Bits Bucket For February 17, 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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So now that the Japanese economy is officially in the crapper who is gonna prop up our Treasuries? The Fed and the Chinese?
Also can we start to expect the Japanese to start dumping their holdings to raise money?
and who is going to prop up the EU Treasuries? I think the FED is going to have competition for getting refinancing at effectively below-zero rates.
The Dutch economy is going down the drain too now: the government projected a budget surplus of at least 2% a few months ago, now they project a budget deficit of 3% in 2009 and 5.5% in 2010. These projections are ALWAYS behind the curve, so in reality it’s gonna be a lot worse.
Note that the official deficit ceiling for euro countries is 3% - the Dutch (usually one of the strongest EU economies with savgins surplus) are going to join the PIGS; but I guess the same goes for the rest of Euroland. The Europact is history.
The need for cash intensifies, no?
That’s certainly the case with the current flight to the dollar. Do you think the fedgov will win the game long term by letting foreign bagholders take the brunt of the devaluation?
It’s always been the plan so far. Why mess with what works?
need for cash, why?
in the current situation those with the maximum debt are making out like bandits, carrying debt gets cheaper with the day and the debts are erased on a continuous basis (prices and wages are increasing strongly in Europe, and I think this trend will continue as long as the printing presses keep running). I don’t think anyone expects the debts will ever have to be paid back in real money, they will be inflated away or forgiven.
a 5.5% budget deficit is the best incentive you can have for the kleptocrats to create even more inflation.
“… and debts are erased on a continuous basis…”
The erasure of debt translates to an erasure of an equal amount of money.
One person’s debt is another person’s money.
combo,
Let it go. He’s on the short bus.
Only someone who’s never read a bank balance sheet fails to understand this.
Hint: the value of the deposits (checking, savings) shows up on the LIABILITY side. Do you understand why?
Hint: the value of the deposits (checking, savings) shows up on the LIABILITY side. Do you understand why?
——————————————————————————
I’ll ask madoff and get back with you on that.
How ’bout we drive our short bus over your big head?
You could. But then who’ll take care of your short-bus children while you’re busy in jail being some bad boy’s b*tch?
The FED, print money and buy treasuries to keep interest rates low. Initially many investors will also buy treasuries as a “flight to safety”. Once those investors understand the scope of the scheme I would guess that trend will reverse. The FED & government might get away with printing money for a while if they don’t start printing it by the trillions. Old debt will be repaid with new debt due to a lack of income. This Ponzi like scheme might continue for a decade or so but what can’t go on for ever has to stop at some point. At that point only 2 ways out exist: Default or printing more money which translates into deflation or inflation. Knowing how our politicians operate I would guess they chose inflation. While the day of reckoning might still be well into the future I think we already passed the point of no return. In that sense, deficits really don’t matter any more. I just wish they would spend the money on energy indepedence instead of pork.
By any serious definition, the pork in that bill was a minimal percentage of the total, though not a small amount overall.
That being said, I agree about the energy infrastructure. North American needs a massive overhaul to the power grid. Massive. While we are at it, we might as well do the upgrade for the next 50 to 100 years, not 10 to 20. And it is not just a future prosperity issue. It is a security issue.
I’m not at all sure that we can make many useful predictions about electricity demand (and therefore how to meet it) 100 years from now. I’m not sure that the AC vs DC was even settled 100 years ago.
I agree it is hard to figure out where we will need it, but demand for power isn’t going away and the long term trend is away from burning stuff close to where you need the power (like from candles to lights from electricity or gas fueled vehicles to ones that used energy stored in a battery but generated else where). So, yeah, we might not be able to get the exact distribution right, but this is a stimulous bill - digging and filling in holes is good enough. Anything else is gravy. Electricy infrastructure, especially one that allows nuclear to go away from population centers and allows lots of little solar arrays to feed back into the overall grid, is the best place to put the gravy, IMHO. And if you plan for a 100, and it fills the demand for 200 (with additional repairs), that works too.
MICEX locked limit down?
Exchanges closed?
Somebody was trying to unwind a trillion $$$ in derivatives last night.
Anybody seen the PM’s recently???
Irish default?
not the first time in recent memory that Russia shut down the MICEX and RTS exchanges. They’re regulated to close for an hour if certain indexes fall 5%.
On Monday it was reported that Russian industrial output fell by 16% YOY January 08-09 .. and i suppose the markets responded to the bad news.
gold surged another 6% today in euros, and 3% in dollars (and by days end probably even more). This has been going on for weeks now and things keep accelerating. Seems the lifeboats are leaving the Titanic.
If we define HYPERINFLATION as over 100% inflation yoy , the term hyperinflation might be an understatement for what is happening to the major currencies these days …
where are all the deflationists, please explain what is going on …
Well, you are correct, in fact I noticed last week that the price of roses had increased 400% since last month.
Tulip hyperinflation.
Well, you are correct, in fact I noticed last week that the price of roses had increased 400% since last month.
what on Feb 14?
I think the point was you cannot always extrapolate a short term trend and apply it to the entire US economy as a whole.
I for one doubt the increase is gold is a harbinger of hyperinflation. I think it means that people are very uncertain and have a lack of faith in what the future holds.
Who is behind al these “Cash 4 Gold” schemes advertised non stop on TV? I would really like to know who is buying all the gold?
Don’t worry about who’s behind them. It’s a safe transaction and your satisfaction is guaranteed!
(Can you tell I’ve seen it a million times?)
“where are the deflationists, please explain what is going on…”
A flight to perceived safety, perhaps? Financial lemmings on the move? Buy gold now or be priced out forever?
flight to safety - from the dangers of the printing presses.
Perceived flight to safety.
Perception is a two way street.
Tech bubble: pop!
so the smart money runs to real estate,
Real estate bubble: pop!
so the smart money runs to equities,
Stock market bubble: pop!
so the smart money runs to commodities,
Commodity bubble: pop!
so the smart money runs to….
so the smart money runs to….
US Treasuries.
pop
“pop”
One can only hope.
How’d you know I was lookin’ at you, if you weren’t lookin’ at me?
Same reason people are running to Treasuries. Hyper-inflation worries should demand much higher yields than 3% on a 30-year note, yet people run there whenever something implodes or the markets head lower. Maybe someone could do a “# gold oz” to housing price chart, spread over 50 years. That ratio shouldn’t change much if they are due to inflation, no?
home prices in gold can be found here:
http://sharelynx.com/chartstemp/USHLSPOG.php
the ratio varies by about a factor of ten.
problem is homes are no longer ‘goods’ but ‘assets’. They are not purchased, but ‘financed’ (with central bank magic). As a result, the ‘price’ is no longer relevant (at least until it gets to extremes).
I think the many Treasury investors are just plain wrong in accepting below 3% rates while governments all over the world are inflating away. The majority in the markets is usually very wrong …
Of course gold buyers could be wrong as well buying at current ‘inflated’ prices; but as long as they are a tiny fraction of the market I wouldn’t worry about that too much
i heard this phrase before to describe flight to ust: “it is not a question anymore of how much is the return on your money, but how much of your money will return”.
We all need to keep in mind that “inflation”, “deflation”, “hyperinflation” etc. is all a relative thing, depending on the context.
Right now obviously we’re seeing high inflation of gold prices. However you can’t disagree that we’re seeing high deflation of prices of most other goods - most notably housing and cars, but also other goods.
Gold in this case isn’t being looked at as a good, but rather as a currency; specifically a “safety” currency. The crap’s really hitting the fan again the last couple of weeks, especially this week.
In the end - right now safety is the one thing very much most in demand; not much else is.
again, you see deflation in the US but there is NO sign of that in Europe and Asia, except a bit at the pump. Prices of almost everything - both goods and services - keep going up (except mortgages and used cars, probably; obviously homeprices are not rising as quickly as they did over the last years).
Wages in EU mainland (and in Netherlands even social security payouts) are also increasing at the highest rate in 10-20 years.
The governments have a social contract to provide a certain level of benefits to labor in exchange for votes. This has been the very definition of post war prosperity. Ridiculous levels of spending and borrowing continue. They are effectively printing money, as are we Americans.
Government intervention into the economy is turning into a worldwide disaster, especially when the motivation is to prop up the house of cards instead of trying to inject a dose of fiscal sanity.
nhz,
Do you have any take on demand? Prices may still be working their way up, but it’s temporary if demand is falling off a cliff.
you mean demand for homes?
The demand is there, just not at current prices … most people here don’t give a damn about homeprices, as long as they get the financing (probably just like in the US). But with current prices, mortgage rates near 400-year lows and about the most reckless lending ever (8x income is still normal here), it is impossible to get enough new players on the housing ladder.
So one could say there is a buyers strike, out of necessity - not because there is insufficient demand for homes. The homes that still sell mostly sell to those who are buying with OPM and free government put options, plus probably a few clueless buyers using their own money.
In order for demand to count, it requires both willingness and ability buy. Sounds like ability is finally hitting the wall due to price excesses. Prices will start to fall if people aren’t buying because they can’t. The invisible hand is just kinda slow.
I was actually wondering about sales volume of stuff in general (suppose I should have asked about sales volume instead of demand.) Are people still buying cars and furniture and electronics and such. You should start seeing prices for stuff fall if sales evaporate, just the same as with houses.
Al:
sales volume for homes is down big time, -40% yoy last month if I remember correctly. They even used the word ‘buyers strike’ last week. I think the bottom (starters) is falling out of the market, as a result of extremely high prices. Even a starter home which is usually really POS, costs 6-7x median income over here.
Homes in the higher price segment are still selling, which might be a reason why median home prices keep climbing. Many of these people buy a new (more expensive) home while expecting to sell their old home for a good price. They can do this because the carrying cost of the second home is very low, because of various government subsidies and tax incentives (effectively 1-2% per year for the first two years).
So sales in the higher price segment might continue for another 1-2 years before they hit the wall. Sooner or later these buyers will need to get rid of their old home and they will start influencing the price statistics …
For general goods I don’t expect falling prices; prices of used cars are falling but that has a lot of other causes (tax, environmental etc.). Sales (turnover) of electronics etc. were up strongly in december compared to previous year. Wages and purchasing power of working people are climbing, why should prices decline? I’m not sure about the rest of Europe, but I know in Germany it’s the same: purchasing power for people who have a job is up at least a few % this year - which also means they can afford a more expensive home (especially with the current super low rates).
Maybe things change when unemployment starts to bite, but for now that is still too low to significantly influence the consumption statistics.
Sounds like you guys are in the “subprime is contained” part of the housing cycle. Buckle up.
When you kill off the low end, the mid-end follows (since the low end can no longer trade up), and the high-end last.
Around where I live (high end area), we are just now beginning to see significant price reductions, at a time when low end has already fallen 50%, and has begun to clear inventories. This is ~18 months following the start of the mess.
What Rental Watch said.
In our higher-end area, prices have also just started to see some better corrections (20% or so, and much more to go) and the lower end is down 50-70% and selling like hotcakes!
Sounds like you are 18-24 months behind us, nhz. One difference, though: you guys have rising wages while we haven’t seen rising wages in years. Our housing bubble was 100% credit-driven.
There is deflation in Japan, as there has been for years, e.g.:
Bank of Japan Jumble
And while the Eurozone isn’t seeing deflation yet, it’s getting closer and no doubt will be there soon, with the depression intensifying:
Euro-Zone Inflation Falls; Unemployment Rises
Europe and Asia are just a little behind the U.S. on the curve - but they’re on the same curve nonetheless.
some experts have convincingly argued that Japan does not have real deflation, but just disinflation (or only a very mild form of deflation). Prices of TV’s, digital cameras, cars, clothing etc. going down in itself is not deflation, but mostly a benign result of advances in production technology (and cheap workers from over the border, sometimes).
As for EU / Asia being on the same curve as the US: I seriously doubt it, the bubble dynamics here are very different (e.g. our bubble is much older and bigger by % gains, and the downslide will probably take much longer too). There also is the issue of savings surplus which is VERY different from the US (and UK), and huge differences in import/export balance.
