Bits Bucket For January 20, 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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Name:Ben Jones
Location:Northern Arizona, United States
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We will hear the cry it’s not ‘enough’ over and over again for a long,long time. Or as J.Jackson would say… Taint enough!
U.S. stimulus not enough, TARP bailout misused: Soros
WASHINGTON (Reuters) - The stimulus plan the U.S. government is currently considering is necessary to help American citizens, but it will likely not reverse the country’s economic decline, hedge fund manager and billionaire philanthropist George Soros said on Monday.
“It is not enough to turn the situation around,” Soros told the U.S. Conference of Mayors about the $850 billion proposal to increase spending and cut taxes.
The plan, which was introduced in the U.S. House of Representatives last week and will likely be passed by next month, will help state and local governments balance their budgets and preserve important social services, Soros said.
At the same time, the $700 billion financial bailout known as TARP for Troubled Assets Relief Program had been carried out in a “haphazard and capricious way” and “without proper planning,” he said.
“Unfortunately it was misused and the way it was done has poisoned the well. It has created tremendous ill will toward putting up more money,” Soros said.
For more than a year, the United States has been crippled by a recession that was triggered by a housing market downturn. Last summer, financial institutions with exposures to securities backed by bad mortgages began to buckle.
The government stepped in with the TARP to inject liquidity into struggling firms. Last week, President-elect Barack Obama requested Congress release the second half of the funds.
Soros advocated using bailout money to recapitalize banks, but said the $350 billion would not be enough. He said such a move would take more than the entire $700 billion.
The bursting housing bubble “acted like a detonator that exploded a much larger bubble,” he said.
“The economies of the world are falling off a cliff. This is a situation that is comparable to the 1930s. And once you recognize it, you have to recognize the size of the problem is much bigger,” he said.
Soros said the United States needed “radical and unorthodox policy measures” to prevent a repeat of the Great Depression of the early 20th century that include recapitalizing banks and writing down the country’s accumulated debt.
Also, he said, it should create more money to offset the collapse of credit and then rapidly pull that cash out of the system when inflation emerges. The government would have to be very nimble in the timing of such moves, he said.
Just thinking in rough terms, with the bubble bust sucking trillions of conjured dollars out of the economy the risk of any given spending plan being enough is extremely low. It is as if Humpty Dumpty fell directly onto a big, hot pan.
He’s asking a dinosaur to walk a tightrope.
I wouldn’t be surprised to see the DOW, down more than 160 at one point, rally into positive territory today. I see no reason for it, in light of such dismal news, but there is no rationale anymore.
Crude oil, down more than 6% today, is now up more than 2%.
This was not supposed to nest here. I posted it as a new comment, not a reply.
“nimble government” is an oxymoron. Rest assured no matter what else happens, Soros will make out like the bandit he is.
When will these people realize that the only thing the government can do is steal from Peter to bailout Paul. The idea that it is necessary to steal from Peter to save Peter is crazy. Now he wants the government to steal from Peter but “put the money back really quick” before Peter and Paul notice that their money is worthless.
Unfortunately they cannot put the money back where it came from. Net result is a transfer of wealth from A to B where B is most likely the top 1%.
“For more than a year, the United States has been crippled by a recession that was triggered by a housing market downturn.”
No, this recession was NOT triggered by a housing market downturn. This recession was triggered by greedy pigmen, enabled by a failed monetary policy, and an incompetent president.
Didn’t someone here predict that Wall St. would do something to show the new president who’s really the boss?
Good call whoever that was.
Call their bluff’s what I say…
http://www.larouchepub.com/other/2008/3542soros_obama.html
George Soros owns Obama. The key to understanding how Obama will govern, is to figure out what Soros wants (and is now in a position to demand). Drug legalization will doubtless be a high priority. So will gun control.
Banks Foreclose on Builders With Perfect Records…
TEMPE, Ariz. — Dave Brown, one of this city’s best-known home builders, had kept his head above water through the housing downturn, not missing a single interest payment on his loans.
Dave Brown, a builder in Tempe, Ariz., had never missed an interest payment, but his bank shut down his projects anyway.
So he was confounded a few months back when one of his banks, spooked by the decline in his company’s revenue, suddenly demanded millions of dollars in additional collateral to continue carrying loans on his projects.
He was unable to come up with the money, and in October, JPMorgan Chase foreclosed on five of his developments. Shortly thereafter, Brown Family Communities, 33 years in the business, decided to shut its doors.
“They treated me like a deadbeat who missed his car payment,” said an embittered Mr. Brown, 76. “They wanted their money now.”
After riding high on one of the greatest housing booms in American history, the nation’s home builders today face a devastating reversal of fortune.
Although the housing crisis is nearly two years old, many banks had refrained from cracking down on small home builders.
They are starting to do so, and a wide swath of the industry could be forced out of business in the next few years. The trouble is concentrated especially in the Sun Belt, the scene of so much overbuilding.
Not only have new-home sales stagnated, but builders confront a rising wave of foreclosed properties coming to market at prices below the cost of building a new home. To move houses, they have to mark them down to less than the cost of construction.
The convergence of these problems is bringing many small and medium-size builders — who account for about 70 percent of new-home construction in the United States — to their knees.
So, this dude is torqued because his bank finally figured out there’s a huge supply of houses and that financing the construction of even more houses is a nonstarter?
It might be tough on him, but isn’t this exactly what needs to happen?
I don’t understand the Moron bank’s thinking
if he stopped construction with 1/2 finished buildings the bank lose ALL they lent him.
But if they allow him to finish only those that can be finished quickly, at least the bank will have a finished house it can sell OR RENT….
So they wont have write off 100% of the loan….
I read that article. The bank action that started the man’s problems wasn’t a foreclosure. The bank called his loan because of deteriorating general business conditions. If he didn’t want the loan to be callable, he should have negotiated those terms - or better yet, finance his business out of accumulated profits. There is a general feeling of “not fair” in what the bank did, but it is a business relationship, not a family one. You have to expect the other side to do what is best for them, not for you within the terms of your agreement.
My sympathy is limited.
Now us tax payers gave this bank millions of dollars to keep them from having to do these kinda things.
What is the bank doing with the TARP money??
Bonuses for management???
They are holding it in reserve so they won’t violate their capital requirements when they eventually have to write down more of the assets they currently have on their books. What else did you expect them to do?
I think I used this example before. You are a banker. You know for a fact, that a bunch of your assets are going to continue to go down in value and put you in violation of regulatory requirements. You are given money. Do you 1) hold on to the money so you aren’t taken over by the FDIC in 6-18 months, 2) make a $30K (95% of purchase price) car loan to John, a construction worker who can’t verify his claimed income of $40K last year, or 3) make a $60K small buisness loan to Jenny, a stay at home mom, who wants to open a scrap booking supply store (the 4th in town, two others are behind in their rent) in a strip mall?
Why is anyone surprised that the banks are sitting on the TARP money. To do anything else would be a breach of their duty to their shareholders. If we wanted them to make loans with the money, we should have made it a binding requirement of taking the money. Not a great idea IMHO, but Hank and company could have done it.
I think I used this example before. You are a banker. You know for a fact, that a bunch of your assets are going to continue to go down in value
Actually it should read, you are a banker. You know for a fact that your assets are currently worth far less than you have been telling stock holders and the gov.
Why do banks make loans on depreciating assets like cars then? I mean when you drive off the lot, doesn’t your car decrease in value 30%?
Since the economy is in the midst of deflation, shouldn’t the bank call in all of its loans? Is there any collateral that is actually going up? Shouldn’t the bank be calling in all of its loans?
Car loans may have collateral, but they are recourse and made based on the belief that the borrower can (and will) pay it back out of income. The collateral is nice, but in a recourse loan, the bank isn’t depending on it to get their money back.
This was inevitable. If the bank didn’t do it, the market was going to.
“To move houses, they have to mark them down to less than the cost of construction.”
“According to an estimate by the National Association of Home Builders, at least 20,000 builders — about a fifth of the total nationwide — have closed up shop in the last two years.”
I knew there were probably thousands of builders - I didn’t realize there were actually 100,000. Wow.
Lot’s of Mon-n-pop operations that were building 2,3 or 4 spec homes during the boom. You don’t see these in places like California, but they are quite common in Larimer County, CO. Now that the big boyz have pulled up their stakes and left town the mon-n-pops are the only ones left.
Horrible! *shudder *
That’s…lessee…at least 99,850 builders too many, in my estimation.
What’s the source of the article? Thanks.
“What’s the source of the article? Thanks.”
This morning’s NYT.
What nobody seems to be talking about is that all these moves to “slow” building and “cut back” inventory are FAR below what is actually necessary.
IMHO, we don’t need a single new (spec) home built in this country for at least 3-4 years. That means that every single major builder should probably just close up shop. There’s simply NO reason to continue to build. They are dollar cost averaging their way in on a stock that’s going to 0; it doesn’t make any sense at all. There’s simply no profit for them in it, build 10 homes, lose 1M dollars. Build 100, lose 10M dollars.
If the govt really wanted to support home prices they would decree that no new homes can be built for the next 5 years. With builders out there still functioning, the problem just continues to get pushed into the future.
“Although the housing crisis is nearly two years old, many banks had refrained from cracking down on small home builders.
They are starting to do so, and a wide swath of the industry could be forced out of business in the next few years. ”
Great, so we’ll be left with the Toll Bros., and Hovnanian’s of the industry.
What they should have done was let him spend the rest of the money, then not be able to pay it back. It was just “rude” of them to call the loan when he’d only spent half the money on houses that won’t be able to be sold.
end sarcasm.
Federal Home Loan Banks may have to borrow from U.S.
Losses from mortgage-related investments are causing some banks’ capital to fall close to or below required minimums. The banks say accounting rules make their situation look worse than it is.
By Binyamin Appelbaum
January 20, 2009
Washington — The mortgage crisis is seeping into one of the last dry corners of the mortgage business, the regional network of Federal Home Loan Banks, which provide U.S. banks with hundreds of billions of dollars in low-cost funding to support lending to home buyers.
The little-known network has grown in importance as banks lose access to other sources of funding because of the credit crunch. The volume of outstanding loans provided by the home-loan banks has increased by 58% since the beginning of 2007, to more than $1 trillion at the end of September.
But several of these banks hold mortgage-related investments that have plummeted in value. The losses are draining the capital foundations of the home-loan banks, forcing them either to reduce their lending — making mortgages more expensive and harder to get — or to raise additional capital.
The money could come from taxpayers. The Treasury Department created a program in September that for the first time allows the home-loan banks to borrow directly from the federal government. That hasn’t happened yet, but some financial experts said it was looking increasingly likely.
A report from Moody’s Investors Service last week citing “the demonstrated importance of the [home-loan banks] to the banking system through the credit crisis” concluded that the government was likely to provide the necessary support to keep loans flowing.
The 12 home-loan banks are collectives chartered by the federal government and owned by member financial firms. The government’s sponsorship allows the collectives to borrow money at low cost, which they lend to banks of all sizes, including giants such as Bank of America Corp. and small community lenders. Nearly all U.S. banks are members of at least one of the collectives.
As with other banks, federal regulators require the home-loan banks to keep a certain amount of money as a capital foundation to support their lending.
The home-loan bank in Seattle, which serves the northwestern United States, said last week that the declining value of its investments probably dropped its capital below a level required at the end of the year, though a final determination won’t be made until the bank completes its fourth-quarter bookkeeping.
The home-loan bank in Pittsburgh warned Friday that it too was in danger of dropping below a capital threshold.
And Moody’s estimated that six more banks could follow Seattle and Pittsburgh.
The FHLBs have an open window at the Fed. There is no risk nor was there ever risk of them failing.
The 12 banks of the FHLBank System are owned by over 8,100 regulated financial institutions from all 50 states, U.S. possessions, and territories.
Of course the money will come from taxpayers, the money for the Fed comes from taxpayers.
“…the money for the Fed comes from taxpayers.”
I thunk it came from a technology called a printing press. Me confused!
I think the money is first generated by computers and then the taxpayer pay it back to the Fed. Am I right?
“Am I right?”
Only if you understand that inflation is a form of tax.
Dutch bubble update:
there are now 188.000 homes for sale in Netherlands, on a total of about 5 million homes (nearly 17 million citizens). Sales numbers are plunging and while actual sales prices have started to decline slowly, asking prices (price per sq m2) are still going up: 4-9% higher than one year ago. As a result, it now often takes more than a year to sell a home.
Lowering of official asking prices was very unusual one year ago, but now for many homes the asking price is frequently lowered - although clearly not enough. Denial still rules the Dutch market.
What kind of prices do you see over there (per sq/ft) for a decent home? I just figured that hearing about your market may make me feel better about mine!
Thx.
Well, we’re ( involuntary on my part ) real life real estate players today. Off to court this morning. Twelve years ago my husband (before I knew him, or this would have not happened) “lent” his then-attorney a bunch of money which she used to buy herself an office condo, and subsequently lost her license to practice over said action. Fastforward to 11 years later, and she’s not able to meet the balloon deadline, which was 6-1-08. This is over $ 55,000, mind you. Fastforward to November, when she got a temporary restraining order against the sheriff’s sale. TRO’s in our state for this kind of thing are supposed to only last two weeks at most. Fastforward to 6 weeks later, and we’re trying to get it lifted. Today, the judge is asking for something called ” a status conference”. Unfortunately, unless some wise ( ! ) person buys this office at the sheriff sale for over what we want, which is simply what we’re owed, we have to evict the mentally-ill bit-h, throw out her rat’s nest of legal paperwork that she has piled up to the walls, have it cleaned and repaired, and put it on the market, or rent it out. Luckily it’s in a nice office park and half of the price of what other office condos are being offered for in there. You don’t even wanna know about the phony lawsuit she’s filed against my husband, our attorney, and his entire legal firm for “perjury” and “conspiracy”. This is because my husband and our attorney both testified against her at the State Bar Ethics Board. We’ll be asking for damages if the judge lets that portion of her so-called case go forward. So, there is a bit of real-life real estate drama for the readers to comment on. We’ll make money on it one way or the other, and the legal fees are deductible, but still. The cash will make a nice addition to our retirment nest egg, though. If we have to put it on the market ourselves, we’ll have to ask about 20 percent more for the cleaning, fixing up, and realtor fees. My stepsister will handle it. She’s our ( 2nd ) attorney who has a real estate license from long ago, so we won’t get cheated by the nice young entrepeneur who will wnat the office for a song….I will update the results of the day’s efforts later on.
Good luck, silverback!
Check with the state bar association to make sure there aren’t any rules about what you have to do with the old papers. Her former clients may have ownership rights over them (emphasis on may). In any event, if there is something you are supposed to do with them, even if it just shredding, make sure you know about it so you can add that cost into your request to the judge.
Will impress the heck out of any judge if a non-lawyer is trying to do the right thing with the documents. You’ll get brownie points.
Are you complaining or bragging?
I was wondering the same thing.
I don’t know, qaxbami. Am I complaining or bragging ? Seems like a lot of both goes on here. What do you think ? I just think that our real life, real time experience with being on the other end of a foreclosure against a mentally-ill, disbarred attorney who has nothing to do with her time but file more briefs complaining about perjury and misconduct against any legal help we hire is of interest to some here, albeit not you.
