Bits Bucket For March 11, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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When they try to tell you it’s the housing market, look ‘em in the eye and say “It’s the derivatives, baby!”
Wow…This 2006 interview with Jim Cramer should find some TRACTION with the Daily Show gang…Video with link
“In it, the host of Mad Money says he regularly manipulated the market when he ran his hedge fund. He calls it “a fun game, and it’s a lucrative game.” He suggests all hedge fund managers do the same. “No one else in the world would ever admit that, but I could care. I am not going to say it on TV,” he quips in the video.
He also calls Wall Street Journal reporters “bozos” and says behaving illegally is okay because the SEC doesn’t understand it anyway.
Here are some gems:
-On manipulating the market: “A lot of times when I was short at my hedge fund, and I was positioned short, meaning I needed it down, I would create a level of activity before hand that could drive the futures,”
On falsely creating the impression a stock is down (what he calls “fomenting”): “You can’t foment. That’s a violation… But you do it anyway because the SEC doesn’t understand it.” He adds, “When you have six days and your company may be in doubt because you are down, I think it is really important to foment.”
-On the truth: “What’s important when you are in that hedge fund mode is to not be doing anything that is remotely truthful, because the truth is so against your view - it is important to create a new truth to develop a fiction,” Cramer advises. “You can’t take any chances.”
http://www.huffingtonpost.com/2009/03/11/jim-cramer-shorting-stock_n_173824.html
There’s a great many crooks in the shorting/hedge fund game. Some need to spend time in jail.
I wouldn’t be the least bit surprised if a few on this board know some of these crooks personally.
“I am NOT a Crook”
“I know nothing!” “I see nothing!
NOTHING!!
test
crooksandliars.com/john-amato/jon-stewart-creams-jim-cramer-daily-sho
Jon Stewart nailed him. What an indictment of the rah rah coverage by CNBC of the massive financial crimes of the past decade.
If something went over my head, it wouldn’t be the first time, but here goes.
Where is Hozzie? Has anybody heard from him? Is he out ice fishing, or fixing combines, or doing other preparatory to planting things?
I miss his level headed and compassionate take on the world. And although I can’t begin to follow the market in real time, or even to understand most of what he was saying (being blessed with a job that is not a McJob that I want to keep because I get good problems to noodle), I really really really liked his commentary.
OK, I’ve done my mourning in public.
Was gonna ask the same thing this morning.
Was wondering that myself.
We do see the partner-in-crime, mr. vozworth from time to time.
I know you FPSS,
you’re gonna miss me when Im gone……
I read a couple of weeks ago that he is ill. I wish him a speedy recovery and hope he comes back soon. Hoz, we miss you!
I miss him too Jane.
Leigh
Ditto here…
Was wondering about Hoz myself. Hope he returns soon so I can have another debate about mark-to-model price vs. mark-to-market price with him.
+1.
Definitely miss hozzie, and wish him a speedy recovery…
You’re sort of becoming a sex symbol on here, I think…lol…smart, non-controversial, ethical. Get well soon, bud.
I think he’s over 70 too.
He still has a way with the ladies. I suspect he is secretly Sean Connery or Hugh Hefner.
I secretly think he is retired from employment at the Fed.
maybe Ben can email and find out?
I e-mailed him earlier today.
No word yet, will let ya know when I hear back from him.
Best,
Leigh
Thanks, Leigh.
I’ve always appreciated Hoz’s posts, and hope he is feeling well.
Please let us know if you hear from him.
That’s it. He IS a sex symbol. Like one of those stoic English lords of yore who sallied forth against the Normans, again and again, drawing himself up and imparting strength to the troops even though his ribs were taped and knees still aching from last week’s border incursion.
Aye,
For surely he is -
Sir Hoz!
Leigh
Global banking taskmaster Greenspin claims his conduct at the Fed didn’t cause the bubble.
http://tinyurl.com/dzmcop
Didn’t he claim it was caused by the fall of the Berlin Wall? Interesting that there was no housing bubble in Germany, though.
It’ll actually be cool to see his excuses evolve as our understanding of the bubble reaches a consensus. One thing is for sure, he will always deny playing a significant role in order to protect his “legacy”. Because of his messiah-like status, it’ll be pretty hard to pass the buck on this one.
Greenspin just did as his Masters instructed and found a way for the sheeple to willing put the yoke of debt slavery around their own necks.
We’re in a big mess, says TTT. And he should know, since he was one of the key players who got us here.
http://news.yahoo.com/s/nm/20090310/ts_nm/us_usa_financial_geithner
Anyone interested in doing a mind-meld with little Timmay?
He can’t even sell his house in Larchmont, NY.
How’s he gonna fix the bigger house?
Turbo-Tax Timmay!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
BWAHAHAHAHAHHAHAHHAHAHHHHHHHHHHHHHHHHHHHH!!!
“Anyone interested in doing a mind-meld with little Timmay”?
My mind may explode, but I’d love to try a Kung-Fu grip on his punk azz.LOL!
Why not just schedule a “home viewing” of the Timmays?
I’d be up for it. It’s only a short train ride away from New York (~ $20-ish) and the entertainment value has to be priceless.
Plus, who knows what you might find? A discreet tucked away copy of Six Saucy Sistahs of Sodom, etc.
perfect spot for the next HBB meetup?
Why not just stick your finger down your throat. Same result, less effort.