I’m in Belgium. Wages are up 4.1% (automatic indexing - they must have picked the point when the oil price was highest.) House prices are stagnant, rents seem to be dropping a little - general price level I would say is also dropping slightly.
Perhaps you have a specific country you’d like to give details about?
“Right now obviously we’re seeing high inflation of gold prices. However you can’t disagree that we’re seeing high deflation of prices of most other goods”
So in that context you can say that gold is currently being used as a hedge against deflation. Hmmmmmm……a sword that cuts both ways. I’d say it’s probably a good idea to have yourself at least a little bit of the yellow stuff…..if you can find it. To hell with paper gold. Hold it physically or not at all. Would you buy a gun and then have someone hold it for you?
“To hell with paper gold. Hold it physically or not at all.”
Time will tell if I have been foolish on this front, but my paper gold seems to be doing quite well today, and there is every indication that I could liquidate it at the bid-price if I wanted to do so.
” there is every indication that I could liquidate it at the bid-price if I wanted to do so.”
As long as your one of the first in line.
I held GLD for years, before this last rise began. Some of the “old gold” guys speculate there isn’t adequate, not to mention openly/adequately audited.
If by paper, one means Perth Mint certificates, there probably isn’t much risk. I have a GoldMoney account, and don’t concern myself with that one either.
Must admit I feel fine, having sold GLD for a 72% gain (as I said, I’ve had it quite awhile), much of which is now in gold stock majors, all of which are out of this country.
Risky? Probably. After years of reading/seeing examples of probable manipulation of the PM markets, I’m content to hold some of my gain in stocks.
Physical still rules tho….
My advice - some of both (physical and paper).
I agree; some day the paper gold (gains) will vanish into thin air (by outlawing gold/gold trading again, Comex default etc.). It is unpredictable when that day comes, but wouldn’t surprise me if it happens this year.
The price of beans could be a hill of gold, but the price of gold doesn’t amount to a hill of beans.
Hill of beans, can of beans, what the heck:
Well hand me down that can o’ beans
Hand me down that can o’ beans
Hand me down that can o’ beans
I’m throwing it away
Out the winder go the beans
Out the winder go the beans
Out the winder go the beans
I had a lucky day
Mary, my Mary, my sweet young Mary
We’re going out this evening
Mary, my Mary
I’m gonna take you out tonight
So hand me down that can o’ beans
Hand me down that can o’ beans
Hand me down that can o’ beans
I’m throwing it away
Out the winder go the beans
Out the winder go the beans
Out the winder go the beans
Go the beans, go the beans
Good times are here to stay…
Been loading up on non-perishable food items for some time now. Not because I think I’ll be held up in a bunker somewhere. Just as another inflation hedge that really is a no-brainer. Follows the same principle as gold. It’s a tangible item with an intrinsic value. And, your going to consume it anyway, why not buy during the realitively short period of deflation we’re experiencing. Why not buy before inflation takes it’s toll, even if it doesn’t go hyper. Buy a bag a flour today for $10 instead of $25 or more down the line.
Along those lines, I’ve been looking at items that are in a deflationary way right now to hold as an inflation hedge, in addition to housing. Just recently bought a two-year old fifth wheel trailer at less than half it’s low NADA value. The thing is in perfect shape. Bought it from a couple who are walking away from there home, and hurting bad - real bad. Right now people are dumping toys that they bought with home equity that they’re walking away from. Any cash they can get is a freebee (ethical implications be damned). Now, I may use the fifth wheel, or I may not. I put a cover on it and it’s sitting. At the very least it’s a real, tangible asset that can’t be printed away. I surf Craigslist, visit our pawn shops regularly, looking for items that are way deflated, but will still be useful to people down the line. Holding “real” things that aren’t making me money doesn’t bother me a bit. How much are you making on those CD’s?
Soon, the cost of all goods will go up. Whether or no we go hyperinflatioary remains to be seen. But we know serious inflation is eminent. Remember, gold isn’t the only thing with intrinsic value. In fact, many “things” are far more deflated than gold right now, but won’t be for long. And, some things might be more exchangable than gold in the future - we don’t know. Look for things you would use anyway and buy them up. Look for things that people use every day and stock up. Look for the unbelievable values in goods right now in this short lived deflationary environment.
Gold is a good thing, but it’s not the only thing.
Stock up on other items too, like aspirin. Has a shelf life, but very useful/saleable. Got the idea from the book “Reinventing Collapse: The Soviet Example and American Prospects” by Dimitri Orlov.
…..toilet paper and scotch….. once the larder is decently supplied…
Mostly, I hope to smoothe out potential delivery disruptions. “Just in time” may well be a euphemism that’s outlived its shelf-life.
… in dis crazy world.
Hyperinflation is not the only reason for gold’s behavior. It turns out Western European banks may also be insolvent as a result of exposure to Eastern Europe and Latin America. Add to that, the possibility of Euro dissolution as some members don’t have the ability to respond to their domestic economic crises. The economic crisis is turning into a political crisis.
Wages, houses, equities, milk, gas, are all falling here in America. The world never decoupled. America is the global economic consumption engine. The rest of the world is tethered to it. The rest of the cars behind it are crashing as America jumps the consumption track.
..the world never decoupled…
exactamundo.. which is why foreign countries continue to buy US treasuries and support our economy. Whatever we buy less of (oil, for instance) falls in price, and whatever countries supply us with it suffer.
“It turns out Western European banks may also be insolvent as a result of exposure to Eastern Europe…”
I’ve been waiting for this shoe to drop for a while. Europe has been pointing the finger at our sub-prime debacle and smugly pontificating about our short sightedness. Well, some of us have been pointing the finger at housing prices in Eastern Europe, financed by European banks like Raiffeisenbank, EuroBank, Piraeus Bank, Societe Generale Expressbank, and Alianz Bank, and doing some pontificating of our own. So… if Americans were stupid and irresponsible for making $400,000 home loans to janitors making a household income of $40,000, what does it make Europeans lending similar amounts to people with a household income of $4,000? In countries with no credit rating systems? To people with no history of credit?
The other part of the story I am waiting to hear about is the massive infusion of laundered organized crime money in creating the E. European real estate bubble. But I guess complex story lines are too difficult for most people to untangle, so I will have to settle for “It’s all America’s fault.”
I guess I would have to go with “more than stupid,” but that is just me.
Is the organized crime money going away? That is an interesting question - the effect of the downturn on criminal enterprises. I’d think a lot of stuff they are traditionally involved with are discretionary items (drugs, prostitution, gambling, etc.) and others could be less profitable in a world where you can threaten people with violence if you like but they can’t pay protection money if they don’t have it at all. Then again, they might be able to move into other areas.
Do you have any more thoughts?
“Is the organized crime money going away? That is an interesting question - the effect of the downturn on criminal enterprises. I’d think a lot of stuff they are traditionally involved with are discretionary items (drugs, prostitution, gambling, etc.) ”
Now, Polly!!?
“discretionary items (drugs, prostitution, gambling, etc.)”
Now REALLY!!??
Discretionary????!!!!
More like where can I buy in, thriving GROWTH industries in the coming depression (although profit margin will be less)
in Netherlands criminal money (especially from drugs) is very important for propping up real estate. Most of the big drugs syndicates invest their money in real estate, because it is one of the few items where money laundering is very very easy.
The shadow side from this has become clear over the years: RE is not liquid, and when the gangsters suddenly need a lot of money (e.g. drugs deal gone wrong) or simply want to cash in and retire, there is a problem. This has caused many high profile drive-by shootings in Amsterdam where RE tycoons and their lawyers are killed because somebody gets worried about the return of their money. This could get worse when RE is starting to tank here.
Even in my own small town I have the suspicion that a lot of real estate is owned by drug syndicates from the big cities. Most of these are expensive monumental homes that have been empty for ages, and are registered to obscure companies from Amsterdam and surroundings.
And of course on the Spanish Costa or the London City drugs money and other criminal money (e.g. from Russia or Easter Europe gangsters) is all over the place …
RE: the effect of the downturn on criminal enterprises.
I’m not sure yet, it is too early. I also think that E European organized crime is more complex than the items you mention … not as easily defined. In many cases there is no line between state actors, organized crime actors, and “legitimate” business interests. Companies like Gazprom in Russia and Multigroup in Bulgaria blend traditional business areas (insurance, energy, manufacturing) with organized crime strategies (strong arm tactics, judicial and legislative corruption, illegal information gathering). Since these organizations don’t publish full accounts of their activities it is hard to say what the net impact of the downturn is going to be on organized crime. But I wouldn’t bet against them.
Financially, they are probably taking a beating just like everybody else. Energy prices are down, business activity is contracting etc. But from a liquidity standpoint they likely aren’t suffering as deeply as traditional companies are, and I would bet that they view this as an opportunity … if they have the excess capital to fuel an absolutely massive over investment in residential and commercial real estate then they probably also have the liquid capital necessary to expand into new businesses during a down cycle, and to influence/manipulate political processes to their benefit along the way.
EndofEmpire has a good point. Think of all the underground, black market money that needs to be laundered on any given day. What’s a good way to do that? Why unregulated markets, like maybe…
And those unregulated markets just bit the dust.
Which leads to… You have to wonder which ones are really suicides and which ones aren’t and how many more “market corrections”, er, suicides are gonna happen.
Mexican drug war anyone?
You also have to wonder how much and what kind of pressure this is putting on governments.
“I’ve been waiting for this shoe to drop for a while. Europe has been pointing the finger at our sub-prime debacle and smugly pontificating about our short sightedness.”
+1
The fact that the world still seems to be stuck on the “American sub-prime” meme amazes me.
They have all the same home-grown fundamentals going on as well, based on the same forces (global liquidity bubble).
When this realization break, it will be ugly.
Some people are still blaming the “po’ folks” for causing the world wide meltdown.
http://www.nytimes.com/2009/02/15/realestate/15cov.html?_r=1
The Optimists’ Club
By MICHAEL M. GRYNBAUM
AS apartment prices plunge and sales hit a standstill, real estate agents may be giving bankers a run for their money as the city’s most maligned profession.
Yet despite the worst residential market downturn in a generation, hundreds of New Yorkers still want a piece of the action — or whatever’s left of it.
In the waning weeks of 2008, the state administered more than 700 licensing exams to aspirants looking to join the ranks of agents.
This way to the cliff.
It’s not the Optimist’s Club; it’s the lack of a college degree.
What better way to get access to their data? Keep your friends close, your enemies closer?
I might get a license myself—in about 3yrs, after the herd has been culled.
Another bright idea from the Dutch government: our Finance Minister is openly thinking about ’savings banks’ which are government-approved as ’safe’ for savers, and include the current 100K euro deposit insurance. As a result, the other banks (probably by far the majority of current banks) will be ‘unsafe’, without deposit insurance so anyone still saving money there must be an idiot in the current financial climate.
One incentive to do this is that currently the worst banks (often foreign banks) are attracting loads of savers, because they offer slightly higher rates and still have the full 100K deposit insurance - because of EU banking rules the government is not allowed to discriminate against foreign banks. I understand this point, this is stupid and needs to end.
Economists say that in order to pull this off, the ’safe’ banks would have to make ’safe’ investments, which means they can never offer the current 4% rates on savings accounts and savers will have to accept far lower rates (for sure below inflation …). So it all sounds like a government proposal where savers are forced to subsidise homeowners, banksters and uncompetitive companies at a loss, or risk losing all their capital.
No one asks if maybe rates should get higher to compensate savers for the huge risks (especially mortgage rates, and the special loans for big business - I think rates for small businesses are plenty high now). It’s a tought time to move all your savings into gold, but this sure sounds like all the incentive one needs. Never underestimate the stupidity of the kleptocrats
They guys on cNBC are highlighting the eurobank’s problems and it looks iffy.
Did anybody see that guy using the C-word this morning? Think russia.
Didn’t know that you could use the C-word on TV now a days.
What was the “C” word used on cNBC?
well it seems to me that the shanghai tycoons are a helluva lot smarter than the WS tycoons.
