Bits Bucket For January 24, 2009
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Governors seek concessions from public workers
Governors seeking concessions from public employee unions to help balance state budgets…
Julie Carr Smyth, Associated Press Writer
Saturday January 24, 2009, 3:52 am EST
COLUMBUS, Ohio (AP) — Governors across the nation are seeking significant concessions from public employee unions in hopes of helping to balance their teetering budgets during the economic downturn.
From Maryland to California, Ohio to Hawaii, governors have asked or ordered state workers to accept furloughs, salary reductions, truncated workweeks or benefit cuts. They say the concessions are a better alternative to further job losses in the face of record-breaking unemployment.
Unions argue their members shouldn’t be singled out and are even more vital in hard times — securing neighborhoods and prisons, educating children and providing social services to growing numbers of citizens.
In hard-hit Ohio, Democratic Gov. Ted Strickland has been a friend of the unions. But as the state’s budget woes have intensified, he is asking unionized state employees to consider a 5 percent pay cut, a 35-hour workweek and the elimination of paid personal days and holidays, to save the state hundreds of millions of dollars.
The memo noted there’s no guarantee that accepting concessions will preclude later job cuts.
A huge taxpayer “obligation” could be remedied if State governors mandated that retirees could only accept ONE government pension check every month. IE: If you’re receiving a military pension, you don’t get a fireman’s pension. If you’re getting SS, you don’t get a county office hen’s pension. If you’re a city attorney, you don’t get a sheriff’s pension. Or a combination of all of the above –as a boomer friend of mine is drawing to the tune of 225K (!) a year (on top of the money he makes as a divorce lawyer.)
Funny how these dyed-in-the-wool “conservative Republicans” go to ground when confronted with the loss of their socialist paychecks….
As for how “vital” their work is to any given community, that’s a function of its population density and need to keep people off the streets.
ahanson,
Most military retirees, especially those who do the minimum 20 years and get out, are still relatively young (late 30s/early 40s) when they start their second career. They’ve earned one retirement; why preclude them from earning a second, just like anyone else? Military retention would suffer even more if those pondering re-enlistment knew their smallish military pension would effectively bar them from many second careers.
why preclude them from earning a second, just like anyone else?
Glib answer:
Because there’s no more money?
This is across-the-board pain. EVERYONE takes the hit. Pensions were never meant to ensure a cushy retirement, they are meant to sustain basic life after a person is no longer of use to the workforce. Over the last couple of generations our technology has extended our lifetimes, not added them. Although you may enjoy different career iterations, you are still, after all, only you. And you only work for one life.
So if you work two or three careers during that span, great. Enjoy them and their compensation while you work them. But don’t expect the taxpayers (what’s left of them,) to pay for two or three people’s worth of retirements. That’s why you saved up all that money while you were working, right?
Sounds harsh, but the alternative is you get nothing.
Just ask this blog how it feels about paying multiple pensions to retiring boomers. Case closed.
Pensions are a form of savings to be fair. They are a deferment of compensation to some later date.
On the other hand, by accepting a pension as part of one’s total compensation you are accepting some risk that the entity making the commitment will still be around when its time to pay out…
Are you saying they didn’t earn their retirement?
No, quite the contrary. Military service, especially in the combat arms or combat support services, requires a lot of sacrifices, not least of which may be your life, limbs, or health. It imposes tremendous strains on marriages and families. The prospect of an early retirement is one of the few inducements that makes it worthwhile to stick around for twenty-some years.
Are you saying they didn’t earn their retirement?
Nope, I’m saying they obviously didn’t “retire” if they’re now working a second career.
We’ve got to redefine the term. And the pension system. One person. One pension. Period.
People who don’t understand the realities of military service have no business trying to change the military retirement system or define the debate. Disclaimer: I am not a military retiree, but spent enough years in uniform (six) to know better than to remain silent while clueless meddlers tamper with matters they know nothing about.
…have no business trying to change the military retirement system or define the debate…
Perhaps, but the taxpayers certainly do….
Whether you agree with that reality or choose to take up arms is why they invented politics.
I think maybe it depends on the type of pension/payment. For example, the old style federal government pensions are meant to be all a person has to retire on. You can get up to 82% of your last year’s salary (if you work for gov 40 years and have mondo accrued sick leave when you are done). The people under that system don’t get social security and didn’t/don’t pay into social security. Under the new system, you do pay into SS and your pension is maxed out at 40% of last year’s salary. The pension isn’t meant or designed to be enough to live on at all.
Teacher pensions are often designed more like the old federal system with 70, 80 or an even higher percentage of highest salary paid out.
Military pensions are clearly not meant to be all a person lives on since it is not that much money after the 20 year qualification period. Especially since I think they are based on actual pay and not the value of the housing allowances, etc.
But there is a heck of a lot of room for reform along the edges. Maybe if you retire at 55 with 30 years in (military, fed gov, police, teacher, whatever) you should establish what your pension will be at that time, but not collect until a normal retirement age. You can go off and do another job for those 10 years - and commanding a higher salary because of your experience - but not collect the retirement until you actually retire.
And the fraud on the retirement disability payments has got to stop. You aren’t disabled just because you can’t be a fire fighter anymore. I couldn’t ever be a fire fighter - not strong enough - and I am not disabled. Some of these guys are winning body building contests less than a year after their diasability payments are approved.
Oh, and the guys with serious brain injuries from military service often ARE disabled. They should get their designations. The issues with that system are horrendous.
Polly:
Age should be the factor….no 2nd 3rd checks until you are 65 or even 75. And the 2nd 3rd pension income is deducted for working…so you ‘d better really be “retired”
———————————–
But there is a heck of a lot of room for reform along the edges. Maybe if you retire at 55 with 30 years
Wt economist should get a load of some of these other state ret. systems. They put NYS to shame. Maybe that’s why NYS ret system is one of the best funded systems.
ahansen, asking people, who don’t have a pension, what they think of pensions? come now.
Hey, Good Dad,
Kiri and company are the ones who are going to be taxed to pay for these multiple pensions–AND for the economic foibles of those who stuck them with said payments, (that would be us.) The money’s not there. T’aint gonna happen.
The reality of this global systemic collapse is that contracts will be broken. Expectations will be drastically lowered. And if some sort of comprehensive, if not fundamental reform is not enacted, mass revolt will ensure that NO ONE gets a pension of any sort.
The fiasco hits home, neh? I’ve been paying into SS since 1963, and never once did I expect to draw a penny out of it. Did you? Seriously?
ahansen,
Your idea about taking away people’s pensions is interesting. They did earn it in a legal contract, but if they don’t need it, relative to the common good, negating them is an option. Along the same lines, folks who buy into this might predate on you. More than half an acre is kind of much, don’t you think (even if you did earn it). Feeding so many pets, when people are hungry, wel it just isn’t there is it. Can’t have it both ways.
Actually, I expect much higher taxes for everyone will be in store.
Not advocating for it Blue, (!) just stating the obvious. These pensions are already gone, it’s just a matter of how the remaining funds will be divvied up to avoid total anarchy and social disintegration. I’m certainly not happy about it, having lost my life’s savings and all my personally-held assets over the last couple of years. But that doesn’t change the reality of the situation for me or 30 million other boomers.
As for my excesses, it would cost an entity more to confiscate and utilize them than would be realized by their redistribution–believe me, they’ve tried. And do they really want to give up my contribution to their rapidly dwindling tax base? I’m thinking not.
Someone wants to put in water, roads, utilities, services…? Please, be my guest! But good luck finding anyone looney enough to want to come and live here voluntarily–or stay once they do. It’s not like you can just run to the mall for supplies…. For the record, I actually do provide quarters and sustenance for a rotating assortment of ronan scientific types here at the Nerd Sanctuary–bidden or not.
As for the “pets,” they’re all back up food sources–and pretty much feed themselves from the closed system that is the ranch. You want chicken entrails and horse poops for dinner? I’m sure they’ll share….
I was just making a reach with the “pets”, not my personal opinion. I’ve raised the walking edibles too.
I agree that guarantees like pensions are only as good as the resources that back them. Perhaps lucky for me that very few of these flimsy guarantees apply to me.
We can loose our stuff or have it taken, but our spirit we can only give away.
Those different pensions have nothing to do with each other. An army or navy veteran receives a pension as something earned from years of his service. If, after 20 years of service, a veteran gets a job as a police officer and then retires, he will receive a second pension for his years of service to whichever community his worked in as a cop. You could argue that one or both of those pensions is too generous, but the two have nothing to do with each other. They don’t even come from the same government.
Exactly.
Not all who enter the military live to collect a pension.
“A huge taxpayer “obligation” could be remedied if State governors mandated that retirees could only accept ONE government pension check every month.”
Another huge taxpayer obligation could be remedied if State governors mandated that all illegal aliens be deported. I’d go for that mandate first.
And birthright citizenship for children of non-citizens, that’s another joke. Some dick up in New York wants to abolish the 22nd amendment to the Constitution. Amend the 14th and maybe we’ll discuss it, although I don’t think a president should have more than two terms anyway.
Another huge taxpayer obligation could be remedied if State governors mandated that all illegal aliens be deported. I’d go for that mandate first.
BINGO!!!!
Why is it that none of our political leaders are even mentioning this? I’ bet that if California had deported (even better: prevented from entering the U.S.), all of the illegal immigrants, we would not have had a deficit.
“Funny how these dyed-in-the-wool “conservative Republicans” go to ground when confronted with the loss of their socialist paychecks….”
You’re saying Republicans are the only one who double dip??
What BS. Again.
You’re saying Republicans are the only one who double dip??
Um, no sweetie. Merely pointing out an amusing anomaly that tends to provoke knee-jerk reaction.
You’re saying Republicans are the only ones with knee jerk reactions??
Well played, Blano!
Ahansen,
It’s laughable they campaign on and champion a warped ideology they themselves can’t or refuse to adhere to but expect everyone else to toe the line on.
“Funny how these dyed-in-the-wool “conservative Republicans” go to ground when confronted with the loss of their socialist paychecks….
Typical. Plead poverty in the good times and plead poverty in the bad times.
Maybe if the state hadn’t, I dunno, wasted millions on “brother-in-law” deals, they might have some money to get through the lean times.
The problem with reform, be it pensions, entitlements, SS, is that everybody and his brother/sister has a hand in believing their situation is different, that they shouldn’t be penalized, that they earned whatever is coming their way, that they defered income by accepting a pension or whatever. It’s all true, but so what? Show me the money… So, what’s it going to be? How do you reform a system where everyone has a special interest? I remember some retired couple snarkily encouraging my sister and me to work harder so they could enjoy steak on their SS checks, in addition to their cushy pensions, and investments. Kinda burned me up.
“everybody and his brother/sister has a hand in believing their situation is different”
The theme of the the 20th Century was the triumph of the indivudual over the collective (thinking of Freud, and late-capitalist marketing techniques). Modernism is all about the heroic individual, who will shape or lead the masses. However, despite a focus on the individual, a Modernist ultimately believes in collective organizations, shared standards and democratization. (We simultaneously decided to place value in personal feelings and self-analysis, ie the development of Modern Art, Oprah and the Sopranos.) Unfortunately, when everyone begins to identify as the hero, the special case, the Modern dream falls apart.
I wonder if part of the excitement about Barack Obama isn’t to do with the hope of resurrecting the Modern age. (After all the Modern era started in Europe, but is really the age of America’s rise to power and global cultural influence.) When he is compared to Kennedy, that’s the dream I hear. I think it’s also the reason there is so much global interest in Obama. It’s interesting that he assumes the presidency with increased power, leftover from the last US administration, and that Kennedy has been identified as the first imperial president, if you believe in that line of thinking, by Arthur Schlesinger. I think we have at the moment a deep distrust of centralized power and a deep fear of it collapsing. We’re about thirteen years old, really
.
Is Modernism even over? Maybe post-Modernism is just a phase of Modernism, and we’re not done, yet? Then we can probably settle ourselves down again more quickly. But if we’re actually shifting into a new era, and Modernism is really ended, we’re bound to have some serious pangs, and until we’re settled with whatever the rules are, it’s going to be pretty hard to keep people from making exceptions for themselves. Loosey-goosey rules about money can be a real destabilizing and corrupting force. But maybe it’s a natural part of global power shifting around.
I imagine historians looking at the way we clung to housing to deal with this (quite reasonable) anxiety. The Manic Panic era.
I think it’s great that governors are seeking concessions, but I would like to see more than that. The problem with concessions is that they are likely to turn out to be temporary; to be withdrawn after the current crisis passes.
What really needs to be done is a basic re-examination of how and what the states spend money on, with an eye to eliminating functions that are truly not necessary. Somehow, this never happens, and states keep adding people and functions. This is untenable unless we are all prepared to accept large tax increases to pay for it.
In California at least, the voters are partially responsible for the problem, but the political machinery has to take the greatest share of the blame. Politicians (Arnold and others) get in to office promising to cut unnecessary spending, but always “discover” that even more spending is required.
Something is really broken here, and the states will be revisiting this problem again and again unless they start dealing with the real problem.
Landlord….I agree about the people being part of the problem….Passing all the “Feel Good” bonds without regard to how we will pay them off…The biggest problem I believe is the government itself….Its way to large for our “Important” needs…IMO, the state, county and muni has become a well paid WPA program.
Thats fine as long as the state is doing “Kick Ass” business because its like “Out of site Out of mind”….But when the crap hits the fan and the “private sector” takes all the hits while the public sector goes to court to stop a “two day Furlough” then we have “job class warfare”..
I have been through four of these…This will be my fifth…My fear is this will be the longest and the worst…The state will try to “Tax & Fee” their way out but the deficits are to big and will continue for to long…The Tax payers will revolt with tax avoidance thereby counpounding the problem for both revenue & jobs for California and maybe the nation for that matter, given that California sends the Feds about 140 bil per year…I am afraid this is a train wreck unlike anything we have seen….Bow your neck, hold onto the rudder…Its going to be a rough ride…
Much as I think some pension funds were too generous, a deal’s a deal. I hate to see people not honoring contracts or commitments.
Here’s a better idea for the states: Just because the Federal Government eliminated income tax on forgiven mortgage debt in 2007 (an outrageous middle-class tax cut probably worth around 1 TRILLION dollars that the left doesn’t credit Bush for!) doesn’t mean the STATES have to. California, for example, passed no such forgiveness law, but as far as I can tell, are making no effort to collect.
Perhaps they should make an effort to collect. The unions representing these workers should compel the Government to collect taxes owed.
Here’s an idea on pension clawbacks: you work hard for me and after you’re done, I take away a large portion of what I promised to pay you.
Deal?
Oh I see, good for the goose, but not the gander.
Here’s some more news: less than half of the working age population (that means ALL ages) receive or will receive a pension.
You might want to take a closer look at “cousin Vinny’s brother-in-law construction contract” with the gov. instead of working stiffs who are already getting screwed.
You should try and talk to some “white collar” retirees from GM.
They’re the canary in the coal mine… loss of medical and other benefits, some not replaceable at anything like a resonable cost.
Just gone, as they do not have the contractual protections the Union people have. (Not saying the unions aren’t a bit excessive…)
If you have been paying into a pension for a long time ,you want them to honor it ,if you have been paying for a short time you don’t think its as big a deal for it to not be honored .
My beef is how did the Companies,government or not , get away with underfunding these pension accounts ? If your offering these kind of benefits,
instead of a higher salary ,than how do you get away with the under-funding of such accounts ? This is the great evil that I see .
While it might be true that health care costs skyrocketed beyond what a Companies original contracts were based on ,still a underfunding existed because it was clear each year that the costs were inflationary . In fact many Wall Street Companies are underestimating their real worth by underfunding pension plans . This attitude that the new workers will just pay is not a very sound idea .
It would be better if pensions were based on real income each year that a Company makes so that during boom years more is collected and during low profit years less is collected .Fixed health care benefits are a touchy area because of the rising
health costs and that model needs to be adjusted .
I know a vet who just died . He got all of 1 and 1/2 years on his retirement because of agent orange killing him . He got his health care at the VA ,but I can’t say that I was impressed with the care he would talk about .
Anyway ,I say a company has to pay more into their fixed benefits in spite of the fact that it would make their pumped up stock value not look as good .
Our local fish wrap has finally started to report these facts. The local REtards are working furiously to spin a positive, now saying it is the time to renovate your old house and get ready for the spring bottom and bounce. News groups never report a counterpoint to these outlandish claims. Won’t matter we are going down.
News - Local / Metro
Saturday, Jan. 24, 2009
Columbia home sales tumble
By KRISTY EPPLEY RUPON - krupon@thestate.com
The recession that is raging through the nation took a bite out of Columbia-area home and condominium sales last year.
Sales dropped about 23 percent in 2008, compared with the previous year, according to the Consolidated Multiple Listing Service, which compiles home sales figures in the Midlands.
The number of sales in 2008 was the lowest in six years.
‘Fraid so. We’re pretty much locked into a feedback loop at this point.
More layoffs mean more foreclosures which means more bank failures which means more layoffs and less lending which means more layoffs and retail spending which means…. well, you get the picture.
“…LESS retail spending…” (sheesh)
The Colorado Springs Gazette “Springshome” section is written by and for realtors. Rather than actually informing the public, the section serves as a forum for NAR shills to try to continue to draw in the unwary. A case in point: Today’s print edition (Saturday, January 24th) carries an article from a realtor from the Colegate Banker Residential Brokerage entitled “House Hunting: Decline in Excess Inventory a Bright Spot in the Housing Picture.” The realtor headlines his article by stating that “Many experts agree that the financial system will begin to show signs of stabilization in early 2009 and we may see a real estate turnaround by the summer.”
The realtor is canny enough not to make these claims himself. Rather, he cites various “experts” and NAR updates as the basis of these ludicrous prognostications. Of course, the Gazette is totally lacking any independent, couragous, non-REIC affiliated voices who would be challenge the “experts” cited by Realtor Boy, or point out how the “experts,” especially those with a vested interest in shilling for the NAR, have been almost universally trying to excuse their discredited past optimism by trotting out the false “nobody saw this coming” line.
wmbz:
Since i used to live in SC why are they predicting 14% unemployment? I never had problems finding alternative employment. But then they had a lot of military and factory workers before hugo.
As mortgage rates hit new lows every week, the number of homeowners seeking to refinance their homes has spiked to its highest level in five years.
Run the Refinancing Numbers, Then Run Them Again (January 24, 2009)
Erik S. Lesser for The New York Times
The couple is working to refinance their home, which could save them some $300 a month.
But many have been unable to win approval for their applications. And even some of the homeowners who do qualify have backed off, once they found out how difficult it was to get the advertised rate.
So what should be a bright spot in an otherwise dismal economy — throngs of homeowners locking in low, fixed-rate mortgages that will free them up to spend elsewhere — threatens to become another example of how even the best government intentions do not always pan out.
That was the case when the government, through its Troubled Asset Relief Program, started pumping money into banks with the goal of shoring up their balance sheets and spurring lending. And it appears to be happening again as the Federal Reserve buys up mortgage securities. The Fed is pushing down interest rates, but that has not been enough to bring the housing market back to life.
I’m curious to know what appraisers are doing now for refi applications. For all applicants, there will have been a huge loss in equity.
I wonder how many people that rushed to refi got the shock of their lifetime when they were told how far underwater they were? If I were in that situation, I wouldent be able to look at the numbers.
“I’m curious to know what appraisers are doing now for refi applications”.
I spoke with an appraiser last year and he said his business was strong. I saw him two weeks ago and he said his business was down 50% over last year. Fewer new sales and refi’s that don’t ‘hit’ the numbers.I would expect that is the case in most places.