Nope…I don’t DO snakes
It was 2:00 am, and I couldn’t fall asleep. Therefore, I decided to come to work at 2:30 am. I’ve been awake since, and I should go home around 11:00 am.
Sometimes, I feel more productive when I work at night; in the mornings, it takes me a while to fully wake up. Plus, I have a need for a nap after lunch around 1:30 - 2:00pm, which I normally don’t take. Thus, I am sleepy for a couple of hours in the afternoon. By the time I am fully awake again, it’s almost time to go home… lol
reminds me of when I worked a summer as a freshman-hs. in the Assessors office in Hemet.
I think I was the only one on time, and throughout the entire day.
Now I recognize they were ‘out in the field’. Shoot. What an easy job. should have stuck with it?
I wish I could do that. Unfortunately, I’d have to call my patients to come in at 2 a.m., and that might be a little weird. I need to retire so I can be like Brett.
Can’t you volunteer to work night shifts in a hospital (assuming you’re a doctor, IIRC)?
A kindred spirit. I don’t know what you do, but I analyze things so that our clients understand them, in a way that the courses of action sort of suggest themselves. The clear lines begin to emerge, for me, in the pre-dawn hours. I think it is because I am so tired that things reduce to bare bones. No frills, no side trips, no excursions into fancy. The relative weights of things settle of their own accord. The great Swedish film maker Ingmar Bergman called this “the hour of the wolf”, and the term has always struck my fancy.
http://realestate.yahoo.com/promo/would-you-walk-away.html
Would you walk away?
By CNNMoney.com
Mar 10th, 2009
With 1 in 5 homeowners underwater, many pundits predict a flood of people walking away from their homes. Five readers talked to us about why they are - and are not - sticking around.
Fewer walking away than you think
—
Emphasis as in the article, which is 5 out of 5 stories of plucky home owners sticking it out.
The costs and benefits analysis seems… odd. Where is the benefit of not paying the mortgage? Doesn’t this offset the costs of moving that are implied to be so big?
Hey Matt,
I gave it a quick read. They’re primarily talking about the timing of the costs of walking vs staying. If you walk, the moving costs are/hit to credit score etc are right up front, while staying hides the much greater costs over years of paying too much. It’s more about psychology than money.
When the prices are skyrocketing, it’s all about fundamentals. When they are dropping like stones it must be psychology
Interesting that none of interviewees are underwater by more than $100K. It would seem the kool-ade stops flowing prior to taking a $100K bath.
I think it also makes a difference how financially literate they are, and how dependent they are on a “credit rating” for their day-to-day life.
You’ll get two types who walk away:
1. The Houseflipper/scamster type who doesn’t care about anything, and walks away because they think it’s “unfair” that their investment didn’t pan out. (The sentiment of our Administration reinforces their feeling)
2. The person experienced with business deals and negotiation, who does a simple calculation and sees if he’s better off walking away, despite any sunk costs, and renting or re-buying an identical house down the block.
The people who won’t walk are those in the middle who fit into neither category. The ones who bought a house because it was the right thing to do: the American Dream.
Hmmmm, also willing to walk are those that fall into both categories 1 and 2. Donald Trump comes to mind.
“The people who won’t walk are those in the middle who fit into neither category. The ones who bought a house because it was the right thing to do: the American Dream.”
That may be the case now, but I’d certainly expect that to change as we move further into this crisis. Plus, I strongly suspect that the reason why a lot of these homeowners haven’t yet walked away is that they had some sort of cash reserve.
I’m really interested in seeing what will happen on the housing front this summer. That’s when the Alt-A’s will reset and all the people who have recently been laid off will have burned thru their cash reserves.
Desperate attempt to keep people from looking out for their own financial interests. The MTG contract is a contract to either pay the MTG or give back the asset which is secured by the MTG. It’s that simple, as long as you do one or the other, you’ve fulfilled the contract.
I really don’t agree with those who encourage these people to “stick it out” and “man up”. First off, anytime I see terms like that, it’s almost always means that someone is trying to “force” or “coerce” someone else into doing something that’s against their best interests. And second, as I’ve said many times, the numbers involved just make this too big a financial hit for middle class America to afford. If you bought a home for 400K that is now worth 200K, you’ve take a 200K hit. You also borrowed all that money, so the 200K hit is actually ~400K that you have to pay back. Middle class people (many of whom are in exactly that situation or worse) simply cannot afford that kind of damage to their balance sheets. This is a business decision, not a moral decision, and not an emotional one. The right decision, from a business perspective, is to walk away.
“The MTG contract is a contract to either pay the MTG or give back the asset which is secured by the MTG. It’s that simple, as long as you do one or the other, you’ve fulfilled the contract.”
Not if you hold a mortgage in a recourse state.
Don’t get me wrong, its still a business decision, but there are even more severe consequences to consider.
Yes, you’re right, I should have mentioned that. It certainly effects the decision making process, that’s for sure!
Note to self: Only take out mortgages in non-recourse states. Otherwise, rent.
(Back from my disappearance. Hopefully Hoz won’t be out as long. Mine was work… too much of it. As well as market chasing in these fine times for bears.)
Recourse states… I have dug around a bit and can’t seem to find a decent list of which states are recourse and which are not. Does anyone have a pointer to something like that?
