Bits Bucket For January 30, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
January 29, 2009
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Ha! I have never been the first poster, or anywhere near the first poster, cuz I live in the west coast and you guys are always up and ‘attem before I have even had my first cup of coffee.
I’ve been thinking and reading a lot about the idea of a “steady state” or “no growth economy”.
Given the environmental restraints we have been bumping up against, as well as the collapse of capitalism as we know it, why is a steady state economy not even on the radar?
It’s not some crazy fringe idea, and not even incompatible with capitalism.
What gives? Inquiring minds want to know.
I prefer to think of it as a “replacement economy.” An economy that no longer makes CRTs but makes Plasmas and LCDs or even organic LCDs
(world economy …. not yet efficient to produce here.)
Some sectors (Used Home Sellers) drop, while others (Bankruptcy Lawyers, Mental Health Counselors) surge.
Net effect can be steady state. Regardless of deflation or inflation. Boomers get killed with deflation reflected in lowered fixed incomes at depressed interest rates or get the bonus of high interest rates and high annual adjustments to their entitlements due to high inflation. Doesn’t seem too damn likely, nor would it benefit the economy as a whole, except that they may be the last citizens to truly enjoy “disposable income.”
No NET growth could be fantastic if it were the result of necessary market adjustment, IMHO.
What Economy?
It appears that many of the Queebees of the US of the greed machine have survived very well on stock shuffling, commission bonuses, flipping mortgages and other non-productive, self important Bull$hit to include outright Fraud for years.
As all the exhausted little, productive workerbees down below see the hives collapsing and the honeypots stolen, they cry “Where’s my house?” and ” Oh Crap…do I have buzz around another 40 years to pay for and build another Ponzi scheme castle for these A__holes?”
LOL +10
I wish the kids that hate the boomers would realize that the generation BEFORE the boomers REALLY had it easy!
The competition for jobs, college slots, and the effect of the draft for the Vietnam War made early life very difficult for the baby boomers. Some of us never found a real job (thats why real estate looked so good to many).
These “olders” are still in charge (Cheney’s bunch) and they’re still golfing, yachting and firing the rest of us! Wise up!
yes, this is quite true … but let’s face it, Gen X (except for internet boom) had it tougher than the boomers. well, okay, early boomers had the draft (later boomers were too young).
And to succeed in the internet boom, you either had to have the right friends or a penchant for lying on job applications. Those with REAL computer skills and experience got passed up for people who made s*** up like “10 years Java” in 1997 (it hadn’t been around for 10 years!).
Btw, the lying was facilitated by using “HR Depts” to do hiring. These people do not have technical skills and do not know how to evaluate technical applicants.
How would the economy be kept at a steady state? Would that be through government intervention and planning? Maybe Obama can come up with a 5 year Plan to achieve that. Oh, wait…
This steady state economy idea is interesting. I suppose no new drugs will be developed to delay or reverse any disease, no new gains on energy technology will ever occur, no higher speed internet will be developed, no advances in robotics or artificial intelligence methods will occur. Essentially no one will want to use their creative brains anymore because no one will want to profit. Interesting.
I don’t agree with you on a lot of what you say, however this time I agree with what you posted.
Disagree. Technical innovations put the old method out of business. Remember IBM’s deep indigestion when the word processor, which they built, threatened sales of the electric typewriter, which they built?
And again the personal computer they were so ambivalent about because it threatened sales of their mainframes? (They were right to be worried–but they forgot they had competition.)
Yes, you would be right to be concerned about a planned economy. That would be like IBM on a national scale (France tried this for a while, btw), meaning no technical innovation because it would threaten those with seniority in obsolete divisions.
But in a market economy, innovation DOES put obsolete technologies out to pasture (even if those old techs had some good sides to them–eventually the obs. item goes into death spiral and is no longer economic to manufacture). So the ‘replacement economy’ model works just fine.
Heaven help us if we politicize this, however, because people always want to build castles and defend what they built their career on, even if it’s a sinking ship. (Happens in academia, too–remember Lord Kelvin sniffing at plate techtonics?)
Yeah, its called ‘tenure’
Thats a gross oversimplification of the issue. A ’stead state’ economy should perhapse be more correctly viewed as a closed system. An economic ‘ecology’ if you will. Innovations can definitely occur in an evolotuionary sense as new economic niches are created but the ‘net’ capitol (energy in the truest sense) is not created or destroyed. movement forward comes from the struggle against entropy. The hypertrophic growth we have experienced over the past few hundred years is not sustainable and in many ways has done irreprable harm. Why cant you see that?
The big problem with pushing this kind of system is that it makes Ponzi schemes (like social security, et.al.) ever harder to run.
“This steady state economy idea is interesting. I suppose no new drugs will be developed to delay or reverse any disease, no new gains on energy technology will ever occur, no higher speed internet will be developed, no advances in robotics or artificial intelligence methods will occur. Essentially no one will want to use their creative brains anymore because no one will want to profit. Interesting.”
There was an episode of Star Trek along this theme…no indication of any development for over 10,000-yrs.
LOL, some of the posters are trekkies.
The episode was called “Errand of Mercy” from the original Star Trek series
Further to what Robin said, you never have a “steady state” economy because technology is always improving. There will always be better ways to produce real output with available resources, capital, and labor. At the same time the balance between these inputs is also changing.
What it amounts to is that you can still have a dynamic economy even with constant population and resource availability.
This sounds abstract and Utopian.
It’s not.
All you need for what he’s saying is competition.
Ok, want some real competition? Scrap the entire patent and copyright system. If I try to compete against large manufacturing concerns these days, I will most certainly get hit with mass patent lawsuits, whether justified or not.
Just the fact that such a thing as a DEFENSIVE PATENT even exists should tell you how badly screwed up the system is, and why we will continue to stagnate until people like me are free from it’s tyranny.
For example, the idea of wrapping something around your coffee cup to protect your hand from the heat is not a new idea. Yet we have granted a patent to someone for the sleeve that goes around it. The COMBOVER!!! For gods sake they granted a patent for the combover.
This insanity has to end before people like me can bring new ideas to fruition - something we’re going to desperately need before we can pull ourselves out of this mess.
We shouldn’t be granting a single patent for anything short of inventing faster than light travel, a comprehensive cure for cancer or again itself, a perpetual motion machine, or a time machine.
Anything else is just granting someone the right to claim exclusive rights to pissing in the wind(which has probably already been patented).
/rant
SR
Apologies if this double posts…
Ok, want some real competition? Scrap the entire patent and copyright system. If I try to compete against large manufacturing concerns these days, I will most certainly get hit with mass patent lawsuits, whether justified or not.
Just the fact that such a thing as a DEFENSIVE PATENT even exists should tell you how badly screwed up the system is, and why we will continue to stagnate until people like me are free from it’s tyranny.
For example, the idea of wrapping something around your coffee cup to protect your hand from the heat is not a new idea. Yet we have granted a patent to someone for the sleeve that goes around it. The COMBOVER!!! For gods sake they granted a patent for the combover.
This insanity has to end before people like me can bring new ideas to fruition - something we’re going to desperately need before we can pull ourselves out of this mess.
We shouldn’t be granting a single patent for anything short of inventing faster than light travel, a comprehensive cure for cancer or again itself, a perpetual motion machine, or a time machine.
Anything else is just granting someone the right to claim exclusive rights to pissing in the wind(which has probably already been patented).
/rant
SR
Sorry again about the previous double post - got swallowed the first time.
Also, typos: it’s=its and again=aging
SR
Here’s the problem: USPTO has become a profit center for the govt. Thus they rubber stamp to collect the fees and ‘let the legal system’ sort out what’s true and false.
This is immensely costly (and the source of the some of the “tort reform” clamor, although what is needed is patent reform).
In the UK they have a “loser pays” system. This would remove some of the patent bullying by sham companies that only exist to sue on patents. However, it would not stop the “mutually assured destruction” patent arsenal building of large tech companies.
One of the stupidities of the last 30 years was to allow software patents. You can’t patent a recipe, a business method, or a mathematical formula, but you can patent SOFTWARE?!? Because it’s all three at once, thus something different? No, it was a simple case of those making the laws not understanding what they were legislating. And it’s choking innovation in the software sector. (The open source movement arose out of the academic sector as a reaction to this mess, as an attempt to save the computer software industry from itself.)
SOFTWARE SHOULD BE COPYRIGHTED. That’s it. And copyrights should not last as long as they do. 100 years is utterly obscene.
But as Heinlein said, in the US if someone has made money for a while of off a certain thing, they believe they have an entitlement to continue making money that way forever.
You can patent a business method. It is ridiculous.
You can even patent a tax strategy - something that is embedded in the laws of the country. Stupid beyond belief.
I want to sincerely thank you both for making my point better than I did.
/Tip o’ the hat to you
Sounds abstract and utopian? Then you do not know human nature - to use one’s own noggin’ and profit.
Yes. This model worked well for the Street Hoodlums and will continue to work well for the unforseeable future.
Even though I recognize your sarcasm, I don’t get what you are saying. Wall street hoodlums are merely feeding off the profits from the creators and innovators. There are many times more creators and innovators than there are hoodlums. These innovators include salaried professionals. Manhattan is too small to fit them into that space anyway.
Wealth is not a zero sum game. If it was zero sum, we’d still be wearing furs and living in the trees. The implication of this blog is “how to preserve your wealth during this real estate bubble.” Preserving your own wealth is a very selfish act (in the Objectivist jargon) and is proper. It’s why I always am astounded to see anti free market posts every day on this blog, even though they are few.
“It’s why I always am astounded to see anti free market posts every day on this blog, even though they are few.”
If you believe that there is actually such a thing as a ‘free’ market….which there isn’t.
Perhaps you could define your view of a ‘free’ market and I’ll be happy to joust at it.
“I always am astounded to see anti free market posts every day”
Gosh, I wonder why? Current events perhaps?
Naw, couldn’t be.
Def. of free market. Orwellian conundrum. The “free, fair, and competitive” market (where the government prevents players from subverting the law so they can capture all the marbles and crush the opposition into dust) has come to mean the laissez-faire market.
Laissez-faire is just as failed a paradigm as communism. 1929, 2008–how many more giant crashes do we need? Heck, the “Fed” was created on the theory that it would cool down bubbles so the busts wouldn’t be so bad.
If the gov’t stays out of the market, market players will attempt to monopolize the market by hook or by crook. Carnegie, Rockefeller, Gates–they all made their money this way.
Worse are when the market players collude. When foreign players do it we call it a cartel. At home it used to be called a trust. Now it’s called Wall Street genius. It comes right out of our wallets, of course…
Unfettered capitalism always drives the cost of commodities below the cost of production and ends with a few players holding monopolies and charging ‘what the market will bear’. If you think this leads to economic stagnation (not to mention starvation!), you’d be right.
In a ‘free’ market, the gov’t is supposed to keep this from happening by playing market cop. Over the years, big business has turned a clean cop dirty. So here we are.
Ding ding ding! We have a winner!
The more you explain it, the more I don’t understand it.
Mark Twain
The more you explain it, the more I don’t understand it.
Mark Twain
I am not talking about no new innovation or no change. It’s not even about stopping growth. C’mon, use your brain. That’s plain stupid.
Many believe that capitalism requires constant growth. Capitalism as we know it has led to constant growth, but in the consumer sector. Manufacturing desire and demand for useless crap. Playing on people’s most base fears and selling them stuff.
There is a way to GROW that isn’t about things.
Plus the population is expanding as well, that has historically always lead to problems.
This reminds me of the ‘Goldilocks Economy’.
yeah, but ‘goldilocks’ was a bunch of bull. Rather than being “just right” it was a manic bubble to cover an inevitable recession. Hold off recession eight years, get a depression in return.
I watched a bit of CNBC this morning for the first time in six months. What a JOKE. Somebody needs to put Dennis Neal out of his and everybody else’ misery. The guy is whining and complaining incessantly about the crackdown on bonuses for employees of companies who are into the TARP money. He blathered on about the fact that good employees would leave, blah, blah, blah. Nobody brought up to this clown, the point that they wouldn’t have a job period if not for the “bailout”. I made a good decison, canning the cable. Runts like him don’t deserve an audience.
All money is debt, and the banks want a cut of the interest paid on that debt. Afterall, they need $ billions for doing very little other than lending out other people’s money. To create room in the money supply for the interest, the money supply, (and therefore total amount of debt) must be constantly growing.
Debt can only constantly be growing, if people have irrational exuberance of the future. I can spend more than I make now, because the future will be magically better and I’ll be able to pay it all off and then save a ton needed for retirement.
The only way we can have irrational exuberance is if we believe the future will be bigger and better than the present.
We need growth so the bankers can get their massive bonuses.
“All money is debt …”
More accurately, money is the result of debt. When money is loaned into existence an equal amount of debt also springs into existence.
Money might even be considered anti-debt because a certain sum of money can be used to cancel an equal amount of debt.
A vivid and accurate metaphor.
If I give you an IOU and you trade it as money… the money, in this case an IOU, *is* my debt. When someone finally gives me back the IOU I issued then I “owe myself” something which effectively destroys the OIU.
So, in our society, “money” is “debt” and the fact that returning the IOU to the issuer destroys both the “money” and the “debt” does not change the nature of money.
Grow or Die. This is hard-wired into the American psyche.
Speaking of both the American psyche and growing, does anyone remember backyard gardens? Canning and “preserves?” I remember this from my childhood, not only in Sandy, Utah, but also Anaheim and Fullerton, CA. And fruit trees. We planted three trees: plum, peach and nectarine. Neighbors had avocado, lemon, and orange trees. Half our neighborhood was Mexican, and I remember they often had tomato plants in the front yard. And about six streets over, some owner of a legacy property (around which our tract houses were built) had an extra quarter acre next to his house, and he farmed that little patch of land right until he passed away in the early 1990s. This suburban gardening seems to be a missing component–a major one, or I wouldn’t waste my time writing this comment–of the discussions concerning reshaping the American economy. And I didn’t grow up in a neighborhood of farmers. It was a blue collar street mixed with aerospace workers. I remember the one CPA on our street moved out as fast as he could. And there were chickens, too. Both the Mexicans and the Whites. I’m talking about the Disneyland area, people, not Utarr. Even as late as the year 2000, I knew an Oklahoma engineer who had a vegetable garden next to the 91 freeway, in the backyard of his Anaheim home, across from Anaheim Hills. Now, I myself, have never hoed a row (except for the pumpkin project in second grade, and they came out big and orange, just the way they were supposed to) or watered a plant, so I’d be just as dependent upon a farmers market (or neighborly bartering) as I am now upon the supermarket. I have no green thumb. But this “home garden fall-back” component to the neighborhood economies seems to be missing–here–in the historical examinations of the US economy from the 1930s to the present. I’ve read this blog for two years. My personal view is that what we knew is not coming back. It’s not cyclical. The economy as we knew it is gone. We’ve bought all the crap we can buy and put into a storage locker. We’ve seen all the reality shows and heard all the jokes from the entertainment industry. We’ve seen the re-makes of movies and movies based on old TV shows. I’m not saying it’s the end of American civilization, over the next thirty years. I’m just saying that Americans might have to get their fingernails dirty, again. (In the U.S. in 1918, the National War Garden Commission produced a pamphlet, “War Vegetable Gardening and the Home Storage of Vegetables”.) But then I don’t know the future anymore than anyone else. I don’t know if we’re going to have regional civil wars and riots, or if we’re just going to morph into an indolent French- or Swedish-style society. From what I’ve read and seen the last six months, no one else knows, either. Not Rupert Murdoch, Warren Buffett, not Steve Forbes. I suppose this post will be derided as absurd. But for some, I’m willing to guess this post may provide some food for thought. I mean, seriously, what economic role–from 1945 to 1975 (or ‘85)–to the home production of fruits and vegetables play in the household budget?
You make a very good arguement for the future of food production in our country. One of the BEST shows I have ever seen regarding this is called (to the best of my recollection): Peak oil in Cuba. You’d be looking directly into our future of food if you can get your hands on it.
My quick summary: After the USSR collapsed the told Cuba “No Oil!”". Cuba fell overnight. The average Cuban lost something like 17lbs the first year… There was no petrol for farm machines, cars, etc. Instead of crying the gov’t handed out millions of bicycles and people started “urban gardens”. One guy in a clip says he has two degrees- engineer and something else, but growing food pays better, so thats what he is doing. Farmers market popped up everywhere, people bartered, and now Cuba is a frontrunner in research and production of organic pesticides! The health of the general population has improved dramatically. I’d love to see this in the USA, it would put the hurt on our lame pharmicudical (sp?) industry.
It has been a while since I’ve seen it, and I missed a ton of info in my description, but if you are interested, FIND THIS VIDEO.
Who knew we would one day look to Castro for inspiration on how to save our country.
I see lots of victory gardens in my ‘hood. Fla. has a long growing season, but also a wicked nematode and locust problem. But there they are.
+AAA kudos to what I also see in the future.
Backyard garden? Everyone I know has one. I’ve got an apple tree that produces really sweet, really fugly apples. (I don’t spray them or anything.) They’re good for pies and applesauce but you wouldn’t eat one unprocessed because they are, seriously….ugly! We plant tomatoes, watermelons, strawberries, cukes, zucchini, hot peppers, and green peppers. My wife cans a lot of tomatoes and makes salsa.
We live in an area with a lot of deer so we lose some plants to them. Deer basically ate 3 young bing cherry trees. Left the pear trees alone, though.
The economic impact is pretty small.
This is so true, in fact we just started one last year for the fun of it. Little did I know it may become of some use!
I love gardening, but where I live we only have 20 frost free nights a year. Makes it tough! My indoor tomatoes are doing okay, though.
“I love gardening, but where I live we only have 20 frost free nights a year.”
Wow. Are you in Leadville or something?
My little sister is a canning an gardening freak and she hunts. She and her hubby have 500-600 acers plus critters. She grows and cans everything in sight and some stuff I even wonder about. Plants, animals or fish. Nobody is safe from her.
Sheesh…YOU… can’t even stand still very long at her place or you might end up IN frigging Mason JAR
Plants, animals or fish. Nobody is safe from her. That’s the ultimate survival plan. Eat your neighbors.
‘Eat your neighbors.’
Why, I’ve already made a list of who I’m going to eat first. (And this was even before it looked like times might get tough.)
b..b..but she doesn’t have many neighbors…anymore
“Why, I’ve already made a list of who I’m going to eat first. (And this was even before it looked like times might get tough.)”
I’ve got a few recipe ideas:
Mac ‘n Tony’s knees
Steak Diane
Keith stroganoff
Leg of Pam (with mint jelly)
Spaghetti with Pete’s balls
Name your neighbors, and I’d be happy to suggest another recipe.
Speaking as an amateur gardener, I can tell you that vegetable gardening on one’s own little plot of land, or even apartment balcony, is big business. Many people who used to spend most of their hobby dollars on flower gardening are turning to raising vegetables, tucking them in among the flowers or converting areas that used to be flower beds to growing edibles.
There is nothing on this planet better than a home-grown tomato. Nothing!
Every year I give out about 300lbs of tomatos to friends and co workers. I must say I get a ful head of pride every every complement. I am lucky my garden is 100×100 bigger than most track home lots.
I was not going to plant any veg this year - one because my hubby hated the “fruit” rats it attracted (he amde me give away my tomato plants) and two because we are all being asked ot cut back water usage in lovely CA.
Otherwise I was quite liking the idea of expanding the veg and flower garden.
Funny that you mention “street farming.” In the area of Georiga that I live it is a mixture of the people who have lived here forever and the suburb communities that have popped up all around the city(we are horse country so the city mandates a min of 1 acre per house. thank you to the housing bubble which popped and has kept it a nice mixture. Was worried for a while)..anyway the point I am trying to make is that on street corners during the spring/summer season streeet farms pop up everywhere. From sunflowers to watermelon to cucumbers to corn…who plants them?..one day you see they are plowed and planting ready..the next time corn stalks…no one touches them..and it inspired us last year to grow in our yard area as well. It felt good to grab a tomato, corn or fresh cucumber every evening and know it didn’t cost me anything except a 10 cents seed bag at walmart!!
I see a basic need based economy to be the new norm.
Food
Clothing
Shelter
Public transportation for the masses
Small savings accounts
Govt hands and control in banking, Insurance, Public Transportation, Education and Heath care. People will learn a hard living lesson in Amerika.
Good post. In the post-phony-baloney-economy gardening will be seen not just as a virtue but as a survival skill.
Now, where did I put my roast beef seeds?
We live in the city, and have a fairly small backyard. But our 3 “gals” give us 3 eggs a day.
Backyard chickens are gaining popularity again. Even our neighborhood pet store now carries organic chicken feed.
I expect to see more of this as things get worse.
My wife is putting in a backyard garden.
