January 8, 2009

Bits Bucket For January 8, 2009

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Comment by Jas Jain
2009-01-08 07:06:08

My comments, some public and some in private e-mail exchange, during September 2007:

Can you spell recession? And should soon prepare for the deflationary depression.

My thesis has been that it would be too sudden for the interventionists to do anything. And that is exactly what is going to happen, IMO.

Bubbles do lot more damage than people think. They change many people for the worse. Such people are going to be trouble in the neighborhood during a depression.

Rate cut means that the recession is imminent.

Recession will come suddenly and “unexpectedly” so as not to give manipulators much time and to catch them by a “surprise.” A very good tactic for war.

We deserve a recession and were deserve a depression because we allowed manipulators the power to manipulate the economy, i.e., “bankers’ mischief,” with “reckless mortgage lending” and we know for whose benefit that power is always used.

Norman Mailer: “God is the Creator and Devil is the Manipulator.” Therefore, it is clear who reigns over America. Mortgage (literally, dead-hand) means Devil’s hand on one’s home. Devil will claim what is under his hand.

It is payback time for the bad behavior from the top to the bottom!


Comment by polly
2009-01-08 07:12:08

That was completely incomprehensible. I got that you are gloating about something, but if you want us to admire your genius in its fullest bloom, you are going to have to be more transparent.

Comment by Jas Jain
2009-01-08 07:34:16

Bitching seems like a tradition here. Since you don’t get it, please take some time to think (I don’t write pages, I only share my conclusions). Anyway, let me spell out for you:

“My thesis has been that it [coming downturn] would be too sudden for the interventionists to do anything.”

“Rate cut [in Sep'07] means that the recession is imminent. [It began in Dec'07]. Recession will come suddenly and “unexpectedly” so as not to give manipulators much time and to catch them by a “surprise.”

Not born out by subsequent facts?

It is disgusting to having to deal with ungrateful people, but that is what we got.


Comment by Professor Bear
2009-01-08 07:41:21

“Bitching seems like a tradition here.”

You’re the expert.

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Comment by Jas Jain
2009-01-08 07:54:06

I am a self-professed critic of the American culture/system and bitches are simply bitches that engage in personal attacks on the posters. Got it, prof?


Comment by ann gogh
2009-01-08 08:03:18

The government will not stand for deflation.
Too bad they let stocks deflate and refuse to let the air out of the housing bubba.

Comment by aNYCdj
2009-01-08 08:06:21


why don’t you talk about how we dumbed down America by making ghetto an acceptable language?

And the consequences of 24/7 disgusting gansta rap and hip hop music……or is that over your head?

Comment by FB wants a do over
2009-01-08 10:02:11

“bitches are simply bitches that engage in personal attacks on the posters”

And dbags are simply dbags that engage in gloating.

Comment by hd74man
2009-01-08 10:03:09

RE: gansta rap and hip hop music……

It sure ain’t the days of the Temptations and Four Tops.


Comment by aNYCdj
2009-01-08 11:09:00

The band that should have been a super group of the 80’s The Catholic Girls…way ahead of their time:


Comment by Cowtown
2009-01-08 11:42:53

This is clearly a case of the pot calling the kettle a b1tch.

Comment by REhobbyist
2009-01-08 17:05:54

I loved the Four Tops clip. If there wasn’t a dog in my lap I’d get up and dance. Thanks, HDman.

Comment by polly
2009-01-08 07:52:15

Who said that your stuff wasn’t borne out by subsequent facts? I said I had no idea what you were saying. You just clarified your point. Now I know what you were saying.

When communicating with groups, it is always best to know your audience. When I was working at a radio station, we regularly rejected famous authors who wrote important books because they had no sense of audience during an interview (like insulting the host for asking questions that were meant to evoke an explanation from the book). Expecting a bunch of blog readers to keep an index of a year’s worth of your predictions in their heads is absurd in the extreme.

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Comment by Jas Jain
2009-01-08 08:29:14

You started by accusing me of gloating, didn’t you? Don’t people need to know the past record vis-à-vis forecasting the nature and the suddenness of the Crisis?

You could have asked more politely if all you genuinely wanted was clarification.


Comment by polly
2009-01-08 09:00:44

The gloating was pretty obvious. I didn’t need to know what you were saying to figure out the emotions behind the content.

Comment by Prime_Is_Contained
2009-01-08 10:13:42

“You could have asked more politely if all you genuinely wanted was clarification.”

I thought she did ask politely…

Comment by bluprint
2009-01-08 10:21:58

I thought she did ask politely

Well it was pretty sarcastic.

But It’s pretty obvious to me at this point that Jas tends to interpret mild sarcasm as something much more aggressive or insulting.

Comment by ButImNotDeadYet
2009-01-08 12:39:08

My only comment on this thread is: WHO CARES?

The world doesn’t revolve around Jas. Stop feeding the troll and it might go away…

Comment by scdave
2009-01-08 13:49:13

Ditto here…

Comment by FB wants a do over
2009-01-08 14:01:59

Requires kid gloves

Comment by BanteringBear
2009-01-08 16:18:27

Well stated, Polly. Anyone who archives all of their blog posts, then continually copies and pastes them to the same blog, is quite insecure to say the least.

Furthermore, why in the heck does a self proclaimed “critic of the American culture/system” continue to reside in the US, especially when he’s from another country? Go away, already. There are plenty of individuals much more deserving of US citizenship than yourself. We don’t need born and bred narcissists.

Comment by Mikey(2)
2009-01-09 13:32:47

Good banter. You should open up the discussion every day, Jas. I dig the edge to your comments. Sometimes it’s just a little too nicey-nicey here.

Personally, I’d live to see some Realtwhores comment; then it would get really interesting.

Comment by oxide
2009-01-08 08:17:11

“Rate cut in Sept 2007 means that recession is imminent.”

Good call. I was expecting the great crash when credit markets froze up in August 2007, which is when the banks suddenly realized that Alt-A may be in trouble(1) and that defaults would be much higher than they thought.(2) That initial freeze-up was just gaining momentum in the news media when Bernanke sent in the helicopters. That banks shut up, FAST. They really thought the rate cut would solve their problems forever.(4) So they went on Partying like it was 1929.

Jas, you were definitely right about the deflation! So, at what point will deflation will turn into inflation? Do we look for Stimulate Me™ Messiah dolls on the shelves in Wal-Mart? Or do we look for a bottom in the price of gold? Yen? Yuan? Euro? I already gave up on oil.

(1)because the idiots placed importance on FICO rather than on price/income ratio.
(2)because their idea of a normal risk model was to just price in a few defaults(3)
(3)not realizing that easily over 50% of ARM-IO-Neg-am could default [oh horror] regardless of FICO(1).
(4)They much have misunderstood the “25″ part of “pay off the adjusted high payment for the remaining 25 years.”
(5)because the only thing man learns from history, is that man never learns from history.

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Comment by packman
2009-01-08 08:31:28

Sorry, but to 99% of us here on HBB, a recession has been imminent for a long time, with many other leading indicators coming long before the rate cuts.

Like the very existence of this blog, for instance.

Comment by SWAMI_E
2009-01-08 10:14:49

I don’t see any deflation in the price of gold since I bought it in September 2007. You are confusing economic collapse with deflation. The following gold prices were a harbinger of the economic collapse.
7/13/07 666.50 Close
7/16/07 666.00 Close
7/17/07 666.50 Close
7/18/07 666.75 Close
7/31/07 666.75 Open
8/02/07 666.25 Close
8/03/07 666.35 Open
8/28/07 666.00 Close
8/30/07 666.30 Open
8/30/07 666.00 Close

Comment by LeftCAin2004
2009-01-08 10:15:34

“Do we look for Stimulate Me™ Messiah dolls on the shelves in Wal-Mart?”

I fell off my chair, I laughed so hard.

I come to this blog just to retain my sanity when everyone around me kept saying “Now’s a great time to buy” for years! And some folks still do.

Just yesterday, I heard a Whole Foods cashier (in Chandler, AZ) say that to me! She is under-water on her mortgage and is trying to sell it. She lives in Ahwatukee (which is really Phoenix; there is no such place as Ahwatukee, AZ), and there are tons of homes for sale there. She said, “If you are a buyer, now is a great time to buy!” She said she might take her house off the market and wait for the market to turn around.

I didn’t say aything but just wished her good luck.

Comment by packman
2009-01-08 11:12:44

“I don’t see any deflation in the price of gold since I bought it in September 2007.”

That’s because the primary demand of gold isn’t as a commodity, it’s as a currency.

Pretty much every good/commodity/etc. around us is deflating, relative to the dollar. Currencies generally aren’t.

Comment by packman
2009-01-08 11:15:40

Price deflation will continue as long as other countries are willing to buy our debt. If other countries start refusing to buy our debt (there’s been some hinting, but nothing serious), then hyperinflation begins.

Wage deflation is happening already, in the form of increased unemployment.

Comment by SWAMI_E
2009-01-08 11:44:23

Could be that the inflation is hiding out in the Treasury Bond Bubble. The 666 Economic Collapse is gonna look like inflation and deflation and normalcy all at the same time.

Comment by ButImNotDeadYet
2009-01-08 12:44:48

As I posted (late yesterday) I keep looking for signs of deflation in things I buy at the grocery store and I don’t find any. A box of cereal? A bag of Doritos? A can of soup? A frozen pizza? Anything from the produce aisle? Nope, nope, nope, nope, and nope…

We don’t have “deflation” until some of those things go down in price. And they spent the better part of 2008 going UP in price (considerably). Maybe they’ve leveled off now. Or, maybe they’re fixin’ to go down soon. But it ain’t happened yet…

Comment by ecofeco
2009-01-08 14:14:08

My local grocery store had raised priced, then lowered prices, and has again raised prices.

Gasoline went back up. Still significantly cheaper than a year ago.

Comment by knockwurst
2009-01-08 17:06:59

I love it! If someone slanders Mexicans and anyone else objects, they’re just being ‘PC with a stick up their butt’, but if you slander Americans…we’ll that’s just wrong!

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Comment by SanFranciscoBayAreaGal
2009-01-08 21:06:47


If someone slanders anyone else and objects, people are being PC, or have a bad sense of humor, or etc…

Agree 100% with you.

Comment by jane
2009-01-09 00:06:16

All, it seems to me that we have all been there.

Seeing matters unfold, documenting them, running them up the flagpole, and then being gaslighted. Taking a really hard look at the rigor of our analysis and the validity of our conclusions. Determining they are sound. And then feeling like a mule just kicked us in the gut.

The authentic response to being robbed of your voice is fury. Being diminished in this way is the analogue of being asked to buy into the convictions of the bully on the school bus who denies your right to live. Or into the convictions of the narcissistic spouse to whom you are a socket wrench required to sustain an opulent life.

If you have learned the lesson of smiling while being obliterated, you will kill your fury. But it has integrity, and it will exact recognition. It will burrow into a place in your soul, and multiply in recesses where it may survive. It will ultimately be heard. It will emerge through some other channel, triggered by something entirely unrelated, directed at something other than the thing that birthed it. In common parlance, we call it ‘kicking the dog’. In ancient metaphor, the voice of the persecuted was the one crying in the wilderness. This meme, of anger which has been forced underground, has legs.

I submit that to a degree, we are a community of anger here. We have seen things clearly, and have been diminished. We have seen putrefaction in reward systems. We have recognized the campaign to manipulate us, and are rightly affronted. We are intelligent, and our manipulators would trash our awareness so that it no longer works. Our manipulators have reaped rewards. We have reaped opportunity costs.

My meandering point is that we might want to consider acknowledging the validity our collective anger. We might consider recognizing the spillovers resulting from being f*cked in the pocket book by the credit bubble and its sequalae. Having your job expropriated is a legitimate cause for anger. Having the validity of your analysis and conclusions mocked, a form of extermination, is a legitimate cause for anger. I am by no means a rabble rouser, and in fact am almost at the point where I simply expect to be scr*wed, but I feel we might consider honoring those among us who are in pain, and whose anger must have its voice.

Dorothy Parker did it with rapier wit. Drove her anger deep into herself. Despite her assets and steel backbone, her anger had the final word. David Foster Wallace, same story.

Personally, my salvation lies in the hope of osmosing the sensibility of a dumb beast. I take a lesson from my dog - a magnificent, ancient Akita who had a tough life before winding up in rescue. He has no residual anger. OTOH, even in his dotage, when he experiences a stranger potentially violating his den and his food source (me) - he honors what must be his anger. It does not go underground. BTW, he looks a lot better than I will look at the equivalent age of 110.

This is my case for using our intelligence to hear those among us with authentic anger, honestly gotten, and not continue the cycle of denying a voice to members of our own community.

Comment by Mikey(2)
2009-01-09 13:41:20

Wow, Jane, you write beautifully, and your point is well made. I particularly liked the phrase, “the spillovers from being f*cked in the pocket book by the credit bubble and its sequalae.” It caught me by surprise, which is always a pleasure in reading.

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Comment by targetdrone
2009-01-08 07:14:26

Thanks for the post . Your views are appreciated.

Comment by Hwy50ina49Dodge
2009-01-08 07:36:10

Aw come on Jas…geez, “cut with the negative waves Kelly..it’s gonna be a mother beautiful recovery” ;-)

Soup is food.

I promise to stop by this spring, I need to place a tree-house expansion material order with Home Despot in Tehachapi…Should I bring beer or wine? I might as well tell you the gift I got for you…it’s a t-shirt:

on the front: Lions, Tigers & Bears…Oh My!
on the back: Hey Snap Out of It!


Comment by hd74man
2009-01-08 14:42:05

RE: “cut with the negative waves Kelly..it’s gonna be a mother beautiful recovery”

“Kelly’s Hero’s”…whatta classic-Clint Eastwood, Telly Savalas,
Don Rickles, Don Sutherland, Carroll O’Connor.

Hollywood doesn’t make’em like this anymore.

Comment by Marcus
2009-01-08 07:40:31

Ben should write a book on the bubble. He could chronicle the build up and collapse with quotes from the blog. I’ve read a lot of insightful things here over the past few years and I think it would be a great way to show the masses that we did see this coming and that their representatives were deaf to the warning cries.

Comment by Muir
2009-01-08 09:04:00


Comment by In Montana
2009-01-08 09:05:50

I thought he was writing something like that already.

Comment by Olympiagal
2009-01-08 09:30:03

I also thought Ben is doing something like that, and I am excited about it.

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Comment by Muggy
2009-01-08 11:04:42

a collection of the best posts/threads would be cool, with interstitial commentary.

Of course, we’d probably be the only ones to buy it. Everyone else would probably buy Rich Dad instead.

Comment by REhobbyist
2009-01-08 17:09:26

LOL, Muggy. or David Lereah’s book.

Comment by Hwy50ina49Dodge
2009-01-08 07:08:01

anecdotal evidence of consumer bling going…bingada bangada boom!

This guy has combined elements of several HBB posters. :-)



Comment by oxide
2009-01-08 07:23:27

About a year ago, an acquaintance of mine bought an old biker bar about and is refurbishing it. Last summer business was good — the bar had been a favorite with bikers so they were glad to see it open again. Business has been really bad lately, especially in winter. The guy had borrowed from his 401K to buy the bar, then he lost his job. :-(

Comment by taxmeupthebooty
2009-01-08 07:36:41

hope he makes it
will cheap gas help ?

Comment by polly
2009-01-08 08:08:37

Don’t loans against your 401k get “called” immediately upon leaving employment? Where is he going to get the money to pay back the loan?

Comment by oxide
2009-01-08 08:46:57

I don’t think cheap gas will help, because bikes get fairly high mileage anyway. Winter hurts much more, especially since our winter has been cold, and icy. The worst for bikes.

Yes, the 401K loan gets called — he told me he was worried about that. I don’t know the details, but I don’t think he borrowed more than $50K. Maybe it would be best to go into BK now. The most he’ll do is lost the bar and go broke — I mean come out at 0 and start over, which is actually better than going broke owing $250K like lots of folks.

I really feel sorry for him, but I think he’ll do all right. He didn’t buy a house — he knew housing was a crock, same as we did. He lives with aging parents in their house. He didn’t like admitting that because chicks thought that made him a loser, but it will be his saving grace.

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Comment by MissedApproachMN
2009-01-08 13:04:16

FYI- As of 2005, only 15% of Harley Owners were 35 Years old or younger. In 1985, 50% of Harley Owners were 35 Years old or younger. Its a bad time to do anything Harley realted from a demographics standpoint. As a Gen-X, I can assure you that I never run into anyone in my age category interested in a Harley or Cheesy Leather lifestyle that seems to go with it. I can, however, always watch the perceived lifestyle on commericials for Centrum Silver/latest erectile drug. For more fun, run a Craigslist in Las Vegas or Phoenix for used Harleys- its a sea of inventory.