Anyway, we did pretty good down at court, and the new judge is being careful with our little cracked-egg opponent, knowing how litigious she is. Next hearing is on Feb 6th, (since this was a status hearing where the judge just wanted to hear some arguments and eyeball us ), and the TRO should be dissolved by then, so we can proceed with our sheriff sale.
Thanks for the tip, Polly. I will bear the tips you gave about the disposal of her “legal” documents in mind. She’ll have to be charged for the shredding, which she won’t pay. I guess we’ll have to take advice from our counsel on that. We now have had 2 judges and 3 attorneys involved in what should be a relatively simple foreclosure. Lucky I have some vacation days LOL.
Thanks for the well wishes, CA renter.
Don’t worry qazbami. Just skip my boring posts.
Are you complaining or bragging?
I think it’s called venting
sounds to me like hubby got “a little on the side bennies” when he made that loan.
WTF? Where the heck did you come up with that?
why else would you loan your lawyer 55K?
No, although that very question came up before the State Bar Ethics Board. The situation my husband was in with her was that his first wife had just died a few months before, his only brother had died, and then finally, his father had died. He never had any children. He had retained her to close his father’s estate, and she had filed his tax returns for him the previous 2 years. She knew how much money he had inherited and saved up. He then had a massive heart attack, and had quintuple bypass surgery. She had obtained his financial power of attorney. In the months between the heart attack and for awhile after his bypass surgery, he was in a deep depression. She plundered his checking account, and persuaded him to give her the money for this loan. He didn’t know that you have to have a promissory note given at the time you give $$ on a loan, as naive as that seems. Besides, she was his attorney. You can trust your attorney, right ? Sigh. She was trying to isolate him, also. She chased off his sister-in-law who was trying to help him during his convalescence. Unfortunately, his whole family is either scattered or dead, and he had no immediate relatives who knew of his situation. Then, he answered an ad I had put in a singles column, since I was suddenly single, and by that time the harassment for more money had advanced to screaming, threats, and phone calls night and day both at his job and at his home. I couldn’t believe some of them. I intervened after we started dating, had him call the police, eventually get an order of personal protection against her, and involved my stepsister, who was the replacement attorney. The bit-h then filed a grievance against my stepsister with the Ethics Board for “breaking the attorney/client bond”, and that was the beginning of the real 11-year three-ring circus. My stepsister is a kick-ass attorney, with an impeccable record, and of course, she was completely exonorated. Then she filed a grievance on the bit-h, which went all the way to the Supreme Court, believe it or not, 3 times before the state Supreme Court, and I don’t know how many briefs and appearances before the State Ethics Commssion. We have a strict Ethics Commission ( Attorney Grievance Board ) in our state, and they really held her feet to the fire. But no, no sexual benefits from her to him. I think he’d rather copulate with an alligator. More likely to survive the experience.
Wow, that’s quite a sad story, silverback. Good thing your husband found you. I can see how he would have felt terribly depressed.
Still wishing you the best as you continue to pursue this miserable case.
LOL. That was my thought too. No guy is going to loan his female lawyer fifty grand unless he’s banging her like a cheap gong. Especially if she’s hot and he’s not.
Not hot. Not hot. She’s 8 years older, not hot. Anyway, if he was, before my time with him.
Not one, not two, but three “not hot’s” makes me think she must be kinda hot. LOL, just ribbing you silverback.
Silver’s story is an important one. It’s about what happens to people when family members die, people become ill, friends/family stray, and money is inherited. All experiences each of us will/have endure. The final death blow is when the lawyers begin fighting lawyers and then it’s a long spiral down. Hopefully Silver is near the bottom and headed back up.
We all have potentially explosive situations in our lives and any one of those could develop into a story like this. We want to live boldly, with purpose as human beings are not inherently weak and indifferent, but it is helpful to remember stories like this and back down, walk away, remain silent, and take the short-term perceived abuse for the longer-term sake of your sanity and well being.
Dang silverback, sorry hear about that. That woman is a certifiable loony.
However, I’m curious as to how you will collect any money from someone who is:
A) Broke
B) May be too mentally ill to ever find and hold a decent paying job.
C) May not have any assets worth anything.
I am honestly curious. I also wish you luck. I’ve been screwed by people like that, only I couldn’t afford justice.
Well, we are foreclosing on the office building, but she got a temporary restraining order to stop the sheriff sale in November. By statute in our state, a TRO only is supposed to last 14 days for this type of thing. Well, now it’s what, end of JANUARY ? To say the least, we’re ticked. Old judge retired, then the holidays, then the new judge had to miss a court date due to another prior commitment, now the “status conference” today, and now it’s been continued to Feb. 6th. She said she would rule then. Once the TRO is lifted, which it will be, since the plaintiff doesn’t really have a good reason to stop the foreclosure on an office building, ( with people being booted out of their forclosed homes right and left, I don’t understand why she’s getting such deference paid to her, and we’re not getting due process of law ), we’ll be able to go ahead with the sheriff sale. Some lucky dog will buy the place and have the wonderful fun of kicking her out after the 6 month redemption period expires, or we will kick her out, and then either rent the place out or sell it, and that is how we will make our place whole. As far as damages, which we will be trying to collect, she has tax refunds and retirement assets. Normally, we wouldn’t be going to that degree, but with countless motions, hearings, etc. dating back 11 years due to different briefs she’s filed against us and our attorneys, I don’t care. Judges have threatened her with jail time for her behavior in court. It’s just amazing. Even today, she wasl interrupting the judge and talking over her while she was ruling. Only helps our case.
One man in NZ has a clue:
“Peter Lyons: Dose of reality required to get our house back in order
Quotable Value has just announced that average house prices fell by 7 per cent last year. This seems relatively benign compared with the dramatic slumps in residential property prices in Britain and the US.
It is more likely a reflection of the unwillingness of many New Zealanders to accept prices below their expectations. They would rather withdraw their property from the market and wait for prices to pick up.
It could be a long wait…”
http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=10552578
sounds exactly like the Netherlands. People feel entitled to become an instant millionaire from the sale of their home, even now that the market is in severe distress and properties for sale are piling up.
But as long as the central banks keep pumping money and driving rates down to the lowest values ever, they have no reason to worry I’m afraid (except for those with ridiculous leverage). So instead of being realistic sellers stick to their wishing price, and inflation will bail them out in the long run.
Even the NZ central bank (that has a reputation of restraint and relatively solid monetary policy) dropped rates hugely in order to support the market, while the plunge in homeprices hasn’t even started for real. I don’t think we will see a dose of reality before the central banksters regain some mental sanity.
Rail freight declines sharply since October:
http://www.trafficworld.com/newssection/rail.asp?id=49441
“Railcar loadings of bulk materials and large products plunged 14.2 percent from December 2007, while train hauls of intermodal containers and trailers fell 13.7 percent.”
“Hatch said freight specialists in and out of the rail industry were caught off guard by “the violence of this drop” in volumes. “December was terrible, and January is starting off badly,” Hatch said.”
“But the news has been almost relentlessly bad for the traffic outlook. Coal is the single-biggest rail cargo and had long been a source of strength for railroads even as every other shipment category weakened. In December, even coal loadings fell.”
“If even coal is reduced, what does that say about the strength of this country?” Hatch asked.
The decline in intermodal isn’t surprising, less trinkets from Asia coming through the ports in containers and being shipped east on rail. The drop in coal shipments is more interesting as most of that coal is going to power plants to generate electricity. Is electricity consumption dropping due to more empty houses, occupied houses using less, businesses using less, something else?
“Hatch said freight specialists in and out of the rail industry were caught off guard by “the violence of this drop” in volumes. “December was terrible, and January is starting off badly,” Hatch said.”
Why is that some many people don’t see ‘it’ coming or get caught off guard? How on earth would a freight mover not see what is going on in the transportation industry in general. The lessons learned in this down turn may not stick, apparently we are surrounded by dimwits.
“Why is that some many people don’t see ‘it’ coming or get caught off guard? How on earth would a freight mover not see what is going on in the transportation industry in general.”
Rail freight shipments have been trending lower the past year, maybe two. I don’t think those declines came as any surprise. I think the surprise reference is to the sharpness of the decline since October. One could argue as to whether this increase in the decline should have come as a surprise.
It will be interesting to see how much greater the year over year declines are for the first few months of 2009 - 20%, 30%, more?
Perhaps another element of the surprise is that until recently business was being turned away due to lack of capacity and some routes were suffering routine delays due to those same capacity issues.
I think the main thing to note is it’s just another measure of how sharply the economy appears to be contacting.
“…I think the main thing to note is it’s just another measure of how sharply the economy appears to be contacting.”
Still looking…for Sir Greenisspent’s “box index”
Most of these rail companies have a mountain of debt. I suspect they are in deep trouble.
No “apparently” to it. We ARE surrounded by dimwits… and their in-laws or a friend’s friend or the bimbo the boss is banging, or the frat bothers, etc.
Qualified people need not apply. Might make the boss and his expensive degree look bad.
There was a story in our local paper in November about the empty boxcars sitting on an unused spur which fronts the river and upscale shopping/theater area. The railroad told the city that they were running out of places to put empty boxcars. We have very little graffiti here except for those boxcars and the city cant do anything.
Kinda funny to see the mayor and council fret about it, but I don’t like seeing that turd world art either.
Top advisers to President-elect Barack Obama indicate they will emphasize getting credit to consumers and businesses rather than helping banks as the new administration deploys the second half of the $700 billion rescue fund.
But nagging from the background is the fact that shoveling too much credit out the doors of financial institutions is what brought on the present painful economic correction. Obama’s advisors appear to be aiming at re-inflating the credit (debt) boom. All booms fueled by debt eventually end in deflationary downturns. Understandably, Obama will try to postpone the day of reckoning.
The Obama Administration also seems poised to push for the establishment of a federal bank that will specialize in buying failed assets, that “toxic junk” that bogs down the commercial banks. An “aggregator bank” they will call it and it would be capitalized by money from the $700 billion financial bailout fund. The hope would be that taking bad assets off the hands of banks would allow the banks to attract badly needed private capital and renew lending, the original intention behind the bailout fund known as the Troubled Asset Relief Program (TARP). The new money will be either borrowed or created from thin air. (!)
We call it BARF….Bad Asset Relief Fantasy. Obama’s advisors have convinced him the government is powerful enough to absorb the banking system’s accumulated mistakes and make them whole again. All the BARF (aka TARP) will do is bundle up a gigantic number of bad assets and pass them along to future generations. Our kids will inherit only the wind and little more.
Axel Merk puts it this way; “Recessions are no fun, neither are personal or corporate bankruptcies; but they may be the cure needed to weed out the excesses of the boom. In contrast, today, hedge fund managers that ran their funds into the ground are raising hundreds of millions of dollars to start anew. Some of the folks that ran Long Term Capital Management into the ground in 1998 started fresh only to have another massive failure in the current credit crisis. We don’t expect the new breed of second chances to be any better.”
“The Obama Administration also seems poised to push for the establishment of a federal bank that will specialize in buying failed assets”
BOFA BANK of FAILED ASSETS
I suggest calling it the TSFSIV (Toxic Superfund SIV)
… and introduce a new AAAA+ rating, so that S&P and Moody’s can give it the appropriate label for foreign investors who still have some savings they need to get rid off.
Just stamp it, sell it, and move on.
No one ever thought of that.
Dopes Now™!!!
“…they will emphasize getting credit to consumers and businesses rather than helping banks…”
I’ll believe it when I see it, simply because the banks play second fiddle to no one. One would expect the bankers to make this crystal clear to the incoming adminstration very soon.
Goldman Sachs was the first or second largest contributor to Obama’s campaign. The banks are in the driver’s seat. Stop creating money by refusing all loans. Then prices will really plummet.
Really? Are they in a position to drive such a hard bargain, given that they are largely culpable for bringing the world financial system to the brink of collapse? Where is their humility?
Humility? BWAHAHAHAHAHAHAHAHHHH!
RE: Top advisers to President-elect Barack Obama indicate they will emphasize getting credit to consumers and businesses rather than helping banks as the new administration deploys the second half of the $700 billion rescue fund.
http://www.youtube.com/watch?v=P36×8rTb3jI
Poor Peggy, Soon she’ll be kicked out of the house with no where to go because the soon to be repo’d car will have no gas.
This may take a while. I think a toxic landfill that covers the entire U.S. would need some serious EPA study and approval.
ARE YOU READY FOR THIS?
Ba dada BOMP BOMP
Ba dada dada BOMP BOMP
Ba dada dada BOMP BOMP
Ba dada dada BOMP BOMP
Ba dada dada …
ARE YOU READY FOR THIS?
The Obamanation of desolation begins today. How long will they be allowed to put the blame on the Shrub and company before Hope ™ in Change ™ begins to fade?
They’ll blame the previous administration for the entire term. I notice the futures markets aren’t all hopped up over the imaculation-coronation.
Don’t get me wrong, there isn’t a nickel in a sawbuck’s difference between the two major parties IMHO. They both seem to have the same goal of telling citizens how to live their lives.
No there isn’t but the poor saps love to blame each other and the sheeple follow along.
Oh where oh where is Ron Paul, The True Messiah?
He could fix everything, I’ll bet …
Ron Paul never promised to fix everything. He was very upfront about what government could and couldn’t do, or shouldn’t do. That’s what set him apart from the other candidates.
“They’ll blame the previous administration for the entire term…”
Cheney-Shrub…”we believe in a strong dollar…and in handing to future American generations the greatest prosperity our Nation has ever known”
Come on, man. Give the guy a chance. He’s not some ideological true believer, like Shrub and company.
LMFAO!
That was supposed to be funny right?
Nope. Why would it be funny? Obama is a moderate. The hyper librals are already nearly as angry at him as they have been at Bush. Wait until Gitmo is still in operation in May and see how mad they are.
Polly, I think you’ve been in DC too long. Obama is a liberal from the same mold as Hilary. You’d call them both moderate but that’s only because they are both well practiced at showmanship.
Tell the people what they want to hear, make sure you have a scary boogeyman, and they’ll quietly be herded along like sheep.
It’s not about conservative or liberal, it’s about power, period.
Obama a moderate?? Not quite. Rahm Emanuel the epitomy of moderation?? I think not. He’s fairly far left, just not quite the hyper type.
However, I think he understands, to his credit, that he can’t govern as a hyper libbie and has tacked a bit towards the middle. As most presidents have done, including Bush (despite what the hyper libs here think).
The hyper libs, as always, will never be satisfied no matter what one does, which is why they’re best left ignored. Their whining about Rick Warren shows just how pathetic they are.
Please give examples from his voting record in the Senate that he is a moderate.
Unfortunately you are correct and with the individuals he has selected I do not envision much if any change from past policies.
I voted for him. I was and still am disappointed with his financial team. Summers to Geithner to Volker when there are some really capable economists.
IMHO we have to much Harvard and not enough Nebraska.
See Hoz, most of the people who voted for B.O. are moderates. When this depression gets worse due to the upcoming Option ARM and ALT-A resets and unemployment goes up to 14% the moderates will regret they did not vote for Ron Paul.
I’m quite sure though that with Ron Paul things would have been *worse* - on the surface - in the short term. So if RP was the new president an hour from now - people would be calling for his head in 2 years, because sheeple don’t care about the long term.