“I spoke with an appraiser last year and he said his business was strong. I saw him two weeks ago and he said his business was down 50% over last year. Fewer new sales and refi’s that don’t ‘hit’ the numbers.I would expect that is the case in most places.”
I think all this focus on “record low” interest rates will have the unintended consequence of speeding up the bust. As the next wave of resets looms, and folks confront the reality they don’t qualify for a great rate (not enough equity, too low a FICO score, not able to document income to support DTI ratios), and their home appraises at 20%, 30%, 40% less than they paid, the walk-aways will will start in earnest.
They are trying to hawk the second wave of “historically low” interest rates. The first wave was the interest rate to buy the house. The second wave was the interest rate to refinance the house. People are quickly finding there are several hangups:
1. Too many fees in refinancing.
2. The expected apprecation never materialized.
3. There were a lot of GF’s willing to buy the paper in 2005 (Lehman, Gov of Iceland et al). No more. And, no buyer of paper means no originator of paper.
4. Oh wait, you mean they have to start paying prinicpal on top of interest?
The second “wave” will be the same height as a ripple made by mosquito larvae.
Let’s not forget the biggie:
5. Proof of income
Another possible unintended consequence of low interest rates:
What if a responsible person, current on his mortgage, with a fixed mortgage decides to refinance, and realizes how much the estimated selling price of his house has declined after an appraisal decides to do some math? He may discover he can save more money by walking away and renting, or walking away and purchasing an equivalent home for 40% less than what he paid.
It’s a simple matter of math. If you don’t have much money in the house, for example you only put 5% down, and have only been paying in for 5 years, then it may be a win.
For example, suppose you have a 500,000 mortgage at 6%.
You put $25K down, and paid $3000/month (I’m ignoring taxes now) for the past 3 years. That’s $133,000 you spent.
You can buy the same home now $300,000 down the block. (Assume $300,000 is what you’ve financed)
300,000 at 5% is 1610/month. Now you’re mortgage is $19,320/year instead of $36,000/year. If you plan to stay there at least 15 years, you’ll be way ahead by moving, even with the $130,000 in sunk costs (actually less, because rent would have cost something…)
If you’ve been a careful saver, and can afford to buy an equivalent house in your neighborhood for less before you walk away from your current one, you’ll feel like a sucker if you don’t. And it’s probably legit, for a no-recourse loan.
Why let the fraudsters who lied on their mortgage applications and caused this mess get all the love and money from the current administration? Just do the math and walk away.
“Why let the fraudsters who lied on their mortgage applications and caused this mess get all the love and money”
It is one thing to err and fail. It is another to join the fraud.
I bought a place here in OK 2 years ago and financed 150k @ 6.125%. I’m closing in a week or two on a 15-year fixed @ 4.375 and paid no points up front. My outstanding principal is down to 130k so the payment hardly changes, and I’ll be paying 500/month in principal with every payment. So for some us the low rates are in fact pretty nice.
We haven’t walked away from the only mortgage we have, but we’ve darn well talked about it. If it wasn’t for the need to maintain good credit in a land of increasingly poor FICO scores, we’d probably have done it. As it is, if we can’t sell the house when we’re done with it, it’ll be turned into rental fodder. ( This place was purchased in 2000, before all of the disaster really started. Obviously, had we known what was to come within the next 9 years, we wouldn’t have bought it ). But, our montly payment is just about $ 100 more than the current rents for homes in this subdivision, so we won’t be hurt too badly if we rent it. It’s not like we haven’t been landlords on and off for years !
I just talked to a realtor I know last week. She’s a nice woman, in her sixties, but drank the Kool Aid. She’s desperate to sell houses, hasn’t had a sale in a while. When times were good she bought a piece of overpriced land and built a new home. Unfortunately, she has an ARM and it adjusted up. It sounded like she was almost in tears when she said “I don’t want to lose my home”.
At any rate, she was complaining about appraisals. Apparently, in the greater Seattle area, they’re knocking 25% off the final number to reflect “market conditions”. This is driving a stake through the heart of the market for both refinances as well as sales.
“…they’re knocking 25% off the final number to reflect “market conditions”.”
Sounds about right. Seattle is usually a trend-setter, but they have been a bit slow to get on board this crash (their median price is now quite a bit more than Southern California and maybe even N. California).
No doubt the people in Seattle now are playing catch-up and that 25% will be dispensed with rather quickly.
So they assume appraisers don’t know what they’re doing and knock off another 25%?! That’s funny/sad.
(Please note: The opinion below does not necessarily represent the opinion of the HBB or Ben Jones.)
Not necessarily. Perhaps they finally figured out that Seattle will crash like the rest of the country and they figure that even a valid appraisal (which most probably are, finally) cannot take into account that upcoming crash (i.e., it doesn’t show in the comps.) - so the lenders figure they’d better add it in.
(Please note: This was just my opinion, so be easy on others, please.)
And I wonder how much of it is people actually being asked to bring in the needed paperwork and deciding that the hope of $300 a month isn’t enough to pay them to actually find (or get valid copies) of what they need to produce.
Not even counting the ones who never had the paperwork in the first place because their original applications were based on fog and mirrors.
New rules raise the bar for condo mortgages in Florida
http://www.miamiherald.com/103/story/870083.html
Ouch, that’s going to leave a mark.
Inflation in condo prices was much worse than most people are willing to admit. This may seem like an obvious statement in this forum, but in humble opinion, condo values have been misunderstood by almost everyone in the market.
I like to compare condo valuations to what an apartment in a similar-sized complex would cost with a small amount added to account for upkeep. Judged by that standard, condos in my area are overvalued by a factor of about three and one-half or possibly four.
Since I’m not familiar with the Florida market, I’m not sure what the ratio is there, but I would expect that it is not that different.
Can anyone familiar with the Florida market comment?
Condo selling prices in central Florida are coming down hard and fast. Wishing prices are all over the map, but overall are declining. The number sold each month seem to be way less than the number of houses sold. Most sellers who close the deal seem to be either (a) flippers or people who bought vastly more than they can really afford and now are short-selling, or (b) owners who have out-of-area addresses in the tax records, implying that these were second homes.
See? More fraud. These people should be PROSECUTED!!!! PROSECUTED!!!! They committed fraud while we, the innocent suffered from exorbitantly high house prices.
Mortgage fraud is a federal crime. These people should be prosecuted under existing laws. That’s the problem in this country, we don’t need new laws, we just need the ones we have to be enforced!!!
Realtors think that (get this) MORE credit is the key to unlocking the housing market!
http://www.sun-sentinel.com/business/sfl-flzurbanland0124sbjan24,0,3482883.story
It’s almost as if they are being led by a blind, mentally deficient child. And that would make it kind of understandable. But this.. It’s just unreal. Every major bank in the country has effectively failed BECAUSE of making too much credit available to residential RE. And yet, these moron realtors think that they “fix” is to continue to pump MORE credit in.
At this point, the only thing that more credit will do is make the responsible buyers (who are really the only ones left at this point anyway) hold back. I’m just at a loss for words. What’s the answer to a massive credit bubble? Why, of course… MORE CREDIT!
“Realtors think that (get this) MORE credit is the key to unlocking the housing market”!
I have changed my way of viewing these asinine comments. It just like one giant comedy skit by and endless parade of court jesters, who perform the same show over and over in hopes that the audience is ignorant enough not to notice it’s the same routine.
So far, so good.
Wait… are talking about SNL?
Michael - this was bothering me, too, for the past several months. While we have continued to keep our eyes on listings in favored areas, the thought that we might be competing with someone who now can afford payments that were higher last month turned us off. It’s the old “better to pay a lower price with a higher interest rate than the opposite” problem.
I’m a little encouraged when I read that most mortgage applications are for re-fi’s and that most of those are getting turned down, primarily because the applicants went in clueless about what their house will appraise for and that their LTV will not qualify them for the loan.
Finally, I see that the banks are crushing the builders who do not have a huge cash backup, driving prices down farther and faster than was the case for the past year. This will embolden me to make more low-ball offers, more aggressively. I’m not ashamed to offer less than the cost of construction of of rebuilding — that’s just today’s market.
* JANUARY 23, 2009, 10:48 P.M. ET
Far Away From Wall Street, a Herd Gets Gored
In the Lehman Bankruptcy, Goats R Us Feels It Was Left High and Dry in the California Hills
“…Twice a year, Goats R Us transported about 1,000 Angora and Spanish goats to the site and let them roam to nibble on coyote brush and other shrubs, which can pose wildfire dangers in the dry season.
The herders, who were recruited from ranches in Peru and Chile, slept in a travel trailer, eating their meals on the site and looking after the goats with the help of two border collies.
The goats had worked at the property, called Oak Knoll, for the Navy, which operated a hospital on the site for decades. Lehman and SunCal bought the land at a government auction, conducted on the Internet, for $100 million in late 2005, near the height of the property boom. The venture envisioned about 900 homes, walking trails and public parks.
Big land owners use goats for fire control because they are dependable and hard-working. They clear brush and poison oak, which two-legged landscapers try to avoid. The goats also are often preferable to herbicides, especially in residential areas, such as Oak Knoll.
“They were doing a good job at vegetation management,” says Al Auletta, who was overseeing the project for the Oakland Redevelopment Agency. “The goats were pretty effective at that.”
For many years the goats were happy, Ms. Oyarzun says. The sprawling hospital campus was a favorite of the herd. Some goats liked to sun themselves on the porches of the empty Navy buildings. One goat preferred to sit by the former officers’ club, near the tennis courts. His nickname is Admiral.
…
Honoring Cookie
Another prominent goat at the site was Cookie, who has the distinction of being one of the few animals that Ms. Oyarzun considers an honorary union worker. In the late 1990s, Local 70 of the International Brotherhood of Teamsters sent a lighthearted letter of protest to a college in Oakland that had hired the goats without first informing the union. After the parties settled their dispute, Cookie was outfitted with a Teamsters jacket.”
WSJ
Scab goats. Shoot ‘em and make goat chops.
I have a question for my fellow HBBr’s when do you think the time will come or if it will come, when a large percentage of the population come to grips/admit that the housing market and general economy is in an unprecedented down turn?
What I am seeing here in my home state is that the majority think this is merely a speed bump and a rebound is just around the corner. The blind faith that the government will come to the rescue is amazing, at least to me. Granted I firmly believe bigger government is the wrong way to go. We already have a leviathan on our hands making matters worse.
I realize there is no absolute answer, just opinions, like riding a stock to the bottom, do folks just keep hoping and wishing. At some point people must comes to grip with reality, like it or not.
Just thinking, has good old common sense been eroded away, along with gut feelings?
“comes to grip” = come to grip
Unfortunately, I am seeing the same thing. Everybody around here thinks that the worse is over, and that this year will be like 2005 with 30% appreciation.
I have been threatened with missing the train, and never being able to buy a house… My answer is: so what? Why does a house define me? I am free to do whatever I want, and not worry about the plowing snow, or paying insane retirement packages to mediocre town employees.
My answer is: so what? Why does a house define me?
It doesn’t and shouldn’t, but it certainly does many people.
I think one huge problem is a ton of folks are having is, that they ‘lived’ off their house as well as in it, and the reality they are facing now has never been seen before by them. So they hope for change while they ride strapped to the front of the bus as it goes over the cliff.
“So they hope for change while they ride strapped to the front of the bus as it goes over the cliff.”
Let’s hope this hope is kept alive. The longer these FBs have hope the longer they’ll keep up with their mortgage payments, and the banks sure could use the money.
I have the same opinion. Even if the forclosures slow down, there’s enough inventory to keep prices falling.
Let’s hope this hope is kept alive. The longer these FBs have hope the longer they’ll keep up with their mortgage payments, and the banks sure could use the money
A joke I heard today about our currency.
Our currency went from gold to paper to plastic to hope.
Our currency went from gold to paper to plastic to hope.
Poetry.
“Our currency went from gold to paper to plastic to hope.”
It’s always been hope. After all is gone, true currency is sex, food, and muscle.
true currency is sex, food, and muscle.
So what, a horse?
Another problem a ton of folks are having is that before the housing bubble completely upended the social order, America’s socio-economic class structure was largely defined by the neighborhoods in which they bought and maintained homes. Neighborhood quality is generally determined by the quality of housing, including external factors like the crime rate and the quality of local schools.
By doling out money to so many American households to buy homes they could not afford and pricing out those who knew better than to buy homes they could not afford, the lenders who fueled the housing bubble overturned the traditional role of homeownership as a status symbol. Many who thought they had arrived a couple of years ago are now the same group losing jobs and homes in the downturn, and a sizable number of these would have lost their homes even without job loss due to ARM resets or otherwise having assumed unrepayable mortgage debt.
Interesting note. The bubble created a tremendous amount of “false wealth” due to equity windfalls realized by home sales or via refi/HELOC. I’ve seen this within my own family and it is quite interesting to see how the bubble social climbers continue to try an grasp on their status and spending habits even though finances are extraordinarily strained as they must pay on their status symbols.
Neighborhood quality/stability is a huge issue, one that I’ve been paying particularly close attention to as part of my coursework.
In a nutshell, the peeps spent what they did on housing during the boom largely because they were searching for a neighborhood that met with their idealizations. The funny part, as you point out, is that the rising prices themselves worked against the very ideal they thought they were buying into.
Speaking with my mom and other seniors, I often hear them lament how their neighborhoods are changing. In response I’ll point out that their “ideal” neighborhood (homogenous by class and race) is no longer possible - both as they knew them - and as many today still envision them.
I’ll cite the example of rampant urban NIMBYism as proof that people were paying high prices for the neighborhood of their dreams - not the neighborhood they actually will have.
“neighborhoods are changing”
I second that opinion. My neighborhood has changed quite a bit over the last couple of years. We bought our house in 1992 it was a wonderful area, then once the refi boom started everything changed. I am now seeing who jummped onto that boat, lots of homes in my area are in forclosure. Some were rented out and its starting to look like tejuana now.
“In a nutshell, the peeps spent what they did on housing during the boom largely because they were searching for a neighborhood that met with their idealizations. The funny part, as you point out, is that the rising prices themselves worked against the very ideal they thought they were buying into.”
I see exactly the same thing in my area. My neighborhood was (at the peak) valued between 500K and 750K. It’s probably worth about 200-300K. Anyway, the people who bought in here many years ago are all pretty wealthy (nice cars, good jobs, plenty of C level folks). As the home prices went up, all of that changed. The new neighbors are much more middle/lower-middle class. Lots of big parties in the back yard, plenty of 3 series BMWs sitting around; all the trappings of a moron caught in the credit bubble.
The neighborhood, despite increasing dramatically in value (I’m in the Palm Beach, FL area), has almost definitely seen the income of the median home buyer drop significantly. The wealthy buyers (during the boom) were buying homes in the 1M+ range, not 500K+. Now, those “wealthy” buyers probably pulled down (dramatically) the median income in the areas they bought into; the 1M dollar homes sold to those with HH incomes of 100K, for example.
It’s resulted in a strange situation. I have neighbors who drive Bentleys, and neighbors that drive 15 year old Honda Civics. That’s NOT a normal situation, and it all stems from the extreme upward pressure on lending standards. Buying a 400K home (in the past) required an income of ~150K, which, by almost any standards, is pretty high income. However, during the boom, 40K (which is below the median in our area) would get you into that 400K home. Very strange bedfellows, that’s for sure. I’ll take some pictures one of these days, my neighbor that drives a 250K Bentley has a police officer with 2 cars (and his cruiser) that might add up to 10K in value. Very, very strange.
“I’ve seen this within my own family…”
Me too. In the two most extreme cases among my wife’s and my siblings, we have two families which currently own two houses a piece, and are losing tons of money because of this; one of these two families went through a divorce last year to boot.
This the same thing I’ve been discussing with my wife- how will you know where to buy a house even when prices have bottomed? What cities will be solvent and able to really provide services after the fall out? What will taxes be when half the city is vacant? Not to mention the build quality of the actual houses themselves…I don’t know if it will ever really make sense to own again!
By doling out money to so many American households to buy homes they could not afford and pricing out those who knew better than to buy homes they could not afford, the lenders who fueled the housing bubble overturned the traditional role of homeownership as a status symbol.
An excellent point, one that I haven’t seen framed quite that way before.
I certainly experienced that status symbol inversion when I sold in 2005, two blocks from where I rent now. When I announced that I didn’t think now was a good time to buy (before I enountered the HBB, which I found when trying to quantify/justify/rationalize my decision), my soon-to-be ex-wife and friendly neighborhood Realtor looked at me with a mixture of scorn and pity, like I was at least mildly deluded and quite possibly batsh!t crazy.
Which I very well may be. But not about this particular issue.
(Insert Pussycat-style maniacal laughter here.)
“In response I’ll point out that their “ideal” neighborhood (homogenous by class and race) is no longer possible - both as they knew them - and as many today still envision them”.
Very true.
I have noticed many areas in our state, mostly middle to lower class, deteriorate, and over the last 5-6 years these areas have had a huge influx of zero down ‘buyers’ and the deterioration has gone into hyper drive. These places are primarily inhabited by blacks, Hispanics and lower class whites. The pride in maintaining their property is just not there.
It is a touchy subject of course because if you don’t chose your words very carefully, you will be labeled a racist. When that has nothing to do with it, this growing problem is continually swept under the rug. So now as defaults rise local politicians want us to ’save’ these folks from losing their houses, even though that will not correct the problem. It is a vicious circle, once again this diversity/social engineering project is a failure.
One can only imagine how a person feels, black or white who works hard plays by the rules has maintained their property, and is sandwiched in between two dumps/low life’s.
This problem is not going away, fact is millions of people should have never been given loans is the first place, black,white, red, yellow or any hue in between.
I watched as the nice little semi-rural area I moved to in 2000 descended into the abyss. It is a really weird area now. New development mixed with areas of poverty and gang strongholds.
And to add to that, this issue is probably the most important for me as regards any future purchase of a house. There are now cheap houses to be had in Florida, but I am not going to buy until I see how things settle out. I want to see who is going to live where and I want to avoid future gang areas. I also want to avoid areas right now where the natives are going to get restless and start raiding more prosperous areas nearby. I have my eye on one area, but it is sort of sandwiched between two towns where a large number of “have-nots” live.
“…like I was at least mildly deluded and quite possibly batsh!t crazy.”
“Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule.”
– Friedrich Nietzsche –
“This the same thing I’ve been discussing with my wife- how will you know where to buy a house even when prices have bottomed?”
- Look for places that don’t completely fall apart despite the damage of a protracted recession.
- Wait until homes sell for 100 times monthly rents on comparable housing or for 3 times median incomes in the area where you want to buy.
Palmetto - same here. I’ve seen a couple of places locally that seem like great deals, but they are surrounded by some very iffy turf. If things get bad enough, proximity to angry or desperate have-nots isn’t something I want to face, particularly at my advanced age.
It will take a minimum of four years to weed out the riff raff who lied about their incomes from the neighborhoods that they could not honestly afford with traditional loans. First of all, the new administration is soft on low incomes and integrating neighborhoods. Also I anticipate there will be major subsidies targeted at the low income people who are under water. It will be politically unpopular, but Congress and the last President have a precedent in passing / voting in unpopular measures such as bailouts.
I would not be surprised if it will take ten years before all the riff raff moves out of the areas they really could not afford.
Fence sitters and people who truly know the definition of value will wait patiently and enjoy the freedom of renting for many years in the meantime. They will also wisely be active in tax avoidance schemes so as not to sanction the new tntitlement class - those who lie about their incomes to get into a neighborhood they did not deserve to be in.
