Bits Bucket For March 5, 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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I wonder how conservative farmers in the Red States feel about having their tax dollars appropriated to help liberal Democrats in the Blue states buy homes valued north of $729,750? I would be reaching for my pitch fork about now if I were a Nebraska farmer.
Housing plan loan limit could help Californians
James Temple, Chronicle Staff Writer
Wednesday, March 4, 2009
(03-04) 18:27 PST SAN FRANCISCO — The Obama administration unveiled key details of its housing market rescue program on Wednesday, including a ceiling on mortgages eligible for modification that was raised high enough to potentially help hundreds of thousands of struggling Californians, local real estate experts say.
The “Making Home Affordable” plan, originally announced last month, is designed to help as many as 9 million U.S. homeowners avoid foreclosure or secure more affordable loans. It includes two main components: one that would allow borrowers who have been making timely payments to refinance into cheaper fixed-rate loans, and another that will encourage lenders to modify monthly mortgage payments for borrowers at risk of default.
Most of the new details on Wednesday applied to the $75 billion modification program, aimed at keeping up to four million struggling borrowers in their homes. Notably, it was revealed that the program applies to loans with unpaid principal balances of up to $729,750, for an occupied single-family home. There was broad concern the figure would be set too low to help many in a high-cost housing state like California or especially the Bay Area, where as recently as the summer of 2006 median home prices exceeded that threshold in four of nine counties, according to San Diego research firm MDA DataQuick.
The farmer in Nebraska realizes that this program will not help anyone. It entices people to continue slaving under the weight of an overpriced unproductive asset, lengthening the pain and only postponing failure. Farmers generally do not practice cruelty.
“Farmers generally do not practice cruelty.”
ROTFLMAO! “Farmers” tend to be idealized in the minds of Americans as noble beings. However, we suffer today in the US for the mistakes of the “farmers” and it isn’t getting much better. It was farmers who had an insatiable thirst for slaves to till their land and harvest their crops. And as a result we had a bloody Civil War and later, much racial strife. Today, “farmers” have had an insatiable thirst for illegal labor from south of the border, which has caused much divisiveness and strife in the country as well. Not to mention farmers dumping their labor on the country and taxpayers to take care of. Farmers are very good at creating an underclass. Cruelty to the max.
Small, family run farms like the hydro-harvest farm up the street from me is a different matter. No, that family does NOT practice cruelty. But the AG business as a whole? Absolutely. The worst.
I wonder if Eric Holder will ever fess up and acknowledge that “farmers” are responsible for most of the racial and ethnic strife in the US. Now, THAT would be an honest dialogue. I’d like to see him get up on his hind legs and preach about that.
Farmers also have received billions of dollars in welfare payments over the past 70 years.
As their crop land is turned into housing, I’m sure to a politician it seems fair for the money flow to continue.
For sure, I do not have much experience with slave holding, so I can’t identify with your rage. Back in those days, my folks were being driven from their farms by the Anglos. Clearances.
It’s a dark world, where farming is the root of all evil. Enjoy.
“It’s a dark world, where farming is the root of all evil. Enjoy.”
It’s a darker world where people twist the words of others, just so they can be right.
I was reading my post and I just can’t seem to find anywhere I said you had any experience with slave-holding.
Go right ahead and blame everything on the Anglos. Like Mexico or South America were bastions of human rights before the Anglos showed up. Man’s inhumanity to man has a VERY long history on this planet.
My original thesis was that “farmers” have committed incredible atrocities over the centuries to get the land tilled and the crops harvested. And some continue to do so, otherwise there wouldn’t be a need for human rights activists in places like Imokalee, Florida. Overseers are not a thing of the past, I hate to break it to you. Now you, as an individual farmer, might be quite humane in your operation and I applaud that. More of you are needed.
The words I wrote were not your words twisted, they were my words, my experience (and lack thereof). I take no ownership in your harsh stereotype.
Whatever is going on in your Imokalee, I hope you find a good outcome.
Funny, out here in corn and wheat land, the farmers are bit#hing about the illegals as much as anybody.
Most of the illegals in the Plains states were “encouraged” to come here by the meatpackers (starting back in the 70s), to undercut strikes. Has been a race to the bottom since.
I hear there are a lot of illegal slaves stuck to maple trees up in Maine.
Palmy,
The Civil War didn’t start over slavery, that became a rallying cry later on.
Mike
OK, if you say so.
However, my original point was that “farmers” in the US back in the day, had an awful lot of slave labor. And right up to this moment in time, we’re suffering for that. And now “farmers” have encouraged another wave of poverty and degradation with their more modern, pseudo-slave labor, again being the means (or at least part of it) by which this country has been torn up and divided.
Exactly.. the civil war was engineered by the banking industry and was about the right of states to secede from the union. I prefer to call it the war of northern aggression.
It is kind of ironic that the North instituted a draft (military slavery) in order to fight slavery in the south.
There is no such thing as “illegal” workers as everyone has a right to exchange their time for money. The only thing immoral are the socialist policies that steal from some people to pay for others, ie the “illegals”.
If you want real slavery, look at the debt slavery engineered by the banks and the government. Look at the income tax slavery where you must work through May each year just to pay the government off.
OTAY! Point taken. AND, time for a change!
Good grief…
I don’t think committing atrocities is limited to farmers. Just as a bit of not-so-trivial trivia, the history of the construction of New Amsterdam (now known as New York) has a bit of slavery in it as well. I seem to recall a slaves grave that was uncovered 10 years or so ago in the NYC area. Slavery died out in the north a bit after the Revolution because it was no longer economically viable.
Well gosh darn VTD, I guess human slavery today, where parents sell their children, where adults are selling adults, is just another form of free enterprise. Nothing illegal or morally wrong with that.
The Civil War did start over slavery for Southern states. It became a rallying cry for the North later on. Fixed it for you.
Well gosh darn VTD, I guess human slavery today, where parents sell their children, where adults are selling adults, is just another form of free enterprise.
Hey, great point — if the almighty free market decides to commodify human life, then so be it.
Pesky questions of decency or their mundane bureaucratic cousins (laws and regulations) would only interfere with the Will Of The Invisible Hand.
Let’s turn this economic morass around!
SanFranBayAGal,
Wow, you totally miss the key thing about free enterprise being that you cannot use violence against another. Slavery or taxation of labor is violence and the opposite of *free* enterprise.
VTD, are you familiar with “Pollyanna?”
Your ideals will NEVER happen. NEVER. Try to understand that you will be frustrated for the rest of your life as long as you keep thinking people will be kind to their fellow men.
Ain’t. Gonna. Happen.
Therefore… laws, rules, protocols, procedures, etc.
ecofeco,
I know people will always be sinful, but that doesn’t justify your promoting of sin (violence). I can promote the truth to encourage others to stop the violence.
“Farmers generally do not practice cruelty.”
say what?
u.s. farmers invented bailouts and they are kings of bankruptcy.
i had a cotton farmer client in mississippi that spent half his career in bankruptcy all while driving around in his new ford F250 that he got every two years while sucking on the taxpayer teet.
“I wonder how conservative farmers in the Red States feel about having their tax dollars appropriated to help liberal Democrats in the Blue states buy homes valued north of $729,750? I would be reaching for my pitch fork about now if I were a Nebraska farmer.”
They should direct any pitchforks at themselves for supporting politicians whose policies that gave rise to the current economic crisis. But it’s not just farmers in Red States that should be livid at current efforts to prop up prices of overpriced houses.
I don’t think the farmers have much choice in politicians… the system is rigged such that no one has a real choice. They can vote for a Ron Paul or other 3rd party candidate, but farmers are no more guilty than anyone else when they choose to play the lessor of two evils game.
I don’t think this needs to be limited to just farmers in red states. How about people who have been working two jobs for the last 6 years to pay rent and daycare.
It’s one thing to be struggling to make ends meet, but it’s a whole other thing to be completely sh*t on by the government helping people people stay in 3/4 million dollar homes.
In the interest of accuracy, its actually UP TO $729,750, not north of……….which is neither here nor there — I’m pissed too!
It’s now plainly obvious that our government is just getting better and better at rewarding greed and stupidity.
And punishing the opposite behaviors.
I say:
“Many thanks to all you clowns in DC and Sacramento!”
My tax dollars have been subsidizing farmers for years - so turnabout is fair play.
Actually - it sucks because I’m not getting a penny of housing subsidy either. If you’re a responsible college educated white male the government gives you two things - Jack and Spit.
What’s a white male?
Which word are you having trouble understanding?
A target for castration??
Maybe it’s time to consider a sex change operation.
Yes, thank goodness for responsible college educated white men, since everyone else is an entitlement queen.
I had no idea all the Walls Streeters, auto execs, mortgage brokers and realtwhores that are getting bailouts and who brought the country to its knees were minority women. Michelle Obama must be the new Dick Cheney.
You just made his point for him. Because a FEW white males in the industries you mentioned have done wrong, the responsible and upstanding among us are held to their standard, but get zero benefits.
When’s the last time you heard of a grant or action program for disadvantaged white guys (believe it or not, there are actually quite a few of us).
I grew up poorer than the welfare kids because my mom was too proud to accept any gov’t handouts. By God nobody EVER gave me a damn thing because I was disadvantaged.
Lumping all or even most white guys in with the Banker turds is every bit as bad as lumping all black guys in with the ones who commit violent crimes. It’s probably even worse because by now I think pretty much everyone knows that’s wrong to do for black people, but you didn’t even think twice about doing it to white people now did you?
Blue states have been funding red states for years and years. Not sure why a farmer would care, we can just take back his damn farm subsidies.
All bailouts suck, yes, but red states subsidizing blue states?
Studies have shown that the states that receive the most in federal spending per dollar of federal taxes paid are red states (8 out of 10 in the 08 election).
And that the top 10 states that pay the most in federal dollars and receive the least in federal spending are blue, i.e. went for Obama in 08.
(per The Tax Foundation)
BTW –this is not a “yay” Obama post, but one can be opposed to bailouts without glorifying farmers and vilifying liberals.
Alaska is overrun with anti-tax wingnuts, who get EXTREMELY upset when it is mentioned that we get $1.84 from Washington for every $1 in taxes that we spend, and almost 30x the amount of federal welfare back from the gov’t than the lowest state (Arizona). 1/3 of all jobs in Alaska depend on those federal tax dollars.
Denial is so much more convenient than reality. Ted Stevens was immensely popular here because he was a profligate welfare queen, not because he was a real conservative.
More hypocrisy from the don’t-tax and spend “convervatives”. Newsflash: money doesn’t grow on trees.
23:25 Pacific time March 04 , 2009 . This is to good I am first post.
If it’s too good to be true……..
Are points also awarded for being last post?
Ever.
On most days, the last post of the day is way better than some of these first posts.
That’s embarrassing.
I’ll just tag my post here if nobody minds.
From the New York Times
“For Mark Klepper, 50, who lives in Miami, buying a big house was a way to establish credit to start a business. In 2004 he bought a home for $585,000, and watched its value rise to $1.4 million. After refinancing twice, he owes $1,064,000. But the home is now worth a little more than he paid for it, and his income has fallen by 40 percent. He stopped paying his mortgage in January. If he were to continue paying, he said, the drain would crush his business. The government’s plan does not help him.”
I am a fool.
I am a fool.
I am a fool.
“I feel if there’s a plan out there, there shouldn’t be a limit,” Mr. Klepper said. “If the government is helping these lenders, they need to take some principal write-downs.”
He asked his lender to reduce his balance to $600,000 and his rate to 4 percent, but so far has made no headway.
“I’m saying I can afford to pay, just not what I did in the past,” he said. “I wouldn’t be asking for it if everything was fine, but it’s not.”
All repeat after me:
I am a fool.
I am a fool.
I am a fool.
Yes, I too could have borrowed $585K for a house, refinanced and taken half a million out, lived on easy street and then cried that I too was a victim.
But NNOOOOOoooooooo…. I had to be prudent and honest.
I am a fool.
I am a fool.
I am a fool…..
He made off with an extra $500k in less than five years. He is many things, but not a sucker or a victim.
I meant I, Muir, am the fool.
Yes, I too could have borrowed $585K for a house, refinanced and taken half a million out, lived on easy street and then cried that I too was a victim.
But NNOOOOOoooooooo…. I had to be prudent and honest.
I am a fool.
I am a fool.
I am a fool…..
___
“I feel if there’s a plan out there, there shouldn’t be a limit,” Mr. Klepper said. “If the government is helping these lenders, they need to take some principal write-downs.”
He asked his lender to reduce his balance to $600,000 and his rate to 4 percent, but so far has made no headway.
“I’m saying I can afford to pay, just not what I did in the past,” he said. “I wouldn’t be asking for it if everything was fine, but it’s not.”
Ah, yes. I should have seen that. But what if we had all taken out $500k in loans and defaulted? What would you have spent that money on? I know that I, personally, couldn’t have found anything that I thought was worth $500k.
You could travel around the world dozens of times on that much cash. Assuming, of course, that you don’t stay in five star hotels. (which I would never do)
You’re not alone.
This guy’s phone number and address pop right up on Google. His POS looks more like a $100K home than a $1MM home. I wonder if he is getting any calls letting him know how they feel about potentially bailing him out. I often contemplate about whether these people are brilliant scam artists or just deluded fools. When they use their real names and have unlisted numbers I lean more towards fool.
I think he may have the $500K sitting in a bank somewhere….or invested it in a hot cigarette boat. At any rate, he can probably lay his hands on most of it. Frankly, if there is no limit to bailout money, then I want to have a certain mansion that I saw for sale on Grosse Isle that cost $ 6M to build, and was selling for $ 2.8M a few years ago. Gorgeous. Gorgeous. And, I will then hock it back up to the $ 6M “value”, and then “spend” the rest ( cash under our bed ), and then whine for a bailout. It’s a retirement plan of sorts, man. Yeah.
Let’s say ‘ya’ to the “UP” while we’re at it.
Has anyone seen the new Kmart commercial advertising Lay-away?
Yes…lay-away. Someone tell me I wasn’t dreaming that.
Wow. Memories. Back when people actually had to earn credit cards with good credit. Imagine that.
I think layaway is a terrible concept (at least in the modern climate) along with gift cards.
It’s going to turn into just another way to loot the coffers when they enter bankruptcy yet all over again.
I know the golden oldies have all these nostalgia-laden rose-colored glasses but it was a terrible idea then and it’s a terrible idea now. Buy a piggy bank instead.
I thought you supported the “lay away” concept?
I do.
But that pesky little space makes all the difference. Not that you want any in between space in the latter.
The only time lay-away makes sense is for time-critical purchases… take advantage of a sale, get something before it is sold out, etc. I don’t think anyone would use lay-away for generic items like they use a credit card for.
Why wouldn’t you just take it home then? The implication of layaway is that you don’t have the money to pay for it then - i.e. a case where you’d otherwise use a credit card.
My wife was all hot to save 100$ through a 10% off 6 months no payments purchase on a new Home Depot credit card.
Now if it was a year, I’d say go for it. The creditors might not have their acts together in a year to ask for their money
K-Mart closed stategically located stores in So Ca. IIRC, they filed BK again. Wal-Mart won. Lay Away is a great concept. I hope it goes beyond the holiday season, and makes a come back.
IIRC the Kmart near my place has always had layaway. That’s nothing new. Maybe it’s just new nationwide.
