Bits Bucket For January 10, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Good morning from southern Oregon.
Rancher, how’s the housing market in the Grant’s Pass area? I’ve been looking at online listings for a small place with a few acres for a retirement retreat. I hear the economy is in the dumper there.
A small place on 2 acres in Grants Pass should sell for less than $100k. I haven’t looked at listings there in quite a while, but would guess that nothing comes close to approaching that figure at this time. I cannot recall the economy in that area ever supporting high real estate prices.
Grants Pass is a great place to live. We’ve got
a great climate, farms and ranches abound, great
fishing and hunting, and right on I-5 for quick
travel.
That being said, the city has empty
houses all over the place and right now two major housing developments have started site prep. It’s as if we’ve been cut off from the rest of the universe when it comes to economic news.
Economy? What economy? The county’s broke and the city has just been brought under control by the new city council. The city has
for years done just what it wanted and the old
city councilers just rubber stamped what they
wanted. No More!
Housing is down about 20% from peak and
still falling. Give it a year and come take a look. Putting aside the city’s problems, it is
a great place to live, wonderful parks, summer
programs that put major cities to shame, great
schools, and I mean great, and a neat old time
downtown that is doing pretty well.
Go here and click on “photos”
http://www.visitgrantspass.org/index.aspx?page=8
http://www.ci.grants-pass.or.us/
Is Oregon Technical Products still in business? They were the manufacturing arm of Dalmo Victor/Bell Aerospace back when I worked at DV in the late 1970’s. I always had to come up to Grants Pass for a week or so when we started production of a new board.
Thanks for the info. I spent a lot of time there as a kid, but that was a long time ago. I looked around last summer and it seemed like there were a lot of places available, but I didn’t get a good feel for the local pricing. Prices seemed kind of California-ish.
OR is #7 on the unemployment roster. Tons of empty housing inventory in high desert area.
I thought everybody wants to live there and all those everbodies are millionares? What’s up with that my RE believing homies? What happened?
Bend is bust, no more retirement birds.
Plus, no work in the state. You move here,
you bring your job or your money.
‘Bend is bust, no more retirement birds.’
Wonderful! Truly wonderful!
It was sickening to behold what the funny munny did to Bend. So many other places, too, of course, but Bend was a really neat place, which made it extra awful.
Bend has been bloating towards bust since the mid 90’s, as CA locusts “found” it. The place is in serious trouble unless it can operate on a totally new paradigm.
So how far was Bend from the beaten path anyway? I know 97 was a decent highway, but how’s it handling all the new traffic?
Myself, I’d rather be right off the I-5, or at least closer to the ocean.
My reply just disappeared into the ether..
The economy for the last decade was predicated on “rich” people retiring from CA
and eastern states. That cash flow came to
a screeching halt last year and now most of
the retirement homes and assisted living centers
are sitting half empty. We have two major
job sources and both are related to housing and
the layoffs have already started.
Housing is down 20-25% from peak hand
has a long way to fall as the people living here
can’t afford what’s on the market. Median
income here is $30k and most of the new
housing is around $229k on up.
We sit on the Rogue river, I-5 is on the
north of town, we have great schools, the
best parks in Oregon, wonderful activities
during the summer months, a great climate,
a really neat old town center, a half hour
to Medford for Costco or the airport, a
county government that is broke, a city
government that for years spent money
like Washington that is now under the firm
solid control of the new city council, and
in general a great place to live.
A year or so before we retired and decided to move from Marin, CA we took
our coach and visited AZ, NM, NV, CO, UT,
ID, OR, and WA looking for the place that
would suit our needs. We kept score…
This place took tops in every category.
Go here and click on “photos”
http://www.visitgrantspass.org/Index.aspx?page=272
Then here and do the same on the right.
http://www.grantspass.com/
Okay, I gotta ask here, Rancher: WHY are you letting your secret out?!
People read this blog, you know, and not alllll of the readers are the miracles of brilliance, charm, enlightenment and wonderfulness that so many HBBers are. Next thing you know, Grants Pass’ll get ‘discovered’ and then you’re fooked. Utterly. All the good stuff evaporates when everyone comes rushing to enjoy the good stuff.
RE: Grant’s Pass, OR slide show
Mighty fine looking country much like the Upper Kennebec River Valley in Maine.
How are the river outfitter’s doing?
In Maine the rafting company numbers are down from around 26 a decade ago to around a dozen now, with half of those on the financial edge.
Not so good, tourism is way down. Our town
is not a destination town, it’s a “stop on the
way town from there to there”. We’re the
nexus from the California coast to Portland
and half way between Portland and Redding
CA.
As an aside, everyone please note that Olympia, WA is awful. No, really, it is. It’s rainy as all get out, and just generally terrible. Bigfoot walks around naked, everyone is super pale, and if I see you I’ll punch you in the guts with my little pale girly fist.
Keep this in mind, people, and please spread the word.
I’d vouch for that.
We went there last summer, and the place is truly dismal
‘I’d vouch for that.’
Thanks, speedy.
Oh, and the next time you visit this dismal, horrible place, you have to be sure to let me know ahead of time. When I learned you came by and didn’t even tell me I just cried and cried, right out of my eyes. Like this!
*Squeezes tears out of little green Oly-eyes in a dramatic fashion *
Well about beautiful Tumwater? A bowling alley, a MegaFoods. All done in mid century architecture. What more could you want?
“Next thing you know, Grants Pass’ll get ‘discovered’ and then you’re fooked. Utterly. All the good stuff evaporates when everyone comes rushing to enjoy the good stuff.”
Oly, I know your comment is partly in jest (as usual ;), but this type of attitude really irks me…
If you find a place you really like, the thing to do is figure out WHY you like it, and how you can expand the positive qualities and transfer them to other places, not keep the whole thing a secret.
It just amazes me how many people look at life as a finite cookie jar, and the more people there are, the fewer cookies for each one. It never occurs to them that more people can actually CONTRIBUTE more, and make life even better for the rest.
‘Well about beautiful Tumwater? A bowling alley, a MegaFoods. All done in mid century architecture. What more could you want?’
Hey! Do you live here? In dismal, horrid Tumwater? That no one should ever come to live in, because it is so terrible, especially Californians should not come?
Give it a few minutes…if it has links in it, it has to go through a filter.
Awww, nice thing to know, thanks.
My family there tells me things very bad…
Depends on what your definition of what “bad”
is….. sure, things are slowing down, but that’s
happening everywhere and if it gets really bad
with the economic horizon, this is where I want
to be.
A small town with great resources, local
farms and ranches, good water, clean air,
surrounded by miles and miles of natural forests yet right next to a major artery for
commerce.
You need a town of at least 25k population to provide the basic infrastructure of police, fire and medical. Our three rivers hospital is
almost brand new, with all the latest goodies and it serves the entire county, which is bigger than some states. ( I think )
My orthopedic surgeon was top of his class
at Harvard medical and he came here for his
family. He wanted his kids to grow up in a
small town with good values. This is true of
most of the young doctors and professionals.
I’m here for life. We bought our place here
on the river and will be building a new house
come spring. We figure it will be 60% under
the budget that we planned for two years ago.
“We figure it will be 60% under
the budget that we planned for two years ago.”
And the finished product will be worth that much less. Too many lose sight of this.
So, according to Charlie Gasparino (sp?) on CNBC, Citi called up Paulson and said they are still seeing massive quartelry losses and need another cash injection. Paulson said, too bad, so sad. First half of TARP is gone and congress won’t release the second half to be used for direct liquidity injections as was done with the first half.
So, Citi is forced to try to sell assets to raise capital needed to cover 4Q losses.
Credit crunch 3.0 on the horizon?
And how much of the stock market stabalization is based on a large number of hedge funds freezing redemptions? Eventually,they are going to have to honor those redemption requests. Then what?
What happened to all that money? Was it just used to pay investors/salaries/incentives, etc?
“What happened to all that money?”
That is the real question and not just about TARP funds.
“That money” didn’t go anywhere because “that money” never existed. It was created out of thin air on a computer at the Federal Reserve and loaned to the Treasury, then given to the banks to replace “that money” that the banks had lost — to give investors and bondholders of the banks the illusion that “that money” they had invested in the banks was backed up by something (which it is not).
Meanwhile, “that money” that the Federal Reserve created will become an obligation of the taxpayers of the United States but in reality there are no plans for taxpayers to replenish “that money”. It is all just another illusion.
You see, we have created a monstrous class of “financial engineers” here in this country who have spent their entire careers creating illusions of “that money” using giant mirrors. Whenever someone discovers that one of those piles of money in one of the mirrors is just an image, and not a real pile, they set up another large mirror somewhere nearby with a reflected image of “that money” so that everyone is reassured that “that money” may have disappeared, but it’s okay because it’s backed up by another pile of “that money”.
After all, the United States is the most advanced, prosperous country in the world isn’t it? Look at the beautiful houses the people live in and the sophisticated airports they fly into and out of. And those big, beautiful SUVs they all drive. There must be lots and lots of “that money” in America so it is a safe place to bring your money if you’re a foreign banker or investor.
So, please, stop asking “what happened to all that money.” It is a rather unseemly question…
Great reply!! Thanks.
So true and well said. That’s precisely the purpose of the 500 billion MBS purchase plan. Welcome to the Farm.
Explain something to me though. Isn’t “that money” created by selling treasury bonds, quite a bit of it to foreigners, who do expect to be paid back? I admit I’m confused when folks here say that these Bush and Obama $trillions won’t have to be paid back by the taxpayers.
What you call unseemly is in fact not quite so obvious to many/most. I assume you read this board and many here, not to mention the average “citizen”, are still under the illusion that we are going be OK somehow. We will actually have some sort of logical bottom and stabilization that make sense if maybe not a bit confusing & extended. That the bottom just must stop at 1995 or 1980 or 1933…Many also assume that the fraud we are reading about is perhaps just anomalies or “not really that many”. They also assume that “they” are really looking out for us. That their motives really do correspond to our best interest and preservation of us. Last but not least is that many think Frick & Frack are really different.
Jobs seem to be cascading now. All aboard!
Have a friend who is one of the higher ups in Suntrust..he told us the hush hush on the money is due to the fact that the banks are in so much worse shape than they are letting be known..the banks needed that money just to keep afloat…hence what you are now seeing with Citi…he knows what he is talking about he trades banks paper..
“…due to the fact that the banks are in so much worse shape than they are letting be known.”
+1
Thanks, Ann. I guess.
They need the money to stay afloat AND continue sucking up their inflated salaries– keep the gravy train running even if the box cars are empty. I’ve being thinking for years that many people’s salaries are completely disconnected from adding “value” and/or GDP to the economy. Por ejemplo, When I have to explain to a financial advisor– who claimed that since the unemployment rate in the GD was 40% that 7.2% is really not so bad– I almost blew a gasket. (the highest rate was 24.9% in 1933, and because we’ve changed the way we calculate unemployment, this 7.2% would be, compared to GD standards, closer to 14%) I don’t have a background in finance, nor do I make 6 figures, but I have basic factual knowledge about these things. I guess if you can keep peddling the happy juice you get to earn funny money.
SaladSD,
You bring up an interesting point about the employment statistics. From time to time, it has become necessary for the financial engineers to bend and distort some of the mirrors they use, in order to make thing appear better than they actually are. Sortof like at a carnival house, when you stand in front of the mirror that makes everyone look skinny. It makes everyone feel better about the safety of “that money.”
RE: From time to time, it has become necessary for the financial engineers to bend and distort some of the mirrors they use, in order to make thing appear better than they actually are. Sortof like at a carnival house, when you stand in front of the mirror that makes everyone look skinny.
Kinda like the Income Approach capitalization rate used by the commercial appraiser of the Myrtle Beach Hard Rock Theme Park which ended up DOA after 9 months of operation.
$400 million down the BK crapper.
Rock on, dudes!
Brett:
Kinda like no cute little chicky-poo reporter asked “well what did you do with the $100K of Heloc money?”
Had they asked that question 4-5 years ago, i doubt this bubble would have gotten so big.
Nah, during the boom the banks couldn’t care less how the peeps used the fake moolah.
More than 10 years ago they had huge banners at my local branch exhorting customers to tap imagined equity to pay for vacations.
Heck, one does not have to have lived through the Depression to know that was a bad idea. The sooner they fess up and admit the hyper-consumer service economy is a sham, the better.
You want to know where the money went? A lot of it went right into the hands of the FBs that Barney and Chris want to “help”. How many hundreds of billions of dollars in defaulted home-equity loans are out there? And how much of that money was used to by things that these people still have?
THE reason car sales are down 40% from last year is that there’s no more home equity money. I’m sure other large discretionary purchases are also hit hard.
(Also, before any BK judge allows a cramdown, if this were a Just nation, the judge will demand that all cars, TVs, jewelery, etc, bought in the past few years be sold.)
I wonder if cram downs will be allowed to happen? If they do, then everybody will want one.
“You want to know where the money went? A lot of it went right into the hands of the FBs that Barney and Chris want to ‘help’.”
-
I see it now, the banks are the real victims.
Browny took advantage of the poor unsuspecting banks.
Everybody will WANT a cram-down, but not everybody will get one. That’s the beauty(?) of a cram-down. A judge will do the diligence that the broker was supposed to do. It will take time — no insta-approvals. And judges don’t nudge-nugde wink-wink to collect goody-goody fees-fees either. You lied about you income? Tostada. You squatted for 8 months? I’ll just add that to your tab. You pretend you’re living in your spec-home? Tostada. You heloc-ed? Sell your Escalade…oh you went to Puerta Viarta on the Love Boat instead? Tostada.
I’m warming up to cram-downs. A precious few deserving ones (there are some) will be saved, the rest will be tostada. The best part is that dispenses with the bull and it’s the final answer: cram or walk. Either way, now SYFPH.*
—–
*internet-speak for “shut you f’in pie-hole.” (i.e. be quiet)
A judge will do due diligence? Not if the docket is overloaded and there’s an ever-growing stack of filings in the in-box.
RE: A judge will do the diligence that the broker was supposed to do. It will take time — no insta-approvals. And judges don’t nudge-nugde wink-wink to collect goody-goody fees-fees either. You lied about you income? Tostada. You squatted for 8 months? I’ll just add that to your tab. You pretend you’re living in your spec-home? Tostada. You heloc-ed? Sell your Escalade…oh you went to Puerta Viarta on the Love Boat instead? Tostada.
I like this perspective, OX….maybe there will be some justice coming down the road.
The docket will not matter. The leg work and work out is done by the Trustee, a lawyer who works for the court. The Trustee gets paid well, out of the settlement. The judge can process these things as fast as he wants to. Hire more Trustees.
Hang um! Next!
Hang em High.
http://en.wikipedia.org/wiki/Isaac_Parker
What if judge was a “victim” - err, drank the kool-aid, as well. How much sympathy would there be, in that case?
It’s also the IRS’s fault! They didn’t scrutinize interest deductions. And they’re still not doing it. (Though most of this behavior is from Congress’s pressuring.)
If the IRS audited every FB with a HELOC, I’m sure they’ll find some money to collect in back taxes and penalties.
If the IRS audited every FB with a HELOC, I’m sure they’ll find some money to collect in back taxes and penalties.
In many cases they would spend more money doing the audits than they would collect which is why they dont do that. If they audited every FB its hard to say what the net result would be…
bluprint -
If looked at on an individual basis, sure, perhaps it costs more to perform the individual audit versus the penalties/back taxes collected. However, I’m curious how it pencils out if one considers the effect it has overall due to others being less likely to lie/cheat due to fear of audit.
Not saying your statement isn’t true. Just that even if the individual audit doesn’t pencil out, it might still result in a net gain due to the effect the fear of audit might have on others…
The IRS should sell tickets. I’d pay to watch them ask some FB why his mortgage application says he makes $200K/year, while his last 5 years of tax returns claim he only makes $50K.
drumminj,
The effect you describe no doubt exists. At some point diminishing marginal returns kicks in and the extra costs wouldn’t pay off. Who knows where that point is maybe they have already passed it maybe not.
I’d pay to watch them ask some FB why his mortgage application says he makes $200K/year, while his last 5 years of tax returns claim he only makes $50K.
Lying on a loan app doesnt create a tax liability. Why would they care?
No one knows what banks did with the TARP funds and we may never know. Why should it be any different with how the FBs spent their equity loan money? Not that I agree with this, however, the local, state and federal governments are stretched so thin fiscally that they can’t afford to pay for the resources needed to provide the necessary oversight. I suspect if the cram down becomes a reality one or two FBs would be made examples of like Lehman, however, in the end they’d herd most of FBs through like cattle.
“Lying on a loan app doesnt create a tax liability. Why would they care?”
Because if there was fraud on the loan, then the forgiven debt gets 1099ed.
Why shouldn’t lying on a loan app create a tax liability? The IRS frequently examines lifestyle and other factors when determining if someone is hiding income
I think it would be reasonable to give someone with a liar loan a choice: either go to jail for mortgage fraud, or pay income taxes on the amount stated.
Of course, this will never happen. Both Dems and Repubs want to treat these folks as victims.
b/c the law is the law. As Darrell points out fraud may over ride some of the recent legislation forgiving the tax due on the forgiven mortgage.
But aside from that, lets assume the laws with regard to forgiving tax liability related to forgiven mortgage debt didn’t exist.
Why shouldn’t lying on a loan app create a tax liability?
B/c you are taxed based on your actual earnings, not based on what you claim to a third party you make.
It might be that searching RE records would be a good way to find tax cheats and who knows the IRS might do this at some point but still taxes are calculated based on actual earnings.
Blu, it may be equally likely that the fraud was on the 1040. Point is, if the person is ’self-employed’, the only limit on 1040 deductions is set by chutzpah, and the only limit on income declared is set by conscience. A systemic liar has no conscience.
I’m with you on having some public executions.
There’s a very easy solution to this! The IRS can contract with a company to examine mortgage applications for federal-government backed mortgages and see if the stated income matches reported income.
If it exceeds it, the contractor sends them a letter telling them to pay up.
Contractor gets to split any proceeds collected with U.S. Treasury 50-50. It’s a win-win!
