 2005.
I think they will approve as many as they can. The GSE’s will end up guaranteeing all the mortgages as this is the only real way to help Joe Public. They will continue to push down mortgage rates. This is all they know.
“…this is the only real way to help Joe Public…”
Yes, but help Joe Public do what? Old Joe really needs to start asking himself what his personal end game is.
Serf’s up!
I hear you, but these fed heads are getting desperate and you’ve seen the other rabbits they have pulled out. Now we are at point of them buying mortgage bonds to push rates down. they will keep going and going and going
“Watch me pull a Rabid out of my hat”, said Mad Hatter Henry
4. The number of qualifying individuals with sound employment.
Leigh
CRE - uh oh.
AP
General Growth Properties gets loan reprieve
2 hours ago
CHICAGO (AP) — General Growth Properties Inc. has received a two-week extension on mortgage loans totaling $900 million, as the troubled shopping mall owner works to stave off bankruptcy and negotiate longer-term extensions with lenders.
The mortgages cover two malls, Fashion Show and Palazzo, located in Las Vegas, the company said late Sunday.
General Growth Properties said last month it faced solvency trouble and might seek bankruptcy if it couldn’t refinance or extend the nearly $1 billion in debt coming due. The company hired law firm Sidley Austin as an adviser as it struggles to refinance its staggering debt amid the economic downturn.
The nation’s second-largest shopping mall owner, General Growth has a stake in more than 200 shopping malls in 44 states. It is trying to sell its Las Vegas locations.
Shares of General Growth have lost 91 percent of their value since the end of September, amid concerns about the real estate investment trust’s ability to sell debt, and turmoil in General Growth’s executive ranks. Shares closed Friday at $1.38.
Last month, the company reported disappointing third-quarter results and cut its year-end forecast. Company spokesman David Keating had said then General Growth was looking at multiple options, including continuing to work with lenders on loan extensions.
Leigh
I heard about this and said that’s encouraging. Then I found out the extension was for TWO WEEKS!
Hence the uh oh!
Leigh
Two weeks is a long time. It includes 2 possible Sundays for the Fed to engineer another mega-plan to save the economy. And with the official revelation that we have, in fact, been in recession for exactly one year, it must mean we are close to an end to it. Since the stock market is always forward-looking by at least 6 months, it is possible that two weeks could well be enough. Finally, the stampede at Wal-Mart shows that the US consumer is alive and well (although the employees are apparently not).
In its outlook piece for 2009 economists at the House of Morgan forecast that the yield on the 10 year will reach 2 percent next year. Actually, at the rate at which it is moving it could be there before Christmas.
2.83% and falling…
2.8%
2.72
2.69
The liquidity tornado continues to intensify, leading to ever-dropping barometric pressure in the credit market.
in my best Bono:
“Ben a lot of talk about this next song. Maybe, maybe too much talk..This is MONDAY BLOODY MONDAY!!!”
U,
2?
MONDAY, NOVEMBER 24, 2008
EDITORIAL COMMENTARY
Looking for the Last Refuge
By THOMAS G. DONLAN
The new asset bubble is Treasury bonds and T-bills.
“…The English poet Robert Herrick issued this warning to young ladies more than 400 years ago:
“Gather ye rosebuds while ye may,
Old time is still a-flying:
And this same flower that smiles today
Tomorrow will be dying.”
Herrick’s poem addresses a kind of youthful, luminous beauty that cannot last forever. But the luster of T-bills cannot forever empower the U.S. Treasury, either. Standing in for Robert Herrick in these times is a chorus of Wall Streeters called the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association.
These 14 worthies met with a gaggle of civil servants on Nov. 4 at the Hay-Adams Hotel, just across Lafayette Square from the White House and the Treasury. The formal minutes of the closed meeting betray a certain anxiety about America’s fiscal rosebuds: “Acting Assistant Secretary for Financial Markets Karthik Ramanathan stated that the exceptional borrowing needs in fiscal year 2009, which according to market estimates could approach $1.4 trillion and potentially vary by $500 billion, presented a unique set of challenges for Treasury.”
Some members apparently scoffed at the Treasury’s estimate, and guessed that the government will need $2 trillion of new money in fiscal 2009.
Even using the Treasury’s estimate, borrowing twice as much as the market absorbed in 2008 would not be a small thing. Worse, the character of U.S. debt adds to the challenges. So much of the national debt is borrowed on short maturities that borrowing activities on the Treasury’s estimate could exceed $2 trillion in fiscal 2009, as short-term bills are rolled over and over.
“Despite borrowing across the curve, the average maturity has declined by three months in the last quarter,” Ramanathan reported. The advisory committee urged Treasury to go longer, issuing three-year notes, more 10-year notes and more 30-year bonds….”
http://online.barrons.com/article/SB122731267403949481.html?mod=googlenews_barrons
And if you think there are real buyers of US Treasuries, I suggest you look at last Friday’s Fed balance sheet.
“And if you think there are real buyers of US Treasuries, I suggest you look at last Friday’s Fed balance sheet.”
All the while Bernanke is acting as if this has not been done yet. The timing of the speeches and new funding facilities they create are very telling. I see a pattern forming.
hoz, eveyone knows “they” are printing to buy treasuries..
everyone is doing it .. the chinese, the saudies, the europeans, the japanese….
its not up for debate.
print some for the little people. or is that China’s job?
if your looking for a currency crash, its the yuan.
Concerns grow over ability of states to raise debt
By David Oakley in London and Michael Mackenzie in New,York
Published: December 1 2008 02:00 | Last updated: December 1 2008 02:00
Fears are rising over the ability of governments to raise the vast amounts of debt they need to pay for economic stimulus packages and bank bail-outs.
Faced with the prospect of governments around the world issuing more than €2,000bn ($2,535bn) of bonds in the next year, bankers are warning of potential problems in meeting funding needs….”