H. Wayne Huizenga of Huizenga Holdings used the “C” word on CNBC this morning. Isn’t he the Waste Management CEO? Owns the Dolphins and just sold them.
Here’s what he said.
“I’m in favor of some stimulus package, but what we’ve done is ridiculous. All we are doing is making government stronger and the last thing we need to do is make government stronger. My goodness….more and more government jobs and eventually government will control everything. I mean I’m afraid to use the C word, but in 8 years if we keep going like this we are going to be a Communist country.”
So he admits that we are already a sham democracy. He just doesn’t want us to move from facism to communism. Or did he mean to say that we would become a socialist country?
That is funny. Michael Steele, chairman of the RNC, said that the government has never ever ever created a job. Ever. I heard the interview with Stephanololous. I usually think the Republicans are much better than the Democrats at rhetoric, but….this meme won’t hunt.
Oh, that “C” word.
Now, to be a Communist country, don’t you have to actually be run by the Communist Party, otherwise you would just be a Marxist paradise like North Korea?
I find it funny that big business is always holding its hand out for help from the government, yet screams bloody communism when money is not going into their own pockets.
LOL, SFBay! It’s so true. I know gobs of house/mortgage sellers who scream socialism with just about any govy regs or control.
But when you mention all the socialist RE buying programs that help them make a living, they shrug and pretend its not the same.
“You can’t get a man to understand something if his salary depends on him not understanding it…”
You have problem with Corporate Communist Capitalism©®™, comrade?
Anyone else notice that the tentative deficit figures for 2009 keep getting bigger, even though the price tag of the stimulus package has gotten smaller? The MSM now is saying $1.5 - 1.6 Trillion for 2009, with the stimulus price tag being $787 Billion. Two weeks ago it was $1.4 Trillion deficit for 2009, with the stimulus price tag being anywhere from $820 - $1,000 Billion.
regarding deficits: same story all over Europe, projected deficits keep growing by week (or day, sometimes). I think reality is setting in and it is becoming impossible to deny that the economy is crashing, and of course most of the economists do nothing more than following the trend (which is constructed from old data).
Dutch government official statement from today: worst economic contraction since 1931.
“…projected deficits keep growing by week…”
As I said, the need for cash intensifies.
Guys, can we let it rest? We’ve way into “dead horse” territory here. Let’s have more wheat and less chaff.
Children, dogs and dutchmen should be seen but seldom heard.
I happen to like our resident Dutchman and enjoy getting his perspective on the European front.
Not sure why people need to be unkind about differences of opinion. It wouldn’t do us any good to sit in an echo chamber all day, would it?
“As I said, the need for cash intensifies.”
the real kind not the IOU I’ll pay you as soon as all my investmnets go back up in value kind. yes that kind is in short supply compelling the FED to sell trillions of new treasuries to “give” to zombie banks and other assorted projects.
But they sure don’t pay much for cash deposits these days almost like the only cash in demand is the free kind.
Now I suppose you can get paid well for junk bonds and 2nd mortgages
You can get some decent returns on your money if you have enough of it. Just look at Warren Buffets recent deals, or what the sovereign wealth funds and hedge funds were demanding from the banks. Us little guys just can’t push enough to get a good deal.
I suggest we start a Savers Strike (and I don’t mean stop saving, but just stop lending them our savings for less than nothing). When there are enough of us they will have to reconsider
I hate the fact that some politicians hypocritically vote against “spending” that (rightly or wrongly) is trying to address the twin problems of joblessness and crumbling infrastructure, yet they also voted for an extremely expensive and needless war, as well as gi-normous borrowing to pay for their own generation’s entitlements.
A real conservative only cares about balancing budgets. Everyone would be so much better off if they just lived within their means.
I’m hearing a lot of this from the left these days:
The stimulus is bad, but the war is bad so that makes the stimulus not so bad after all.
Guess the two wrongs don’t make a right thing doesn’t apply in the world of Barack-O-Mania huh?
When did the right suddenly get concerned with excessive spending? Oh yeah, when BtMN became president…as long as they could throw it away on earmarks, practitioners of corporate malfeasance and bad foreign policy, no problemo! Helping the states and vital industries in a tough time is when they decide to actually practice what they preach?
I’m still waiting for them to explain how creating jobs to address the problems of crumbling infrastructure, find alternative energy sources to address a dangerous overreliance on oil from a hostile region is somehow “hurting our children”?
I’m naturally suspicious of any group that says “War is Peace”, “Freedom is Slavery”, “Ignorance is Strength” and their newest mantra: “Debt is Wealth”. Orwell was too…
Yes, the right says ALL of that. I’d post examples of each if it weren’t for the filter.
Thanks for 100% ignoring my point….which once again is this….just because one side spends irresponsibly does not make it right when the other side does it.
Why is this so hard to understand?
If you can’t figure out how spending $1.5T (when interest is being taken into account) is hurting children, you’re obviously not paying any attention.
And please don’t give me any of this nonesense about infrastructure. Have you actually read what’s in the bill? If one new bridge gets built anywhere in the country in the next 3 years I will shocked.
Nobody can be that much of a partisan and have the blind folds on that tightly not to see what a colossal waste of money this so-called stimulus bill truly is.
Manny,
I think everyone gets your point. But I’d love to hear just one Republican say “we effed up.” Actually, McCain said it the other day, to his credit. But he’s the only one I’ve heard say it publicly.
“Thanks for 100% ignoring my point….which once again is this….just because one side spends irresponsibly does not make it right when the other side does it.”
I never said it was. However, when the legislators who helped create the mess with their profligate spending are suddenly unanimously opposed to spending any money in fixing or at least soften the consequences, only a fool wouldn’t recognize who the real partisans are.
Considering how many “red” states are clamoring for the money and desperately need the help, they are more slaves to ideology than a duty to serve their own states. The hypocrisy in order to “look responsible” is simply unbelievable. Hopefully the voters will reward them in 2010 with even more one-way tickets home from Washington.
S_n_s,
If the republicans don’t start looking out for their constituents and manning up to their mistakes, instead of playing partisan games, they will continue to get pwned at the polls.
+1
Conservatism used to mean competent financial management. Now it means war-mongering & massive deficits in the name of Jesus.
LOL.
Deficits are caused by the interaction between income and spending, not by spending alone. There may be some new projected revenue numbers out.
(sorry if posted already - I was gone this weekend)
Kansas in deep financial doo-doo - looks like they’ll delay tax refunds and even paychecks.
Link
How much of the my-tee stimulus II will go just to keep state/local gov’ts from foundering?
It’s reported here that our transit agencies are facing yet another “doomsday” shut down due to large funding shortfalls caused by falling tax receipts.
I’m getting the sinking feeling not too many bridges are going to be rebuilt after all. That money, just like all the other stimulus and bailout money, seems to be needed just to maintain the status quo and pay for the sins of the past.
the next shoe to fall will be pension fund contributions underfunded. folks will be losing their pensions and paid for health care before all is done and over. To quote a famous floridian, ” We are now operating on a new economic paradigm.”
Delay worker’s salary? Seriously? That is bad juju. Why is it hitting Kansas first? I remember CA was thinking of giving out something other than money for tax refunds, but salaries?
Talk about sending demand over a cliff…
Wow…
I wouldn’t have thought Kansas would be 2nd behind California… But hey, we knew this wasn’t isolated.
California is sending out 20,000 layoff notices. I’m sure that will stimulate the economy. Oh, they are union jobs so they’ll get to spend six more months doing little before being laid off.
Who’s next? MN? MA? FL?
Got Popcorn?
Neil
Florida will hit big time next fiscal year.
Main industry: real estate development. Buh-bye.
Secondary: Tourism: Buh-bye
Tertiary: Defense & Space: Buh-bye
The State of Florida’s budget for the current fiscal year is down 10% off the peak. And that doesn’t include raping every savings fund the State has.
Next year is going to be another 10%. Republicans are saying raising taxes are now on the table.
“California is sending out 20,000 layoff notices. I’m sure that will stimulate the economy. Oh, they are union jobs so they’ll get to spend six more months doing little before being laid off.”
“State Budget in Limbo—As are the People of California”
“One vote shy, state budget still in limbo Capitol lockdown and all-nighters can’t shake loose the one GOP Senate vote needed to pass the spending plan. Weary Democrats will try again this morning….
Ending a weekend marathon of tense negotiations, bleary-eyed state lawmakers late Sunday suspended their bid to plug California’s $41-billion deficit but vowed to continue working today to halt the state’s dizzying slide toward financial collapse….
Despite support from legislative leaders in both parties, the budget deal became mired in politics. The two-day hunt for a third Republican in the state Senate willing to vote for $14.4 billion in temporary tax increases proved futile. Lawmakers and staff said there were enough GOP votes in the Assembly for passage in that house.”
It looks like Arnold and the heavily Democratic legislature just need to turn over one remaining holdout Republican to pass the budget. My bet is that the budget passes no later than end of this week as enormous pressure and even bribes/concessions will be thrown at the last GOP senator to turn him.
My prediction-they will turn the last republican holdout and the budget will pass and not one single state employee will get axed.
That 20,000 layoff notice is a prop ploy to bludgeon thru a budget. CA never, never lays off state workers. They cannot even furlough them for 2 days each month without the state employee unions squawking.
Ummmm,
In case you haven’t noticed state workers are furloughed for 2 days each month.
Kansas will always have dorothy and the wizard of oz to ask for help.
“Why is it hitting Kansas first?”
Maybe because the KS state gov’t isn’t as accomplished at kicking the can down the road as some of their peers? That and some of their biggest industries/employers are on the ropes.
Arnie or the governor’s office is going to be sending out 20,000 layoff notices today.
It’s a pissing contest between the Democratic Govenor, and the GOP State Congress. Republicans don’t like the budget, and are holding refunds and paychecks hostage to get what they want.
From the initial reaction, not a good move for the GOP.
The GOP is balking at the new tax increases, which are pretty severe. The current plan is 3 fold, spending cuts, tax increases, and new bonds to kick the can. I think the spending cuts should be the primary focus, because the other two will have less effect as time goes on… CA is already a high tax state, which means the budget and spending is out of control.
Valid reasons or not, they’ve pisssed off a lot of people.
A lot of people are printing out new W-4s. Which, of course, will make the problem worse.
Thank you for the reminder. Refiled from 3 to 5
It took about a week to get my Kansas refund after I e-filed. I’m glad I didn’t wait any longer.
Here for everyone’s enjoyment!
This is a real fun read
Shadenfraud mega size.
abcnews.go.com/Business/Economy/story?id=6867448&page=1
I had trouble finding it with google, so hopefully the link below will work for everyone. Thanks for the post.
http://abcnews.go.com/Business/Economy/story?id=6867448&page=1
This is a real fun read
“From Janitor to Agent to the Stars”
…to Janitor
What an idiot.
Observation from this weekend. We stayed at The Homestead in Hot Springs, VA. It’s an awesome, fairly high-end resort, visited by a fair amount of presidents and such. We got a great deal - seems like there are a lot out there to be had on hotels these days. The hotel was relatively full this weekend, being valentine’s and president’s day. However from talking with a bellhop I was shocked to hear that they’re seeing only 10% occupancy during the week and 50% on the weekends now. They’re main “season” is Sep/Oct due to the colors - however he said they really didn’t have a high season this past year due to the economy.
FWIW - I’d recommend that place to anyone in the mid-atlantic area - you can get a good deal, and it really is a nice resort, with lots of history going back to 1766.
(P.S. While we were there we got the Roanoke paper - on the front page was the story of a family that was living high on the hog but now has had their cars repossesed, lost their home, etc. It was quite a Schadenfreude moment.)
Europe is not in that stage yet …
today my newspaper runs another story about the local wharf where a new 50-100M euro yacht is being completed; they are doing anything they can to meet the HUGE demand. To get an idea what we are talking about, some of these yachts use the same basic hull as recent (big) Dutch warships.
The wharf has a full order book until 2013 and they only make yachts starting at around 10M euros. And this thing doesn’t run on credit, customers have to pay a large sum in advance.
nhz,
What have you been hearing about the Eastern Europe situation? Are the Austrians going to get socked? Will Germany step up? What’s the latest from over there?
we hear pretty little about that, seems the US papers write a lot more about it (which doesn’t really surprise me, it’s a nice distraction).