I wonder if We, the Taxpayers, can sue the government to force them to collect taxes that they’re owed! In many states there’s a related issue: even though Congress passed the “Deadbeat Specuvestors Tax Relief Act of 2007″ exempting forgiven mortgage debt from income tax, few states did. I’d be damned if CA raises my income tax before at least trying to collect taxes already owed from others. Just because I’m not running around calling myself a victim doesn’t mean I should have to suffer.
Bubbles are usually followed by bursts and the gum gets all in your hair. Usually takes a long long time to get out of your hair, and then you realize that to get it all out, you just have to cut your hair really really short.
Ala this big bad bubble. Short short short haircuts everywhere.
My guess is that it went to cover losses. $ trillions in losses coming, and the Fed and Treasury can’t cover them all.
All these sob stories of Madoff investors that thought they were rich and now learn they are poor is just the begining. Wait until the corporate bankruptcies begin to roll across the land from sea to shining sea.
Good question.
Sometimes I wonder whether terrorist groups are somehow part of all this.
Just how do all these funds simply evaporate? A portion of it will due to poorly performing economies worldwide, but this much?
As a taxpayer, I demand a full accounting of where it went. And where it’s going to go. Anyone seen a website out there to this effect? Thanks in advance.
I agree!!! They are using MY tax money… I want to know where it went and how they are going 2 pay me back…grrrrrrrr!!!!!!!!!
The funds “evaporate” because they are or were so highly leveraged. If you buy X number of shares of a company but borrow 80% of the money needed to make the purchase, then the stock only has to decline by 20% for you to be wiped out (you still gotta pay off the loan).
Bill -
I understand all that…what you’re saying is among the many things that I referred to when I said “poorly performing economies worldwide”. (I worked in the stock market for six years ending in 2004).
Yet, the sheer amount of TARP funds “needed” by all these NYC crooks is unceasing. Yesterday, hoz pro-offered that up to 40% of TARP funds would end up in Asia. If that’s true, then it all makes a great deal more sense.
I would hope that the Feds reverse the 1998 legislation that now allows banks, insurance companies and the like to mingle assets/purchase one another. The capital gain waver on real estate sold after two years of possession (which also was part of that 1998 legislation) perhaps should be trashed, too.
What Prof says herein re: Citi is an indication that something to that effect is in the offing. Let it be true.
One of the things that needs to be done to fix this mess is to remove incentive to commit fraud. Or theft. Or gambling with the assets of others.
Isn’t this precisely what happening in 1929-1930? Even my simplistic 11th grade textbook spent a couple pages on the cleaning ladies who bought stock on margin.
This time I thought it was only hedge funds that did that to get their returns, or Private Equity Firms to buy companies. I didn’t realize individuals had begun buying on margin again.
One consequence of the bubble is that it created an entire class of people whose first and only thought is what they can get away with and how they can game the system.
One of the things that needs to be done to fix this mess is to remove incentive to commit fraud. Or theft. Or gambling with the assets of others.
All good ideas, but all things that’re structurally built into the system — or at least winked at — right now.
The question is this: Do we have the willpower to make such fundamental changes to the financial industry?
(I’m not sure what the answer is.)
ET-Chicago
“One of the things that needs to be done to fix this mess is to remove incentive to commit fraud. Or theft. Or gambling with the assets of others.
All good ideas, but all things that’re structurally built into the system — or at least winked at — right now.
The question is this: Do we have the willpower to make such fundamental changes to the financial industry?
(I’m not sure what the answer is.)”
-
Now, this is truth.
Comment by ET-Chicago
2009-01-10 09:37:33
One of the things that needs to be done to fix this mess is to remove incentive to commit fraud. Or theft. Or gambling with the assets of others.
All good ideas, but all things that’re structurally built into the system — or at least winked at — right now.
The question is this: Do we have the willpower to make such fundamental changes to the financial industry?
(I’m not sure what the answer is.)
—-
Truth!
At last.
ET…I am not sure either…Its frustrating…
Full accounting of TARP money…
PBS News hour talked about that just last night. Jim Lehrer has an uncanny way of being on topic. Let me find you some links…
A ha. Former Senator John Sununu (R-NH) was on the oversight committee, and his idea of oversight was to ask 10 questions of everyone who got TARP money. PBS doesn’t have the transcript, but I found some stuff for you:
Here’s a link to a short report about the committee:
http://www.directorship.com/oversight-panel-questions-tarp
Here’s the website for the committee:
http://cop.senate.gov/
Here’s the actual report (37 page PDF!):
http://cop.senate.gov/documents/cop-121008-report.pdf
OK, sorry, here’s one more link..it’s the most recent report (warning, PDF)
http://cop.senate.gov/documents/cop-010909-report.pdf
Thanks, oxide. I’m heading out now to get some stuff done, but I’ll be looking at these later today or tomorrow.
Terrorists? If by “terrorists” you mean “board of directors and lobbyists and politicians and regulators” then I have your answer as to how it happened.
Excellent redirection back to the source Eco. Let’s talk about the real terrorist threat. The economic terrorists.
No, I mean real terrorists. The type that’d like to see you dead.
If you haven’t given much thought about how folks can create havoc on the world economic stage, I suggest you begin.
Yep. Those hobgoblin turrrists…. all 20 of them are an immense power structure even the US cannot take down.
rigggggght.
All “that money” from TARP went to replenish the money that disappeared from bank’s balance sheets as their sour real estate holdings were foreclosed on. As the home foreclosures roll on so will the bank writeoffs roll on.
The PTB are desperate to keep homebuyers in their homes and keeping up with their housepayments. Monthly payments to the banks help keep the banks alive. Stopping the payments and walking away from the house and leaving it to be foreclosed on by the banks screw the banks and ultimately screw the taxpayers.
Combo -
I know that’s what they say, and we’ve all heard repeatedly what TARP is designed to do, but something doesn’t smell right. Citi shouldn’t be screaming for more TARP funds already, no matter the size of their deficit. How much did Citi get in TARP anyway? 30-50B? They need that much money just to clear so they can stay “operational”? To whom are they obligated? $30-50B to Joe 6-pack? Hardly. How many poor decisions did they make (for example, GSEs)? Did they act to that extent on 80/20 or 50/50 margin plays? Who has their fingers in Citi’s books besides the Citi brass?
I sense there’s a hell of a lot more going on that anyone here has heard about.
I’d like to see the Feds take a gamble here - now that the average Joe and Jill have had a few months to get their money out of the big banks, and the new FDIC is $250K, turn off the tap completely to one of the majors to see what happens.
Obviously, the failure of the big banks in the aggregate would spell unmitigated disaster - but our financial future ten years out already is an unmitigated disaster unless some sort of reliable floor (both financial and operational) is built that folks on the outside can trust. At present, I see no reason for anyone of any persuasion to have faith in any part of the system.
Failure might FORCE regulators to actually regulate.
Here’s and idea. Reboot and try again. Take the remaining TARP funds and open up a few new banks and a new private Freddie / Fannie. Let the other zombies fend for themselves. Setup the new banks, Fannie, and Freddie with the appropriate oversight needed to ensure this mess doesn’t happen again.
Yes. I’ve been thinking along these same lines.
Why the hell should the big banks get anything after say, March 1? Let ‘em deal or let ‘em die.
Meanwhile, open new non-government run banks as you say, or throw MY tax money (thank you) - or the Chinese or Japanese citizenry’s money (to reference Ben and Faster) at the mid-majors or the small regionals and ban ANY employee that ever worked for a big bank from ever working in the banking industry again.
Also, move the financial heart of the country out of New York to Kansas City flyover country. Since much of today’s exchanges is automated and easily replicated/rebuilt, I’d be willing to pay for the geographic move. NYC has a rotten core.
(Incidentally, I’ve a similar, long-held notion that any lawyer serving elected office should have their license to practice suspended until after they are out of elected office. That would take care of lots of problems).
They were supposed to have had 125B of SIVs. 50% on t he dollar valuartions leaves them still some billions short. If they don’t get the money, they might not be able to pay dividends and bonuses.
+1
“leaving it to be foreclosed on by the banks screw the banks and ultimately screw the taxpayers.”
More to the point I think it screws the savers as eventually the’ll have no other recourse but to monetize the debt and create massive inflation.
Yet $hiity is always running job ads and paying bonuses for tellers,customer service people, who speak any language other then English.
———————————–
Citi is forced to try to sell assets to raise capital needed to cover 4Q losses
“Yet $hiity is always running job ads and paying bonuses for tellers,customer service people, who speak any language other then English.”
More than 10 years ago, I worked for B of A. At that time, there was extensive training, and employees were required to learn about all things banking. They had some bright minds working for them, from the call centers all the way up. Not anymore. One phone call to the bank and it quickly becomes clear that any warm body will do. I highly doubt the wages are anything to write home about given the poor level of service.
I highly doubt the wages are anything to write home about given the poor level of service.
Correct. All it means is that the bilingual employees make an extra 1 or 2 dollars per hour.
When you make $12 an hour, that’s not an insignificant bump.
I worked in a call center for a large company about 15 years ago. At the time it was a requirement that all of the employees in the center have at least some credits towards a B.A., in general they preferred college graduates. I would estimate that about 60% of us were college graduates. At the time “outsourcing” was considered using a third party vendor in Florida to handle our call overflow and deal with the off hours.
Working in a call center for any company, while in many ways a grueling and unpleasant experience, can give young people good exposure to a company’s products and allow them to develop a lot of customer service skills that are needed in most professions. The trend towards outsourcing not only robs companies of this way to get entry level employees some relevant experience, it sets the tone that customer service is not important enough to be handled by “real” employees. Companies end up having outsourcing cultures where even employees who work directly for the company are viewed as nothing more than a cost, and it never occurs to management that developing and training people could pay off at some point down the road.
Same thing is happening in the tech industry. The company I work for provides 3 levels of support. 1st level (the call center) was moved to India last year. Typically 2nd level support vacancies were filled via canditates from the 1st level group. Not anymore. Not having these entry level positions also creates a barrier for those that want to get into the tech industry. Then we hear about how they need to increase the number of HB-1 visa’s because we don’t have enough qualified people in the U.S.
Well put, Frank.
Newspapers stopped training, and the public who called were treated like irritants.
Then they stopped calling… and buying.
The IT support at the company I work for used to consist of full time employees who everyone knew, who worked in the same building as you did and would actually stop by your desk to answer basic questions or help you with a tech problem.
Of course, we now don’t have a single IT support function that has not been outsourced. There are a small group of employees that are considered “3rd tier” who work for a vendor who will come out to your desk, but only after a couple of escalations. The 800 number that employees have to call for support has the prompts set up in such a way that it is very difficult to get a person on the line, you generally have to lie about what your problem is to actually speak with someone. When you do get someone you generally get someone in India, many times there is a language barrier, even though they all speak English, many accents are so thick that it makes communicating very difficult.
You can imagine if we treat our employees this way, how well our customers are treated. I think that is the biggest problem with much of outsourcing is the corporate environment it generates. The goal becomes to service your customers with as little human contact as possible, it then filters through other aspects of how the “real” employees are treated. Try actually talking to someone in Human Resources at many large companies when you have a benefits or a paycheck problem. Everything is self-service, no one knows who to call. We do it to our customers, so why not treat the employees just as badly.
What’s the old saying?
“It’s good to save money in business, but you can also save yourself right of business.”
“…right OUT of business.”
Sheesh.
“Paulson said, too bad, so sad.”
Paulson showed signs over the past year that he understands the too-big-to-fail business model is a failure. Now if only his successor can catch on before the U.S. financial system is permanently defunct.
Here is an encouraging sign: One player in the Megabank, Inc cartel is going to break up. Now if only we can dismantle the rest of them and start properly regulating the hedge fund industry, perhaps we can end up with a newly competitive financial system devoid of too-big-to-fail entities.
Wall Street Journal
* BUSINESS
* JANUARY 10, 2009
Citigroup Takes First Step Toward Breakup
Pushed by Federal Government, Beleaguered Giant Pursues Brokerage Venture With Morgan Stanley; Robert Rubin to Retire
By DAVID ENRICH
Citigroup Inc., under pressure from the federal government, took a big step toward breaking up the financial supermarket, entering discussions to spin-off its Smith Barney brokerage unit into a joint venture with rival Morgan Stanley, according to people familiar with the talks.
News of the talks, which could result in an agreement as soon as next week, surfaced Friday afternoon as Robert Rubin, a senior counselor and director at Citigroup, announced his retirement from the New York company. The former Treasury secretary brought his high profile and respectability to Citigroup, but his reputation was diminished by his role in the financial turmoil at the bank.
Don’t take your love away from me
Don’t you leave my heart in misery
If you go then I’ll be blue
‘Cause breaking up his hard to do
Too bad, so sad…
I told a friend that what America needs is another Roosevelt, and I didn’t care which Roosevelt. Maybe we’ll get a combination of both.
Oh wonderful. Get us out of the depression by getting us into another war.
Maybe a civil war…
Buy Citigroup stock. That is the only way you’ll partake in its downfall.
Somebody recently posted about Paulson’s $700+ million that he rolled into treasuries. I am quite bothered by the fact that any one person has this much money when there are people literally starving to death in this world. That this person continues to make financial decisions against the interests of the working poor to protect bonuses of other wealthy elitists is to add insult to injury. I’ve completely lost faith in our system. Can we recover from this? Is there hope that the distribution of wealth can be more fair and equitable in the future?
Wikipedia has a great article on Ayn Rand’s “Atlas Shrugged.” The following is excerpted from that article (Part 5).
Rand’s heroes must continually fight against the “parasites”, “looters”, and “moochers” of the society surrounding them.
The moochers are those who demand others’ earnings because they claim to be needy and unable to earn themselves. Even as they beg for their help, however, they curse the people who make that help possible, because they hate the talented for having the talent they don’t possess. Although the moochers seem benign at first glance, they are portrayed as more destructive than the looters—they destroy the productive through guilt and often motivate the “lawful” looting performed by governments.
What does fiction have to do with anything?
“because they hate the talented for having the talent they don’t possess”
Right, that “talent” is quite often being born in the right circles and having no conscience.
I grew up in a hardworking area (ranchers, coal miners, etc.) and yet many were poor anyway because there were really no opportunities for them. Try it for awhile and see what kind of barriers you have to encounter. I agree that many are just milking the system, but if you’re poor, it doesn’t necessarily put you into that class.
Stop making sense, you’re going to confuse Bill.
LOL!!!
Lost, have you read ‘Atlas Shrugged’?
Your point is well taken - not everyone has the same opportunities, and it’s not just about who has “talent” and who doesn’t. Honestly, I don’t think that’s the point Bill is making (and I don’t believe that’s the point Rand was making, but I could be projecting my own bias here).
Bill was responding to a post regarding what is being done with the TARP funds…My take is the part of the story he is alluding to is where the bureaucrats are punishing the productive members of society for being successful - those that actually produced something.
My take is that the “moochers” Bill is alluding to is not the poor, as you have taken it, but rather those in the financial system, begging for money from the government/system/taxpayers/productive members of society (ie most of us!). I didn’t take his post as any kind of assault on those who are poor.
Lost, have you read ‘Atlas Shrugged’?
Please understand I intend this as a genuine question, not a challenge or anything.
drumminj-
Clever interpretation, but incorrect. You probably haven’t posted here long enough to remember Bill in Carolina. He’s just another of the blind conservative apologists for the current regimes failed policies.
I’m betting Losty is more well-read than 95% of the posters here, drumminj.
Yup, I read it when I was young, in high school, and again a few years ago. I grew up 30 miles from what she used as a prototype for Galt’s Gulch (the Ouray, Colorado valley).
Bill has a history of slamming the less fortunate, in any guise possible, so to me, it just went along with the rest of his rants.
BanteringBear - While I haven’t actively posted here too much, I’ve been reading for several years now (since mid-2006, I believe?). I don’t keep notes of each person’s biases, so I tend to take things people say at face value. It’s certainly possible I give Bill too much credit. I do think that Ayn Rand and ‘Atlas Shrugged’ gets a bad rap from people on this board…I do think that, while her philosophy might be a bit too black and white, there’s still important lessons and perspectives presented in the book. I think it’s a mistake to dismiss her and the book outright, which many on this blog seem to do (not saying you’re one of them).
Lost - Glad you took my question at face value. I just drove through eastern Utah and thought of you. Ouray is one of the places on the map that was close to my route and I’d like to get to at some point…just didn’t have the time on this drive. Sure is a beautiful area.
Yes, me thinks BIL is one of those affluent types who blather on about how they single-handedly made their wealth through smarts, hard work and talent, and then you discover they enjoyed the benefit of very favorable family infrastructure, ala Warren Buffet (his father was a Congressman) and Donald Trump (his father was a Developer). Not to say that these guys haven’t work their butts off, but it’s certainly much easier to get ahead in the world when you have a warm snugly safety net.
Lost
I wonder how many here can pronounce
“Ouray” correctly….and yes, I’ve driven
over Red Mountain pass many times during
the winter.
Hey, Rancher, as an ex-Coloradoan, you know we Coloradoans pronounce it You-ray with the accent on the second syllable, but did you know the Utes pronounce it Ooo-ray (accent on the first). I’ve made fun of many a tourist (in my smug mind, not verbally) for pronouncing it the second way until my friend Clifford Duncan, a Ute Elder, informed me that I’M the fool (what’s new).
Ain’t people a study, myself included?
PS As for Red Mtn Pass, well, you’re a brave soul. Beautiful, but I’d rather look at photos, even in summer it gives me the willies, even though I’ve been over all the 4-wheel passes in that area (Engineer, Black Bear, etc.) - but on a bicycle! My cousin is head of the Ouray County Road Dept and he cut his teeth on Red Mtn (he’s in his late 20s) at the age of 18, driving a snowplow. After attending the Silverton Avalanche School and learning there are over 200 avalanche runs on that pass, and also being stopped while they shot them down, I’m turning into a flatlander.
Hey, drumminj, don’t confuse Ouray, Utah with Ouray, Colorado, two VERY different places, though both named after the Ute leader. An easy mistake to make.
I’m further south in the redrock country, not as cold and a lot prettier (IMHO).
PS Have to add that this assessment of Red Mtn Pass comes from someone (me) who has climbed a number of peaks, including Longs and Mt. Sneffels (3x). Go figure.
Lost,
Going over RM pass was not a choice, I had to be in Durango for some meetings and
I really didn’t want to fly out of Montrose.
