Bits Bucket For February 2, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Yay! No more “rent this house/condo for the Superbowl” ads or signs.
Super Bowl interrupted by porn on Arizona station
http://biz.yahoo.com/ap/090202/fbn_super_bowl_porn.html?.v=1
Check this out. I bet there are several viewers calling lawyers today. Lol!!!!
LOL
It’s causing quite a ruckus here in Tucson. As for me, I heard the game on the radio, and that broadcast was squeaky clean.
And, since I’m from Pittsburgh, I found the game’s outcome to be quite satisfying. (Never underestimate Pennsylvania Persistence.)
Yay Steelers!
What a game!
Leigh
Those were the guys in the less cute outfits? The yellow ones? IIIIII wanted the men in the pretty clothes to win and was wildly upset when they did not. But since I can’t recall the team name, and didn’t actually know who was playing until I looked at the teevee, I imagine I may, gradually, recover from the disappointment.
But I’m glad you’re pleased, Leigh.
Sorry, what constitutes a “cute” outfit?
Not that I’m such a big football fan but they are standard outfits, and they come in two different colors (”this” team and “that” team.)
I could see how you would think that the Cardinals were more “color-coordinated” but that don’t make them “cute”.
Am I missin’ something here?
Oh, very well. I will go against my custom and actually think about something I will say or did say. Even though I suspect that everyone, including me, will be displeased and take issue with what my brain has produced.
Hmmmm… *thinky face *….* rummages in head, like it was the junk drawer and I can’t find the pencil or the thimble*…
Oh, I know why I liked the pretty Superbowl team! Because they were red and white, just like candy-canes, and I like candy-canes. I like all candy. In fact, I think that every team should dress like candy. In fact, I think that everyone in general should dress like candy.
I do. Sometimes, anyway. Last year I went through a phase where I dressed like what I was most enjoying eating, and it turns out that I was eating a lot of chocolate-covered cordial cherries, so every day for about two-three weeks I wore a pink shirt, or a creamy ivory shirt, (that’s the nougat) with bright red undergarments, (that’s the marachino cherry) and brown pants, either dark brown or else my favorite light brown corduroy slacks, (that’s the chocolate, obviously, either milk or dark) and over it all, a leather jacket in the appropriate hue and texture. I even have a leather jacket that is sueded in a rough finish. It looks just like the outside of a powdered truffle cordial cherry!
Thus I conclude my entirely persuasive arguments. I bet you’re convinced, huh huh huh?
The suits that were red, because they were really, really red, with a picture of a bird on the helmet. Always a plus.
Where’s my post? It was a miracle of wisdom and smartness!
Thanks Oly!
And a big *clink* to all the Pittsburgh fans out there.
*Clink* to the AZ fans too - great game!
Leigh
OMG… I can be the first post, but I don’t know what to say. It’s too early for me
LOOOOZER………..by 6 seconds….LOL
Well Bye Bye Dow 8000 this morning
It’s a groundhog’s shadow market today…
MarketWatch dot com
February 2 2009 10:25 A.M. EST
Red ink for Groundhog Day
As Punxsutawney Phil sees his shadow (meaning six more weeks of winter), frostbitten investors settle in for another day of selling.
RE: As Punxsutawney Phil sees his shadow
It was disaster in NY.
The fake Staten Island “Phil” imposter bit Mayor Bloomburg,
Looks like groundhog stew will be featured on various homeless shelter menu’s this week.
http://www.newsday.com/news/local/newyork/ny-nybite0203,0,5114201.story
Cool! I wonder if Uncle Sam will follow suit?
February 3 2009 12:39 A.M. EST
Bank of Japan to buy stocks
(MarketWatch dot com) Central bank will spend up to $111.5 billion to bolster banking system
In surprise announcement, Bank of Japan says it will buy shares held by financial institutions in bid to stabilize economy.
Missed it by *that* much.
Well, Brett, maybe you should prepare a little laminated card with a wise and pithy saying on it and prop it up on your keyboard for the next time, far in the future, when you get to be first to post again. Then you’ll sound wise and pithy, see, instead of gormless.
Ah, I remember the wondrous day when I was first to post…I had gotten up to pe*e and habit led me right to the computer. I was not awake, so I pawed groggily at the keyboard like some sort of poorly-trained circus bear, and tried not to fall off the chair as I cudgeled my snoring wits for something to say to the cruel, capricious, over-educated, and critical audience of HBBers I knew would soon wake up and criticize my post. Eventually I contented myself with telling you all about a dream I had just had, with a duckling in it. (And when everyone woke up and got online they all said it was a stupid dream, and I cried and cried.)
That’s when I decided to prepare a laminated card of wisdom. I still have it. Well, I have it somewhere, I’m sure…
Hey! You guys all want to hear about a dream I had? There was a bunny in it! It was awesome!
I actually liked the ducky dream.
Oh, thank you. * stops crying *
Let us pause for a second and consider the 800 lb gorilla in the room, otherwise known as the “Federal Reserve”:
The Federal Reserve: The Greatest Scam In History?
The Federal Reserve was created in 1913-1914 in order to bring stability to the economy and yet almost every major crash, including the Great Depression, can be attributed to the Federal Reserve.
We are going to take a look at the history of the Fed and what prominent historical figures have said about the organisation.
Firstly, from 1837-1862 there was a system of national banks in the USA but then in 1913-1914 a consortium of 12 privately held banks got together and formed the Federal Reserve Bank, an entity that is not part of the US government. These banks then purchased notes from the US Mint for printing costs and lent them out through member banks charging interest.
The Federal Reserve came into being after its supporters paid for the Presidential campaign of US President Woodrow Wilson. Wilson signed the bill that transferred the US currency to twelve regional private banks Wilson regretted his decision later saying:
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”
In 1933 President Roosevelt confiscated citizens gold and handed it to the Federal Reserve. At the very moment when Americans have needed to protect their wealth the most, the best store of wealth ever created, gold, was confiscated from American citizens and given to a un-elected conglomerate of private banks.
Connect the dots?
1837- 1862? Yeah.. the “Free Banking” era.
How did that work out? ..state chartered banks.. Half the banks failed during that 25 years. Average lifespan for a bank was 5 years.. Wild swings, in money supply.
But some acted like central banks because, evidently, there was a need for it. Check out the Panic of 1857..
There is no “free banking” unless fractional reserve lending is outlawed as the fraud (misrepresentation of gold/silver reserves) it is. With 100% reserve banking, then the potential loss to holders of bank notes is directly related to the number of loans that go bad minus the risk premium paid on the loans that are good.
What is the percentage of bad loans in our economy or that of 1837 - 1862? What was the average interest rate during that time? People who had their savings in sound banks were left in tact as well as those whom put their money in gold.
Anyone whom claims a “central bank” is necessary or that “fractional reserve lending” is necessary insists that a mathematically impossible system of exponential growth in the money supply of the issuing agency be setup. All such banks will fail at the onset of peak debt or a rumor of insolvency. The bigger and more centralized the bank then greater the impact of the failure. Imposing a monopoly via government force may prolong the life of banks, but when they do fail an entire nation will be destroyed along with its currency.
“With 100% reserve banking, then the potential loss to holders of bank notes is directly related to the number of loans that go bad minus the risk premium paid on the loans that are good.”
What?
So, let’s assume we are on 100% reserve. I walk into the bank with some gold or notes or whatever and deposit it. Okay. Okay, now the bank has to hold 100% of my account balance in reserve.
What loans could possibly go bad if there are NO loans?
this is interesting..
Who woulda thunk that goldsmiths invented the fractional reserve banking system, and then evolved into the first of such banking institutions.. a practice which is currently, by the way, universal in modern banking.
wiki.. “reserve banking” / “history”.
Obviously you spend more time “defending” the status quo than using your brain to analyze the problem.
Think of gold like housing. You can only rent your gold to one individual at a time without having the renters complain of fraud. Think of banking like property management firms. They find the renters and do the background credit checks.
You rent your money for a fixed period of time during which time you do not have access to it. If you want to withdraw your money early then there are fees associated just like a land lord ending a rental agreement early.
It is so funny how people get all confused about what is right and wrong or necessary just by switching the subject from lending any other commodity to lending “money”.
Here’s another way to think about it, VTDan…
10 people have 10 extra houses… they want them cared for so they call you. Your business is to take care of vacant houses, for a fee. You’re a professional house sitter.
You visit the empty homes once in a while.. water the plants.. check that doors and windows are locked.. etc.
Then one day you have an idea and present it to the owners of the homes. “Me watching all of your empty homes is costing you money and these homes sitting empty is a waste of resources.
“How about if i rent them out for you and charge the renters a fee, and then share whatever profits with you? I’ll also screen the renters and continue to manage the property and make sure they remain safe and sound.
You will make money instead of paying me money.”
The owners think it’s a great idea.. they’ve been offered a way to earn money (interest) by allowing you to rent (lend) their empty homes (bank deposits) to people (borrowers) and, without lifting a finger, their fallow property is suddenly transformed from a wasteful, costly burden into an income producer.
Say hello to the reserve banking system.
Joey, what you described is 100% reserve banking… and is what I support. The bank never lent the same house to two people at once and the owner of the house could not live in it while it was being rented out.
VTDan…
My example was hardly ideal.. I outlined a zero-percent reserve banking system. The entire inventory, 100% of all ten homes was rented out. All of the “deposits” were at risk, placed entirely in the hands of renters.
The renters might destroy the homes… by accident or perhaps on purpose. There was nothing back held in reserve. Property owners risked everything for the sake of a small monthly return. The house sitter (the bank) owned nothing of his own with which to restore or repay the homeowners for losses, nor was there an agreement for him to do so, as far as we know..
Of course in the real world such an arrangement has, in a sense, something in “reserve”. The owners would use a portion of income to buy homeowner’s insurance… sorta like FDIC deposit insurance. The house sitter would be bonded and his actions would be regulated.. or similar.
Purchasing insurance adds it’s own elements of risk and reward. If all the homes “failed” at one time, the insurance company would likely fail and might only be able to pay off part of the lost value.
.. so we come to some important things about reserve banking safety. First of all, well.. reserve something. Hold something back in preparation for a worst case scenario. We’ll assume the loss of one house max is a reasonable assumption.. not too much and not too little.
Do not allow him to rent out 100% of a house. Hold perhaps 10% in reserve. 10% times ten homes represents one house.
This reserve forms a pool by which small losses (like one home lost) can be recovered without the entire scheme (the house sitting economy) falling apart.
Be careful who your renters (borrowers) are.. check them out.. make sure they have a good history.
Insure the homes (aka deposits) for added security..
Your objection seems to be that rental agreements (banking regulations) allow renters to sub-let the homes… and those sub-leasers to again sub-let the home to someone else.
Layer upon layer of sub-leases means a lot of people are making money off of one house (here’s where money is being created.. we got more money than we started with).
Does all this sub-letting add risk to the system if contentious rental (lending) rules are followed all the way down the line? If so, how?
imo, there’s nothing wrong with this system in theory, and the system works well when it’s treated with the respect it deserves.. which was not the case in the euphoric Bubble years.
Spell checkers .. they approve words without being able to assess the meaning of the words..
…Does this add risk to the system if
contentiousconscientious rental (lending) rules are followed? If so, how?Hey geeks.. With the speed available in modern CPUs, couldn’t a set of grammatical rules be incorporated into a spell checker?
Like it might then distinguish the context of a thought and be suspicious when the word “two” seems out of place, and the writer may have meant “too”.
But i aint up to speed.. maybe they already got ‘em..
Failure offers to teach us what not to repeat, but it can’t force learning upon us. It’s up to us to acknowledge it and pay attention to what it’s saying.
As for the Federal Reserve being a privately-held bank/consortium - why is it not shown just “who” owns it? The owners have to be people, directly or indirectly. Who are they, how do they get their profit, and how much is that profit they take away?
This is a commonly misunderstood aspect. Its not really “private” per se and is not run for a profit. It is similar to the DTC, the FHLB and some other entities.
In order to be a MEMBER of the Federal Reserve system, you must invest 3 percent of your capital in the bank. You reserve shares in return. These shares are not tradable. They do pay a 6 percent dividend.
Its a public bank with private aspects. Its not considered part of the federal government because it doesn’t require congressional approval to act.
But its not a private bank like Citi or BoA or such. No private individual directly holds shares and no one can take away profits.
reserve = receive shares in return. whoops.
Maz - thanks. (Late)
Feb. 2 (Bloomberg) — President Barack Obama said the U.S. is suffering from a “massive hangover” from years of economic risk-taking and that some banks remain “very vulnerable.”
“The fact of the matter is that we are suffering from a massive hangover from a binge of risk-taking and that’s still getting worse and it’s going to take some time for us to be able to dig ourselves out of this hole,” Obama said in an interview on NBC’s Today show.
Obama said it’s likely that some banks haven’t fully disclosed all of their losses. “They’re going to have to write down those losses, and some banks won’t make it,” he said in the interview that aired today.
a binge of risk-taking and that’s still getting worse
hmm … does he acknowledge that he plans to go even deeper into debt and that this increased future risk ?