I don’t think for a moment Germany is going to bail out the Austrians and I don’t know how serious the situation is. There are similar issues with ING (again) and mortgages in another country, I think it was Hungary. ING is presenting its latest numbers tomorrow, maybe we get a clue then?
My question to ya’ll is: why is the government trying to reward poor behavior and decision-making?
What I mean is the following: I have no debt, I didn’t engage in spending sprees with my CC, I didn’t buy a house that I can’t afford. However, the government is doing nothing to help someone like me to avoid this economic mess.
On the other hand, they are wanting to help all those people that did the wrong things by modifying loans, lowering interests, tax breaks, etc.
Why do such a thing?
The same can be said for banks; bad banks got billions of dollars in federal aid, while more ‘conservative’ and ‘healthier’ banks got nothing.
No wonder our society is so messed up; reward poor behavior while not encouraging good decisions.
and please forgive any grammar errors; it’s too god damn early
“why is the government trying to reward poor behavior and decision-making?”
Well, government sort of embodies the collective insanity/mob mentality of the society, for one thing. For another, like attracts like and many people in government at the upper levels are lower and more vicious than the various special interest groups they pander to.
It would appear to me that “poor behavior people vote” and “good behavior people” don’t.
Panem et circenses
Because the entire economy has become a Ponzi scheme, yet they are convinced that the only way to avert Great Depression II at this point is to rescue it.
Most Americans are afraid of the consequences of borrowing and spending (as well as voting for politicians who did the same) and have the hubris to believe they can delay or avoid the inevitable.
GD II will be a humbling experience…
do you honestly believe another Great Depression is inevitable?
Inevitable? It’s already here.
Notice how so many statistics are postfixed with the phrase ‘worst since the Great Depression’ these days and then some pundit says that ‘overall conditions’ won’t get that bad?
Well they’re half right. Things are gonna be worse this time around.
I read Galbraith’s 1929 Crash book recently and it’s quite shocking in that it’s just like reading about the past 5-10 years. The more frightening thing is that last time it was localized. This time it’s global.
“The more frightening thing is that last time it was localized. This time it’s global.”
Galbraith only wrote about the GD in America, but it was global last time as well. Google “Great Britain Great Depression” and read up on it a bit…
The world is more connected this time, so the effects will spread more broadly and more quickly IMHO, but it was global the last time as well.
The depression was global last time, but the excesses leading up to the GD - the debt, the speculation, the greed were mainly American. This time they are global.
example from Europe:
the Dutch government today said that the economy is in the worst shape since 1931 (they don’t use the D-word over here, we don’t want to scare the sheeple).
Less than four months ago they said the economy was in perfect shape and 2009 would post a 2% budget surplus (now predicted at -3%, but that’s way too optimistic for sure). And things will go downhill for at least some years. I’m convinced the GDP contraction, unemployment, budget deficit etc. numbers will break all post-WWII records.
Perhaps they aren’t trying to reward anyone at all, perhaps they’ve been caught flatfooted and are scrambling for answers?
Two ways to look at it:
Feel good way: keep FBs in their “homes”
Alternate reality: keep FBs paying whatever they can
Brett - has the government actually helped anyone? Or has the government talked about helping people, but not actually accomplished the helping yet?
Aside from a few tax breaks in the stimulus bill, all of it seems to be helping those companies and industries with the best lobbyists.
Question: How many bankers are receiving bonuses from companies that would have been liquidated vs. homeowners receiving loan modifications?
Don’t worry Brett:
We will give banks Hundreds of billions to get solvent and they will demand fico’s of 700 to get loans
while all their customers have 600 fico scores hence no lending, no business and no recovery.
Boy we have such smart people in Washington, don’t we?
You’d rather the government demand that banks lend money to anyone as if they could still securitize it and sell it to Norweigian villages?
Sorry, DJ, I know you would prefer they just not bail out the banks, but our system doesn’t adjust quickly enough for that to really be viable. People could try creating good banks to take over the valid businesses of the legacy banks, but it would take a while. Quite a while. In the meantime, people still need a place to deposit a paycheck.
Polly:
What about bottom up, helping those with low fico score get up to 700?
I would cut CC interest rates to 0% for 5 years if you have never gone over your limit or missed a payment….
How about real job training. We are in desperate need of short term high intensity job training for new skills. No more 4 year colleges how about 6 months 40+ hours a week while collecting unemployment and a supplement to keep your head above water?
I never understood why we let people do nothing for 6+ months and then expect them to find a job just as the benefits run out
Well, when I was out of work I spent a lot of time looking for work. I didn’t have time to do 40 hours of training a week. Now, I wasn’t very successful at it until I found a contact who knew of a job that would be a good fit and told me about it and recommended me. But before that job panned out, I was looking full time.
And if I recall correctly, someone I knew in Hoboken was in a jobs retraining program while on unemployment. It was an alternative to checking the box on the online form swearing that he had really looked for work during that week. And a friend in Erie, Pennsylvania was getting an associates degree full time while collecting unemployment with full knowledge of the state. I think she even got a few extra months of coverage because she was in school. I’ve never heard of similar programs in NY, but you should ask around. Might be harder since my understanding is you are generally paid off book/1099 and therefore aren’t in the unemployment system.
Some of these programs might have been temporary things put in place because of the last recession.
Oh, and I’m sorry that I didn’t address your first point. They can’t selectively reduce responsible borrower’s credit card interest rates for the same reason that it is so hard to do the same thing to mortgage rates. A lot of them have been securitized and turned into bonds that other people bought. Trying to sort out the mortgage backed securities is a piece of cake compared to doing to a credit card receivables backed security. Also, the government hasn’t tradidtionally been involved in credit card lending so the infrastructure and institutional knowledge just isn’t there. At least the feds have a few people around that know something about the mechanics of the mortgage and student loan businesses. Credit cards receivables are harder.
Also, don’t underestimate the value to the government of sheer ease of imlementation. Giving money to the banks is easy. There aren’t that many of them. You hand out the money, take you preferred shares in return and you are done. Giving away money to or imposing rate limits on the accounts of millions of credit card holders (never mind figuring out which ones are eligible) is devastatingly hard.
In government service, finding the best possible solution is always balanced against finding the solution that is is possible to implement.
Polly:
Thanks, you can collect unemployment while in school, IF you were a student attending classes and your layoff had nothing to do with school.
Such as leaving early from work,and needing to adjust your work schedule around school. etc.
Some states do have money put aside to allow you to go to school and have the school verify your attendance to collect your checks. But its limited.
Thanks again, so why can they selectively RAISE rates with no justification at all?
Happened to me last month C$h&&bank raises my rate to 24% no reason after 18 years never an over limit fee, never a late fee nothing….indiscriminate, so now they wont renew my card in 3 years when it expires and i can keep my 7% rate
——————————-
They can’t selectively reduce responsible borrower’s credit card interest rates for the same reason that it is so hard to do the same thing to mortgage rates.
Thanks again, so why can they selectively RAISE rates with no justification at all.
———————————————————————-
1. the reason is in the fine print.
2. someone has to subsidize the people that ain’t payin.
NYCDJ,
They probably still own your account. They don’t have a lot of reason to raise the rates that much on an account they don’t own. Why can they? Because they put a clause into the original contract saying they could raise the rate at any time for any reason or no reason and you signed it. Why did you get hit? No idea. I never worked directly for a bank. I’m sure they have little algorithms they use. It might have been because they thought you would pay the higher rate. Or, more likely IMHO, they want to clear out a bunch of accounts and thought that you would rather pay the thing off (and would be able to do it) rather than pay the higher rate. Or some combo of both.
I couldn’t convince my wife that no bank would let you transfer balances within the same bank. I think that deep down she still thinks that banks Are Here To Help.
65 to 70% of people own a home.
30 to 35% rent.
It’s a simple numbers game as to which group the politicians will pander to.
yes; even in Netherlands, where homeowners are just a small (55%) minority
all political parties of any significance are firmly on the side of the homeowners (plus the RE mob).
sorry, should have been: homeowners are just a small (55%) majority.
Even more stunning when you realise that of the adult population as a whole, only 33% are homebuyers (33% own outright, the rest are renters) with a mortgage and only a small percentage of those were subprime borrowers (9-10% maybe?)
I wonder what the percentage was for HELOC borrrowers out of that 33%?
OT
the Donald likes to file early and often
he casino operator had assets of about $2.1 billion and total debts of about $1.74 billion on December 31, 2008, it said in its filing with the U.S. Bankruptcy Court for the District of New Jersey.
I wonder how soon his “wealth” video’s & cd’s will start showing up in the local thrift shops for .25 cents.
“Trump, the most flamboyant player in an industry filled with colorful, headstrong executives, said the company represents less than 1 percent of his net worth, and that “my investment in it is worthless to me now.”
Filed under: “See ya…suckers”
“No stranger to bankruptcy, Trump Entertainment Resort Holdings went into chapter 11 in 2004, from which it emerged a year later with Trump having relinquished the position of CEO.”
“Friday’s statement did not say when Trump’s resignation would be offered or take effect. His daughter Ivanka Trump is also resigning, it said.”
Trump Entertainment files for bankruptcy:
http://finance.yahoo.com/news/Trump-Entertainment-files-for-rb-14373690.html
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!!
So it still had $36 billion in chips?
Or this was from a much larger filing?
Cooking pancakes this morning. Haven’t heard much news other than Our President will speak.
360M (I think you mixed up the colors again
)
He may be counting the condotels sold to his family twice
PBS Frontline will have a documentary of the September 2008 economic meltdown. (I read that the meltdown was much worse than they told us. Electronic sell orders cashed out 500B in money market funds, eating up reserves. They had to shut it down before it turned into a 5T run on the banks.)
And I just wanted to repeat a few things from last night’s Arizona thread:
Darrel in Phx did a quick look up of the AZ Department of Ag:
“2003: Citrus cartons: 4 million…Lettuce cartons: 31 million.
2008: Citrus cartons: 2.25 million… Lettuce cartons 22 million.”
milkcrate replied: “Outsourcing the nation’s food production is a national security issue and no, I am not kidding.”
I agree. It used to be that our winter produce came from California, with only out-of-season berries coming from central America. Now, it ALL comes from Mexico. Except orange juice, which mostly comes from Brazil. About half our frozen veggies come from China. What the hell? I guess the only thing we grow in America anymore is corn.
Not to mention all these countries are 15-20 years behind on pesticide banning, due to the health hazards. Parkinson’s was linked to pesticides 25 yrs ago. If you have the gene, pesticies can be the trigger. While our ag is dangerous still, imported ag is more harmful/deadly,imo.
I was overjoyed to see strawberries from Plant City, FL at my neighborhood gourmet grocery store last weekend. At $5 for 2 quarts, I thought they were a good buy. Yummy, too.
It gets pretty scary when you don’t know where the food you’re buying was grown.
I don’t have a link, but I read a few years ago that the United States would be a net food importer by 2025. What happens when Mexico threatens to cut off our food supply unless we tear down the wall?
I read/heard that Mexico is ready to collapse, so they can go *@*@ themselves. Besides, maybe that would force our nefarious govt. to encourage food production, and not pay the farmers not to grow it. If Peak Oil is real, that will solve the food importing problem anyway.
Tear down the wall and plant land mines and hidden trampolines instead. More effective AND more useful for game shows.
Just curious, do those that were so mean to Aladinsane owe him an apology?
For what? He was clearly wrong.
You’d make more money shorting the pound than you would holding gold.
I think of him as the guy who figured out a little late that he was in danger of bringing a (golden) knife to a gunfight, and found it frustrating. I think gold is only the ticket in a narrow range of circumstances where currency gets run into the ground, but everybody remains “civilized”. A little past that guns and food trump gold.
Gold will get you to the other side of the crisis, but is not much use during the crisis.
Any strategy that doesn’t work against the specific situation for which it’s being advocated is called FAILURE.
