Bits Bucket For December 4, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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We were at a bar on Bleecker Street yesterday. I heard a woman at a table behind me say, “Barbara Corcoran said this thing is going to turn around faster than anybody thinks”.
I drank faster after that. Between that and The Treasury wanting to hand out 4.5% mortgage rates my hatred for people is definitely in a bubble. People are dumb. I hope that stupid woman, at the bar, ends up homeless. I will laugh.
When the coffee cart guy asked how I was today, I smiled and said “still employed; they’re firing all the Starbucks drinkers.”
The effect of 4.5 pct mortgage rates against the backdrop of rising unemployment, a record rate of decline in housing prices and a reversion to prudent bank lending standards seems highly unpredictible. One possible way forward is an acceleration of price declines in the direction of discovering a new, affordable equilibrium price, as a flood of new comps that align with buyers’ incomes, at much lower prices than 2005 levels, are quickly translated by prospective buyers into inferences of current market values. I believe something similar happened with respect to the flood of Fed money into Wall Street this past year — what was intended as a life support turned into a drowning pool.
“One possible way forward is an acceleration of price declines in the direction of discovering a new, affordable equilibrium price, as a flood of new comps that align with buyers’ incomes.”
RE: the 4.5% mortgages for new buyers with eligibility based on traditional metrics.
That’s why of all the dumb ideas out there, this might be the best. Rather than funneling money to those who HELOCed their way to false affluence and their lenders, it aids those who are “priced out forever” by allowing them to buy homes they CAN afford under traditional metrics. And it helps younger people who had nothing to do with this disaster, rather than just older people looking to cash in on false inflated housing values.
It could slow the price descent, if those in better off neighborhoods hold the line on price forcing those who would normally be able to live there to buy in less affluent neighborhoods, but only for a while.
As Ben would point out, however, if places where there was an overbuilding problem rather than (primarily) a price bubble, all the incentives in the world won’t solve the problem. You’ll just empty apartments and rented homes to fill others with owner occupants, shifting the problem. Rental property owners beware!
Let’s call a spade a spade here. This is just one more NAR-sponsored protectionist subsidy of one of America’s most heavily subsidized industry by politicians who do not have the taxpayer’s interest in mind, in the guise of a mortgage rescue plan that is for the common good. We have already dumped so much of our nation’s collective wealth down the housing sector’s rat hole, so what’s the big deal about dumping a lot more?
P.S. Note also that this is disaster capitalism at its best, as we have a severe (Fed-engineered) housing crisis at hand, which can only be remedied by robbing Main Street to funnel more money into the hands of big money interests in the REIC.
It didn’t work in Japan. Why would it work here?
I’ve never seen evidence a bubble reinflate EVER. Why would it be different now?
We are at or near an interest rate level bottom. The same $400K houses that sells with government subsidized interest rates at 4.5% is still going to crash when market interest rates adjust up to 25% when the national debt and deficit is failed to be financed by non government institutions REGARDLESS of price to income ratio, unemployment, or housing supply.
Propping up housing prices or artificially lowering interest rates is literally sacrificing helicopter loads of money to the volcano god. The more magically pretend affordable these over-priced POS boxes become, the more are going to be built. It’s cheaper to get your house by starting 10 new building companies and undercutting everybody else trying to sell on price.
The housing supply is already so huge that a normal market ratio of 3 times income is probably already down to 2 times income.
When all is said and done, with this utterly stupid clueless government policy, we are talking about doubling the national debt and accomplishing 0.0% of solving the fundamental problem of bubble prices, which will just collapse again. Then what? Quadruple the national debt?
FPSS
“…The reality of Japanese fiscal policy in the 1990s is less mysterious and, ultimately, more disappointing. The actual amount injected into the economy by the Japanese government—through either public spending or tax reductions—was 23 trillion yen, about a third of the total amount announced. This limited quantity of total fiscal stimulus was disbursed in insufficiently sized and inefficiently administered doses, with the exception of the 1995 stimulus package. That package did result in solid growth in 1996, demonstrating that fiscal policy does work when it is tried….
The total amount spent was 23 trillion yen, or 4.5 percent of a year’s GDP. While a not insignificant amount of money, it is not a terribly large amount spread out over sixplus
years of recession, with a total cost in wealth forgone of 8 to 10 percent of GDP (as argued in chapter 1).”
from Chapter 2 “Fiscal Policy Works When It Is Tried” in the book “Restoring Japan’s Economic Growth” by Adam Posen
caution 22pg pdf
http://www.petersoninstitute.org/publications/chapters_preview/35/2iie2628.pdf
Let’s see - government attempts to force rates at a certain level. Why doesn’t that sound familiar? Um….
Now I remember!
Zimbabwe.
“I’ve never seen evidence a bubble reinflate EVER. Why would it be different now?”
Exactly, FPSS. Bubbles cannot be re-blown while popping.
The inflation of a bubble is intimately tied to the _psychology_ that is afoot. It’s hard to buy the line that “housing only goes up” immediately after it has fallen 30-40%.
This may slow the descent, but cannot reverse it.
It will help some small number of FBs who bought a home with a toxic mortgage, but could actually afford a slightly-below-market fixed mortgage. That’s all it can possibly do.
Even giving out loans at 0% cannot change the collapse because there are no INCOMES to pay for it.
Isn’t this basic point rather obvious?
Once the monthly stimulus checks start rolling in, don’t worry about incomes. We’ll tax or print our way to riches! Hahahaha… yet it will happen… maybe…
In that case, don’t let us stop you from running out and buying a multi-million dollar McMansion.
We will wait over there in corner holding our breath waiting for the checks too.
The gub doesn’t look at it as a housing or credit bubble. They look at it as “normal”.
“Let’s call a spade a spade here. This is just one more NAR-sponsored protectionist subsidy of one of America’s most heavily subsidized industry by politicians who do not have the taxpayer’s interest in mind…”
Exactly. And, politicians have learned NOTHING. In fact, the local government in Reno, NV just approved a 6500 acre development 30 miles outside of town for 12000 new homes. This, as THOUSANDS of homes sit vacant and deteriorating! The developer just lined everyone’s pockets in order to get it passed!
“Even giving out loans at 0% cannot change the collapse because there are no INCOMES to pay for it.”
Yes this is obvious, provided lenders are now requiring income documentation (which they allegedly would, at least with respect to this “hush hush” 4.5 pct loan program).
I have no problem with this as long as the mortgage brokers and realturds can’t make more then 2% per transaction. I cannot believe with all the trouble we have had, no one will address the inflated compensation these turds get.
Another socialist who thinks govt should set, or at least limit, wages, salaries and commissions.
How much are YOU worth? That’t too much.
admit it, these turds are over paid - are you a real turd sympathizer?
No worries, KR. The market is taking care of RE incomes. In most of California, prices have come down by 30%, translating directly to a pay cut of the same amount. They’re working harder for less, negotiating with banks for prolonged periods of time over short sales and foreclosures.
If an industry accepts tax payer money, it must deal with the consequences of that action.
All gifts come with strings attached.
KR,
I’ve maintained exactly that for the last 2 years! Act…ually, I was thinking more like ONE %!
This isn’t about “capping” someone’s income ( fer’ chrissakes, they’ve already BEEN paid and paid generously for MAKING this mess! )
This is about accountability.
It is not that wages are “set”, but rather that there is funny business going on at the NAR and it’s regional siblings, which prevents competition and allows price fixing to occur. I do not believe on the other side any ones wages or comissions should be regulated, but illegal business opperations should.
Why can’t it be a flat fee or an hourly fee for agents. That way they have incentive to do good work (ie staging if they are a selling agent, and coming up with good listings if a buying agent). A commission is incentive to sell at high prices (for buying and selling agents) rather than just sell or accomodate transactions, which is supposed to be their job.
A good, sought-after agent could charge higher prices based on performance and demand of their services.
Socialists are not setting a ceiling on wages. It’s the NAR setting a floor on wages and prohibiting competition. Blatent collusion on the part of Realtors to maintain a monopoly. not my idea of capitalism.
oxide,
Good to see you haven’t lost your touch! Oh and don’t forget about the pocket listings and cherry pickin’!
AFAIK no other developed nation treats their realtwhores as well as we do here? They’re fighting disintermediation tooth and nail.
As I’ve said before, it’s not just insane prices we here at Ben’s want to see changed. They need to scrap NAR and start over. There just isn’t enough ‘good’ left to salvage.
I don’t see how handing out supplemented mortgages below market rates helps to solve any problems and I feel for any fool who participates in these programs. With a 4.5% mortgage rate a new buyer may be able to afford the monthly payment on one of the still overpriced homes on the market using traditional metrics, but what happens in five years if he needs to sell? If these programs are no longer in effect and our free money policies spark inflation prospective buyers in 5 years will be looking at 10%+ rates and the prices of houses will be discounted accordingly. Today’s government supported knife catcher is going to be butchered.
We all have to remember, it almost doesn’t matter how low MTG rates go, they are not going to make up for the massive shift from 10X income lending to (normal) 3X income lending. There’s nothing that’s going to fix that; yes, lower rates will make homes a BIT more affordable. But it’s not going to come CLOSE to making up the difference above.
Median income in my area is ~40K. Median home price (at peak) was ~410K. There’s just no interest rate that is going to make that work (at least not one we have ever seen before). I suppose there’s nothing to keep them from saying that FNM/FRE are going to write 30 year notes at 1% interest rates. That would dramatically alter the 3X income rule. But anything like normal rates, it’s just not going to be that significant.
2x incomes per household halves the ratio. 5:1 is bad but not terrible.
That is probably median HOUSEHOLD income at $40, not individual income.
Cocaine is a helluva drug. They say every fiat note contains trace amounts of that drug from all the cash that is churned through the illegal drug industry. Maybe there’s a lot more grams per note then suspected, and people are literally sniffing those notes up their noses. There’s an alternative “deflation theory”.
Recycling fiat notes might be as hazardous as asbestos removal.
What’s a “bit more affordable” when the supply of houses has DOUBLED? If you were a builder you’d keep building too and undercut everybody who tries to sell in reverse fashion to every specu-flipper who tried to scalp everyone who was looking to buy by front running their purchases with the buying of second, third, and fourth “investment” homes. These second, third, and fourth specu-flipper “investment” homes are still out there waiting to be unloaded when the market magically recovers its high.
But they will write loans with 3% or 0% down. To me that’s the key; minimum 10% down. Skin in the game reflects good borrowers ( savers). It also keeps prices reasonable, limits fraudulent speculators and usually makes one think twice about walking away. Otherwise, they just might succeed in inflating another, slightly smaller, bubble. They can always skirt the no-doc issue with fraudulent paper work. The thing that really scares me is the accepted criminal mindset of the mortgage/RE industry.
Michael Fink,
It makes me wonder what an Amortization Table on a 1% 30 Year FRM would look like? Even w/ all of the interest “front loaded” wouldn’t the loanowner be chipping away at principle much earlier?
I’ve always gone by the general rule that’s it’s a far better thing to pay for cheap assets w/ expensive money ( rather than vice-versa ) but at 1%, WELL below inflation, could this make sense?
“One possible way forward is an acceleration of price declines in the direction of discovering a new, affordable equilibrium price, as a flood of new comps that align with buyers’ incomes, at much lower prices than 2005 levels, are quickly translated by prospective buyers into inferences of current market values. I believe something similar happened with respect to the flood of Fed money into Wall Street this past year — what was intended as a life support turned into a drowning pool.”
PB, this was exactly what I told my wife yesterday. It looks to me the Fed wants to prop up the home builders in a similar way they wanted to prop up the IB. Well, when the FED bailed out WS, GS was $125. Today GS is $70, so we all saw how well this worked. I do not expect different outcome here – this baby is going DOWN. Maybe it is time to load up on some SRS.
“One possible way forward is an acceleration of price declines…. I believe something similar happened with respect to the flood of Fed money into Wall Street this past year — what was intended as a life support turned into a drowning pool.”
PB, this was exactly what I told my wife yesterday. It looks to me the Fed wants to prop up the home builders in a similar way they wanted to prop up the IB. Well, when the FED bailed out WS, GS was $125. Today GS is $70, so we all saw how well this worked. I do not expect different outcome here – this baby is going DOWN. Maybe it is time to load up on some SRS.
Voodoo Priest Jim Cramer babbled to Don Deutsch last nite that “housing will bottom next spring and the window of time will be short. Offer 60% of asking”.
BS
I had to stop watching him for a while. Talk about leading the sheep to slaughter. And now that he’s been pumping buying dividend stocks, dividend slashing must be imminent.
Needless to say, he is an idiot and a jackass. Almost no sellers would fail to reject out of hand an offer at 60 pct of asking.
Oddly enough, he claimed that sellers will jump on a 60% offer. He may be right about that but wrong on the timing.
But if everyone makes extreme lowball offers, sooner or later the sellers will get the message to lower their damn prices. I am a proponent of everyone getting in there and lowballing. I am helping my son look for a place. We are making 30% low offers, usually outbid by “investors.” We do not negotiate. Finally, yesterday I spoke to a listing agent who said that a 30% low offer was the highest he had received. This was in a neighborhood that has already fallen by 40%. If this deal goes through, my son will have PITI payments of $900 a month for a house ($100,000 mortgage.)
30% under asking is way too high.
One of the problems with lowball offers is that most sellers simply can’t take them; they owe too much money. They’re not going to spend the time and effort negotiating with the bank to take a short sale when they can simply mail the keys back to them.
You have to wait until the bank gets the house and then negotiate with them.
It could bottom out next spring if the hyper-inflationistas are correct.
Best comments I have heard on the 4.5 pct mortgage plan thus far:
1) NPR news referred to it as the Treasury’s “hush hush” plan (never minding that it was the lead story on p. A1 in today’s WSJ).
2) A commentator wryly noted that if the plan is already common knowledge but will not be implemented until after inauguration day, prospective buyers would do best by waiting until the plan goes into effect, in order to capture the value of a massive (100 bps+) interest rate subsidy in their monthly payments*. Meanwhile the demand side of the market may go into hibernation, virtually shutting down the owner-occupied residential real estate market for the next two months.
*For instance, on a $300,000 San Diego starter home, this could generate savings of roughly $3,000 / year ($500 / month) on the monthly payment amount.
More like ($250 / month)…
isn’t this why there is a bull run on long treasuries? because the government plans to buy them forcing rates lower ?
Yep. Two colleges of mine bought two moths ago and both were very happy, I would say almost proud, that they got 5.65% interest. I cannot even begin to imagine how screwed they feel right now. The government will scare the RE investors (knife catchers) the same way they scared the average stock market investor. There will be a lot of nasty unintended consequences in this price fixing.
Yep. Two colleges of mine bought two moths ago and both were very happy, I would say almost proud, that they got 5.65%. I cannot even begin to imagine how screwed they feel right now. The government will scare the RE investors (knife catchers) the same way they scared the average stock market investor. There will be a lot of nasty unintended consequences in this price fixing.
“People are dumb.”
But GMAC says people are smart. You know who I mean. The brain surgeons who need to refi out of a suicide loan. Those are the smart people GMAC squawks about in their People Are Smart commercial.
And smart people buy Smart Notes.
“People Are Smart” ads only serve to ensnare dumb people into doing dumb things.
As far as advertising goes, “smart” is the new black. HI Express, Fidelity…that message is everywhere these days.
From the WaPo article:
“The cost of the plan and source of funding remain unclear. One possibility is for the Treasury to raise money by issuing bonds to the public at 3 percent interest. This could allow the government to turn a profit because it would be buying securities that pay 4.5 percent. ”
Yeah because loaning out money at higher-than-borrowing-rates worked so well for the banks.
IT’S ABOUT THE DEFAULTS, STUPID!!!!
If this plan passes, I’ll be majorly pissed. Writing my congressman…
‘Treasury to raise money by issuing bonds to the public at 3 percent interest. ”
What public are they talking about ? the peoples ‘public of China? How much money do they think the American public has to invest when they are getting let go in record numbers?
LMAO. These people are clues. The government is broke and is bailing out everybody. Who will bail out the government? The US taxpayer. But the taxpayer is broke. Then let the government bail out the taxpayer by giving him stimulus checks… It is like a snake that eats its tail. Bizarre world.
The fact that so many Americans feel entitled to get-rich-quick off of houses, and not lose on speculative investments make me very angry, too. Every person who bought a home with an adjustable mortgage was a speculator. They have no right to ask the Taxpayers for help when their bet doesn’t pan out.
And the Government’s actions–punishing taxpayers and savers so that Housing can be propped up–is sickening. Why don’t the people who rent and/or live in houses they can afford have a political voice? Aren’t they the majority?
Just watched CNN; the real estate showed typical price/payment and the new reate would save you…ooooo $114 !, and her comment was that would make a REAL difference in whether someone would buy….