Comment by scdave
2009-01-08 13:55:21

You a flyer missed ??

Comment by MissedApproachMN
2009-01-08 15:15:34

Way back in 2005- DH/DA (Decision Height/Decision Altitude) was reached, no financial references were visually apparent (thanks to this Blog) so it was P,T,F&G (Power, Tower, Flaps and Gear)

Now I’m in the holding pattern until 2013.

Comment by DennisN
2009-01-08 15:43:09

My brother bought his first Harley - a brand new Fatboy - two years ago at age 63….

Comment by Jim A.
2009-01-08 08:50:35

Taxable distribution.

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Comment by polly
2009-01-08 09:07:39

Plus penalty, right? Damn. That hurts.

Comment by edward
2009-01-08 09:26:09

Yeah, at that point it becomes an early withdrawal with all the associated taxes and penalties.

Comment by San Diego RE Bear
2009-01-08 10:46:22

But he can write off the withdrawal from the 401(k) against any business losses. (Although not the 10% penalty for fed and whatever the penalty is for state.) Tell him to get to a really good tax planner before he does anything else. He may be able to avoid BK and lots of IRS taxes with the right planning.

Comment by ButImNotDeadYet
2009-01-08 12:49:58

Under certain circumstances, the 10% penalty can be waived (at least for IRA withdrawals, not sure if the rules are the same for 401k’s)

Comment by Laurel, md
2009-01-08 14:12:08

I had a year to pay it back.

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Comment by hd74man
2009-01-08 07:41:14

RE: This guy has combined elements of several HBB posters

Harley Davidson Motor Co. downgraded to underperform.

52 week low-$11.54

52 week high-$48.05

Yesterday’s close-$17.35 from ‘05 high of $81.00.

So much for the days of arrogant Taj Mahal stealerships charging $5k over MSRP.

Shed no tears over this crowd of greed-heads.

Comment by DinOR
2009-01-08 08:04:13

“Taj Mahal stealerships” LOL!

You should see the one we have in Salem, OR. Truly a monument. But Hwy50’s consolidated comments ring true, and not just for HOG. Seems everywhere I go it’s apparent that so much of what we see is nothing more than a facade.

The part that bugged me most about the boom was at the height, nobody had any time for you ( unless you were the current highest bidder ) and now you have to settle for substandard service due to the economy. Either way, stick it.

Comment by DennisN
2009-01-08 08:48:50

They opened a giant HD dealership here in Meridian ID only about 18 months ago. I can’t believe you need that big a place to sell a few Fatboys.


“We know that your interest in Harley-Davidson is about more than just the motorcycle. It’s about the Harley-Davidson Experience. That’s why everything we do is centered around you, the customer. From Demo Days to Service Seminars to the 6-hole putting green at High Desert’s new store in Meridian, we want you to enjoy every aspect of Harley-Davidson® and Buell® motorcycles. “

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Comment by Muir
2009-01-08 09:11:44

I bought a suzuki 805 (formerly Volusia) in 05.
I called 5 counties prices $7500-$8800
Got my ride for $6200 after calling around.
My bike rides better than a lot of those $25K+ bikes.

Comment by ET-Chicago
2009-01-08 09:12:11

A six-hole putting green?

What in God’s name does that have to do with buying a Road King?

Comment by exeter
2009-01-08 10:19:36

$25k for a scooter that parts fall off and only overweight tough-guy wanna be slobs want to be seen on. You did the right thing Muir.

Comment by aNYCdj
2009-01-08 11:12:00

But those guys seem to have lots of biker chicky-poos willing to take off their shirts…….can’t be all that bad.

and only overweight tough-guy wanna be slobs want to be seen on.

Comment by sleepless_near_seattle
2009-01-08 12:56:05

“A six-hole putting green?”

Well, consider who they’re now marketing to. All the clean-cut guys who couldn’t be ruffians in the 60s-70s are now realizing that it was cool to be a ruffian. Suit-types who “entertain clients” on the golf course, but still want the image of not being one of those stodgy-corporate-types. It must be hard work being that ashamed of yourself.

Guys who don’t realize that the HD “experience” was being on the road, not in a flashy showroom trying to impress others exactly like you.

Comment by BanteringBear
2009-01-08 17:33:08

“We know that your interest in Harley-Davidson is about more than just the motorcycle. It’s about the Harley-Davidson Experience. That’s why everything we do is centered around you, the customer We’d like to thank you for buying into our horsesh!t and throwing ridiculous sums of money at our substandard motorcycles.”

Comment by hd74man
2009-01-08 10:12:22

RE: Taj Mahal stealerships” LOL!

I bought my first HD from a dealer who started in 1965 and operated his dealership out of an old cow barn.

The 2 wrenches used to fight over who was gonna get to use the one hydraulic life.

Man, I can still smell those portable kerosene heaters he used to keep the place warm in the winter.

Now a stealership has to have a whole floor devoted to selling t-shirts, trinkets, and logo-ed Pampers to the wanna-be’s.

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Comment by hd74man
2009-01-08 10:15:37

RE: Either way, stick it.


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Comment by goedeck
2009-01-08 09:46:29

Doyle HD just closed Roseburg, OR dealership and consolidated all their inventory to their Eugene store. We also just had a Bayliner plant close for good last month.

Surplus of toys I guess.

Comment by lavi d
2009-01-08 10:33:53

Red Rock Harley Davidson just moved into their new digs. They were in a former car-dealership just down the street.

I’ll let you how that turns out.

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Comment by hd74man
2009-01-08 13:37:00

RE: I’ll let you how that turns out.

They’ll be just like the newly bankrupted “Hard Rock Theme Park” in Myrtle Beach, SC.

5 years in planning; $400 million in debt; 9 months in operation.

Complete liquidation-no re-org.

Bad timing is everything.

Comment by Kim
2009-01-08 08:01:24

“anecdotal evidence of consumer bling going…bingada bangada boom!”

I don’t have a link, but my husband heard on NPR yesterday that the reason we’re seeing so many tacky “As Seen on TV”/Billy Mayes (sp?) commercials is because a huge percentage of commercials were for automobiles. The auto companies cut back on marketing, and the studios are selling those ad time slots at discounts. In turn, sales of those “as seen on TV”-type products (think: Snuggie, Mighty Putty) are up!

Comment by Bill in Carolina
2009-01-08 08:07:56

Notice also the number of TV ads by your local cable provider. Each one represents a spot they couldn’t sell to a paying advertiser.

Comment by edgewaterjohn
2009-01-08 08:38:14

Comcast can’t sell sh*t then!

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Comment by John
2009-01-08 13:18:25

Comcast ends up running their own ads about 5% of the time down here in South FL. It pisses me off because their ads are 50% louder than the show and the other commercials. You need to have the remote close by at all times or you risk blowing an ear drum.

Comment by CA renter
2009-01-09 05:07:14

Same with Time-Warner here in San Diego.

Comment by ann gogh
2009-01-08 08:09:53

I hate car commercials anyway. It’s always some football coach voice telling me I want a rugged truck or some snob telling me I need luxury.
Screw dat.

Comment by Not Mssing It
2009-01-08 10:01:49

And just where is it that I can buy a 2009 Ford Mustang with that black tinted windshield I see on the commercials? I have been looking at all the lots but just can’t seem to find one.

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Comment by hd74man
2009-01-08 10:27:50

RE: And just where is it that I can buy a 2009 Ford Mustang with that black tinted windshield I see on the commercials? I have been looking at all the lots but just can’t seem to find one.

Most auto dealer sales managers are idiots. They never have squat on the lots.

But I ‘m sure your local FoMoCo dealer would only be too happy to take your build order at the moment or find you one.

Personally, I never buy off the lot. With a personal build order you can dump all the gratutious crap the dealer wants to charge up the wazoo for.

Never paid more than $300* over dealer invoice either.

(no trade-in)

Comment by Not Mssing It
2009-01-08 10:33:43

I was kidding. I would never, number one: buy a American made automobile again. And number two: They always advertise the cars with tinted front windshields. I’ll bet you can’t buy one like that legally but they’ll advertise them.

Comment by hd74man
2009-01-08 12:48:06

RE: Ben should write a book on the bubble.

WSJ critic sure trashed the one written by the Countrywide marketing toad.

Comment by polly
2009-01-08 08:15:05

So, used to be ads for new cars, and now they are ads for getting a loan against your car title?

And talk about a death spiral type loan. You get a loan against your car title. Can’t pay it? You lose your car. Lose your car and you can’t get to work. Can’t get to work and there is no chance of ever paying off the loan. No way to pay off the loan and there is no way to get car back and get to work. Only job opportunity left is one you can walk, bike, or public transport to. Good luck with that.

Comment by Arizona Slim
2009-01-08 08:34:50

Aw, come on. I bicycle commuted to work for years. Loved most every minute of it too!

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Comment by edgewaterjohn
2009-01-08 08:42:50

“Only job opportunity left is one you can walk, bike, or public transport to.”

Location. Location. Location.

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Comment by ET-Chicago
2009-01-08 08:49:12

Only job opportunity left is one you can walk, bike, or public transport to. Good luck with that.

Depends where and how you live, I guess.

I’ve only been willing to take jobs where I can walk, bike, or use mass transit since I was 25 years old. (I haven’t lived in a big city all that time, either.)

This is an area where I’ve tried to act on my principles — though I did try car commuting in Northern Virginia in my early 20s. I hated driving all the time. I realized it would turn me into a babbling automaton. So for me, it’s never been a tough choice to make.

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Comment by polly
2009-01-08 09:49:22

Getting to work without a car is certainly possible. I’ve been doing it for years. But these ads are not aimed at professionals with various job opportunities in urban areas. I think they are aimed at unskilled young adults who are living with parents because they spent all their money on their cars and maxed out credit cards. I’m guessing that loss of transportation brings these kids from an entry level job with maybe some hope for a future to supermarket restocker or fast food checkout.

Responsible adults don’t turn in their car titles to get short term cash.

I also think these places may be springing up because laws are kicking in restricting pay daw loans, and secured loans are exempted.

Comment by goedeck
2009-01-08 09:55:40

I can’t get a girl
Cuz I ain’t got a car
I can’t get a car
Cuz I ain’t got a job
I can’t get a job
Cuz I ain’t got a car
So I’m looking for a girl with a job and a car
Don’t you know where you are

Lost in America
Lost in America
Lost in America

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Comment by michael
2009-01-08 08:48:40

i dont know what it is but i just want to hang out with the shamwow guy.

Comment by Muir
2009-01-08 09:14:53

He looks like a guy that likes a little coke with his JD.

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Comment by pressboardbox
2009-01-08 09:46:39

I’m pretty happy about it because my parachute just got a big rip in it and I was wondering how I was going to fix it.

Comment by edgewaterjohn
2009-01-08 08:21:49

About those Stealerships…

Be careful folks, on of my side jobs is to manage a modest fleet of vehicles, and starting this fall any warranty or repair work has been accompanied by a hard sell for brakes, tires etc. Both from stealerships and repair shops.

One place called me to approve a complete brake job because they said my driver complained about brake noise when bringing in a car for unrelated work. I denied the request and had the driver come straight back to the office. After a quick quiz of the driver it became clear that he didn’t so much as mention a peep aboout the brakes to anyone. We have three identical cars that see identical duty cycles and the brake wear is minimal on all of them.

Comment by Jim A.
2009-01-08 08:52:37

There is DEFINATELY pressure to “upsell” maintenance.

Comment by realestateskeptic
2009-01-08 12:07:50

Just came from an oil change and tire rotation at a Monroe Muffler. For the first time in my life I printed out and used a coupon. Out the door for $22.50. Not bad, I can’t do this myself. The 4 other customers that came and went all had coupons as well. The manager looked at the “report” and said, I won’t try to sell you anything else today…. very interesting in many respects.

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Comment by mikey
2009-01-08 10:40:56

Good post edgewaterjohn

My young neighbor girl is a contract health worker. She was home during a big snow storm. Her Dad is dead and her boyfriend is up north and told her to take it to a shop. Instead of cleaning the ice and snow of her winsdshield wipers, she evidently turned them frozen and bent the thin metal on both blades and stripped one wipper blade arms attacted to the motor arm scew .

Over coffee, she told me her local repair shop wanted her to leave car for 2 days because they were buy due to the storm and gave her an estimate of $130 parts and labor for the job. She was a litle low on cash, stuck and had to leave that night to return to her job.

I called a local part store I used and the parts counter guy laughed at the story and at the repair shop’s rip off estimate. He had the arm in stock and even told me another store that sold good quality wipper blades that were cheaper than his.

We got the parts in 25 minutes. I replaced the blades and changed the wipper arm including using lock-tight red on the screw treads. Took my time and made sure her blades had a balanced sweep and retracted and rested correctly at shut off.

I am NO mechanic and I DIDN’T sleep in a Holiday Inn last night but the total time to do the rush job not including pick up time was under 6 minutes and it cost her $46 with tax . I gave her the stand “gentle Dad” basic preventive maintenance lecture to include checking all fluids and tire rotation for free.

The car dealers and repair shops are definitely getting hungry. If you can’t do it yourself and have the time, get a few estimates and question everything :)

Comment by Olympiagal
2009-01-08 11:05:06

That was good of you, mikey. In my observation, as soon as any mechanic, anywhere, sees that you have b00bs, and are therefore probably a girl, why, they extravagantly lie and try to rip you off as much as possible. It’s like an instinct.*
So on behalf of girls everywhere, I say ‘thanks’ for helping a sistah out.

Although I do think this girl should learn how to change a windshield wiper blade, or at least clean the thing right. Jeeze. And she can change a tire and check her oil, right? Sigh.
I like to tinker with tools and fiddle around and have therefore learned some useful skills*. (’Course, I busted up some things in a very exciting fashion as I went about fiddling. There is that.)
I think everyone, boys and girls, should be taught some basic tool-use and fixing stuff in car and house sort of skills in high-school.

*Unless you’re dating the mechanic. Then they stick to only lying.

** And the most useful skill of all may be how to enchant mechanics.

Okay, no more laughing loudly. Time to be productive today. *assumes productivey sort of face *

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Comment by ella
2009-01-08 13:49:50

“So on behalf of girls everywhere, I say ‘thanks’ for helping a sistah out.”

I second that emotion!

Comment by ahansen
2009-01-08 14:59:30

+1 Thanks guys, fer shore!

I don’t believe I changed a flat tire along a highway the entire time I owned my Porsche 911S. Moreover, Dieter the Malevolent and I eventually became good buddies over years of tune-ups…actually, I rather enjoyed being a grease monkey back in the days of curburetors and timing chains. When he discovered I had been an organist, he showed me how to tune the exhaust to C major so I could play the bass line to Bach along Hwy 395.
Try THAT in a Prius.

Comment by lavi d
2009-01-08 10:21:26

anecdotal evidence of consumer bling going…bingada bangada boom!

Quite the rant. thanks

Fixed URL:

Harley Rant

Comment by WT Economist
2009-01-08 07:12:43

Here’s some bad news: most of the recent housing sales have been to speculators, meaning that rather than constitute real inventory reductions, these sales are properties that will return to the market.


“We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve,” said Stiglitz, a Columbia University professor of economics. “We could see a double-dip in the housing recession if that happens.”

What this means is that excess housing is being mothballed, and will cut in before new houses are built or prices rise. Those who buy wisely at the bottom will sell when they get enough profit, knife catchers will escape as soon as the get back to even — if they don’t get foreclosed on before that.

Looks like it will be a great time to buy in 2030.

Comment by taxmeupthebooty
2009-01-08 07:23:47

in my hood, it’s all inWESTors
mostly Asians

foreclosures are gone

Comment by Olympiagal
2009-01-08 09:36:30

Hooray! You’re back, taxmebootay! I was seriously missing my favorite ‘Incomprehensible Oracle’.
You got yer turban on, right? Keep the mystic pronouncements coming, I urge you.

Comment by packman
2009-01-08 07:31:22

Thanks for the link.

That would be a big fat “DOH!!” for those that claim that we’re close to a rebound.

Comment by Professor Bear
2009-01-08 07:39:45

“Here’s some bad news: most of the recent housing sales have been to speculators, meaning that rather than constitute real inventory reductions, these sales are properties that will return to the market.”

That is hardly news to this forum. I think we figured that out back in 2005 or so…

Further, it is hardly bad news, if you happen to be a renter, or an affordable housing advocate. As I point out below, housing prices per square foot in San Diego are currently dropping at a rate of about 96 pct per annum. Pretty soon prices will have returned to levels where we can once again recruit and retain a young and vibrant work force through affordable housing in an attractive location. Why don’t politicians see the up side of falling housing prices for once, instead of acting like Cassandra reincarnate?