Unfortunately, it is in the space left over from hundreds of square feet of new concrete for driveway and patio enlarging, and incldues an irrigation system. $8200, yuck.
She can’t wait for her first crop of 3 cucumbers to go into the ground. I can wait.
It’s also built into many new immigrants minds and it builds up in the 2nd generation, more in the third generation, and so on.
“Grow or Die. This is hard-wired into the American psyche.”
And it’s the thing about us that drives me nuts (well, that and our MSM’s obsession with pop culture, the tragic or bizarre personal story of the moment, and made-up controversy. But I digress).
My employer, a “Not-for-profit” medical center, constantly pushes the mantra “We must grow the business”. And I constantly ask (to myself, because I want to keep my job) “WHY?” Why can’t we focus on doing what we do better? There is a finite amount of business in the field of health care. Why do we place so much emphasis on trying to garner a bigger piece of the pie for our (”not-for-profit”) corporation?
I never would have made it in the dog-eat-dog world of business competition.
His (or her) income is based on income or growth in some way. If not directly through a bonus, then because the higher the income/larger the organization, the higher the executive compensation can be set using “comparables” at similar exempt organizations.
Guaranteed.
Yup.
Bingo on the bonus situation, polly. Our CEO was one of the highest-compensated healthcare execs in the U.S. last year. Not-for-profit, my A**.
Now I’ve gone and blown my cover. So much for being incognito. Ah, they’re coming to take me away now….
Polly, I wrote a response basically saying “Bingo!” that may or may not show up later.
And it’s the thing about us that drives me nuts (well, that and our MSM’s obsession with pop culture, the tragic or bizarre personal story of the moment, and made-up controversy. But I digress).
Testify, Elanor! Nice post. I, too, often wonder, WHY?! Why is ‘bigger always better’?
THANK YOU, I can see you get the idea.
How many Starbucks do we need? Why does being a business owner require that you be obssessed with growing your business?
At what point does one have enough?
At what point do you decide that your business is big enough, your needs and your workers needs are being met, overhead is paid, etc.
Oh yeah, businesses need credit so they can EXPAND. Cuz everyone knows that businesses must always keep on expanding right?
Then when you have expanded as much as you can, do whatever you can to exploit new markets. Cover the entire planet with Starbucks and McDonalds.
Doesn’t is all boil down to greed? Can we not get past some basic human hard-wiring that we need to acquire as much as possible?
I don’t think I can ever train my dogs to not eat as much dog food as I leave for them - most dogs will eat themselves sick if left to their own devices. I just have some kind of YES UTOPIAN idea that humans don’t have to be that dumb.
“How many Starbucks do we need?”
Zero. In fact, I’m not so sure they’ll survive period. They grew way too big, way too fast.
Before the federal reserve businesses used *savings* to expand, savings that they earned by being profitable. When credit is cheap your competitors can “rush ahead” without doing the necessary saving. You are left with no choice but to follow the trend or go out of business.
Do you have an example of how we could deliberately encourage a flat, steady state economy?
Assuming we can exert that sort of control over the economy, wouldn’t it be more desireable to force growth?
Please do answer in terms of your premise that capitalism has “collapsed”.
This should be interesting.
the keyword you used is “forced growth” basically we had a horrible waste of resources with this housing bubble and we called that growth.
Have GDP fat line for contract would be better then trying to keep it going by means of fraud. Or pandering to the public, the stupid companies need to be shut down.
The too big to fail should be broken, jeeze where is trust busting
Carousel!
“Lastday, Capricorn 29’s. Year of the City: 2274. Carousel begins.”
“We have a runner on level 6.”
If we could have the glass box thingy in the living room where you can pick out hot women with a remote control, press the button, and they instantly show up and climb out wearing skimpy, loose outfits, ready for a right rodgering……it might actually be worth it.
Besides, you might get renewed….
A friend of mine went on carousel. Now he’s gone.
Growth for the sake of growth is the ideology of a cancer cell.
There is no “right amount” of growth. If people are free to use their own resources how they see fit they will invest and grow where they think it makes sense.
The problem we have today is that *some people* decided they would consume the resources of *other people* and then they counted this “consumption” as growth. The only thing that was growing was “consumption” and they did not accurately account for the losses in real capital or notice that even though there has been “nominal” growth there has been a very real shrinking of the wealth we need.
not exactly.. the individual cancers cell don’t grow. Cancer cells multiply at a high rate… a rate high enough to overcome their death rate as well as the body’s ability to kill them.
While such uncontrolled growth might be considered a legitimate survival strategy for cancer, it has one major fault. Eventually it kills the host and the cancer also dies.
The housing bubble was uncontrolled growth. In a sense, the Bubble came close to killing it’s host. Nobody around here supports a repeat or continuation of that sort of growth.
And to diminish the benefits of normal, healthy economic growth by equating it to that of cancer is at best disingenuous.
It would be more accurate to equate a healthy economy with a plant, or tree. A tree grows because there is competition for sunlight. It need not grow at some enormous rate to survive.. only equal to or, preferably, a bit faster than it’s competitors.
Do you have an example of how we could deliberately encourage a flat, steady state economy? How about living within your means?
Exactly!
But then the bankers, executives, politicians, etc. cannot grow richer off the work of others.
They will grow rich by taking bribes. Black market and an underground hush hush economy will spring up.
My living within my means won’t make a dent in the overall economy. It’ll certainly affect my personal economy.
The thread’s original poster implys that a steady state can be deliberately aimed at… that there is some method that the PTB could institute towards this end, if only they wanted to, even though capitalism has supposedly collapsed. I asked what methods he was referring to.
btw.. A “steady state” economy has a definition that does not take into account how much people spend. (Wiki defines it as: The steady state is a condition of the economy in which output per worker (productivity of labour) and capital per worker (capital intensity) do not change over time.)
..but lets just disregard that and continue along your line of thought..
I’ll rephrase my question: How can we (or the PTB) force everyone to live within their means?
I said “capitalism as we know it” has collapsed.
OK HBBers, I would love to sit here in front of my computer and discuss economics and politics (yes I do love to do that)….
…but here is sunny CA there are waves to be ridden. My board is on the car and I will have to continue this conversation later.
But - there is much good stuff out there on the web for your reading pleasure. Just google “steady state economy”. I’m not gonna link because then my posts never show up.
Please report back after your readings with your well-thought out responses. Don’t forget to spell check. No knee-jerk responses. Put your politics aside for a moment and think of the bigger picture.
I’ll catch a couple of nice waves for you and check back in this evening
yeah.. see ya later.. commie.
Two of our totally insane in-house English teachers were screaming and crying about all of the “Apostrope Abuse” on last night”’’s board and now all my sissy friends are afraid to post ?
Good thing taxmebootay didn’t make an appearance–they’d a’ fainted away or else cried like little French girls!
How’s that?
Apostrophe abuse? Where’s the problem’s?
Was doing some research for my inventor/father this morning. Found this on a government website:
“…it’s mission, programs, and organizational structure.”
Oopsey-daisy!
Oh, my bad. I should have said that my father *IS* an inventor, and I was doing some research for him.
‘Scuse me!
I have wondered this myself. I think there will always be technological improvements, but that doesn’t have to result in “growth” as we define it today. For all the ever-expanding growth in the economy, we still have many societal ills (poverty, homelessness, lack of adequate medical care, etc.) that have actually gotten much worse in the past few decades.
Instead of measuring the “success” of the economy by growth of GDP or whatever usual tools, why not use health and standard of living of the majority of citizens as the yardstick by which a successful business or economy is measured?
We do use a quality of life metric and so does much of the world. We just ignore it because it clearly shows we’re going backwards.
Google it and choose any reputable research you deem fit. They all same the same thing.
Yo, SF.
I have to admit that that “0″ in the BitsBucket was driving me nuts as well. Care to elaborate/link to this “steady state” of which you speak?
I was always under the impression that unless an economy was producing something, there was nothing on which to base a currency.
Thanks.
Lovely crescent moon and Venus out tonight btw….
Lovely crescent moon and Venus out tonight btw….
Most definitely.
————————–
Can’t answer for sfrenter, but my impression is that this obsession with “growth” is problematic for our economy. Sometimes, too much growth ends up in overcapacity, and we get malinvestment as a result.
Instead, perhaps a steady, slow/no-growth economy would be more stable. It’s a bit like pushing on a string, IMHO. We grow and grow, **but need to find a market/demand that is growing equally fast** for our products/services. If that market doesn’t exist, we artificially stimulate demand via cheap credit and slick advertising campaigns.
And here we are…
Again, not sure if that was what the OP intended, but it’s how I interpret it…and agree that mature economies cannot grow at the same rate as developing economies. We need to focus on stability rather than growth, IMHO.
definitely, just look at nature: fast growth is almost always extremely unstable. Most of nature has ’stable economies’ and although we think we are far above that, we are not IMHO.
Fast growth is what got us into the current economic troubles and is leading to even more serious (existential) problems down the road. Yes, we need to focus on stability and sustainability (but it won’t happen, because it would be more difficult for the kleptocrats and topmanagers to grab a huge chunk of the pie in such an economy).
I suspect that a steady growth in the economy due to productivity improvements is a good thing, a goal that should be and is acheivable. But I agree with you about the “growth obsession,” when it comes to Wall Street. The way to make money had over fist is to buy in on the bottom floor of some startup that becomes a big company. That’s WHY WS is obsessed with growth stocks, and willing to pay a premium for them. Of course most startups fail. And the most successful eventually reach saturation, and can grow no more. (starbucks) These two factors add to the degree of speculation in the stock market. The goal is to buy early and sell before the stock peaks, when it is still growing…
productivity improvements should mean that most products and services get cheaper in real terms (more affordable) instead of more expensive - like they do in the current debt-fueled economy where only some products that you don’t really need get more affordable.
If product quality of durables goes up at the same time, the economy is certain to shrink in dollar terms, except when new, really useful products (markets) would be found.
Yes, cheaper in real terms. But the IDEA in principle of a fiat money system is that we add enough money to counteract this tendency. It’s also supposed to act to counter the concentration of wealth.
When I worked for a large orange-colored home improvement chain in Flagstaff, AZ, it always used to frost my pumpkin when Bob Nardelli and his Atlanta A-holes would pass on our store’s new sales goals: always double digit sales growth expected no matter what the extenuating circumstances.
They went ahead and built another store on the east side of town after opening a store just a few years ago in Cottonwood to the south. I told anyone who would listen (not many) that these corporate clowns were going to shoot themselves in the foot–especially when the real estate market takes a dive.
Well, the RE market has taken a dump and we all know the rest. Can’t tell these “highly talented” Welch clones anything , can we?
“Well, the RE market has taken a dump and we all know the rest. Can’t tell these “highly talented” Welch clones anything , can we?”
Thats why they must recieve gargantuan bonuses or else this TALENT will go somewhere else.
recieve = receive
No, really, I can spell even thought the facts contradict that statement.
BWa ha ha. My wife and I are eagerly awaiting the new Home Depot being finished this month 1 mile closer to our house. This implys, of course, that they are closing the older one that was 1 mile further up the freeway.
Clearly, being a half mile closer to us than the Lowes is an important part of their corporate strategy.
said it better then me
How about a “sustainable” economy?
That would take careful considerate thought and generous compromise. Hardly what you can expect from a predatory society.
“Hardly what you can expect from a predatory society.”
Name a non-predatory society. Society is a collection of individuals, and humans are a predatory species.
My point exactly. Make your own sustainable lifestyle. Society will not head that way.
Well, we have evolved somewhat from the middle ages, from the days of witch burning and slaveholding. But maybe not so much from the Gilded Age and the robber barons, eh?
Still, one could hope that as an intelligent species which occasionally learns from its mistakes that we could stumble toward something more sustainable. We know about growth for growth’s sake … the MO of the cancer cell, as Ed Abbey put it.
Ah, the smell of philosophizing in the morning. Not exactly like victory, I guess.
True, but a slowly evolving one. We don’t have the same sort of blatant witch trials and slaveholding that we once had, at least. Who knows, we might stumble to our senses over time.
I think our once “sustainable” economy a bought a ticket on the old Rock Island Line and that mighty fine train left the station…many, many years ago
There are many things we can produce that are not things. As I posted (but post got swallowed?) I would love to stay and chat, but surf’s up here, gotta go!
Google “steady state economy”. Read.
I may have set my sights too low with this ongoing real estate crash. I first had thoughts of buying a house for 1/2 price, but now turn my hopes to maybe buying a farm in Montana.
With the drop in grain and cattle prices, drying up of credit, not many farmers have been able to save for a rainy day. It has been speculated by some on this blog that the next big crash will be in farmland and I tend to agree. A lot of farmers screwed themselves last year by thinking they were going to get high prices for their product. However, the longer they waited to sell their grain, the more money they lost. This was after they paid the highest prices ever for fuel and fertilizer.
The one thing that some farmers have going for them is the CRP dollars from the govt. But that seems to be running out slowly and I haven’t spent much time researching how long the program will continue.
Meanwhile, it sure is great to be a “lowly” renter through all of this. I have no desire to even look at buying anything for another year or two.
When tillable dirt goes back to $500/acre is when we’re back to normal. Vast expanses of Delaware dirt is still fantasy priced at a range of 10,000-40,000/acre.
“When tillable dirt goes back to $500/acre is when we’re back to normal. Vast expanses of Delaware dirt is still fantasy priced at a range of 10,000-40,000/acre”.
Fantasy dirt prices here also, we watched a 2 acre plot that sold for $10,000.00 in 2001 go to an asking price of near $200,000.00 last year, and we live in a poor state with over 10% unemployment now. LOOONG way to go!
It sounds like it was grossly overpriced in 2001. $5k/acre? Spare me.
I know nothing about what’s happening back east, but in western WA, as zoning laws have changed, what was once farmland, will never again be. Haven’t seen $500 per acre in over 20 years. I don’t expect to ever again.
There are “vast expanses” in Delaware?
Polly it sounds strange but it’s true. Most of the penninsula south of the C&D canal is or was ag land. It’s takes an hour to drive from the Del shore to the MD border to the west if memory serves me.
Actually, I do believe you. 95 barely clips Deleware, and that is pretty much all I’ve ever done (plus train) in that state. Hey, I grew up in suburban MA (easy train ride to Boston) and we had several farms in town. You could drive around in the summer and pick up fresh sweet corn and leave the money in a can nailed to the sign.
The Trader Joe’s down the street from me gets heirloom tomatoes from one of the remaining farms in my home town, though they do a lot of pick your own as well which makes it kind of “farming lite” as near as I can tell.
This country is not as filled up as we think it is, even with sprawl.
I knew the end was near in 2005 when I got lost on the way to Rehoboth and stumbled across some McMansion farm out in the middle of BFE about 25 miles south of Dover and nowhere near the shore. Totally absurd.
It makes me want to find the place again and see if they sold a single one. It was about 1/4 developed when I saw it. More uesfull if it had remained a corn field thats for certain.
You’d be surprised - try zooming in on google maps satellite view - there are indeed large areas of farmland. NJ too.
Becareful of buying any tpye of farm. I lived on a 2,200 acre grain/cattle farm with associated other critters when I was going to college.
Sheesh…I never had so many demanding and unforgiving BOSSES in my life
‘Sheesh…I never had so many demanding and unforgiving BOSSES in my life’
Boy, you got that right. I growed up on a farm with cows and horses and stuff, not even that many, but I’m still not fully recovered. Especially from the goats. Them jerks will scar your spirit and ruin your mental equilibrium, for sure. They do it for an idle prank, in between eating cars and fruit-trees.
Darn. So much for my idea of buying a goat to keep the lawn cropped. Of course, it probably wouldn’t distinguish the lawn from the garden, so maybe it’s good to let that dream fade away.
‘Of course, it probably wouldn’t distinguish the lawn from the garden,’
Heck, it wouldn’t distinguish between your lawn and your cast iron patio furniture, stray kittens and vagrants, and any handy vehicles, let alone leave your garden intact.
“Heck, it wouldn’t distinguish between your lawn and your cast iron patio furniture…”
Exactly. No need to go to the junkyard- just throw it in the goat bin.
yeah maybe ted turner will sell you some of his MT dirt
Oy. I just accidentally fell out of my self-imposed news exile and heard some madman congressman (R-don’t know his name) giving his defintion of “stimulus”:
If the government gives people $5,000, then they can afford to buy a Chrysler from the plant where he lives. What?!
And now I find we have an local election coming up and the realtors are getting all involved:
“These people destroyed our [RE] industry. And they would destroy us again in a heartbeat. This history is worth remembering, because now we have a lovely Carole James leading the NDP [the Canadian leftie party], who is the new smiling, shiny puppet of the left-wing ideologues.”
Now, I don’t care if the local business community campaign against the NDP (who haven’t been in power for ages and probably won’t win again anyway), that’s just normal. But I don’t want to hear a bunch of realtors giving political opinions all over the place. I already had to hear their “economic forecasts” for 5 years. Go. Away. Get. Off. the. News. You’re not economists and you’re not politicians, you’re just salesmen, stop being taken seriously!! Aaaaaaaaaaaaah.
Thanks, I can go to sleep now.
Another Blagojevich????
Give me a $5000 reduction in principle on my credit cards and i will buy things i desperately NEED. Like a new suit for job interviews, a mac laptop so i can get jobs which REQUIRE you to have your own even as an intern…yes you cant even intern in America without your own Mac laptop…WTF?
I need a $175 oxygen sensor on my car to get the engine light off…
REAL needs and money spent wisely by us peons.
=====================================
If the government gives people $5,000, then they can afford to buy a Chrysler from the plant where he lives. What?!
“.. a mac laptop so i can get jobs which REQUIRE you to have your own even as an intern…yes you cant even intern in America without your own Mac laptop…WTF?”
Sheesh…I’m really, really OLD!
WTF?…I went to college with the geeks that played with ancient slide rules, old TI calculators and helped invent your Mac laptop problems….Auuuuggggggggg !
I have one of my grandfather’s old slide rules - he was a civil engineer. It is beautiful. I was told it is ivory, too, though I have my doubts.
Compass No. 495 Made in Japan.
My father still uses his slide rule.
Geez you guys. I used a slide rule in college, since calculators hadn’t been invented yet.
Whippersnappers!
Mikey:
My junior year in college, I bought a state-of-the-art Texas Instruments calculator that added, subtracted, multiplied and divided! It was bulky, weighed a couple of pounds and cost $85, a lot of money in those days.
I remember those TI calculator college days Elanor. One of my professors announced that there would be NO battery operated calculators ALLOWED in his math classes. About 1/2 the class got up and headed to the deans office for a class transfer.
I was by no means a math whiz but my Mom taught me how many fingers and toes I had and I was confident enough to operate a little wooden pencil with an eraser.
I pulled a B- there but my college freshman English professor still trembles and communicates to me with some sort of “gestures” at our college reuions
Obviously wasn’t an engineering class (I used a solar calculator). Re-bought two more of the out of production model on ebay since they last nearly forever. Only problem back in the day was the possibility that some idiot security gard would break it trying to take the batteries out entering some classified area.
We used to have a pile of stones we’d use for our math problems.
Around 1971 a guy in our office bought the first portable TI four-function calculator. LED segment readout, a real battery hog. He paid $199 for it and was really pi$$ed when the price dropped to $129 about a month later.
Now they give four-function calculators away.
Now they give 10 function calculators away.
It is amazing isn’t it?
Adam, you were lucky. We didn’t have any pile of stones, only rabbit turds…
Rabbit turds? You lucky lucky bastard. We had hot burning coals, and we were DAAAAMN glad to get ‘em.
The whole “internship” scam is just another way that the elites can keep their position relative to the rest of America. The only place I remember seeing this addressed was an as aside in Naomi Klein’s “No Logo”, btw. It used to be that internships were a part-time thing in which to gain experience in a certain industry, but they have become a chance for companies to get free labor from young job seekers. Even if all you did during the internship was make coffee and copies, you are in a better position with an internship on the resume (and the connections made through it) than without.
Who can afford to go work for free for some company for several months, and pay for the “professional” wardrobe, laptop, and other business expenses, let alone pay living expenses, during that time? Not the average joe, or the college age offspring of the average joe. So who is in a better position to appear qualified for an entry-level corporate gig? The kid who went to state school and delivered pizzas to offset the student loans, or the kid whose parents paid the rent while they worked for free as an “intern” for some company? Poor and working-class folks don’t have the luxury of being able to work full-time without pay for several months.
Meanwhile, who has better connections, and is more likely to be offered a job with the company? The lower-class kid who had to actually work for pay, or the rich kid who already did an “internship” with the company?
Oh, for Pete’s sake. Free labor from interns isn’t exactly news. I worked one of those “free labor” internships back in 1978.
Why would anyone work for free except as a charity volunteer?