Please explain how Ron Paul would prevent the Option ARM and ALT-A resets and reduced unemployment.
“Please explain how Ron Paul would prevent the Option ARM and ALT-A resets and reduced unemployment.”
Comment directed at?
IMO he obviously would not have been able to help with that at all. The resets will happen, foreclosures will continue to spike until they peak at extremely high levels a couple of years from now, and the same with unemployment.
The difference with Paul is that he would have lessened the government interference, that otherwise now with Obama will drag on the recession/depression longer than it otherwise would, and also serve as an ongoing drag - forever (e.g. like FDR’s FDIC, SS, etc. have been for 60+ years now).
Ron Paul would have ben some tough medicine.
If his policies that he advocated had come to pass, Mr. Ron Paul would have put us in a depression that would have made the great depression seem like a walk in the park.
hoz, care to name which policies you think would lead to this outcome? I respect your opinion, and am curious what you think would be so bad. (Note that I’m in disagreement, and was/am a RP supporter, but am always curious to hear counter arguments).
“If his policies that he advocated had come to pass, Mr. Ron Paul would have put us in a depression that would have made the great depression seem like a walk in the park.”
Yep…. But what would have come after?
Another World War?
It’s amusing to hear the squealers now belaboring “we should have nominated RonPaul” when it was their own party of hacks who beheaded Mr. Paul in their nomination process. Instead they backstopped the next in line with a mayoral nattering dingbat and lost all.
exeter -
Are you speaking of Louisiana? You certainly could be.
Re: Obama - not long ago, wasn’t he voted the most liberal senator in the entire USA?
What does Sarah Palin have to do with Louisiana? Anyways, Obama was voted most liberal… and President of the USA. Take note.
“He’s not some ideological true believer, like Shrub and company.”
Complete horses*it.
Cheney-Shrub: ” …we really want him to…succeed as president!”
BWAAAAAHAHHAHAHHAHHHA!!!!!!
“Today, the man called Obama takes up the president’s job,” writes Bill Bonner. “Poor man. He seems like a decent sort. A shame…something like that happening to him. But he hung around with the wrong crowd - lowbred types in high political circles - and look where it has gotten him. Today, he’ll be called upon to stand before a hundred million viewers, put his hand on a Bible, and lie.
“To the question - will he swear to uphold the Constitution of the United States America - he will give the answer he has rehearsed. Yes, I can! Then, like almost every American president since John Quincy Adams, he will ignore it.”
yes, totally agree.
Obama seems like a nice guy, for a politician that is. But his choice of players for the Administration spells trouble ahead, I don’t think his economic or foreign policy will be any better (from a EU perspective) than those of Shrub.
But McSame would adhere to constitution if he were “unfortunate” enough to get elected to the 4 year torture chamber that so many aspire to because he’s “honarable, noble and law abiding”.
Riiiiiight.
exeter, can you leave the strawman arguments out of this? Really, your partisan-ness is getting tired. No one made this claim. One can criticize BHO without implicitly making claims that an alternate candidate would behave differently/better.
When the working class hating corporatists suspend the cynicism, innuendo and extremist ideology talking points is when I stop exposing them for what they are.
YOU are whining about cynicism, innuendo and extremist ideology??? Just when I thought you couldn’t get any more ridiculous……lmao.
It seems like a lot of people are eager for Obama to fail. But if he fails, things will get really really bad for a lot of people. The fallout will effect everyone.
This is not the end of the beginning of this financial crisis, this is the beginning of the beginning. To hope for failure now is unconscionable.
I’m not eager for Obama to fail. I’m eager to see the American people begin to take responsibilty for their own actions and lives. We as a nation need to work harder, save harder, and elect people who believe in and will follow the constitution.
What we have now is government of the people, by the banks, for the banks. If you can’t see the problem there then you are part of the problem.
“We as a nation need to work harder, save harder, and elect people who believe in and will follow the constitution.”
I disagree, about the working harder part. I think plenty of people are working hard enough, too hard, and going nowhere. In fact, I’m in favor of working less hard, and less period. I’d like to see a 35 hour workweek, so people have more time for family. I’m tired of greedy @ssed corporate boomers “working” out on the golf course while raking in tens of millions per year at the expense of entire countries. Bring on the public lynchings.
Think of the closest five relatives you have.
How many of them really work very hard at all?
In my family:
Mom, retired, worked only between 40 and 65.
Older sister, school teacher, gets summers off.
Older brother, PA, works 80 hour weeks.
Younger sister, graphic designer, works part time.
Younger brother, international training manager, started full time career at 30.
Those are all pretty soft gigs if you ask me. You don’t even want to know how soft my own job is.
Why? The uber-left hoped for and tried to bring about Bush’s failure in Iraq and Afghanistan from the beginning.
Who cares if Obama fails? The right-wingers will just be happy with that so they can fill their talk shows with hours and hours of “Told you so.”
Fail? Then you assume the economic situation is something he can fix. What is sad is that so many people think the solution to all problems is more gubmint.
Exactly. Those bozos will never learn.
So if the economic situation is something that CAN’T be fixed, wouldn’t they be justified in blaming the previous admin?
So if the economic situation is something that CAN’T be fixed, wouldn’t they be justified in blaming the previous admin? When people are caught up in a disaster without a remedy, they will have to entertain themselves & occupy their time somehow. Fixing blame is fun.
The point is moot. They’d still be justified.
The assumption in the above scenario was that it “can’t be fixed.” If it can be fixed, there’s no place for blame.
“It seems like a lot of people are eager for Obama to fail.”
And how is this attitude toward the POTUS different from the past 8 years??
“To hope for failure now is unconscionable.”
To hope for failure at any time is unconscionable.
But that’s politics.
I am not hoping for failure. I am hoping for success. We are already deep in the failure pot thanks to shrub.
“The Obamanation of desolation begins today. How long will they be allowed to put the blame on the Shrub and company before Hope ™ in Change ™ begins to fade?”
Considering it is their fault, I would say for about eternity.
No doubt this lowlife POS will get the job! Of course he fits right in.
The Geithner embarrassment….Timothy Geithner, Mr. Obama’s nominee for Treasury Secretary, had failed to pay self-employment taxes during his time at the International Monetary Fund. The IMF had repeatedly informed Geithner, as it had all its employees, of his obligation to pay that tax. Geithner apparently signed documents saying he would pay the tax. Moreover, Geithner accepted IMF reimbursement for Social Security and Medicare taxes that he had not, in fact, paid. Geithner paid part of his obligation after a 2006 Internal Revenue Service audit, and the rest of it after he was nominated to become treasury secretary. The question facing confirmation hearings on Wednesday, “Is a man so careless (or ‘forgetful’) truly qualified for the job of Treasury Secretary?”
Do as we say, not as we do.
What did everyone do yesterday for the national “day of service”?
Served my employer, as usual.
Went to work also, worked 10 hours, got two hours of overtime, did 8 refunds, coded 60 inpatient consults, helped train a kind of stubborn know-it-all to take over collecting from the workers comp and auto insurers since evidently they have better things planned for me ( hope hope ). Then went to physical therapy. Then ate dinner. Did the dishes. Then watch 1/4 of The Fellowship of the Ring. Then went to bed.
I don’t have time for national service. I have to earn money to pay the taxes.
Not a thing.
cut firewood…delivered to senior neighbors…whose children never seem to get around to it when they visit.
Wait a second, I checked on my daughter’s dog, took out her trash, and took her some food. She almost never has time to cook and her budget is even tighter than ours. Does that count?
Fixed 2 water damaged windows for a man who had a death in the family, but I didn`t know it was a “day of service”.
collected food for a food bank
picked up roadside rubbish from a little stretch of vacant land near my house
Really?! NO. Freakin’. WAY! Serious, I don’t mean to shout, but that is exactly what IIII did! Were we separated at birth?
Well, I guess it’s not that big a coincidence, so I should calm down. There’s lots of hungry people and no shortage of litter, after all.
*grumble *
Next time I have a ‘day of service’ I’m going to lurk and watch for litterbugs and when I see one, leap out, catch them, and make them eat whatever it was they threw out. THAT would be a valuable act.
And not only that Olygirl, with your girly arms!
Say, arn’t you going to kill those litterbugs. HUH.
You know I would!
Fracking litteres. I mean, how can the frogs eat it all, I ask!
Frooking - oh wait.
Day of service.
Aye, kill the litterbug, is what I meant to say. Or not,
Leigh
P.S. My eyes leak with laughter as I type this cryptic pledge to thee, my sister!
Worked. Do not sacrifice. Others do not sacrifice for you.
What a lovely person you seem to be; pleasant, enlightened, civilized, generous of heart, kind of spirit…I bet your numerous incredibly attractive foreign girlfriends are simply thrilled, THRILLED, I say, with the catch they have in you.
Yes and they certainly are not American women!
I’ll let you be the sacrificial animal first.
If you don’t do anything for yourself, no one is going to volunteer to do things for you. Tested that route and did not find out until age 25. No one will do your thinking for you.
Self made means no obligations.
I tried to help members of my family move ahead and get ambition. I tried for over ten years. It did not work. They wanted only money.
Lesson learned well. You can go ahead and give your money or labor away first.
I slept, drank some beer, slept some more, drank some more beer, scratched my balls, then went to sleep for the rest of the day.
Copy cat!
I sat in the corner breathing like darth vader* and drawing. I didn’t help anyone, but I did not breathe around them, which was really nice of me.
* flu + bronchitis + pregnancy = darth vaderitis. Other symptoms include failure to fit into pretty dresses in your closet, crying when contestents on Top Chef help each other and failure to walk in a straight line on the way to work. Also, flying into a rage at the television and then forgetting what your point is. And then falling asleep.
no surprise really; in Netherlands we have had several scandals regarding payments to Dutch IMF employees. Though illegaly collecting huge sums of money, after some time the storm calms down and they never pay back the money (although in a few cases the responsible government department paid some compensation). Apparently being above the law is part of the job at IMF, on top of the far too high salaries.
I watched Obama painting some walls. He was saying something about America not needing idle hands. As 3 or 4 people stood around watching him paint walls. Which made me sad because here was the President-Elect painting walls while three or four other people just stood around watching him.
Then I went outside and built a snow fort with my kids. We sledded a little bit in the back yard and I gave my oldest some tips on snowboarding. That made me happy.
Then I resumed troubleshooting the XP install that I accidentally destroyed after setting my system up to dual boot Windows 7 beta. (Which I find to be great, BTW.)
Later I watched the news and there was a story about some poor woman who “scraped together” $5,000 to take herself and her 8 kids to DC to see the inauguration. That made me sad again because I’m sure the lady could have done something a lot better for herself and her kids with that $5,000.
Then I went to sleep.
From today’s WSJ
(dead tree A4)
Fannie, Freddie Strive to Serve Housing Market, Taxpayers
(excerpts)
Before the takeover, the tension was between shareholders’ desire for bigger dividends and political pressure on the government-sponsored mortgage companies to support the housing market and help more low-income people afford homes. Now the conflict is between the government’s efforts to spur housing with lower mortgage costs and the desire to avoid heavy loan-default losses that would be borne by taxpayers.
Fannie and Freddie over the past 18 months have gradually imposed larger surcharges on mortgage rates or fees for borrowers deemed high-risk. Real-estate brokers and home builders — traditionally backers of Fannie and Freddie — are up in arms. “It’s appalling,” Jerry Howard, chief executive of the National Association of Home Builders, said in an interview. “They’re kicking people with relatively high credit scores out of the queue” for buying or refinancing homes.
(snip)
Burned by heavy losses in 2008, Fannie and Freddie have reverted to a focus on prime-quality borrowers with enough cash for sizable down payments. That has left a growing share of the market to loans insured by the Federal Housing Administration, which accepts borrowers with low credit scores and down payments of as little as 3.5%. While Fannie and Freddie now are criticized for being too strict in their credit standards, many critics fear the FHA is too lax and may face heavy losses eventually.
Yes Jerry, Its appalling, those B@$T@rds at Phony and fraudy are keeping the strawberry pickers out of your member’s developments. They now have to go get in line at the FHA. The shame, the horror, the injustice of it all!
I’ll calm down now, too much jitter juice.
Oh yeah, FHA is going to be a real nightmare when the wheels start to fall off that pig. In my area, they were financing homes up to about 500K with 3% down. The credit score requirements weren’t that high, the income requirements weren’t overly tough. All in all, it’s going to be another disaster, FHA is just alt-A (or subprime) with government backing. Also, the RE shills in my area caught on to that game quickly, and starting pushing many people into FHA as soon as the limits went up.
Now, in all my reading about FHA, its primary mission is to support low income housing. WTF is low income about 500K (or ~700K in parts of CA) homes? What planet are these people from. 500K homes are only affordable to about 3-5% of the entire US population (those making over ~175K HH). How on earth is that low income. And 700K? Now you’re talking about people with incomes approaching 1/4 of a MILLION dollars per year? And they need low-income home loans?
I live in bizzaro world, I swear I do.
Hey Al, fire up your private jet cause we need some global warming!
S. Fla. temps to dip to 30s
Click-2-Listen
By KIMBERLY MILLER
Palm Beach Post Staff Writer
Tuesday, January 20, 2009
Stop smirking South Florida. A taste of all that cold weather tormenting the Midwest will plow into town today, triggering shelters to open and putting farmers on freeze alert
I love the “it’s colder than heck, so global warming must be wrong” arguments.
Seems everyone forgets the summer of 2006 when it was in the 120s in South Dakota. The heat wave that summer killed 225 people. Seems the global warming deniers were silent about that whole episode.
It gets hotter than normal somewhere every year. It gets colder than normal somewhere every year. It snows more than normal somewhere every year. There’s a heat wave somewhere every year.
Global warming is BS. Grow up.
Since my posts don’t seem to be coming through, I’ll try this again anyways…..
It gets hotter than normal somewhere every year. It’s colder than normal somewhere every year. There’s a heat wave somewhere every year. There’s a drought somewhere every year. There’s floods somewhere every year. There’s hurricanes every year.
Your picking out one thing and claiming it proves the naysayers wrong is laughable. The climate has been changing since day 1 and man has nothing to do with it. Period.
Doesn’t hurt to act like there is global warming though. What’s the downside?
“Doesn’t hurt to act like there is global warming though. What’s the downside?”
More than four million people worldwide fell into poverty last year because of costly global warming initiatives, including the conversion of corn for food into corn for ethanol. Acting as if there is man-made global warming when there is no evidence to support it, has the potential of hurting and killing hundreds of millions of human beings, mostly in developing countries. And what happens when coal-running power plants are shut down or driven into bankrupcy because some politician–hint, hint–thinks they are adding too much CO2 to the atmosphere? Telling people living in abject poverty they cannot have electricity because it would hurt the environment is not a small matter. Trillions of dollars are being diverted to averting a non-event, and that money comes from taxpayers globally.
I love the “It’s warmer than heck, so global warming must be right” arguments, too.
I love the “it’s colder than heck, so global warming must be wrong” arguments.
Yeah, it’s kind of like saying I had a pleasant conversation with a black man today — I’m pretty sure racism has been eradicated!
Laugh.