He is appearing more prescient by the day.
Only if your definition of prescient is someone who makes a generic prediction with no sense of timing about when it’s going to happen.
Given enough time, any prediction will come true.
Given enough time, any prediction will come true.
Alright then, I predict I will sleep with Penelope Cruz.
That would fall under “every rule has an exception”.
“Alright then, I predict I will sleep with Penelope Cruz.”
Burried in the same earth at some point.
LOL.
Your response > my response.
“Given enough time, any prediction will come true.”
I predict your prediction will never come true. If I am right, then you are wrong about your own prediction, and if I am wrong, then you are wrong about my prediction. Either way, you will be wrong.
Bertrand Russell lives!!!
Gor, hoary self-referentiality on this blog. Along with long division. Next, one of y’all will pull out all that algebraic geometry stuff!
And measure the success of a prediction for long term investing at one particular moment and don’t wait to see if it acutally pans out in the long term.
That’s your silliest post yet FPSS.
The whole point of this little forum was for us nutjobs to make generic predictions about when the HB was gonna pop. Apparently we had no sense of timing but eventually we were correct.
Just like aladinsane will eventually be proven so.
We made extraordinarily specific predictions.
Ivy Zelman’s chart pretty much sealed in everything you needed to know when it was published in Jan 2006.
FPSS is spot on, darth.
And actually the emperor made many specific predictions and they didn’t come true (COMEX judgment day was my favorite). I think he left this site because of all the egg on his face and not to go hide in some foreign country with his gold. The dude was a first and foremost a liar. The corker was when he announced he would be gone to the Sierras, and then would post as Emporer_Norton while he was “gone”, then he’d “come back” and tell us what all he saw.
He was in the mountains with his Jesuit Priest buddies, do you all forget? He was his own antimater.
Any discussion of his predictions for the physical universe is pointless.
When a man tells you that he is psychotic, belive him.
Not sure what you all are talking about, but gold has held up rather well, no?
Seems to me that both aladinsane and combotechie were right, at least for now. You’d be better off investing according to their advice than to most “experts” out there.
I miss aladinsane as well.
wait with that question until gold hits $ 2500.
I give it a few months with the current speed of unraveling (maybe a few years if Bernanke & friends double their effors to manipulate gold down).
If the only inflation we have in the dollar is with respect to gold and food, rent, SFH, cars, electronics, clothes, etc. all continue to go down, I will be entirely delighted. So far, that is what I see.
And Lad and his miraculous story of, “my gold is all stored overseas with friends who I can trust to never touch it without my permission no matter what happens and to defend it with their lives and the lives of their families just because they like me so much” is also part of his prediction. If the overseas locations of his personal stores even exist, I’d like to see how that fantasy would play out. However, I suspect it was all just a story to keep people from trying to figure out his real name and location to get at his stash.
“However, I suspect it was all just a story to keep people from trying to figure out his real name and location to get at his stash.”
Ahhhh…. not me, but a couple of people here know who he is.
–
–
Alad’s point was that GOLD would protect him and similar followers in a doomsday scenario.
That is a preposterous claim. It was somewhat true in the far off, quaint old times circa the 30s when countries meant worlds away and distant lands.
We can’t even keep trusted nephews from selling the DVDs.
Manipulate gold down? Why?
Last i heard nobody was on a gold standard.. so how does the price of gold matter? Do currencies values rise and fall according to changes in the price of gold? Do product prices? Do interest rates?
What does it matter to non-gold bugs if gold is $250, $2500 or $25,000 an oz?
Touche’
it may not matter to non-goldbugs, but it has mattered all through the ages. For many ages the price in gold for many things has been remarkably stable. A rising goldprice is an early indicator that the currency is getting trashed; you will find out in a few years, when it is too late.
It may matter as Russia and the Emirates are both discussing partially gold-backed currencies. It may matter because China is not only (still) making deals in So. America, but following Davos, making collaborative stops in Europe. It may matter because the Chinese government is slowly but surely shifting a portion of assets into gold. But mostly, it may matter because the sheeple get skeered, and when they’re skeered, they follow the other sheeple into gold….
(she says, predictably)
I had my own tangles with laddie. And I’ve taken some shots on this board myself. If you can’t stand the heat, get out of the kitchen and we’ve lost a few who couldn’t take the heat.
I know, but I miss him all the same. He made me laugh, some of his comments were right on the mark…
Dude (his own name for hisself) was funny at times.
But he seemed to enjoy trying to put his footsteps on people’s backs. Not for the sake or argument or linguist jousting. Oh, well. The board remains engaging.
I personally like that there are a variety of viewpoints. The correctly posited arguments eventually manage to speak for themselves. No one on this board has always been entirely right about everything, or entirely wrong.
I always enjoyed Aladinsane’s posts.
Ditto. I miss that quirky sense of humor. We all need more of that these days.
I posted the other day that I missed his posts. I never doubted that Gold would be an OK investment,and posted that I have bought some GLD back then. I always doubted the crash of COMEX and the “physical gold” arguments he made and which crash never materialized. For most people converting $$ to physical and back to $$ is, percentagewise a 15%+ loss right off the bat. If having to go overseas to retrieve your gold was the world we are headed towards, I’m not equipped to deal with that, and as I posted back then, would rather have my collection of guns, than gold.
’tis lots easier to get gold with guns than guns with gold.
Personally, I miss the guy. Wish he’d come back, always had interesting quotes.
Anyone else see this one?
A ‘fraud’ bigger than Madoff
Senior US soldiers investigated over missing Iraq reconstruction billions
By Patrick Cockburn in Sulaimaniyah, Northern Iraq
Monday, 16 February 2009
In what could turn out to be the greatest fraud in US history, American authorities have started to investigate the alleged role of senior military officers in the misuse of $125bn (£88bn) in a US -directed effort to reconstruct Iraq after the fall of Saddam Hussein. The exact sum missing may never be clear, but a report by the US Special Inspector General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn, making it an even bigger theft than Bernard Madoff’s notorious Ponzi scheme.
http://www.independent.co.uk/news/world/americas/a-fraud-bigger-than-madoff-1622987.html
HELL NO!
Has there ever been a more incompetently fought war in our history?
When the Bush administration fired General Taguba after hiring him to investigate Abu Ghraib prison I just knew that was not the only thing they were covering up over there.
We could have paid the Iraqi’s double what their per capita income was, in exchange all we ask is you don’t kill each other and we get first dibs on your oil
I would have cost us a fraction of what we spent so far, not to mention those 4500 lives that were tossed away.
… plus the about 1 million other lives that were tossed away without even considering the loss
A million? I didn’t know that.
Either way, even losing a single innocent person is a tragedy. What’s happened over there is totally unforgivable.
If any of you read fiction - then try The Trail, by John Lescroart because that’s exactly what part of his storyline is about. Contractors starting up in Iraq and being paid cash - which was flown in from the US by our military. Its actually a murder novel, but you can’t miss the point that the taxpayer was getting screwed.
I think they can start looking inside the Cheney bunker.
“Anyone else see this one?”
–
Yes, this is old news. 60 minutes did a story on this.
Anyone with half a brains and a little knowledge of History could have predicted this (which is exactly why it happened under Bush2) Yes, I predicted it.
—
p.s. The Afghan situation was also predicted years ago also. Look at Imperial Hubris (written by ex-CIA Middle Eastern chief)
This story goes all the way back to 2002.
Google “missing iraq money.”
Once again, I think it is best to blame the Democrats:
The untold story in this whole national crisis is that President Clinton put on steroids the Community Reinvestment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.
And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.
As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.
Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.
Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.
In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.
But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.
At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households.
The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today’s nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.
And the worst is far from over. By the time it is, we’ll all be paying for Clinton’s social experiment, one that Obama hopes to trump with a whole new round of meddling in the housing and jobs markets. In fact, the social experiment Obama has planned could dwarf both the Great Society and New Deal in size and scope.
There’s a political root cause to this mess that we ignore at our peril. If we blame the wrong culprits, we’ll learn the wrong lessons. And taxpayers will be on the hook for even larger bailouts down the road.
But the government-can-do-no-wrong crowd just doesn’t get it. They won’t acknowledge the law of unintended consequences from well-meaning, if misguided, acts.
Obama and Democrats on the Hill think even more regulation and more interference in the market will solve the problem their policies helped cause. For now, unarmed by the historic record, conventional wisdom is buying into their blame-business-first rhetoric and bigger-government solutions.
While government arguably has a role in helping low-income folks buy a home, Clinton went overboard by strong-arming lenders with tougher and tougher regulations, which only led to lenders taking on hundreds of billions in subprime bilge.
Market failure? Hardly. Once again, this crisis has the Democrat’s fingerprints all over it.
“But the government-can-do-no-wrong crowd just doesn’t get it…”
The corporate-profiteers-will-somehow-save-us-by-policing-themselves crowd doesn’t get it either.
Pretending to decrease spending by increasing borrowing is a big reason why the hypocrites keep losing seats in Congress. Thankfully, at least for now the government ultimately still has to answer to the citizen voters and not shareholders.
Isn’t it interesting that those geographical areas that were subject to compliance with CRA have a lower foreclosure rate than those areas that did not have to comply?
Bahh… forget those details.
Wingers only recite winger babble. Would that I still had at my fingertips links to the myriad data-strewn rebuttals of that silly pseudo-history.
CRAs have performed better over time than I would ever have expected. To conflate them with the Rubin/Gramm/Clinton/Greenspan/Paulson et al’s deregulatory zeal and enthusiasm for “financial innovation”, is ignorant.
Repeat after me: Subprime was the proverbial straw. Subprime was the proverbial straw. …..and so on.
Subprime still accounts for a chunk of the losses, but compared to CDSs, it was no more than the banana peel which accelerated the slide into financial oblivion.
I still think Greenspan was more culpable. He kept the Fed rate too low for too long after 9/11.
That really kicked off the refinancing boom.
Market failure? Hardly. Once again, this crisis has the Democrat’s fingerprints all over it.
That’s why when Bush was appointed president in 2000, backed by a Republican majority in congress, I knew things could only get better.
I guess Bush must be behind the Obama/Pelosi $3 billion gift to ACORN to round up “inner city” voters and get them registered to vote. It just has to be Bush behind it, since 95% of the “work” ACORN does turns out to be fraudulent.
It just has to be Bush behind it…
I didn’t say Bush was behind anything, I was simply pointing out that he had plenty of time and power to straighten out just about any mess left by Clinton.
I don’t expect any politician to work miracles, but to conveniently skip over six years of Republican rule in order to “blame the Democrats” is just plain silly at best and ignorant at worst.
Hey, you get to say the same thing I did in 2000 now!
“Now that we have a Democratic president and a Democratic majority in Congress, things have to get better”
” guess Bush must be behind the Obama/Pelosi $3 billion gift to ACORN to round up “inner city” voters and get them registered to vote. ”
–
3 BILLION?
I’ve got some good connections of you need better stuff, that paraquat laden stuff is bad to inhale.
cobalt,
The idea that some ghetto blacks and Mexican illegals brought this on is sheer stupidity.
Based on everything I’ve read and seen with my own two eyes it was the middle class that bought and HELOCed us into this mess.
MEW was a way of life for millions.
The only ones that could believe that ACORN /CRA is the cause of this would be FOX news and acolytes.
I have a family member that was on the board of ENRON, may as well blame the power hungry Californians for ENRON’s collapse.
When will people learn, it’s unbridled greed and hubris that brought this on.
-
p.s. Yet Greenspan was still unapologetic in the CNBC interviw last week and said “Capitalism is the best thing we got going and you can’t legislate greed.”
cobalt, many brought this on, from both parties, all the way back to 1983 and Reagan.
It’s unseeingly to be partisan.
The FDIC, and creation of Fannie Mae (along with the mortgage intrest deduction and capital gains exclusion brought this on). Of course the alternative includes smaller depressions every 20 years or so (as a new generation learns you can’t spend more than you earn). This one let 4 generations wait to learn the same lesson all at once).
It just has to be Bush behind it, since 95% of the “work” ACORN does turns out to be fraudulent.