FT
http://www.ft.com/cms/s/0/ab6d978a-bf49-11dd-ae63-0000779fd18c.html
Be creative. Once the western hemisphere consolidates currency and creates the Amero, then it can be devalued to inflate all your concerns away.
http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999%E2%80%932002)
Aladinsane
I know you live in the sierras. Do you pan for the yellow stuff. I am going up to Rock Creek above Toms place as soon as the fishing season starts. Wondering if it is a good place to pan. Thanks
The problem in America today is too much debt. Most of our income is going toward servicing more and more debt, leaving less and less for consumption. Maynards argue increasing debt is the way to stimulate additional demand. This is unsustainable. Reducing or stretching debt, while increasing income, will lead to sustainable growth. It’s time to get creative.
Yup, creative in bringing back manufacturing and technology jobs, that were outsourced to third world countries that have a different cost schedule, so they are “cheaper” compared to the US, but the quality of the product or service is dismal.
Creative in taxing the outsourced jobs at the same level as local jobs?
Creative in fomenting business, and fomenting those businesses that hire people?
Creative in stop spending money to prop up failed business models?
Creative in reducing the size and scope of government in order to pay off debt?
Creative in providing a decent wage, and benefits for workers, so that they will not have to retire into poverty?
There are so many things that can be done, but nobody dares to do it, because it would upset powerful groups.
Great post, Pinch.
Second that. Excellent post, Pinch.
Gets to the notion that supply-siders got it wrong. It doesn’t matter what you produce if you have no end customers.
Those very same employees that are so despised by corporate interests are your customers, directly or indirectly. If the masses have no money, the entire system collapses.
Trickle-down does NOT work!!!
We may not be able to beat some of these guys on cost but we should be beating them on quality and after purchase service. We should be kicking their teeth in with quality and service. What’s stopping us?
Service: people will happily accept less service for lower prices. Investing in service is a loser.
Quality: is a human centered process. Americans are humans, so are the Chinese, Japanese and Nigerians. Why would Americans be any better at quality than anyone else? Are we taught from a young age to always produce it? No. As a matter of fact, we are told to always shop around for the lowest price, with little tangible ability to compare based on quality.
Maybe you are being sarcastic?
No. I’m arguing for a differentiation strategy. When markets become saturated (PCs or cars) some consumers look for better value, ease of use, reliability, and whatnot (MACs or foreign cars).
What’s more, although most branded kitchen appliances are manufactured in China, faster, no BS warranty repair or exchange service — ownership experience — differentiate them.
I get frustrated with the lack of quality when I shop mortar and brick stores. I think: am I the only one who seems have noticed how lousy all this stuff is?
I used to shop a clothing company known for it’s quality. I stopped when I realized they were competing on price (read: don’t care about quality) and using their return policy to keep customers happy. After my fifth or sixth return because of quality issues, I decided I was fighting a losing battle.
I would buy at a company that can guarantee that my blender (or watchma thingy) would work for 10 years plus and pay more. As it is, I shop for price at big box stores because I can either a)get a poorly made item at the cheapest price or b)get a poorly made item with a huge markup.
Internet shopping does help the quality issue quite a bit. I’m usually happier with those purchases. (I’m happiest with my thrift store purchases and stuff I get for free, but that’s another story…)
I always feel like I know more than the service providers. Perhaps this is just me growing up as a technical kinda’ guy, but I personally like to know how everything works and would rather deal with it myself.
I think: am I the only one who seems have noticed how lousy all this stuff is?
no. I pretty much never buy cheap and short term anymore (unless it’s something that should expire quickly).
however, the other side of the coin is that lots of stuff is actually too cheap (artificially cheap) when you factor in human labour, cost of finite resources, etc.
I used to be in a small clothing company, and it was pretty eye-opening: in order to use good quality materials and use local labour (I’m not even talking union, just low wages in North America) it’s very hard compete with Banana Republic or similar. We actually did well, but it was a real labour of love and without massive economy of scale it’s even tougher. I don’t mean this as a lament, just something I think about when I buy things. Bear in mind that pretty much everything you buy is doubled from materials to final product and then doubled again from wholesale to retail.
Between various technological advances which make many goods cheaper and easier to produce and easy access to second-hand goods from all over the place (via ebay, craigslist) careful consumers are pretty blessed right now in many ways. That doesn’t mean it’s forever, though.
A cozy broke lifestyle is the way.
I think quality requires a long term sustained effort in engineering, design, manufacturing, and customer service. That requires a lot of continuity in corporate leadership. I just don’t think the overall structure of American capitalism is designed for that (with rare exceptions). Wall Street demands a quarterly view. Compare the US system with the Japanese keiretsu system.
As a new corporate CEO, it is much easier to relax quality while marketing it heavily, knowing that in a few years you will have a second tier product but in the meantime you’ve banked a few hundred million and expanded earnings for current shareholders.
Apple has quality products but only by the shear force of personality of Steve Jobs. Boeing, Cisco and the like do it because their markets require it.
The problem is that you can lie and say you have a quality product when you don’t. See GM for these past many years. And people will believe you. That reduces the market to that tiny fraction that know the difference, and I don’t think there is enough money there for the big companies to go after it, even if they had the leadership continuity.
I believe this is a symptom rather than a cause, the cause being offshoring of our jobs, which places strong downward pressure on wages. The credit being kindly provided to replace the lost income, so we do not complain too much.
How do you explain that the countries that got all those jobs have similar problems as us (China and India both have huge housing bubbles and credit crises themselves)? I am pretty sure that even if not a single job were outsourced from the USA, we still would be in exactly the same situations we are today. The problem is not the diminishing of the real earnings of the US consumer. The real issue is that the consumer has been spending more than he earns.