Unfortunately, I am seeing the same thing. Everybody around here thinks that the worse is over, and that this year will be like 2005 with 30% appreciation.
When people tell me that I always respond: “If you think that 2008 was bad (overall), wait until to you get a load of 2009!”.
And since I told all these folks back in 2007 that 2008 would be bad, I now have some cred.
30% appreciation? Talk about optimism. If they break even in 2009 they will have done very well.
I don’t think this realization will hit most people until they try to sell, refi, or get a HELOC. Then, they will have to face the reality of how much their homes are worth in today’s market. If you don’t have to do any of these things, you can delude yourself indefinitely.
You are right: I agirl i work with has been trying to rent out her 3b/2ba house for months with no luck (she moved in with her boyfriend). She has dropped the rent down to $850 a month and still cannot rent it….her mortgage is $1300 a month! She has finally realized that she is going to have to let the house go back to the bank as she cannot refi, modify, etc. She listed the house for sale, but it’s way underwater.
Just one example of many.
It should sell for less than the present value of $850/mo if she cannot even rent it for that amount.
Absolutely right! Home owners can delude themselves indefinitely into thinking their own home is worth far more than any of the other devalued homes in the neighborhood, even beyond the point when they can’t sell it for what they believed it to be worth. In our zip code, the median list price on the MLS is currently $1,249,000, even though the median used home sale price has been stuck between $700K-$800K for over a year. If they keep their homes listed at such high prices for long enough, these sellers may be able themselves all the way into the grave.
Nahh, they won’t make it to the grave. At some point they will fall behind and the bank will take it. The banks (for all the damage they have done) are at least good at one thing. Selling assets at MARKET prices into a crashing RE environment. They don’t have any emotional attachment, and they realize that every day they hold a 500K home, it loses 200-1000 dollars in value. That’s a strong incentive to get this garbage off the books ASAP.
Eventually you will be right, but I don’t see the banks acting very quickly to unload all the foreclosed property that is hailing down on them from the falling sky. My suspicion is that since ‘noone could have seen this coming,’ they are completely unprepared and overwhelmed by the task that dropped onto their plates.
Am I the only one who just cringes every time someone says “nooo-one could have seen this coming”? It’s just absolutely infuriating to me. Plenty of people saw this coming. Shiller wrote a BOOK about what was going to happen (and has, so far, been pretty much spot on). As a matter of fact, a more true statement is really that “Everyone should have seen this coming”. If you can do 4th grade math, you should have been able to see that this was totally without precident, and also, totally insane. Home prices up 100-300% in 5 years? And they have NEVER done that before, but instead have almost perfect mirrored the rate of inflation? I mean, come on. It didn’t take a degree in mathematics or economics to figure this one out!
“…they are completely unprepared and overwhelmed by the task…”
Had the banks begun making preparations for handling a flood of foreclosures they could not so easily use the “no one saw this coming” defense today.
Michael: There are several key reasons I can think of to recite the “no one could have seen this coming” mantra:
1) I am stupid, so stupid that I really, truly could never in this world or the next have seen it coming. Now I will cover up my stupidity by claiming that no one else saw it coming either.
2) I am smart, so smart that I knew it was obviously coming. But I was also complicit, as policies that I championed are among the key factors that contributed to the mess. Now I will cover up my complicity by pretending the disaster at hand dropped out of the sky like a black swan, rather than having been financially engineered by the smartest guys in the room.
3) I am a clueless herd animal who reads everything in print about finance but cannot formulate an independent thought to save my life. On the rare occasions when I do think independently, I still take great caution to never question or act outside the collective herd wisdom. Now I will cover up my bovine proclivities by claiming that none of my bovine-brained peers saw it coming, either.
People on the HBB saw it coming because we are largely on the “outside.” If you were on the “inside,” you had no incentive to see it coming and might actually have been risking your job if you did. See Henry Blodgett’s “Why Wall Street Always Blows It,” in December 2008, Atlantic.
‘If you were on the “inside,” you had no incentive to see it coming and might actually have been risking your job if you did.’
Not only that, but insiders whose minds are drunk on Group Think are generally blind to an objective assessment of what is currently happening.
PB,
Coming from a legal background, I think you miss the most important reason to spout the “nobody could have seen it coming” statements.
It’s important to say this to prepare a defense against lawsuits.
If you were a banker, homebuilder, etc., and were caught by the press saying “I saw this coming in 2003 but shut up so I could continue to collect my bonus”, when people sued you they could take that statement and use it as proof of intentional or negligent fraud. Lawyers will alway tell clients to shut up and don’t say anything that sounds like a mea culpa.
DennisN — I thought your point was encompassed by my point 2), but I agree with the idea of avoiding lawsuits, or in some cases the guillotine.
There are two fools in any business one who prices too high and the other who prices too low.
I firmly believe bigger government is the wrong way to go.
If government had been big enough to put sensibel limits on the insanity of the banks, we wouldn’t need bigger government now.
Let the FB BK, have the judges cram down those who deserve a break. Let the banks eat it, let the Caseys fry. Fix health care. And then give people jobs that don’t depend on somebody impulse-buying crap.
If I remember correctly the goverment had limits regulations and rules. The banks prospered and then we reformed away the rules, so they can make even more money
I am finding about 40% of the people I talk to are now well versed in the basics of the credit bubble and the world financial situation. 10% are aware that this is a problem of unprecedented proportions. 20% (half the 40%) are “can-do” optomistic that we will shoulder our way through this.
A year ago, I’d say only 5% or less of people I talk to saw a bust on the way. These are people I do business with, they are all in manufacturing.
It’s almost in proportion to how much house prices have gone down. I would only guess that when house prices have fallen 50%, then more than half the people will have gotten it. Of course by that time, the pols and the TV will be screaming that it is the end of the world. It will be many years before average people accept that the new reality is the old normal.
Here, in the Atlantic City/Southern New Jersey area, acquaintances with whom I exchange small talk about the housing market almost always brush off any gloomy talk with an, “Awww– the prices will come back; they always do,” or “It’s just a down part of the cycle.” They all seem to expect a v-shaped rebound, the up slope sparked by, well, I don’t know what. When anyone cites falling mortgage rates as a reason to believe a recovery is right around the corner, I– like alot of people on this blog– will respond to the effect, “I do not care if interest rates are 0%; even if a borrower could secure a $500,000 loan, paying that back over 30 years is going to take some doing.” I do not know what it will take to wake up people to the reality that, in constant dollars, they never again will see the prices we had c.2006.
You’re right. There are a HUGE number of factors pointing in an even worse direction. Among these are:
1) Massive numbers of foreclosures NOT being put on the market by banks yet (hoping to not flood the market).
2) Huge pent-up demand by people that want to sell, but are all waiting for the market to recover.
3) Option ARMs, the ultimate time-bomb.
4) Inflation just around the corner (see mortgage rates and gold and oil the past week). This is because people see our debt going into this mess $10T and see it maybe doubling during the mess. With an economy that will likely end up around $11T, that debt will not be serviceable (at least if you want to get re-elected), and so the printing presses will fire up even more.
What I tell people now is to take the amount of money that they make per year and divide it by 3, because that will be their net standard of living when this thing is over.
Baby Boomers becoming net sellers…they’ve been net buyers for at least three decades.
This is very big, and very few people are discussing it.
“Baby Boomers becoming net sellers…they’ve been net buyers for at least three decades.
This is very big, and very few people are discussing it.”
As Donald Trump would say - ‘this is HUGE’.
“They all seem to expect a v-shaped rebound, the up slope sparked by, well, I don’t know what.”
Stimulus unlimited?
Same here, wmbz. And, as the new president is from my city there’s a particuarly strong sense here that we are just one more stimulus package away from everlasting boom times.
While this sense of hope is deserved by some, I do take particular delight in noticing how the local monied classes (yuppies, gov’t workers, etc.) - who heartily took part in the RE boom and tax cuts - now suddenly have reversed course and sing the praises of government economic intervention.
In 2001 they didn’t think the gov’t could spend enough to save their azz. Now in 2009 they also think the gov’t can’t spend enough to save their azz.
“I have a question for my fellow HBBr’s when do you think the time will come or if it will come, when a large percentage of the population come to grips/admit that the housing market and general economy is in an unprecedented down turn?”
A) This may be an unprecedented housing downturn, when the housing market prices drop another 25% or so. At this time it is still second to the great depression.
B) By any reasonable standards this is not an unprecedented economic downturn. This recession is not as bad as 1980 - 1982 yet. It is going to get worse in the states, but it may not be as bad as the hyperbole suggests.
How many currencies collapsed in 80-82?
How many developed countries’ economies collapsed in 80-82?
B) “By any reasonable standards this is not an unprecedented economic downturn. This recession is not as bad as 1980 - 1982 yet. It is going to get worse in the states, but it may not be as bad as the hyperbole suggests”.
“Yet” You may well be right, the whole thing is being held to together with hope that government can rev it up again. However the system has sprung leaks all over the place. Unemployment here is zooming upward, retail down, housing down, car sales down, recreational toys down, etc… No way out of this mess but down, clean out the weak.
I remember 1980-1982, 83 very well, this will be worse, I can’t grasp other wise.
The unemployment rate hit 10.3% in 1980-82 in S.Carolina. We are near 9% now, state government is forecasting 14% to 15% in 2009. Just one more reason I think we will be hit a lot harder than 80-82.
“…yet.”
Time will tell. You have to wonder, looking at the trajectory of the CA unemployment graph shown on p. 1 of today’s San Diego Union Tribune.
That graph is frightening….
I’d like to see that graph expanded back one more year.
The data are here. They made it as inconvenient as possible, but if you pull the two series (1976-1989 and 1990-2008), sort it, reformat it and append it, you can get the CA unemployment rate series from 1976-2008. Or just take my word for it on the broad contours of the changes:
Jan 1976 9.3% Same as current level
Remember the bear market from 1973-1974 that wiped out 1/2 the value of the U.S. stock market?
Dec 1979 6.1% Pre-recession trough
Nov 1982 11.0% Double-dip recession peak
4.9% higher and 2 years and 9 months after trough (hit again in Dec 82 and Feb 83)
Nov 1988 5.1% Pre-recession plateau
Remained between 5.1% and 5.2% continuously through Jan 1990
Oct 92 9.9% Post-recession plateau
The unemployment rate reached 9.8% in Sep 92 and stayed between 9.8%-9.9% until Feb 93
Jan 01 4.7% Pre-recession trough
The cumulation of the greatest stock market bubble since at least the 1920s was accompanied by the lowest CA unemployment rate since 1976.
Jan 03 6.9% Post-recession plateau
The unemployment rate reached 6.8% in Nov 02 and remained between 6.8% and 6.9% continuously from Nov 02 through Nov 03.
Jul 06 4.8% Pre-recession plateau
The unemployment rate stayed between 4.8% to 5.0% continuously from Feb 06-Mar 07.
Dec 08 9.3%
This is the peak unemployment rate thus far in the current recession. Ominously, the annualized three month rate of increase in the unemployment rate is 6.0%, the highest ever dating back to January 1976.
A graph of the (annualized) three-month rate of increase back to 1976 shows that
(1) it never previously topped 4% until May 08, but has visited that level three times since;
(2) There is a lag between when the three-month rate of increase tops off and when unemployment stops rising (actually a natural consequence of the relationship between the rate of change and the level of a stochastic process, coupled with hysteresis in the rate of change):
For instance, the rate of increase peaked at 3.8% in Apr-82, but the unemployment rate did not peak until seven months later (Nov-82) at a level 1.3% higher (11.0%).
Similarly, the rate of increase peaked at 3.2% in Nov-90, but unemployment did not peak until twenty-three months later (Oct-92) at a level 3.3% higher (9.9%).
So a crude but conservative guess (based on averaging two data points
) is that CA unemployment will peak in 15 months (Mar-10) at a level 2.3% higher than its current level, at 11.6%. This is conservative because the rate of increase is above 6% — much higher than in previous recessions — and there is no sign it is bottoming out. Unemployment will not stop increasing until the rate of change goes to zero — such is the nature of rates of changes and process levels.
Footnote: CA housing prices did not stop dropping in the early 1990s until maybe 1996, which was about 4 years after CA unemployment hit its peak. If unemployment peaked in Mar-10 and the lag in the trough of housing prices played out the same way this time as last, then I guess we are looking at a bottom in CA housing prices in 2014 (assuming peak unemployment is reached in Mar-10).
Here is the data relating UE rate to 3-month (trailing annualized) rate of change:
Month / UE Rate / 3-month annualized rate of change
Apr-82 9.7% 3.8% (Peak rate of increase)
May-82 9.8% 3.0%
Jun-82 9.9% 2.3%
Jul-82 10.2% 2.1%
Aug-82 10.4% 2.6%
Sep-82 10.5% 2.6%
Oct-82 10.7% 2.0%
Nov-82 11.0% 2.3% (Peak unemployment rate)
Dec-82 11.0% 1.8%
Jan-83 10.9% 0.6%
Feb-83 11.0% 0.1%
Mar-83 10.8% -0.5%
Month / UE Rate / 3-month annualized rate of change
Nov-90 6.6% 3.2% (Peak rate of increase)
Dec-90 6.8% 3.2%
Jan-91 7.1% 3.2%
Feb-91 7.3% 2.8%
Mar-91 7.6% 3.2%
Apr-91 7.7% 2.4%
May-91 7.8% 2.0%
Jun-91 7.8% 0.8%
Jul-91 7.8% 0.4%
Aug-91 7.8% 0.0%
Sep-91 7.9% 0.4%
Oct-91 7.9% 0.4%
Nov-91 8.1% 1.2%
Dec-91 8.3% 1.6%
Jan-92 8.5% 2.4%
Feb-92 9.0% 3.6%
Mar-92 8.9% 2.4%
Apr-92 8.9% 1.6%
May-92 9.2% 0.8%
Jun-92 9.4% 2.0%
Jul-92 9.5% 2.4%
Aug-92 9.7% 2.0%
Sep-92 9.8% 1.6%
Oct-92 9.9% 1.6% (Peak unemployment rate)
My data link doesn’t work; try this:
http://www.labormarketinfo.edd.ca.gov/?pageid=164
Your the Man PB !!!… Nice research…
Hoz — The question I have for you (or anyone who thinks they know) is this:
Was there any other downturn since the 1930s when the housing market seriously tanked well ahead of the labor market tanking? My guess is no; for instance, in the early-1980s downturn, high unemployment was the root cause of a follow-on housing downturn.
My conjecture is that the foreclosure crisis underway is merely a warmup act for what will follow a “worse than expected” increase in unemployment which “nobody could have foreseen.”
in the early-1980s downturn, high unemployment was the root cause of a follow-on housing downturn ??
I must disagree Bear…Paul Volker raised the prime rate to 18%…Thats what crushed the real estate market…
Good point. We have seen the extreme opposite end of high interest rates this time around — another way this crisis is different, as the key underlying forces behind the current downturn are very deflationary, due to credit destruction.
Of course, if reflation efforts ran amok, we could see a replay of the early-1980s interest rate blowout again at some point in the next few years.
yep…
“we could see a replay of the early-1980s interest rate blowout again at some point in the next few years.”
That would warm the cockles of my alleged heart. I’m retired and trying to live off the interest on savings, which is a mother-of-an-SOB right now.
Push up the rates to 18%! Flush out the crooks and let them die in the gutter.
Dennis - I’m screwed, too, in that respect. Fortunately, rents are falling here and are 20% and more off one year ago, so I may be able to make up some of the loss via rent savings. Will hate if it takes a move to do so, but ya gotta do what ya gotta do.
In the US, emphatically NO.
Japan - Real estate led the way down, unemployment followed. We cannot prevent a housing collapse or RE collapse in the US (nor should we), but the Federal Reserve and thousands of macro economists have studied the Japanese downturn and all have reached the same conclusion. The Japanese raised rates and turned into Zombie Banking.
The one thing the Fed will not do is raise rates until inflation is over 4.5%. The Fed is far from being out of ammo. The anticipated national unemployment should reach 11% by July. Unfortunately this recession seems to be hitting the coasts significantly harder than the Midwest and South. We never recovered from the 2001 recession. California unemployment may reach 14%.
Among the areas that are currently getting wasted in California are high tech and pharmaceuticals. The sad part: these jobs likely will not come back in the US.
“Unfortunately this recession seems to be hitting the coasts significantly harder than the Midwest and South.”
As you point out, up in these parts we never recovered from the ‘01 recession, and at least here on the other side of Lake Michigan, that it’s possibly because of the long continuous slide that’s gone on since then, and the rest of the country is just playing catchup.
We’re already at 10.6% unemployment here, despite fewer and fewer numbers of people seeking work here, and I don’t see how we won’t blow through the 17% high in the early 80’s recession.
“California unemployment may reach 14%.”
That sounds about right to me, based on my long post on CA unemployment rates. It is interesting to see the housing market die a bloodless death, unlike in the early-1980s when the Volcker interest rate hikes resulted in considerable bloodletting.
Volker raised interest rates because inflation was also ~20% during that time as well. People not only quite buying houses, they quite buying cars and any other big ticket item as well. Sticker shock was coined during that time period.
recession is not as bad as 1980 - 1982 yet ??
I keep asking myself that question hoz…Is the current situation as bad as that period…I lost a lot of money during that period and it was very, very stressful…
It all depends if you were one of those that lost a job last year.
For those that didn’t, it’s not as bad as 1981-2, but for those that did…
As PB implies, what happens IF employment reaches the tipping point? A point which only reveals itself well after the fact.
Unemployment hit 11.5% in my county last month. They’re already predicting an all time record to come. Uncharted waters here.
We are currently about 60% as bad as 80 - 82.
Unemployment in the US reached 13%. In this recession without a government stimulus (other than saving the financial system), unemployment might reach 12%.
In 1981 20% of all business planned on expanding, this year 50%+ of all businesses plan on expanding. A vast difference.
There are a lot of companies that are making book aka running the mint, making coin, stuffing the mattress etc. It depends where you are in the trough from the Fed to your place of employment. Money hits the Street first and from there filters slowly to the rest of America.
There are some banks that are going to be showing unbelievable profits. These banks accepted TARP money because it was cheap, not because it was needed to bolster the balance sheet.
Hoz — I just posted a very long discussion of the CA unemployment rate. The key insight is that in the previous three recessions, the rate of increase in UE rate (measured on a three-month trailing basis at an annualized rate) never exceeded 4 percent before the UE rate topped out. This time is different — the three-month trailing rate of increase has shot up from 0 pct in Jan-08 to its current level of 6 pct with no sign of abating (i.e., the second deriviative is still positive), and the unemployment rate last month was 9.3%.
Given the current level of the rate of increase and persistence in the rate of change, I am projecting that unemployment will continue to increase for at least another year, and top out well over 10 pct. Since high levels of unemployment tend to persist for years after the peak and bode poorly for home price appreciation, I guess we could predict the CA housing market won’t find a bottom until maybe 2014 or so?
Very nice analysis, Bear thanks.
The only prediction i would make is that things will happen much quicker this time round, and the swings will be very violent in both directions.
As for the ‘those jobs won’t be coming back’ folks….
Sure they will. Absolute worst case, the dollar does an Argentina - the US is suddenly the cheapest supplier of skilled labour in the world. The jobs will be come back at the speed of light. (well, copper for the last mile or so)
Prior performance is not a guarantee of future returns. System effects now dominate.
Hoz –
Here are a few more aspects of the 1980-82 situation to ponder as you try to gauge how bad things might get in the present episode:
1) Did any major investment banks collapse? (Notice the whole sector on Wall Street folded shop last fall.)