The wife and I were coming down the
pass headed into Ouray when we saw a small Winnybego headed south up the mountain driving in the wrong lane hugging the cliff towering over them. When we got closer the driver slowed almost to a stop and pulled over into his lane right next to the edge of the cliff.
An elder couple, white haired and white knuckled, with fear plastered on both their faces, stopped until we passed and then
crept back into the wrong lane.
Kansas license plates told me it all.
No guard rails on the road. Avalanches
take them out. One spring they found
the snowplow and the two operators that
had been swept off the road. Nasty
place that road.
Rancher, I made the mistake of riding that road once on my mtn bike. I got going too fast and it was the inside lane on a blind corner or over the edge. I took the inside lane, got really lucky, nobody coming.
My first time ever driving it was at the ripe old age of 17, drove my sister’s boyfriend’s caddie back from Albuquerque, man was I nervous. He’d just bought it and needed a driver, paid me $50. He had no clue, he was only 20 himself. Craziness.
Right, that “talent” is quite often being born in the right circles and having no conscience.
That is wrong and also cynical. Talent is created by ones’ own self interest. Some way to create weatlh that is fascinating to me may be boring to someone else and that other person probably hasn’t found anything interesting to do - his loss.
I grew up in a lower middle class environment but both parents were married until one died. They were wonderful parents. The love and guidance they had provided me the will to finish college, finish graduate school, and take my career to even higher levels. They also taught me to be a responsible saver.
Bill, you are one lucky guy. So many people don’t have what good parents give you - confidence, empathy, knowing you can do things, those traits you need to even try to succeed.
Bill,
Even intelligence is a matter of luck. Some people were born with it, and some were not. Doesn’t make one person more “worthy” of the world’s riches, IMHO.
It’s all about money and power. The more money you have, the more power you have…and that power enables you to redirect more money toward yourself and your interests (people who can help keep you in power, hence get more money for them and you).
Money is more about politics than it is about productivity. I’ve seen a whole lot of very productive illegal immigrants who have very little money. Meanwhile, most of the money has been going to “management” and “financial” employees (and that’s just earned income). I’d hardly call them “productive.”
they destroy the productive through guilt and often motivate the “lawful” looting performed by governments.
Oh yea the guys on Wallstreet have been very productive, what a joke. Ken Lay, Bernie Ebbers, Mozillo, Fuld ect ect. These men are leaches on others productivity. Many of those so called Moochers are people who realize that the playing field has been secretly manipulated to keep them from winning.
“because they hate the talented for having the talent they don’t possess”
The last dying yelp of the submerging economic racist movement.
The Randian’s smug me-first, the-rules-don’t-apply-to-me-because-I’m-unique brand of shallow authoritarianism grows tiresome quickly.
And don’t get me started on the quality of her wordsmithing from an aesthetic standpoint — ugh.
Frankly, I was always surprised that Mr. Sane seemed to be such a fan of Ms. Rand’s work. He is more sensible than that.
+1,178
I have never understood the fanaticism with some here regarding Ann.
To me, she always sounded sophomoric, too much of, as Woody Alen said, “mental masturbation.”
I was very heartened to know that Mr. Greenspan was an avid follower, another expert in “mental masturbation.”
+ infinity
I read Atlas Shrugged about 5 years ago. Sophomoric is a good description. 2-dimensional cartoon charactures. No real in depth exploration of real life situations.
Some on, the static engine that operates with free energy….. blah, blah, blah…
Yes, it sucks to work your butt off, and then have a portion of it taken to provide for those that did not work as hard.
But, what economic system does this describe???? Communism or what has passed as capitalism for the last 3 decades?
+ infinity to the nth degree
I refer to her as the “third pressing of Adam Smith” since I love metaphors involving food.
I almost got smacked for it once when somebody “got” the metaphor.
I don’t get it…
extra-virgin olive oil
virgin olive oil
second pressing
third pressing
…
Those who have no strength to destroy any of the Philosophy of Objectivism think they can destroy it by character assassination of Ayn Rand. The true individualists know how to separate the philosophy from the flaws of Ayn herself. The ones who confuse the philosophy with a human are losers.
Right, we must all be “jealous” and “bitter” and not at all “objective”.
The true believers are the only ones who know all the sacred secrets.
LOL
Bill, are you channeling aladinsane?
Yes, I agree that ‘Atlas Shrugged’ is pretty appropriate/topical with respect to TARP and other current events.
The analogy doesn’t work. Here, the looters (the financial industry, the corporate CEOs who just came long to loot the company) are one who thinks they have all the talent and hence are entitled to game the system without producing anything of value.
Ah, but that’s subjective.
Objectively, they’re douche bags.
You’re talking about the Mediocre Masters of the Universe who’ve been bootstrapped into wealth and privilege, right?
Just be aware when quoting Rand that she is very, very popular in the *insert drumroll here* financial community.
Yes, the masters of monetary destruction think they’re the people single handedly holding society together.
– w
“I am quite bothered by the fact that any one person has this much money when there are people literally starving to death in this world.”
I am quite bothered that this person issued a ‘no recession in 2008′ economic forecast in Dec 2007, then oversaw the the largest job losses since 1945 during the ensuing ’slowdown’ plus the dismantling of the U.S. financial system in large chunks. The prelude of misleading happy talk to the unfolding of a severe recession culminated in mass financial panic by fall 2008 (not merely limited to behind closed doors at the Fed), which is one of the best things that ever happened to l-t T-bond investors.
Is there hope that the distribution of wealth can be more fair and equitable in the future?
Charity begins at home..
Find someone who has less than you do, pool your money together, and each takes half. That’s fair and equitable.. isn’t it?
Are you following your own advice, Joey?.
I’ve been poor. I put myself through college (Master’s Degree). It becomes demoralizing to try to play by the rules in a crooked system. The harder I worked, the more money I put in someone else’s pocket. I now have my own business. I’m still relatively poor, but what I earn I keep. I also donate a lot of my income to charity, mostly animal shelters and such.
mostly animal shelters and such ??
Lost,
I’ve been so poor that if you could go around
the world for a buck, I couldn’t have gotten out
the drive.
That all changed 35 years ago when I went
into business, realizing that working for some-
one else would keep you poor.
Retired at 52 and have never looked back.
Rancher, you’re a free man, a very enviable and rare lot indeed. Kudos.
I’m sorta retired, no income, but I do as little as possible.
Losty, I’m touched by your giving to the animal charities, but will YOU be following your own advice?
When the shoe is on the other foot and you have employees who don’t share all the pressures, risks, and responsibilities you have as a business owner, will you be providing 401-K benefits, pensions, health care and lots of raises?
Heck, I don’t provide those things for myself. But you know, if I had employees (everyone I work with is contract), I’d give them those things before I did myself. Maybe it’s cause I’m a cool person (open for debate), but more likely, I know I can live w/o them, and if I had employees, especially with families, I’d feel remiss not providing the best I could. Heck, I’d even make it profit sharing. In fact, I do give my contractors good bonuses when we finish a job (publishing), not that I have that many jobs.
So, to answer your question, yes. Because I believe that wealth is in the people around you and what you can do to make a difference, not in your bank account. And you know what? Those very same people always come through for me when I get between a rock and hard place (which is often, considering where I live).
Amen, Losty!!!
“if I had employees (everyone I work with is contract), I’d give them those things before I did myself.”
Yes, and I’d take over Mother Theresa’s work if I had the time.
MD
MD, you can accuse me of being an altruist and demean that if you want, but it falls on deaf ears. People like you have no effect whatsoever on how I view the world - my personal wealth, my personal happiness, and my friends validate my views over and over and over. Sorry if you’re stuck in the ratrace of being a doctor, as your name suggests you might be.
My wealth lies in being able to live in a beautiful place and use my time exactly like I want. I have everything I need, and then some.
Back in my school days, my friends called me by initials: MD. I’m just a working stiff.
Sorry if I came across a little harsh; it’s nothing personal. I was reacting to your comment that the harder you worked the more you put in someone else’s pocket.
MD
A noble cause Joey. Have you done so?
Have you already done that joey?
Yeah, that’s right. Evil San Fran Nan Pelosi is coming to take half of our $36K/year paychecks to hand to deadbeats in the inner city.
That tactic worked on the Joe the Plumbers of America for years, whoopsie, not this past November.
I thought everyone knew this is how the system works. The inner party typically hires someone from within industry to regulate it. You need someone with industry know how and expertise, says Squealer with a smile and some spin.
The absolutist black or white drivel pushed forward in atlas shrugged is what got us here. What opportunities does a kid growing in the projects have, whose mother is on crack and dad is missing? Tell a kid who wants to go to school but has to walk past drug dealers trying to recruit him that society should not have to bear his weight. I am not proposing we go to socialism but the notion that we all are equally endowed is also socialist.
The reason we are in this mess is legions of college kids in 70′ were force fed this pop philosopy lesson and came out believing they were the next john galt. They turned into wall street brahmins who ran roughshod over all regulation and safegaurds because these were just created by and for ‘parasites’ like you and me who just want to feed of the amazing intellect and success of our lord and masters.
Greenspan happens to be a great disciple of Ayn Rand btw, the systematic destruction of regulatory structure is right out of Rand’s playbook.
Again, + infinity
A+++
Here, here! And I always find it quite hypocritical, for someone who so strongly advocated stoic uber-individualism, that Ayn Rand found it necessary to change her birth name: Alisa Zinovievna Rosenbaum Guess she went Hollywood, after all….
Super post, sartre.
Ahh, that ol’ ‘black and white’ stuff…I think some people cling to it so fervently because shades of gray are so fiddly and confusing. ‘Black or white’ is very comfortable. You know where you are when there’s only two shades and they are so vividly colored. ‘Look!’ such people can say with joy, ‘It’s black! That’s bad!’ Or else, ‘Look! It’s white’, etc etc…..
When you accept that a great many things are ‘gray’, so to speak, why, then you have to pay attention and think hard and tease out nuance and so forth.
Who wants to have to do that?!
(Well, I mean—IIIII do, and so do many of you here, evidently, and also running around in the world at large. That was rhetorical.)
Let me add–in my experience, which is more broad and vivid than my mom and Sweet Baby Jeebus would really approve of–in my experience, the smarter the person is the less likely they are to be a ‘black and whiter’. Now, you CAN have smart people who simply prefer to go with ‘black and white’, yes.
(And these souls are what I like to kindly term ‘intellectually lazy’.)
Read up on the traits of the malignant narcissist. Black and white is one.
Right on, Oly.
Ah, the indomitable Stephen Moore of Club for Growth fame, reporting for duty on the Ayn Rand mother ship:
http://online.wsj.com/article/SB123146363567166677.html
According to Steve-O, “When profits and wealth and creativity are denigrated in society, they start to disappear — leaving everyone the poorer.”
I had no idea our society had been denigrating profits and wealth. Seems like we were pseudograting profits and wealth.
According to Steve-O, “When profits and wealth and creativity are denigrated in society, they start to disappear — leaving everyone the poorer.”
What’s been denigrated is not profits and wealth, it’s manipulation of the system, fruad, and theft .
What wealth did the CEO’s of these financial institutions create. They created a mirage of wealth and used it to rob everyone in the US.
“What opportunities does a kid growing in the projects have, whose mother is on crack and dad is missing? ….The reason we are in this mess is legions of college kids in 70′ were force fed this pop philosopy lesson and came out believing they were the next john galt. They turned into wall street brahmins who ran roughshod over all regulation and safegaurds..”
Perhaps, but it was the social engineering courses at those colleges that led to the failed government ideas such as subsidized housing projects.
Maybe that kid’s parents ended up like they did because the government took on the role of provider.
In the 50s, if you didn’t work, you didn’t eat.
Why yes, that disgusting, poor, black child of a crack addict should just do the right thing: lie down and die!
/sarcasm
Now you’re being absurd. No, the government can’t abandon the mess it created, but it’s time to stop the cycle.
MD
“In the 50s, if you didn’t work, you didn’t eat.”
So if you lose your job and can’t find another in recession/depression, you should die of hunger?
…while your former masters who created recession/depession through their economic policies will dine on caviar and congratulate themselves on being masters of the universe?
Nice.
Did anyone die of hunger in the US in the 50s?
Higher education is the cause of poverty? What is the cause of your intellectual poverty?
What is the source of your intellectual laziness? The Great Society failed and it’s not because of Wall Street.
Keep going Barrister. You’re really making a case.
The absolutist black or white drivel pushed forward in atlas shrugged
That’s the biggest crock of $hyter I’ve seen posted on this board.
And if you have half a brain, you would realize your statement itself in italics above is absolute.
you are correct, extreme idealogy deserves absolute criticism.
Is there hope that the distribution of wealth can be more fair and equitable in the future?
We need to define what wealth is first….
‘We need to define what wealth is first….’
We sure do. I think about what constitutes ‘wealth’ quite a bit, being as how so many of my fellow bald monkeys spend their days in the sun pursuing this ‘wealth’ thingie. So, what IS it?
So, what IS it ??
This maybe it..By; RLS
The man is a success who has lived well, laughed often and loved much; who has gained the respect of intelligent men and the love of children; who leaves the world better than he found it, whether by an improved poppy, a perfect poem, or a rescued soul; who never lacked appreciation of earth’s beauty or failed to express it; who looked for the best in others and gave the best he had.
+ infinity squared!
Yes, but I’m still not giving away 50 percent of what’s in our savings account. True story of 2008 “charitable” giving:
1. $ 350 to a woman who was losing her apartment in Chicago, had lost job after job ( I think she’s got some mental health problems although she’s a talented person ), and used to live in a $ 1,500,000 house in the 80’s until her divorce attorney husband divorced her and threw her out. That was a gift. I actually know she was near the brink of starvation and had a box of cereal, milk, hadn’t had any meat for 2 weeks, and a loaf of bread left to eat. Now she’s going shopping ( ? !! ) with her daughter and having a debate with daughter about splitting the rent on a Zipcar ? ! WTF.
2. Loaned ( she signed papers ) a woman at work $ 300, of which she’s paid back $ 140. She was supposed to pay me an extra $ 30 and have it all paid off by November 30th. The payments went from $ 60.00 a month to $ 20 a month, and now they’ve stopped altogether.
3. Helped daughter with airline tickets and took her with us on pre-planned trip to DisneyWorld with my parents after her fiance’ jilted her. She was cranky during the trip, agaaaain. Told her she will have to help with tickets next time since we can’t keep on doing this. She & fiance’ are back together again. She’s going to India to be with him.
Giving in 2009 ? I give $ 5.56 per pay period to the Jewish Family Services in our area, and Paws for a Cause ( trains assistance dogs for the disabled ). That’s the only thing that we’re giving in 2009. Period. I paid $160 to go to stupid school re: the unpaid loan, and that was a good fee for me to pay to learn the lesson. Tough chit, no more helping.
The snowplow service didn’t show up again, so I just shovelled the driveway, which I’m not supposed to do with injured shoulder, so maybe I’m feeling grumpy. But truly, tough chit.
One defintion of monetary wealth is 100-300 times the median household assets. After that you’re taxed up the wazoo. By one calculation this amounts to a maximum personal fortune of $28-$78 million dollars. Sounds reasonable? That’s what Huey Long proposed in his Share Our Wealth program in 1934. He didn’t live too long after that.
No, I’m not talking about that ‘money’ crap, I mean real ‘wealth’.
“We need to define what wealth is first….”
I don’t think I need to “define” wealth for you guys to understand my point. You’re smarter than that, and must certainly understand that we have a situation in this country where a precious few are getting extraordinarily wealthy while the masses are being forced into a much lower standard of living. For God’s sake, even Hank Paulson himself has copped to this.
From Wikipedia:
“Paulson identified the wide gap between the richest and poorest Americans as an issue on his list of the country’s four major long-term economic issues to be addressed, highlighting the issue in one of his first public appearances as Secretary of Treasury.”
Oh I’m sure he’ll “address” it all right.
“Hmmm, this gap just isn’t big enough. We still have people who think they have rights and equal opportunities and can afford to hire lawyers.”
Given an environment where anyone can get wealthy, few will.
Umm, Joey…
Not “everyone” can be wealthy. It’s simply not physically possible.
There is — and will always be — a range. What we can control is the distance between the two opposite points, and how everything is distributed in the middle.
BTW, nobody is claiming that a disabled former waitress should make as much as a highly-trained surgeon. What most (I’m assuming) are saying is that the existing disparity is far too extreme.
We are free to control ourselves and guide our own lives towards whatever goals we desire.
If I ever want you to take control my life, I’ll let you know. In the meantime, myob.
BS.
We might be able to control ourselves, but only to the degree that we are allowed to by the PTB (Washington and Wall Street).
Many on this blog have been doing the right thing for years, but our dollars are being decimated, and our lives are being greatly affected by people who have absolute control over our money and laws. It is the politicians and money masters who are making all the money at everyone else’s expense. I have no control over them (a perfect example being all the faxes, letters, phone calls, e-mails, etc. that so many of us have sent out over the past year+, only to be ignored).
“hope that the distribution of wealth can be more fair and equitable in the future?”
Which do you want, Fair or Equal? Can’t have both.
“hope that the distribution of wealth can be more fair and equitable in the future?”
Which do you want, Fair or Equal? Can’t have both.
———————————
You changed the words. “Equitable” and “equal” do not have the same definitions.
The OP said “equitable” which is defined precisely as being just.
http://dictionary.reference.com/browse/equitable
SD Union Tribune
Bush may ask soon for rest of bailout
Congress likely to balk, setting up delicate veto
By David Cho and Lori Montgomery
2:00 a.m. January 10, 2009
WASHINGTON — Senior Bush administration officials, consulting with the Obama transition team, have prepared a plan to ask lawmakers for the second half of the $700 billion financial rescue package despite intense opposition in Congress, sources familiar with the discussions said.
The initiative could create an unusual political scenario straddling the Bush and Obama administrations. If Congress were to vote down the measure, either President Bush or Obama would have to exercise a veto to get the money.
Obama officials would prefer that Bush exercise any veto rather than leave the new president with the unsavory task of rebuffing his fellow Democrats in Congress to advance a widely unpopular program, sources said. The White House has declined to say publicly whether Bush would be willing to issue the veto.