The reason is, in the last couple of months a few friends have fallen on hard times, and some are considering walking on their mortgages. Specifically, in Virginia, Maryland, Texas, England (OK, he’ll just come to the USA for his next job and never go back). And given what I see of some other friends’ mortgages, more might be ready if their jobs take a stumble.
What with all the cash-out refis and HELOCs, I think there more people out there with recourse loans than we know. I wonder how many of them are aware of this.
Recourse or not, you still cannot get blood from a turnip.
One of the most important points that very few policy-makers understand.
“Not if you hold a mortgage in a recourse state.
Don’t get me wrong, its still a business decision, but there are even more severe consequences to consider.”
Not after a couple of years of sticking it out.
Can’t get blood from a turnip.
My ex-millionaire ex-boss sold a gated community mansion for 850k at the right time (2006-7, IIRC) to a GF who defaulted 6 months later.
The only thing he did wrong was turn around and buy another house for $650k with $100k down, at 9% now going to 15%, a few months before his company collapsed. I’m sure it seemed more sane than the previous house, at the time.
He could have bought a $200K house with $100k down, but hey, then he wouldn’t have looked like a big shot anymore. How could his little kid get out of the leased SUV at school and hold her head up without owning a pool.
At some point all the toys are sold off and the economy still sucks and all you can afford is turnip soup.
Financial Times
Insight: Rebalancing the books
By Jeremy Grantham
Published: March 10 2009 15:54 | Last updated: March 10 2009 15:54
The proximate cause of our problems today is the breaking of the US housing bubble, and the ultimate cause is the remarkably widespread belief in rational expectations: that economic man behaves like a logical machine that in turn causes markets to tend to efficiency and equilibrium. In such a world the tech bubble was rationalised by Alan Greenspan as an internet-driven productivity burst, and the housing bubble (in reality a 100-year event) was so preposterous an idea that Ben Bernanke could not see it, such was his faith in efficiency.
In an efficient world all asset price changes merely reflect fundamental change and thousands of well informed investors are bound to be right. There is never anything to fear and we can all keep dancing forever.
Asset price bubbles have preceded all the great busts – both in markets and economies. They are extremely dangerous and destabilising and great efforts should be made to moderate these bubbles as they form. Our recent squad of leaders were, if anything, cheerleaders, glorying in the splendid new world order. Unfortunately this includes our current financial leadership, none of whom blew the whistle although all of them were on the scene enjoying, it seems, the “new moderation”.
Well now the tide has gone out and $50,000bn of perceived wealth in the US (stocks and real estate) has declined to below $30,000bn, leaving the original $25,000bn of private debt stranded. Now born-again prudent bankers would not surprisingly prefer better ratios of collateral protection than they had before. Where $50,000bn of perceived asset value supported $25,000bn in debt they would presumably prefer the current $30,000bn to support about $12,000bn.
With brutal speed, we have realised we are not rich after all and that we are dangerously under pensioned and over debted. We suddenly face a long period of frugality that in the long run may be good for us.
AKA deflation.
Would you agree with this equation?
Current Deflation + Anti-deflation Policy Stance = Future Inflation
If I “printed” up $500B and buried it in my backyard, would that be inflationary?
Unless the money enters the system via loans, the money-printing can only legitimize past inflation not create future inflation.
I’m certainly no expert on the subject, still it seems that even if all 500B entered the system, I can’t see how it would be inflationary since it still doesn’t make up for the 20T or whatever the T number is that has disappeared.
Add to FPSS comment, the size of banking/lending industry has shrunk. Some of the big printing presses (Bear, Leh, the entire Subprime lending industry) don’t even exist. Some printers have run out of ink and other supplies and are searching for deposits to lend, MS and GS.
Moreover, nobody trusts any of the paper these clowns produce. They need government guarantees. Even FNM is having trouble printing monies. FHA is having trouble guaranteeing printed stuff. FDIC is running low on insurance funds. The printing presses are on ice. Oh, and the spreads are widening on the Big Kahuna.
Adding to this comment, lending is not done in the abstract. It is made against collateral.
I only see falling values of collateral - falling home prices, falling stock prices, falling bond prices, falling incomes.
Of course, this won’t go on forever. But it can go on for far longer than most people believe.
Big Kahuna = ?
The spreads on credit-default swaps for U.S. government debt jumped to 97 basis points Tuesday, nearly seven times higher than a year ago and 60% higher than the end of last year, to a level roughly in line with those of France, according to data supplied by Markit. The spreads also hit a record last week.
MarketWatch: U.S. sovereign-credit spreads rise sevenfold in year
“credit-default swaps for U.S. government debt”
Having a hard time processing that. Who is qualified to insure the USG debt? Is this just financial masturbation?
It is.
Heads you win, tails you default.
Is $500B all you think has been created?
To this and to Blue’s comment below - the credit tightening is indeed deflationary - it is the unwind of years of inflation - mostly the past 35 years or so. However do you really think that the powers who run things and make tons of moolah from said inflation will allow this to continue to happen? In my very strong opinion the answer is no. They will allow the balloon to deflate to a manageable level, patch it, and then pump it back up.
Anyone who thinks we’ve seen the last of the pumping - the stimulus, bailouts, rescues, etc. is sadly mistaken.
Naah, I just pulled that number out to illustrate my point.
BlueSkye - Right! Is AIG going to write the swaps on Uncle Sam too? Does anybody else get the feeling we are all being taken for morons?