2) Were there massive hedge fund liquidations?
3) Was there a huge overhang of derivatives hanging above the real economy’s throat like the Sword of Damocles?
4) Was there a virtual shutdown in bulk rate shipping (as evidenced by a 90 pct drop in the Baltic Dry Index last year)?
Please tell us whether or not it is different this time in light of the above questions.
ugh. Sounds more like ‘29-’32, considering all the bank failures.
Here in Ohio, the biannual budget is said about $8 billion and growing. If the feds fill it this year, they will have to come back every year; there is just no tax base with which to support locust swarm. Oh, maybe would work if we get 10 or 20 new major auto plants and a few steel mills. Anybody feel like putting a wager on that happening in less that 100 years? The Obamachecks will be our payoff for November 08. After that we’ll be back to burning the furniture and living off the land.
…Should read ” about $8 billion in DEFICIT and growing”…
Cali’s deficit is 40 billion and growing. Last I heard the feds were offering up a 4 billion patch. That will help a bunch. (snark off)
This point of, “and growing” is what the politicos just don’t get. They are trying to put a snoopy band-aid on a severe arterial bleeder. You can slow the rate of the blood loss but the patient is still going to bleed out.
“Anybody feel like putting a wager on that happening in less that 100 years?”
Forget it. Between environmental laws, labor laws, wheelie laws, and several hundred thousand federal and state laws, we’re basically done with heavy manufacturing.
I only hope that the Chinese will be kind enough to keep us fed, as we beg.
“I only hope that the Chinese will be kind enough to keep us fed, as we beg.”
So the U.S. doesn’t produce food anymore?
California is starting to shut down their agriculture due to water diversions for endangered species…pretty soon the rest of the country will follow, once an endangered Amoeba is found.
So, yes for now, but not for long
LOL. Americans love gallows humor. Seems like a good time for an “Endangered Species Cookbook.” Sauteed Snail Darter with Garlicky Couscous.
plenty of old-fashioned cultivars will come back, then
grow local
NE may be horrid for growing corn, but you can turn out a mean squash crop!
sorry, just can’t marshall up any crocodile tears for the demise of “suck ‘em dry” agribusiness in the desert. malinvestment and waste if there ever was.
read “The Botany of Desire”, last chapter: Potato. I may never eat another McD’s fry. Ew.
read Howard Kunstler’s The Long Emergency. Sometimes he comes off as a little hysterical, and too heavy on the peak oil is everything theory, but still…he’s been right so far.
“come to grips”
In California as of yesterday we had nearly 10% unemplyment for December, it shows no signs of abating. By my fuzzy math it could hit 20% by August of this year.
Those newly unemployed are coming to grips with how dire the situation is, one household at a time.
9.3% as of yesterday…Thats the reported number…Actual number is likely much higher…Look at the graph the Pbear posted above…
I am pretty sure that figure excludes all the Mexicans who went home when CA employment opportunities dried up. Early in the recession, the disapperation of this tranch of the labor force hid rising job loss.
+ one hundred billion
There is absolutely nothing we can do to help these fools holding out for yesteryear’s prices. What’s more, there is nothing we can do to help the fools that think they can help these fools. The only thing we can do is protect ourselves from these maniacs.
We already know their plan. What are we going to do to protect ourselves? What are we going to do when the Treasury market crashes? What are we going to do if the stock market takes another leg down?
Stock up on vodka and bluejeans - it worked back in the USSR.
Canned fish is also a good inflation hedge if you have a large storage area. Otherwise, I suggest The Precious™.
Mmm, Mercury…
Mmmm, atherosclerosis (what you get instead of Omega-3 fatty acids if you choose to eat more beef and less fish)
I think that the overall population will admit the downturn in housing when the real estate agents start figuring out that they cannot afford to list houses at the prices that their sellers want them to. No sales=no commissions= no job. The focus on getting buyers to buy (RE always goes up, it’s a great time to buy) has to shift because you can’t get blood out of a stone. Credit is tight, 401Ks are destroyed, and friends are losing their jobs.
To sell, agents will have to convince sellers to lower their prices. Simple as that. Around my neck of the woods, THIS SPRING is going to be the telltale time.
Been waiting for this moment.
In the Bay Area - the people I hang with don’t get it, yet. Probably because they’re all gainfully employed - the company is strong, though minor cut backs are being made - so no one feels the income pinch.
We all read the same news about housing prices melting down in the Bay Area, but I know of several people who have recently bought new homes and are trying to sell their old ones. There does seem to be this pervasive belief that the meltdown is terrible, but they can somehow magically escape it. People still don’t think San Francisco prices are coming down - even though they have - and that things will rebound this year. And they still seem to believe that market’s going to take off like a rocket and you have to get in now or you’ll miss the boat.
That said, at gatherings with friends, the ones who own houses are now eerily quiet when the discussion turns to the housing market. No more boasting of value, no more talk of granite counter tops or remodeling. A lot less confidence and a little more fear.
Going to be a tough year for them.
A lot less confidence and a little more fear.
I’m sensing the beginnings of the same thing among friends and colleagues in the Bay Area — but San Fran proper and Marin County strike me as quite Manhattan-like in their Manifest Destiny Delusions (i.e., clearly it’s different here). The Bay Area has been on the gravy train for a long, long time.
That explains why Tesla hasn’t gotten cancellations yet on its roadsters.
Here’s the story. Were supposed to sell for 92K, “investors” put 50K down. Now price raised to 109K, and those with deposits must pay 6700-9200USD more to keep the options they were supposed to get at 92K.
This company has yet to produce a single car (were supposed to be delivered last Feb).
They’ve also partnered with Daimler for batts on 1000 units, as if this will save them.
Add them to Pets.com in the f***ed companies pile.
Silicon Valley sorts made up the initial depositors.
Short answer? It will be later this year when everyone figures out how bad it really it is.
Home-moaners, especially those who bought at or near the peak of the market, are still trying desperately to pretend that a recovery is just around the corner. And of course, all of the “experts” who have been so categorically wrong for the past several years are still whistling past the graveyard in their search for “signs of stabilization” that will herald “the beginnings of a real estate turnaround.” The greed and denial are still way too strong, despite all those little green men under the floorboards of reality who are whispering that this is going to be far, far worse than even the most convinced bears could possibly imagine.
The Second Half of the Credit Crisis
By Ian Cooper | Saturday, January 24th, 2009
Could it be we’ve just entered the second half of the credit crisis?
Just as 2008 was the year of subprime woes, this one will go down as the year of Option ARM resets (or adjustable rate mortgage resets). With billions in Option ARMs resets in 2009 and 2010, this crisis is about to unleash a fury no one’s prepared for.
It won’t be as bad as subprime, of course. It’ll be worse.
That’s because lenders created these ARMs with “teaser” features to borrowers, which included making lower minimal payments for the first few years before the loan reset to a higher payment schedule. And if that weren’t bad enough, there’s another feature called “negative amortization,” which means you’re not paying back any principal.
In fact, with negative amortization loans, your loan balance increases over time. Incredulously, every time you make a payment, you owe the bank even more. These are the loans that allow consumers to buy a house they can’t otherwise afford.
As for speculators, they may use negative amortization loans if they believe prices will increase at a fast pace. But with the opposite happening, they’re out of luck.
And the banks will be left holding the bag.
So when your financial advisor tells you the financial crisis is well behind us, you’ll know better.
It’s been a while since I looked at that Credit Suisse chart of resets by mortgage type, but I seem to remember 2009 as being kind of a “breather” year before the Alt-A and prime adjustable resets peak in 2010 and 2011.
BTW, subprime IS now “contained” since almost all those loans have reset and gone into the dumper.
CBS 60 Minutes December 14, 2008, Scott Pelley interview with Whitney Tilson
Tilson: “Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.”
“The defaults right now are incredibly high. At unprecedented levels. And there’s no evidence that the default rate is tapering
off. Those defaults almost inevitably are leading to foreclosures, and homes being auctioned, and home prices continuing to fall,” Tilson explains.
“What you seem to be saying is that there is a very predictable time bomb effect here?” Pelley asks.
“Exactly. I mean, you can look back at what was written in ‘05 and ‘07. You can look at the reset dates. You can look at the current default rates, and it’s really very clear and predictable what’s gonna happen here,” Tilson says.
Just look at a projection from the investment bank of Credit Suisse: there are the billions of dollars in sub-prime mortgages that reset last year and this year. But what hasn’t hit yet are Alt-A and option ARM resets, when homeowners will pay higher interest rates in the next three years. We’re at the beginning of a second wave.
“How big is the potential damage from the Alt As compared to what we just saw in the sub-primes?” Pelley asks.
“Well, the sub-prime is, was approaching $1 trillion, the Alt-A is
about $1 trillion. And then you have option ARMs on top of
that. That’s probably another $500 billion to $600 billion on top of that,” Tilson says.
Asked how many of these option ARMs he imagines are going to fail, Tilson says, “Well north of 50 percent. My gut would be 70 percent of these option ARMs will default.”
“How do you know that?” Pelley asks.
“Well we know it based on current default rates. And this is before the reset. So people are defaulting even on the little three percent teaser interest-only rates they’re being asked to pay today,” Tilson says.
I wonder how our Messiah will fix this next wave of resets?
Balanced Bill -
I believe that chart assumed that the option ARMs don’t reset early. They had an absolute date by which they would reset, but could also reset earlier if the borrower made minimum payments (less than accruing interest) often enough that their outstanding indebtedness reached a certain point over their original borrowed amount (110% or so). Assuming people have been making those minimum payments often, they may hit that reset point earlier than the chart shows.
The option ARMs may fill in the hole between the subprimes and the other types of Alt-A’s.
2009 as being kind of a “breather”
Phew…just what we needed, a gasp of air, before the COMMERCIAL RE WAVE crashes down upon OUR poor little taxpayer supported banks
Perfect economic storm in California = rising unemployment coupled with peak prime and Alt-A ARM resets on top of a glut of foreclosure homes…
… and I forgot to mention housing prices already down by forty percent off the peak and still falling at maybe a forty percent annual rate.
Anything else I missed here?
Gee, it is hard to recount it all in one post, but there is also
- a huge drop in the flow of venture capital funding;
- a $42 billion gap in the California state budget;
- big holes in lots of California city budgets (San Diego included);
- a near-shutdown in the shipping industry which brought us all of the cheap imports which till recently fueled our consumption bender;
- the ongoing effects of the collapse of the Wall Street investment banking sector, especially including the shutdown of the mortgage securitization sump pump;
- the collapse of the hedge fund industry;
- the massive drop in the value of stock markets all over the developed world;
- the collapse or government acquisition of major mortgage lending institutions that fueled the California housing bubble, including IndyMac, New Century, Ameriquest, etc, etc, etc;
- the incentive for households to walk away from their mortgage debt obligations because they are so underwater that it would make more sense for them to take the hit to their credit rating and buy a home for much cheaper in a few years.
Now what have I missed?
Oh yes — I forgot to mention the pessimism that is weighing down the economy. If everyone would just use the THINK METHOD, and use the power of positive thinking to feel good again, we could immediately turn around the situation.
Fair disclaimer: Deep down, Professor Bear is an optimist
Out of crisis comes opportunity…This will pass once the excess is taken out of the system…Getting through it will be the hard part…
“If everyone would just use the THINK METHOD, ”
Thank you, Professor Hill. How is Marian?
“How is Marian?”
We are still making beautiful music together
Seventy six trombones led the big parade
With a hundred and ten cornets close at hand
They were followed by rows and rows of the finest virtuosos;
the cream of every famous band.
Seventy six trombones caught the morning sun
With a hundred and ten cornets right behind
There were more than a thousand reeds springing up like weeds,
There were horns of every shape and kind
There were copper bottom tympani in horse platoons
Thundering, thundering, all along the way
Double bell euphoniums and big bassoons
Each bassoon having his big fat say
There were fifty mounted cannon in the battery
Thundering, thundering, louder than before
Clarinets of every size and trumpeters who’d improvise
A full octave higher than the score
Seventy six trombones hit the counter point
While a hundred and ten cornets played the air
To the rhythm of ‘Harch Harch Harch!’
All the kids began to march
And they’re marching still, right today
Funny Girl
I’m on to you, Professor Bear. At heart, you’re a closet idealist. But I won’t “out” you on this board. Oops, sorry about that!
He’s one of them Nithuanians north of town…you watch your phraseology!
“At heart, you’re a closet idealist.”
Tilting at windmills is hard work!
To dream…the impossible dream…..
“Fair disclaimer: Deep down, Professor Bear is an optimist
”
Really? Then why did my dogs just hide the razor blades from me?
PB you said “Gee, it is hard to recount it all in one post, but there is also…”
You forgot to add the drought to the perfect California storm.
You also forgot to include the competitive shift of import/export activity away from California ports. Like the housing boom, there has been a “port boom” of sorts over the last few years, and many of the newer (or recently expanded) ports on the Gulf of Mexico and East Coast are clawing away at California’s market share…
“You forgot to add the drought …”
Right. No Grapes of Wrath scenario would be complete without a drought thrown in to the picture…
I replied below - but basically I have a feeling the government will just tell the banking sector to extend out those reset dates and try to avoid the foreclosures.
I know people are saying that people are just going to walk away from their underwater houses - but can they if it is a refi? I thought they lost their non-recourse loan status - how many of these loan do you think were refis as opposed to the original loan?
Hasn’t the government told lenders to do all kinds of silly things that are not in their self interest? For example, wasn’t a large chunk of the $350 bn in TARP money supposed to get loaned out into the mortgage market to jump start housing demand? And wasn’t the Hope Now program supposed to encourage lenders to work out ways to help FBs avoid foreclosure?
Good luck with the moral suasion approach in an environment where everyone is in a state of high panic.
“The pound not so sterling, Britain grapples with deepening recession”
McClatchy Newspapers
Hell, it’s not SO STERLING in our home grown little recession here in the colonies either. One of the kids in my family is between jobs and wanted to know if I could back him with a loan if he gets to the point that he needs it.
I will, he’s a good kid, works hard when he HAS a JOB and he really hated to have to even consider asking.
It IS OUR US Government, NAR and it’s their crooked friends on Wall Street that FAILED him and EVERY other hard working young person and adult in America this time.
Most sensible adults that lived conservatively, worked hard and saved should HOPEFULLY be okay. That is, if they don’t lose their jobs, houses or get seriously SICK or ILL in America . Others, through no fault of their own, never had the chance or oppertunity get established because the greed or negligence of others in the country.
What I HATE MOST is the awful enployment burden and financial worry that these greedy and reckless Ba$tard$ are causing on the young people starting out and seniors that are not adequetely or financially secure. Most young people getting out of school AREN’T making 40-50k PLUS and most seniors AREN’T rich with big investments and huge pensions dispite what the MSM spins.
The Savings and Loan, Enron and other crooked scandels that WASHINGTON, DC overlooked or enabled won’t amount to a Hill of Beans when this frigging FIASCO and DISASTER brings the United States and the taxpayers to their KNEES or the SOUP lines.
Sheesh…”When will WE, the People, ever learn?”
Every-other generation has to learn anew.
After all the damage they have done, why are politicians b@ling out investment banks? What public good do they serve? Half the time their analyst produce bogus reports for public consumption. The other half, they are betting against the public. Not only should these clowns fail, some of them deserve punishment.
Instead of punishment, our politicians reward them with multi-billion dollar ‘retention’ bonuses and golden commodes. Thain shamed and exposed their ineptness, didn’t he? Laugh at these fools rushing to save IBs. Laugh at them HBB’ers. Laugh at them all, the blithering idiots.
“What I HATE MOST is the awful enployment burden and financial worry that these greedy and reckless Ba$tard$ are causing on the young people starting out and seniors that are not adequetely or financially secure.”
Mikey,
I truly believe the younger generation will fare ok.
It is our/my generation (46 y/o) that will be receiving the shaft. We are the ones with a lifetime of investment in the current system.
It’s normal to worry for the young people. I know, I have two daughters. Better start worrying about us.
Mike
Mikey,
I truly believe the younger generation will fare ok.
It is our/my generation (46 y/o) that will be receiving the shaft. We are the ones with a lifetime of investment in the current system.
It’s normal to worry for the young people. I know, I have two daughters. Better start worrying about us
I’ve been worrying about “US” since one of “their” Presidents, my friends, neighbors and my local draft board decided to send me on an all expense paid to SE Asia with a crappy gun that kept jamming, an old Esso gas station map for directions and NO ICE CREAM !
forgot the word “vacation” in there somewhere
That was an early experiment in “youth-in-asia”.
You’re 46… and got drafted?
HE, said 46
I say 46, I WISH…I’m only 63 yrs young here
Didn’t they stop the draft in 1973?
You must have been really tall at age 11.
He’s 63 years old, NOT born in ‘63.
“…all expense paid to SE Asia with a crappy gun that kept jamming,..”
You do mean rifle or weapon don’t you?
Mike — The worst is in store for the crest of the baby boom generation (you and I among them). We are the folks whose retirements will create the largest dependency ratio in the history of America. There won’t be enough productive workers to collectively support us in the fashion to which our retired parents are accustomed.
The famous mikey motto is…
“Do it today…because tomorrow…it WILL be against the LAW”
Anyone here have any idea what DAY it is ?
because tomorrow…it WILL be against the LAW” ??
Amen Mikey…Create laws to catch violators to create revenue streams to create jobs….Its mostly one big fricken scam…It makes the madoff ponzi look like chump change…
Fact: Mandatory sentencing became popular to support the private prision industry.
“Do it today…because tomorrow…it WILL be against the LAW”
Yup… LSD was legal in the early 60″s, so was methaamphetamine the now dreaded “meth”
The pharma produced stuff was so much better than the stuff produced by the Mexican Mafia
It is cheaper though unless you have a prescription & good insurance.
“Fact: Mandatory sentencing became popular to support the private prison industry.”
If I remember correctly it was because judges of a particular political philosophy were unable to keep vicious animals in jail.
But what’s a little history rewrite between friends.
who says it was the judges?
the psychology profession muscled its way into criminology in the 1950’s and asserted without proof that they could intervene and cure criminals
on the say-so of prison psychologists, parole boards released a number of psychopaths
these individuals went right back to commiting heinous crimes
by the 1980’s it was clear that this approach was not working. mandatory sentencing was an over-reaction to well-publicized cases like Willie Horton
sociopathy is much better understood now. such individuals are incapable of “reform”. sex offender registries were a more rational response to this knowledge, if poorly implemented.
majority in prison, though, are dumbasses who did something while young. age tends to soften them out (although if they don’t acquire a LEGIT trade in prison, they will leave ready to practice an ILLEGIT one!). it’s been found that 15 yo’s, especially in groups of their peers, exhibit similar behavior and thought patterns to sociopaths. Criminologists could have told you this decades ago–psychologists just caught up to this now. (has to do with the extreme narcissism and the brain not being fully formed.)
I try to educate my students about the fallacy of comparing the cost of imprisoning an inmate for one year (@$50,000) with the cost of “sending them to Harvard” (@$49,999). I tell them the comparison is bogus; if you want to compare something, then compare the cost of imprisoning one of these gentlemen for a year with the cost of allowing him to run at large for a year. I tell them to ask their other “perfessors” to put a price on one rape, robbery, agg assault, etc. Bottom line: Yes, It’s expensive; but it’s money well spent. All the kids hear in the other courses, though, is that “it costs more to imprison someone for a year than it does to send them to Hahhvahd.
There won’t be enough productive workers to collectively support us in the fashion to which our retired parents are accustomed.
Unless we import educated immigrants.