’cause he’s a democrat. his risky is ‘different’
What exactly does that mean? Democrats have different accounting standards than Republicans?
As we all know, deficits don’t matter.
As long as the government can destroy the investor class then nothing else matters.
Hey you guys, give the guy a break. At least he acknowledges that we have a debt problem. The last guy(what was his name?) didn’t even do that. His answer for almost any economic issue was one form or another of “go shopping!”
As the addiction “experts” say, admitting you have a problem is the first step.
Now, if we can just get past or skip the step where we p1ss away a metric buttload of cash in a hopeless attempt at keeping asset prices up….
So let’s throw good money after bad!
Some banks, like BofA, shouldn’t have “made it” to begin with. That’s the madness of this whole “bailout”. Failed institutions kept on life support when they should expire anyway and let sound institutions step up to the plate and flourish. Sort of like rescuing FBs, at the expense of the prudent. The more failure you reward, the more failure you get.
There’s an insanity bubble in Washington. When’s that going to burst? I wouldn’t mind seeing a few idiots explode.
The more failure you reward, the more failure you get.
There’s the money quote. It’s funny that all the Wall Street bankers haven’t yet realized that losing money for the government doesn’t pay nearly as well as making money for rich people.
But at least it pays. You won’t see anyone cutting pills in half on Wall Street.
Yeah but they want to invite their congressmen to a huge pity party if they’re limited to 400k/yr.
RE: BofA
Party hearty at the Stupor Bowl!!!
The “Big Suit” chucks just don’t get it.
http://www.abcnews.go.com/Blotter/story?id=6782719&page=1
Part of their “growth strategy”
Just like new spinna rimz is part of any self respecting hood rat’s “growth strategy”?
RE: Just like new spinna rimz is part of any self respecting hood rat’s “growth strategy”?
Well, EJ, if you really think about, it’s a proper fit.
Their next acquisition will be all those corner, inner city, “EZ Dough” instant check cashing emporiums with their 400% cashier fee’s and processing surcharges.
Goes well with their banking for “America” theme.
I’ve always heard that some of the current banks are already behind the payday loan places. I believe this was in the book “Credit Card Nation.”
LOL - I was going to post the article myself, but you beat me to it.
“The fact of the matter is that we are suffering from a massive hangover from a binge of risk-taking ”
What is this “WE” garbage. Not all citizens/biz drank the proverbial koolaide. Let those who took the gamble and lost pay the price.
It is kinda like making all people take chemo and radiation cuz some people smoked and got cancer.
Financially, I am not my brothers keeper.
To get the banks lending again, couldn’t the government just insure all new loans that meet specific, verifiable requirements? Or do they want to go back to lending to everyone who can fog a mirror?
Banks are failing b/c policy makers adopted a poor economic model that is heavily dependent on asset price inflation and cheap imports.
Asset prices have reached maximum expansionary limit and are in reverse. Cheap exporters are falling off a cliff. The economic model is shutting down.
Spending new money to support falling asset prices and a failed economic model at the expense of alternative growth worthy investments is a prescription for doom and depression, economic malaise.
The problem is the only ones who want(or need) to borrow are the last ones that should be given a loan. Checkmate.
Yep….
So Preside BO is saying all these horrible (true) things about banks and the economy. Should be quite a rally in the markets.
” … it’s going to take some time for us to be able to dig ourselves out of this hole,” Obama said in an interview on NBC’s Today show.”
Obviously, Obama and crew don’t understand that you can’t dig your way out of a hole. The more you dig, the deeper you get. The first rule when you’re in a hole — stop digging.
Who says they’re digging the same hole deeper? I think the stimulus package is digging a different hole, only in richer soil this time, that might actually grow something.
Now if you’re talking about bad banks and more bailouts for junk that’s “too big to fail,” yeah, I agree.
Wasn’t most of this stimulus supposed to go to infrastructure? What happened? Acorn, planned parenthood,municipalities and more bureaucratic waste.
Most of it DID go to infrastructure and state money, plus tax cuts. The projects you mentioned didn’t cost that much, but oh did they get the attention on the news.
The liberals believe that Obama et al put the incendiary projects in delibrately as bargaining chips, with full intention of removing them to make the minority party feel like they had saved the day from the evil messiah. We can’t count out the horse-trading that goes on in the Capitol.
I read the other day 5% of the package was going to infrastructure the rest is mostly welfare. Sombody have better numbers?
It’s about 15%:
- $32B for electricity grid
- $32B for transportation
- $31B for federal buildings repair and some other
- $19B for water projects
- $10B for rail and mass transit
Link
I think you’re close enough, BP. No wonder Caterpillar got dumped before the announcement.
Education spending is also infrastructure. It creates something that will return financial benefits in the future.
How much is to be “spent” this year (2009) with the current iteration of this bill?
I thought the Big Bad Bank was supposed to relieve the bad banks of said losses? Is the plan tabled for now?
According to one person with knowledge of the matter, the bad bank will likely be one aspect of a “kitchen-sink approach.” There simply isn’t enough money to buy all the bad debt from the banks, so that idea will be supplemented with the purchasing or guaranteeing of mortgages directly from individuals, additional guarantees of bad debt on the banks’ books, and possibly the infusion of more capital—along the lines of what the government did for Citigroup and, most recently, Bank of America.
Daily Beast — Gasparino: Stop Bashing Wall Street!
Do the math, kid!
They have about $40-60T problem. You’re gonna tell me that a $800B will save the banks?
How does that work? Can you show me the numbers?
the Bad bank idea that worked in Sweden right? thats why they are so keen on using it now ?
From CNN:
http://money.cnn.com/2009/02/01/news/economy/Senate_stimulus_housing/index.htm?cnn=yes
Snippets:
Create a 4% mortgage: Senate Republicans are likely to introduce a provision that would encourage lenders to offer a 30-year fixed rate mortgage at 4% for a limited period of time. The loans would only be available to credit-worthy home buyers and homeowners seeking to refinance.
Hold off on foreclosures: Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters last week that he would like a provision in the stimulus package that would impose a 90-day moratorium on foreclosures. Dodd may consider other housing measures as well.
mortgage at 4% for a limited period of time.
So when this limitd period of time is over, there won’t be 4% mortgages anymore and….HOUSE PRICES WILL FALL to compensate for HIGHER INTEREST RATES!
So then they’ll start offering 3% mortgages for a limited time to fix that problem.
Then they’ll lather/rinse/repeat until everyone in the USA can sit on his rear end in his government-owned house!
Hey, if anyone out there wants to pay 4% on a plunging asset, be my guest.
Well, if your mortgage is at 6%, then refinancing to 4% might just make fiscal sense.
Refinancing, for more and more FBs, is no longer a given. Combotechie will aprove though, as it would ensure that FBs keep paying into the system - and right now every little bit helps.
Well, if your mortgage is at 6%, then refinancing to 4% might just make fiscal sense.
It pumps money into the system. Everyone who refinances has more money at the end of the month to spend.
If any GF and FB who has a job, suddenly CAN’T afford or doesn’t WANT to pay to keep a house at even 5-6% fixed for 30 years, THAT should be PROOF that they OVER-PAID for the POS for …(drum roll)….some REASON
And it can help keep housing unaffordable, and that is a key part to all of this - can’t let the peons own their own house!
“Well, if your mortgage is at 6%, then refinancing to 4% might just make fiscal sense.”
not if after that “limited amount of time” your rate goes up to 16%.
try to think beyond today…please.
No, the 4% is fixed for 30 years. That’s what “fixed” means. The “limited time” is how long theses 4% mortgages will be available.
The sentence is badly written. The online news moves too fast these days.
Even 4.5% refinance makes sense to me from 6%.
At 4% I could refi our little loan from 30 to 15 yrs for only $65/month more payment. I’m still waiting for expected inflation though ;), but it would take a lot of it to override the $74k of total interest savings going from 30 to 15 yrs.
One thing this might do is make it irresistably important to be qualified. E.g., my former boss with the underwater defaulting $650k loan might just dump the unprofitable business and get a real (bad) job - but one that barely qualifies. Saving him thousands /month and somewhat protecting his lost $100k down payment. With 2 jobs, they could actually be solvent again in fairly short order. Then he can quit and start defaulting again
Of course that dumps several other people onto unemployment. Yay for stimulus.
yes, similar discussions going on in Netherlands.
We now have 3.2% variable mortgage rate, effectively 1.6% because of our HMD. 5-15y fixed rates are in the 4-4.5% range (2% effective). Homeowner organisations and politicians are crying that something has to be done to lower mortgage costs for homeowners. At least one of the banks that got money from the government is now providing homeloans at artificially low rates. Soon the 3.2% rate will be ‘far too high’ as well
It’s all about keeping home prices rising (they still do over here) and punishing savers. Most of the sheeple don’t understand rates, they think anything over 0% is caused by greedy banks so politics needs to do something about that.
Probably most of the kleptocrats don’t understand either that this ’solution’ only delays the reckoning and makes the problem even worse; most of them are totally clueless when it comes to finance and economics.
I have to wonder how many would qualify in terms of incomes and credit score in todays market who are not already locked in somewhere?
I always try to stay away from partisanship, but I have to say - at least the pubs paid lip service to free markets.
Perhaps its best this way. When this all fails, and it’s obvious that the failure is caused in large part by government intervention, then we there may be a reactionary shift back towards free markets again. I have no hope that we’ll actually get there, but maybe at least we’ll have a move in that direction.
Actually - sorry let me step back. A large portion of the proposals are from pubs. Never mind. I hadn’t read enough yet. I was reacting just to the Dodd thing. The 4% mortgage is indeed pushed by pubs, and also to some extent the $15k homebuyer credit.
Back to being a bipartisan basher.
Whew! That was close! I thought I was going to have to post a whole bunch of source links reminding everyone how the Repubs not only paid lip service to “free markets” but spent the last 30 years dismantling all the financial industry regulations, consumer and environmental protection and workers’ rights almost single handedly. (they all go together as any regulation is considered socialeest and anti-free market by the Repubs)
That would have been a lot of links!
I always try to stay away from partisanship, but I have to say - at least the pubs paid lip service to free markets.
The free market is a myth.
There may be policies that are “more free” or “less free,” but there can be no free market given our tax structures, corporate rights, property rights, water rights, state’s rights, federal rights, national security issues, health and safety issues, an interventionist foreign policy stance — the list of “impediments” (from a free market believer’s standpoint) goes on and on.
Pretending to believe in this myth benefits so-called conservatives and their corporate puppetmasters in their ongoing attempts to rob the citizenry blind, however.
Witness their ongoing game of “privatize the profits, socialize the losses” — is Wall Street’s pathetic grovelling for help the hallmark of a Free Marketeer? No, clearly, it shouldn’t be. And yet that’s the game these self-proclaimed champions of unfettered enterprise continue to play.
The “free market” as it exists is merely a stacked deck, constructed to favor one relatively small demographic to the detriment of all others.
Somalia is the only country I know of that has free markets. Not sure I’d want to live there though.
Those 4% interest loans might be a good idea if they limited it to primary residence to freeze out the knife catchers. But no one could afford these prices at 4% fixed, which, DUH, is the reason they needed a 4% NINJA. Prices will have to fall.
If a buyer treats it as a place to live and your payment is fixed, it’s okay if it’s a declining asset, right?
‘If a buyer treats it as a place to live and your payment is fixed, it’s okay if it’s a declining asset, right?’
Well, yeah. Bought mine to live in, payment fixed and affordable—sounds just fine to me.
In fact, I pestered the assessors office last year and the year before and demanded a reduction in property tax because the value is obviously declining. They said it was only down 7% last year. Yeah, my little pink BUM. It’s gone down much more! Anyone can see that! Why, I recently heard from a resident in this very area that the appraiser their bank sent said that values here have declined over 30%!
Oh, and they didn’t get the refinance they were seeking, by the way. Boo hoo. I tried to look sympathetic, but I’m not very good at that particular expression.
Can you buy an appraisal to wave, and is it useful in protests? I’m wondering if for a few hundred now it might be worth it in a few years if prices trend up again, beside the immediate relief.
From the U-T:
“Officials said loans to credit-worthy borrowers on primary residences with a mortgage of up to $625,000 would qualify, including those seeking to refinance their current loans.”
This is absurd. Nothing should be done to prop up prices of overpriced houses, much less those with loans will above a half million dollars. The Greedy Old Party shows its true colors once again.
Americans’ saving more, spending less
WASHINGTON – Americans are hunkering down and saving more. For a recession-battered economy, it couldn’t be happening at a worse time.
Economists call it the “paradox of thrift.” What’s good for individuals — spending less, saving more — is bad for the economy when everyone does it.
On Friday, the government reported Americans’ savings rate, as a percentage of after-tax incomes, rose to 2.9 percent in the last three months of 2008. That’s up sharply from 1.2 percent in the third quarter and less than 1 percent a year ago.
Grace Case, 38, of Syracuse, N.Y., is a self-described recovering creditaholic. For 13 years, she charged it all — cars, clothes, repairs, vacations. She’d make only the minimum card payments to sustain her buying spree for her and her family, which includes her husband and two children.