What if production decreases faster than the supply of money? Isn’t that still inflation? Everyday I see more people hording cash while producing less. When everyone finally goes to spend again there will be nothing left to buy.
One thing I’d add to Packman, they will allow the bubble to deflate, buy up cheap assets, then re-inflate.
What if production decreases faster than the supply of money?
This is the first “correct” question I have seen in a long time. Bully on you for bringing it up!
The answer is to ask where was the supply of money the largest? It wasn’t in forwarding credit to homepawners or credit cards or loans to buy Chinese art and Panama condos.
It was in the derivatives market. Ballooning amounts of debt in a zero-sum game that had very little to do with anything. Until that deleveraging goes away, I don’t see inflation. (On a side note, that’s why they need to bail AIG so badly.)
So unless I see where the next credit expansion game comes from, I don’t see it.
They have truly h*mped the pooch with this one.
they will allow the bubble to deflate, buy up cheap assets, then re-inflate.
Of course, that has always been the banker’s game since time immemorial.
This is the history of 19th century America in a nutshell: inflate, deflate, wipe out debtors, buy on cheap, lather, rinse, repeat.
This is news to people?!? Read a history textbook or two.
Or read an allegory on the subject like the Wizard of Oz.
I have posted answers to both john and the LAIG-abeest but they seem to be stuck in the system.
In answer to who CDS on the US treasury. Yes, it’s financial masturbation, as long as the news flow keeps getting worse, there’s more demand for CDS so if you buy them now, you can sell them later for more money. I don’t think there’s any way you could realistically collect if the Treasury defaulted.
+1 on the bluto.
The game is the opposite of Alice: <i<jam today but never jam yesterday and jam tomorrow.
Inflation is determined by the supply of money and the velocity which it is spent, assuming a linear relationship between prices and monetary quantities.
Interest rates near zero would be a strong indicator that there is no longer a linear relationship. They’ll be writing new textbooks about monetary theory from this experience once this all calms down.
FPSS - If you have a chance to repost, I would still like to hear your reply. Unless, of course, it was flagged by the system for cruel mockery, which I could do without.
John, it was a perfectly earnest response. In fact, I called it the only interesting question I have heard in a very long time.
If it doesn’t come through (for whatever reason), we can chat about it again later. I don’t feel like repeating such a long argument.
“Who is qualified to insure the USG debt?”
It’s turtles all the way down.
Thanks FPSS. I always appreciate your insight.
You’re more than welcome, John!
PS :- My bark is worse than my bite.
Har! Says you!
You frighten the big bad wolf!
Bark my butt –
Da teeth are sharpy!
Measured in flesh pounds!
Chuckles,
Leigh
thats a keeper.
The current deflation is the unwinding of the big inflation we’ve had for the past 50 years. It has nothing to do with the future.
That’s right, Blue Skye. Even the rock crumbles.
Particularly when the “rock” is made out of “paper maché”.
Perhaps - but I would say it has to do with the future in that it will make it easier now to re-inflate. We had reached a natural limit, and in fact surpassed it. Now that we’re going back below the natural limit, the downward forces won’t be there like they have been.
The current bailouts etc. are priming the pump. They may not directly result in future inflation (though I still think they will to some extent), but they’re setting the table, both in terms of precedents, and in terms of rebuilding the banks’ reserves. Even if those reserves aren’t directly pumped out to the system - future bailouts will, because they won’t be needed as much for the already-replenished reserves.
Comment by Professor Bear
“Would you agree with this equation?
Current Deflation + Anti-deflation Policy Stance = Future Inflation”
______
reply:
WSJ
Fed Considers Its Next Actions
Amid Unrelenting Strains, Options Include Purchasing Treasurys, Fannie-Freddie Debt.
(yes)
No, this is the legitimization of PAST inflation not FUTURE inflation.
Read above.
Why isn’t this absurdly obvious point making any traction?
Comment by Faster Pussycat, Sell Sell
“No, this is the legitimization of PAST inflation not FUTURE inflation.
Read above.
Why isn’t this absurdly obvious point making any traction?”
___
Ok, I’ll try to warm up the neurons.
I’m making coffee.
I’ll reread again and again. Slap my face with cold water.
All of us are not created equal, some of us have less of the neuron-synaptic thingys firing all on 6 cylinders simultaneously.
I’m not trying to beat you up (well, OK, I really am) but still let me explain via a parable:
Imagine you bought a ding-dong for $100,000 and someone loaned you the money. Suddenly, the $100K is in the system (via the seller), and they’re all partying it up because they’re all so rich-rich-rich and prices are rising accordingly.
Now you declare bankruptcy effectively bankrupting the loaner of the monies. The Fed prints up $100K and gives it to the loaner. Did they create NEW inflation?
The answer should be obvious.
Can I try FPSS?
The central bank had a slowly growing money supply, which the banks used to lever themselves up WAY too much. The effective money supply was based on lending institutions having 30:1 or 50:1 ratios. Prices rose on this inflated effective money supply. In other words, past price increases were based on banking irresponsibility.
Now that the banks are deleveraging, the effective money supply has dropped off a cliff. Prices are dropping in response. The money being poured into the system is trying to fill the deleveraging void, and thus justify past price increases.
I don’t know where equilibrium is, but you can bet that there won’t be any significant price increases in the near to mid future. Note I didn’t mention anything about lost jobs/recession above.