“There have been discussions between the administration and the transition team on how to proceed should the president-elect determine that he would like President Bush to notify Congress on his behalf of the intent to use the remaining $350 billion so that it will be available early in the new administration,” White House press secretary Dana Perino said. “No final decisions have been made.”
So, congress just delays action until Obama takes office. Congress, not Bush/Obama is in charge of when they act on the request, right?
I just don’t see congress sending $300 billion a quarter for the next few years to Wall Street to keep the “too big to fail” from failing.
If Congress were to vote down the measure, either President Bush or Obama would have to exercise a veto to get the money.
Either this is a REALLY bad paragraph [we're talking Palin school of journalism], or I am going to get the constitutional shock of my life. Say Obama asks Congress for $350B TARP. Congress says no. Obama vetos the no and gets the money to fund his “widely unpopular” [according to whom?] program. WTF? There is no WAY that can be constitutionally valid.
And how can “either” president veto the bill? That would be two presidents at one time. I guess they are discussing whether the bill hits the Big Kahuna Desk before or after the 20th — or perhaps they’ll pocket veto the thing and confuse me futher. But this point is moot anyway. Congress will never agree on a bill in the next 10 days. Pelosi is predicting the Feb recess.
The original Bill funded the full $700 billion, with a lause that only the first half of the $350 billion would be release immediatly, and the other $350 billion would be release when the president asked for it…unless the law is altered at that time to not release the money.
So, the bill would be to NOT release the already approved money. If the president veto’s the bill altering the law, then the money is released.
Unless congress overrides the veto.
Ah, I see. Thanks. But I’m sure Congress won’t agree to anything until after Obama is sworn in.
My fear is that Bush will not go out with a whimper..He is a Egomaniac..10 days to go…
… and they all lived happily after.
As I see it ,the winners and the losers were already set in place when this
bubble popped and the Government had no business trying to change the bag-holders . Of course everyone would of sued each other for bad faith,
fraud ,or any number of business law violations . The schemes go beyond
just lack of regulation from the Government ,it goes to widespread crime
because of self-regulation of Business . The laws were already in place and the laws and civil complaints were violated and the legal system was the
true remedy ,IMHO.
Heads they win, tails we lose.
Don’t you feel like we are living in bread and circuses times Wizard?
SFBAG…….Yes ,yes, yes .
Does anyone remember HP’s “No recession in 2008″ forecast, issued in December 2007? How did that turn out?
- Not so good on the labor market front.
- Really good for anyone holding l-t T-bonds!
- PimpCo and anyone else whose investments were mainly parked in l-t T-bonds made out like bandits.
Financial Times
US loses most jobs since 1945
By Krishna Guha, Andrew Ward and Edward Luce in Washington
Published: January 9 2009 13:49 | Last updated: January 9 2009 19:13
The US economy lost more than half a million jobs in December for the second month running, figures showed on Friday, making 2008 the worst year for job losses since 1945 and intensifying pressure on Congress to pass a fiscal stimulus.
The number of jobs lost during the year reached 2.6m, while the unemployment rate – 4.4 per cent before the credit crisis – jumped to 7.2 per cent in December, its highest level in 16 years.
“…the unemployment rate – 4.4 per cent before the credit crisis – jumped to 7.2 per cent in December…”
“Unemployment is up 61%” has a nicer ring to it.
I’m focused more on the underemployment rate over 13%.
The official unemployment rate in my county is 10%. Actual unemployment is probably closer to 20%. I wouldn’t even want to know what the underemployment number is. Things are absolutely awful RIGHT NOW. The severity of the situation at hand is lost on many, though not so much here on the blog.
Bantering….Remind me please where are you ??
Bear, you’re in Lewis co, right? Jeebus! Are you serious?!
Yes, Lewis County WA, just south of Thurston County, Olygal territory. There’s a lot of Kool Aid flowing in the press painting WA state as some employment utopia. What’s not mentioned is the fact that the state has a history of some tremendous busts. What’s happening on the fringes, is making it’s way to the core.
Holy Moley, BanteringBear! I had not idea Lewis County wash hit so bad already.
I totally agree that busts start afrom the periphery and work their way in.
Things are just starting to trend down here in Seattle; we’re a bit behind you, but I suspect we’ll be gaining on your soon…
underemployment rate over 13% ??
Likely much higher…Not to encouraging for consumer confidence moving forward…
We kinda knew, didn’t we Professor? Winston has been a very bad boy. After the commodities spike, it’s no surprise unemployment zoomed too. The margins, they crushed the margins and ‘drove’ the entire global economy off a cliff. They made it worst than Japan as a result. Heck, Japan is now even worst than Japan.
Two questions for anyone who thinks they know the answer:
1) Were the sliced and diced MBS churned out by Wall Street’s subprime securitization sausage shops financially engineered to be bullet proof against retroactive loan modifications?
2) Did some of the TARP money that was supposed to get loaned out all over the place instead get funneled into purchasing oil which is now hoarded in offshore tankers, waiting for higher prices before coming in to port?
Professor-
What provoked question number two?
Pure conjecture.
Also, this is probably what I would try if somebody handed me $10 bns of other peoples’ money with no strings attached or oversight. I certainly would not use the money to make loans on falling knife collateral, especially if I were a bank already facing reserve issues.
I would do the same.
Was pondering when gas prices were at their lowest, how I could find a way to store some of that gas.
Too difficult, of course, but if I had the means, it would have been done.
I enjoy the conjecture. It’s also entertaining to visualize scores of oil tankers burning cash while sitting idle off the coast, waiting for crude prices to pop while instead they drop.
I suspect that the extra funds were used to ‘encourage’ an escalation in the middle east, most recently, and that is to Hide/mask/smoke mirrors something else that is currently happening, to get the publics mind off what is really occuring right under our noses.
I am just sayin…I suspect something underfoot while the general public is focusing on their own personal financial issues, the events unfolding will distract them from wielding more influence on our politicians etc.
Just sayin..
Banks and brokerages have reported close to half a trillion in losses in the last 18 months…. And we wonder where the TARP money went?
It was all paid out in bonuses to Wall Street playas, many, many years ago.
I have an asset with $1 underlying value, but through high leverage and massive liquidity I’m able to claim it is worth $5. I have booked $4 in profit and paid out $3 in bonuses.
Jump ahead, and the bubble pops. Now I’m forced to admit my $5 asset isn’t really worth $5. I say, okay, not it is worth $4. So, my balance sheet is now negative…..
So, I take $1 in tarp money… now my balance sheet is positive again.
Until next quarter when I’m forced to admit that asset isn’t really worth $4. I say, $3. I need more cashinfusions to bring my balance sheet back positive again.
The money was spent years ago, and now we have to cover the losses or let the financial system collapse. Over the long-term, I don’t think we can really cover all the losses.
“It was all paid out in bonuses to Wall Street playas, many, many years ago.”
Bingo! That is the horrific beauty of easy money financial stimulus from the Fed, followed up by bailouts during the crash phase! The playas on Wall Street get to cash in their chips when the sun is shining, and the taxpayer gets to pick up the tab during the ensuing hurricane. It’s a beautiful system, no?
…and this is what the bailouts are really all about.
Once the “playas” are secure… well, you ain’t seen nothin’ yet.
“The money was spent years ago, and now we have to cover the losses or let the financial system collapse. Over the long-term, I don’t think we can really cover all the losses.”
I most sincerely hope the Obamanites grasp this point, and bust the trusts which comprise Megabank, Inc before our entire financial system collapses. So far I see few signs to indicate this, but I have my hopes, as Obama appears to be a quicker study than his predecessor.
“…as Obama appears to be a quicker study than his predecessor.”
That’s inconceivable!
That’s like comparing Yale to Occidental College!
+1 Prof.
I hope so too.
But to be fair, my big toe is a quicker learner than the predecessor.
I think raising the bar maybe a tiny bit is called for.
If the man fails, he fails.
‘But to be fair, my big toe is a quicker learner than the predecessor.’
Is this the big toe that is with or is it the big toe without the toenail on it? Because I would think that’d make a difference in intellectual capacity, possibly.
‘But to be fair, my big toe is a quicker learner than the predecessor.’
But, yes, I’d agree there. Both my toes are equally smart, but I know that the yogurt I ate this morning was both smarter and more alert than our current Commander-In-Chief. Man, that thing was down-right lively. I guess I oughtta clean out my fridge more often.
You remembered!
The ugly black toe, is smarter.
Nice analogy Darrell. Thank you.
‘…financially engineered to be bullet proof against retroactive loan modifications?’
Who made it …illegal…to have gold hidden in the attic?
The Gov’t motto: “we’re… “The Deciders!”
Beautiful morning along the Calif coast…enroute to Encinitas!
hwy…It must be really nice down there today…Its going to be clear skies, no wind and 65 here today…:)
hwy50ina49dodge –
Sorry to say, but I cannot join you guys this morning. Not sure how late you are planning to hang out today, but I have familial obligations at least through the early part of the afternoon. I will try to join the blog conversation occasionally as time allows in case I cannot make it in person.
..financially engineered to be bullet proof against retroactive loan modifications..
Why do that? If the time comes when modifications might improve the value of the securities, your hands are tied.
As for tankers of oil waiting offshore for prices to climb, the oil a tanker carries is commony bought and sold several times to different entities while enroute. There’s no reason to drop anchor.
From The Wall Street Journal.
The December 2009 NYMEX crude contract is trading at about $60.17, or roughly a $15 premium to February contracts. That kind of price mismatch encourages traders to store oil for future delivery.
Bloomberg reports today that one of the largest supertanker fleet operators has an additional 5 to 10 requests for oil tankers that can be used as floating storage. Currently, about 25 idled tankers are filled with oil around the world.
That kind of price mismatch encourages traders to store oil for future delivery..
Of course it does.. but where or how the oil is stored is immaterial.
“financially engineered to be bullet proof against retroactive loan modifications?”
I am not sure what the exact question is. The trustee of the securitization trust is deemed the holder of the loans, but only acts of the direction of the certificate holders. With respect to most decisions a certain % of the certificates holders is required, but with changes in payment on the underlying notes, most trusts would require 100% certificate holder approval. This can be acquired in most cases by invoking a tender, and having the trustor as 100% holder direct the trustee agree to the changes. I note that if another entity is providing liquidity and/or credit support, they may have been given the certificate holder’s rights.
If you are talking about changes without note holder approval, I question the legality of that. Most of these modification plans are subject to the discretion of the noteholder.
As far as what happens if insufficient monies come in to pay the certificate holders. In most cases if there is not enough to pay the senior holders there is a trust termination event and liquidation of assets with losses on the senior required to be covered by the enhancers if any. The residual piece holders usually lose everything.
“If you are talking about changes without note holder approval, I question the legality of that. Most of these modification plans are subject to the discretion of the noteholder.”
I thought the story was that mortgages were sliced and diced into different risk tranches, repackaged as MBS, then sold off to investors. If there is no way to connect the lines between the investors who are the ultimate creditors under the mortgage contracts and the borrowers who would like to have their mortgages written down to more affordable principle values, then it would appear more problematic to cram down the loans than, say, if the originating lender held the mortgage on the asset column of its books. If this situation has the effect of making cramdowns more difficult to implement, then there would be implicit protection for the creditor’s contractual position in the strategy.
This is a great question/discussion that nobody seems to know PB. Very few loans are still held by the banks and as you say, most have been securitized/diced/sliced and sold to investors. The mere logistics of gaining investor concensus coupled with contract law issues makes it almost impossible to change the terms on those loans from the investor side. I would wager loans that have or will receive judicial modification will have a combo of FDIC/gov/TARP funds tapped to pay off the investors to clear the way for the loan mods. So in essence, taxpayer pays off the investors.
“So in essence, taxpayer pays off the investors.”
Bingo. So here is a modified version of my ‘financial engineering’ hypothesis:
Were the sliced and diced MBS churned out by Wall Street’s subprime securitization sausage shops financially engineered to be bullet proof against privately structured retroactive loan modifications, thereby necessitating the injection of bailout funds to lubricate the cramdowns?
(I like the modified version better, as it was perfectly rational for Megabank, Inc to gamble on the availability of bailout monies at the moment of crisis.)
Very good question, PB.
PB
There is no #2.
There is oil stored in tankers off shore that is sold against futures contracts. The cost of money for 3 months is ZERO. The cost of the tanker is minimal and the futures are priced 12% over the current spot price. After all costs, the net profit for a completely hedged trade is 10% for three months of non work. If margined according to exchange rules, the annual return is 1000+%.
Getting the oil is easy, getting the tanker is hard. Now the big firms are trying to do it - Citigroup et all. the spread will come down to reality and risk.
“Now the big firms are trying to do it - Citigroup et all.”
And you are claiming Citi took no TARP monies? Hmmmmmm…
I never claimed Citi took no TARP money. lol
How much is now guaranteed by the Fed ~ 165B or is it 365B ?
It doesn’t matter it will never get paid back.
The particular thread is precisely what I discussed several threads up.
I don’t believe that Citi or the other major are in some dire need for funds so that they can clear. How can they possibly have obligations matching the quantity of TARP funds we’ve been seeing laid out? TARP money is meant to help free seized-up credit markets and FBs, is it not? That’s not what is going on here.
And yet Citi want MORE. Why?
Something else is going on. I’m not sure it plays out as hoz says here (oil contracts versus propping up greenback), but nonetheless….
I very much doubt what is happening now has anything to do with compensation/bonuses for the greased pigs of the industry. They now are being watched. It’s something else.
In any event, do remember that TARP didn’t pass on the first go ’round. Congress, Paulson et al. changed it. Classic bait-and-switch maneuver? Hmmm….
Hoz, I don’t understand what the inefficiency is that prevents this from happening on such a large scale that it drives both current price up and future price down, into a more sensible equilibrium.
Is it lack of available storage capacity? Seems like storage would be relatively cheap even in on-ground facilities, not just in tankers en-route.
“…what the inefficiency is…”
A credible threat to print money in unlimited quantities. D’oh…
I’m seeing this as just another long position on which the Yale turds will lose billions. We all know that there is a good possibility that prices will fall another 12% by autumn. Doesn’t leverage work both ways?
I’m wondering the same thing.
Will we have to bail them out of the “oil crisis” too?
Now they’re creating 3.5MM jobs, or so they say. Most of those will probably be in taxme’s county, the rest will be in mine.
Hmmm, I wonder how many in the Obama admin will soon realize that they can make a significant dent in the unemployment numbers by re-instituting the draft.
Now that would be quite a show.
I wonder - will Hwy50ina49Dodge send a certified letter to Obama to suggest that he re-institute the draft?
by re-instituting the draft ??
Not unless we get into a “real” war unlike the fabricated one that we are in now…I do see a distinct possibility that a “mandatory” two year call to service after high school could come out of a Obama administration with congressional support…
I saw that new story being spun out of the Obama team that there will be 3.5 million jobs created by the stimulation plan.
So at current rates of job loss that’s what, 7 or 8 months of job losses covered. It would seem to me that this is a net negative with the added disincentive of making the dollars still being earned by those employed equivalent to single ply toilet paper.
Anybody out there want to try to convince me that there is a productive, not consumptive, function that the government does well?
(crickets chirping)
Whoa, whoa, whoa!!!
This morning they were dreaming up 3.5 million and I looked again less than 12 hours later and they are claiming 4.1 million!!!
If I use prof’s formula to calculate this going forward then by this time next week they’ll be adding 32 million jobs. ((4.1/3.5^14)*3.5)
Obama is a magical man, without a doubt!
Not magical man, magic man:
Cold late night so long ago
When I was not so strong you know
A pretty man came to me
Never seen eyes so blue
I could not run away
It seemed wed seen each other in a dream
It seemed like he knew me
He looked right through me
Come on home, girl he said with a smile
You dont have to love me yet
Lets get high awhile
But try to understand
Try to understand
Try try try to understand
Im a magic man.
Winter nights we sang in tune
Played inside the months of moon
Never think of never
Let this spell last forever
Summer over passed to fall
Tried to realize it all
Mama says shes worried
Growing up in a hurry
Come on home, girl mama cried on the phone
Too soon to lose my baby yet my girl should be at home!
But try to understand, try to understand
Try try try to understand
Hes a magic man, mama
Hes a magic man
Come on home, girl he said with a smile
I cast my spell of love on you a woman from a child!
But try to understand, try to understand
Im a magic man!
No, they are not.
They may claim they are creating(or saving) 3.5 million jobs…. But in my opinion, it won’t work. $100 billion a year in handouts to consumers? That didn’t work last year. $100 billion to allow business to reclain past taxes paid? Doesn’t alter the profit/loss decision on hiring or firing this year. $1000 per new employee? Doesn’t cover demand destruction.
The couple hundred billion left for shovel-ready infrastructure projects MIGHT create 1 million jobs.
Sorry, my comment above was made with tongue planted firmly in cheek.
Darrill:
‘REPAVE AMERICA” Hundreds of thousands of newly asphalted streets do it now that asphalt prices have collapsed.
I guess you call those shovel ready jobs, and repainting too. Not much lag time in those jobs.
Yeah, but my husband is a somewhat ill, 56-year old unemployed chemist with many years of higher learning studies. Probably not a shovel-job type of person. So, what’s going to be done for him ? Absolutely nothing.
YEAH Smart people are going to get the shovel right up their ***!
Such is our fate in the New OHbahma world!
tell him to Aim LOW….its a hard lesson to learn.. trust me.
———————————————————
Yeah, but my husband is a somewhat ill, 56-year old unemployed chemist with many years of higher learning studies. Probably not a shovel-job type of person. So, what’s going to be done for him ? Absolutely nothing.
Sadly, he’s tried that, but he’s too complex mentally for tech work either in pharmacy or the lab. He thinks out the process too much, asks too many questions, and gets screamed at for holding up the production line, so to speak. They don’t want him. His disease has slowed him down too. It’s heartbreaking to see him reading a book on the number “e” ( so he tried to explain to me ), and savoring chapter after chapter, yet he can’t get a job sweeping floors. He’s good, he’s smart, he’s faithful, he tries hard, he’s prompt, he’s couteous, and nobody wants him. He’s sent out close to 800 resumes’ this year and applied for jobs 5 states away. It’s a tough old world, as my father says. Luckily he’s a wonderful guy and I’m just fine at technician-type work. so right now, he watches the budget, does the shopping and cooking, does the laundry, analyzes things in his head, and supports me while I go out and hustle the dollars. With his comorbidities and deep depression, he’s qualified for S.S. disability, but he’ll probably get turned down on the first try. We’ll appeal it through a couple of levels, and will have more medical evidence due to some tests he’s having in February ( can’t get in sooner ), and hopefully he’ll be granted benefits on the 3rd pass. I’m starting to teach him medical coding, also. His pharmacy school background will help him with that, and nobody screams at you in particular in that line of work.