But after being laid off 2 1/2 years ago from her job as an accountant, she landed another accounting job that cut her salary from $60,000 to $40,000. It was impossible to meet minimum payments on her card balances.
Now, the Cases are on a strict budget. They take “staycations,” grow their own vegetables, buy only used cars and pre-pay cell phones. Case hasn’t used a credit card in two years. And she’s saving more.
“It’s really a liberating feeling,” she said. “If you want something, you have to have the money for it.”
So where’s the money going? To savings accounts? To debt reduction?
No one knows for sure. But Robert Frank, Cornell University economist, says it doesn’t much matter.
“For economic purposes, paying off debt and saving are the same,” he said. “Incurring debt is negative savings; paying down debt is savings.”
========================
“… paying debt and saving are the same.”?
Mmmmm…. I prefer to have my OWN money rather than owing someone money… not the same!!!
“paying down debt is savings.”
No it isn’t. It’s monetary cancellation. Poof. All gone.
Putting money in a savings instrument actually allows money to be lent back into the system.
No wonder our economy is so fubar, with University economist clowns like this.
Ok, I was a little off the cuff above.
Paying off goverment debt is monetary cancellation. Paying off debt like CCs and bank loans does put money back into the system like savings.
Need my coffee.
No actually you were mostly right the first time, at least from a money system standpoint. Paying off most bank debt is monetary cancellation, at least until such time as the bank loans it back out again (if they do), because you’re taking money out of the system (e.g. from your paycheck) to pay off that debt. Therefore from a monetary system standpoint paying off debt is not the same as savings.
From a personal-finance standpoint though they are similar. For instance as you pay off your mortgage debt, you are in effect adding to your savings, with your “savings” being your house itself. From a personal-finance standpoint debt is negative savings basically - so yes paying off debt is the same as saving.
Too may people were under the illusion that they were better off going deeper in debt (e.g. though mortgages, HELOCs, etc.) and then using that money to “invest” in things like - houses, home improvements, the stock market, etc. They bought into the sucker’s line that it’s worthwhile since home mortgage is tax deductible. So he if you can get a loan at 6%, you only really pay 4% after taxes, and if you can turn around and make 7% in the stock market (or housing market ect) - then it makes perfect sense!
They never looked below the cheap Maaco paint job though, at the real risk relationships and the real tax numbers.
People just love those gov’t rebate checks. The problem is, it went from a forced savings, into paying off the credit card balance, into I need to stave off bankruptcy.
rebate=refund
One step further, any debts repaid would help to increase the reserves on the balance sheet, which for many banks are woefully low. Thus in an environment where banks have lost money due to defaults/bad assets, they are trying desperately to keep their ratios up, so they will not lend. This is the big paradox or problem right now for a bank… if you lend out money you stretch your reserves and there are few borrowers who look credit worthy.
Usually you would raise your interest rates to offset the risks, but with the GSEs and Fed pushing for lower interest, you won’t commit any loans on your own capital at such artificially low rates. It’s far too much risk when the economy is imploding and people are losing jobs, for a measly 5%. The only thing that gets lent is gov guaranteed money (FNM/FRE), and the gov takes all default risks.
But going back to the topic about money creation/destruction… The Fed/GSEs are attempting a hell Mary at indebting the consumers with more cheap money so the tug of war is which occurs faster. My guess, the pay backs and loan defaults are mounting faster than the attempts of monetary inflation by the gov. So next step is 825billion in more “stimulus” or public debt, to create more dollars. If the consumer is rejecting more debt, the gov will force it upon us!
Only a fool is going to put money in savings, when the earned interest plus tax on same doesn’t even keep up with the rate of real inflation. I keep a cash reserve of 2X my average monthly income in savings to have that liquidity on hand, but am under no illusions that this is helping me to stay ahead financially.
Not if you believe your principal will not be protected elsewhere. I am happy with my 2-5% interest for now, feeling comfortable that I can buy stocks and real estate down another 25% in the near future. I like to be fully invested in equities and real estate, but it was not in a good place to be last year. I was in 5% CDs last year. Since what I would have otherwised purchased is down over 20%, I look at it as being 25% better off. Complain all you want, but this is the first time in 10 years I have been able to save more (and it is turning out to be much more) than the houses I am interested in are appreciating (which are in fact depreciating), and my income actually went down since I have an equity interest in the firm and last year sucked.
“Only a fool is going to put money in savings”
- Can you clarify what you mean by “savings”? (e.g. do you consider equities, bonds, CDs, RE, PMs, etc. as savings? or just cash?)
- What would be your alternate proposal?
Packman:
You beat me to it.
Where?
In the icebox?
Under the oft-mentioned mattress?
Following M.C. hammer’s advice on Ben’s new ad?
Where?
How about-
Food, water, fuel, etc? Hard assets, that can actually be bartered in the event of a financial system collapse (deflationary or inflationary). Of course, if all He$$ breaks loose, you may not be able to take it all with you, in the event that you and your family must move.
Certainly, Gold and other precious metals have intrinsic value, but they also will be the first targets for criminals.
Tough choices in tough times.
Guns, food, and water should be a part of everyone’s portfolio!
RE: Guns, food, and water should be a part of everyone’s portfolio!
The juice went out for a couple of weeks in a number of communities located the central section of Mazzland due to an ice storm a few weeks ago.
The local news featured whiners and snivelers on a daily basis, screaming for government investigation, and frothing at the mouth demanding the heads of the utility company.
That little electrical umbillical cord gets cut, and for vast numbers of people, the world literally comes unglued.
So much for self-sufficiency and personal responsiblity here in Wally World Nation.
‘That little electrical umbillical cord gets cut, and for vast numbers of people, the world literally comes unglued.’
That is one very good thing about my neighborhood. We’re on a peninsula, with one main road, and the power goes out at least once every winter, sometimes for days. Every single household on my street, for instance, has got a generator, fireplace, some wood, a chainsaw, food stores, etc. I don’t know about guns–they’s mostly a buncha gentle retired hippies. (That’s okay, I’ve got enough to share.:) )
Someone was laughing with me just the other day about the outage last winter, everyone on their street was the same as on mine–prepared–with the exception of some newbies from CA. Those iggerant wussies had to go move to a hotel in town for a week. Funny! My, it’s fun to shake one’s head patronizingly, isn’t it? I find it to be so, anyway.
I would like nothing better than to buy a solar panel and a huge freezer and stock up on homesteader goodies. But guess what, I’m a bitter renter who lives a frakin’ apartment, you know, what we HBB’s are supposed to be so proud of? And despite doing everything right (educated, responsible, frugal etc), my jobs are unstable and I have to move every 4 years or so.
I don’t have much choice except to store my money as some form of money.
Oxide,
“I don’t have much choice except to store my money as some form of money.”
Think solar powered motor home full of canned goods, weapons of targetted destruction and gold bars. Heh, heh.
‘Think solar powered motor home full of canned goods, weapons of targetted destruction and gold bars. Heh, heh.’
Yeah! And who even cares. if Armageddon comes or not! Equipped thusly, this would be the mother of all super-exciting road-trips, in the right hands!
Dangit! I STILL have not mastered the italics thingie!
*flings self out of chair in a snit *
RE: I’m a bitter renter who lives a frakin’ apartment, you know, what we HBB’s are supposed to be so proud of? And despite doing everything right (educated, responsible, frugal etc), my jobs are unstable and I have to move every 4 years or so.
Hey Oxide, don’t sell yourself short… you got the one thing scores don’t…instant mobility.
Your landlord is the one who is really stuck.
SHTF’-off ya go…bug-out gear can be stored in a closet if ya get the essential stuff.
Ya just have to be listening to get the head start, that’s all
I’ve got the black V8 Interceptor already, and the shotgun and scruffy dog. Just need to saw off the gun, stock up on dog food and install my twin 55 gallon drums in the rear hatch, and invest in some leather.
Even putting aside the real fear of job loss for a second, if what you would otherwise buy is actually falling in value as Tim noted, why use inflation as your baseline. The reason for saving is personal, and should not be overlooked based on some concept of overall inflation which has nothing to do with your interests or goals.
Mark Twain’s saying, in today’s financial environment, sums it ALL up.
“I am more concerned in the return of my principal than the return on my interest”
Is someone holding your principal hostage?
There has been no “mission accomplished” moment in the War on Savers.
Agree, the bombing still continues at full force.
creditaholic accountant? No wonder she was out of work for 2.5 years.
“creditaholic accountant? No wonder she was out of work for 2.5 years”
SK,
You took the words right out of my mouth.
Watching this slow motion train wreck is like watching the Terminator in T2 thrashing about in the tank of molten metal.
Mike
I had a boss that would occasionally walk around the office with the paper looking at bankruptcies/foreclosure filings. He would constantly jabber on about how he’s looking to see if anyone that worked for him was in financial trouble. Implication being those people are a security risk.
It’s frightening to read how many of these FBs occupy or occupied sensitive positions in the financial world. Heck, all my local bank branches seem to be staffed by twentysomethings that look like they live in their parent’s basement.
I’m wondering if there will really be much fall-out related to this. It’s true that the largest security risk for almost any organization is internal (employees, etc). Financial troubles lead people to do things they might not do otherwise, whether that’s robbing a liquor store or selling employers secrets.
Will a solid financial background (e.g credit score/history) ever be a differentiating factor in employement?
Probably not…….like just about every other standard in America, they will lower the bar until they can fill all the open positions. Thus devaluing the work of those that hold themselves to a higher standard.
It’s hard to find any STANDARD lower than allowing a convicted felon brokering mortgages out of his Mom’s basement on a laptop
Gov’t security clearances already use credit / debt. I’m sure some private businesses use these metrics as well.
Just remember - if you don’t use credit, you probably have a horrible FICO score. I found that with zero debt, I am pretty much punished like some sort of huge credit deadbeat.
MOST companies use your FICO in hiring considerations.
Any justification for doing so is nothing but convoluted rationalization. (which is a nice way of saying bullsh!t)
RE: It’s hard to find any STANDARD lower than allowing a convicted felon brokering mortgages out of his Mom’s basement on a laptop
I knew a state certified appraiser, who got busted for income tax evasion by the IRS and sentenced to 6 months
in prison.
While he was in the can, he had a couple of office flunkies go out and do his property inspections, draft the report, and then bring the final product for him to sign as the preparer of the report.
Completely illegal according to the Standards of Professional Appraisal Practice.
The dude’s wife was a broker for one of town’s largest real estate company who funneled their clients to the mortgage company which subsequently sent him all their appraisal work-because if you got the ballz to cheat the IRS, ya got the ballz to fudge a report’s narrative content and final valuation number without a second thought.
State appraisal standards board was always too busy collecting licensing fees to ever investigate the situation.
Your government in action.
People in financial trouble are a security risk. It seems to reason that if they screwed up with their own money, someone else’s is not going to be very safe for very long.
It’s also a matter of fairness. I will do what I can in my business to make sure I don’t reward folks who were “dabbling in real estate”, bought houses they couldn’t afford, etc. I’d certainly never hire someone who was a houseflipper.
What people do when not on the job at your business is none of your damn business.
It’s certainly fair to look at previous employment and business history. If they wanted to earn a living in “real estate” OR couldn’t handle their debt, it’s very relevant.
We don’t know how long she was out of work. She was laid off two years ago, but may have landed that other job a few months later.
The problem is still that our economy is too consumer-based. If you spend money, you go into debt. If you don’t spend money, you put someone out of a job, so HE goes into debt and doesn’t spend, which puts you out of a job eventually. It’s a catch-22 and damned-if-you-do rolled into one.
I was gonna post this but you beat me to it. Before you know it Americans will be saving 5%+, as I predicted last year (before this semi-depression is over saving rate of 5-10% will be back in this country). We are now at almost 3% when for much of this decade was less than 1% to slightly negative.
“So where’s the money going?”
A lot of it is going to the banks coffers, where it remains, reducing the amount of money in circulation. This reduction of circulating money makes any remainding money still circulating more scarce thus more valuable.
This fact makes cash the king.
With trillions of dollars of spent equity gone, why does anyone expect to see an infusing of billions changing things dramatically.
Yep.
The biggest stimulation of this mess will be the to the drug boyz; I bet theyre leasing more land and lining up mules.The Fed may as well drop bricks of Fiftys on the ghetto.
“David Pearson terms “a deflationist overshooter”. This is articulated ….: the weight of de-flation (de-leveraging, de-risking, precipitously de-clining core asset prices, de-capacitating financial system distress, de-employment shocks, secular de-consumption (savings) ratios, even demographics) trumps any triage, stitching or even bionic limb replacement conjured by central banks and Keynesian stimuli, by a large magnitude.”
-cassandra
This is why Japan is in a pickle after 18 years.
You can’t replace the $62T borrowed in the shadow-banking market by taking $2T on the Fed’s balance sheet, and calling it a day.
Money go poof-poof, it’s poof-tastic!
While that may be true that current efforts are far to small to offset the destruction of credit. Few stop to contemplate what it will mean if 80 to 90% of the money supply is held as bank reserves. Considering that no one “needs” dollars after they have defaulted on their debt, people will adopt a bartering system to get what they need and the demand for dollars will fall.