The point is that neither event, now or then, has much of cause rooted in how many SUVs are running on the roads.
If we could just come up with battery technology to store the cold weather, and release it in the summer… and vice versa!
Global weather patterns are shifting.
I thought ‘Global Warming’ was passe and the new phrase was ‘Global Climate Change’. Kind of covers all the bases.
Well, global warming is the driver for climate change, which is the result: colder some places, warmer others, more, violent storms, etc. I’ve been in heated arguments about this issue. The switch from “Global Warming” to “Global Climate Change” was popularized by conservative spinmeister Frank Luntz.
http://en.wikipedia.org/wiki/Frank_Luntz
“Luntz redefined the term “Orwellian” in a positive sense, saying that if one reads Orwell’s Essay On Language (presumably referring to Politics and the English Language), “To be ‘Orwellian’ is to speak with absolute clarity, to be succinct, to explain what the event is, to talk about what triggers something happening… and to do so without any pejorative whatsoever.”[3]
Not arguing with you samk. Just fleshing out the phrase’s provenance.
MrBubble
You folks (with a couple of exceptions) lack of grasp of the basic sciences is appalling.
Please conduct this experiment for quick enlightenment: Stand in garage. Start lawnmower (or other small ICE). Keep all doors and windows closed. Record results after 10 minutes.
Oh wait…
Now multiply by the hundreds of millions. Maybe we can just open a window or something, right?
Oh wait…
O.K.
Try this.
Hot/Cold -Cold/Hot exchange.
AC/Heat vi save- pressure.
Or, what goes out will come in; what comes in will go out. Pressure.
The third rock from the sun will tilt on Her will. Neigher hot nor cold.
As if we could calculate!
Good night Irene.
Leigh
Rats butt.
Neither.
Even though the taxpayers pay FOUR TIMES MORE for the Obama Inauguration than any other, they still need to pay to watch parts of it:
Barack Obama’s team along with the DNC and the Inaugural committee have sold exclusive rights to the concert being held on the National Mall and Lincoln Memorial to HBO, preventing news organizations from being able to air reports of this tax payer funded event.
Is this legal? And if HBO was sold the rights to the event why are tax-payers paying for the whole thing?
Guess the taxpayers don’t get to keep the “change”.
Also in the news that ABC bought rights to one of the events, and Disney to air yet another. I suppose these concession sales are being used to fund part of the festivities.
The grandiose extravagance of the neoelites is in pretty stark contrast with the aprehensive air of frugality enveloping average folk.
“They have no bread? Let them eat cake.”
You are upset that Disney bought the rights to broadcast a Miley Cyrus/Jonas Brothers/etc. “Kids’ Inaugural: We Are the Future” concert?
Why?
Didn’t say I was upset. Only meant that the whole deal isn’t being paid for with tax dollars.
Yawn. Bush’s ‘05 listed cost was about $45M, but that number does not include security. If you were to add in the security the total was $155M. Obama’s estimated costs are about $150M including security. So, not much difference even though they are planning for much larger crowds.
Disney is broadcasting the music from a ball for kids - a Miley Cyrus/Jonas Brothers/etc. concert. This is a huge problem because?
The Sunday concert was broadcast by HBO on an unscrambled signal so you should have been able to see it with any cable or dish system. Also, you could see it free on the HBO website. Also, public radio carried the audio. Putting it on non-commercial stations, means the 100’s of thousands of people watching it live didn’t have to wait around in the cold during commercials.
The balls are paid for by donations and ticket sales. The Virginia Old Dominion Ball was advertising on local TV to try to sell tickets over the weekend. The state association that runs the ball has to deal with it if they lose money.
“Official” balls are ones that the president an first lady drop in on for 3 to 10 minutes. They aren’t paid for out of government funds. General buzz around DC is that they are over crowded, the music is marginal (if not the performer, then the audio quality in the halls), the food is terrible, and there isn’t enough of it.
There is one group of taxpayers that get screwed over in all this, at least usually. The residents of the District of Columbia end up paying for a disproportionate amount of police, emergency health care, traffic control, sanitation, etc. I believe the Obama inaugural committee has promised to do a better job reimbursing the District for its costs this time, so that may up the total costs to the committee.
There is one group of taxpayers that get screwed over in all this, at least usually. The residents of the District of Columbia end up paying for a disproportionate amount of police, emergency health care, traffic control, sanitation, etc.
Yes — except amend that usually to always — DC citizen taxpayers always get screwed for big events, whether it’s an inauguration or some kind of other event.
As I’m sure you know (but a lot of people here prob’ly don’t), the DC taxbase is low, Congressional largesse rarely provides adequate funds for anything in the District, including basic services, and DC is prohibited from passing costs along to neighboring Virginia and Maryland via commuter taxes or other means.
““Official” balls are ones that the president an first lady drop in on for 3 to 10 minutes. They aren’t paid for out of government funds. General buzz around DC is that they are over crowded, the music is marginal (if not the performer, then the audio quality in the halls), the food is terrible, and there isn’t enough of it.”
Went to one once upon a time. The “general buzz” has it absolutely right. The one I attended charge for drinks and the Prez didn’t show up until very, very late. If you’ve ever been to a cocktail party where you and your date hardly know anyone, that is pretty much what its like.
Even though the taxpayers pay FOUR TIMES MORE for the Obama Inauguration than any other
How much is Obama’s inauguration costing?
How much did GW Bush’s second inauguration cost?
Yeah, it was hard to see almost 35 cents over the course of 4 years, or about 8.5 cents a year, go to the inauguration.
I mean, last time, I paid only 2 cents a year. This guy is such a waster of our tax
dollardime!It is the same the last time. The $45 million number for the last one doesn’t include security costs. Real total was about $155 million. The estimate for this one (vicinity of $150 million) includes security.
huge breakout in euro goldprice today, from the consolidation of the last few months; this does not bode well for the euro, I guess the all time high (from October) will be reached this week and maybe surpassed as well. Maybe the market knows that the ECB is going to print themselves out of the mess, just like Heliben.
Strange that this happens exactly on the day that the Messiah is taking office (I would rather expect a breakout in the dollar goldprice …).
it is starting to look like a breakout in $ gold is near too.
this could mean fireworks in the gold market this weak …
It will have to go over 900 to stop the hissing noise.
I would say over $ 880.
however, in Euro the all time high (from October 2008) is just 2% above the current level. If we get a new all time high (could easily happen today) I have no doubt that the $ 880/900 level will break too within short notice. In US$ the goldprice advance has been masked recently as a result of the financial turmoil (deleverage causing US$ surge).
There have already been breakouts in other currencies over the last months like the British Pound; after that its usually off to the races (the race to the bottom for all fiat currencies, actually).
In the currency tug of war, we are where we were a year ago $/EURO. Coincidentally, so is the price of gold. It’s a breath holding contest.
I think this summer gold will repeat its downward drift toward $700. I’m holding off buying more gold until August.
October of this year we will probably see the stock market crash of the century. Gold, municipal bonds, savings bonds, t-bills and notes should be the basis of anyones portfolio outside a 401k and IRA.
Guns, ammo, canned goods & well-fed defenseless neighbors should be the basis of viable portfolios.
My neighbors are both well fed and well armed, except for the Amish family. They are busy growing food. We’ve got them covered.
Diane Sawyer, “We will talk to the folks that made their pilgrimage to the Obama’s big day.” Yes, and they will lay down palm frawns and watch Obama ride in on a donkey. This has become a substitute for religion for many. Let me go make some toast and see if Obama’s image comes up (this Obama worship is ripe for The Onion and SNL, if they weren’t see leftist).
“…This has become a substitute for religion for many.”
You gotta wonder at how much “internal desolation”…Cheney-Shrub placed inside folks over the last 8 years…
What happened to another man who was greated with palms as he rode into town does not set a happy precedent.
The electorate can be very fickle.
I seem to recall a certain outgoing president who had approval ratings near 90% at one time. Talk about an inconveinent truth! (that no one wants to remember on such a joyous day)
Now either a huge chunk of this nation suddenly went missing or many of same voters on that bandwagon are now hopping onto a new one.
Oh, that’s right - the populace was/is scared - so that makes it all okay.
Teddy Roosevelt??
Interesting that both gold and the $ are skyrocketing today. That’s something I don’t ever remember seeing. Perhaps the Obama effect?
(Implication being that I think the gold rise is temporary, e.g. indicating possible risk of something - unexpected - happening today, and will probably drop back down again in the next day or two)
it is unusual but has happened before a few times over the last year. We will find out in a few days which one is for real (if both moves stick, the real event is probably the demise of the euro).
Got stagflation?
Connecting the dots, or how to extrapolate events unfolding over there to what will probably happen here:
“FRANKFURT, Germany (AP) — Carmaker BMW AG said Tuesday it would reduce the working hours for some 26,000 German employees as part of efforts to slow production amid a deepening economic downturn.
The Munich-based company said management and employee representatives have agreed to expand production cutback measures to include shorter work times at selected plants in Germany. It will also reduce the number of temporary workers.”
If the Germans and Brits are now moving to four day work weeks, plant shutdowns, and laying off the temporary workers, you can expect the same drill in America soon.
This is not predicting the future so much as expecting the same shock wave that just flattened your neighbor’s house to also reach your own.
I read yesterday that BMW is going hat in hand to their gubmint for some bailout dough.
in Netherlands a lot of big companies are releasing employees on a temporary basis, officially for three months (but the first plans that were approved already got extended). During this time the employees don’t work but sometimes get some additional training, and keep their full salary (instead of unemployment benefits); all paid for by the government. In return, the companies promise to take back these workers when the economy gets better, or at least give them another job with the same wage. Keep in mind that wages in most of Europe are rising strongly, in many countries at the highest rate in 10 years.
Of course this policy the most stupid thing you can do, it completely shuts out market forces and will do serious damage to companies that are trying to adapt to the slower economy. But labor unions, big companies and politicians love the deal. Privatize the gains, socialize the losses. At least until government coffers run out, shouldn’t take too long …
Some years ago, a young friend of mine in Germany lost his job when his department was closed. Lucky for him, he was living with a woman at the time. That worked out quite well for him, and he did not even look for work. Apparently the law required her to house and feed him for a couple years. LOL!
probably in Germany (like in Netherlands) you don’t receive wellfare when your partner has a job; however, in the first 1-2 years you receive unemployment benefits when you are fired. This is usually independent from partner income, and after tax the difference with normal income is very small.
One risk in the more developed EU economies is that partners will choose to keep only one job and have the other take care of the children (saves a lot of money on childcare etc.). Many people even have a special insurance in the mortgage that makes sure they don’t pay a cent extra when one of them looses the job. So in the first 1-2 years this is often profitable, only after 2 years or so it starts to bite, dependent on the situation.
One risk in the more developed EU economies is that partners will choose to keep only one job and have the other take care of the children (saves a lot of money on childcare etc.).
Wait — that’s a risk? That’s a problem?
That’s the way it should be, really.
European and Scandinavian countries actually support new parents and their families well, unlike US politicians who bellow about “family values” but don’t do much to support them.
the risk is that they do it at the cost of the taxpayer: they buy the maximum home they can get on double income (one they could never afford on ONE income) and then when one stops working government has to pay for the difference. If people accept a drop in income while one stops working, I have no problem with it.
I know about the Swedish childcare situation (the Dutch are moving in the same direction, with half a year paid leave for both partners). The Swedes don’t want to discuss it but in reality it is an economic nightmare, only possible in a bubble economy. People look for a well-paid job and as soon as they have it they start breeding; if you plan well you can be without work for many years without any pay cut. And after all those years your employer still has to take you back on the same job (or at least one that pays as much). That sure is the wrong kind of socialism to me.
We need pictures to verify the “lucky” portion of the story.
Well, that is one way to make sure the Euro falls even faster than the dollar.
We don’t do four day work weeks. We just fire as many as possible and make the rest work 80 hours.
It looks like the correction is happening very quickly. This SFGate article about the latest DataQuick numbers indicates a solid 36% drop with no indications of a bottom. There is still a long way to go, but with this strong of a start it seems like a greatly prolonged stagnation period such as Japan has experienced is not going to happen. This speedy transition also limits what politicians can attempt both because there is light at the end of the tunnel and because everything is moving so fast any given set of numbers ends up looking wrong after a few days or weeks.
Despite rapidly declining sale prices, I see no capitulation on the seller side of the San Diego market just yet, at least in our zip code (92127) and surrounding areas. People still have their homes listed near 2005 prices, despite a 40+ pct drop in price per square foot (according to Radar Logic data).
As of mid-November 2008, Radar Logic data shows the San Diego price per square foot dipped below $200 at all averaging periods (1-day, 7-day, 28-day) for the first time since Spring 2002. Given that the price per square foot peaked in May 2006, it took four years for the market to climb to its highest level (2002-2006) but less than three years to fall back (2006-2009). The downhill portion of the climb is proving considerably steeper than the uphill portion, and is getting steeper. For instance, I recently calculated the average rate of decline from May 2006 through recent days of $0.23/SqFt/day, while the current rate of decline is more like
(205.62-198.87)/18 = $0.375/SqFt/day.
For a hypothetical example of the implications, if you were renting an 1800 SqFt home for $2300/mo, renting rather than owning a similar property would save a month’s rent in the opportunity cost of foregone home equity losses every 2300/(1800*0.375) = 3.4 days that you threw away money on rent. The comparison gets much better if you throw in other costs of ownership (interest payements, property taxes, insurance, HOA dues, Mello Roos fees, maintenance and repair, etc).
Transaction Period End Date RPX.SD.1 RPX.SD.7 RPX.SD.28
18-Nov-08 $197.51 $198.27 $198.87
14-Nov-08 $197.83 $198.36 $198.98
13-Nov-08 $209.59 $199.68 $200.17
12-Nov-08 $188.87 $193.01 $199.86
11-Nov-08 #N/A $196.67 $201.50
10-Nov-08 $204.56 $197.26 $201.85
7-Nov-08 $203.47 $194.32 $201.60
6-Nov-08 $183.51 $194.03 $201.74
5-Nov-08 $199.17 $198.16 $203.33
4-Nov-08 $201.19 $198.58 $204.03
3-Nov-08 $192.62 $196.76 $204.52
31-Oct-08 $203.17 $201.72 $205.62
Price is set on the fringe. During the rise, prices were boosted by sales above list. Perhaps now they will be set by final sales well below list.
Agreed. But so far, the sellers have missed the memo. I see a persistent gap of about $500K ($1200K versus $700K) between median used home list price on the MLS versus median used home sale price in our zip code (92127). My guesses are that this gap cannot persist forever and that at some future point in time, it will resolve downwards like a loud thunderclap.
Do you have a way to see what individual houses sold for vs their list price? One of the small local realators here has that on their website and I find it interesting. If the $1.2M listings are selling for $700K, that is a thunderclap. Sellers watch the comps.
I track NoVA and south FL. Generally selling price has been running 91-92% of listing price in both places, for about 2 years. Historic low percentage. And median sales prices (including PPSF) are rocketing downward.
Capitulation will come.
it would sure help to check repeat sales prices in order to understand what is happening.