——
Prices are coming down, but several relatives already have had prop taxes almost double this round, and the states are rumbling shortfalls continuing. Even if the house is affordable etc etc..I believe you will be a rooted target for ever higher taxes most especially Ca, NY etc..
—-
Re. Babs Corcoran…when is someone going to put a stake in that vampires heart? Just watched her, and that long haired RE sleeze on youtube berating Schiff on his call of price plummets on RE, thay were laughing out loud ,and said prices were going to be up 10%, Then Ben Stein early this year at Dow 10K saying the days 1% drop on financials was a buy of a lifetime…these cons really need to be held accountable!
The stupid woman is you. It is exactly your disdain and wishing bad things to happen to one of your countrymen that is ruining this country. We have Senators who are calling some of our most important CEO’s stupid for the whole world to hear. It is those working for companies owned by “Evil Rich” people who do not seem to realize that while they wish them pain they are creating their own. The best example are our unions who consistently work against management and the company’s best interest to achieve short term goals…Now they may all be out of work…so who won? America and people in general do best when we wish each other well, when we speak in a positive manner. The woman at the bar was the smart one…it’s all about attitude and yours is a disgrace!
Financial Times
Insight: A rocky road to 2010
By Aline van Duyn
Published: December 3 2008 16:42 | Last updated: December 3 2008 16:42
…
The much-needed return of confidence to financial markets the collapse of many parts of the banking system remains elusive. (Am I just sleepy, or is that not really a sentence? — PB)
The hits to the real economy – in the US, Europe and even China – are severe and continue to get worse. There are no signs that lending will do anything other than shrink in the coming months, putting a further squeeze on both companies and consumers.
…
One of the biggest strains has come from trying to absorb the “never ending patchwork of solutions” devised by governments. Anyone tracking the many market intervention plans by the Fed and the Treasury knows the list is dizzyingly long, and that details are still in many cases sketchy.
The many moves to inject liquidity into financial markets are clearly going to last longer than had been thought a few weeks ago. Just this week, the Fed added another three months of life to three liquidity facilities. These will now run until at least the end of next April.
Jeffrey Rosenberg, head of credit strategy at Bank of America, says this is an acknowledgement that the “period of adjustment” in financial markets will take longer than initially anticipated.
Understanding how government’s new role has changed markets and investment opportunities is key. Bill Gross of Pimco highlighted that change this week.
“We are now morphing towards a world where the government fist is being substituted for the invisible hand, where regulation trumps Wild West capitalism and where corporate profits are no longer a function of leverage, cheap financing and the rather mindless ability to make a deal with other people’s money,” he wrote in his monthly investment outlook.
His advice to stock investors is to embrace the “sheepish” rather than “brave” new world and get used to lower earnings, growth and reduced “animal spirits”.
…
“and the rather mindless ability to make a deal with other people’s money”
So… is that as close to an apology as we’re going to get from Bill Gross for his rather large and active hand in all of this?
What a tool.
yes, please get used to lower earnings otherwise the Pimp is going to get in serious trouble soon. From now on, if the Pimp gets it his way, you can only earn money with debt.
So very well said Sir! I’ve despised this prick ever since he reveled in the market’s -last- dark stretch of hours in 2002. Btw, prior to the tech wreck meltdown how many people had ever even heard of this douche?
Just finished “The Collapse of Complex Societies” by Joseph Tainter, and I recommend it highly…
It was written 20 years ago and is very prescient.
I liked this quote:
“Collapse occurs , and can only occur, in a power vacuum. Collapse is possible only when there is no competitor strong enough to fill the political vacuum of disintegration. Where such a competitor does exist there can be no collapse, for the competitor will expand territorially to administer the population left leaderless.”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I’m thinking of course about financial collapse, and there are no competitors on the world stage now, just mutually assured commiseration, in spades.
Your are absolutely correct. Tell your friends.
King,
Are you still thinking it’s a throwback era economy, circa 1974?
I’m thinking there will be an outstanding buying opportunity as there was in 1974.
History rhymes well but it doesn’t exactly repeat.
King,
Please tell me there will be no disco this time around.
Hey I like disco to rap any day
Lad, what’s the outlook on “the color”? I like “the color” better than the precious. That is what Hearst (Gerald McRainey), on Deadwood, called it. I’m serious. What is going on with gold? It seems kind of dead. I know what Combo would say. Do you buy hear, as the CBs destroy their currencies?
NYCB,
We are at one of those turning points in history, the very 1st one for most of us.
Events will transpire that will shock even the most jaded…
Fail to prepare, prepare to fail financially.
Go to cash?
With every frantic and unprecedented move by the PTB, the value of historical analysis is diminished.
We’re in uncharted waters - on at least that I think we all can agree.
RE: We’re in uncharted waters - on at least that I think we all can agree.
With a doubling of the national debt there sure ain’t much dough in the kitty to attend to any future world military confrontations.
The Russian fleet is now steamin’ thru the Panama Canel and NATO is gettin’ cozy and suckin’ up for their oil with
MOONBAT PELOSI leading the Light Brigade!
USA no more NUMBA #1, GI.
YOU GOWA DOWN MONKEY DUNG HOLE BIG TIME!
The petro states are getting the shakes. Lotsa loose cannons on the deck nowadays.
I believe that Russian “fleet” consists of exactly 3 ships small enough to fit in the Panama Canal.
I would be more worried about their nuclear submarines, I figure one of them is gonna go “boom” all by itself.
I often think we should mercy kill the russian fleet of subs while they are in port.
There would be some blow back but in the end everyone, especially the poor sailors, would be happier.
Skip,
Too funny! It was once suggested that we BUY their fleet of nuke subs ( to keep them from rotting at the dock! )
I served on (2) LHA-class amphib carriers and they were designed to clear the canal by about a foot on each side. The flight deck was 80′ feet off the water so it looked like you were “runnin’ aground” the whole time.
RE: I believe that Russian “fleet” consists of exactly 3 ships small enough to fit in the Panama Canal.
Proverbial camel’s nose under the tent.
They are merely “testing the waters”…KGB is probably takin’ lots of pics and various measurements on the cruise thru.
Sure didn’t take long for the probes to start.
But I’m sure Hillary will put a stop to it all.
I feel safe.
cityboy,
Interesting the way you worded that; “dead”. Gold is the poster girl of dead assets. It produces no yield. We have just witnessed a global mania of leveraged investing in dead assets. It appears to be unwinding.
Poor precious all by it’s lonesome, no debts, no interconnectivity.
That’s just the point. There is debt backed speculation in Gold still. It is connected. The “we’re all gonna get rich just borrowing $ to own this stuff” crowd is backing out inch by inch.
You yourself went into $ debt, to make home improvements, rather than let loose any of your ticket to unimaginable wealth and power. The fantasy is fading.
dude, we’re just doing pre-game batting practice now.
The game hasn’t even started…
Why hasn’t the precious needed an implicit financial guarantee, like EVERY other form of money?
Answer me that.
I agree that the game you’re talking isn’t in play.
The game we are in (deleveraging) is hardly close to over. Just getting started. Those who are all suited up for next season’s game could get creamed. JMO.
Why would any government prop up gold? Doesn’t make sense.
Wall Street hates the precious, as transparency ain’t their game.
Alad,
If credit is collapsing and debt is going to start going down; wouldn’t that mean that cash is going up in value and gold would go down.
Is there a double whammy in that as others have stated gold was bought and traded on leverage like any other commodity? Isn’t a gold hedge fund and street tracks gold (GLD) a hint that gold might have been another asset bubble?
I really do not know where all this is going. I realize there are huge inflationary forces in the potential bailouts. However, I am not sure they are large enough to offset the huge deflationary forces working on the credit markets. I keep thinking we are seeing a collapse in debt and creation of new debt. However the ammount of discovery of old debt that has failed isn’t effecting M3 calculations yet. So, the bad debt is sitting on the books at the Fed, the big banks and in the hands of bond investors.
As far as this goes I don’t have a quantative answer that makes me think I know the right price for any of this stuff. I have a sense of it but any attempt at investment would be a WAG. We might have created more inflation that I thought or perhaps losses are somewhat over estimated. Perhaps capital flows from China are increasing to handle the debt. Not sure.
Anyhow, its a quandry.
Gold is Mother Nature’s money, and last year there was around 50 fiat Dollars/Euros/Yen what have you for every Dollar worth of the precious.
Maybe we’re down to 20 to 1 now. It’s hard to fit twenty people in a size-1 dress. it’s just a numbers game at this point, and the numbers are all going my way.
Time is on my side, yes it is…
Are you absolutely sure about that?
Your valuation response shows the number of fiat dollars collapsing by 50%.
If it drops to say 10:1… Not sure where it will all settle out. You could easily have 50% losses.
Maybe I haven’t made myself clear…
I don’t see fiat of any flavor being in favor, soon.
RE: What is going on with gold? It seems kind of dead.
FWIW-Buried in the WSJ a couple days ago, was a blurb noting that even the back room fraudsters at Citi thought that gold would run to $2k per oz. in the next 2 years.
Thought it was kinda of a radical pronouncement from the staid suit crowd.
Watching this mess unfold makes the lawless days in Deadwood look like a viable alternative. If only we had Al Swearingen in charge instead of Hank Paulson…
I taught Canadian college freshmen with this book last year. (We also read many strong criticisms of Tainter’s work.) The students were hilarious: “It can’t happen here, but the U.S. sure is in trouble.”
Tainter’s main thesis, that societies collapse because of diminishing returns of social complexity, is fascinating. Very interesting to think about in the context of medicine, NASA, fossil fuel dependence, industrial agriculture, finance…
Societies only exist by division of labor and trade. Peace only exists to the extent unhindered free trade exists.
People are either freely trading with one another or they are not; there is no third way possibility for goods to move from person to person. They are either moved voluntarily and peacefully or through non voluntary brute violent force. (paraphrasing Ludwig von Mises)
Seems to me that Zimbabwe has already collapsed, but there doesn’t seem to be a power vacuum.
Rhodesia was (and could be again) the breadbasket of Africa.
Mugabe got hoovered out of office this year, but it didn’t take.
The real story is that the rest of Africa is a basket-case, just trying to get by. If there was a dominant country going forward on the dark continent, they’d surely usurp him, and get the country going again, but where is that country?
This looks like a great book. It’s already in my Amazon wish list.
There was a discussion yesterday about banks “hoarding” the bailout money. Is anybody really naive enough to think that banks were given that money to lend it out? That might be what the Boys are saying but they are trying to recapitalize the banks. You don’t recapitalize by making more shabby loans.
The banks “saving” that money, and not lending it, it is one of the few things that I actually agree with. We don’t need more bad loans. Of course Treasury looks like they will take care of that on their own.
We have committed suicide. The pills and vodka are in our system. It’s just a matter of time for them to take effect.
Will they find us dead on the toilet like Elvis? Or was it Liza Minelli? Or both?
Ooops, Judy Garland - too early.
That stimulus lead to Somewhere Over the Rainbow Gardens Luxury Villa Estates, way up High.
Producer Don Simpson went that way, as well. He had something like 27 different types of drugs coursing through his veins at the time. “High Concept” was a great read.
An addict friend likes to mix vicodin-viagra-cocaine together.
I saw him a couple weeks ago and he looked like the living dead, his clothes were about 3 sizes too small and it looked like he was draped in a tent.
Sounds like a lot more fun than slurping down Slim Fast Shakes!
NYCityBoy,
Likewise, there has been a lot of discussion in the media about the stimulus package earlier this year “not working” because people did not spend that money. 80% of it went to savings, or to pay down debt.
Likewise, I have no problem with people doing that with their stimulus checks. In fact, it seems a more just distribution of money to allow people to choose what to do with their portion of the moneys being distributed. The moneys that were “saved” or were used to “pay down debt” actually had a healing effect on the nation’s economy (assuming this money was not just put under the mattress), because those moneys were being used to reduce non-performing loans on the banks’ books, or they were added to the banks’ balance sheets as a liability (deposited in a savings or checking account) thus improving the reserve ratio of the bank that holds those deposits.
Giving the TARP moneys directly to the banks so that they can repair their balance sheets, seems like a capricious and arbitrary way to distribute the funds to me. That money is trapped by the reserve ratios, and it is not going to “trickle down” so that helps anyone on “Main Street.” It keeps the banks (temporarily, I think) from becoming insolvent and defaulting on their loans. So, it solves the CDS domino-effect problem which would have wiped out a lot of the Very-Rich Counterparties. The people on Main Street were not helped at all…
Don’t forget the banks are relentlessly reducing the money supply.
Payments by borrowers made to banks and kept by banks reduces money from circulation. This makes money scarce.
But that means they’re not reducing it - they’re hoarding it. There’s a big difference.
What happens when the economy returns to normal again? All that new money goes back out into the system.
That is why it’s important to differentiate between different types of inflation:
1. Money supply vs.
2. Prices
And at this point I would say that 1 can be divided into two parts:
1A Money supply in circulation (liquid)
1B Total money supply (liquid plus non-liquid assets/reserves)
You have to be careful about what happens to that money when it is released into the economy though. If it circulates primarily outside of the US, the US can still see depression/deflation while other countries see dollar inflation. The bane of being the world currency is that the $ doesn’t have to come home.
Yeah, here is the thing. Even if they do return the money to circulation “when the economy returns to normal”; how much leverage will they be taking on?
If its anything less than current leverage levels then we will have substantial deflation. Remember our banks were leveraged 30:1. If the hard money supply doubles and leverage drops to 5:1 then the money supply has dropped by 33%. Its not even clear the government has done that much to M0.
I know they are running a lot of debt out there but a 10yr note paying 3% doesn’t create as big of a multiplier as you would think. Consider the bailout of 750B. That is they have to put out 22 billion a year of dollars with that. Compare that to the amount of M0 already in existance. Its not actually that large of an amount.
That is assuming the 750B didn’t create any velocity of money to reduce the debt.
Our government debt service is probably around 550B per year. That is pretty bad on the 11T of debt. Of course in the deflationary enviroment rates get pushed down. So that 5% rate I’m assuming is probably more like 2% or 220B or even 1%. If the government was really really sneaky and smarter than you guys are thinking; they’d get all that debt refinanced in a deflationary scare at some real low rates. Then create some inflation at some point in the future. So, suddenly all of that debt loading is not that bad.
Now, corporate debt and the Fed might collapse at some point. However, that isn’t the government and isn’t the treasury. So, you might be shocked that the dollar is still standing after all this.
I could be totally wrong about this. Then again, maybe not.
Correction the banks aren’t hoarding the money, they are using it to pay dividends and to benefit CEO/management. It is a taxpayer giveaway to management and stockholders.
Dec. 4 (Bloomberg) — American International Group Inc., whose bonuses and perks drew fire from lawmakers after the insurer accepted a federal bailout, will make special retention payments that more than double the salaries of some senior managers, according to a person familiar with the matter.
Some executives in the group of 130 recipients will get more than $500,000 to stay through 2009, about 200 percent of their salaries, said the person, who declined to be named because the information hasn’t been publicly disclosed
We have been sitting on the sidelines for the last several years and have really enjoyed following this blog. We lost a significant amount of money in Ohio on the sell of our home back in 2005 when the market first started to flutter.
At this point, we are thinking that the timing may about right to buy, once there are essentially no buyers in the market except those with cash. However, there are still homeowners that have unrealistic expectations on what their houses are worth.
We would appreciate getting the perspective of others on timing a purchase near the bottom of the bust. We are in a location where there is a high percentage of military families.
Thanks in advance.
You’ll know there’s a bottom when prices start going up consistently. You won’t get the lowest price but you won’t suffer the pain of lost value.
Or you could just buy what you can comfortably afford (or rent) and forget about the house as an investment.
Full disclosure: we’re thinking of jumping in perhaps a year to 18 months from now as an inflation hedge. Already prices are reasonable (to us) for our retirement property. We don’t own any property right now.
The lowest point won’t be a point.. it’ll be a flat, desolate plane stretching out beyond the horizon. Pack extra provisions.
Yep!
I’m starting to get itchy to test the waters. My plan is to find homes priced up to 120-125% of what I want to pay and offer 75-80% of asking. I fully expect it to fail at this point, but nothing ventured, nothing gained and - hey - someone out there may accept it. I’ve seen it happening already in some instances.
I did forewarn one of my old realtors that this is my game plan once I start looking again. Back during the boom, he had little time for me and thought I was unrealistic. Now? He said he has no problem with my plan.
eastcoaster,
Nor do I. Depending on how close we are to retirement it ‘may’ make sense. At some point, you have to worry about you and stop worrying so much about “the market”.