Do you realize how incredibly dumb that is? (and that’s putting it politely)
That’s funny. Chrysler giving people a $5000 discount isn’t causing them to buy the cars, so why would getting a $5000 present (which can be spent on anything or even saved) do it? Maybe Chrysler should try a $10,000 price reduction and see how that works.
“Chrysler giving people a $5000 discount isn’t causing them to buy the cars.” Thats funny because my dodge dealer call yesterday, asked me if I was the market for a new truck. I said later this year I was going to buy. He got all excited up until I told him it would be a Toyota Tundra. Then I told him I did not think Chrysler was going to survive. He agreed the hung up.
Im bumping up all my California tax exemptions to the max this year. I would rather owe the state money than vice versa. This is the nail in the coffin for business’ in Cali.
I was going to spend my state tax refund on a new fridge, however I dont think Sears takes IOU’s.
California will never learn. They always seem to pick really “bad actors” as govenors
At least Arnold managed to cut govt expenditures, including job furloughs.. upheld by a court yesterday if i recall.. which is nothing to sneeze at, imo.
Cool..now just get the Courts to let him run as a GOP President and California will have solved ALL our minor economic problems….once again
Oh ye of little faith! Our savior is already amongst us!
Buckwheat, it seems to me that if you max out all your exemptions, you end up owing LESS, or maybe even qualify for a refund, um I mean IOU.
Did I misunderstand your post?
By increasing exemptions, less taxes are taken out of each check, which increases your chances of owing more come tax time. “Maxing them out” is about taking as many deductions as you can, but keeping within 10% of what you’ll ultimately owe on Federal (to avoid penalties). You need to play that strategy if you’re working and paying taxes in Cali right now.
I will increase my exemptions per pay period to reflect I have like 6 six kids so they will take out way less money. When I file at the end of the year of course I will be honest and will only be able to claim my one child. When the computing is done at tax time I owe the state a grand instead of vice versa.
I once processed a W-2 for a guy upping his exemptions to 13. I questioned him on it to double check, knowing he was well paid and certainly didn’t have 13 kids. He sheepishly admitted to being in money trouble.
I have friends in Cali and they are all upping their 2009 exemptions too. It would be naieve to do anything else.
I caught that one too.
One thing I like about Illinois is that your state income tax is just a flat 3% of your federal adjusted income. There are a few exemptions, but nothing large.
It seems that no matter what I do, I am never more than $100 off in any direction at tax time. Actually, my experience is that it’s really hard to overpay and get a refund - any time I’ve managed to do that it has been somewhere around $20 so it’s easier to just put a check mark in the box to donate it to the land conservation fund and not worry about getting a piddly check in the mail a few months later.
We can probably look forward to that 3% being raised pretty soon by our new governor.
Not sure how exactly I managed to do it, but MD owes me less than $60 when I did a quick guesstimate on my taxes this week. Did Maryland raise income taxes? I thought I upped the two withholdings in comparable ways last year, but MD was just about perfect and the Fed one was definitely too high. I should have adjusted when interest rates tanked.
I know a lot of people around here have a very different mind set, but the extraordinary convenience of not having to deal with quarterly payments or possible interest and penalties wins for me every time. Doesn’t work for the day traders, of course….
“Im bumping up all my California tax exemptions to the max this year. I would rather owe the state money than vice versa. This is the nail in the coffin for business’ in Cali.”
If any tax refund I’m owed by California is delayed, I will adjust my withholding to have the minimum withheld. If I owe money next year, they’ll get a check on April 15th and not one day sooner.
I really wonder if they have any legal right to delay a tax refund, not that that will stop them. If they lose, they’ll just pay it later plus some token amount of interest.
Call your local rep and senator and make sure to tell them that. It is exactly the sort of thing that could head the contemplated policy off at the pass. States are terrified of an interuption in the regular flow of money coming in. Absolutely terrified.
Thanks for the suggestion. I just emailed my rep and senator expressing my concerns and possible actions.
SDGreg - can you e-mail me at sd.re.b@hotmail.com
Thanks!
I have lost my tolerance to caffeine.
/OFFTOPIC
What?! *slams down mug full of coffee and grasps temples in sympathy *
You poor poor man! That’s terrible! How do you know? And why did it happen, was yer abducted by aliens, and probed?
And this in’t off-topic, nohow, coffee is the fuel of civilization!
Amen.
I know how it is. I decaffeinated for eye surgery a few months ago and notice the less restful sleeping effects if I fall off the wagon.
Lunesta and Gustav Mahler….
“Dunkel ist das Leben, ist der Tod!”
Check out this email I got from Airtran:
“Buy, sell or finance your home and earn A+ Rewards credits after closing! Watch how quickly your A+ Rewards credit balance can add up”
American’s doing that too.
Excuse me what? The airlines are offering home refi’s now?
Well, that about beats all…
Nah, just points. Of course in the logic of this consumer culture buying a house just to get a trip to HI is a no brainer.
You get a discount if you purchase near the airport.
“You get a discount if you purchase near the airport.”
You get a discount if you purchase the airline!
A couple of years ago, based on what I was reading on this board and other places I decided to move 75% of my (small) RRSP (Canadian tax sheltered investment vehicle) to a safer place from a equity mix. The investment person thought I was making a big mistake, market only goes up in the long run yadda yadda. That 75% portion has been increasing a little bit each year, the stuff left in equities, not so good .
It’s off by about a third.
My employer announced about three weeks ago that 500 people would be let go starting Feb 2. I don’t think I’m in the danger zone but who knows? They are doing it over a two week period. Everyone is a bit freaked out but I actually prefer knowing the number and time frame. In previous layoff events they haven’t been announced, it’s been all rumours and speculation, then people start disappearing…
You should get back in touch with the investment person and compare notes.
They aren’t there anymore.
Could be “the move your going to regret…”
http://finance.yahoo.com/focus-retirement/article/106502/The-Move-You-Are-Going-to-Regret?mod=retirement-preparation
I haven’t regretted it so far..
Also because of what I was reading on here, my Mr. and I moved our retirement money out of stock-based funds and into 1:1 ratio funds. I told my mother to do the same. The other day, she told me that my uncle wished I had told him as well! He’s lost a bundle. This board (and Peter Schiff) is a year or two ahead of the curve, so I expect to be reading big things about back-yard gardening and a no-growth economy in 12-24 months time. I also expect gold will be taking off again shortly as a safe haven. We’ll see…
What are 1:1 ratio funds? Please edumacate me.
A savings account.
Economic Signs Turn From Grim To Worse
Another Wave of Evidence Of a Deepening Recession
By Annys Shin
Washington Post Staff Writer
Friday, January 30, 2009; Page A01
On the eve of what is expected to be the clearest evidence yet of the nation’s deepening recession, bad news rolled in from across the economy and the world.
Sales of new homes in December plummeted, corporations announced plans to cut 13,000 more U.S. jobs, unemployment claims jumped, and a troubled icon of U.S. manufacturing, Ford Motor, yesterday announced a massive loss.
Early this morning, the Japanese government announced that factory output had fallen 9.6 percent and that joblessness in the world’s second-largest economy jumped to 4.4 percent, in the largest increase in 41 years.
The accelerating pattern of grim indicators has led up to a report scheduled for release this morning on U.S. economic performance in the final three months of last year. Many economists think the economy shrank by as much as a 6 percent annual rate — that would be the worst quarter for the economy since 1982 — and they see little potential for growth until later this year.
Capturing the sentiment of a nation caught in an economic tailspin, President Obama said yesterday that it was “shameful” that Wall Street firms doled out nearly $20 billion in executive bonuses even as the government was spending billions of dollars to rescue financial firms.
“shameful”
Wow, I bet that really stung the banker men to hear that.
I would be really impressed if he made them give it back. Not much chance of that, though.
I’d like to see them let some of these rims go into actual bankruptcy. Then we’d see some clawbacks.
Screw these fraudsters who’ve wrecked the financial world! We need to round these bums up, give them a trial and then execute them like the Chinese do. And the one’s who don’t receive the death penalty get life in “cornhole prison”. I’ll give the Chinese credit, they know how to take care of big wigs who f*ck up and ruin lives. We can’t get all of them but we can get enough to make an example that will last for decades.
They probably already split the loot with his campaign. The rest is for show.
I wish I could believe that Obama had it in him to really change Washington, but since he’s pretty much a career politician, is surrounding himself with insiders and doing the same things his predecessors have done, I don’t really see that as a recipe for change. Sounds more like the definition of insanity. The only way things will ever change is to have a revolution. Round up all the politicians and millionaires that caused this mess and put their heads on fence posts outside the White House. Holy sh!t. I’m starting to sound like Roger Hedgecock! Nice name.
Wall Street Bonuses May Go Way of Dodo Amid Bailouts…
Jan. 30 (Bloomberg) — The Wall Street bonus, considered a sacred ritual, may become the industry’s biggest casualty as governments worldwide bail out financial institutions.
UBS AG was told to reduce bonuses after the Swiss government gave the country’s biggest bank a $59.2 billion lifeline. Bank of America Corp. is under pressure to scale back payouts after New York Attorney General Andrew Cuomo subpoenaed executives earlier this week for information on compensation and President Barack Obama said just yesterday that bonuses handed out by banks represent “the height of irresponsibility.”
The current system of “asymmetric compensation,” in which people are rewarded when they do well and aren’t required to return the rewards when they lose money, is detrimental to society and needs to change, said Nassim Taleb, a professor at New York University and author of “The Black Swan: The Impact of the Highly Improbable,” in an interview.
The worst economic crisis since the Great Depression, a $700 billion taxpayer bailout in the U.S. and the demise of three of the biggest securities firms — Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. — didn’t deter investment banks from offering year-end rewards to employees on top of their salaries.
Financial companies in New York City paid cash bonuses of $18.4 billion last year, the sixth-most in history, even as they posted record losses, according to data compiled by the office of state Comptroller Thomas DiNapoli.
Drain the Pool
“We won’t arrive at a situation where there are no bonuses,” Stephen Green, chairman of HSBC Holdings Plc, said at a press conference in Davos today. “There are always parts of companies that are profitable, and if somebody’s been working in a profitable business in a market where bonuses are a normal part of compensation, it’s difficult sometimes to say you won’t have any bonuses in that business.”
please … what a nonsense!
USB cut management bonuses from 3 billion to 2 billion (after strong political pressure); the company produced record losses for itself and especially for client portfolios. These criminals should all get fired without the golden parachutes and never get a job in the financial sector again; but instead they can party again with ‘just’ 2 billion for this year …
we have the same discussions in Europe and although the bonuses are sometimes cut, these gangsters always find new ways to get away with many millions a year in ‘compensation’. I’m sure one of the topics at Davos will be how they can stealthily get away with more loot now that the public eye is on the bonus culture.
NY City and State will be very unhappy if those bonuses are eliminated ‘cuz the former recipients will now pay a lot less in income taxes.
I think the key part of his statement was “profitable business”.
euro gold price blasted through the alltime high tonight, as expected.
EU stock exchanges are hovering near unchanged for now, but the record gold price spells trouble ahead. $gold downtrend is still being tested but can’t be long before it is broken too (as one of the last, gold is at an all time high in most other currencies already).
Everything in Europe is screaming inflation (or at most disinflation/stagflation): wages rising at record speed, prices of necessary goods rising strongly (except petrol, for now), prices of industry goods and services rising at record speed, home prices are still rising or holding steady (in Old Europe, not on the borders and UK). NO sign of ‘deflation’ here. Official CPI numbers are still in the 1-2% range thanks to all the downward manipulations.
Dutch mortgage rates have declined to 3.2%, that’s effectively 1.6% because of our HMD. And contrary to US, almost everyone who can fog a mirror can get a homeloan here, including 100-120% I/O loans and all kind of other crazy deals. Just what we needed
“And contrary to US, almost everyone who can fog a mirror can get a homeloan here, including 100-120% I/O loans and all kind of other crazy deals. Just what we needed”
I know, you know, that trend can not last. Sounds like when your bubble bursts there will be plenty of shrapnel to go around. It will happen when your PTB least expect it.
That’s what the US gets for trading Ft. Knox economics for Disneyworld dollars
At least Disney dollars have more colors and better pictures.
I know that that’s all I ask for, in my pretend currency.
When it is an all time high.
It’s a screaming signal to buy.
It’s the last frontier, distilled ambrosia of terra.
All baser bubbles betray, but not the bubble regia.
Gains we want, without the sweat.
One asset left, so place your bet.
A friend who lives on the Upper West Side of Manhattan told me
that a studio in a grand townhouse in the 70s near West End Avenue
that was previously rented for $3000 a month but which has been
vacant for a while is now being offered by the same owner for $1300.
Don’t know if this is evidence of deflation, or whether it’s part of
a trend, but it got my attention, for sure.
That’s my neighborhood.
BTW, that $3,000 was a “wishing rent” for a studio so that’s not really indicative.
Rents have dropped about 25% in two months over here.
Real question is how large is the studio. I know people live in 250 square foot studios in NYC, but I wouldn’t want to be one of them.
If the space is so small that it really is only good for sleeping when it is too late to reasonably get back to your place in the ‘burbs, then $1300 is a bit pricey, too.
NYC is one of the few places in the world where you can get an adult to pay huge $$ to live in a glorified drom room.
That’s because the adults are all hoping to “hit it big”. It’s the “gold rush” mentality.
And rents drop steeply in the down cycle.
Dear Faster–What are b’stone 1 BRs going for in your nabe?
We had to leave midtown for Forest Hills after the last bust–
and would love to return to the UWS–at the moment, as
renters. Thanks to you and to anyone else with info.
That is 10 times what we pay for our house payment. My pool has twice the square footage
The Law of Unintended Consequences rears it’s ugly head. Didn’t anyone think of this before now??
But homeowners get breaks from tax on forgiven debt, so why not GM??
http://www.detnews.com/apps/pbcs.dll/article?AID=/20090130/AUTO01/901300348/1148
The current U.S. administration says it will not be held to any monetary figure in order to ‘fix’ the problem. I for one can’t understand why we won’t experience an inflationary blast at some point?
Jan 31, 2009
CHAN AKYA
Keynesian bomb is ticking
By Chan Akya
Keynesian spending that is being unleashed upon an unsuspecting world takes the role of a stereotypical Hitchcock moment: after first beguiling audiences into believing that danger lurks around the corner, the master movie maker usually displays an anticlimactic result such as a harmless mewing cat; but before the comic relief can fully set in he reveals a nasty turn as the real villain enters from the other side of the screen.
For all the sounds and fury associated with the current meltdown in the global economy, the outburst of Keynesian spending will likely create a far worse result, namely hyperinflation that could
well take hold before the year is over. There are a number of factors leading up to this, on both the supply and demand sides of the equation.
To the cynically minded few, there is a simple enough reason for this, namely that inflation is usually the best cure for all debt overhang situations. To explain that further using the example of the US economy, the overall “stock” of private, government and corporate debt at the end of 2007 was around US$25 trillion, about double the country’s annual gross domestic product. Against this, there have been some $25 trillion of asset value reduction from $50 trillion in the value of stocks, homes and future pension values to around $25 trillion by the end of 2008.
Okay… let’s say the government spends $2 trillion… $1 trillion defict, $700 billion TARP and half the $800 billion stimulus.
Okay. But let’s assume $2 trillion in debt goes bad, the $700B TARP sits on bank balance sheets against future losses, and most of the stimulus money goes to paying down debt.
What is the net effect on the money supply?
Government spending is supposed to multiply by 10 through fractional reserve banking by new debt being generated, but the debt is collapsing faster than new debt is generated so the money supply still shrinks.
There are 2 ways to make excess debt go away. 1) Inflate it away, but that requires wahe increases. Price increases without wage increases makes it harder, not easier to pay down debt. 2) Default.
Everything I see says government and bankers are hoping for 1) but most people are opting for 2).
So, do we end up with both 1 and 2?
Do we spend years trying for 1 and still end up with 2 (default)?
Couldn’t option 2 be a faster way to the eventual bottom so that we can begin rebuilding a more sustainable economy sooner? Do we really want to drag this out indefinitely by trying option 1?
You’re gonna get a Japan no matter what.
They can always tax it back away…
What comes after trillions?
zillions?
What comes after trillions?
Well a billion bytes is a gigabyte. A trillion bytes is a terabyte (a thousand gigabytes). And a thousand terabytes is a petabyte, so pillions maybe?
Petillion?
Thank you. I’m going to go with pillions and see how it sticks.
I’ll let you know.
billion
trillion
quadrillion
quintillion
sextillion
septillion
…
That should last through 2020 at least…
you skipped gazillion.
Maybe if the US forges new ground here, the British will finally give in and use our terminology. (OK, I know the Zimbabweans will have already deployed the petabuck by then, but I’m talking major currency here.)
You have good ideas.
And I like ‘pillion’, or ‘petillion’. It sounds like a crispy kind of potato snack. Or else a butterfly. Or else both, in the form of a crispy flying snack. All good things.
pillion is close to pillow. Kind of soft and squishy leading into the dream world
LOL Olymiagal
one googol…..10100
I think that depends on which version of ‘English’ you speak. In America, it’s quadrillion, I believe.
I call BS on this hyperinflation nonsense. What will hyperinflate? House prices? Been there, done that. Fuel Prices, ditto. Food? Now that’s a possibility, but that’s only in the case of a major natural disaster.
Combo is right on this one. Massive jobs losses leads to less dollars swishing around in the system and prices will remain stable or drop.
If anything we’ve already experience hyperinflation in the past 5 years and we’re now experiencing the hangover.
LOL! Now they worry! Hey idiots, we ain’t gonna pay the debt, I thought your guys were smart?
World worries how U.S. will pay for stimulus…
DAVOS, Switzerland: Even as the U.S. Congress looks for ways to expand President Barack Obama’s $819 billion stimulus package, the rest of the world is wondering how Washington will pay for it all.
Few people attending the World Economic Forum question the need to revive America’s economy, the world’s largest, with a package that could reach $1 trillion over two years. But the long-term fallout from increased borrowing by the U.S. government, and its potential to drive up inflation and interest rates around the world, seems to getting more attention here than in Washington.
“The U.S. needs to show some proof they have a plan to get out of the fiscal problem,” said Ernesto Zedillo, the former Mexican president who helped steer his country through a financial crisis in 1994. “We, as developing countries, need to know we won’t be crowded out of the capital markets, which is already happening.”
Zedillo said that Washington, unlike most other countries, had the option of simply printing more money, because the dollar was a reserve currency for the rest of the world.
Over the long run, that could force long-term interest rates higher and drive down the value of the dollar, undermining the benefits that come with its special status.
by printing, what are we? @#$%in idiots?
This morning CNBC had a couple ex-CEOs on. Co-founder of Home Depot and I missed the other guy’s company.
Listening to them, I was convinced they don’t get what is going on.
For the last 30 years, it seems the only things you had to worry about were access to capital, ability to import cheap goods, and how much of the profit was going to be skimmed off by government.
Now, in my opinion, there is something new they have to worry about, and it seems not to have sunk in yet. They have to worry about their customers actually having MONEY to buy the products.
For 30 years, the customers had access to ever larger piles of debt at ever lower interest rates. Customers didn’t need money because they had access to debt.
Now, that debt load is too large. Rather than living on debt, people are looking to pay down or walk away from debt. They actually need this silly little thing called WAGES!!!!
Talking about the stimulus, they want the full chunk of money to go to business tax cuts, to bankers, etc. We don’t need no stinking tax cuts to individuals. We don’t need unemployment benefits extensions, increase in food stamps, healthcare, money to states for education…. That stuff is just wasted money.
What we need is to give the money to the lenders so they can lend more money and we can return to 2005.
INSANE!!!
There is already too much debt! Banks are lending because people that need to borrow probably can’t pay it back. Giving more money to the lenders does not make it possible for people already burried in debt to take on more debt or pay back the debt they already have.
We need less debt. We need wages!!!!!!!!!!!!!
the problem is that many current business models - especially with the larger companies - are based on forever declining interest rates, and/or negative real rates. Don’t worry about debt loads because inflation will bail everyone out - use the debt to aggressively expand operations and crush competitors. Companies that try to be profitable without excessive debt have been crowded out over the last 10-20 years, not much left that would be profitable at normal rates.
This situation will only improve when the current, desperately ill, economic model crashes.
Often consumers are operating on a similar model; big business is wasting most of the money that is thrown at it, but consumers do exactly the same: give them a longer rope to hang themselves on and they will happily cooperate. They need a very hard lesson, just like big business.
can you explain to me how a company that doesnt leverage up, gets crowded out? BoA stopped playing in Alt A paper and they would be in a great position if they didnt take on bad banks
many big companies are operating at a loss e.g. by buying market share through selling popular stuff at a loss (loss doesn’t matter if extra credit is dirt cheap, the stock market loves expanding business). As a result, they are crowding out small companies that don’t thrive on debt and have to make a profit. I have seen many examples in retail, and I don’t doubt it happens everywhere at the moment.