From what I’m seeing in Netherlands (I know, very different market) the price per sqm2 is still going up while the average sales price is declining. This may reflect that the pricier properties are lingering on the market and contribute less to the average sales price; and expensive properties are usually a bit cheaper per sqm2. From casual observation it seems normal that time on the market for expensive properties has strongly increased.
However, this explanation contradicts the stories in the media that the most troubles are with the cheapest properties, because the buyers for these (our version of subprime) can no longer get a mortgage.
The difference may also reflect that expensive properties get split up into small but relatively more expensive apartments (probably less of an issue in the US, but over here an important factor).
“…despite a 40+ pct drop in price per square foot”
But hey, with that kinda drop in prices…there must be tons of people that qualify for mortgage loans right? What are they waiting for?…better interest rates?
So what U.S. bank will be the first to become the ‘guinea pig’?
RBS Will Be Guinea Pig for ‘Creeping Nationalization’
Jan. 20 (Bloomberg) — Royal Bank of Scotland Group Plc, facing the biggest loss in British history, promised to make 6 billion pounds ($8.7 billion) available to U.K. borrowers as the lender took another step toward full government control.
In exchange for government guarantees on losses from toxic debt, the bank will have to sign a binding agreement with the Treasury on how much it will lend and on what terms. Auditors will move in to check the bank is following the government directive.
“We’ll be one of the first guinea pigs,” RBS Chief Executive Officer Stephen Hester told reporters on a conference call yesterday. The Edinburgh-based company is in talks with the Treasury about terms of the agreement. Loans will only be made “on commercial terms and to creditworthy people,” he said.
RBS’s shares tumbled 67 percent in London trading yesterday, the most in two decades, on speculation the government may take full control of the bank. The loans agreement marks the government’s most direct intervention in the management of U.K. banks since the credit crisis started. Prime Minister Gordon Brown said yesterday he is “angry” banks are rationing credit, pushing the economy deeper into its worst recession since World War II.
“The government wants to take control, dictate lending policies, dictate banks’ views of their assets, and generally interfere with what are private companies,” the U.K. Shareholders Association said in a statement, describing Brown’s plan as “creeping nationalization.” The lobby group represents individual investors.
RBS claims the huge losses are mostly a result of toxic RE related stuff in the portfolio it aquired in the takeover of Dutch ABNAMRO last year. Looks like these banksters themselves are totally clueless; at least I’m happy that ABNAMRO sold that part before the buyers found out how toxic it was (I’m banking with them, they are currently state-owned as a result of the credit crunch; last year they said they had very little exposure to the RE market …).
I don’t hope the British policy spreads to EU mainland; it looks like a serious attempt to reinflate the housing market. Mortgage rates in UK and most of Europe are at record lows and lending in EU mainland is nearly as easy as ever (only in UK the banks are getting more cautious). If the banks start lending again with the government assuming all the risk, we could get a huge echo bubble in the housing market. In that case all the risk is passed directly to the taxpayer and savers (because of inflation), instead of partly to the market / individual investors as in the current situation.
Real recovery won’t be anytime soon
The gloom of recession is moving in. We’ll see relief rallies but not a bull market. The bubble that spawned the current bust was huge, and so are the repercussions.
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/real-recovery-wont-be-anytime-soon.aspx
The word from the San Diego Union-Tribune is that some high end areas are immune from the housing bust. We will see how well that tentative conclusion holds up over the next three years in the face of a tsunami crest of Alt-A, prime and option ARM resets, mounting job losses, tight availability of jumbo loan financing, and massive hedge fund and stock market losses. My guess is that the worst is yet to come for high end San Diego markets, but admittedly I am a professed bear.
Some ZIP codes immune to crisis
A few neighborhoods even see an increase in housing prices
By Roger Showley (Contact) Union-Tribune Staff Writer and Lori Weisberg (Contact) Union-Tribune Staff Writer
2:00 a.m. January 20, 2009
Online: See details on San Diego County housing prices and sales in 2008 at uniontrib.com/more/ documents
San Diego County housing prices may have tanked in 2008, but there was a wide variation among neighborhoods, MDA DataQuick figures show.
Some areas had median prices that were nearly 50 percent less than in 2007, but a lucky few actually showed price increases.
The bottom line, according to DataQuick analyst Andrew LePage, is that the neighborhoods with large price declines were fueled by a preponderance of low-cost foreclosure sales. By contrast, those areas with relatively few foreclosures suffered fewer, if any, price drops.
“…but admittedly I am a professed bear”
Mr. Bear,
Psssssssst, I promise to keep it a secret..the total number of “Eyeore of the week” awards you have won! (it would really discourage others)
Arlington-based Wall Homes files for bankruptcy
12:00 AM CST on Monday, January 19, 2009
By VICTOR GODINEZ / The Dallas Morning News
Arlington-based Wall Homes Inc. recently hosted an episode of TV’s Extreme Makeover: Home Edition, featuring a house built in a week for a needy family.
[Click image for a larger version] JENN ACKERMAN/DMN
JENN ACKERMAN/DMN
Wall Homes helped build a new house for the Augustin family, whose old home was destroyed in a flood.
Now the homebuilder is getting ready to give itself a makeover after filing for Chapter 11 bankruptcy protection Saturday.
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-wallhomes_19bus.ART.State.Edition1.4ed6468.html
Here it is Inauguration Day in 2009, and the stock market is plummeting again. How many times by now has it plummeted since last September? I long ago lost track.
More times than it had in the previous 10 years.
It has to get to the level were people making $6.50 per hour think it’s a good time to buy stocks so as to supplement the interest rate on their passbook savings account.
HOOOOOWEEEEE!
Christmas has come early! Three cheers for OBAMANATOR!!!
I’m not sure if this is how it was supposed to work, but being short in this market on inaguration day has brought about, “change I can believe in”, to the balance of my speculative account.
UYG 52 week low.
Im in.
with you.
I wanna play.
+1
In @ 3.14
Win a few, lose a few. lol
The clearing corp made money off me today in UYG. In/out in/out in/out
momma gots a squeeze box, daddy cant sleep at night.
in and out and in and out
2.92
I’m in the market for that Squeeze Box (after I digitize all my CD’s, etc.)
In again at 2.85.
Who made money? hozzie got it right; the clearing corp!
I’m gonna tag along this time too.
Vozzie,
How long do you plan to be in it? It seems to me financial companies still have some plenty of “down” left in them.
Wow - balls of steel.
Thinking that we’re near a bottom in financials? Based on what?
(Not trying to be argumentative, but inquisitive)
The UYG is a 2X power play with limited downside risk. Trading at $3 and change. It is like buying oil at $35, the downside is limited. In the case of UYG, the government is handing out moneys and some banks are going to make book. A little good news and you make 100% on your investment. Not to many times is that opportunity available. The risk reward is about 10:1
I figured that’s what you were thinking; I the same, and am in (though not heavy).
It’s a trade not a buy and hold.
the deal got even better today… not a pretty chart; looking at volume I would expect another down day for real capitulation though …
Nov 21 low was 3.21. Today’s low 3.21. Jan 6 high was 6.23. Even if it retraces just 50 pct, ….
Guess that means it’s time to dump my SKF?
Looks like a good day for it…
UYG 52 week low.
Mmmmmm. Tasty.
Very short term for me, hopefully.
Mike
I’m in (actually selling puts and probably will ended up owning UYG at under 2 bucks.)
2.75 into the close
IM IN !
If at 1st you don’t succeed try try and try. In again with my Native American Arrowhead making friend. pulled the trigger @ 2.76
(At same time the government will bail me out. Either that or I’ll buy a bank.)
I followed hoz in at 3.81. It will come back, yes?
Waiting….
“I followed hoz in at 3.81. It will come back, yes?”
Merely a flesh wound!
Mike
Why didn’t you take your profit? When the market gives you 15% in one day on a 2X -take the profit. You were in at a good price the market went to 4.20+. Greed kills.
I was late to the party ($ 3.31) then doubled down at 2.95. Hoz must have been shorting by that time, lol.
I won’t buy much in the US, but I will only short SKF or other 2X indexes that are trading at high prices.
stop outs are on.
“The government increasingly resembles somebody who is trying to give the kiss of life to a corpse.” Vince Cable
http://www.independent.co.uk/news/uk/politics/this-is-like-giving-the-kiss-of-life-to-a-corpse-1451390.html
Rolling Stones playing ‘Start Me Up’ in the background. Go go!
very off topic but i have a question:
first…i really kinda like barack obama. i have voted republican in every election except this one…i voted for ron paul in the primary and libertarian in the general election (as protest). i do wish the best for president obama. he is after all inheriting one heck of a mess.
i do not really see that much difference in the two parties anymore. mccain’s solution to the housing bubble was pure socialism as far as i was concerned.
now here’s my question…am i a racist for questioning the notion that barack obama is the first african american president? on every news channel/blog/publication they are referring to him in that way.
wasn’t his mother white? how much caucasion blood do you need to disqualify you as an african american and vice versa?
i just find it all really weird…the absolute acceptance of something that is so apparently false.
State Street reports rising unrealized losses, shares tumble
* Tuesday January 20, 2009, 9:19 am EST
BOSTON (Reuters) - State Street Corp (NYSE:STT - News), a leading institutional money manager, said quarterly earnings fell 71 percent and unrealized losses rose in its commercial paper program and investment portfolio, sending its shares down 37 percent in premarket trading.
“These results were very disappointing,” RBC Capital analyst Gerard Cassidy said, adding that investors were clearly “spooked” by the higher unrealized losses and the company’s weak outlook for 2009.
Investors have long worried about State Street’s growing unrealized losses and whether the company would have to write them off.
Net income in the fourth quarter was $65 million, or 15 cents per share, down from $223 million, or 57 cents per share, a year earlier. The numbers include expenses to cut its workforce and prop up ailing funds.
On an operating basis, earnings were $511 million, or $1.18 per share, down from $540 million, or $1.38 per share, a year earlier.
The company said after-tax, unrealized mark-to-market losses in its investment portfolio increased to $6.3 billion, up $3.0 billion from September 30.
Unrealized losses in its asset-backed commercial paper program increased to $3.6 billion, rising $1.4 billion from September 30.
As of January 16, unrealized after-tax losses in the investment portfolio had narrowed to $5.9 billion, the company said.
Mortgages
Loan Fraud Seen on the Rise
“…In fact, according to a recent report from the Mortgage Asset Research Institute in Reston, Va., occurrences of fraud among loan officers, brokers and other industry professionals actually outpaced 2007 levels by 45 percent in the second quarter of 2008, the most recent reporting period…”
NYT
Loan fraud always goes up.
This is another big reason that it’s impossible to determine the actual value of real estate. Fraud increases demand, which makes prices higher than they should be.
More than last few years?! Wow.
For a single person with one paid off car and renting $1000 per month, what’s the optimal amount of money to have in cash (5%-earning mix of savings bonds, Treasury notes, and municipal bonds) and gold bullion to last for 9 years without a job?
Obama Derangement Syndrome already? lmao.
Better laugh for a week, as that “a” is very big to laugh “o.”
Actually it is so big you’d probably need a whole year to laugh it off.
Are we making fun of the size of people’s dumpers on this board? Is that how low so will go?
OK, I’ll play. Mine is so big that when I sit around my apartment (rented), I sit around the apartment! Haw haw haw! Wow, that’s fun!! Oh, wait. I’m supposed to make fun of other people. Darn. I never get that right!
Ad hominem attacks? Pretty lame, Milhouse.
In other news (and request for comments), the SRS bump helped me today. Hope that it did for others. I put my 401k rollover half in at $57 a week ago or so. A touch nihilistic, but with REITs cutting dividends (from an article re Vornado) and malls turning into ghost towns, I think that they could be another leg down? Thoughts?
MrBubble
10x your annual expenditure (1x extra for emergencies.)
But I’m well known for not “over-thinking” these things. Do the obvious thing, and it all works out.
what’s the optimal amount of money to have in cash 3x the total amount of money you can ever accumulate in your lifetime LOL
It doesn’t matter what you have, its what you spend.
HDT
You might not want to count Munis in your “cash” group just now. Check the CDS spreads first.
Remember Peter Schiff being laughed at?
youtube.com/watch?v=B8r-nDBx5Jg
Someone needs to track down those giggling chumps and remind them how wrong they were.
How to be successful in business media.
Look directly into the camera and lie.
Jan. 20 (Bloomberg) — Ineos Group Holdings, Georgia Gulf Corp. and Chemtura Corp. are crashing on a mountain of takeover debt and may follow Lyondell Chemical Co. into bankruptcy, trading in their bonds shows.
The combination of $11.7 billion in debt, frozen credit markets and the global recession are forcing the companies to negotiate with creditors to loosen terms of their loans. A glut in supplies that drove prices of polypropylene down by half since October will make it even harder for plastics makers to meet debt payments, just as manufacturers in the Middle East add millions of tons of new supplies.
There was a post last week regarding a Seattle-area HBB meetup tonight. I noted some of the details in my calendar (time, place), but lost the email of whoever was organizing it. You guys still planning on getting together? 6pm @ Kate’s Pub in Wallingford?
Yep, still planned for tonight. 6pm & Kate’s Pub in Wallingford is the plan…
See you guys there!
Will there be something marking the group (sign, etc?) I’ll feel silly going table to table asking people if they’re with the “bubble blog”
Dang. Wish I was up there today.
Ugh..my posts aren’t going through. Will y’all have a sign or something to make you easy to find?
Idaho Officials Probing Possible $50M Ponzi Scheme
Monday, January 19, 2009
IDAHO FALLS, Idaho — The Idaho Department of Finance has begun investigating a possible Ponzi scheme involving as much as $50 million, an officials says.
Marilyn Chastain, securities bureau chief for the agency, told the Post Register the target of the investigation is a local business operator, Daren Palmer, who is linked with Trigon Group Inc.
“Our investigation is probably going to be broader than just Palmer and Trigon,” Chastain said. “At this point, probably just a couple.”
She declined to name those people.
Palmer confirmed to The Associated Press he was being investigated but would not comment farther.
The investigation started last month after the agency met with about 30 investors who said they were defrauded. It’s unclear how many investors are involved.
Chastain said the agency is still trying to piece together what happened.
A Ponzi or pyramid scheme is an investment scam in which money from new investors is used to pay old investors. Such investment programs often rely on personal relationships and trust between investors and those who manage it, and common interests can also be involved, Chastain said.
“We see this among churches, among ethnic groups,” she said. “It’s called ‘affinity fraud,’ and it’s one of the most devastating means of defrauding people.”
At least one lawsuit has been filed against Palmer and his wife Michelle. The case brought by Mark and Penny Peterson of Idaho falls claims the couple traded a piece of land they owned for a $500,000 stake in a Trigon hedge fund.
The lawsuit also lists Mauri Ventures, a company managed by K. Jayce Howell of Idaho Falls, as a defendant.
In a written statement to the Post Register, Howell said he loaned money to Trigon.
He said Palmer owns Trigon, adding in the statement that “neither Daren Palmer nor Trigon has ever had any ownership in Mauri Ventures. Mauri Ventures and its owners have never had any ownership interest in Trigon.”
Mauri Ventures, along with another company Howell manages, claim the Palmers owe $1.2 million on various properties. Howell says those companies have started foreclosure proceedings.
I’m still trying to figure out why putting large sums of money in a mostly unregulated investment with little or no transparency was a good idea.