Comment by Blue Skye
2009-01-08 08:44:43

I like your positive spin. When my dad was 14, he left the grime of the South Buffalo steel mill and went to California. He got a job driving a Cadillac for some dude and had a time of it. A few years later he was on Iwo Jima.

Where does one get this young and vibrant workforce?

Comment by Jim A.
2009-01-08 08:54:53

96%!!! (which means $2000 instead of $500,000)or 9.6%?

Comment by Jim A.
2009-01-08 08:56:13

oops that’s 20k not 2k.

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Comment by Professor Bear
2009-01-08 11:00:43

The 96 pct rate of decline is clearly not sustainable, which bodes for a near-term L-shaped bottom, similar to the aftermath of a receding tsunami wave.

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Comment by reuven
2009-01-08 08:09:41

I’ve thought the same thing. With all the houses on the market, buying a house with hopes to sell it again in a month–even if the price seems very low–is a risky venture! At *best*, you’ll get your money back minus transaction fees.

Comment by oxide
2009-01-08 09:14:44

So does this mean housing prices will look like…

| _/\__/\/\_/\__/\/\/\___—-/??

I could probably live with prices anywhere in that curve..

Comment by Muir
2009-01-08 09:21:24


Comment by ella
2009-01-08 14:00:46

I think it looks more like this:

\(^o^)/ \(^o^)/ \(^o^)/ \(^o^)/
\(^o^)/ \(^o^)/ \(^o^)/ \(^o^)/\(^o^)/ \(^o^)/ \(^o^)/ \(^o^)/

(@.@) ??

(O.O) !!!



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Comment by Professor Bear
2009-01-08 11:01:50

Perfect depiction of the comment I just made above (L-shaped bottom)…

Comment by Lars39
2009-01-08 07:13:23

We are quickly moving from recession to depression.

Comment by hd74man
2009-01-08 07:22:37

RE: We are quickly moving from recession to depression.

Financial high roller suicides are certainly in the news these days.

Comment by ann gogh
2009-01-08 08:14:50

I’m sure grumpy not sure if it’s a clinical depression.
Can we get some good news in here?

Comment by edgewaterjohn
2009-01-08 08:23:51

That IS the good news.

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Comment by Olympiagal
2009-01-08 09:38:45

Yeah, I know IIIII’m a smilin’ away.
Maybe you just need to drink more beer with your Cheerios, Ann.

Comment by lavi d
2009-01-08 10:40:53

Can we get some good news in here?

The Good News:

Health? check
Food in belly? check
Roof over head? check

It’s all good, then.

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Comment by Asparagus
2009-01-08 07:40:14

Sort of OT.

Speaking with my FIL this holiday (he owns a small business) we were talking about retailers. In December it seemed obvious to us that they were running scared. We had a theory, that if you owned a store, you had ordered your Xmas inventory back in the summer and now were in danger of eating it.

The result being, you are not ordering any more new units, or at least a greatly reduced amount (deflation?). Which will mean decreased supply for consumers who are still consuming (inflation?).

Then, over the last two weeks, my wife has ordered two items online which have resulted in a message from Amazon that says, sorry, these items just aren’t coming. Nothing about a delay, just, you’re not going to get them (inlfation? (we could probably get them if we were willing to pay more somewhere else)).

Comment by DinOR
2009-01-08 08:09:14


I suppose we should all start getting used to it. I’ve seen retailers “consolidate lines” before, but nothing like this! They can only afford to shelve the product lines w/ the absolute -best- mark-ups. Everyone else? Under the bus w/ you!

Comment by Asparagus
2009-01-08 08:30:29

Now everything is a beanie baby.

Line up

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Comment by DinOR
2009-01-08 08:34:33

Oh I don’t know that these fits and starts in the supply chain have to -automatically- equate to inflation? They may well but in ways I think this is healthy too! Do we really need grocers that stock 38 different brands of mustard?

It’s freaking mustard fer’ crissakes!

Comment by polly
2009-01-08 09:24:30

Then it all should be going cheap when yard sale season comes around again, though maybe not exactly the type you were looking for.

Comment by mrktMaven
2009-01-08 09:17:01

It’s a risky strategy, however. People tend to substitute during hard times. If consumers can’t find a meaningful product at the price they are willing to pay at your store, they may try shopping for it at one of your competitors. Pretty soon they substitute your store completely and you lose a reliable repeat customer.

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Comment by DinOR
2009-01-08 09:35:04


Absolutely true. Yet there’s no saying they won’t “substitute” you altogether anyway? Frankly I’m a little ashamed and shocked by the consumer behavior I see in a lot of people here locally.

Of course I’d be the -worst- judge of consumer behavior. Even when I was making decent money ( I still ate a bag lunch? )

Comment by aNYCdj
2009-01-08 08:11:18

They closed back in june and still nobody has rented a corner store with lots of big high windows. 68 years…..


Comment by MazNJ
2009-01-08 10:39:00

While in lower Manhattan I don’t see much retail space unrented, when I travel home at night to my little suburb on the Jersey Shore, there is simply CRAPLOADS of retail space that has been sitting unrented, alot of it recent but some of it now over a year or more and it just keeps on building up (haven’t seen a single new store open in a while but tons going out of business). I don’t lament many of them but I’m perplexed by the Property Managers. Some of the stores I dealt with simply said the rents they were trying to charge was too high… But why kick out an occupant if you don’t have a replacement (at least in the works?) Just shorten the terms of their lease going forward while you line up that person willing to pay a higher rent :/

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Comment by VaBeyatch in Virginia Beach
2009-01-08 11:21:53

To accept a lower rent is to admit your property isn’t worth what it once was.

Comment by Jon
2009-01-08 10:30:38

“Then, over the last two weeks, my wife has ordered two items online which have resulted in a message from Amazon that says, sorry, these items just aren’t coming. Nothing about a delay, just, you’re not going to get them (inlfation? (we could probably get them if we were willing to pay more somewhere else)).”

I had a similar experience. I went to a furniture store to by a stand for my new LCD TV. Spent some time talking to the store manager (who was the only person working in a warehouse sized building & I was the only customer). His comment was that the major furniture manufacturers are vastly reducing their product lines. Mentioned one that had 500 different kinds of couches, chairs, etc… and were reducing to just 50.

That is a form of deflation.

Comment by ella
2009-01-08 14:06:20

I had an opposite experience (which I already posted about) where the manager of a store (luxury goods) was raising prices on some products “because of the economy”. What she meant is that the demand was down, so they couldn’t afford to keep some items in stock and were special ordering only, so you pay more for shipping, etc. It seems to me like a triply losing strategy:

1. Impulse buyers can’t get what they want right away (have to wait for delivery)
2. Makes it more expensive, obviously.
3. Why not buy online then and get the best price?

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Comment by lavi d
2009-01-08 10:47:31

…you had ordered your Xmas inventory back in the summer and now were in danger of eating it.

Just before Christmas I was in Fry’s here in Vegas and I was amazed at how low the shelves seemed to be.

It occurred to me that perhaps they had purposely “understocked” because they thought the season would be slow.

Comment by jane
2009-01-09 02:22:15

Feet on the street in NoVa: there is a Loehmann’s in Falls Church. Loehmann’s is a liquidator for designer clothes. I last went there in January 2006, needed something WARM and BUSINESS-Y and had CASHMERE SWEATERS in mind. (Thank doG, you can get away with a skirt and cashmere sweater, even at a client meeting. It’s like the shorthand definition of ‘minimally acceptable business attire’, and ensures that nobody expects you to work 70 hour weeks). Anyway, I selected three cashmere sweaters from the clearance rack, multiply discounted, and paid $15 each for them.

Was in similar mood today. Hadn’t been back at the ol’ place in two years. I dashed over after work, and had NEVER seen Loehmann’s so empty, or the shelves so bare.

There were a total of twelve pairs of leather gloves left, and they were not ‘giving them away’. They were only at the normal discount from retail, around 50% off.

There were NO cashmere sweaters.

Half the shoe department was empty shelving.

FWIW, Loehmann’s is a place that used to be packed like sardines, both with merchandise squeezed onto closely spaced racks, and with every variety of pushy shopper.

This is not the Loehmann’s that I knew and loved, and could spend like a skinflint in.

This is like Neiman Marcus-gone-Costco-but-needing-increased-delivery-frequency. Just like how I saw things at the Outer Banks.

Comment by CA renter
2009-01-09 05:23:04

Production capacity had been reduced over the past 1-3 years (depending on the industry). This is exactly what I was worried about, because all that “cheap stuff” we HBBers wanted to buy has probably seen max inventory already a year ago.

IMHO, this might lead us into the inflationary environment, but not sure exactly how the transition will take place.

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Comment by Professor Bear
2009-01-08 07:13:47

A possible future sign the CA housing market is bottoming out: Earthquake! The Northridge Quake in 1994 was near the bottom of the SoCal housing price slide that started circa 1990. As the individual quoted in this article points out, it is always earthquake season in CA.

Lenders could be rocked by big quake
Study: Industry crisis would be intensified
By Emmet Pierce (Contact) Union-Tribune Staff Writer
2:00 a.m. January 8, 2009

Reeling from losses on surging foreclosures, lenders in California are being advised to brace themselves for a second financial shock if a major earthquake hits the state.

In its annual Global Climate and Catastrophe Report, the Aon Benfield reinsurance brokerage says a severe earthquake would accelerate the ongoing mortgage market meltdown. Many victims would simply stop making their monthly mortgage payments, the recent report warns.

It may be hard to envision things getting worse for a lending industry beset by rising foreclosures and a national credit crunch, but the threat is real, insists Bryon Ehrhart, chief executive officer of Aon Benfield’s analytics division.

“If you throw an earthquake on top of that, the propensity for people to walk away from their homes is even higher,” Ehrhart said. “It is not far-fetched. It is always earthquake season.”

Comment by Hwy50ina49Dodge
2009-01-08 07:18:18

Hoz find something quick…Mr. Bear is pulling away for the Eyeore Award of the week! …again ;-)

Comment by Professor Bear
2009-01-08 07:30:55

Hwy50 — Check out my annualized rate of decline in San Diego price per square foot below. I think that may clinch it for me ;-)

Comment by Hwy50ina49Dodge
2009-01-08 07:45:24

Hey Mr. Bear & all you other spontaneous San Diego region HBB’s I’m taking the train to Encinitas this Saturday…going to the Potato Shack for breakfast…Juanita’s for lunch…not sure where for dinner…but anyways, let’s go help the loco economy & buy a few beers & laugh laugh laugh! Looks like a good weekend for a stroll down Moonlight or Beacon’s. I’ll post information in the HBB forum later today.

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Comment by ann gogh
2009-01-08 08:19:55

Hwy. I don’t do the forum. email me and i’ll meet up witch you.

Comment by San Diego RE Bear
2009-01-08 11:08:53

Sounds good, can I get in on the e-mail too.

sd.re.b at hotmail dot com :)

Comment by Mike in Carlsbad
2009-01-08 23:13:14

mmm Juanitas. Still selling burritos for 3.50 and the line goes out the door.

Comment by hoz
2009-01-08 07:59:23

“I’m not asking anybody,” said Eeyore. “I’m just telling everybody. We can look for the North Pole, or we can play ‘Here we go gathering Nuts in May’ with the end part of an ants’ nest. It’s all the same to me.”


Comment by ella
2009-01-08 14:08:44


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Comment by lavi d
2009-01-08 10:54:45

You know the old saying about (Southern) CA’s seasons…

Fire, Flood, Earthquake, Drought.

Comment by Muggy
2009-01-08 11:53:04

Upstate NY has two seasons: winter and construction :smile:

Comment by cactus
2009-01-08 12:12:33

Earthquake and bail exactly what happened last time. My one neighbor left for Mexico City just too panicked by all the after shocks which go on for years.

Comment by Hwy50ina49Dodge
2009-01-08 07:15:30

So long for using 1929 as a reference. ;-)

BOE Cuts Rate to Lowest Since Bank’s Creation in 1694

Rate History

“…The benchmark rate has never been this low since King William III founded the central bank to fund a war against Louis XIV’s France. The rate began at 6 percent and fell no lower than 4 percent throughout the 18th century.

It touched 2 percent several times in the second half of the 19th century. The central bank held it at that level throughout World War II until 1951.”


Comment by packman
2009-01-08 07:53:05

Wow. Truly we are living in extraordinary times.

OK so here’s a question. We see the PTB are pumping and pumping as hard as they can, trying to get credit / money back into the system as hard as they can, while the system is deflating tremendously, as a natural outcome of popping of the bubble. Might there end up being a “whiplash” effect?

Comment by packman
2009-01-08 07:56:16

Meant to continue - a whiplash effect such that when the economy stops deflating (it has to some time) there will be some significant after-effects of all this credit/money pumping?

I know we’ve talked a lot about the possibility of hyperinflation - perhaps that’ll be one aftereffect. I’m thinking though about other possible aftereffects even. Not sure what though - just throwing it out there.

Comment by Pinch-a-penny
2009-01-08 08:01:21

Historically, the after effects of the last Great Depression was World War 2.

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Comment by max4me
2009-01-08 08:37:43

I miss that gold bug…I hope he is okay

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Comment by edgewaterjohn
2009-01-08 09:02:26

As so many point out, Japan - while far from a match - is probably the best (flawed) recent comparison we have.

They went ZIRP, had comparatively little land, have to import just about everything, and had oodles of hard savings that could have been used to run up prices - still - no hyperinflation.

No one can predict exactly how this will break, but what I am fairly certain of is that the all-knowing all-seeing big bad gov’t is reactionary - not anticipatory. Perhaps today it seems they are ahead of the curve, but I think time will prove they weren’t.

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Comment by ET-Chicago
2009-01-08 09:36:21

… the all-knowing all-seeing big bad gov’t is reactionary - not anticipatory. Perhaps today it seems they are ahead of the curve, but I think time will prove they weren’t.

No, I think it’s fair to say that the government started behind the curve and will remain behind the curve for the foreseeable future, regardless of who’s at the helm. Having said that, I don’t think a move from “reactionary” to “anticipatory” policy can happen until the triage phase is over.

Comment by crazy frog
2009-01-08 13:03:48

IMO, looking at the big picture USA today resemble closer Great Brittan from the late 19th/early 20th century, than Japan circa 1990s.
USA used to be the biggest industrial/financial power for quite a while and have been losing its dominant position in the world. Everything else come as a secondary effect.

Comment by ella
2009-01-08 18:02:44

“and had oodles of hard savings that could have been used to run up prices”

I am probably out of my depth here…but although there aren’t oodles of savings in the US, there will be this trillion bajillion stimulus of imaginary future money coming through the pipelines. Wouldn’t that show up as a period of inflation (maybe delayed) at some point?

Comment by packman
2009-01-08 08:34:12

“So long for using 1929 as a reference.”

OK then dangit - it’s the worse economy since… The Plague!!!

Comment by Jim A.
2009-01-08 09:04:02

Well land values did fall considerably….(although feudal tenure is more analagous to renting than buying)

Comment by packman
2009-01-08 09:24:27

Plus, nothing kills demand like half the population dying in 3 years or so.

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Comment by MrBubble
2009-01-08 16:11:45

At least wages would increase…

Comment by Hwy50ina49Dodge
2009-01-08 10:08:46

LOL :-)

Comment by packman
2009-01-08 11:19:24

“Bring out your debt!!!” “Bring out your debt!!!”

“But I’m not debt yet!!!”

Comment by ozajh
2009-01-08 17:12:12

(* Quick whispered negotiation. TARP money changes hands. *)


“Bring out your debt!!!” “Bring out your debt!!!”

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Comment by diogenes (Tampa)
2009-01-08 10:36:13

I find this actually a quite interesting bit of information and a timely perspective to our current dillema.
John Law founded the Mississippi Company at about this same time and started the rampant “land speculation” of the Americas to the French. the Collapse occurred around 1720. That was a similar event to the creation of the FED in 1913, and the corresponding “Boom” of the 1920’s and collapse in the 1930’s.
This led to DEPRESSION throughout Europe, France in particular…..end result….The French Revolution, at about the same time as the American Revolution.

Economic Depressions often result in revolutionary reactions.

Comment by Muggy
2009-01-08 11:56:37

“Economic Depressions often result in revolutionary reactions.”

What do we want?! A WHOPPER!
What will we pay?! A DOLLAR!

Comment by ella
2009-01-08 15:16:33

Oooh, I just read about that (in my boyfriend Nialls’ book). It was the scheme of a murderous Scot (John Law)! He got control of the Royal debt and could issue shares and could issue paper money (and he held shares in Mississipi, too), so a slight conflict of interest.

The French Revolution took 2 generations after the initial collapse to occur, but think how much more quickly information travels these days.