If I had 0 dollars and no job and everyone around me had no or limited dollars as well, then I would offer to trade my services for their services. I would work for food, shelter, etc. People are creative and will find ways to live and commence commerce even if dollars are scarce.
Huge bank reserves are a damn waiting to burst into hyperinflation. Hyperinflation is not determined by the supply of dollars, it is determined by the demand for dollars. World wide demand for the dollars can fall almost overnight if they catch wind that our government will default on its debt. Considering that deflationists are projecting a huge decline in the money supply and credit even as the national debt is growing at a record rate, then they must also be predicting a debt default by the federal government.
A debt default will destroy demand for dollars regardless of how fast the supply is shrinking. Furthermore, deflationists are ignoring the 100% increase in the monetary base over the past 6 months. Most of this is currently being held as reserves, but if President Obeyme has his way, he will force the banks to start lending those reserves which will increase the money supply by 10x the reserves.
Yeah? Tell that to the pension funds.
All that money that the banks aren’t lending is less money for the FDIC to come up with after they’re closed down.
True, but if you’re a bank then how will you survive without loaning money? How can you pay your workers and interest to depositors? A bank that doesn’t loan is dead, just like a home builder that doesn’t build.
Hence, the bank death spiral.
what is at the bottom of the spiral staircase………
Fundamentals.
Uh, quick question: I’m thinking of getting one of those prepaid cellphones for when my VoIP goes down. Got any suggestions?
Cricket has great coverage in Arizona. No Contracts, nice phones. Good deal on wireless data as well.
I want all HBBers to contact their reps in support of this bill. Why should we have to pay interest and late fees when Congresscritters and appointees don’t have to?
http://www.foxnews.com/politics/2009/01/28/gop-congressman-intros-rangel-rule-eliminating-irs-late-fees/
Dutch home prices are still rising (a bit) and the government already introduced its first plan to keep prices rising forever: homeowners with financial stress (e.g. because they lost their job) no longer need to pay the mortgage. Their mortgage will be paid as long as necessary by a fund that is related to the National Mortgage Guarantee - a semi-gov fund that is ultimately backed by the Dutch taxpayers. Bright idea at a time when unemployment is starting to surge from an alltime low. Just shows that the US does not have a monopoly on stupid housing policies.
Politics is also discussing initiatives to help poor homeowners that are stuck with two homes (because their old home ‘doesn’t sell’). For the moment they decided to wait-and-see, but there will probably more free money for poor double-homeowners in about 2 months. I hope we have some more bankfailures before then, so there is no money left for such stupid initiatives.
On another note: the Dutch government is coming under increased pressure because they secretly backed the US invasion of Iraq and even performed certain war activities, while parliament was not informed and a big majority of the population was against this war. The primary incentive for this support seems to be that they were promised in exchange the position of NATO secretary general for Mr. De Hoop Scheffer (a close friend of our pm).
Does the government get to recover these insurance payments from the homedebtor down the road, when they return to work or sell the property?
no word about the details, my guess is that - just like with our national mortgage guarantee - government takes on the full debt and tries to collect from the debtor. Of course, if they are out of a job and stop paying the mortgage there is nothing to collect.
People under financial pressure can file for some kind of alternative bankruptcy procedure here, where they live on minimum wage for 3 years, get some mandatory debt counceling and keep most of their belongings (e.g. you can keep your car, yacht, expensive furniture and art, cash savings up to about 5K euro, etc). After those 3 years all debts are erased and they can make a fresh start; whether the debt was 10K or 1000K euros does not matter, it is fully erased.
This procedure is extremely sensitive to fraud and very popular. So ultimately, I don’t think government will recover any of the money they pay on these mortgages unless the ‘financial stress’ turns out to be very temporary.
This is what our democratic party wants? to be more like Europe? Thanks nhz.
Kiri, Nobody told you Sean Mannity is for entertainment purposes.
What does that mean ,ex? I asked what I thought is a logical question to nhz’s astounding statements about, his countries, over-the-top socialism. BTW, I never listen to Hannity,Limbaugh or any other right-wing nut job, but that doesn’t make me a democrat. I also luv to read nhz’s comments, because it urges me to veer slightly right, when I find myself wandering to the left.
It’s a mistake to say you “never listen” to Rush et al..
The obvious comeback is “Well, if you never listen to them how do you know what they say? Who formulates your opinions for you?”
It’s safer to say you certainly do listen to them, but disagree.
btw, don’t listen to anyone if you’re easily manipulated. Fix that first.
You along with all the crazies you mentioned in your post typically would characterize the assertions in NHZ’s post as socialist and then proceed to to conflate socialism with the US democratic party…. just as you did. It’s clear you and they don’t understand what socialism is nor has any country on the planet experienced socialism in it’s primary form. But for some… having a few buzzwords in lieu of a lexicon seems to work to advance the cause of the wealthy elite, regardless of political affiliation, even at their own economic peril. And one of those buzzwords is socialism.
Hey Joey!! I’m not easily manipulated, so I don’t need to be fixed! got it! aaaand I don’t LISTEN to Rush et al. because FOR ENTERTAINMENT PURPOSES they are tunnel visioned. Just like I don’t listen to exeter because, for non-entertainment purposes, he is also tunnel visioned.
“buzzwords in lieu of a lexicon”
Kiri, You did well at proving this point. Thank you.
“buzzwords in lieu of a lexicon”
“Never accept a job that requires you to wear new clothes.”
Sorry Kirisdad..
I was heading out the door to an appointment when “Right wing nutjob” caught my eye, and I thought hey.. i resemble that remark.. and fired off a round.
““Never accept a job that requires you to wear new clothes.””
For the first time in my life, I am tempted to make a Palin joke…resisting…
‘For the first time in my life, I am tempted to make a Palin joke…resisting…
Do it, ella! Stop resisting! You know what, I was totally infatuated with that one red jacket she wore, the one that was IDENTICAL to the Michael Jackson ‘Thriller’ video one? You know the one?
All I know is, I am super jealous of the bag-lady who ended up with THAT lovely garment, after the Palin wardrobe was ‘donated to charity’*.
* Yeah, whatever. I bet it was not, either.
There’s somethin about Palin that encourages an awful lot of meowww.. rrRRWOWww.. HISSSSS! from other ladies..
I’ve no idea what it might be.. and probably wouldn’t want to know.
Henry David would not have been one of her fans.
“You know what, I was totally infatuated with that one red jacket she wore, the one that was IDENTICAL to the Michael Jackson ‘Thriller’ video one? You know the one?”
Yes! Actually, I believe you and I have had a chat about her wardrobe before, because I liked her 3/4 length sleeves and I wanted you to sing in the car to cheer up her campaign (or something.)
Her wardrobe was good. I’ll tell you what, that money did not go for a bunch of tacky St. John’s pantsuits. It was probably a better use of money than the rest of the campaign, because it was fun to look at and didn’t make everyone depressed. And it came from wealthy private donors who got all sniffy, while she walked around looking hot. That is my kind of political scandal: offended hoity-toity people, illicit family shopping sprees and black Valentino with red stilettos. Oh, that was a fun news cycle (eyes getting misty here).
“Henry David would not have been one of her fans.”
He was just totally jealous of how hot she looked in glasses.
Sexist !
Heres a quote
“They grabbed tasty Mexican bread and pastries on their way to job sites building dirt-cheap homes across the county”.
It should have said, Many illegals on there way to build overpriced crapboxs
http:
//www.sbsun.com/ci_11604389?source=rss
heres linkhttp://www.sbsun.com/ci_11604389?source=rss
Are they saying that we Americans can’t build dirt-cheap homes anymore? Hmmmph!
From today’s Independendent (UK):
http://www.independent.co.uk/money/mortgages/house-prices-could-fall-40-per-cent-without-loan-boost-1523110.html
“House prices could drop by a total of 40 per cent unless the Government steps in to boost lending, a report says today. The extreme scenario painted by the Centre for Economics and Business Research (CEBR) would see prices plunge by a record 25 per cent this year after last year’s 16 per cent slide.”
Benjamin Williamson, an economist at CEBR, said: “The glimmer of light at the end of the tunnel for the beleaguered housing market is that prices and interest rates are now at levels whereby any improvement in lending is likely to lead to substantially increased activity and at the very least a bottoming out in house prices. However, if lending remains close to current very low levels, the spectre of the biggest annual drop in UK GDP since post-war demobilisation in 2009, with concomitant rises in unemployment and collapsing confidence, will likely lead to an acceleration in house price falls.”
Cluelessness reigns supreme - trying to prop up an unsustainable housing bubble with equally unsustainable access to easy credit. More interesting are the reader comments lambasting efforts to prop up high housing prices.
even if the banksters and kleptocrats can keep the bubble alive at current nominal price level, the crashing Pound will do the rest of the correction. Seen from outside the UK, UK home prices are down more than 50% already.
“Seen from outside the UK, UK home prices are down more than 50% already.”
That’s a much faster rate of decline than places in the U.S. that have had declines of 50% or more. Interesting. UK nationals made a number of second house purchases abroad during the bubble (Florida, Spain, e.g.). Is this playing some role in the speed of the collapse in the UK?
first of all, the -50% number is mostly a result of the fast crash in the Pound, not in nominal home price declines.
Price discovery in Spain has not really started yet, as the government is trying to prop up the market for now. As long as you don’t need to sell, there seems to be no problem
I think many British buyers in Spain actually moved from Britain to Spain (to retire or start a new life), so they are not affected by the UK property crash. If they used their money wisely (UK prices were far higher than those in Spain) they shouldn’t run into trouble in the near term. And although the Spanish job market is bad now, the UK is not far behind probably.
The biggest risk is for foreign investors who purchased homes in Spain with their first home equity as collateral. Many Dutchies, Germans and Irish did that but, but I don’t know the percentage of British specuvestors.
Even against the dollar UK home prices are down a lot.
I have an idea…instead of local foreclosure bus tours, English property tours to take advantage of the plunging pound.
FPSS sounded cheerful about the prospects of shorting the pound, at least last week. I am something of a neophyte when it comes to that, and wouldn’t want to tiptoe into something I didn’t, er, understand. I don’t suppose there is an ETF that tracks sterling… Or?
Or maybe I should just call Wells Fargo and and ask whether a court-blocked CD account, growing as fast as a cactus but still rising, for my kid is still there.
Then I should pick up fallen limbs from my woodsy back yard for next year’s winter.
Groundhogs aren’t good predictors.
But the birds are already flying north in big V formations.
Maybe they will get their timing right.
There is an ETF : FXB
I’d be careful though of shorting. I think there’s gonna be a bit of a bounce. Too many people piled into the short-pound trade.
Otherwise, I’d just delay that London trip or those books you’ve been planning to order from them by 6-12 months (that’s my take on it!)
Late to the party, I’d have to pick up everybody’s empties. Appreciate the response, will monitor from afar.
One of the oldest rules of trading is “never have regrets”. You have to go against evolution and become a “regretless machine”.
Quite tough actually. Goes against all human instincts. We are simply not built that way.
You will NEVER time things perfectly - either the entry or the exit.
And if you miss a trade, there will be another trade somewhere.
“never have regrets”
I have finally come to the point in life that I can apply this to my love life.
Perhaps next I will try investing.
The Big Lebowski: Your revolution is over, Mr. Lebowski. Condolences. The bums lost. My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?
[the Dude walks out and shuts the door]
The Big Lebowski: The bums will always lose!
Brandt: How was your meeting, Mr. Lebowski?
The Dude: Okay. The old man told me to take any rug in the house.
*last one and back to lurking the intertubes…..
I spent the weekend in Canada. There is still the usual talk about how much better and better off Canadians are than their neighbors to the south. Obama plans to make his first visit to Canada, which they think is only appropriate. Apparently Bush visiting Mexico first was an insult to them.
New tone is very angry over the “Buy America” talk regarding the US stimulis plan. Why shouldn’t Canadian steel mills get their fair share of our program? Is not Canada our major trading partner? Don’t we supply more gas and oil to the US than anyone else? How about we shut off their oil?!?
Dependants get pretty angry when the gravy train slows. Imagine how angry our less friendly “trading partners” will be when our spending in their direction slows.
I asked only one question: “When you remodel your house, do you have the appliances delivered to your neighbor?” Blank stares.
“Don’t we supply more gas and oil to the US than anyone else? How about we shut off their oil?!?”
I dunno. Despite the fact that I’m vehemently opposed to so-called “free trade”, which is a bunch of BS as far as I am concerned, I do think it is only fair to dance with the one what brung ya. In other words, any country that has played fair with us, should be reciprocated. Charity begins as home, but when home is taken care of, it is a good idea to look around and reward those who have helped you. Canada appears to have been a good neighbor, and yet here we are pouring money into a failed state at the other border and coddling its special interest groups.
Of course Canada is a good neighbor, but did they sell steel into the US at their expense, to help us? Do we have a moral obligation to use US taxpayer debt to subsidize Canadian factories?
GM & Ford have factories in Canada, so I think we are already subsidizing them to some extent.
The canadian gov’t pledged tax dollars toward the big three.