Muggy, Bub, meow et al: I completely forgot to check back on that audio production thread Muggy started the other day. There were some good comments.
Crap! I have class tonight! We’ll have to hook up again soon. BTW, I saw that you got laid off. That sucks.
Jan. 20 (Bloomberg) — The Standard & Poor’s 500 Index is off to its second-worst start as analysts cut profit estimates by a record 83 percentage points and companies signal worse to come.
…
“Analysts’ expectations have to come down, and they have to come way down,” said Roland Lescure…. “The fourth quarter has been dreadful.”
Stocks tumbled as Wal-Mart Stores Inc., Alcoa Inc. and Time Warner Inc. cut profit forecasts…. Wall Street stock pickers, who were cheerleaders for equities as the S&P 500 tumbled the most since 1937, now forecast a 28 percent drop in profits for the fourth quarter after saying in March that earnings would rise as much as 55 percent.
So freakin predictable. I couldn’t believe the idiots who were touting “historically attractive P/E ratios” last Oct/Nov when massive earnings dumps were staring us in the face.
My guess is that their “28 percent drop in profits” forecast will also be wildly off the mark (on the optimistic side, of course).
Jan. 20 (Bloomberg) — State Street Corp., the world’s largest money manager for institutions, fell the most since 1984 … after unrealized bond losses almost doubled and it propped up funds to protect investors.
Unrealized losses on State Street’s fixed-income investments rose to $6.3 billion at Dec. 31 from $3.3 billion at Sept. 30…. Unrealized losses on assets held in conduits increased to $3.6 billion from $2.2 billion. Net income in the fourth quarter fell to $65 million, or 15 cents a share, from $223 million, or 57 cents, a year earlier.
Results included costs of more than $800 million to offset losses in its stable value funds, cut jobs and write down the value of investment securities.
Why Wall Street could go to jail
http://money.cnn.com/galleries/2008/fortune/0812/gallery.parloff_quotes.fortune/index.html
Really nice collection of quotes from the perps on the street.
bold off?
I like that their unit of time measurement is “Time to Armageddon”.
(I didn’t look at the top of the page at first, and I thought it was a bloggy blog and then saw “CNN Money” at the top of the page. Still finding it confusing to see words and sentiment on CNN or NYT that you would only find in the blogosphere a couple of years ago.)
But isn’t it great? MSM is finally starting to get on board. This train may now pick up some speed.
The euphoria will blow over fast, and the executive orders will start pouring out. This is going to drag out a long, long time, hello FDR 2.
One-Quarter of Stimulus Money Won’t Be Spent by 2011, CBO Says
By Brian Faler
Jan. 20 (Bloomberg) — At least one-quarter of House Democrats’ proposed $825 billion economic stimulus plan wouldn’t be spent until at least 2011, according to a report that suggests the package may take longer than expected to boost the economy.
A Congressional Budget Office analysis said most of the plan’s $355 billion in appropriations for programs such as highway construction wouldn’t be spent until after 2010. The government would spend about $26 billion of that money this year and $110 billion more next year, the report estimated. It projected the government would spend $103 billion in 2011, $53 billion in 2012 and $63 billion from 2013 to 2019.
The plan, crafted with President-elect Barack Obama’s economic team, is aimed at helping lift the economy out of recession through a combination of tax cuts for families and businesses and $550 billion in new federal spending on infrastructure projects, expanded jobless benefits, renewable energy initiatives and scores of other initiatives.
The report, e-mailed to reporters by Senate Minority Leader Mitch McConnell’s office, only analyzed the discretionary section of the plan and didn’t examine the $275 billion worth of tax cuts or approximately $195 billion in mandatory spending changes such as increased jobless benefits.
It suggested that much of the stimulus may not come until after the economy has begun to recover. The Congressional Budget Office has said it expects a “slow” recovery to begin later this year and that the economy will expand by a “modest” 1.5 percent in 2010.
Highway Construction
The report said the government would spend less than $5 billion of the $30 billion provided for highway construction in the next two years. The government would be able to spend less than $3 billion of the $18.5 billion provided for energy efficiency and renewable energy programs by the end of next year, the study said.
The timing of spending on different programs would vary because some, such as building a highway, take longer to implement than others, such as providing bigger unemployment assistance checks.
House Appropriations Committee Chairman David Obey, a Wisconsin Democrat, declined last week to say how quickly he believed the government could spend the stimulus money. He said that while lawmakers looked for programs that could be implemented quickly, they didn’t focus exclusively on “shovel- ready” projects because they also wanted to address longer-term problems.
To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net
Last Updated: January 20, 2009 10:56 EST
“…appropriations for programs such as highway construction wouldn’t be spent until after 2010.”
Fine by me, that way there will be enough time…to get America’s…”National Reserve Guard” units home from: “Sha-Zam-Islam is now democracy” and get them a well deserved job…in America… near their families…where they belong. Hey Rummy, how’s your slam-bang -democracy book comin’ along?
Nouriel Roubini - U.S. Losses may reach $3.6 Trillion.
Jan. 20 (Bloomberg) — U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis.
“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”
Here’s the link.
Remember back in Summer 2007 when subprime losses were going to be contained to $200 bn? If Roubini is correct, that earlier estimate will prove off to the low side by a factor of 18.
Roubini’s estimate is on the low side by a factor of 7-10.
You really think so, FPSS? You are forecasting 25-36T in losses??
Yes.
Contrary to what inflationists believe, it is not easy to make house prices double that easily. That requires the money to flow into wages. Since wages didn’t rise in this cycle (or not much anyway even counting Chindia), all of this must be credit, and it must go away.
Now, this credit flowed into houses (US + intl.), government bonds, stocks (US + intl.), art, rare books. In fact, I can’t think of a single asset class that didn’t have an absurd bubble including obscure stuff like teak, and seaweed production.
If you can do multiplication, it’s a simple matter to see what it takes to make US home prices double. There are 110 million households, assume 100K per house, and 2x that amount.
House prices in Panama and Nicaragua are higher than Chicago’s Gold Coast. Prices for raw land in rural India were higher than Manhattan. Do you understand what kinda “credit firepower” it takes to make this kinda stuff happen?
It wasn’t on the central banks’ balances sheets (back then) so it had to be sitting on private balance sheets somewhere. Isn’t this rather obvious?
Now, go do the same calculation globally. Now, throw in all the other asset classes. After that, throw in all the derivatives all of which are zero-sum.
When you finish this calculation, you will be on your living-room floor clutching your knees rocking back-and-forth like a little baby.
As for me, I already had that moment a few years ago. I was horrified so I drank a bottle of wine (or two), passed out, checked my calculations in the morning, and was still horrified.
I’m well into the “acceptance” phase now.
I posted a response but it is long and detailed so it probably won’t show up for a while.
Apparently it’s waiting in line behind the link I postsed 4 hours ago to the original article.
Does Ben seriously have to review all the posted links? If so - hats off to him. My God though, what an inefficient system - surely there must be a better way ?!
FPSS,
My wife likes this show on HGTV called House Hunters… I don’t get it, but I love her anyway.
So, Sunday I’m watching the Cardinals beat the Eagles, and at halftime I come into the bedroom for a nap, and House Hunters international is on.
A couple for L.A. are taking the equity out of their SoCal home and buying a vacation… no.. no… They will only be there about a month a year, so it is really a specuvestment home… in…. Hold onto your hat….
Nicaragua.
HUGE 5000 sqft McMansion type places they are looking at, in the price rage of $500K.
GDP is $3000 per person, but there are housing development after housing development of $500K McMansions.
Please!!!!!
Copyright 2006.
Nicaragua will be the next Costa Rico. Yeah, both are going to crash HARD without the CA equity locusts.
Well, I’m guessing here but I think he wants to.
It’s one way to prevent spam/unwanted ads, etc.
Oh, Law.
“Does Ben seriously have to review all the posted links? If so - hats off to him. My God though, what an inefficient system - surely there must be a better way ?!”
Well, then I am very sorry for going off on such a tear over medical systems yesterday.
“When you finish this calculation, you will be on your living-room floor clutching your knees rocking back-and-forth like a little baby.”
Is ignorance bliss, or is knowledge bliss? Rocking like a little baby does not sound that bad — I have had some of the most serene moments in my entire life rocking little babies to sleep.
Knowledge makes me money. Ignorance doesn’t.
That’s all I have to say on the subject.
That takes my breath away. How do you come up with this?
I posted a long explanation but it hasn’t shown up. My guess is it will show up later.
“My guess is it will show up later.”
I sure hope so. I am bored and in need of cheap entertainment.
I also posted a long very dismal take on the San Diego crash (measured in price per square foot terms) which I am hoping will appear later on. The short version is that the crash appears to have accelerated towards mid-November 2008 — perhaps due in part to the market’s breathing problems given the huge cloud of dust that was sent up by Wall Street’s virtual collapse in October. The recent rate of decline is on the order of $0.375/SqFt/day, which translates into an approximate drop in market value of $750/day on a 2000 SqFt San Diego starter home (0.375 X 2000 = $750).
Globally maybe… But U.S. only?
I’m thinking $7-10 trillion for U.S.
Sorry, I did mean globally. I should’ve been more careful.
US is still largest share though. Even if we assume a first-order approximation as “percentage share of world GDP”, we still come up with numbers larger than yours.
yes this is very scary
FPSS, I’ve seen a number (globally) of around 54T.
I think they said that was equal to the world GDP… for the next 30 years.
When you get to this level of uncertainty, there are a zillion variables, and getting it right to within 20% is like a minor miracle.
We can quibble endlessly about where it’s gonna land between $35-55T but what we can safely dismiss is that it’s gonna stop at $2T.
Do these people even pull out a simple Excel sheet to do a rough calculation?
“Bank of America may slash as much as 4,000 jobs in its capital markets units starting this week, the Financial Times reported on its Web site quoting executives familiar with the matter.”
Of course, all these folks could find employment in infrastructure rebuild, such as the new 16 lane suspension bridge in RockingSham County, NH, connecting Main Street, USA to excreter’s think-tank compound across the raging Squamscott River.
“The cuts are expected to be in New York and reflect the consolidation of the bank’s sales and trading businesses after it bought Merrill Lynch three weeks ago.
The capital markets headcount of the combined banks is expected to be reduced by between 30 and 40 percent, meaning the number of job cuts could reach about 4,000, a Merrill executive told the paper.”
Jan. 20 (Bloomberg) — Kingdom Holding Co., the investment company controlled by Prince Alwaleed bin Talal, reported a fourth-quarter loss of almost 31 billion riyals ($8.26 billion) after Citigroup Inc. shares plunged in the credit crisis.
…
“The loss is phenomenal,” John Sfakianakis, chief economist at Saudi British Bank, said in an interview today by telephone from Riyadh. “This is the biggest corporate story for Saudi Arabia in many years.”
I’m sure the Saudis love globalisation
Rates: When Zero Is Way Too High
http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db20090119_561565.htm?campaign_id=yhoo
This is from a report done by Goldman Sachs. Its sickening to read the hope and willingness of the writer to go along with these ideas to re-inflate the bubble. All Hail The FED! (sarcasm off)
Here is an idea…. Let it collapse.
Good REALTOR comment from a link that will follow :
I am a Realtor. Starting in 1999, we noticed that a bubble was brewing. We bought up everything we could find and waited a year before selling. We wanted to get out, not knowing when the bubble would burst. We kept a few properties, and started dollar cost averaging “in” to buy and “out” to sell. Our commissions, referral fees, and profits were exploding. It got so crazy, that all we had to do was smile at a prospective buyer, no more lying was required. In about 2005, we saw some stickiness on house prices. We could no longer list and sell in a week. That means we had to be creative to find new buyers. It seems that everyone was either a flipper, investor or buyer. The N.A.R. was the number one cheerleader during all this frenzy. “You better buy NOW, or you will never be able to be a homeowner”, Yopu will remain a “renter”, as though renting is like being a terrorist. How did we find new buyetrs, if everyone was a buyer? We trolled for the homeless! We sent out buses and vans with card tables with literature and some uneducated sounding flippers to extoll the virtues of homeonwership. They key words were: NO MONEY DOWN, CASH BACK AT CLOSING, HOUSE PRICES ONLY GO UP, NO CREDIT CHECKS. We didn”t even require identification, no drivers license, No Social Security card, No telephone nunmber or address. Come on back down here tot he bust stoip or Salvation Army when you get your free meals this week and we will help you move in—NO CHARGE!
This link :
http://www.cbsnews.com/video/watch/?id=4668112n
This can’t be right! Why, everyone knows it was the “po’ folks” and Congress who forced, FORCED I TELL YOU! banks to sell to “po’ folks”, who caused this mess!
Seriously, good find on the article.
This just in - FED helped the banks cook the books. GASP! Really??? Some of the same players from S&L involved :
http://abcnews.go.com/print?id=6658365
Send Dochow to Dachau.
Remember a short 12-18 months ago when all the flappin’ heads on Wall Street were saying “We just want to know the truth”, between thier BS about kitchen sink quarters?????
We were correct. NO ONE WANTED THE TRUTH.
The truth is, every Wall Street bank and brokerage is insolvent.
Warren Buffet nailed it when he coined the term “…mark to fantasy” and “…financial weapons of mass destruction.”
“…Critics Point to Cozy Relationship Between Banks and Regulators”
Shrub: “Get Crissy Cox in my Office Now! Tell Cheney to put down that dang Predator Drone joy stick and bring his “persuasion paddle”…NOW!
Shrub: “We really want him to succeed as president..we really do!”
3 hours into Obama’s dance and the gov’t is out of control, he should resign already.
Now I want to know how and when this guy got a highranking regulatory job. I want to see all of his emails and pull all of his contacts in for interviews. If that doesn’t work a quick trip over to Gauntanamo before it closes.
Come on, folks — how can you lie about the health of a financial institution without lying? Get with the program!
Government Regulators Aided IndyMac Cover-Up, Maybe Others
Darrel Dochow May Not Be the Only Official Who Helped Banks Hide Financial Problems
By BRIAN ROSS, JUSTIN ROOD, and JOSEPH RHEE
Jan. 16, 2009—
A brewing fraud scandal at the Treasury Department may be worse than officials originally thought.
Investigators probing how Treasury regulators allowed a bank to falsify financial records hiding its ill health have found at least three other instances of similar apparent fraud, sources tell ABC News.
In at least one instance, investigators say, banking regulators actually approached the bank with the suggestion of falsifying deposit dates to satisfy banking rules — even if it disguised the bank’s health to the public.
Irish property tycoon commits suicide
Ian King, Deputy Business Editor
Irish police believe a well-known Dublin businessman, with extensive property interests in Britain, has killed himself.
The body of property tycoon Patrick Rocca was found at his home at Porterstown, Castleknock, in west Dublin, yesterday morning.
http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article5554017.ece
As someone who has spent a lot of time in the UK and Ireland over the last 10 years, I am hardly surprised at the spectacular collapse going on over there. We (USA) may have been drinking pints of Kool-aide, whilst they were downing pitchers of the stuff.
Éireann go-broke!!!
BWAHAHHAHAHHAHAHHAHAHHAHAHAHHAHHHHHHHHHH!!!
Still waiting for some wall street swan dives!