It’s a deflation in ding-dongs though. Oh the humanity.
I agree with you FPSS - I made the same point some months ago. Printing money to make good on the loans only covers the past, not the future. Not printing enough money and letting some loans go bad will actually cause deflation in the future.
It’s a deflation in ding-dongs though. Oh the humanity.
ROTFLMAO
You hit my funny bone which has sorely been needing some tickling lately.
To extend the story:
Imagine the 100k came from a 10k monetary base, which the bank turned into 100k via 10x leverage (fractional lending). The Fed monetized the whole banana after the default so now the base is 100k. The bank is deleveraged for now, but at some point won’t they leverage back up again? When they do, someone will now have 1Mill compared to 100k worth of partying to do.
At some point (maybe not this go-round), we’re gonna get a hangover the size of the moon and its going to kill someone.
“Imagine you bought a ding-dong for $100,000 ”
___
If only I were so lucky!
(actually that did help, thx)
p.s. Oly probably hasn’t read this one yet.
But the Fed never monetizes the whole banana - that’s the whole point.
You are failing to understand the game - deflation is awesome for bankers - they get to buy assets for cheap, and then play the game of “chase the banana” one more time.
Most of the ‘money-credit’ expansion came from securitizing junk loans and parking them in thinly capitalized Special Purpose Entities (SPEs), or thinly capitalized balance sheets with increased leverage ratios, or selling them to unsuspecting investors here and abroad.
Since there is no market appetite for any of these junk loans without explicit government guarantee, the whole thing is collapsing. The Fed and Treasury are propping it all up with liquidity facilities and guarantees, hoping they can get the thing expanding again. They can’t. Even if we bought all the junk off the criminal lenders, lending will not be the same, discontinuous change.
“…deflation is awesome for bankers…”
Esp. those who buried some of the $700 bn in TARP monies under a mattress to be brought out again once the fire sales begin.
No but they do monetize part of it, which means the peak the next go round is gonna be higher. That was my point.
And I’m not saying its bad for banks. I get it. The banks “lose” money on default, but the money they lose is made up money anyway, it was just loaned into existance. In return for cartoon money defaults they get real assets, not a bad gig if you can get it.
Esp. those who buried some of the $700 bn in TARP monies under a mattress to be brought out again once the fire sales begin.
Heck, thats part of the game. When your play money goes poof, you just come back for more.
Honestly, I’m getting to the point where I’m not even mad about it most of the time anymore (I guess I’m in the disillusionment phase of ideology). If the sheeple are so stupid as to allow this to continue then f’em. You wanna exchange stable money for a game of political baseball? Fine.
How do I get to play the other game…the one where I’m always a winner? That’s the question I ask most of the time now. Unfortunately for me I’ve only been asking it seriously of myself for a year or so when I should have been asking it for, oh, like 15 years.
Faster posted:
“No, this is the legitimization of PAST inflation not FUTURE inflation.”
This is what I believe, thanks in large part to you. When I hear people yammering on about future inflation, I always respond with: “we already HAD inflation”.
which means the peak the next go round is gonna be higher.
Aah, but herein lies the rub. There are external constraints.
This only works if the collateral (= income) is higher and someone is willing to plug the deficit at ever lower yields.
Which is not gonna be the case since Chindia is online.
It works for a while but not forever.
You wanna exchange stable money for a game of political baseball? Fine.
Don’t get mad. Play the game. Correctly.
Live severely under your means to raise capital, and then, play. And even then live seriously under your means to raise some more. While partying, of course.
Unfortunately for me I’ve only been asking it seriously of myself for a year or so when I should have been asking it for, oh, like 15 years.
Unfortunately for you, this game has been on for the better part of a few thousand years or so. This is hardly new. This is about as old as it gets.
What’s new, of course, is that you just woke up.
Problem with jumping into the game is that most of us have this nasty little thing called integrity. You have to learn how to get rid of that. Once you do though, it’s all GOOD!
Problem with jumping into the game is that most of us have this nasty little thing called integrity.
Sorry, this is buncha hoo-ey.
I’ve done nothing unethical in my life. But I understand the game. And I play it by my understanding of it and how others are likely to behave.
So does Buffett, I may add. In fact, I might add that his call for “government guarantees” goes an extra-step towards unethical because he needs the backstop.
There’s a buncha peeople and a game. Your only choice is whether to play or not to play.
Incidentally, the best book I’ve read on how to start playing is, “The Richest Man in Babylon”. It’s an older book, so you should be able to find it cheap somewhere.
Wikipedia has a good summary. http://en.wikipedia.org/wiki/The_Richest_Man_in_Babylon_(book)
For a different take on playing the game the Mystery of Banking is available free from Mises.org
http://mises.org/Books/mysteryofbanking.pdf
warning gigantic pdf
Gotta agree with FPSS’ “There’s a buncha peeople and a game. Your only choice is whether to play or not to play.”
Emotionally, the previous posters’ outrage is somewhere I’ve been at, but to no benefit.
Parents and grandparents taught me that Wall Street was rigged and a place for suckers to lose their money in.
They were right of course. Somehow that makes it’s difficult for me to change my thinking to FPPS. But, it’s the rational road.
“No but they do monetize part of it, which means the peak the next go round is gonna be higher.”
They monetize part (e.g. TARP) which ends up in the hands of bankers who know how to remain patient until the onset of fire sales.