In the 60 Minutes(?) interview with Obama, they brought up “sequencing,” a new term for me. When a new admin comes in, they try to pass legislation most pleasing to the other party first. This makes the opposition more comfortable, then you hit them with the more partisan stuff later. Boiling the frog, so to speak. He may have to move quicker than he wanted to though.
Maybe Obama is starting off conservative with tax cuts (which he promised in the campaign), and the more liberal stuff will follow in sequence. Don’t forget that he’s got four years. And if the country doesn’t completely fall apart, Democrats may pick up a couple Senate seats in 2010, which would eliminate all and any opposition.
But these are fully refundable credits. That is not a tax cut, which would be proportionate to what you pay in taxes. It is a handout, going to everyone, including those that do not pay taxes.
Naming a skunk Flower, does not make him a flower.
Oxide….Interesting perspective…Put-mm to sleep first then take total control….Bill is going to be pissed…:)
J6P will last FOUR months. That’s length of time of his/her unemployment.
Don’t even think about extensions. They are hard to get and still won’t cover the cost of living that unemployment didn’t cover either.
It’s going to be like the 70s and 80s all over again.
China Risks the Madoff Treatment From Treasuries: William Pesek
Commentary by William Pesek
Jan. 9 (Bloomberg) — Beijing bookstores would be wise to stock up on Johann Wolfgang von Goethe. His work will help Chinese officials understand the “Faustian bargain” in which they are engaged with the U.S.
The reference here is to a compromise of principles for fleeting gains. In literature, Goethe’s Faust is a mythic German alchemist who made a deal with the devil. And that, in a nutshell, is where China, the biggest foreign holder of U.S. debt, finds itself as America re-inflates its economy.
Treasury Secretary Henry Paulson isn’t the devil, yet on his watch the U.S. has morphed into a huge debt-issuing machine. The Congressional Budget Office says the U.S. deficit will more than double this year to at least $1.18 trillion, the biggest since World War II.
Barack Obama has even bigger plans. The CBO’s estimates don’t include the cost of the president-elect’s stimulus package, which will probably add at least $750 billion to the total over the next two years. Last year’s shortfall totaled $455 billion. The U.S. needs China’s money more than ever.
“I spent most of the first two quarters of 2008 marveling at the pace of Chinese reserve accumulation,” Council on Foreign Relations economist Brad Setser in New York wrote on his Web log this week. “I expect to spend the first few quarters of 2009 marveling at the size of the U.S. fiscal deficit.”
Best Customer
All that borrowing could burst what Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., calls a market with “some bubble characteristics.” That isn’t escaping officials in Beijing.
China owns $653 billion of Treasuries, and indications are that it’s losing its appetite for U.S. debt. Expect Asia’s second-biggest economy to cut the share of dollars in its $1.9 trillion of reserves, and perhaps sharply.
How does this square with your other post?
‘That is the horrific beauty of easy money financial stimulus from the Fed, followed up by bailouts during the crash phase! The playas on Wall Street get to cash in their chips when the sun is shining, and the taxpayer gets to pick up the tab’
You haven’t paid for anything. You (and your neighbors) probably haven’t even covered the interest for money borrowed for the roads you’ll drive on today. Somebody is paying, but it sure isn’t the poor US taxpayer.
“You haven’t paid for anything. You (and your neighbors) probably haven’t even covered the interest for money borrowed for the roads you’ll drive on today. Somebody is paying, but it sure isn’t the poor US taxpayer.”
How did you figure this, Ben? Just curious.
The government hands money to the billionaires, then borrows that money from foreigners that need to keep favorible exchange rates for their export economies to survive.
Then, we don’t pay back the loans…..
How is the taxpayer harmed?
Of course, eventually the foreigners will sell their U.S. debt and let the exchange rates adjust, causing inflation on international exchange rates. This makes foreign products increase in price… so jobs return to America… but we do suffer a reduced standard of living compared to the years we were living on cheap foreign labor and debt from cheap foreign loans.
“How is the taxpayer harmed?”
I guess that depends on whether William Buiter’s dollar collapse scenario comes to pass. But you and Ben have a point — it is not really the U.S. taxpayer per se who is at risk, but rather anyone who is long U.S. dollar obligations, including foreign investors in our debt market, U.S. pensioners, and anyone who earns a dollar-denominated wage or salary.
“and anyone who earns a dollar-denominated wage or salary.”
Actually, devaluation of the dollar would help wages as imports become more expensive, making products produced here more valuable.
It is the people with $1 denominated assets, not necessarily those earning wages in $s.
The thing is, for a currency to devalue, it needs another currency to devaule against…. and NO ONE aroundtheworld wants the $ to devalue. Raceto the bottom is ON!
And in a race to the bottom, who wins????
USA, with 300 million people, millions of square miles of farm land, the Saudi Arabia of coal, mineral deposits in vast abundance, etc.
Europe, with 2 dozen countries with different agendas, cultures, values… unequal distribution of resources trying to pretend they can have a single fiscal policy? Dependant on nat gas from Russia and oil from the Middle East?
China or Idnia with over 1 billion people each, barely able to grow enough food to feed their people. Insufficient fossil fuel to industrialize. Dependant on exporting to countries that can no longer afford to buy thier goods.
Let’s not even talk about Japan…. a volcanic rock with no resources to speak of other than a very stong sense of national unity and very agressive fiscal policy focused on unilateral international trade warfare.
I think these other curriencies can EASILY win a race to the bottom if they so choose.
Exactly - It’s just that none of the countries you’ve listed want to have thier currencies quickly devalued Zimbabwe style.
“Japan…. a volcanic rock with no resources to speak of”
I don’t know, they produce Gwen Stefani fans by the millions. That has to be worth something.
Excellent post, Darrell. Best I’ve seen from you among numerous good posts. Thanks - and keep it coming, please.
It’s easy. Just look at the interest on the US gov debt and actual tax received. Here is a way of looking at it; I know a young lady who makes OK money. She drives a Mercedes (refied it once and took out 5 grand), wears a $12,000 watch and designer clothes. She also has over $80,000 in credit card debt. She confided in me that given her lifestyle, she will never be able to pay the debt off. And I’m sure the credit card companies know this as well, given their models, etc. But as long as she makes the minimum payments, all concerned pretend otherwise.
When I drove out to California last summer, I was stuck behind 2 huge military track driven vehicles on massive flatbeds. As I followed, I thought about how much metal, labor, etc, was in these things. How expensive it must be to haul them out there and then to be shipped overseas. And that’s before they have even been put into action.
I live near a rail line. Every few days, a long train load of hummers and assorted military objects will go by, car after car. Watch a little TV and it is one story after another about gov this and that. This country has been living beyond its means for decades!
And just like the young lady I know, all concerned pretend that this will all get paid for. I’m saying it won’t get paid back because it is impossible. This has been obvious, IMO, for some time. Back in 2005, I used to wonder if the housing bubble bust would be the event that finally breaks the camels back. I’m thinking that maybe it is, and that may be what we are witnessing.
“‘That is the horrific beauty of easy money financial stimulus from the Fed, followed up by bailouts during the crash phase! The playas on Wall Street get to cash in their chips when the sun is shining, and the taxpayer gets to pick up the tab’”
But if the last part, “and the taxpayer gets to pick up the tab” is struck out, there is no arguing the point.
Debt collapse = depression.
“…and that may be what we are witnessing.”
So far I have seen no hint from top government officials that they don’t believe money can be printed at will in whatever quantity necessary for any purpose they deem worthy.
long train load of hummers and assorted military objects ??
Early & Mid 20th Century war mentality with occasional reinvigoration See; Vietnam & Iraq….
Debt collapse = depression.
I think thats right but our government belives they can trick the fundemental idea of the dollar being a store of value. Dollar printing USED to be fixed to GDP
Now its fixed to overpriced RE
Yep, the Chinese and the Japanese paid for it via inflation of their savings.
You should explain this (again) FPSS.
Ok, it’s just a different way of saying the same thing that Ben is saying.
The Chinese and Japanese busted ass to make these goods. They were able to sell them to the US. If you had free trade, the remninbi would’ve risen enough to plug the deficit.
Instead, they had a peg. Well, how do you devalue a currency? You keep the dollars in some form (T-bonds and T-bills, in this case) and you pump more and more remninbi into the local system. That’s inflation.
They are going to find that the ol’-fashioned mercantilism doesn’t pay.
“You keep the dollars in some form (T-bonds and T-bills, in this case) and you pump more and more remninbi into the local system.”
Do you mean that Asian countries reinvested their profits(denominated in dollars) into US Treasuries instead of repatriating the profits? And then they printed additional currency for domestic circulation?
Yep, you could almost say the elites of these country stole from their own people without explicitly saying that’s what they were doing.
What do you think these “sovereign funds” are, child?
You think the citizens of these places are gonna benefit from these “sovereign funds”?!?
LOL
Pull the other one, dude, pull the other one.
Gotcha. Thank you. On a personal note, what is your stock in trade if I may ask?
Agree Ben. The tax payer isn’t being hosed. Foreigners that are working much harder than us, for low wages, so their government can loan us the money that we can’t repay, but we need to keep buying thier cheap products, are really the ones getting the short-stick.
Resembles a Ponzi scheme, no? Only difference, the Fed can issue more FRN’s when necessary to keep the scheme going.
I have paid taxes every year of my life that I have worked, and I have been working for a long time already. But I have also paid an inflation tax, and a perfectly good example of this is in the form of inflated housing prices (thank you Alan Greenspan) which have priced our family out of the housing market despite the fact that we have two incomes. I guess it is our bad that neither of us were born wealthy or sufficiently successful in life to put us in the small percentage of San Diego households that can actually afford to buy a home here, but don’t tell me I don’t pay taxes, because I certainly do.
Sure, you pay taxes. I’ve roughed in my 1040, and I’ll be paying some $17K this year in addition to $10K in SS and Medicare AND another $10K my employer matchedon those. Add on $5K state and atleast $5K sales plus $2K property plus.. plus… plus…
But, our society receives a hecka lot of benefit for that taxes.
What does the Chinese worker receive in exchange for working their butt off so that their government can lend us the money we need to keep the Ponzi going? A handfull of rice and some beans?
Who gets the bigger shaft?
Can’t argue with you there. I note there has been a steady flow of Chinese workers to our shores since 1850 or so, and they often come willing and prepared to work much harder than complacent Americans.
PB, that goes for just about any country.
“I guess it is our bad”
you could have just borrowed with no down payment
I guess I could have too…. now everything is all screwed up and I have a bad feeling it won’t get better for a long time.
Anecdotal stuff from the Street…
While gulping $4 billion from the the taxpayer bail-out trough American Express just saw fit to jack my purchase interest rate from 6.9% to 10%.
I have a relatively small credit line of $16,300, and have never carried a balance exceeding 30%. With what I have considered a reasonable interest rate, I haved use the account to purchase quasi- big ticket items which I consider “bargins”, aka 50% off Colt handguns; heavy duty yard equipment, Craftsman tools, et. el.
I have had the account for 15 years and never missed a payment.
When I called service to complain, the Indian accented woman on the other end, stated-”It’s the economy, sir…”
My response-”Yeah, that’s right, the Fed Funds rate is 0%; the Prime is 3.25%; Libor is 1.41; 30 year mortgage rates below 5%; Charles Shumer is gloating over CitiCorp’s acquiescence to “cram-downs contract re-writes”; Barney Frank is looking to bail-out every foreclosure deadbeat and scammer from coast to coast; and YOU jap an A1 customer with 800+ credit score with a 45% interest rate increase?
However, The ramble was completely over her head.
“IT”S THE ECONOMY, SIR!
Of course, with an interest rate no longer attractive, my immediate response is to pay off the balance and subsequently CLOSE THE DISCRETIONARY PURCHASE WINDOW which IS EXACTLY what the idiots in government doesn’t want anybody to be doing!
It’s a complete comedy of the absurd.
More than hard times ahead for this country.
How are they supposed to cover their losses if they can’t make 10% on their money?
Come one man!!!! Be willing to pay the higher interest rate, for the greater good.
It’s all part of the de-leveraging process. You’re lucky they didn’t cut your credit line in half. At least, you can pay it off. Think about the prole who can’t. He too will close the wallet or show up at a bankruptcy hearing.
Since most of the people offering and implementing solutions to the crisis don’t understand consumer or organizational behavior, it is farcical, all of it. Can’t blame some of the proles for gaming the gamers, however.
The higher rates will entice the people, that can,to pay the balance, giving the bank more cash. This allows them to lower the minimum payments on the rest and still get their, even higher, interest rates -which,in turn, pay for the defaults. See, all good.
http://hamptonroads.com/2009/01/s-hampton-roads-home-prices-drop-again-dec
“S. Hampton Roads home prices drop again in Dec.”
It’s still very bubbly here. But I think maybe they are finally getting it. The main stream media has been slow to report. There is a large military presence and mostly gov’t contractors, so those people could stay employed. The home prices are still way outside what the incomes should support.
I posted this last night, will repost, as many of you donated to her cause and it’s nice to see our own ahansen now inspiring others (haven’t yet read the People article). Thanks Big V and twingirls for finding the info.
www dot oprah dot com/article/omagazine/200901_omag_change_happens/4
Also in the January 19nth People page 111.
You go, Allena!
Thanks, Lost. I looked at the link last night. Love the photo they used, and am curious to hear if you know about how it was taken - if Allena is lurking and can explain, or if you know.
Are the dogs really that big? Or is a series of images superimposed in photoshop? It has a surreal feel to it, so either the photographer is really good, or someone’s good with post-processing
Also, I thought Allena was against having photos of her taken/published? You mentioned there’d be an article in People…I’m curious what changed? Not criticizing in any way…I’m genuinely curious as I was very amused by Allena’s stories of chasing reporters/photographers off her property
Allena, are you around today? I hope you are recovering/have recovered well!
I can’t answer for Allena, but the photo looks real to me, some dogs are really BIG!! And Allena is not a large person, she weighs all of 100 pounds according to the article.
As for the press, my contact with Allena led me to believe it was the ghouls that she rejected, and rightly so. If someone is willing to write the actual story and pay her for it, then why not? Especially if she can inspire others.
And I think she looks GREAT!! She’s been through hell and continues to inspire me, thanks, Allena.
I took it to be a painting.
It has a surreal feel to it, so either the photographer is really good, or someone’s good with post-processing.
The image doesn’t appear to be manipulated. I think A.) the dogs really are kind of big, and B.) they’re positioned close enough to the lens that the depth-of-field exaggerates their relative size somewhat.
(Nice photo!)
She has a wolfhound and some type of mastiff. Both really big dogs. The mastiff may be near 200 lbs.
Yeah, I’m familiar with large-breed dogs. I guess I’m just not used to seeing them contrasted with a 100lb woman
And them being in the foreground while Allena is sitting (it appears) just accentuates the difference.
I agree that Allena looks great, and certainly am not objecting to her telling her story (not that I’m in any place to do so anyhow). I do think it’s great and inspiring. I was just curious due to the impression I got earlier on is all.
I hope she keeps those things well fed. She’s about the right size for a snack for either one of them. Heck, she’s about the right size for a snack for ME. Hahahaha!
Now, just jesting, Alana. I hope everything is going super-great for you and your gigantic dogs.
Oly, send those pups that pot roast you just made, would make a nice before lunch snack.
‘Oly, send those pups that pot roast you just made,’
What?! Nohow!
*clutches pot-roast greedily to bosom and licks it slowly and tenderly, with love and satisfaction*
Arrgh! I wish I was a better person, and didn’t want to consume my fellows so often. But, dammmmn, they just taste sooooo goooooood….
‘‘Oly, send those pups that pot roast you just made,’’
Besides, I ate most of it last night, in an astonishing display of gluttony and noisy pleasure. What’s left I’m going to hold in my paws and gnaw on later today, lying on a rug in front of the fire. Then I’m going to lick my paws clean, get up, and go run around in the forest sniffing at things and howling.
That’s usually how weekends are run at Chez Olympiagal.
My dogs would LOVE you!! Except they’d really hope you’d share a bit with them…
A bit or a bite…
Yep, the dogs really ARE that big. The wolfhound’s head is at my shoulder when he sits and I stand. The mastiff weighs close to 200 pounds as well. I am about half their weight. However, the shot was taken in crisp late afternoon winter light with additional floods and very high saturation. The dogs were lying at my feet, (I’m actually resting one boot on RK to keep him down,) but because of their length, their heads may appear a bit exaggerated. I don’t recall what lense she used, but the photographer was standing about ten feet away from us. It really is a remarkable shot.
When I first saw it I, too, thought it might have been a composite because of the strong definition. But I saw the proof sheet, and nope, the photographer, Diana Koenisberg, is just that good. Oprah doesn’t fuque around….
The mags don’t pay anything unless you’re Angelina Jolie’s baby, but it’s all material for my book, and good publicity for rescue dog organizations. Besides, it gives my aged mother something to talk about….
Oh, and the beasts get at least one and often two pot roasts a week. Or a turkey. I wait for the $0.99/lb sales and fill up the freezer. Then clean out the fridge into a stock pot, add frozen meat, a bay leaf and some salt and pepper, cook over low all night and pour it all over a good quality kibble the next day. Those are two loyal, happy dogs!
(And cats. And ravens.)
I took a look at the article…The only thing I was wondering is where were the dogs ?? Black bears will run from dogs…
The Oprah article tells you where, they saved her life.
My dogs would probably help the bear.
‘My dogs would probably help the bear.’
My dog IS a bear.
Well, geez, how the heck do you top THAT???
I have some ravens that follow me around, but I have to feed them…they show up every day where I hike and squawk at me. One’s named “Quoth” (I stole that from Allena, cool, eh?).