“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
Charls Dickens
I have to agree with GH on this.
We used to be able to have a middle-class lifestyle without going deeply into debt. Today, that same lifestyle cannot be sustained by people holding those same jobs.
It’s not that people are trying to live above their means, but they are using a framework where “X” job = “X” lifestyle, historically-speaking.
My mom had a European-made vacuum cleaner that lasted at least 40 years (sold it at her estate sale after she passed away). It cost a lot at the time, but over the years, the quality paid off. The same can be said of many American-made things from past decades. They were more expensive, but lasted longer. And the Americans who made the products made decent wages that allowed them to buy those same products.
Today, we have cheap, plastic crap from third-world countries…that has to be replaced every year or so. It’s harmful to the environment (discarded end product, and pollution resulting from manufacturing), and it ends up being at least as expensive –over time — as buying a good-quality, domestically-made product.
Any bookish tales to tell?
I’m reading “The Great Dirigibles” by John Toland.
It’s all hot-air, and fascinating stuff that ends badly usually.
Economically, call our era:
“The Great Derivatibles”
Weird thing this morning. Got some bucks from the ATM, and for the first time ever in my life I got 10’s instead of 20’s out. Anyone else seeing this? Might there be an actual shortage of $20 bills?
Haven’t seen that since the 80s. It is interesting.
Will report if we see the same here.
Home Prices Snowball
David Serchuk, 12.01.08, 06:00 AM EST
That light at the end of the housing market tunnel might, indeed, be a train.
http://www.forbes.com/2008/11/26/intelligent-investing-real-estate-price-drop-panelDec1.html?partner=yahootix
“The real estate downturn is picking up speed again. After months of slowed-down price drops that hopeful commenters pegged as signs of a bottom”
Say what? What color is the sky in their world? The has not yet been any slowdown to the price drops.
Great Caesar’s Ghost!
They aren’t chicken littles…
They are: Chicken Bigs
The sky is the limit!
“…Prices only fell -0.49% between April and May, giving some real estate watchers hope that the declines were declining.”
No kidding, the spring season will likely see the most sales activity (realtive to the other quarters) - even during a bad year.
Why do these guys insist on making this so complicated?
Westwood Village was a real hopping place in the 70’s and early 80’s, it was UCLA-adjacent and all the 1st run movies played there, and then in 1988 an innocent bystander (ever hear of a guilty bystander?) was shot dead, a stray gang bullet found it’s mark.
Almost immediately, it’s cache went down and it became one of those “nobody goes there anymore” kind of places.
============================
2 gangsters had the Blackest of Fridays @ a Toys R’ Us the other day exchanging reality gunfire (battery included), and i’m guessing that we were kinda done with being consumeristas anyway, and does J6P want to have to wear kevlar going to k-mart?
(sorry, apparently I cannot start threads. I have been trying)
Trump’ed, again - lol :
http://www.chicagotribune.com/business/chi-mon_trump_lawsuitdec01,0,5468625.story
Aladinsane,
Wow, instant timewarp! I used to hang out there with the high school friends back when i was a junior and senior in 86-87. We would all pile in a car and drive from the San Gabriel Valley to Westwood to walk around and feel “hip”. Then the shooting happened and poof, all gone. Actually suprised that it hasn’t happened yet in Old Town Pasadena as today it seems to have the same feel as Westwood had back then.
Some of my best times were the Bullocks after Christmas sale, the deli, Mr. Kline’s Guys and Dolls for beautiful jewerly, Shed’s for a great haircut and the Bullocks Tea Room for lunch and a fashion show. Those were the good times in the 60’s. Driving up there from Redondo Beach was a world away and a date to go to the movies top of the list. Hamburger Hamlet, O the best of times.
I lived in Westwood for a year while at school there, back in ‘72. It was pretty cool, but the economic mess of the 1970s and early ’80s is what really did Westwood in. The shooting was only the trigger. By the early ’80s, there were other places to go with better parking, newer theaters, hipper restaurants, etc. The Promenade, for example, got a lot of the business that formerly went to Westwood.
I’m surprised at how badly Westwood bungled their comeback attempt, though. Last time I was there, it was strip mall city, chain eateries - just ugly - and they still had not dealt with the parking problems.
oh yeah, used to go there with friends for thousand oaks for something to do…to the movies…there was a pretty good pizza place that sold pizza by the slice as i remember. I was not going there anymore by the time of the shooting.
Trump’ed, again - lol :
http://www.chicagotribune.com/business/chi-mon_trump_lawsuitdec01,0,5468625.story
I slice of anecdotal pie from sin city:
I drove through LV last night going northbound and then returning south on a round trip to drop my eldest off in St. George.
I saw something I don’t think I’ve ever seen before. There were at least 6 lighted billboards along the freeway between state line and Vegas that were either blank of advertising the billboard itself. I’m not even sure I’ve ever seen a single one unfilled in the last 10 years or so.
Going from San Diego to LA a few weeks ago, we saw the same thing…where we hadn’t seen it before.
Trump’ed, again - lol :
http://www.chicagotribune.com/business/chi-mon_trump_lawsuitdec01,0,5468625.story
Drug Violence in Tijuana Claims 23 More Lives
Watch Video Last Updated:
12-01-08 at 7:51AM
A violent and deadly weekend in Tijuana claimed the lives of 23 people in seven separate attacks in less than 24 hours.
“Those deaths include the discovery of nine decapitated men in an empty lot. Mexican authorities said their heads were found in a plastic bag next to the bodies.
More than 4,000 people have been murdered in Mexico in 2008 in drug-related violence.”
Ok, I have been too busy watching the economy crater to pay attention to my local news. Grim stuff there.
Peckinpah’s Mexico looks tame in comparison to the real thing…
============
“Those deaths include the discovery of nine decapitated men in an empty lot.”