Remember when everyone dumped layaway in, oh, 2006?
But, Daddy, I want an oompah-loompah NOW!
I used layaway all the time when I was a kid. Bought myself my first computer that way. It was an Atari 600XL with 16k of ram. Taught myself BASIC programming on that machine. When I got the 1010 tape drive, also through layaway, I was in heaven!
I still have my Atari 800XL. And a 1010 tape drive.
Wow! 64K!
No, 16K! If you knew what you were doing, you could expand it to 64K though…
http://www.atarimuseum.com/computers/8BITS/XL/800xl/800xl.htm
Bring back disco and bell-bottoms and we’ll pretty much be back to where this whole mess started. Oh,….Wait.
I still blame disco and cocaine for the mess of the last 35 years.
RE: Bring back disco and bell-bottoms and we’ll pretty much be back to where this whole mess started.
YES!
http://www.youtube.com/watch?v=CS9OO0S5w2k
The chain of Virgin Megastores is being shutdown country-wide. But the reason the investors give for this makes me roll my eyes.
the stores in general remain profitable, but that the real-estate joint venture of Related Companies and Vornado Realty Trust, which bought Virgin Entertainment Group Inc. in 2007, determined that they could earn higher rents from new tenants in the spaces occupied by the stores.
Commercial real estate is going in the tank, and these guys think there are going to be “new tenants” who are going to be paying “higher rents”?
Let’s see if the link posts….
http://www.bizjournals.com/sanjose/stories/2009/03/02/daily81.html?jst=b_ln_hl
Dennis,
Your post came through
This underscores my basic claim that there are virtually no companies that were not plugged directly into the FIRE matrix.
For example, Starbucks is a RE company that happens to sell coffee. This is emphasized by their general preference for buying the property rather than renting it.
Same for the punters that “rescued” Virgin. They wanted to speculate on the RE possibilites not the business of selling music (which is dead but that’s a different story.)
“Starbucks is a RE company that happens to sell coffee.”
So, they were more interested in the grounds.
Nice summary of the global business model. All you have to do to win is show up.
I read somewhere (was it The Millionaire Next Door?) that Ray Kroc’s primary objective with McDonald’s was the acquisition and selling of real estate, not hamburgers. The hamburgers were incidental to the real business of buying and selling land (land upon which he had built a McDonald’s).
“So, they were more interested in the grounds.”
Priceless. +1
Yep, the burgers came second with him.
The hamburgers were incidental to the real business of buying and selling land (land upon which he had built a McDonald’s).
They certainly have vast real estate holdings, but I don’t think the burgers and fries have ever been secondary to the real estate.
The company owns approximately 45% of the land and nearly 70% of the buildings for its restaurants (source: Morningstar). The proportion of real estate holdings is higher in some countries, lower in others. In general, it sounds they’ve been fairly smart about leasing real estate instead of buying in areas where market rates are high or overinflated.
That’s because everyone goes to Streetlight in SJ and SF……:-)
“the stores in general remain profitable, but that the real-estate joint venture of Related Companies and Vornado Realty Trust, which bought Virgin Entertainment Group Inc. in 2007, determined that they could earn higher rents from new tenants in the spaces occupied by the stores.”
That’s fascinating and depressing. I’ve seen so many business come and go nearby in certain locations that it made me wonder if the only determining factor on whether or not they survived in that location was whether or not they could make enough to cover the rent, not whether or not they were generally viable businesses.
If/when commercial RE finally crashes, that should lower the costs for most businesses and should provide a more stable base for businesses to develop, build, and survive long term. How many otherwise viable businesses have been forced out of business due to ever higher rents?
“If/when commercial RE finally crashes,that should lower the costs for most businesses and should provide a more stable base for businesses to develop, build, and survive long term.”
All they’ll need are customers, ones with money.
What you say is true, but it is going to become Interesting getting there.
Wow, didn’t Vornado, like, implode last year? Or maybe it was just their price per share.
Vornado is still around but they got BIG into commercial retail, particularly second and third tier shopping mall developments and that’s KILLING them now.
Right. It has nothing to do with the fact that nobody buys cds anymore, we all music these days.
make that “we all DOWNLOAD music these days”.
I’ve decided I’m going to go retro. Instead of downloading music for torrents, I’m going to buy used CDs. Everyone seems to rip their CDs and sell them.
Bingo. I’m hitting the yard sales this spring for CDs. The collection at the library is a little limited.
Try the library. It’s free.
We’ve got a chain of stores around here that sell used CDs. Once the RIAA launched their assault that’s where I started to buy discs.
I’ve decided I’m going to go retro.
Goin’ retro is all LPs, 7-inches, and 78s.
You can also buy used CDs and DVDs from private parties on Amazon. Books too.
I was thinking about vinyl but the two for two 1200’s and a mixer, along with all the records… Also records can be expensive. I guess anything but cassette tapes!
“Instead of downloading music for torrents, I’m going to buy used CDs”
+1. CDs make a fantastic backup media for digital music.
Yeah… we will soon see how that’s working out for them. Watchers of trends ..?? I think obliviously ignorant.
See no evil, hear no evil. Here’s one way to raise the Dow:
Incredible shrinking financial stocks
Analyst warns beaten-down shares could get the boot from S&P 500
By John Spence, MarketWatch
BOSTON (MarketWatch) — As if the credit crisis and the latest brutal sell-off weren’t enough for troubled financial-services firms, some stocks could be punished further if they are ejected from widely followed indexes.
Hard-hit financial stocks may be dropped from the S&P 500 Index as the recent wave of selling whittles down their market caps, a Wall Street analyst said Wednesday.
If the index committee at Standard & Poor’s decides to remove embattled financial stocks from the blue-chip benchmark, it could push the shares even lower, as index funds sell to reflect the index changes.
“In the S&P 500, four financials rank within the bottom 10 companies in the index,” wrote Melissa Roberts at Keefe, Bruyette & Woods in a research note.
This goes along with my take on index funds, such as those that track the S&P 500. Some people prefer “actively managed” funds, but I reply that the S&P 500 index IS actively managed: by Standard & Poor’s. It’s just that you don’t have to pay the S&P analysts for their labors.
The financials getting dumped out of S&p500 is a signal to start edging back into the index. But financials include GE, GM, etc.
So many like Morningstar were recommending buying dividend-yielding stocks cheap as a Win-Win. Duh!! Dividends are downwardly adjustable, as recent history has proven.
Off-topic, but interesting. As an MD, you might be interested to hear that in the UK, doctors make about as much money as Chartered Accountants with similar years of experience. After 20 years of experience, a UK MD (at the median) makes about $90K. I suspect that’s a major part of where the savings from government-run health care comes from - salary reductions. Based on the reductions in Medicare and Medicaid compensation Obama just kicked off, I expect the American version of the UK’s National Health Service will rely on similar wage savings. It looks like a 2/3 cut in salary might be on the menu for MD’s in the years ahead.
UK MDs don’t start their careers with $250K of student loans. I agree that salaries are a large part of the extra costs - particularly specialists - in US, but a portion of it is necessary to get them through our bubblicious educational system.
Also lack of incentive to do preventative care. US insurance companies won’t pay for it since the financial benefits are often years down the road. They expect you to have switched jobs and be on a different insurance company by the time the initial expenditure would be made back in less acute illness.
If so, medical schools are going to have to seriously cut their costs, so that they can seriously cut tuition. Otherwise, becoming a doctor makes no financial sense. It is already the case for GPs. The tuition bubble has to pop soon. Like municipalities that lived large on RE taxes for a few years and now have to face the music, universities have lived large on fat tuition hikes paid for by students/families with bubble money, and now they are going to have to cut the fat.
I’ve heard that general practitioners really don’t make a lot of money once you account for things like malpractice insurance, office overhead, etc.
This is one of the reasons that there is a shortage of GP’s in some parts of the country, you get paid way more to be a specialist.
I’m friends with our pediatrician’s wife. She shops at places like Payless and once we had a conversation about how you really can’t save money by sewing your own clothes, it’s often cheaper to buy them at discount stores.
I used to make my own furniture….it is way cheaper to buy in a store.
Thanks, helps to have some perspective. I kinda wish I hadn’t mentioned my educational background here though, since some monkey spankers like to assume that we don’t think we’re people too. Besides, I don’t know that I would have chosen the same path again, knowing what I know now…the whole system has become a real CF.
NSO, oh dear!
It matters not - learning is a personal choice, as it will be!
Now, stop fretting in the den!
Pull up a chair, and let us nod to our host.
*clink*
Leigh
I want doctors to make a lot of money. I want medical schools to be selective. I want only the best of the best applying to medical school. I don’t want my surgeon making less money than my mechanic.
Bair Says Insurance Fund Could Be Insolvent This Year (Bloomberg March 4)
By Alison Vekshin
Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.
“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.
“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”
The FDIC last week approved a one-time “emergency” fee and other assessment increases on the industry to rebuild a fund to repay customers for deposits of as much as $250,000 when a bank fails. The fees, opposed by the industry, may generate $27 billion this year after the fund fell to $18.9 billion in the fourth quarter from $34.6 billion in the previous period, the FDIC said.
“There is not nearly enough paper currency or coin to meet demand if depositors suddenly decide they prefer their mattresses to the bank vault.” ~Potiphar Gride
ahhh … fractional reserve banking.
Doesn’t the FDIC have a bottomless credit line from the Fedury? How could they possibly go insolvent?
FDIC fund is suppose to be industry (banks) self-funded, and only requiring funds from the Treasury/Fed as a last ditch action. So Sheila wants the fund to be replenished now from banks because it would “look bad” if she had to go to the Treasury/Fed to ask for money.
This morning my bank declared that it was insolvent. Which is kinda scary. All i have is a low-balance checking account, but I need that electronic mattress for bill-paying and direct deposit.
I stopped direct deposit to avoid losing money in-transit on a Friday after the bank closes. Some times it takes companies several pay periods to get their act together on direct deposit.
Which is insane, it isn’t it? Why does it take so long? There is no real reason it should take so long.
Once again, the banks are creating an artificial time lag to make money.
Or - Er - covering their naked short?
Leigh
“Say buddy, I’m was with the FDIC, could you SPARE me a DIME” ?
LOL. More like “can you spare two trillion”
Recession Deepening Across Regions, Industries, Fed Says
By Neil Irwin
Washington Post Staff Writer
Thursday, March 5, 2009; Page D01
The U.S. recession is dragging down almost every industry in almost every part of the country and businesses do not expect conditions to improve until late this year at the earliest, according to a Federal Reserve report released yesterday.
The grim prognosis came amid new signs of deterioration in both the service sector and the job market in February. Nonetheless, the U.S. stock market yesterday leaped 2.4 percent, as measured by the Standard & Poor’s 500-stock index, buoyed by reports that China would move to further stimulate its economy. Investors also viewed favorably newly announced details of the Obama administration’s plan to prevent foreclosures. The surge on the market snapped a five-day slide.
“Bad news is not surprising anymore,” said Eugenio Aleman, a senior economist at Wells Fargo. “Markets already know how bad things are.”
The Fed’s “beige book,” a compilation of anecdotal reports from businesses around the country, underlined how difficult it has become to find bright spots in the economy. Consumer spending in recent weeks remained “very weak on balance,” though in some places not quite as bad as it was during the dismal holiday season. Travel “continued to fall in most areas.”
I read many articles that elude to the fact ‘recovery’ will begin at the end of this year. Yet little explanation as to what will bring this about. So what will cause this turn around, Barry’s hope for change plans?
Everybody needs to just start saying “yes we can” and all will be fine.
“Toto, I’ve a feeling we’re not in Kansas any more.”
Every good prediction is always just around the corner. Then the mirage recedes.
In this Pollyanna-p*ssy-sniffing country to do otherwise would be suicidal.
Hope Now!!! Get Scr*wed Later!
What do you think about this call for more dollar drops? Credible?
China just announced their own stimulus plan.
Divide each number by GDP to see if it can make any difference.
Divide each number by the number of households to see it can be paid back.
Long division - what a wondrous beast you are!
U.S. Sets Big Incentives to Head Off Foreclosures
N.Y. Times
By EDMUND L. ANDREWS
Published: March 4, 2009
WASHINGTON — The Obama administration on Wednesday began the most ambitious effort since the 1930s to help troubled homeowners, offering lenders and borrowers big incentives and subsidies to try to stem the wave of foreclosures.
People with mortgages as high as $729,750 could qualify for help, and there is no ceiling on how high their income can be as long as they are in danger of losing their homes. Interest rates on loans could go as low as 2 percent for some. Many homeowners could see their mortgage payments drop by several hundred dollars a month, and some could save more than $1,000 a month.
Administration officials estimate that the plan will help as many as four million people avoid foreclosure, at a cost to taxpayers of about $75 billion. In addition, the Treasury Department said it intended to follow up with a plan to help troubled borrowers with second mortgages, which many homebuyers used as “piggyback” loans to buy houses with no money down.
The plan is bolder and more expensive than any of the Bush administration’s programs, which were based almost entirely on coaxing lenders to voluntarily modify loans. While the number of loan modifications has climbed sharply, the number of foreclosures skyrocketed to 2.2 million at the end of 2008, a record.
The new plan, which takes effect immediately, is intended to win much bigger concessions from lenders by offering a mix of generous financial incentives and regulatory arm-twisting. The final impact will depend on how both lenders and the investors who own mortgages respond, but housing experts said the administration had a good chance of achieving its goal.
From what I have seen this plan is supposed to cut payments to 31% of gross income PITI. Won`t that by itself accelerate downward pressure on house prices ?
31% of grosss income is a suicide loan level unless you have at least 3 or 4 of the following:
Low or no child care costs
Low or no commuting costs (including car loan/insurance)
Low or no student loans and other unsecured loan carrying costs
Not putting much in retirement funds
Not paying much for health insurance/health care costs
Not much inclination to eat out
I did the math and I could squeak by on that loan. But 5 of the six criteria above apply to me. I do put quite a bit in retirement accounts. I might be able to get away with one more, but no more than that without reducing retirement contributions. The tax advantage of a mortgage means you might be able to get away with one more, but no more than that.
At 31% of gross they will mostly be redefaulting.
Median house price in Palm Beach County Fl.
Nov. 05 $421,500.00
Jan. 08 $232,000.00
At $232,000.00 on a 30yr. fixed I would have to believe is still way above 31% of most peoples/ families gross.
“At 31% of gross they will mostly be redefaulting.”
+1 Exactly!
Approx 51% of banks acct receivables comes from fees.
the plan will help as many as four million people avoid foreclosure, at a cost to taxpayers of about $75 billion. Anyone else doubt that $20,000 per people is going to help much if at all?
Thats because its not going to cost us $75B is it?
Already we find someone looking for a modification who IMHO doesn’t deserve it.
Local realtor owns 2 houses, both in the most expensive areas of town, and wants modifications. Whines about foreclosure if he doesn’t get what he wants.
The freep can’t find anyone more deserving??
http://www.freep.com/article/20090305/NEWS06/903050383/Will+mortgage+plan+be+any+help+in+Michigan?
A guy in NW Arkansas I know put 20% down on his house in 2000. Made current payments the entire time. Not in financial difficulty at all. In fact he makes more than he did in 2000. (Basically your normal mortage holder from the good old days). He just informed me that he is getting his house re-appraised today to try and qualify for Obama-aid.