If it’s in an area you like at a price you can well afford then more power to ya’! For years I thought I would be able to see a substantial price correction *without the meltdown we’re now confronting ( obviously that didn’t happen )
The uncertainty of “where we’ll wind up” in retirement is absolutely killing me! Folks can flame away all they like but I don’t think the bravado of saying “I don’t care if I rent until I die” creates much of a sense of “place” in the order of things?
RE: We are in a location where there is a high percentage of military families.
A column by Pat Buchanan stated the only place left to cut from the fed budget is by closing the 1000 military bases around the world.
You bring all these personel home there’s gonna be big time chaos and downsizing.
Since Fed employment is all based on seniority there’s no tellin’ what bases will absorb the remnants and which one’s will cut.
The pundits are tryin’ to convince people that this thing will all be over after the 2nd quarter of ‘09 after a 16 month run.
The “recession” of ‘29 ran for 43 months which I think is more probable.
Remember the government propagandists haven’t been right about anything relative to this debacle.
I’d continue to sit on the sidelines and horde my cash.
hd74man,
Well… then Pat would be wrong. There’s ‘plenty’ of places that could and should be cut ( it’s just that the military has ALWAYS made for the easiest target! )
It’s large an it’s highly visible. Employment aside, there’s any number of places they can start. Since obviously our food chain is no longer safe, why not chip away at the FDA and USDA?
RE: Well… then Pat would be wrong. There’s ‘plenty’ of places that could and should be cut ( it’s just that the military has ALWAYS made for the easiest target! )
Din/OR-
Don’t shoot me I”m only the messenger.
Buchanan was just sayin’ mandated entitlements take up so much of the budget their ain’t nothing left to cut. I’ll take him at his word, since I’ve got no full time staff to track all the data.
However, having had the misfortune to have eaten a sominella enterididus tainted egg the other day, I’d say the Krauts, Frogs, and doper Dutchmen can all go abouting protecting themselves.
The USDA needs to protect me from bad food originating in dirtbag countries with no food safety inspection services.
hd74man,
Sometimes in my haste to post I gloss over the obvious, my bad. But I’ll have to agree, everyone gets stuck in traffic and when you do sometimes you find yourself at the “Savage Nation”. Michael talked about how at one time we had THE cleanest food chain on the planet!
Oy vey! Anyway he went on to talk about how compromised that’s become, to the point that we shouldn’t even bother? It was about the time of the tainted pet food scare. Also ( if he is to be believed ) it is also in our drugs and supplements as well.
So why o’ why do we always turn to the DOD every time we get ourselves into a financial jam!?
“We would appreciate getting the perspective of others on timing a purchase near the bottom of the bust.”
I’m holding off buying until prices reach 2000 levels. The bubble really started in late 1998, early 1999 here, but 2000 levels would lob off enough of the damage to keep me happy.
ECB cuts 75 basis points. The race to the bottom is speeding up.
NYCB,
Will be in NYC over new year’s. I’ve got a pint of beer with your name on it and I believe a gallon of cynicism with my name on it. Time, place?
There are 17% more Americans on food stamps presently, vs. last year.
31.5 million people receive them, which probably translates to around 51 million people in our country that would starve otherwise.
1 out of 6 of us.
How scary is that?
“that would starve otherwise”
I call bologna. That program is so corrupt. Yes, there may be some that would starve but I would venture that they are a rarity. What percentage of food stamps get sold? That is a huge scam to get around the limitations on what food stamps can buy. Answer me that before the victimization stories are written.
yeah… i’ve known a whole lot of people who got foodstamps at one time or another.. can’t think of one person who would’ve starved without them.
I mean.. it’s fricken free food at the grocery store! Wow!! i’m almost tempted to apply.
‘…can’t think of one person who would’ve starved without them.’
The last time I noticed someone using that food stamp credit card thingie, I had noticed her in the first place because of the mild terror that filled my heart, and the wonderment. How many of me would it take to make one of her…at least 6 of me, I estimated. I mean, she had her own gravitational pull! There aren’t many fat people in Olympia, for some reason. She must have been a tourist from a far-off fat people land. Or, maybe she was scoping out the free-range Olympians to pick one of us to eat for dinner. And was she buying nourishing vegetables and fruits with her food stamps, to serve as a side dish to the selected Olympian?
Nohow.
“How many of me would it take to make one of her…at least 6 of me…”
(Molly now dons flame-retardant suit…)
Eeeeeeyeeewwwww, I see this all the time too. I’m sure there are thin people who use food stamps, but I’ve never, ever seen one who did. Most are total food blisters.
I’ve only known a handful of people on gov’t assistance and EVERY one of them could afford cigarettes. LOTS of cigarettes.
Let the flaming begin.
(dons asbestos suit)
If we really want a food-stamps program that has the goal of preventing hunger, perhaps it should come with a BMI limitation? E.g. over this BMI, you obviously are not really what we would consider “hungry”.
I’ve never heard of anyone dying from hunger while obese.
Ahem, and ‘who’ again is it that oversees the Food Stamp program?
Not to start the flame wars and not to make cases for anyone, but if I’m not mistaken there is a proven and direct correlation regarding quality of food and its nutritional value, the poorest quality food being the most likely to be eaten by poor people having qualities such as fat and filler content which help promote the poor to a greater level of obesity. Not saying this is absolute truth or even the explanaion for 1/4 of the obesity seen in this demographic, but it is a viable possibility.
RE: the poorest quality food being the most likely to be eaten by poor people having qualities such as fat and filler content which help promote the poor to a greater level of obesity.
Ya know how you solve this?
You have a federally run commissary like those on major military bases. The inventory is stocked by the USDA surplus food program.
Food recipients are monitored by a dietician and have their grocery lists filled accordingly.
A dozen Twinkies and a double Cherry Coke for breakfast are not on the menu.
This would put an immediate end to the obesity and fraud crap, plus it lightens up the diabetes and heart disease healthcare cost load on Medicaid.
Ditto.
On NPR they interviewed a guy who was going to apply for food stamps. At the end of the interview the journalist made a comment that the guy was driving a brand new truck (Ford F150). He asked the guy whether he will keep the truck. The guy laughed and said “I hope so, dude.“
Let’s see now: the guy drives a truck that costs at least $20k and he is starving… I do not think so.
Given a 17% increase during one of the largest downturns in history, it is unlikely that the increase was due to corruption. I call baloney on your bologna. People in the middle and upper classes are in a panic. Imagine the impact of dramatically higher food prices on food stamp recipients.
They used to sell for 50 cents on the dollar in Oakland for the a.m. Colt 45 drinkers.
But if the Lad’s figures be true, still disturbing trend.
It is disturbing. But the big numbers do not represent the picture accurately – it is not that so many people need this program. It is that the program grew so much that they hand out food stamps to almost anybody.
Are you implying that every food stamp recipient wouldn’t be dead within 2 weeks if they didn’t receive the food stamps? I am shocked, shocked, I tell you.
The people I have seen using food stamps here in Chicago can last at least a couple of months without any food before dying from starvation. Chicago is ranked the fattest city in USA, which means the fattest city in the world. Really people that use food stamps here are HUGE. And they never buy any vegetables or other type of food that you actually cook. And it does not look like they are concern about the price of the items they buy at all. We are in the top 5% bracket now, but my wife always is flabbergasted by the food bills people on food stamps pay at the cashier. We used to live on very tight budget for years while at graduate school and I can tell you from personal experience that you can stretch your dollar a very long way if you really are in need to do it. I can say that I have not seen a single person on food stamps trying to stretch his dollar, which makes me think they are not hungry. They maybe poor, but they are not hungry. I have been hungry and I can recognize one.
Ditto here in N Ohio. When the SHTF, the staving masses here will have to go on a three week slimfast before they’ll be in any shape to riot in the streets. At best, they’ll tie imploring notes onto steak bones an hurl them at passing stimulus check couriers. No, sorry, no starving masses here. Not if size has anything to do with it.
staving = starving
A lot of food stamp money gets turned into cheap beer and crack. Lots of bums sell their groceries for 50-60 cents on the dollar.
I need to find some sellers, if I could get my food 50 cents on the dollar.
Maybe I’ll post on craigslist…
Hmmm… still better than what Mortgage Backed Securities are going for these days!
Hey, maybe we should start Food Stamp Backed Securities! We could slice and dice them and sell them ’round the world, after the rating companies give them a “AAAAAA+++” rating, of course!
“What percentage of food stamps get sold?”
Most states now use an ATM type card.
Yes - kind of nutty. here in Maryland the card is called the “INDEPENDENCE” card. Folks whip ‘em out like they’ve got a Platinum AmEx card.
It should be called “DEPENDENCE” card and and be colored toxic frog green rather than the red white and blue with stars design. Harummphh - usually wielded by one of the aforementioned size 24+ “food needy” consumers in front of me with 20+ items in the 8 item quick check line.
A funny aside - years back I cheered a cashier in the Quick check line an Annapolis Giant Food as she confronted the customer with - “Either you can’t read, or you can’t add but you need to move to another line”
She’s probably unemployed now but is a hero in my mind!
The program is another subsidy to the corn farmers and cattle ranchers.
I see food stamps being used to buy very nice steaks every time I am at the grocery store.
If you got rid of food stamps, who would step forward and buy all of those steaks?
‘who would step forward and buy all of those steaks?’
Well, I do MY best. Are you doing YOUR part, ya farmer-hater?
RE: victimization stories
A while ago I was at deli-sandwich shop/convenience store scorin’ a late coffee.
When I get in line I notice this size 24 woman in front of me.
All of a sudden she yells, “Are my damn sandwiches ready yet, Eddie?”
The preparer dude then walks over with an arm-full of wrappings and plops them all down. So it’s 3 1 liter bottles of straight sugar Coke and a dozen custom-mades…$63.00.
Payment was made in food stamps.
This was before the new embarrassment prevention debit cards
As Size 24 waddled out the door, I asked the clerk, “Food stamps for retail Italian sandwiches?
He smirks and says, Yup…and pizza’s too! Business is damn good too! You know everybody by face. Damn, lazy fooks never do their own cooking.
How dare you tell such a story. You must hate every poor person on the planet.
A person does not have to “otherwise starve” to get food stamps. You only need to be in the lower 20% or so income bracket and not have too many toys laying around in plain sight.
Rather: 1 out of 6 people in the USA are in the lower sixth income bracket.
Shocking!
B.S.
Maybe you haven’t been watching the news that Ben’s been posting about 50 people trying to fit into one job, and 49 go away jobless?
I’m thinking that the lower tier economy is in tears…
my granny used to tell me “believe half of what you see and nothing of what you read..” and I’ve learned through experience that it was sage advice.
Even in the best of times there have been thousands of people aching to apply for a few jobs. Toll bridge attendants on the SFBay Bridge comes to mind.. i think something like 20,000 applied for 10 openings a few years ago.
The food stamp/welfare system is thoroughly corrupt. Conclusions drawn from it’s machinations will be equally corrupt. GIGO.
lad,
I don’t dispute the growing unemployment situation. My point is that the social food subsidy program reaches many who are living quite comfortably compared to starvation standards.
An old friend of mine with two small kids at the time was on foods stamps for 6 months. Her husband left her to be a BMX racer. Go figure. Anyways, she used food stamps whenever she could. She was embarassed and kept it a secret until I found out accidentally. I didn’t really care about it because that is the way it is. She felt ashamed that I found out.
Most of the bad stories you hear about food stamp are true. Exchange stamps for 50% of it’s value for actual cash and unfortunately, that is rampnat. BUt I really believe it is going to a good cause and the majority of the benficiaries are ghosts. They use it when there is not alot of people in the stores, buy food at the weirdest hours, pay partial cash and partial foodstamps, etc.
Food stamps used to look like money, sort of.
Nowadays recipients use something that could easily be construed as a credit card.
Not so much $tigmata, most people would never notice…
“My point is that the social food subsidy program reaches many who are living quite comfortably compared to starvation standards.”
The most egregious abusers of this USDA program are the corporations who want goodies like Twinkies on the approved food list.
True story, I have a friend who recently retired to the Atlanta area. He started doing volunteer work for a food bank. An older woman came in and picked up half a dozen bags of food. My friend, felt sorry for her and helped her carry the bags to her Cadilac Escalade.
‘An old friend of mine with two small kids at the time was on foods stamps for 6 months. Her husband left her to be a BMX racer. Go figure. Anyways, she used food stamps whenever she could. She was embarassed and kept it a secret until I found out accidentally. I didn’t really care about it because that is the way it is. She felt ashamed that I found out.’
Okay, now, this pisses me off. This is EXACTLY the sort of person who DESERVES food-stamps, and I enthusiastically approve of my tax dollars going to feed this woman and her two little kids. And yet she was ashamed. Angry! I’m angry!
FP! Tell us the rest of the story! Which I hope is that the retard assh*t of a husband snapped his neck falling off his little bike, and spent the next decade drooling and twitching in a wheelchair. Abandoning his kids…! A*sshat!
That’s probably part of the story, Oly. The other part is that the girl hooked up with another loser-with-a-wallet and had a couple more kids before he, too, hit the road.
Fortunately, there was alot of support from her “real” friends so she was able to get back on her feet. This was 6-7 years ago. She met a very nice person (one of my buddies), they became close and a few years later were married. He genuinely adores her kids and they have one of their own. Both of them works and I see them at least once a month.
As for the EX, we don’t know what happened to him and never went around to see his kids. She feels comfortable talking about her experience and I’m sure she doesn’t let her kids forget about it either.
‘She met a very nice person (one of my buddies), they became close and a few years later were married. He genuinely adores her kids and they have one of their own.’
Hooray! It’s a good ending story. I like those kinds best.
Happy! I’m happy!
bluprint, you’re lucky Big V isn’t here to see that comment.
Hey, I’m glad it turned out well. I like to see people do well.
Blue Skye,
LOL! Yeah, go figure?
“The freshest statistics, covering 2007, were served up this week by the U.S. Department of Agriculture.
An estimated 36.2 million people struggled with some form of hunger (or, to use the government term, “food insecurity.”)
That’s 12.2 percent of the population – one in eight Americans.
Among them . . . some 691,000 children.
That was last year.”
http://ac360.blogs.cnn.com/2008/11/21/i-have-a-masters-degree-i-shouldnt-have-to-do-this/
Screw all those hungry kids. Why don’t they find a job an there’s plenty of food in garbage bins all around the country.
NYCB, poverty isn’t a scam. It’s real people barely able to keep going. Many of them hungry.
“NYCB, poverty isn’t a scam.”
No $hit. But subsidizing one generation after another to keep them just at that poverty level sure seems to be a scam.
I remember in elementary school that there were “reduced lunch” programs. We did not qualify, I don’t think. We would never have taken it if we did. But a lot of other kids did, including our neighbors. They were the biggest scammers on the block. They made more than us (under the table), had newer furniture and nicer cars. They reveled in the fact that they got reduced lunches. We carried our own in a brown bag. Those hot lunches sure looked good sometimes. I watched my neighbor throw hot lunches away with the most arrogant attitude imaginable.
We often went hungry as kids. That is what happens with 9 people and 1 income. We had what we had. This idea that all of these food stampers are victims and the salt of the earth is complete bulls–t. I’ve seen this corruption over and over. There are some people that are in these programs and are really good. Many of them are despicable.
The free/reduced lunch program is huge! Its a farmer subsidy and entitlement all rolled into one neat little program. I have no problem feeding the truly poor children but I really love seeing the kids with $100 Nikes and a cell phone getting free or reduced lunch….
NYCB, I’m surprised you didn’t qualify by the end because the qualifications go by income and number of children. As my parents had more and more kids (six in the end) we came closer and closer to qualifying for reduced lunches. Dad’s wages went up, though, so we still had to brown bag it (darn!). The hot lunches at our school were the stuff of legend (hot dogs of unknown provenance with cheez whiz and tiny bacon bits that looked like snot crumbled on top) and usually someone would give away their tasty fruit (loved the pears in syrup) and Mom did spring for the school milk, so I didn’t suffer TOO much from all that tunafish and peanut butter.
“NYCB, I’m surprised you didn’t qualify by the end because the qualifications go by income and number of children.”
My family would have never applied so I will never know. My guess is that we would have easily qualified. I am convinced that we would have eaten grubs and put every kid to work before turning to a program like that. I could see my family, possibly, taking charity from our church and even that would have been a long shot.
RE: Those hot lunches sure looked good sometimes
The hot lunches at my HS were the cat’s azz.
Cost was like 35 cents-for everybody.
All federal surplus food, but man, it was good.
I played varsity football and would order 3 helping’s if it was a good menu day.
Those counter serving ladies would pile the plate high!
Plus the kids sitting around you always hated something on their plate which they’d readily give you.
The canned peas and corn were especially detested.
Pepper steaks, mashed spuds, corn, peas, dinner rolls…Yum! Yum!
I still have dreams about that food service pizza. I loved it so much.