Was Alfredo Garcia one of them?
The war on drugs leads to war, drug profits eclipse tourism profits in Mexico
Legalize it
Tax it
Increase police force
Throw users who brake the law in jail for a long time
Pay for that jail time with the tax money collected.
Destroy profit engine for these violent criminals who have destabilized Mexico.
It seems so simple and yet no politician will even consider it.
measton, this happened in Mexico. It doesn’t happen here because our government is not nearly as corrupt as theirs. We enforce our laws here.
Wrong
It doesn’t happen here yet because no one in the US drug trade makes a fraction of what is spent on police and law enforcement. That’s not the case in Mexico. Drug trade brings in as much as tourism did at its prime. The profits of the drug trade are concentrated and do not have to be used to support infrastructure ect. They use this money to buy police, politicians, and more guns than the military has. This results in a breakdown of the rule of law, which can easily be experienced in border towns near the Mexican Border.
Right. As I said, they have a corrupt government. This is due to restricted speech, restricted news media, and a closed court system. I don’t think it’s happening just because drugs are illegal. After all, they’re illegal here too, and we don’t have the problems Mexico has.
Singapore doesn’t have this kind of stuff happen either. This is because they put drug dealers to death. Six months of appeals after sentencing, and then they get to dance along the end of a rope.
Looking into the crystal ball of S. Cali’s future
Florida’s future, too.
If only drugs were illegal, then maybe we wouldn’t have the heinous criminal acts…
What is it about Texas Congressmen and “original” thoughts about economics? First it was Ron Paul. Now get a load of this:
http://www.tylerpaper.com/apps/pbcs.dll/article?AID=/20081130/NEWS08/811300328
“U.S. Rep. Louie Gohmert, R-Tyler, proposed that the U.S. government stimulate the country’s economy by collecting no federal income tax this year….
Gohmert said, as the current administration continues obligating trillions of taxpayer dollars to bail out failing businesses, a better, cheaper solution to revive the economy would be to suspend collection of the estimated $1.2 trillion the U.S. Treasury will receive in 2008.”
Upon reading this, I am speechless.
BULLETIN
U.S. ECONOMY ENTERED RECESSION IN DECEMBER 2007: NBER
U.S. recession began in December 2007, NBER says
By Rex Nutting
Last update: 12:15 p.m. EST Dec. 1, 2008
National Bureau of Economic Research panel says US recession began in December 2007
A panel of the National Bureau of Economic Research says the U.S. economy fell into a recession last year.
The NBER says its group of academic economists who determine business cycles met and decided that the U.S. recession began in December 2007.
Many economists believe the current downturn will last until the middle of 2009 and will be the most severe slump since the 1981-82 recession.
Yahoo
Does this mean it’s now “Official”
Gee, I remember back then how Volker sent my job and a few hundred thousand more to Brazil, Mexico and elsewhere; guess who’s coming back for another whack at us! Mr. Whip Inflation himself.
We’ve established a really nice sustainable downtrend line on the indices, not too shallow and not too steep. With my luck, it will probably broken to the upside soon.
Paulson and Bernanke are scheduled to have speech’s today, so your luck might change.
Bing!!!!!!!!!!!!
” …not too shallow and not too steep.”
A Goldilocks downtrend.
Looks like its official. Actually the HBBers have been saying this for over a year now.
NBER says U.S. recession began December 2007
WASHINGTON (Reuters) – The U.S. economy slipped into recession in December 2007, the National Bureau of Economic Research’s business cycle dating committee announced on Monday.
The NBER’s committee, considered the arbiter of U.S. recessions, said its members met by conference call on Friday and concluded that the 73-month economic expansion had ended.
Our guberment hard at work once more. One year later they figure out we’re in a recession. Wait, there were elections last month. OK, I get it now.
“The economy is fundamentally strong.” JM
Shhhh! Don’t want to panic the
votersconsumers, now. Everything will be ponies and rainbows as long as you didn’t vote for the other guy.“The NBER is a private group of leading economists charged with dating the start and end of economic downturns.”
Private industry doesn’t do any better than government …
Up next, an announcement that there was a housing bubble which peaked in mid-2005, and there is a bust that’s been going on for more than three years.
Saw that. I’m surprised that they were willing to back that far.
Side comment… let’s hear it for government efficiency!!! Does it really take a full year to crunch numbers and figure out we’re in a recession??? Don’t these people use computers and calculators nowadays? Or are we still in slide-rule-land?
Does this mean that if this becomes a depression, starting say about now, that they’ll discover this in 2018 or so?
The determination of a recession has been outsourced to the private sector. NBER is not a government agency.
Doh - I knew that.
I’m curious though - how is the NBER funded? Couldn’t find the info online.
I looked also. Follow the money…I doubt it’s a very private organization.
It’s a non-profit according to their own site. That’s all I was able to find.
It’s kind of funny. It’s like the doctor (economists) told the patient (Wall Street) that he got a broken leg in December of 2007. Now the patient feels the broken leg pain. Ouch!
Heard them try to explain their tardy revelation on CNBC. They said that they wait until they are pretty sure the govt is done revising numbers, because they (NBER) does not want to make revisions after the fact. Said they were concerned since they are the official word, and their proclamations are the “official” start and end dates of recessions…they don’t want to get it wrong.
It’s hokey, but there it is…
US military to deploy 20,000 troops around US
Is it terrorism or food riots they are worried about?
no, seasoned shoppers trampling patrons prior to credit getting shut off..
Alabamy mayor busted!
Birmingham Mayor Larry Langford was arrested this morning on federal charges and is being held at the federal courthouse, the FBI and other federal officials confirm.