The other interesting bit was how people panicked, turned to gold, and then the crown made holding gold illegal, and even searched people’s houses. And my friends think economic history is “boring”! hmmph.

Comment by bluto
2009-01-08 15:33:09

To be fair, the Mississippi Company was mostly about monetizing the French debt (just as the South Seas Company was about monetizing the English debt). There’s an interesting book on both that came out after the stock bubble. The author tells the story of John Law in comparison to notables stock market players, but the parallels are much closer to the housing bubble (more debt financing, etc).

Comment by ella
2009-01-08 18:04:30

What is it called (the book)?

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Comment by polly
2009-01-08 07:16:52

TV commercials are scarey these days. There are huge numbers of various non-competative entry colleges and training schools presenting alleged testimonials from former students about how their lives were made perfect by getting some valuable but distressingly easy education. Seems that something you can pick up in less than a year and with no effort on your part will triple your salary, get you a beautiful wife with adorable baby, and the undying admiration of your parents who used to think you were a total screw up. Oh, and a house.

One more form of debt that people won’t be able to pay back. When will it end?

Comment by taxmeupthebooty
2009-01-08 07:25:25

all it takes in fed
degree= pay
you may be the exception ,but the feds are totally on board w degrees……..
glad my kid is taking engineering/finance
can’t fake that

Comment by polly
2009-01-08 08:24:50

I have plenty of degrees. And I got loans for the first two - and paid them off, quickly. Third one was half paid for by a former employer and half paid for by me without loans - I had the cash.

Good luck getting a government job without work experience during a downturn. A degree won’t get you on the most qualified list if 50 other people have the degree and the experience.

Comment by aNYCdj
2009-01-08 09:36:49

That is what i face everyday..Bean Counters, Robots who can’t think outside the box…..

Just when we desperately need to hire people like me…we are told to Get Lost!

A degree won’t get you on the most qualified list if 50 other people have the degree and the experience

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Comment by Skip
2009-01-08 11:29:29

glad my kid is taking engineering/finance
can’t fake that

You can outsource to another country for 1/10th the cost though.

Comment by Professor Bear
2009-01-08 07:32:02

Polly — Thanks for reminding me why I never watch teevee.

Comment by Ernest
2009-01-08 08:12:10

Wish more people would do the same.

Comment by Arizona Slim
2009-01-08 08:36:40

Yours Truly doesn’t own a television. Never have, in fact.

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Comment by Bungalowball
2009-01-08 12:55:18

I spend all day not watching TV.

Haven’t owned one in years. The rapidly changing visual stimuli in commercials can really mess with your brain, imho. I’d much rather watch paint dry.

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Comment by awaiting wipeout
2009-01-08 17:15:38

Same here. Actually we own a flat screen for DVD movies, but its not hooked up for TV viewing. We have not watched TV in 14 years. We’re out of touch with pop culture, and proud to be called book worms. I also am learning to play piano. Life is richer without TV.

Comment by Jas Jain
2009-01-08 07:36:34

When we get rid of the evil Federal govt fully controlled by Debt Pushers. Pushibng Debt is an evil.


Comment by GH
2009-01-08 07:41:34

The really pathetic thing about these institutions is that they are approved by the USDOE for student lending. My wife got suckered into one of these in the early 80’s. It was later declared a fraudulent school by the USDOE, yet in 2002 they came after her for the money (no statute of limitations on student loans). I paid it off rather than take a hit on her credit report, but the point is the whole student loan industry is as bad as the mortgage industry. Ripe with fraud and contempt.

I am not even sure regular college is a worthwhile investment any more, what with all the required junk classes one has to pay for etc, but the so called trade schools are another matter altogether, and yes a sign of the times. Take an unemployed person and put them in debt another $10K or so on loans which can ruin the rest of their lives. UGGG!

Comment by polly
2009-01-08 08:32:30

“but the point is the whole student loan industry is as bad as the mortgage industry”

I actually think it may be worse. At least with a first mortgage loan in a non-recourse state, you can let the lender have the house, take a hit to your credit score and be done with it. The student loans are with you forever. How is junior joe six pack supposed to be able to figure out what job skills are going to be sufficiently in demand for him to be able to pay off a 20 year loan?

Comment by Xenos
2009-01-08 09:37:10

It can get pretty bad. I know people who graduated from law school with nearly $150,000 debt from undergraduate and law school combined. Some ended up hired and then shortly later fired when the dot.com boom fizzled, some were underemployed, some unemployed, and one who never even passed the bar exam. F*cked. I ended up with just $40,000 in debt, but have yet to net more than that in a given year.

I am not complaining for myself. I knew the risks, and took them. But for some kids with long records of academic success were told they had what it takes to be a great success, got into great schools, performed well, and learned that they were just surplus production only after they graduated. I am surprised they have not faked their deaths and taken on new identities by now.

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Comment by Skip
2009-01-08 11:33:37

Think of all those folks who signed up for a masters in Petroleum Engineering when oil was $140/barrel.

Comment by MrBubble
2009-01-08 16:14:41

They are sitting all around me and pooping their pants after not hearing back from the companies that supposedly hired them for June. D’oh.

Comment by awaiting wipeout
2009-01-08 17:25:51

A trade school for the medical sector might be a worthwhile path for a good career ( X-Ray Techs, Mammo Techs, Sonogram Tech, or an LVN). The curriculum isn’t for the low functioning.

Comment by peter a
2009-01-08 08:00:01

Training schools always do good in a economic down turn. I worked for a computer training school off and on in the mid 90’s. The JTPA money was great something like $500000 a month. That was just government money not the private walk ins.

Comment by Blue Skye
2009-01-08 08:56:56

getting a young wife who has an adorable baby would be my worst nightmare!

Comment by lavi d
2009-01-08 11:24:09

getting a young wife who has an adorable baby would be my worst nightmare!

How about getting a young wife pregnant with an adorable baby?

Comment by LehighValleyGuy
2009-01-08 14:33:56

“How about getting a young wife pregnant with an adorable baby?”

You obviously haven’t been here very long. If you had been, you would have learned that the last thing this world needs is more people. All people ever do is pave and pollute and squander precious non-renewable resources.

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Comment by LehighValleyGuy
2009-01-08 16:14:34

(sarcasm off)

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Comment by MrBubble
2009-01-08 16:19:11

Just more person who’ll eventually get in my way or be in front of me at the deli, unable to figure out whether he wants Boar’s Head roasted turkey or Black Forest ham. Or another mouth to feed during the great Madmaxian trek across the wasteland…

Yeah, juuuuust what we need.

Comment by realestateskeptic
2009-01-08 12:14:38

With the student loan market closing down, these places are going to be closing at alarming rates. Their goals was to simply process your student loan and offer some sort of degree. Often the financially aid department is larger then any academic department….

Comment by CA renter
2009-01-09 05:31:02

TV commercials are scarey these days. There are huge numbers of various non-competative entry colleges and training schools presenting alleged testimonials from former students about how their lives were made perfect by getting some valuable but distressingly easy education.

This is something else I was waiting for…from what I remember in the 70s and early 80s (stagflation/inflation/recession), there were tons of these commercials. What sells when people can’t find jobs? Education.

Comment by taxmeupthebooty
2009-01-08 07:21:00

Zandi was pimping for the stimulator “package”
won’t work , they never do

Comment by oxide
2009-01-08 09:26:43

Zandi has been pimping for years. I’ve seen him on PBS a lot and all he does is spew the conventional wisdom of the day. I get more out of HBB, and we’re aren’t even “experts.”

Comment by Professor Bear
2009-01-08 07:29:16

Recent Radar Logic price per square foot in San Diego

Date RPX.SD.1
17-Oct-08 $219.95
20-Oct-08 $206.39
21-Oct-08 $201.83
22-Oct-08 $202.29
24-Oct-08 $205.20
27-Oct-08 $208.39
28-Oct-08 $192.09
29-Oct-08 $201.10
31-Oct-08 $203.17
3-Nov-08 $192.62
4-Nov-08 $201.19
5-Nov-08 $199.17
6-Nov-08 $183.51

Annualized rate of change from 17-Oct-08 through 6-Nov-08

Oct = 31-17 = 14 days
Nov = 6 days
Total = 20 days

((183.51/219.95)^(360/20)-1)*100 = -96.1% per annum

This sucker is going down…

Comment by REhobbyist
2009-01-08 07:35:14

PBear: at what price would you buy a house to live in? 100? 150? 0?

Comment by Professor Bear
2009-01-08 08:30:37

Last time it was $89/sq ft, but that was a lot of inflation ago, and in a bad neighborhood to boot. I am more inclined to think in terms of price-rent ratios; when they are in the range from 100 to 120, it is a good time to buy. For instance, the last place we owned, we bought at a price-rent ratio of around 115. Where we are now, this would mean buying a SFR for around $260,000. They have been recently selling for around $400,000. So I guess that means we have to wait for another 35 pct drop, which would take less than another year at the recent rate of decline (over 40 pct per year).

Comment by Jim A.
2009-01-08 10:26:16

Certainly price/rent ratios are very good at telling you how long you’d have to live in your purchase until you break even.

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Comment by Professor Bear
2009-01-08 11:04:28

They are very good at telling me when I can buy a house without having to ever worry about getting stucco. If you buy when the price/rent ratio is near or at the bottom, then you can sell your house within one week’s time at any point in the future and pay off your mortgage with the proceeds. We know — done it twice already in one lifetime, and will not buy again until when and if a third such opportunity presents itself.

Comment by Blue Skye
2009-01-08 09:01:26

JMO, but such a small window and such volatility, not a solid basis for extrapolation.

Comment by Professor Bear
2009-01-08 11:20:13

Many posters, including yourself, have misinterpreted my annualized rate of change calculations as either extrapolations or predictions. The correct interpretation is that of measuring a current rate of change on a comparable basis to an annual change — akin to the way we measure the slope of a curve at a tangent (aka the derivative). Think of measuring the slope of a tangent line to a curve which frequently changes direction and you will have the right concept.

To get a better idea of the recent trend (rather than the current rate of change), one can go back to late May 2006 when the price was about $356/sq ft, compared to early January 2009 (just over 31 months later) compared to the current price of around $200 per square foot and measure the monthly rate of decline in price per square foot. Given that prices have dropped at a nearly linear rate over this period, the PPSF change per month can be easily computed as the imputed slope:

(356-200)/31 = $5/sq ft/ month.

So, for instance, the monthly decline in value for an 1800 sq ft home over this period (like the one we rent) has been about $5*1800 = $9,000 — well over four times our monthly rent check once you add in interest payments, homeowner’s insurance, property taxes, repair and maintenance, HOA, Mello Roos, etc etc etc.

Comment by lavi d
2009-01-08 11:39:12

(356-200)/31 = $5/sq ft/ month.

Your mathings are sore amazing, sir.

Thank you so much for sharing, and I’m not being snarky or sarcastic - I truly appreciate your willingness to break things down (along with related data, links and proofs) for the rest of us.

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Comment by Blue Skye
2009-01-08 12:15:48

Professor, I appreciate you taking the time to answer, but I beg to differ. You’re not so misunderstood as you imagine. When you take three weeks of volatile data and do a calculation to show an “annualized” rate, you are implying that it is a somewhat useful indication of a trend of one year’s duration. Pretty misleading for us 7 year olds, encouraging us to naive extrapolation. My comment was that it wasn’t useful for extrapolation. You could have used a subset of the same data to proclaim that it was going up. Just sayin.

In your response you explained very well that the longer term trend is nowhere near the shorter term rate you came up with.

Hey, you don’t put me off with the calc talk, I aced three semesters and Dif Eq while I was earning my BS in Fraternity Party. My issue was rather a question of the valid use of small sets of statistics.

I’m very interested in the shape of the curve, as I’ve mentioned before. Yesterday you mentioned the volcano. Were we on a straight looking slope on the parabolic rise, when it was where we are now on the downside?

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Comment by Professor Bear
2009-01-08 18:14:23

‘When you take three weeks of volatile data and do a calculation to show an “annualized” rate, you are implying that it is a somewhat useful indication of a trend of one year’s duration.’

No, no, no. That is your misinterpretation. One can quote an instantaneous rate of change in annual units without implying that one expects the same rate of change to persist for the next year. I guess you would that if I told you I crossed the 10 mph threshold when accelerating from 0 to 60, I would be implying that it would take me a full hour to go 10 miles.

Let me give you a loosely analogous example. Some times I challenge undergraduates by asking them whether a probability density function can equal a big number for some points on its domain — say 100. Many will get confused, believing this is not possible since probabilities are “always on the range from 0 to 1.”

But the p.d.f.

f(x) = 100-5000x, 0 < x < 1/50, 0 else

has an average height of 50 on the interval [0,1/50] and is zero elsewhere; hence this is a legitimate p.d.f. even though its value equals 100 at the left end of the range.

Comment by Professor Bear
2009-01-08 18:17:53

“You could have used a subset of the same data to proclaim that it was going up. Just sayin.”

No subset of similar length since May 2006 went up.

Comment by Professor Bear
2009-01-08 18:20:23

If I had no better use of my time, I would take a shot at smoothing the 1-day Radar Logic time series into a more up-to-date estimate than the 28-day moving average. Dumb averaging is a useful tool for getting an indication of where things are headed, but there is a tradeoff between smoothness and lag time which leaves room for improvement. I will let y’all know if my schedule relaxes to the point where I have time to play around with this…

Comment by diogenes (Tampa)
2009-01-08 10:49:51

((183.51/219.95)^(360/20)-1)*100 = -96.1% per annum

This sucker is going down…

Disclaimer: “Past performance doesn’t guarantee future results. Please consult your financial professional before making any investment decisions.”

this same logic is how we got here in the first place.
Remember the Realtwhores claims: IF you don’t buy now you’ll be priced out forever!! RE is going up 30% per year! (how long could that last?).

Comment by WT Economist
2009-01-08 07:33:46

Analyst: the housing market can’t be saved, so the federal government would be better off using its scarce resources elsewhere.


Comment by Professor Bear
2009-01-08 07:35:46

I have a counter theory to Mr Gordons’: Historians have a way of retrospectively whitewashing bad news, and the norm is the uptick in high profile suicides that we see today during the market crash.

Do Hard Economic Times Spur Suicide?

Listen Now [3 min 31 sec] add to playlist

All Things Considered, January 7, 2009 · Recent high-profile suicides have been linked to the global economic downturn. They call to mind stories of bankers jumping out of windows during the Great Depression. John Steele Gordon, financial historian and author of An Empire Of Wealth: The Epic History Of American Financial Power, says stories of Depression-era jumpers are a myth.

Comment by DinOR
2009-01-08 08:15:30

So you’re saying what we’re currently encountering is worse!?

Comment by Blano
2009-01-08 11:06:48

I think Galbreath mentions in his Great Crash book also that there wasn’t any appreciable uptick in suicides during the GD.

Comment by Curt
2009-01-08 07:38:13

This is unforgivable!

The White House is for sale! (Not for rent as in prior administrations)


Comment by Hwy50ina49Dodge
2009-01-08 08:04:58

Shadow White House! :-)

Cheney is going to sell 1% of his Halliburton stock on Jan 21st and pay cash for it. ;-)

And the guy’s Iranian, I can almost see the smirk on “Dicky Boys” face!

Comment by bink
2009-01-08 11:13:23

He actually spelled out “god love you” in the hedges? Clearly this is a man of the utmost taste and class.

Comment by Curt
2009-01-08 11:31:25

I think the ultimate expression of “class” is this:

But the Atlanta White House’s signature piece of artwork is a ceiling mural of Jesus ministering to people of various races. A Hispanic man wears a sombrero, an American Indian dons a headdress, and at the feet of Jesus is Mr. Milani himself, [the owner,] his head bowed in submission.

Oh, and mosaic of his bust on the bottom of the pool, that too!

Comment by polly
2009-01-08 07:41:31

Anyone have any insight into what is behind the fraud at the Indian outsourcing giant? NY Times article impliies it was just a big company still thinking like a family owned company and trying to meet growth expectations, but I wonder if there is more “there” there.


Comment by hoz
2009-01-08 08:17:14

The most important point and currently being ignored is that SAY used the American accounting firm PWC and met SEC approval. ADRs were traded.

PWC is toast. Now to go through every listed stock that is audited by PWC and short. Untrustworthy financials.

Comment by polly
2009-01-08 08:44:14

THAT is what I was looking for. This is the sort of thing that could take down an accounting firm. That is if anyone has any time to pay attention what with Madoff eating up all the time and resources the press dares to allocate to business fraud.

Comment by hoz
2009-01-08 10:11:35

PWC also audited the Madoff feeder firms. Oops

The saddest part about this is that it will make the rating agencies look good.

