Bits Bucket For January 7, 2009
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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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Looks like the boyz had it going on in Spain,greed, graft, bribery, cons, it’s all good…
Marbella’s Billionaire Spent Bribes on Tiger-Guarded Stud Farm…
Jan. 7 (Bloomberg) — As an urban planning adviser in the sun- drenched Spanish resort town of Marbella, Juan Antonio Roca had after- tax income of less than 150,000 euros a year.
When he was arrested for corruption in March 2006, police seized assets worth 2.4 billion euros ($3.4 billion), including a century-old palace in Madrid, a country estate equipped with a helipad overlooking the Rock of Gibraltar and a stud farm guarded by a tiger.
According to a 451-page July 2007 indictment by Marbella prosecutor Miguel Angel Torres, Roca also owned a ranch to raise fighting bulls, a private jet, a helicopter and a painting by Spanish master Joan Miro.
Known in Marbella as “The Boss,” Roca has become Spain’s national symbol of municipal corruption amid the boom and bust of the country’s real estate industry.
“Marbella is a special case, but the conditions which allowed it to occur exist across the country,” says Jesus Sanchez-Lambas, a law professor and general secretary of Madrid’s Ortega y Gasset University Institute. “Corruption in town planning is institutionalized.”
Roca, 55, who was convicted of bribing a judge in August by the High Court of Andalusia in Granada, is currently standing trial at Spain’s National Court in Madrid where, along with five other defendants, he’s charged with embezzling 36 million euros of public funds.
Operation Malaya
Prosecutors are preparing to go to trial in connection with the 2007 indictment, dubbed Operation Malaya, against Roca and 85 others in Marbella, Madrid, Barcelona and San Sebastian. The charges include embezzlement, money laundering, dereliction of duty and bribery.
Roca’s lawyer, Jose Anibal Alvarez, said in December that none of the evidence proves that Roca took bribes, embezzled from city hall or laundered money. Spanish officials are making him a scapegoat for the corruption that’s widespread in city halls across Spain, he says. In December, Roca was in prison in Alhaurin de la Torre, a village outside Marbella.
http://www.bloomberg.com/apps/news?pid=20601109&sid=akGONZPNY7Wg&refer=home
Roca’s lawyer, Jose Anibal Alvarez, said in December that none of the evidence proves that Roca took bribes, embezzled from city hall or laundered money. Spanish officials are making him a scapegoat for the corruption that’s widespread in city halls across Spain, he says. In December, Roca was in prison in Alhaurin de la Torre, a village outside Marbella.
I know nothing of the matter but I would bet a ice cold glass of coke, that its both.
Since his property is on the coast by Gibraltar, there are a few other ways to make a lot of money in a short period of time. Smuggling is rampant in that area.
there is more smuggling and drug traffic (with Morocco) in the Marbella/Estepona region. One of the reasons is that the Marbella mob controls customs/coast guard, something that probably doesn’t work so easy in Gibraltar.
not surprisingly, a lot of the RE agents and lawyers involved in the scamming and corruption are Dutch …
So perhaps those hanging their hopes on China being able to go ‘it’ alone, may need to re-think their position. The youth in China are saving instead of spending, that can’t be a good thing, could it?
Zero Growth in China Is 2009 Black Swan Event: William Pesek
Zero Growth?
There’s no doubt that China’s leaders have the will to support growth. The question is their ability to do so while all of the world’s economic engines sputter. Yes, all.
That issue featured prominently in the annual “10 Outrageous Claims” release of Saxo Bank. Each year, analysts at the Danish Internet trading bank come up with a list of “Black Swan” events, or unexpected ones with great impact. This year’s candidates include the odds of revolution in Iran, crude oil falling to $25 a barrel, the Standard & Poor’s 500 Index sliding to 500 and Italy scrapping the euro.
A Saxo Bank team led by London-based Chief Investment Officer Steen Jakobsen also pondered this question: Will we see a China crisis with gross domestic product at 0 percent?
Their rationale is that the export-driven industries of China’s economy will be hurt by the freefall in U.S. growth. Many commodity-related investments in recent years will sour with global demand. And since China has been running an overly expansionary monetary policy for many years, the gamut of speculative bubbles will be revealed.
Tough Year
Clearly, zero growth isn’t the most likely outcome. Walker, for example, expects 0 percent to 4 percent this year, with a 30 percent probability of a contraction.
For a developing and highly populated nation like China, 5 percent growth is as good as zero. For Japan, such output would be a dream; for China it would be a nightmare.
A year ago, officials in Beijing struggled to keep their $3.3 trillion economy from overheating. That task will prove easy compared with juggling plunging exports, shuttered factories, tumbling property prices, surging unemployment, dwindling demand and growing worker unrest.
Economists have long agreed that China needs growth in the vicinity of 10 percent to placate the masses. The social contract is this: We will make you richer, you won’t question the government. If growth slows to 5 percent, never mind zero, Chinese officials will be in a very bad way.
Losing End
China’s $1.9 trillion of currency reserves are a plus. So is the government’s success in letting the yuan rise a bit, but not enough to devastate exporters. And as we saw from recent stimulus efforts, China is willing to do what it takes. That may not be enough, though.
Anyone willing to place bets that “conflicts” in that part of the world are going to be happening, if the growth of China slows down to 5%, I am not even thinking 0% here?
I think conflict is the US way of solving domestic problems, and NOT the way China manages its affairs.
BBC
China’s newly frugal youths
By Gemma O’Neill and Shuvra Mahmud
BBC Monitoring
Amid the global economic downturn, young people in China are defying government initiatives to boost spending and coming up with novel ways to save money.
Back in July 2008, Wang Chao, a 28-year-old office worker from Shanghai, told the BBC he spent 2,000 yuan (then about $290; £150) in a single day on trainers, clothes and gadgets.
But when last month his company cut salaries by half, Wang said he was forced to cut back on luxuries and swap restaurant meals for homemade packed lunches.
“My monthly income has been cut by 50%. I have had to reduce my living costs, though I’m still able to eat well.”
Blogs and popular internet forums are full of stories and advice from young people looking to stretch their money further.
This is despite the government’s allocation of some $586m-worth of funds to encourage spending to keep China’s economic growth around what it believes is the minimum necessary to maintain social stability.
‘Stingy group’
The young savers, or the “kou kou zu” (”stingy group”), come from the generation born around the 1980s; now 20- and 30-somethings who have been regularly accused of being spoilt and lacking financial awareness.
In large cities like Beijing and Shanghai, young white collar workers were well-known for their ability to overspend. A recent Shanghai government survey revealed that office workers in the city spent an average of 2,500 yuan per month - a disposable income beyond the grasp of most Chinese.
By contrast, the kou kou zu are eschewing restaurants for school and company canteens; taxis and public transport for bicycles; and high street shops for online ones. It remains a grassroots movement, but it appears to be growing.
Zhang Yan, a “kou kou” from Fujian province, said learning to spend wisely had been more than just a reaction to the global recession.
She told the China Daily newspaper: “This is not just a response to the crisis - it’s something you can benefit from your whole life. Plus, it is environmentally friendly and represents a healthy and positive life attitude.”
(Cont’d)
Frugal is back.
Leigh
50% pay cut! All at once? The Am. way is to do it a little at a time so the frogs don’t hop out of the pot.
Good on those youth cutting back, maybe the party indoctrination worked too well - and so now none want to become wage slaves?
One of the biggest reasons to be bearish on global markets is that 5-7% growth is still counted on in Chindia. The simplistic way I see it, China is likely to grow at a smaller premium to the U.S. than during the boom, because although its trend line is higher, it probably also has a higher beta and therefore should swing more wildly around its trend. If U.S. contracts 4-5% from Q4 2008 to Q4 2009, I expect China to have zero or negative growth.
The reality of the global recession/depression is still not registering with most investors. After the OIE*, the markets could start falling precipitously, as they did after the election.
*Obama Inauguration Extravaganza
Yes, it’s odd that no-one anticipates negative growth in China. This is a possibility!
Just to nitpick a little: Taleb’s Black Swan is basically what the geological perspective uniformitarianism has described all along: that a natural process, say, like erosion, is predictable unless of course a nuke goes off on your stream bed.
Here’s some more science fun (cue Barenaked Ladies - “Woo hoo hoo, it’s all been dooooone before):
nytimes.com/imagepages/2006/08/14/science/20060815_SCILL_GRAPHIC.html
No surprise, wonder when the construction of strip malls will start contracting? 2009? In our area they are still popping up like dandelions. I know builders gotta build.
U.S. Shopping Mall Vacancies Reach 10-Year High as Stores Fail…
Jan. 7 (Bloomberg) — Vacancies at U.S. malls and shopping centers approached 10-year highs in the fourth quarter, and are set to rise further as declining retail sales put more stores out of business, research firm Reis Inc. said.
Regional mall vacancies rose to 7.1 percent last quarter from 6.6 percent in the third quarter. It was the highest vacancy rate since Reis began tracking regional malls in 2000, as well as the largest quarter-to-quarter jump in vacancies, according to New York-based Reis.
More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc. and Sharper Image Corp., filed for bankruptcy protection in 2008 as the credit squeeze and recession drained sales. Vacancies will rise further until the job market recovers, housing prices stabilize and lending resumes, restoring consumer confidence, said Reis.
“So much of consumer spending depends on the wealth effect,” said Victor Calanog, director of research at Reis. “Unfortunately, all three conditions are still in flux. Even when they stabilize we often observe anywhere from a 12- to 24- month lag until commercial retail properties begin benefiting.”
At neighborhood and community shopping centers, the vacancy rate rose to 8.9 percent from 8.4 percent in the third quarter, the highest since Reis began publishing quarterly data in 1999.
Shopping Centers Suffer
Asking rents at malls fell 0.2 percent from the previous quarter and rose 0.3 percent from a year earlier. Mall vacancies have climbed 2 percentage points from the 5.1 percent in 2005’s second quarter, the low for the last business cycle, said Reis.
Asking rents at shopping centers, which are typically anchored by a grocery store, fell 0.3 percent from the prior quarter and rose 0.4 percent from a year earlier. Effective rents fell 0.9 percent from the prior quarter and were down 1.1 percent from a year earlier, according to Reis.
At neighborhood shopping centers, tenants vacated more space than they leased, causing so-called net absorption to shrink by 4.1 million square feet, according to Reis.
“Neighborhood and community centers coming online encountered tremendous difficulties in pre-leasing retail space,” Calanog said. “This has been prevalent all throughout 2008, with new projects coming online at around 50 percent vacant, compared to the 25 percent to 30 percent vacancy levels for new projects in previous years.”
Yeah, builders do have to build:
http://www.nytimes.com/2009/01/07/business/07denver.html?ref=business
“I’m here,” said Mr. Nichols, the president of the Nichols Partnership, a commercial real estate developer, “to talk to you about why we would be stupid enough to build 500 housing units” during a national economic downturn.
“He was talking about the Spire — a 42-story condominium and retail development going up across the street from the Colorado Convention Center, where the Expo was unfolding. His quip brought ripples of laughter and a wave of applause from hundreds of real estate professionals who had paid to hear the annual fall forecast for Denver’s commercial real estate market.”
I guess it’s different in Denver.
Well I guess it IS different in Denver, ’cause it looks like the “spire” in Chicago will be stuck in the “hole in the ground” phase for the forseeable future. http://en.wikipedia.org/wiki/Chicago_Spire
An observation - you can tell quite easily from a list of “tallest buildings” when we’ve had major recessions and depressions.
http://en.wikipedia.org/wiki/List_of_tallest_buildings_in_the_United_States#Tallest_buildings
Almost invariable there is a boom of building completions right at the begging of a recession or depression, followed by a large gap of no buildings being completed.
Of the tallest 10 buildings in the U.S. -
- 3 were completed this year or last year
- 2 were completed just after the GD crash (1930 and 1931)
- 2 were completed at the beginning of the 1973/1974 recession
- 2 were completed before/during the early-90’s recession
- 1 was completed right before the 1970 recession
Without exception - not a single one of the top 10 buildings was completed more than a year before a recession, and usually at least a major recession or depression.
As you go down the list you start to see some exceptions, but in general most of the buildings are such. I’d be interesting to see a graph (though I don’t have time to create one).
Good find - thanks for sharing.
YUP. That doesn’t bode very well for Dubai either…
Remember that “tallest building in the world” in SE Asian right before the Asian currency collapse?
Maybe that “tower of Babel” story was onto something, heh heh.
An interesting side note - while look at that stuff in Wikipedia - I noticed that the soon-to-be largest building in the world, in terms of floor space, is the Abraj Al-Bait Towers in Mecca. Obviously built primarily with oil money, and only visitable by Muslims.
Link:
http://en.wikipedia.org/wiki/Abraj_Al_Bait_Towers
It’s mostly complete - with the main tower scheduled for completion next year.
Not really the best looking thing in the world.
Not the best looking? That thing is hideous!
Figures that Chicago’s biggest monument to how screwed up the housing market is was supposed to be in the shape of a screw.
I rather thought it looked like a giant dildo but whatever, either would work.
Every article I read eludes to the fact that things will start shoring up around mid year 2009. Wrong IMO.
U.S. December Job Cuts Quadruple From Year Ago, Challenger Says
By Courtney Schlisserman
Jan. 7 (Bloomberg) — Job cuts announced by U.S. employers almost quadrupled in December from a year earlier, paced by declines at financial firms, chemical makers and retailers as the recession rippled through the economy.
Firing announcements rose 275 percent last month from December 2007, to 166,348, Chicago-based Challenger. Gray & Christmas Inc. said today. For all of 2008, employers announced 1.22 million job cuts, the most in five years.
The economy is caught in a self-perpetuating cycle of rising job losses and declines in consumer spending that threatens to extend and deepen the economic slump this year. President-elect Barack Obama has said his top priority after taking office will be to pass a stimulus package that will save or create 3 million jobs.
“Unfortunately, heavy job-cutting could continue through at least the first half of 2009,” John A. Challenger, chief executive officer of the placement company, said in a statement. “Nearly every industry experienced higher job cuts in 2008, as fallout from the collapse of the housing and financial markets spread throughout the economy.”
The U.S. economy probably lost 500,000 jobs in December, according to the median projection of economists surveyed by Bloomberg News ahead of the Labor Department’s Jan. 9 employment report. That would bring the total decline for last year to 2.4 million, the most since 1945.
Seven-Year High
The number of planned job cuts decreased 8.4 percent last month from November’s almost seven-year high of 181,671, Challenger said. The figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of monthly numbers.
Financial companies led industries in announced cutbacks, with 39,604 last month, and also had the most announcements for the year at 260,110. It was the third-biggest industry annual total since records began in 1999, Challenger said.
Pardon me for raining on this parade, but from my perch here in Tucson, I’m noticing something very interesting.
I make my living as a graphic designer and photographer, and I’m noticing that my business is on the upswing. This, despite the fact that layoffs are increasing.
And it’s not just me.
A colleague from Portland, Oregon has been in the design biz since the early 1980. He says that his studio gets busier during recessions. Why? Because companies that let go of the in-house staff realize (belatedly, in many cases) that they need the skills that those departed staffers offered.
So, who they gonna call? Us, the freelancers! The git ‘er done people!
My colleague is also one of those “never stop promoting his studio” types. I’m with him on that idea. I’ve seen too many people who say that they get all of their business through word of mouth, then, a few months or a year later, they’re hurting.
Gotta agree with you here, Ive almost never had to solicit any business for years…it all came to me Dj was just a PT thing but for a few years i was working literally every weekend just from the overflow gigs from 5 dj companies. Now they are hurting and so am I.
So i am a very rusty in actually doing the face to face promoting thing, i guess this is the new skill i have to force myself to do everyday. Its not easy. But I should have stopped this dj stuff years ago, and I really don’t want to dj anymore weddings but no else is offering me money, I booked a wedding last week and have 2 referrals from a wedding i did in 06 in my email box, i have to answer.
————————————————–
I’ve seen too many people who say that they get all of their business through word of mouth, then, a few months or a year later, they’re hurting.
DJ, have you looked into podcasting as a way of expanding your reach? Reason for the question: If I’m not listening to the local community radio station (KXCI Tucson) on the iTunes, I’m listening to podcasts.
One of my favorite podcasts is called the Chillcast. It’s an hour of downtempo chill that’s produced by a SoCal musician. She goes by the name of AnjiBee. She’s become quite successful as a podcaster, and her example would be well worth emulating.
And, fellas, if Anji’s voice doesn’t get you going, well, you’ve got a problem.
Slim:
Truthfully downtempo music is the last thing i need in my life…
heck house music puts me to sleep, almost crashed my car years ago with that droning boring music on the radio
Thats why zydeco is just right for me ..i am the l one of the last kick asss dj’s i know. Crank it to 11 and have fun
http://www.youtube.com/watch?v=MnONgEfKJOU
If I’m not listening to the local community radio station (KXCI Tucson)…
Your comments often get me homesick for Tucson.
I was riding my mountain bike in the desert around Sabino Canyon wearing a Walkman when KXCI first came on the air.
I had no idea what it was, all I knew was that it beat the crap out of KRQQ and whatever the current dinosaur rock station (KLPX?) was at the time.
KXCI FTW!
Nice work, Slim. Just listened to the voice. [Homer drooling].