He has no intention of moving, foreclosing, flipping, no risk at losing his house, and yet somehow he will qualify for aid after his divorce. Why? because the money is there for the taking.
I think you have something there Rusty.
I was down and out, I was ready to lose my house, my car was ready to be repossessed, my credit cards were in default. But then I opened a can of “Obama-aid ” and everything turned around. The sun came out, my car got waxed, my mortgage is current and I am on my way down to Best Buy to charge a new plasma T.V. You should open a can too!
Why not Circuit City?? Oh yeah, they may not be around to honor the warranty, like GM and Chrysler - “)
How great is that? Even the people who didn’t vote for Obama love him now!
I think he has the right idea. If the deadbeats are winning time to change the strategy. When the producers get on the handout list the whole system falls apart.
“Local realtor owns 2 houses, both in the most expensive areas of town, and wants modifications.”
You have to currently live in the house to qualify. The article doesn’t specifically say, but seems to imply he could be over 105% LTV. So good luck with that.
Surely he can only refinance one house - the one he’s living in. Does this bill now apply to inventments?
Market Scan
The Poseidon Mortgage Adventure
Alex Davidson, 03.04.09, 06:50 PM EST
As housing prices slide, one in five Americans find their home loans under water, with more likely to take a bath.
There seems to be a long road between here and a healthy American housing market.
According to a study by First American CoreLogic released Wednesday, one in five homeowners with mortgages owe more to their lenders than their homes are worth. Compounding the problem, is that that rate will increase as housing prices drop in states that have so far avoided the worst of the crisis.
About 8.31 million properties had negative equity at the end of the year, up 9.0% from 7.63 million at the end of September. The percentage of these underwater borrowers rose to 20.0% from 18.0% over that time. There are currently 60.0 million homeowners in the United States, putting the total percentage of underwater homes at 13.9%.
The study covered 43 U.S. states and the District of Columbia. Seven states — Maine, Mississippi, North and South Dakota, Vermont, Wisconsin and Wyoming — were left out because they lagged in reporting data.
States such as California, Florida and Nevada were particularly stressed. Along with Arizona, Georgia, Michigan, and Ohio they accounted for 62.0% of underwater borrowers but just 41.0% of mortgages.
Other areas, however, are deteriorating. Connecticut, for example, saw a 25.0% increase in homes with negative equity, while the District of Columbia had a 44.0% rise.
New York fared best, with just 4.7% of borrowers with negative equity and an average 48.0% loan-to-value ratio. This, however, could change as employment and bonuses slide in the financial-services industry.
http://www.forbes.com/2009/03/04/homeowners-mortgage-crisis-markets-economy_homes_recession.html
Whenever I buy a new car I am immediately underwater as soon as I drive it off the lot, but I don’t lose any sleep over that fact. I don’t see why homebuyers that can keep up with their payments should care what their house if valued at, unless they plan on selling it.
flipping it
I’ve never owned a new car in my life. Since I started buying Japanese, I’ve had very few repair bills as well.
Ditto.
There seems to be a long road between here and a healthy American housing market.
————————–
This is true; and that long road will be even longer until the govt stops throwing money at the housing market.
If the govt would have stepped back and let the housing market work, we would be much closer to a **healthy** housing market than we are now.
March 5 (Bloomberg) — Bernard Madoff could face 20 years in jail if convicted of what prosecutors are calling the biggest Ponzi scheme in history. But his $50 billion ploy pales next to the one created by Wall Street during the past decade: the securitization machine.
In “Waiting for Mr. Buffett: What an Investor Learns 1,269 Miles From Wall Street,” Janet Tavakoli explains that securitization process, and how regulators, politicians and the government ignored all kinds of warnings from people who saw it for what it was. Tavakoli uses her 2005 lunch with billionaire investor Warren Buffett and their ensuing correspondence as the backbone of her analysis of the current financial crisis.
Tavakoli, 55, spent 22 years working in the structured- finance departments of Wall Street firms, securitizing mortgages and other loans. She has been the head of her own small advisory firm, Tavakoli Structured Finance Inc., since 2003 and has written books about the mechanics of securitization including collateralized debt obligations, the most infamous of all.
Securitization consists of bundling loans and slicing them into packages with different risk profiles to be sold separately. Collateralized debt obligations take already securitized loans and further bundle them into packages. CDO- squareds do the same process all over again.
Rating agencies, which were being paid by the investment banks doing the securitization, would smack their best credit grade of AAA on the top tranches of these bundles. Many of those ratings have been cut to junk in the past two years as defaults surged.
How We Got Here
Tavakoli doesn’t think the concept of securitization is flawed; she says it was abused by greedy financiers and turned into the monster that led to the collapse of the financial system.
In a telephone interview, the seasoned financial engineer talked about how we got here, and the future of securitization.
Tavakoli: It was a massive Ponzi scheme with many players involved. At times you’d have the CDO manager, an investment bank and a hedge fund involved, all of them knowing they were doing the wrong thing. These people all wanted to get in on the fees, so they all went along with this stuff. Some of the CDO- squareds that came out in 2007 were nothing more than a way of avoiding acknowledging losses. It’s a scandal.
When you raise money from new investors to pay off old investors — if you’re an investment bank and you have these rotting loans, and you package them up and feed them to new investors so you can pay your bonuses and dividends — that’s a Ponzi scheme. By every definition, this is as bad as what Madoff was doing. It was massive, bigger in size.
Regulators Were Asleep
Onaran: Why didn’t the regulators realize this?
Tavakoli: They were all sleeping — the Securities and Exchange Commission, the Federal Reserve, the Congress, the Senate banking committee and a number of other people. I wrote the SEC in February 2007, complaining about rating agencies.
In August of 2005, the SEC was investigating Bear Stearns Cos. for mortgage securitization. Then they dropped the matter. The New York attorney general had an investigation and he dropped it too.
Sounds like my local food store, take old brown hamburger meat and repackage with some fresh red meat on the outside..
—————————–
When you raise money from new investors to pay off old investors — if you’re an investment bank and you have these rotting loans, and you package them up and feed them to new investors so you can pay your bonuses and dividends — that’s a Ponzi scheme.
I believe the technique for ground meat nowadays is to treat all of it with carbon monoxide, which makes it nice & red, so it will stay fresh-looking until it’s pretty well rotten. The CO isn’t poisonous, but the meat may well be if you let it go too long.
Mm, yes. Consumers were too picky about the brown meat anyway–slight oxidation doesn’t harm the meat. However, you’re right that the modified atmosphere masks when it has actually gone bad. Ugh.
She hit the nail on the head describing the regulators & legislators as being asleep at the wheel.
Down near the end of the interview she said “We should redo these mortgages but not help out speculators and the people who bought a bigger house than they could afford.”
So she is saying they shouldn’t redo any mortgages, because the only mortgages that need “redone” are the ones in the class of speculator or bigger than they could afford. If they could afford it, then they don’t need a “redo”.
“The New York attorney general had an investigation and he dropped it too.”
The NY Governor had an investigation, and he was convinced to let it go as well.
There is a big difference between sleepiness and corruption.
All this unregulated stuff should be blamed on Bush, right?
If you want to get down to the brass tacks all of this deregulation feeding frenzy really started under Regan (SnL crisis anyone? Buler?….Bueler?…..). Yes, Clinton kept the music going like the good o’l boy tool he was/is but Bush the lesser was really the poster boy for the whole rotten mess. Inherit the wind. Thats all thats left.
The Daily Show last night had a good segment on how the cable financial reporters completely missed the entire market melt down and ponzi schemes.
Kramer was featured prominently.
Yes, I enjoyed it.
http://www.thedailyshow.com/video/index.jhtml?videoId=220252&title=cnbc-gives-financial-advice
I especially liked Cramer’s comment about buying something overvalued as the only way to make money.
Here’s one place to see the video. I thought it was really good.
http://www.salon.com/opinion/walsh/politics/2009/03/05/stewart_cnbc/
OMG, this was awesome! Highly recommended watching!
Link:
http://www.thedailyshow.com/full-episodes/index.jhtml?episodeId=220250
Thanx!
Unlucky or Unwise, Some Borrowers Are Left Out
http://www.nytimes.com/2009/03/05/us/05mortgage.html?hp
For Mark Klepper, 50, who lives in Miami, buying a big house was a way to establish credit to start a business. In 2004 he bought a home for $585,000, and watched its value rise to $1.4 million. After refinancing twice, he owes $1,064,000. But the home is now worth a little more than he paid for it, and his income has fallen by 40 percent. He stopped paying his mortgage in January. If he were to continue paying, he said, the drain would crush his business. The government’s plan does not help him.
“I feel if there’s a plan out there, there shouldn’t be a limit,” Mr. Klepper said. “If the government is helping these lenders, they need to take some principal write-downs.”
He asked his lender to reduce his balance to $600,000 and his rate to 4 percent, but so far has made no headway.
“I’m saying I can afford to pay, just not what I did in the past,” he said. “I wouldn’t be asking for it if everything was fine, but it’s not.”
Sounds like a good “businessman”.
“I feel if there’s a plan out there, there shouldn’t be a limit,” Mr. Klepper said. “If the government is helping these lenders, they need to take some principal write-downs.”
None of these plans should do anything for those that re-fi’d into larger loan balances. I might feel some small amount of sympathy if there were problems with the initial purchase price loan and there were otherwise no indications of fraud in the original transaction.
““I’m saying I can afford to pay, just not what I did in the past,” he said.”
Then you’re saying you CAN’T afford to pay. Sheesh.
Where’s the $500,000 he pulled out over time???? Give me a freakin’ break.
What an a**. This guy wants a $464,000 (not counting the interest rate subsidy) gift from the taxpayers. I volunteer to drive down to Miami and video him getting his butt thrown out onto the street.
“Where’s the $500,000 he pulled out over time???? Give me a freakin’ break.”
Yet again the MSM fails to ask what should have been question #1….WTF did you do with the $500K you pulled out of the house??!!
Didn’t Jeb Bush, former FL governor, and his business partner do something like that with a commercial building they bought and had big loans on back in the S&L days? They bought it at a certain price, got a big loan, defaulted and bought it back at a much lower price from the federal government. And taxpayers ate the difference. Something like that. I remember thinking at the time, why shouldn’t these wealthy people have to pay the loan payments they contracted for?
I believe that was brother Neil.
Yeah…that was Jeb
Neil Bush got his claim to fame with the Silverado Savings and Loan Scam and BUST
Damn, I guess little T.T.Tim thinks if he can’t figure out what the hell he’s doing just drop back and blame evil oil businesses. LOL!
WASHINGTON, March 4 (Reuters) - U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.
It was one of the sharpest attacks yet on the oil and gas industry by a top Obama administration official, reinforcing the White House stance that new U.S. energy policy will focus on promoting renewable energy sources like wind and solar power and rely less on traditional fossil fuels like oil as America tackles climate change.
“We don’t believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don’t think that’s good economic policy and we think changing those incentives is good for the country,” Geithner told the Senate Finance Committee at a hearing on the White House’s proposed budget for the 2010 spending year.
The Obama administration’s budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019.
This new 13 percent tax on all oil and gas production in the Gulf would only affect those companies enjoying a loophole that allows them to avoid paying royalties on the energy supplies they drill. Companies already paying royalties would get a tax credit.
Obama’s budget would also place a $4 per acre annual fee on energy leases in the Gulf that are designated as nonproducing. The budget proposal projects the fee would generate $1.2 billion from 2010 to 2019.
Senator John Cornyn of Texas criticized the tax increases, saying they would hurt independent energy companies that provide a large share of U.S. oil and gas supplies.
Tiny Tim has been hoppin’ around on crutches for the last few weeks.
Nothing’s quite working out for him.
He reminds me of that frat boy… the one who wasn’t the biggest partier, biggest womanizer, biggest drinker, or class prez… no, the one who saved you from a pinch. “Good save, bro’.” The one who found some legalism to get the cops to go away when they come out for noise violation, or who saved the frat from being shut down by the dean.
Unfortunately, there’s a hurricane outside and the roof is starting to come off, and he doesn’t have any background in building construction…
He reminds me of the biggest partier/womanizer/etc, who’s now trying to become the one who saves you in a pinch, but isn’t very good at it.
Timmay reminds me of the little sneaky sh*t who would steal money from your wallet while you were asleep. He’s also the type that would drink your beer and smoke your stash and never throw any money in.
Oh yeah, let ‘em go mess with big oil - let me know how that turns out. Between this and taking on the big ag we should be in for quite a fireworks show.
Look at the disconnect here. Government giving $75 billion to irresposible homeowners. On the same day proposing a $5 billion tax on companies working hard to provide a vital source of energy. Sure I support moving to alternative energies. But the oil and gas companies are providing the energy we need and they are taking great risks and investing large amounts of money.
Give to the irresponsible and take from the responsisble. At the same time the giveaway is 15x larger than the new revenue.
Imagine the energy that could be saved if we everyone in a McMansion that couldnt afford it was foreclosed on, and the homes were bulzoded. The former occupants could move in with relatives or into an appartment. If the country is really serious about energy independence, and doing something about climate change; buldoze the mcmansions.
this guy is supposed to be treasury secretary, not an activist. this new group hanging out in DC, may be worse then the old.
Everybody worships Al Gore. Don’t you?
2000 election doomed this country.
Turbo Tax Tim wants the people to believe their cost of living will not rise in lock step with increased energy taxes.
My thought too, but then I read they’re going to lower the cost on some other oil sources. Shouldn’t bump the price too much. However, it could cause some disruption. I think with demand in the toilet the disruption won’t be as exaggerated as it would during a strong economy.
(I would guess that the ’subsidized’ lucky ducky oil producers are not as efficient as the ones who are paying more, hence it will take a while for their costs to even out.)
It won’t, because oil is globally priced, and raising the tax on a few US producers won’t affect the global price.
That’s not hard to figure out is it?
“That’s not hard to figure out is it?”
Figuring and logic isn’t a moonbats strong hand.
What’s so hilarious, at least to me, is that team Barry stated that T.T.Tim was the ONLY one who knew how to ‘fix’ this mess! LOL! We are so screwed, no wait I know the answer Tim… Print Mo Money!
Global warming intertwined with Treasury policy??
What a joke.
KR, a lot of people are about to realize what you already have.
Let the lobbying begin! No way those “loophole” oil co’s are going to let their competition suddenly enter a fair playing field!!!!
It’s a little harder to pull off when Dick Cheney isn’t in charge of energy policy, though I’m sure they will try.
“Sweet Gulf loophole Oil”…besides chevrontexacoexxonmobilevaleroshellbp Inc. … are such cry babies waaaawaaaaaawaaaaaaaaaawaaaaaaaaaa!
“The Obama administration’s budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019.
This new 13 percent tax on all oil and gas production in the Gulf would only affect those companies enjoying a loophole that allows them to avoid paying royalties on the energy supplies they drill. Companies already paying royalties would get a tax credit.
Obama’s budget would also place a $4 per acre annual fee on energy leases in the Gulf that are designated as nonproducing. The budget proposal projects the fee would generate $1.2 billion from 2010 to 2019.”
Alaska is a pretty red state, so it was a shock to learn that the citizens increasingly feel they should get precedence over oil company shareholders when it comes to profiting off of public lands…especially since drilling for foreign oil has a far lower profit margin…foreign governments get a way better deal from them than American citizens do.