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Comment by polly
2009-01-08 13:29:06

All of them? Wasn’t he getting money from everywhere? Or were there just a few doing the direct feeding and others were in a fund of funds situtation? I thought part of the problem was that he wasn’t using a big accounting firm and that was one thing that should have tipped everyone off…or maybe that was his captive brokerage….

In any event, what a mess.

Comment by Skip
2009-01-08 11:43:37

I think you will find it was Price Waterhouse, the Indian LLP subsidiary of PWC.

Foreign auditors are banned from signing off on balance sheets of Indian companies, but I think Price Waterhouse was doing business in the country when the Britain still ruled.

I imagine the PWC lawyers are trying to find a way out right now.

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Comment by hoz
2009-01-08 13:44:11

To be listed as an ADR and traded in the US, PWC parent had to sign off as did the SEC.

Comment by yensoy
2009-01-08 10:15:59

PWC should pay a heavy price for this. It’s amazing what level of fraud was perpetrated by the CEO. A banker friend was baffled by what happened, said that even their cash in hand statement was doctored and couldn’t think of any reason why the auditors didn’t have a clue.

Interestingly, even after this nasty “surprise”, the company as such is profitable. The best thing that could happen to the 50000 or so employees is a forced sale a-la FDIC. Maybe Sheila Bair could help.

Comment by peter a
2009-01-08 08:22:06

Indians, Pakistanis and Sri Lankins, are one of the most corrupt people on this earth. (I know that this is a broad bush statement). Its purely cultural. To these people its all about money and bling. Goto an Indian party and watch the hostess. She will change her clothes at least ten times during that party, by the end she will have more gold on than Mr T.
Its no surprise that this guy defraud his people. If he punished by the law he will end up on house arrest on one of his estates paying the police to keep out those that he conned .

Great food though.

Comment by Pinch-a-penny
2009-01-08 08:43:31

The other thing that people here must not forget is that the Indian culture is heavily divided by chastes, and this guy most likely is from the higher-up chaste that will never see a day in jail.
As far as the damage to the India outsourcing scam, I hope that it is as widespread as the terrible serivice that they provide.

Comment by sartre
2009-01-08 09:31:29

Its not about caste, its about money. Some of the most corrupt politicians come from so called lower caste now.

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Comment by yensoy
2009-01-08 10:10:25

You are all full of it. Want me to stereotype Americans?

Comment by Rancher
2009-01-08 10:21:18

Some of the politicians elected in out lying
areas are illiterate and have staff that reads
them the reports and then dictates replies.

Comment by Jon
2009-01-08 10:35:51

“Some of the politicians elected in out lying
areas are illiterate and have staff that reads
them the reports and then dictates replies.”

Well, just cuz dummycrats can read their own reports don’t make thems any better!

Comment by Olympiagal
2009-01-08 11:08:03

‘Want me to stereotype Americans?’

Oh, no thanks, yensoy. We have Jas for that.

Comment by lavi d
2009-01-08 13:34:37

…this guy most likely is from the higher-up chaste…

If he’s from a higher-up “chaste” does that mean he never gets laid?

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Comment by Jas Jain
2009-01-08 08:45:39

“Indians, Pakistanis and Sri Lankins, are one of the most corrupt people on this earth.”

Certainly, especially, compared to Western European Christians. My criticism of America and Americans is relative to the American and Western European past for the past 2-3 centuries.

Cultures matter! And American culture is in big-time decline for the past 15-25 years.


Comment by Xenos
2009-01-08 09:35:17

Jas, ever look at the financials of the East India Company? Colonialism is the biggest racket in human history.

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Comment by Skip
2009-01-08 12:02:16

Are they still in business???

Comment by yensoy
2009-01-08 10:21:37

Right, this kind of stuff never happens in the “civilized” West. Enron was really a well-intentioned accident, and Maddoff will pay back his depositors by making license plates - a lot of them.

Americans are spiritual people not really into “money and bling”. A-Rod just donated his contract and endorsement proceeds to Haiti, and the Wall Street crowd are trading in their Ferraris for bicycles.


Reality check - the subcontinent has 1.5 billion people. How many of these did you meet?

Comment by QinQueens
2009-01-08 10:30:55

As an OOW IT worker: hip hip (you know)!

Comment by Professor Bear
2009-01-08 07:44:50

Foul weather is screwing up the economy again. Remember back in 2005 when real estate investors were braving Florida hurricanes to get first in line for condo sales?

January 8 2009 9:43 A.M. EST

Wal-Mart sales come up shy

Retailing giant cites severe weather as well as recessionary doldrums
Same-store sales growth’s well short of expectations for December, downshifting to 1.7% rate from prior year’s 2.4%.

Comment by DinOR
2009-01-08 08:22:26

Well, fair enough but I happen to think we’re seeing a juncture of the failure of state/local gov’s to serve their local contituents -along- with a weak economy.

The mayor of Spokane is crying the blues over spending 150k a day to dig themselves out, and there’s no assurance the last few days of the holiday shopping season would be anything but a bust. However the least that we owe the taxpayers and retailers is cleared roads. If shoppers decide to stay by a warm fireplace, that’s their business, but as retailer I’d like at least the opportunity to sink or swim on my own.

Comment by Jon
2009-01-08 10:39:45

Well then you really wouldn’t be sinking or swimming on your own. You’d be sinking or swimming based upon the expenditure of taxpayer’s money. No?

Comment by edgewaterjohn
2009-01-08 08:32:05

Yes, because this is the first winter this nation ever experienced.

Comment by Elanor
2009-01-08 10:51:35

LOL! The news anchors and an awful lot of drivers sure act like it when that first snowfall (or two or three) happens every year.

Comment by realestateskeptic
2009-01-08 12:18:35

I love when they ignore the fact that the number, whatever it was, is a year over year or seasonally adjusted number , and then go on to blame a calendar or seasonal factor….. Brokers are great at doing this.

Comment by Denver Guy
2009-01-08 07:45:31

I wanted to see what the thinkers here feel is the right course of action for my situation. Roughly 9 months ago I bought a brand new house in a newly developing build in the Denver Colorado area. Now I know that was not the best move but I felt at the time that it was well within my budget and we managed to get fairly good deal on it for the time. Now I knew that the market would tank but it worked for us. Now 2 of the 3 builders have pulled out of the development with multiple lots un built. One builder is still building but slowly on new a new area of lots. In total I think there are around 150 or so homes currently built. On top of this the community originally came with the tv/internet service built into the HOA. Just last night we had a meeting with the developer stating that from now on the service will be unbundled and we are free to choose our own providers (of course there are no other providers) and will cost us more for less service (ie. Internet speeds dropping, TV costs increase despite not working 100%). Now my question is this given the recient events I have some grave concerns that this community will not be completed for years yet if at all. Given these facts would it be a good idea to try to sell the place now while I could most likely get most of my money back (we did very well in bargaining with the builder for many concession but the biggest was price) and look at a more established area or just wait and see what happens as we have a great house at a great price and the payments are easy. I just don’t want to be in a position where it is too late once the writing is on the wall.

Comment by packman
2009-01-08 08:07:30

Two questions first, before any advice can be given:

1. What was the size of your downpayment?

2. Are you willing to walk away and take a big credit hit?

Comment by Denver Guy
2009-01-08 08:31:18

No I am not talking about walking away, the down payment was 10% and right now I feel that we have a fairly good shot at getting most of that back.

Comment by packman
2009-01-08 08:42:55

See my statement below (response to Muggy).

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Comment by darrell_in_phx
2009-01-08 08:17:32

I doubt it would be as easy to sell as you think. If the builder was willing to cut you a great deal 9 months ago, then they’d be willing to cut even greater deals now. The fact that they can’t sell tells me you won’t be able to either.

Lots of luck.

Comment by Muggy
2009-01-08 08:28:57

Hi Denver, this is a weird response… just an idea:

If you like the area and your neighbors, stay.

I grew up on the outskirts on Rochester, literally where the edge of civilization ended. I don’t remember the exact year, but it most have been the late 80’s… anyway, a “new development was supposed to be built, the land was cleared, one house started, and that was it. To this day nothing has changed except flora and fauna returned and they paved a little piece to the finished house.

But here’s why you should stay: the “neighborhood” was the coolest playground ever. We had massive dirtbike trails, played sweeping neighborhood-wide games of capture the flag, had campfires, threw dirt bombs all day, etc. Abandoned isn’t always bad.

I say it really depends on your neighbors. My sister bought new in a McDevelopment and it’s obvious everyone is going to split.

Comment by Muggy
2009-01-08 08:31:50

Oh yeah, and the older kids actually taped red bug eyes to flashlights and made the younger kids hunt snipe. I got scared and ran home.

Comment by packman
2009-01-08 08:40:52

Ha ha … snipe hunts. That brings back memories.

Denver Guy - given your statement above, that you’re not willing to walk, I would second what Muggy says. Half-built neighborhoods can be OK and fun even, and eventually it will probably be built out if/when the economy recovers.

With the caveat however that you have to be careful about security. Un-lived-in homes (e.g. foreclosed, or built and never sold) are a haven for homeless and/or drug dealers during tough economic times. I would take significant measures to ensure you’re secure - be it an active neighborhood watch system, a home security system, a safe, a gun, or whatever you’re willing to do.

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Comment by Blue Skye
2009-01-08 09:08:53

“I grew up on the outskirts on Rochester, literally where the edge of civilization ended.”

I live out past that.

Comment by Muggy
2009-01-08 09:15:14

Blue, you a 315′er?

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Comment by Blue Skye
2009-01-08 09:26:04

Worse. I’m in the 607.

Comment by exeter
2009-01-08 10:14:13

Ewww…. 607… almost as bad as 315.

Comment by Blue Skye
2009-01-08 11:02:15

not as bad as 412 though.

Comment by Muggy
2009-01-08 12:02:41

Blue, all this time I didn’t realize you were from Upstate. Am I nuts for missing it so badly?

Comment by realestateskeptic
2009-01-08 12:21:12

518 ain’t so great either….

Comment by Blue Skye
2009-01-08 12:28:36

As my mother would say, it’s “Western NY”. LOL. If you’re up in the summertime, I’ll take you (and crew) for a cruise and a cold brew on Seneca Lake.

Comment by exeter
2009-01-08 12:35:20

Agreed. 518 is the West Virginia part of NYS. It makes Frogballs, Arkansas look cosmopolitan.

Comment by Muggy
2009-01-08 18:45:03

“As my mother would say, it’s “Western NY”. LOL. If you’re up in the summertime, I’ll take you (and crew) for a cruise and a cold brew on Seneca Lake.”

Ha! I call it upstate because I had the misfortune of getting the definition entangled with the whole NYC version of upstate while I lived downstate, where upstate is considered anything on Metro North.

I’ll take you up on that! If you visit Florida, I’ll take you road-raging on I-4.

Comment by Olympiagal
2009-01-08 09:44:09

‘…except flora and fauna returned’.

Hooray! A happy ending!

Comment by sleepless_near_seattle
2009-01-08 13:19:35

“I grew up on the outskirts on Rochester…”

Muggy, have you ever ingested a Garbage Plate at Nic Tahoe’s?

(I was an intern at Kodak in early 90s)

Comment by Muggy
2009-01-08 13:54:37

Are you kidding? I have hot sauce and mustard in my veins.

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Comment by sleepless_near_seattle
2009-01-08 15:35:59

Awesome. By far the best late-night, vomit-inhibiting (or vomit-inducing, whatever) post bar-hopping meal in all the land.

I think the owner’s kids now run it, but it’s good to see it’s still around.

Comment by Real Estate Refugee
2009-01-08 08:39:05

“we have a great house at a great price and the payments are easy.”

I’m sorry. I’m having trouble seeing the problem.

If you’re a reader here, then you were aware when you bought your house that you weren’t buying at the absolute bottom.

Is renting cheaper?

Is the fact that the development most likely won’t be finished really a problem? Sounds like more open land for the kids to play on.

As long as your job is secure (as it can be), you like your house and it’s location and plan to stay a while. Kick back, pop open a beer and relax for christsakes.

Comment by Kim
2009-01-08 08:41:49

Denver is an interesting situation. From what I understand, their prices - for the most part - are around or below pre-bubble levels. However, builders kept building on that empty land that we were “running out of”, and now you’re stuck with a massive oversupply that has and will continue to depress prices further.

Personally I wouldn’t mind having a little privacy and living next to a few empty lots. I can’t say what you should do - that’s personal preference. But I wouldn’t count on those lots being developed for a long, long time. In fact, there are laws in some areas that if you maintain them long enough, you can lay claim to them (IIRC, its 20 years in IL; not sure about CO.).

Out of curiosity, has the builder turned the HOA over to the homeowners yet?

Comment by realestateskeptic
2009-01-08 12:23:59

Does the HOA own the road, water, sewer and infrastructure? If so, how many folks are going to be around to pay to maintain it? If the town does it, different story, but I’d be worried about HOA expenses that were supposed to carried by X number of homes only be carried by a small percentage of contributors….

Comment by jay
2009-01-08 14:18:21

i hear this is a major problem now, and some people who bought places outright are now losing them because there are so few to pay all the bills. now, that would really suck. i decided i would not buy in a condo or any area with HOA because of this and i’m looking at a cash purchase. I guess you could just not pay and stay as long as possible

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Comment by Carl Morris
2009-01-08 13:31:06

“Denver is an interesting situation. From what I understand, their prices - for the most part - are around or below pre-bubble levels.”

Really? I have yet to see any pre-1997 prices.

Comment by Skip
2009-01-08 12:00:23

Given that the cable/internet unbundled and you have an HOA, you are in a great position to come up with your own co-op and negotiate a great price. There should be plenty of techies in the Denver area to help you guys find a solution.

Cable internet costs me almost $50/month
$50x’s 200 houses x’s 12 months = 120k/yr
I bet there are a lot of solutions for less than 120k/yr.

I would also buy any of the lots that might be tempt someone in the future to rezone as commercial. I have seen that happen in Texas. Nothing like having a convenience store pop up next door.

Comment by San Diego RE Bear
2009-01-08 12:31:04

If you like where you live and can live there for years I’d probably stay. Some problems are easy - bad cable? Go Dish Network - I love it. No Internet - I use Verizon Wireless, if your cell phone works there (big if), so will your Internet and you can take it with you on vacation. It’s slower but so far nothing I can’t live with.

Do you have an empty lot behind you or to either side? What would happen if you “accidently” fenced it in and used it as your own. Yes, someday they’ll figure it out but in the meantime you have a huge yard. Or will they sell you that lot at a low price? Big yard now and you can build a home on it in the next bubble.

For me the question is why do you want to leave? If only half the homes are built is that really bad? How soon do you need to leave? Denver is well ahead of us (San Diego) in terms of bubble deflation and will probably bottom out much sooner. Yes, you might lose more value for awhile, but I’m guessing you’ve already lost a big chunk of what you will be losing. If the homes aren’t built are their big fixed costs for the HOA that you will be forced to pay? (A BIG consideration.) That could make a difference. Finally, do you have any reason to sell other than worrying about losing value?

Comment by takingbets
2009-01-08 07:48:05

my husband talked to a local dairyman yesterday. He said in the 40 years he’s been in business he’s never seen anything like what’s happening now. His pricing for milk and cheese is the lowest he’s ever charged and yet the grocery stores are not passing the lower prices down to their customers. Business has virtually stopped, he is not able to move his products because the end users are not buying like they used to.

We own a parts business and buy directly from factory’s. I have also noticed since the price for oil and steel has came down they are refusing to bring down their prices, but when the prices for oil and steel were skyrocketing last year they would raise their prices monthly if not weekly.

I am stumped as to why company’s are refusing to let prices go back down so we can get things moving again. Is it greed?

Comment by hoz
2009-01-08 08:04:45

Where are you located? Mailbox milk money is 35% higher than 2 years ago. The minimum price support is $11/100wt. (app 12.4 gal) - with production from the dairy should be around $2.24/gl.

Grocery stores kept the price of milk and dairy products low on the way up. At some points last summer, the price should have been over $5/gl

Comment by Bill in Carolina
2009-01-08 08:16:51

Milk prices here have come down about 30% from their peak last summer. Less than $3.00 per gallon in most chains.

Comment by takingbets
2009-01-08 08:32:45

Hoz, location is Bakersfield.

Comment by hoz
2009-01-08 09:54:33

California has serious dairy problems. Most are feed lot and have enormous costs in feed and labor with triple milking daily to make ends meet. It would not surprise me if breakeven in Cal were $16/100. Exports from California to Asia are hindered as opposed to Minn and Wis where they are encouraged. A very large difference in profitability. I would not be surprised if California’s epa puts in a methane tax - a false rumor out here but once a means of getting money to the gov is presented, it tends to occur. California does weird stuff.