Bill — Do you think our Homeland-security crazed gubmint will be smart enough to lay out a welcome mat for the hoards of highly skilled immigrants who want to settle here? I have seen little evidence to support this hopeful outcome.
P.S. I am talking about recent history; Silicon Valley probably would never have happened if our recent anti-skilled immigrant policy had been in force for the full duration of the last half century.
Whole communities are being created with these immigrants up here…Cupertino and Milpitas are good examples…
Aren’t the Silicon Valley companies and their stock options responsible for causing the real estate insanity in the Bay Area that started in the late seventies?
When people say that we need more of these immigrants so that we can have more Googles, how many people actually benefit from companies like Google? There employees get good jobs and their investors (especially those that got in early) get a good return on their investment, but that’s a fairly small number of people.
Furthermore, the idea that we need lots of foreign engineers and scientists is a myth. A professor at UC David, Norman Matloff, has been on a little crusade for a decade against the H1-B visa program used by big corporations to bring in cheap foreign engineers.
Here’s an interview with him in the magazine Computerworld: http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=Government&articleId=323943&taxonomyId=13&pageNumber=1
And down in the South Bay there are communities from India. Lots of them are my neighbors. The ones I currently meet are friendly. Funny how 3 years ago the ones I met in the same neighborhood never smiled and were unfriendly. These people from India are good people.
Are those educated immigrants going to bring jobs with them?
Matloff=Greenspan, a charlatan
I’ve read one of his “findings” and could find enough holes large enough to let all of Mexico through.
“Mike — The worst is in store for the crest of the baby boom generation (you and I among them). We are the folks whose retirements will create the largest dependency ratio in the history of America. There won’t be enough productive workers to collectively support us in the fashion to which our retired parents are accustomed.”
PB,We are on the same page.
“I’ve been worrying about “US” since one of “their” Presidents, my friends, neighbors and my local draft board decided to send me on an all expense paid to SE Asia with a crappy gun that kept jamming, an old Esso gas station map for directions and NO ICE CREAM !”
Mikey,
No offense intended.
Mike
Hey!…ICE CREAM was important to me when I was a kid
‘Hey!…ICE CREAM was important to me when I was a kid’
Shoots, it’s quite important to me NOW. Half my freezer is full of blackberries and blueberries I picked this fall, so’s I could blend up little batches of berry ice-cream all winter long. I got a little device, I forget the brand–I’m not good with brands, it has a penguin with a hat on it is all I know—a ‘mini-chiller’ is what it’s called. You just pour your stuff in there and twist the handle around for a bit, off and on for a mere 15-20 minutes and there you are!
Mmmmm…..ice-cream…..
LINUX makes an ice cream machine?
lol…my friggin MS Windows Vista freezes enough to make ice cream
A danvier? I used to have one with a little elephant? or kitten or something. Maybe it was a penguin.
Anyway, vanilla with crumbled chocolate wafers was the BEST.
Blog has been eating my posts like crazy for the past few days.
More credit, that’s exactly what we need!
http://www.sun-sentinel.com/business/sfl-flzurbanland0124sbjan24,0,3482883.story
The California jobless rate graph currently looks much like the San Diego foreclosure graph appeared a few months back (before the foreclosure moratorium kicked in): It rockets nearly straight up from 5.9% in December 2007 to 9.3% in December 2008, at an accelerating rate with no end in sight. Assuming the labor force did not significantly change over the past year, the ranks of the unemployed swelled by (9.3/5.9-1)*100 = 57.6 percent in one year.
I am starting to think the bottom callers (even well-respected Chris Thornberg) are overly optimistic in calling for a housing market bottom in 2009, as few will be sufficiently brave and financially qualified to venture into the housing market when unemployment is climbing this fast. And then there is a foreclosure crisis, soon to be exacerbated by peak prime and Alt-A resets. One should not get too excited over the eventual end of a hurricane just after the point when the eye has passed.
State, local jobless numbers jump
By Dean Calbreath (Contact) Union-Tribune Staff Writer
11:53 a.m. January 23, 2009
SAN DIEGO — The unemployment rate in California soared to 9.3 percent last month – its highest point in 15 years – as construction firms, hotels, restaurants, casinos and amusement parks laid off workers in response to the widening recession.
Statewide, 78,200 workers lost their jobs in December, bringing the annual job losses to 257,400, according to data released Friday by the state Employment Development Department.
The jobless rate represented a major jump from 8.3 percent in November and 5.9 percent in December 2007. The national unemployment rate was 7.2 percent last month.
With job losses projected to continue over the near future, many economists, employment experts and labor leaders say it’s likely California’s jobless rate will hit double digits later this year, topping the recession of the early 1990s.
“We’re facing a code-red economic crisis,” said Art Pulaski, executive secretary-treasurer of the California Labor Federation. “Skyrocketing joblessness is causing workers and their families to fall further into a deep, dark hole that is helping to fuel a vicious downward spiral for our state’s economy.”
Stephen Levy, director of the Center for the Continuing Study for the California Economy in Palo Alto, said employment “really fell off a cliff” during the last two months of last year and it will take at least nine months for government stimulus programs to have a noticeable effect on hiring.
Levy expects that the jobless rate “will certainly go over 10 percent this year and it’s hard to know where it will end up.”
And yet this state wants to ad more taxes to the people.
I am out of here as soon as I get my RN. There by taking more revenue out of the state.
Did it almost 20 years ago…went to Texas, certainly the smartest move I ever made regarding finances.
But I do miss In and Out, Tommy’s, and The Pantry…but not enough to live there.
“many economists, employment experts and labor leaders say it’s likely California’s jobless rate will hit double digits later this year”
They will be shocked I guess when it goes to double digits NEXT MONTH!
These “leaders” drive me nuts. We are in a very significant economic downturn and they think they can help by driving the economy while only using the rear view mirror.
Any forward thinkers out there?
I appears many “forward thinkers” are pointing their cars out of California, idling and are getting ready to punch it to the floor it like that RN above.
Haven’t we also been reading of the CA exodus? It sure doesn’t sound as if your labor pool grew in 2008.
Well that would be great if it is true, because there would be more foreclosure McMansions for the rest of us to invest in
I guess the venture capitalists won’t be able to save the San Diego residential real estate market, as some previously suggested. Black swans for everyone!
Venture capital funding falls 53%
Survey: Iffy economy bad for local startups
By Mike Freeman (Contact) Union-Tribune Staff Writer
2:00 a.m. January 24, 2009
Venture capital money for San Diego’s startup companies fell in the fourth quarter from a year earlier, as the shaky economy and credit crunch made funding tougher to find.
Twenty-four local companies netted $205 million during the quarter, according to the quarterly MoneyTree survey released yesterday by PricewaterhouseCoopers and the National Venture Capital Association.
Life science companies led local deals, with 10 firms netting $74 million in the quarter. Two network chip companies – Luxtera and Staccato Communications – as well as clean-tech outfit Fallbrook Technologies – also received funding.
But fourth-quarter venture money locally dropped 53 percent from the same time in 2007, when 37 companies pulled in $434 million.
“While these figures aren’t what we would have hoped for after a strong 2007, they were certainly expected given the state of the economy and credit markets,” said Jim Ingraham, a partner at PricewaterhouseCoopers in San Diego.
Venture capital funding falls ??
Thats a big driver around here and its been dead in the water for about a year…
The cynic in me wants to capitulate with regard to holding out hope in change within our government. The two party machines are too strong to break so we continue to elect incumbents and hand picked party hacks year after year.
My inner optimist thinks that the primaries for congressional seats in 2010 will provide an unparalleled opportunity to unseat the good ol’ boys (and girls).
Two questions:
1) What is the best way for people around the nation to start working toward this goal, to foment overwhelming anti incumbent sentiment?
2) Keeping in mind the advertising maxim of 6 words or less, what is the battle cry for this movement?
“Would You Like Fries with That Change?”
What’s the point in inventing a battle cry… People will use the one they always use.
“Unseat all the bums, except mine.”
Amen. It never ceases to amaze me how gullible, stupid people continue to bitch about the direction the country is going in, then troop into the voting booth every election, in true lemming-like fashion, and vote for more of the same. They refuse to give their time and money to help truly deserving independents and REAL mavericks in the Ron Paul mold, not the phoney McSame-Palin clown show. While Establishment-sanctioned Democrats and Republicans intent on imposing K-Street values at the expense of Main Street will always be flush with cash from their corporate pimps, the true stand-up candidates never have a prayer because they will never attract the funding and active support needed to challenge the status quo.
Baaaaaaaaaaaaaa! say the voters.
Hey, aren’t real mavericks little grass eating critters that get seperated from their mothers and the herd. If they don’t get branded in the butt and plopped into another herd, they get eaten by coyotes, wolves, hyenas, lions or whatever.
I would think that the term Maverick and Dead Meat would be damned near synonymous unless you were one helleva, large, very mean baby ELEPHANT that had a Black Belt and a tiny Uzzi.
“My inner optimist thinks that the primaries for congressional seats in 2010 will provide an unparalleled opportunity to unseat the good ol’ boys (and girls).”
Dude — I was thinking this morning that Obama, with his team of economic genius retreads, may set the plate for a Romney candidacy at some point in the foreseeable future, as eventually the populace will catch on to the fact that more of the policies that created this mess will not get us out. Romney is a turnaround specialist, and if he played his cards right, he could come in as the outsider who could take a new approach to turn around Washington. I expect this to happen in 2012 barring unforeseen changes.
‘I expect this to happen in 2012 barring unforeseen changes.’
Cancel my subscription to the resurrection.
That’s all well and good, maybe.
But IMHO the major problem is congress, not the presidency.
Romney ??
With all due respect Bear, we just went through a painful 8 years with a incompetent evangelical…I don’t think the country would embrace a Morman either from the left or right…And, if I read his bio correctly I have limited praise for hiss successes since the skids were greased in that his father was a governor and the grandfather was the president of the original GM…Maybe Ron Paul….
Ron Paul will have lost the rest of his marbles by then.
As long as the ideas remain then thats Okay by me…Someone else can pick up the ball…Or we can just continue doing what we have been doing for the last eight years and what appears to be a continuance for another four….
Oh Yeah Bear!…Palin and Romney in 2012. Throw in John McSame as the director of the Central INTELLIGENCE Agency and a few bush/raygun Iran Contra Death Squads on SSI/SSDI and you can’t possibly lose with that winning ticket
“Palin and Romney in 2012″
That would be a handsome looking pair of maavericks, no?
Surely you jest? Are you trolling to see who bites on this one PB?
LOL
SanFranciscoBayAreaGal
lol, and you seriously had to ask ?
OK already, just playin’ with y’all. Now get back to worshiping the new Messiah™.
I guess I bit on that one…:(
PB - was thinking the same thing. Romney would have been the better choice against Obama on the last go around.
I think Bush and the housing bubble pretty much destroyed any chance of a Republican victory last year.
Naa…Palin will be the candidate, for sure. But the election will be a referendum on Obama…and that will be tough for him as the country still has no clue as to how bad this crash is going to get.
All the dems need is a “new” SNL dancing moose if they’re crazy enough to run Palin again
Naa, Hillary tried, but couldn’t win.
I was thinking yesterday about the tragedy of Obama’s economics team appointments. He had the opportunity to institute THE CHANGE WE NEED but instead mainly went for Clinton-era retreads (Summers, Geithner, etc) for top economics posts. It seems highly unlikely that the architects and instigators of the economic disaster currently playing out will have the vision and wisdom to fix it, much less to even properly diagnose the root causes of the problems at hand. It is as though one visits a physician to learn they are suffering from cancer, only to die of a heart attack a few hours after leaving the office.
The partisans will accuse you of not giving them a chance, and will go forward putting maximum blame on Shrubco for as long as possible. This rhetoric will fall on deaf ears by this time next year.
The partisans will accuse you of not giving them a chance, and will go forward putting maximum blame on Shrubco for as long as possible. This rhetoric will fall on deaf ears by this time next year.
deaf ears…Dream on. Hell, I intend to milk the current Dubya/GOP Fiasco for at least 8 years and trace it’s criminal roots back to raygun/poppybush/IranContra/neil bush/Savings & Loans/Enron and a few other their fractured fairytales with villians just to keep the hard core little lefty kiddies up and interested at bedtime.
Shrubco..MAXIMUM Blame…Warp Speed Ahead Mr Sulu:)
Yes..mr change looks more like the Clinton administration. Makes you wonder who is really in charge.
I though that after I heard he was talking to Hillary- the woman who bashed him all through the primarys- and now he wants her to work for him? Seems to me he’s just doing as he’s told by the party bosses. Guess we’ll see who is really McSame, eh?
If Joe didn’t take veep, would it have been offered to her?
She may end up there ultimately…
scdave,
take the tinfoil hat off.
I knew that would get a response from some one
Sheesh…some of these wobbly old gop PACKYDERMS need two head shots between the eyes to realize…when they’re DEAD…DOA
wiggle, wiggle ..twitch..twitch
Keep your friends close and your enemies closer.
We need a Pecora like investigation to expose the rot. Until we get that, there will be no change.
Even though I didn’t vote for the guy I thought if nothing else some REAL change would make things interesting. The resurrection of the Clinton retreads was most disappointing.
Do you guys really get how hierarchical government is? Same people running agencies and departments with a different guy at the top can do totally different stuff. Totally. Especially with an intellectually engaged, hands on, policy wonk at the helm.
But put complete newbies at the top of the underlying hierachy and you would get chaos. Nothing would get done at all. Nothing. They would say “jump” to the wrong department and the turf war would be 18 months old before anyone thought to tell them that they should have said it to the guy down the other hallway.
Just letting the civil right division of the Justice Department enforce civil rights instead of fantasizing about voter fraud would be a big change from the last 8 years. Actually sending someone to the middle east to start some talks at the *start* of the term is change. Paying some tiny attention to the environmental impact of mining coal by taking down entire mountains and dumping the slag into the adjoining rivers would be change. It isn’t waving a magic wand and bringing housing and other durable goods items back to a sustainable price level, but you didn’t expect that, did you? The other stuff is change and it matters too.
Nothing is what I want government to do the most.
Let’s put newbies in there!
You just had 8 years of that. Enjoying the results?
Not at all, what gave you the idea I supported the previous admistration?
You’re doing a heck of a job “Brownie”
Polly,
I understand what you’re saying, still I don’t believe for a minute BO couldn’t accomplish what you’re suggesting with some new, different faces.
Is Panetta really the only one capable of running and/or reforming the CIA?? Nobody besides Hillary has the experience to change things at State?? Nobody else in the Democratic Party is waiting in the wings with equal amounts of zeal and possibility?? I just don’t think so.
Don’t forget that Geithner AKA “artful tax dodger” is the ‘only’ person in D.C. who really understands TRAP/BARF according to B.O. Funny he understands that but couldn’t wrap his huge brain around turbo tax! LOL.
yes, Polly, I too get what you’re saying but there are other ‘insiders’ who aren’t as tainted as Geithner!
And Summers? I think I threw up a little in my mouth just now.
Once again, the Democrats showing they have little interest or understanding in the workings of finance, guaranteeing they will be Wall Street’s patsies for many more years to come.
I think my point is particularly relevant for the Treasury and CEA appointments. These guys have been around the government block. You think they are tainted. Most people don’t remember back that far. And most members of Congress who do remember back that far will say you need people with experience in a crisis. I don’t know exactly why these two gentlemen are expected to garner so much respect from the Republicans in the Senate (Dems would like, but don’t absolutely need the Republicans in the House), but they are. Getting the bills passed is the emphasis here.
Polly,
Thank you. Makes sense to me.
Polly, your nuanced and patient responses to some of the firebrand commentary on this blog is MUCH appreciated. You are a one-woman library of public information and good citizenry.
We tend to forget that WE are the government-a living, breathing (and constantly evolving) organism. Your insights make it real.
‘Polly, your nuanced and patient responses to some of the firebrand commentary on this blog is MUCH appreciated.’
Yes, polly, I appreciate your posts, too. Thanks.
Ditto, polly.
Thanks for all your insights.
“Nothing would get done at all. Nothing”.
And that would be a bad thing?
“The resurrection of the Clinton retreads was most disappointing”.
I know a few hard core lefties, we rarely if ever talk politics. Anyway they are not happy at all with most of his picks, feel betrayed. All I said was and your surprised that a politician let you down.
Your hard-core lefty friends must not have been paying attention to the campaign last year. There was nothing that Obama said or did to indicate that he would be a hard-core lefty. A person paying attention would have realized that President Obama would be a somewhat wishy-washy liberal very much like Bill Clinton. That would be the reason that there were almost no significant policy differences between Obama and Hillary Clinton. Big Business really doesn’t have much to worry about.
+1
I more or less said the same to my friends when they were starting to get pissed by Big O’s picks in December.
Guess it gets hard to get around when you have those ideology goggles on. All of my moderate friends were completely unsurprised by Obama’s actions thus far. (Though some were miffed about Rick Warren–I’m the gay one, and looking at conservative commentary since, I think it was a brilliant choice, so no outrage here.)
Well…It does appear that the MAJORITY of American’s got disappointed in the all of the raygun/bush/Iran Conta/bush retreads up being up front…so the VOTERS rotated the tires and ELECTED a new school bus driver for today…enjoy the ride Clyde
There’s change.. and then there’s change.
One kind of change is frightening. It takes us off the beaten path, and into unfamiliar territory. You need to have faith in your leaders to follow them there.
The other kind of change is comfortable. It harkens back to the past, when things were “different”… the good old days. It’s known and it’s safe. The quality of leadership is irrelevant. This is the sort we will get.
oh, snap. now the dems are the reactionary party.
too bad they can’t ditch No Child Left Behind (I know they won’t–Congress is too predictable). I will never forgive Bush for that idiocy. goodbye local schools, goodbye any sort of academic excellence in this country for at least a generation.
So what’s the goobermint going to do about this? Hell the next wave of re-sets isn’t even being covered by the MSM that I know of.
The Second Half of the Credit Crisis…
By Ian Cooper | Saturday, January 24th, 2009
Could it be we’ve just entered the second half of the credit crisis?
Just as 2008 was the year of subprime woes, this one will go down as the year of Option ARM resets (or adjustable rate mortgage resets). With billions in Option ARMs resets in 2009 and 2010, this crisis is about to unleash a fury no one’s prepared for.
It won’t be as bad as subprime, of course. It’ll be worse.
That’s because lenders created these ARMs with “teaser” features to borrowers, which included making lower minimal payments for the first few years before the loan reset to a higher payment schedule. And if that weren’t bad enough, there’s another feature called “negative amortization,” which means you’re not paying back any principal.
In fact, with negative amortization loans, your loan balance increases over time. Incredulously, every time you make a payment, you owe the bank even more. These are the loans that allow consumers to buy a house they can’t otherwise afford.
As for speculators, they may use negative amortization loans if they believe prices will increase at a fast pace. But with the opposite happening, they’re out of luck.
And the banks will be left holding the bag.
So when your financial adviser tells you the financial crisis is well behind us, you’ll know better.
Sorry for the double post!
The sad(?) thing is I can see the government just telling the banks to keep all these option arms at the teaser rate to try and prevent defaults/foreclosures - so the bloody liars get a reprieve and get to live in a house they should never have bought in the first place.
A sad tragedy
http://news.yahoo.com/s/ap/20090124/ap_on_re_eu/eu_belgium_stabbings
but this one quote stands out,
“We thought that things like this only happened in the United States and now we see that in Belgium, in a small village like this … that such a thing could happen, it is very, very bad,” said Serge De Plecker.
Europe really thinks were like this?