If you have a thing for mellifluous, female voices and want to learn Spanish, check out Kara at Coffee Break Spanish. She’s Scottish to boot.
MrBubble
Nobel Laureate Paul Krugman, the liberal economist, says: “The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren’t lending; businesses and consumers aren’t spending. Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression.” (Well, it’s at least a significant recession now in its 13th month.)
Krugman’s conclusion: “Here’s my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it’s only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy - well, you can see where this is going.”
Consumers are belt-tightening, which worsens the slowdown. This morning’s Wall Street Journal reports: Hard-hit Families Suddenly Get Frugal, Aggravating Nation’s Economic Woes.
It’s one of our pet theories that consumers will catch hell for being pinch-pennies in the face of the downturn. But what else should they do? Return to buying things they don’t need with money they don’t have?
Loan money to everybody that asks for it. Then go on a crazy spending spree with borrowed money. Who needs income if you can spend other people’s money? Just make loans available for everything and everybody and soon the gravy train will be under full steam again. Just keep borrowing from the future to shore up the present and we might be able to keep this Ponzi scheme going for a while longer. As long as stupid foreigners are willing to loan us money we’d be fools not to take them up on it. When time comes to pay them back, we have a technology called a printing press. Isn’t life wonderful?
I think it would be easier and more fair to just change the personal bankruptcy laws so that you can file every year just like a business.
That would get a lot of deadbeats excited about taking out loans they cant afford to buy things they don’t need.
I’m I the only one that sees some good in all of this?
Bad husbandry of resources, if not just outright wastefulness, consumption for the sake of consumption.
Is this not a natural that a corrective cycle follows?
I see all of this as just an opportunity to get our act together and have a real economy. And, maybe some needed frugality with resources, that despite some peoples’ beliefs, are not boundless.
Muir, presumably you like nature, given your handle…
I’ve noticed over the years, that people that enjoy nature appreciate cycles. Moreover, they aren’t drawn to trinkets.
I read another poster on a different board who was reflecting on watching his kid pick dirt out of his ear after the child went swimming in the Finger Lakes, and imagining the joy of the countless fathers who had done just that over the course of thousands of years.
So, no, many people see the good in all of this. They saw the good on all of this before it even happened, sometimes thousands of years ago.
‘I’ve noticed over the years, that people that enjoy nature appreciate cycles. Moreover, they aren’t drawn to trinkets.’
Welllllll, I don’t know. I am about the tree-hugginest evolved semi-bald monkey gal around, yet I wear my tiara when I go kayaking, for instance, and also when I scamper around in the forest, and when I climb trees. I just jam it on good, so it won’t fall off. Then when I’m halfway up the trunk I stop and wave majestically, waggling my head so that rays of sunlight–if there are any of those out–can sparkle off my lovely tiara and cast beams of beauty around for all to enjoy. The frogs like that.
+1
I’m amazed that every mention of “belt-tightening” by the media presents it as a bad thing. Given the state of America (literally and figuratively), a belt tightening is very much a good thing IMO.
Unfortunately - the winners so far haven’t been frugality with regards to wastefulness and health. For instance the two lone gainers last year in the Dow were Wal Mart and McDonalds. Great. So instead of improving to a society that’s frugal and values quality, we’re regressing into a society that’s frugal and still wants crap and fat.
“we’re regressing into a society that’s frugal and still wants crap and fat.”
What do we want? A WHOPPER!
What will we pay! A DOLLAR!
What do we want? A WHOPPER!
What will we pay! A DOLLAR!
What do we want? A WHOPPER!
What will we pay! A DOLLAR!
LMFAO, the masses will demand fries from Mickey-D’s instead of the heads of politicians.
fries from Mickey-D’s instead of the heads of politicians.
I’ve had squirrel brains…not sure I would eat donkey brains or elephant brains.
LOL.
All throughout this there have been references to a possible “Mad Max” scenario. My vision instead has been of a “Robocop” scenario, which I think is a lot more likely. Rather than a desert wasteland I see financial and real estate wreckage, and crime and corruption all around, and cheesy TV commercials to boot.
“I’d buy THAT for a dollar”.
Robocop? Not likely. Now Judge Dredd, on the other hand…
Sorry all, the Idiocracy scenario is already in play.
Is Judge Dredd the one where every restaurant is a Taco Bell?
That made me laugh out loud.
Demolition Man
Right, thank you, FB. I get these Stallone/Snipes movies mixed up.
In Judge Dredd everyone lives in huge mega-cities with lawless wastelands outside the cities.
The new Porsche ‘Panamera’ is a pretty good impression of the SUX 6000 from Robocop
‘The new Porsche ‘Panamera’ is a pretty good impression of the SUX 6000 from Robocop’
Is that the car in the commercial, where a car thief gets in, bands go across his chest and eletrocutes him and then he falls out onto the concrete floor, smoking slightly? And the commercial guy says, ‘And it won’t even drain your battery.’
Man, I loved that commercial.
I liked Robocop quite a bit, although I thought it needed more shooting.
“Comment by Muggy
2009-01-07 08:30:47
Sorry all, the Idiocracy scenario is already in play.
”
There’s that f@g talk again.
GO AWAY! - - ‘bate’n
/Brawndo has the electrolytes plants crave
“There’s that f@g talk again.”
That’s my favorite recurring theme in Idiocracy - the threat of proper grammar and “big words.” LMAO
Well we’re really stuck in one of those places where the long term good is directly in conflict with the short term “good” IMHO. For a long time, as a nation we’ve been trying to borrow our way to prosperity. Federal deficits, trade imbalances, a declining saving rate; they’ve all been on an unsupportable path for DECADES. As with many systems with strong but slow negative feedback, trying to fix the problem in the short term just makes the long term problems worse. Add to this the political dimension, which tends to mean that we get government “stimulus” (more borrowing and spending) when the economy is doing poorly (in the short term) and tax cuts and deregualtion when the economy is doing well (in the short term).
Muir +1
The real problem is that too many of our jobs support the making and using of discretionary end-user consumer items and services.* Everyone’s income depends on somebody else buying something new. If people suddenly stop impulse buying, the employment chain goes down like a row of dominoes.
What we need is an economy where the jobs make a product that a consumer doesn’t buy. So when the consumer chooses not to buy, your job is still needed and nobody get laid off. End product: people are employed, but are still allowed to save without crashing a consumer economy. Sample industries: physical infrastructure, educational infrastructure, repairing defence infrastructure, technical innovation, energy independence…hmmm, sounds familiar…
Great post, Muir.
Completely agree.
I’m with you, Muir. It seems to me that a lifestyle of simplicity combined with all the various advances in productivity we’ve had over the past several years could theoretically result in an end-result where we’re all comfortably housed and fed, working 20 hours per week and having a lot of free time to pursue other interests besides working.
I don’t expect it, but I believe it is possible and desirable.
This seems to be a common theme with partisans — give the other side authority to implement a bad idea and when it inevitably fails blame them for not doing it exactly the way it ought to be done.
+1
Indeed, this is what the American people have collectively been doing for at least a century now. Give the government impossible tasks and then complain that they aren’t being done well. The whole partisan politics thing is just a side show.
Hey, they did put a man on the moon.
Yeah but it taking them 30 years to even start working on the 2nd ave subway in Manhattan…..
Hint give nyc 5 billion tomorrow and hire 5-10 crews all working 24/7 on different parts of the subway, and maybe it will get done in 2 years and not 10!
—————————–
Hey, they did put a man on the moon.
“It’s one of our pet theories that consumers will catch hell for being pinch-pennies in the face of the downturn. But what else should they do? Return to buying things they don’t need with money they don’t have?”
Like 0% for 60months for unqualified buyers with printed tax payer dollars.
“Hard-hit Families Suddenly Get Frugal, Aggravating Nation’s Economic Woes.”
Keynes’ General Theory predicts a collapse in liquidity preference at this stage in the trade cycle, after the ‘collapse in the marginal efficiency of capital, particularly in the case of those types of capital which have been contributing most to the previous phase of heavy new investment. Liquidity preference, except for those manifestations of it which are associated with increasing trade and speculation, does not increase until after the collapse in the marginal efficiency of capital.’
If one thinks of the real estate stock (commercial and residential) as the type of capital contributing the most to the previous phase of new investment, Keynes’ story seems to fit the situation at hand quite well. The only missing ingredient is that he predicted a steep increase in interest rates at this stage in the cycle…
I said ‘collapse in liquidity preference’ when I meant ‘increase in liquidity preference’ — sorry, back to bed now!
“The only missing ingredient is that he predicted a steep increase in interest rates at this stage in the cycle…”
Keynes could not possibly have foreseen the degree of reckless degenerate profligacy we have been experiencing with regard to the ‘creation’ of new ‘money’. This unprecedented and astonishing increase in the supply of money means that the ’steep increase in interest rates’ stage has been temporarily postponed (as well as being greatly exacerbated).
I live the opposite. When times are great I’m frugal. In the last 4 months I’ve purchased a big-bore V-twin motorcycle, 46″ HD LCD, King size bed from Macy’s and put a new roof on the house. Paid cash for all of it at about a 50% discount from bubble time prices.
I’m doing my part.
That’s how I play too.
“But what else should they do? Return to buying things they don’t need with money they don’t have?”
Exactly. The PTB are about to find out that J6P, despite not being very bright, might seem like an ATM, but like an ATM you don’t get anything out if you haven’t PUT anything IN.
Or, to phrase it in a way they MIGHT understand, “No money, no honey.”
Just came back from Vacation from Bogota, Colombia, and let me tell you guys that it looks like the builders are having a field day there. There are more condo buildings, and condo developments than you can shake a stick at. Price per square foot in some places is about 300, but most of the time it is around 200-250. This is for a country where the minimum wage is about 250 per month, and the average wage is about 10K a year. This makes a house affordable that is no larger than 100 square feet…. Maybe a bedroom?
Yet they are still in denial, and are blaming an article in the leading newspaper about the stalling of sales, but no lowering of prices yet. In fact they are about 3 years behind most US markets, but they will get the same treatement that Miami is getting. Amazing that in such a poor country, there are so many Mercedes, Audi, and BMW’s…
Another really interesting thing is that they are just starting to suburbanize their main city, but the ‘burbs lack infrastructure, have a single lane country road into the city for thousands of residents, and have no schools. It lends itself to a nightmarish traffic problem, and for huge anger management problems.
no reason to be amazed with all the expensive EU cars and the high real estate prices; Colombia is drug money central, and most of the government is involved. I heard from Ecuador (neighbour country) that their RE market is suddenly close to dead; maybe they are quicker in getting the message than the sheeple in Europe? Can’t be long before the gangsters want out of RE and start demanding their money back. Expect more drive-by shootings of high profile RE professionals, like in Amsterdam over the last five years.
I am amazed not because of the amount of money the drug trade has left in the country, but by the sheer stupidity of drug dealers not laying low. I guess it is not in their nature to blend into the crowd, and take their profits and invest them wisely. I guess they have more in common with Susanne than what we though?
Why should they lay low when they have the right-wing, American-armed paramilitary orgs in their pocket?
If the masses complain, send the soldates to exterminate some more villages.
As opposed to the left wing Chavez armed guerillas that do most of the kidnapping, and town razing?
There are no innocents in that fight, but the leftist guerillas take first prize in brutality and human rights violations.
When the Colombian bubble bursts, will they blame the Yankees? Or will they circle the wagons and continue kidnapping and shooting at each other?
Columbia,..no worries…they’ll have plenty to chew on why they contemplate the needed repair jobs.
I was in the Cartibbean a year ago. Construction cranes as far as the eye could see. All those rich Americans are going to buy timeshares and vacation condos ALL over the world!
I was in Panama in April. Mind-boggling over-development. Thankfully, it’s different there - they have the canal, so the demand is infinite.
There was a post here yesterday that pointed out the declaration of many various US-administered islands in the South Pacific as nature preserves/national marine monuments as if it were some sort of example of ridiculous government waste and that nobody is going to go visit them.
Well, that’s the point! Starting around World War II, the US military really enjoyed owning a bunch of isolated places that were nothing more than a reef that created a protected harbor and a spit of land barely big enough for a runway. They felt these places were so strategic that they pointed guns at anyone foolish enough to come near them. As a result, these are some of the very few places left in the world that have pristine environments. Now the the military doesn’t want them anymore, the only way to keep them pristine is to continue to keep people away. Given the way the military spends money, transferring control to the Nature Conservancy probably saves a ton of money.
And people like me would love to scuba dive, if there’s a boat that will go there!
It’s just despicable, how far and wide this thing runs. The most upsetting thing, for me, is the absolute desecration of wildlife, trees and vegetation, all in the name of overpriced, underutilized shelter.
You go Ahnorld… Raising taxes won’t ‘fix’ anything, but not to worry California, the FED will be passing out bilge pumps so you can start bailing…
Schwarzenegger Blocks Tax Rises as California Cash Crunch Looms…
Jan. 7 (Bloomberg) — California moved closer to running out of cash and being unable to pay its bills after Governor Arnold Schwarzenegger vetoed an $18 billion package of tax increases and spending sent to him by Democrats.
Schwarzenegger said the measures raised taxes unfairly, did not go far enough to boost the state’s ailing economy, failed to cut enough spending and didn’t include a temporary stay on home foreclosures. Lawmakers passed the bills on Dec. 18 and only sent them to him yesterday after talks on a compromise broke down.
“This package is deeply flawed and, as promised, I vetoed it the moment it landed on my desk,” Schwarzenegger said in a letter to lawmakers.
California, the most-populous U.S. state, forecasts it will collect about $42 billion less than it will need to pay its bills over the next 18 months because of the yearlong national recession. It may run out of money as soon as February, forcing the state to issue IOUs instead of cash to judges, lawmakers, and those set to receive tax refunds.
The measures approved by the Legislature would have raised $7.3 billion through higher levies on oil production and retail sales, a surcharge on income taxes and a user fee on gasoline. The tax increases, which were coupled with $8.3 billion in spending cuts, would have reduced the deficit by an estimated $18 billion, less than half the shortfall anticipated over the next 18 months.
Democratic lawmakers passed their plan by a simple majority, saying the measures didn’t require the two-thirds vote specified by the state constitution for a tax increase because the changes didn’t result in higher net levies on income. Republicans have used that rule to thwart previous proposals.
Fiscal Emergency
“The governor is leveraging this fiscal emergency for reasons that are unclear but appear to be ideological in nature,” said Senate Democratic leader Darrell Steinberg, from Sacramento.
Schwarzenegger, a Republican, last month ordered state workers to take two days of unpaid leave each month and all departments to cut employee costs by as much as 10 percent. The impasse forced a state panel Dec. 18 to cut funding for $3.8 billion of construction on schools, roads and other public works, a decision officials said might cost tens of thousands of jobs.
California, the biggest borrower in the U.S. municipal market, has the second-lowest credit ratings in the country because of perennial fiscal shortfalls and legislative gridlock. It is rated A+ by Standard & Poor’s and Fitch Ratings, the fifth- highest grade, and an equivalent A1 at Moody’s Investors Service.
Does anyone remember the trading of IOU during the Wilson administration in 1994 (I think, I might be off by two years here). Where a trading system can into place fairly quickly; I also know that people took the IOUs, because the money was there it was just a budget “disagreement” that got resolved by mid-August of that year.
The fear is that this time around people will be demanding cash (I would), since there is no time horizon to convert these IOUs into cash.
A year ago, my SIL was innovative with her “buy a new house at a discount and let the overmortgaged old one go back to the bank” method of real estate investment.
Well, it has gone mainstream. A co-worker of mine…. Well, let’s back up.
2 years ago he puts $25K deposit on a $600K house with plans of selling his existing house for $200K profit (Owes $150K, hopes to sell for $350K). Well, we can’t sell the old house for the $350K… Tries 3 times to walk from the $25K deposit, but the builder keeps coming back with better and better offers… Eventually get the new house for $550K. Borrows $100K from in-laws as down payment, and rents out the his $350K house for a year waiting for the market to improve.
Jump ahead a year. The buiilder is selling his model for under $400K, close to $350K. He eventually stopped renting out the old house and sold it for $250K to pay back his in-laws.
So, he’s lost $100K on the old house and $200K on the new house….
Solution? He just got his loan approved to buy another house. 2 years ago, this house was purchased for $600K, and the buyer then put over $100K into it in a failed flip. He’s getting it for $335K from the bank post foreclosure. The place is in EXCELLENT shape.
.
Wait a year, the place will be worth $235K then.
Cool deal. So I assume he’s letting the first house he bought for $550K go into foreclosure. Better yet, he can rent it out for a year or so until the bank takes it back.
That’s the Miami strategy for sure Mike.
Have you seen all those small plastic stick in the ground curbside adds promising to help you stop making mortgage payments for 2 years?
Yes i am pisssed, for the next 2 years i will be throwing away my money on rent while a “homeownah” is stealing money from the bank…its not fair I’ll tell ya!
———————————
help you stop making mortgage payments for 2 years?
Give it time. It is to be expected that these little games would pop up.
Lord. That’s like the definition of “knife catcher”. What the heck is he thinking? Just keep doubling down?
He’ll be doing “buy and bail” on both the old homes? That’s great; hope the bank chokes on those 2, and then on the 335K home that he’ll bail on in another 2 years.