————————————————————————————
Well, squirrels gotta eat too.
I was told when you point one finger at a person three are pointing back at you.
I was told that, as well! And my response was, “Oh, yeah, well, look at THIS ‘one’ finger. (you can guess which finger it was), and now my other three fingers are pointed downward, towards the ground, as if to say, perhaps, oh, look some pretty grass or a worm and not at me at all.”
Not word for word, of course, but some such similar response.
Then I’d get my mouth washed out with soap. I was mild and biddable in my youth. Nowadays anyone trying to wash my mouth out with soap would be missing their pointing-out finger along with the other three pointing-back fingers, and part of a thumb, and there’d be a big bite mark in their hat brim.
But, yes, the good old days…hahaha! Rachel and I both got to be fond of the taste of Ivory soap….
*starts to sing ‘Memories’ loudly and soulfully *
Ah, I miss Donald Hamilton bad guys.
Finger his baddies and they drove you off the road, stopped your car, and ordered: “Retrieve the offending digits.”
President Clinton put on steroids the Community Reinvestment Act,
You guys keep posting this, put up some numbers that support the theory that CRA was a major cause of the bubble collapse.
In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton, stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates.
Barr noted that institutions fully regulated by CRA made “perhaps one in four” sub-prime loans, and that “the worst and most widespread abuses occurred in the institutions with the least federal oversight”.
Note: CRA loans were to low income people, so if you look at it as # of subprime dollars loaned rather than number of loans the ratio is much smaller than 1 in 4. CRA had very little to do with Alt-A loans.
According to Janet L. Yellen, President of the Federal Reserve Bank of San Francisco, independent mortgage companies made risky “high-priced loans” at more than twice the rate of the banks and thrifts; most CRA loans were not the higher-priced loans that have contributed to the current crisis.
A 2008 study by Traiger & Hinckley LLP, a law firm that counsels financial institutions on CRA compliance, found that CRA regulated institutions were less likely to make subprime loans, and when they did the interest rates were lower. CRA banks were also half as likely to resell the loans.
Emre Ergungor of the Federal Reserve Bank of Cleveland found that there was no statistical difference in foreclosure rates between regulated and less-regulated banks, although a local bank presence resulted in fewer foreclosures.
The bottom line is that this crisis is due to excess unregulated leverage by banks, securitization, and criminal rating agencies all unregulated. CRA, GSE’s had little to do with it. If they were the primary problem the problem would be solved by having GSE’s buy up more loans. They’ve done this, and we are still collapsing.
Well said Measton.
tiny scam by the people. humongous scam by the banks and wall street.
Any post that starts with “lets blame X party” is not worth reading. Anyone who cannot see that both parties are controlled by the same money interests is blind. Anyone who thinks that *government* can solve anything is a fool.
“There are certain things that are true no matter how much someone may deny them. In the economic realm, for instance, you cannot legislate the poor into independence by legislating the wealthy out of it. You cannot multiply wealth by dividing it. Government cannot give to people what it does not first take away from people. And that which one man received without working for, another man must work for without receiving.” - Kenneth W. Sollitt
” Government cannot give to people what it does not first take away from people”
Not entirely true. Take the US highway system. Certainly the gov took taxes and land to create this, but my guess is that almost all got back more than what they invested in the form of commerce(higher stock prices, more business, cheaper goods ect ect), and more efficient travel. Thus government returned more than it took. The gov takes money to regulate banks and finance, although they have done a piss poor job as of late banking would be reduced to loan sharks without any regulation. Thus the overall benefit exeeds the money it takes to provide the service.
“you cannot legislate the poor into independence by legislating the wealthy out of it. ”
I’m not sure the wealthy have been legislated out of independence by taxation, but I’d say that public schools and programs like Head Start which reduce poverty and crime likely do reduce dependence by the poor.
“You cannot multiply wealth by dividing it.”
Now this statement is flat out wrong. Do you really think that if policy concentrates 90% of the wealth into the hands of 10 families that our economy and country would be better off than if policy and regulation promoted the distribution of this wealth to 100,000 families. The strenght of the US has always been the middle class, take that away and we are Mexico or some other central American middle east eastern europe disaster. Now I agree that gov can not tax the rich and just hand it to the poor. I oppose well fare and unemployment benefits, but gov can tax the rich and create opportunity for the middle class. They can prevent monopolies and oligopolies from destroying competition and manipulating markets.
Bravo!
Very well said, measton!
I think we can all agree that lots of folks had their hands in the cookie jar over the years, so let’s move on.
cobaltblue, 3 words for ya. Republican controlled Congress.
Here’s another torpedo for ya, why didn’t the fully Republican controlled admin since 2000 changes those rules? Take your time and think about it. (Fully. Controlled. Republican. Government. Since 2000. Didn’t. Change. Rules.)
(Please! No hints from the studio audience.)
One more question. Have you ever been to Egypt and seen that famous river?
Would that be the Denial River, or “It’s Always the Other Party Fault River?”
‘Extreme Makeover: Foreclosure Edition’
I could have guessed this would end up this way. IMO, the worst damage here is to the community, because those volunteers won’t be so eager to lend a helping hand again.
http://www.cdapress.com/articles/2009/02/17/news/news04.txt
..Although the show is a ratings hit for the network, it has also attracted criticism for exalting lavish lifestyles and saddling recipients with hefty property tax and utility bills.
yeah.. what good is a free $500K, 3,678-square-foot home if you have to get off your rump and find a part time burger flipping job to cover tax and utilities.
So, blame the producer, the suppliers and volunteers that built and gifted him the fricken thing for free.. That takes the cake.
INFLATION vs. DEFLATION
Okay, it’s a frequent subject here. Personally, I am an agnostic. I can see how the massive government bail-outs can weaken the dollar, but I also see the scope of the problem and think it’s just a bucket working against an ocean.
Folks like combo and FPSS are strongly in the deflation camp, while others are predicting extreme inflation. I am a frequent reader of itulip and their ka-poom theory sounds pretty plausible to me. I think it was Prof. Bear who is in the short-term deflation, long-term inflation camp. Me, I’m an agnostic - I can see how both scenarios are plausible, and I don’t pretend to know which is more likely or the order that they will occur.
So, rather than having you guys argue for what you think is gonna happen, how about an old high-school debate team strategy: switch sides! Seriously, combo, pussycat - what would it take to make you think that INflation was in the cards, rather than deflation? And any inflationists on here, what would make you change your mind and move into the DEflation camp? Might be an interesting mental exercise, and more interesting to readers than just saying “Yeah, cash is king” or “very inflationary” after each bit of info that confirms your pet thesis, whichever it may be…
I’ve been in both camps from time to time, observing, learning. We’ve had huge unmeasured inflation in home prices over the last decade. This was followed by a commodities spike, which was driven largely by fear of the printing press. Higher commodities prices, however, slowed consumption and crashed the global economy.
Private bankers were pretty much printing their own moneys throughout the bubble years. That’s over now. They are insolvent. It’s hard to say whether governments have the political capital or financial ability to match yesteryear’s printing presses. I intend to keep learning from other people’s behaviors, separating fact from fiction, arbitraging the difference.
Waking up was what crashed the dream.
You forgot the guns, ammo and canned goods camp.
Humming “Gunpowder and Lead.”?
Guns, ammo and canned goods are great in either extreme.
I was gambling in Havana
I took a little risk
Send lawyers, guns and money
Dad, get me out of this!
deflation in the cards?
when I see the CPI (in Europe) or the real (undoctered) CPI in US in seriously negative territory (-2% or so) for at least a year. And even that would only wipe out a small part of the preceding inflation …
I can tell you this: it’s not going to happen, except maybe in your dreams.
??? what are you saying - deflation or no inflation?
sorry if my english is not clear …
I’m expecting inflation in Europe and nothing else; for the US I’m less sure, but I don’t see any convincing proof of actual deflation there. Maybe the US could experience some (temporary) deflation.
My short version:
1) Deflation because money supply is shrinking due to deleveraging.
2) Inflation because of lack of confidence in paper money.
I’m hoping deflation wins, because lack of confidence in paper money will cause commerce to collapse. Barter just can’t fill the gap.
inflation for rich people. those that have. deflation for the poor people. those that have not.
deflation for rich people. those that have. inflation for poor people. those that have not.
Now I think I have all the bases covered.
Deflation for those with credit worthy FICOs… yum.
CME Housing Futures index indicates housing bottom will be at Nov, 2010 with another 14.5% decline from this point forward (current decline up to this point: -26.6%, total of -41.1% nationally):
“How low will prices go? The ups and downs of home prices are heavily dependent on regional economies, so it’s hard to give one answer.
But the S&P/Case-Shiller index of home values nationwide has plunged 19.1% in the past year and 26.6% from its peak in June 2006, as of data for November that were released late last month.
Futures contracts that trade on the Chicago Mercantile Exchange forecast a further decline of 14.5% by November 2010, after which home prices likely will begin to revive.”
Ladies and gentlemen, write your down payment checks now and future-dated to Nov 1, 2010.
I just heard a NAR ad today that said it’s foolish to try to find the bottom and that a home is the key investment in wealth.
And those people never lie.
Let’s see.
Rents headed down
Jobs headed down
Credit harder to come by
No more “funky” loans
Will RE go up in this environment?
Only if are a Realtor™ or an open-mouthed droolin’ short-bus-ridin’ nincompoop. But I repeat myself.
Nincompoop!!!! I love it! Imbeciles and braindead asswipes are my other favorite references for used house sales tards.
OBwan will announce his housing price support plans tomorrow in PHX. Are you assuming that the gubmint cannot prop up home prices if it is elevated to a priority for battling the economic crisis?
Is there an updated Case Shiller graph somewhere? A colleague gave me a great YouTube roller coaster animated graph of it but it ended at 2006 prices.
You can pull the data yourself (google “case-shiller”), it is already in excel format from the Case-Shiller site. Make your own graph from that in excel, takes all of a minute.
I also graph the rate of change for the Boston metro area so every month when the Boston Globe publishes the data with a “this is the bottom” quote I can point out to them that the rate of change downward is growing larger, not smaller, which would consistent with a change toward the bottom. Boston hasn’t even hit the inflection point of the decline yet the MAR insists this is the bottom.
Of course, the Globe never recognizes this…
The housing futures scare me.
I’m afraid congress is going to take “bold” action that’s going to nail everyone on the short side.
Interest and principal payments tax fee?
Down payments tax free?
1% mortgage rates?
Triple sowkow, double-secret, tax rebates?
Communism?
Tonite on PBS:
Inside the MeltdownTuesday, February 17, 2009, at 9 P.M. ET on PBS
FRONTLINE investigates the causes of the worst economic crisis in 70
years and how the government responded. The film chronicles the inside
stories of the Bear Stearns deal, Lehman Brothers collapse, the
propping up of insurance giant AIG, and the $700 billion bailout. Inside
the Meltdown examines what Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke didn’t see, couldn’t stop and
haven’t been able to fix.
Full Press Release: http://www.pbs.org/frontline/meltdown
(Where were they 3 years ago…. doh)
Investigative reporting is a lagging indicator.
Don’t get your hopes up on this show……Charlie Rose had the show’s producer on last night. He seemed more interested in the “drama” of the story than anything else.
From Washington Post DOT com:
PBS Frontline producer Michael Kirk will be online Wednesday, February 18 at 11 a.m. ET to discuss his film “Inside the Meltdown,” which investigates the causes of the ongoing economic crisis and examines what government officials didn’t see, couldn’t stop and haven’t been able to fix.
“Inside the Meltdown” airs Tuesday, February 17 at 9 p.m. on PBS (check local listings).
Submit your questions and comments before or during the live discussion.
Might be fun for HBB’ers to send in Q & C about what will (inevitably) be omitted, distorted, &/or overlooked in the documentary.
NEW YORK (Reuters) - Factory activity in New York State fell to a record low in February with new orders and employment falling sharply as the U.S. recession deepened….
The New York Federal Reserve’s Empire State factory index fell to minus 34.65 — the lowest in the history of the index, which dates back to July 2001. It was down from January’s already contractionary reading of minus 22.20.