“…We (USA) may have been drinking pints of Kool-aide, whilst they were downing pitchers of the stuff”
My mother was from Ireland…
“why did god invent whiskey?”
So the Irish wouldn’t rule the world!”
God created the wheel barrow so the Irish could walk upright.
Is anyone tracking the Ponzicide statistics?
Jan. 20 (Bloomberg) — The Dow Jones Industrial Average may fall below its 2002-2003 lows … said technical analyst Louise Yamada.
Yamada … said investors using borrowed money helped many stocks and commodities climb to records in recent years and there is a “very low probability” of those highs being regained anytime soon….
“There is yet scant evidence of a significant bottom, no directional conviction and no definable leadership; and macro statistics continue to deteriorate,” Yamada wrote in a note to clients. “We must await the technical evidence that the market is coming to grips and developing a bottoming process beyond several weeks.”
S&P is going to 10x earnings (or lower.)
This is not over by a long shot.
What will that be when average earnings fall below zero? Or would they just make it the S&P 20?
And earnings are going lower.
Henry Blodgett and Aaron Task talked today about the pay cuts being offered employees. While thousands of workers have been given pink slips, countless others are being offered reduced wages and salaries. This phenomenon has rarely been seen since the ’30s. Pay Cuts!
I’m not sure what country you’re from, but we here in America have been taking pay cuts for almost 20 years now.
The street says B.O.’s speech sucked…
Wall Street hits session lows after Obama’s speech
* Tuesday January 20, 2009, 1:02 pm EST
NEW YORK (Reuters) - Stock indexes extended losses and hit session lows on Tuesday after President Barack Obama’s inauguration speech provided few new details about measures to tackle the growing economic crisis.
“I think people were looking for something, new plans, new hopes,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatam, New Jersey.
“They didn’t hear something new.”
President Obama’s speech came on the heels of news that State Street Corp (NYSE:STT - News), the world’s largest money manager for institutions, posted a $6.3 billion unrealized loss in its investment portfolio.
JPMorgan (NYSE:JPM - News) was the top drag on the Dow, pulled lower by fresh fears about the health of the global banking system and after the State Street news.
Since his November 4 election, Wall Street has bet that Obama will put plans in place to help stabilize the sliding economy and stem rising unemployment.
But stocks started the session lower on Tuesday, pushed down by the ailing banking sector and grim earnings expectations.
“we want more … money for banksters and other well connected too wealthy people”
The street wanted to hear the words of Ron Paul come out of B.O.’s mouth. Instead all they got was B.O. Why were they surprised?
The street wanted to hear the words of Ron Paul come out of B.O.’s mouth
Now that’s funny, there is no way the street wants Ron Paul in office. Remember the street is up to it’s eyeballs in debt and falling stock prices.
Breach! Fire in the hole! Brace yourselves! Man overboard!
Left, left, left….
Did the new administration dismantle the PPT?
Far better to let the market capitulate in 2009 to levels from which it can only go up and implicitly place the blame on predecessors than to indefinitely continue the slow motion avalanche.
That’s probably the idea.
As we speak - 8k on the Dow breached. 800 on the S&P to come?
Long way to go to where it can only go up! Rather than a slo-mo train wreck, I’d call it the Grand Tetons in the rear view mirror.
picture worth a thousand words
http://money.cnn.com/quote/chart/chart.html?pg=ch&symb=spx&time=all&freq=1dy&charts=0&comp=&compidx=aaaaa%7E0&ind_compind=&uf=0&lf=1&ma=0&maval=60
Good analogy.
However note that the base of the Grand Tetons is still at 6,800 ft. - higher than the highest of the Appalachian mountains.
So there’s still a long potential way to go down.
Also note that the top of Grand Teton is 13,770 ft - almost exactly the top of the Dow in 2007.
And getting more relief every day as the Jackson Hole block down-drops. What’s the analogy there?
The last two times she dipped under 800, they took her nearly up to 1600 in short order. Is there any reason the serial bubble blowers at the PPT cannot do this again? (I thunk three was a charm…)
Apparently the dire predictions of bad cell phone service in the DC area today also applies to the PPT’s Blackberrys.
I keep thinking I smell capitulation, and then the market undergoes another violent downleg. This episode has been very reminiscent of the dot bomb bust, IMO.
Look at a thirty year chart Professor. It looks like “party over” to me.
Dumb question.
I am not a day trader and want to buy SPY sometime (looks sooner today)
What brokerage house should I use?
I’ll only be making a one time buy (buy-hold-forget)
In the tradition of a decade trade.
-
I may be the only one here who has never owned stock.
Sorry about the dumb question. Houses I’ve bought and sold by myself, I always thought (correctly in hindsight) that the market was something to stay away from unless you were one of the few that was on the inside or knew what they were doing.
Etrade or any firm for a single purchase that gives you the 1st trade free.
Thank you Hoz.
I appreciate it.
SPY pays quarterly dividends. If you plan to have those automatically reinvested in SPY, then make sure your broker doesn’t charge a dividend reinvestment fee. Its a nuisance fee (usually only a few pennies), but somewhat easy to avoid.
Ohhh thx!
first the dot bomb bust, and now the dot bond bust
Instead of pricing hope, the market seems to be pricing fear. Fear of bank nationalization. Fear of increased regulation. Fear of lower or no earnings. Fear of lower or no dividends. Fear of the unknown.
Technically, after hitting 818, we rallied to 858, made a double top above the downtrend line and then the bottom fell out. We closed snugly beneath it — 805. We are drifting in no man’s land.
This bank nationalization issue appears to be gaining some traction. Of course we all know that if it comes to that, they won’t be able to stop at just one.
Production cuts by the Organization of Petroleum Exporting Countries have yet to create equilibrium in an energy market gripped by recession.
WTF does that mean? Is this author so inciteful as to know (in the way that God knows) the proper price of oil?
Jesus where do they find these people?
finance daht yahoo daht com/news/Oil-markets-suggest-broad-apf-14105409.html
Kennedy & Bryd collapse…is Cheney hiding out over in the “Shadow Gov’t VP Office?
I don’t want to wish them ill so I’ll say… I think they should both retire, in order to work on their health issues.
They ran out of scotch at the luncheon and Teddy had a fit, followed by the grand cyclopes falling out.
That 16 year old they were chasing was just too much for them.
Bank bond paper is going a lot wider. Soon it will be a decent purchase. Under nationalization, the shareholders get the shaft. The debt gets paid and guaranteed by the government. Citi paper is wider by 100bps.
Nationalize or allow total bank failure? Something needs to be done quickly.
RTC!!!! Aggrigator bank that buys the debt for whatever needed to make depositors whole. Stock holders get nothing and bond holders take a huge haircut.
I really don’t care if the bank is shut down, or just had its debtors wiped out.
Pump money into banks, but good banks ONLY!
No, $300+ billion a quarter slow bleed for years.
There are plenty of good banks.
The fed has drawn the Maginot line at Citi, BAC, WFC, AIG, GE and a few others. Relax, sit back get some popcorn and enjoy the show.
Either Mr. Fisher’s scenario is correct and we get deflation no matter what the government does or Mr. Friedman’s scenario is correct and modest inflation is returned to the system.
Either way we will all know soon
(There is also the hoz ‘Banana Republic Theory’ - As holders of our debt realize there is scant chance that they will ever get paid, they bail on the dollar a la Argentina Peso).
got the full round trip treatment on the GE…
guess Im an investor now….kimosabe.
Oops
Stay in Japan where it is safe.
I am still waiting for the MOF to tell the BOJ to intervene and print Yen to drive the currency south.
If that happens there is no safe currency . I do not know what I will do then. Probably back to Brazil and learn to dance.
EWJ puts in an 8 tomorrow.
here’s the question.
do the 10,000 feb put options at a 7 dollar stike on EWJ have ANY value whatsoever?
the put/call ratio on the February EWJ- looks like more short term downside. Yen Rallies. Dollar index is broken.
Oil in contango is gonna be a violent shock and awe market momment.
I don’t think so. Japan has real companies with real earnings. If the BOJ gets their marching orders the market is up a lot.
It is not my preferred type of investment. But it is safer than being in US Treasuries.
If you want to own the index at 7, then the puts are a sell. I don’t think it will get that low. In fact I am pretty confident that Asia has hit its bottom. When I bought into Japan on the blowoff bottom - I was scared as I could be (I am a coward), paper was all ’sell at market’ 100 to 100,000 shares. Some stocks were trading at 2X next years reduced earnings 1X last years earnings.
Some of these stocks can still be bought at 3X next years reduced earnings.
I am looking at a pairs trade
Long Brazilian Real short Swiss Franc.
If the banking crisis is real, then Switzerland is the new Iceland and the currency drops 50%. If the crisis is bogus, then the Real rallies 25%.
your on the case, Brizillian Bonds were the only significant rally.
good lord…
:>)
bought when I sold my jgb
a 6 week vacation in Brazil…. the perfect plan.
Is this a GOP Modus Operandi?
Drill here! Drill Now!… Loan funds here! Loan funds Now!…War here! War Now!
The plural is modi operandi (”modes of operation”). It is used in law enforcement to describe a criminal’s characteristic patterns and style of committing crimes.[2] It is also applied in fraud investigation when speaking of behavior patterns that indicate specific types of fraud,
“…With storage tight on land, there are an estimated 80 million barrels of oil being held in large tankers offshore, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.”
“We’re filling up every crevice of storage that anybody can find,” he said. “The pipelines are filled up, the terminals are filled up. Refiners are amply supplied. This is a market that definitely has a surplus.”
If crude at sea has reached 80 million barrels, it could nearly supply the entire globe for a day.
Crude futures beyond February fall, suggesting pessimism over energy demand:
http://finance.yahoo.com/news/Oil-markets-suggest-broad-apf-14105409.html
Once contango breeches, then the price of spot oil will be able to rise - does not mean it will rise.
The US imported a lot of extra oil because of Contango - free moneys. There will be no reason to import and the price will reach equilibrium.
There is massive oil price distortion in the US relative to the rest of the world - all because we price the NYMEX from Cushing, OK. If there is oil in Cushing the price goes down.
Wed 21 spot oil prices
Brent Blend 41.26
Tapis 44.19
Alaska North Slope 36.67
Dubai 1M 40.36
Louisiana Sweet 45.85
Urals 40.66
WTI 38.54
Oman 1M 42.18
Minas 44.74
Forties 40.91
Bonny Light 43.36
Notice that Louisiana sweet is $7 over Cushing(WTI). Usually Brent is $2 less than Cushing
Holly bananas
“NYT BREAKING NEWS 4:07 PM ET: Dow Falls More Than 330 Points; S.&P. Drops More Than 5 percent”
Where’s the floor again?
(oops, I meant holy bananas, but I kind of like “holly bananas”. I am practising not swearing since half the people I associate with now are under 4)
Anyway, floor? Where are you?
Let’s see:
- Dow falls 900+ points the two days after the election
- Dow falls 300+ points inauguration day.
I’d say Wall Street’s not too fond of BHO.
Typical buy on the rumor, sell on the news.
Stocks rose into election day, despite polls showing Barack extending lead. Then drop on the news.
Stocks were climbing into the new years in anticipation, then start to drop as it arrives. This is just an extension of the news.
“I’d say Wall Street’s not too fond of BHO.”
How fond is Wall Street of GWB, given that current drops in the market reflect results which occurred on his watch?
Change was coming, either way. There’s always “hope” with a new president, no matter who it is.
People also seem positive going into the holidays, since they’re off the hook for a few weeks.
In both cases, reality then sets in that the underlying problems just don’t go away on their own.
Yeah, yeah. I was being facetious folks. In reality the president doesn’t have much say over the long-term market trends, let alone the day-to-day swings. Barack certainly hasn’t done anything yet to drive any wild swings like this. In reality the prez isn’t much more than a puppet to the banking crew, when it comes to exerting financial force. He basically announces things, that’s it.
Still it does seem an odd coincidence though.
Change…What’s a lefty to do when you have nobody to hate?
UYG at $3 / SKF at $200.
Despite our bearishness, buying financials for the long term seems a no brainer at these levels, no?
Correction UYG at 2.7. Was it a good buy at 3??
In at 2.88 just before the close.
NO.
It can only loose another 100% from here….
You think?
If only it were that easy.
I agree.
3 gallons of wholesale gasoline should not be equalogically the same number as a levered CDS regarding whether privately held banks exist in the future.
unless however, private banks do not exist…
and if you believe that, you can take that fascist talk right down to the black market.
International mining companies also have postponed or canceled projects and padlocked the gates to mines as consumers have cut spending on cars, jewelry and housing.
Global mining giant Rio Tinto announced last week that iron ore production, used to make steel, tumbled 18 percent in the fourth quarter and said Tuesday its aluminum subsidiary would double previously announced production cuts.
Unwanted copper, gold, bauxite (used in aluminum) and iron ore, is piling up or being left underground as the worst recession in at least a generation saps demand.
“Expect inventories to get bigger and expect this continuing process (of cutbacks),” said Andrew Martyn, a portfolio manager who specializes in mining for Toronto-based Davis-Rea Ltd. “It’s going to go for quite some time here.”
Dealing with rising levels of unemployment is obviously going to be a big challenge for the Obama administration. But there’s a new twist on the layoff leviathan that hasn’t been seen in a major way in America since the 1930s: In addition to laying off workers, some corporations are asking remaining employees to take a pay cuts, and fairly large ones in some cases.
Consider these announcements in recent weeks, as compiled by The Wall Street Journal:
AMD: 1100 jobs cut and salary cuts of 5% to 20% for remaining employees.
Caterpillar: Cutting executives pay by 50%, up to 15% for non-executive employees.
Hutchinson Technology: 5% salary cuts for remaining employees.
Saks: Cutting 1100, says remaining employees will get no wage increases or 401(k) contributions for 2009.
YRC Worldwide: 10% pay cuts for drivers, 15% pay cuts for non-union employees.
Of course, most people would rather have a job at a lower salary than be unemployed - almost certainly including the 30,000 employees of Circuit City likely to lose their jobs as the electronics retail liquidates. But few Americans have much financial cushion to work with and lower salaries could mean more mortgage defaults and foreclosures, and certainly suggest even weaker consumer spending and confidence in the offing.
I spoke with a programmer who hasn’t been asked to take a pay cut just to increase the # of hours he works by 20% for no pay increase.
I see DEFLATION
For the hyper-consumers who were used to spending 110-115% of their pre-bust income, this is a virtual death sentence for their way of life and for a whole lotta retailers.
Yep. Lower (but still livable) standard of living coming to a town near you.
“…living in your volcano lair with catgirls is probably a vast increase in standard of living for most of humanity”
State foreclosure aid totals $19.6 million
Federal funding will help keep foreclosures from destroying neighborhoods, a real estate agent says.
By TUX TURKEL, Staff Writer
January 20, 2009
GETTING HELP
MAINE COMMUNITIES in line for Neighborhood Stabilization Program funds:
Sanford: $1.8 million
Lewiston: $1.4 million
Portland: $1.3 million
Bangor: $1 million
Westbrook: $936,414
Auburn: $921,889
South Portland: $805,851
Old Orchard Beach: $776,266
Biddeford: $768,942
Bath: $704,017
Brunswick: $664,675
Lisbon: $639,348
Saco: $639,153
Waterville: $639,144
Waterboro: $616,104
A new federal program that gives $19.6 million to Maine communities with high numbers of foreclosured houses will help stablize property values of neighboring homes, according to a Gorham real estate agent who works closely with distressed property owners.