This will be looked back at as the absolute height of our lunacy.
When the world was faced with tough choices, we chose to debate the weather.
I am all for stopping and remediating pollution, but to set policy on the theory of Global Warming?
Please. No one can even predict next weeks weather with any accuracy, and they want me to accept their posit on much longer term trends?
Maybe the public school educated masses buy it.
>90% of climate scientists are nearly unanimous about the effects of global warming and its causes. Religious leaders, corporate welfare queens and American conservatives are unanimous that it doesn’t exist. I know whom I would rather believe.
Also, what is wrong with acting like there IS global warming, even if you don’t believe in it?
I’m a fairly logical person and until the global warming believers can figure out a way to turn down the thermostat on that big old thermonuclear star we call the sun, then I’m gonna’ be calling BS on the belief that we as puny little insignificant turd ball humans can doom the planet. Any global warming proponent have any idea how we’re gonna’ get Chindia to play along with this douchebaggery?
The difference between acceptance of global warming as fact and that mankind activities are the driving cause of such warming is probably $100 quadrillion spent as soon as possible chasing the elusive perfect world of liberal dreams.
The cheerleaders of the movement don’t particularly try to separate the two conclusions.
Consensus science is a political phenomenon, and serves political ends.
“90% of climate scientists are nearly unanimous”
Yeah, right! Were not you the one chastising a poster yesterday (or day before) about nonfact based discourse?
“Were not you the one chastising a poster yesterday (or day before) about nonfact based discourse?”
A survey published in 2009 by Peter Doran and Maggie Zimmerman of Earth and Environmental Sciences, University of Illinois at Chicago of 3146 Earth Scientists found that 97% of active climatologists agree that human activity is causing global warming
http://scienceblogs.com/deltoid/2009/01/97_of_active_climatologists_ag.php
(EOS Transactions - Journal of the American Geophysical Union. Click on the link at the webpage to see the PDF of the original study)
Anytime that you want to accuse me of pulling facts out of my a$$, CrackerJim, feel free…you will always lose. I care more about attribution than almost anyone you will ever meet.
I included a link for you to verify that I am indeed using fact based discourse. I don’t mind being called out, but it is infuriating that my links don’t make it past the filter. Mind that I will hold you to the same standard.
“Anytime that you want to accuse me of pulling facts out of my a$$, CrackerJim, feel free…you will always lose. I care more about attribution than almost anyone you will ever meet.”
You have a link to an “opinion poll” conducted by questionably biased pollsters. I can link to many distinctly different concluding “opnion polls” that prove no more than you just did.
That’s the difference between ‘climate’ and ‘weather’.
Obviously, being privately educated, you missed that class
The days of easy credit, buying crap and overpriced houses might be over, however, the need for food hasn’t subsided.
“The net effect of the failures in banking is that a lot of people have less money than they expected they would have a year ago. This is bad enough, given our habits and practices of modern life. But what happens when farming collapses? The prospect for that is closer than most of us might realize. The way we produce our food has been organized at a scale that has ruinous consequences, not least its addiction to capital. Now that banking is in collapse, capital will be extremely scarce. Nobody in the cities reads farm news, or listens to farm reports on the radio. Guess what, though: we are entering the planting season. It will be interesting to learn how many farmers “out there” in the Cheez Doodle belt are not able to secure loans for this year’s crop.
My guess is that the disorder in agriculture will be pretty severe this year, especially since some of the world’s most productive places — California, northern China, Argentina, the Australian grain belt — are caught in extremes of drought on top of capital shortages. If the US government is going to try to make remedial policy for anything, it better start with agriculture, to promote local, smaller-scaled farming using methods that are much less dependent on oil byproducts and capital injections.
This will, of course, require a re-allocation of lands suitable for growing food. Our real estate market mechanisms could conceivably enable this to happen, but not without a coherent consensus that it is imperative to do so. If agri-business as currently practiced doesn’t flounder on capital shortages, it will surely collapse on disruptions in the oil markets. President Obama at least made a start in the right direction by proposing to eliminate further subsidies to farmers above the $250,000 level. But the situation is really more acute. Surely the US Department of Agriculture already knows about it, but the public may not be interested until the shelves in the Piggly-Wiggly are bare — and then, of course, they’ll go apeshit.”
Relax, Supply will meet Demand, as always.
Eventually.
Combo, you are so mellow. Do you listen to new age music?
Supply may meet demand, but it will not meet needs.
Demand is the combination of “need/want + ability to pay”. So if supply shrinks, then prices go up until demand shrinks too. The result is that many people will not be able to afford food and will go hungry and therefore “apeshit”.
Will work for food.
Will whine for bailout
This sounds like alarmism to me. If anything, we produce too much. Some farmers will lose (b/c they are maxed out), others will find higher prices for their grain. If some of this ethanol idiocy would go away/work itself out, we’d find that we rather have some excess capacity.
I’m watching meat prices. Now THAT business has been volatile lately.
There’s only one way for meat prices. DOWN.
Read the recent New York Times Dining section. They are talking about - wait for it, wait for it - cube steak.
No more foie gras and truffles. They skipped past the less important cuts all the way down to cube steak.
Clearly, their target audience is not exactly in the prime of financial health. What that does to demand is obvious, and the rest is plain ol’ Econ 101.
I saw those cube steak recipes yesterday. The Times Wednesday recipes are good. But they were just slumming with that. The lifestyle focus of the paper is still the sliver of New York that goes to the Hamptons in the summer and sends their children to expensive private schools, including kindergartens with competitive admissions. Its the New York of “The Real Housewives of New York,” if you’ve seen that show.
Bzzzzzt. Wrong.
While both the Times and the WSJ may make the most of their New York “mystique”, the blunt fact is that they get most of their revenue from everywhere else around the country.
Executive wannabees all over subscribe to the WSJ in the fervent hope that they too some day may aspire to be the next Jack Welsh. (Smart New York traders buy the FT not the WSJ.)
And the suburban housewives of Johnson County, KS are far more likely to be reading the NYT than the people in the Hamptons.
They know what they are selling. A dream.
CBS News featured a 90 yo woman who is a new YouTube sensation, where she demonstrates recipes from the Great Depression. Who knew stale bread, water and grease could be so tasty?
I was thinking alarmism when I first read the article, however, we’ve been importing more and more food into the U.S. and the droughts / credit tightening appear to be real. Suspect at a minimum in the near term we’ll see another round of noticeable increases in food prices.
Last year farmers were culling herds due to drought, less hay, costs, etc. In the first months of this year demand for beef dropped considerably due to the declining economy forcing feedyards to shrink or close.
I read in a Mexican newspaper that Mexico imports half of its food.
Things might get interesting in the land of the Eagle and the Serpent.
Where’s that journalist come up with “cheez doodle belt”?
disorder in agriculture will be pretty severe this year, especially since some of the world’s most productive places — California, northern China, Argentina, the Australian grain belt — are caught in extremes of drought on top of capital shortages.
A lot of these things are tied together. Water is joined with energy prices. I read recently that 1/3 of all the electricity consumed in California goes to pumping water around the state. Either because of true drought or by higher electricity prices the farms there are going to take a hit.
We appear to have a normal water year here in Idaho, so I’ll have to monitor the local farms’ planting. Last year because of crop prices quite a few local acres were taken out of fallow and planted with livestock corn.
BINGO!
Farmers around the country cant get loans to plant this year because the banksters are shut up thighter than Bernie Madof’s sphincter once he gets thrown in the slammer. Whats even worse, in central California farmers cant get loans at all because the underwriters don’t think there will be enough water to plant anything. The knock on effects of our greed and stupidity are really starting to manifest and its goign to be an interesting year. Cue the Long Emergency. Any of you ready?
It’s all good Sleeper. That farming stuff is bad for global warming anyway. If you guys in Cali can’t figure out how to prioritize between irrigation for food and green grass in your yard, that’s no emergency for me.
Big Agribusiness is TERRIBLE for global warming and monoculture farming severely damages the soil so if that goes the way of the Dodo I for one wont shed a tear but the problem is, what replaces it?
Last year I grew about 75% of the vegetable I consumed and this year I plan to grow a surplus (and sell what I dont eat). I also support the local farmers markets and a few CSA’s (Baltimore MD) but I have no illusion what so ever that I am, or ever could be, self sufficient that that scares me.
I have taken a long hard look at just how interdependent our society really is, at every scale, and I now realize just how vulnerable that makes every one of us. Again, that scares the shit out of me. Not so much the fact itself but rather that SO FEW other people seem to have the same awareness.
look dude you just dont understand I mean its not like we have choice between having a green country club or like making food, it really complicated bro
Blog weasels ate my previous reply
Big time agribusines IS terrible for glabal warming and monoculture farming seriously damages the soil. If that goes the way of the dodo I for one wont shed a tear the problem though is, what replaces it?
Last year I grew 75% of the vegetables I consumed and this year I plan to grow a surplus (and sell what I dont eat). I enthusiasticly support the local farmers markets and belong to a few CSA’s (Baltimore MD) but I have no illusions what so ever that I am or ever could be self sufficient and that scares me.
Over the plast few years I have thought long and hard about just how interconnected our society is at every level. Being an architect perhapse gives me a unique perspective on this but realising it I have also come to understand just how vulnerable that makes us all and that scares the crap out of me. I’m scared less about the facts themselves than I am about HOW FEW people actually share this realization.
And no. I’m not at all prepared for what I think is coming
There are probably several hundred thousand individuals who are aware of the problem. This interdependency is what scares the crap out of me, particularly with respect to the potential for hyperinflation.
If we cannot afford to import goods we need (oil, parts for maintenance) because the dollar is worthless then mass starvation is the end result. There is nothing the government can do, our food supply chain is so long and thin that without the dollar we would quickly runout of everything (including new shoes and clothing) It would take years to get local industry retooled to produce what we need at home and to produce goods for export. Retooling requires capital which we do not have much of which means that years may be optimistic.
About the only thing you can do to prepare is store up 1+ years of food (help you through the transition) and get away from the masses which will be at each other’s throat. Secure a means of generating electricity, a water source, some guns/ammo. Even if you drop $200K into preparing you barely put a dent into the “self/local community sufficiency” problem.
You want to live near where food is grown and start a home based business that serves the local community and is not dependent upon a continual supply of foreign imports.
Unless you are planning on being the Omega Man, learn to do (or grow) one or two things really well. It’s the best strategy in good times and bad.
We’ll be able to trade a boatload of wheat for a boatload of flexible machining tools if things get that bad.
Only remember to make them take a container of politicians as well, kind of like the surprise in the box of Cracker Jacks.
Another comedy troupe that has it all figured out!
Bank of England to start pumping money into UK economy
Darling expected to give quantitative easing green light
£150bn could be spent buying up assets
Heather Stewart
guardian.co.uk, Thursday 5 March 2009 10.15 GMT
The financial crisis will enter a new phase today when the Bank of England announces that it will fight the economic downturn by pumping hundreds of billions of pounds into the economy.
The Bank is expected to confirm at lunchtime that it will embrace quantitative easing, the process of buying up government and corporate debt.
Mervyn King and his colleagues on the monetary policy committee may also vote for another cut in interest rates. But with the cost of borrowing already at a record low of 1%, their rate-cutting ammunition is all but exhausted. Economists believe that the Bank could spend up to £150bn buying up assets to get more money into the system.
Alistair Darling, the chancellor, has to give his permission for taxpayers’ money to be put at risk, so he and King are expected to exchange quick-fire letters detailing how much the Bank can spend on quantitative easing, and what exactly it will be allowed to buy.
Shares in London fell this morning as traders awaited the announcement, with the FTSE 100 dropping 48 points to 3597.
The City also received another reminder of the weak state of the economy, with the news that sales of new cars plummeted by 22% in February.
As the recession deepens, weakening wage growth, plunging oil prices and consumer demand are threatening to drag inflation well below the Bank’s 2% target.
Tuesday, March 3, 2009
Geithner ducks a big question
Mr. Geithner was on the hot seat again today. He did his best to sell a bad budget. The closing tape speaks for itself.
One of the Congressmen asked a hard question. “Mr. Geithner can we sell the bonds necessary to fund this deficit? Are the Chinese still buying our bonds?”
Mr. Geithner responded with a full three minutes of non-answers to those questions. At the end of three minutes the Congressman repeated his questions.
For another two minutes Mr. Geithner ducked the questions. He just repeated the sound bights that had been drilled into his head.
Mr. Geithner has to remember that he is in the big leagues now. When he talks on the Hill these days a few hundred thousand bond and currency traders are tuning in. I doubt that many of them missed the significance of Mr. Geithner’s non-answers to a direct question.
These are questions that should be asked and should be answered. After all, if Treasury is unable to sell about $2T of paper over the next eighteen months at the current historically low rates then whole plan falls apart. This is a cart and horse situation. Mr. Geithner is up front on the horse, believing he is charge. While actually the bond market is in the cart and it has the whip.
Mr. Geithner should be aware by now that the markets have been just vicious when they have had a target in their sights. If in doubt he should consult with Jeff Immelt. Mr. Immelt can describe what it is like when the market turns on you.
Perhaps Buffett could also share insights on what happens when markets turn on their masters?
Wow, is this time to short treasuries or what?!?
Not unless you have a death wish.
If they pull a QE on you, your face will be mauled off by the collective chimps.
QE?
nevermind.
QE = Quantitative Easing = printing money to buy long-term bonds (= rising prices, falling yield.)
Thanks for asking, bluprint. I was too embarrassed to. I thought he meant quarter end.
Despite my comments below (never bet against the house), I’m in. Order is in for some TBT tomorrow.
QE is indeed a risk. There’s only so much QE that can happen before heads start rolling. Hyperinflation is political suicide. It may still happen, but I think in the end the Fed has to capitulate and raise rates, ala the early 80’s. This is likely to happen when they see that the current insane rates just aren’t working, and they throw up their hands.
Never bet against the house.
However that being said - that’s exactly why I didn’t short sell financials the past couple of years. Turns out they weren’t quite the omnipotent “house” I thought. A big missed opportunity.
There is a difference between a game they can goose via words, and a game where they can actually explicitly play.
They weren’t so omnipotent in the tech-bubble meltdown either.
I thought the trouble was that TPB would always monkey around saving certain firms thus you never knew if your short would work out
doesnt seem to be happening now does it
Yeah, but the first one would and everyone knew it was Bear.
And you don’t ride that sucker down until it crashes. You cover when you know the PTB is gonna intervene. (Hint: it’s called a weekend.)
Yep - exactly. I either:
A. Underestimated the scale of the downturn, not realizing it would even overwhelm the biggies - catching them by surprise, or
B. Didn’t realize the biggies had other plans, such that their stock prices didn’t really matter (in the short run at least), or
C. Both
Most likely the latter.
Oh well.
“And you don’t ride that sucker down until it crashes. You cover when you know the PTB is gonna intervene. (Hint: it’s called a weekend.)”
Gah! It still all seems like speculation whether its stocks, or shorting stocks, or real estate, gold, Wheaties, whatever.
I’m not saying I don’t participate myself, but it seems in the past you looked at numbers and either invested or didn’t and now you have to factor in emotions, and Bernankes, and Geithners, and riots in Eastern Europe.