Yep, in high school I remember getting lunch at the school cafeteria - cartons of milk were 6 cents - and then going out to McDs and getting two Big Macs and large fries as a snack during study period.
Generally swam a mile a day in swim team practice after school.
Don’t work out like that and can’t eat like that anymore. Sigh.
True, personally observed story……
Daughter in high school is dating a kid who is living with his grandparents. Dad is an alcoholic disappears for days at a time, Mom slightly more reliable, lives with his grandparents, who are on S.Security. (This story seems much more common now, than when I grew up around here).
Kid and his sister get free school lunches, because of family situation. Evidently. about 20% of the kids in our school district qualify (and we’re talking about an area that isn’t exactly poverty-stricken). Before he started having dinner (and occasionally breakfast) over at our place every night, school lunch was about the only meal he was guaranteed to get.
(I don’t mind feeding him every night……..if for no other reason, he thinks my cooking kicks ass….:)….)
When you actually start seeing this stuff in real life, you realize most of these programs do more good than bad. Sure, some money is abused/wasted, but you can say that about ANY government program.
‘… school lunch was about the only meal he was guaranteed to get.’
School lunch is the reason I’m the tall, robust, strapping lass I am today. They had those colorful vegetable thingies, for instance. Milk! They even had a freakin’ DESSERT!
I LOVED school lunch. I sometimes would lick my little mint-green partitioned serving plate. I remember once a boy laughed at me when I did this, so I bonked him with the plate and then went back to licking it. After that I licked in peace.
Ahhh, school lunches….
You can only grow so far on a diet of poached deer-meat, apples and beans, after all. A garden only lasts a few months in Utarr.
At the root of most of these problems are “bad” parents. But that can’t be discussed. It wouldn’t be PC. I’m not against helping the poor but continuing this madness, generation after generation, seems disastrous to me.
We do everything in the name of “the children” and then the children turn around and do it again to their children. The circle is unbroken.
Voting away your neighbor’s property, for any cause, isn’t “helping the poor”. If you want to “help the poor”, you should be voluntarily paying double the taxes you are assessed. I bet every single one of these hypocritical douches that pretends they are so benevolent pays the bare minimum in taxes.
So what would you suggest as an alternative? Let them and their children starve to break the “chain”?
Humans being humans aka FALLIBLE there are always going to be some that need assistance at least some of the time. And yes some are going to game the system, but let’s not punish those truly needing help because of it. Of course, HBB posters will never ever need assistance ever because they are blessed superior beings in control of their lives at all times.
Btw, not being PC is not an excuse for being nasty and inhumane.
“Btw, not being PC is not an excuse for being nasty and inhumane.”
How very extreme. Good job.
Hey, guys.
Have we forgotten that a much larger proportion of American children are raised in poverty than adults live in poverty? It seems that most of the children who are raised in poverty escape it. Yet having children, especially if one parent is left holding the bag as so often happens in our society, seems to reduce the household to poverty. And so again a huge percentage of our children are raised in poverty.
Think about it, prudent people. You wouldn’t have a child in this environment–neither would I! Between my wife and I we make median US income … we are saving frantically … we live in a closet … own one beat-up car … haven’t bought a new computer in three years … must limit travel to visit friends and family despite major illnesses/events going on. The wife listens to Dave Ramsey daily to keep her spirits up.
A coworker of mine has four children. Married twice, divorced once. Turned out second husband when he refused to get a job. He was an artist, but business dried up last year. She has gone to my boss, in tears, begging for any overtime she can get just to keep food on the table. The rent she pays is outrageous (but if she moved into my complex the state would probably take her kids away–social inflation!). I believe she also has a car payment or at least car expenses. The government tells her that she makes too much money for food stamps. She hopes to retire one day to Jamaica on a farm but for now she must get through this day to day struggle. Some days she goes without food. Her children miss husband #2. Apparently he went to NYC to make it big but had a nervous breakdown and is living in a homeless shelter.
It used to be that you could get a decent cement block house (shack, hehe) for $40k. She pays over $700/mo rent. Also, light bills used to be about $50. Now they are in the hundreds. She got rid of TV, game systems and made other cut backs to reduce her bill but it’s still ridiculous. Why? Well, the co. that built the complex (much of which is section
don’t give a flip about energy efficiency, and Gainesville has made the enlightened decision to collect taxes through the electric bill. Why is it that a bus driver who works more than 40 hours a week of total grind can’t make enough to support her family? Makes no sense.
On top of this… and everyone is poor here… she feels pressure to pay big bucks to have her daughters’ hair done. Awesome.
As an alternative, I would suggest that we just force people like you to pay more, since you feel using violence to take instead of asking and seeking voluntary charity, is preferable. What’s wrong with that? Instead of us both paying X, I pay 0.5X and you pay 2X. What, are you greedy, selfish, and uncaring?
If you’re going to force others to conform to your morality, is it not reasonable that you should have to walk twice as many steps as those you force to walk a path with you?
Let’s also pretend it’s “humane” to take through violence, as long as we justify it by some personal subjectively valued “greater good”.
I’m sorry, but it’s precisely because of attitudes like yours that the USA is now on the precipice of economic collapse. But don’t apologize. Nobody would ever expect you to do anything except blame everyone but yourself.
And what if I’d rather give my money to a private soup kitchen than an inefficient government bureaucracy that takes a monstrous middleman cut? Is your Highness going to allow such freedom of choice?
kitty, you need to notice that Crook never said you shouldn’t help poor people. He just said you just shouldn’t take one persons income at the pointy end of the government stick in order to feed another person. The problem is, the government turns “we *should* help” situations into “you *will* help or be improsined for tax evasion” situations. Where are the warm fuzzy feelings from that?
Lots of great charities exist to do this thing that people voluntarily contribute money to; catholic charities, feed the children, salvation army, etc… Why can’t we just leave it at that?
Personally, I give money directly to people. I support “the working man”, especially if they are behind a bar. Last year we helped out an artist that we know. He needed money at Christmas. This year, money’s definitely tighter and we are more concerned about job security. I plan to spend some extra on the retirement home that my sister runs.
RE: It’s real people barely able to keep going
Kinda like 31 year old, husbandless, Ms.Van Truong with her 1YO; 13YO; and 16YO daughter-currently knocked up by a live-in 17YO boyfriend and who is now accused of smothering her 8 month old infant by another dude?
Goin’ 3rd World in hurry!
http://www.boston.com/news/local/massachusetts/articles/2008/12/03/teen_charged_in_sons_death_found_infant_brother_dead
The elite better hope the food stamp program works otherwise those recently middle class people might riot.
Ok, again… I presume most here don’t mean the blanket statements that might be construed… I’m not a liberal, I generally detest welfare, but alot of these programs really do help people. Sometimes its the parents fault. Sometimes its not the parents fault. However, it is NEVER the childrens fault. I will readily admit - I received discounted lunch. I eventually was the only person I knew in school who received FREE lunch. Was I ashamed of it? Yeah. Heck, I went to a parochial school (for free when my parents were unable to pay). I served as an altar server (used to be altar boys, and no, no priest jokes, my were all excellent). I was fed at the rectory. At home, I wasn’t necessarily fed. Thankfully, despite all the gaping holes and problems in society, there is still enough meritocracy left that I was able to work hard and rise above that. Was I to blame, at that point in time, for my situation? I certainly hope not. What we really REALLY need here is enforcement of the rules of these programs. Cut down on the corruption, not the programs. While asking for “more” beauracracy seems like a horrific thing, its solely directed at the enforcement of these programs. Is it easy? No. Should we cut all funding and force people to prove their need? Probably not. Should we actually at least investigate reported cheats and do a half decent check for obvious cheats? Yes. If anything, sufficient enough punishment might help drive off the marginal offenders at least.
Let’s look at how this thread degraded. It began with a ridiculous, dramatic statement.
“31.5 million people receive them, which probably translates to around 51 million people in our country that would starve otherwise.”
I called B.S. on this. I don’t think 51 million people would “starve”, if not for food stamps. I was then accused of not believing that poverty really exists. WTF is with that?
Alad wants to make us out to be Africa. I remember driving through the southern part of my home state. It was just like Africa, except for the miles of corn and soybean fields and all of those cows and horses.
I call B.S. on the extremists. I question 51 million starvation deaths and then the extremist view is that I don’t believe there is poverty. Some days you just have to laugh.
Extremism economically about 10 years ago would have been LTCM being bailed out to the tune of $4.6 Billion, but today it’s our government guaranteeing over $7 Trillion worth of losses…
It’s a whole different ballgame in many regards, not just financially.
Our very way of life is being challenged.
“Our very way of life is being challenged.”
That may be true. But does that mean 51 million people are in imminent danger of dying of starvation, if not for food stamps? That was your initial statement.
NYCB:
We simply cannot conceive the idea of food shortages in our country, as we’ve never been in that situation, nor could we conceive the idea that rather suddenly over 30 million people might just have to go to Plan Beg, Borrow or Steal, if our government goes under.
You remember how upset you were when I dared compare the fall of communism with the fall of consumerism, about a year ago?
The possibility is looming more with every passing day…
I don’t put anything outside the realm of possibility. But your post made it seem that 51,000,000 are currently starving to death in the U.S.A. I think it was an overly dramatic post. You were not making a prediction. You said that it was the present. That is wrong.
This is what you wrote.
“31.5 million people receive them, which probably translates to around 51 million people in our country that would starve otherwise.”
That means that you feel 51,000,000 people get every morsel of food that they eat from food stamps. I call B.S. on that. I do not disagree that there are undernourished people in this country. But that is not how you portrayed it.
“You remember how upset you were when I dared compare the fall of communism with the fall of consumerism, about a year ago?”
I barely remember last night and I don’t hang on your every word, since your view of history is often shaky, in my opinion.
Let’s put things into proper perspective…
If I told you in 1998 that our government would bail out Wall Street in the future to the tune of 1500+++ x the LTCM bailout, you would have laughed in my face and deservedly so.
I never said people were starving, just the possibility of it happening.
We are headed into a “there is no free lunch” economy, and if there is a food shortage, who do you think is going to get first shot at it?
Those with money.
Did you catch that story out of Colorado a few weeks ago, where 40,000 people showed up at somebody’s farm, to pick sloppy second leftover vegetables?
They expected 5,000 people…
p.s.
Here’s what I was talking about…
============
Closing the ‘Collapse Gap’: the USSR was better prepared for collapse than the US.
Good evening, ladies and gentlemen. I am not an expert or a scholar or an activist. I am more of an eye-witness. I watched the Soviet Union collapse, and I have tried to put my observations into a concise message. I will leave it up to you to decide just how urgent a message it is.
My talk tonight is about the lack of collapse-preparedness here in the United States. I will compare it with the situation in the Soviet Union, prior to its collapse. The rhetorical device I am going to use is the “Collapse Gap” – to go along with the Nuclear Gap, and the Space Gap, and various other superpower gaps that were fashionable during the Cold War.
http://www.energybulletin.net/node/23259
That is one scary document.
He might have missed one major cultural difference though:
“We definitely should not expect any grand rescue plans, innovative technology programs, or miracles of social cohesion.”
Only correct if he means.. Grand Rescue Plans That Work.
I fully expect that the US Government will go down swinging to the end, with plan after plan, should collapse ever come. I don’t know if this is collapse, but we have already gone through Plans A to F or G already (if I haven’t completely lost count.)
I’m sure they have something special planned with Plan H for Housing and perhaps Plan I for Income (or Infrastructure), or perhaps Plan J for Jesus will work.
I’m thinking about the HBB debate as to whether cash (really short term treasuries and bank accounts below the FDIC limit) or gold, in the end, has any value.
What if neither do?
I’ve seen paper money strewn on city streets a few times in my life elsewhere in the world, as it had lost any semblance of value and was held more in contempt, than held anymore.
well, in essence, neither do have intrinsic value in terms of survival when the SHTF.
Food, water and shelter are what matter. How you aquire or what you trade in exchange for food, water and shelter doesn’t matter.
Will provide commerical real estate analysis, public finance analysis, or city planning services for food.
How do you like my chances?
Perhaps I should start counting being somewhat overweight as an “ass-et.”
I’ve split my former cash into 50% cash and 50% gold. Now I save 99% of my HBB time by skipping The Alad vs Combo pissin match.
LMFAO!
Dec. 4 (Bloomberg) — D.E. Shaw & Co. LP, the investment firm run by David Shaw, and Farallon Capital Management LLC limited withdrawals by clients, joining more than 80 hedge-fund managers to impose restrictions in the past two months.
This thing is going to drag on for the next decade, sound familiar?
Calls for $1 Trillion Stimulus Package Grow as Economy Tumbles…
By Rich Miller and Matt Benjamin
Dec. 4 (Bloomberg) — The one thing that isn’t shrinking in the U.S. economy these days is the size of the stimulus package that financial experts say is needed to turn it around.
With automobile sales dropping, payrolls plunging and manufacturing contracting, economists from across the political spectrum are raising the ante on how much the government should lay out. Some are now calling for at least a $1 trillion boost.
Kenneth Rogoff, a Harvard University professor who was an adviser to Republican presidential candidate John McCain, and Joseph Stiglitz, a Nobel Prize winner who served in President Bill Clinton’s White House, are among those who say President- elect Barack Obama should push for a package of that size.
“They need a stimulus of $500-to-$600 billion a year for at least two years to counter what is going to be a collapse in consumption,” said Rogoff, a former chief economist at the International Monetary Fund.
http://www.bloomberg.com/apps/news?pid=20601087&sid=afWnxP9Dzv0M&refer=worldwide
“Calls for $1 Trillion Stimulus Package Grow as Economy Tumbles…”
Technically, wouldn’t this be a call for a second $1 Trillion Stimulus Package?
It’s almost John Holmesian, this stimulus package.
In the end he died of AIDS. Hopefully economic stimulus will not doom the economy to a similar fate.
This economy will more likely succumb to CAIDS…
Credit Acquired Intelligence Deficiency Syndrome
I’m coming around to the idea.
However I still say just give us all $1,000,000.
It will be necessary to give the money to banks first, as bankers have our collective best interests in their hearts and minds.
It just blows me away on how hell-bent the government and PTB are on putting bandaids on sucking chest wounds.
Want to fix the consumption downturn? Give everyone X% back of their 2008 income taxes. (pick a number……make it 50 or better, if you really want to get money moving again).
I’m still of the opinion that the oil and commodities price inflation earlier this year was the final straw breaking the financial back of Middle-Class America, between stangnant incomes, tax increases, user fees, increases in insurance rates and offloading of risk,……the list goes on and on.
GSfixer,
You said it! Most households can suck up $4 gas for awhile, but even w/ ‘my’ wife’s lengthy commute it became a drag. She was dropping a $20 in like every other day and still seldom had over half a tank.
( So it really cut into our “dining out” money )
I can’t imagine what it was like for those that ‘also’ had lengthy commutes and were making $10 an hour etc. How long can anyone sustain that?
The City of Chicago is now proposing to sell it’s parking meters to investment bankers, after it did a similar 99 year lease of the Skyway, a toll boothed hypotenuse short cut between two stretches of I-94 . Parking meter rates are expected to go up to $6.25 an hour.
Great plan to
attractattack tourists with a sales tax of 10.25% plus insane fees like $6.25/hour parking! Maybe stores like Best Buy and Circuit City, Bed, Bath, and Beyond could solve all their problems by charging similarly just to park at their stores. How about mall entrance fees, to maintain the marble floors of course!I don’t understand why they can’t make even more money by just hiking the rates themselves?
And like Senor Long-Dong, in the end it’ll be just a lot of useless meat. Afterall, what’s a package that cannot be stimulated?
Two things you don’t want to see being made are legislation and sausages…
Can any of you clever wordsmiths craft a fitting quip?
From the mind of Ambrose Bierce…
“Litigation: A machine which you go into as a pig and come out of as a sausage.”
Maynards just don’t get it. Borrow and spend. Borrow and spend. How do they think we got in this housing bubble mess? Two wars, super easy credit, and a doubling of the national debt and we’re in worse shape than we were after the last recession. We’ve clearly lost our way and out of fresh ideas.
It’s all about surviving the crisis from here forward — no time to reflect on the massive moral hazard currently under creation, with the likely prospect that the life-support stimulus currently underway at so many different levels sets the stage for a repeat of this economic disaster a few years down the road. Those who profit immensely from economic disasters must be immensely satisfied at this point.
“…to counter what is going to be a collapse in consumption….”
So they aree openly admitting that they seek to replace lost consumption. This is proof that they have yet to tackle the long term questions surrounding the restoration of a balanced and productive economy.
“”the restoration of a balanced and productive economy.”"
Huh? What’s that?
236,000 cars manufactured in the US were sold during the month of November.
I know, dontcha love it?
236,000 cars manufactured in the US were sold during the month of November.