It’s called (or was at one time) Predatory Pricing.
At 82% off its never been a better time to buy.
Corporations get to deduct interest paid on debt from their taxable income. They can’t deduct dividends (lets skip the dividends received deduction for these purposes since that applies within a corporate entity, not between the corporate entity and its investors).
So a corporation that raises capital by issuing corporate bonds at 6% gets a huge tax deduction compared to a corporation that raises capital by selling shares and paying dividends at the same rate. The tax code favors debt.
Of course, the tax deduction is only useful if you have taxable profits, but that is another issue entirely.
They can’t deduct dividends A mere bagatelle that could be (but won’t ever) be canceled by an act of Congress.
You think this Congress is going to eliminate the double taxation of corporate profits? When RR and GWB didn’t? OK. Please don’t hold your breath waiting. Turning blue and passing out isn’t fun.
Or did you mean they will elimiate the deduction for interest? Cost of borrowing is part of cost of doing business and businesses are taxed on profits, not income. Borrowing over a certain amount may be a very bad business decision, but so are a lot of other things that corporations can do. Elimination of this deduction is also not a good candidate for breath holding.
YES YES. Add to this a stock market where equity prices are based upon the aggregate amount of money flowing into the market, and not the profits of and dividends from the underlying companies.
Jim,
dont confuse money flows with US dollars.
The majority of Home Depot’s business has always been the building trade. I worked there in college. Contractors would come in and buy things like 200 doors. Now they must be relying on the do-it yourself crowd to pull them through.
DYI is a non-starter also. I remember when I bought my home in 1989, 20% down which disappeared in two years. For years, I refused to put any money (large projects) into my house. In 2001 I redid my kitchen, 2002 one bath,2004 the master bath and patio. In ‘06, I realized we were in a bubble and I’ve stopped renovating. All people are not alike, but the renovation fever was affected by home appreciation.
And the ability to use a HELOC to pay for it.
I re-did.
is “I live better because”
I’ve been to 2 Home Depots in the last week and they were literally ghost towns. The lumber guy was complaining how slow it was, then right in the middle of cutting our wood for us, he gets called away by his manager to be a “greeter”. First of all, Mr. Congeniality he was NOT. Second of all, THERE WAS NO ONE TO GREET!!!! Say what you want about Home Depot, but their management is top notch!
“right in the middle”
cut yer own @#$%in wood….
WE need a job.
I just got my letter from State Farm yesterday; thank you for being a customer, we will be pulling all homeowners, renters, personal liability, PWC and boat lines in the next few months. Please go to a competitor now.
Kind of surprised that they pulled the lines other then homeowners; why not insure the other stuff? I know that homeowners is regulated by the state, and I am sure that they either couldn’t (or feel they couldn’t) make money at the insurance rates that the state mandated. But the other lines are uncontrolled, they could charge 300K per year to insure a 100K boat if they so desired. I’m just wondering, why pull the other lines.
So, I’m off to shop insurance again. I’m thinking about Geico, looking to move my 2 cars and my renters line over to them (they are still writing renters insurance). I’ll have to get them on the phone and see what they have to say.
The state of Florida might be requiring this. When Mass. had a car insurance regime that was a guaranteed loss for insurers, the Mass Div. of Insurance passed a rule that if an insurer dropped out of the auto insurance business they could not insure anything - houses, boats, etc.
In HI they flipped it the other way. If you weren’t writing home owners, you couldn’t write other policies. They tried to blackmail the insurance companies into writing home insurance, and all they did was make it hard to get car insurance.
They are thinking of doing the same thing in FL. If you write anything in the state, you have to write homeowners/renters as well.
I hope they don’t do it. Frankly, I wish they would just let Citizens compete with the private insurance companies and find a market rate. It cracks me up when people say that State Farm is leaving because they are mad they can’t make more money.
Ugh.. Don’t get me wrong, I think that insurance is a terribly crooked business. But, let me be the first to tell you, companies the size of SF don’t leave a market because they are “making too much money”. We’ve artificially set the rates for homeowners too low; because of that, SF feels they are taking on too much risk for the premium received. And frankly, I would tend to agree with them; having lived through a few decent hurricanes down here; they are just incredibly devastating. A cat 5 would put every insurance company in the nation (that’s writing in FL) out of business, no doubt about it.
I’m a big fan of free markets. Let the market determine the rate; if it’s high, so be it (just pushes home prices/values down further). I don’t really want to see all the risk fall on the state insurance fund (Citizens). That’s a terrible plan; insurance is all about pooling dis-similar types of risk together. Citizens would concentrate the losses for a hurricane right into the people least able to afford the problems (the people who were just hit by the hurricanes).
Oh well, all of this is good news for those of us looking to buy in FL, prices will fall further as insurance prices increase. Kind of a PITA for me though, I have to find a new renter’s policy. I think I’m going to go with Geico, 500 bucks a year for the “gold level” policy (everything maxed out) doesn’t seem that bad to me.
And of course the destruction of a bunch of under- to un-insured homes might do something about the oversupply of housing….
If i hadda guess they are bailing out because there’s little money in insuring the stuff hurricanes cannot destroy. As to charging whatever they like, and State Farm competes with all the other insurance companies.
There was a small article up here about State Farm (HQ is near Chicago) a few days ago. Florida denied them a rate hike, so they told the state they were completely exiting the Florida insurance market. Their plan is to be gone in ~3 years.
Too bad the taxpayer don’t own an insurance company that could step right in.
–Makes me glad I don’t pay taxes in FL.
Wonder what brought this about, lol. No one saw this coming, lend money to dead beats, and reap the reward!
A tiny town outside our state capital…
News - Local / Metro
Friday, Jan. 30, 2009
Irmo presses home upkeep
Messy yards, broken-down vehicles worry officials.
Parts of Irmo are starting to look rundown, town officials and neighborhood leaders say.
Unkempt yards, broken-down vehicles in driveways and piles of trash are generating concern that a suburban version of big-city blight is taking root.
The problem is sprouting in areas built two generations ago as new homes continue to rise on the edge of the town of 12,500, one of Columbia’s oldest neighboring communities.
Irmo Police Department Code Enforcement Officer Bettye Anderson approaches a house after determining a truck parked in a Friarsgate subdivision driveway may be considered abandoned. Vehicles must be on four inflated tires and able to run to not violate code. Some Irmo neighborhoods are beginning to show their age, with unkempt yards and code violations on the rise, according to town councilman Hardy Kingsaid.
“If we let it get worse, it’s going to bring down our community,” Town Councilman Hardy Kingsaid. “We need to turn things around without some neighborhoods becoming the pits.”
Town police warned homeowners 110 times about messy yards, 270 times about inoperable vehicles, and 111 times about trash accumulation since September 2007, records show.
No totals on those problems at the 4,000 homes in town had been kept before then.
Irmo officials are searching for ways to stop the problems — ones they say are increasing with home foreclosures — from spreading.
“This can become pervasive,” Councilwoman Kathy Condomsaid. “This is something we need to prevent. It’s a problem we are dealing with consistently.”
What’s the ratio of owner-occupied homes vs. rentals in Irmo? In any community of SF homes, there is a tipping point.
Hey, that would be a great research topic for someone seeking a post-graduate degree in the social sciences.
Husband shared a house in Irmo when he was working a short term contract in Columbia ten years ago. He was in a nice area and we considered moving there from the Greenville area. I haven’t been back lately though. I do remember several developments that were only partly finished. They bothered me then.
Kathy Condom? sounds like we’re in health ed class.
Reminds me of the Flight of the Concords where Brit has a job wearing a giant condom.
The stock market is in a swoon….401(k)s are sickly…CDs are pallid….real estate is at death’s door. What to do?
“Stocks overall aren’t going to appreciate in value for the near future and there aren’t many real ‘growth’ opportunities in this market available to the typical American participant in a 401(k). Americans in the know are pulling funds out of stocks, which are just going down or oscillating in the same sickening range of depressed values, and putting their 401(k) moneys in bonds or money market funds, which are generating returns only slightly better than the CPI at best. At worst, the huge amounts of cash being shifted into Treasuries and bonds is creating an unsustainable bubble in Treasuries and bonds that will also soon burst.”
Jeff Snyder suggests the feds enact a three to four year program permitting people to prepay their debts with pretax dollars that would otherwise be used to make their tax-exempt 401(k) contributions. Screwball idea? Maybe not.
1) Moral hazard. Reward people that went into debt by helping them avoid income tax.
2) Paying off debt shrinks the money supply, the LAST thing the PTB want right now.
I have a better idea. Let’s just not have any taxes.
“Let’s just not have any taxes.”
Great idea. After all, if they’re going to wipe out borders and make this a polyglot warring culture country, why have any taxes at all?
At least we would not be paying salaries of Barney Frank, Chris Dodd, Harry Reid, Nancy Pelosi, Chuck Shumer and Hillary.
At least we would not be paying salaries of Barney Frank, Chris Dodd, Harry Reid, Nancy Pelosi, Chuck Shumer and Hillary.
Or Mark Foley, Tom DeLay, Larry Craig, Randy Cunningham, Ted Stevens and Scooter.
…oh wait.
Which is not to say that I care much for Barney Frank, Chris Dodd, Harry Reid, Nancy Pelosi or Hillary.
Can’t stand Frank, Reid or Hillary, for that matter.
Don’t know much about Schumer.
Love it! Throw in SS contributions as well. Not just for a few years, but for a decade so that the most pernitious debt, the mortgage, can be paid off. The benefit won’t be so much access to that money but the interest saved by paying off debt.
If retirement savings were consecutive to mortgage payments rather than concurrent, a thirty-year mortgage would be closer to ten years and the interest saved on a median-priced home would be well into six digits. In turn, there would be much less reliance on credit to buy other things. There’s still plenty of time to contribute into retirement, just pay more into it after paying ten years on the home. It would cost the government nothing but cost the banks about 70% on each mortgage.
Wouldn’t that just destroy the market? All the automated 401k contributions must account for alot.
I’m just waiting for “Pets.com” to re-appear with THEIR angry sock puppet DEMANDING a bailout
“I’m just waiting for “Pets.com” to re-appear with THEIR angry sock puppet DEMANDING a bailout”
Dang I wish I was a writer for SNL - I’d be stealing that idea in a heartbeat.
(PS You should send it to them. Or The Daily Show.)
Chan Akya writes in Asia Times: “The honest way [to resolve the financial crisis] would be to write off the debt and the capital of all financial companies and start all over again with vastly shrunk monetary bases: however no liberal democracy - much less autocratic dictators - can withstand wave upon wave of deflation that this entails. The opposite therefore must be true: a burst of inflation that helps to reduce the purchasing power of money while effectively reducing the difficulty associated with servicing mountains of debt. This is all good for the people who have to repay their borrowings, but what about those who own the assets, that is, the lenders?”
If you know for sure that double, triple, or quadruple inflation rates await us you should be taking on gobs of debt and putting the borrowed money into commodities and other real assets that fare well in heavy inflation. You will pay back the borrowed money in much cheaper dollars thereby benefiting yourself and ruining the lender.
Caveat: No inflation in the history of humankind has ever failed to end painfully. When the inevitable collapse of inflation occurs you don’t want to be caught under a load of debt.
This is not to be construed as financial advice. Merely a recital of historical fact.
In the face of massive debt collapse, attempts to create inflation becomes like pushing on a string. You can shove money into the system, but you can’t make people spend it. If people aren’t spending money, the value of those commodities falls.
Do you have to force people to spend money? How much does it cost just to survive?
I’ll guess the average range of the average person living in average conditions is they spend between 80 and 100% of income on basic necessities.
I’ve always been suspicious of the “pushing on a string,” analogy. You can ALWAYS find people willing to borrow and spend their way to the poor house. IMHO the difficulty is that lenders start actually looking at the borrowers capacity to pay the money back.
But now that the banks can’t securitize, they are worried about getting paid back. That means tighter lending standards.
They can push more money at the banks, but they can’t make the banks lend to people that can’t pay it back nor make those people better able to pay it back. This is the “pushing on the string” aspect.
“But now that the banks can’t securitize, they are worried about getting paid back. That means tighter lending standards.”
BINGO!
They would gladly lend other people`s money without any risk of loss while collecting huge fees, but lending their money with a risk of loss while collecting small fees is a different story.
Which is why I blame the rating agencies for the mess we’re in. No phony rating =no sale of phony debt=no bubble.
Jeff, they look like the guy in Vegas whose just been told that those are $1,000 chips he’s been loosing, not $100 chips.
Well, now that our premier Axiom 101 from “Rules of American Usery and Fraud” has run aground, is there anyone out there that actually knows HOW to build and sell something of VALUE…anything…anyone ?
anyone out there that actually knows HOW to build and sell something of VALUE…anything…anyone ? Prostitutes & tattoo artists qualify, and they are domestic businesses, aren’t they?
Yes. We are the largest producer of electrical solar panels in the world.
The market? Overseas and growing even in this economy.
What not here? I guess an Escalade is seen as a better investment for most home and business owners.
Wet the little string, leave it in a foreclosure in Detroit overnight and Presto…you could push against the string!
Of course, you or the little string might be stolen, tampered with, murdered or reported missing as part of this little demonstration
I am just now beginning to see more generous offerings from bank credit card companies again (in some cases arbitragible rates) after a period of about a year or two in which there was nothing of interest, interest-wise.
How long can YOU hold a few million EMPTY houses over your head Uncle Sam ?
yes, timing is everything and the inflation/deflation/stagflation etc. debate keeps raging on.
I can understand why people with no money in my country try to get the absolute maximum home + mortgage: privatize the gains, socialize the losses. They act like they are financially dumb, but I think most of them understand pretty well what they are doing.
Yep… With $0 down, your gambling with other peoples’ money. Heads, you win. Tails, you walk away.
Genious.
The real suckers are the idiots that work hard, spend less than they make, don’t work under the table, actually pay taxes and eat their own losses on lost gambles.
If you punish good behavior and reward bad behavior you’re bound to get a lot less of the former and a lot more of the latter. Everybody with at least half a brain gets the message loud and clear. The bigger gamble you take the better off you’ll be. It either works out in your favor or it becomes the taxpayer’s/sucker’s problem.
That works until someone stops bailing you out. Then you eat dirt and live in a box.
There was a spoof on This Old House called This Old Box
Punish good behavior, reward bad behavior. If Obama, truly is the Messiah, this will end. I have little hope.
The republicans may hate Obama but it’s better him than me.
My only worry the first few weeks as President would be if my firing squads were running low on ammo
“No inflation in the history of humankind has ever failed to end painfully”
Not too too long ago, when I started working, a dime would buy a loaf of bread, 30c a gallon of high test gas or a pack of Camels, a few grand a Ford LTD, $10K to $20K a decent house. Seems to me we’ve snuck in a great inflation to the tune of x20.
Brace for the pain. There is nothing the Fed can do to prevent the collapse of the greatest expansion of credit in history.
Rinse and repeat? Sure we could be that stupid, but first the wash cycle.
I beg to differ. 30 cent a gallon high test gas was too too long ago.
Regular was 28c in N.J. in 1968. I suppose that is too too long ago.
I bought regular leaded gas in West Texas for 17 cents a gallon in March 1967. Ah yes, I remember it well.
Remember when you would get blue chips or S&H green stamps for a fill up, or get dishes or glasses?
or those huge yellow smiley face mugs at the Shell station?
College tuitions have risen over 400% since 1990. My medical ins. co-pay has gone from $5 to $20. Medical ins premiums have gone up 200% in that time frame. Autos and housing? Are we now in the hangover from inflation? Our most expensive expenditures.
“Are we now in the hangover from inflation? Our most expensive expenditures.”
Dang nabbit….I just posted basically the same thing in the hyperinflation thread above!
I agree with you completely. Inflation has been well hidden by the gubment for the past 10-20 years, but it is obvious to everyone except the bean counters in DC who are told by their masters to keep the number fudged so SS benefits and all the other Inflation indexed gubment obigations are kept artifically low.
Those shrink rays they have been using at the grocery stores (and now the Girl Scouts!) have been helping hide inflation as well.
College tuitions have risen over 400% since 1990. My medical ins. co-pay has gone from $5 to $20 … Are we now in the hangover from inflation?
I’m in agreement as well. I’ve been railing against bloat and inflation at the university level for years — it’s been going on a lot longer than this ding-dang housing bubble, even, which is remarkable.
Yes but can you tell me how it will end?
and what you dont support education?
Support education? Heck, I’m so poor I can’t even pay attention!
It’s gonna end with a lot of third- and fourth-tier institutions sinking into the abyss, never to be heard from again.
It’s gonna end with leaner universities, and leaner athletic budgets.
It’s gonna end with fewer administrators making $100K+ to attend endless rounds of meetings and gladhand other muckety-mucks.
It’s gonna end with students getting a higher ROI for their education dollars.
Why would you think I don’t support education? I’ve worked for several large universities, and I support good, affordable education — not overpriced, undernourished schools that rip off students, staff, and faculty alike.
I’d be willing to bet that as more people lose their jobs (and their health insurance) that you’re going to see doctors, dentists, and other health pros making deals. (Better to get some money in the door rather than none.) I think you’ll also see some pretty amazing medical price deflation.
Just sayin’…
No more $10 bandaids or $4 a pill aspirin?
That’s just crazy talk!
Dental is the most outrageous, relative to non-U.S. prices. Crowns in Nuevo Progreso, Tam., Mexico (across the border from McAllen, TX) cost about $150 each and although the offices are tiny and spartan the work is excellent and is done overnight, and you are treated with kindness and respect. Root canals, $160 or so; fillings $20-$30. I hear Algodones, across from the AZ-CA border, is also a good spot for dental.
The bankers had it all figured out. Dump a little money into the economy by Fed buying some government debt. Then let it multiply 10x through fractional reserve. By controlling the seed and the fractional reserve, they control the money supply.
Oh, until the people decide to withdrawl their money from the banks… Oh, no big. Just create FDIC. No more run on the bank.
Oh…. but what if everyone just decides to not pay back their debt???
darrell,
Do you know when the last time was that we had as much as a 10% reserve requirement? Do you know what it is now?
I thought it was still 10%.
I’m no expert, but I believe the 10% applies only to certain private citizen checking accounts and the reserve requirement on other (including all savings accounts) is 0%. Then there is something called “sweeps” to help around the reserve problem on checking accounts.
Welcome to 0% reserve banking.
I’m pretty sure technically that we do still have a 10% reserve requirement. However this is based on “exchange accounts” - things like checking and such - the very liquid accounts. The problem is that over time these accounts have become a very tiny percentage of actual money “held” by the bank - most now is in Money Market accounts, CD’s, etc. - which are not subject to the 10% reserve.
So for all intents and purposes the 10% reserve is fairly meaningless. People treat their MM account as a regular checking account, not realize that there’s no backing - there’s just a minute amount of money shuffled around from person to person.
Here’s a dirty little secret. Fractional reserve banking only works when people put their money back into the banks so the banks can lend it out again. How many people have done that during the past few anti-frugal years? Very few….hence the fractional reserve system is effectively broken.
They just don’t want you to know that.
WTH? I thought India & China were going to pick up our slack!
Japan Heads for Worst Recession as Output Tumbles…
Jan. 30 (Bloomberg) — Japan headed for its worst postwar recession as factory production slumped an unprecedented 9.6 percent, NEC Corp. said it will cut more than 20,000 workers and Hitachi Ltd. forecast a record loss.
The December drop in output eclipsed the previous record of 8.5 percent set only a month earlier, the Trade Ministry said today in Tokyo. NEC, Japan’s biggest personal-computer maker, forecast its first loss in three years.
The Nikkei 225 Stock Average slumped 10 percent this month, extending last year’s record 42 percent drop as the global recession smothered demand for Japanese cars and electronics. Mounting losses forced companies to fire workers in December, spurring the biggest jump in the unemployment rate in 41 years.
“Japan’s economy is falling off a cliff,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “There’s really nothing out there to drive growth.”
The International Monetary Fund said this week that Japan’s gross domestic product will shrink 2.6 percent this year, the bleakest projection for any Group of Seven economy except the U.K. That contraction would be Japan’s worst since World War II.
Yep. I’m getting reports from an acquaintance who owns a business over there and it’s pretty grim.
Home building slumps in California
S.D. County permits down 30.8% in 2008
By Dean Calbreath (Contact)
Union-Tribune Staff Writer and Roger Showley (Contact)
Union-Tribune Staff Writer
2:00 a.m. January 30, 2009
Home building in California sank last year to levels not seen since World War II, with even slower activity predicted for 2009, the Burbank-based Construction Industry Research Board reported yesterday.
San Diego County saw a near-collapse of home building as developers suspended operations to wait out the flood of low-priced foreclosure properties competing for buyers’ attention.