You must be an engineer.
Of course, you have to look at the numbers. The numbers are everything but you have to factor in people’s reactions too. That’s how it works. It’s humans in action and they do spectacularly bizarre things.
Only engineering types shy away from making these analyses but these are just as rigorous logically speaking as the hard numbers that I am so fond of.
Rigor is the level of intellectual clarity you bring to your thinking. Rigor does not equate to mathematics although it is indeed a large part of it.
LOL. Guilty as charged, Fast one. Good pull.
However, I am in sales so at least I now understand that the emotional does exist and that I do have to react to it.
I was mostly belly-achin’. I’ve stated over and over that I buy into educating oneself to buy and sell securities instead of the common advice of DCA-ing into S&P index funds and letting it ride. If you can be one of the 10% (1% ??) that knows how to do this stuff, I really believe you can be better off.
However, it’s one thing to learn about balance sheets and financial ratios and quite another to understand Collateralized Debt Obligations and factor in the effects of globalization. Seemingly there are many more variables, at a much quicker pace, in less time than before.
Or, alternatively, I could just be lazy. I s’pose I could use a priorities adjustment. But my priority right now is keeping a job for at least another 2 years…which is unfortunate since having time now to understand and adjust investments might be more important long term.
Oh, I’ve had this conversation dozens of times plus my dad’s an engineer. I can spot the signs of an engineering mind a mile away in this context.
But seriously, when I explain to them the nuts and bolts of how things are all assembled they realize that there is an intellectual rigor and framework under which it is operating. It’s not magic.
There are moving parts and you need to know how they move no different from a car or a complex piece of software. Except the laws are kinda loosie-goosie - historical in nature, or general principles that hold stochastically not deterministically.
The goal is to twist the odds in your favor. You’ll never approach the determinism of a car engine.
Whether you choose to pursue it or not is a choice for you to make but to dismiss all of it as “mere” speculation is just ol’-fashioned sour grapes.
Cheers!
I posted a long answer but it hasn’t appeared yet.
Darn!
You also have to factor in chaos theory.
Might be too late for response, but any recommendations on books or other resources regarding behavioral finance or investor psychology?
Futures are down this morning. And, this little episode over the possible second Chinese stimulus is disgusting.
Yesterday there were headlines like: “China to the rescue”, but the Chinese have other plans and their own agenda and goals (rightfully so)
But this little drama and the market swings that accompany it show just how desperate this country’s political and financial leadership has become. Seriously, I could down to the alley by the ‘el (subway) tracks right now and find crackheads with more dignity (and better plans for scoring their next hit) than our political and financial elites!
They held off announcing anything. This way they get a bounc eont eh rumor and on the actual announcement down the line. Why are they so much smarter than our “leaders.”
Skeptic, I posted NY numbers in yesterdays bucket. 1990 is at her doorstep……. again.
And this POS group is trying to shake down the German taxpayers over Opel. However Angela Merkel is far tougher than our wimpy PTB.
GM auditors raise doubts on automaker’s viability
GM auditors cite losses, lack of cash flow in raising doubts about its viability…
Tom Krisher, AP Auto Writer
Thursday March 5, 2009, 7:24 am EST
DETROIT (AP) — General Motors Corp.’s auditors have raised “substantial doubt” about the troubled automaker’s ability to continue operations.
The company revealed the concerns, raised by the accounting firm Deloitte & Touche LLP, in its annual report filed on Thursday.
GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008.
GM says in its report that its auditors cited recurring losses from operations, stockholders’ deficit and an inability to generate enough cash to meet its obligations in raising substantial doubts about its ability to continue as a going concern.
The company said in its filing that its future depends on successfully executing the viability plan submitted to the government in February to justify the loans.
“If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code,” GM said in the annual report, filed with the U.S. Securities and Exchange Commission.
GM, the report said, is highly dependent on auto sales volume, which dropped rapidly last year.
“There is no assurance that the global automobile market will recover or that it will not suffer a significant further downturn,” the company wrote.
WAY before GM got it’s first slice of gubmint cheese, several independent auditors reported it would take a minimum of 130 Billion dollars if there was to be any chance of stabilization. Of course no one at D.Central planning listened.
Oh, geez, I wish GM would just expire already. These zombie companies are such a distraction and they suck up all the oxygen.
Speaking of oxygen, I was musing about the effect of myriad bailouts on credit available for more worthy uses. For instance, if the latest foreclosure bailout manages to keep many homeowners on the brink of foreclosure in their homes, won’t that come at the expense of loanable funds for potential new buyers? I am not really one of these — I am out of the market indefinately until this bubble is fully deflated. But I cannot help but wonder if the various foreclosure bailouts don’t have the unintended consequence of putting money that might be loaned out to potential new buyers of homes (in line with their incomes) into the hands of those who will not be able to ever pay off their loans because they borrowed more than their incomes will enable them to repay?
They aren’t auto manufacturers - they are PACs.
I thought GM was too big to file.
re: shaking up Opel
They are only working out of the Boeing playbook. As they expanded mfctr overseas, they started shaking down those governments just as they had US Congress.
Who’s in control: sovereign nations or multinational corporations?
Opel has been part of GM since the 1930s. Heck, Buick was importing Opels in the early 1970s — my grandparents had one of each (Buick and a smaller Opel).
This is just as much a Deloitte CYA as it is anything else.
GM actually needs Deloitte & Tush to tell them that they may not survive? What exactly does GM management do these days?
No kidding. They’re probably busy looking for new jobs on the gov’t dime.
Its important because a “going concern” letter may trigger loan/debt covenants.
Looks like maybe we have another watershed in the banks today.
I think you mean waterfall.
I see a remodeling boom in the near future.
Chinese drywall found in Port St. Lucie’s Tradition community
By ALLISON ROSS
Palm Beach Post Staff Writer
Wednesday, March 04, 2009
PORT ST. LUCIE — Only a few months ago, the term “Chinese drywall” was unknown to Michael Vega, who rents a condo in Port St. Lucie’s Tradition community with his wife.
He knew only that something was corroding wires and metal components in the house and emitting an odor that gave his wife headaches and congestion.
Since builder Centerline Homes brought in an independent analyst to test plasterboard, “Chinese drywall” has become a phrase that consumes Vega’s time and causes him to lose sleep at night.
Chinese-made drywall is suspected as the cause of sulfuric gases corroding wires, pipes and even air-conditioning components throughout Florida and across the country, all the while throwing off a sulfur-like smell.
Once thought to be contained to Southwest Florida, problems with Chinese-manufactured drywall were recently reported in Palm Beach County and along the Treasure Coast.
While Coral Springs-based Centerline Homes has declined comment, Vega said the company’s tests found the drywall in his condo was indeed plasterboard from China.
“Who knows what this drywall could be doing to us?” Vega asked. “If it affects metal, what can it do to flesh?”
Vega is not the only one in Tradition’s Promenade condo development who may have Chinese-made drywall in his home.
According to Promenade property manager Bert Kelly, some owners and renters in the 135-unit complex have complained about unusual and unpleasant odors and air-conditioning units that were not working. Centerline tested an unknown number of the houses for Chinese-manufactured drywall, he said.
Initially, experts dated the problem to 2006, when rebuilds from hurricane damage and a growing housing boom created a shortage of American-made plasterboard. That since has been revised to include houses that had drywall added between 2004 and early 2007.
Chinese drywall manufacturer Knauf Plasterboard Tianjin Co. said it began receiving complaints in 2006. The company said it traced the odor to a gypsum mine and ceased using the mine that year.
“gypsum mine”
B.S.
My money is on improperly run coal fired power plant gas scrubbers, where man made gypsum has been a boom to drywall manufacturers.
If you turn toxic waste into a product for sale, it’s not toxic waste anymore.
It may still be toxic waste, but it’s no longer toxic waste IN YOUR COUNTRY if you export it.
“If you turn toxic waste into a product for sale, it’s not toxic waste anymore.”
Do you see the cute little 1 year old who is… sucking on a Chinese vinyl Barbie/Skippy synthetic blonde head, …
Hell is often thought to smell like sulfur.
County could see little mortgage relief
Obama plan won’t help many distressed owners
By Emmet Pierce
Union-Tribune Staff Writer
2:00 a.m. March 5, 2009
The Obama administration yesterday unveiled details of a $75 billion program to help borrowers avoid foreclosure, but some analysts say it will have little benefit for San Diego County and other U.S. communities that have been hit hardest by the mortgage-market meltdown.
The plan is designed to help households at risk of foreclosure to refinance or modify their loans to make mortgage payments more affordable. But in markets where prices have fallen sharply, tens of thousands of distressed homeowners won’t qualify because their home values have fallen too far.
Some aspects of the Obama administration’s foreclosure-prevention plan could limit its impact in San Diego County. The plan has a cap that prevents people who owe more than 105 percent of a home’s value from qualifying for help in refinancing. Under the plan, only loans guaranteed by government-controlled mortgage giants Freddie Mac and Fannie Mae can take part in refinancing.
The foreclosure-prevention strategy “will benefit the people who probably need it the least,” said Dave McDonald, president of the San Diego County chapter of the California Association of Mortgage Brokers. “I don’t think it will have much effect here. In other states, it will.”
San Diego real estate economist Gary London agreed. “It will be good for Toledo, (Ohio), but not for San Diego,” he said.
…
Treasury Department officials have said the mortgage-rescue program is aimed at responsible home buyers and isn’t intended to help everyone.
Some analysts say it’s unfair to label deeply indebted homeowners as irresponsible when lenders sold thousands of unsustainable loans without verifying borrowers’ income during the housing boom. There’s no shortage of people who failed to foresee the decline of the housing market.
“I would not say that people who bought at the top of the market here were irresponsible,” said Alan Gin, an economist with the Burnham-Moores Real Estate Institute of the University of San Diego. “Some would argue that they should have known that their mortgages could reset and really strain them. What people did not expect was a rapid downturn in terms of prices.”
Emmet Pierce: (619) 293-1372; emmet.pierce@uniontrib.com
How many more bailout ransom notes will we see from too-big-to-fail firms before this crisis is over?
Wall Street Journal
* MARCH 5, 2009, 7:47 A.M. ET
GM Auditors Raise Doubts on Auto Maker’s Viability
By BHATTIPROLU MURTI
General Motors Corp.’s auditor said formally Thursday that there is substantial doubt the struggling auto maker can remain a going concern, putting an official stamp on the company’s dire condition and forcing GM to seek waivers from lenders.
The comments came in GM’s delayed annual report filed with the Securities and Exchange Commission. Auditor Deloitte & Touche cited GM’s continuing losses from operations, its negative net worth and an inability to generate the cash needed to run its business.
I hear GMAC CD’s are perfectly safe though!!!
Of course!!! They’re a bank now.
Mantra for the crash: The bigger they are, the farther they fall.
Wall Street Journal
* MARCH 5, 2009
Big Investors Face Deeper Losses
As Private-Equity Shops Revalue Assets, Institutions Brace for Worst
By CRAIG KARMIN and SUSAN PULLIAM
Big investors like pension funds and endowments, licking their wounds from miserable returns last year, are bracing for more.
In the next few weeks, private-equity firms — which buy companies, take them private, restructure and resell them — will report declines of 15% to 50% for the fourth quarter of 2008 amid the deep economic recession, analysts and investors say. Two big private-equity firms already have reported sizable declines in the value of their hard-to-price holdings.
Those drops in turn will further batter the performance of public pension funds, foundations and endowments. These institutional investors had barreled into private-equity investing in the past decade, hungry for market-beating returns. Some hold 10% or more of their assets in these private-equity firms.
The valuation of assets by financial players has been central during the financial crisis, with banks and securities firms taking hundreds of billions of write-downs in assets. Markdowns at private-equity firms have lagged behind those of banks and are now coming into play because of new accounting rules that require private-equity firms to mark their holdings at prices at which they could sell them in the current market.
“The [private-equity] values being carried by pension funds have been twice what they should be,” says Donald Putnam of Grail Partners, an investment-advisory firm, referring to their private-equity holdings.
Private equity firms? Couldn’t happen to a better pack of sharks.
If I don’t rant I will surely rave.
“In the next few weeks, private-equity firms — which buy companies, take them private, restructure and resell them”
Private-equity tapeworms
This is a good short piece on the risk that we are turning into Japan.
WSJ Online
* AHEAD OF THE TAPE
* MARCH 5, 2009, 8:13 A.M. ET
TALF and Ilk Won’t Cure Economic Ills
By MARK GONGLOFF
The government is still applying cyclical remedies to a secular problem.
The latest example is the Term Asset-Backed Securities Loan Facility, or TALF, designed to reinvigorate the market for bundled consumer and small-business loans and, possibly, commercial mortgages, collateralized debt obligations and more.
That sounds great, if only there were massive pent-up demand for credit going unmet, as is often the case at the end of recessions caused by the ups and downs of the business cycle.
Instead, credit has dried up this time because of the more secular — meaning structural or long-lasting — phenomenon of a debt bubble. That old debt is still fouling consumer and bank balance sheets, and the TALF won’t do much to erase it.
“We need earmark reform and when I’m president, I will go line by line to make sure we’re not spending money unwisely,” candidate Obama said on the campaign trail.
As a candidate, President Barack Obama promised to go “line by line” through legislation to take out wasteful pork projects known as earmarks. Yet his administration is now pushing a $410 billion spending bill that contains perhaps the largest number of legislative earmarks in American history.
Question? Hey Barry, where’s the change? LOL!
I actually took the time to watch his little infomercial right before the election. As soon as I heard the “I’ll go through line by line,” I turned it off. Just another lie.
Guess he learned from W, too busy watching BBall to actually go over boring legislation.
They’re going to start calling this admin the Great Disappointment.
They are trying to say this is an old bill from the previous administration, which is, sort of, true. However its being presented and debated now and as far as I know, BO and not W is going to be asked to sign it….
They don’t have the time. They aren’t staffed up yet. This bill was supposed to be passed last September. Federal government is currently working under a continuing resolution - very, very inflexible. It would be nice to try to renegotiate it from scratch, but it would eat up all the air in the room. It would also likely send all non-essential federal employees home on a paid (they pay people for the time off when they pass the buget) vacation for a week or two.
Money that is not earmarked is still spent… the executive branch just has less say over how it is spent.
Far better to let congress decide where to spend then money than to give it to the executive branch to make the call.
Focus on eliminating pork… except that they have rebranded pork as stimulus.
Er…didn’t the Supreme Court overturn the line by line veto?
Must look that one up - be right back.
Leigh
Yes the Supreme Court did overturn the line item veto. Congress gave the power to Clinton and the Supremes overturned what Congress had bestowed.
This little posting from a Detroit News blogger is about a neighborhood that is still considered “nice” within the city limits. A lot of homes built way back when had their own individuality and have held up well over the years. Such a shame it’s all going to hell in a handbasket.
http://apps.detnews.com/apps/blogs/livinginthedblog/index.php
Hey - I just noticed the the bits bucket has a new icon! Is that you’re doing Ben?
A blue house. I guess we could have a thread on what exactly that portends.
Was watching CNBC last night (I know…) and saw a UVA chart that showed that 87% of all foreclosures are in CA, FL, AZ and NV.
Does anyone know if this is accurate? I would trust UVA but not CNBC.