The sister-in-law did the buy and bail a year ago. Owed $240K on a house not worth $180K… sub-prime ARM heading to 10+%. She got a brand new house for $200K, 30 year fixed FHA at 5.5%.
Now the builder is selling her same model house for $130K.
She’s on the verge of walking from the new house and moving into an apartment.
Bwahahaha!! More proof that sometimes people get exactly what they deserve! (The bank, the builder, and your SIL.)
I don’t think your co-worker really “lost” $100k on the first house. It was probably never worth $350k in the first place otherwise he would have been able to sell it $350k and not $250k.
Borrows $100K from in-laws as down payment…
Thank god the in-laws got paid back!
Yes, good point there, lavi.
So, to encapsulate the Bush legacy:
Bush-ville?
W-ville?
Shrub-ville?
Victory-ville?
This suckers going down-ville?
The history books simply can’t be published until the Bush legacy phrase is established.
“You’re doing a heckuva job, Brownie”-ville
Shrub
“Dickey Boy” Cheney
Condi “Islam-Sha-Zam-Democracy”
Rummy “I can win x4 wars simultaneously”
Rove “all Evangelical voters are ours”
Clarence Thomas “read my lips”
Well, they all be able to pay cash $$$$$… for a better house than 97% of what most American’s call home…with the proceeds from their up and coming “My Legacy Best Seller” book…including cash paid appearances on Rash Limpbaughs & Sean inShannity disciple shows.
What does Jerry Springer pay these days?
-Rove “all Evangelical voters are ours”-
Guess again KarLyle. They’re pissed due to low-cost, no-cost symbolic BS like Terry Schiavo thrown at them for their support at the voting booth. Retardican “leaders” better come up with real policy instead of gimmicks.
“Guess again KarLyle. They’re pissed due to low-cost, no-cost symbolic BS like Terry Schiavo thrown at them for their support at the voting booth. Retardican “leaders” better come up with real policy instead of gimmicks.”
When we need more myopic mewlings from the Big Gov-teat sucking toady on the banks of the Squamscott, we’ll call ya, Excreter.
gimmicks, gimmicks and more gimmicks. That’s all they know.
I predict that at least one of them will post a confessional like the ones that came out after Watergate. Remember John Dean’s Blind Ambition? That kind of book.
Decider-ville, as in, “My cronies and I have decided to wreck this country’s prosperity.”
Bush-ville?
Why are you picking on the guy?
He’s a C student in a job that requires a A+ scholar.
That, in and of itself is an accomplishment.
He is an enigma. Not overly bright by appearance, but somehow managed to hold on for two terms.
His administration will probably go down in history as “WTF”
“Mission accomplished.”
Duh. What else?
Dutch bubble update:
Amsterdam homeprices declined 10% in november, with sales numbers declining 25%. This is the first serious price decline in the Netherlands after nearly 30 years of rising prices. The november prices reflect transactions from about August, so before the credit crisis really hit in Europe. Seems the higher segment of the market was hit significantly, which could explain the sudden -10% drop.
The realtors are silent about current numbers, but rumour has it that by end of 2008 sales numbers were down 40-50% compared to previous year. National homeprices are still holding up (minus 0.9% in november) but this spells trouble ahead. Seems like the train has finally left the station
“Seems like the train has finally left the station”
Congratulations! It had to happen at some point.
Yay! Champagne all around.
Seriously - it sounds like that’s a really good thing, and about time. It’ll be interesting to compare crashes with the U.S. and other areas, in terms of the velocity and depth.
I bet that our crash will be far slower thanks to government interference
Congratulations!
Let us know when the government mortgage insurance program goes bally up. This will be the moment of reckoning for Netherlands IMO, similar to the Bear Stearns fiasco in USA.
nhz: I thought you said that it is against the law for house prices to decrease in your country. What has changed?
Financial Times
Choices made in 2009 will shape the globe’s destiny
By Martin Wolf
Published: January 6 2009 19:27 | Last updated: January 6 2009 19:27
“Welcome to 2009. This is a year in which the fate of the world economy will be determined, maybe for generations. Some entertain hopes that we can restore the globally unbalanced economic growth of the middle years of this decade. They are wrong. Our choice is only over what will replace it. It is between a better balanced world economy and disintegration. That choice cannot be postponed. It must be made this year.
We are in the grip of the most significant global financial crisis for seven decades. As a result, the world has run out of creditworthy, large-scale, willing private borrowers. The alternative of relying on vast US fiscal deficits and expansion of central bank credit is a temporary – albeit necessary – expedient. But it will not deliver a durable return to growth. Fundamental changes are needed.”
Exactly. For the “paradox of thrift” argument, just who is it that is going to finance those “trillion dollar deficits for years” that President Obama sees? Americans will have to save for the government to spend, but that still leaves us living within our means as a country, with a 10 percent decline in the standard of living.
It’s really the paradigm of thrift, not a paradox at all.
When we start buying only what we can pay for, rather than buying what we will pay for next Tuesday, the entire game changes.
It is no wonder that the comic Popeye, which ridiculed the buy now - pay later mentality, came out in 1929.
Since today’s not Tuesday, it’s a good day for a hamburger.
Jan. 7 (Bloomberg) — Companies in the U.S. eliminated an estimated 693,000 jobs in December, the most since records began in 2001, a private report based on payroll data showed.
Marketwatch link -
http://www.marketwatch.com/news/story/ADP-shows-693000-jobs-lost/story.aspx?guid={11A2598F-2D9D-48D2-A934-144BA5E1BB9C}
“…693,000 jobs in December, the most since records began in 2001,…”
I heard a snippet in the news yesterday that so-and-so predicts this statistic will crest at 1m jobs before we are out of the woods…
Business Week article on wealthy Manhattanites about to learn about gravity:
“You’ve got a market where suddenly people don’t have the wealth they had before. Those who helped to build Wall Street to the stratosphere don’t know what their futures look like now,” said Rick Goodwin, publisher of Ultimate Homes and its parent publication Unique Homes.
Nearly 42 percent of the 259 Manhattan homes currently listed for $10 million or more were dumped on the market since September, according to StreetEasy.com, a New York City listings web site.
http://www.businessweek.com/ap/financialnews/D95HOPP00.htm
“Nearly 42 percent of the 259 Manhattan homes currently listed for $10 million or more were dumped on the market since September,…”
Is that number inordinately high? I see something similar in San Diego — 27 out of 57 MLS-listed homes priced above $10m (47%) were listed (dumped on the market?) since September.
‘”Up through the end of this summer, there were almost two markets in Manhattan, the high-end and everything else,” said Jonathan Miller, president and chief executive of Miller Samuel Inc., a real estate appraisal and consulting firm.
That all changed after Sept. 7 when the government seized control of Fannie Mae and Freddie Mac, the mortgage finance giants.
“People started thinking the high-end market is just as vulnerable as the rest,” Miller said.’
What could the seizures at Fannie and Freddie possibly have to do with the $10m+ NYC apartment market? Surely people were not using mortgages to buy homes in this price range???
Marketwatch - 693,000 private-sector jobs lost in December - far worse than expected. Ouch.
Stock market will still be up today.
Dang - mrktMaven beat me to it. Ignore.
(close thread)
“Stock market will still be up today.”
Packman —
I take it you have adopted a new mantra for 2009
BTB = Buy The Builders!
BWAAAAAHAHHAHAHHAHHHA!!!!!! cough, cough …(modified fpss)
Will their protection from on high continue under Obamanation?
I just don’t see the builders being protected, for several reasons:
1. There aren’t a lot of American full-time jobs there. Even the largest of the homebuilders only actually have about 5,000 people on payroll. The bulk of jobs are temporary and/or illegal immigrants.
2. A case can’t be made for homebuilders being a “necessary” component of the economy, like can be made for the car makers. There are dozens of large homebuilders, and literally thousands of small ones. There are only 3 large carmakers, and a couple of small ones - and look how hard it was for the car makers to get money.
3. A lot of people view the homebuilders as a big contributor to the mess, so they’re a lot less likely to get money vs. the auto makers. Yes the banks were also huge contributors and got tons of money, but they had the advantage of virtually holding our economy hostage. The homebuilders don’t have that pull.
I think the homebuilders are already getting their “bailout” in the form of more insanely-low interest rates. Many people think this will help them. I don’t, which is why I’m short.
Goody! I just lovvvvvvvvve your words.
Oh, btw, I hate builders. Really, really. I can’t remember if I’ve told you guys that once or twice?
*scratches head, trying to recall *
Yes. Heck I should just adopt it as a sig line.
To me the stock market is now emulating the housing market in 2005. Completely ignore all warning signs around, and float due to speculation.
In this case it’s worse because there isn’t an obvious bubble with in physical prices - they’re relatively flat since early November. However relative to everything else - employment, earnings, manufacturing, etc., stock prices have been absolutely soaring the last two months. I think this is due to speculation that there’s a recovery around the corner, which IMO is very incorrect. Perhaps it’s the “Obama hope” thing or something - I don’t know.
Disclaimer - I’m short on homebuilders, so I have a vested interest in at least that segment going down. I plan to get out on the next leg down though - I’ve had enough of this irrationality, and in the long run any shorting is dangerous due to the possibility of hyperinflation. It’s frustrating that no homebuilders have gone bankrupt yet actually, since they were at the leading edge of the curve and were in fact the direct contributors to the bubble, via the insane inventory.
Nice summation of the current situation, I’m in agreement.
This late fall/winter is a strange time for the nation. Politics is a distraction at this point. The heart of the matter appears to be that we have reached a point somewhat equal to the 1990-1 and 2001-2 recessions - if not in pure number terms at least in terms of the public conscience.
So, for 25 years now vast swaths of the nation have become conditioned to expect a recovery right about now. The next six months will be very, very interesting.
Good observation on the recovery time. I think that explains a lot of it actually.
Not many remember the doldrums of the 70’s and early 80’s, where we had 4 nasty recessions in a 13-year period, with the latter-two essentially being one long 3-year recession. The middle-age investors of today (e.g. me) may remember them but weren’t really affected by them financially. The ones that were affected financially are now retired, and have their money mostly in bonds, CD’s, or real estate - not equities. So the equity investors of today are only really familiar with the very short recessions of 1991 and 2002.
Oh I remember the doldrums of the 70s and early 80s and the recessions. Not fun times.
I remember my father being out of work a few times during the 70s & 80s. It seemed like all my friends dads were laid off at some point.
The article from Monday about people in Vegas having spent their entire career only knowing the upside can probably be applied to a lot of people. It seems all of the Gen-Ys I work with has the impression that recessions are short/trivial. That B-school might not be worth $100k right now doesn’t even register.
Don’t forget the inflation, circa 1973-1980……
True, there was wage inflation (sorta). The problem (as now) was that every year, the wage increase never seemed to quite make up for the increase in prices.
Gen X knows better. Unfortunately, we coped by becoming champion moochers, and with the Boomers heading for Brokeville, that gig might be up…
LOL, actually the wage inflation began in the mid to late seventies. Housing was early eighties.Obviously the oil embargo, in 1973, started the inflationary ball rolling. My father lost his job on Wall st. in 1974. Very similar time, to right now, brokerage house mergers and closings.
What piece of really good news could knock the wind out of the rally?
Oh, I think that the markets will generally do pretty well until after the inaguration. Then there will the realization that nothing has really changed: It doesn’t matter who is at the helm, we’re still up a creek without a paddle. And the deliverance music is playing…..
If you’ve been following Obama’s videos on Change.gov, you’ll note a recurring theme of “This economy’s in serious trouble, and it’s going to take a while to recover.”
So, if Barack himself is saying that it will be a while, I think we’d better listen up.
You know, that’s a good point in an objective discussion.
Going forward it’s probably good to remember that all this talk of a mid-2009 recovery is not really coming from the incoming adminstration proper - so much as it is coming from this motley crue:
- the NAR
- Bubblevision
- the Murdoch spider web
- retail
- desperate FBs
- the Boyz
- eCONomists
- politicians up for re-election in 2010
Speaking of 2010, Jeb knows Florida is skee-rooed. He has announced his intention NOT to run for Martinez’ seat.
Martinez is a REIC whore, in case anyone was wondering.
Oh, and Jeb rescinded the intangible property tax during the peak of the boom (but did nothing about the real property tax explosion), quietly, knowing full well that when the good times stopped rolling the gov’t would be broke.
JEB! is a REIC whore also. He’s a S. Florida developer.
All stopped-clock predictions occasionally miss.
Financial Times
Wall St falls on downbeat company news
By Alistair Gray in New York
Published: January 7 2009 13:57 | Last updated: January 7 2009 19:31
A fresh glut of downbeat corporate developments from diverse blue chips such as Alcoa, Time Warner and Intel conspired with a bleak labour market survey to push US stocks lower in their worst session of the year so far.
The market, which has enjoyed a reasonable start to 2009, slid from a two-month high after lower profit guidance and more job cuts from a series of bellwether companies heightened concerns that the year-long recession was deepening.
Since many people are critical of Obama’s economic plans (I see both sides, personally), what would you do if you were the ultimate ruler of the United States? Pretend you have all the power and don’t even have to deal with Congress. How would you handle the “crisis”?
1. What would you do about millions of people who are/will be unemployed in the next few years? Crime? How would you handle that?
2. What would you do about healthcare?
3. Social Security and Medicare?
4. What industries do you think should pick up where consumerism left off?
5. How would you handle private and public pension defaults (assuming insurance won’t be able to cover it)? What would you do with the workers who were promised (and worked for) benefits that are no longer there?
6. What would you do about housing?
More…
7. What would you do about taxes (income, sales, corporate, etc.)?
8. If you choose not to do anything (no public money, no deficit spending, a libertarian utopia), what would the outcome be, considering **real world** examples and human nature (not theory)?
Ignore all the lobbyist drooling for wasteful Keynesian stimulus and implement some of his original ideas. It appears he is being pigeon-holed into spending money on things that will not pay off.
Expand unemployment, food stamps, and widen healthcare. Let home prices fall to where people can afford them. Provide tax cuts to small businesses, middle, and lower income families. Stop funding failed ideas and failed businesses. Implement real free trade not one way trade. Get out of the way.
Crickets
Exactly measton. The knuts only have gimmicks to offer.
2. What would you do about healthcare? 3. Social Security and Medicare?
Social Security should be a pay as you go system, with no paying extra payroll taxes in exchange for future promises. The ratio of workers to beneficiaries should be set at 3 to 1, with people allowed to retire in age order as workers become available to support them. Whatever taxes they pay should be divided up, with no particular amount guaranteed.
Similarly, the govenrment should figure out what level of health care finance it can provide to everyone, permanently (no debt), and provide it to everyone. People would be allowed to spend more on their own — with no subsidy, counted as personal income. There would be a choice between a stripped down version of Medicare and federal subsidies for private insurance. Actual costs in Medicare would be used to determine the subsidy level for people at different ages and with different conditions. Copayments would be substantial, and adjusted for income.
Bottom line — if we can’t afford it for eveyone 20 years from now, we can’t afford it for those over 65 today.
4. What industries do you think should pick up where consumerism left off?
Investment in energy efficiency and alternatives. If the government imposed a tax on fossil fuels (higher on oil, because of the national security component) that rose as the price fell, keeping the consumer cost at the equivalent of (say) $90 per barrel, the private sector would seek alternatives and efficiency by itself.
5. How would you handle private and public pension defaults (assuming insurance won’t be able to cover it)? What would you do with the workers who were promised (and worked for) benefits that are no longer there?
Tough luck — you can live off Social Security, which is all most Americans will ever get, or keep working, which is what younger generations will be forced to do. In many cases pensions are a result of political power and deals, not working for it, with massive retroactive sweeteners put in during the last decade, with costs deferred to now. Those who get those pensions are no more deserving that our overpaid executives.
6. What would you do about housing?
Be thankful it is getting cheaper.
1. What would you do about millions of people who are/will be unemployed in the next few years?
The poor were told, in the mid-1990s, that they had to work for their benefits. How about that?
I think you are wrong about pensions.
To allow companies to declare bankruptcy to eliminate pensions for the worker bees while setting up their own pensions in bankrupt-proof trusts should not be allowed.
To allow the military to deny pensions & benefits to its retirees would be a huge mistake and result in a lot less people willing to defend our country.
Home mortgage interest rates @ 14+%
Rebuilt all the campgrounds & solar shower bathrooms in every County / State / National park in America
Use prison labor to cut & split free firewood…why sell it to Japan China for .003 cents per board foot?
Use prison labor to make tents for the homeless…like Jans pack does
Have a National…”turn-in-your-real-estate-license” …get $75.00 cash
$200.00 for a brokers license
wait there’s more…I’ll be back…need more coffee…
2. What would you do about healthcare?
Act 1: by making a National degree than no medical facility in America can charge more than .42 cents…for a single q-tip
Act 2: by making a National degree that if you receive a 2nd duplicate medical bill…you get the service for free.
Act 3: by making a National degree that any doctor making more than $500,000 dollars must live within 3 miles of the hospital.
“…What would you do with the workers who were promised (and worked for) benefits that are no longer there?”
Pay for a NRA membership…complete with a $100.00 first purchase cash rebate.