There were 65,380 units approved by cities and counties in 2008, down 42.2 percent from 2007 and a fraction of the all-time peak of 314,569 authorized in 1986, the research board said. The projection for 2009 is for only 63,400 permits to be issued.
And from Alan Gin, who had a difficult time early on with interpreting what his San Diego Index of Leading Economic Indicators was telling him…
The December decline in building permits helped push San Diego’s index of leading economic indicators, released yesterday by the Burnham-Moores Real Estate Institute at the University of San Diego, to its lowest point ever.
The index dropped 2.1 percent last month, its second-steepest drop ever.
USD economist Alan Gin cited the December housing figures as a major reason for the index’s decline.
“A terrible year for construction ended with the lowest monthly level (of building permits) on record,” he said. The research board had previously reported San Diego’s total for December at 135 units, down from 240 in November and 659 in December 2007.
Gin said there is “no sign that things are going to turn around or even flatten out” in the near future.
“Right now, we’re in a self-reinforcing cycle,” he said. “Weakness in the economy damages the housing market and that damages the banking system, which in turn damages the economy. Weakness in retail sales causes job losses at retailers, which causes more weakness in sales. Everything keeps working back on itself.”
The USD index has fallen in 32 of the past 33 months, with the three largest drops ever in the last three months. The index dropped 2.2 percent in October and 1.9 percent in November.
In addition to the decline in construction permits, Gin said the outlook has been darkened by a large jump in initial claims for unemployment, a decline in want ads, a drop in local stock prices – which fell 38 percent last year – and continuing gloom in consumer confidence, which has declined for 20 months in a row.
He noted that consumer confidence, as measured in polls by The San Diego Union-Tribune, dropped 49 percent last year and is down 64 percent from an all-time high reached in October 2004.
Housing construction has probably never been this low since 1943, said Ben Bartolotto, the construction research board’s director.
Both the state and local building industry trade groups bemoaned the low level of home construction as an added drag on the economy and urged action to jump-start business, such as speedier permit processing and lower fees.
“How does this present economic disaster not compare to a horrific natural disaster?” asked Borre Winckel, chief executive of the San Diego County Building Industry Association. “With people both losing their jobs and their homes, what more terrible circumstance can be conceived. Yet most city halls show business like usual. It is shocking to see no sense of urgency in play.”
Natural disasters are acts of God, while this economic disaster was financially engineered by the Wizards of Fed and Wall Street.
“Both the state and local building industry trade groups bemoaned the low level of home construction as an added drag on the economy and urged action to jump-start business, such as speedier permit processing and lower fees.”
We’ve got a glut of housing and these fools just want to build, build, build. I only hope this collapse crushes them out of existence forever.
The chair legs have been burned out from under the residential building industry, so now I guess the plan is to burn the seat and back of the chair, and perhaps the entire house as well.
If the US residential building industry vanished today, how long would it take to re-create one? Erecting houses is not rocket science.
“If the US residential building industry vanished today,…”
I guess San Diego is a test case.
It’s pretty optimistic that you still have 65000 optimists in CA.
The queen moonbat on BARF2…This plus increased abortions will ’stimulate’ the economy, said the mother of 5 and grandmother of 6…
“To give you a “taste” of what this pork-laden monstrosity contains, check out this excerpt from Speaker of the House Nancy Pelosi’s appearance on CBS”.
CBS: Can you honestly say that every program in this plan is solely to stimulate the economy?
Pelosi: (nods) Yes I will.
CBS: How does $335 million in STD [sexually transmitted disease] prevention stimulate the economy?
Pelosi: I’ll tell you how – there is a, uh… I’m a big believer in prevention. And we have, uh – there’s a, uh, part of the bill on the health side of it that is about prevention. It is about, uh, it being less expensive to the states to do these prevention measures…
Where do you think all those people who get STD’s go when they get sick? HOw much do you think it costs to take care of a patient with AIDS? If we cut all money for prevention how many would become infected. How many people who rely on blood transfusions would be at risk? How many cops and medical workers would be at risk when caring for these people?
Did you ever hear the expression that an ounce of prevention = a pound of cure? Are you really worried that 335 million will break the bank. I suspect that it will save the government and citizens much more.
Plus researchers and public health workers have jobs. Exactly how anyone can fail to see that 100% of this sort of program gets spent on supplies, salaries, etc. is beyond me.
Ah, but behaving like an adult and actually thinking about the long-term benefits would cut into the chance to wax judgmental about other people’s sexuality.
“chance to wax judgmental about other people’s sexuality”.
Right, because every thinking person knows that it’s only your queers and lesbos that get and spread STD’s… LOL.
It seems like more sick people would stimulate the economy more. Doctors/Nurses/Hospitals/Drug companies/medical device companies/mortuaries/etc would all benefit.
Just another rat hole, that will suck up all the funding, accomplish very little then ask for more money. With layer upon layer of redundant make work positions.
but, but that would consider partisians on both sides to connect the dots or to take the extra step.
dang,
what I wanted to post was:
but, but that would mean partisians on both sides would have to connect the dots or to take the extra step.
Too much coffee
In the new world:
All spending = Stimulus
We should just have the feds offer to buy rocks for $10K a pop. Think of all the stimulus!
That was an interview w/Stephanopolus (spelling?). She is the worst liar I’ve ever heard. (as opposed to a good liar)
Although the economy shrank at a startling 3.8 pct pace, it was much better than Winston expected. In fact, it was double plus good.
You knew it would be. Come on -0.5% to -5.4% in one Q - no way!
More double plus good news from the economic front:
Jan. 30 (Bloomberg) — Exxon Mobil Corp., the world’s largest company by market value, posted a smaller decline in profit than analysts estimated as increased refining earnings cushioned the impact of a record drop in oil prices.
Fourth-quarter net income tumbled 33 percent to $7.82 billion, or $1.55 a share, from $11.7 billion, or $2.13…. Per-share profit was 8 cents higher than the average of 12 analyst estimates compiled by Bloomberg.
“Exxon Mobil Corp., the world’s largest company by market value, posted a smaller decline in profit”
Well. That oughta cause the stock market to go to the moon! Place yer bets, folks!
Exxon Coproration still posted a record profit of 45.2 BILLION so somebody is REALLY being overcharged somewhere down the line
When oil was at 35, we were paying $1 for gas. When oil hit $70 we were paying $2. As oil broke $140, $4.
Now oil is as 40 and I’m still paying $1.75.
I think there is a lot of refineries with 100 oil in the storage tanks, and they do not want to refine it at this gas price. So, they are shutting down refining capacity hoping oil and gas prices go back up.
What is it? 80% capacity right now? With many refineries extenting their “scheduled maintenance” down times.
This allows the greater crack spread.
What does it matter? We know electric plug-in and solar is going to save the world - right?
I thought we knew that there was an endless supply of oil that would be sold to us by USA loving countries, and that we shouldn’t ever bother ourselves with thinking about conservation.
With many refineries extenting their “scheduled maintenance” down times.
It’s called an oligopoly. Big refiners have purchased all of the smaller refiners and shut many of them down. Now with a wink wink nod nod they shut down for maintenance. BS
It’s called an oligopoly. Hey, if you don’t like the situation, stop buying their products.
Trust me they get as little of my money as possible. I have a bike for short trips, an electric scooter for longer trips in town, and a car that gets 50mpg when my work takes me out of town.
The great thing about their oligopoly is that in order to make a living almost everyone has to use their product.
You also have to consider what type of fuel does your local electric company use to generate power for your lights, computer, etc.
Not sure if this was posted the other week - city mayors want a piece of the stimulus pie -
WSJ Article
Comment by edgewaterjohn
2009-01-29 19:21:28
“… BTW, I’m puzzled as to what exactly makes one view (deflation) a “bias” while the opposing view (stag/inflation) is somehow objectively unbiased.”
from Wikipedia: “Bias is a term used to describe a tendency or preference towards a particular perspective, ideology or result, especially when the tendency interferes with the ability to be impartial, unprejudiced, or objective.”
I have no preference for inflation or deflation. I calls ‘em as I sees ‘em. In the case of deflation - there has not been any to date! Many here have confused disinflation with deflation, wrong.
As to inflation, there have been steadily rising prices in non exchange traded goods, such as the base metals and the rare earth metals. There have been rising prices in shipping, energy, food. For those that work there have been steadily rising incomes and purchasing power. Yet all that anticipate deflation ignore this data. That is bias.
The GDP coming in down 3.8 surprised me. I thought it would be down only 3% (posted this earlier this week). The probability of GDP being down 5% was 0.15 - the numbers from the government over the last 3 months were not as bad as the hyperbole suggested.
According to MW, GDP was better than expected b/c of inventory growth. Without inventory growth, GDP would be negative 5.1 pct.
As unemployment rises, they are going to cut prices to get rid of inventory. Details will follow:
Details from MrktWatch:
Consumer spending fell 3.5%, including drops of 7.1% in spending on services, 3.5% in spending on durable goods and 22.4% in outlays on nondurable goods, the weakest in 21 years.
Business investment fell 20.1% in the fourth quarter, subtracting 2.3 percentage points from growth. This marked the largest drop since 1980.
Investments in equipment and software dropped 27.8%, the weakest in 50 years. Investments in structures fell 19.1%, the largest decline since the first quarter of 1975.
The nation’s exports fell 19.7% in the fourth quarter, while imports, which are a subtraction from the calculation of GDP, fell 15.7%. As a result, the narrowing trade deficit added 0.09 percentage point to growth.
Government spending increased 1.9% after having risen 5.8% in the third quarter. Federal spending rose 5.8%.
Defense spending rose 2.1% in the fourth quarter. Non-defense spending rose 14.1%.
Meanwhile, spending by state and local governments fell 0.5%. In all, government spending contributed 0.4 of a percentage point to growth.
Businesses added $6.2 billion to their inventories, on the heels of having cutting them by $29.6 billion in the third quarter. The change in inventories added 1.32 percentage points to growth.
Residential investment fell 23.6% in the fourth quarter, and thus has declined in each quarter for the past three years. Investment in residences subtracted 0.85 of percentage point from the fourth quarter’s GDP growth, compared with 0.60 of point from third quarter growth.
Inventory build up was a large part but the larger part was the GDP deflator at -0.1% which probably should have been -3.0, but then the GDP would have been positive. That is the governments fudge factor. The -0.1 reading by the way says that there was ~ 2% inflation in the 4th Q.
This conforms with a rising unemployment reduction of spending as opposed to reduced general spending.
When the gov calculates inflation how does the drop in housing factor in. Remember rent equivalents being used to mask inflation on the way up. My guess is that they are masking deflation on the way down. Doesn’t housing account for something like 40% in the gov inflation calculations.
Rents are used somehow, house prices are not. Which definitely hid inflation over the last decade.
“For those that work there have been steadily rising incomes and purchasing power.”
This, and the accompanying statements, are generalizations. Admittedly, the opposing viewpoint also borrows heavily on sweeping statements.
While the long term outcome remains uncertain, the primary flaw in the inflation argument, IMVHO, is that it inherently suggests the existence of an omnipotent PTB that can dictate outcomes instead of merely reacting to the fallout.
Agreed, the consensus GDP of -5.4% was hyperbole.
Absolutely a generalization from the BLS. Some people took paycuts, some got raises but the net sum is increased purchasing power increased salary. See the BLS for pay increases plus the PCE deflator.
The gloom surrounding this year’s World Economic Forum descended into confrontation yesterday as international labour leaders launched a withering attack on the 1,400 business executives and 41 heads of government at Davos over what the labour leaders alleged was their failure to respond effectively to a deepening crisis of their own creation.
Guy Ryder, the general secretary of the International Trade Union Confederation (ITUC), said that the current financial turmoil had triggered a social timebomb that would lead to deepening civil unrest and soaring crime.
The comments from the confederation, which represents 168 million workers in 157 countries, are the most ferocious example yet of a backlash that has persuaded many who attend frequently to stay away from Davos this year. Yesterday Alistair Darling, the Chancellor, became the latest political figure to stay away from the meeting, after a similar move by David Miliband, the Foreign Secretary.
Mr Ryder, speaking as strikes involving hundreds of thousands of workers erupted across France and Germany, told The Times: “We are on the road to serious social instability, which could be extremely dangerous in some countries to democracy itself.”
Related Links
He said: “Davos does not make me at all confident. I don’t see any of the leadership here that is needed to get us out of this crisis . . . There is very little contrition here.”
“a social timebomb that would lead to deepening civil unrest and soaring crime.”
Unsure of the deflation/inflation/sound banks thing, wife and I have discussed converting cash to real assets, tools, solar panels, maybe a windmill…
One thing about assets, they need to be kept safe. Pre-2007, when cash was in the bank, I did not worry at all about it at all. I had never appreciated safe-keeping as a service banks offered. That’s changing. If we buy this stuff, someone can rip it off.
We live in a nieghborhood that had gone from sh)thole to chic. Now the pendulum is swinging back. Where we are, we have already seen an increase in car burglaries, domestic abuse and for the first time ever I was approached by a prostitute three blocks from our apartment. It might be in our minds, but we can ’smell’ something coming.
I am seeing a new mix of people in the apartment where I live now, compared to 3 years ago before I left these apartments to work in Phoenix. This new mix is (ahem) traditionally from the lower class. Many of these people are innocently fleeing the growing crime in their former hoods, but inevitably some of them bring friends or relatives over and that’s where the neighborhood really goes downhill. This is only a mile and a half from Redondo Beach King Harbor. This is affecting rentals mainly, but will of course spill over into the residential areas around here. Surrounding houses are zillowed at above $500,000.
“We live in a nieghborhood that had gone from sh)thole to chic. Now the pendulum is swinging back.”
Gentrification of urban ghettos was a cheesy trend.
Gentrification of urban ghettos was a cheesy trend.
It’s not a trend, it’s a cycle — similar to the life cycle of a forest or meadow.
There are neighborhoods in any older American city that’ve been through the cycle multiple times. In Chicago, I can show you places that were elite neighborhoods during one generation and virtual wastelands during the next. The denizens of Manhattan in particular seem to have a myopic view of this ebb and flow, as if it’s somehow, well, different there …
ET, I was under the impression that gentrification established it’s roots in the 1980’s along with the advent of condos in the suburbs.
“Gentrification” is merely a new-ish term for a cyclic event that’s been occurring since cities have been cities. The demographic groups involved may have new names or change their criteria for status, but the concept remains the same.
At least that’s how I look at it.
“We live in a nieghborhood that had gone from sh)thole to chic. Now the pendulum is swinging back.”
There was an interesting local article a few months back about rising crime in the (somewhat) recently gentrified Ukranian Village/Wicker Park/Humboldt Park areas of Chicago.
In the article they interviewed a young lady that had been a long time area resident. She plainly stated that other former longtime residents, who happened to be partial to criminal endeavors, were attracted by the conspicous consumption of the area’s newer residents.
While this might not shock any HBBer, it was a bit startling to hear it stated so matter of factly from someone on the streets and outside our little discourse.
When I lived in Chicago, Wicker Park was the nabe where I had a gun held to my head (true story!)
My girlfriend lived across from the Rainbo Club for 16 years. Back in the day it could be a somewhat scary neighborhood during odd hours, especially down certain side streets that the locals tended to avoid after dark.
Having said that, I always felt more endangered in places like Lincoln Park on the weekend (not that I’ve been there recently) — lots of meathead drunks with short fuses, and lots of people hangin’ out waiting to roll the right unsuspecting idiot.
“for the first time ever I was approached by a prostitute three blocks from our apartment.”
How much?
This would settle the inflation/deflation once and for all.
Mike
This would settle the inflation/deflation ‘debate’ once and for all.
Doh.
Mike
Maybe we could make an index. Instead of Case/Shiller, Johns/Trixies…
For those of you who desire a place in the country,your time may be coming.Through most of our history,a hundred acres of land and a farmhouse cost about what a nice but not fancy house would in town.But then you had to make a living out there ,a hardscrabble one too.
The farming thing has been skewed by the super-sizing and all the help programs.With their prices dropping for the grain,and all the credit issues ,they’ll need big help soon.I’m afraid all the nursing spots may be taken at Ma sow government,Farming may revert back down to the people instead of to the super-comglamorats.
Which is fine if you know how to do it, but with the average farmer over age 60, fewer people do.
I couldn’t manage to grow tomatoes in my backyard.
Perhaps I should buy a place and send a daughter to ag school. She like animals, after all.
My dad grew up on a farm and would know all that stuff, but he’s long gone. I’m a city slicker in a white collar job. I know very little about mechanics, nothing about growing things, nothing about welding, blacksmithing, and I cannot eve shoot straight. The countryside is not for me. I have to depend on my taxes paying for the police (and if the police cowardly exit the city like in N.O., pay for national guard).
I know very little about…. I recommend you learn how to learn.
Good luck with that one. lmao.
SUNY Farmingdale stopped offering its agricultural program back in the 90’s. I know one person who graduated from it and one who dropped out. The drop out has a nice job working for the parks dept.
Cornell still has their program, I think. My friend went to another SUNY for horticulture.
No thanks Jess. I came up jerkin’ cows miles from nowhere. It gets old very quickly.
lol. That would be a good introduction for someone wondering about the “farm life”. I wouldn’t mind having a few of this and that (garden, fruit trees, couple animals) but no way I’m milking x-hundred head twice a day. No thanks.
Incidentally, I think the corporate govt was possibly the worst thing to happen to dairy farmers. Are you old enough to remember when farmers could sell raw milk directly to the public without going through a coop or milk company and people valued milk based on the cream line? I’m not, but I would sure like to buy fresh milk if I could.
Fruit trees=PITA. Prune, tend, prune, spray, prune, tend and spray for 10 years before any yield.Then you get a couple bushels of apples one month out of the year. The easy method? Head down to the orchard and get a 1/2bushel and 2 doz cider donuts for $10.
“Are you old enough to remember when farmers could sell raw milk directly to the public without going through a coop or milk company and people valued milk based on the cream line?”
BP, you can still buy raw milk, at least here in PA. I think you need some sort of special license to sell it. It’s about double the price of pasteurized and tastes slightly creamier.
It varies by state. In AR it is illegal for farmers to sell raw (unpasteurized) milk from cows. Raw milk from goats is fine (with some restriction).
IIRC some states (you mention PA) allow some form of selling raw milk. I believe many of those cases are restrictive, like you can only sell it directly from the farm (not ship it to be distributed from a store) but it’s been a while since I’ve looked into that, so I don’t recall all the details.
There was a place that was selling “cream line milk” here in AR, meaning it had not been homogenized.
Federal law prohibits selling raw milk across state lines.
Of course, prohibition of raw milk sales is favorable to large/corporate distributors. If pasteurized milk is the standard either by mandate or otherwise, it allows them to consolidate farms and build longer supply lines (b/c the milk will keep longer for shipping).
Amen. People with an idealized view of “country life” are the one’s who have never lived it. I like being no more than 5 minutes from the nearest taco, thank you! Having grown up in the middle of nowhere, whenever I drive through some small town in the middle of nowhere today, I have to wonder “What do these people DO? Why would anybody choose to live here?!”
I mean, there’s the internet, Netflix, and satellite tv, so they probably aren’t as isolated as I was when I was a kid, but still, I assume the mentality hasn’t changed to a great degree. I have no wish to re-experience the racism/sexism/bible-thumping that is prevalent in the hinterlands.
Don’t get me wrong, my inner misanthrope completely understands the urge to have some space and get away from humanity. I can see the appeal of having a few miles between your house and the neighbor’s. But what people who haven’t lived in the middle of nowhere don’t understand that what you may gain in physical isolation you lose in privacy and intellectual activity…
People with an idealized view of “country life” are the one’s who have never lived it.
I grew up living the “country life” and I can’t wait to get back one day. Some of us are “in the know” and still enjoy that life.
Agreed.
Livin’ in the city ain’t where it’s at
It’s like tryin’ to find go-old in a silver mine
It’s like tryin’ to drink whisky (unh)
From a bottle of wye-heen.
Overheard two girls working at the ice cream stand in Williamstown, VT this summer comparing how their Friday night went:
Girl 1: I was out until midnight last night.
Girl 2: Me too.
Girl 1: OMG, I am so hung over!
Girl 2: Really?I was up milking cows until midnight.
Girl 2 looked jealous and pissed.
Caterpillar Says It Will Cut Another 2,110 Production Jobs
By Beth Jinks
Jan. 30 (Bloomberg) — Caterpillar Inc. will lay off 2,110 additional employees at three manufacturing facilities, the company said today in a release distributed by PR Newswire.
“…One stark lesson from the ongoing financial and economic crisis is that so-called black swans — large-impact, hard-to-predict and seemingly rare events — can occur more frequently than generally believed.With policymakers around the world throwing massive conventional and unconventional monetary and fiscal stimuli at their economies, we think that it is worth exploring the black swan event of very high inflation or even hyperinflation.