Now is this a black one of the 300 lb variety, or something brown and monstrous along the lines of “Ben” from “Grizzly Adams”. (BTW, my FAVORITE show growing up as a boy)
Lostie,
Is by chance the one of the other ravens named “Nevermore?”
I’ll ask Quoth the Raven next time I go out…
They’re funny, there’s an old telephone pole that I park under about the same time MOL each day. They sit on it and wait, when I get out they start quacking like ducks (and yes, I do know the difference, for sure not ducks, ducks aren’t black) until I throw them something. Sometimes I buy day-old bread for them, sometimes I forget and they get dog biscuits, which I always carry in case we ever get stuck out there. Somehow I think they would LOVE it if we got stuck out there, being akin to buzzards..OK, enough of that.
Black bears will run from people, too.
Most of the time….
Sorry…My bad…I Did not read the whole article…I just figued those two behemoths
were at her side and no way a bear would come close to her…Glad you made it okay ahansen…
I was just walking the dog, thinking about the inflation scenario. If food costs skyrocketed, wouldn’t a simple solution be a change in diet and box gardening? I mean, even “poor” people can still buy a Pepsi.
I’m trying to map out a few scenarios for the next few years, and I have to go back to Ben’s mantra, it’s all about the jobs. We can imagine any scenario we want, but what does it matter if you’re unemployed? And, if you’re employed, you will adjust along the way… in any scenario, housing still crashes.
Hoz, I have to say(and please forgive, I do love your posts) it’s a little suspect that the guy who ranches is predicting soaring food prices.
It is about jobs and wages.
Wages are not sufficient to live the lifestyle to which we had become accustomed, even without rising unemployment.
Wages aren’t going up. Therefore, prices will come down or there will be massive demand destruction.
Either one is sure to cause MASSIVE business bankruptcies. Federal Reserve Z1, debt outstanding for non-finaicial businesses…
1993: …..3,680.7 billion.
2008 Q3: 11,011.2 billion.
ooooooops
Most of the world lives on rice and beans and very little meat. Calculate the cost of living off 25 pound bags of rice and red beans for a few weeks. It isn’t much and you’ll be sure to lose weight. Meat is going to be a luxury in the future, used mainly as a garnish and flavoring ingredient.
Meat is going to be a luxury in the future, used mainly as a garnish and flavoring ingredient.
Not if agribusiness, the cattle industry, and the fast food industry have anything to say about it. And all the people in places like China and India who, through increasing prosperity, got a taste of the Western-style good life — cars and real estate and air conditioning and hamburgers (oh my).
I don’t disagree with you, I just foresee massive resistance from consumers and corporations alike in all corners of the globe. We as a species will be dragged kicking and screaming away from meat, if at all.
We’re back to the demand destruction/supply destruction argument.
If people have less money, they’ll stop eating beef. Then, the ranchers lower the prices and raise fewer cows. This reduces the demand for corn and other grains as the cows are eating less. Reduced demand for corn drives down the price, allowing the ranchers to further reduce the price.
That darn supply and demand.
We’re already seeing cheap oil causing ethanol plants to shut down, reducing demand for corn, causing corn prices to fall.
We have excess supply of just about everything, and without the ability to spend 110% of our income falling demand.
What happens when supply exceeds demand??? Oh yeah, prices fall.
excess supply of just about everything ??
Yep….And its not going to stop
IMO….Welcome to the new age of frugality..
I consider myself frugal for the most part…I credit living next door to and watching my portuguese grandparents along with having a fairly poor upbringing for this…While raising my children they would sometimes question me about this…Why don’t you buy this dad ?? You can afford it…Maybe now, as adults and going through this economic turmoil and all being good savers themselves they will see that Gluttony has a ultimate price tag…
Hopefully we will get used to it. Technological societies seem to require less people. (At least, less fertility.)
We need to get over the “Ponzi scheme” type government programs we’ve gotten used to over centuries of rising populations.
If we ever get to the point where rising technology doesn’t make up for dropping population, well, we might have to get used to dropping budgets and negative “growth” someday soon.
+1
RE: Most of the world lives on rice and beans and very little meat. Calculate the cost of living off 25 pound bags of rice and red beans for a few weeks. It isn’t much and you’ll be sure to lose weight.
A lot of US fatso’s could use a rice and beans diet.
http://www.reuters.com/article/domesticNews/idUSTRE50863H20090109?feedType=RSS&feedName=domesticNews
A great many Americans need to get there broad butts off the football couch. Go ride a bike, hike, swim at the Y. This country is awash in fatsos. My waddling bro and his porky wife always comment I need to gain weight. I’m 138/5′7″. Bro and wifey bought a pricey treadmill for exercise on their patio in Phoenix. That enthusiasm lasted about four months. I’ve worked with Downs Syndrome adults that had more commitment. From what I’ve seen the Arizona food groups = french fries, cheesy Mexican, Ranch dressing on Iceburg, pizza, coffee, and alcohol.
There’s nothing wrong with alcohol, dammit!!!
Also, 5′9/140 and yeah, I’ve heard the “gain some weight” all my life.
On the brighter side, my physician at annual checkup time thinks I shouldn’t change a thing.
‘There’s nothing wrong with alcohol, dammit!!!’
Testify!!! (hiccup)
(pours Olygal another drink)
You got 2 inches and 15 pounds on me, but I bet I could take ya. Particularly because I fight dirty. I bite, for instance. And also you’d likely be drunk, making you uncoordinated.
Of course, I’d probably be drunk, too, come to think of it. (hiccup)
HAHAhahahahaa! *gasps for breath from laughing, falls off chair uncoordinatedly*
(pours Olygal another drink)
Why, thanks, Primey, I needed that. (hiccup)
* makes mental vow to never ever bite Primey, even if the situation would seem to demand it*
The day I graduated from high school, I was 6′2″ and 136 lbs. I credit two things for that:
1. Lots of water skiing and daily tennis
2. No one saying, “Honey, where are you going?” when my hand hit the doorknob.
I am asked with surprising frequency if I am a lineman for the bucs.
I almost forgot: pours little more cab, just a little more…
How about 6′7″ at 235.
I disagree with the “losing weight” argument. It’s VERY easy to rack up pure calories on rice, beans, and pasta. And I’m pretty sure that Atkins was right when it came to carbs, especially refined ones. Low-carb diets were the standard for weight loss until the 1960’s when the advice switched to low fat, because a couple persuasive scientists said so.
Meat is so concentrated in protein that it’s easy to get all you need from just a little. The real issue is vegetables, preferably fresh or frozen. The most nutritionally valuable food is also the least tasty, hardest to produce, and most expensive. Figures.
B*llocks on the least tasty, you just don’t know how to prep it then.
It does take effort though; and agricultural policy is to blame for the price (= subsidies on corn, soy, etc.)
Agreed. My grandmother knew how to cook vegetables to a mushy, flavorless pulp. After I learned how to grill vegetables, my children (ages four through ten at the time) would clamor for me to grill vegetables for them.
If sex and finance are all about the timing, cooking is all about the technique.
RE: Ag subsidies.
Poor people in India are relatively healthy compared to their rich citizens, as the rich have access to unhealthy animal products such as high-fat meats and ghee. The poor primarily subsist on vegetables, grains and legumes, which is a healthier diet.
By contrast, due in part to ag subsidies, America’s poor eat a diet high in junk food and cheese, prone to help them become obese despite a shortage of income to pay for food.
+1 on the technique.
And the reason grilling works is because of something called a Maillard reaction. Look it up.
Also, agreed on the rich v/s poor in developing v/s developed nations.
Making food is work. Not everyone needs to be over-the-top @nal-retentive like me but some basic understanding of principles goes a long way.
Okay, I took the bait.
Very interesting about what happens with meat. Still love my meat and vegetables that are grilled, fresh, or al dente.
Thanks FPSS
Yes, but if you learn how to control the Maillard, that’s where all the “taste” comes from.
Didn’t we say “technique”?
Hey, Fasty, why don’t you post a link to your food blog, for all to enjoy.
Here, read all about over here.
(For best results, read the last entry first.)
You certainly did.
Sorry if double post–Fasty, how about you post a link to your food blog.
I tried to post an explanation of Maillard.
I think Ben blocks external links until he reviews them which is a fair policy but I do not think a technical explanation of the difference between “caramelization” (= oxidation of sugar in the presence of heat) and “Maillard” (= reduction of an amino acid with sugar in the presence of heat) constitutes a reasonable threat to the economic system as we know it.
But that’s just me.
And predictably, Ben approved my post as soon as I tried to be funny.
ROTFLMAO @ myself.
I wonder if paranoia is called for though, huh, huh, huh?
WEee WAz ROBBED……..
Where are the pictures of Faster actually Eating her wonderful food????
I gotta laugh at the inflation squealers. Where were they circa 2001-2006 when inflation was raging in every category? When so many of us found refuge on this blog in late 2004, watching in utter amazement as prices of housing, fuel and food escalated leaving us speechless, nobody but a few of us here on this blog uttered a peep. Dead silence. Suddenly inflation is the favorite hobgoblin used by the economic slave owners(banks, corporations and their clueless minions) to impede and obfuscate.
Get a grip.
It is an anomaly. lol
I would love to predict lower costs, lower prices..it aint happening.
The US is a third world country, the rest of the world does not give a rat’s ass what happens here -unless it affects their individual economies. Asia got smacked and is now doing alternative stimulus programs that will not rely on the US. As a result there is rising demand in Asia.
The commodities market may be down from last July, but it is up 30% from November. The Baltic Dry Shipping index is down from its peak in August, but is up 25% from Nov. These are all inflationary.
Brazil’s Vale is up 60% from its low! There is demand outside of the US.
The US and Europe will not participate in the Asian recovery. The emerging markets will participate.
The riskiest country to invest in (outside of India) is the US. Better off putting your moneys in Vietnam :>( -my worst investment last year.
This is a very interesting, and on-going conversation. And certainly food for thought. However, I’m as far from convinced as when we started.
9 months ago I posted my 401(k) options and asked for advice. You said Asia-Pac. I moved about 50% of my 401(k) there for a month or so, and got out a month later with only a 7% or so loss. HECKA glad I got out when I did!
The rest of the world joined in the race to the bottom and was seriously catching up.
We’re in a deflationary spiral of falling demand and massive debt collapse.
$15 trillion of debt will default and $7-10 trillion in real losses.
The bombs are falling and I’m staying hunkered down in my shelter, thanks.
I have no problem with hunkering down in a bombe shelter! I like chocolate bombes.
The Federal Reserve is making a concentrated effort to force individuals and companies to take riskier positions or investments. 3% for a 30yr bond is a joke.
The deleveraging has already occurred. If you had to delever, you did it last Q. The Fed bought everything and is willing to buy anything.
As Mr. Robert Schiller said last night, “The products weren’t bad, the counterparty risk [e.g. AIG] was bad.” If firms know their counterparty risk then there is no need for further deleveraging. There are still enormous problems in the US financial sector. IMHO the largest problem is that banks won’t show profits for years. Banks are the largest part of the economy.
Since there is no place in the US that justifies risking moneys, my bomb shelter is primarily Japan.
The Federal Reserve is making a concentrated effort to force individuals and companies to take riskier positions or investments. 3% for a 30yr bond is a joke.
…right back to where we started this whole mess.
Not sure if they don’t get it, or if there is a more sinister motive.
“Not sure if they don’t get it,…”
It is nice to be able to issue lots of debt at a time of generational low interest rates. This is financial engineering at its best.
the fed also wants all of us savers to spend our cash by lowering rates to zero. not much to be made with the money in the bank unless deflation continues. and, how safe is my cash in the bank these days. i’m thinking i need to spend a good chunk into a property, i saw 2 peoperties that were decend needing a little work go for 40k and 55k. 1700 and 1500 sq/ft, need new roofs, carpet. How can i lose if i dump some of my cash into a property and have no morgage. I am waiting to jump, but think i can’t possibily get one for much less. but, then i see all the foreclosures coming here in phoenix and think maybe that is too much.
Please define “third world country”.
I believe the price of most of the things we buy is based on the product’s embodied energy, energy consumed to dig it up, melt it down, refine it, manufacture it, package and ship it, etc. The biggest example is a house. The biggest global credit/housing bubble in human history is over. Energy shortages will not come back in decades, not until the next housing mania. If there is to be a great inflation, it will be a monetary phenomena, not one of global shortages.
Unless we blow everything up.
The price of oil is down. The price of fertilizing and cultivating will follow. There may be some rough dislocations on the way, but the price of food, and of our labor, will come down. JMO.
Don’t forget to invest in Iceland.
Third world country
a) Financial decisions announced on Sundays.
b) Horrible utility services
c) Sub world standard telecommunications
d) Falling standard of living
e) Falling employment
f) Super rich class/ Poor class with a declining middle class
g) Transportation might be incl depending on where one lives. NYC is great UP is non existent.
Do you want more?
No, you mean about what I thought you did. I do wonder though if all of those “headed to” items mean we are there already in the trash heap. We have a lot of resources and could make this work better if we stop misbehaving.
Most of us do not live in dirt huts, sew rags together for our clothes, carry loads of sticks for miles to cook what little we can scrounge over a fire, watch our kids starve to death, die from waterborn disease. That’s what I was thinking third world was.
I humbly suggest that hozzie has never actually visited or lived in a third world outside the hotels.
Running water 24×7 is still a luxury in some of these “up-and-coming” places. They’ve been up-and-coming for a long time, and have failed to actually get there.
Parts of America are like this. Right in the middle of major cities. I can show where they are in my city. A top 10 city. Let alone rural areas.
As someone once told me, even a 3rd world country has a middle class, it just may be really small.
Many people also mistake 4th world countries for 3rd world countries. (Google it)
Foreclosures finally hitting my area hard. At least 4 comps that zillow is ignoring since the last 3rd party sale, because Zillow ignores forecsoure sales.
Well, just checked REDC. Past PHX auctions have had 1, maybe 2 from my zip. This month’s REDC has 7 for my zip.
i went to look at 2 REDC properties in mesa, one had some workers there and said i could go in, i have not called a realtor yet as sometimes they are open, windows are open, or workers or insurance guys were there. so, i get a pretty good idea if it is stripped clean. anyhow, in mesa, they were total dumps, all loaded with the trash and other crap. anyhow, there may be good houses but those i would let some other sucker buy.I don’t like auctions because of shill bidding or who knows what else is going on. plus, you can get bidding wars. many of the buyers are investors and i’m hoping the number of properties this early in the game sucks up all that investment cash and i can buy a little later after all the investors spent their cash. Is this a possibility with sales recently, that it is mostly investors and eventually all their cash will be spent?? can they possibily be flipping even now??
How long is eternity? In Bullhead City….ohhhh…. about a month and a half.
http://tinyurl.com/86a56d
“Officials in Bullhead City extinguished the eternal flame at the city’s new veterans memorial park after receiving a $961 gas bill,”
“The Medal of Honor Memorial at the Arizona Veterans Memorial Park alongside the Colorado River was lit on Veterans Day in November. When the bill arrived in late December, city officials were stunned.”
“Johnson said the flame is impressive, but city parks officials are looking at ways to put a smaller burner in place and only use the larger one at special events.
‘We’re looking at alternatives, because $1,000 a month in these economic times is certainly a consideration,’ Johnson said.”
$1,000 a month should be a consideration in any economic time. These folks are fools.
This calls for a solar-powered flicker candle. Not too romantic, but you gotta take what you can get.
There’s something seriously wrong about a solar-powered candle…
City officials are “stunned”?
Really?
Why?
Does the city pay their workers’ home utility bills? Does that account for the ignorance?
Did the city not pick up the phone to call the utility to do a required cost analysis? Isn’t picking up the phone to call a utility to get a gas rate re: any public works project part of a city worker’s $100K annual taxpayer-funded job?
Might be worth a phone call to the Bullhead City manager’s office.
They probably did a calculation, but the correct answer requires multiplying by 24 and 30 instead of dividing by either.
Maybe a picture of an eternal flame, laminated, and fastened down with Scotch tape ( or $ 1.00-store tape ) on the memorial would do ? Just thinking it would cost about $ 4 bucks max.
‘We’re looking at alternatives’
I would suggest cutting out “flames” from cellophane, then they can use a solar powered fan to blow them up and around in the air.
Wallllaaa!! Eternal flame!
Lennar Corp. shares took a beating Friday morning after self-proclaimed fraud buster Barry Minkow criticized the financial structure of some of its deals.
Shares of the nation’s second-largest homebuilder (NYSE: LEN) were down $2.20 to $9.22 shortly before 11 a.m. Lennar is the third-largest homebuilder in Austin.
Minkow, who served more than seven years for a stock fraud involving carpet-cleaning company ZZZZ Best, released a list of what he termed 10 red flags involving Lennar. He now operates the Fraud Discovery Institute and has posted details of his allegations at http://www.frauddiscoverynetwork.com .
Lennar provided “vague and less-than-transparent responses to the SEC inquiries about off-balance sheet, joint-venture debt,” the institute alleges.
Minkow’s group alleges that the builder has “exhibited a pattern of behavior over a sustained period of time of deceptive business practices, ranging from building homes using Chinese drywall to cut costs, to causing the California Public Retirement Fund (CALPERS) to lose approximately $1 billion.”
Lennar said it was working on a response to Minkow’s allegations.
The institute said it has sent a letter of complaint to the Securities and Exchange Commission, the FBI and the IRS
‘Lennar said it was working on a response to Minkow’s allegations.’
And what would that be? Making a bunch of stinkies in their panties and a mass booking of one-way flights to Bali?
Man, I hope Lennar gets nailed to the wall, with giant, rusty nails, and not the sanitary, clean finishing little nails. Then let’s bring out the spackle and putty knives and get to work! Awwright!
I HATE the builders. I’ve mentioned that once or twice, I believe.
Have Irvine and Lennar Ignored Hazardous Nuclear Waste at El Toro?
Dead men tell no tales, but those who publish their research go on helping people long after they are gone. That is the case with the late Dr. Chuck Bennett, former Chair of the Technical Subcommittee, on the Restoration Advisory Board for the Former MCAS at El Toro.