4. What industries do you think should pick up where consumerism left off?
Nationalize the mfg & production of cheap aspirin & wine & bottled mtn. spring water…No more food stamps…free “baked daily” bread…free navy bean soup (the kind they serve in the Congress lunchroom)…free orange juice..free avocado’s…free almonds…free milk…free honey…this is America!… the land of plenty…just ask Hank!
‘Have a National…”turn-in-your-real-estate-license” …get $75.00 cash
$200.00 for a brokers license’
LMAO!
“Crime? How would you handle that?”
Some criminals will solve their own problems when confronted with reality. Anyone remember Bud Dwyer’s exit?
en.wikipedia.org/wiki/Bud_dwyer
Cuyahoga County (Cleveland, OH) sheriff announced major release of prisoners; his budget is kaput! He says tough luck, citizens. Oh yeah, he just doubled the salary of one of his in laws….says he’s worth it.
I would print about $3 trillion out of thin air. Stimulus x 15. If your household make less than $10K a year(2007, 1040 reported income), you get $10K. If you make $10K to $40K, you get 1x your income. If you make over $40K, you get $40K - (income - $40K)x.05. Example. $100K income = $40 - .5x$60K = $10K.
If you have debt, the money goes to repay your debt. If you do not have debt, the money goes to you to compensate for lost purchasing power. If you have already walked from debt, the money goes to those debtors.
Healthcare: Tort reform. Instead of 51% of jury 51% convinced of liability, make it 66% of jury 66% convinced. Slice 15-20% of healthcare cost that currently goes to malpractice insurance.
Then set up non-profit healthcare funds to replace the current insurance model.
Social Security and Medicare:
Remove the cap on “contributions”. Make Social Security payments a flat payment regardless of your income or how much you paid in. Make the payment = full time, minimum wage job.
Medicare is fixed by healthcare fixes from above.
What replaces consumption??? We lock down the Wall Street Debt engine and make it harder for the U.S. to live on debt. This forces an exchange rate adjustment due to trade deficit. The trade deficit then becomes sefl-correcting as the dollar is devalued against foreign currienceis. Then we can return to mining, ag, and manufacturing.
Pension defaults???
Same thing we did for people that had WorldCom and Enron stock. Let them sue, and perhaps collect 1%.
You believing lies does not obligate the government to fulfill the promise.
Housing???
Let prices fall. Eventually all construction will stop, and we can start actually working off the excess inventory. There are atleast 5 million too many houses, maybe 10 million if we kick out the illegals. We don’t need to build a single new house for a good 8 years.
All the construction workers can operate the soup kitchens. We can buy up old apartments and turn them into public housing.
Just think when those construction workers march in Washington demanding…”Hire Americans FIRST”
And you are wrong about having too many houses in America….what you should say is we have 5 million wrong sized houses in America, we need to build nice 2 bedroom 1000 sq ft real starter houses.
Or find ways to immediately subdivide those 3000sq ft McMansions into 2 or3 right sized apartments.
——————————————————-
There are atleast 5 million too many houses, maybe 10 million if we kick out the illegals
“There are atleast 5 million too many houses, maybe 10 million if we kick out the illegals”
Add another 20 million in second homes.
Hey, hands off my tumbling-down shack! So, is it a 2nd home if I own it (not da bank), while renting main abode? OK, guilty … sort of.
“And you are wrong about having too many houses in America….what you should say is we have 5 million wrong sized houses in America, we need to build nice 2 bedroom 1000 sq ft real starter houses.”
100 million households growing at 1% per year = 1 million new households per year.
We were building, on average, 1.4 houses per year from 1980 on. Some were tear downs and condemed and cush, but still, we were adding 1.2-1.3 million new houses to the housing supply. The result is 5 million more hoeses that the citizens need. But no problem, we have 30 million illegals in 5 million household occupying those houses.
The problem is that from 2002 to 2007 we added over 12 million houses in those 7 years. 5 million too many houses.
Yes, many of those houses are, as you say, wrong sized. But, if we build more small houses and sub-divide the big houses into multi-unit housing, it just adds more and more units to an already horridly oversupplied market!
We’re not going to build new, small houses. We’re not going to sub-divide the big houses. There is too much supply, so neither of those solutions will do anything.
What is going to happen is that prices will keep falling in the overbuilt areas like LV and PHX until that $600K false bubble-price, 3000 sqft, 5 bedroom+bonus room, McMansion that cost $400K to build, is selling for $150K-$200K where the average household can afford it. Then ALL construction stops in these horridly overbuilt markets.
Possibly Darrell:
So what about First time home buyers that cant afford $500-600-700 summer electric bills for the McMansions in LV and Phoenix?
I doubt you would want to zone off 3-4 never used bedrooms with no ac for the summer.
At that rate even $150K is too much money when you add in the cooling costs per month.
“So what about First time home buyers that cant afford $500-600-700 summer electric bills for the McMansions in LV and Phoenix?”
1) The first time home buyers will pick up my 1800 sqft for $50K while I move to the 3000 sqft McMansion for $150K.
2) evap cooler, heavy insulation, heavy curtains, solar water heater.
3) We save up the money in winter when we have <$50 a month heating bills. Costs me more to heat my water and run my oven than to heat my house.
4) If your house payment is 25% or less of gross income, they can afford the elec bills.
I guess i am used to a 2 fam house. Grew up in them till i was 18 and went to college. Live in one now great old time landlord
My father was a bricklayer and he survived the winters and lean times having a tenant’s rent coming in each month…..
Why do we all have to be white trash? Cant some of us make a ton of money and buy the good stuff?
Healthcare: Tort reform. Instead of 51% of jury 51% convinced of liability, make it 66% of jury 66% convinced. Slice 15-20% of healthcare cost that currently goes to malpractice insurance.
Nothing like rewarding the incompetent doctors.
The first thing to do would be to unhide all of those hidden settlements and analyze the costs. You might find that the insurance industry are the ones making the money and not the people who sue doctors. They did something like this in Tennessee a few years ago. Texas passed a medical tort reform a few years ago and capped the amount you can sue for(not inflation adjusted). Luckily, medical cost dove after this law was enacted (sarcasm - the costs did not go down at all).
You didn’t mention anything about one of the strongest unions in the country - the AMA. For a start, allowing more colleges to offer medical degree just might lower the amount of money it costs to go to med school. Things like making more drugs prescription-free, etc.
Agree with this, Skip. IMHO, if a doctor takes the good kidney instead of the cancerous kidney (for example), he/she should be sued and put out of business.
Medicine is different from most other occupations, as a mistake can easily have life-or-death consequences. Too many doctors are arrogant and unwilling to listen to anyone else — the patient, patient’s family/representatives, nurses or other hospital staff, etc. — who might be trying to prevent a mistake.
If a doctor makes too many mistakes, he/she should not be practicing medicine. Get rid of the bad doctors and hospital administrators and you will have far fewer malpractice lawsuits.
You’ll never get rid of malpractice if AMA is allowed to shield those doctors who have gotten dozens of claims. If you talk to the tort lawyers, they will freely tell you that they keep suing the same people over and over again–but the AMA refuses to deboard physicians in almost all cases. Bring in some outside oversight. The self-dealing needs to stop.
If bus drivers were responsible for discipline, there would never be another preventable accident. >:-D
Oh, and Consumer Reports revealed in 2008 that high pay for doctors (which has exploded in the 2000’s) is more than twice the factor that malpractice insurance is in high healthcare costs.
Add to that the 15 to 20% that goes to insurance companies for administrative costs and profit. With a single (not for profit) payer, that chunk could be eliminated as well.
BTW, it’s up to the individual state boards of professional regulation to yank the licenses of unqualified doctors.
“I would print about $3 trillion out of thin air. Stimulus x 15. If your household make less than $10K a year(2007, 1040 reported income), you get $10K. If you make $10K to $40K, you get 1x your income. If you make over $40K, you get $40K - (income - $40K)x.05. Example. $100K income = $40 - .5x$60K = $10K.”
You forgot “advance to nearest utility and pay owner 10x amount shown on dice….”
Mostly, I agree Darrell. I would have more gov’t run medical schools and have doctors work off their schooling.
If they do make you pay FICA for every dollar earned, then I would increase the amount of working years needed to collect and increase the maximum monthly benefit and decrease the minimum monthly benefit. Then I’m fine with it.
The first thing that needs to be done as “dictator for a year” is the immediate cutting of all taxes. Why tax if the government has the power to print money? The effect of this move is a huge reduction in the amount of overhead we experience as a country along with the removal of a huge barrier to entry.
Then I would start broadcasting the history of the constitution, natural rights, freedom, an the effects of central banking on the TV to “wake up the idiots who have been fed BS for their whole life” so that they do not riot when other programs are cut.
Then withdraw from all foreign entanglements bringing the troops home. These two changes could save our economy $2-3T.
Remove all of the red-tape, labor laws, and every unconstitutional federal program and you would open up the free market to be more productive.
Then I would have the population sign a petition to save social security and medicare. Everyone who signs pays the 15% tax (those already receiving the benefits cannot sign). I figure if you are willing to force others the pay the tax, then you can have no moral objection to me forcing you. The money these people have “volunteered” will be used to ween the most needy off of social security.
Arrest and imprison the top 5% of the banking industry and outlaw fractional reserve lending. End all subsidies of any sort.
Government spending is about 3T per year and Obama wants to make it closer to 4T mean while US GDP is 13.5T and falling. Once you realize that GDP includes “non production” activities such as “paying yourself rent for the home you own” and other hedonistic measures to artificially inflate it you will see that government spending is approaching 33-40% of everything we produce as a country and growing.
A strong leader would teach the people because an ignorant population will quickly enslave itself again.
I like this…
+1 on pretty much everything.
“wake up the idiots who have been fed BS for their whole life”
You mean “PBS”.
PBS as the feeders, or the feedees?
Sounds like a good way to turn American into Soylent Green, as written by Charles Dickens.
ie, bring back slavery. And why let some Mexican or Pakistani child huff toxic glue in a Nike factory when we can do the same at home?
—
Remove all of the red-tape, labor laws, and every unconstitutional federal program and you would open up the free market to be more productive.
A strong leader would teach the people because an ignorant population will quickly enslave itself again.
—
In other words, you have learned nothing from the fall of Communism.
A 13 year old should be free to learn a trade and enter the work force. If you are so concerned about slavery why do you enslave young adults with arbitrary restrictions on what they can and cannot do.
Study your history and you will learn that the free market did away with child “slavery” simply by raising the standard of living for everyone. Your government is sending us right back into poverty where parents must get their children to work just so that they do not starve. Good plan there…
You find a child working against their will then you can help them. But don’t deny those industrious children the opportunity to do something productive with their time (particularly those who have moved beyond puberty).
Only partially right.
http://en.wikipedia.org/wiki/Child_labor
Without workers rights, we go right back Upton Sinclair’s “The Jungle.”
http://en.wikipedia.org/wiki/Upton_sinclair
VT Dan, kids who are 13 DO have a job already. It’s called SCHOOL. You technically can’t drop out until you’re 16. They are allowed to enter the workforce when they are 16, which is young enough. Many kids aren’t even done growing yet!
Most school districts have vocational training for the 15-18 year olds right in the school, or they’ll bus you to the vocational school.
War.
Free? did someone say free? I am all about that? Where do
I sign up?
You might get something but there ain’t no free - NRBQ
What do we need to do about health care? First of all, I think we need to get over the idea that health care needs to be centered around going to the doctor.
Why? Because a lot of what ails us doesn’t need doctoring. Remember Eric Heiden? The Olympic speed skating champion at the 1980 Games?
Well, Eric went on to medical school, and he recently co-authored a book called Faster, Better, Stronger. It’s about health and fitness. In it, Eric and his co-author say that 10% to 25% of our physical wellbeing is based on our genes. Meaning that 75% to 90% is based on how we live our lives.
In short, much of what we call “health” is up to us. Not the doctors.
Okay, back to the top. Going to the doctor. The not-so-nice truth is that doctors aren’t needed for a lot of health care tasks. Did you know that 85% of what a doctor does can also be done by a nurse?
So, instead of going to the doctor, why not go to a nurse practitioner? Or, for that matter, a physician assistant? That’s what I do. And her practice is based on you doing what you can for yourself (we’re talking, diet, exercise, rest, social interactions and other things of a non-medical sort here) rather than running for her to get a prescription for this, that, and the other thing.
One step Congress could take would be to repeal the Food and Drug Act. Right now this gives a legal monopoly to doctors to prescribe most drugs, even simple ones who should be capable of being self-prescribed by well-informed consumers.
I take simple blood-pressure medications. These cost $4/month most places. Why should I have to rack up a big office-visit bill just to have the doc scribble an annual renewal for me?
The prescribing of drugs by doctors is probably the only government-enforced monopoly of its kind. Even lawyers step back from such things. They may be ill-advised, but private non-lawyers may represent themselves in the courts of this country.
The solution is simple: make ALL drugs non-prescription.
WHAAAAAT??? Can you even begin to imagine the harm that would be done by people self-diagnosing and prescribing? !!!
Why, the Viagra/Cialis/Levitra market ALONE would result in millions of emergency room visits.
Not if there was no emergency room. Lets return to the 1840’s, only we get to keep our laptops. I think I am moving to Brazil.
Elanor,
Yes there could be harm done. But you have not addressed my point.
Why should THE GOVERNMENT make it a legally-binding monopoly of doctors only being able to let you have access to drugs?
How would you feel if the lawyers did the same thing? How would you like a length JAIL SENTANCE for doing your own taxes, or writing your own will, or pursuing your own small claims action?
Most people should and would continue to see a doctor about drug use. But why should the government get involved?
Dennis, who’s going to regulate the pharmaceutical industry if the gubmint doesn’t? Without an FDA, what’s to stop the use and abuse of substances that are currently at least kept somewhat safe by regulation?
Or are you one of them thar ultra-libertarians just tryin’ to yank my chain?
Elanor, you clearly do not understand that the FDA is in the pocket of the big pharmaceutical industry and is used as a tool against cheaper, safer, healthier, patent-free alternatives. Just like the big bankers go back and forth between the treasury, big phama does the same with FDA.
The FDA “outlaws” fruits that have been eaten in Africa for 1000’s of years and have the ability to turn “sour” into the best “sweet” anyone has ever tasted and still be “sugar free”.
All you need to keep industry honest is to hold the drug companies responsible for the consequences of using their products. A couple of law suits over falsely advertised products and companies would be set straight real quick.
VTDan, my husband works in the pharmaceutical industry. I’m a doctor. I am reasonably well versed on the FDA as well as its many differences from its European and Asian counterparts.
There have been plenty of lawsuits over medical products. They have made the industry more cautious about certain claims, but they clearly have not stemmed the tide of new money-making products coming out of Big Pharma. As long as there is big money to be made, any given industry will continue to pursue profit. The drug industry is not so different from the financial industry in that regard. And look where THAT has gotten us.
An annual renewal? you’re lucky. I’m on a simple bp med and cholesterol med. Every three months it’s blood test and dr.s visist for renewal. I hate it.
Our “health industry” is really more of a “sickness industry”. Lots of money to be made by treating chronic conditions but very little money to be made by prevention. It’s sick.
So many in the medical field laugh at herbal remedies and say they don’t do anything. Here’s a contradiction: When I offered a relative on chemotherapy some non-traditional (herbal) suggestions for alleviating her side effects, her doctor vetoed it, saying two contradictory statements:
1)Don’t take it, it could counteract the helpful effects of the chemo drug And:
2)Besides, herbal remedies have no effect
How can something that “has no effect” also be potent enough to cancel out the actions of very strong and expensive chemotherapy drugs?
I am not making this up - the doctor made both of these contradictory statements.
I bet I know what herb you were offering.
Umm… because some of those “safe, natural herbal remedies” are known to destroy liver function or to interfere with common blood pressure drugs.
Not all of them, of course–some herbs really do indeed do nothing (including all true “homeopathic” remedies, unless you believe that “vibrations” from non-existant molecules can magically cure disease)–but there are quite a few poisonous nostrums floating around out there.
To wit:
kava kava. Used as a relaxant and anti-depressant. It WILL destroy your liver.
Apricot pits aka Laetrile. Contains cyanide. Once an experimental treatment for cancer (works in vitro, not in vivo), banned in US for decades. Any amount of cyanide destroys cell respiration. Enough WILL kill you.
St. John’s Wort. Mild antidepressant. Shown not to help major depression. Also interferes with other drugs (always consult pharmacist before taking this one).
Kale. Very good for you. Messes with drug thinners like warfarin. Could cause uncontrolled bleeding. (Yes, even food can hurt you if it conflicts with your meds.)
Vitamin C. Human beings must consume vitamin C regularly to prevent scurvy. Mega-dosing is pointless because the body will simply shed excess amounts in urine. Mega-dosing may be implicated in urinary cancer. Even mildly elevated levels of C (aka 300% RDA) have NOT been proven to prevent colds.
ma huang aka “herbal meth”-stimulant, similar to caffeine. causes heart palpitations when combined with caffeine. Implicated in over a dozen US deaths since its sale was legalized by DSHEA.
so 6 out of several thousand are bad. How about a list of what works, start with the B’s, omegas and CoQ10.
This is my favorite snake oil story
per MDanderson web site
Background: PC-SPES® is an herbal combination product that was produced and marketed until early 2002 by BotanicLab, Inc., for the treatment of prostate cancer. The initials “PC” stand for “prostate cancer” and “spes” is Latin for hope.