Can we call it a depression yet?
Anybody think there’s a play on UYG today?
Was just looking at that myself. Down to $2.63. Limited downside, potential upside on a pop.
Hoz, what you thinking?
Yes, I’m writing more UYG puts and buying GLD with the proceeds.
Why do it via writing puts? Seems like with that route you’d have the leveraged downside risk if we’re wrong…
Unless, that is, you’re happy to be put the shares at a lower cost, to hold them until the next upward movement. Is that your plan?
Although I wouldn’t be happy to get put the shares, I wouldn’t mind considering the breakeven point is around a buck after the potential tax writeoff minus any investment gains I make on the proceeds in the interim. Even if half the bank holdings go into receivership, how much under a buck can UYG go? Not sure how a net credit transaction with limited loss can be considered leveraged?
Hate to see gold above $950 spot. My rule of thumb is to stop buying gold when the 10 year note yields 4% or more, and to start selling when the yield is above 6%.
MS65 Saint Gauden one ouncers on the 13th were priced for sale at $2400 apiece. I have two of them I bought at $1250 apiece. Rare coins love uncontrollable government spending and printing presses.
Why such the premier to spot? I am guessing from your post that they are rare and collectible, but isn’t gold, gold? I’d be concerned they would lose that “added” value much like fine art and fine wine have been hammered lately.
Totally agree, skeptic: bullion makes more sense to me than collectibles. The extra value depends on collectors maintaining their desire to hold rare coins.
Why such the premier to spot?
Because that’s what the market will bear. Dealers and big traders manipulate prices. Gold bugs get buggered.
My understanding that its plain ordinary non collectible coins that are commanding a premium over spot.
Why?
Perhaps because the coins actually contain Au atoms, while “paper gold” does not?
Perhaps also because if you can get them out of the country you can sell them anywhere. Not so sure with paper gold.
What do you use to buy things with, gold or paper?
Rare coins are a slightly better value. The extra value hedges the overall percentage of any loss in the underlying PM.
“The extra value hedges the overall percentage of any loss in the underlying PM.”
And what hedges against a loss in the imputed collectible value?
Or, to put it a different way: if you are paying 2X the underlying PM value and calling the extra value a “hedge” against any loss in the underlying PM value, does it reduce your risk better than a 50% PM, 50% cash portfolio?
Note that I’m using the term “hedge” in the manner that Jon is using it since I’m responding to him—but I do realize that it is not an actual hedge in the normal sense of the word.
Hey, don’t get me wrong, I’m not a gold bug, and I recognize you can have a bubble in anything, including rare coins. My comment is only valid in the non-bubble scenario.
Scarcity has value. Old silver dollars run pretty much the same few dollars over spot whether spot is $3 or $23. And with hoarding and increasing populations, rare coins become relatively more scarce every year.
I’ve collected very few over the years (<10). Not for an investment, just for personal interest. As to holding cash, I agree that is probably a smarter thing to do today just for the extreme liquidity.
Jon, I don’t get that argument. I would buy gold for its gold content and would think that in tough times, the premium for being “rare” would go crashing just like fine art, wine, mansions, yachts…..
Colorado, I don’t buy the paper Gold is worthless argument anymore today than I did over the Summer. GLD prints, every Friday, its physical holdings, by brand and bar number, weight, etc. Now it may be a big fraud, but they have a 909 page list of every single bar of physical Gold they have to back up the “paper” gold. I also think it would be A LOT easier for me to access my brokerage account in a foreign country via the Internet and sell my “paper” gold then to try to get a bunch a physical thru security at the airport…. Anyone gonna throw 10-20K in coins or bars into one of those buckets at the airport metal detectors or trust it to the out of sight baggage handlers?
Anyone gonna throw 10-20K in coins or bars into one of those buckets at the airport metal detectors or trust it to the out of sight baggage handlers? The assumption that airlines will continue in operation when TSHTF has a life of its own. If you have 20 kilos of gold & intend to gold-bug out when this happens, best have your own plane fully fueled, staffed & ready to go at your private airstrip, at a moment’s notice, and always stay close by your means of escape. Better yet, leave now while the gettin’ is good.
Yep, just more of the lunacy of how crazy it would have to get. It could happen, though I seriously doubt it here in the US. But if it does, I’m hunkering down here in my semi-rural area with some cash, gold, guns, food and prayers for us all. I can see such unrest in China, maybe Russia, as being close to a total breakdown, but us Americans are just too apathetic to cause such a stir
I was told a story of a South African businessman who smuggled plenty of Kruggerands out of SA in his yacht. He had to hide them carefully because he would be inspected before leaving.
Wanna buy a NY condo?
http://www.nypost.com/seven/02172009/news/regionalnews/manhattan/condo_crisis_hits_wall_st__high_rollers_155570.htm
“Dozens of financial-industry professionals may lose their new Battery Park City condos because the building’s developer allegedly defaulted on debt payments, which forced the property into foreclosure and threatens an immediate shut-off of heat and electricity.”
“It’s a bitter irony for the residents of 225 Rector St. - many of whom made fortunes on Wall Street - that the nationwide bank-fueled foreclosure crisis has come full circle to hit them in their own homes.”
“For the moment, our main issue is to ensure that we have heat,” says Maria Rapetskaya, who bought a studio in August.”
In August? This is exactly what happened in the early 1990s following the condo/co-op conversion boom. One of my wife’s co-workers had to move back in with mom because her condo, which she couldn’t sell, was in a building that couldn’t pay the heat bill, since so many units had defaulted.
Be still, my beating heart!
What?! You have one of those thingies?!
(Now, I’m just teasing, you know.)
Even the Grinch(tm) had one; it was merely several sizes too small…
FPSS may be delightfullly vicious at times, but I’m pretty sure his love of serving fine food for friends rules out the several-sizes-too-small theory…
ROTFLMAO
A million bucks for a one bedroom condo. What are people thinking????
Please!!! Don’t be statin’ the obvious.
I once had to point out that you would’ve have to sell the condo to some OTHER single person who has a million+ buckeroos and is willing to live in a box forever.
“Dear, why buy the most expensive house in this neighborhood? Seriously, who but us is likely to pay that much to live next to those two foreclosed houses?”
Oh, sorry. Having an Obvious flashback to last summer’s house hunting.
Here’s a fun quote from Marketwatch.com.
“A break below 750 by the S&P ‘could morph into a full-blown crash scenario that may find a resting spot anywhere between 600 and 640, taking away roughly one-third of the gains from the 1982 lows. While possible, we are not yet putting too much weight on the outcome,’ said Paul Nolte, director of investments at Hinsdale Associates.”
Man, we bubbleheads who talk about getting back to 1997 prices, plus inflation are pikers. The stock analysts are starting to compare current prices to 1982!
I love the logic of these guys. If we go below 750, we’ll drop to 600-640. Because a low of 714 is just so implausible. There are 2 problems with the stock markets. 1) Too much information is ignored, like collapsing profits and incompetent management. 2) Too much information is factored in, like this charting crap.
He may know about some programmed trades set to hit if it reaches 750 & 600. People like even numbers.
Remember, for someone to be selling, someone must be buying.
I’ve been calling for 1983 prices from the very beginning.
In fact, hozzie and I have a running bet on the subject.
I’m in the 1983 camp also FPSS
1983 price for what? housing or stock market? or gold?
Housing.
Stock market was 10x earnings - not projected earnings, not EBITDA, actual live sustainable earnings.
FPSS, surely you aren’t going to stick to stocks at 10x earnings when earnings are negative, right?
OK, this deserves a detailed explanation but since this is cocktail hour, and there’s no particular hurry to rush an answer out (we have 6+ months), let’s defer to a future date, shall we?
I’m not going to take this bet, but would be surprised if it pans out like that in Netherlands. That would require a 93% decline from current prices (to counter a +/- 1500% price runup). Long before that time the whole country would be bankrupt.
I think FPSS is talking about stock prices, not house prices… Though, in my opinion, both are reasonible at this point.
so it was house prices after all … Dutch stock prices will be back to 1983 levels pretty soon, I don’t doubt that. They are currently around 1995 level I think.
Yeah, except you’re calling for 1983 prices in inflation adjusted dollars, puddytat. I’m talking NOMINAL dollars! Get this: there are condos in Reno, NV (yeah, I know… RENO) selling for 1975 prices in nominal dollars ALREADY, and the correction is far from over. I do believe that real estate is local to a certain degree, but most areas will get slaughtered. Of course, that hyperinflation should take care of all of this. Where is it, by the way? They keep talking about it, but I just see prices falling, falling, falling. Got milk last night for $1.99 per gallon. Chicken @ $.69 per lb…
You might very well be right that my prediction is too conservative.
Borrower default = deflation.
And they will walk away when the choice comes between eating and the “American dream”.
I guess you don’t buy into all the thinly-veiled insinuations from all the king’s horses and all the king’s men that they will “do something” to make stocks and real estate go up again?
One argument against the potential for stimulus to prop up U.S. housing prices: Pols and bureaucrats have been talking about doing something like this for over a year already. If it could be done, then why haven’t they already done it?
I demonstrated the math. I posted the results including the worksheet. I advocated the use of long division for the last few numbers.
You must either contradict the assumptions, the calculations, or accept as Conan Doyle stated, when you take away all other possible alternatives, whatever left behind as improbable as it may seem must be the answer.
I’ve been in the 1982 (not 1983, but who’s counting?) club for years, too.
Viral email going around the net…. I’ve got it from my dad and my wife….
“Important Notice:
DUE TO RECENT BUDGET CUTS,
AND THE RISING COST OF ELECTRICITY, GAS AND OIL,
THE LIGHT AT THE END OF THE TUNNEL HAS BEEN TURNED OFF.”
Feb. 17 (Bloomberg) — U.S. regulators accused R. Allen Stanford of running a “massive, ongoing fraud” while selling about $8 billion in certificates of deposit through Antigua- based Stanford International Bank Ltd.
the tide is definitely receding in the financial markets …
And EVERYONE was skinny-dippin’.
EVERYONE was skinny-dippin’ I put on my trunks & went home many moons ago.
I see more and more pundits calling a depression! Today, there was a video piece on TheStreet.com from “Harry Dent” who warns we’re in for another Great Depression. (OF course, he’s plugging his book, too.)
I think Uncle Harry has been on this track for many years already.
The unfolding of history eventually makes sufficiently general stopped clock predictions look smart.
Is that the same Harry Dent who wrote “The Roaring 2000s: Building The Wealth And Lifestyle You Desire In The Greatest Boom In History”?
Here’s an idea: quit spending hundreds of millions of taxpayer dollars to kill wildlife for the benefit of wealthy ranchers. Why should the public be financially responsible for protecting their animals? Furthermore, why are we killing wild animals period? The wealthy businessmen have hijacked our country. I’ve got my pitchfork handy…
http://www.rgj.com/article/20090216/NEWS18/90216053&OAS_sitepage=news.rgj.com%2Fbreakingnews
In a natural environment, predator population would be maintained by lack of food. In areas where we ranch, that would require out livestock herds to be wiped out so that the preditors could naturally starve to death.
If we’re going to keep our herds of economically sound size, then we have to keep preditor population down.
BS
What BS?
Limits on animal population are largly based on the availability of food in the area. If there is ample food, the population will increase.
In the presence of large flocks of food… say sheep… the population of predator species will multiply until they exceed the availability of food.
That’s how it works in nature.
If we want flocks of sheep that are larger than would be found in nature, we have to use other means (other than exceeding the food supply) to maintain preditor population levels.
Historically, humans personally protected the sheep from predators day & night. We’re just lazy.
First of all, I like a lot of your posts. That said, the sh!t is deep on this one. You posted:
“In areas where we ranch, that would require out livestock herds to be wiped out so that the preditors could naturally starve to death.”
This is more far fetched and preposterous that words can describe. There is absolutely zero possibility of such a scenario.