“I asked only one question: “When you remodel your house, do you have the appliances delivered to your neighbor?” Blank stares.”
Good one Blue.
I’ve always said “If every house on your street was on fire, which fire would you put out first?”
Taking care of your own isn’t being selfish.
BTW, I have enjoyed my many experiences in Canada. Nice people, beautiful country.
Mike
“Do we have a moral obligation to use US taxpayer debt to subsidize Canadian factories?”
No you don’t. But then again, it’s not a case of using US taxpayer money to subsidize Canadian factories. It’s a case of allowing Canadian companies to bid IAW the free trade act. Have US companies become so feeble that they can’t compete with the juggernauts north of the border?
‘“free trade”, which is a bunch of BS as far as I am concerned,’
Say it louder and say it often.
This is exactly what happened in 1930, as the economy began to slide. Americans, and Federal Politicians, in general, became critical of all kinds of trade policies, and the subsequent period saw a deterioration of trade throughout the world, making the entire economic contraction that much worse. As I read various blogs, and consider the attitudes of many folks, it appears we are doomed to repeat the same mistakes, again!
Sure, we should review all the trade agreements in place, or proposed, but I am afraid we need “them” as much as “they” need us.
Never has the world been more interdependent. And if you do not think interdependency leads to prosperity, just compare most of the world with North Korea; one of the most “self-sufficient” economies in the world (I know, as I lived in South Korea for a time, and made a study of the Koreas for many years).
We really are in a position that, if we pull the trigger at the wrong trading partner, we could be end up hurting ourselves!
Just saw the Smoot-Hawley comment by BP, below. My sentiments, exactly!
Never has the world sucked so much life out of these United States.
The rest we did to ourselves, I guess.
RE: ‘“free trade”, which is a bunch of BS as far as I am concerned,’
Say it louder and say it often.
700,000 cars from Korea incoming…
5,000 of ours outgoing…
BS
A friend got to handle the local office of Symmantec as they were closing it. All the IT equipment was shipped to India, where they were growing operations. He said India taxes the import of all the old equipment at something like 30% of it’s value? In addition to this, I don’t think India gives out H1B’s to Americans that need jobs. So when I hear other countries grip about free trade, I see it as hypocritical.
We have been there and done that. See first GD and what one of the main causes. If you pass another Smoot-Hawley Tariff Act other nations will do the same and cause a trade war. Do we really need to add to this debacle now?
http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act
With only 30% of GDP being production based, the U.S. wins any trade war this time around. During GD1, we were the big losers since we were the biggest exporter.
Nobody wins in a trade war. It is akin to “winning” a nuclear war.
Nobody wins in a trade war. It is akin to “winning” a nuclear war.
“Shall we play a game?”
Joshua: The only winning move is not to play.
Jon,
Correct. The free trade fraud apologists and globalistas don’t want that obvious fact known. They are the power structure that profits from it and will say or do anything to advance the cause of free trade…. which has failed miserably.
What you say may be true, however, just take a look at our production base (autos, airplanes, finished timber, building products, etc.) and you will see that hundreds of thousands have already lost better than average paying jobs because our overseas customers are not buying.
I have to agree with “BP”; a free trade “war” is like a nuclear war. There is not a real winner! (Except perhaps the ‘academics’ that are supported by the taxation of the economy’s activity who can sit back in salaried offices and say “I told you so”).
Free trade worked very well for the US for many years when it was an industrial power house. But the rest of the world made great strides in catching up. You shouldn’t believe that protectionism will bring back the standard of living that came with being the world’s assembly line now that everyone else can build their own stuff.
Let’s not be naive, most Asian countries manipulate their currencies relative to ours to give them an artificial advantage. That is not free trade.
Secondly, it is stupid to have free trade with countries that can massively undercut your labor costs. Their standard of living might go up a bit, but ours will decline dramatically. Japan and Korea are one thing, but China and India are on a vastly different scale. Over the long term, their is nothing that we can do that they won’t be able to do cheaper. Nothing. Which means doom for the U.S. if we maintain our current system.
I have no problem trading with industrialized countries that do not manipulate their currencies.
Jon: you might be correct in the short run, but even 2.4 billion Indians and Chinese eventually want to live in a home, buy a TV, go to a Doctor, and buy a pair of decent shoes. You would be surprised how much the Chinese Government is affraid of it’s newly upwardly mobile growing population of workers. They cannot put the proverbial Genie back in the bottle, without killing 100 million people!
With Economics, everything levels out, in the long run. No nation has permanent perfect absolute advantages in everything. Only shorter-run comparative advantages. That is why those countries that manipulate their currencies and subsidize industries eventually lose out (think France, and Airbus, or even the USSR, as examples).
The problem is that our lifetimes are affected primarily by shorter-run realities. In the U.S. the more we restrict competition and try to “protect” uncompetitive sectors of the economy (including Government!!!), the faster we will decline, both in terms of our Current Account balances, and in terms of our standard of living.
There is a reason why nations rise and fall, and it often follows, to some degree, the entire economic timeline of comparative advantages. One advantage that we used to maintain, in the US, was our productive labor force. We have aborted and restricted growth to the degree that we are ceding that advantage to every developing country. Look at Europe, as it is a few years ahead of us on the ‘decline curve’.
It is natural for those of us in “Industrialized Countries” to want to stop the march of progress, and maintain our advantages, and standard of living, as is; but economic change is like a river; you can dam it, re-direct it over short distances, but you cannot stop its march.
“I asked only one question: “When you remodel your house, do you have the appliances delivered to your neighbor?” Blank stares.”
The blank stares may have been confusion over the bad analogy. If their were expecatations that US infrastructure money was going to be spent building bridges in Canada, then your question may have made sense.
Ha, a mixed analogy. It is the only useful kind after a case of Molson. I will try your version and see if my friends throw me in the snow bank.
“I suppose we should build the bridge in Montreal then too, eurpppp…Eh?”
Canada has a rule that 35% of the programming on TV has to be produced locally. This is why so many scifi programs, like BSG, Stargates, etc. moved production to Vancouver.
How is this being a “good neighbor”?
Everyone in the world, it seems, has some protectionist inclinations. The U.S. somehow, seems to not act theirs very often any more.
“Canada has a rule that 35% of the programming on TV has to be produced locally. This is why so many scifi programs, like BSG, Stargates, etc. moved production to Vancouver.”
Really (asking genuinely)? Just to capture a Canadian audience share? It’s not because it’s just cheaper to do it in Canada, especially when the CDN dollar is worth less than the US $?
I thought it had to have actual Canadian content (ie Canadian-made & written, star a moose and 6 guys named Gord, set in their donut restaurant in Red Deer, etc. They have tons of strict rules about it. If you remember Bob & Doug Mackenzie, that was originally a joke about how stereotypically “Canadian” Canadian content has to be to get funding. If you have information otherwise, I’d be genuinely curious to see/hear it.
BC is also great for sci fi shows that need a wide variety of terrain for their offworld adventures (seriously, BC is out of this world).
“Apparently Bush visiting Mexico first was an insult to them.”
Oh? I didn’t even know. Can you believe it…I don’t care either! The only time I think about Obama is when I visit the HBB, ’cause you guys are ob. sessed. with him
Sheesh, if I was planning an itinerary in January, I would probably pick Mexico first, too.
FWIW, free trade isn’t too, too popular up where I live either. It’s from Brian Mulroney, and he was a…how can I say this politely? He was quite fond of pink elephants. It shows in his policy. I used to export to the US, and NAFTA was of no real benefit, it was just paperwork stuff. It mainly benefits big multinationals, not specific countries. As usual.
Oh, Bush visited Mexico first, not Obama. What fantastic reading comprehension I have.
OK, well never mind. Still super-offended over here. Why, why didn’t he love us? *sob* If he has visited us first, we would have draped him in rich polar fleeces and plied him with beer and donuts, and then crowned him with a diadem of softwood lumber and fresh maple leaves. So, his loss really
What does Mexico have, huh? What! Tequila and warm, sandy beaches, you say? Oh…Claro, claro.
Hahahah! Nice post.
For California readers, info on the CA state income tax refund delays:
http://www.ftb.ca.gov/refund_delay_2008.shtml
“Am I entitled to receive interest because of the delay? - It depends upon the length of the delay. For individual taxpayers, interest on current year refunds is only paid if your refund is not issued within 45 days after April 15, or the date that your return is filed, whichever is later. If you are entitled to receive interest on a prior year refund, you will receive it when your refund is issued.”
Great - they can delay your refund through the end of May without paying any interest. How many taxpayers will now adjust their withholding to either get no money back or owe money?
“How many taxpayers will now adjust their withholding to either get no money back or owe money?”
Already did. Why would any sane creditor keep extending more money to a borrower who has not made good on his promises to pay? Why can’t I charge a late penalty and 30% interest per annum as is typical for deadbeats? Can I put a lien on the Golden Gate Bridge since the state refuses to pay money I am rightfully owed? I want this thing to go class action–and I want California to pay. No more $200K/year unionized firefighters, cops, and nurses.
“How many taxpayers will now adjust their withholding to either get no money back or owe money?”
none…those that do not already do so are too stupid to understand the concept.
i am a tax accountant…the number of citizens that actually belive they are getting a gift from the “state” when they get income tax refunds is astonishing.
the income tax withholding system was the greatest wool ever pulled over the eyes of the taxpayer.
If I were dictator for a day, I would change just two things in Federal law:
(1) No withholding - all taxes paid directly by the taxpayer.
(2) Tax day changed from April 15 to the first Monday in November.
I could then retire content with a lifetime’s work well done.
SACRAMENTO, Calif. — California has stopped paying many bills after elected leaders failed to meet a self-imposed end-of-January deadline for solving the state’s budget crisis.
Checks are not being issued for Cal Grant college scholarships, county social services and even the California Highway Patrol. No state tax rebates will be issued until a plan is adopted to deal with the state’s huge deficit.
http://www.kcra.com/politics/18619826/detail.html
I predict huge riots in Los Angeles…soon.
I wish the state could heal its collective guilt and hit up the Indian casinos for some cash.
Legalize pot. There, all econonic problems solved.
Brandt: You never went to college…
The Dude: Oh, no I did, but I spent most of my time occupying various administration buildings… smoking a lot of thai stick… breaking into the ROTC… and bowling. To tell you the truth Brandt, I don’t remember most of it.
Complexes with many deadbeats may lose out on Fannie Mae loans
By JEFF OSTROWSKI
Palm Beach Post Staff Writer
Monday, February 02, 2009
Yet another barrier to landing a mortgage after the housing crash: Mortgage giant Fannie Mae isn’t buying loans backed by condos in developments where more than 15 percent of unit owners are behind on their monthly fees.
Fannie’s rule took effect in early 2008 in response to the flood of foreclosures and plummeting condo values. In many boom-time condo conversions and condo developments in South Florida, a third of unit owners are behind on their condo dues.
“This is going to affect a lot of associations,” says Ken Arnold, head of Association Financial, a Miami company that collects fees for condo and homeowner associations. “You can have a fantastic credit score and still not be able to buy a condo.”
Not that Arnold blames the mortgage industry for a bit of belated scrutiny of its collateral.
“In today’s market, you can’t criticize the lenders for doing a little more due diligence,” Arnold says.
Jim Sahnger, a mortgage broker at Palm Beach Financial Network in Sewall’s Point, says he heard of one condo buyer who tried to qualify for a loan at a troubled development in Palm Beach Gardens.
When the lender learned that 30 percent of the project’s owners were dues deadbeats, Sahnger says, the deal was “dead in the water.”
Who the #%$ would even think of buying into a building already experiencing a problem with deadbeats? Does anyone do any research before buying anymore?
Gee, maybe we do need the nanny state after all, how else can these people be protected from themselves?
When the lender learned that 30 percent of the project’s owners were dues deadbeats, Sahnger says, the deal was “dead in the water.”
30 percent deadbeats? If you have a problem with one-third of your “owners” paying their bills, the condo is prob’ly in the death spiral already. Fannie’s decision not to buy into such nonsense is more like the little finishing nails around the top of a white pine pauper’s coffin.
Deflation hits the run way in Paris and Milan: fashion models for 50% off. Come get your models before you are priced out forever. Maybe we (well at least the guys) can all contribute to a relieve fund for these poor models:
The economic downturn affects the fashion industry, with even models working for 50% off.
February 2, 2009: 8:38 AM ET
PARIS (Reuters) — Free designer dresses, an army of admirers and $15,000 to stroll down a catwalk: no wonder thousands of teenage girls aspire to being a top model.
But at the haute couture shows in Paris, the leggy blondes in silk dresses who advertise a life of luxury are finding their world turned inside out by the economic crisis.
“Half price! It’s half-price everywhere, in Milan, even in New York,” cried Anna Chyzh, a 23-year-old from Kiev who had just changed out of a Stephane Rolland haute couture gown into jeans and was headed to the next show.
Like many models from Ukraine, Russia and the Balkans, Chyzh regularly sends money home to support her mother, a freelance interior designer who is having trouble finding work because of the downturn.
“She says, Anna, you have to help me now. So we have to work for Mum, we cannot refuse any contracts now,” she added before disappearing in a swarm of equally blonde and skinny girls.