A study published in the September 2002 issue of the Journal of the National Cancer Institute analyzed lots of PC-SPES® manufactured between 1996 and 2001. This evaluation found variable ingredients in PC-SPES® between lots, with higher levels of indomethacin and DES after 1999. These post-1999 samples were found to have much greater estrogenic properties compared to earlier samples, and to possess a higher level of activity against prostate cell lines in laboratory tests. After 2001, greater amounts of the natural constituents licochalcone A and baicalin, as well as warfarin, were found in samples. These results suggest that PC-SPES® produced at different times may not be equivalent or comparable, and that the “anti-cancer” effects of PC-SPES® may have been due to undeclared prescription drug ingredients.
Bottom line is Chinese company ground up weeds, added some drugs like DES that are known to help prostate cancer, then added warfarin to help prevent the blood clots that occur with DES. This was dangerous and expensive for patients.
Vitamin C works great for me. The point about vitamin C being water soluble is a non sequitur as their are many vitamins that require daily intake to maintain health(eg all Vitamin Bs).
Its not really debatable that people who eat fresh vegetables and fruits are healthier than those that don’t. The debate should be over whether or not supplements can provide the same benefits.
The thing to remember is that 100% of RDA is really a minimum, not an average or maximum.
I would also add that putting the raw sappy insides from an Aloe vera plant on sunburns is the best thing you can do.
Far superior to anything you can get at a pharmacy.
The aging of the baby boom generation will likely result in vast new experience/data regarding the effects of diet, vitamins, supplements, etc. on chronic conditions. Food absolutely affects people’s health, and herbs are basically just nutrient-rich foods. Many of today’s modern medicines are based on synthetic versions of alkaloids found in plants. Pharmaceutical companies want us all to be very afraid of the things that we can grow in our gardens. But I also agree with the skeptics that there are a lot of money-hungry charlatans out there who’ll be happy to sell you expensive false promises.
Yea, I tried to sell some snake oil to a neighbor suffering from cancer. Two people I met on the internet told me the stuff could cure cancer and showed me before and after pictures. My neighbors doctor told them that the stuff might be dangerous. How could he know? He’s never tasted it. The stuff was a bargain only $1000 bucks a vial. You know it’s good it came from China. All I know is I trust my internet herbalists and drug companies over government, science, and MD’s?????
When a society is more fixated on health insurance than health it is a very sick society. But, hey, religion for consciousness, emotion for science, security instead of freedom - it’s all the same.
Most everybody’s hell-bent on eiher becoming a serf or a communist.
PA’s need to work under a Doctor and you get billed the same. NPR’s do not , but the ins. is still astronomical. It’s the insurances that are making costs high. Malpractice and billing costs. Tort reform is needed, lawyers are not.
Good old-fashioned trust-busting. Prevent any one company from creating either a vertical or horizontal monopoly for any one industry — banking, food processing, media.
Agriculturally, stop subsidizing the Big 5 crops (soy wheat rice corn cotton). Those subsidies should instead be directed toward labor-intensive vegetables and high-quality meat and dairy. Keep perishable food regionally based to cut down on travel, cut risk of nationwide outbreaks of e coli, and limit company size.
+ a million for this advice.
Of course, busting the Monsanto/ConAgra/Cargill trust would require epic will. Also, body armor for anyone who tries it.
Obama appointed former Iowa governor Tom Vilsack as Ag Secretary. Vilsack is mostly progressive, but he’s eyebrow-deep in corn kernals, and is fairly cozy with Monsanto. (it’s the only way to come to power in Iowa). The liberals are anstsy, but cautiously optimistic, about this pick. Will Obama set the policy for Vilsack to follow, or will Vilsack just ask his old buddies write legislation for him?
We have plenty of physcial food already. The problems are in distribution and the profit margin.
I wait anxiously to find out which way Obama’s food policy will go: local control, or Big Agra?
+1
With the added benefit of composting food waste locally for composted fertilizer rather than petroleum based fertilizer and reducing waste for landfills and off-shore dumping.
I just discovered that “asparagus” means sprout in Greek.
Asparagus Maximus is my full name.
Mrs. Maximus shortens it to ‘Gus’ sometimes. A lot times shortens it to ‘Ass’.
it is such a fuss
to pronouce
‘With the added benefit of composting food waste locally for composted fertilizer ‘
Thurston co. WA, where I live, has started a program to do this, which I think is great. The county budget’s so bad, though, that I worry they’ll drop it. Why, they blamed budget constraints for the reason they recently took all the giant recycling bins away down at the Island Market, at the base of the peninsula I live on, which displeased me greatly as a lot of the glass, metal, cardboard and paper that used to go in there will now end up in landfills. Or else tossed on the road.
It’s still a LOT better than in Utarr. I was there at my mom’s for Christmas and it was difficult for me to see all the glass, plastics and paper that ended up in the trash. Where she lives, and where I grew up, in remote rural Utarr, there just is no recycling program to speak of, besides a big bin for newspapers here and there at a shopping center. “Conserve? Recycle? We don’t need no stinkin’ recycling! Sweet Baby Jeebus will come clean up everything if we pray hard enough! And then give us new stuff!”
So, have they caught on to the fact that they must not be prayin’ hard enough yet?
‘So, have they caught on to the fact that they must not be prayin’ hard enough yet?’
Nope. *shakes fluffy Olyhead sadly * So I guess I should start praying that them Utarrens stop being so dadblastid stupid.
+100
This is the biggest problem Capitalism faces. It works great when there are 100’s of companies fighting for you business. When it gets down to 3-4 it’s just too easy to manipulate the market, the gov, and smash any small start up. We should separate content and delivery. ie Utilities can’t own transmission wires, another highly regulated company will own transmission, and then anyone who wants to sell power can pay to transmit it over the system if they meet quality standards. Same with telephone, cable, nat gas, rail, ect. How great would it be if you could buy access to one or two stations on cable, and all stations had to compete. Ben could start his own 24 hour a day housingbubble channel.
It’s all been tried within my lifetime and it always reverts back to the mean… money buying it all back and re-centralizing and monopolizing it.
That’s the real “free” market. Free to screw you over.
Exactly. And this is why I favor government ownership or control/regulation over all basic necessities and finite natural resources…and the government must be fully accountable to the public.
No “closed door” sessions or back-office agreements. Every transaction and every rule must be transparent to the citizens who can overturn what the government does with a 70% vote (or something like that).
Also agree that the medical/healthcare industry is designed to profit only when people are sick. There is no profit incentive to make people well, and there is no incentive to come up with remedies that cannot be monopolized.
I don’t know what you can do about healthcare anymore. 1 surgery, 5 days in hospital and the bill is $83K - that is just the hospital. What gets interesting is insurance only pays $20K, I pay $2K (left over on $4K maximum out of pocket) and the hospital eats the other $60K. Absurd on so many levels.
The hospital never expected to get $83K. They’ll be satisfied with their $22K. What makes no sense at all is that someone without insurance would be hounded for the full $83K. That’s absurd.
A few years ago, I had a root canal. I have no insurance, but received a cash discount. The grand total for my procedure was less than the co-pay for my neighbors root canal. Methinks that bills are jacked up intentionally when insurance is involved.
Medical billing is a joke. I know of no other business that can bill 500% over what they will accept except Garage Sales and Swap Meets.
lots of mistakes, too. I know a guy who was in the hospital for an extended stay and ended up getting so many bills it was impossible to keep track. One of them was for the removal of an ovarian cyst. You can bet he protested about that one!
…what would you do if you were the ultimate ruler of the United States?
In no particular order:
Legalize and tax recreational drugs, dismantle the DEA and use the resultant funds to pay for rehab and education (Only part of drug enforcement I would keep would be keeping drugs from kids)
Tax gasoline up to $3/gal (if gas is 2.50, fed tax is .50) and use the proceeds to get US off foreign oil as quickly and sustainably as possible.
Revamp patent and copyright laws so they can no longer be used by patent firms and the entertainment industries to stop innovation that threatens their business models.
+ 1,000,000,000,000,000
Esp. the patent and copyright part.
I have a very simple plan:
1. Jubilee (general debt cancellation);
2. Abolish the Federal Reserve;
3. Free mintage of gold and/or silver at the US mint;
4. Abolish every Federal entity and tax not mentioned explicitly in the Constitution.
5. Pick Representatives by lot from the public.
6. States appoint Senators.
7. Explicit recognition of the right of secession by any state or portion thereof that wishes no longer to be part of the USA.
This would go a long way towards (re-)establishing liberty.
The seeds for this bitter harvest were planted with the LTCM bailout back in 1998. Now there are far too many too-big-to-fail hedge funds to work out special backroom rescue plans for all of them.
SD Union Tribune Business Section
‘Horrific’ year for almost all who invested in hedge funds
By Ellen Nakashima
2:00 a.m. January 7, 2009
Hedge funds, the highflying darlings of the investment industry, have fallen to earth. These funds meant for sophisticated, rich investors just endured their worst year ever.
The industry was down 18.5 percent as of November after an unprecedented six-month streak of losses. The amount of money the hedge funds had to invest, which peaked at almost $2 trillion in June, shrank by almost one-fifth by October, according to Chicago-based Hedge Fund Research. Some fund managers say the industry’s capital could shrink by as much as 75 percent.
Tens of billions of dollars are being pulled out of these secretive funds by nervous investors who seek to put their money in safer alternatives or need cash to meet other investment obligations.
The wild swings in the stock market last year were due in part to hedge funds selling assets to meet redemption requests and to reduce leverage levels, analysts said.
The past 12 months have been “an indescribably horrific year, and everything’s been down,” said Robert Dennis, investment director of the Massachusetts Public Employee Retirement Administration Commission, which oversees municipal pension funds, a number of which have invested in hedge funds. “This year is to be written off as a horror movie to be seen once and never again.”
Once predators on the margins of the market, hedge funds have grown into integral participants. Now they are under enormous stress. Congressional hearings have highlighted their potential to put the global financial system at risk through excessive use of debt to finance investments and through extensive links with banks and other large financial institutions.
More and more pension funds and college endowments have been investing in hedge funds, and pressure is mounting for regulation of the funds.
“We’ve been living on borrowed time in that the industry has grown far more rapidly than we’ve been able to support with the existing legal, regulatory and investment infrastructure,” said Andrew Lo, director of the Massachusetts Institute of Technology’s Laboratory for Financial Engineering.
…
“Hedge funds were . . . an integral part of the bubble,” said George Soros, one of the world’s wealthiest and most prominent hedge fund managers, in testimony to Congress last fall. “But the bubble has now burst, and hedge funds will be decimated.”
I wonder if that smug “HedgeFundAnalyst” still lurks here…
If he were here, I am sure he would be saying now is the time to buy stocks, and I would have to agree with him, given how many overleveraged underhedged funds are dumping them!
–
Home prices declining at the fastest rate in years
The YoY Price Change as per Radar Logic PPSF data:
SanFran, -36%
LasVegas, -33%
Phoenix, -33%
LosAngeles, -29%
SanDiego, -29%
SanJose, -28%
Miami -26%
Tampa, -21%
25 Composite (the US) -21%
Chicago, -15%
Seattle -12%
Jas
Brace for impact!
There ought to be enough data by now to derive the decay time constant and do a logarithmic extrapolation on this, or do we have to wait until acceleration turns negative?
Hasn’t the second derivative already turned negative?
Last time I checked, the second derivative was zero for the SD price graph, and it has been stuck there since May 2007. However, the first derivative is steeply negative (PPSF dropping by $0.23/day).
I guess I was thinking in double negatives. Can’t predict the trajectory until declines start to decelorate. Jas says they are still accelerating.
Up here in NY, things are simply frozen.
I made my hapless wife eyeball the Radar Logic price chart for San Diego last night. She commented that it looks like a volcano…
DJ, please accept my apologies. I have a job idea for you: video depositions.
It pays decent, and would combine your legal/tech skills.
Thanks already talked about that…..the biggest company in nyc Fink didn’t want to hire me because they were scared i might give the law firms my resume and want to become a Paralegal again.
geez I never win anymore….no matter what i say I Lose
Its hell being smart in America
I posted this last night, but I think it got buried at the bottom of the bits bucket.
January 2009
The art market bubble
http://www.newcriterion.com/articles.cfm/The-art-market-bubble-3978
Excerpts, the first quote is the juiciest:
What’s the silliest thing you have heard in the past year or two? Take your time. Our candidate comes from Tobias Meyer, Sotheby’s head of contemporary art, who declared in 2007 that “the best art is the most expensive because the market is so smart.”
…
Ivanishvili and others like him “didn’t simply shove their wealth into contemporary art, they imported the strategies of financial investment into art collecting.”
…
Just last June, the excellent Tobias Meyer informed the public that the art market goes in only one direction: up. “For the first time since 1914,” he said, “we are in a non-cyclical market.” Tulips, anyone?
Another bubble is brewing – bonds
By Edward Chancellor
Published: January 4 2009
“…A common feature of great bubbles is that they enjoy the support of the authorities. In 1720, the public acquired shares in the South Sea Company secure in the knowledge that the bubble was promoted by the government of the day.
Today’s bond buyers place their faith in Ben Bernanke. The Fed chairman has long made it clear he sees low long-term rates as a tool for combating deflation. In December, the Fed announced it was considering purchasing government bonds. Just as the “Greenspan put” emboldened stock speculators a decade ago, the “Bernanke put” has placed an apparent floor under the market for Treasuries.
The deflation story that drives the current bond bubble is more plausible than the dotcom pipe-dreams of yesteryear. Deflation is sparked by a combination of bank losses and tighter lending standards, increasing risk aversion and a rise in the demand for money, falling household consumption and higher savings, together with mounting unemployment and a widening output gap. All these conditions pertain today. If this crisis were left to its own devices, the result would likely be a pronounced and prolonged decline in the price level as occurred in the early 1930s.
However, the authorities are not standing by idly. Instead, the Fed is bolstering the credit markets in numerous ways and has cut short-term rates to near zero. Some $7,200bn (£4,930bn, €5,150bn) has been pledged to support the US financial system, of which $2,600bn has already been spent. Although bank lending is currently stagnant, the monetary base climbed by 775 per cent in the year to November. …”
http://www.ft.com/cms/s/0/051482b2-d903-11dd-ab5f-000077b07658,s01=1.html
Comparing the Bond market to the South Sea Company and the Dotcom bubble is probably appropriate, but it strikes me as a funny. “Today’s bond buyers place their faith in Ben Bernanke.” The US bond salvation appears to be a general debasement of all currencies across the world.
I’m in treasuries for one thing and one thing only. I do not trust anything else. So what is I lose 5% in treasuries (which I more than gained in the last 1.5 years). I’m still WAY ahead of where I would be if my money was ANYWHERE else that I have available in my 401(k).
Return OF Investment, not Return ON Investment.
Well yes. But keep in mind that bottoms are as hard to call as tops. And while avoiding buying at the top of the market is critical, trying to buy at the exact bottom is less so.
But buying only half or a third of the way through the correction is almost as bad as buying at the exact top.
Duying NASDAQ at 5000 in 2000 would have been bad, but buying at 3500 six months later would not have been much better when the eventual bottom was at 1200 2 years after that.
We’re only half-way through the residential real estate collapse, the commercial collapse is just getting started, and the upcoming corporate and personal bankruptcies is going to be Biblical in scale.
We’re SOOOO far from being near the exact bottom…. Besides, there is a “not exact bottom” on both sides of the bottom. So, let’s say I’m wrong in my expectation of atleast 50% further to fall. Let’s say it is only 20% below the November lows. Okay, so 2-3 years from now, when we’re right back HERE!!!! I buy. That is the same as buying here, right?
Sorry, but there is FAR too much pain yet to come for me to be the slightest bit worried about missing the bottom. I’ve missed a 40% drop so far, so don’t fell in any rush to “get back my losses”. No losses for me, thanks.
“…All these conditions pertain today.”
Hozzy, ou’re in a close 2nd place position for this weeks…Eyeore Award!
Somebody get Mr. Bear a Happy Camper t-shirt… include a picture of Goldilocks bending over showing her bottom…like the Coppertone sun lotion girl.
Hey Hoz, does this mean you’ve changed your mind about TIPS?
HBO buys exclusive rights to the Presidential inauguration.
Put it on par with a football game. Are loosers like me who don’t subscribe be blacked out? (no pun intended)
Who owns the franchise on the President anyway, that could sell it to HBO?
Does that mean you can’t watch it if you don’t get HBO?
It’s not the inaguration, it’s a concert. The inaguration will be on every channel just as normal.
That makes more sense.
anything you can do i can do better…
http://www.nytimes.com/2009/01/08/business/worldbusiness/08satyam.html?ref=technology
Jas, thanks for your reminder that whatever missteps happen in the US are copied verbatim in India sooner or later.
Last week, I briefly broached the topic of the current recession with an Indian academic economist. His response was to quote Chaos Theory, in effect claiming that nothing can be predicted over the long term. Now I respect him a lot for reasons other than his mastery of economics, but it was a reminder to me how academia is truly an ivory tower.
The correct branch of mathematics to study the current state of the economy is Game Theory.
The correct branch of mathematics to study the current state of the economy is Game Theory.
—————————————————————–
I would go with Chaos Theory.