“These properties can destroy a neighborhood,” said Demetria Chadbourne of Demetria’s Team – The Real Estate Group. “It’s going to be huge to take that money and do something in these communities.”
The U.S. Department of Housing and Urban Development last week approved Maine’s plan to use the money in 15 communities, with the largest shares earmarked for Sanford, Lewiston and Portland. The funds come from the Neighborhood Stabilization Program, which will provide nearly $4 billion nationwide.
The states will use that money to help communities with particularly severe foreclosure problems and risks of property abandonment.
The program allows state and local governments to purchase foreclosed homes at a discount, according to HUD, and to rehabilitate or redevelop them, to respond to rising foreclosures and falling home values.
State and local governments can use the grants to acquire land and property; demolish or rehabilitate abandoned properties; and offer down-payment and closing-cost assistance to low- to moderate-income homebuyers.
The program also seeks to prevent future foreclosures by requiring personal-finance counseling for families receiving homebuyer assistance.
Maine’s foreclosure rate is modest compared to the top states battered by the housing bust, led by Florida, California and Nevada. But the number of foreclosures in Maine has been growing since 2006, according to the Bureau of Financial Institutions.
The latest figures, for the last quarter of 2008, show one loan out of every 431 mortgages to be in the process of foreclosure, roughly two-tenths of a percent, statewide.
Many of the distressed properties are concentrated in a dozen or so communities.
In Sanford, for instance, the town’s status as a place where working families could find affordable homes began to change during the real estate boom, according to Chadbourne. Sanford’s proximity to Boston brought out-of-state buyers and developers to the area, pushing up home prices.
After the economy crashed, many people couldn’t afford their homes, leading to foreclosures.
“You went from extremely affordable housing to the craziness of the 2003 to 2006 era,” she said.
Maine doesn’t have blocks of abandoned homes, like some urban areas do nationally. But even one blighted house can bring down property values on a street, Chadbourne said. Attracting a buyer who will fix the house and live in it helps the entire neighborhood.
“It will get people in there who will take real care of the property,” she said. “That is the biggest benefit of this program.”
Staff Writer Tux Turkel can be contacted at 791-6462 or at:
tturkel@pressherald.com
http://pressherald.mainetoday.com/story.php?id=234061&ac=PHnws
Jan. 20 (Bloomberg) — Hypo Real Estate Holding AG, the property lender bailed out by the German government, will receive an additional 12 billion euros ($15.5 billion) in financial aid.
Jan. 20 (Bloomberg) — Intel Corp., the world’s largest chipmaker, may report a loss in the first quarter, breaking a more than 21-year run of profitability, Chief Executive Officer Paul Otellini told employees.
“We are not going to wake up in six months with everything rosy again,” Otellini told employees last week in an internal memo obtained by Bloomberg News. After 87 quarters of profit, the first quarter is “too close to call,” the memo said.
Just somehow you would think that if a Company had 21 years of good profits that they should have a big balance sheet and they should be able to ride out the hard times . 87 quarters of profit should compel this Company to keep its employees, for a while anyway . Maybe I’m a idealist about how a Company should save money during good times to ride out the bad times ,just like a family should save for a rainy day .
ROTFLMAO
Welcome to the New Capitalism™.
When times are good, we give ourselves large bonuses; when times are bad, we ask the government for a bailout.
Who were the largest consumers of computer firepower for the last 10 years or so (chips, hardware, fast memory, hard disks)?
You got it! It was the finance industry.
OOOOOOOOOOOOOOPPPSSS!!!
What are you? Some kinda damn socialist/commie?
Just kidding. But you’re right in a way you may not realize. We live in a 75% consumer driven economy. (give or take a few billion in fraud, etc) You would think corporations would realize that laying off too many people is shooting themselves in the foot.
Of course, too many companies these days treat customers as some kind of damn nuisance and have the attitude of we owe them living.
Remember, it’s good to save money in business, but you can save yourself right out of business.
1) Your customers don’t need jobs or wages, they have access to debt.
2) I lived in an apartment that didn’t have separate meters for each unit. They took the water bill and ran it through a complex formula to determine each unit’s share of the water bill.
Hypothetically, by using less water I would reduce my water bill. Well, with 400 units, for each 10% I reduced my water usage, I reduced my bill by about .025%.
Okay, if we ALL cut our usage 10%, we’d all save 10%. In reality, what I did would not effect the other 400 units. So, I didn’t worry about saving water.
No multiply this to a country with millions of businesses. What one company does does not effect the other millions.
WSJ — Citigroup Inc. slashed its common-stock dividend to 1 cent from 16 cents, as required by the federal government’s $20 billion bailout of the embattled bank in November.
That capital injection, among other terms, prohibited Citigroup from paying a dividend of more than 1 cent for three years.
The dividend cut will conserve about $817.5 million in capital per quarter, based on Citigroup’s 5.45 billion shares outstanding at the end of 2008.
These companies were throwing off $100s of Billion in dividends. AND, $100s of billions in bonuses. Each year for years.
And this $1Ts thrown off is going to be patched up with $700 billion???? As if.
2 acres in Riggins, Idaho with this house http://tinyurl.com/9dpwlk
Asking price $575,000
CRRRAZY!
Makes Humboldt, California, seem sane… it ain’t cold there in the winter.
(I can say this because I was born and have lived in Idaho)
Um, but its NOT a double wide!
That house is gonna be 1/20th that price in less than 5 years.
What do they do there besides h*mping potatoes and cows?
$80 b-b-b-b-b-b-b-b-billion? I remember when $29 bn was a lot of money (last March when that amount of taxpayer-funded guarantees were injected into the BSC bailout). What flavor koolaide has Lewis been drinking?
B. of A. needs more than $80 billion: FBR
Wells Fargo also will likely cut dividend to boost capital, analyst says
By Alistair Barr, MarketWatch
Last update: 5:48 p.m. EST Jan. 20, 2009
SAN FRANCISCO (MarketWatch) — Bank of America Corp. needs more than $80 billion in new common equity capital to support the huge amount of assets on its balance sheet, an analyst said Tuesday.
Friedman, Billings, Ramsey’s Paul Miller also said Wells Fargo & Co. probably will have to cut its dividend soon as that bank tries to boost capital.
Shares of Bank of America slumped 29% to close at $5.10 on Tuesday. That’s the lowest level since late 1990. Wells Fargo lost 24% to close at $114.23, the lowest level in roughly a decade.
Can anyone explain to me why Wall Street is collectively so fookin’ S-T-O-O-P-I-D? Guess what, fools, you can’t hide bad news under a rock in the information age. The ratings agencies’ AAA was a laughing stock on this blog long before Wall Street caught on en masse.
“Japan has real companies with real earnings.”
But, if I understand correctly, those profits are based on being able to sell stuff to Europe and Asia. Which, in turn, is based on a favorable exchange rate.
They’ve been runnig a .5% rate while everyone else was at 4-5%+ too get people to take yen out of the country and keep the currency cheap so they could export.
Now, everyone else is cutting, creating relative strength of the Yen. At the same time, recession/depression in their customer countries. Is this not a double whammy to their export dirven economy? They lose the price advantage as the total market is dropping.
Add the tripple whammy that profits brought back home translate to lower yen value to pay your Japan based costs.
Doesn’t sound like a recipe for profits to me.
Who are they going to export to if not Europe and America?
They do have to import oil, food, and other raw materials, right? Just a volcanic rock in the ocean, and they do not live on fish alone, right?
Won’t this turn them into a debtor nation?
HELLOOOOOO!!! They are already the world’s second largest debtor nation.
Nominal yes.
Per GDP they are by far the largest.
(so far)
Actually I take that back - they are the largest amongst large economies. Zimbabwe and Lebanon have larger per GDP than Japan actually.
They don’t count. C’mon, man!
The IT budget of MS or GS is larger than the GDP of the bottom third of African countries.
So even worse.
They’ve sucked on the mercantilist teat along with China. Like everyone else in the 19th century, they will learn that it doesn’t work.
Faster I thought we went through this already.
Japan can write a check and pay off its entire debt and still have moneys in the bank. That is what reserves are for.
If Japan wanted to make the Yen cheap, print more Yen.
The US is a large part of the Japan’s exports a 20% drop in Japan’s exports to the US is a 0.5% drop in Japanese GDP. I think they can live with that. Then they stop buying from the US. They export less than 5% to Europe.
GDP: $4.272 trillion
Export partners: US 20.4%, China 15.3%, South Korea 7.6%, Taiwan 6.3%, Hong Kong 5.4% (2007)
Total Exports: $678.1 billion
Import partners: China 20.5%, US 11.6%, Saudi Arabia 5.7%, UAE 5.2%, Australia 5%, South Korea 4.4%, Indonesia 4.2% (2007)
Yes, the companies earnings will get hurt. They will still be cheap relative to any other investment. Toyota will still be profitable. Mitsubishi will still make heavy equipment for the US.
The world is adjusting without us.
Actually, they can’t. Somebody has to want to accept those reserves in those form.
The sum total of foreigners simply cannot divest USD. They have to come here and buy US goods and services. Isn’t this straightforwardly obvious?
They are playing the same ol’ 19th-century mercantilist game but this time it’s not backed by gold, and they don’t have the arms to get their gold anyway.
And most of their exports to the remaining four are flow-throughs to the US and EU anyway. It’s just value-add in the very long global chain.
The debt that Japan has worries about are the external debt denominated in dollars. ~ $1.4T
The internal debt is troublesome. Taxes will have to be raised.
As to profits
“TOKYO, Jan 18 (Reuters) - Three major Japanese shipping firms will likely see double-digit falls in profits for the current business year ending in March, hit by sluggish global transport activity, a leading business newspaper said on Sunday.
Nippon Yusen KK, which projected a 6 percent year-on-year increase in group pretax profit, will likely post a 10 percent fall to about 180 billion yen ($1.99 billion), the Nihon Keizai Shimbun reported without citing sources.
The Nikkei said Mitsui O.S.K. Lines Ltd is expected to report a 270 billion yen group pretax profit, some 10 percent below its earlier forecast, while Kawasaki Kisen Kaisha Ltd will likely log a 32 percent decline to about 85 billion yen….”
The worst hit area and still showing profits, but the stocks are trading at 3X the downgraded future earnings projections. I am not advocating anybody to buy these stocks, just using as an example. In the meantime the US is trading at 18X S&P500 future earnings. Which is riskier?
Nobody is doubting that US stocks are riskier than JP stocks.
Your claim is that Japan can simply be exempt from GD2. I think they are going down in flames, and will resort to beggar-thy-neighbor style money-printing.
I do not believe there will be GD2.
I believe the economy is doing a lot better than the policos and media portray. I have numbers that show this. Even IBMs numbers this afternoon should cause a reasonable person to rethink the economic events.
“Velocity is a function of fiscal deficits”. Monetization causes velocity. Velocity causes inflation.
Debt deflation has throughout history led to inflation. Why should this time be different?
Because households are going to need to repair their personal balance sheets. Plus, the derivatives mess is a lot bigger.
And in any case, if stuff is so easy to do, why did Japan go into free fall for 18 years?
IBM may be seeing the same thing my company is seeing. Software is cheaper than people. Upgrade the hardware and software so you can do the same work with fewer people.
Recent customers of ours? Well, they are in the lists of companies that have announced layoffs.
Maybe I’m tainted by living in foreclsoure capital USA, where house prices are off 40% YTD and 30% of the economy was tied to housing… but from what I’m seeing here, it is already GD2.
EVERYONE is cutting back on everything. Everyone is walking from debts, losing jobs, shutting businesses…
Heck, my wife works for the largest hospital chain in AZ, and THEY are laying off becasue people aren’t paying the hospital bills, people are cancelling procedures, not going to doctors, etc.
As this housing bubble rolls across the country, no where will be safe.
Billionaires saving hundreds of billions a month, does not mean it isn’t a depression.
How many times will the U.S. banking sector need to be bailed out before we can finally consider it properly bailed out?
Banking rout raises new fears on Wall St
By Francesco Guerrera in New York and and Krishna Guha in Washington
Published: January 20 2009 18:52 | Last updated: January 20 2009 23:10
The Obama administration yesterday came under immediate pressure to rescue the battered financial sector as bank stocks plunged amid growing fears over their capital needs.
The S&P Financials index lost 16.7 per cent, leading a 5.3 per cent retreat in the overall stock market. Among leading banks, Citigroup fell 20 per cent to $2.80, its lowest level since the 1998 merger that created the company; Wells Fargo lost 24 per cent; and Bank of America plunged 29 per cent.
It’s gonna take a long while.
They need $300B a quarter for about 4-5 years.
Ain’t happenin’. Sooner or later, even the worst politicians are going to come under the pressure of their lives from their voters.
Welcome to 1873! This is not over by a long shot.
Oath flub merits a do-over, scholars say
Several constitutional lawyers said President Barack Obama should, just to be safe, retake the oath of office that Chief Justice John Roberts flubbed.
http://tinyurl.com/85mhzz
Crap. Now all those false rumors about him taking the oath on the Koran will be popping up again.
His Inaugural Speech could have gone like this:
“Values have shrunken to fantastic levels; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; the savings of many years in thousands of families are gone.
More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment… Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.
The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”
FDR - 1933 Inaugural speech
There truly has never been a better time to rent, as not only are home prices crashing, but rents are beginning to deflate as well.
Wall Street Journal
* REAL ESTATE
* JANUARY 20, 2009, 10:50 P.M. ET
Finally, Renters Have Some Pull
By DANA MATTIOLI
Now it’s a renter’s market, too.
As the housing downturn deepens, rental rates are falling in many major U.S. cities, including New York and Los Angeles, and tenants are finding they have greater leeway to renegotiate their leases.
Early in the housing crisis, former homeowners were starting to rent again, supporting demand for rentals. Now, with more newly constructed condos being converted into rental units, landlords are struggling to keep buildings occupied. Apartment rents nationwide fell 0.4% in the fourth quarter from the third quarter — the first drop since 2003, according to Reis Inc., a New York City-based real-estate research company. Apartment vacancies rose to 6.6% in the quarter from 5.7% a year earlier.
In some major cities, the declines have been far steeper. In Manhattan, rents fell on almost all kinds of apartments in 2008. Rents of studio apartments fell 7.4%, and rents of one-bedrooms and two-bedrooms in buildings without a doorman fell 5.5% and 5.6%, respectively, according to a report released Tuesday by the Real Estate Group of New York, a Manhattan-based brokerage firm. In Miami, 60% of rents decreased in the fourth quarter, and 45% of rents in Los Angeles declined. Rents did buck the trend in a few cities. During 2008, rents increased 2.3% in Pittsburgh and 4.2% in Houston.
I’m living proof. I negotiated $50/mo. off of my rent. Not a huge sum, but the difference more than covers my season’s pass to the local ski resort. And in the city where everyone said that rents would skyrocket.
Wasn’t even a vacant condo building, although there are lots of those around…