Emotionally, the previous posters’ outrage is somewhere I’ve been at, but to no benefit.
I grew up with this, and I share most of it (otherwise I wouldn’t be here) but I understand the game, and the need to play in it.
My father, on the other hand, never got past the rage. It never got to a point where he actually understands the technical mechanics and the moving parts of it all.
And he’s an engineer. With a grad degree from one of the top schools and a list of patents that made him quite comfortable!
But he simply doesn’t get basic financial calculus. Which is just freakin’ shocking!
At some point, you must get over the anger and learn the game.
AKA deflation.
Asset price deflation. Not necessarily correlated to consumer price deflation. It was in the US in the 1930’s, it wasn’t in Japan in the 1990’s.
This time around - we will see.
Stuff you *want* will deflate in price.
Stuff you *need* will inflate in price.
Again this point has been made here before
Let’s put it this way - if you want to predict the future, imagine the worst case scenario for the middle class wage earner. Work backwards and the steps that got you there are exactly what will play out in the future.
You guys crack me up.
And, I thought I was cynical.
Not so fast, yensoy. I have noticed significant price declines at the supermarket lately. We had tremendous inflation in food prices, deflation is setting in. Milk is down to $1.99 a gallon, chicken at $.69 a lb, cheese has come waaay down, apples have dropped $1 per lb, lettuce is cheaper by $.30 per head, and I could go on and on and on.
The effects of inflation and deflation are the same. Real wages fall, savings is lost through default or devaluation. It is harder for everyone to get food.
Everyone is so focused on supply, they ignore international demand. If money supply shrinks, the treasury defaults. A treasury default is the same as dollar crash from the perspective of the holders of 12T in government debt.
Foreigners leaving the dollar can cause a rapid fall in the value of the dollar… if it gains momentum the dollar will be destroyed even if the supply doesn’t go to infinity as the demand will drop to 0 without a credible assurance that the government will not print, or default.
Good point virginiatechdan, they key is international demand, namely china and saudi.
Foreigners leaving the dollar can cause a rapid fall in the value of the dollar…
The sum total of foreigners cannot leave the dollar. France can sell to China and vice versa but the collective total cannot sell their holdings for anything but US goods and services.
Isn’t this totally obvious? Must we go through this absurd rigmarole every freakin’ morning?
“The sum total of foreigners cannot leave the dollar”
Sure they can. They can stop buying Treasuries, and use their huge dollar reserves to buy up USD denominated assets.
The result will be inflation (in nominal dollars).
Do they WANT to do it? Probably not. But they sure can.
What are they going to buy?
The US will be more than happy to sell them extraordinarily inflated assets that don’t cover the cash flow (”Hello, Rockefeller Center! Hello, Pebble Beach!”)
Plus, like always, you can always “block” buying stuff on “strategic” grounds (”Hello, ports! Hello, Unocal!”)
You, and all others, seem to assume that these rules exist in some kinda vacuum. Or that the rules of the game can never be changed by the players.
C’mon, man! There’s plenty of evidence to the contrary.
The US is a master at this game. Until the reserve currency shifts. Then, we are sooooooooooooo scr*wed.
“Until the reserve currency shifts. ”
= inflation.
“You, and all others, seem to assume that these rules exist in some kinda vacuum.”
I saw first hand what happens when the government starts printing money (via “loans” and “capital infusions” for politically connected.) I lived through hyper-inflation.
I agree with you, we’re currently in a deflationary spiral. Question is, for how long? Debt monetization eventually will lead to inflation. It’s not a question of “if”, but of “when”, IMO.
I lived through hyper-inflation.
You live in NYC and with this data point, I’m guessing you’re Russian or Argentinian. (long shot: Zimbabwean but unlikely.)
There’s a difference though. Debt monetization is legitimizing past inflation not creating future inflation.
Both the US and the UK “get” it. This is not Brazil or India or Russia.
I am not denying the scope in “theory”. I am denying the scope in “practice”.
“Debt monetization is legitimizing past inflation not creating future inflation.”
How so? All this monetized debt, i.e. cash, WILL find its way into economy. Not to mention deficit spending… US may “get it” in theory, but will they be able to stop the genie once it escapes the bottle?
You’re not predicting “deflation foreva”, are you? It’s a question of timing, no?
Just scroll above and read. I’m not repeating everything ONE more time for your benefit.
“Until the reserve currency shifts. ”
= inflation.
So wrong you are. Read ‘Secrets of the Temple’ by William Greider for the hard evidence on why you are wrong.
I should have said, “inflation in dollars”. Is currency collapse so difficult to comprehend?
Most surprising aspect of the unraveling: That leading central bankers completely missed the housing bubble; or is it merely that they are good actors? I really cannot tell which is the better explanation.
A great man you say? All I see is the actor creating his own ideal image.
– Friedrich Nietzsche –
Right now, I don’t trust the banks. I don’t trust the CEOs running the banks. I don’t trust the list of regulators supposedly regulating the banks and protecting my monies. I don’t trust the Money Markets. I don’t trust the Fed. I don’t trust the people overseeing the Fed. And, I’m beginning to lose trust in the guarantees.
Until they get rid of the Zombies, and banks are able to raise capital independently, and regulators are able to restore trust to our financial system instead of undermining it, our economy is not going anywhere. In fact, we’ll probably be stuck in the mud for a L..ong, long time.