Try catastrophe theory.
Chaos Theory is the same as Technical analysis. The future can be derived from the past.
I would go with Quantum game theory.
Benoit Mandelbrot wrote a great book on fractals and the stock market. It basically put the lie to that “six sigma” crap. Six sigma doesn’t make any sense if you’re having six sigma events on top of each other. Mandelbrot, starting with cotton futures, shows you why. Neat stuff.
Ha, Russia was just a target for setting the “sight”…
Next target: India!
(But only after they have created a National hedgefungus named: “Long Term Rupee Management” :-
http://en.wikipedia.org/wiki/Tunguska_event)
Mr. Raju said Wednesday that 50.4 billion rupees, or $1.04 billion, of the 53.6 billion rupees in cash and bank loans the company listed in assets for its second quarter, which ended in September, were nonexistent.
…
Satyam serves as the back office for some of the largest banks, manufacturers, health care and media companies in the world, handling everything from computer systems to customer service. Clients have included General Electric, General Motors, Nestlé and the United States government. In some cases, Satyam is even responsible for clients’ finances and accounting.
HAHAHAHAHAHAH.
Who DIDN’T cook their books?!
Level 3 assets anyone?
“Right now, as of today, I would rather buy a basket of oversold industrial commodities than gold”
Mr. Marc Faber Jan 7, 2008
I humbly agree with Mr. Faber. The next best opportunity may unfortunately be gold. Private Aladin Sane, where are you? This is your moment to shine. lol
He’s on an evangelical mission in the remote mountains of Mexico. It will be a sequel to “Mosquito Coast”.
I’m confused…should that date have been 2009 (today) or was it one year ago?
2009
still living in the past. lol
Oh, I thought we were just laughling at idiot prognistications from the past.
A vacuous statement.
I would also love to buy a basket of OVERSOLD anything rather than Gold. Problem is, how do I know what is oversold?
Oversold commodities are easy to determine.
The cost of production is greater than the cost of the finished product. Molybdenum, cobalt, rare earth metals etc. Perhaps Sprott’s Molybdenum fund (MLY on Toronto exchange) or other obscure metal fund.
Like all burst bubbles, an overshoot on the downside. Throw out the good with the bad.
Unless deflation sets in and cost of production falls.
I’d be a little a’scared that the reported production costs were based on peak oil price and peak transportation cost, and peak production that leaned heavily on marginal sources.
How many companies will produce at a loss due to a fear of the shut down and start up costs.
“Aladin Sane, where are you? This is your moment to shine. ”
Not totally. Remember all the Mezzcans and Evangs that were going to use handcannons to kill everyone for water?
He may have some investor merit, but his social predictions were, um, insane.
Not that I’m defending those predictions, but I think even aladin would state that the time for such things isn’t here yet. The worst of the GD didn’t really start until about 3-4 years after the initial stock market crash. We still have low unemployment historically. If we hit 15-20% - that’s when the crap would hit the fan.
Aladin’s mistake was to bail when he saw everyone buying guns and thinking it was because they were doing it because of the coming armageddon, when in reality it’s just in anticipation of Obama restrictions.
‘…everyone buying guns and thinking it was because they were doing it because of the coming armageddon, when in reality it’s just in anticipation of Obama restrictions.’
Or maybe they just like guns. Guns, guns, guns…it’s always a good time to get another gun.
“it’s always a good time to get another gun.”
Not if you’re good with the one you’ve got.
I never met an over/under or side by side that I couldn’t not need
Oly, interesting you mention that.
I myself find guns to be offensive. I was trained by the military to use them, so, of course, I know how to use them well.
Yet, every time I see them in a restaurant on a police officer, it makes me feel bad. I always have similar thoughts, “well they are providing a social function, even if a disagreeable one.”
I’m not at all a “goodness and light” kind of guy. The world would be better off with some people not amongst us (though figuring out who decides this is a knotty issue.)
But guns, specially a cult around them, I find to be a sickness.
On a lighter note, I made some awesome rice pudding yesterday and plan on making flan this week
(Muir said)
‘I myself find guns to be offensive. I was trained by the military to use them, so, of course, I know how to use them well…But guns, specially a cult around them, I find to be a sickness.’
I was never in the military. I just grew up in the remote wilderness red-rocks of Utarr, and guns were like a religion. Or maybe that was just my looney, wicked, fundamentalist dad. Besides school lunch, most of the meat I ever ate in my youth was poached wildlife. Anyway, I learned to shoot as a wee lass, just as a matter of course, and I am a great shot, but I don’t shoot stuff, besides cans and a noisy smoke detector I couldn’t reach that was making me ape-p00p crazy, and other stuff like that. I don’t hunt anymore. I also don’t fondle my guns and murmur endearments or indulge in any other worshipful behavior. I just have some guns. I like my guns.
I’m glad I have them, and that I shoot good; I’m a skinny girl living in the remote deep dark woods, what am I gonna do if a bad person should come to visit? Use harsh language? Hit ‘em with my tiara?
And now, let us move on to more delightful subjects, like your rice pudding and your flan. Talk fooooood to me, Muir, and do it slowww and thrillingly, with details, you know how I like….
*breathes heavily, flutters eyelashes, *
Hahahahahahah!
“I myself find guns to be offensive.”
I’m curious to learn more about “why?”
My dad and mom’s courting consisted of shooting rats with .22’s at the county dump in rural Ohio. When I was 11 (freaking 11), my buddy and I would walk across the street to the farm and unload 12 gauges into old stuffed animals and whatnot. We shot the occasional groundhog at the request of the farmer. If that’s not bad enough, they were semi-autos! I used to show off my shoulder bruises to my classmates.
I keep a 16 gauge semi-auto with both slugs and buckshot for your everyday doomsday/home-invader/need to shoot a to eat scenario.
Anyway, why do you find them offensive? I think redneck trucks with large tires and rebel flags are way worse.
Where’s my post? I was telling Muir how I fondle and caress and murmur endearments to my firearms, but it hasn’t shown up yet.
(actually I said something else.)
Yes, but does it murmur back?
Not to worry, I’ll post recipes
I’m glad you said “firearms” instead of “gun”
If you had, I wouldn’t be able to get up from my desk for awile……..
‘If you had, I wouldn’t be able to get up from my desk for awile……..’
Yes, there is a distinction, isn’t there, fixey? One of them nuance thingies.
You said “Thingie” !!!!!!!!
I just bought a nice S&W Sigma chambered in 9mm as a hedge against the coming Feinstein-Obama “assault weapons ban”. I really didn’t want to spend the money on it right now, but thought I should get it while it was still available. I actually prefer my .38 Airweight revolver for concealed carry.
IMHO, you can increase today’s unemployment numbers by 6-8% if compared to the 1930’s. There was no social security, disability, welfare etc. Exactly, how many Americans are physically (figuratively not literally) working in a paid job today? I’ve never seen that statistic.
sure, but if today’s trend continues gold may be oversold within a week or so and more attractive than some commodities that have rallied significantly lately
yesterday I sold some Energy funds that went up 35% in one week.
Welcome to trade wars:
“We are reviewing the buy American proposal and we are committed to a plan that will save or create 3 million jobs including jobs in manufacturing,” Obama transition spokeswoman Jen Psaki said by e-mail.
Buy American…if you can!
made in China = Toxic Warning Label
made in India = Toxic Label Warning
How to Craft A Stimulus
By Ruth Marcus
“The stimulus package about to be unveiled is like an incredibly expensive experimental drug — or, better yet, a cocktail of drugs — to treat a serious disease. No one believes the medication will be a complete cure; indeed, it is not guaranteed to alleviate the symptoms. The side effects could be serious and long-lasting.
Also, 535 people get to determine the proper mixture of drugs and dosages. Very few of them are physicians. …”
WaPo
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/06/AR2009010602825.html
I need a new drug
one that won’t make me mean…
Anybody out there that still thinks there might be deflation?
Yes, I think there might be deflation.
Just giving trillions to banks to shore-up balance sheets does nothing. They have to get the money into hands of people that will spend it. But, as shown by last summer’s stimulus checks, handing people money results in them saving it, or worse, paying down debt.
$100-200 billion to let businesses get credit for income taxes paid 2003-2005. Great, they can stay in business two more months.
$200 billion for 2 more rounds of stimulus checks like the one. $100 billion a year to replace the loss of $1 trillion in lost borrowing ???
To get consumers spending again, the handouts would have to be $1 trillion a year. Without that, no demand, and deflation.
“To get consumers spending again, the handouts would have to be $1 trillion a year. Without that, no demand, and deflation.”
I dunno, but there’s something about living in a nation that would even think about handing out that kind of money that fails to inspire me to buy deeper into it (read: buy a house or take on debt).
They keep thinking their actions will inspire confidence, but for me the effects are just the opposite. The more they spend, the less I do.
At this point, fear of rampant inflation is probably the one thing that could get me out there making purchases. Other than that….
Exactly!!!!! Only in a nation handing out that kind of money, where inflation is a SURE bet, does it make sense to spend every penny you can get your hands on and run up massive debt.
Handing out $100 billion here and $100 billion there just makes people save it or pay down debt. $1 trillion in hand outs, to everyone, not just the elderly in the form of Social Security and Medicare, promised to be “first of many” such handouts… now that could get people spending again.
There is fear of US inflation. Just not in the US and only by the sovereign countries that hold $10T US dollars.
Deflation is hype. Less than a 10% chance of deflation - 2/23 or to put it another way, in every financial crisis over the last 100 yrs, how many had deflation?
Great Depression 1. The value of any product is just a perception and companies live or die on maintaining the perception of value of the products they sell.
There is deflation right now across all asset classes and a wide variety of consumer consumables. Companies will struggle to keep their prices. But the longer this goes on, the more likely deflation becomes the norm. Which was the big difference with GD1. It lasted long enough for deflation to become prevalent.
Which is why the government has to throw a trillion $$ at the problem NOW. Inflation is preferable to deflation. There is no bottom to deflation. I can guarantee you Bernanke and the feds are looking into a big, black chasm of deflation/depression and they are scared sh**less.
The problem with all this “stimulus”, …..since we don’t make consumer goods in the good old USA anymore, a fair portion of any stimulus will go straight to China, Japan, etc. As if they aren’t sitting on enough US dollars already.
Until China (and to a lesser extent, Japan and Korea) start buying US made products and services, this problem can’t be fixed.
The problem with all this “stimulus”, …..since we don’t make consumer goods in the good old USA anymore, a fair portion of any stimulus will go straight to China, Japan, etc. As if they aren’t sitting on enough US dollars already.
Which is why I suspect they are focusing on infrastructure.
I read on Mankiws blog that the Obama team was reaching out to economists on both sides for their opinions. It sounds like Mankiw favors a cut in payroll tax possibly offset by increasing the gas tax. People can easily avoid the gas tax and thus reduce the amount of money going overseas but they will still have money in their hand to make purchases. He told them he had reservations about infrastructure spending. My guess is we will see a bit of everything. Throw the bowl of spaghetti and see what sticks.
Bottom line on the inflation/deflation issue is wages!
Over the last 15 years we’ve seen 20% wage increase, 50% CPI increase and 180% household debt increase as people used debt to make up for lost purchasing power of their income.
Access to debt is being cut off since most of it was borrowed using rising real estate values as collateral. That means falling demand. There will be an initial 10% drop in consumer spending as people are forced to live within their means, then that will ripple through unemployment into further consumenr spending cuts. Then come the corporate defaults from reduced consumer spending.
$1 trillion here and $1 trillion there in increased government spending will not stop the collapse of $15 trillion in excess consumer and corporate debt….
(15 years ago, $7 trillion combined personal and corporate debt. Now $25 trillion… on 20% medain household income growth…)
Hoz, I know you are mostly worried about the effects on international exchange rates…. But EVERY country is firing up the printing presses and preparing for helicopter drops. Race to the bottom is on. We’re in the lead, but we’re running out of gears. “Pulling out all the stops???” What stops are left??? Seriously.
Without higher wages, we’re already seeing falling demand. And price increases, just results in more demand drop.
There is excess capacity and low and falling demand, and to me, that is deflation.
I’m sick of hearing Wall Street idiots and Washington morons saying this is a Wall Street problem that will spread to Main Street if they don’t act.
WRONG!!!! It is a Main Street issue that wages have not kept up with inflation, lifestyles were funded on debt, and now Main Street is broke, cut off from easy debt, burried in an already massive debt load, and being forced, against tehir will, to slow spending and default on debt. A Main Street problem that has built for 20 years, spread to Wall Street, and is feeding back to Main Street, which is feeding back to Wall Street….
Efforts to rescue Wall Street will do NOTHING to halt the collapse of Main Street, and there can be no inflation while Main Street is collapsing.
Darrell - YOU ROCK! Thanks for your input!
+1
Darrell
Point well understood, but the deleveraging has been done. Fait accompli. The Federal Reserve is the backstop. Yes 10% have lives that are worse than last year, 30% are unchanged, but 40% are better off today. There is no downward wage pressure.
We have not seen any deflation in the US in the last 61 yrs. We are experiencing disinflation, but the Hoteling rule still applies. Cheap commodities are in the past. There is no easy quick source for metals or oils or foods that cannot be bought by someone with more moneys.
The first rule of the Fed is to lie. The Federal Reserve is more concerned about extricating themselves from this mess than concerned over deflation. When do they turn off the spigot? When the dollar drops 40%? Or when food prices go up 100%?
The deleveraging is NOT done. There is still $25T in debt, $15T of which, I think, is going to go into default, and the Fed can not backstop it all.
There IS downward wage preasure. People are being forced to take days off, being asked to take salary cuts, being forced to work fewer hours, getting laid off, accepting jobs with lower wages, making less comissioned sales, on and on…
My FIL that sells big trucks for Freightliner still has a job, but being 100% on comission, made 25% as much in 2008 as he made in 2007.
My SIL works for US Airways. She’s seen about 60% of the hours in 2008 as she had in 2007. Her husband is a thrower for Southwest, got his full 2040, but 0 overtime… 2007 he had 500 hours of overtime.
My wife’s work drastically cut back vacation earned and what can be carried, and made everyone take at least a week in December…. NO more selling back excess vacation like they used to be able to do.
How many companies have said they will suspend 401(k) match? How many said they won’t be giving raises, have hiring freezes, etc?
People ARE NOT better off today than they were a year ago, because a year ago they were able to spend 110% of their income because they just did a cash-out-refi of their house, and now they are only spending 90% of their income becuase their 401(k) has been devistated, their house is worth less than they owe on it, and they are trying to rebuild some hope of a retirement.
You, like everyone else, seem to be ignoring the severe impact from the loss of ability to borrow. We were adding $1 trillion a year in consumer debt and $1 trillion a year in new business debt on top of $500 billion a year federal deficit. That is a lot of cash pumping into the economy, and it was not enough to keep us out of recession. Now, in place of that $2.5 trillion, we MAY get $1.5 trillion government spending.
If $2.5 trillion was not enough to keep us out of recession, how is $1.5 trillion going to be enough halt teh downward spiral and turn it around.
Supply/demand. Real demand comes from Main Street, and Main Street is broke, burried under a mountain of debt, and unable to get more debt. Consumer spending will continue to crash, and that will continue to kill demand, and with loss of demand will come deflation.
Handing Trillions to billionaires to ensure they stay billionaires, DOES NOT allow the regular people to continue to spend 110% of their income, forever, without having to ever pay on or for any of the debt.
You are a Wall Street-er, and you don’t understand what it is like on Main Street. Do you know what it is like to Cash your $2000 paycheck, send $1600 to the mortgage, $300 to the credit cards, and have $100 to make it 2 weeks to the next check, when you will get a $2000 paycheck, use $400 of it to pay the utilities, $400 to car, $100 to gas, $500 to groceries, $300 to credit cards, $200 to student loans, and have $100 to get to the next paycheck….
It isn’t a problem if you can constantly charge $1000 a month on your credit cards, then roll that over to your mortgage with a HELOC or Chash-out refi every year or two. But, take away the ability to roll that debt over, and it it becomes painful.
What he said……
Don’t forget the offloading`of health care costs onto J6P, even if he is insured……thru increased premiums, bigger copays, and of course the ever popular “Charges in excess of plan coverage”
The only people making bank the past 8-10 years have been the Wall Street types, and anyone associated with the Real Estate bubble. Everybody else has lost 20-25% of their purchasing power.
I found an online inflation calculator the other day (it was a US Government one, so I assume that it erred on the conservative side). Put in my starting pay per hour as a freshly minted A&P (with ZERO hands-on experience) in 1979.
Today, I’ve got thirty years in the business, in charge of taking care of a 20 million dollar airplane (well, six months ago it was a twenty million dollar airplane……..)
But I’m making no more than I did as a new hire in 1979, when adjusted for inflation.
Something is wrong with this picture.
Have to agree with Darrell on this one. Outside of a few posters here (counting myself in this unusually lucky group), I can’t think of a single person from my personal life who is better off today than a year ago.
Almost every single person I know has lost a ton of money either in the stock or bond markets or in housing. Many have taken pay cuts or lost jobs. Not sure where the inflation is going to come from unless Obama plans to hire all these people at their 2007 pay levels and give them raises every year.
“When the dollar drops 40%? Or when food prices go up 100%?”