While such an outcome is clearly not our main case, the risk of hyperinflation cannot be dismissed very easily any longer, in our view. We discuss the historical evidence, the conditions that can lead to very high or hyperinflation, and whether and how it might happen again….”
Morgan Stanley
Jan 29, 2009
MS defines hyperinflation as 50% per month. This is something that any reasonable investor can protect against.
http://www.morganstanley.com/views/gef/index.html#anchor7320
Wow. Is this a general view of Morgan Stanley, or just of some rogue person?
Got a link perhaps?
I talked to my financial advisor at Morgan Stanley yesterday. He certainly did not express this opinion to me.
If Morgan Stanley thinks it might happen, then it is no Black Swan event.
Heck, they had to stop being an investment bank and be come a bank holding company to be able to get TARP money to keep from dissolving. Why would they now have a crystal ball that works?
Exactly.
Just heard a radio report that said we/the U.S. may need to send U.S. troops into Mexico as social unrest grows and drug cartels take over government!
Anyone else hear this? Bad news if true!
http://www.elpasotimes.com/news/ci_11587311
Unrelated, Mexico may send troops into the US as banking cartels take over the government.
BINGO!
lol
Just heard a radio report that said we/the U.S. may need to send U.S. troops into Mexico as social unrest grows and drug cartels take over government!
Anyone else hear this? Bad news if true!
Of course it’s true.
We can’t afford to have thousands of angry, soon to be unemployed, Blackwater Mercenaries running around Main Street, USA with hostility, guns and grenades and NOTHING to do !
Yes, I heard about this a few weeks ago.
Also the Marine Corp has forbidden Marines on leave to visit Tijuana. This caused some indignation in Mexico “Is Mexico more dangerous than Iraq?” they asked.
The answer is no, but Marines on leave are not armed.
Anyone else hear this? Bad news if true! I’ve been reading the El Paso Times web site for years. El Paso is one of the safest cities in the US, just across the border from Juarez, Mexico, one of the most dangerous cities in the world. Many Juarez officials & police have already moved to El Paso for their own safety. Don’t worry about the US sending gun men into Mexico, but worry about Mexican gun men coming into the US. I believe it’s just a matter of time before some large scale atrocity originating from Mexico occurs in El Paso.
El Paso is far from being one of the safest cities in the U.S. It ranks near the middle, and is quite a bit more dangerous than the U.S. as a whole when non-metropolitan areas are included. It is safer overall than similar-sized Fort Worth, according to indexed FBI data, but it has a high incidence of automobile theft, for obvious reasons.
See, for example:
http://www.bestplaces.net/crime/?city1=54824000&city2=54827000
It is amazing that El Paso is still one of the safer cities in the US, but then again, I imagine that the neighborhoods the Mafioso heads lived in were very safe as well.
NPR reported this morning that there’s a water shortage in Mexico City. Officials are asking for a big cutback in water use through Tuesday. If rain doesn’t revive the dangerously low reservoir that serves the city they have a catastrophe on their hands.
Talk about a trigger for social unrest!
They are SOL! The rainy season in Mexico City is May - Sept. Winter rains is extremely rare.
Jan. 30 (Bloomberg) — Procter & Gamble Co., the world’s largest consumer products company, reported second-quarter sales that fell more than analysts estimated as shoppers curbed purchases and the stronger dollar hurt overseas sales.
P&G is generally viewed as “recession proof” as people still need to buy soap and toothpaste regardless of how bad the economy gets.
During hard times, branded labels are viewed as a luxury to poorer segments of the market, particularly when private labels, at half the price, do the same thing. Branded labels are forced to offer special promotions to keep market share.
private labels, at half the price, do the same thing. I have not found any dish washing liquid as good as P&G’s Dawn for cleaning greasy dinnerware.
How much of this can you spend on this annually?
$20?
Now, try running a global conglomerate with those kinda numbers. One with debt.
“I have not found any dish washing liquid as good as P&G’s Dawn for cleaning greasy dinnerware”.
The best absolutely at cutting grease and oils, marina dock masters have been using it for years to dispense with fuel spills at the fuel docks. I have found nothing that even comes close.
but they don’t need to buy name brand soaps shampoos ect. They could easily reduce consumption 50%. If you don’t have a job and can’t pay for heat do you really need to shower every day??
I think that you hit the nail on the head with your comment. Everyone “assumes” that there is some minimal level of consumption that people will “find a way” to maintain no matter what. They ignore the reality that most of the worlds population would consider $10/day “well off” and they get by and even live happy lives.
Showers can be cut to once a week, people can go to bed when the sun goes down and wear thicker clothes and sleep in sleeping bags while leaving their “heat” at 40 degrees.
Some theoretical “minimum conceivable standard of living” cannot be used to “put a floor” under the economic down turn or determine what companies are “recession proof”.
Considering the degree to which raw resources have been squandered and the amount of debt used to “maintain” all major companies (directly or indirectly) I would argue that every international corporation may no longer be economically viable simply due to the overhead involved in running such large companies.
Think about how much money is spent on marketing, packaging, and shipping. These are luxuries that our economy can no longer support.
Exactly.
The other problem is that the people who knew it can always get worse (GD), and who knew how to stand up to and stop a corrupt system and take no crap from their own government, (WW2) have died off.
I just looked at P and G debt, wow. Not where I want my money in a recession.
Here’s a link that might interest our AZ friends, and anyone connected to higher ed. for that matter. It’s an announcement detailing the furloughs coming to ASU. Sounds pretty ill, and it scared the bejeezus out of the friend that sent it to me.
http://asunews.asu.edu/20090128_furloughprogram
John, I just sent that link to a Univ. of Utah dept head who I talked to the other day. They are talking massive cuts there and he was worried sick.
Hi Losty! Where yer been? Are you in Montana now? Tell us all about it!
If you were in Bozeman, Montana, and saw someone wandering around kind of lost, wearing Eskimo mukluks and a huge snowboarder coat, gloves up to the elbows, electric socks (the kind with batteries), and huge goggles, that would be me.
Oh, and toting a camera. Don’t ever lick anything metal around here, for sure.
A bit of a shock on the temperature, but kind of like Colorado for me, so not bad, but the school is totally cool. Can’t wait for it to warm up, though. I’m actually still looking for a place to rent, has to be a house since I have pets, everything I’ve looked at is too expensive. If anyone has any ideas, send your email to: info at yellowcatbooks dot com. Or post here, I’ll check back.
I think my next gig will be a documentary on Antarctica.
Lost,
Good to see you posting. Like Oly asked are you in Montana or still in Utah?
Look up.
Nice to see some organizations still have a sense of responsibility. Congratulations to the ASU President and Board.
Good news: A furlough is preferable to a layoff. Heck, if you have a little savings, a furlough can be a pleasant thing.
Bad news: University employees, both public and private, tend to view their jobs as extremely secure. As the higher ed bubble deflates in the midst of our credit implosion, the security of these jobs is clearly no longer a done deal.
As the higher ed bubble deflates in the midst of our credit implosion, the security of these jobs is clearly no longer a done deal.
It will be interesting to see how this unfolds. My daughter has a 4.0 in HS and a 30 in the ACT (top 5%). She has been receiving literature from all sorts of 2nd tier private schools offering her 20K scholarships. The problem is when I visit the school websites I find out that the full annual cost (tuition, room + board, books, etc.) is close to 40K.
Heck, our 2 main private schools in Denver, Regis University and University of Denver (ever heard of them?) charge 40K as well.
And its getting pricey at the state schools as well. University of Colorado - Boulder is about 18K full cost, and almost 40K if you are a non residents. CSU is about 16K and University of Northern Colorado (not a top tier state school like CU or CSU) runs about 13K. And to add insult to injury, if you are not a local you have to live on campus the first year at all 3 schools. Since we do not live in Boulder (CU), Fort Collins (CSU) or Greeley (UNC) we must incur the unnecessary expense of student housing, even though we live 20 - 35 miles from any of them.
Another option is Mesa State College in Grand Junction. Tuition free because of my daughters test scores, so it would only be housing costs (7K), but its a 3rd tier school. Then there are the local CCs, which are approaching 4K per year. And both are in Greeley and Fort Collins. Funny how its OK to commute 20+ miles to CC but not to CU nor CSU.
There is also a good chance of a full scholarship (tuition, room & board) at a small college in western Nebraska, which is a 3 hour drive from here. Its not 1st tier, but free is free.
At those prices you could hire a full time personal instructor or pay multiple area experts $40/hr for 20 hrs of “class time” per week. All that would be necessary is a “respectable” testing system (like the SAT/CAT) for each “degree”. The cost of taking a test (in a free market) would likely be less than $20 to $50 dollars. In this way, smart students who accept the responsibility to “teach themselves” could get a “degree” much faster and cheaper. When they need instructors they get dedicated 1 on 1 time!
The sad thing is that Virginia Tech almost costs that much to “out of state” students and that my state taxes are going to fund such a horribly over priced system. Then the federal government is devaluing my dollar by guaranteeing loans to support these colleges.
Now apply these concepts to a whole host of overpriced industries / services and you can see where we are headed.
Headed? We’re THERE.
If your daughter will go for it, have her attend Mesa State College for the first year and then transfer to one of the state schools. First year classes (and this is coming from an engineer that attended a 3rd tier state school and then went to grad school at a top-10 school) are all the same everywhere you go. In fact, at the 3rd tier state school my freshman classes were taught by full professors. At the top-10 school I taught sophomore engineering students using the same textbook I had studied from a few years earlier.
I got a far better education at po-dunk state than the students I taught at big-name private university, that’s for sure.
Mesa isn’t a bad little school. And it’s not so expensive. I personally would consider Ft. Lewis (in Durango) or Western State (Gunnison) as they’re in nicer towns, but Durango would cost more for housing. I went to Colo. State (BA) and the Univ of Colo. in Boulder (MA) and would’ve fared just as well going to Mesa or one of the others for the first few years. Mesa is now a 4 year college.
In Colo, shoot at least one app to a carefully selected elite school with a bloated endowment. I kid you not.
If they accept you, it is cheaper to go to the Seven Sisters or Ivy League or Little Ivies or Stanford than it is to go to a second tier school. Because if they want you, they have the money to buy you, and they spread it around. Among the well endowed schools, there are likely to be targeted endowments for scholarship funds to the donor’s local state. Not that you will ever hear about this. The money, and the acceptance letter, will simply magically appear.
It may be a long shot, it may not. The downside is limited and the upside is large payoff, for a finite expenditure of energy. If she is forcing herself to do it just to check the box, though, it’s probably not the right expenditure of energy.
This plan trimms $100 million from the budget.
Legislatures are pormising cuts of $200-300 million this year and $900 million range for next year.
Tax receipts are down 20+%. This puts a 20+% hole in the state budget. The budget is about 40% education, 40% healthcare and other fed mandated programs, and 20% everything else.
The are talking 40% cut to education.
8-12% income cuts… All very inflationary, I’m sure!
Whats the dillio,
Wall Street Paint Tapers Local 865 on Strike?
It’s dropping like a stone.
Hoz,
I realize I don’t know much….
But, everywhere I look I see massive oversupply of everything and crashing demand for everything. Granted, I’m not a billionaire, just a Joe Schmoe… Maybe it really is different in the world of billionaires… But, where I come from, excess supply and rapidly falling demand means deflation.
Yes, the government can push $2 trillion into the economy. But I think the debt will be collapsing much faster than that. $25 trillion in consumer and personal debt. As that crashes( I expect $15T in defaults over the next 5 years), can the government REALLY push money into the system fast enough to keep the money supply inflated?
How many billionaire bailouts can they do before the Joe Schmoes grab their guns and head to Washington and New York???
I used to really respect your opinion, but now you fell more and more like the Realtors of 2006. Ignore the reality of oversupply, crashing demand, unaffordable prices, and all fundamentals of debt to income, and just keep saying that prices will keep rising.
Or, it could just be that my view is scewed by living in PHX, one of the worst hit areas of the country. It is REALLY, REALLY ugly here, and getting worse by the minute.
Darrell, you are right there is an oversupply of stuff we do not need and as a result prices are falling in many areas.
Factories are being shut down (because at todays prices they are not profitable) in record numbers which means that the total supply of goods on the market will fall dramatically over the next year (which will cause prices to rise until it is profitable to reopen factories). The problem will be that (without credit) people will not have the income to afford these goods at the prices necessary to reopen the factories. Effectively everyone will be priced out.
Almost every hyperinflation is proceeded by a period of deflation. Deflation is the first phase of people trying to pay off debts. Soon it will become apparent that there is not enough money to pay off all of the debts in society. The result will be widespread default causing almost everyone with money in the hands of a another party to lose it. Essentially, counter-party risk will continue to grow until all trust is broken down. Hyperinflation is the result of people losing confidence in the system and this loss of confidence usually comes about when they see the government printing money for their “friends” while everyone else starves because they cannot pay off their debts.
Foreigners who realize we cannot pay off our debts will count our money as worthless to them (they do not need it on a day to day basis). If foreigners consider our money worthless then hyperinflation will result because it takes both sides of a trade to agree on the value.
But if all other currencies are also seen as worthless, then what is there for us to hyperinflate against? Gold? So… I don’t buy, use or eat gold.
They will hyper-inflate against all other commodities and people will resort to trading value for value instead of value for “promise to pay nothing”.
In a hyperinflationary scenario, gold doesn’t go to “infinity”.
It goes to the point of barter - two goats and a chicken, or whatever the barter rate is.
A subtle point that even the gold-istas don’t seem to appreciate. You can’t eat gold.
According to what I learned here earlier in the week, those goats would be more than happy to eat your gold.
I have been thinking about this. In other parts/places where there was a hyperinflationary collapse like Argentina, Russia, Mexico, Venezuela, Zimbabwe, their local currency that was hyperinflating Vs. the Dollar, and the Dollar was the one that was being accepted as the currency (to the great dismay of the Finance ministers, and to the bureocracy, I might add). Those that had dollars had purchasing power, and lost little in the way of their fortune. Those that did not… Went out and banged old pottery to make a ruckus, but were in fact poor.
The great difference, is that there is no other currency that is accepted worldwide, hence the dollar’s reserve status. I think that we ***might*** see a return of physical dollars vs. make believe credit ones, as an exchange means. But here is the kicker… Unless you establish arbitrage rates for products, how would one barter products and services for other products and services? That is what is driving me bonkers… And that is what in essence a currency must be able to do… Provide portability.
mises.org defines money as “the most marketable commodity” meaning that the cost to market and exchange it is next to nothing. Other commodities have a certain amount of “transaction overhead” associated with finding a buyer. There can exist multiple forms of “money” if they all have comparable transaction costs.
When a certain commodity is in high demand exchange rates between it and other commodities automatically form and become well known among the people. This is the basis of price discovery.
This price discovery mechanism is what originally selected gold/silver because over time they had the properties that make “good money”. Scarcity, luxury, divisibility, purity/sameness, portability, and shelf life.
When times get tough “gasoline” is almost as good as “money” because almost everyone wants and could use gasoline and the cost to “resell” it is very low.
A world-wide hyperinflation will result in the automatic discovery of a new market-based money. Any attempt by the government to prevent the use of market-based money will worsen the depression and prevent recovery.
Darrell
You are trying successfully to think objectively. Instead of looking at falling demand,try looking at who is buying and why. Supply is nebulous and can rapidly change.
I am not a billionaire, none of us are Joe Schmoes. If the debt collapses by 30% that would be ~$7.5T. That is outside of the realm of reasonable probability. The most likely figure is ~$4T. The low figure is $2T aka already seen the worst.
The billionaires are just mopes. Mssrs Buffett, Icahn, Gates et al are rich specialists. They know nothing more than you. They make huge mistakes. Buffett in Bank of America, Icahn in Ford, Gates in the S&P 500 funds.
The bailout is not to Billionaires, the bailout is to keep the doors of modern finance open. Some billionaires may make moneys, but that is because they will be short bank stocks. Most bank bonds are held by private and public pension plans. Most MBS are held by private and public pension plans.
“If the debt collapses by 30% that would be ~$7.5T. That is outside of the realm of reasonable probability”
I disagree. I think it is a certainty.
We’ve been living on debt, and it is over.
“the bailout is to keep the doors of modern finance open.”
Modern finance that gave us trillions and trillions of debt which can’t be repaid? Yeah, let’s keep that going! NOT!!!!
We need to shut down the debt factory. We need to stop trying to reboot the debt machine so we can kick the can another 5 years down the road.
It is game over.
“Most bank bonds are held by private and public pension plans. Most MBS are held by private and public pension plans.”
And it is time to accept that those pensions will not and can not be paid.
AZ is talking about a 40% reduction in education spending. Yeah, good luck with that without breaking the backs of the unions and admitting teacher pensions won’t be paid.
“try looking at who is buying and why.”
Buying what? The autos piling up on dealer lots and at factory gates? The merchandise piling up on China’s docks? The iron ore piling up at mines that can’t shut down fast enough to slow the build up? The oil that is filling ever storage facility, even causing old tankers to be pulled out of moth-ball?
Every where up and down the supply chain I see companies shutting down because they can’t sell their finished good, imtermediate componets, raw materials, etc.
It seems to me the only thing people are buying are safe havens, or perceived safe havens.
Think globally oil at $45+/bbl, Nuclear reactor vessels from Mitsubishi, look at where there are shortages. Looking at just the US is like an Argentinian looking at only Argentina.
There are sales of all these materials. Iron ore contracts for the next year are being negotiated at this moment, iron ore prices will be up 10% - the companies are asking for 30% increase.
The world is dissociating from the US, slowly but surely.
Only US oil in Oklahoma is cheap, there is little oil available in New Orleans.
Brent Blend 44.18
Tapis 49.50
Alaska North Slope 39.25
Dubai 1M 43.29
Louisiana Sweet 48.70
Urals 42.58
WTI 41.67
Oman 1M 44.83
Minas 50.15
Forties 43.68
Bonny Light 47.28
Because they bought the oil through futures last summer at $140 and they can’t afford to sell at $40, so they are parking the oil in any manner of storage they can find waiting for the market to recover.
This will be as effective as those that took their house off the market last year and rented it out for a year waiting for the market to recover.
Darrell,
I see what you are seeing, but my impression is that hoz is looking down the road just a bit more.
Take those tanks of oil waiting for higher prices. Right now, oil companies are shutting down drilling/pumping operations. At some point, the oil in those tanks will become a significant percentage of currently available oil (there is no/very little new oil coming on-line).
At that point, what will happen to oil prices?
I certainly don’t know what’s going to happen in the future, and the inflation/deflation debate has been the most troublesome issue, IMHO. There are very strong arguments on both sides, and we just might see both come to pass.
I really appreciate hoz coming here to give us a different perspective from what we see going on all around us. It’s times like these that can cause us to be a bit myopic (myself included!).
Thanks to both of you for carrying on this conversation.
FRANCE
More than one million French workers downed tools yesterday in the first general strike to hit a major industrialised nation since the start of the global financial crisis.
Unions said more than two million public and private sector workers took to the streets across France to protest against President Nicolas Sarkozy’s handling of the economic crisis, saying too much had been done to bail out fat cats and banks, and not enough to protect jobs and help workers make ends meet.
My guess is we have a lot more of this to come. Rioters in Greece targeted banks.
And, so it begins. This is the nightmare situation for the ruling classes. What will the spring thaw in Eastern Europe bring?
Rather than foist half-baked unpopular solutions onto the people, governments need to include the people in their debates.
Moving too quickly, without explanation, justification, and debate, is the biggest danger.
Obama is looking to head off labor unrest here with his signing 3 laws to boost government support of labor today. There is real push back against the ultra rich. Cool!
Blue, it is SO ABOUT TIME.
Did Congress pass these “laws” or has Obama assumed dictatorial powers?
Remember the executive privelege a certain someone leaned on so heavily?
Bush??
a push against the ultra rich.. who is that, exactly?
Way more than half of all the jobs are thanks to small business. These are run by people who gambled everything.. who’ve invested their lives, every dime they have plus borrowed money, to grow it or just to keep things going.
They might provide 25, 250, 2500 or whatever number of steady paychecks. These rare individuals who have what it takes to be a success are the goose that lays the golden job.
They aren’t stupid, nor are they masochists. Every one of them has escape plans prepared in the back of their minds for when the time comes.. ranging from an orderly selling out to just walking away… retire to the quiet country side… log a solid 8 hours of comfortable sleep for the first time in.. who remembers?
You push them too hard and forget these little layoffs or paycuts required to keep the business alive in bad times.. they can close the doors and send everyone home. Let the workers or the govt run the business. Stand back and see how well they do..
Tell me.. How does govt “support labor”?
I already know how govt can support business: Leave it alone.
“Tell me.. How does govt “support labor”?
“I already know how govt can support business: Leave it alone”.
Having been self employed for 32 years now, I can say with out any doubt that gubmint has hindered me more than helped.