‘Europe really thinks we’re like this?’
I recall one of my professors in college was Russian, he told me that when he first prepared to come to America he was nervous about it because he ‘wasn’t very good with a handgun’.
He was more or less under the impression that us crazy cowboys wander around in the mall or go to get the mail or eat our Cheerios and alla time jist sorta pop off a shot every now and then, for idle pleasure. I told him, ‘No–that’s jist in Utarr, my good sir.’ Then I offered to show him how to shoot, in case he ever wished to go to Utarr. I was prankish in those days.
Ah, those college times…
Now I feel nostalgic.
Oh, my point might have been that, yes, it seems that lots of other peoples have a somewhat skewed idea of what America is like. Probably it’s the teevee shows we export.
Say! That reminds me! Did anyone see the Battlestar Galactica episode last night?!
Say! That reminds me! Did anyone see the Battlestar Galactica episode last night?!
No, I missed it because I went out at night for the first time in months. (It was weird. But nice.)
I promise to catch up this weekend, however.
Yup. It was fine, but a lot slower than last week - to be expected I guess. Poor Felix. He never seems to catch a break. And it seems a funny time for the doc to get all hepped up about medical privacy. He didn’t worry about it quite so much the last 4 years, did he?
I also saw a show on Animal Planet today that was all about vampires of the animal knigdom. There must have been three stories about people with leeches up their noses. And all sorts of other worms and larvae and things that like human blood. It was very, very cool.
Yes I watched Battlestar last night. Much slower episode. At the same time the plot thickens and pots are starting to bubble over.
Gawd don’t you just love Starbuck’s character. I also love the role Richard Hatch is playing compared to the character he played as Apollo in the original series.
Hahahahah! Oh, merciful Jeebus! Lissen, I just read this an hour ago and am still giggling and bemused.
You guys gotta go read Dirk Benedict’s (the original Starbuck) blog!
http://www.dirkbenedictcentral.com/
Under: ‘Starbuck: Lost in Castration’.
He seems to be very bitter ’cause Starbuck’s a girrrrrlllll now.
Hey, Faceman!
Starbuck is a gir-rul, Starbuck is a gir-rul….la la la la la la….
Jeeze, what a grump! He oughta relax, have a cigar and drink hisself under the table with a ’socializer’.
Oh, and I dislike how he spells using the British style, for ‘humour’ and ‘favourite’ and spelling civilized with an ’s’. He’s from MONTANA. What, when he types does he put on a jacket with leather patches on the elbow and smoke a pipe of Borkum Riff too? I thought it was pretentious and a teensy bit silly.
Apparently “the war against masculinity has been won,” and that sorry state is personified in the New Starbuck — “Starbuck would go the way of most men in today’s society. Starbuck would become ‘Stardoe.’ ”
Oh, Dirk.
Oh, Dirk.
That certainly is a long, unintentionally funny rant.
“Everything has turned into its opposite, so that what was once flirting and smoking is now sexual harassment and criminal. And everyone is more lonely and miserable as a result.”
Olygal —
You already knew about this from the Mormon church — There is opposition in all things.
Well one is pop culture fluff and one is a huge critical success created for the thinking portion of the population. (In other words a small but very loyal following.)
Sounds like bitter grapes to me and not just a touch of misogyny. If he really wants to rant about something why doesn’t he go after Sylvester Stallone in “First Blood” for basically stealing plot of “Ruckus.” Come to think of it, that was also far darker than the original, but much more masculine as it totally lost the love scene (or any female character of interest.)
Let’s not forget that Dirk also appeared in the A-Team a real thinking person show. The one good thing about the A-Team was Dwight Schultz who went on to star in STTNG as Lieutenant Reginald Barclay
Yep, saw it. Galactica is a little slower, but I’ll watch the rest as it will wrap up the story. A surprisingly damned fine series.
HBBers. Please, please, please refrain from dropping hints about Battlestar Galactica!! I went to the movie store and they didn’t have the second disk of season four last night. Upsetting. Then I come onto this board and feel like Tantalus with everybody talking about the next season. Frack me! I have yet even to find out if they bring back the #3 line. Mmmm… Lucy Lawless.
MrBubble
I’m going to post this in tomorrow’s B&B too. Sorry to hog bandwidth, but this is serious!
People overseas also get ideas that Americans all look like movie stars or are all rich (well, that cover has been kind of blown now
). I knew an Italian girl who was going on a trip to Florida who thought that everyone would be “carino” just like in her favourite American teen drama. Literally every person. I told her there was selective casting in America, just like in Italy, but she just pointed to various actors in magazines to show me what Americans look like. I thought it was funny and changed the subject by offering to translate her favourite English pop song. People want the world to be the way they want the world to be, sometimes, especially if it involves cute boys. (And she was gorgeous, so I’m sure she found lots of cute American boys anyway.)
Unfortunately, to some degree, yes. But you have to understand that for a lot of Europeans, their view of America comes from news headlines and Hollywood films.
When the company I was working for was relocating from London UK to Los Angeles, the relocation meetings were mostly about calming everyone’s fear of being shot. People were asking about purchasing handguns for protection, etc. (This wasn’t too long after the riots).
They all moved to LA expecting danger and they got leafblowers and suburban boredom instead.
My wife’s sister in law (her brother’s wife) is a a Brit and has lived in the US for about 20+ years. Her late parents refused to come visit them in the US because they too were afraid of being shot. They eventually did come, and felt quite sheepish over their fear.
‘They eventually did come, and felt quite sheepish over their fear.’
Well, you missed a good chance for a humorous prank, there. You shoulda gone over to their house and lurked in the bushes and then when the parents drove up, fresh from the airport and eating crumpets or whatever it is British people do when they have a minute, then you could have popped up outta the shrubs and shot out the nearest street-light or something! Huh huh huh?
(Assuming you have that good of aim to hit a street-light. Although the mere attempt would probably been enough.)
See, that’d been funny!*
*Well, IIIIIII think that’d been funny. I’m sure I’m right.
Man, I love to lurk in the shrubs.
Yes, the people who gave us warfare for 1500 years, including inventing world war, trench warfare and holocausts, think we are bad.
The Romans think were bad ?
“In addition to ongoing actions to reduce operating expenses, Logitech has initiated a restructuring that is expected to reduce the Company’s global salaried workforce by between 550 and 600 employees. This plan is expected to generate annual cost savings beginning in Fiscal Year 2010 of approximately $50 million. As a result of the restructuring, the Company expects to incur a total charge of approximately $20-24 million over the next twelve months, of which approximately $16-18 million is expected to be incurred during the fourth quarter of FY 2009.”
From SEC filing of 1/20/09. My BIL is one of those who has been reduced. He was simply told, “Don’t come in tomorrow.” This is the BIL with a masters of EE and an MBA. We’ll see how long it takes him to find his next gig.
Funny thing though, he has told me in the past that for every individual like him, there are 100 more plebes in china.
I believe that any American woman should be able to serve their country based on their experience, aptitude, education and qualifications.
That in mind, as President mikey, I would not trust the likes of Condi or Hillary anywhere near ME with a tiniest, sharp pointy object, never mind Secretary of State and turn my back on them.
Most of our male leaders are absolute disasters that should be seated on an ant hill with a leaky bucket of honey but sheesh America, don’t we have better women in this country than THESE TWO ?
I think Hillary is more competent than Condi. Condi was an academic out of her element. Kind of like that poet on inauguration day.
Gold. Paid 945.00 cdn per oz. Oct 08. Friday close 1107 cdn per oz. So far gold has very good to investors outside of U.S. Any comments on the future of the precious?
Paging Aladinsane…
I’d say it’s off to the races if it breaks 1000usd again.
I’m personally warming to oil though, it’s consumable.
That would make it 1231.00 cdn. Here’s Hopin’.
My impression is the Fed, the IMF, and other globally influential banking institutions use the gold price as a pressure relief valve, letting it run up towards $1000, then hammering it back down to $800 after a few more knifecatchers throw their money in Aladinsane’s direction.
The point here is that central banks could potentially relieve a lot of pressure by “buying low” near $800, letting the price rise to $1000, then “selling high” before hammering the price back down. Overwhelming market power can greatly enhance the beneficial effects of leverage.
and here I thought that gold got beaten down when hedgies lost lots of money on bad trades and had to sell their performing assets (gold) to stay in business
As a general rule of thumb, when an investment is being promoted on late night informercials it’s probably not a bargain.
It’s not scientific, but I’m sticking to it!
Holiday seasoon over and I flew back to Phoenix for the first time in a month yesterday. Typically at 5pm Terminal 1 is packed. I noticed fewer people in the terminal. It was a great feeling as I dislike crowds. The recession is taking its toll.
Low oil prices helped airline stocks lately but the increasing layoffs are going to bite the stocks again.
Hamptonites going broke!
“They’re saying that’s not our fault,” one recently departed Credit Suisse banker said of his former colleagues. “They say that was the traders. Why should we punished by that?”
Ah, but this is a year when the sins of a few are being paid for by many. And few people are going to cry for the investment banker or corporate lawyer who has to sell his beach house on Nantucket — especially when billions in taxpayer money are propping up their firms. Still, this sudden austerity coming after such a flush run is shocking the once-wealthy. If the next 12 to 18 months turn out to be as bad as many predict, this is not a time for self-pity: it is a moment to adopt survival techniques.
While it may crush you to sell your mansion in the Hamptons in such a depressed real estate market, it is better than going through a forced restructuring. “People have to be prepared for three to four years of diminished expectations,” Mr. Haverstick said.
REFOCUS This is no time for assets that don’t produce income — particularly those with high carrying costs. Second and third homes fall into this category. But so do multiple nannies, yachts and horse farms. People who are overextended need to act as if the good old days are gone forever.
http://www.nytimes.com/2009/01/24/your-money/24wealth.html?em
Soon (if not already) there will be tremendous political pressure for “Save Our Homes” bailouts to wealthy folks losing homes in upscale neighborhoods. I wonder how the politicians will white wash the reverse Robin Hood policies necessary to make this happen? I am sure that with the right blend of financial engineering and media spin, they will be able to pull it off, even with Democrats running the show…
It’ll only go to registered Dems and then they will see it as egalatarian.
http://tinyurl.com/dxcwzd
‘In Mexico, money from relatives abroad dries up’
‘Nine months ago, Vargas, 36, lost her job at a mortgage company… Drastic cutbacks have followed as her family struggles to live on her husband’s $30,000 salary….”The migrants used to send back money to their families, who would hire someone to build a second floor or paint their houses,” Rodriguez said. “But now everyone over there is losing their jobs, and down here the jobs are disappearing as a result.”
Here’s a thought: Don’t have eight kids, so you won’t have to send the primary breadwinner outside the country to earn enough to support all those hungry mouths.
From the article:
“The couple live with their son and his wife, along with daughter Dora Jimenez, her husband and their three small children. Every adult works odd jobs, from selling produce and bottled water to construction.”
I lived 12 years in Mexico and didn’t know anyone who had 8 kids. Believe it or not, most Mexicans are having 2-3 kids at most these days.
Did you live in a far-flung rural area, or in a city? Because that makes a big difference.
In a city. I have also been to Iguala (the city in the story). While Iguala is no metropolis its hardly a “far flung rural area”.
Truth be told, most Mexicans today live in urban areas.
I heard something about that from a neighbor last year. He said that big families were common in the past, but couples are not having as many kids these days. He thought that this would eventually significantly reduce the number of Mexicans attempting to enter the country illegally.
Buried in the economic avalanche
Policy makers to hold balance of power in Davos
By William L. Watts, MarketWatch
Last update: 7:12 p.m. EST Jan. 23, 2009
LONDON (MarketWatch) — A global economic crisis won’t be enough to keep CEOs and high-flying financiers away from the helipads in Davos next week, but the corporate elite will no longer be the stars of the show when the World Economic Forum’s yearly retreat for top executives, economists and politicians gets under way high in the Swiss Alps.
A crippled financial system and the threat of the deepest global downturn since the Great Depression have changed the equation, participants and observers say.
“This is not just another Davos,” said Andy Stern, president of the Service Employees International Union, the large and powerful American labor union.
A regular foe of private-equity firms and an advocate of tougher regulation of businesses and markets, Stern will make his first trek to the mountain resort for the annual gathering. Stern said he hopes the current economic turmoil will result in a “humbling and mind-opening moment” for many of the forum’s regular attendees.
“These experts have failed the citizens of the globe. They have wrought economic havoc with financial manipulation, greed and deregulation,” he said, in a telephone interview. “I don’t know if it will do any good, but there is a need for straight talk and ending the backslapping, self-congratulatory noblesse-oblige attitude that I think has been more prevalent in the past.”
“This is not just another Davos.”
I would think not, what with all the finger pointing and the blaming of each other that will be happening.
I’M LOVING IT!
What the experts aren’t saying:
1) The housing market has a natural speed limit, driven by demographic factors like the birth-and-death process of household formation;
2) Greenspan’s housing market stimulus of the early 2000s drove the housing sector into overdrive for a protracted period of time, burning the chair legs out from under the industry’s future demand, as housing demand far exceeded the natural speed limit for about eight years of bubble price increases (1998-2005);
3) The aftermath of the building and consumption binge fueled by a massive credit bubble will be a long and painful correction, as the glut of homes build in excess of fundamental demand does not go away just because the building industry has cut back new home construction to the lowest level of the last 1/2 century.
How would more housing market stimulus fix the situation described above?
Headline on CNN Money this morning:
John Thain and the curse of being No. 2
I would like to offer a revision: “John Thain and the curse of being a steaming pile of No. 2″.
http://money.cnn.com/2009/01/24/news/companies/thain.fortune/?postversion=2009012411
This is really dumb. They stole the TARP money from the American public fair and square. Wouldn’t it be illegal to take back the bonuses that Hank Paulson secured to compensate them in the style to which they are accustomed?
New York Times
Editorial
It’s Not Their Money
Published: January 22, 2009
What is it with American bankers and their sense of entitlement?
After losing billions, taking billions from taxpayers and avoiding disaster only by selling itself to Bank of America, Merrill Lynch was still ready to give a multimillion-dollar “performance” bonus to its chief executive, John Thain. It refrained only after a storm of protest that reached from Main Street to Capitol Hill.
As it turns out, the outrage was not enough to stop the flow of money to other executives. According to a report in The Financial Times on Thursday, Merrill granted $3 billion to $4 billion in bonuses in December — part of a total compensation budget of $15 billion for the year that was just slightly less than that of 2007.
The year-end bonuses were approved by Merrill’s compensation committee just days after shareholders approved the merger and days before Bank of America was made aware of Merrill’s stunning fourth-quarter losses. The news of the rushed bonuses almost prompted Bank of America to pull out of the deal and ultimately required the Treasury to provide an extra $20 billion, as well as a guarantee on billions more in potential losses.
‘…“performance” bonus to its chief executive, John Thain…’
Do investment bankers’ performance evaluations depend on how much money they can steal from taxpayers? (I realize that I am using ‘taxpayer’ in a very broadly defined sense…perhaps I should have said ‘bagholders’ instead?)
Just had a brief conversation with an old friend stopping through. He asked if we were in the market for a home, and said it was a good time to buy given that prices have fallen so much, and that smart money investors are already piling in to the market. He also claimed that it is hard to time a bottom.
I started into my explanation of why it is not wise to buy when prices are falling rapidly and showed him a graph of Radar Logic data which demonstrate the price per square foot has dropped in San Diego from over $350 to under $200 and is still falling fast (maybe $0.25/SqFt/day or more, or 30 X $0.25 X 2000 = $15,000/month on a 2000 SqFt home). Then I started in with my explanation of how CA unemployment is at 9.3% and rising at the most rapid rate since 1976. At that point he intimated that his daughter (who was waiting for him in the car) had just lost her management level job, and I felt sorry at that point that I had gone to such great lengths to explain why it is not a good time to buy.
A friend of mine told me her brother put his $900K+ house on the market because his and his wife’s commission-based jobs aren’t paying as well as they used to. He took his home off the market after being “insulted” by an offer 100K below asking.
I didn’t have the heart to tell her that a buyer making a 90% offer would likely be overpaying.
Bwaaaaahaaaahaaaa!!!!! Awkward!
“He also claimed that it is hard to time a bottom.”
Yea, Californians only had 5 years or so to figure it out last time.
Last year, California’s median housing price was dropping about $3,000 per WEEK. It will probably drop somewhat less this year, simply because it is running out of room to fall. So ask him if he minds throwing out $2,000 per week out the window (in addition to living expenses and the mortgage). That’s certainly how I see it.
Like I said above, at recent (very recent in fact) rates of price decline, a 2000 SqFt home in San Diego is costing its owner $15,000/month or so ($3,750/week) in negative capital gains. Of course, this does not reflect interest payments to the bank, insurance, property tax, HOA, Mello Roos, maintenance and upkeep, and the risk that your home will be wiped out during one of California’s climate’s unique four seasons: fire, flood, debris flow and earthquake.
Nobody ever talks about the fact that if your house was falling by $5k per month, so were others. Therefore, if you were looking for, and bought, a similar property in a different area, the lower tax consequences could pay part or all of the commissions over time. Depending on when you bought your previous property, the amount of lowered taxes could be substantial.
Basic point: to those pinheads who cling to peak values: GET REAL!! Your POS dropped by XX% (Yes, that means double-digit percentage), but most of the other real estate you are salivating at/for has too! Buy now so we on this Blog can freely ridicule you!
Lower taxes to boot!
If buying up or down. Win, win, win, win. The NAR should pay me.
“his daughter (who was waiting for him in the car) had just lost her management level job, and I felt sorry at that point that I had gone to such great lengths to explain why it is not a good time to buy.”
I don’t get this. If I had just lost my job and I had not seen this coming I’d be picking your brain like crazy trying to figure out the future and how to position myself for it. How old’s the daughter? Under 30 with no kids is a whole lot better than being 30-45 with young kids in the house. Hopefully your dose of reality will give them something to think about (too bad the daughter didn’t hear it) and may prevent them from making big mistakes in the future.
And yes, I know I’m a pollyanna, but I can’t believe you and the rest of us continuing to give people the naked truth won’t, in the long run, prevent some unnecessary mistakes from being made.
Super Baaaddd Bank! Why not? No more stupid than the super stupid ideas coming out of D.C.entral planning…
Among the queerest financial stories of the last week was the proposal to create a ‘bad bank.’ It hardly seemed necessary. There were already dozens of them. The idea is to transfer all the sins of the bubble era to the ‘bad bank’ - funded with public money. Then, the bad bank will be crucified so that the rest of us can have life, and have it more abundantly. We first saw the idea floated in the pages of the New York Times last week. Now, it has made its way to the Financial Times in London, gaining favor as the measure of sin increases. The SUN says British taxpayers are on the hook for as much as 2 trillion pounds. In America, the bankers face $3.5 trillion in losses, says Mr. Roubini.
But if the ‘bad bank’ idea could work, why not create a super baaaddd bank? We could use it to get rid of all our mistakes. Writers could unload their bad novels. Businessmen could sweep their errors under its broad carpet. What the heck, let people get out of bad marriages without penalty; the super baaaddd bank could pay the alimony and divorce costs.
The hitch with the bad bank idea is so obvious even a banker could spot it. If the cost of mistakes is reduced, people might make more of them. Like the rest of us, bankers are neither good nor bad, but subject to influence. Unlike metallurgy or particle physics, banking does not have a rising learning curve. It’s not science. Instead, it’s more like love and gambling…with a circular learning pattern. They learn…and then they forget. They get carried away in the boom upswing; then they get whacked when it turns down.