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Comment by darrell_in_phx
2009-01-08 08:20:29

My safeway has been selling milk for $1.50 a gallon for the last two weeks. They’ve been offering awesome sales. AND, get $.10 off gas for every $100 you spend. My wife has been filling her tank for $1.20 a gallon.

Comment by BanteringBear
2009-01-08 20:18:27

I’m always amazed by how cheap groceries are in Phoenix when I visit family.

Comment by Asparagus
2009-01-08 08:24:33

Maybe things are sooooo bad that you’re picking up an oversize portion of the overhead.

Mental exercise:

If I sell one hundred units in 2008 with fixed costs at $200 and variable costs at $300 ($3 per unit), then I can sell a unit for $5 dollars to break even.

Flash forward to something beyond a recession and into something horrid:

If I sell 50 units in 2009, my fixed costs are still $200, but my variable costs moved DOWN to $40 ($2 per unit), I am now looking to sell 50 units at $6 to break even. (an increase of 20%).

Until a competitor with lower overhead comes in and wipes me out.

Comment by Asparagus
2009-01-08 08:26:13

check that 2009 number, it should be:
“variable costs moved DOWN to $100 ($2 per unit)”

for a total production cost of $300 in 2009

Comment by darrell_in_phx
2009-01-08 08:27:52

go to www safeway com and look at the ad for 85306. milk $1.50. Round steak (Why buy burger for $3 a lb when they will custom grind the round steak for you for ) $1.47. New York Strip for $4 a lb. Cheeroes for $1.50 a box.

Yes, these are teaser prices and they offer them to get you to come spend $200 on other stuff…. But, this is stuff I buy anyway.

Comment by edgewaterjohn
2009-01-08 08:50:00

Besides, downward stickiness shouldn’t come as a surprise at all. In the face of declining demand, it’s about the only way they have to (maybe) weather the storm.

Comment by bluto
2009-01-08 10:04:17

Milk is funny, there are two cartels (one is based on the distance from Eau Claire, WI) and the other is on the west side of the rockies (and not based on anything so consistant). It’s hard to compare milk prices between the two cartels.

Comment by mrktMaven
2009-01-08 08:33:00

The parts factory probably cannot lower prices on expensive inventory made during the commodities spike. If it did, you would need a new supplier.

Comment by takingbets
2009-01-08 09:10:14

I’ve thought about that, its happened to us more than once. Its hard to sell something under cost, but thats the price of doing business. Its relatively easy to check the pricing of other merchants these days so you have to lose sometimes. I feel there’s been enough time now for them to blow through the higher priced goods and to start lowering their prices. What i wonder is if thats what the FED is fighting against? The prices that skyrocketed during the commodities boom last summer need to come back to an equallibriam of affordability all the way down to the end user, IMO.

Comment by mrktMaven
2009-01-08 11:09:40

Instead of turning inventory, some players along supply chains will hold out for a return to ‘normal pricing’ based on government support hopes. Ultimately, this ‘wait and see’ behavior clogs up the entire distribution channel forcing weaker members into bankruptcy. That’s why this crisis will drag on for some time.

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Comment by Curt
2009-01-08 08:37:56

Part of the problem might be all those darn cows moving to California.

Comment by Blue Skye
2009-01-08 09:17:22

My company sells large machinery imported from Europe. We add US components such as motors.

The exchange rate at the beginning of 2008 was around 1.35. Right now it’s bouncing around between 1.35 and 1.4. Wages are still going up in Europe. Our costs have not come down YOY, they’ve gone up considerably.

Sales volume has dropped. That makes the margin you need to stay in business go up.

Domestic motors (steel + copper) have not come down in price for 2009 (yet).

It’s a really really slow moving trainwreck.

Comment by Hwy50ina49Dodge
2009-01-08 07:59:44

Sir Greenisspent…has become rather…quite lately.

Comment by mrktMaven
2009-01-08 08:13:11

Wal-Mart, the world’s biggest retail chain, said today that fourth-quarter profit will miss its earlier forecasts after sales at stores open at least a year rose 1.7 percent last month, missing analysts’ estimates.


Comment by hoz
2009-01-08 08:24:02

Madoff investment loans a no go at Deutsche Bank

By Haig Simonian in Zurich, Scheherazade Daneshkhu and Peggy Hollinger in Paris and Brooke Masters in London

Published: January 7 2009 21:01 | Last updated: January 7 2009 21:01

Deutsche Bank was approached dozens of times in the past two years to lend to hedge fund investors who wanted to funnel money to Bernard Madoff, but repeatedly turned down the ­opportunities because the money manager did not pass the bank’s due diligence criteria.

The approaches came from all over the world, from investors who were accessing Mr Madoff’s funds through a wide variety of feeder funds, and continued into the last quarter, according to sources.

The requests for leverage shared common threads, including refusals to allow any contact with the money manager and ­references to “split strike” strategy – how Mr Madoff described his investing methods.

Deutsche Bank declined to comment, except to say that it had no material exposure to Mr Madoff….”


How DB get into such a financial mess when they did due diligence on Madoff is fairy tale material. Why didn’t they do the same due diligence on their CDO investments?

Comment by Muggy
2009-01-08 08:34:53

Did you see Madoff is STILL working it under house arrest? They caught him mailing millions of dollars of jewelry to friends.

Comment by polly
2009-01-08 10:04:54

And his kids. The sons took one look at the package and called their lawyers who turned the package over to prosecutors to prove the kids were still helping as much as they could.

Life is bad when the first thing your kids do upon receiving a gift from you in the holiday season is call their lawyers.

Comment by yensoy
2009-01-08 10:27:29

I won’t be surprised if it’s a deal between Madoff and his sons to show good behavior on part of the sons and keep them out of jail. I won’t put anything past that family.

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Comment by Skip
2009-01-08 12:12:42

Bingo - I think the whole thing was set to allow his sons to proclaim their “innocents” and avoid jail/paying back investors.

Billions gone and he had a measly $1 million in jewelry?

I am sure that there are a few safe deposit boxes that contain the “real” jewelry.

Please also note that the feds were notified within minutes of the receipt of said jewelry.

Comment by CA renter
2009-01-09 06:04:55

Absolutely agree. This is a set-up to clear the sons.

Mr. Madoff is older and probably saw the writing was on the wall. He is taking the hit for the family, IMHO, because they are young and still have many years left, presumably.

Comment by hoz
2009-01-08 10:05:48

How about the way he worked his friend.

“Ten days before his arrest, Bernard Madoff received $250 million from a man who helped give him his start on Wall Street, a move that shows how the investment manager tried to raise cash to stave off his firm’s collapse.”

Comment by jay
2009-01-08 14:24:29

yeah, what a justice system when this crook is out on bail mailing jewery to everyone. probably sending cash to isle or man, jersey, switzerland….you can bet some billions are hidden in some off shore accounts. He should be in jail for 30 years!

Comment by robin
2009-01-08 23:42:58

Unless he happens to live longer than that!

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Comment by Blue Skye
2009-01-08 09:20:27

“split strike”

one for you…..two for me…..

Didn’t laurel and hardy do a movie on this theme?

Comment by aNYCdj
2009-01-08 08:25:45

Macys closing 11 stores 960 former employees will seek food stamps:


Good news: they will be offered retail jobs in other stores 1000 miles away.

Comment by ecofeco
2009-01-08 21:59:44

.. for less money. (sorry, no link or inside knowledge, just experience)

Comment by hoz
2009-01-08 08:26:11

Insight: No immunity from policy action

By Mohamed El-Erian

Published: January 7 2009 16:05 | Last updated: January 7 2009 16:05

Not long ago, the question of how the actions of national authorities – and the US Federal Reserve in particular – impacted on their investment decisions would get a range of replies from investors. Some observed that their decisions were unaffected; others cited the old mantra that “you should never fight the Fed”.

Today, few investors would cling to these simple views. Most correctly realise the importance of a more dynamic approach that recognises that well-intentioned official actions are fundamentally altering risk-reward propositions in several markets. Not even relative-value investors, who have historically prided themselves on never having to take a directional view on the economy and policies, are immune to the impact of policy actions.

It is not just that the Fed has been pushed into a more activist role by an unprecedented financial crisis that has morphed into a global economic calamity. And it is not just about interest rates being cut to zero.

It is also about the adoption by the Fed (and other government agencies such as the Treasury of unorthodox measures that target specific sectors, individual institutions and – importantly within these two – precise parts of the capital structure.

The surge in activism is not a matter of choice for the authorities; it is a necessity. The response seeks to contain the economic and financial hurricane that, especially after Lehman’s collapse, has become truly global in nature and indiscriminate in impact. It is about trying to activate new circuit breakers to limit the damage to employment, productivity and welfare in 2009 and beyond.

There is no easy way to do this. The breakdown in traditional policy transmission mechanisms is so severe that the authorities have, in the words of Fed chairman Ben Bernanke, to sidestep the banking system. This involves their becoming directly involved in markets and in institutions deemed of systemic importance. And increasingly, Fed action is part of a broader government response that does, and should, combine the resources of multiple agencies.

Investors will differ on whether this is being done in the right way. But they should all agree that such public-sector involvement inevitably affects the effectiveness of traditional investment strategies. There is no question about the willingness of governments in many countries to take bold actions, including full and partial nationalisations. The uncertainty relates to their effectiveness.

In this new world, investors should pay particular attention to three issues.

First, the authorities are forced to make difficult choices about which markets and, more controversially, which institutions to support. By definition, these choices are not commercially driven. As a result, the notion of a level playing field for markets is giving way to the more random influence of discretionary decisions.

Second, given the speed and highly contagious nature of the crisis, the authorities do not have the luxury of a master plan that specifies ex ante the extent and sequencing of market interventions. Instead, they seek to respond quickly to severe market failures.

Third, when they intervene, the authorities must also seek to protect taxpayers. As such, they will subordinate somebody in the capital structure – the equity holders for sure. In some very exceptional cases, holders of preferred and senior securities could also be vulnerable.

Where does this leave investors? As my colleague Paul McCulley likes to say, only a thin line separates courage from stupidity. Investors should position their portfolios predominantly under the umbrella of government support rather than outside it; they should follow government actions rather than pre-empt them; and they should focus primarily on the senior parts of the capital structure.

The time will come when the authorities will return to being just the referees of markets. For now, they are both referees and players. Investors should adjust their investment approaches accordingly.

Comment by mrktMaven
2009-01-08 08:39:37

Pimpco is lead by girliemen, sissys, and sheilas — crony anti-capitalists.

Comment by Jas Jain
2009-01-08 09:42:22

In one word — CROOKS! Crooks feed on the public, including the government.


Comment by Professor Bear
2009-01-08 11:06:57

They also make “helpful” public policy recommendations which, if followed, play directly into the hand they have dealt themselves. Of course, this can work out handsomely for the pols who pass such measures, in the form of future campaign contributions.

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Comment by measton
2009-01-08 19:34:35

The time will come when the authorities will return to being just the referees of markets.

Yep after all the competition has been removed and a dominant market position has been established the authorities will return the ship to the thieves that ran it into the reef in the first place.

Comment by packman
2009-01-08 08:27:45

There’s an interesting article in the WaPo about pension underfunding - seems quite extreme. Funding of pensions at the end of 2008 was down to 75%!

Link forthcoming…

Comment by packman
Comment by aNYCdj
2009-01-08 09:46:52


can you say IOU’s? You will get 80% today and that dreaded script for the rest.

Really what else can they do?

Comment by ecofeco
2009-01-08 22:03:36

What’s worse is that a lot of it was INTENTIONAL.

Comment by Arizona Slim
2009-01-08 08:40:00

Florida homebuilder writes about her business struggles, wins ticket to the Inauguration:


Comment by hoz
2009-01-08 08:40:45

Has America Lost Its Mojo?

By Kenneth Rogoff
Project Syndicate

Cambridge ― You know that American self-confidence is shaken when even the President starts expressing fear that the financial crisis may turn out worse than the Great Depression of the 1930s. George Bush is not alone in worrying that things might get a lot worse before they get better. A growing number of savvy business people are also starting to wonder whether the United States will be able to right its economy anytime soon.

Professional forecasters are considerably more sanguine, with the consensus forecast for U.S. growth in 2009 at around -1.5 percent, after a similar contraction in the second half of 2008. This would be a painful recession, but far short of the 10-15 percent output drop normally associated with a full-blown depression. Of course, economic forecasters have generally been far too optimistic at every turn of late, so the public is understandably leery of their prognostications….

The U.S. may be ground zero for the global financial crisis, but it is not the only country driven by self-doubt. Britain, Ireland, and Spain each face financial crises of a similar magnitude. Some countries that depend on energy exports, particularly governance-challenged ones such as Russia and Venezuela, are experiencing even worse downturns. Even once-invulnerable China must contemplate a halving of its growth rate. Europe and Japan do not have quite as complex financial messes as the U.S. But these regions are nevertheless mired in recession. The global economy is in a pickle.

But, just as optimists were too sanguine in the boom, ultra-pessimists probably go too far in forecasting a depression around the corner. 2009 will be a tough year. Yet, absent a large-scale conflagration, there is a fair chance that 2010 will see a restoration of weak growth in the U.S., Europe, and Japan, and probably robust growth in most emerging markets. The U.S. economy may have lost a fair chunk of its mojo, but it will require a lot more bad luck and policy blunders to get to a second worldwide Great Depression.”


Fortunately Mr. Rogoff is a better word smith than I. No Novas around the corner, a bad bet.

Comment by waiting in_la
Comment by WT Economist
2009-01-08 08:46:10

Porn industry seeks federal bailout:


I’m surprised. I thought that was the one thing American made that was still competitive on world markets.

Comment by Kim
2009-01-08 09:22:31

That was a publicity stunt, nothing more. It worked too.

Comment by Professor Bear
2009-01-08 11:24:02

What was the auto manufacturing executives’ road trip to Washington (after the private jet trip proved to be political anathema)?

Comment by Skip
2009-01-08 12:15:46

It made you buy porn?

Comment by Kim
2009-01-08 13:26:29

I may have peeked at photos of food and real estate. Nothing that makes Larry any money.

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Comment by sleepless_near_seattle
2009-01-08 13:06:28

“competitive on world markets.”

Are you kidding? Have you seen some of those Asian and Eastern European girls?

Kidding, people! Just kidding. No really….I’m kidding.

Comment by Olympiagal
2009-01-08 15:18:09

‘Kidding, people! Just kidding. No really….I’m kidding.’

Yes, yes, of course we believe you.
*puts on wide-eyed credulous face, such as it is *

Comment by sleepless_near_seattle
2009-01-08 15:32:14


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Comment by Bungalowball
2009-01-08 13:15:44

It is clear to me that a bailout here for the porn industry is essential, and their proposed $5 billion amount seems completely reasonable. However, I’d prefer a bottom-up rather than a top-down approach.

How about a 50% tax credit for any money individuals spend on print or internet pornography, up to a maximum of $5,000 per taxpayer per year?

(Yes, I’m joking)

Comment by MrBubble
2009-01-08 16:30:05

“I’d prefer a bottom-up rather than a top-down approach.”

I vote that this part is the funny part of your post.

Comment by Bill in Los Angeles
2009-01-08 19:37:16

“Porn industry seeks federal bailout:”

I’d give them a bone - er.

Comment by mrktMaven
2009-01-08 08:47:40

A person close to Citigroup said that it is still negotiating details of an agreement with lawmakers, and that it hasn’t made a final decision to embrace the “cramdown” legislation. But the efforts mark a surprising change of direction by the financial-services industry. Banks have consistently fought such legislation. They say that cramdowns, when bankruptcy judges force lenders to modify mortgages, would raise borrowing costs for all home buyers.

WSJ: Citigroup, Senators in talks to let judges modify mortgages

Comment by WT Economist
2009-01-08 09:21:34

As mentioned, even if they want to, mortgage servicers are reluctant to write down loans voluntarily, and debtors don’t feel the need to eat Ramen noodles to keep their homes. Hence, no renegotiation even when it is in the interest of both parties.

One needs a judge, backed by the law, to say 1) accept this lower amount or you get nothing and 2) pay this amount or we’ll garnish your wages.

Comment by bluprint
2009-01-08 09:24:30

…would raise borrowing costs for all home buyers.

Is there really any debate about that?

Also, since house purchases are so driven by cost of credit it seems this change in policy have the added affect of putting more downward pressure on RE prices.

Comment by Jon
2009-01-08 10:57:48

I would debate that. If you have the transparency to show that a mortgage has 20% down and represents a small enough debt/income ratio for a buyer with an excellent credit history, why should borrowing costs go up? The 20% down should insure against a future cramdown anyway.

On the other hand, those who don’t have the above should see their borrowing costs go way, way up. And that would potentially prevent future bubbles.

Recognizing risk where it actually exists if the key to a healthy economy.