And what percentage of those 236,000 cars manufactured and sold in the US in November were profitable sales for the manufacturing company given their current cost structure?
You know the bit about losing money on every unit produced… you can always make it up on volume
I’m still waiting for my check from the first stimulus package…
….sigh…..
If you haven’t begged for it properly by right about now (as I heard on the radio recently)… it may be gone forever.
They said it was different in Dubai. Amazing from Bloomberg:
The property bubble in the desert emirate, home to the world’s tallest building, most expensive hotel suite and largest manmade islands, is bursting as scarce credit and slumping oil prices have international investors scurrying to dump assets.
“…home to the world’s tallest building, most expensive hotel suite and largest manmade islands,…”
Islamic terrorist gangs…like low hanging fruit…even in their own “homelands”
Again I ask, what effect will this have on the domestic situations in all the petro states? Hugo has to be freakin’ - so is Pooty Poot.
Reading about the Cairo OPEC meeting was most amusing. I hope we see $25bbl - that ought shake someone outta the tree.
We could drive the knife through their heart with a gas tax. That would be an Oh Sht moment for OPEC/Venezuela/Russia. We could just hand the money back to the consumer by cutting payroll taxes.
Or we could let the Big Three fail and cut military spending, but that would anger both the extreme left and right. Maybe it would be treason to suggest such a thing, and I could be a double agent for Russia/Venezuela/OPEC.
NoSingleOne,
In the entire time “I’ve” been affiliated w/ the military ( 1980 on ) we were always the “first cut”. What a lot of people fail to realize is that the avg. Navy division of say 30 guys got about $3,000 a quarter for basic supplies.
The bulk of the $$ that goes to the military isn’t going to infantry and sailor salaries. It goes more to subsidizing foreign bases and making military hardware that needs replacing every 5-10 years due to technology “obsolescence”, even though we are light years ahead of any other country in military technology, and no national military force has been a serious threat to us since the Soviet Union. Unfortunately, bigger guns won’t keep us safer from global terrorist networks, which are a much bigger threat than any military force.
Right, that’s the part everyone keeps pointing out. That’s why I offered a contra POV. Anyway my reserve squadron flies aircraft that were stamped out when I was in HS ( and I’m almost 50 )
Visit http://www.thepeoplescube.com for some real laughs about what a concertina wire/land mine surrounded country we would look like if it were *not for overseas military installations. Christ, we shut down Subic and Clark, what more do people want! ( Or are we considering Hawaii a “foreign country” now? )
An economist here in the great state of CA was proposing we raise the gas tax when gas prices are low and lower the gas tax when gas prices are high. According to his calculations this would take care of the budget deficit in CA.
I think that’s a great idea.
Whats great is they are all revenue starved so they all slunk back home and upped production to sell more.
Ahhhhh. Its just like watching the homebuilders self destruct.
‘Its just like watching the homebuilders self destruct.’
Yeah. No prettier sight in the world.
How much money did the NAR have to kick in to Congressional campaign coffers to push through this deal for taxpayer-subsidized respiking of the mortgage lending punch bowl?
Treasury Weighs Action on Mortgage Rates
Intervention Would Aim to Buoy the Housing Market by Forcing Down the Cost of Loans
By David Cho, Zachary A. Goldfarb and Dina ElBoghdady
Washington Post Staff Writers
Thursday, December 4, 2008; Page A01
The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal.
Under the initiative, the Treasury would offer to buy securities that finance newly issued loans for home purchases, according to the sources. But to participate in the government’s program, mortgage lenders would have to set exceptionally low interest rates, for instance, no more than 4.5 percent for traditional, 30-year fixed-rate loans.
These securities would be purchased primarily from Fannie Mae and Freddie Mac, the financing giants that buy most mortgages from U.S. lenders, according to sources who spoke on condition of anonymity because the plan has not been finalized.
The cost of the plan and source of funding remain unclear. One possibility is for the Treasury to raise money by issuing bonds to the public at 3 percent interest. This could allow the government to turn a profit because it would be buying securities that pay 4.5 percent.
At a meeting attended by the Treasury’s Interim Assistant Secretary for Financial Stability Neel Kashkari and the National Association of Realtors in mid-November, senior Treasury officials said they were optimistic that subsidizing lower mortgage rates with taxpayer dollars would help revive the housing market, sources said.
Treasury officials told the Realtors that the plan could be a more effective way to help homeowners than focusing efforts solely on borrowers who are struggling to meet their monthly payments, the sources said. Democratic lawmakers have been advocating a proposal to modify the mortgages of distressed homeowners.
The housing market would come back if SS accounts could be used for downpayments, and if SS and 401k contributions could be put towards mortgages. The thirty year mortgage would be replaced by the ten year and the mortgage industry would have to contract accordingly.
The system we have now forces the homeowner to save money he/she doesn’t have at 0% then pay 6%+/- on the mortgage ballance annually. That’s crazy, but it makes the banks rich.
We could pay our way out of this mess with our own money, while infusing capital and diluting underperforming assets of lending institutions in the short and mid-term. As long as the gov’t is going to be a conduit of capital, that conduit may as well go through our hands to save us hundreds of thousands in interest over time.
The saved interst payments would go to some sector other than financial. If I could take 100k of my SS and pay off 100K of principal, I’d have about $500 a month in unpaid interest to spend or save, which would be a nice economic stimulus package.
Is this reasonable?
I like it. This is creative thinking.
So you are suggesting that savers basically use their owner-occupied homes as retirement savings vehicles? Why does that idea sound vaguely familiar?
I’m suggesting that, for people who choose and have chosen to have a mortgage, they essentially borrow their own SS interest free and pay back over time, like a mortgage, but without paying the interest. I think the best retirement strategy is to get out from under your mortgage as fast as possible. Once having no mortgage or rent, savings can then catch up with or even surpass what would have been in the SS account if never touched.
It’s only an investment vehicle in the sense that whatever your mortgage rate is, that will be your rate of return on your SS.
Many more people would be enabled to buy a home. Many more would be able to make their mortgage payments and keep their home (which means keeping it off the market). Even people upside down may find that the savings in interest over time will offset the loss in equity they’ve experienced.
Besides, many younger, first-time home buyers have just about written off getting anything back from SS. Politically, it could be a rather easily sell.
So what do you do when they don’t pay back their SS “Loan.” They are going to get old an need services/money anyway and we can’t abandon them, so we will be paying twice for their incompetence.
There were a few years back somewhere in human history where mankind went without Social Security. I think ; ‘ }
However, to your point, I thought I was pretty explicit that the principal portion of the monthly mortgage would go back to SS until paid back. That would still come out of the paycheck. If you’re more comfortable wth including the phrase “forced to” then OK.
SS is a savings account, just a government controlled one. In order to access it, I would expect some strings to be attached. If SS could provide a downpayment and mortgages were restricted to 3.5 times income or so, then I think 30 year mortgages would become 10 years. This would lead to the atrophy of the mortgage industry, which would be a pleasant thing. It would also increase disposable income considerably.
In the short term, doubled- and tripled-down payments on performing loans would dilute the underperforming loans. Maybe there would be fewer defaults and even one’s own cash made available for refi’s for a specified set of qualifications should the 4.5% thing get done. And if existing homeowners could pay down/off their mortgages with money already contributed, there would be billions of dollars in capital going to banks immediately, perhaps doing away with the need for any of the proposed bailouts.
Try figuring out how much money you could save (you who have mortgages) if you could have all your SS and apply future SS and 401k contributions to your mortgage. I’m 3 years into a 20-year loan and I’d be done with in three more years. I’d have saved better than half the amount of the mortgage in interest and would have 20 years left to catch up with SS payments. I don’t know how well that works for others.
Not if they’re on a 10 yr. mortgage, or at least they shouldn’t.
I’ve RUN hypotheticals for people that will have their mortgage paid off while they are still in the work force and the difference in positive net worth is staggering!
I suppose further, if you -elect- *not to participate then fine, your balance would remain untouched. The only propblem “I” see is that just like the “Map of Misery” this would occur in highly concentrated pockets once again. ( You realize there are entire swaths of the Plains States that are laughing at us right now, don’t you? )
Shuzilla,
Not ready to say it’s ‘absolute genius’ but I’m pretty close to it. More than just ‘atrophy’ in the mortgage arena, ( and that can’t happen soon enough ) it would also create stability in neighborhoods that have suffered from flipper frenzy over the last decade.
It would actually put Americans in a place where they could tell their boss to stick it and they are *not moving for a promotion/transfer/BS any more. They would have a chip in the game. Further their children would inherit ( likely ) a completely paid off home AND the life insurance money.
I’m going to suggest you take that to representatives in your state and keep calling them until they hear you out! I too am a fan of mortgage acceleration ( which sadly died on the vine ) but I happen to think if you can’t “hit the lottery” ( this is the next best thing ) Rub w/ it man.
Rather “Run” with it.
My bad.
I’m not sure mortgage acceleration is still the correct game plan if one expects any significant inflation in the future. I’d very much like to revenge myself on the banks (should that be neccessary) by paying the last half of my mortgage back with nearly worthless dollars. (My parents were paying $100/month in the early 1980s after the inflation of the 1970s…)
Shuzilla,
Bravo! (a!?) That works.
4.5% pffffft.
Them without the jobs can’t buy the houses.
For the refi crowd, so what? They get a little lower payment but there’s no equity to tap. Besides, how many didn’t have teasers and other voodoo loans? For them 4.5% is probably still an increase.
The 4.5% is not available for refi’s.
Even better!
yet…
Exactly…yet. My guess is that this plan will be implemented–it will be available for refis, and any number of future plans to aid the “struggling homeowner” will also come forward, including reduction of principal balance. We need to keep Harry Howmuchamonth and Sally Specuvestor happy; with lower housing payments, they might be able to afford their Hummer. And even if not, they’ll get to keep it anyway.
I want my 4.5%. I’m at 5.25 now and would love to save the $$$.
Won’t a lot of refis help to unwind the hedge funds? Think of all the CDOs based on ARMS. If a decent portion of those pay off due to refinancing, CDOs and swaps and other derivatives/insurance contacts will close without payment needing to be made.
It would be a shame to reward the underwater Alt-As, but to put a floor under them may be the cheapest way to get the banks out from under their folly.
4.5% saves about $100 a month from where we are currently on a 200K note. Big whatever! It might push the DTI back a few points. I used to talk about this a lot, that even if rates were as low as 4%, if people had to qualify by fully documenting income under stringent underwriting rules then we’ll still have collapsing prices that revert to, or close to, mean. Lower rates can only mess with that reversion to mean by several thousand dollars one way or another. So what!! 4.5% fully amortized loans still do not get us back to 3x or 4x incomes in most places.
ex,
I don’t doubt you but… if the borrower applied that add’l $100 toward pre-paying down their mortgage it would be about one extra payment a year. Just like a bi-weekly plan, they would build up equity more quickly and pay off the loan about 7 years sooner.
Before we pooh-pooh that, imagine your last decade or so in the workforce w/ zero house payments? It would make this country a lot less dependent on SS. IMHO
In 2003, Wells Fargo offered my a 4.75% rate to refi my house with zero, absolutely zero, costs. I refi’d my 30 year fixed at 6.25 to a 15 year fixed at 4.75.
I’m betting a lot of people who bought during the Greenspan 1% years have low rates. So I’m betting this won’t help much.
Wonder if jumbos are included.
That has to be the most overused catchphrase this decade: “struggling homeowners.” The mainstream media especially love it. In the 1990s, the mantra was “booming economy.”
We need the “Defense of Homeowners” act that prohibits the government from calling anyone a “homeowner” if he has no equity in the property.
NY Times
Snips
A Rush Into Refinancing as Mortgage Rates Fall
By TARA SIEGEL BERNARD
Published: December 3, 2008
On Wednesday, people close to the discussions said that the Treasury had been talking with Fannie Mae and Freddie Mac about ways to drive down mortgage rates to as low as 4.5 percent. That rate is about a percentage point lower than the going rates for such loans.
And even if the efforts go as planned, they may not help the most distressed homeowners.
For all the renewed interest in refinancing, about 12 million households, or 15 percent of owners of single-family homes, are not eligible. Their mortgages exceed the value of their home, Ms. Chen said.
Subprime loans are not available along with stated income loans, where borrowers do not have to fully document their income. That has limited the options for many small-business owners and other self-employed individuals. People with inconsistent or unpredictable incomes, like those who rely on commissions, are also affected.
—–
Lengthly article.
I wish the government would just stop it’s attempts to fix - grrrr.
Leigh
My parents had a 3.5% mortgage on their mid-fifties San Jose, CA purchase.
Observation: We are chaotically snowballing into a Terry Schiavo economy, with life support services provided by the Fedury.
’ssshrubery got on a midnight plane to D.C. to keep a living corpse alive, but can you imagine him doing the same thing in regards to our eCONomy?
Can’t wait to hear what they call President Obama. I doubt it will be very inventive.
I suspect he will get a free pass there, due to all the catchy ones being extremely non-PC, and the stylish and PC “Green”-ish ones like ’ssshrubery having already been used.
The stuffed toy chimp advert on here that says “What’s your home worth?” is oh so very appropriate…
MarketWatch
Toll shrinks 4th-quarter loss; can’t forecast ‘09 net
By Robert Daniel
Last update: 5:24 a.m. EST Dec. 4, 2008
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TEL AVIV (MarketWatch) — Toll Brothers Inc., (TOL:Toll Brothers, Inc
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4:03pm 12/03/2008
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TOL 19.23, +0.99, +5.4%) the Horsham, Pa., home builder, narrowed its fiscal fourth-quarter loss on 40% lower revenue. The company declined to forecast earnings for fiscal 2009, citing “numerous uncertainties,” but said revenue should drop significantly from fiscal 2008’s total of $3.16 billion.
Toll estimated that in fiscal 2009 it would deliver 2,000 to 3,000 homes at an average price of $600,000 to $625,000.
—
Average price what!
That is soooooooooo 2006. (rolls eyes).
Leigh
So I like how they didn’t do the math of predicted 2009 revenue, $1.2 Billion to ~$1.9Billion. Ummm… could they possibly do a more scattered prediction?
Notice how they avoided saying revenue will be under half of a very bad year?
Got Popcorn?
Neil
600K - 625K?? That’s insane.
“deliver 2,000 to 3,000 homes at an average price of $600,000 to $625,000″
I think maybe he meant that they would build them and then deliver them to the banks…
NEW YORK – AT&T Inc. joined the recession’s parade of layoffs Thursday by announcing plans to cut 12,000 jobs, about 4 percent of its work force.
The Dallas-based telecommunications company — the nation’s largest — said the job cuts will take place in December and throughout 2009
~~~
Looks like big T is about to call it in.
Comment by hoz
2008-12-03 23:32:57
~~~This is not economics, this is peoples lives. The Federal Reserve will spend every penny, centime, peso available to prevent a repeat of 1931. Failure to do so will result in such massive social upheaval that the country might not survive.
Norway is socialist and has the highest standard of living in the world. I grew up when the US had the highest standard of living in the world and now we are considered third world technology (internet and telecommunications) with the 18th highest standard of living in the world.
—-
Hoz had some good on topico posts last night. I can tell you that reading this does make me feel proud to be a part of whats happened in the US.
10yr goes under 2.60% today.
phhht, what a mess. There is no debate about whether the US is in deflation and a liquidity trap.
Who in their right mind would buy this crap? I’d rather stick my money under the proverbial pillow.
Who in their right mind would buy this crap? I’d rather stick my money under the proverbial pillow.
That’s the whole point, push people out of treasuries into risky assetts. They will get your money under the pillow at some point with inflation.
From Across the Curve:
T Bills
December 4th, 2008 11:42 am
I just spoke to a bill trader who noted that a large chunk of the bill list is trading at zero percent. He mentioned a point that I had forgotten but is worth noting. Bills always trade well in December because at year end there is demand for them as investors of every ilk dress up their balance sheets. He has seen that demand to a far greater extent than normal.
He says that given all that has transpired this year there will be enormous demand for bill through the entire month of December. He has seen demand from an eclectic group of investors from around the globe. He expects the treasury to announce shortly a series of cash management bills which would total about $100 billion.
In his opinion if they do not issue bills will scream through zero.
So get used to these low rates they are here for a while.
I also distinctly remember when most products had Made In USA tags, and where top quality stuff that lasted. Go into any store and find anything like that now.
All the crap was made in china or taiwan.
RE: All the crap was made in china or taiwan.
Go in and look at the Shoe and Boot Wall at LL Bean in Freeport, ME.
Save for New Balance products, t’aint a piece of footwear in the place that’s made in the USA.
What kind of country is it, that can’t even shod itself?