The folks that cling to the nanny state to ’save’ them generally are not very self sufficient, and need a “level” playing field to compete.
They had better toughen up for the shit storm heading our way, many wimps will bit the dust this go round.
a push against the ultra rich.. who is that, exactly?
The ultra rich are not the small business owners. You’ve fallen for the propaganda. The elite want everyone to think that if we tax them it will destroy small business. Fewer than 5% of small business’s make more than 250k a year. I think it’s closer to 2%. That does not put you in the top 0.1% or elite catagory.
If they shut their doors there is an army of other small business people who will take up the slack if any slack exists. The problem is there are no customers. The whole trickle down economics mentality is a proven failure. You need consumers, that means you have to have people who make or borrow money that is worth something.
You seem to have missed the point.
There is a symbiotic relationship between business, employees and consumers. It’s self-destructive for any of them to take sides with govt against business, employees or consumers.
The money travels in a circle so we can start at any point on the circle. Lets start with employees and say employees have some money in their pockets.
They need to eat. A business has food. The employee buys food and consumes it, and at this stage can be labeled the consumer.
Those consumers traded money for food at the business.
With that money the business can afford to pay employees to create more food. And so it goes..
Enter government. While government is not a part of the circle, we allow it to reach in at any point and grab some money, and it reaches in at every point. It taxes consumers with sales tax. It taxes businesses and it taxes employee paychecks. Government removes that money from the circle.
Now there’s less money to go around. No matter who the government burdens with a tax increase, all in the circle suffer to a degree.
For example, if consumers have been taxed with a new sales tax, they cannot afford to buy as much product as before. So, business receives less income and cannot afford to provide as much employment and pay as before. As consumers, employees can only afford less food and business shrinks and lays off people, and.. well.. i hope the picture is clear by now. Less food available, less employment available.. less money available.
Now all of us in the working, contributing to society, providing jobs and raising family circle are forced to tighten our belts and make do with less, while the govt gains weight..
The danger/advantage of a socialist society. Unions ruling the government. Workers demanding higher pay as prices are coming down, does lead to inflation. Nhz did say prices in the euro were going up. Does the eurozone meltdown while other non-union markets/countries expand? How do they sell their goods globally and compete on prices? Which way does a Obama/democrat led USA go? Interesting.
my guess is that as soon as the current US dollar spike is over the US will join the global inflation/reflation party, the race to the bottom of all fiat currencies.
That doesn’t mean that wages will keep up with actual inflation (in fact, I think in EU disposable income is probably going down for most people - but it strongly depends on the individual situation). I don’t expect much good from a democrat led USA: more (stealth) inflation and probably more trade protection / trade wars is in the cards.
But it sure is interesting that what happens in Europe lately (home prices still afloat, wages rising, lower currency etc.) is exactly what the FED seems to desire but cannot accomplish …
The danger/advantage of a socialist society. Unions ruling the government. Workers demanding higher pay as prices are coming down, does lead to inflation.
I don’t think that lead to inflation in the former East Block countries, I think it lead to a scarcity of items being available.
Empty store shelves and nothing to buy. Thats what I remember from the history books.
The danger/advantage of a fascist/corporatist society. Corporations ruling the government. Management demanding more production for less money as profits hit an all time high, does lead to economic slavery.
See how that works?
Feds allege plot to destroy Fannie Mae data
The Justice Department says it foiled a plot by a fired Fannie Mae worker to destroy data with a computer virus.
The U.S. Attorney’s Office says 35-year-old Rajendrasinh Makwana, of Glen Allen, Va., is scheduled for arraignment Friday in U.S. District Court in Baltimore on one count of computer intrusion.
U.S. Attorney Rod Rosenstein says Makwana was fired Oct. 24 from the company’s office in Urbana.
Rosenstein says that on that day, Makwana programmed a computer with a malicious code that was set to spread throughout the Fannie Mae network and destroy all data this Saturday.
http://biz.yahoo.com/ap/090130/fannie_mae_virus.html?.v=1
Whoa.
Home prices in Maine to keep sliding, Realtor says
The outlook is gloomy for other real estate too, with an oversupply of retail, office and industrial space.
By TUX TURKEL, Staff Writer
January 30, 2009
Median home prices in Maine are likely to fall an additional 5 percent to 10 percent this year before stabilizing, a Realtor predicted Thursday at the annual Maine Real Estate & Development Association conference in Portland.
The ongoing crisis in banking and credit markets makes accurate predictions impossible, said Anne Weigel of Coldwell Banker Residential Brokerage in Portland, because of how the uncertainty may influence buyer and seller behavior. But the federal government’s economic stimulus efforts offer encouragement that the market could start to recover after this year.
“It depends on the recession and how many people lose their jobs and homes,” Weigel said. “Foreclosures and short sales are depressing prices.”
Weigel’s comments came as the real estate industry struggles to navigate one of the rockiest economic downturns in decades. No real estate sector is immune, although some speakers stressed that the Portland area appears poised to weather the storm better than many cities.
In the Portland office market, for instance, the overall vacancy rate hit 8.6 percent last year, compared with 13.5 percent nationally. But no significant construction is expected in 2009, and vacancies are likely to grow by another percent or two, said Jim Harnden of Ram Harnden Commercial Real Estate.
Layoffs and plant closings have created an oversupply of industrial space in southern Maine, said Tom Dunham and Greg Hastings of NAI/The Dunham Group. With demand low, it’s a tenants’ market. Landlords should expect to make concessions, they said.
The retail sector can look for another tough year, said Matthew Cardente of Cardente Real Estate. Retail development along the Interstate 95 and Interstate 295 corridors is saturated. More national chains, such as Circuit City, will go away, leaving more vacancies. At least 10 storefronts have become empty in Portland’s Old Port over the past year, Cardente said, as tenants close or move.
Maine’s crucial hospitality industry will see openings of new hotels fall by more than half, from nine last year to four each in 2009 and 2010, said Sean Riley, chief executive officer of Maine Course Hospitality Group. These midscale projects, in the $7 million to $10 million range, will be able to find financing, he said.
Apartment owners face flat rents and worries that tenants who lose jobs will fall behind on payments. Multi-family housing in Portland should retain its value, however, according to Brit Vitalius of Sullivan Multi-Family Realty. But prices will continue to fall this year in Westbrook, Biddeford-Saco and Lewiston-Auburn, where buyers are scarce.
Real estate forecasting is a tough act in good times. Peering up from the depths of a recession is even trickier, especially for the housing market.
At the 2008 conference, Weigel predicted prices would bottom out by last summer. That hasn’t happened.
The median sales price for homes in Maine fell by roughly 7 percent last year, from $194,000 in 2007 to $180,000, according to figures released this week by the Maine Real Estate Information System. Sales volume was off nearly 21 percent for the period.
Weigel was on target in 2008, though, when she warned sellers to be realistic about pricing their homes in a buyer’s market.
In September – just as the banking and stock market crisis was unfolding – Portland-area real estate agents heard an optimistic outlook from Lawrence Yun, chief economist of the National Association of Realtors. Yun called for a housing recovery in 2009. Portland appeared to be in better shape than many cities, he said, because prices didn’t shoot up during the boom, and employment was more stable.
But a housing bottom has yet to come into view. Yun’s group reported this week that prices fell 13 percent last year. They slid a record 15.3 percent in December, compared with a year earlier, driven in part by a large number of foreclosures and other distress sales.
In Maine, figures collected by Weigel for the conference support the familiar maxim that real estate values depend on location. Median prices rose last year in Bethel, by 8.8 percent, and Freeport, by 3.5 percent, thanks to high-value sales. Big declines took place in Augusta, 19.7 percent; Kittery, 15.1 percent; and Yarmouth, 13.4 percent.
Referring to last year’s 7 percent statewide price decline, though, Weigel alluded to the drop in average stock values to offer some perspective for real estate developers.
“The good news is it’s less than the drop in the Dow,” she said.
Staff Writer Tux Turkel can be contacted at 791-6462 or at:
tturkel@pressherald.com
http://pressherald.mainetoday.com/story.php?id=236062&ac=PHnws
Freddie Mac offering rents to foreclosed borrowers
Tenants of borrowers will also be offered leases, a feature of a new plan implemented this month by Fannie Mae, according to statements from the two government-controlled companies. Both extended their suspensions of evictions of borrowers or renters due to foreclosure through Feb. 28.
“Keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recovery in the housing market,” David Moffett, Freddie Mac’s chief executive officer, said in a statement.
http://www.reuters.com/article/marketsNews/idINN3036592820090130?rpc=44
But - renting is throwing your money away!!!!!
Seriously - this is serious Schadenfreude to anyone who ever said that. They’re doing people a favor by allowing them to rent the home that they once “owned”.
Also - does this perhaps seem like a really *bad* idea for Freddie (and by extension the American taxpayers)? Not only owning but now also having to spend extra $$ to manage an asset that’s losing money.
Just another way for the government to pump money into the system, IMO. They’re looking for as many holes in the system as possible to do just that.
What happens if someone actually wants to buy that house, I wonder?
Did we just get shafted even more?
Presumably they still could, since (per the article) the leases are month-to-month, so the owner (Fannie) could kick them out if the house is bought.
However that being said - I think I misread the article. These lines are confusing:
“Tenants of borrowers will also be offered leases, a feature of a new plan implemented this month by Fannie Mae, according to statements from the two government-controlled companies. ”
“By extending leases to borrowers in addition to tenants…”
I had assumed that they were talking about resident-owned homes, not rental homes. But it appears they’re actually talking about rental homes that are foreclosed up.
Why the **** would Fannie extend leases to both to both a foreclosed “owner” and to a separate tenant? This makes no sense. Why would the previous owner possibly sign a lease on a home which they no longer own, and don’t live in?
I’m scratching my head on this one.
Any self-respecting F’d borrower that would actually pay rent to the very lender that foreclosed on them needs to be put down for good. I would sooner live in a trailer park or in my mom’s basement before I gave them another GD dime.
The deluded realtor on marketwatch forum is really leaning on the old NARscum mantra. Check it out
http://tinyurl.com/d82u5a
——————————————————–
Fact-rates are at a record low.
Fact-affordability is now at a record high (before you twist this, don’t confuse people buying homes that THEY couldn’t afford with affordability based on income/rate/price).
Fact-population is rising at 3MM per year- check the US Census
Fact-banks will lend to you if you have a job and a down payment, even a small one.
Fact-prices rise over time
Fact-real estate (land) is finite
———————————————————-
Wasn’t there a Pismoclam posting on here??
Don’t most people reaslize that Census data gets less and less reliable the closer we get to a new census year if there have been any inflection points or changes in rate of change? I mean, seriously. Trend data is based on the changes recorded between 1990 and 2000. Unless the census is really updating stuff every year? If they do, where does the information come from?
Saw something like that with our little Market watch page in the local daily today. “Now is a great time to buy a house, and the future will be even better” or some such. Said to buy now, and values will still decline but only 15%.
Sounds like a plan to me LOL
The guardian
More than one million French workers downed tools yesterday in the first general strike to hit a major industrialised nation since the start of the global financial crisis.
Unions said more than two million public and private sector workers took to the streets across France to protest against President Nicolas Sarkozy’s handling of the economic crisis, saying too much had been done to bail out fat cats and banks, and not enough to protect jobs and help workers make ends meet.
Why do I see more of this in our future? In Greece rioters targeted banks.
the problem in Europe is that workers expect the good times to last forever, while this is clearly impossible. If you listen to the demands of people on the street, many of them are totally clueless as to what is happening financially. They only care about their own incomes, especially union workerss (unions are pretty powerful in countries like France, Germany etc.).
I agree that bailing out just the fat banking cats is very wrong, but what most of the protesters want (a continuation of the Greenspun years of easy money, where everyone gets more every year) is not a viable option.
More than one million French workers downed tools yesterday in the first general strike to hit a major industrialised nation since the start of the global financial crisis.
Frankly, I admire this about the French. They aren’t afraid to raise a ruckus.
Our own attempts at protest have become increasingly lame over the past two decades (at least). I hope that changes — though the time to kick it into gear was late 2000, really.
Golden handcuffs - most people are shackled by them to some degree or another - me included.
In my youth, on our visits to the old country, I always wondered why pops said he envied the life of the contented cows grazing on the peaceful & scenic Apline slopes.
Rioting is France’s favorite outdoor sport. I’m not saying something like that or what happened in Greece couldn’t happen here, but our population seems far more docile when it comes to expressing its outrage.
So, they hang together and we hang separately? Aren’t we all still hung?
‘Rioting is France’s favorite outdoor sport.’
It’s quite fashionable here in my lovely Olympia, WA, also. Generally viewed as a healthful, invigorating hobby that’ll give you a good cardio and lung workout, along with providing good clean fun and an opportunity to meet others of like mind.
Just pack an umbrella and some extra rocks.
Why, I enjoy it myself, along with gardening, knitting and stamp collecting.
I do wish other cities would pick up the habit. Then we could have ‘riot-offs’.
My city can riot better than your city. Better to wait until the warmer months, however, when one can venture outside without risk of frostbite.
Candya*ss!
Man,
You need to come to the SF Bay Area and see how docile the population is.
I can’t, I’m afraid to get on BART.
I hope I qualify for middle class. Does thousands in losses help my bottom line? Wait, maybe I could become a government hairdresser. I better renew my license.
Discussion is starting in Netherlands about the latest ING (Direct) bailout. The Dutch government overtook the full financial risk of ING’s mortgage portfolio (while ING keeps official ownership). The state paid 90% of face value for the mortgages, while they were on the books for 70% and current valuations in the market for Alt-A mortgages suggest even that is optimistic (values could decline further, giving more owners a good incentive to walk away etc.).
Government still states that the 90% valuation is ‘very pessimistic’ and the company that evaluated the mortgages is sure that it is a terrific deal for the taxpayers.
Experts have calculated that the banksters from ING received a free present (there is no compensation at all for the deal) from Dutch taxpayers to the tune of at least 6 billion euros. ING stock value increased about 5 billion after the deal, suggesting this calculation is realistic. But why worry, as long as the lavish salaries, bonuses and other goodies for top management remain more or less intact?
Is anyone else going to the Bruce Norris “Cat 5″ seminar tomorrow?
I wish I could, sounds like you’re having good weather for walk in the Balboa park.
Noticed an interesting thing today. Yield curve inversion on real estate rates in my neck of the wood (VT). The quoted rate at my bank for a 15 year is 5.75% and the 30 year is 5.50% (both zero points).
Ok, I may have my head up my a$$ financially but isn’t interest effectively a risk premium on a loan and a 30 year mortgage is inherently more risky than a 15? So a 30 should ALWAYS be more than a 15 year. Right? And if your a smart shopper you’d get the 30 year mortgage and prepay it causing the banks to lose the higher interest rate payments on the shorter loan.
Oh and did any of you see that Freddie (or maybe is Fannie) is going to become the largest slumlord in the world? Damn.
Why do I feel like I live in Wonderland these days?
Freddie Mac to rent foreclosed propertiesJanuary 30, 2009 12:10 PM
All Associated Press newsWASHINGTON (AP) - Mortgage finance company Freddie Mac said it will allow some borrowers to rent out their homes after losing them to foreclosure.
The goal of the new policy, announced Friday, is to prevent properties from becoming vacant so they won’t fall into disrepair.
Freddie Mac to rent foreclosed propertiesJanuary 30, 2009 12:10 PM
Sure sign a lease and then immediately stop paying. GSE’s are so overburdened they might get back to you by 2015.
+1
Fannie Mae as landlord?
Call Rep Barney Frank when your driveway needs to be plowed. Or the shower drain backs up. I bet he drives a F350 with a plow on the front and awesome toolbox.
Also, tell him to take his time. The more time he’s working on home repair, the less time he can work on economic destruction.
Proof they can’t afford to book the actual losses.
They are doing the “lease it out for a year until the market recovers” trick that got so many deeper into trouble over the last couple years.
Yep. (see my other post) This is just another way for the gubmint to lose money, and thus also another method to pump money into the system down the road.
Who decides how much the rent will be?? What’s the formula?? What’s the procedure for repairs?? How much is the security deposit?? Do you get evicted after so many late payments?? How many missed payments before eviction?? Who will make all these decisions?? Does this result in a new bureaucracy??
This ought to be interesting.
Place your bets. S&P index by close — 800? 815? 830? 845? 860?
845. It’s SB weekend and we want the mood to be on the subdued positive side.
The new financial bubble is here
Fear has driven money toward the Treasury market, sending bill, note and bond prices soaring, but there will be plenty of pain to go around once the bubble pops.
By Jim Jubak
MSN Money
In the 1993 movie “Groundhog Day,” Bill Murray is condemned to live Feb. 2 over and over again until he gets it right.
As Groundhog Day 2009 approaches, it seems like we’re trapped in a similar fix. We have to live through the inflation of one financial bubble after another until we finally get our financial affairs in order.
Nearly nine years after the tech bubble burst in March 2000 and months and perhaps years before we’ve worked our way through the bubble that burst in 2007, you can see another bubble taking on air.
Treasury market expands
That’s right: If you’ve been convinced that we’d soon see another bubble and that we hadn’t learned much from our previous follies, and you’ve been waiting just to see which asset class would inflate and then go pop, wait no longer. The next asset bubble is here, and it’s called the U.S. Treasury market.
The best things that you can say about this bubble are that because the Treasury market is so huge, it won’t inflate to the extreme proportions of the past two bubbles, and that there are already signs that the bubble has reached its maximum degree of inflation
Another builder offs himself…
Millionaire Lord ‘guns down lover’ before killing himself at country mansion.
Dead: Lord Worthington bought his title of Lord of Shray Hill and was the director of a building company
By Daily Mail Reporter
Last updated at 4:34 PM on 30th January 2009
A multi-millionaire lord gunned down his girlfriend at the couple’s £1million home and then killed himself.
Police discovered 47-year-old Julie Rees inside the mansion with two gunshot wounds - today she is seriously injured in hospital.
Her partner Lord Howard Worthington, 52, was found dead in a neighbouring field after turning the gun on himself.
Why do these asshats so often try to snuff family and significant others before they kill themselves? I have nothing against people killing themselves, heck, there’s LOTS of people I would eagerly buy the bullets for, as well as including an encouraging little note urging them to get to it as soon as possible, but I firmly object to this habit of killing others first. What is it, they just can’t stand the idea of the remaining family sitting in the sun, sipping lemonade, enjoying life?
Why do you assume it was over finances?
Lordy, lordy!
nytol, fist fulla pills, 2 hands brown and down the hatch….leave the tots and tarts out of it.
fist fulla pills might’ve been faster than a gun but pip, pip, stiff upper lip, cheerio and all that, ol’ chap!
aren’t you the one looking for a chained-bound prison inmate with a santa’s hat?
where are the values?
oops, forget the puka-shell necklace..\
..
==
U
a Lord in a ‘Mansion’ of just 1 million Pound? Now that sounds like serious deflation … where is Jas???
in Netherlands 1 million Pound (= 1 million euro) buys a slightly bigger than average home in the blurbs, nothing special …
Ex-Fed Official Poole Against Buying Treasurys
The Federal Reserve should stop dropping hints that it could buy longer-maturity Treasurys to help the economy, said former St. Louis Federal Reserve President William Poole, adding that buying long-end Treasurys to anchor rates would be a serious mistake.
Poole, who retired from the central bank last spring after serving for 10 years, said instead, the Fed should let the expansion in money work its way through the economy. While that will take some time to kick in, it will eventually aid the recovery.
Poole said the costs of potential Treasury-buying aimed at anchoring interest rates far surpass the benefits, and exiting such a strategy would be a messy affair for the government bond market. Already, speculation over what the Fed might do has led to volatile trade….”
WSJ
Just another tricky day with you.
My money got forced out of treasuries when my company changed 401(k) providers. Now I’m sitting in a fund of the 401(k) manager’s own corporate debt… NOT where I want to be. But until the brokered account is set up, I’m kind of trapped.
My wife’s money is sill in “government fund” with a mix of Treasuries and GSE debt. I’d love to get it out of that, but there just aren’t any better options that I see. Long stock funds? Heck no. Corp debt? No way! Commodity ETFs? HECK NO!
All this talk about home gardens and doom is making me excited. I’m right this minute drinking tea I made from mint, pineapple sage, and lavender I grew myself last year, the second year I had a decent herb garden. It’s in a pretty little cup I got at an estate sale for 50 cents, with pink flowers and golden scrolls and little blue feathers drawn on it. 50 cents is more than I usually pay for a piece of antique fine china, but I decided it was worth it. I made the tea partly from enthusiasm for spring and partly to show sympathy for poor, poor Jim A., one of our own, who was recently abducted and probed by aliens for hours and who subsequently became caffeine-intolerant. Isn’t that right, Jim A.? Look at me, I shall raise my herb tea to you, in a toast, ya poor coffee-less probed-person.