A letter he wrote May 29th 2000 for the Fullerton Observer, was titled “An Update on Critical Issues for the El Toro Base Closure”. Sadly, the doctor did not live long enough to press his cause. The City of Irvine, The Irvine Ranch Water District, and the “Great Parks” Corporation certainly don’t want it to be an active topic, and now we discover that it is also a radioactive topic. Along with the disputed contractor Lennar, the agencies planned to turn El Toro into a park and housing community. It is totally amazing that the people of California ever allowed it to go so far.
http://www.salem-news.com/articles/december082008/el_toro_nukes_12-7-08.php
I’ve got the PERFECT nails for you, Oly! Now listen, these aren’t your typical 16 penny framers. No, no, no. These things are like ten inches long, as big around as an electrical cord, and get this: RUSTY! Let me know if you can ever use them. I’ve only got like a dozen, so you’ll have to use them sparingly.
‘Let me know if you can ever use them. I’ve only got like a dozen, so you’ll have to use them sparingly.’
I want them! Save them for me, for when one of these days we have a PNW HBBer meet-up.
Two departing senior executives of Dell Inc. are getting a combined $11.3 million in severance pay, according to a federal filing.
Michael Cannon, Dell’s president of global operations who is scheduled to retire Jan. 31, receive $10 million severance in three separate payments this year. Chief Marketing Officer Mark Jarvis, who will leave the company before the end of January to return to the consulting business that brought him to the company, will get $625,000 combined with $625,000 in bonuses, according to the filing with the U.S. Securities and Exchange Commission.
Also, Cannon is due to get a $1.25 million consulting fee within 15 days of Jan. 31, 2010, the filing shows.
Last week, Dell (Nasdaq: DELL) disclosed that Cannon and Jarvis were leaving the company as part of a management shake up that started in October.
How do you get severance pay if you are retiring ?
Its all that new fangled math they teach the kids nowadays in school. ……. LOL
Golden parachutte.
Written in their contract when hired.
I hope that this practice, of obscene parachute amounts, is gone for good. The notion that a talented CEO will not take the job without one is ridiculous. If he/she is not confident of earning the company a profit, they should not interview. The worker who puts bolts on the machine takes his hourly wage because it is certain and he knows that he will not receive lucrative stock options or bonuses but instead a steady income. It’s all “trades.”
Bad news for me, Little Rock didn’t experience a bubble and therefore wont experience much decline in prices.
I guess I should go ahead and buy now.
Oh yeah, same for Rochester, Buffalo, Syracuse, El Paso, TX and a few other places.
With a big bubble here, and a big bubble there
Here’s a bubble, there’s a bubble
Everywhere’s a housing bubble…
Watch and wait. Here in the backwater that is Penn Yan, we had no bubble, or so they say. I’ve always thought we did, but that it was masked by our decades long rolling local depression.
I’ve been casually shopping for 10 acres for a few years and a few of the local realators know my specs and that I have cash to do the deal. Got an email from one of them yesterday; 10 acres with 1200 ft2 “octagon” house bought in ‘04 for $95K. Assessed currently at $140K. Needs some TLC. Year round stream on property.
Realator says the guy is broke and will sell for $65 cash, no contingencies.
The haircuts are only beginning in backwater country. How can any area be immune to a universal misery?
I LOVE those octagon houses. Have you even been in one in the summer? They actually do a nice job of venting heat.
Oh man, your post has me DROOLING to move upstate. I want nothing more a quiet nowheresville with nothing going on. Now, I just have to get the wife to agree to *not* living in Rochester’s east ‘burbs. I love Hammondsport, btw. I hope when it’s obvious that we’re in a housing death spiral all of those Finger Lakes second homes that were “investments” hit the market.
My parents have friends that O&O a B&B in Penn Yan, which brings me to another point: I can’t wait for the damn B&B bubble to burst, too.
B&B bubble = flip side of HELOC.
It’s already over; they just haven’t got the memo yet.
Velocity of Lakefront sales slowed to zero this summer.
These distress sales will send us the memo.
I am waiting. My numbers which I’ve been keeping track of for about 2 years now show a marked decline in sales a downward trend in the yoy increases of average price. It appears the overall trend on yoy price increases may have really turned negative in the most recent numbers (november).
Posted this late last night, my friend who has a structural engineering firm (the major firm for Aspen houses and commercial) just laid off his head engineer, he says things are totally dead.
And here’s an interesting website:
www dot layoffdaily dot com
I have a brother-in-law that is a civil engineer and architect. Let go all his staff and is strugling project to project. My sister has resumes out. She dropped out of the labor force 5 years ago when they had their first kid.
Darrell, sad thing about this guy is he’s made a fortune and invested it all in rentals. Hope he survives. He’s actually thinking of closing down the firm and going back to school in mechanical eng. to study solar.
Let’s play the housing Ponzi walkaway game. In this game you can’t blame the gamers for gaming their game. Also, you can’t blame the game for gaming their gamers. Everyone wins! No one is responsible! And, it’s pain free!*
Fine printing press: *Unless, of course, if you get gamed by a gamer or were gamed by your targeted game. Then, black swans cover the earth and everything Armageddons. It’s a game eat game world, you know.
Score: It’s a tie 0-0
We just bought a 10,000 gross weight 27 foot 1991 Collins 5th wheel that was kept under cover and is in almost new condition for $2800. Very few 5th wheel trailers are durable enough to live in; otherwise, they just fall apart in a few years. The Collins is one of them that can be lived in full tine, as are Alpenlite, Carriage by Carginal, Carri-Lite; Everest by Keystone; Excel by Petersen, Bighorn by Heartland, Holiday Rambler, Eagle by Jayco, King of the Road, Doubletree, New Horizons, Kountry Aire by NuWa, Newmar, Sunnybrook, Teton,Travel Unit, Travelaire. Most of these weight so much that a pickup truck, even a one ton, is not big enough for the job. Many of these trailer manufactures have gone out of business in 2008. The only travel trailer good enough for full time is Bigfoot by Nash. My wife is the anxious type and the Collins gives us an out if the landlord actually sells the two houses here on one lot. Recently two people have been by to look. I told both of them the roof leaks, which is the truth. They were obviously looking at a lot of houses. Original purchase was $625,000 and both can now be had for $325,000 on a short sale.
Interesting info.
Congratulations on the 5th wheel!
Bigfoot just went out of business after 27 years.
Their campers and trailers are top of the line when
it comes to structural integrity and systems.
Final figures for Atlantic City, NJ casinos ‘08 are in, and they must have the honchos terrified: Revenues down about 20% for December; down about 8% for the year. The downward trend is accelerating. I still don’t know how to do links, but local rag has a story in which they quote a compulsive slotplayer who is a “retired investment banker from New York.” Gist of his comment is, “I want comps. Free meals; free show tickets; free limo; free room; free slot play.” Now dat’s class. Just the type of “sport” these casinos need to attract.
You would think the Casinos would be down more ,its not like people have money for that sport anymore . Maybe people are so desperate that they are going to the Casinos for the rent ? I use to have a neighbor who went to the Casinos to get extra money that was
needed and he claimed they came out ahead ……hard to believe .
Yeah– paper today also has story on couple who tried unsuccessfully to leverage embezzled funds at AC casinos; seems they thought they’d keep gaming profits and return “borrowed” money later with nobody the wiser. Didn’t work out. IIRC, attorney was recently disbarred for pulling similar stunt with clients’ trust funds. I think many members of the public have been seduced by the “rock star treatment” given to professional poker players on ESPN into believing that, like the degenerates they see on the tube, they also quickly can turn a profit and then quit while they’re ahead. Hey– if it were that easy, then these casinos wouldn’t exist.
At the risk of picking nits, casinos make money on every poker hand in a tournament setting. The players take all the risk.
Pogo.com has FREE “gaming” - you play in Pogo tokens/little or no cost/keep your money for your medicines and mortgages !
The neighborhood moron who lives four houses away from me is bitching because has has a lien on his house. But not to worry: he’s going to Vegas to make some big money on the slots. Lol.
He and his disfunctional family has been a source of constant amusement throughout the 35 years I’ve lived here.
CNN is showing I.O.U.S.A.
One of the lines was “We’re running up this debt, and someone is going to have to pay it off. That someone is our children. It is immoral to spend someone elses moeny.”
Guess what. The kids are NOT going to pay it back.
If the kids cannot pay it back, it’s like running up the credit cards and only having enough to pay the interest, but with the difference that the interest is low, and maybe inflation will take care of the problem.
In this program, lots and lots of fixes for Social Security were offered. ALL of them involved raising taxes… I mean contributions and/or reducing benefits to future recepients, with no changes for those already receiving.
WHAT????
Hecka NO! I’m already paying way more than my parents or grandparents, but their benefits are untouchable while I’ll have to pay even more-more and then get less back. Oh, I don’t think so. Let’s share the pain, INCLUDING sharing the pain with those already collecting!
“We’re running up this debt, and someone is going to have to pay it off. That someone is our children. It is immoral to spend someone elses moeny.”
The logical conclusion of this argument? ALL government debt is immoral.
“We’re running up this debt and, and someone is going to have to pay it off.”
Lol. Breaking news! Nobody could have seen this coming!
Have you ever seen a bumper sticker e.g. on some RV that says “We’re spending our kids’ inheritance [funny hehe]“? I have wanted to change it to say “We’re spending our kids’ Social Security”.
I went to an Estate sale today, werid thing is all the appliances were gone and the mini blinds were for sale. Was told owner died.
I have seen other Estate sales where the house was for sale. They don’t strip them of window coverings and appliances.
Even the built in vent/ micowave above the stove was gone leaving the original primer paint behind it. Nice area way back in Ahwatukie AZ
Another midnight dash here in Phoenix.
Wall Street Journal
* REAL ESTATE
* JANUARY 9, 2009, 9:31 A.M. ET
KB Home Posts $307 Million Loss
By KERRY E. GRACE
KB Home reported a narrower fiscal fourth-quarter loss on improved margins and lower write-downs as the homebuilder continues to hunker down in a woeful housing market.
Revenue for the period ended Nov. 30 fell 56%.
Chief Executive Jeffrey Mezger called the downward pressure on the home-building industry and overall economy “unprecedented,” but said the company is aggressively trying to restore profitability to its home-building operations.
Nonetheless, “housing market and general economic conditions in 2009 are expected to remain difficult, or possibly worsen, as the timing of any meaningful recovery for the home-building industry remains uncertain,” he said.
Olygal: saw your post yesterday about the Boeing layoffs announcement. Should help convince Seattle-its that it is _not_ so different here…
It’s always different everywhere.
It sure ain’t different here in SE Utah, same as it always was…
HOw’s all this rain treating you, Primey? I’m growing some little mushrooms from behind my ears. I’m gonna sautee them up tonight, with pasta, and wine. More wine. (Hiccup) Is that cannibalism?
Mmmmmmmmmm…. Wild mushrooms! Hand-foraged, even! And so close to home! I just hope there is no ear-wax on them, that could be kinda gross, if not for the fact that nothing about Olygal could be gross.
All this rain is just fine by me. It make me think of spring, and putting in a garden. Thinking of getting starts going inside this year to extend my growing season.
Tell me ’bout yer garden!
Meanwhile, I’m going to pat my non-gross head-blooming mushrooms. (Thanks, too)
Boeing was going through layoffs in the 70s, 80s, 90s etc. The company has its ups and downs.
Obama Calls for ‘Grand Bargain’ on Economy: ‘Everybody’s Going to Have to Give’
“Everybody’s going to have to give. Everybody’s going to have to have some skin in the game,” Obama said.
Between the cabinet picks and speaking like a grownup, dare I dream that we have a rational centrist coming along? Will he demand that _everyone_ getting refunds get no more back than they put in?
I’ll be confident when I see the blogosphere on both extremes light up in outrage…
I thought rational centrists (or “moderates” as we used to call them, but why use one word when 10 will do) were extinct?
God knows I get the weird looks when I tell folks I’m a moderate.
LMFAO! A centrist? Only to morons who are easily duped. A Marxist with out doubt!
Millions to lose their jobs as world’s largest importer of waste hit by collapse in demand for packaging:
www dot guardian dot co dot uk/environment/2009/jan/09/recycling-global-recession-china
The recycle center here in Moab just put out a call for donations, they’re about to go under.
HALLELUIA!!!
Can the angels be singing?
Call me regressed or call me environmentally-friendly, this can only be a good thing for the world as a whole.
What an effin’ waste of good resources to pack all this cr@pola, ship it halfway across the world, unpack it, and toss the packaging!
I’ve always wondered about that myself…
trash, third pressing…(maybe I still don’t get it)…
I posted an explanation above.
I know, I read it, but somehow some synapsis isn’t connecting…
Hey, Puddytat, you’re a culinary genius and I thought of you while having dinner tonight - a can of green beans, but not just ANY green beans, French cut with almonds (supposedly).
OK, now I get it… (whacks the Puddytat with a cooking book, or was it Atlas Shrugged..whack whack whack…)
Why not take a buncha green beans sauté them with some olive oil, almonds, salt and pepper and save the recycling of a can?
Surely even you get some fresh produce from time to time, no?
Ah, heck, why would I go to all that trouble when I can just open a can?
Maybe sometime, though, when I own a frying pan…
why would I go to all that trouble when I can just open a can?
They taste better, DUH!!!
Well shoots, can’t have EVERYTHING can we? Lazy or good tasting, I’ll go for the lazy every time.
Speaking of time…makes me think about owning a Times Square Rolex…
Well, you ARE getting the real Times Square treatment about it, aren’t you?
We have a 4,800 sq ft garden. Everything from garlic to snap peas. Last year we had
6 varieties of tomatoes, all 63 plants. We can
a mean salsa….
Geez, who isn’t about to go under? A recycle center?
“Geez, who isn’t about to go under?”
One of the fascinating things about an economy as large as ours is the TIME it takes for certain events to unfold.
If you picture a train wreck in your mind, you can visualize the engine coming off the tracks, the cars crumpling, the bending and twisting of steel, the ensuing fires, broken glass, screams, shouts, smoke and injuries, etc.
You understand intuitively that in reality it happens in a few seconds.
Our economy wrecks over YEARS. Years of mismanagement, political posturing, greed, corruption, and other events have pushed and pulled it off course and the wreck is happening now.
But because it takes years to wreck a really big economy, each and every day there can be new information, mis-information, management and mismanagement, hopes and fears.
It seems we are at the stage of the wreck now where many can see that we are off the track and headed for a bad ending. As time goes by, more and more people will become unemployed and poorer in substance, health and spirit. Politicians will do their best to blame others for the conditions and lack of workable remedies.
To me, the wreck event will include the Federal repudiation of its debt, after cities, towns, counties, and states do the same.
Does anyone else see the inevitability of this economic wreck, when the fact is, the total current unfunded obligations on the Federal level, including Medicare, Social Security, and other obligations exceeds fifty Trillion dollars, and climbing as we speak and sleep?
Hey, did you just watch IOUSA?
Yes.
Moab’s a green little town, the people here really recycle. It will affect the employees there as well as the self-employed guy who makes a living coming to your door to pick it up so you don’t have to go to the recycle center.
Recycling isn’t green. Not consuming and not wasting is green.
Recycling is just a step in the larger process.
Just thought I’d make sure a green-ish NYC-er told a gas-guzzler how it works.
Well, everyone out here sure thinks recycling is green. I guess I’m greener than I thought, since I don’t buy anything much, just food and a little gas for my hog SUV that I actually use for its intended purpose. I drive it about 200 miles a month, so it’s not too bad, but no, can’t compete with you NYers who don’t even drive. And I usually don’t eat from cans.
But then, betcha ain’t never seen no green flash in NYC…
But I could be wrong (again).
“But then, betcha ain’t never seen no green flash in NYC…”
No, but I’ll bet he’s seen a green flasher.
“Not consuming and not wasting is green.”
This cannot be said enough.
Consumerism has the ability to morph into any form, and the “green” movement concerns me because of this. If religion can be commodified then so can the ecological movement.
Lost,
The split second green? the last light?
Yep, seen it many times.
The Messiah™ wants to roll it all back:
President-elect Barack Obama said turning around the U.S. economy will require cutting back on some campaign promises and personal sacrifice from Americans.
“I want to be realistic here, not everything that we talked about during the campaign are we going to be able to do on the pace we had hoped,” Obama said in an interview on ABC’s “This Week” program, scheduled to air tomorrow. ABC posted excerpts of the interview, Obama’s first since returning to Washington as president-elect, today on its Web site.
BWAHAHAHHAHAHAHHAHHAHAHAHHAHAHAHHAHHHHHHHHHHHHHHH!!!
Deficits don’t matter….
Promises don’t matter….
Suck it up and pay your share….
When unemployment hits 20%, we still will have saved 5 million jobs.
ACKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK!
Fo’ shizzle, y’all, this be a politician. He be a lyin’ son-of-a-bee-yatch so why you surprised when he be retractin’ his lyin’ filth, huh?
Democracy is the worship of jackals by jackasses.
- H. L. Mencken
He hasn’t even been inaugerated yet (or whatever that fancy word is).
Yeah, and his inauguration tickets are the hottest thing in DC.
It’s quite entertainin’ actually. I met a few fellers when I was there two weeks ago who are clearin’ out and rentin’ their rentals for $12K (yep!) the week of the inauguration.
Obamatopia™, here we come!
LOL
Obamanation©, here we come!
Prepare to get augered.
O’Buggerednation test™
buggered™ that one.
This will be an on going SNL skit LMFAO! Poor Barry hasn’t a clue.
Also, our next President will lock in a single term if he raises taxes on the “Incredible Bread Machine” - businesses and investors. Cannot get out of a recession by increasing taxes.
If tax increases on the high end are balanced with tax hand-outs to the low end of the income scale, it would be VERY anti-recessionary.
Making the rich richer, ONLY improved the economy as long as the poor get access to more and more debt at lower rates, and then don’t have to pay it back.
Trickle down economics…. meaning the rich get richer and everyone else lives on debt, is TOAST.
Right again, Darrell!
“If tax increases on the high end are balanced with tax hand-outs to the low end of the income scale, it would be VERY anti-recessionary.”
Let’s see how the tax-the-rich scheme works out. It may work and it may not but anti-recessionary it sure is not!