“The Federal Reserve will spend every penny, centime, peso available to prevent a repeat of 1931. ”
I believe that should be changed to: The Federal reserve will create as many pennies, centimes and pesos necessary to prevent a repeat of 1931.
It’s hard to spend what you ain’t got to begin with.
Bingo.
The phrase “will spend every…” implies that they’re using something that exists. They’re not - they’re creating it out of thin air before using it.
“I believe that should be changed to: The Federal reserve will create as many pennies, centimes and pesos necessary to prevent a repeat of 1931.”
Nah, they won’t create pennies—-that’s a hard asset! Dollars are cheap to print, anything that requires a physical metal, not nearly so cheap to mint.
Norway is socialist and has the highest standard of living in the world. I grew up when the US had the highest standard of living in the world and now we are considered third world technology (internet and telecommunications) with the 18th highest standard of living in the world.
It is easy to be socialist when you have a small, civilized, homogeneous nation sitting on an ass load of oil.
Lose any of those three - and it quickly turns south.
Fire at large European refinery shuts down about a million gallons of daily production. Sliding oil prices means its just about that time for the predictable Norwegian oil platform shutdown due to a fire/leak/safety issue. But of course they arent part of OPEC. Things just happen in Norway.
“Norway is socialist and has the highest standard of living in the world. I grew up when the US had the highest standard of living in the world and now we are considered third world technology (internet and telecommunications) with the 18th highest standard of living in the world.”
Online info from the Norwegian newspaper VG website titled “Facts about Norway”:
Norway is a country of socio-economic equality with a high standard of living and a homogeneous population.
“I grew up when the US had the highest standard of living in the world and now we are considered third world technology (internet and telecommunications)”
I work in telecom, and I call major major BS on this statement.
The U.S. is hampered in rural areas simply to our vastly spread geography - it’s very expensive to bring broadband service to many homes, vs. other areas like Europe and Asia. However the technology that exists in Europe and Asia, even on the high end, is very much the same as what we have here. I know because I’ve worked in depth with the equipment providers, the service providers, and the telecom standards bodies.
The rest of the world has caught up to the U.S. to a great extent (very often with stolen technology BTW, in the case of Asia), but certainly has not surpassed us, especially to the extent of stating that “we’re considered third world technology”. 100Mbps fiber-to-the-home, iPhones, IPTV, Google, etc. are most definitely not third-world technology.
Let’s not sell ourselves short.
I work in telecom, and I call major major BS on this statement…The U.S. is hampered in rural areas…stolen technology BTW, in the case of Asia…but certainly has not surpassed us
I call major BS on you…this post is so intellectually dishonest I have to rebut:
-Canada has more broadband penetration than any country in the world.
-EU long ago surpassed US in broadband penetration.
-South Korea has cheaper faster, and more prevalent broadband access than any country.
Does the US have more rural areas to penetrate than Canada? Did South Korea steal any US technology secrets? Do Europeans use broadband less than Americans?
Puhlease…Try posting facts from any credible source about national broadband statistics instead of from a 1990’s Tom Clancy novel. If you want, I’ll post links to several credible URLs backing up my POV, but any third grader can find them on Google as well.
The problem with the US is that bandwidth is too expensive because private companies only care about making money by limiting access and keeping us chained to outdated technology to increase their profit margins, just like OPEC has done to us with oil. The rest of the world, as you call it, has made broadband akin to a public utility and subsidized building its infrastructure years ago.
If you really do work in telecom, you need to stop drinking the Koolaid and open your eyes. I have heard similar arguments on TV from US automakers vis a vis foreign ones, and there was never a better comedy routine in years.
“I grew up when the US had the highest standard of living in the world and now we are considered third world technology (internet and telecommunications)”
I work in telecom, and I call major major BS on this statement.
I also have to call bs! I moved from Canada to Silly Valley in 1998 to partake in the dotcom bubble, and while all of my IT-incompetent friends were downloading mp3’s over napster in Canada, I couldn’t even get broadband at our rental in Mountain View! This was the MIDDLE of the tech revolution.
Just because you invented something, doesn’t mean you are teh bestest at providing the infrastructure for it. You don’t think that the rest of the world has iPhones, fiber, IPTV, and Google? Well I’m in Europe right now and we have that crap in spades!
Sorry but I don’t consider “broadband penetration” the same as “technological advancement”, especially when it’s subsidized by the government in these other countries. The problem with the government policy that we do have is the regulations - allowing service providers to only have access to certain areas and customers, and forcing them to allow competitors to use their equipment without paying for it, which discourages infrastructure investment.
Even so w/regards to broadband penetration - like I say - the U.S. is hindered in large part due to its much higher amounts of rural and suburban areas, and to some extent the existence of its legacy network, requiring extra work for compatibility. These are not government policy or macro economic issues; aside from the fact that government doesn’t foot the bill for people who don’t live near a downtown area.
What do I see is companies like Verizon offering super high bandwidth and extensive channel plans via FTTH - and this service is in fact cheaper than legacy cable modem. It is being marketed heavily and deployed en masse, and also lots of other companies offering high bandwidth DSL, plus satellite TV (developed in the U.S.), plus satellite radio (developed in the U.S.) etc. etc. etc.
Does anyone have statistics on how much grant funding Chris Mayer takes from the NAR and other REIC sources? I am guessing it is a large sum.
The Paulson Plan to Save Housing
December 04, 2008 07:16 AM ET | James Pethokoukis
Save the homeowner, save the world. At least that is the line of thinking that the Treasury department seems to be coming around to. Reports say that Team Paulson is considering the following plan: 1) Treasury would encourage banks to issue mortgages at 4.5 percent by offering to purchase securities underpinning the loans; b) The purchases would be funded by borrowing money at 3 percent; c) Christopher Meyer of Columbia University thinks the move would help 1.5-2.5 million people buy homes.
I was talking to a man yesterday who lived in Port Saint Lucie Florida. He had stopped making his mortgage payments on his $300,000 house three months ago , he also told me he knew about 30 people who had already walked away , funny thing was he said he felt bad for one of them because they had put $30,000 down.
That is a true irony of this downturn…
Those who would have been considered “responsible” or “prudent” in a historical context, and made a significant downpayment are _also_ those who have the most to lose when the walk away.
Sad but true.
I am so glad to hear this story about real estate infestors snapping up bargains at a condo auction. Clearly the crisis is over now, and blue skies await.
Today’s bidding wars
Buyers flock to condo auction, ready to snap up bargains
By Amy Hoak, MarketWatch
Last update: 9:41 p.m. EST Dec. 3, 2008
LOMBARD, Ill. (MarketWatch) — Voices shout dollar amounts across the packed hotel ballroom until the bids stop flowing, the hammer falls and the auctioneer cries “sold!”
Backed by applause and the sounds of a live rock band playing “Money (That’s What I Want),” the winner marches through the crowd to claim his prize — a $416,000, three-bedroom condominium he just bought for $260,000. At the back of the room, a bartender stands poised to serve customers drinks during a brief intermission.
“a $416,000, three-bedroom condominium he just bought for $260,000.”
Correction: a $225,000 condo he just bought for $260,000. Just because a prior fool paid $416,000 for it doesn’t mean it was ever worth it.
“At the back of the room, a bartender stands poised to serve customers drinks during a brief intermission.”
Sounds like the auction people are using a page from the Vegas Casino playbook - the more free alcohol you provide the more likely “customers” are to open the wallets. Add a little rohypnol and some string to the paddle arms and maybe we can get the prices all the way back up to 2005 levels.
my suspicion: After a heated debate, the big 3 automakers will be denied.. their stock prices plummet.. but in a stunning, unexpected turnaround a bailout will be approved over the weekend since no politico in his right mind would actually support the evaporation of the estimated 3 million jobs put at risk.
Monday prices.. well.. take a guess.
Ok I got a question. It seems we are stuck in a Groundhog Day mode. Meaning that the Titanic (economy) hit the iceberg and is sinking. This is what was said last year, but it seems that we keep seeing the Titanic hitting the iceberg but each time the damage is getting worse and worse and the crew has no clue on how to abandon ship.
I see why Mr. Thomas has little to say…his actions speaks volumes…”
“…Mr. Donofrio applied to the Supreme Court after the Supreme Court of New Jersey dismissed his case. His first application was to Justice David Souter, who denied the application. Mr. Donofrio then applied to Justice Clarence Thomas, who scheduled Friday’s meeting.”
‘Tribune’ Ad Creates Stir: Birth Certificate Issue Refuses To Go Away:
http://www.thebulletin.us/site/index.cfm?newsid=20213282&BRD=2737&PAG=461&dept_id=576361&rfi=8
This is the HBB. The DailyKOS is
<—–
that way.
There’s a butterfly moving somewhere near your birthplace…
SOV.
Ralph whitworth is dumping shares, and this implies that Relational Investors (an investment arm of Calpers) is giving up on the thrift. This may be the second largest bank failure of the year. They did not recieve any TARP money. A Spanish banking conglomerate (Santander) appears to be the bagholder.
Only new thinking will save the global economy
By Mohamed El-Erian
Published: December 3 2008
“…First, intervention should be limited to sectors at the centre of the healing process, thereby supplementing recent success in the commercial and money markets with the gradual normalisation of the housing and financial sectors.
Second, wherever they can, governments should partner the private sector which, in most cases, would involve voluntary co-investments, but in some cases (such as US cars) may require co-ordinated burden-sharing among stakeholders. Third, they should address upfront exit mechanisms. Finally, they should not let the best be the enemy of the good: crisis management inevitably results in inconsistencies that a subsequent reconciliation and reform effort must address.
Aggressive government involvement runs counter to the basic tenets of a market system. It should be minimised. But, when it is required because of massive and cascading market failures such as those of today, it should be subject to these principles. The weaker the adherence to such principles, the greater the cost to human welfare and the lower the likely effectiveness of any policy action. Coming to grips quickly with this brutal reality is crucial for safeguarding the longer-term sustainability of market mechanisms, both domestically and globally.”
FT
From the London Banker website (comment section):
HISTORY
1.Margin calls on hedge funds
2.Sudden contraction of global market liquidity
3.Huge sales to meet margin calls
4.Trillions of dollars of value wiped off balance sheets
5.High levels of hedgie redemptions
6.More sales of assets
7.Collapse in global prices for equities, debt and commodities.
8.Dollar stronger because lots of funds in London struggling to meet their margin calls in New York.
9.Fed doubles balance sheet
10.Taxpayer largesse doled out to Wall Street
11.Bailouts of autos, airlines, etc. wherever (and ONLY wherever) Wall Street is at risk from CDS liabilities
12.Huge expansion in the monetary base
13.Banks begin to accumulate massive reserves
14.Incoming margin cash (and a lot of other cash) parked in Treasuries
15.Treasury prices up; yields down.
16.25 November: Bloomberg reports US bailout totals 7.7 trillion
FUTURE
17.Margin calls end
18.Deleveraging stops
19.Reduced demand for dollars
20.Reduced need to park cash in US Treasuries
21.US domestic demand very low and imports greatly reduced
22.US trade deficit declines quickly
23.Exporters to US don’t need to need to buy so many US Treasuries
24.Bank reserves used to buy crashed assets, many outside the US
25.Banks start to sell US Treasuries to finance these purchases
26.Net sales of US Treasuries – prices falter then fall
27.US can’t sell enough Treasuries and starts to monetize debt
28.Dollar starts to fall
29.Global equity markets rise
30.Commodity prices rise
31.Supply-side shock in the US leads to shortages
32.US prices rise and US govt. can’t fudge inflation numbers enough
33.US citizens panic
34.Hyperinflation of prices of consumption goods in the USA
35.Dollar falls
36.IMF overwhelmed
37.Exports to USA reduced even further
38.Global economy shrinks again, worse than ever
39.Global depression
“…As these openings demonstrate, the GCC states are among few in the world that can view the current crisis and see potential opportunities. While there will certainly be bumps in the road as these relatively young economies settle and shift in the face of a turbulent world economy, responsible management of vast oil wealth has put the GCC states in a position to weather the financial crisis, and weather it well.”
Stratfor
Bahrain and Oman are about to get a taste of oil under break even price points of 40 bucks a barrell. With an average break even of 38 dollars among the GCC, it wont take long to turn the middle-east into a Somali Pirates destination.
Will they shut the taps off? Thats the question.
“26.Net sales of US Treasuries – prices falter then fall”
Does anyone really believe that the fear that is driving Treasuries up will end quickly?
In the face of significant risk of a global depression, I have a hard time buying that…
Flight to perceived quality will not stop quickly, IMHO.
Anecdote…
My SIL used to date a guy in Georgia (she lives in Dallas). Evidently he had a lot of money, big house, yada, yada. He would take her skiing at fancy ski places, etc. He was also in construction.
So she recently broke up with her bf and has started talking to this guy again. Evidently he went bust, lost the house and now lives in Utah and is a ski instructor. She also says he is a lot happier now.
Happiness is underrated… it doesn’t even appear on some people’s list.
I think in many cases its not that people underrate happiness, the problem is they don’t understand how a particular thing (such as more money or a certain job) will play into the happiness quotient.
Yeah, he’s happy. But is she going to start dating him again?
I’m guessing not.
I’m not sure. I think they stayed in contact after they broke up in general. If she doesn’t date him again, I don’t think it will be b/c of money (I mean, they DID break up for a reason). I think she’s mostly over the money thing now.
Google Layoffs - 10,000 Workers Affected
Google has been quietly laying off staff and up to 10,000 jobs could be on the chopping block according to sources. Since August, hundreds of employees have been laid off and there are reports that about 500 of them were recruiters for Google.
By law, Google is required to report layoffs publicly and with the SEC however, Google has managed to get around the legal requirement. In fact, one of the ways Google was able to meet Wall Street’s Q3 earnings expectations was by trimming “operational” expenses.
http://www.webguild.org/2008/11/google-layoffs-10000-workers-affected.php
And this is the “do no evil” corp!! I thought that they were going to be doing business differently and the employee was valued! I guess this is not the case.
Why don’t they want to file with the state and SEC? This is a coup out from my point of view.
D.E. Shaw, Farallon Restrict Withdrawals as Fund Freeze Deepens
D.E. Shaw, which oversees $36 billion, capped redemptions from its Composite and Oculus funds, said two people familiar with the New York-based company. Farallon, a $30 billion firm based in San Francisco, did the same with its biggest fund after investors asked to get back more than 25 percent of their money.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9Tzhsya0YWE&refer=home
=====================
Farallon was a most appropriate name for a Hedge Fund…
The Farallon (translation: Rocky) Islands just 27 miles from San Francisco, were a graveyard for ship equity in the 19th century and nuclear waste in the 20th century.
are we back to the bad news is good news on wall street?
The PPT failed to show-up today
Gun sales are up 42% nationally…
Welcome to the next bubble
Why are so many people arming themselves on the eve of what has promised to be a period of boundless prosperity and unprecedented harmony?
Am I missing something?
Best to have and not need than need and not have. Plus my collection is going up in value every day since the Messiah was elected, I guess that’s change I can believe in. It’s way out performing my 401 parked in cash. I’ll admit I’m a gun nut. I have way more guns than I need but not as many as I’d like to have. I don’t enjoy hunting (never liked killing anything) but I do enjoy target shooting. I go more for the older bolt action milsurp guns because of their historical nature. I just purchased a Swiss K31 straight pull rifle and this thing is a work of art. The machining is flawless and it’s a joy to shoot. For the Swiss, target shooting begins at 300m and my rifle was manufactured in 1941 and will out shoot anything new on the range using iron sights.
I don’t hunt either. Still, it was kind of wierd to drive out of my government installation today past an 8 point deer just sitting in the grass 50 ft off the road. I guess behind barbed wire and guards in a no-gun zone is the best place to be for a deer in the fall
Fear that the new administration will restrict access?…
guns = gold
Have any of you been following the follies of African countries armed to the teeth killing one-another over much ado about nothing the past 25 years?
The only difference between them and us might be the color of our skin…
Yeah, because other than the color of our skin, African countries are pretty much identical to the U.S. of course.
Get a clue man. Many African countries don’t even have a government.
Sorry was harsh with the “get a clue” comment.
Maybe you haven’t noticed, but the empty suit in charge has already uttered his mea culpas, which normally doesn’t happen until around January 20th with most Presidents…
We are for all intents and purposes without a functioning leader for another month and a half.
Whats another 45 days considering it’s been a leaderless 8 years?
(rolls eyes)
Somehow I knew you guys would come back with that.
I didn’t really notice our military, police, fire departments, etc. disbanding in 2000 - did you?
Trying to compare the U.S. with most African countries is just foolish.
Quit while you’re behind - please, before you get lapped.
What are cops, watchdogs, limits and boundaries when said boundaries aren’t enforced?