Langford, LaPierre and Montgomery investment banker Bill Blount are accused in a U.S. Securities and Exchange Commission lawsuit of not disclosing $156,000 in payments to Langford. The SEC has accused Blount of paying Langford through LaPierre as part of a plan to secure Jefferson County financial business when Langford was Jefferson County Commission president. (Read the May 2008 story)
The SEC lawsuit against Birmingham Mayor Larry Langford fails to show how friends’ personal payments to Langford led to $6.7 million in government business, their lawyers said in a filing seeking dismissal of the suit this summer.
http://blog.al.com/spotnews/2008/12/birmingham_mayor_larry_langfor_15.html
http://news.yahoo.com/s/afp/20081201/pl_afp/usmilitarytroops_081201053151;_ylt=AmA40kRdBcdqFv90a4qNp8ms0NUE
WASHINGTON, (AFP) – The US Department of Defense plans to deploy 20,000 troops nationwide by 2011 to help state and local officials respond to terror or nuclear attacks and emergencies, The Washington Post said Monday.
Citing Pentagon officials, the newspaper said the plan calls for three rapid-reaction forces.
The first 4,700-strong unit, built around an active-duty combat brigade, is based at Fort Stewart, Georgia, and is already available for deployment, according to General Victor Renuart, commander of the US Northern Command, it said.
Two additional groups will later join nearly 80 smaller National Guard and reserve units made up of about 6,000 troops to support local and state authorities nationwide, The Post said.
They will all would be trained to respond to domestic chemical, biological, radiological, nuclear, or high-yield explosive attacks.
The newpaper said that civil liberties groups and libertarians had expressed concern that the plan could undermine the Posse Comitatus Act, a 130-year-old law restricting the military’s role in domestic law enforcement.
I’m surprised it wasn’t Blackwater troops, that’s probably next
Watched War Inc. last night so I may be a little paranoid.
I’m going to take a guess that, if true, this has more to do with keeping these folks employed rather than any pending “Code Red” situation. Imagine if all our troops overseas had to come home and find jobs?
this has more to do with keeping these folks employed rather than any pending “Code Red” situation.
Yeah, that was my thought, too. Give them something to do after Iraq, if that ever ends. I’m not sure anything on the published list of what they would train for is anything an average police officer is trained or equipped to handle.
Many of the areas of the country were screaming when they shut down most of cold war bases. I wasn’t exactly panicked about the air force base across the lake when it existed (and they had nuclear weapons) I betcha most places will be happy to have whatever small slice of a deployment they can get.
Imagine if all our troops overseas had to come home and find jobs?
I hear Blackwater is hiring to provide security to dictators around the globe.
Only a totalitarian society would even claim absolute safety as a worthy ideal, because it would require total state control over its citizens’ lives. - Ron Paul
I’d take this announcement at face value, frankly.
20,000 troops would be hard pressed to maintain security in ONE medium sized city, if it were to truly HTF.
The wife and I just started watching reruns of the show “Jericho” last night. Eerie..
Oppenheimer & Co analyst Meredith Whitney, among the earliest to turn bearish on the sector, said she expects lenders to pull more than $2 trillion of credit lines over the next 18 months, with severe consequences for U.S. consumers.
“While just over 70 percent of U.S. households have credit cards, over 90 percent of those households revolve credit at some point during the year, or in other words use credit card lines as a cash management vehicle,” she wrote. “We view the credit card as the second key source of consumer liquidity, the first being their jobs. Pulling credit at a time when job losses are increasing by over 50 percent year on year in most key states is a dangerous and unprecedented combination.”
90% ?!! mind blowing!!
Owed to hedge fun…
Hedge Fund pirates, yes, they rob I;
Took away the withdrawal slips,
Minutes after I tried to take
From the bottomless pit.
Emancipate yourselves from financial slavery;
None but ourselves can free our mines.
Have no fear for economic energy,
cause none of them can stop the time.
How long shall they kill our profits,
While we stand aside and look? ooh!
Some say its just a part of it:
We’ve got to audit the books
Wont you help to sing
These songs of freedom? -
cause all I ever have:
Redemption songs;
Redemption songs;
Redemption songs.
http://www.youtube.com/watch?v=6yXRGdZdonM
Tha airee, mon.
From the AP
WASHINGTON – President George W. Bush expressed remorse that the global financial crisis has cost jobs and harmed retirement accounts and said he’ll back more government intervention if needed to ease the recession.
“I’m sorry it’s happening, of course,” Bush said in a wide-ranging interview with ABC’s “World News,” which was airing Monday. “Obviously I don’t like the idea of people losing jobs, or being worried about their 401(k)s. On the other hand, the American people got to know that we will safeguard the system. I mean, we’re in. And if we need to be in more, we will.”
“This economy will recover,” Bush said in the interview conducted last Wednesday at the Camp David, Md., presidential retreat. “And when it recovers, many of the assets backed by the government now will be redeemed, and we will — could conceivably — make money off of some of the holdings.”
Later in the interview, he said: “I can’t guarantee that we’ll get all our money back, but it’s conceivable we could.”
I feel confident now
“I mean, we’re in. And if we need to be in more, we will.”
All-In, as in push all the chips on the table, holding a straight flush?
You’d say that too if only seven weeks stood between you and a handsomely funded, fully insured, and heavily protected retirement.
I have come to the conclusion we are merely attempting to propup the investments of the Baby Boomers to the detriment of Gen X & Milinials.
Unsuccessfully, it appears.
Perhaps the “I Like Ike” generation won’t be the last to get a great “Golden Years” deal. It might be the first to get something like those coming after are going to get.
But I still bet on the back end of the baby boom for that.
“I have come to the conclusion we are merely attempting to propup the investments of the Baby Boomers to the detriment of Gen X & Milinials.”
+1 Exactly!
Most anything is conceivable. That’s not much help. Question is, how likely??