Great post Darrell
The debt machine for the middle class was used like food stamps for the poor to keep the people from rioting. Banks and CEO’s have stripped the wealth and productivity of the middle class. The middle class didn’t riot because easy money made them feel rich.
test™
copyright©
test®
test & trade ; (w/o spaces)
House Bill Aims to Stabilize Housing, Addresses Foreclosure and Stimulus
WASHINGTON, Jan. 9 /PRNewswire/ — A bill that embraces the need for righting the housing market — the first big step toward economic recovery — was introduced Friday in the U.S. House of Representatives.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080923/NARLOGO)
H.R. 384, The TARP Reform and Accountability Act, was offered by Rep. Barney Frank (D-Mass.), chair of the House Financial Services Committee. The bill would require the Treasury Department to develop a program, outside the Troubled Asset Relief Program, to stimulate demand for home purchases and lower property inventories, by making affordable mortgages available for qualified buyers through interest rate buydowns, a priority of the National Association of Realtors.
The measure would amend the TARP provisions of the Emergency Economic Stabilization Act of 2008 to make significant steps to reduce foreclosures, strengthen accountability and close loopholes. Treasury could consider the impact of areas with the highest inventories of foreclosed properties.
NAR President Charles McMillan was heartened by the legislation that would move the housing market forward. “The bill proposed by Chairman Frank is an important first step toward launching a real estate recovery. Housing has always led this country out of economic downturns, and this bill recognizes that the key to bolstering the overall economy is creating stability in the real estate markets. With foreclosure relief, improving the Hope for Homeowners Plan, and expanding TARP to support commercial real estate loans and commercial mortgage-backed securities, this legislation will help create housing stability.”
“By directing the Treasury Department to increase the availability of affordable mortgages rates for qualified home buyers and to offer reduced rate loans designed to stimulate demand for home purchases and clear inventory of properties, Chairman Frank has responded to the most critical issues facing potential homeowners,” McMillan said.
Oh really? What about the issues of (1) no savings available for a downpayment? (2) High risk of job loss in a deteriorating economy? (3) Risk of catching a falling knife in a housing market where prices are dropping at the fastest rate in history?
Lovely.
Seems to me that a good job to have in future years will be as a demolition expert.
In fact, I’m surprised that 2005’s builder/developer kings haven’t begun to re-fashion themselves as demolition experts.
Aside, has Barney Frank and NAR’s McMillian ever lived in a single- or double-wide? This Extended Pain Plan will ensure that millions of Americans will end up in one themselves.
Barney Frank is a much greater threat to this country than any “terrorist” has ever been.
This is how I like my gloom and doom scenarios — shot straight from the hip, with no lipstick on the pig’s lips. I also like the Gelman reference. Gelman is a famous Bayesian statistician.
SperoNews
Commentary: Economics
The End of the World as we know it
The U.S. and the world are reaping the unintended consequences of cheap petroleum, as well as ignorance, stupidity, and hubris. Obama and his advisors did not see the economic crisis coming. Do they see the political crisis coming?
Tuesday, January 06, 2009
By James Quinn
Columbia University statistician Andrew Gelman has said, “The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple. It operates with limited information (rational ignorance), short time horizons, low feedback, and poor, misaligned incentives. Society in contrast is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system you often get unintended consequences.”
Gelman is dead on, if not understated. He states that the political system is simple. I’d go a step further and say that lifetime politicians and entrenched government bureaucrats are “simple.” They show no indication of knowledge or expertise in American history or rational financial theory. The President, Congress, Federal Reserve, and Treasury try mightily to direct our economy. It is an impossible task. With a GDP of $14 trillion, there are thousands of inputs and outputs that feed the system. Their hubris leads them to believe that they are in control and can manipulate the gears of capitalism in a way that will produce their desired outcomes. If a desired outcome occurs, it is simply due to dumb luck. The more likely result of their manipulations of our complex system is a set of bigger problems that never occurred to them.
…
The $775 billion plan will grow to at least $1 trillion as Obama will need to buy off various factions within Congress with pork projects. Congress will approve the second $350 billion tranche of TARP funds. Barney Frank and Nancy Pelosi will shovel billions to homeowners who should be foreclosed upon. Billions more will be given to the automakers. GMAC will get more funds from the taxpayer at 8 percent interest so they can then loan it to subprime borrowers at 0 percent. This doesn’t sound profitable, but they’ll make it up on volume.
TARP funds will be given to commercial developers who foolishly overleveraged, overbuilt, and overpaid for properties. Credit card companies that handed out credit like candy for the last 20 years will see their write-offs triple to over 10 percent by 2010. The government will give more of your tax dollars to these incompetent bankers so they can send out another 5 million credit card offers to deadbeats. The Federal Reserve will buy mortgage debt and long-term Treasuries to artificially reduce market interest rates. With money market funds paying .25 percent, senior citizen savers will be forced to take on risk to get a return on their money. Penalizing savers to resuscitate reckless gamblers is the path that Ben Bernanke has chosen. When the Markets decline another 20 percent in 2009, more senior citizens will see their retirements destroyed by Mr. Bernanke.
Citicorp and JP Morgan will require additional enormous injections of capital from the taxpayer due to their looming credit card and commercial loan losses. The top 10 biggest banks are insolvent. They are being kept alive on life support systems provided by the Federal Reserve and Treasury. All the bankers who didn’t bankrupt their banks should be outraged at this misappropriation of taxpayer capital to incompetent, reckless, immoral, politically connected bankers.
Home prices will drop another 15 percent in 2009 and will remain depressed until 2015. The market will adjust to its natural equilibrium level despite all government efforts to keep prices artificially elevated. When you can buy a house and rent it out and generate a positive cash flow, houses will be reasonably priced. Despite the immense spending, zero interest rates, and propping up bankrupt financial institutions, consumers will not spend. Economists, bureaucrats and politicians are so focused on models and theories that they have failed to realize that the social mood of the country has changed forever. The poor economic conditions are being caused by the mood change, not vice versa. A return to frugality, saving, and simpler lives will keep a cap on spending for at least the next decade.
The sum total of all that has been done and all that will be done will eventually lead to a hyperinflationary bust. The money supply is being expanded too rapidly, fiscal stimulus spending will be borrowed from foreigners, the dollar will fall as foreigners refuse to accept 2 percent for 10 years, and the Federal Reserve will react too late, just like they did when this crisis began.
This overstimulation of the economy will lead to a panic out of dollars and into real assets. The government will attempt to control the situation by confiscating gold as they did in the 1930s and Americans will be forced to surrender more liberties. In periods of economic and social upheaval - war, revolution, or dictatorship become possibilities. The average American needs to wake up from their materialistic stupor and understand the risks that lie ahead. An educated, concerned citizen is our only defense against tyranny. Orwellian governmental policies will be inflicted upon the populous.
James Quinn writes for the Cutting Edge News and is a senior director of strategic planning for a major university. This article reflects his personal views, and does not necessarily represent the views of his employers and is neither sponsored nor endorsed by them.
Gelman sounds like a reader of the HBB or an active participant of the HBB.
The poor economic conditions are being caused by the mood change, not vice versa.
Disagree on this.
The poor economic conditions are caused by too much debt w.r.t. current income. Mood is just a simple offspring of the realization that one must pay it back or default.
In agree to a point, FPSS. The _initial_ mood change was caused by affordability–e.g. those losing houses because they couldn’t refi out of the situation as the could in the past; this was fundamentally about flattening of appreciation.
But I think the author is correct that the subsequent fallout in the economy (failing banks, tanking stock market, declining home equity) all have a dramatic impact on “mood”, and that the change in mood is responsible for the second wave of issues (retailers failing due to declining sales, companies doing layoffs due to declining profitability, belt-tightening everywhere due to the belief that things will get worse).
All of those things are pro-cyclic with mood: they make the psychology worse, and the negative psychology reinforces all of those trends.
So you’re both right.
“…that the change in mood is responsible for the second wave of issues (retailers failing due to declining sales,…”
I know this is what most macroeconomists believe, because I see it quoted in the press on a weekly basis, but methinks they under estimate the effect of the home equity ATM machine (or the absence thereof) on household budget constraints. A dumb comparison of home equity ATM spending by year from 2000 through the present is all the analysis that it would take to see this, but I guess it is asking a lot to expect macroeconomists to consider that budget constraints might make a difference.
Besides, attributing the decline to a mood swing is danagerous in that it further encourages the pols to monkey with things. As the author alludes to, pols are highly simplistic creatures and they feed off emotion - it’s their gateway to further riches/power.
they feed off
emotioncampaign contributions“campaign contributions”
Which are generated by Wall Street profits, which are generated by monies from the Congress.
“Which are generated by Wall Street profits, which are generated by monies from the Congress.”
What goes around, comes around, and around, and around again, so long as Congress can hide its campaign-finance schemes in the guise of bailouts and giveaways ‘for the common good.’
I agree with you, FPSS. The psychobabble economics set goes on and on and on about the effect of mood on consumer behavior, but they have the direction of causality backwards: Having no money to spend puts consumers in a depressed mood.
Grampa used to say: “Money won’t make you happy, but not having it will make you miserable.”
In order to have money to spend, one must:
(a) provide a “value-added” good or service to someone somewhere, and/or
(b) be able to borrow a lot and then default and/or
(c) have savings.
I don’t see the American populace overall fitting anywhere above (HBB-ers exempted.)
Ergo, the “bad mood”.
“…(b) be able to borrow a lot and then default and/or…”
Isn’t Plan B basically the Obamanation© plan, including the use of money that grows on trees to pay for all the unfunded insurance involved?
Yes, and it’s not working which explains that funny backup beeping sound that his economic team has been making even before he has assumed office.
Mania is always followed by depression. Always. It can look like it is situational, but it is inevitable. To the Moon! —> Crash and burn.
Trouble is the doctor gave us uppers when he shoudn’t have. Now there is hell to pay. No escaping it. Nature demands payback.
Comment by Faster Pussycat, Sell Sell
2009-01-11 11:06:05
The poor economic conditions are being caused by the mood change, not vice versa.
Disagree on this.
The poor economic conditions are caused by too much debt w.r.t. current income. Mood is just a simple offspring of the realization that one must pay it back or default.
———————————
I’m with you on that, FPSS. The rest of the article is exceptional. Definitely sounds like an HBB’er.
I thought this about Quinn; not sure about Gelman. I hope they both visit here on occasion, as I like what they have to say…
Gelman is a coauthor on one of my favorite stat books…
Huh, no Bits Bucket for the 11th? Automation busted, maybe?
We’ll probably be getting a kidnap letter from NAR any moment with conditions for Ben’s release…
ROTFLMAO
What, no Bosco?
tell me about it, I take a week off to go fishing and come back about to be the proud owner of Mitsubushi Morgan Stanley Soloman Smith Barney UFJ, FIN….
I give up, Im TARPEd
Tee hee
FBs can get off the hook in so many different ways…
U-T Editorial: The sole downside of default
Responsible borrowers get the tab for saving delinquents’ homes
2:00 a.m. January 11, 2009
…
The Federal Housing Administration advertises on YouTube and Facebook a $300 billion program to assume bad mortgages and replace them with FHA-insured, 30-year, fixed-rate mortgages.
The Federal National Mortgage Association, better known as Fannie Mae and insurer of much of this debt, streamlines modifying loans to limit monthly payments to 38 percent of borrowers’ gross income. Fannie is also testing if it can speed up “short loans” – selling houses ahead of foreclosure for less than is owed – by pre-approving how much of the lender’s loss on the initial loan it will cover.
Citigroup, bailed out by the feds, agrees to pending federal legislation long anathema to banks: letting judges reduce what owners in bankruptcy owe on home loans signed before the law is enacted.
As a last resort, Web sites tout ways owners can walk away from a house because it’s worth less than they owe, even though they can afford the payments.
And the consequences to owners who simply default? After four years or, in some circumstances, two, Fannie will insure another mortgage if defaulters have “repaired” their credit.
Efforts to stop foreclosures go beyond paperwork. The Association of Community Organizations for Reform Now plans three weeks of “events” to “stop the foreclosure machinery” by urging people to move back into homes they lost or stick tight in homes they will lose.
They may quickly learn that the law is not on their side, and for good reason: Lenders who lend for a mystery profit can fast go out of business.
Who pays for this massive, unprecedented, after-the-fact, affordable-housing program for millions who willingly if gullibly took on debt they can’t repay? Federal taxpayers, including millions of homeowners who borrowed what they could afford.
Plaints about the hardships of foreclosure swamp Washington politicians. It’s time they hear, too, about the burden so many are so ready to impose on millions of responsible homeowners for the lapses of a relative few.
Plaints about the hardships of foreclosure swamp Washington politicians. It’s time they hear, too, about the burden so many are so ready to impose on millions of responsible homeowners for the lapses of a relative few.
————————
We need our own “ACORN”.
It’s difficult to get a bunch of responsible savers riled up enough to march on Washington, and that’s what we need, IMHO.
Some excerpts from an article about the collapsing RE market in NY’s Hamptons.
“Lynn Ronchetto, a real estate speculator who owns five properties in four states (all investments), believes at the moment there is a problem with what the owners will sell for and what the buyers will pay”.
“I was looking around East Hampton just last week, and quite frankly the prices some people were asking was based on what price they wanted to get and not what the home is worth,” she explained. Ronchetto believes many homes that are unrealistically priced will stay on the market forever. Jan Nelson a seasoned broker for Atlantic Beach Reality Group in Montauk, agrees. She predicts 2009 will be, “The year of the whine, as in whining about why won’t my home sell.” Nelson believes too many homes are overpriced and that no time frame will accomodate that in this climate.”
“All pricing is resetting, and we’re in the middle of it and no one knows what anything is worth.”
http://www.danshamptons.com/content/danspapers/issue40_2009/09.html
“prices some people were asking was based on what price they wanted to get and not what the home is worth”
That pretty much sums it up for all of Long Island. I see many listing that have been around for a couple years, just siting and sitting. Now that there’s some standards in lending, few can afford the asking prices. Asking prices are just unrealistic for incomes, on Long Island.
The Hamptons are becoming the poster child for “Easy Come, Easy Go”. Few places are as affected by today’s financial debacle, with respect to real estate as the Hamptons. The Manhattan bubble is in for some serious shrinkage. But the second homes in the Hamptons will be let go first. By this time next year I’m predicting total carnage.
Shake up yourself
You’re not the big man any more.
Pick up the pieces
You left lying on the floor.
She’s up and gone,
You’re on your own,
Better act your age
‘Cuz by now you oughtta know.
It’s hard, my friend,
But it’s easy come and easy go.
“Easy Come, Easy Go” - Iain Sutherland
Meet The Press had an economic roundtable discussion today. The Vanity Fair journalist said (I’m paraphrasing);
“Housing is grossly overpriced still and the govt. shouldn’t be involved”.
That’s right America. A 20%+ decline on the CaseSchiller index isn’t gonna do the job. When we see significant reductions where the price closely reflects local wages is when we’re “back to normal”.
Half-way back to normal. Then we have to worry about overcorrection due to suck economy and MASSIVE oversupply.
Primey! Primey?
Prime is contained; tell us all about your garden plans, why don’t you.
Oly - I’m harvesting tomatoes. Not a lot so far, but I’ve got Better Boys beginning to ripen, and plum tomatoes which should be starting to get ripe in 10 days or so. How sick is that?
“How sick is that?”
Well, considering I dug myself out of 10 inches of snow today, it actually sounds pretty good.
LUXIST
Falling Prices In London and Manhattan Luxury Real Estate
Posted Jan 11th 2009 7:02PM by Deidre Woollard
A recent article predicted continued gloom for the California real estate market this year but two other expensive markets are also in peril. The high-end market in Manhattan, once believed to be impervious to economic doom, spent the last quarter of 2008 catching up to the rest of the world. Properties that once would have been snapped up in days for a price close to list have now sat on the market for months and faced deep price cuts. A report from Prudential Douglas Elliman reveals that the median sales price of a luxury apartment (defined as the top 10 percent of the market) fell nearly four percent to $4.02 million in the fourth quarter of 2008 compared to last year. The top of the market is likely to continue to weaken as the fallout from failed banks and Wall Street firms continues to be felt. Our Sunday real estate round-up continues to show buying from financial fat cats but many are trying to sell their apartments for readily available wealth. StreetEasy.com says that almost 42 percent of the 259 Manhattan homes currently listed for $10 million or more came on the market since September. What affects Manhattan also affects the Hamptons with vacation and second homes searching for buyers that may be less ready to invest in something for pure pleasure.
It’s not much better across the pond. Bloomberg reports that luxury home values in London’s nine most expensive neighborhoods fell almost 17 percent last year. Like New York City, London is a big financial center and the loss of jobs in banking, finance, insurance and related industries is having a big impact on the market. The real estate brokers at Knight Frank report that the number of houses and apartments sold for at least 1 million pounds last year fell 49 percent from 2007’s record number. Overall it is predicted that London luxury housing values could fall by 30 percent by the time the real estate slump hits its inevitable bottom.
Wall Street Journal
* OPINION: CROSS COUNTRY
* JANUARY 10, 2009
California’s Gold Rush Has Been Reversed
Entrepreneurs are fleeing heavy taxes in the state.
By DEVIN NUNES
Tulare, Calif.
On Jan. 24, 1848, James Wilson Marshall found gold at Sutter’s Mill, in Coloma, Calif., sparking a mad rush of some 300,000 people desiring to strike it rich. San Francisco grew from a tiny hamlet to a boomtown in no time, and in 1850 California entered the Union as the 31st state.
With this history at their back, state leaders might have understood that people have a propensity to get up and move when a better life is to be had elsewhere. But no. After more than 150 years of being a destination, California is becoming a place entrepreneurs, investment capital and the hardy workers who made it a global leader in agriculture, technological innovation and scientific research are fleeing. This exodus is the marker of something deeper than a national recession. It’s a sign that the attempts by state leaders to spend their way back to prosperity are killing California.
Gulp…l-t T-bond yields are at the lowest level of my lifetime…
Series: DGS10, 10-Year Treasury Constant Maturity Rate
Bolts are out of the running for the Souper Bowl. Consequently, the San Diego economy is doomed…
But I’m sure the mayor and city council of Glendale AZ are in a GOOOODDDDD mood tonight. 70K seats + standing room only. 50K went to season ticket holders, and the other 20K sold out in 6 minutes. That is a lot of sales tax! We expected 8 games and are getting 10!