Was Pooh bear, Eeyore and Christopher Robin with you?
Yeah, but I got hungry and ate one of them.
http://www.cnbc.com/id/28932865
CHICAGO — As the nine-seat airplane raced through the skies … an onboard telephone began to ring. Rod R. Blagojevich, the soon-to-be ex-governor of Illinois, instructed his aides not to answer… “I’ll tell you what,” Mr. Blagojevich said, laughing, as the phone went on ringing. “I’m not jumping out. Not for those people, no way.”
“At moments during the day, Mr. Blagojevich reflected on what was ahead, most immediately how best to pay his mortgage come March 1 without his $177,000-a-year salary.”
“My successor has done a whole bunch as the lieutenant governor — taken all kinds of trips all over the world and trade missions — like he’s got anything to do with anything as lieutenant governor.”
What a classy guy, huh? Hopefully when the Feds are done with him, this state won’t have to pay his pension.
“Illinois: where our governors make our license plates!”
He hasn’t even been indicted yet…probably won’t. Spitzer never went to trial either.
Its coming…
http://www.nbcchicago.com/news/local/Fitzgerald-Wants-Blago-Indictment-Extension.html
U.S. Attorney Patrick Fitzgerald on Wednesday asked for more time to return an indictment against the governor, saying the time is needed to review evidence and interview more potential defendants in the corruption investigation.
Under law, federal prosecutors normally have 30 days to file an indictment against a defendant. That deadline would have been Jan. 7, and the 90-day extension Fitzgerald wants would give prosecutors until April 7 instead.
Pink pantookas…… and foo foo fluff.
Witness: Man stabbed ex to reclaim implants
http://www.msnbc.msn.com/id/28926834/
The HELOC’ers are taking matters into their own hands. I guess letting Judge Judy decide the case isent good enough! Lol!!!
Well, there’s that deflationary feeling again. What a b00b though to attempt that!
Nearly as good as the story of the guy who’s getting a divorce and wants the kidney back he donated to his wife!
Its established that this guy is pretty dim-witted. That being said, what did this cat think he was going to do with those things???
Give ‘em to his next gal! After all, ‘waste not, want not’.
Steep drop in world wheat crop forecast
By Javier Blas in London
Published: January 29 2009 18:10 | Last updated: January 29 2009 18:10
The world’s wheat harvest is likely to “fall sharply” in 2009-10 as farmers cut the acreage devoted to the cereal, the International Grains Council said yesterday in its first forecast for the incoming crop.
“The largest declines are expected in the EU, Russia, Ukraine, the US and China,” the IGC noted in its monthly report. ..”
FT
“EU, Russia, Ukraine, the US and China”
Which of the major wheat producing regions does that list exclude?
India (2), Canada (6), Australia (7), not to mention Pakistan, Brazil, and Argentina.
http://internationaltrade.suite101.com/article.cfm/top_ten_wheat_countries
Beer Lao os mostly rice.
ou, is
potaoto, poatoato
—
I give up.
uncle.
Unless demand falls faster than supply.
Sure substitute dirt for wheat, no problem. That is called hedonic inflation. People don’t need to eat real food.
I thought a huge chunk of the grain supply went to feeding livestock, and wasn’t it you that said the cheap meat won’t last because they are over slaughtering. No livestock = less demand for grains.
Besides, I know a few Americans that could use a few less slices of carbs per day.
The housing bust may have the accidental benefit of decreasing obesity, but the countervailing effect of higher stress levels on health could outweigh the weight loss effect of less overeating.
Celiac Sprue was discoved during a wheat shortage caused by WW2
Why are farmers cutting back on wheat planting ?
I bet a lot of corn growers abandon corn and move to another crop.
Good Ann, Bad Ann.
good bank, bad bank is ON HOLD!
‘Bad Bank’ Will Not Boost Lending, Whitney Says (Update1)
By Josh Fineman
Jan. 29 (Bloomberg) — A U.S. proposal to create a “bad bank” to buy troubled assets won’t cause banks to increase lending, Oppenheimer & Co. analyst Meredith Whitney said.
“Simply removing ‘toxic’ assets from bank balance sheets will not directly cause banks to increase lending,” Whitney wrote in a note today.
…
Whitney is in favor of banks selling “crown jewel” assets to cover their own losses, she wrote.
“We believe private capital will readily invest in businesses that make money and grow,” Whitney wrote. “However, the banks do not fit this description.”
“If a bank were to sell its ‘bad’ assets into a ‘bad bank,’ it would still be left with lower earnings power from higher losses on ‘good loans’ and the requirements to build reserves, lower earnings power from lower assets and a higher legacy expense structure, or both,” Whitney wrote.
To contact the reporter on this story: Joshua Fineman in New York at jfineman@bloomberg.net.
Got SKF?
Russia no longer holds U.S. agency debt-c.bank
Russia has fully exited its holding of U.S. mortgage agency debt, central bank chairman Sergei Ignatyev said on Friday.
As of Nov. 1 Russia held Fannie Mae (FNM.N) and Freddie Mac (FRE.N) bonds worth $20.9 billion, down from from $65.6 billion at the beginning of 2008.
http://www.reuters.com/article/marketsNews/idINLU15835120090130?rpc=44
Is this a sign of things to come in the future? What happens when other countries dump our mortgage debt?
Two birds, one stone. Russia is making a statement about the USA’s debt, and at the same time they’re drumming up every penny of liquidity they can get now that oil has tanked.
“Americans need to shed debt, not begin borrowing even more. Instead of ’stimulating’ us to keep borrowing to buy buy buy, how about ’stimulating’ us to eliminate debt so that in the future we can live, live, live?” ~Jeff Snyder
Absolutely. Today’s savings is tomorrow’s capital for new innovative endeavors.
Today’s savings is only good for the economy if you put it into a bank and someone else borrows it. Otherwise it is just a drain on the money supply.
It’s official — There is only one party, the inner party. After yesterday’s 4 trillion dollar pitch, comes this one straight off the presses: (Have they no shame?)
Jan. 30 (Bloomberg) — U.S. stocks won’t rally until Congress approves President Barack Obama’s economic stimulus plan and the Treasury resolves how to use its remaining financial- rescue funds, according to Goldman Sachs Group Inc.
“(Have they no shame?)”
This is one them there “rhetorical” or “trick” questions, right?
“… Over the long run, that could force long-term interest rates higher and drive down the value of the dollar, undermining the benefits that come with its special status.
Until now, most fears about surging government debt have focused on borrowing by European countries like Spain, Greece and especially Britain, which is also in the midst of a sizable bank bailout. That recently forced the British pound to a 23-year low against the dollar.
While the dollar’s status as refuge in a time of turmoil should prevent that kind of sell-off for now, a number of financial specialists warned that if fundamental factors like the lack of American savings and bloated budget deficits did not change, the dollar could eventually fall sharply .
“There aren’t that many safe havens,” said Alan S. Blinder, a Princeton economist who is a former vice chairman of the Federal Reserve in Washington, explaining why the dollar’s status as a reserve currency is unlikely to be threatened….”
NYT
“There aren’t that many safe havens”, but there are safe havens.
“but there are safe havens”
Like what?
safe havens: look what was up today (and most days over the last turbulent weeks) in the markets …
Not everyone agrees it’s a good idea to write protectionism into law at this time. “We believe it invites reciprocal restrictions on U.S. exports,” said a General Electric spokesperson, a business that would, ironically, be a huge beneficiary of the provision. “When you take competition out, it drives prices up. We’re in a globalized world — we can’t turn back the clock.”
The EU has already threatened to challenge such a move if it’s brought into law — which would, essentially, be an instant global trade barrier. We also note that the U.S. signed a G-20 trade agreement as recently as November 2008, in which member nations vowed not to enact trade restrictions in 2009.
“There is no company that is going to benefit more from the stimulus package than Caterpillar,” Caterpillar’s Bill Lane told The Washington Post, “but I am telling you that by embracing Buy American, you are undermining our ability to export U.S.-produced products overseas. Any student of history will tell you that one of the most significant mistakes of the 1930s is when the U.S. embraced protectionism.
“It had a cascading effect that ground world trade almost to a halt, and turned a one-year recession into the Great Depression.”
Fed Ex CEO said essentially the same thing. Said “Buy American” would be nothing short of a calamity for the world economy. Unfortunately, Buy American or something similar is probably coming, and is simply a symptom of an already-occurring disaster.
By the quotes coming out of the E.U. and Canada yesterday, it sure sounds like they’re ready to rumble.
Not at all a constructive development.
Let the EU keep its Rochford cheese!
Let Canada keep its………….I’ll think of something.
Hockey Players
Trouble is, they’ll say the same thing about our caterpillars.
Isn’t it great to know that the U.S. citizen’s most important role in the world is as a buyer of other countries’ junk?
So all the pigs that feed on our trade imbalance are against the US fighting for a better deal. Yes bad for Caterpillar but good many other companies. It amazes me how much support communist China gets from these so called democratic free market capitalists. Look at all the jobs that have been lost due to the piss poor job of our gov to make good trade deals that help the average American. These fantasy service jobs are about to evaporate. I’ll do my own brakes, cook my own food, ect ect ect. We need to create jobs in the US, we need to rebuild manufacturing.
“We need to create jobs in the US, we need to rebuild manufacturing”.
So how does one go about this “creating” jobs?
How about offering REVERSE Tax Incentives?????
Tax breaks based on the percentage of your workforce that does NOT work 9-5 M-F
We need 2nd 3rd shift work…Wmbz…i used to get tons of extra DJ work in SC people were getting off at all hours of the night and just didn’t want to go home. So you would have DJ’s 5-7 nights a week and a packed bar at midnight on Wednesday…not here in the big apple!
Lots of people worked weekends…You know what its like on Sullivan’s Island at non on Tuesday….man the beach was empty….
Plus here the industrial section Long Island City is a ghost town after 6pm and weekends holiday tons of FREE parking being wasted
Dick Hoey (good macroeconomist) saying on CNBC that Q1 will be down 5 to 6% “and possibly as much as 7%.” Says Q4 overstated due to unintended inventory build (as noted above) and that there is a massive global inventory liquidation coming over the next 3-4 months. Sees troughing in summer and mild recovery in 2nd half, especially if/when corporate tax rate is cut.
Doesn’t the name “Hoey” make you question his predictions?
No, but it wants me to put him on a prison chaingang with a hoe, and go, “Ho ho ho!”
I actually used to work in the same company as this guy in the early 80s (anybody remember A.G. Becker?) and so I have followed him over the years.
I guess there will be less applications for unemployment when Freddie Mac hires all those realtors / mortgage brokers to become property managers.
Nope. Used house sales folk and mortgage brokers are usually 1099ed.
Jan. 30 (Bloomberg) — Pay and bonuses for executives at companies receiving federal bailouts would be limited in total to the U.S. president’s $400,000 salary, and a court would be created to restrain their “massive self-indulgences,” under legislation introduced by two senators.
“We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer” by taking multimillion-dollar bonuses, said Democratic Senator Claire McCaskill of Missouri. Her proposed $400,000 pay cap for executives would cover salary, bonuses and stock options.
BWAAAAAAHAAAAAAAWWAAAAAHAAAA!!!!
New Bubble: Creative compensation development to get around those pesky salary limitations.
yep
yeah, sure … we had similar legislation in the Netherlands over the last three years or so, based on the EUR 200.000 prime minister salary. Wages for top level managers in (semi-)gov organisations have never risen faster than over the last few years.
If they’re going to attempt this, maybe they should peg it to the average hourly pay within their organization (must include part timers, private contractors, etc.). Sure, its still manipulatable, but it would be somewhat less random than a peg to the President’s pay.
They’re also going to have to come up with a way to prevent companies from simply moving offshore to get around the rules.
Peg it to the average pay of the company employees? Are you mad?!
That means they would have to cut their 300% above employee average at least in half!
Barbaric! Cruel and unusual! Blatantly unconstitutional! Class warfare! This is America by god and looking out for number one to the detriment of anyone else is a god given right!
HOW DARE THEY?!
Sorry, but this is not related to whatever you are discussing — current observation from the Big island of Hawaii. Renters for my vacation rental are back, but they are not exactly tourists. They totally disappeared in June through October, a trickle began in November and December. Now I am getting quite a few calls and bookings, a function of better airfares and baby boomers who all say they are coming here to buy land or houses while prices are at their lowest. My subdivision of about 50 homes (150 houselots) now has 3 new homes under construction. Land prices have fallen from a peak of 190k for a 1/2 acre in July 2005 to about $100k now. Most of us paid 20-25k in 2002 or earlier. The extremely low prices were due to the 1992 lava flow nearby.
“They aren’t making any more land!”
Oh wait, yes “they” are.
You did say “lava flows”, right?
Puna District:
Probably Pahoa.
though I enjoy Lava Tree Park, the area in and around that part of the Big Island is where I would never want to vacation, unless I was visisting from another Island. All the beaches are are Kona side.
I prefer the cold and solitude Mauka near Volcano or North Kohala… I miss going to Waimea and taking the White Road hike to go see the backside of Waipio.
Ditto. If I were to buy on the big island it would be dry side up toward Hawi.
MM, closed ~826 this does seem to have been the S&P’s worst January ever. Now what?
I think we’re headed lower. I’d guess we’ll see 7000 Dow and probably even 6000 before we see 9000 again. Reasoning:
(1) I feel confident that analysts are (way) too optimistic about growth in China and most other non-Western economies, which is being counted on to underpin the global economy.
(2) The deficit is out of control and I think bond yields could add yet another 100 basis points very quickly, maybe even 200.
(3) I don’t believe the Pelosi-and-Reid-led Congress will be persuaded about the relative efficacy of tax cuts over spending (the stimulus package is a disaster) anytime soon.
(3a) The market is quickly losing confidence in the leadership ability of the current administration. There’s not much they can do to make things better, but they appear to be pretty adept, like their predecessors, at making things worse.
(4) Q1 GDP will be worse than Q4 GDP. This realization is part of what sent the market down today after an up open on the GDP release, although it should still provide some more downside ammo.
Ocala National, Suburban Federal Savings,and Magnet Bank threw a big pizza party !!
The Super Bank Failure Friday Bowl is on the intertubes.
Go Sheila !!
It seems, at least with Magnet that they are doing it right. They have no buyer and will be sending out checks to insured depositors.
The fundamentals are in play. We’ve grown very news and earnings dependent. Whether or not the G-Men trump fundamentals is yet to be determined.
If they start to sell names like XOM, CVX, WMT, PG, and CAT — particularly XOM and CVX — it’s over. CAT made a new low. WMT and PG are near previous lows. XOM and CVX are still high flying from their lows, however.
Hey all!
Great bits bucket today, thanks so much, especially Ben!
New York - the next housing bust?
The city has fallen on hard economic times, and that could bring its high-priced housing market back down to Earth.
By Les Christie, CNNMoney.com staff writer
January 30, 2009: 4:45 PM ET
NEW YORK (CNNMoney.com) — The Masters of the Universe have been dethroned. Now the question is just how much Wall Street’s meltdown is going to hurt the city of New York and, by extension, its high-priced housing market.
Even in a city where $20 million townhouse listings don’t raise an eyebrow, signs of trouble abound. Fourth quarter 2008 sales volume was down a whopping 40% from 2007 according to New York brokerage the Corcoran Group. And the average price of existing homes dropped 3.6% during the same period.
The S&P Case-Shiller Home Price Index showed a price decline of 8.6% for the New York metro area, including the city and the surrounding suburbs, for the 12 months ending November 30.
New York’s economy runs on Wall Street money, and after the failure of Lehman Brothers and the sales of both Merrill Lynch and Bear Stearns, there isn’t nearly as much of it as there used to be.
After the financial markets imploded, the New York real estate market “stopped dead,” said Dottie Herman, CEO of broker Prudential Douglas Elliman. “If you think you’re going to lose your job, you’re not going to buy. [We're] a long way off from the past couple of years.”
Whereas bidding wars were once commonplace, city apartments are now languishing on the market.
Leonard Steinberg, a Prudential Douglas-Elliman agent who handles many high end listings, has been trying to move a $1.2 million condo located in the Chelsea part of town for more than a year. The home was originally priced at $1.4 million.
Gotham’s grim outlook
And the city’s economic conditions are only getting worse. On Friday, New York City Mayor Michael Bloomberg announced $1 billion worth of budget cuts as Gotham steels itself against a rapidly dwindling tax base. Its coffers are expected to dwindle by a stunning $4.1 billion for fiscal 2009, which ends June 30, thanks to the economic turmoil.
Perhaps it’s no surprise then that Goldman Sachs recently issued a report predicting that New York City’s normally-stratospheric prices will fall as much as 44%.
And investors betting on derivatives based on the Case-Shiller Home Price Index aren’t much more optimistic. They’re betting that New York prices will tumble over 21% over the next 4 years.
Jobs are the obvious problem. Some 65,000 payroll jobs were lost in the last three months of 2008 alone, according to the city Comptroller’s office. New York’s unemployment rate jumped to 7.4% in December, up from 6.3% in November.
Jonathan Miller, president of Miller Samuel, a premier appraisal firm in the city, said that financial market turmoil could hit home prices harder in New York than anywhere else.
“It’s more exposed than other metro areas to financial industry job losses,” Miller said.
And Wall Street types who are lucky enough to hang onto their jobs have seen their 2008 bonuses slashed by 44% compared with 2007 levels.
If New York City does somehow manage to dodge the real estate bullet that’s crippled so many other metro areas nationwide, it may be thanks to some of the market’s unique qualities.
“We didn’t have the rampant speculation that many places had,” said Miller, who cited cities like Phoenix and Las Vegas. Most New York buildings require buyers to run their finances by a coop board for approval, and to put down at least 20%.
And, by virtue of its limited size, the city didn’t experience the kind of rampant overbuilding that places like the Sun Belt saw.
Additionally, the city is benefiting from the overall trend toward urban living that should help maintain demand for housing. “Our findings indicate that upper-middle and high-income households have increasingly chosen to reside in the city, said city Comptroller William Thompson, “suggesting that our city may be more resilient to this economic downturn than in 1990 when companies and families were fleeing New York.”
All that, however, only helps so much. Any time you subtract billions of dollars from a local economy there will be vast ripple effects. Restaurants, retail putfits and of course, real estate will all suffer.
Said Miller: “We’re going to have to go through more pain before things get better.”
http://money.cnn.com/2009/01/30/real_estate/New_York_next_bust/index.htm?postversion=2009013016
Couldn’t happen to a more deserving city.
Have you guys seen the France Protests on the u? They are calling it Black Thursday.
The Paris march appeared bigger than previous protests against Mr Sarkozy’s reforms since he took office in May 2007 but smaller than protests against Jacques Chirac in 2006.
http://business.timesonline.co.uk/tol/business/economics/article5610593.ece
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I call that a four day weekend, full of debauchery and self-importance. Much like the antics in Davos…..mail it in people.its reigning bullshit.
Jan. 30 (Bloomberg) — The Office of Thrift Supervision let IndyMac Bank and four unidentified institutions violate the agency’s financial reporting standards, drawing more fire to the regulator after its biggest savings and loans failed last year.
California’s chief accountant on Monday will begin delaying nearly $4 billion of scheduled state payments, postponing income-tax refunds, grants to college students and welfare checks in an effort to prevent the state from running out of cash.
The delays will hurt an already wilting state economy, economists said, calling them the opposite of stimulus checks because people won’t get money they expect to receive. Controller John Chiang has said the delays will last 30 days.
WSJ: California to Delay $4 Billion in Payments
IOu’s are money.
or havent you herd?
You are right. What will they do, issue IOUs that say payment will be made in 30 days? What is the (conceptual) difference between this and handing out green pieces of paper, with the promise that you can trade the paper for stuff later on?
Those green pieces have “In God We Trust.”
Those people on the receiving end of IOUs needn’t worry. Pres. Obama will be paying their mortgage and gas bill.
Strawberry scented welfare checks for everyone!!!
i like it.. This teaches so many things to so many people who understand so little about reality. Particularly, it’s a lesson in thrift.
Interesting posts on housing dropping 50% off peak on the UYG yahoo board :
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_U/threadview?m=tm&bn=57417&tid=68070&mid=68257&tof=2&rt=2&frt=1&off=1
Next reply is also good, as well.
Check out one of these retorts :
‘n 3-7 years they will worth a little less than today.
You might want look at housing bubbles in the past.
Nobody is going to believe that they’re not making anymore land thing again.
That saying is hundreds of years old and newbies still fall for it.
Most people thought houses were overpriced in 2002. When prices go considerable below 2002 then a bottom will be in. The new houses built won’t be brand new in 7 more years either.’
from :
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_U/threadview?m=tm&bn=57417&tid=68070&mid=68289&tof=2&rt=2&frt=1&off=1