St. Louis City Leader Says Police Ineffective, Tells Residents to Get Armed
ST. LOUIS — A St. Louis city leader frustrated with the police response to rising crime called Tuesday on residents to arm themselves to protect their lives and property.
Alderman Charles Quincy Troupe said police are ineffective, outnumbered or don’t care about the increase in crime in his north St. Louis ward. St. Louis has had 157 homicides in 2008, 33 more than last year at this time.
http://www.foxnews.com/story/0,2933,460725,00.html
One section of one city does not a country make.
Look - I’m not trying to present the U.S. as some kind of perfect society. But to compare the U.S. with most African countries is kind of like comparing a Bentley with a Yugo. Yeah - they’re both cars, but that’s about where the similarity ends.
BTW - I don’t remember if you ever answered the question about what country you plan to go to when the SHTF here. I hope it’s not Switzerland. They have lots of guns there - and they know how to use them. Therefore it must be a really unsafe place.
Wait - I forgot that during WWII that was the *only* safe place to be in Europe. Nevermind.
packman,
Who’s gonna pay the coppers when municipalities start going broke, en masse?
I have zero interest in anything Swiss, they’re just a bigger bettor Iceland, ripe for a fall.
well… There is some talk that our new leader’s party, given a dominant congressional majority along with executive privilage, which has long lusted for a nation where among other things we peons were disarmed, has decided that the time to act has arrived..
There’s a tin foil hat conspiracy theory making the rounds that those who are predicting economic failure, armed riots, and other such optimistic futures (Celeste Dion? nah, that don’t sound right…Gerald Celente…)…anyway, that these people are able to accurately forecast because the PTB are cluing them in on what’s in the big master plan and are using them as tools to make it happen, thus all the gun sales and survivalist mentality.
As if the PTB could plan anything and had a clue themselves…
Along those lines…I’ve decided to join the Brotherhood of Masons so I can be on the inside about all this stuff.
But I just found out they won’t have me. They don’t allow sisters, unless you’re a Daughter of Job, and we’re no relation (not that old anyway). I mean, I’m qualified to join the Daughters of American Revolutionaries or whatever it’s called, but not the Masons? WTF???
I mean, I already know the secret handshake and all…
‘I mean, I already know the secret handshake and all…’
Why, you sneaky little minx! I’m not surprised, either.
But you know…they’ll get you for that.
Not if I can shake hands with them first!
The secret handshake, does it include pinkies?
I know nothing bout it and I ain’t gonna admit it.
My wife and I did a “what if?” scenario last night…
What if we hadn’t sold our house in el lay 3 years ago, and had done nothing with our stocks?
Our home might be worth what we paid for it in 2001, and we would have been wiped out of Wall Street, as our stocks were in a margin account and we only had around 50% equity.
On a brighter note, the precious has done admirably.
I think the US economy is stuck in a Groundhog Day mode. Every time someone trys to fix the issues it seems we are starting from beginning again.
Ya know, everything is like that. Whenever they talk about “addressing” poverty or fixing the schools, it’s like we never tried anything before and we’re at ground zero. So there is little acknowledgement that the previous efforts didn’t work, and the opponents or this or that measure are dismissed as uncaring.
BB is talking on the Tube about cramming down principal on mortgages .
Did you hear him say they would not force price fixing of homes? I was quite relieved to hear him say that, but he’s still pushing more taxpayor funded bail-outs that makes me sick!
I had to share this. I came into work today and taped to the doors were photocopies of a “craft sale” going on at the bank down the block from us. It went on to say that the crafts were all made by the ” creative employees of ( x) bank” and would have a number of different crafts, all listed below. Oh- and there’s free hot cider. I figure I’ll go and have a couple of cups.
Pretty telling when bankers resort to handicraft to make some dough.
Bankers have been creating money since the dawn of man.
I think I’ll take the free toaster…
L-t T-bond yields take a swan dive
Somewhat related, I’m hearing a lot of family/friends who are being told not to expect a raise for 2009. With CPI slowing, it’s no surprise
For folks who have been living on the edge with a monster mortage, waiting for next year’s raise, this has got to take some wind out of your sails.
How about still having a job, never mind a raise???!
2.59 ON THE 10YR.
BOOYAAAAA.
2.56 double booya
This means that many adjustable rate mortgages might adjust _down_.
Capital One buying DC-area Chevy Chase bank. Will add the link in a sec. Chevy Chase has been hit hard by risky loans.
In a related note - for anyone who attempts to state that there were no fines based CRA compliance (a significant contributor to the bubble), I offer this tidbit:
Link:
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/04/AR2008120401068.html
CRA did not mandate subprime it mandated that banks loan to everyone. If you make X and put down 20%, and this meets bank criteria, then you can buy a home worth Y regardless of what neighborhood you live in. Securitization and rating agencies with conflicts of interest and a gov who would not stand up to them caused this mess, fraud also played a big roll. It wasn’t low interest rates and it wasn’t CRA. Banks and others who want to deflect blame use this all the time. I don’t think CRA played a roll in the collapsing McMansion market do you?? How much money has Capital One taken from the gov which it is now using to buy other banks.
Where to start? You said so much clueless stuff, it’s hard to know. We’ll start with:
“CRA did not mandate subprime it mandated that banks loan to everyone.”
Being that “everyone” = prime + subprime, and the banks were already lending to prime, by definition this means that CRA did indeed mandate subprime.
Regarding “it wasn’t low interest rates” - come one man. You state that banks are using this to deflect blame - who the heck do you think brought about the low interest rates? The banks. If they’re blaming low interest rates, they’re only pointing the finger at themselves. Low interest rates were not the only cause of the bubble (I have a running list I’ve built of 14 contributing factors), but they certainly were a primary cause - probably the single biggest.
Regarding the “collapsing McMansion market” vs. subprime - you have absolutely got to be kidding me. McMansion may be collapsing - but subprime collapsed way way before McMansions. By the way - the two are not exclusive, as you imply. Part of the whole problem is that people bought McMansions using subprime loans!!
(yeah I’m going to be harsh with you and use the “clueless” word - you said so much stupid stuff)
Oops - screwed up my bolding there some. You get the idea.
According to Publisher’s Weekly (the industry standard) Houghton Mifflin Harcourt has asked its editors to stop buying books. They are one of the big 5 in publishing.
As I get ready to send 2 books to the printer next week, the book industry news looks very grim. Borders is struggling and up for sale. Rumor has it that the Amazon Kindle will be discontinued (I have books tailored to that, but no big loss, they’re also in print). Barnes and Noble are returning books to publishers with a shorter turn around time.
A Canadian printer will get my business, they bid lowest, which has always been the case (last 15 years), even though I still try to deal with my fellow countrymen, but they just bid too high. The Kanucks do great work and are a pleasure to deal with. Publishing books is a front-end cash intensive business. I also have a few e-books, which are less to produce but don’t seem to sell as well.
Just wanted to point this out, no hurry on finishing that great American novel, you have lots of time. Would be interested in hearing how many of you actually buy books…
I go to the library. I used to spend upwards of $500 a year on books. Now? Just using a service my tax dollars go toward regardless if I use it or not. In fact, I started going to the library not to save money but to reduce clutter.
Ironically enough, I read very little any more and rarely buy books.
Up until I found this website, I probably bought and read at least 30 books a year. The last few years, I have maybe bought and read 10 a year.
Mis-posted
“…Barnes and Noble are returning books to publishers with a shorter turn around time.”
Cheney’s new book: “If I were President…the secret ambitions of a VP paddle boy”… will save the day for 1st quarter earnings.
Reading ANGLER right now. Its very interesting. Cheney was very smart and manipulative, right from the start and the Democrats miscalculated and let him win early and often, very scary stuff.
You mean a fishing magazine has an in-depth article about Cheney? Seems about right.
How did Cheney manage to lose two wars then exactly the same way?
I guess it was all Rumsfeld’s fault?
I’m hoping when Obama is sworn in he will at least make Rumsfeld leave the Pentagon.
Meant to post as Lost in Utah since I’m back in the Beehive State after a nice visit to the Sierras. The Salt Lake Tribune posted today that Utah is 5th in the nation for healthy lifestyles, but last for mental health.
I see lots of crazed canyoneers and mtn bikers in great shape but a bit possessed. Then I see even more Dominant Religion types who are out of shape but seem happy. Go figure.
But you all know how I can get things backwards…
On another note, am moving my stuff from storage in Colorado and have been talking to several movers, one in Telluride. He tells me things are abyssmally slow (or whatever that word is). Very worried. But the Mayflower guy offered to move my stuff for thousands of dollars over what anyone else wanted. guess they’re not hurting, even though the Telluride guy says he knows them and they are. Maybe he doesn’t like going through the Zion Curtain.
I think I’m just gonna move it myself.
“…The Salt Lake Tribune posted today that Utah is 5th in the nation for healthy lifestyles”
Were are they on the list for… “reproductive” health?
Utah is one of the most urban states in the nation, meaning more of its citizens live in the city percentage wise. IOW, everyone lives in Salt Lake. Given the pollution there, which is very unhealthy in the winter, especially because of inversions, I’m surprised it rated so high. Who knows what criteria they used (maybe I should reread the article).
My part of Utah is where people come to get lost and injured. Right now there’s a woman from Colorado who’s been lost in an area of slot canyons for 2 weeks, no one can find her (Little WIld Horse). I had to quit search and rescue because it took too much time…
I buy books all the time. However, a great many of them are from estate sales and the Goodwill. I have many times bragged about the quality of the yard and estate sales out here in Olympia, how you can get a giant box of leatherbound antique books for a few bucks. It’s absurd. Absurd and wonderful.
Anyway, most of the walls of my house are covered with shelves filled with books, with spots here and there for some artwork.
Ahhhh, I love books. Books, books, books…books make me happy to be an evolved bald monkey. That, and beer. Oh, and shoes. Hmmm…I guess that’s about it, for tolerating this evolution thingie. Books, beer, and shoes.
But hows about septarian nodules from Orderville and stuff like that?
i buy lots of books.. maybe 5 a month. I used to buy from brick and mortar bookstores but half the time they don’t have my book in stock while Amazon does.
While I could shop barnesnoble.com, Amazon’s attraction is that it also sells other stuff..
So, i make a shopping list that includes books along with everything else and order it all from Amazon.
Kindle’s reviews put me off buying one. There is a huge potential market for an electronic reader but this one isn’t the answer.. Proprietary format.. high book and reader pricing.. uncomfortable hardware.. aint gonna make it.
Amazon is really screwing publishers with the whole Kindle thing. Here’s how it works: you upload the ebook and determine a fair market price, Amazon then cuts it by a huge percentage, without consulting you, take it or leave it. There are a number of publishers ready to file a class-action suit for non-disclosure of actual sales, how would one know how many ebooks have sold, there’s no inventory to track, so it would be easy for Amazon to be dishonest here. I have personally had one ebook disappear from my account page, yet it’s still for sale and they refuse to answer my emails about it. Without it on my accounts page, I have no idea if it’s selling and also have received no money. Frustrating.
They’re also trying to corner the market on the print-on-demand industry by telling publishers they won’t carry their POD books unless they let Amazon’s POD arm print them. A number of publishers have pulled out of Amazon, but it’s such a big market it’s like partial suicide, if there is such a thing…
Actually they just sub it out to China. That “canuck” spiel is just marketing.
I’ve been steadily collecting E books in case we end up retiring overseas. Much easier to carry, and mostly flood safe
We buy lots of books, both online and in stores (mostly B&N).
Though the computer is great for blogs, it’s nicer to be able to relax and read wherever you want (we don’t have Blackberrys or tech like that).
This silly man still believes in the rule of law?/
The battle over the mass modifications of troubled mortgages has begun in earnest. On Dec. 1, William Frey, a private investor in mortgage-backed securities, filed a lawsuit in New York State Supreme Court alleging that the proposed modification of some 400,000 home loans originally underwritten by the defunct lender Countrywide Financial is illegal.
The lawsuit , which seeks class-action status, was filed against Bank of America (NYSE:BAC - News), which bought Countrywide in late 2007. It argues that most of the Countrywide loans are not Countrywide’s or Bank of America’s to modify, but rather are owned by trusts that bought them through securitization — the process of financing home loans through the public markets by parceling them out to investors.
Frey says that BofA’s modifications (BusinessWeek.com, 10/23/07) will short bondholders $8.4 billion by reducing borrower payments. While those loan adjustments may help to keep struggling borrowers in their homes today, Frey says those alterations run the risk of permanently damaging the secondary market for housing finance.
“I am an advocate for investors’ contractual rights,” says Frey, 50,
More like a stock investment than a bond investment except when the homes goes up he doesn’t share in the gains, only the loses hahahaha
teach these stupid jerks to loan out money on over priced homes
“…Barnes and Noble are returning books to publishers with a shorter turn around time.”
Cheney’s new book: “If I were President…the secret ambitions of a VP paddle boy”… will save the day for 1st quarter earnings.
Mr. Bear has competition for the “Eyeore” economist of the week award.
“Oh, bother! Disney is going to take away the little honey packets at the Brer Rabbit food court.”
“…In the U.S., Heinz posted a second-quarter profit two weeks ago that beat analysts’ estimates and reiterated its full-year earnings forecast. You have to think that frozen TV dinners and ketchup are about as recession-proof as it gets.
That didn’t shelter the company from having to more than double the interest it pays on $800 million of debt last week.”
Financial Darwinists Must Applaud Debt-Cost Jump: Mark Gilbert
http://www.bloomberg.com/apps/news?pid=20601039&sid=aXwxmqfwpuvc&refer=home
Black gold
$44.54
$43.89
Too late to buy an SUV?
SUV = supersized underwater vehicle
$43.52
Change:-3.12 -6.69%
Volume:214,584
3:30pm 12/04/2008
Black gold’s turning into black silver.
But probably not for too long…
More like black gold’s’ turning into quick silver.
What’s that up ahead? Can’t quite make it out.. wait a minute.. yes. It looks like another bailout.. for.. Exxon.. BP.. Chevron.
Roubini advocating mortgage write-downs instead of re-writes/mods:
http://finance.yahoo.com/tech-ticker/article/138999/2009-Recession-Will-Be-Severe-%27There-Is-a-Global-Deflationary-Risk%27-Roubini-Says?tickers=%5Edji,%5Egspc,TLT,UDN,UUP,GLD,SPY
People with no jobs (or fear of losing their jobs) do not tend to make really large purchases. Like a house, for example:
http://finance.yahoo.com/news/Number-of-workers-on-jobless-rb-13745901.html
I’m becoming more and more convinced that this thing is just getting started.
——————————
WASHINGTON (Reuters) - The number of U.S. workers on jobless benefits rolls hit a 26-year high last month, data showed on Thursday, and it may head higher as a deepening economic slump forces a broad spectrum of firms to cut jobs.
Yes, phase two…
Wall Street Journal
* REAL ESTATE
* DECEMBER 4, 2008, 11:57 A.M. ET
Bernanke Urges Action on Foreclosures
By BRIAN BLACKSTONE
WASHINGTON — U.S. Federal Reserve Chairman Ben Bernanke on Thursday urged the government to consider sweeping steps to prevent foreclosures, including buying risky mortgages and refinancing them under more favorable terms to homeowners.
“Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy,” Mr. Bernanke said in prepared remarks to a Fed housing conference.
“More needs to be done,” he said.
Can someone remind me how long ago it was when BB and HP first started dropping hints they would bail out the housing market? It seems like this started ages ago, and that prices subsequently dropped by a lot more than anyone expected, but I guess this will not stop housing market cargo cultists from believing in their gods’ promises for future helicopter drops of mortgage subsidies and cram downs, all funded out of the general government revenue pool.
“Can someone remind me how long ago it was when BB and HP first started dropping hints they would bail out the housing market? It seems like this started ages ago, and that prices subsequently dropped by a lot more than anyone expected”
The PTB never seem to provide the very thing they promise and I think they know exactly what they’re doing. Anyone in their right mind knows housing is still grossly overpriced and the best way for them to accelerate the crash to the floor is to debate, debate and debate some more.
At least Benanke realizes that home-prices cannot be saved:
“I don’t think we would be either willing or able to target house prices. I think that would probably be an impossible thing to do given the size of the national housing market,” Bernanke said.
http://finance.yahoo.com/news/Bernanke-more-action-needed-apf-13746546.html
The one thing I’ve noticed is his demeanor is changing. He seems to be having trouble speaking (quivering lips included)with each appearance he makes. He looks scared. Does anyone else notice this?
Bazooka Ben admits defeat?!?
Nobel, ye? We hardly knew ye!