JPMorgan Chase to cut 3,400 WaMu jobs in Seattle
http://seattlepi.nwsource.com/business/390155_wamu02.html
‘JPMorgan Chase said it will eliminate 3,400 jobs at Washington Mutual’s banking operations in Seattle.
Of that total, 1,500 jobs are being eliminated now, with those employees to be gone by the end of January. Another 1,900 employees will stay on in temporary, transition jobs that will disappear next year.’
Merry Christmas…
I did hear there was a war on Christmas…
Really sad, though. Layoffs are happening all about, it sucks.
JPMorgan Chase & Co. said Monday it will cut a total of 9,200 jobs at Washington Mutual
That headline is on yahoo.
Crap. Why can’t they ever hang until after Christmas… What would have 24 days been at this point?
I’d guess between 15 and 20 million. That’s real money that the execs won’t be able to pay themselves as bonus.
I’d rather get laid off before Christmas than after I’ve overspent.
I’m thinking there is going to be an awful lot of empty bank buildings in the future, much like retail overbuilding there is a bank office of some type in each shopping center and even in the grocery stores themselves.
The local telephone utility left their old building for greener pastures. Guess what business is now occupying their old building? A NEW BANK! Not a new branch of an existing bank, but a NEW BANK! Opened up in the past month. I don’t get it…
Anyone listen to Peter Schiff on the Ron Owens show this morning? It was an immensely satisfying hour of radio. However, the fact that there are still people (callers) who think that *Peter* is out of touch with reality tells me that we are nowhere near the bottom in *anything*.
Out of the blue my husband started going on about Peter Schiff’s wisdom yesterday, so he must be getting into the conscious of the general public because my husband does not care a snap of his fingers about finance (he makes up for it by being a very disciplined saver and wise spender).
For all of you in the Bay Area that missed the interview, KGO has audio files you can download and listen when your ready.
October construction spending falls more than expected…
From the AP…
“The Commerce Department reported Monday that construction spending dropped by 1.2 percent in October, much bigger than the 0.9 percent decline many analysts expected.
“Meanwhile, the Institute for Supply Management said its gauge of manufacturing activity fell to a reading of 36.2 in November, a 26-year low. That was a steeper-than-expected drop from the October reading of 38.9 and underscored that the hard economic times were beginning to have a major effect on manufacturing. A reading below 50 indicates the sector is contracting.”
Banana Republic News
From the Reserve Bank of Zimbabwe:
As Monetary Authorities, we have been humbled and have taken heart in the realization that some leading Central Banks, including those in the USA and the UK, are now not just talking of, but also actually implementing flexible and pragmatic central bank support programmes where these are deemed necessary in their National interests.
That is precisely the path that we began over 4 years ago in pursuit of our own national interest and we have not wavered on that critical path despite the untold misunderstanding, vilification and demonization we have endured from across the political divide.
Yet there are telling examples of the path we have…For instance, when the USA economy was recently confronted by the devastating effects of Hurricanes Katrina and Rita, as well as the Iraq war, their Central Bank stepped in and injected life-boat schemes in the form of billions of dollars that were printed and pumped into the American economy.
…
….the USA economy confronted a severe mortgage crisis… The USA Central Bank again responded by injecting over US$160 billion between December, 2007 and March, 2008…. leading central banks in the global economy are bailing out troubled economic sectors to achieve macroeconomic and financial stability….the Bank of England… providing a £50 billion lifeline to the UK’s banking sector.
Here in Zimbabwe we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander….
As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances.”
Credit to Ms. Yves Smith
Naked Capitalism
Wheeeee! The USA has more helicopters than Zimbabwe
Zimbabwe or aren’t we?
Now if you would please kindly to send me your name, address and telephones number so I can wire transact the exact sum of $10,000,000,000 US to your bank. Thanks you for your most dear help in this matter of high impotence.
December 1, 2008, 6:25 am
People should be reading Adam Posen
Everyone’s looking back to the 1930s for policy guidance — and that’s a good thing. But we don’t have to go back that far to see how fiscal policy works in a liquidity trap; Japan was there only a little while ago. And Adam Posen’s book, especially Chapter 2, Fiscal Policy Works When It Is Tried, is must reading right now.
Mr. Paul Krugman
http://krugman.blogs.nytimes.com/2008/12/01/people-should-be-reading-adam-posen/
I suggest to any deflationist that they read Mr. Adam Posen’s Chapter. Especially my good buddies ‘Clue’ aka Vozzie and ‘FasterPussycatSellSell’ aka FPSS
A couple of the comments below the Krugman entry are interesting. The # 1 joke in all this is that pumping money into the banks ect is going to solve the problem. People can’t or those that can don’t want to borrow to buy a house or a car ect in a deflationary environment. The payroll tax holiday idea is much more likely to stimulate the economy as people will notice an increase in their paycheck each week and many will just spend it. The rebate checks are viewed by most as a one time windfall and I suspect more squirl it away. Rebuilding infrastructure also might work by keeping unemployment lower. When I see them handing money to the middle class in the quantities that they have handed money to the banks, then I will start worrying about inflation. Until then I’m keeping a large amount short and in cash.
Hoz,
I cannot debate the matter anymore.
In delfation.
In insolvency.
In panic.
at Peak Debt.
watching the twilight of peak consumption.
WE both know why the world is broken, spending money is easy. Making money is whole other matter.
If by making money you print more money to make things so people make money, you think the problem is solved. But people are confused about WTF is money. And what to make.
Banks kicked regulators’ ass in 2005, prevented restrictions on bad mortgages.
http://www.msnbc.msn.com/id/28001417/
They made their one last score and subsequently went out of business.
I’d love to see how much ceo’s sold during that period of time, how many cds did they purchase through shell investment off shore investment houses.
Investors sue Countrywide to force loans purchase
http://biz.yahoo.com/rb/081201/business_us_countrywide_mortgages_lawsuit.html?.v=1
Oh my, I love it!!!!!!!!!