Did you see Jon Stewart’s take down? He ran a bunch of buy, buy, buy clips, exposing the cheerleaders. Where is Hogan’s bottom?
LOL - from Masters of the Universe, to Masters of Truthiness in one fell swoop.
Who needs real news, when ‘fake news’ is so much more accurate?
Here’s the link to Jon Stewart taking down CNBC pundits - Mr. Santelli’s rant is included:
http://tinyurl.com/aj5u9p
My favorite part?
Stewart called out Lil’ Ricky Santelli for his lack of sack in accepting an invitation to appear on the program, then canceling at the last minute.
commentator on NPR this morning made the same point.
can’t find the right link tho this one is close:
http://www.npr.org/templates/story/story.php?storyId=101465335
Ok, with this new plan:
- someone bought a house they could afford for $200K, the house went up to $400K and they did a cash out refinance for $350K.
- they spent the $150K on cars vacations and a boat.
- now the house is worth $350K but they can only afford $200K.
Their neighbor next door with the same house didn’t do any of that, no cars, no boat, no vacation. He still owes $200K.
Do the top people get a 2% loan and maybe a write down of their principal, paid by their neighbor?
Yes, because if the forementioned irresponsible buyer were allowed to foreclose, the good guy’s house would lose value - This is the isnane extortion angle Ben Bernanke himself has pawned off on congress and all of America. FAIR is a four-letter word.
There is something you can do about it, there’s something all of us can do about it. Your dollars are your real vote. Cast them wisely.
It will teach the neighbor that the next time there is a run up in property values to immediately take out a home equity loand and spend the money.
Did Fannie and Freddie underwrite cash out refi’s? Because those are the only ones eligible.
Here’s a chart showing the percentage of houses underwater for each state - I think there was some discussion about these numbers yesterday or the day before.
(not sure if it needs subscription or not)
Nevada is highest at 55.1%. NY is lowest at 4.7%.
Yeee-haaa!!!!
California is #1 again! WE RULE!
California is often a leader.
Sometimes leading isn’t such a good thing.
p.s. there’s a saying (though not really relevant to this) -
The early bird may get the worm, but the second mouse gets the cheese.
Career Development Sites See Surge in Seniors
There’s an interesting graph in there showing the projected percent change in labor force by age from 2006-2016, from the BLS. Both the 65-74 and the 75-and-older age groups are projected up over 83%.
Montana update
My offer went in this morning. It will be accepted (wink, wink).
Very nice price predicated on an all cash deal. I can’t say much
as there are confidentiality agreements in place. But if this is, as
Grizz predicts, having my azz handed to me, please give me more!
Please hear me when I say that there are some very good deals
available right now. There is a lot of smart money moving you just
don’t hear about it. I’m not calling a bottom. The deals are there,
you just have to ferret them out.
Mike
As a general rule - no one ever knows if they’re getting a good deal until 5 years after the deal is made. That’s because “a good deal” isn’t just relative to prices in the surrounding area - it’s also relative to prices in the surrounding timeframe, including the future.
I’ll also add that if I am going to “ferret” something out, I’d just as sooner wait until most deals are decent ones so that all that “ferreting” effort actually yields something spectacular.
Call it the First Law of Intelligent Laziness.
Hot Money vs. cold cash.
I’m more a fan of distilled spirits than fresh beer myself.
Congratulations Mike - you got a property you love for a price YOU can afford. That sounds like a deal.
Update - Offer accepted.
jsocal,
Thanks. You summed it up nicely.
Puddy tatt,
I like the way you think.
Mike
Good luck, Mike. Having just spent a good deal of time in Montana, I think you’re catching a falling knife. Hope not.
Yeah, good luck is right. Without even knowing where in western MT Mike bought, what sized parcel, and for how much, I can confidently say that he grotesquely overpaid (if nothing else, based upon his parroted “40%” off). The correction has barely started in MT, and the idea that somebody with cash is going to find a “deal” this early in the game is laughable. Anybody familiar with the hyperinflation in land from MT to ID, Wyoming and beyond, knows just how far things are going to crater. A 95% drop in value in such areas is not only possible, it’s probable.
I was just talking to a guy yesterday whose daughter and son in law moved from WA to North Dakota close to ten years ago. They bought a 3,000 sq ft house with a barn on 14 acres for $8000 cash. Gives you an idea of how cheap things really are in the boonies- when you forget about the bubble nonsense.
Time will tell I suppose. One thing to think about though is that if the bottom does fall out I still have more bullets. I’m not close to being “all in”. BTW the deal ended being 53% off peak. One of my neighbors is a billionaire.
Mike
Hey, SV. Congrats on your new place!
(positive thinking here…)
Please let us know how your offer works out?
Fed Moves to Free Up Credit for Consumers
Quite a chart in there showing the plunge in issuance of asset-backed securities. Peaked at $1 Trillion in both 2005 and 2006, down to about $150 Billion in 2008, and only $2.1 billion so far in 2009.
Marketwatch dot com
March 5 2009 9:53 A.M. EST
Bulletin
U.S. stock indexes forfeit bulk of previous session’s gains at opening bell
Underwater U.S. start awaits
Futures signal that much of Wednesday’s rally likely to be wiped clean at the open. Retailers, autos and big banks in the spotlight.
More upbeat prognostication from the Market Watchers…Hard to believe what permabulls these folks were a couple of years ago!
MARKET STRATEGY
Dow could hit 4,000
Noted newsletter editor Peter Eliades tells Stacey Delo why he believes the market could get bit worse — thousands-of-points-on-the-Dow worse — before things get better.
I don’t claim to know when or how low the U.S. headline stock market indexes will bottom out, but I predict that the stock market will be in recovery mode long before the housing market bottoms out.
How much have you lost so far?
I try not to look at my 401(K) statements, as it is too depressing.
So your moniker refers only to RE and not the stock market?
I would think a stock market bear would LOVE looking at his statements nowadays.
I stopped getting any statements about my stock market investments 18 months ago.
Depends on what you mean by “bottoms out”. My view is that it’s going to be a really long bottom - like on the order of 8-10 years, where price movement will be in the gap somewhere between a nominal bottom and an inflation-adjusted bottom.
I think the stock market probably won’t lead the front-end of the bottom - where prices stop falling, though it will definitely lead the back-end of the bottom, where prices actually rise relative to inflation.
This of course assumes that we return to a semi-normal state of some level of inflation.
Yep. The market is creating new lows as we speak, 6657 and 686.
Exeter,
Not sure if you saw this yesterday, but I am just wondering if your people on the ground this this is more bs or if they agree that this chip plant may actually happen?
AMD plan moves forward under new name
MALTA - AMD’s chip fab operation now has a new name — the GlobalFoundries.
The newly formed company is planning to build a more than $4 billion computer chip plant in Malta.
The potential deal has been talked about for over two years. On Wednesday the plan moved from talk….to reality.
GlobalFoundries announced it will build the micro-chip fabrication plant in the Luther Forest Technology Park. It follows months of speculation about whether the deal would fall apart because of a downturn in the economy and AMD’s business.
The new entity is a partnership between AMD and an Abu Dubai company. The plant will be called Fab 2. Projects Manager Terry Caudell said they plan to clear the site in April with a ground-breaking in mid-summer.
It will employ about 1500 people, as construction begins later this year. They expect to produce micro-chips in 2012.
The folks who run the Luther Forest Tech camp said this is what they’ve been preparing for years. They compare GlobalFoundries to an anchor store in a shopping mall, saying other smaller companies are sure to follow.
Fab jobs don’t exactly pay all that well.
I haven’t talked to my contact at Ferguson Pipe but the scuttle on the ground is this….
AMD is now down to a 30% equity stake in this taxpayer funded boondoggle. Oh yea…. You weren’t aware of the taxpayer funding this pipedream and the Govt. of Abu Dhabi taking ownership? Yeah… and AMD is now trading around $2. After the hype is peeled away, those who view this thing with heavy doses of skepticism suggest that the construction will be funded and the project built out and will get shuttered due to the obvious deflationary spiral we’re in. I’m very surprised there is funding but have confirmed they HAVE NOT actually put a shovel in the ground. It’s all clearing and grubbing right now and the eyes that are watching the work say they’re in no hurry to clear and grub.
In the best case scenario with 1500 new jobs (the official number is 1400), there is still a massive net loss of jobs over the last 30 years. The level of speculation regarding “The Foundry” heard from the beaten down, lied to natives is so pathetic, I don’t know whether to laugh or cry in sympathy for them. Honestly, it’s borderline idolatry for many of them as if this thing is the 2nd coming. They’re already cashing a check they don’t have, nor will they ever.
I remind everyone with the every decade boondoggles offered by county governments as the answer to the long term economic decline. Case in point? The burn plant in Wash. County. Promised as a huge money maker, jobs for every one and low taxes and what happened? 14 jobs, property taxes TRIPLED in Wash. County and the county handed over the facility to Waste Management. And the natives get burned again.
Question, what’s the difference between these two following persons:
1) Person A in 2005: real estate will keep going up double digit forever, it never goes down, because we are running out of land.
2) Person B in 2009-?: real estate will never rise again and will keep doing down all the way to nothing because no body wants to buy a house any more, forever. Prices will never come back to the previous level, even in 100 or 200 years from now.
I argue that other than the direction of the prices, there is no difference between the two person. That’s why I do not use the words “never”, “ever”, “forever” or the likes when trying to predict something as volatile as asset prices or the economy in general.
But that’s just me.
Person C in reality: Residential real estate will never see the inflation adjusted prices of 2005 in our lifetime without some sort of market distorting subisidies.
Never say never. It happened in Texas in the span of 20 years.
Well I don’t know how old you are, but what you are saying is certainly possible, or even likely. What I have been reading is some people saying “prices will never be at the peak price ever again”. Nothing said about nominal vs. real or ever is really one’s lifetime (depending a person’s age, that could be 10, 20, or 50 years from now) and not 100 years. Yes prices could really never be at 2005 prices 50 years from now in real term, but trust me, sooner or later there will be another RE bubble, because human don’t have that long of a memory when it comes to money and investing.
You’re a Grade A m*ron, and that’s the nicest thing I can think about your statements.
The difference in both cases is that we can clearly observe two extraordinarily relevant metrics : price/rent and price/income.
In fact, we have overwhelming amount of empirical data that if you don’t have the income, you can go into hock but you can’t do that forever.
So it is just you.
Feel free to be a knifecatcher but there is absolutely no chance that this bubble gets reflated.
>You’re a Grade A m*ron
Perhaps you woke up from wrong side of the bed this morning? Stop with the name calling already re-read what I wrote.
>The difference in both cases is that we can clearly observe two extraordinarily relevant metrics : price/rent and price/income.
Exactly. So for people who said house prices will drop to $0 or will never recover its peak price in 100 or 200 years or even more, what is your stance on that?
>Feel free to be a knifecatcher but there is absolutely no chance that this bubble gets reflated.
Uhm, I said nothing about this bubble being reflated. I merely point out the fallacy of anyone trying to say some asset price will “never”, “ever”, “forever” go in a certain direction, no matter what timeframe we are talking about.
As I posted previously I think housing prices may keep going down and stay down until 2015.
I think you mis-read my intent with my statement. My point is not that the RE bubble will be reflated anytime soon through the variety of “rescue packages”, housing prices will go down to traditional valuation vs. income/rent no matter what the govt does, and probably overshoot on the downside. But my intent is to challenge those people who uses words like “ever”, “never”, “forever” to make prediction for asset prices, because those are timeframes that no reasonable person should really make any prediction with any degree of certainty.
And there is no reason to call people moron either, even if you don’t like what I have to say. That’s quite childish. Two adults (which I assume you are) can argue fine points of a debate without resorting to name calling.
Everything is relative, but it is obvious that prices in real terms cannot go up forever where forever is defined as the life time of todays population. So this person is completely disconnected from reality.
The second individual makes a practical and rational statement that prices will never return to their current high in real terms (in the life of those hearing his comments, the only time period that really matters).
Prices in many areas can go well below 0 based upon the tax burden/cleanup costs. Many of these places may have negative value for a *LONG* time.
Nominal prices are unpredictable, because the dollar can rise and fall dramatically. In hyperinflation, the real value of most real estate approaches 0 because there are few business opportunities that can support property taxes (which keep up with inflation better than other things). Also loans dry up. Hyperinflation only lasts about 2-3 years before a new monetary system can serve as a foundation of growth.
I think it is reasonable to predict that most real estate prices will fall in real terms for the next 20 years and then stay down for another 20 years after that. During this time the average life expectancy will drop. If prices do start going up in real terms it means that the government has stopped interfering with the economy and our capital base has recovered. Remember, we destroyed 100 years of capital formation, it will take at least 50 years to recover what we have squandered and that is “forever” for most people.
During this time the average life expectancy will drop.
Maybe not. I think that a lot of people might lose some weight since they can longer afford to live high on the hog anymore and will actually have to do physical labor (since they are qualified for nothing else). A diet of beans and rice and some good old fashioned work might add some years to today’s lard butts.
It won’t drop. The majority of illnesses are caused by overnutrition, lack of exercise, and other problems associated with too much prosperity.
What are Beanie-Babies going for these days?
Do Beanie-Babies have a clearly defined relationship historically to inflation/income/rent?
I have a few beanie babies somewhere. Some of the birds and sea creatures were pretty. I liked the octopus and the flamingo, especially. Maybe I should find them in case my friend visits with her 4 year old kid this spring…
I completely agree with you cougar and studies of investor behavior have shown this to be true. There are people you could not talk out of real estate in 2005 no matter how logical the argument. There will be people who will be so terrified of real estate at the end of this correction they will not be able to see opportunities in front of them no matter how well a property cash flows. Yes, we have a couple years of more pain before buying will make sense (and we really need to see where incomes end up) but it will make sense again at some point if you want to look at it as a true investment.
I think a lot of the kool-aid drinkers won’t buy again UNTIL the next bubble whatever it is. (Yes, I think a lot of people managed to get themselves screwed by the NASDAQ AND Beanie Babies AND real estate and will never learn to buy when everyone else hates an asset class.) I also think a lot of the people who saw the bubble will be unable to act on opportunites when the time is right because a lot of reactionary fear seems to cripple even the smart people. But there will be investment opportunites again. Although this is showing my bias in that I don’t think the world is going to end which maybe makes me a moron too.
“…But there will be investment opportunity again”
That,…or 6 Billion people will start throwing rocks at each other.
Tide Detergent…Check
Asphalt…Check
Concrete…Check
Corn…Check
Bayer Aspirin…Check
Red wine…Check
Lego’s…Check
Whittle toy trains…Check
Lipton tea…Check
Chicken Noodle Soup…Check
Wheat…Check
Steel & Aluminum…Check
Electricity…Check
Cotton…Check
Rubber…Check
Honey…Check
D / C / AA & AAA rechargeable batteries…Check
Solar recharger…Check
Propane…Check
Hand cranking flashlite…Check
30-06 ammo…Check
Pulp products…Check
Scotch…Check
Wine & beer…Check
Map of shortcut to cave…Check
Fox Fire Boxed set…Check
Water purification equipment…Check
Seeds…Check
Studebaker stock certificates…Check
“Everything I ever really needed to know…I learned in Kindergarten”…Check
Neil’s “All Natural” popcorn…Check
Tin-foil-hat with titanium/gold metal core…Check
Person A existed in the very recent past.