So let them have a good beating. It will give them of a lesson that will last a lifetime…and give the next generation a solid banking sector.
Enjoy your weekend,
Bill Bonner
The Daily Reckoning
“The idea is to transfer all the sins of the bubble era to the ‘bad bank’ - funded with public money.”
Isn’t this just Hammerin’ Hank’s Superfund SIV in disguise?
What’s in a name? That which we call a turd by any other name would smell as rank.
“The hitch with the bad bank idea is so obvious even a banker could spot it. If the cost of mistakes is reduced, people might make more of them. Like the rest of us, bankers are neither good nor bad, but subject to influence.”
Got moral hazard? The Obama economics genius bank is wallowing in it.
Pressure is building on Ken Lewis to resign, as more shareholders file lawsuits accusing the embattled chief executive of Bank of America of mismanagement….
The latest suits, filed on Thursday in New York, accuse Mr Lewis and John Thain … of withholding important information from shareholders prior to the deal’s closing this month.
FT — continued: They also claim that Mr Lewis’ decision to approach federal officials for help with the deal on December 17, which was only revealed last week, should have been disclosed to shareholders prior to the January 1 close of the transaction. When it announced its earnings last week, BofA said Merrill’s losses ballooned unexpectedly in the second week of December. At the time of the shareholder vote on December 5, BofA says, Merrill’s performance was in line with management’s expectations.
But executives within BofA and across Wall Street were puzzled by that statement. General market indices for commercial mortgage-backed securities, high-yield corporate debt and credit default swaps show that values plummeted in November. By the second week of December, values were recovering.
Have I mentioned I hate Bank of India, er, America?
Financial Times
BofA had role in Merrill bonuses
By Greg Farrell and Francesco Guerrera in New York
Published: January 25 2009 23:32 | Last updated: January 25 2009 23:32
Bank of America played a role in Merrill Lynch’s controversial decision to pay $4bn in bonuses in December just as mounting losses were threatening to derail BofA’s takeover of the Wall Street firm, according to people close to the situation.
BofA has said that the payment of $4bn in compensation in a fourth quarter in which Merrill racked up $15bn in losses was sanctioned by John Thain, Merrill’s chief executive.
IS THERE ANY POSSIBLE LEGAL RECOURSE TO GO GO BEYOND FIRING THESE B@ST@RDS AND GETTING THEM TO PAY BACK THEIR DEBT TO AMERICA FOR ALL THE BONUS MONEY THEY STOLE FROM THE TARP FUNDS?
Wall Street Journal
* BUSINESS
* JANUARY 26, 2009
BofA Woes Put Pressure on Lewis
CEO’s Handling of Merrill Deal Draws Shareholder Ire; McColl’s Lament
By DAN FITZPATRICK and JOANN S. LUBLIN
Bank of America Corp.’s handling of its acquisition of troubled Merrill Lynch & Co. has put Chairman and Chief Executive Kenneth Lewis on the hot seat with irate shareholders. Among those disappointed in the steep decline in the bank’s stock are two veterans who helped Mr. Lewis rise to the top.
Hugh McColl Jr., Bank of America’s buccaneering former chairman and chief executive, who picked Mr. Lewis as his successor, and James Hance, the bank’s former chief financial officer, privately have expressed disappointment in certain decisions made by Bank of America during this financial crisis, according to people close to the men.
The two, who still own sizable holdings of stock and remain influential with the bank’s board, are among many shareholders who are fuming at the sharp drop in the Charlotte, N.C., bank’s stock price since the Merrill deal. Bank of America’s shares are down more than 80% since the agreement to buy Merrill over a chaotic weekend in September.
BOA business plan:
1) Lavishly reward top management
2) Screw the
shareholdersbagholdersTough times for J6P :
http://money.cnn.com/galleries/2009/news/0901/gallery.real_people_talk_to_obama/11.html
Gonna get worse.
But it highlights something that many people don’t dare mention: he just took a 30% paycut. He’s about ten years later than a lot of other J6Ps.
30% paycut. Him and millions of others over the last ten years.
Think about it.
AVALANCHE WARNING!!!
I just did a search on RealtyTrac dot com for our zip code (Ranch Bernardo West — San Diego 92127). Here is the accounting:
1716 defaults
1127 trustee sales
3054 bank owned
5 REO home sales (snark!)
64 resale/MLS listed (double snark!!)
4 FSBO
——————————
5970 total homes
By contrast, the MLS listings for all of San Diego shown on ziprealty.com amount to a total of 14,096 homes currently on the market.
Pray tell, what use do those banks have for over 3000 homes in only one San Diego zip code?
BwaHahAHAHhahahAHAHHAHAHAAHAHAHAAAAAAA!!!!
Clarification: by “All of San Diego”, I mean the myriad zip codes that make up all of San Diego county. The evidence suggests that many many underwater home owners are throwing in the towel and handing the keys back to the banks. Are the banks depending on some kind of bailout to pass these foreclosure homes on to some other bagholder’s balance sheet? Maybe the Fed could print enough liquidity to buy 3000 or so bank-owned homes from each California zip code?
I wish there were this choice on real estate listing forms - seller must choose one:
- Need to sell
- Thinking about selling
Add to that a sort feature and it would save a lot of us a whole lot of hours.
-I like to meet people.
LOL - that’s better than mine.
This will take everyone’s minds off personal tax and domestic worker issues…
Finance & Economics
China and America
War of words
Jan 24th 2009 | WASHINGTON, DC
From Economist.com
Economic tensions between America and China are rising—at exactly the wrong time
TECHNICALLY, he is not yet treasury secretary, but Tim Geithner has already made waves in financial markets. In a written response to questions from senators debating his confirmation, Mr Geithner accused China of “manipulating” its currency and promised that the Obama team would push “aggressively” for Beijing to change its policies. The sharp tone and use of the legally-loaded term “currency manipulation” ricocheted through financial markets as investors shuddered at the prospect of a Sino-American spat in the midst of a global slump.
Clearly this was not a slip of the tongue. Conceivably it was a bureaucratic snafu. The tough language came in a 102-page document answering numerous questions from senators—an odd place from which to lob a bombshell at Beijing. If so, it speaks poorly of a man who is already in trouble for failing to pay attention to his taxes. Most likely, therefore, Mr Geithner’s language suggests a change in Washington’s tactics towards China.
Salvo.
Stammerin Hanks been goin to China squawk boxing strong dollar….
Guthnerd says “manipulation” and the Chinese Spreakwrite stands up and pukes up party line….
Chinegro noise.
*I prefer the PB that just shoots the headline from the hip, as if its pure jackass conjecture.
I love this Blog
Love the stream-of-consciousness blogging style.
I sure hope questioning Geithner’s nomination does not qualify me as a financial terrorist
.
Wall Street Journal
* JANUARY 24, 2009
Geithner Delay Slows Assembly of Crisis Team
By DEBORAH SOLOMON
WASHINGTON — The delay in confirming Timothy Geithner as President Barack Obama’s Treasury secretary is slowing the administration’s ability to assemble a team to help tackle the worst financial crisis in decades.
Mr. Geithner has in mind several people to serve in top roles at Treasury, including some who served in the Clinton administration, but won’t have his team officially in place until after he is confirmed. The Senate is expected to approve Mr. Geithner’s nomination Monday after a delay spurred in part by concerns over his personal tax history.
The interregnum isn’t unusual during a hand-over. But it comes as the banking system takes another lurch downward, sowing concern on Wall Street, where lobbyists and bankers are unsure whom to contact. “Sometimes the phone just rings and rings,” said one financial-industry lobbyist.
Stuart Levey, who is running Treasury pending Timothy Geithner’s confirmation, has already been asked to continue overseeing the department’s financial-counterterrorism efforts.
Among those being mentioned as possible candidates for deputy Treasury secretary, according to people familiar with the matter, are Ralph Schlosstein, a co-founder of the hedge-fund firm BlackRock Inc., and Annette Nazareth, a former member of the Securities and Exchange Commission. Mr. Schlosstein, who left BlackRock last year, has given thousands in campaign contributions to Democrats over the years. Ms. Nazareth, now a partner at the law firm Davis, Polk & Wardell, knows Mr. Geithner well from her days on Wall Street and overseeing market regulation at the SEC.
Among those being mentioned for a top job, according to people familiar with the matter, is Lee Sachs, a former assistant Treasury secretary during the Clinton administration, who has been coordinating the Obama team’s Treasury transition. Mr. Sachs could be tapped as undersecretary for domestic finance, a role in which he would help fashion the government’s response to the financial crisis.
“I sure hope questioning Geithner’s nomination does not qualify me as a financial terrorist”
Well, you would be in the same cell as little mild-mannered Robert Shiller.
What, are you guys going to attack people by occupying abandoned buildings and dropping your heaviest volumes on them from a conveniently located book depository maybe?
Dun-dun DUN
China hits back over renminbi comments
By Geoff Dyer in Beijing
Published: January 23 2009 18:19 | Last updated: January 23 2009 19:09
The US and China have embarked on a public row over foreign exchange policy only three days after Barack Obama’s inauguration, with China denying on Friday night it was “manipulating” its currency and saying the allegation would only fan protectionist sentiment in the US.
The Chinese government was responding to claims by Tim Geithner, President Obama’s choice for Treasury secretary, who told a Senate nomination hearing on Thursday that China was “manipulating” the renmnbi.
Mr Geithner’s blunt tone appeared to indicate a more confrontational approach towards China on economic issues.
In a statement on Friday night, China’s commerce ministry said Beijing “has never used so-called currency manipulation to gain benefits in its international trade”, AFP, the news agency, reported. “Directing unsubstantiated criticism at China on the exchange-rate issue will only help US protectionism and will not help towards a real solution to the issue.”
The symbiosis is dying. No more cheap stuff from China if this death occurs. I am not all that upset about it personally, as I don’t much care for cheap stuff. Just today, I (1) broke a ceiling hanger (made in China) that was fabricated so thin and out of such cheap material that it snapped in two when I was hand tightening it; (2) returned a grilled sandwich maker (Made in China) to Target after the smoke it generated on first use made our home reek of toxic plastic fumes. I would be happy to pay a couple of more dollars for the Made in America label if product quality is commensurately higher.
Chinese manufacturing has a way to go, but just because GE or Black and Decker outsource labor from China, it doesn’t mean the chinese have anything to do with decisions about product quality. These companies can produce a high quality product if they want to.
I’m sure company research reveals that enough consumers prefer to pay less, even though we know it means lower quality. $29.99 for a toaster oven.. but it toasts! $1.99 for a drill bit that might be used once or twice.
There’s no shortage of higher priced and better quality drill bits and ovens, but they aren’t usually found at WalMart.
I’m never found at Wal-Mart
Real estate and debt were massive players in the Depression, the S&L Crisis, and today’s economic crisis.
Trying to reform the system involves politicians having to choose between punishing contributors and instituting serious reform of the system. I don’t want to be cynical, but I think politicians will always put the interests of their biggest contributors first. And the interests of their biggest contributors - the real estate industry and the financial industry - are directly opposed to the national interest.
Thus, I don’t see how our political system, which rewards this behavior, can effectively deal with the current economic crisis.
“Thus, I don’t see how our political system, which rewards this behavior, can effectively deal with the current economic crisis.”
It’s happening inadvertently through the back door of a collapsing credit bubble. After the FIRE sector was subsidized so much for so long, the credit bubble grew so ginormous that the market’s force of gravity is collapsing it of its own weight. In the long run, market forces are far stronger than any level of government intervention. Consequently, in the long run, policy makers’ infatuation with Keynesian stimulus will die.
On my own private level, the most hilarious part of this whole debacle is the knowledge that many economists who work at the Fed think Keynesian remedies are a steaming dung heap. Keynes himself would probably recognize the folly of stimulus were he still walking the planet today. Rational expectations for stimulus are a form of moral hazard which kills economies in the long run.
“Keynes himself would probably recognize the folly of stimulus were he still walking the planet today.”
You might be right.
I actually feel kind of badly for Keynes about this. When people reference an incorporate the ideas of dead “great thinkers” into contemporary situations, I do often wonder how the dead guy would feel. Anyone whose ever taught knows the horrifying conclusion students sometimes innocently come to, using their interpretations of your teachings!
Keynes had some great foresight (for example, he recognized that heavy reparations demanded of Germany after WWI would cause trouble down the road). If someone has a working ouija board, please give Keynes a ring, and let us know his thoughts.
I hope my occasional criticism of heavily relying on the ideas of a thinker who died 1/2 century ago for our present day economic policies does not obscure my deep admiration. Economic policies should be unpredictable, as predictable policies lead to predictably dumb herd behavior.
Words ought to be a little wild, for they are the assaults of thought on the unthinking.
–John Maynard Keynes–
No, not at all. I thought you were making quite a good point.
“politicians will always put the interests of their biggest contributors first”
Some say that campaign finance reform is needed to stop this behavior. But this approach has been tried and failed, both on First Amendment and practical grounds.
The real problem is simply that our constitution and system of government gives too much power to the legislature. In constitutional law parlance, the state legislatures have “general police power”, meaning they can pretty much do anything they want to the people that doesn’t directly conflict with the Bill of Rights. On the Federal level, Congress is supposed to be limited to specific powers given in Article I, Section 8, but court interpretations have gradually weakened these limits to the point of being meaningless.
So the legislatures have essentially unlimited power to mandate, tax, and allocate public money in any way they please. These are powers that, eventually, are bound to be abused.
The only solution I can see involves far-reaching constitutional as well as cultural reforms, possibly involving starting over with a new country. There is no easy fix.
It wasn’t always like that. At one time we had all the power. Over the years We the People GAVE the legislature unlimited power to mandate, tax, and allocate public money in any way they (we) please.
..our constitution and system of government gives too much power to the legislature..
Read the Constitution and you’ll see it contains nothing but limitations and constraints on government. The Bill of Rights was an afterthought, written to appease a few nervous souls.. bless their souls.
Big, powerful government evolved from the original system because these days, everybody with some special interest wants their piece of the public pie. So, we bestow more and more power on government so it can be an effective attack dog against competing interests.
You make your bed.. then you gotta sleep in it.
Many of those limitations of which you speak applied only to the Federal Government– even the First Amendment, by its explicit terms, applies only to Congress, though thankfully it has been extended to the states by judicial construction. Regarding the state legislatures, the “general police power” doctrine has been in effect from the word go.
I think one of the traps we fall into is in assuming that the original U.S. Constitution was perfect and we just have to get back to the original meaning. Actually there were serious flaws in the Constitution from the beginning, some of which were eloquently pointed out at the time by the Anti-Federalists. We really need to re-think the whole concept of government and come up with a new system.
imho, we need to re-think the whole concept of big government.
There’s nothing wrong with the Constitution. There is something wrong with us: We loathe taking responsibility for our troubles.. it’s always someone else’s fault.. we blame government or business or labor or the banking system or phase of the moon or whatever.
Changing the Constitution won’t change us one iota.
If RE and finance “are directly opposed to the national interest”, what do you think the national interest is?
Someone else thinks environmentalism and illegal immigration are directly opposed to the national interest. Others hate cops, or teachers, and think we’d be better off without them. Everyone’s got an opinion..
I’m trying to visualize a functional, free society that has contempt for property and finance, but I’m drawing a blank..
No.. wait.. something’s there…. it’s kinda vague, like I’m peering through a fog.. what can it be..
Xanadu?
Shambala?
Bali Hai?
Cannibis?
Camelot?
Come on joey give us some more hints.
Dang I forgot to add
Earth?
Joey — Which bank is it again where you work?
Joey — are you a FIRE troll?
No comment
Hold on I think I’ve got it by george:
Shangri-la
exactly.. it could only exist in Fantasyland.
You’re creating a classic strawman. You’re presenting an argument which I did not make - that I’m recommending a society with contempt for property and finance.
Let me explain it slowly to you:
1) National interest means that we do not have massive amounts of unrepayable loans created, upon which entire economic sectors are built. The financial industry wishes to reinflate that credit bubble which generated those bad loans. So do many politicians. Right now, the Treasury is being looted to stave off the damage created by those bad loans. The wealth of our grandchildren is being squandered to prevent utterly financial collapse right now.
2) The real estate industry wants the credit bubble reinflated as it allowed people to raise vast sums and purchase real estate at vastly inflated prices. From those inflated prices, they real estate industry made money from commissions which were percentages of those inflated prices.
The financial industry and the real estate industry have been massive contributors to politicians, federal, state and local, for many years. This means they have paid off politicians.
Politicians are likely to act in the best interest of their contributors, which is contrary to the national interest listed above.
Hopefully, you were able to follow the logic this time. I regret any confusion you may have had initially.
The RE and finance industries (and every other industry) are doing what comes naturally..
Who doesn’t expect them to struggle to survive? They want to sell product and make money. They exist only because they satisfy our demands. Selling something or other is their primary nature.. there’s no hidden agenda.
Business and finance have no interest in sharing the wealth with anyone, nor in being mommy/daddy and preventing stupid people from buying unaffordable products.. or from jumping off the bridge.. nor should they.
Politicians act in the best interest of their constituency, be they the struggling masses or the wealthy elite. Enough votes can and often does trump wealth because political power comes from either source, and power is what politics is all about.
The attempt to satisfy one’s constituency is also perfectly natural. The specific desires don’t matter. They are willing to do a-n-y-t-h-i-n-g for you. A politician who thinks otherwise is an inneffective, inferior and soon-to-be former politician.
Finance, politicians, salespeople and businesses are nothing but tools. We (currently) have the freedom to use those tools as we see fit. We often misuse the tools and hurt ourselves. And we, in an effort to deny our accountability, then blame the tools.
What’s the solution? Get rid of the tools and/or restrict our freedom to use them? Who does this punish? Aside from that, let’s just ignore the fact that this “cure” doesn’t even begin to address the source of the problem, which is our collective immaturity.
We can either grow up or we can hide all the sharp objects and treat ourselves like children. I know I’m in the minority when I say I prefer the former.
Don’t bother trying to enlighten the resident banking troll. Frankly, I preferred interacting with the gold dealer. At least he had a good sense of humor and was culturally literate.
Uh-oh. Now i’m in trouble.
Expressing a dissenting opinion has attracted the attention of the HBB Thought Police… how could I have been so dumb..
PB.. Starting now, I will change my ways and conform!
Bankers are BAD! Wall street? BAD! Salespeople? BAD! Lending, borrowing, and debt? BAD! Politicians? BAD!
All these (and many more) are evil and must be purged from the social consciousness!
Please tell me I still have some chance of being accepted by your anti-capitalist clique? Look. I’m on my knees.. begging.
Joey ,during the last boom of housing and debt ,no question a mania credited debt and leverage that was extended beyond reason . In a case like the last 7 to 10 years ,it would not have social value to have such a fake mania that was not tied to real wages ,but rather faulty lending and mania investments.
What would be in the National interest and certainly created more stability is to have a economy that is
flushed with jobs and the price of homes is in step with wage inflation and local wages .
There is a big difference between people simply buying homes and cars and qualifying for those loans verses a Ponzi-scheme in which
liar loans and faulty prices funded a mania that was based on leverage and the wealth effect from fake prices ,that were pushed up by a crime wave of easy money to unqualified people .
I think its pretty clear what the difference between normal commerce and a mania is. The fake boom was nothing but a waste and a fraud and it happened in 1929 also regarding a fake stock market that crashed .
Ponzi-scheme.. liar loans.. a crime wave of easy money to unqualified people..
But those lenders destroyed themselves.. the big and small Wall Street players suffered and are suffering.. banks, businesses of all sorts are suffering. For many it was fatal. As for blaming corporate execs who got big paychecks and bonuses, they were doing exactly what they are always being paid to do.. make as much money as possible, whatever the circumstances, bubble or no.