They best start putting some meat on those bones if they expect to survive.
What he said……..
Really, I don’t understand the appeal of fashion models.
To me, they are unattractive on about every level you can name.
They are designed for hanging clothes. The girls on the cover of Maxim seem to have about 20 more lbs on them than the ones on Vogue…
In a strange twist of fate, I saw the Karate Kid last night (I had never seen it!). Sadly, every time I saw Elisabeth Shue, all I could think was, “these days the studio would tell her to drop 25lbs.” She looks like an elephant by today’s standards, whereas 20 years ago, she was clearly cast to be the hot girl. Wait, is this deflation again sneaking up on us, again
?
“They are designed for hanging clothes.” That’s always the response to the question of why they are so thin. That and, “Clothes just look better on them”. I would rather see A) models that better reflect the size of real women to see what the clothes would look like on them if I were a fashion person and B) women I would like to see without clothes in the first place if I were me. Which I am.
“The girls on the cover of Maxim seem to have about 20 more lbs on them than the ones on Vogue…” And they are still bone-racks IMHO. Like a fly’s compound eye and motion, I can’t even see women under size eight. Sorry Olive Oyl.
MrBubble
“models that better reflect the size of real women to see what the clothes would look like on them if I were a fashion person”
All I’m gonna say is that architects often find it painful to see the buildings they designed in their inhabited state.
But good on you. I briefly worked at an eating disorders clinic, many years ago, and the world could use more of your attitude.
LOL, but grr! My response keeps getting eaten (heh) by the computers. Sorry about the potential multiple post, but I enamored with my terrible pun below.
“That’s pretty funny, but that I am not talking about ‘buildings’ that need ‘flying butt-dresses’ to remain upright!
And I’m not talking about what the world needs. Just what I need. All Tommy Hobbes today!”
MrBubble
An architectural pun!
=^_^=
They couldn’t afford food before… and now we cut their pay?
Or, is the “half-off” the clothes? Weren’t they already a lot more than half-off?
Freelance interior designer in Ukraine?
we didn’t hear about that model (from Brazil if I remember correctly) … does she now demand payment in US$ again, instead of euros?
That was Giselle Bundchen if memory serves correctly…
I guess after providing billions of dollars in public monies to keep Megabank, Inc’s bonuses flowing, there is not much public wealth left to share with those facing true hardship…
Welfare rolls cut despite recession
18 states slash caseloads; alarm raised about system
By Jason DeParle
NEW YORK TIMES NEWS SERVICE
2:00 a.m. February 2, 2009
WASHINGTON – Despite soaring unemployment and the worst economic crisis in decades, 18 states cut their welfare rolls last year, and nationally the number of people receiving cash assistance remained at or near the lowest in more than 40 years.
WASHINGTON – Despite soaring unemployment and the worst economic crisis in decades, 18 states cut their welfare rolls last year, and nationally the number of people receiving cash assistance remained at or near the lowest in more than 40 years.
We better put these people to work doing something or we are going to see crime soar. Already hearing stories of home invasions which were unheard of around here 5-10years ago.
“We better put these people to work doing something or we are going to see crime soar.”
I’ve got it: Send them to Manhattan for employment with the banks which received the $350bn in TARP monies. That ought to be enough money to employ lots of minimum wage workers for the rest of their working lives, and minimum wage workers are not sufficiently financially sophisticated to flush billions of dollars down the toilet, so the financial system would be protected as well.
Amid much talk about “calling the bottom” in the equity and Real Estate markets; I will posit this thought:
Mr. Credit/Consumer Fueled Market is dead.
His corpse lies sprawled on the sidewalk, his brains blown out by a .44 magnum right between the eyes, brains and blood and bits of skull covering twenty square feet on the concrete behind him.
There is no “talking and wishing and hoping” this guy back to life.
You can correctly guess that this is as “bad as it gets” or “as low as it goes”. However, there is no money to be made on expecting him to arise from the dead.
This is not like a movie fistfight where the good guy bounces back and lands a triumphant right cross against the bad guy. This is just a corpse.
The politicians and bankers want you to act otherwise - as if doing all the right things will change the outcome. They don’t want you to run away. They want you to still give them money in the hope that it really isn’t as bad as what you see with your own eyes.
Unless you know how to make money on stench, flies, maggots, bacteria, and stains,
avoid the market. It’s dead.
Bottomcallers, unite!
Trading Strategies
Searching for the Bottom
MarketWatch dot com
Wondering when the market will reach bottom? Join the club. Our experts are here to help, though, as they offer 11 different views on finding the market’s lowest point and how to adapt your investments.
The background to this cagey bit of financial journalism shows a gentleman in a suit holding a brief case in one hand and an “Acme Stock Exchange” sign in the other hand (all companies in the old Road Runner cartoon were called Acme). He appears to have very recently jumped off of a cliff.
This is referring to that LMAO commercial last night, right?
People can call the “bottom” all they want, but what is and what isn’t a bottom depends on a whole lot of different things, starting simply with your perspective.
- Are we talking housing market, or stock prices, or corporate earnings, or actual investment gains (dividend adjusted)?
- But before you answer - are we talking nominal values or inflation-adjusted values?
- But before you answer - are we talking government CPI figures for inflation, or inflation in that particular asset class, or inflation for all goods and services?
- But before you answer - are we talking Tax-adjusted values or nor non-tax adjusted?
etc. etc.
In other words, bottom-calling is a pointless venture.
Are we talking J-Lo-sized butts or Jennifer Aniston-sized ones, or a butt you can bounce a quarter off of like Brad Pitt?
Yep, we need more data!
This is going to be a Kathy Bates - sized bottom at least.
(Sorry for that visual)
OOOOOOOH!!!
I need to bleach my brain.
But good one, packman!
Cool, it will be an awesome, powerful, talented bottom! And a real soft landing, woot!
I was scarred as a teenager when I read an interview with Mel Gibson in which he said he had (* feeling faint*) hair and zits on his bottom. Please tell me we are not headed for Mel Gibson’s bottom, because I can only take so much bad news, you know.
Does that mean I don’t get a handout to pay my rent?
Hmm, I wonder when WS, FED, etc. are going to realize that the American Consumer is not going to come roaring back? If the Central Banks of the world initiate inflation (which is actually a form of “beggar thy neighbor”) then that will be the very worst thing that can be done. It will not only wipe out savings, it will cause more pull backs in spending, poverty, and despair. The “deflation” that is being “fought” is mainly due to falling house prices, falling fuel prices (as a component of other goods and services), and a deep need for Bonuses or all types.
There is no Cost-Of-Living increases these days. Inflation? Re-flation? You really don’t want that.
More and more people seem to think that the FED and other Central Bankers are tinkering with an economy that they don’t understand. I don’t understand it either, but I know I don’t. They don’t, but think they do. Here is an analogy: I once tried to save money by a do-it-yourself front end alignment on my old pick-up. I didn’t understand how it worked, but I DID know how to get out of any mess I made and the downside risks involved. Yes, I ended up at Z’s front end service none-the-worse-for-wear and wiser for the experience. No, I was not out anymore money than I would have been otherwise. I get it. Do “they?” (Fed, Central Bankers, Wall Street, etc.)
Roidy
They don’t, but think they do.
This is pretty much the MO for all government. There is absolutely nothing worse for a project than someone doing something which they have no clue about but THINK they are experts in (or are smart enough to figure out along the way).
That applies to anything from managing an economy to building a dog house. In any case, it is almost always better to have someone who doesn’t know what he’s doing and KNOW that over someone who doesn’t know what he’s doing but thinks he does.
The nature of our political system is such that we prefer people/candidates who act like they know what they are doing over people who recognize their own limitations. Since no one is smart enough to “run the whole thing”, the result is we almost always have the wrong person for the job.
“Hmm, I wonder when WS, FED, etc. are going to realize that the American Consumer is not going to come roaring back?”
Oh, I think deep down they know it, but they have the audacity to hope!
IMHO, WS, FED, government, etc. do realize that the American Consumer is not going to come roaring back. Their primary goal is to kick the can down the road till the next bonus/election. They could not care less for the long term effects of their policies.
Why do you think there was that absurd “rebate check”?
I mean, that thing was criminal. It’s not even a a check. More like an interest-free loan to come out of your future taxes.
They know the drill. They know the gig is over.
Yes, it was criminal, but was cheered by the sheeply with great joy.
I do not remember from whom was the quote that stated that “The moment the populace realize that it can vote itself freebies, democracy as a system is finished.” Apparently we have reached that moment since the sheeply not only cheer such utter nonsense as the past “rebate checks”, but also demand more to follow.
Everyone is screaming: “Stimulate me baby!”
Sorry for the Jas-like rant.
Did they?
They voted themselves an advance against their future labor which they have to pay back. They aren’t even smart enough to vote themselves freebies!!!
They went full retard.
LOL. I haven’t look at it from this angle so far.
They thought they had another round on the house, but will find out soon that they in fact own the pub, so they will have to pay for all the drinks eventually. As a double whammy there will be extremly painful hangover headache.
You Muh-Muh-Muh_Make Me Happy!
*disclaimer: trying to find the joy.
*reference: totally different movie.
“Full Retard” is from Tropic Thunder.
not The Big Lebowski.
I read a Lew Rockwell story entitled “Their theories, Our Money” that made this point very well. The vast majority of people have the opinion that economics is too complicated for anyone to grasp. The interdependent relationships and unknowns are so complex that even if you have a solid grasp of “cause and effect” of general policies, you cannot know the timing or the reaction of other parties/events. In effect, economics policies are like a religion.
We all immediately reject the imposition of someone else’s religion upon us, but when it comes to “economics” or “politics” or “retirement” then everything changes and the “experts” are allowed to force their pet theories on everyone.
Some would say I would force libertarian ideals on everyone, but that is absurd. If you want a communist monetary system and fascist government to take 50% of everything you earn then that is YOUR business. Imposing it on me, well now we are at war with each-other.
Far too many libertarians are flag-wavers for “how things should be”.
We know. We “get” it. We concur. And we don’t care.
However, this is the “way things are”, and this is the way they are likely to be so you might as well learn how to make money within this current framework not some ideal vision of how the world should work.
You are better served this way, and you will be a less bitter and angry person for it, IMO.
“We know. We “get” it. We concur. And we don’t care.”
+ trumpets, standing ovation, and balloons and confetti.
And a woman would be far happier if she just accepted rape and learned to “enjoy” the experience instead of flag-waving for how things should be. They would be far less bitter and angry for it, IYO.
Don’t get me wrong, I will work with reality to make the world a better place, but I will not be “part of the problem” by adopting the practices of the “system”.
The problem with society is that *most people* are not aware of the evils they commit against their friends and neighbors. Nothing will change unless people are educated and telling those who attempt to educate others to “just shut-up and deal with it” is hardly helping the cause you supposedly “concur” with.
You are being given a choice. Learn how it works, or become marginalized and bitter.
The banking system has long, powerful and entrenched interests. I doubt you are going to make even a dent in it.
OK, this is my last post on the subject. BORING. NEXT.
Walter Sobchak: OVER THE LINE!
Smokey: Huh?
Walter Sobchak: I’m sorry, Smokey. You were over the line, that’s a foul.
Smokey: Bull****. Mark it 8, Dude.
Walter Sobchak: Uh, excuse me. Mark it zero. Next frame.
Smokey: Bull****, Walter. Mark it 8, Dude.
Walter Sobchak: Smokey, this is not ‘Nam. This is bowling. There are rules.
We know. We “get” it. We concur.
“We” the sheeple who above you were pointing out aren’t even smart enough to vote themselves freebies?
Or “we” on this board, who are still fairly spread out on this subject.
There is not a general concurrence on this issue in either case IMO.
However, this is the “way things are”, and this is the way they are likely to be so you might as well learn how to make money within this current framework not some ideal vision of how the world should work.
I agree but there is still plenty of room for political philosophising. I don’t see any reason why one can’t both game the current system and strive for something better. If you don’t care to participate then just abstain.
Read my comments on “libertarian emotional minefields” below.
Wow, that was a great game.
Pepsuber was awesome. I was so worried they were going to go the classic corp. route and have him save the day, but the ship blew anyway… genious!
It was really genious on many levels. I’m surprised Pepsi risked speaking to such a small audience. I wonder if Fey/Palin hadn’t made headlines if that ad would have ever been made.
Coke and Pepsi both advertised. Careerbuilder and Monster both advertised. Anyone know whether the Superbowl stopped selling exclusivity agreements, or is it just that no one was buying them?
I didn’t see any GM or Chrysler ads.
Wasn’t any.
ya saw two, count em 2 GE ads,
1. Electro-grid.
2. Green Energy
GE, We Bring Fresh 780 Week Lows to Light. (96 or therebouts)
The Godaddy commercial during the last 2 minutes of the superbowl was spectucalur. It’s all about the enhancements.
Latest Cease and Desist orders from the FDIC: The one I had been watching, New Frontier, finally made the list - about four years too late IMO.
Check for your bank . . .
http://www.fdic.gov/bank/individual/enforcement/neworders.html
I’m surprised nobody’s brought this up, ’cause I thought it was kinda funny. Didn’t anybody catch BO’s off the cuff comment about Jessica Simpson??