Person B doesn’t exist.
Funny… I see some of those people on HBB everyday. Where have you been?
Person A was wrong and Person B may be right, except as regards timing — maybe more like 10 to 20 years with no substantial recovery than 100 to 200 years.
Have you not heard that timing IS everything? If person A got out in 2006 he probably made out like a bandit. He can just say he changed his mind or something.
Asset prices, no matter going up or going down, can’t go in one direction forever, no matter what that direction is. Having said that, we still have a long way to go on the way down before going back up again. However, I am not smart enough (and I doubt anyone is) to be able to say to any degree of certainty to a point to say “forever” or “never” or whatever.
Oh no! The top agent on Long Island has had to sell all his polo ponies!
We’re looking at a new Hamptons
by Jeff Miller
Published: March 4, 2009
A study at Miami University of Ohio in 2005 discovered something interesting about really smart people. They tend to crack under pressure, burdened by the very notion of failing.
Does that explain why the biggest brains seem so clueless about how to fix the financial mess we’re in? And why they continue to do stupid things?
Duh, beats me.
But seriously, it was neatly summed up in a recent Hank Plante CBS column about Virginia Hammerness, whose grandfather, A.P. Giannini, founded Bank of America. Citing, for instance, the bank’s purchase of “the near-bankrupt Merrill Lynch brokerage, even after learning that huge bonuses were paid out to Lynch employees right after the deal was announced,” Hammerness wondered aloud, “What kind of idiots are running that bank?”
She also recalled how her grandfather, after the 1906 San Francisco earthquake, propped up a wooden plank on the street and started making loans. All were based on a handshake, and all were repaid.
So here we are, in the midst of another kind of earthquake, and it seems like not enough people are following old A.P.’s worthy example. Banks aren’t setting up planks to make loans. Instead they and consumers alike are falling prey to Keynes’s paradox of thrift by hoarding money, which slows the economy and kills jobs, which further slows the economy, etc. and etc.
Here’s how bad it’s getting: A mansion in Bridgehampton that roared onto the market in 2006 at $24.95 million is now whimpering for a mere $12.95 million, and still can’t find a buyer.
That was noted in a recent Wall Street Journal story headlined “The Hamptons Half-Price Sale.” The story also reported that Hamptons broker Enzo Morabito, who labels himself “#1 agent on Long Island,” has sold all his polo ponies.
I’m not trying to generate sympathy, as if that would be possible while speaking of polo ponies and Hamptons manses. Instead, I’m trying to get a grip on The Great Smackdown and what will happen next. Will we “come together and lift this nation from the depths of this crisis,” as President Obama exhorted the other night, or will we turn on each other like members of the Donner party?
Well, as the crater deepens, there are signs of the latter out east. Example: Embattled Wachovia Federal Savings Bank has sued former Suffolk County Legis. George Guldi, charging that he “pocketed $1.8 million as part of an elaborate mortgage fraud scheme involving his late father’s Water Mill home,” as reported by The Southampton Press. Guldi’s response: “If someone gave me $1.8 million, I would have remembered it.”
And there’s that persistent, acrid whiff of revenge in the air. Take, for example, this remark in a recent City File New York story: “… don’t be surprised if recent college grads end up turning ex-Lehman COO Joe Gregory’s $32 million Bridgehampton home into a booze-soaked share house.”
Even that scenario might be optimistic, it appears. Reports suggest that summer rental activity, such a reliable barometer of Hamptons and Wall Street weather, is under a dark cloud. “Hamptons rental season not hot,” proclaimed The Real Deal a while back, citing transactions down 80 to 90 percent from 2008. The New York Post chimed in with “Summer Lows; big bargains hit the Hamptons rental market,” noting that some shoppers are offering less than half the asking price for some glam palaces, evidently without blushing.
“Welcome to the new Hamptons,” said another Wall Street Journal story, “where the boom’s sunny days and Champagne nights have given way to foreclosure notices and sales at discounts of 25 percent to 30 percent and more. Some buyers are making offers of 50 cents on the dollar, and less.” Brokers are reportedly referring to “Lehman houses” and “Madoff houses” like they used to speak of termite infestation and murder scenes.
“We are entering what might be called Hamptons 4.0,” wrote “Richistan” author Robert Frank recently (and hopefully?) in his “Wealth Report” Journal blog. “… a little less traffic, slightly shorter restaurant lines and lower prices at the local Ralph Lauren shops and Citarella stores. It will be like the new Hummers – slightly smaller but still outsized.”
Not everyone is so optimistic. A commenter summed up the case for the pessimists as follows: “blah blah blah.”
http://libn.com/blog/2009/03/04/miller-we%E2%80%99re-looking-at-a-new-hamptons/
From the WSJ article “The Hamptons Half-Price Sale” referenced above:
At Prudential’s Bridgehampton office, Broker Lynda Ireland spends much of her time now dealing with offers from individuals she calls “investors.” “They are putting $1 million to $1.5 million offers on homes that are $3 million to $4 million,” the 25-year Hamptons resident says.
Ms. Ireland herself has been unable to sell a four-bedroom Southampton house she purchased unfinished from a builder in 2006 and put work into it. In 2007, Ms. Ireland put the home on the market for $925,000. The property languished. About four months ago, she rejected an offer of $680,000, sure she could get more. Now, faced with two mortgages and a plummeting market, Ms. Ireland emailed thousands of colleagues and potential customers. “Owner Is Ready to Make a Deal Before They Lose the House,” the email read. The note gave a new price: $595,000, which “is still negotiable.” She’s now entertaining bids at $550,000 — 41% below her original asking price.
“She’s now entertaining bids at $550,000 — 41% below her original asking price”.
“Entertaining bids” Indeed, she sweating bullets, ain’t no entertaining going on.
I’m thinking ‘Donner scenario’ myself.
Donner?,…Party of 25 million? your tables are ready, LOL
I live on the edge of some pretty nasty hoods and my opinion of human nature, always at a fairly low level, hasn’t improved at all over the past few years.
A.P Giannini didn’t make LOANS at that rude counter. What he did was hand out $20 each to people who claimed to be Bank of Italy depositors, no proof required. In those days people were more trustworthy. Giannini knew that people would trust him if in turn he trusted them, and at that time people needed to “withdraw” a few dollars from savings just to live on for a few days.
IIRC Bank of Italy didn’t become Bank of America until circa 1930.
Will $hitti break the buck today?
Go, go, go!!!
Candy-Crappin’ Unicorn™ gonna pull out another one of those “weekend bailouts”. And it’s not even the weekend.
FPSS,
Can you point me in the direction or translate what you are posting about?
Thank you
Posted too soon. Found what you were talking about.
About two years ago, Citi’s market value was above $270 billion. Today its market cap is a little over $5.4 billion.
Just, wow. 98%
Now is a great time to buy! Now is a great time to buy!
Ooops, sorry folks, had to turn off my NAR bot.
It had better be a nice road.
35,000 South Florida jobs to be created from I-595 construction
By MICHAEL TURNBELL
South Florida Sun Sentinel
Wednesday, March 04, 2009
The planned rebuilding of Interstate 595 is giving renewed hope to unemployed South Floridians who covet the thousands of jobs the $1.79 billion project is expected to generate.
The state expects to sign a contract with Spanish construction conglomerate ACS Infrastructure Development within the next week.
Once that happens, the frenzied task of filling jobs will begin.
Florida’s jobless rate topped 8 percent in December, the highest level in 16 years, according to the latest figures available. The biggest job losses continue to be in construction, which is why the I-595 project is so attractive to anyone who has worked in the industry - in management or operating heavy equipment
Well hiring a Spanish construction company is sure convenient, I guess American companies don’t want to do that kind of work either.
In Fl I’ll trust the Spaniards over the locals (both the good ole’ boys and Cubans.)
I think a contractor from this country is excluded from the “buy American” provisions in the stimulus bill, a part of the watering down. Always check the fine print.
Sorry if this has already been posted:
Rick Santelli cancels on the Daily Show, so Jon Stewart rips CNBC a new one.
It’s about time. On the eve of this last wave of selling, they were pumping the turnaround. These guys aren’t financial journalists. They are clowns without makeup.
+1 All they do is lead the sheep to the slaughterhouse. I would love to see some of the e-mails CNBC gets nowadays. Lol!!
lol.
best quote from Jim Cramer: “That’s why the market won’t quit no matter how bad actual companies are doing.”
I disagree. I think this one is better!
“You should be buying things and accept that they’re overvalued. But accept that they’re going to keep going higher…”
What???
From the Virginia Pilot:
http://hamptonroads.com/2009/03/33000-local-homeowners-owe-more-homes-are-worth
33,000 Local homeowners owe more than homes are worth.
$hitti breaks the buck!!!
YEAHHHHHHHHHHHHHHHHHHHHHHHHHH!!!
JPM’s chart looks ominous.
Send in the clowns.
What surprise rumor can the PTB leak via Bubblevision this afternoon?
MUSTARD SEEDS I TELL YOU!!!!!
MUSTARD SEEDS!!!!!
LOLOL that mustard seed thing cracked me up as soon as I started hearing it.
The mustard seeds have been washed away by the Great Financial Flood and sent out to sea.
Is that the infamous descending triangle I see on the 3 month chart???
Funny now that housing prices are going down, people are opening the history books and finding that real estate going down is not so impossible after all!
http://www.brownstoner.com/brownstoner/archives/2009/03/this_is_not_the.php
Brownstoner dug up a New York Times article from the era when the brownstones were actually being built, 130 years ago.
“In the lower part of Brooklyn, houses which rented last year for sums ranging from $200 to $700 will generally be let for the same figures this year. But on all other houses there will be very considerable reductions, and owners of houses which have been rented for more than $1,000 will have to make reductions amounting to 25 per cent., or even more, if they want tenants.”
“Many new houses have been erected in Brooklyn during the last year, but mostly in the newer neighborhoods. These are now in the market for sale, and, as has already been said, many persons are looking about for houses to buy, but as yet very few sales have been made. All the Brooklyn real estate agents do not believe, with the one already mentioned, that bottom prices have been reached. One of them with whom a Times reporter talked emphatically said that he believed affairs would get worse rather than better. Prices now asked for houses and lots, he said were lower than last year’s prices, and he could see no prospect of improvement.”
What cost $1,000 in 1879 would cost $21,998 in 2007 according to my inflation calculator.
I believe those are *annual* rents, correct? I think that’s how NYC apartment and house rents were quoted back then.
Any guesses how long until they RS UYG?
:Citigroup Inc (C) (NYSE Exchange)
NEW Real Time: 0.99 -0.13/-11.71% 11:29 AM ET
Should I buy a candy bar or a share of Citigroup?
Candy bar. At least you can eat it when you are huddled in your hiding place as the roving masses take your rice.
Or, given this country’s obesity problem maybe hide with the rice and leave the candy bar on the kitchen counter.
March 5 (Bloomberg) — U.S. worker productivity in the fourth quarter unexpectedly fell as the economy shrank even faster than companies cut jobs and hours.
Productivity, a measure of employee output per hour, fell at a 0.4 percent annual rate, the first decrease in a year and much less than the 3.2 percent gain estimated last month, the Labor Department said today in Washington. Labor costs climbed 5.7 percent, more than prior projections.
They’re not productive because they’re worried about losing their jobs. Or because they’re too busy paying attention to dire economic reports instead of DOING their jobs.
…or they’re “scared stiff”
Is anybody getting shell-shocked yet?
Nah, I was raised on stories of war and depression. It’s an “old country” thang.
No — saw it coming after reading the budget proposal and after concluding the stress test was a ‘keep the zombie alive’ ruse. After accepting the fact we were heading for more pain, I fell into a vile “gather food and water” dark mood, however. I apologize if I rubbed anyone the wrong way. I’m over it. I think.
“I fell into a vile “gather food and water” dark mood, however.”
I kinda noticed that, but I didn’t take offense and I don’t think anyone else did either.
I tried to gather food and water too. My favorite flavored water shot from 1.00/bottle to 1.69/bottle in one week, so I was starting to think I was too late.
Buy a water filter and some fruit juice and make them yourself.
My fave is Trader Joe’s ‘Lemon Ginger Echinacea’ at about 70% water and 30% juice. Reuse old plastic water bottles, keep them in the fridge until you need them.
I just knew my ‘too stingy to die’ ethos would pay off someday
“I apologize if I rubbed anyone the wrong way. I’m over it. I think.”
Along with this I’ve seen you defend yourself a couple times against anyone who might have thought you gleeful over the carnage. Personally, I have never gotten that impression from your writings at all.
In fact, I really like what you’ve had to say about markets and stuff and I see them as just a clear headed view of what’s going on, unclouded by and large by emotion.
“Is anybody getting shell-shocked yet?”
No, “burn baby, burn” sums up how I feel.
No, because on a day to day basis it doesn’t really affect me all that much, IMHO.
I am, however, concerned I’m going to be out of position so to speak when Mother Of All Short Squeezes 2 makes her appearance.
Nope…I’m good here…just the usual multiple, ‘friendly fire’ renter’s flesh wounds so far
I carry a six pack of xanax. I don’t take it but I will if I start hyperventilating. Honestly, start having fun now while nobody’s watching.
I never lose sight of how some folks…make monies $$$$$$$$$$$…by being an… “efficient” corporate free American “business enterprise” kinda gives you that warm-hearted sorta feeling.
“New hires at DCM train for three weeks in what the company calls “empathic active listening,” which mixes the comforting air of a funeral director with the nonjudgmental tones of a friend. The new employees learn to use such anger-deflecting phrases as “If I hear you correctly, you’d like…”
“You get to be the person who cares,” the training manager, Autumn Boomgaarden, told a class of four new hires.”
You’re Dead? That Won’t Stop the Debt Collector:
by David Streitfeld
Sunday, March 1, 2009
provided by: The New York Times
Love it!!!
Why work hard when there are fools to be parted from their monies?
History of America in a nutshell. Consult any 18th or 19th century newspaper.
Who were the Mizner brothers?
Wow - haven’t heard that name in a while. I assume it’s the namesake of “Mizner park” in Boca, right? I never really knew the history, other than there was some rich person named Mizner. I didn’t realize there were brothers.
He’d steal a hot stove and come back for the smoke.
Yep, they were the part and parcel of the 20’s Florida land boom to transform Boca Raton from swampland into “paradise”.
Dang it Hwy!!! You melted my resistance to reading the NYT.
Had to look this up to make sure it wasn’t something from the Onion.
“In times of illness and death, the hierarchy of debts is adjusted,” said Michael Ginsberg of Kaulkin Ginsberg, a consulting company to the debt collection industry. “We do our best to make sure our doctor is paid, because we might need him again. And we want the dead to rest easy, knowing their obligations are taken care of.”
The dead to rest easy???? O my freakin’ God.
Isn’t it just too freakin’ delicious for words?
It just makes me wanna go out and slap somebody’s dead grandma!
Everything’s Amazing, Nobody’s Happy
http://www.youtube.com/watch?v=yk7nKjr9Keo
A little lighthearted fun… enjoy!
Thanks!
Exactly!
“you’re sitting in a chair @ 30,000 feet!”
(Hwy goes back to planting birdhouse gourd seeds, humming, home home on the range…)
Google, what a tool!
Ah, thanks for that
He definately has a point:
“Give it A SECOND! Its going TO SPACE and BACK!”