“The couple are among nearly one-third of Arizonans who now owe more on their mortgage than their house is worth.”
” ‘We can’t afford to keep this house,’ she said. ‘We don’t have equity.’ ”
http://www.azcentral.com/arizonarepublic/news/articles/2008/12/01/20081201foreclosureblock1201.html
Rev up the helicopers. Bernanke — we can always print money and use it to buy long-dated government debt.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajcLVDMwN5To&refer=home
Presumably not what he wants to do.
Nasdaq and Dow gave up all of last week’s gains in one day. Why am I not surprised? The rally was criminal and unsustainable. Friday before last one hour Geithner moonshot still stands, however. Given proper tools and timely data these swings can be brutally profitable.
Today was telegraphed, that’s for sure.
I got up early today just to try to trade this swing, but it moved so fast that it was down 3.5% in the first 5min, and I gave up on it… Figured I might get a better opportunity to get short later in the day. Nope!
I may be completely out of my mind, but I nibbled on a blue chip this afternoon. As an investment, not a trade.
Trying to swing trade this market in size would feel like Russian roulette with three chambers loaded.
But picking up a cigar butt or two seems reasonable on days like this.
i have played the market a bit too, and have been quite lucky to not get burned a couple times. i thought of buying some intel, sony, or nokia today..but caution told me not to do it! i need to see the lows of last week break then we might have a buy for a short term profit. i listen to roubini and he says another 20-30% down! who knows, but it is not going back up another 20-30% any time soon….a 9% drop in the nasdaq should make anyone cautious!!
Anyone have a problem where 50% of their posts never show up?
Yup. Seems to be better if you get in early.
Strolled around Rodeo Dr Saturday evening, the only crowd we saw we paparozzi outside of Chanel waiting for Lindsay Lohan to emerge. Most stores had no one. LMAO
Is there a widely accepted definition of housing affordability? I, for one, am quite skeptical that respiking home purchase demand would increase it, as I recall from Econ 1 class that an increase in demand leads to higher, not lower (aka more affordable) prices. In this particular case, lower interest rates are likely to be quickly capitalized into higher (aka less affordable) home prices, just like after the Fed hyperstimulated the housing market in the early 2000s.
Sharply lower loan rates boost home affordability
Drop in mortgage rates, prices could help housing sales in 2009, analysts say
By John Spence, MarketWatch
Last update: 12:26 p.m. EST Dec. 1, 2008
BOSTON (MarketWatch) — The Federal Reserve’s plan to spend $600 billion buying mortgages is driving down lending rates and boosting home affordability, which combined with decreasing inventories may signal a 2009 recovery for the battered home-building sector, some Wall Street analysts say.
The Fed’s announcement last week pushed rates on 30-year fixed-rate mortgages below 6% as panic-stricken lending markets eased somewhat after news of the government’s latest efforts to inject liquidity into the financial system.
“The recent decline in mortgage rates, primarily resulting from the recently-announced Term Asset-Backed Securities Loan Facility (TALF), has led to a significant improvement in affordability, and over time better affordability typically leads to an improvement in sales activity,” wrote Credit Suisse analysts, led by Daniel Oppenheim, in a research note Monday.
Easy credit allowed the high prices. Easy credit allowed people to raise vast sums with little skin in the game.
High prices are loved by the REIC and politicians and current home owners. Thus these groups have, at last look, put up about 8 trillion dollars of tax money and IOUs into the real estate and financial markets.
(Side note: could money funneled to the REIC wind up back in the hands of politicians? Perish the thought! Politicians and REIC would never do such a devious thing.)
Politicians and the REIC want to keep the credit party going. And hope the housing mania will reignite.
Will they succeed? Time will tell.
Yes. I’m beyond sick of hearing everyone in the MSM talk about lowering rates so housing can be more affordable. I’m desperately looking for double-digit rates to make housing more affordable.
FPSS,
About the 1983 thing, I’ve posted on the HBB forum in the finance section, post is titled “Beginning of the current credit cycle.”
I’ve tried posting several times here to no avail.
Armageddon, official recession, DOW tanks and Hillary is slated for Sec of State.
Boringggggggggg.
Got a call from my Schwab consultant today at work. Thankfully I wasn’t at work yet. Anyways, she says that she would like to discuss my cash position and see if there are better options out there. What is better than cash in a deflationary environment as the dollar strengthens against the euro and pound? I asked my magic 8-ball if I should call her back and all signs pointed to no.
But she doesn’t make money if you hang out in all cash. Er, I mean *you* don’t make all those fabulous returns that come from a stock market that will turn up at any second.
She specifically said it wasn’t a sales call. Remember, they are always looking out for your best interest. Is it a great time to buy the financials yet? Where are the mustard seeds Kudlow is talking about? All this talk about mustard seeds makes me want a shallot and dijon mustard vinaigrette with my salad tonight.
A little NAR joke to lift the spirits…
How do you get a realtor off of your porch?
Pay them for the pizza!
Do we have to tip?
Yes…but only 6%,
had to take a look at some houses in phoenix for sale at low prices, one is in a decent area, but on the edge of not so great areas. others in areas so bad they would have to pay me to own the house. I never knew there were so many poor bad areas of town. the price 35k, the only problems being a tree that fell on the roof-hole about 4 feet across, and an interior stripped of kitchen. looks like someone was doing a renovation because the a/c was brand new as were the windows. and, the house looks overall pretty nice. so probably 20k-30k to fix the hole and other stuff. but, then i add it up and renting my month to month place is not such a bad deal! my money is in the bank and, i can move whenever i want. oh, and there was gang or punks that tagged the walls. so, who really knows how bad the area really is….
so, who really knows how bad the area really is….