Comment by bluprint
2009-01-08 12:02:50

First, you are comparing a better loan to a less good loan. Keeping the other factors the same (LTV, debt/income, etc) allows us to evaluate the one changing factor, the cramdown issue.

If the rules change to increase the amount of risk to a lender, the lender is going to want an increased price to offset all or part of the increased cost. It’s that simple.

So an 80% LTV after would cost more than an 80% LTV before.

Additionally, the more the govt changes the rules regarding enforcement of contractual obligations the more risk of future changes contract parties have to consider as a possibility. Higher risk is higher expected costs which tends to put upward pressure up the cost of all similar financial contracts.

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Comment by nhz
2009-01-08 12:11:11

I agree that people with safe mortgages and perfect credit should not have to pay ‘extra’.

in the Netherlands a similar discussion is going on. Homeowner organisations and the mortgage mob are trying to pass all the downside risk to future homeowners and taxpayers, while offering full insurance of home values for existing owners.

The idea is to make government-backed mortgage insurance mandatory for all homes (currently voluntary, and only for mortgages up to 260K euro), and have everyone who buys a new home after the law is introduced pay for it with an extra risk premium that is the same % for everyone. Disgusting proposal, and I don’t think it will work. The required risk premium would hugely increase mortgage cost for future owners, and thus drive down home prices pretty soon, or cause the market to lock up completely.

Another option would be to keep the risk premium artifically low and have the taxpayer pay the bill if the mortgage insurance fund runs out of money (as they have been doing for a long time now, but that was in a rising market). I don’t think this will work for long when Dutch homeprices really turn down. But with politicians you never know, they always find ways to make things worse.

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Comment by realestateskeptic
2009-01-08 12:33:50

Right now the risks lenders take don’t include someone telling you (actually a Court ORDER) that you can not demand to be paid back what you lent. Post reform it will, that it a HUGE difference. In practice maybe its the same but in theory its a much different game. Appraisals are art, not science and there will be huge battles between appraisers and what the “value” is.

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Comment by Left LA
2009-01-08 08:49:00

Highest paid public servant?

As of this month, Hank Paulson will have served about 2.5 years as Treasury Secretary. When he moved over from Goldman Sachs, he was able to transfer his $700mm in GS shares into Treasuries without paying any capital gains.

Therefore, Hank saved himself $105mm in taxes and essentially cheating the taxpayer of this revenue. Over 2.5 years, that translates to a virtual government salary of $41mm a year for a horrendous performance.

Do you feel cheated?

Comment by ET-Chicago
2009-01-08 08:53:27

Not only that — he saved himself and his money from Goldman’s stock doldrums while simultaneously helping to steer the rest of us into a ditch. (Though to be fair, he was legally required to divest that money or put it in a blind trust.)

What a peach.

Comment by hoz
2009-01-08 09:57:39

If he moved into 10 yr. gov treasuries, he is up an additional 12%.

Just another bene for working at Government Sachs.

Comment by Professor Bear
2009-01-08 11:27:33

“…he was able to transfer his $700mm in GS shares into Treasuries without paying any capital gains.”

Pretty good market timing, given that T-bond yields have subsequently dropped to a generational low…

Comment by Suffolk_Them
2009-01-08 09:06:27

I wonder if the following is related to the fact that the market “out east” is starting to fall apart, thanks to the sorry state of the financial companies.

January 06, 2009

Hamptons Luxury Homes Files Form 15 to Suspend Reporting Obligations; Company to No Longer Have Its Common Stock Quoted on the OTCBB

BRIDGEHAMPTON, N.Y.–(BUSINESS WIRE)–Hamptons Luxury Homes, Inc. (OTCBB:HLXH), a construction services company that builds and renovates multi-million dollar estate homes in the Hamptons area of Long Island, New York today announced that, on December 31, 2008, it had filed with the U.S. Securities and Exchange Commission a notice of termination of registration under Section 12(g) of the Securities Exchange Act and suspension of duty to file reports under Section 15(d) of the Securities Exchange Act. The filing of the notice automatically suspends the duty of Hamptons Luxury Homes to file Securities Exchange act Section 13 reports with the SEC and will, 90 days after filing, terminate the registration of the Company’s common stock under the Securities Exchange Act. As a result of this action, the Company’s common stock will no longer be quoted on the OTCBB


Comment by bluprint
2009-01-08 09:11:33

GameStop holiday sales surge, shares jump

NEW YORK (AP) — In what was a dismal holiday season for many store chains, video game retailer GameStop Corp. proved an exception.

I recall hearing anecdotal stories that during the GD entertainment did well; movies, magazines, etc. Certainly video games provide far more entertainment per dollar than the average movie. Perhaps the video game industry will be a bright spot. Also, this may not bode well for the movie industry if it gets replaced in this respect.

Comment by Kim
2009-01-08 09:20:32

I’m sure there was a corresponding decline in the sales of $60+ new videogames at Wal-Mart, Best Buy, etc. as people are buying used ones instead.

Comment by Blue Skye
2009-01-08 09:23:53

Minature Golf.

Best business of the GD!

Comment by bluto
2009-01-08 10:10:53

The fabled superior performance of movies during the GD, was mostly the result of MGM buying up failing studios and growing while the industry shrank. MGM grew during the great depression but the industry shrank (just like everything else).

Comment by Jon
2009-01-08 11:04:34

Sister has netflix. Family & friends put in our monthly order to her and we all watch all the different movies.

I don’t know how the movie industry survives actually.

Comment by bluprint
2009-01-08 12:05:16

I love netflix especially b/c of the variety you can find. Indies, documentaries and such.

If one were of a mind, one in a situation like yours could set up a server loaded with movies and just rip the movies as they come in and send them back out (for quick turnaround) and then give friends/family access to said server.

Comment by Faster Pussycat, Sell Sell
2009-01-08 13:29:42

+1 on the netflix. I’ve been a “loyal patron” for 7+ years now.

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Comment by lavi d
2009-01-08 13:57:10

…just rip the movies as they come in and send them back out (for quick turnaround) and then give friends/family access to said server.

The industry has a name for this behavior already, “rent, rip, return”.

Unfortunately though, unless all your family/friends are on fiber optic to the home, the speeds are unacceptable anywhere outside the house that’s home to the server. (Not to mention the cable/tv companies are scornful of “home servers”)

Now, RR&R and then having friends and family drop by with their portable hard drives… that’s another story.

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Comment by Faster Pussycat, Sell Sell
2009-01-08 14:55:20

Terabyte NAS servers are pretty cheap these days.

Jes sayin’. :-D

Comment by sleepless_near_seattle
2009-01-08 13:00:23

Another version of staycation. Heck, I’m dusting off my Sega Dreamcast and all the used games I own.

Eff buying a new system, this one has some great games that can still be found at the used places.

Comment by whino
2009-01-08 09:34:11

Freddie, Fannie extend suspensions of foreclosure sales, evictions through Jan. 31

The government-controlled home loan giants said Thursday the extension will allow borrowers facing foreclosure to stay in their homes as the companies work with mortgage servicers to find options for troubled mortgage holders under the Streamlined Modification Program.

The program aims to create a more affordable mortgage payment for borrowers at risk of foreclosure. It applies to borrowers who have missed three payments or more.


Why not just suspend it altogether? Let the FB’s keep their homes! All this will do is open the flood gates to total disaster in the future, when the homes come down the pipe all at once.

Comment by packman
2009-01-08 11:26:16

I’m wondering how much of these moratoriums are due to the “goodness of their heart” vs. just being overwhelmed with all the paperwork and needing occasional breaks just to catch up.

Comment by Blue Skye
2009-01-08 12:20:46

Maybe it’s a setup for an ugly Obama bounce!

Comment by jeff saturday
2009-01-08 09:40:18

Arnold = The Terminator
Obama = The Stimulator
Obama warns of dire consequences without stimulusJanuary 8, 2009 11:26 AM ET
All Associated Press newsWASHINGTON (AP) - President-elect Barack Obama warned of dire and lasting consequences if Congress doesn’t pump unprecedented dollars into the economy, making an urgent pitch for his mammoth spending proposal in his first speech since his election.

“In short, a bad situation could become dramatically worse” if Washington doesn’t go far enough to address the spreading crisis, Obama said as fresh economic reports showed an outlook growing increasingly

Comment by Professor Bear
2009-01-08 11:26:06

“Obama warns of dire consequences without stimulus”

Wasn’t that the Paulson bank bailout sales pitch?

Comment by jeff saturday
2009-01-08 12:17:16

Ready! Fire! Aim!

Comment by ET-Chicago
2009-01-08 09:45:20

Then and now, or where eight years of Exceptional Nincompoopery can get you:

Then: 4.2% (Bureau of Labor Statistics, January 2001)
Now: 6.7% (Bureau of Labor Statistics, November 2008)

Then: 10,587 (close of Friday, Jan. 19, 2001)
Now: 9,015 (close of Tuesday, Jan. 6, 2009)

Then: 115.7 (Conference Board, January 2001)
Now: 38.0, an all-time low (Conference Board, December 2008)

Then: 6.4 million (Census numbers for 2000)
Now: 7.6 million (Census numbers for 2007 — most recent available)

Then: 39.8 million (Census numbers for 2000)
Now: 45.7 million (Census numbers for 2007 — most recent available)

Then: +236.2 billion (2000, Congressional Budget Office)
Now: -$1.2 trillion (projected figure for 2009, Congressional Budget Office)

Comment by Don't Know Nothin About Buyin No House
2009-01-08 15:34:01

Wonder what these benchmarks will look like four years from now.

Comment by hwy50ina49dodge
2009-01-08 16:49:15

“…where eight years of Exceptional…” ;-)

Nothing a good yell from a Yale cheer-leader can’t resolve:

“We got the predator…yes we do!
We got the predator…how ’bout you?”

Gimme a P…Gimme a R…Gimme a E ;-)

Comment by measton
2009-01-08 19:41:19

Dick “Deficits Don’t Matter” Cheney

Said about the economic crisis. “I don’t think he (GW) needs to apologize. I think what he needed to do is take bold, aggressive action and he has,” Cheney said. “I don’t think anybody saw it coming.”

I wish someone would have asked him if deficits matter during that interview.

Comment by darrell_in_phx
2009-01-08 21:30:20

Yeah… Clinton was WAY smarter than Bush. He got out of office 6 months into the crash instead of 2.5 years into like Bush. Timing is everything.

Comment by WT Economist
2009-01-08 09:50:27

Rents falling in Manhattan, with concessions such as a month of free rent and landlords paying brokers fees.


For those of you thinking “whatever,” understand that concessions just DO NOT HAPPEN HERE EVER! It simply has not been a part of the market. This is the equivalent of the NY Times putting ads on its front page, also recently announced.

It is going to be one hell of a year.

Comment by bluprint
2009-01-08 09:58:35

Craigslist post subject line:

$274500 Where have all the buyers gone?


littlerock craigslist org/reb/984771468.html

Comment by mrktMaven
2009-01-08 10:02:09

Jan. 8 (Bloomberg) — The Federal Home Loan Banks face potentially “substantial” losses on mortgage bonds, and in a worse-case scenario only four of the 12 would remain above regulatory capital minimums, Moody’s Investors Service said.

The FHLBs … hold about $76.2 billion of “private- label” mortgage securities that may cause losses under accounting rules….

The government may need to put some of the FHLBs … into conservatorship or force them into mergers with others, Moody’s said. At issue is whether declines in the market value of the securities, totaling $13.5 billion on Sept. 30, will be deemed “other-than-temporary impairments,” the statement said.

Comment by hoz
2009-01-08 10:51:56

The Fed has it covered, not to worry.

There are a lot of banks in worse shape.

Comment by Olympiagal
2009-01-08 10:20:34

(This is waaay off topic, but you all ought to be used to that from me.)

So, I worked from home yesterday and therefore was in my jammies, eating Skittles and watching SpongeBob at about 11 a.m. (But I was thinking inside my head with my brain thingie about work stuff. Every now and then.)
I realized I haven’t actually watched morning teevee at all for at least a year or two, and kid teevee not for several more years beyond that. I was flat-out amazed at the pimping of product to kids. One in particular jumped out at me, this cereal ‘Reese’s Balls’, or some name like that, it was little chocolate and peanut butter balls and just looking at them on the screen brought on incipient diabetes from the sugar overload, but the WORST part was how as soon as the cute little boy starts to eat his nourishing bowl of sugar, pow, there busts into the room a bunch of grown-up black hip-hop artists, covered in bling and garish clothes, with their microphones, doing the requisite cool gangsta gestures, they come busting into the boring ol’ breakfast room and want to be his, the little boy’s, good friend.

That’s because he’s eating such a coooool cereal, you see.

I ’bout barfed. Truly. It was such an utterly blatant pimp, I just, it…arh…glurg…what do you say?! Feeding this sort of crap, physically and figuratively, to little kids!! Or to adult (sort of) slackers working at home! How DARE they?!
We didn’t have teevee growing up, but my cousins did, and I saw commercials now and then and I recall the pimps of breakfast cereal in my youth, but they were like, a toucan, a sillly little helpful leprechaun, a bunny that never got any satisfaction…like that. Not freakin’ GANGSTERS. What’s next, breakfast cereal jingles delivered by p0rn stars??

Comment by Blue Skye
2009-01-08 10:59:26

My mother was a Home economics Teacher. She shopped from a list. Period. I got Wheaties or Oatmeal. Period.

What was Betty Boop shilling?

Skye King…..ovaltine….never got to try it PERIOD!

Comment by bluprint
2009-01-08 12:13:39

What’s next, breakfast cereal jingles delivered by p0rn stars??

What good would that do? I already eat cereal.

Comment by Blue Skye
2009-01-08 12:18:32

It’s for the children.

Comment by Faster Pussycat, Sell Sell
2009-01-08 13:24:20

Oh well then, we can’t let anything happen to those tykes, can we now?

Besides, it’s healthy and good for them. P0rn, champagne, all the good things in life. ;-)

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Comment by MrBubble
2009-01-08 16:38:58

Having an amazing (and perhaps twisted) “Crunch Berry” fantasy. Thanks!

Comment by VaBeyatch in Virginia Beach
2009-01-08 13:32:44

Reese’s puffs are good :-)

Comment by Olympiagal
2009-01-08 14:35:09

Yes! That was the name–it was bugging me that I couldn’t recall. ‘Reese’s Pufffffffssssss….’

So, VaBey, did cool, gold bedecked rappers come bustin’ out your walls and befriend you, at your first bite? :)

Comment by lavi d
2009-01-08 14:05:45

I ’bout barfed.

It is truly amazing the things one will suffer in order to watch Spongebob.

Comment by hd74man
2009-01-08 15:04:29

RE: the cute little boy

Yeah, gotta despise the ad hucksters.

Always a cute “LITTLE” boy instead of your standard contemporary pimpled faced, dough-boy, fattie with a monster roll on his beltline and double chin @ 12 years.

Hey, have some Diabetes II and high cholesterol there, big fella!

Comment by Olympiagal
2009-01-08 17:50:53

I like your anger! :)

Comment by Faster Pussycat, Sell Sell
2009-01-08 10:41:43

Germany’s sale of 10-year bunds lured the least demand in six months as investors shied away from a flood of government securities, raising the prospect of increased borrowing costs for Europe’s biggest economy.

Investors bid for 5.2 billion euros ($7.1 billion) of the bonds offered today, a level of demand that prompted the Bundesbank to retain 32 percent of the securities, according to the central bank’s Web site. European governments want to raise money to finance more than $96 billion in bank bailouts and stave off the worst of the global recession. France may sell 7 billion euros of bonds tomorrow and Ireland began marketing five-year debt today. Spain is also planning a sale.

“I would call this a failed auction,” said David Keeble, head of fixed-income strategy in London at Calyon, the investment-banking unit of France’s Credit Agricole SA. “This was a very poor start of auction season.”

Comment by packman
2009-01-08 11:28:46

Coming soon to a country near you?

Comment by nhz
2009-01-08 12:16:03

not sure if it is representative; I just read today that the Dutch government raised nearly 10 billion euros shortly ago and pays just 1.7% on them. These are shorter term loans (I think around 1 year) but still … 1.7% is clearly below ECB rate, and the Dutch government isn’t that solid anymore financially, after the recent banking takeovers. For the record, I get 4.5% on my Dutch savings account …

Comment by hoz
2009-01-08 14:19:51

A little quick math

US $2 T
Euro countries $3T
Japan $600B
China $600B
Emerging Markets 1.2T

US Corporate $4T (either rollover or to be paid off)

Yep a lot more bond failures to come. Perhaps Mr. James Hamilton is correct! Thus no need to worry, the Fed can buy ‘em all.

“Individual liberty is the first casualty when bureaucracy expands to manage the economy. “

Comment by Faster Pussycat, Sell Sell
2009-01-08 14:35:00

Ergo, my advice not to go bottom fishin’ with corporates and junk quite yet.