Just an assessment: My future broker just informed me that loans in the IE of CA are now even harder to get. Temp loan limits expire at the end of the year but are essentially gone because no new apps are allowed since they won’t close in time. The new loan limit for San Bernardino County is now a paltry 362k. Anything above that, rates are still high and you need 20% down because no PMI company will give you insurance for any LTV ratio. I wonder how many out-of-work or cash-strapped, debt to their eyeballs IE civilians have 75-100k to plop down on a home/closing costs in this economic climate? What in the world will happen to all to those 500-700k homes still on the market in the posher areas of Rancho Cucamonga (if you can call it that)? Looks like the only answer is further drastic price drops - if no one can get a loan. I know I can’t, and I’m an attorney with a six figure income. No way I’m plopping down 500k for a decent home in the IE. Prices are still way too high!!!
FDIC’s Bair warns investors fighting loan changes
Congress may step in and change the legal obligations of mortgage servicers toward investors, she suggested.
They are threatening to stiff the investors….. makes me want to invest in Mortgages.
Yeah, that will nail the coffin shut on the private (non-GSE)securitization market… who in their right mind would buy an investment that the Government doesn’t hesitate to change the terms on??
Bair needs to watch her back. Geithner has aimed his political bazooka at her. Doubt she’s going to last out her appointed term.
“Doubt she’s going to last out her appointed term.”
I hope they give her a golden parachute upon her departure, shes in dire need of a face lift. Must be the Stress?
Arbitrarily stepping in will just be one more step in the wrong direction that strangles the housing market.
Citigroup Needs to Confess Its Writedowns Now
Now that Citigroup Inc. has secured yet another taxpayer bailout, where are the writedowns?
One reason we know Citigroup is anticipating huge losses is that the terms of its latest bailout agreement envision them. Citigroup is responsible for the first $29 billion of losses in the government-guaranteed portfolio, which includes loans and securities backed by residential and commercial real estate. The government will assume 90 percent of any other losses, with Citigroup taking the rest.
In return, Citigroup is handing the feds $7 billion of preferred stock. How sweet is that? Imagine an insurance company offering to charge you a $7,000 premium with a $29,000 deductible to insure your $306,000 house, knowing full well that the master bedroom is on fire.
At the Bailoutpalooza, everybody knows the rules: There are no rules. This has to stop somewhere.
http://www.bloomberg.com/apps/news?pid=20601039&sid=aGjLvBU8S6lE&refer=home
I think they have a fantasy price attached to their stock. To them, it isn’t really “worth” $7/share, rather more (like it used to be) because it is their “home”. Such an offer is a lowball insult to be ignored.
Pop goes the market
This has long been the case, due mainly to the number of cars and trucks owned by businesses. But that gap grew much wider during the boom years. In 1998, there were about 12 million more vehicles than drivers in 1998. By 2006, the difference grew to 34 million.
http://money.cnn.com/2008/11/30/news/companies/auto_bubble/index.htm/2008/11/30/news/companies/auto_bubble/index.htm
This article is a couple days old but the figures are just mind-blowing!
Email to my congressman:
Congressman Wolf,
I am writing to urge you, and the rest of Congress, to use whatever means you have at your disposal to counteract the attempts of the U.S. Treasury department to intervene in the mortgage industry - currently specifically of the current proposal to force a 4.5% mortgage lending rate. These efforts are misguided and extremely dangerous, and will almost certainly destabilize our financial system further than it already is.
As I’m sure you are aware, the real estate market is in the midst of a massive correction. Home prices are falling at unprecedented rates. This correction however is a very necessary correction, in order for home prices to return to their normal affordability levels. With this correction there is certainly pain, but it is necessary pain in order to return to an equilibrium of proper free market credit risk management. Home prices are still much higher than historic normal values, when adjusted for inflation and for comparisons with rent values.
Keep in mind this important point - I say this from the perspective of a homeowner and mortgage holder. I know that I am losing equity on my home, and I also know that I paid more for my home than it was historically worth. I however am a responsible borrower, who made a large down-payment with a fixed-rate loan, and I and my family have lived well within our means of income and savings.
Are we, prudent borrowers and savers (and voters), to be punished for others’ bad credit decisions? This punishment will surely come in the form of much higher taxes - either direct taxes or indirect taxes in the form of inflation. This is the inevitable result of the federal governments’ artificial propping up of the credit markets.
In this specific case, I see the following quote from the Washington Post:
“The cost of the plan and source of funding remain unclear. One possibility is for the Treasury to raise money by issuing bonds to the public at 3 percent interest. This could allow the government to turn a profit because it would be buying securities that pay 4.5 percent.”
What this neglects to account for, however, is the massive loan defaults that are occurring, and will continue to occur, as housing prices correct to their proper historical norms, and additionally due to factors the rapidly-rising unemployment and wage stagnation. Due to these defaults, the Treasury stands to lose yet more 10’s or more likely 100’s of billions of dollars with this program. These losses will need to be accounted for either via additional income taxes or via inflation caused by additional lending (money creation) by the Federal Reserve. Either way the result is the same - reduced spending power by the average American, and thus additional economic strain. We can ill-afford this - especially at this time of economic crisis.
Thank you for your consideration.
xxxxx
Dear Mr. P:
Thank you for your well thought out and very cogent letter regarding this weeks confusing housing situation.
Although the Treasury has been doing a lot lately that I don’t really understand and don’t really trust, I promise to give them the oversight required to get the best possible bills passed through Congress in order to spend as much of your money as I can as wisely as possible.
As you know, I am always standing four square behind aiding all prudent Americans with their purchase of the American Dream.
Thank you for your support in 2010,
Your Congressperson’s harried staffer
Excellent letter. Good for you, packman!
I cannot see 90% of my posts. Anybody else has the same problem? Any suggestions how to go around…
Well, stop talking about your p*anties, for one. None of my thoughts on p*anties ever get through. Also your personal recipes for ‘Lo*ng Pig BBQ sauce’.
Well, glory be! That post DID go through!
As with the housing market, the most extreme and outlandish pessimism in the economic landscape morphs into possibility, believability, and then probability, only in a much shorter time.
My comments of a month or so ago that we could see 12-13% unemployment by summer, the nationalization of many if not most large businesses, and the failure of most equities has already made it out of the first category, I believe.
But the real end game is in the political realm, where things could happen astonishingly rapidly as well, so I’ll start again in the first category: Martial law by May 1 (100 days in), anyone?
Every day, the status quo wreaks of woe…
Push is going to meet shove sooner or later, the only question being who is push and who is shove?
“My comments of a month or so ago that we could see 12-13% unemployment by summer, the nationalization of many if not most large businesses, and the failure of most equities has already made it out of the first category, I believe.”
I still consider these in the “outlandish” category. Maybe not he unemployment one (only probably outlandish), but nationalization of many, if not _most_ large businesses? Sorry, still seems wildly outlandish.
I do expect many company failures, but nowhere near most.
DOW, down more than 305 points at 12:56, rockets up more than 100 to a negative 196 in like a minute’s time. Unbelievable.
Not every interested commentator believes the liquidity tornado will last forever.
Treasury 30-Year Bond Rally’s ‘Days are Numbered’, UBS Says
By Liz Capo McCormick
Dec. 4 (Bloomberg) — Treasury 30-year bond yields are likely to climb from all-time lows as individual investors begin to capitalize on their “good fortune,” according to UBS AG.
“Momentum is still with the 30-year, but our hunch is that the bond’s days are numbered and that the hangover is around the corner,” William O’Donnell, head of U.S. government bond strategy at UBS Securities LLC in Stamford, Connecticut, wrote in a note today. “Not today’s trade, but our eyes are peeled as we cheer on our asset-reallocating retail friends.”
Thirty-year bond yields fell to record lows for the fourth consecutive day after the Federal Reserve said it plans to make weekly purchases of the debt of mortgage issuers to drive borrowings costs lower. Yields have dropped every day since the central bank announced on Nov. 25 that it will buy as much as $500 billion in agency and mortgage securities of government- sponsored enterprises and after Fed Chairman Ben S. Bernanke said he would consider buying Treasuries and target long-term interest rates to combat a deepening recession.
The yield dropped as low as 3.0539 percent today, the lowest level since the Treasury first started selling the securities in 1977. The price of the 4 1/2 percent security due May 2038 rose 11/32, or $3.44 per $1,000 face amount, to 126 2/32, according to BGCantor Market Data. The yield is down from 4.45 percent at the end of 2007 and a record high of 15.2 percent in October 1981.
This is the current bubble. When this bubble ends, I believe the next one will be in gold (that is, gold will go to unusually high levels on a purchasing power basis).
post-armageddon.. You have plenty of gold and are hungry, while all I have is eggs, butter and bread.. and a little whiskey and tobacco.
Which of us is dealing from the position of strength?
Gold’s value increases only within a narrow range of economic pain. Too much or too little pain and gold’s purchasing power falls.
The end-game for gold is pre-post-Armageddon, probably within the next 12 months even, when governments confiscate it or make its ownership illegal, and fix its price, as happened in the ’30s. As soon as these noises happen, the game is over. But, I still say there is a good run left in it. Economic time is being compressed now, like the big bang in reverse.
If you believe the deflation-into-inflation scenario, as I do, then there is some point at the turn in which gold, commodities, and stock prices increase (even in real terms) due to the stimulative effect of reflation outweighing the change in inflation expectations. This could last a week or a couple months, but it should happen. Following this, as inflation rapidly acccelerates, real prices of stocks fall, bonds continue to fall, but for some period of time (weeks, months) gold becomes the new favored asset, possibly rising meteorically before crashing.
The one thing standing in the way of this scenario is cataclysmic political change before deflation ends.
It boils down to the usual suspect, timing.
In some ways it feels like having all the numbers loaded on a craps table, and you know the shooter can’t 7 out for like a year or 2, and almost every roll is gonna pay off…
Didn’t gold just have a bubble? Or am I just losing track at this point, given the increasing amplitude and decreasing duration of bubble wave movements.
No, I don’t think gold has seen a bubble yet. Gold was very cheap relative to equities and oil when it was in the $300 range. It is now perhaps somewhat above levels of normal historical valuation, just like stocks (~1998), housing (~2002)and bonds (~2006) were when they started their big runs.
Well maybe. But periods of crisis like the one underway stimulate flight-to-quality demand for gold. Are you assuming we are in permanent crisis mode from here on out?
Not necessarily, but it seems probable that there has to be a big run on gold before the crisis can end.
“Not necessarily, but it seems probable that there has to be a big run on gold before the crisis can end.”
I envision this phase as more of a dollar dump, which will make both gold and FOREX go up.
Isn’t this what hoz has been alerting us to for weeks now??
14 trading daze 2, 2%
in the tinz.
For those who followed this case mentioned last year on this blog. I say fry her. She’s clearly a sociopath:
http://www.cfnews13.com/News/Local/2008/12/4/abrams_sentenced_to_8_months_for_dog_abuse.html
+1. Disgusting.
I’d tie the rope if they’d hang her.
Ridiculous punishment. She should not serve 8 months in prison for that.
She should be put into a cage with no food or water for six weeks.
I was thinking it would be a real shame if the prison didn’t ever feed her or let her out of her cage..
@Lost - I’ll find the lightpole.. Make sure the knot is in the back. I want this to be slow.
Disgusting..
I can look out my office window and see the courthouse where she was convicted. Driving into work, lots of folks stood outside and picketed. They put a lot of pressure on the judge & jurors to do the right thing. It worked. It’s great to see real Americans giving a damn.
Hoz, how this one sounds to you?
Former Treasury Undersecretary Proposes 100 Year Treasuries
http://www.bloomberg.com/apps/news?pid=20602007&sid=azGBEQQJhY24&refer=govt_bonds
The US does not have credibility to have a 100 year bond. But if we did have the credibility, then I would be in favor of it. When reality sets in 1 yr or 5 yrs or 2 decades the debt will still not be paid of and no prospect of paying it off. The standard of living in the US will drop drastically. A way to ameliorate the drop is to finance for longer terms. Monday the Treasury will be auctioning off 10yr. If those go off decently, then maybe the US can sell some 30 year debt in some size e.g. closer to $15B. At this time the only bonds the US can sell are short term. The primary buyer of 10 & 30 yr bonds is the US government.
QE, unsterilized, fresh moolah, clownbucks galore, reigning dollars, bazookas,and bailouts….
Whose holden the bag, man?
Wonderful logic there, I’m sure, but one that’s lost on me.
The government is going to sell itself long bonds?
Hoz, 100 yrs treasury sounds ludicrous for me. Did the 30 yrs treasury sound crazy when first introduced in 1977?
Nope
a tad of history
Government Bond Certificate. 1898. 750 Rubles. 3 8/10% Conversion Bonds issued by the State (March 1898) in exchange for the 1887 4.5% Mortgage Bonds of the ex-Association for Mutual Credit on Land-Property. Value is stated in rubles, German Reichsmarks, Francs, Pounds Sterling, Dutch Florins. The certificate is for 750 Rubles (1620 German marks = 2000 Francs). Coupons were paid in St. Petersburg, Berlin, Frankfurt, Paris (by Rothschild), Brussels, London, and Amsterdam. The bonds were redeemable at par within 81 years by semi-annual drawings which took place on March 31 and October 1 of each year. Every bond was provided with 24 half-yearly coupons and a talon for the renewal of the coupon-sheet. (Also redeemable in gold bullion).
and from my Japanese buddies that wouldn’t let me short.
“The Nikkei stock index hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44 before closing at 38,915.87. The rates for housing, stocks, and bonds rose so much that at one point the government issued 100-year bonds.”
Not new but the governments had credibility. Russia has started making payments on the Ruble bonds. It is one of the conditions to get full trade membership.
Countries are held responsible for their international debt. Neither revolution nor conquest removes the countries debt. It sucks to be a debtor nation.
“The primary buyer of 10 & 30 yr bonds is the US government.”
Hoz, what do you base this comment on?
Reading BB’s paper from several years back a out close-to-ZIRP policy options, I thought the first step was just to convince the market of the Fed’s intention to use quantitative easing to push down the yield curve, by causing the market to bid up the long-bonds that they would target.
I’ve just been assuming that the Fed is still on Step 1, and has not even had to move on to the actual purchases.
Do you have information that says otherwise? Thanks…
Yes
Last Fridays Fed Balance sheet.
put one here, missing
Now that would certainly pop the bond bubble - it’s the financial equivalent of building 10 high-rises in Miami at the same time: you’d get tremendous initial interest and takers, but, oh, the buyer’s remorse!
Jonathon Swift, The Run Upon the Bankers.
No money left for squandering heirs!
Bills turn the lenders into debtors:
The wish of Nero now is theirs, [2]
“That they had never known their letters.”
2. Nero, signing the death sentence of a condemned criminal, exclaimed:”Quam vellem nescire litteras!”(”How I wish I’d never learned to write!”) Suetonius, 10;
~
the home stretch is gonna be about due process and illegal siezure.
A re-write the Constitution because of the condition our condition is in.
Et nunc, reges, intelligite; er erudimini qui judicati terram.
And now, kings, understand; you who decide the fate of the Earth, educate yourselves
It’s late, maybe that’s why I found this a hilarious comment on American culture:
http://www.youtube.com/watch?v=baRg-H_LsEc&feature=channel
it’s called “Dear China”
Quis, quod, ui, quibus auxiliis, cur, quomodo, quando?
” A plan to sell Lehman Brothers Holdings Inc.’s Neuberger Berman investment-management arm for $2.15 billion fell apart Wednesday, leaving the majority of the unit in the hands of its top managers.
The latest Neuberger plan, subject to approval by a federal bankruptcy court, means that Lehman’s creditors will receive no immediate cash payment to help cover what they’re owed. Instead, Lehman’s estate will keep a 49% stake in Neuberger’s ongoing operations, which creditors hope will increase in value over time.
The deal creates a standalone money-management firm with about $160 billion in assets…”
WSJ
Wheeeeeee! Now that is free money and Mr. Dick Fuld said it was worth $11B. Going from being an employee to being the owner.
Why do these doofuses keep equating the respiking of the mortgage lending punchbowl with affordability? You still have to be able to pay off your loan, which requires more income than most San Diegans earn for a typical home here, even if the rate is 0 pct.
Wall Street Journal
* REAL ESTATE
* DECEMBER 5, 2008
Lower Rates Help Sell Houses, but Market Faces Broader Ills
By MICHAEL CORKERY and NICK TIMIRAOS
A possible move by the Treasury Department to push down mortgage rates has raised the hopes of home buyers, real-estate agents and economists — and the share prices of residential builders and related businesses.
But the proposal, if implemented as reported, won’t be a cure-all for the myriad problems that have curtailed buying.
The Treasury is considering a plan that could enable banks to lend at rates as low as 4.5%, which is more than a full point lower than the prevailing rates on standard 30-year mortgages.
[Affordable Housing]
“People are going to see what this does to their mortgage payment, and they will be kicking themselves if they don’t jump in and buy,” said David Romero, chief operating officer of Century 21 Award in San Diego.