Check the public school ratings and you’ll know
I would never ever buy a house in a tagged area. I’d look every day until the deadline to back out of my purchase agreement. One graffiti phrase would kill the deal for me. I have zero tolerance for ghetto-creators.
Someone sent me this and it made me laugh
A Japanese company ( Toyota ) and an American company (GM) decided to have a
canoe race on the Missouri River . Both teams practiced long and hard to reach
their peak performance before the race.
On the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the
reason for the crushing defeat. A management team made up of senior management
was formed to investigate and recommend appropriate action.
Their conclusion was the Japanese had 8 people rowing and 1 person steering,
while the American team had 8 people steering and 1
person rowing.
Feeling a deeper study was in order, American management hired a consulting
company and paid them a large amount of money for a second opinion.
They advised, of course, that too many people were steering the boat, while not
enough people were rowing. Not sure of how to utilize that information, but
wanting to prevent another loss to the Japanese, the rowing team’s
management structure was totally reorganized to 4 steering supervisors, 3 area
steering superintendents, and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 1 person
rowing the boat greater incentive to work harder. It was called the
‘Rowing
Team Quality First Program,’ with meetings, dinners, and free pens for the
rower.. There was discussion of getting new paddles, canoes, and other
equipment, extra vacation days for practices and bonuses.
The next year the Japanese won by two miles.
Humiliated, the American management laid off the rower for poor performance,
halted development of a new canoe, sold the paddles, and canceled all capital
investments for new equipment. The money saved was distributed to the Senior
Executives as bonuses and the next year’s racing team was
out-sourced to India .
The End.
Then I saw the Bloomberg story below and remembered the fleet of private jets used by big 3 CEO’s to fly hat in hand to US gov for a bailout .
Dec. 2 (Bloomberg) — Toyota Motor Corp., the world’s second-largest automaker, cut managers’ winter bonus payments by 10 percent, as a global recession damps car demand.
About 5,000 managers may have taken bonus cuts,
Paulson has a bannana in his pocket. Bernanke pulled out the bazooka, and its pointed at the long end..
expect 2% on the 10yr in ten days.
expect an inversion on the short end in January, as the last 50 bips come off.
expect another 20% coming off any market in short order.
in the liquidity trap…in deflation, in insolvency..
hey, futures are so bright I gotta wear night goggles.
from the “playbook”
“In principle, our ability to pay interest on excess reserves at a rate equal to the funds rate target, as we have been doing, should keep the actual rate near the target, because banks should have no incentive to lend overnight funds at a rate lower than what they can receive from the Federal Reserve. In practice, however, several factors have served to depress the market rate below the target. One such factor is the presence in the market of large suppliers of funds, notably the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which are not eligible to receive interest on reserves and are thus willing to lend overnight federal funds at rates below the target.1″
———-
WHEN BANKS MAKE MONEY BY NOT LENDING MONEY, THEY DONT LEND.
Footnotes
1. Banks have an incentive to borrow from the GSEs and then redeposit the funds at the Federal Reserve; as a result, banks earn a sure profit equal to the difference between the rate they pay the GSEs and the rate they receive on excess reserves. However, thus far, this type of arbitrage has not been occurring on a sufficient scale, perhaps because banks have not yet fully adjusted their reserve-management practices to take advantage of this opportunity.
——-
RESERVES?
oh yeah, you gotta leave out level II and III “assets”
how does a bank borrow from the GSE’s?
THEY SELL A LOAN AT A DISCOUNT from maturity.
so only banks with fresh new quality loans are good to go to the GSE window….they have mopped up the mess already; unfortunately, there is no demand for housing at any interest rate in many parts of the country.
nobody wants housing, and nobody wants debt.
What do the people crave?
not,
brawndo.
But, it has electrolytes!
Well as Mr. Bernanke wrote in both 2002 & 2003 the easiest way to stop deflation would be to lower the rate on the long term bonds. China and Japan aren’t buying and when you look at the balance sheet the only buyer is the US Treasury.
Who is going to invest at 2.5% for 10 years, when food is increasing at 7% per year?
clue,
Would you please break this down into layperson language.
Thank you.
A year ago, the Fed took care to ensure that their new monetary facilities were “sterilized”; that is, that any money created to purchase something was matched by sales of Treasuries. This is also called “shifting the composition of the balance sheet”. Starting with the commercial paper purchases (?), the interventions have been “unsterilized”; i.e., they have simply created money to buy assets. When Bernanke says “expansion of the balance sheet of the Federal Reserve”, this is what he means.
Clue,
You are a gentleman. Thank you.
This is what I’m talking about!! Stuff’s heating up.
Investors sue Countrywide to force loans purchase
http://news.yahoo.com/s/nm/20081201/bs_nm/us_countrywide_mortgages_lawsuit
“A group of bond investors sued Bank of America (BAC.N)-owned Countrywide Financial on Monday demanding that Countrywide buy every mortgage loan for which it agrees to reduce payments under a predatory lending settlement deal.”
Just for a little fun, take a look at this sortable chart of Case-Schiller by metro area over at the WSJ:
Chart
You click on the headings to sort. Amazing how LA, for example, is still at 184.54 on the index as of September 2008…
650 S&P500 and bust.
enjoy the ride.
Uncle Sam needs to go shopping. Not us
http://www.salon.com/tech/htww/2008/12/02/the_united_states_of_shopping/
For the past few years, I’ve been telling coworkers in Orlando that their housing market will crash, there will be blocks of empty, boarded up houses, and that crime will skyrocket.
#1 and #2 happened, and #3 is well on its way. Someone I work with was in this Wal*Mart…
http://www.myfoxorlando.com/myfox/pages/News/Detail?contentId=7973053&version=8&locale=EN-US&layoutCode=TSTY&pageId=3.2.1
…when a transsexual tried to hold up the place and opened fire.