Comment by Professor Bear
2009-01-08 17:59:48

Who will bail out the Fed? Oh yeah — it’s turtles all the way down.

Comment by mrktMaven
2009-01-08 11:22:52

Looks like an afternoon sell-off again. Anyone else see support around 888?

Comment by Faster Pussycat, Sell Sell
2009-01-08 13:13:01

I could be wrong but it smells like a bear trap.

Comment by mrktMaven
2009-01-08 13:42:14

Perhaps the employment number is not going to be as bad as expected. Even if it is as bad as expected, the stimulus will fix it.

Comment by Faster Pussycat, Sell Sell
2009-01-08 14:47:32

I’m threw in my hat on the side of the longs for a trade.

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Comment by bink
2009-01-08 12:32:14

I meant to post this in the morning, but completely forgot:

“A sign of the times: a surge in filings for unemployment benefits has apparently crashed online application systems in four states this week.”

Phone systems for filing unemployment claims were overwhelmed in multiple states, creating a silver lining: states are now hiring extra call center workers to field the extra call volume.

Comment by mrktMaven
2009-01-08 13:20:11

Jan. 8 (Bloomberg) — U.S. consumer borrowing dropped a record $7.9 billion in November as consumers retrenched and credit markets seized up.

According to the Fed, total consumer borrowing fell at a 3.7 percent annual rate in November, the biggest percentage decline since January 1998. The decline in dollar terms was the biggest since records began in 1943.

Comment by Faster Pussycat, Sell Sell
2009-01-08 13:26:16

Dollar terms being biggest since 1943 don’t mean anything because it’s not inflation adjusted.

Percentage terms does matter though.

Statistical j@ckasses.

Comment by darrell_in_phx
2009-01-08 21:37:53

It is going to take a long time to undo $5-$7 trillion too much consumer debt, at $8 billion a month.

Comment by mrktMaven
2009-01-08 13:46:28

Jan. 8 (Bloomberg) — Hedge funds lost 18.3 percent in 2008, their worst year on record, as managers misjudged the severity of biggest financial crisis since the Great Depression.

A gain of 0.42 percent in December lessened the average loss for the full year….

Comment by Professor Bear
2009-01-08 17:57:42


Comment by nhz
2009-01-09 02:39:42

let’s hope this sets a new trend, and be done with it.

Comment by hoz
2009-01-08 14:37:07

January 5, 2009

Portfolio Rebalancing - Don’t Ignore Duration

John P. Hussman, Ph.D.

“…It is doubtful that long-term investors have any real intent of accepting a 2.5% yield over the next 30 years on Treasury securities having, if not default risk, substantial risk of price volatility. Accordingly, investors must believe that they will have the ability to hold these securities for a rewarding short-term holding period, and then sell them to someone else before prices drop. This is a mentality that we periodically observe in stocks during bubble periods, prior to massive corrections, but is one that we rarely observe in bonds.

The long-term Treasury market now requires near-depression economic conditions to justify prevailing prices and yields-to-maturity. In the event that the general level of risk aversion among investors eases, either the U.S. Treasury market or the value of the U.S. dollar will endure disproportionately large losses. As I noted last week, given the level of extension in yields, it would not be difficult to generate losses of say 10% in the 10-year Treasury bond, and as much as 20-25% in the 30-year Treasury bond over a very short period of time. …”


“A mentality that we periodically observe in stocks during bubble periods, prior to massive corrections…”

But it is different this time, honest. This is the USA everybody wants to own government bonds.

10 yr TIPS 1.97% yield projected inflation rate 2009 1.7%
last 5 days

01/02/09 2.29%
01/05/09 2.34%
01/06/09 2.09%
01/07/09 2.05%
01/08/09 1.97%

I will close out my long TIPS short treasury when the Treasury Bond has a 200BPS yield over the TIPS probably in less than 6 months. This was the home run position of the last 3 months. And it will be a grand slam.

Comment by Professor Bear
2009-01-08 17:56:37

“Accordingly, investors must believe that they will have the ability to hold these securities for a rewarding short-term holding period, and then sell them to someone else before prices drop. This is a mentality that we periodically observe in stocks during bubble periods, prior to massive corrections, but is one that we rarely observe in bonds.”

That sounds vaguely familiar. Oh yeah: ‘I don’t have to worry about buying on an Option ARM with a one percent teaser rate, because I can always sell for a profit a couple of years down the road before the loan resets to fully amortizing.’

Comment by aNYCdj
2009-01-08 14:43:03

DONT ALL START LAUGHING…..just call dan at 347-882-8227

Survey: Reporters dropped ball covering meltdown
Jan 8 04:52 PM US/Eastern

NEW YORK (AP) - Signaling a look inward that echoes critiques of the media’s performance in the months before the Iraq War, some of the nation’s top financial journalists believe reporters dropped the ball as the nation’s economy tumbled toward crisis mode.

Sixty-two of 100 journalists surveyed by Abrams Research, a firm started by former MSNBC chief Dan Abrams, criticized the media’s work, suggesting there was an over-exuberance about the economy and a failure to connect the dots as troubles began.

“That’s a very telling and interesting number,” Abrams said Thursday. “Some of the comments we got were really fascinating. I think there’s a lot of self-examination going on within the financial media about what happened and why.”

The journalists questioned over the past few weeks, mostly reporters from organizations such as CNBC, The Wall Street Journal, The New York Times and others, were promised their identities would be kept confidential in return for their opinions.

They split almost evenly on who deserved the most blame for the crisis: 45 said banks and 44 said regulators. Only two believed that the media was mostly to blame, and nine pointed their fingers at consumers.

Said one journalist: “Everyone dropped the ball. But the media does not have nearly as much blood on its hands as the financial industry and government.”

Another reporter said that, just like in the dot-com era, basic rules of gravity were ignored. What goes up, must come down.

“I blame myself in part,” one reporter said. “I wrote about many of the components of the bust, including the opacity of derivatives (where does the risk go?), the extremely low interest rates that fueled housing, and declining lending standards. But I failed to put it all together and see how really, really bad things would get.”

Yet there was a substantial minority that resisted blame being placed on the media.

“The media, like real life, is full of a diversity of opinions and stories,” a journalist wrote. “The warning signs were there, and stories were written about the looming dangers. I find it offensive that there’s a notion that the entire business press can be criticized for a failure to see the future once we’re in a troubled climate.”

The survey found that 42 of the journalists believe at least three Fortune 1000 executives will be indicted during the coming year for their roles in the financial crisis. Abrams said he was surprised that the number was so high; 27 of the journalists believed there would be no indictments.

“Unfortunately, stupidity and venality aren’t criminal offenses,” one journalist wrote.

Only 30 of the journalists said they thought the current situation will come to be known as a depression. Thirty-one of the journalists said the recession would end by the beginning of next year; most believed it would stretch longer.

Comment by neuromance
2009-01-08 20:09:57

Journalists work on deadlines. They have to become instant experts on their topics, in most cases, as there are journalists, not economists or bankers.

As a result, they speak with people who are the easiest to contact, and most eager to speak. These people are frequently representatives of corporations (”shills”) with skin in the game. So, the corporate angle is the one that get parroted in the media, most of the time.

Comment by waiting_in_la
Comment by SaladSD
2009-01-08 15:30:17

A nice diversion from watching the economic train wreck:

Here are the winners of this year’s Washington Post’s Mensa
Invitational which once again asked readers to take any word from
the dictionary, alter it by adding, subtracting, or changing one
letter, and supply a new definition:

1. Cashtration (n.): The act of buying a house, which renders the
subject financially impotent for an indefinite period of time.

2. Ignoranus: A person who is both stupid and an asshole.

3. Intaxication: Euphoria at getting a tax refund, which lasts until
you realize it was your money to start with.

4. Reintarnation: Coming back to life as a hillbilly.

5. Bozone (n.): The substance surrounding stupid people that stops
bright ideas from penetrating. The bozone layer unfortunately, shows
little sign of breaking down in the near future.

6. Foreploy: Any misrepresentation about yourself for the purpose of
getting laid.

7. Giraffiti: Vandalism spray-painted very, very high

8. Sarchasm: The gulf between the author of sarcastic wit and the
person who doesn’t get it.

9. Inoculatte: To take coffee intravenously when you are running late.

10. Osteopornosis: A degenerate disease. (This one got extra credit.)

11. Karmageddon: It’s like, when everybody is sending off all these
really bad vibes, right? And then, like, the Earth explodes and it’s
like, a serious bummer.

12. Decafalon (n.): The grueling event of getting through the day
consuming only things that are good for you.

13. Glibido: All talk and no action.

14. Dopeler Effect: The tendency of stupid ideas to seem smarter when
they come at you rapidly.

15. Arachnoleptic Fit (n.): The frantic dance performed just after
you’ve accidental ly walked through a spider web.

16. Beelzebug (n.): Satan in the form of a mosquito, that gets into
your bedroom at three in the morning and cannot be cast out.

17. Caterpallor (n.): The color you turn after finding half a worm
in the fruit you’re eating.

Comment by robin
2009-01-09 00:04:49

See #16 and apply the Doppler effect. Been there.. thank God I can now afford screens without holes - :)

Comment by ann gogh
2009-01-08 17:59:04

Those were funny salad.
Hey did you guys hear banks are allowed to rewrite mortgages now? It’s the law.

Comment by jeff saturday
2009-01-08 18:50:31

Fed’s Rosengren says recession more severe than thoughtJanuary 8, 2009 7:22 PM ET

All Thomson Reuters newsNEW YORK (Reuters) - The U.S. recession looks to be longer and more severe than originally thought, but there are signs that the economy will improve in the second half of 2009, a top Federal Reserve official said on Thursday

What`s the sign? Oh, the tsunami of money coming from the Fed.

Comment by neuromance
2009-01-08 20:04:01

Reagan started the boom of the last 20 years with massive deficit spending, to beef up the military. It was the rise of the beltway bandits. Obama expects to do the same, but on a grander scale.

I wonder what the blowback of this massive deficit spending will be.

Comment by neuromance
2009-01-08 20:06:50

I see big players in the financial markets interviewed on various financial shows.

My question becomes, “Why are the people who caused this still wealthy?”

“Society is like a stew. If you don’t keep it stirred up you get a lot of scum on the top.” -Edward Abbey, naturalist and author (1927-1989)

Comment by CA renter
2009-01-09 06:37:38

Good question.

Comment by Professor Bear
2009-01-08 22:55:08

It appears that certain private financial institutions took in hundreds of billions of taxpayer dollars and used them to offset the negative consequences of failed gambles. Why shouldn’t they have to explain what they did with the money?

Treasury’s Oversight of Bailout Is Faulted
Published: January 9, 2009

In a report scheduled to be released Friday, the Congressional panel overseeing the $700 billion federal bailout has expressed growing concern about the effectiveness and execution of the rescue plan.

A draft of the report obtained by The New York Times criticized the Treasury Department for its “shifting explanations” about the underlying purpose of the bailout, its failure to answer many of the panel’s questions and its failure to require financial institutions receiving bailout money to fully account for how they are using the public’s money.

“The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence,” the draft of the report said. “For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore,” it said.

Comment by Professor Bear
2009-01-08 23:06:14

Looking on the bright side, there is a $1t bailout soon to follow the bailout-to-end-all-bailouts (TARP) and then maybe another after that, and another, and another… Furthermore, the Paulson Treasury will soon be supplanted by the Geithner Treasury, and the latter agency, with the help of OBwan’s economics team, will absolutely nail the second bailout, which is to follow the mother off all bailouts by less than six months, as they have learned from everything that didn’t go as planned with last fall’s practice round. It’s all good, people! Don’t worry, be happy.

Wall Street Journal

* JANUARY 9, 2009

Panel Steps Up Criticism of Treasury Over TARP

WASHINGTON — The U.S. Treasury has failed to reveal its strategy for stabilizing the financial system, not answered questions asked by a government watchdog, and has done nothing to help struggling homeowners, a report being released Friday charges.

In the most scathing criticism yet of Treasury’s implementation of the $700 billion financial-rescue package, a draft report being issued by the five-member congressional oversight panel said there appear to be “significant gaps” in Treasury’s ability to track hundreds of billions of dollars of taxpayer money.

“The panel’s initial concerns about the [Troubled Asset Relief Program] have only grown, exacerbated by the shifting explanations of its purposes and the tools used by Treasury,” said the draft report, which found that the department has “not yet explained its strategy” for stabilizing the financial markets.

The report faults Treasury on a variety of fronts: having no ability to ensure banks lend the money they have received from the government; having no standards for measuring the success of the program; and for ignoring or offering incomplete answers to panel questions.

The bipartisan panel, headed by Harvard Law School professor Elizabeth Warren, reserved its most strident criticism for Treasury’s approach to dealing with the foreclosure crisis at the root of the economic turmoil. The draft report noted that Treasury hasn’t used any of TARP’s $700 billion to help borrowers refinance or deal with mortgages that are worth more than the market value of the homes they are tied to.

Comment by Professor Bear
2009-01-08 23:12:50

We will never know if the panic would have been better or worse for a Lehman Bros government bailout, but we can thank HP down the road for creating a monstrous dark cloud of doubt over the guaranteed application of the “too-big-to-fail” doctrine. Unfortunately, it appears the Treasury Secretary designate is a true believer.

Wall Street Journal

* JANUARY 9, 2009

Geithner’s Track Record Cuts Two Ways

WASHINGTON — A bid by President-elect Barack Obama to breathe new life into the financial-sector rescue will have to overcome concerns about the role of Timothy Geithner, the man he picked to be Treasury secretary, in engineering last year’s unpopular series of bailouts.

The incoming Obama administration intends to revamp the government’s rescue efforts in both substance and style. On Thursday, Mr. Obama suggested his administration would expand the Bush administration’s initiatives, including a “sweeping effort” to help homeowners in danger of foreclosure. Other moves could include renewed bids to recapitalize the banking system and spur consumer lending.

Treasury Secretary-designate Timothy Geithner will face tough questions from senators about his role in the Bush financial-rescue effort.

The overall goal would be to present the package as a comprehensive approach rather than last year’s incremental and shifting steps that critics said hampered efforts to combat the crisis.

That grand ambition comports with Mr. Geithner’s belief that because markets overreact during a financial crisis, policy makers must overreact, too. But as he prepares for his confirmation hearings — which could come as soon as next week — Mr. Geithner will have to convince Congress he is the right person to shape the refashioned response despite his ties to the ancien régime.

This tension is complicating the Obama team’s deliberations about when to ask for the second installment of the $700 billion rescue fund now that the first tranche has been fully committed. Waiting until after the Jan. 20 presidential inauguration could unsettle markets. But asking current Treasury Secretary Henry Paulson to make the request could undermine the goal of breaking with the previous approach. Mr. Obama is interested in asking for the money before his inauguration but wants strong support in Congress and no decision has yet been made, according to people familiar with the matter.

Before his nomination, Mr. Geithner was president of the Federal Reserve Bank of New York and a core member of the Bush administration’s crisis team, alongside Mr. Paulson and Federal Reserve Chairman Ben Bernanke.

Mr. Geithner pushed for earlier, more aggressive action during the crisis, at one point clashing with Mr. Paulson on the government’s response to troubled mortgage giants Fannie Mae and Freddie Mac. Mr. Geithner helped engineer the sale of investment bank Bear Stearns Cos. and was willing to consider a government rescue of Lehman Brothers, whose September bankruptcy filing wreaked havoc on markets.

Comment by Professor Bear
2009-01-08 23:21:34

Are the Moody’s people really foolish enough to believe a housing bottom is close at hand in a deepening recession with a worsening foreclosure glut and accelerating price declines, or is this just a bit of spin to keep their REIC advertising revenues flowing? I am not sure what planet’s housing market they are talking about, but our rents are still way low compared to what sellers think they will get.

New Data Say House Prices May Be Nearing a Bottom
By Barbara Kiviat Thursday, Jan. 08, 2009

An old trick of the real estate trade is price-rent ratio, sort of the property equivalent of a stock’s price-earnings ratio. What it’s saying lately is encouraging, though not downright bullish.

Here’s how it works: if the price of buying a house divided by the cost of renting an apartment is higher than usual, then houses are more expensive than they should be. A lower-than-normal ratio suggests good value. Changes in these data are of interest not just to potential buyers trying to figure out if it’s time to finally jump off the sidelines but also to current homeowners wondering how much more pain they’re due for, as well as to policymakers angling to prop up prices. At TIME’s request, Moody’s Economy.com ran numbers on price-rent ratios for a few dozen markets. “It’s one way of estimating how out of kilter house prices are,” says Andres Carbacho-Burgos, an economist at the analytics firm.

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