LOL
The following article will appear in the NYT magazine this weekend. Oh, Cleveland, we hardly knew ye (except when the Cuyahoga River caught on fire).
All Boarded Up
ALEX KOTLOWITZ, New York Times
March 4, 2009
Cleveland is reeling from the foreclosure crisis. There have been roughly 10,000 foreclosures in two years. For all of 2007, before it was overtaken by sky-high foreclosure rates in parts of California, Nevada and Florida, Cleveland’s rate was among the highest in the country. (It’s now 24th among metropolitan areas.) Vacant houses are not a new phenomenon to the city. Ravaged by the closing of American steel mills, Cleveland has long been in decline. With fewer manufacturing jobs to attract workers, it has lost half its population since 1960. Its poverty rate is one of the highest in the nation. But in all those years, nothing has approached the current scale of ruin.
And in December, just when local officials thought things couldn’t get worse, Cuyahoga County, which includes Cleveland, posted a record number of foreclosure filings. The number of empty houses is so staggeringly high that no one has an accurate count. The city estimates that 10,000 houses, or 1 in 13, are vacant. The county treasurer says it’s more likely 15,000. Most of the vacant houses are owned by lenders who foreclosed on the properties and by the wholesalers who are now sweeping in to pick up houses in bulk, as if they were trading in baseball cards …
For maybe one dollar each.
Don’t know why my reply to FPSS are being filtered out, but here is the point I was tying to make with the above post:
1) I wasn’t saying they will be able to reflate housing prices, they won’t. Prices will fall to historical ratio vs income and rent, and probably overshoot on the downside by quite a bit. I have previously said that prices may keep falling or stay down until 2015. There is no easy or fast way out of this, prices will have to correct to normal levels, then some. I am by no means some type of bull on RE.
2) My point was that some people use “ever”, “never” or “forever” in their prediction of asset prices, and to me that is dangerous because that pertains to what, 100, 200, or even 500 years into the future? I doubt anyone can predict asset prices more than 10 years into the future with much consistency, so how can people just say “ever”, “forever” or “never” when it comes to asset prices?
3) Lastly, some people post a lot each day and that is good and all, but before you click on that “Add comment” button, try to read what the person you are replying to is saying, and don’t rush to judgement and call people names, as adults can debate reasonably without doing so.
We can safely say that home prices will NEVER reach 2006-prices in real terms in my lifetime.
That’s a pretty safe NEVER to go by.
(And we have evidence: Florida prices didn’t reach 1926 peaks in nominal terms until 1985-ish.)
Well that’s very different than someone saying “prices will never reach the peak of 2005 prices” without saying it is in real or nominal terms or without qualifying one’s age, and thus lifetime. If someone is 20 years old, then one’s lifetime could be 70 years from now easily. And guess what, like you said FL RE bubble happened twice within that timesframe.
Anybody thinking about diving into the UYG pool again??
I’ve been riding it down from $2.50, so I say GO FOR IT!
LOL bink you sound like me!!!
I got in too early too, @ 1.88; only a small amount, thankfully.
Still think it might make for a decent trade in the 1-to-2-week timeframe, though.
Blano:
Thot about it. But the theory of entities being “too big to fail” isn’t holding much water with me today. Don’t think I can buy the fear now. If I’m wrong, I haven’t lost.
But I don’t live and breathe these things.
The financials couldn’t even muster a rally yesterday.
I’m in UYG for a trade.
I like Alcoa (AA) for a trade at this 5.45-5.50 level too.
Got out of MO this AM.
This market is making me queasy. I can’t bring myself to own SKF anywhere near this level, which isn’t helping.
Seems like SKF would be a short here, as it’s near highs I think.
Don’t listen to me though, I managed to lose money on it when it was at 100.
As I noted above, I’m concerned about being out of position when Mother Of All Short Squeezes Part 2 shows up.
The gold bugs should peek their antennae back out from the woodwork any time now …
Blano
Prev post eaten.
Said I can’t buy the fear this time on UYG.
And I sho’ wouldn’t be holdin’ it long, as others (that’s you, cat) have noted.
I’ve noticed in the last few weeks when I log my NOD numbers that the defendant on some of the cases is beginning to show up as a bank. Any ideas why this may be?
I could understand if it were a defuct bank, but I’m seeing names like Deuschte and BofA which are still animated, if zombified.
Maybe it’s CDO pools taking back collateral from banks who aren’t forwarding payments?
“defuct”
LOL
The jobless rate in Fresno County hit 15.7% in January, according to figures released this morning by the state Employment Development Department.
That’s what I was trying to allude to with the Lance Armstrong item last week. The race watching throngs weren’t taking off work. Most of them probably jobless.
Don’t kill the messenger. The fact that mark-to-market accounting shines a bright light on the consequences of management failure does not imply that mark-to-market accounting causes a corporate failure. Moreover, changing accounting rules to allow more use of Enronesque shell games to hide balance sheet problems behind an obfuscatory cloud of numbers will not make the problems go away. This thinking is just plain dumb — what more is there to say about it?
[TGT] Moody’s cuts Target’s outlook to negative from stable
MARKET SNAPSHOT
Mark-to-market accounting debated
Some blame requirement for ‘debt spiral,’ but others say rule isn’t the problem
By Kate Gibson, MarketWatch
Last update: 3:10 p.m. EST March 5, 2009
NEW YORK (MarketWatch) — Equities investors looking for some hope in an ugly market on Thursday pointed to a news report that a House panel next week plans a hearing on mark-to-market accounting rules blamed by many for aggravating the financial sector’s troubles.
But one accounting expert said the brouhaha over the rule has some auditors and CFOs opting to value various assets at the last transacted price. In many cases, that approach isn’t even required — and doesn’t make the most sense.
“The application of the rule has been done in a way to prevent second guessing,” with some using only the last price paid for an asset when other factors such as interest rates and risk premiums can also be legitimately considered, said David Larsen, managing director and member of the portfolio valuation practice at Duff & Phelps.
This stock market correction may not last forever, but it sure feels like it will!
Countdown to the close: 19 min 59 sec
MarketWatch dot com
INVESTOR ALERT
Dow industrials fall below 7,000
March 5 2009 3:39 P.M. EST
Bulletin
Dow industrials down 300 points in final half-hour of trade
Street back on the downside
Respite from sinking stock prices ends, with Dow down more than 200.
• Stocks can’t slide forever, says strategist Liro Audio | Gold resurfaces
Will it be safe to get back into the water by year-end 2010?
BULLETIN
DOW INDUSTRIALS DOWN 300 POINTS IN FINAL HALF-HOUR OF TRADE
PETER BRIMELOW
The end is nigh — and that’s good
By Peter Brimelow, MarketWatch
Last update: 12:06 a.m. EST March 5, 2009
NEW YORK (MarketWatch) — A veteran bear says the end is near — the end of the great bear market. But we’re not quite there yet.
In its latest issue, Growth Fund Guide draws elaborate technical parallels with the 1929-1932 bear market. In the short run, it concludes that this year’s decline “could last for many more days.” But not forever.
Putting the stock market in a longer perspective, Growth Fund Guide says,
“Since its October 9, 2007 high, the DJIA has appeared to us to be in the process of continuing the major bear market that began in early 2000. Recent price action seems to suggest that we could see one or more declines and advances that could rhyme with [the 1929-32 bear market] … history is suggesting that that a meaningful low in the U.S. market is most likely to take place within the last six months of 2009 or sometime during 2010.”
Is this market correction going to resemble a complete performance of the Wagner Ring cycle by the time it is through? It is beginning to feel that way, and we have just reached the intermission for the first part of Das Rheingold.
Oh, come now, we’ve already had the incestuous love duet between the Unicorn and Congress in the “stimulus”.
But we’ve haven’t had the Valkyries ride out quite yet. So I guess we’re in the middle of Die Walküre. (Das Rheingold is technically only the prologue.)
Kill the wabbit
Kill the wabbit
Kill the wa-a-a-abbit…
My favorite Looney Tunes of all time!
I’m kinda partial to The Rabbit of Seville myself…
video DOT yahoo DOT com/watch/42703/964406
“…Kill the wa-a-a-abbit…”
“My favorite Looney Tunes of all time!”
Bugs: “eh, I don’t think so…you outta see what happens when the “wabbit” is the lowest price on the bounty list…”
Is this market correction going to resemble a complete performance of the Wagner Ring cycle by the time it is through?
Alternately (for the non-opera inclined), can we draw parallels to The Kinks’ song cycles Arthur and/or Preservation Act I&II?
The Pretty Things’ epic S.F. Sorrow?
The Minutemen’s Reagan-era punk magnum opus, Double Nickels On The Dime?
Or is the whole thing kind of meandering, overcooked, and somewhat squirm-inducing, like one of Miles Davis’ later jazz fusion jaunts?
Psychological methods of selling s*it should be destroyed!
I miss the village green.
Cue the Valkries
“history is suggesting that that a meaningful low in the U.S. market is most likely to take place within the last six months of 2009 or sometime during 2010.”
I would hope so - given that the indices can’t actually go below 0!
(right?)
We haven’t really started into the Bear market just yet.
Tits up!
Seriously. Especially if you look at the inflation-adjusted Dow, that’s exactly what it looks like.
Question for FPSS or anyone else who survived Chicago-school religious inculcation and reads here: Doesn’t rational expectations suggest that if market participants all “know” the market will bottom out at 4000 (or whatever the right level is), then it will happen much sooner than year-end 2010? Why is the market as sticky as molasses any more?
Because there’s rational expectations and there’s the actual operational aspects of how those expectations are translated into reality.
Knowledge of the latter doesn’t truly answer your question but it at least leads you onto the path for the answer.
This is a true non-answer. I’m channeling my inner California Zen.
sticky market?
this is a greased pole of throbbing pulsating fear coming at you over your shoulder. Bottoms up.
not that there’s anything wrong with that
seriously, tip the T&A
Another day, another alleged Ponzi scheme uncovered. This time, it’s from the heart of Texas, with the Commodity Futures Trading Commission accusing Ray White and his hedge fund of stealing $10.8 million from investors.
There’s never just one cockroach.
Hunt,
Brother.
‘Giving money and power to government is like giving whiskey and car keys to teenage boys’
P.J. O’Rourke
“When the people find they can vote themselves money, that will herald the end of the republic.”
- Benjamin Franklin
“…is like giving whiskey and car keys to teenage boys”
Those were memorable days…it’s amazing what can take place in ‘54 Ford…in Kansas.
California is gaining on us, but here it’s up to 11.6 percent unemployment in January.
http://www.freep.com/article/20090305/BUSINESS06/90305068/Michigan+unemployment+rate+rises+to+11.6++
Wook in the miwwor, Barney…….
http://www.cnbc.com/id/29532023
March 5 (Bloomberg) — Former KB Home Chief Executive Officer Bruce Karatz was indicted in an alleged scheme to defraud shareholders by awarding himself and other executives millions of dollars in undisclosed stock options, federal prosecutors said.
The indictment contains 20 counts including securities fraud, U.S. Attorney Thomas O’Brien in Los Angeles said today in a statement. Karatz, 63, faces as much as 415 years in prison if convicted on all counts, according to the statement. He’s due to appear in court March 26, O’Brien said.
YESSSSSSSSSSSSSSS!!!!
Oh, Billy! Billy, billy, billy!…..
Start of many more to come?
No effin’ way! somebody might go to jail!!?
This is a good start. Is there a chance any of the other builder CEOs will soon boil in a similar pot of legal stew? One can only hope!
You can start with the Toll Brothers. They sold *tons* of stock right at the top - I’m sure they must used insider info due to the timing and the scale of the sales.
time signature comment test.
The Congress can change contract law?
They like to pretend they can do whatever they McF-king want, but hopefully we still have laws on the books and courts to enforce them in order to prevent a complete abdication of centuries-worth of legal precedent.
The Congress can change contract law? They have already proven that, by abolishing “gold clauses” in private contracts (1933) and were upheld in so doing by the US Supreme Court.
AND THANKS FOR ALL THE FISH !!!!!
It’s: So long and thanks for all the fish!
Gor, you can take a trader out of bumf*ck but you can’t get him to “make quotes” correctly.
why dont you roll me baby
down to nowhere Texas
leave Oklahoma far behind…….
still testing Ben.
The U.S. Census says there are now 306 million people in the U.S.A.
So now, more than 10% of the U.S. population
gets Food Stamps:
WASHINGTON (Reuters) - A record 31.8 million Americans received food stamps at the latest count, an increase of 700,000 people in one month with the United States in recession, government figures showed on Thursday.
Food stamps, which help poor people buy groceries, are the major U.S. anti-hunger program, forecast to cost at least $51 billion in this fiscal year ending September 30, up $10 billion from fiscal 2008.
“A weakened economy means that many more individuals are turning to SNAP/food stamps,” said the Food Research and Action Center. Last summer food stamps were renamed the Supplemental Nutrition Assistance Program, or SNAP.
The average food stamp benefit is $115 a month for individuals and $255 a month per household.
Enrollment for food stamps in December was up 2.2 percent from the previous month with increases in all but three states. Ohio had the largest increase among large states, up 3.4 percent, to 1.26 million people. Texas had the largest enrollment, 3.05 million, up 1.8 percent.
The previous record for food stamp enrollment was 31.6 million last September, which included “disaster” stamps for states hit by hurricanes and floods.
In April, food stamp benefits will increase temporarily by 13 percent under provisions of the recently enacted economic stimulus law. Ellen Vollenger of the Food Research and Action Center said some families will see increases of $80 a month.
Back from Australia. Today’s flight was empty, too. We got tired of fighting with the agent to get compensated for the extra day so we just settled for an upgrade from Business to First (not a big deal these days; United International Business now has flat bed seats in business, too.)
Business was about 1/2 full when we peaked behind the curtain, and the fight attendant told us the whole plane was about 2/3 full.
It looks like there’s a bit of a building boom down there, too. Some condo projects in Canberra are still going on, in various phases of construction not sure who’s going to live there. It’s hard to emigrate to Australia.
Still, I think they’re better off: 20 Million people in a huge country with lots of natural resources.
Here’s a question for you all:
What do you think the risk is that Congress and BO will put the brakes on short sales? I’ve been shorting the DOW ever since Dow 11,000 via NYSE:DOG (Proshares Ultrashort Dow 30)
I’m confident we’ll have a Dow 5000. What I’m not sure of is what will happen if BO suddenly declares war on short selling
I don’t think so - they may try something if the dow is down in the 5K range but like everything else they try it will be ineffective. How many of the houses are short themselves?
I’m neutral on the market right now - positive on gold and silver (as usual) and only short via the prudent bear fund. Covered my shorts last october/november and starting to pick up some oil and gas etfs to hedge my future consumption. They go lower, I buy more. Demand is being destroyed, but there’s a floor somewhere and lots of supply is being shut down while the rest is going to face more onerous taxes and regulations under the messiah. Solar and wind ain’t gonna cut it, and theres zero talk of nuclear, so I’m thinking 2-3 years out energy could be good, unless we go mad max.
Used to live in Australia myself, and have been back several times for work and like it a lot. I would advise young people to go to grad school there and try and get in that way. They control their immigration - that’s a big part of why the country is a nice place. I’m looking at buying the etf of their currency to hedge my future travels there.