I’ve said it before. It was a mental illness.. some form of temporary (but persistant) insanity that affected ALL walks of life. To be fair we have to blame everybody or blame nobody, imho.
Financial Times
Overview: Investors take flight
By Michael Mackenzie in New York
Published: January 23 2009 19:03 | Last updated: January 23 2009 22:14
A barrage of miserable economic data and fears about the cost of bailing out the financial system this week sent investors fleeing from equities, sterling and even long-term government bonds.
The latest instalment of gloom came on Friday with news that the UK economy contracted 1.5 per cent in the last three months of 2008, the biggest quarterly fall in 28 years. The data confirmed the first UK recession since 1991 and sent sterling to fresh lows as investors doubted the government’s new plan for supporting banks.
“The UK is facing a deep and prolonged recession,” said Jonathan Loynes, chief european economist at Capital Economics.
Further evidence that large global economies face a harsh recession was illustrated by news that Korea’s economy shrank by an annualised rate of 21 per cent in the fourth quarter, while Japan’s exports fell a record 35 per cent year on year to December.
China reported the slowest pace of growth in seven years in the fourth quarter amid weaker exports and a faltering housing market. Some analysts doubt China can escape a large contraction in activity given the slump in global growth.
“Asia is in depression,” said Albert Edwards strategist at Société Générale. “Whatever the heavily manipulated Chinese GDP is telling us, that economy must now be contracting.”
Asia’s in depression?!?!?! That’s a bold claim. That doesn’t sound good for the Great Decoupling.
Mr Decoupling, I would like to ask you to step back and make room for Mr Contagion.
IMF set to slash global growth forecast
By Alan Beattie in Washington
Published: January 25 2009 14:00 | Last updated: January 25 2009 17:29
The International Monetary Fund will slash its forecasts for global economic growth this week, saying the downturn is worsening in both rich and poor economies.
Dominique Strauss-Kahn, IMF managing director, said last week that the fund would “significantly adjust” its projections downwards in the light of bad news about growth and continued problems in financial markets.
Kudos to the IMF for ranking among the financial institutions with no need to claim that “no one could have seen this coming.”
WORLD ECONOMIC OUTLOOK, April 2003 — Chapter 2: When Bubbles Burst
-Im striking the word “unprecedented” from the common vernacular.
What has been is what will be,
and what has been done is what will be done,
and there is nothing new under the sun.
Ecclesiastes 1:9
Voz –
What is generally missing from the 21st century economist’s tool kit is a sense of history, and the fact that there will be 10-year floods, 60-year floods and 200-year floods over the course of time. The impact of extreme events naturally increases with the time window of comparison.
What I like about the IMF article is the use of an international panel data set for comparison purposes, which greatly increases the number of 60-year floods in the sample compared to what one gets by looking at macroeconomic time series for a single country.
Once again PB you forgot to add drought
34 pages of dry wonk macro-econ.
Immuna say with with all due respect, and I mean all due respect…
that Coolies, ginzos, gippos, haole’s, flips, injuns, limees, kykes, nips, rag-heads, crackers, and the rest of the consumo-tards dont give squirt o’ piss whether the IMF cranks out 467 pages of “Iceberg dead-ahead”.
“consumo-tards dont give squirt o’ piss”
Sounds like the makings of great opportunities for the Ben Jones’ of the world.
now yer just being cynical-er-est.
I just posted a long analysis of the current bust (U.S. equities and real estate) in comparison to the IMF study results. I have a research question for anyone sufficiently motivated to do the work: Is there a positive correlation between the magnitude and duration of a bubble and the depth and duration of the subsequent bust? For instance, given that U.S. housing prices (as measured by the Case-Shiller index) increased by 159 percent over a period of 65 quarters from their early-1990s recession trough of 73.43 (Q1 1990) to their bubble peak of 189.93 (Q2 2006), should we expect the correction to be of larger magnitude and longer duration than those in the median bust studied by the IMF? (One would want to factor inflation into the analysis, of course…)
iceburg dead ahead.
housing goes lower, same as it ever was.
US equities approaching the rubicon, strong downside bias.
Deflationary Deleveraging bust in a globalized economy.
US TREASURIES….Atlas is Shrugging.
Collapsing Currencies (Iceland, Zimbabwe, Ruble, currently the Pound Sterling)
PIGS collapsing in a currency they cannot tax in (they can only BOND in).
Baltic Ecomomic Pegs financed in Nordic banks RIOTING !
Chinese output and factory production approaching the “regime change” levels.
India….Enron.
Madoff….your money is a myth.
uhhh, MORE MOTHER!@@$% PAGES OF “THIS IS HOW WE FIX THIS” !!!!
*Inflation is a myth, unless your currency collapses.
One problem with pre-announced bailout policy is that the smartest guys in the room are prone to acting on the assumption that bailouts will be able to make it all good again, come whatever may. Pre-announced bailouts are the moral hazard source which makes stupid financial decisions seem smart, right up until the point when a raging flock of black swans attacks the global financial system.
“US equities approaching the rubicon, strong downside bias.”
Second that.
Table 2.1 in the IMF report is very informative. For the sample of countries covered by the IMF study (dating back to 1960), equity busts (as opposed to mere bear markets) resulted in a median 45.5 percent decline in equity prices over 10 quarters = 2 1/2 years, while real estate busts resulted in housing prices declining by a median 27.3 percent decline over 16 quarters = 4 years.
By comparison, so far this go-round, the Wilshire 5000 (broadest index of U.S. equity prices) has fallen from its all-time high of 15,806.69 on October 9, 2007 to a trough (thus far) of 7,471.44 on November 20, 2008, a decline of 52.7 percent over 13 months (4 quarters and change). The Wilshire 5000 has subsequently rallied to its current level of 8,385.13 (January 23, 2009), a 12.2 percent debt cat bounce rally over the past 64 days (10+31+23) which has played out at an annualized rate of
(((8,385.13/7,471.44)^(360/64))-1)*100 = 91.3 percent.
Given that the decline in U.S. equities has already surpassed the median decline in busts covered in the IMF study, but we are only 4 quarters in to the correction, the big uncertainty is whether there is another leg or two down in the next 6(+/-) quarters.
By contrast, as measured by the S&P/Case-Shiller U.S. national home price index, the bubble peak in U.S. home prices was in the second quarter of 2006* (189.93, or 89.93 percent above the first quarter 2000 baseline comparison level of 100.00) and by the third quarter of 2008, the index had dropped off by a mere 21 percent to a level of 150.04 (still 50 percent above Q1 2000 levels), with no indication that the price correction was over. The housing price correction has thus far played out over 10 quarters (counting Q4 2008) versus a median 16 quarters for historic real estate busts (six more quarters would get you out to Q2 2010) and the price correction is short of the IMF study median of 27.3 percent. A conservative guess about what lies ahead is thus that the real estate price correction has another 1 1/2 years to go and that prices will fall by another 8 percent before it is over:
((27.3-21)/(100-21))*100 = 8 percent.
My guess is the eventual price decline will exceed 27.3 percent (the median in IMF study busts) because preceding the correction, we witnessed the largest real estate bubble price run up in history. Just getting back to 2000 price levels would require a total correction of
(89.3/189.3)*100 = 47 percent, and given the economy’s myriad other challenges, it might prove difficult to provide sufficient housing market stimulus to stop the avalanche in progress.
*Interestingly, Radar Logic data suggests the peak price per square foot for San Diego homes was reached in May 2006, coincidental with the second quarter of 2006 when the Case-Shiller index peaked.
Data sources for the above analysis:
Wilshire 5000 Index
S&P/Case-Shiller Home Price Indices
Paging Hoz:
In light of my post (and a couple more higher up in the bits bucket), do you still believe that it isn’t as bad this time as in 1980-82? Or is your argument that we can’t be sure just yet?
Only post for tonight:
PB, The only thing I am sure of is rising inflation.
Personally it is a flip of the coin whether this will be as serious as the ’80s. There are some incredible numbers coming from over 50% of the companies that suggest that ‘it is not so bad’; then there are the atrocious numbers from the rest. If modern economic theory has any credibility, then without government intervention, the national unemployment should peak around 11%. With government intervention, it should peak around 11%. So flip a coin.
(If the US was a ‘net saver’ nation, we might have deflation; but the weird thing about deflation economic history is that it only occurs in countries that are net savers. However, there is also so little economic history concerning deflation that any recession data is statistically insignificant.)
“If modern economic theory has any credibility,…”
You trust the views of an inward looking group that lives out their lives inside an ivory-walled cloister?
“…there is also so little economic history concerning deflation that any recession data is statistically insignificant.)”
You touch on the reason so many very smart economists were blindsided. If there ain’t enough data to produce a statistically significant regression, then they haven’t a clue.
They’re blinded even AFTER you get statistically significant data because economies are OPEN SYSTEMS not CLOSED ones so that the behavior that you’re trying to study may very well change after you gather enough data.
ECONOMIC PREVIEW
Economy in free fall in fourth quarter
Worst quarter since early 1980s, and more to come
By Rex Nutting, MarketWatch
Last update: 9:23 a.m. EST Jan. 25, 2009
WASHINGTON (MarketWatch) — The U.S. economy contracted violently in the fourth quarter, with gross domestic product falling at its fastest pace in more than 25 years, economists said ahead of what promises to be a grim week of economic news.
“Real economic activity fell off a cliff during the fourth quarter, producing a sharp drop in employment, output and spending,” wrote economists at Wachovia.
And the worst part is that it’s not over. Economists expect another huge decline in the first quarter, with a smaller contraction in the second quarter.
GDP is expected to have fallen at a 5.5% annualized rate in the final three months of last year, according to the median forecast of economists surveyed by MarketWatch. That would be the biggest decline since the 6.4% drop in early 1982 and one of the worst quarters in the post-World War II era.
The government will release its first estimate of fourth-quarter GDP on Friday, the culmination of a very busy week on the economic calendar. See Economic Calendar.
Other major releases will include durable-goods orders for December, home sales for December, and consumer confidence surveys for January.
In addition, economists will be watching the weekly jobless claims data for more clues about the health of the labor market. We could see first-time claims breach the 600,000 mark for the first time since the early 1980s.
None of the news in the coming week is expected to be positive.
The bad GDP story
Almost everything that could have gone wrong did after the credit crisis worsened in September. More than 1.5 million jobs were destroyed in the quarter. Consumer spending fell again. Businesses put investment plans on hold. Home builders threw in the towel. Export markets dried up.
The only bright spot was the collapse in prices for oil and other commodities, a sudden reversal caused directly by the global slump. This has boosted consumers’ spending power, but has also slammed corporate profits.
“The weakness was very widespread, with every type of final expenditure falling,” wrote economist Michael Feroli of J.P. Morgan, who expects final sales to fall 5.9% annualized, which would be the third worst quarter since 1949.
NARscum appears to have started a new effort at housing pornography again. I saw a new(?) commercial that included their old standby distortions, one after another on VH1.
Rich posted a good article on inflation v. deflation :
http://www.voiceofsandiego.org/articles/2009/01/21/toscano/744nodeflationaryspiral012109.txt
Check it out.
“But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
I.e., money grows on trees, and there is no such thing as a macroeconomic budget constraint.
unfortunately, you can pull that stunt only once before everyone pulls out and its (zimbab)way from there on….
Missing from the analysis: Currency devaluation risk (but perhaps that is contained by the scepter of a global depression)…
Does Summers still moonlight as a hedge fund adviser?
Obama aide says bail-out may not be enough
By Demetri Sevastopulo and Alan Beattie in Washington
Published: January 25 2009 20:14 | Last updated: January 25 2009 20:14
A top economic adviser to President Barack Obama refused on Sunday to rule out the possibility that the administration would seek more money from Congress to rescue the US banking system.
Lawrence Summers, head of the White House National Economic Council, said the administration would use the $350bn (£256bn, €269.5bn) remaining of the $700bn that Congress provided to start tackling the financial crisis. He suggested, however, that it would later have to assess whether that amount was sufficient to stabilise the financial system.
they have yet to loosen the Craken and its still, not enough….
back to plan uhhh….
Yo ho!
“The authorities could, if they wished, deliver several million dollars of freshly-printed money to every single household in the country if they decided to do so. Under this pure paper money system, it is absurd to suggest that the government cannot create inflation.”
David Hume suggested centuries ago that a doubling of the nominal money in everyone’s account would result in an immediate doubling of prices, provided everyone knew about the doubling (i.e., no fooling games). Milton Friedman’s updated version of this idea is embodied in his statement that ‘inflation is everywhere and always a monetary phenomenon.’
So what’s stopping them, kimosabe?
After all, the housing market is “only” $14T or so. They’ve already printed $2T, right, or have they?
What’s the real problem, kiddo?
sartre may be on to the problem (see his post a bit higher in the bits bucket)…
There are far simpler explanations.
Paging Occam, paging Occam; please report to the academics via séance immediately!
Is this where the acronym KISS comes in?
Got a library card yesterday. Cannot believe it took me so long to do so. After seeing my roommate checking out so many books and movies for free, I suddenly felt like a sucker for any money that I’ve handed over to Borders in the last few years.
Here’s my reading list :
‘Financial Armageddon’ - MichaelJ. Pan
‘The Bond Bible’ - Marilyn Cohen
‘The Bear Book’ - Rothchild
‘The Coming Collapse of the Dollar and How to Profit From It’ - Rubino
What do you guys think, bleak enough for you?
As an added bonuc, I checked out I&II of Ken Burn’s ‘The War’ documentary.
What’s a financial collapse without a World War?
Oh, sheesh, you forgot to take out “The Tomb” by HP Lovecraft, a Geroge Orwell anthology and “We’re All Gonna Die” by D. Pressed.
I realize you’re new to the library (congratulations!), but next time you might want to pick up Peanuts or something for those 4am moments (may I recommend “Here’ Comes Snoopy”). It’s almost February, the most depressing month of the year, so stock up!
http://www.timesonline.co.uk/tol/news/world/europe/article5559773.ece
The proles in Iceland and Latvia are reacting badly to the economic mess their political overlords have created for them. How much longer before scenes like this will be playing out closer to home?
We haven’t seen currency collapse like Iceland, have we? (Massive stock market losses are different, as they primarily hit folks who are too old to take to the streets and throw stuff in anger…).
But, daah-link, this is just the beginning.
You want to leave after seeing the opening fireworks? Don’t you want to see the actual show and the closing fireworks?
Why not have some popcorn?
Wall Street Journal
* JANUARY 22, 2009, 2:45 P.M. ET
Political Interference Seen in Bank Bailout Decisions
Barney Frank Goes to Bat for Lender, and It Gets an Infusion
By DAMIAN PALETTA and DAVID ENRICH
Troubled OneUnited Bank in Boston didn’t look much like a candidate for aid from the Treasury Department’s bank bailout fund last fall.
The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives’ use.
Nonetheless, in December OneUnited got a $12 million injection from the Treasury’s Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.
Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.
Now I am beginning to grasp why pols of all stripes eventually signed on to the TARP, as it provides them with a sack full of bagholder-funded goodies to bestow on their past and future campaign contributors.
Wall Street Journal
* JANUARY 24, 2009
Politicians Asked Feds to Prop Up Ailing Bank
By DAMIAN PALETTA
Two Illinois congressmen urged the Treasury in October to avoid taking any regulatory action against a struggling bank in their state, illustrating the aggressive efforts some politicians are taking to help hometown lenders during the bank crisis.
In a letter they sent, Democratic Reps. Danny K. Davis and Luis Gutierrez also asked government officials to provide financial aid to National Bank of Commerce, based in the Chicago suburb of Berkeley, Ill. (Read the letter.)
(TARP Participants
See how TARP funds break down by state, plus review details on participating institutions.)
Democratic Reps. Danny Davis and Luis Gutierrez wrote Treasury in late October asking the government to help a struggling bank in their state and halt any regulatory action against the lender. Read the letter.
Regulators rebuffed the request, and the two-branch bank failed on Jan. 16.
Lawmakers often seek to help home-state interests, and there is nothing illegal about forwarding requests to regulators and other government officials. But legislators normally stop short of action that might appear to be interfering in the way regulators examine and supervise banks, a process that is supposed to be impartial.
Politicians’ efforts to intervene on behalf of specific banks during the current crisis recall the savings and loan turmoil of the late 1980s, when members of Congress pressured the government to go easy on struggling thrift institutions. Among legislators who’ve tried to help a local bank get cash from the Troubled Asset Relief Program is one who had a lead role in drafting the TARP bill, Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. The bank he went to bat for ultimately did get TARP cash.
“This is a disturbing parallel to precisely some of those things that made the savings-and-loan debacle into a political scandal as well as a financial scandal,” said William Black, an associate professor at the University of Missouri-Kansas City, who was a bank regulator in the S&L crisis.
As Brahms once told a critic, “Any @ss can see that!”
If there is any banker in cyberspace whom I have failed to insult, I apologize.
Anyone read anything lately about Kendra “I don’t believe in bubbles; bubbles are for bathtubs” Todd? In her book [not a bad book by the way; I agree with a lot of her ideas on risk, just not her choice of vehicle] she claimed that her net worth went from $3K to $1.7M in a few years [of course, someone who was staunchly bullish in ANY asset market while the bull was running AND was heavily leveraged might have accomplished the same end result].
Her diversification was to buy the exact same type of investment [pre-construction condos] in different areas, the logic being that it was virtually impossible for all areas to go in the tank at once.
“Inconceivable!” - Vizzini
“You keep using that word. I do not think it means what you think it means.” - Montoya
Of course, she failed to appreciate that all of those “separate” markets were being fed by the same global financing Golden Goose.
She did make a brief appearance opposite Schiff [2007?] taking up the bullish side of the argument but I can’t find anything recent.
She seemed like a straight-shooter [albeit a deluded one about real estate] so one would hope that she would admit her mistake and not fall back on the “no one could have seen it coming” line.
ex-Wreck
I went to the Beverly Center, upscale mall in West Hollywood, for the first time in years today. The parking garage was half empty and a lady on the elevator said she had never seen the mall so dead nor so many “70% off” sales. I was looking at gold jewelry and the look of desperation on the vendors’ faces when we walked in was a bit sad. The economy stinks and I think the high end is crashing now like the low end crashed in 2007. I suspect jobs lost in the last few months were more finance industry and high end jobs than construction workers. The high end housing market cannot be very far behind.
TARP Report Card:
Financing bank executive bonus payments A+
Encouraging banks to lend more F
Rescuing the housing market F
Wall Street Journal
* JANUARY 26, 2009
Lending Drops at Big U.S. Banks
Top Beneficiaries of Federal Cash Saw Outstanding Loans Decline 1.4% Last Quarter
…
The overall decline in loans on the 13 banks’ books — from about $3.36 trillion as of Sept. 30 to $3.31 trillion at year’s end — raises fresh questions about TARP’s effectiveness at coaxing banks to reopen their lending spigots.
“It has failed,” said Campbell Harvey, a finance professor at Duke University’s business school. “Basically we have dropped a huge amount of money … and we have nothing to show for what we actually wanted to happen.”
Banks to consumers: Fuqua
Not sure what part of the hurricane we are in, but I am pretty sure it ain’t the eye…
MarketWatch dot com
January 26 2009 12:41 A.M. EST
Fed in the eye of hurricane
This week’s FOMC meeting likely to focus on unconventional steps
Central bank unlikely to make any dramatic policy announcements even as economic downturn deepens and financial sector remains shaky, but Fed remains deeply involved in rescue plans.