So….once your coffee can is full of Franklins, what’s your L…ong strategy?
Keeping my family safe.
It seems to me as though the banking system may be suffering from a shortage of TRUST at the moment.
PB,
What’s worse is that we’ve already had (2) small banks go under YTD in OR. But that by no means those that remain open are by any stretch “healthy”?
When you look at their bal. sheets, there wasn’t that much that sperated them apart. Their models were almost identical: Lend to builders, become incredibly wealthy, go golfing.
It’s turned into a revolving door protection racket. No one pays attention or does anything until there is a run. Where did Rubin and Gramm work after ushering Glass-Steagall? How much did they earn after leaving public office?
What entity generates all these fanciful Treasury recapitalization schemes? Who is running AIG? They keep repackaging the same sh!t and advertising it as new and improved. What’s changed?
If you think this assessment is wrong, look at the evidence. Where is AG working today? How do you bury Zombies? Convert debt to equity. What is the biggest bond fund? It prefers Treasury purchases and burning down homes over normal market adjustments. You think these clowns care about free-markets?
“You think these clowns care about free-markets?”
You think these clowns care about whether America survives as a country?
If so, please provide some supporting evidence (and good luck with that).
“Where did Rubin and Gramm work after …”
Is Phil Gramm Involved in UBS Case?
By Ken Silverstein
A reader e-mailed with an interesting question:
Former Senator Phil Gramm is a senior executive with Swiss banking giant UBS. According to the information filed Wednesday in the criminal case against UBS, some UBS executives are being treated as unindicted co-conspirators. “These executives occupied positions at the highest levels of management within UBS, including positions on committees that oversaw legal, compliance, tax, risk and regulatory issues related to the United States cross-border business.”
So the question is: Did Phil Gramm serve on any of these UBS committees?
If you were a company that had hired the former chairman of the Senate Banking Committee that designed the regulatory system under which your company operates, wouldn’t if be a breach of your fiduciary obligation to your shareholders NOT to have him on the legal, compliance and regulatory committees?
That’s why yesterday’s dead cat bounce rally off some memo circulated by Citibank CEO Vikram Pandit just made me roll my eyes. What, as if some bank CEO can be trusted to report the truth?
Frankly, I think it was more like “we Wall Streeters want to have a rally today, and this memo sounds like a good excuse”.
The housing bubble was not the cause of ‘our problems’ Mr Grantham, you tool. Credit bubble and majority of US population living beyond their means is closer to the actual cause. I mean that lazy, gluttonous Americans are the root of the problem. Does anybody think they can actually change? Nothing a nuclear bomb can’t fix, I guess. Wish I was more hopeful…
The economy that so many want to patch up was unsustainable on so very many levels.
It’s funny to watch them talk about wind turbines and solar panels…and then some how think to square that with the restoration of outright overconsumption - building too many houses, making too many cars.
Credit bubble and majority of US population living beyond their means is closer to the actual cause
This would not have been possible without the housing bubble. Housing was the only asset that most Americans had to borrow against. No way could they have borrowed so much money unsecured, credit bubble or no credit bubble.
not have been possible without the housing bubble ??
Housing was the “Biggest” pipeline but like edgewater suggested above it really was much broader than that….Cars, Boats, Flat screens etc. all on easy credit….You did not need to be a homeowner to fully participate…
there were housing and credit bubbles all over the world before the US housing bubble really took off.
I think it all started with Easy Al’s bailout & bubble blowing policies in 1987. Housing bubbles started in several countries shortly after that, often near the financial capitals of the world, and grew ever since (at least until 2000, and sometimes much longer).
I agree that housing is one of the most attractive assets to leverage against - except maybe your own body which you can’t walk away from (yet), so I wouldn’t be surprised if the next bubble is in the medical / genetics etc. area.
outright overconsumption ??
On the money again edgewaterjohn…
One of the articles yesterday said that in Georgia, home building permits had dropped 75% since 2006. Thats probably a lot of jobs; a lot of people were employed building those houses. You’d think it would be a good time to get home remodeling jobs done with all those people looking for work but something I found out years ago was that you get quoted higher prices when the economy is bad. They want to make enough in a one week job to live for the whole month because they don’t know when they’ll get another job.
I agree with this line of thinking completely. Everybody keeps throwing around the term “deflation” but as far as I can tell true deflation describes a situation where people quit spending “real capital”. However, we all know that most of the spending that happened during the bubble happened through credit…implying that “deflation” is not really the correct term for what is happening right now. I think the best term for the current turmoil is simply “credit collapse”.
“Well informed investors”. Doesn’t that require transparency and enforcement of rules?
WSJ dot com
* OPINION
* MARCH 11, 2009
The Fed Didn’t Cause the Housing Bubble
Any new regulations should help direct savings toward productive investments.
By ALAN GREENSPAN
We are in the midst of a global crisis that will unquestionably rank as the most virulent since the 1930s. It will eventually subside and pass into history. But how the interacting and reinforcing causes and effects of this severe contraction are interpreted will shape the reconfiguration of our currently disabled global financial system.
[Commentary] Chad Crowe
There are at least two broad and competing explanations of the origins of this crisis. The first is that the “easy money” policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today’s financial mess.
The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria. However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages. Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months. This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate.