I’m the last person to laugh at someone’s weight issues, as I have plenty to lose myself, but the moment of candor and off-handedness of it made me laugh, and I think the soldiers were giggling about it too when the camera cut to them seconds later.
Happy day after superbowl day! This is the day when the real estate market kicks off the next selling season! Remember folks, there is never a better time to buy (or sell) a house! It’s different here. It’s a whole new paradigm. Real estate never goes down. Buy now or be priced out, forever!
Well, Phil saw his shadow this morning. Six more week on winter on the way.
Get those empty open houses started!
Six more
weeksyears ofwinterfalling prices on the way.REDC says it has 1,200 Nor Cal homes to be sold at auction for five days this months beginning this weekend.
I like old country auctions where the low bid wins.
With Wizard of Oz-like “reserve prices,” not so much.
Yesuh, REDC auctions are truly for suckers. They’re an arm of some bank…
(“The fact of the matter is that we are suffering from a massive hangover from a binge of risk-taking and that’s still getting worse and it’s going to take some time for us to be able to dig ourselves out of this hole,” Obama said in an interview on NBC’s Today show.)
Is it just me, or are others confused about using the word “risk” to describe bad things that certainly will happen, as opposed to those that might happen.
“If we borrow all this money, there is a risk we might have to pay it back or go broke?”
It wasn’t a risk problem. It was a living beyond our means problem, partially explained for the bottom 80% of wage earners by a falling wage level and mind control by the advertizing industry.
From Webster’s
Risk
4: the chance that an investment (as a stock or commodity) will lose value
I think he is using it properly and he believes the DOW and housing have not bottomed out yet.
Every dollar spent propping up falling asset prices comes at the expense of future consumption, investment, and growth.
Feb. 2 (Bloomberg) — Chinese Premier Wen Jiabao’s speech in Cambridge, England was interrupted briefly by a protestor who blew a whistle, denounced the leader as a “dictator” and threw a shoe at him.
Following our dubious lead, they too seem to need another “stimulus”.
Q: Which stimulus plan will be the last one?
A: The next one, silly!
The Dude: Walter, ya know, it’s Smokey, so his toe slipped over the line a little, big deal. It’s just a game, man.
Aid for the ‘home rich but cash poor’
Reverse mortgages are for people who are 62-years-old or older. They’re designed to make the mortgage get bigger as they fills up the homeowner’s pockets with cash.
…KATE LOVE: 2007 was an interesting year to be a loan originator.
You can translate “interesting” to “disastrous.” So Love was looking for a part of the mortgage market that was a bit more stable. She found it selling reverse mortgages for a company appropriately named “Stay In Home.” Reverse mortgages are loans that are aimed at cash-strapped older homeowners.
…the lender — wouldn’t have to worry about the value of the home decreasing and the mortgage going upside-down. That’s because almost all reverse mortgages are insured by the Federal Housing Administration. With that kind of safety net, it’s no wonder banks are still offering reverse mortgages….
But for the most part, he says, reverse mortgages are safe and may become more common as an increasing number of Americans retire without enough money to live on.
http://marketplace.publicradio.org/display/web/2009/01/30/reverse_mortgages/
ANd what happens when these people start buying and the houses are going for half what was owed on them?
I don’t understand why the lender has protection from the government on this.
I realize it’s a bit facetious, but if the government needs to subsidize the oldies’ retirement, why not just do it directly, so the cost is transparent? All this snaking around through houses and banks, it’s not working out.
That’s easy. You “BUY” a house and you rent it from BOTH the State as well as the Lenders
Darrell makes an interesting point. Matter of fact, I believe this is happening just a block away from me. An elderly friend/neighbor took out one of these reverse mortgages. Then she went on one of the most baffling spending sprees the rest of us had ever seen.
Day before Xmas 2007, she fell and broke her leg in three places. She can no longer live in her house. It’s been for sale since last June, there’s been at least one price reduction, but no buyers.
I can’t help thinking that the place will become the mother of all short sales, if it doesn’t go into foreclosure first. (Can a reverse mortgaged property go into foreclosure?)
The way I understood it, the reverse mortgager continues to get the money/terms from the original agreement with the bank. While the bank is covered by the government. Money from the bank is actually a loan itself, so the reverse mortgage could be defaulted on, and the money borrowed already spent.
The couple featured in the story say, “We expect to spend our last dollar on our last day.” So, I’m pretty sure they are comfortable with borrowing the entire value of the house, and then, popping off. Or defaulting.
Did I misunderstand? Here’s what it says:
“the lender — wouldn’t have to worry about the value of the home decreasing and the mortgage going upside-down. That’s because almost all reverse mortgages are insured by the Federal Housing Administration.”
Note: the couple featured in the story have 2 houses, so when they die they will leave 2 more houses empty. Multiply that by (x) baby boomers* with vacation and investment properties who will be needing cash for retirement/popping off/needing smaller, more manageable units/needing assisted living. (One of my boomer parents owns 3 properties now, yet does not own 3 bodies or 3 families).
*No offence to the boomers intended by this, just a demographic, not moral, observation.
From Michelle Malkin today rearding the Republican plan for the federal government to offer low-interest mortgages and to guarantee them for at least two years
“Question: Why should government be guaranteeing mortgages? Isn’t that what got us into trouble in the first place?
“Question: Why should government be setting mortgage rates? Aren’t those supposed to be set by the market?
“Question: How can Republicans on the one hand argue that Fannie Mae, Freddie Mae, and other interventions in the housing and mortgage markets were bad and then at the same time propose a doomed policy along similar lines?
“Question: Have Republicans learned nothing from the housing meltdown? “Credit-worthy” borrower = anyone with a pulse. Who will pay when these borrowers default on their loans? Taxpayers will.
“Question: Who will sell these mortgages? Probably the banks. What incentive do they have to ensure the credit-worthiness of borrowers, since they will bear no risk if the borrowers default? Sounds like a formula for another mega-subsidy to the banks…to go along with all the others.
“Question: Why do Republicans continue to believe, as Democrats do, that the number one goal of economic policy should be to prop up housing prices? (Recall McCain’s moronic $300 billion mortgage plan.) Why not let the market determine the correct level of housing prices? Clearly, in many parts of the country, housing prices are still too high.
“The proper response by government is to let the market allow prices to decline.
“The problem is too much borrowing, too much artificial inflation of home prices.
“On what planet should the Republican/conservative alternative be to encourage more borrowing and to prop up prices so they don’t fall ‘too much?’
“This is more of the same old, same old: Kicking the can down the road. Real change — fiscally repsonsible change — means sucking it up, allowing housing prices to fall, and getting the government out of the home-lending business.”
You can read the whole article at michellemalkin.com. She’s been blasting the bailout bunch from the start, and some of her stuff is hilarious. The suck-it-up graphic reprinted in the article is pretty good.
anyone else see the cash4gold commercial during the superbowl last night?
i was surprised (not really) that a cash4gold company had $ 3 million to spend on an ad.
desperate times indeed.
Commented on that on the Bits last night.
Desperation. Cash for your baubly trash.
That sounds like the banks.
BWAHAHHAHAHAHHAHAHAHHHHHHHHHHHHHHH!!!
Every time I saw the old ads, I couldn’t believe there was someone … well… stupid enough to use something like that.
I had presume there were so many numerous ways to scam them with so little verifiability that it would just outright insane to consider it.
Saw that ad and just shivered…. which prompted me to look online to see how bad it was…. yup, apparently scams galore and not only that, they SUPPOSEDLY only pay $30 an ounce on the scrap gold. You can goto almost any nearby gold buying outlet and get substantially more… plus this would SCREAM to me to be a very easy way for thieves to offload items.
When I reloaded this page there was a cash4gold ad at the top.
Using Ed McMahn and MC Hammer was hilarious, two people who were wealthy and lost it all.
I mentioned last night that I’ve seen their ads for many weeks now, only without celebrities, and never thought I’d see it during the Super Bowl.
As Cat said last night, contrary indicator, perhaps??
I’d be careful with what I said then. I had a few beers.
I’m neutral on the subject of gold. Everytime I talk about it, it’s like walking into a “libertarian emotional minefield”.
Sorry, I’d much rather deal with a whole army of hysterical, hormone-laden women than the gold people. It’s so much easier.
NO the TV stations GIVE THEM CREDIT,(pay in 90 days) i’ll bet they stiff tons of TV stations for the ad money
If they required you to pay cash up front before you can run the ads…there would be almost no scams advertised on tv or radio.
““For economic purposes, paying off debt and saving are the same,” he said. “Incurring debt is negative savings; paying down debt is savings.”
========================
“… paying debt and saving are the same.”?
Mmmmm…. I prefer to have my OWN money rather than owing someone money… not the same!!!”
Interesting. If we pay off debt, it makes the money available to loan to someone else. Of course, saving money and putting it int the bank does the exact same thing. It takes the money out of circulation, but makes it available for the bank to loan to someone else.
But, what if no credit worth people that are likely to pay back the money actually show up to borrow the money?
Well, then… the money is just taken out of circulation.
There is a difference though… The debt creates interest payments to the bank. Paying off debt has the same effect as saving on the money supply(taking it out of circuation until someone shows up at the bank to borrow it), but cuts expenses from the borrowers and cuts income to the banks.
I can’t believe I almost fell for it….
So, last week we have stories of the bad bank, and numbers in the $2 trillion to $4 trillion range began being tossed about. RIGHT on the heels of the story of $5 billion in bonuses to Merril playas.
So, the bad bank gets canned and Obama starts talking tough on bonuses. Okay, he has Wall Street by the short curlies instead of the other way around…..
I even mention to my wife that it seems things have turned for Wall Street.
Wait a minute…
Market isn’t falling all that much. Talk that the bad bank has only been delayed a week. Lots of other options like government taking in all the risk but none of the potential reward by using insurance of toxic crapola.
This is a PR ploy, isn’t it! To convince us that it really will be different this time. That this bailout really will help Main Street and not just be funneled off to the mega-rich to keep them mega-rich.
Well, I for one am not falling for it anymore. Writing my congressman and senators again to ensure they know I still do not support more aid, be it TARP, bad bank, or more loan guarantees, to keep the mega-rich, mega-rich while doing nothing to lift the crushing debt load from everyone else.
Where is my bailout????
Where is my yaght?
Can you think of another 390 days when the WORLD lost 40% of its wealth?
WEF 2009: Global crisis ‘has destroyed 40pc of world wealth’
The past five quarters have seen 40pc of the world’s wealth destroyed and business leaders expect the global economic crisis can only get worse.
By Edmund Conway in Davos
Last Updated: 5:42AM GMT 29 Jan 2009
Steve Schwarzman, chairman of private equity giant Blackstone, said an “almost incomprehensible” amount of cash had evaporated since the financial crisis took hold. Photo: Bloomberg
Steve Schwarzman, chairman of private equity giant Blackstone, said an “almost incomprehensible” amount of cash had evaporated since the financial crisis took hold.
“Business will be very different,” he added.
His comments came on a day of the World Economic Forum characterised by the gloom of its participants and warnings that the crisis will endure for some time. News Corp chief executive Rupert Murdoch kicked off the meetings by warning that the atmosphere was worsening – despite global economic confidence plumbing the lowest depths on record.
“The crisis is getting worse,” he said. “It’s going to take drastic action to turn it around, if it can be turned around, quickly. I believe it will take a long time.”
Executives participating in an economic brainstorming session said that despite the trauma caused by the economic and financial problems, another crisis at some point in the future was inevitable.
Sir Howard Davies, director of the London School of Economics and a former Bank of England policymaker said: “The outlook is pretty grim. Things are not good and business surveys are coming out showing they’re getting even worse.”
WASHINGTON — Treasury Secretary Timothy Geithner will give a speech next week in which he will outline the Obama administration’s financial-rescue plans, according to a Treasury official.
The plan will include an effort to help homeowners in danger of foreclosure, as well as additional steps to shore up the financial sector.
WSJ
Problem? $40T
Response? $800B
Conclusion? FAILURE.
Thank you for playing, Geithy-boy. You fail in basic arithmetic.
What do you expect for someone who could not figure out what taxes he owed?
Dear Secretary Geithner;
Thank you for helping homeowners avoid foreclosure. Would you consider giving renters the same help? Oh wait, the landlords are getting all the help already.
Thank you in advance for keeping my landlord in both of his homes. I love being his golden cow.
cheers OV
TIMMAY !!!!
PRINT YOU @#$%IN IDIOT !!!!
The Big Lebowski: I just want to understand this, sir. Every time a rug is micturated upon in this fair city, I have to compensate the owner?
Feb. 2 (Bloomberg) — President Barack Obama will require banks to boost lending to consumers and companies in return for taxpayer aid from the $700 billion bailout fund, in a departure from Bush administration policy, a key lawmaker said.
“You’re going to see the Obama administration,” learning lessons from the first phase of the program, “push for much more lending,” House Financial Services Committee Chairman Barney Frank, who helped write the financial-rescue law, said yesterday on ABC television’s This Week program. “There are going to be some real rules in there.”