While ranchers would certainly suffer more losses, the idea that predators would decimate the herds is pure fantasy, and a page right out of the ranchers guide to bilking taxpayers. The SOB’s need to pay for their own protections, and abide by laws that protect wildlife. Nuff said.
Actually I agree with what Darrel says:
as long as the “we” is the ranchers, who are the ones making the profit on their livestock. “We” the public have no such responsibility, any more than we the public have responsibility to pay for the chicken farmer’s coops, the grain farmer’s silos, the engineer’s PCs, etc. etc.
I drive through a herd of 50 - 100 deer every morning and night that live on Johnson Space Center and the nature center across the road.
Who says deer are stupid?
still watchin UCO? or didja bail out yet?
A real estate investor is downsizing his portfolio…
Too much space: Romney selling Utah home
By Thomas Burr
The Salt Lake Tribune
Posted: 02/16/2009 03:53:02 PM MST
WASHINGTON » Former presidential candidate Mitt Romney is selling his homes in Massachusetts and in Utah because he has “more space” than he needs, his spokesman said Monday.
Romney, who parlayed his experience from running the 2002 Winter Olympics in Salt Lake City into winning the Massachusetts governor’s office and seeking the White House, has put his ski mansion in Utah on sale for $5.25 million.
The home, a 9,500-square-foot, wood-beamed ski villa in Deer Valley, has played host to then-President George W. Bush and Republican presidential candidate John McCain. Romney’s home in Belmont, Mass., is also for sale, but his spokesman said the asking price has yet to be decided.
Romney is keeping his other homes, a lakeside resort home in Wolfeburo, N.H., and a beach house in La Jolla, Calif., which he purchased last year.
“The Romney children are all grown up with families of their own, and Mitt and [his wife] Ann have more space than they need,” spokesman Eric Fehrnstrom said Monday. “So they are simplifying and downsizing.”
“…a beach house in La Jolla, Calif., which he purchased last year.”
2008 was a minus tide pricing in La Jolla?
Not many Mormon surfers in that geographical location…but, there is that humongous Church on the East side of the 5 freeway. Besides, he may go jogging south and wide up @ Black’s beach.
ChurchTemple“The Romney children are all grown up with families of their own…”
LOL, 3 years ago that line would have been used to rationalize buying MORE houses.
Oh, thank you. Sincerely, PB. Truly. I thank you for this.
Hahahahahahaah!
the PIGS are coming home to roost:
Dutch TV news had an item about all the Dutchies that are packing up on the Spanish Costa (Marbella etc.). The party that lasted many years is over and now that the free booze has stopped flowing they are flocking back to the homeland, to apply for unemployment benefits and of course a free home. Most of these people had a job in real estate, car sales, finance etc., the sectors that are in really bad shape now. Many British and Scandinavian partygoers already left before the Dutchies.
Spanish unemployment is at 14% now and expected to top 20% within 1-2 years. A Dutch RE broker, driving around in his Bentley, says the times are still good: maybe it takes a bit longer than last year to sell a 20 million euro villa, but he is not worried at all. Who does not want to live in the eternal vacation paradise?
I expect next year we will hear about all the Dutch pensioners who are returning from the Costa to the homeland because of declining services or simply because their Spanish investments kept declining and they need a little financial help from the government. Another negative surprise for the Dutch budget
Looks like the PPT failed to hold 800.
What announcement could they use to surprise the market and trigger a short squeeze?
Today they sign the stimulus. (sell on the news)
Tomorrow they announce the next failed attempt to keep people chanied to their oversized mortgage. (more sell on the news?)
They can’t announce anymore details of the Bad Asset Relief (ummm… I forget what the F is). $300 billion (or less) to leverage up $1 trillion to buy up bad assets… There are $4 trillion in bad residential backed debt, and more to come with commercial and credit card. Any more details on that “plan” will be bad news.
Congress is NO WHERE near ready for another request for more TARP(BARF) money. So, they have no more money coming….
Wish I knew what they will announce next time they need some news to reverse a massive sell off. You know they will come up with something.
I forget what the F is).
Fantasy!
Bad Asset RelieF
I’m just waiting for one side to call the “stimulus” concept a four year plan and the other side to call it a five year plan. Oh the comedy of it all.
Here’s a whole comedic episode:
Speaker of the House Nancy Pelosi’s home district includes San Francisco .
Star-Kist Tuna’s headquarters are in San Francisco , Pelosi’s home district.
Star-Kist is owned by Del Monte Foods and is a major contributor to Pelosi.
Star-Kist is the major employer in American Samoa, employing 75% of the
Samoan work force. Paul Pelosi, Nancy’s husband, owns $17 million dollars of Star-Kist stock. In January, 2007 when the minimum wage was increased from $5.15 to $7.25, Pelosi had American Samoa exempted from the increase so Del Monte would not have to pay the higher wage. This would make Del Monte products less expensive than their competition’s.
Last week when the huge bailout bill was passed, Pelosi added an earmark to the final bill adding $33 million dollars for an ‘economic development credit in American Samoa ‘.
What a lovely combination of corruption and comedy!
Awesome and highly informative post!
You need to read footnoted DOT org.
Great entertainment each day.
Excellent site, FPSS. Thanks!
The new so called deliberate deadbeat.
Be one and get rescued by the new hope lawmakers.
I usually read the bits while I’m on my lunchtime walk at the mall, so I don’t get to post a lot in the middle of the day.
It was very interesting today how little was posted on the meltdown in the financials. 4% down on the S&P and we take it in stride! I think we may be fast approaching that 90% down day. (90 sellers for every 10 buyers)
You read while you walk? That would surely be interesting to see.
Good thing real estate always goes up, because otherwise this plan to backload the repayment of principle all the way to the end of the loan’s term in the form of a lump sum balloon payment would seem highly questionable. In fact, I seriously doubt that any private lender who held the loan on its books would agree to such a risky modification. I suppose the government could slap on a taxpayer-funded guarantee of the lender’s principle in case any particular borrower could not come up with the lump sum payment at the end of the term?
Wall Street Journal
* FEBRUARY 17, 2009, 6:09 P.M. ET
Obama to Unveil Plan to Help Troubled Homeowners
By DEBORAH SOLOMON
WASHINGTON — President Barack Obama will unveil a multifaceted program Wednesday designed to help troubled homeowners, including efforts to cut monthly mortgage payments, allow more borrowers to refinance their loans and give bankruptcy judges greater power to modify mortgages, according to people familiar with the plans.
The array of options fills in some of the blanks left by Treasury Secretary Timothy Geithner last week when he unveiled the Obama administration’s overhaul of the $700 billion bailout plan, which was to include a new approach to housing. Many economists say addressing the cycle of foreclosures and failing home prices is one key to ending the crisis.
…
Many of the housing plans considered by the Obama and Bush administrations have suffered from one big problem: It’s not clear how the government can prevent people from halting payments to qualify for help.
To address that, Mr. Obama’s plan may require that homeowners eventually pay back the difference between the original payment and the reduced rate. While borrowers would get a lower payment, they would still technically owe a big additional payment at the end of their loan’s term. That could be covered by the rise in a home’s value, assuming the market recovers.
“assuming the market recovers.”
Given the amount of people that are going to have a really big balloon payment in 30 years - I’d say the market won’t be recovering for… about 35 years.
Seriously - if we don’t end up in a high/hyper inflationary environment, I think we may not get back to 2006 prices in nominal terms for about that long.
(A big if there, BTW)
I fully support this kind of plan, as long as taxpayers DO NOT have to provide any guarantees — or money of any sort — to the lenders.
This should be entirely between the lenders and the borrowers. Lenders would not have to deal with the hassle and expense of foreclosing, and borrowers get an “affordable” payment while not benefitting from any equity increases from the written-down amount.
One caveat: they need to watch out for fraud. When the borrowers want to sell at some point in the future, if the second/balloon payment is non-recourse, many will try to “sell” to friends at a discounted price, and then they will try to flip the property.
All transactions need to be fully arms-length, perhaps the lender should have to choose the agent from a govt-approved pool of agents.
OH OH…SoHO No lita….NYC is for sale…..
Interesting map and story:
http://gawker.com/5155144/the-recession-map-of-nolita
Another fraud-perpetrating real estate investor drowns in the tsunami wave while caught sun bathing naked on the beach…
Wall Street Journal
* BUSINESS
* FEBRUARY 17, 2009, 9:16 P.M. ET
On Antigua, Frustrated Stanford Account Holders Gather
By EVAN PEREZ
ST. JOHN’S, Antigua — The U.S. action against financier R. Allen Stanford reverberated 1,500 miles away on the island of Antigua.
Bank of Antigua official Ralph Potter tried to reassure customers that the bank, part of billionaire R. Allen Stanford’s financial empire on the Caribbean island, will reopen Wednesday to conduct normal business.
At the Stanford International Bank, a handful of customers were ushered into separate private banking rooms inside the handsome offices adorned with dark wood paneling and oil paintings. The bank is housed in a landscaped complex just outside Antigua’s international airport.
One depositor who said she invested hundreds of thousands of dollars in certificates of deposit via Stanford’s representative office in Bogotá, Colombia, met with a senior Stanford International Bank official Tuesday to discuss her request to withdraw her money.
The bank provided a Lincoln Town Car to escort the woman and her daughter early Tuesday and she left reassured that she would receive her money, minus an early-withdrawal penalty, on Thursday.
“I feel like a huge weight of worry has been lifted,” the depositor said after her meeting. Just a couple hours later, however, the woman rushed back to Stanford after hearing of the SEC’s charges.
Greenwich Realtor™ gets burned on multimillion dollar mansion spec home investment, and I can’t handle the Schadenfreude — it is way too stimulative!
American Public Media Marketplace
Tuesday, February 17, 2009
Hedge fund haven bit by recession
The Greenwich Country Day School
Greenwich, Conn., is one of the wealthiest towns in America. Known as hedge fund central, the recession is starting to take its toll on the Wall Street bankers who have settled there. Amy Scott reports.
…
AMY SCOTT: It’s one of those sparkling winter afternoons. I’m walking up a snowy driveway to a massive Colonial-style house.
GARY SILBERBERG: Welcome to my home.
Gary Silberberg is a realtor in Greenwich. He also owns this place. It’s got five bedrooms, each with its own bath.
SILBERBERG: Basement stairs.
And down in the basement there’s plenty of room for amenities.
SILBERBERG: This is where you’d probably want your home theater with tiered seating. It’s set up in such a way that you can probably get 10-12 seats in here, theater style seating.
Silberberg doesn’t live here. This is what’s known as a spec home.
SILBERBERG: I built it on speculation that I would sell it.
SCOTT: And how’s that working out so far?
SILBERBERG: So far it’s not quite the way I had planned it. It hasn’t sold as fast as I would have liked.
In fact, it’s been on the market for two years. Silberberg has knocked a million dollars off the price to try to move it. Now he’s asking just under $5 million. At that price he’s competing with dozens of homes sitting on the market around Greenwich. A few years ago they might have sold in a matter of days or weeks.
It is pretty hard to think of ways this latest housing bailout proposal will help people who are not already home owners. It looks much like a reverse-Robin Hood program to transfer wealth away from folks who are not sufficiently wealthy to have bought a home over the past several years to those who are sufficiently wealthy to already own one. The policy seems decidedly un-Democratic.
American Public Media Marketplace
Tuesday, February 17, 2009
Will housing plan help everyone?
Foreclosure sign on house in Miami.
President Obama is set to unveil his proposal to help homeowners fend off foreclosure and stabilize the housing market. But will all that be possible with one plan? Nancy Marshall Genzer reports.
Greenspan backs bank nationalisation
By Krishna Guha and Edward Luce in Washington
Published: February 18 2009 00:06 | Last updated: February 18 2009 00:06
The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman has told the Financial Times.
In an interview with the FT Mr Greenspan, who for decades was regarded as the high priest of laissez-faire capitalism, said nationalisation could be the least bad option left for policymakers.
The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman has told the Financial Times.
———————-
Let me guess…”temporary” means that as long as losses are likely, we (taxpayers) get to own a “nationalized” bank. If it ever becomes profitable, we return it to the private market. Am I missing anything here?