As FPSS asked before on this blog many times: “The dollar drops against what?”
Every country out there has the same or similar dilemma as the USA – huge overcapacity and falling demand. So they will try to print their way out too…
“When the dollar drops 40%? Or when food prices go up 100%?”
As FPSS many times asked before on this blog “The dollar drops against what?” Every country out there has the same or similar dilemma as the USA – huge overcapacity and falling demand. So they will try to print their way out too…
“It is a Main Street issue that wages have not kept up with inflation, lifestyles were funded on debt, and now Main Street is broke, cut off from easy debt, buried in an already massive debt load, and being forced, against their will, to slow spending and default on debt.”
When plankton dies, whales die. I pointed this out here long before the top investment banks on Wall Street shuttered their operations last fall.
Let the whales die, do your best to be the feasting mushroom after the meltdown
cosmosmagazine.com/features/print/2095/silent-spring?page=0%2C0
For the last 3 years I made 33% less than I made 10 years ago. I have recently been laid off due to the economy.
There may be no “down ward pressure on wages” because there aren’t any wages. (not literally, just making a point) Much like not reporting the unemployed who no longer receive benefits.
Let’s ask the 600,000+ people who couldn’t get a job last week because those jobs no longer exist if there is any downward pressure on wages. I know my local unemployment office forces a downward pressure. It’s policy. Both in benefits and job search.
People walking away from houses (and other debts) is inflationary; it’s not just conventional stimulus that counts. In the short run (year or two), who knows, but in the longer run, it’s in almost every American’s interest to have inflation, and it’s completely under our control, so it WILL happen, probably more than we’d like.
I live in San Diego and am looking for a good place to rent for a year or so before buying a place when prices get back to reasonable levels.. Does anyone on this board have any suggestions for getting a good deal renting out a foreclosed property. Any other tips?
Foreclosed properties usually aren’t rented out. Banks do not want to be landlords. Given the backlog on banks’ books, I suppose this might change but I doubt it. Anyone heard differently? As far as rentals go, check the county appraiser for deed history. If the home was purchased 2005-2006 or later, or if your research shows the house in pre-foreclosure, run like hell. I’m personally not comfortable renting from anyone who purchased after 2002-2003 or so. There’s too much risk of being some FB’s patsy, collecting your rent and defaulting on the mortgage so YOU can be kicked out of the house by the sheriff. I rent from a realtor/RE Management Co. who manages the house for the owner along with several other properties from multiple owners. IMHO, this is the way to go. Renting from a solo FB Trump wannabe on their own scares the crap out of me. Good luck!
Does anyone on this board have any suggestions for getting a good deal renting out a foreclosed property. Any other tips?
I’m afraid that that question has been asked and answered so many times on this board that you’ll just be ignored. I could be wrong.
Try this in Google search:
+rent +advice site:thehousingubbleblog.com
You can also try adding +”san diego” +foreclosure
I wish I did, but I don’t. I have to start looking too, but my resource will be my personal and professional network. The first thing I would do is contact everyone you know and tell them what you are looking for - location, type, rent range. Some of the best deals come from “inside” tips. If you find a place research it carefully as stated above. Try to have all deposit put into an escrow account. And make sure it is not an unusally large deposit.
Can you live in an apartment or condo or does it need to be a house?It is much easier to find a stable apartment right now. You can also put down exactly what you need here with an e-mail address and if any SD people come across something we can let you know.
Good luck!
Agree with SD RE Bear.
If you don’t want to live in an apartment, you might try a guest house or a SFH, but try to find an “old school” LL who’s owned the place for decades and just wants the easy monthly income (will take lower rent for better tenant).
If you are just looking for “cheap” you can check out Oceanside in North County or Escondido, but ask about specific areas before jumping in, as this is where we can be more helpful.
Also, you can try Piggington’s (San Diego specific blog):
http://piggington.com/
Good luck!
Just got back from a trip in the Sierras: Tahoe, Reno, and a few other towns. Reno is starting to look like a ghost town. I counted several abandoned Casinos, including the one we stayed in last time. Huge buildings completely empty. Not a lot of gambling going on in the ones that are still open. That and there was a HUGE yet to be completed loft built next to the old abandoned Fitzgerald’s. Bad timing?
I just got back from a trip to eastern Pennsylvania. Saw at least one local news story about business being down in Atlantic City.
You didn’t run into Bye, FL, did you?
That would be in NW PA. Look for the newly planted apple trees in the front yard.
I remember byefl. Good ol’ fixated bye…I wonder how he is, and if he ever stopped being virtuous? I hope he’s well.
BTC = Buy The Casino’s!
BWAAAAAHAHHAHAHHAHHHA!!!!!! cough, cough …(modified fpss)
Late loan payments hit record high in 3Q
The association said delinquencies rose to a seasonally adjusted 2.9 percent from 2.68 percent in the second quarter. The number is a composite ratio reflecting the percentage of accounts across eight categories of consumer loans with payments overdue 30 days or longer.
In addition to indirect auto loans, categories that make up the composite ratio and posted increases in third-quarter delinquencies included: property improvement, marine, recreational vehicle, mobile home, personal loans and home equity loans.
http://biz.yahoo.com/ap/090107/loan_delinquencies.html?.v=1
Keeping up with the Joneses backfires!
Ka-pow!
On a related note, I’m noticing that if I offer some of that cold, hard cash stuff (remember it?) businesses seem more eager to accept it. I guess they figure that a sale is a sale, and if Slim is putting 100% down with no additional payments, it’s all good.
Now that Satyam has perpetrated fraud using an American Accounting company which also happens to be one of the three or four US accounting firms that audited the Madoff feeder funds, will there be any trust worthy US accounting firms left? Who gets first crack at the accounting firms, Madoff feeder fund investors or Satyam investors?
More H1B visas please congress that should solve the problem
Jan. 7 (Bloomberg) — Intel Corp., the world’s largest chipmaker, said fourth-quarter sales dropped 23 percent, missing a forecast that it cut by $1 billion less than two months ago and sending the stock down 6.5 percent.
Revenue was $8.2 billion in the period, down from $10.7 billion in the same quarter a year earlier, the Santa Clara, California-based company said today in a statement. In November, Intel predicted that sales would be about $9 billion, compared with an earlier prediction of at least $10.1 billion.
Doesn’t matter - market will still end up today.
Intel - bah. Who needs ‘em.
So far your stopped clock New Year’s market call is not holding up very well — I guess today is pressure relief valve day. My prediction for the next several months is that pressure relief valve days like today will be interspersed with days on end spent rappelling a wall of fear on little or no positive news whatever. At the end of the next several months, I expect the market will have, most remarkably, trended higher, even though there will be no near term fundamental support, save that the stock market might be relatively less bad than other investing alternatives, and burning hedge funds dumping assets may create fire sale buying opportunities.
Countdown to the close: 36 min 15 sec
INVESTOR ALERT
Stocks shoot for ninth gain in 10
January 7 2009 3:23 P.M. EST
Wall Street slide intensifies
Stock indexes down more than 3% with Alcoa shares pacing laggards on the Dow industrials. Energy slumps as crude logs major daily loss.
Jan. 7 (Bloomberg) — Time Warner Inc. will report a loss for 2008 after writing down the value of its cable, publishing and Internet assets by about $25 billion in the fourth quarter. The shares fell as much as 7.4 percent.
The economy has hurt advertising at the AOL and publishing units more than anticipated….
It is only $25 billion. It isn’t like that is a lot of money or anything.
Ted turner must be Happy he sold everything at $17 a share …almost below $10 again
http://finance.yahoo.com/q?s=TWX
DC Comics is bleeding from multiple sites…
I ‘ve mentioned here about the rise in crime. It worried me. Well, my detached garage was burgled two nights ago. Thieves took; snow blower, lawn mower, gas cultivator,edger, leaf blower, chain saw and 5 gal gas can. My wife left her car open and they helped themselves to her brand new prescription sunglasses ($330.00, never told me what she paid)) cd’s and twenty dollar bill. I didn’t think it would happen, so soon and to us. For the first time, I’m worried about my home and I called about security systems. At least they were neat, they didn’t destroy anything, but the lock. They obviously needed a truck and no one saw or heard anything. If they can’t work or live off the gov’t, they will steal in the old-fashioned ways. Be careful everyone.
Check craigslist and the want ads for that stuff being put up for sale.
You never know.
That sucks.
I knock Florida a lot, but I honestly like the “shoot first, ask later” attitude here. I expect to read more stories about common burglars being shot in S. Florida. Nobody here cares if you shoot a criminal. Being from NY state, it always bothered me that you could be prosecuted… seriously, you’re supposed to figure out in the middle of a burglary whether or not the intruder is a threat?
I would shoot someone for stealing my stuff like they stole from Kiris, not because of the stuff, but for the sanctity of my domicile. I mean that.
In Texas, we have the “castle doctrine”. Google it. For the past 2 nights in a row in San Antonio, we’ve had two sets of burglars shot, one dead, two in critical condition. One of the incidents was actually a father and son team. The son was shot upon trying to enter the residence. NO charges to be filed on shooters.
IMHO, this is a common sense law. If you don’t want to get shot, don’t break into people’s homes or cars, and don’t do anything that might make them feel threatened (esp. WRT trespassing). I love it!
“her brand new prescription sunglasses ($330.00)”……
Not good.
“(never told me what she paid)”…….
Double not good.
LOL, she never questions what I spend, is not a clothes buyer and she earns her own money. I have to admit, I was afraid to ask her the price.
This may sound odd, but a new anger I have over these FED encouraged bubbles and easy credit, is it gets people used to having what they want. That mentality is not easily changed nor, I suppose, does the gov’t want it to change. Well they better find a way to get money to the hordes, because if they don’t, they’ll just take it from the people that have it, anyway they can.
BTW Muggy, I own a glock 19( service weapon), a .357 and a 38 five shot S&W chief. I still fear for my family and your right about NYS, hesitation (trepidation) in firing has been drilled (scared) into me.
‘BTW Muggy, I own a glock 19( service weapon), a .357 and a 38 five shot S&W chief. I still fear for my family and your right about NYS, hesitation (trepidation) in firing has been drilled (scared) into me.’
You were a cop of some sort, were you not? I recall a post about gangs.
I have a pit bull. good insurance in times like these.
I hasten to add: she’s fierce from far away but don’t get too close as she just might smother you trying to wiggle into your lap and like your face off.
Bad side to pits: you get attached to them easily. Sad day when bumbling criminals panic and shoot the dog.
Sounds like my German Shephard.
Grew up with Labs and German Sheps, and both breeds are great family dogs.
‘Grew up with Labs and German Sheps,’
Me, too! Both Max–the German shepherd, and Murphy (aka ‘Portly McFatty’), the golden lab, just came on over to visit and they must’ve liked the air of genteel culture that me and my clan exuded because they never went home. At least, not willingly. At first their owners came and hauled them away, because they both had papers and had cost money, but eventually they gave up on that project, as it was fruitless. Max’n Murphy just came back and then they stayed for the slumber-party, as it were, on and on and on…an 18 year slumber party for Max, and a 13 year one for Murphy. What good dogs.
Excuse me, I must go cry now, just a little bit.
We had other dogs, too, dumped by people* in the orchards and wilderness around our house. Good dogs, all of them. I remember when we got a little black burr-matted mutt, it was Jooley’s turn to name the newest arrival and she picked ‘Ramona’. A week later I went to town and there was Ramona! Standing there next to the tiny post office all skinny and burr-matted and gawking around like some sort of country rube. I was sore amazed at her teleporting skills and leaped out of the truck and rebuked her for running away to the dangerous big city. (We had no traffic lights, then or now, so I guess it wasn’t THAT big a city.)
I ordered her: ‘Back in the truck, you naughty teleporting dog!’ And Ramona wagged her tail and looked sheepish and chastened, and willingly got in the back of the truck, so anyway I finished my errand and drove back home and …there was Ramona.
Oh.
They fell upon each other like long-lost sisters, which I think they were, as they were absolutely identical.
So then we had two of ‘em.
* People who dump animals absolutely su*ck. They should be neutered, at the very least.
Thieves took; snow blower, lawn mower, gas cultivator,edger, leaf blower, chain saw and 5 gal gas can.
Upside? No more yard-work!
Paulson: allowing Fannie Mae, Freddie Mac to return to old operating ways is not an option
Treasury Secretary Henry Paulson says allowing mortgage giants Fannie Mae and Freddie Mac to return to their old operating ways is not an option.
Paulson says Congress and the next administration must decide the proper role government should play in supporting home ownership in light of the severe economic costs imposed on the nation from the bursting of the housing bubble.
The government in September took control of Fannie and Freddie, placing them in conservatorship.
Paulson offered thoughts on a variety of possible solutions on what should follow the conservatorship but did not endorse any particular approach.
http://biz.yahoo.com/ap/090107/paulson_housing.html?.v=4
Better link:
http://www.marketwatch.com/news/story/paulson-sees-four-options-fannie/story.aspx?guid=%7BCE774EEB%2D84AA%2D449B%2DA6FC%2DC27E7ED11844%7D&siteid=yhoof
So, his preferred approach involves letting politicians decide who gets what kind of mortgage where, with the taxpayer CLEARLY on the hook for defaults…. Yeah, no possibility of corruption or future bubble blowing there.
What is SOOOO wrong with loan originators having to hold the loans they write…. Oh, right… they won’t loan to people that can’t pay it back, and making loans to people that can’t pay them back is the basis of our consumer driven economy. I forgot there for a minute…. My bad.
Does it seem to anyone else like Plan A is to return to the carefree lifestyle of inflating real estate and deadbeat consumers by other means than the way we got there circa 2005?
Martin Wolf’s comment seems prescient:
“Some entertain hopes that we can restore the globally unbalanced economic growth of the middle years of this decade. They are wrong.”
Well, Plan A is not working.
Plan B and C are also not working.
+1
Darrell you’re good today!! ‘ making loans to people that can’t pay it back is the basis of our consumer driven economy’… scary isn’t it? Morally and financially.
From the Marketwatch link:
The program was announced on Nov. 25 to create liquidity in the mortgage-backed securities market and help lower mortgage rates in response to the housing crisis. The New York regulator will on a weekly basis provide details about the aggregate dollar figure spent on mortgage-backed securities. No details will be provided about which financial institutions are participating.
————————
Looks like the Fed is making direct purchases of MBSs also, instead of using reverse auctions.
Can somebody please tell me why the taxpayers, who are ultimately on the hook, should have any information hidden from them?
And another story:
Paulson: Abolish Fannie, Freddie
Could it be true??
With share prices hovering between $0 and $1, it is close to true already.
I suggest everyone move to the DC metro area — the entire population of the US, just pick up and leave — because it really IS different here. Went furniture shopping this past weekend and found an item I liked (1k). Asked for a cash discount and was told ‘no deal’. Full price or forget about it.
If merchandisers are unwilling to deal on discretionary purchases such as furniture, I guess this whole mess is way overstated. Just carry on as usual.
Go back when the going out of business signs are hanging in the store windows and gloat!!!!
Just drive down to North Carolina. Furniture deals abound there.
Not much different in Norfolk, VA region according to the media. Although this shocking comment was posted on local news site in response to a “slightly” higher unemployment rate:
Submitted by NPD on Wed, 01/07/2009 at 11:06 am.
My brother was laid off and said the line at the unemployment office in norfolk was wrapped all the way around the building and they had to cut the line off at 1pm due to it being a 3 hour wait. He also said no one can get thru on the phone either. The paperwork he needs is not on their website so that forces additional people to go to the offices. I see a crisis brewing. I read some articles about NY, CA, OH unemployment offices overwhelmed as well. I think the PILOT should do a story about this….major problems with unemployment insurances running out.
I work in an office building that is shared with the unemployment office (you don’t want to see what the bathroom near that office looks like). Anyhoo, in the last 3-6 months we’ve seen a tremendous increase in traffic. The parking lots are now almost completely full and the lines to get in are very long. And this is inside the beltway.
You can run, but you probably can’t hide, from the Russians anyways……
http://www.cnbc.com/id/28534745
Hey Senator Shelby, pick up on that GOP “maverick” theme: Drill here! Drill now!
Crude oil stocks rose by 6.7 million barrels, the U.S. Energy Information Administration said, more than the 900,000-barrel increase analysts expected. Gasoline and distillate stocks also rose.
Oil slides below $46 on big U.S. inventory rise:
http://finance.yahoo.com/news/Oil-slides-below-46-on-big-US-rb-13992237.html
Wow - that’s a big jump.
http://tonto.eia.doe.gov/oog/info/twip/twip.asp
Stocks are now outside (above) what is considered the “average” range for the first time (see third graph down).
Note the direct correlation with prices - e.g. the dip down below the average range in mid-2008, when prices when up to $147. Speculation or not - there definitely has been a direct correlation between oil stocks and prices. I wouldn’t be surprised to see crude down to $30 soon.
Germans are having trouble selling their bonds.
http://www.ft.com/cms/s/0/458a5ca6-c6e1-11dd-97a5-000077b07658.html
At 2.2%… Far from time to panic, I would think.
A Ghoulish Running List:
US RE Executive: Death by Rifle
French Hedge Fund Manager: Death by Razor
German Billionare: Death by Speeding Train
What happend to the good old-fashioned “jump from your skyscraper”?