Barney&Barry LOL!
I don’t know anyone have trouble getting loans with good/excellent credit. A fellow I know in RE told me they are slow, but are having zero trouble getting conventional home loans.
They should have asked Mr. Fwank who is having trouble borrowing money? Oh yea, the ones that shouldn’t have been loaned to in the first place.
They will not be able to reproduce the lending mania that once was.
Please name one time that the problem was actually what you were told the problem was.
“they” told me:
How much do we need for payroll?
Plan proposes Lehman creditors receive stock rather than cash
By Julie MacIntosh, Francesco Guerrera and Nicole Bullock,in New York
Published: February 2 2009
Creditors of Lehman Brothers would receive stock rather than cash under a plan that could separate its illiquid assets into two companies, which would force them to wait for repayment but potentially boost their returns.
The plan would allow Lehman to cordon off difficult-to-sell assets and wait for the markets to improve, preventing a fire sale of its holdings, said Bryan Marsal, co-head of Alvarez and Marsal, which is managing Lehman’s liquidation. The plan is in its preliminary stages but, if it is adopted, the two standalone companies could be publicly listed within two years….”
http://www.ft.com/cms/s/0/aaad195a-f0c8-11dd-972c-0000779fd2ac.html
This would be a most interesting settlement and merits watching. If there is a recovery in the next few years, then the newly issued stock could be worth big dollars.
And you think they won’t game the shareholders because …?
C’mon, man, this is the oldest game in town. You can’t be falling for this one. Not at this stage of the game.
Look, those magic beans made a beanstalk, OK? Sheesh, what nursery rhymes were in your books? Wait a second, did your parents read you concrete poetry at bedtime?
My parents didn’t raise any fools.
The correct business is one of selling “magic beans” to young fools and their even more foolish parents not one of teaching your kids that such things actually exist in the real world.
No beanstalk?
Are you suggesting that I stop planting beans in the backyard and make a delicious bean dip? With white beans, fresh mint, dill, olive oil and a little spring garlic? OK, if you insist.
No, I approve of planting beans, and bean sprouts and bean dips. Particularly ones with spring garlic.
Edible beans, good. Magic beans, not so good.
//*_*\\
Cast not thy pearls before swine lest they trample them underfoot and then turn to attack you!
from memory.. no idea what book, chapter and verse.
The Big Lebowski: Did I urinate on your rug?
The Dude: You mean, did you personally come and pee on my rug?
‘Sovereign Safety Net Has Holes ‘
The WSJ has an article this morn’ “Heard on the Street” on the Treasury Bond Credit Default Swaps. Basically, if the government defaults so do the underwriters of the swaps. Ooops.
“…Given that, would the financial institution that sold you protection, even a foreign bank, actually be able to pay out? Put another way, Uncle Sam’s profligacy has created demand for insurance on its debt. But what is the reason for all of that spending? A need for huge bailouts to save the very institutions that write CDS contracts.
So why is there a market at all? A recent study found high correlations between CDS prices for different sovereigns, as well as with U.S. high-yield bonds and stocks. That suggests CDS on Treasurys are being used not just for U.S.-specific risk but as a leveraged bet on financial turmoil.
Given the disconcerting circularity at the heart of the CDS market, true apocalypse aficionados would do better sticking with a more traditional fallback, like gold.”
BTW, this is why the “just inflate” fails.
Push too hard in one direction, and the other one blows up, and you get the pleasure of bailing them out.
WHEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE!!!
the dude: You mean Coitus?
Careful man, there’s a beverage here.
Holy crap. I’ve been following the Florida numbers for a couple of years. Things are absolute in shambles down there.
Ft. Myers is now 60% off peak prices. Now down to year 2000 prices, and that’s not inflation-adjusted.
Sarasota-Bradenton is down 50% now from peak, and falling at a rate of 25% per year.
The state as a whole is down 35% now, and at 2003 price levels. Prices are absolutely plummeting everywhere, despite sales being up the last few months, and despite prices now getting down to what I would consider reasonable levels. Lots and lots of knife catchers out there.
It looks to me like Florida is going to bottom out with prices way, way below historical norms. This makes sense actually since there was so much overbuild there. It really emphasizes the over-speculation of the baby boomer demand.
2.5 years ago, a house across the street from me went for $270K. Last month, one down the street went for $118K. 56% off.
Even Case-Shiller shows us falling 40% YoY.
I don’t think Florida has anything on Phoenix.
Case/Shiller metro areas actually is a bit misleading, since it only includes large metro areas. Typically the metro areas got more bubbly than rural.
Thus for instance if you look at USA composite vs. metro-20 on the Case/Shiller data, USA composite has a lower peak and is not off as much from it as the metro-20 index.
So the Florida media being down 35% is really a big deal, since it includes rural areas (which Florida has a lot of believe it not), and covers a total population of 18 Million. Most metro areas in Florida are indeed down 40-50%.
Phoenix is definitely right up there too though.
CA central valley and inland empire as well also. I haven’t been tracking all that in detail as much as FL though (I’m hoping to buy in FL in a few years).
Chinalco is looking to buy part of Rio Tinto and the Australian government is not happy about it. Citigroup would love to see the sale since they loaned a few hundred billion to Rio Tinto at 0.625% over Fed Funds and can get paid back.
China is flexing its money. How will the US react when they come shopping here next month? year?
Didn’t the Japanese and Middle East come shopping when they were flushed with cash? I remember the uproar that created.
Didn’t they get taken to the cleaners? I remember the fun that that created.
Rockefeller Center and Pebble Beach. One icon on each coast.
And at least one bestseller (+ cr@ptacular movie) came out of it - Rising Sun.
I remember too. Familiarity with falling knives breeds contempt.
It could happen, but I have a suspicion that the Chineese would do better to use the money for social programs at this point. The go-go days are going to be the gumbo days.
I’d also be surprised if they do not at some point balance their budget the way the failing soviets did.
Maude Lebowski: Yes, they don’t like hearing it and find it difficult to say whereas without batting an eye a man will refer to his dick or his rod or his Johnson.
Johnson?
There is a difference between buying American RE and companies.
China is looking to buy companies.
Xenophobia to the rescue.
Marc Faber has mentioned this quite a while ago. If they are not allowed to buy….
Feb. 2 (Bloomberg) — A majority of U.S. banks made it tougher for consumers and businesses to get credit in the past three months even as lenders received infusions of taxpayer funds, a Federal Reserve report showed today.
“About 65 percent of domestic banks reported having tightened lending standards on commercial and industrial loans to large and middle-market firms,” the Fed said in its quarterly Senior Loan Officer survey. “Large fractions of domestic banks continued to report a tightening of policies on both credit-card and other consumer loans.”
Did anybody see the articles last week about Japan’s common folk and Japan gov taking money out of US Treasuries and buying Yen backed bonds?
And today we see this: Interest rates on US Treasuries rise over worries that big spending by US gov is inflationary.
IMO, Interest rates are rising cause China/Japan and are dumping US Treasuries and not because of US Gov spending/rising debt.
Treasury Real Yield at 16-Month High on Inflation Bet (Update2)
By Dakin Campbell
Feb. 2 (Bloomberg) — For the first time since 2007, Treasury investors are betting that inflation will accelerate.
The yield on 10-year notes exceeds the consumer price index by 2.72 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.
Deflation was the growing concern for investors in 2008 as government bond yields fell to historic lows in December, the Reuters/Jefferies CRB Index of commodities tumbled 53 percent since July and home prices plunged 18 percent amid a deepening recession. Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.
“When the Fed gets finished here they will have an inflation nightmare on their hands,” said Mark MacQueen, who helps oversee $7 billion as co-founder of Sage Advisor Services Ltd. in Austin, Texas. “There is a lot of downside in conservative government bonds.”
MacQueen is selling 30-year Treasuries, which are more sensitive to inflation expectations than shorter-maturity debt.
Rising Yields
The yield on 30-year Treasury bonds climbed 29 basis points, or 0.29 percentage point, to 3.61 percent last week, according to BGCantor Market Data. The price of the 4.5 percent security due in May 2038 declined 5 29/32, or $59.06 per $1,000 face amount, to 116 2/32. For the month, the yield rose 93 basis points, the most since climbing 100 basis points in April 1981.
The yield fell three basis points to 3.57 percent at 8:08 a.m. in New York.
Yields are rising so fast they are already higher than where economists just three weeks ago expected they’d be at year-end. The median estimate of 44 economists, investors and strategists surveyed by Bloomberg News from Jan. 5 to Jan. 12 was for 3.45 percent by 2010.
Investors in 30-year bonds lost 14.6 percent last month, according to Merrill Lynch & Co. index data. January was the worst month for government securities since Merrill Lynch began tracking returns on the securities in 1988.
Yields on 10-year notes fell to the lowest on record in December as the cost of living dropped 0.7 percent, trimming the annual advance to 0.1 percent, the smallest rise in half a century, according to the Labor Department in Washington.
I suggest you look up Power Reserve Dual Currencies (PRDC). The impact this had/has on bond yields is enormous.
A number of people have interpreted flight to safety and flight to improved yield as deflation worries.
Local county sheriff running for mayor of Detroit calls a halt to foreclosures:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20090202/METRO01/902020395
I’m calling for World Peace today.
if Ben runs the one I put here…
children, avert your gaze.
Qustion from later last night:
Check out the Fed’s BOGNONBR - non-borrowed reserves of depository institutions.
http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s1id=BOGNONBR&s1range=5yrs
It went straight down at the start of the crisis, from 50B to -375B, but recently seems to have bounced back up to +175B.
Not sure where they found the 550B ?? I thought they “borrowed” the first TARP dump.
I have a bad feeling….
Im downright ursine-ish to a degree that Im turing diurnal, sprouting large hairs all bout my back and shoulders, cant keep my nails trimmed, and possess an unusually strong desire for Steelhead….
I am unable to see a bottom, dont matter if its Kathy Bate-ish in size and scope….Im gonna hang out with Phelps…maybe that’ll help.
Inhale deeply.
Im downright ursine-ish to a degree that Im turing diurnal
Just don’t do it on the rug. It really ties the room together.
the dude abides.
My post did not show! Coward! gist: Buy low, sell higher.
I am gonna gore you with my horns. Oh I forgot you are in the US markets. Tough luck, the action has moved to Asia.
“Way To Go!”
Drive fast, don’t crash, make your money, make it last
Hang tight, kick back, prepare yourself for the attack-
Buy low, sell high, take your pills, tell your lies
Fake your tan, wear a tie ?
Go to the gym you’ll never die!
And that’s the way to go!
And that’s the way to go ? to go!
Fake it baby - They won’t even know!
You can make it ?
Cos everybody knows that that’s the way to go
Tune in, drop out, raise your voice, never shout
Find your true love on the couch, this is what it’s all about
Change your face, keep your name, keep it real don’t play the game
don’t you know they’re all the same? don’t you know they’re all the same?
Dig deep, fly low, celebrate a tv show
Raise the stakes, drop the pressure, happiness you’ll never measure
Bite your tongue, pay the man, time to start your five year plan
Holiday in Vietnam, then blow a kiss to Uncle Sam.”
Rogue Traders
“… Everyone agrees, more or less, that the Federal Government has the power to print money. That’s what fiat money means by definition. Since the Federal Government can print it’s own money, in whatever quantity it chooses, have you ever wondered why it taxes at all? In fact, if you chose to mail in your 2009 taxes in crisp Federal Reserve Notes, the Government would take that paper money and shred it.
The Federal Government does not need taxes in order to spend. At the Federal level, because the Fed is a currency issuer, the sole purpose of taxes is to extinguish money, reduce aggregate supply, and therefore limit inflation to a tolerable level….”
Winterspeak
“…the sole purpose of taxes is to extinguish money, reduce aggregate supply, and therefore limit inflation to a tolerable level….”
Bunkum. Taxing the little people by inflating away their wages while handing bazillions in TARP monies into the hands of Megabank, Inc is a reverse-Robin-Hood wealth transfer scheme.
Nope
It is just the reversal of the standard definition of economic determination of savings.
Y = C + I + G
Net Private Savings = Y - C - I - T = G - T
Same math, better way to express it.
My apologies to you PB, the expression is self evident in any fiat currency system, Austrian economics be damned.
“So long as a Government’s obligations are denominated in a currency it can print, and so long as that currency is both non-convertible and floating fx, the Government can *always* meet its obligations. It has traded default risk for inflation risk.”
Rule number 1
Government deficits allow private savings. The savings rate is increasing because the government is going into bigger deficits. Elementary Watson. Math is immutable.
as an aside: There is no historical evidence for an increase in inventories resulting in a decrease in future GDP. Businesses have historically increased inventory when they thought they could make more in the future.
“Any Future not shaped by a goal system with detailed reliable inheritance from human morals and metamorals, will contain almost nothing of worth….
Let go of the steering wheel, and the Future crashes.”
Eliezer Yudkowsky
What if you tore the steering wheel out of its mounting and tossed it out the window while moving at 80 miles per hour and holding your feet on the accelerator and the brake at the same time? How would the future look in that case?
Like a car.
“God is in the details.”