I’m add, Mega-Phoneix metro palya… Death by pain pills and alcohol.
http://www.azcentral.com/business/articles/2008/07/23/20080723colesonline-ON.html
The fallen mighty are becoming much more creative in their escape plans anymore.
A cardboard cut-out? Weeeeeird.
‘A cardboard cut-out? Weeeeeird.’
Agreed. I mean, who has one of those lying around? And why would you have one made in the first place? Although, come to think of it, I must admit that I sometimes smooch photos of whoever is my darling, fondly, now and then. But I also like photos of cute babies, and secretly believe in unicorns and Eskimos.
Look, my point is, that’s a bit odd.
Also I’d like to know what the Shakespeare quote was.
Was it: ‘All that glitters is not gold’? (Merchant of Venice, some act or other, I can’t recall this minute.)
PLEASE say that that’s what the quote was!
BWHAHAHAHAHAHA!
“What happend to the good old-fashioned “jump from your skyscraper”?
That’s what I’m talking about, where in the hell are the high rise swan dives? I mean this train jumping, gun sucking, wrist slashing is one one to end it all, but not nearly as attention getting or news worthy as a terminal velocity splat onto the cement.
Dont forget to add.
Banker Kirk Stephenson: Death by Speeding Train
DAVID CALLAWAY
Bear rally over, the great dying begins
Commentary: Earnings warning season shaping up badly
By David Callaway, MarketWatch
Last update: 5:52 p.m. EST Jan. 7, 2009
SAN FRANCISCO (MarketWatch) — Everybody should have known the holidays would only delay it. The freight train of job cuts, plunging earnings and massive spending cutbacks set to hit the economy was, thankfully, pushed back a few weeks while stunned investors and workers across the globe caught their breath after the worst fourth quarter in decades.
But now the great dying has begun, and I’m not talking about German billionaires throwing themselves in front of trains or French aristocrats slitting their wrists, as alarming as these incidents have been. No, earnings season, the time for companies to ‘fess up just how bad it’s been for them in the last three months, is here.
Look on the bright side, Mr. Callaway:
One man’s market crash is another’s generational buying opportunity.
Millionaires feel some economic pinch in downturn - report
Spectrem Group said U.S. households worth $1 million or more - excluding their primary residence - have seen their assets decline by 30% during the financial crisis.
Almost one-fifth of the asset declines were greater than 40%, the report said.
“There’s a huge amount of anger,” said George Walper, president of Spectrem Group.
Nearly all the millionaires surveyed - 90% - said they “fear a prolonged economic downturn,” the report said. On average, they believe it will last for another 22 months.
Maintaining their current lifestyles is also of concern, as 55% of respondents said they are worried they will not have sufficient assets to do so.
http://finance.yahoo.com/news/Millionaires-feel-some-cnnm-13981092.html
Boo F-ing Hoo!!!!!!
Boo hoo is right! I’m sure some retard will say “but we need millionares!”. lmao.
One of my college classmates is a multimillionaire. He lives quite modestly, and you’d never know about his wealth unless someone else told you about it.
I’m sure Mark is doing just fine these days.
consumer discretionary spending? buh-bye.
Mid-career switch…kinda risky behavior for a guy that was blaming Obama for damaging his ability to buy a plumbing business.
Hamas here I come! (wait till he sees what kind of plumbing they have in Gaza…he’ll have dollar signs in both eyeballs!)
Joe the Plumber to become war correspondent:
http://news.yahoo.com/s/ap/20090107/ap_on_re_us/joe_the_plumber
“Joe-the-not-plumber” becomes “Joe-the-not-journalist.”
Has anyone else observed the markets are selling off in the morning and evening and being bought during mid-day? The opposite of recent uptrend. Moreover, using Sep 19’s 1265 high, SPX 942 is a key fib retrace level. Is this THE reversal or more resistance in the bear rally uptrend?
What I notice is that the fundamental situation continues to deteriorate without the slightest hint of improvement and that most professionals are still kidding themselves about the severity of what is transpiring.
Are they really kidding themselves, or just trying to hold out for one more paycheck?
Another one bites the dust :
http://www.cnn.com/2009/US/01/07/illinois.realestate.death/index.html
Looks like the PPT’s got its work cut out for it.
Financial Times
US budget deficit to be ‘biggest since WWII’
By Krishna Guha, Edward Luce and Andrew Ward in Washington
Published: January 7 2009 16:19 | Last updated: January 7 2009 19:18
America’s budget deficit is likely to reach nearly $1,200bn this year even without Barack Obama’s planned fiscal stimulus of about $775bn being taken into account, the country’s budget watchdog warned on Wednesday.
The Congressional Budget Office estimate threw into stark relief the dilemma that the president-elect faces, highlighting both the need for stimulus to support the economy and the already perilous state of US public finances.
Hot diggity — some analysts are offering candid advice on when not to buy a home!
Home buyers advised to look before they leap
Building analyst warns 2009 is a ‘bad time to buy a home’ as jobs vanish
By John Spence, MarketWatch
Last update: 3:46 p.m. EST Jan. 7, 2009
BOSTON (MarketWatch) — Fox-Pitt Kelton home-builder analyst Robert Stevenson said Wednesday he thinks this year will turn out to be “a bad time to buy a home” as the U.S. economy loses more jobs, especially if buyers don’t plan on staying in the house for at least several years.
“While some suggest that now is great time to buy a home given low mortgage rates and falling home prices, we believe that for most homebuyers, the opposite is true,” Stevenson said in a report to clients.
If this kind of thinking diffuses through the MSM, only the illiterati will fall for the gubmint’s knifecatcher encouragement program. But it’s all good, as the Dems can work out foreclosure rescue plans for these individuals when they realize their folly a couple of years down the road.
Not likey this will take hold. Still too much potential ad revenue that could come from the REIC for too much of the MSM to start talking like this.
Remember, the job of the reporter is to create an advertiser friendly environment.
I guess the task remains up to us, then.
Hoz says: “in every financial crisis over the last 100 yrs, how many had deflation?”
How many of those financial crisis over the last 100 years, were at their core, a debt collapse. I know of 2. The Great Depression and Japan’s Lost Decade. Both debt collapses, and both involved defaltion.
This isn’t an oil embargo, a dotcom stock bubble burst, government raising taxes or cutting spending, fed tightening, or transition from war to peace….
This is a full blown financial system implosion, debt collapse, economy running off the rails, fundamental shift in the global economics.
We were adding $1 trillion a year in consumer debt and close to half a trillion a year in business debt, until 2006 when business debt began to explode as well.
Year, consumer debt outstanding, non-financial sector business debt outstanding.
1993 4224.5 3680.7
1994 4546.9 3832.5
1995 4856.7 4133.7
1996 5193.1 4406.7
1997 5494.3 4843.7
1998 5920.3 5410.3
1999 6416.1 6029.6
2000 7010.7 6589.9
2001 7682.9 6953.5
2002 8513.7 7133.3
2003 9500.1 7340.6
2004 10573.0 7795.8
2005 11740.3 8472.6
2006 12939.0 9358.2
2007 13815.3 10588.9
I think $15 trillion of this $25 trillion in debt will go into default, with at least $7 trillion, probably a lot more, in real losses.
$1 trillion in deficit and $750 billion spending bills can not replace the lost purchasing power represented by that collapsing debt.
Again, I’m staying in treasuries, thanks.
I see it is different this time. LOL
They all have the same fiscal characteristic. This is no different than previous financial problems and except for the fact that it is international in scope may be a lot smaller than the ‘80-82 recession.
Stay in Treasuries if you choose, but I would stay in New TIPs guaranteed, without risk of reduction in payment and potential appreciation on inflation.
I enjoy reading everything you write Darrell, just a simple disagreement, as many of the world’s foremost economist are disagreeing, over the same subject.
I would love to win a contest that allowed me to play a round of golf with Mr. Ben Bernanke!
“This is no different than previous financial problems and except for the fact that it is international in scope may be a lot smaller than the ‘80-82 recession.”
I will go out on a limb with the growing consensus of economists who think this will be the worst downturn since the 1930s, if not before. It is different because the euphoria carried on much longer and to a much higher level than in previous episodes. To see just one dimension of this, compare home price appreciation with respect to duration and height (Shiller’s real home price graph provides a nice means to do this).
I approach it from a different direction. In other downturns since the GD, we had savings and the ability to carry more debt. We would live on our savings, and the Fed would lower interet rates and lending standards which would get the economy moving again.
This time, there is verry little in savings, much of that is in asset classes that are quickly losing value like stocks and bonds, AND we were ALREADY living on max debt with low interest rates and loos lending standards.
IF they could get debt flowing again,(which they won’t be able to) it would just put us back where we were at the end of the cycle, which was insufficient to keep us out of recession.
Again, I think it all comes down to wages. We would need an across the board 10% wage increase just to get consumer spending back to where it was in 2006. With soaring unemployment and downward wage preasures, that is not going to happen. That means at least a 10% drop in GDP, which would meet the traditional definition of a depression.
Give $1 trillion to the man on Main Street, and he’ll save it or use it to pay down debt. No way are they going to get Main Street spending again, without massive wage increases, and Main Street not spending means deflation.
MAYBE, MAYBE if they handed out $5 trillion to Main Street so HALF the debt that was run up over the last 15 years could be paid down, MAYBE, just MAYBE you’d get them spending again. Of course, all that paying down of debt would KILL, KILL, REALLY KILL the financial sector.
“In other downturns since the GD, we had savings and the ability to carry more debt.”
That is another dimension of the problem which spells the kiss of doom. There are too many dimensions to this which point the same direction, straight towards the South Pole, for me to collectively shrug them all off as Sir Hoz seems able to do.
I do not shrug off anything!
I do not bet on Novas. Betting on Novas is a “who gives a F’ if you win” bet. Betting on deflation is the same thing as a bet on a Nova. It is buying property in Hiroshima after a nuclear bomb strike. Easier ways to make money.
50% of all listed companies are looking to expand this year. 50% are going to do worse or break even at best. There is no evidence for deflation, there is unemployment and that will expand but the worst month for new layoffs is past history! December has come and gone and the trails are still open. (There is plenty of evidence for disinflation and renewed inflation, but that is another day.)
I do not pick selected data. Deflation is not many things going down in price.
It is a boring subject. I wish I had never opened up the discussion again. I just thought that by this time most had realized it is a main street media hype.
When and if it gets as serious as 1982 let me know. Not this year fer sure.
Hoz,
I’m glad you brought it up, and I think we need to keep working through the details to get to the bottom line.
If you are not seeing wage deflation, perhaps things are different there. Here in Southern California, we are definitely seeing wage deflation and more layoffs in the near future. There is a lot of rumbling in the public sector WRT wage cuts, reduced hours, lay-offs, reduced benefits (which means people will have to save more today to make up for the shortfall in pension income in the future), etc.
It would be great if you would continue to post your thoughts on this, and let us know what you are looking at that shows increasing wages and businesses looking to expand.
Again, I’m not sure you understand what it is like here on Main Street. All my savings is in my 401(k) so I can delay paying the 40% marginal income tax and get the 1/4 company match. The options in the 401(k) are highly, highly limited. There is one option that USED to be treasuries, and is now government guaranteed and has been adding Fannie and Freddie stuff.
TIPS??? Well, that is up to the plan manager to worry about. I’m not allowed to decide that for myself.
I cashed out my 401K in July 2007. Why?
-Figured a 10% penalty was a small price to pay to get out at the top of the market (I actually got out a month or two early and missed out on the last 10%, but better too early than too late). I wasn’t going to be able to retire on the amount in it anyway, and figured getting out from under most of my debt was more important.
-It’s only a matter of time before the government starts changing the rules on them. They will be looking for ways to enhance tax revenue on everything not bolted down.
-As of today, I would be down about 70% on my 401K, if I had kept it. So far, the plan has been working for me.
‘I would love to win a contest that allowed me to play a round of golf with Mr. Ben Bernanke!’
So’s you could hit him with a club? Me, too!
Incidentally, which would you pick, your driver or your nine-iron? I mean, to start with. If it was me, I’d just go for every club in the bag. I’d begin with the numerically lower values but I imagine I’d soon get carried away—I usually do, in most situations—and I’d just end up hauling them out randomly and going to work. ‘Enthusiasm’, that’s my middle name.
And when I was all done, or when my twig-like girl arms got tired, then I’d stud the prone Mr. B all over with little pretty orange tee’s, hammered in with my pointy thingie.
I saw someone get hit with a driver once…well, technically I didn’t see it only the immediate aftermath.
A guy was fixing to drive at a range (we were young, maybe 13 and his brother was 16). He took the backswing and I was standing too close, he almost hit me. So I stepped back. His brother was standing on the other side where the follow through would be. He swung and we heard the “crack” that sounds like he hit the ball. Both of us are looking for the ball, literally going “where did it go?”. I looked down and the ball was still on the tee. Looked over and his brother was on the ground in a 3 ft diameter pool of blood and vomiting.
He got hit just above the ear. Left him deaf in that ear.
That sucks.
Bet his brother never let him forget about it.
Oly
Fair Utarian
I would play golf for the same reason one plays golf at Augusta National! Make money.
A lunch is a bunch of BS, but a day on the course lets one know the true measure of a person.
But if I did not like his play, I would use a 5 iron, 200 yd par 3 with hot air- Leaving a big divot.
Stay in Treasuries if you choose, but I would stay in New TIPs guaranteed, without risk of reduction in payment and potential appreciation on inflation.
If you cannot stand stocks or gold, you should at least be in TIPS or Series I savings bonds or both! In stocks, picking good yielding brick and mortar companies and reinvesting dividends help to protect against inflation and deflation.
Buying gold is also a good move since the government is certainly printing money like crazy.
The logjam against loose credit will be gone sooner or later, and hyperinflation is behind that logjam!
It’s raining really hard here, so I’m indulging in pleasant nostalgia and gentle pensiveness, and in a minute I’m going to make some atole.
I found atole to be displeasing when sipped for breakfast in hot and sunny Zihuatenejo, Mexico, but I LOVE it on a rainy gray afternoon in the PNW. You have to drink it from a clunky mug and be wearing a thick sweater and have damp hair and be pretending to be industriously working but really not be working, for it to be perfect.
thanks Oly for a perfect picture in words
Boone Pickens:
September - Oil won’t fall below $100.
November - Oil is going back to $100 soon.
January - Oil will get back to $100 by the end of 2010:
http://www.cnbc.com/id/28534827
He’s sounding pretty desperate. All of a sudden his giant windfarm thingie and that liquid natural gas conversion project aren’t making a whole heck of a lot of sense. Lots of old timers getting hammered these days.
Dad started in the oil business same time as Pickens
Said he was an a$$ then too
Went to Kincaid’s in Redondo Beach King Harbor last night. Tuesday night I would expect easy reservations. But this was ridiculous. Restaurant had far fewer patrons than I expected. The parking garage around 7pm was less than half full.
But the food and spirits were as good as ever! Kincaid’s in RB is one of my favorites!
Hoz, “Easier ways to make money.”
Again, you show you are totally out of touch with main street. We’re not looking to make money. We’re hunkered down in the bunker hoping to survive the bomb that we saw falling from the sky and are pretty sure is about to go off.
Main Street is broke, beaten, and burried in debt. We’re slashing spending, not because we want to, but because our main soure of green-foldies, out ever-rising home price, has dropped 40% in value in the last 18 months.
There can not be inflation without Main Street spending, and there will be nothing but falling Main Street spending for the foreseeable future.
Crashing demand and massive oversupply…. Hmmm…. 1-2 years ago I was having this exact same conversation with people that were coming up with reason after reason after reason why house prices were not going to deflate…. WRONG!!!
Prices have to be affordable. They are not. Incomes are not going to go up. Incomes are going down. Without income, prices will fall until deman matches supply. If it is supply that falls, then it will just feedback into more falling income….
A deflationary cycle is, in my opinion, every bit as much baked into the cake, as crashing house prices was 2 years ago. Unavoidable.
Just got back from the grocery store tonight. Evidence of “deflation” was estremely hard (impossible?) to find on the store shelves. Other than a sale on frozen pizzas, prices were as high or higher than they’ve been over the last six months…
Deflation means less money. Less money means less production and less world trade, which means less availability of products for sale, thus you get higher prices for those items in short supply.
When it comes to food and other necessities the demand side of the equation will not change much but the supply side of the equation will change a lot. The higher prices for items in short supply are not due to a lack of demand but rather a lack of supply.
Don’t confuse deflation with higher prices. Although the one can lead to the other they are not the same thing.
“are not do to a lack of demand” should be “are not do to an increase in demand”
Inflation in needs (food), deflation in wants (cars,electronics,big houses,high priced coffee, high end clothes ect ect.) I still see a big deflation wave.
Maybe Hoz is right. No doward wage preasure here….
http://www.azcentral.com/business/articles/2009/01/07/20090107biz-onsemiconductor0108.html
“Phoenix-based ON Semiconductor Corp. will lay off 1,500 workers, cut merit increases and bump up previously announced factory closures as part of a sweeping cost-cutting plan disclosed Wednesday.”
”Cost-saving measures not previously announced include eliminating annual merit pay increases and bonuses this year, requiring senior executives to take three weeks off without pay during the first and second quarters and all other employees to take two weeks off unpaid or work a four-day week in the same period.”