This should not come as a surprise. After all, the prices of long-lived assets have always been determined by discounting the flow of income (or imputed services) by interest rates of the same maturities as the life of the asset. No one, to my knowledge, employs overnight interest rates — such as the fed-funds rate — to determine the capitalization rate of real estate, whether it be an office building or a single-family residence.
If the Fed can’t cause a housing bubble, who can?
A multitude of factors contributed:
1. Low interest rates
2. Lax lending standards
3. Crooked appraisers
4. Momentum of rising house prices
5. Firm belief that RE can only go up
6. Mortgage interest deduction
7. Tax-free cap gains
Of these, only the last two remain, plus #1 to some extent. With each factor that vanishes or diminishes, the bubble bursting accelerates. #4 and #5 are trend-driven variables and they have definitely turned in the opposite direction. The PTB are desperately trying to keep #1 valid but it is in danger of breaking and if it does will cause a further fall.
#2 imo is the biggest factor of them all, and I don’t think the bubble can ever be reflated unless they bring this back (and they partially can, with 40- and 50- year mortgages, govt-backed mortgages, first-time buyer tax credits, etc although I would be extremely disgusted if they revived liar loans and 50%+ LTI loans).
You missed: derivatives bubble.
Mirror, Mirror on the wall
Who’s the biggest of them all?
elephant in the room
That’s just it. The Fed didn’t “cause” the speculative mania. That’s why they can’t stop its reversal.
The Fed didn’t directly cause it. However, the Fed was the ONLY person in the room who could have stopped it dead in it’s tracks. For that, they are the most at fault for this entire mess. All it would have taken was a few words out of AG’s mouth that the bubble would have stopped in it’s tracks. Instead, he comes out with BS like “a little froth”. WTF is that? Houses were overvalued by 100-300%. And, by the way, most people are using at LEAST 80% margin accounts to buy these overpriced assets.
A recipe for disaster. Greenspan can argue that the food sucked because of the ingredients. But he was still the chef, and it was his job to make sure that the ingredients were good.
I blame HGTV.
This is not entirely true. They could have taken out the HELOC market if they wanted. Most, if not all HELOC’s are directly tied to prime which is directly tied to fed funds which they have complete control over. The decision to max out your HELOC @ 12% is much different then at 6% or chepaer. No doubt idiots would still be idiots, at would have maxed out at much higher rates, but the Fed could have controlled a major part of the problem.
I blame people who bought houses believing that it would make them rich.
The others were just enablers.
Low interest rates or high, the bubble would have stopped short had no doc loans, zero down, option loans etc not been available. More than anything a simple IRS income verification would have prevented the bubble as it would have locked house prices to real incomes. The Fed had a real responsibility to ensure this happened and that regulation was in place to ensure banks were making prudent financial decisions.
GH,
How can we empasize that enough? All manias ( yes believe it or not ) start out as legitimate bull mkts. By allowing, nay, encouraging NINJA loans, we sealed our fate.
emphasize?
I thought Congress gave the FED the authority to set mortgage downpayments requirements about a decade ago.
Did Greenie not think to excersize his power?
The man just doesn’t know when to quit, does he? Go away, you obfuscating wrinkly pr!ck. Infamy and shame awaits you. Our children and our children’s children will never forgive you.
Candidate for an Ice Flow - although I read Eskimos did not really do that to their elderly.
Can anybody explain the difference between Alan Greenspan and Bernard Madoff?
Both are old farts
Both ran giant ponzi shemes
Both lied for a living
at least Madoff has plead guilty. Greenspan gets paid to speak!
Mean Green was ordained by the taxpayer/voter and govt to do what he did.
Hand waving.
Overnight Fed fund rates can’t influence mortgage cap rates obviously, but it is Fed regulatory laxity regarding capital reserves and oversight of derivatives and “new lending products” that he won’t address.
The ol’ Objectivist he never quite wound up being will never admit that the free market can’t regulate itself. However, just like Fannie and Freddie have proved, you can’t serve two masters: the public interest and the stockholders.
Greenspin claims it wasn’t his job, but clearly it was within his power (and the SEC’s) to enforce existing rules and keep a watchful eye. Underlings who brought it to his attention were swatted away like gnats and conveniently forgotten.
Doesn’t the Fed control reserve ratios? And, if the banks are able to borrow at lower costs (even if just overnight), doesn’t this enable them to drop rates across the board?
IMHO, low interest rates are the cause of lax lending standards (and securitization and crooked appraisers and an exploding derivatives market, etc.). Many fixed income investors (banks, insurance companies, even seniors trying to live on the interest from their savings) need to get a certain return on their money over time. If rates are held too low for too long, these investors start to move out on the risk curve in order to get higher yields. When rates are extraordinarily low, investors have to reach out even further, basically getting into junk bonds — even if they are rated “AAA”.
Also, in order to get a decent return, investors will begin to leverage more and more (and there is plenty of credit in the system to leverage with). This is where the secuitizations came in…and their related derivatives. IMHO, the derivatives market was so successful because investors **knew** the risks were great, and wanted to insure against losses.
Many people at fault here, but at the top of the pyramid sits the Fed.
Boy does this sound familiar.
NY Times
Economic Scene
Banks Counted on Looting America’s Coffers
By DAVID LEONHARDT
Published: March 10, 2009
Sixteen years ago, two economists published a research paper with a delightfully simple title: “Looting.”
The economists were George Akerlof, who would later win a Nobel Prize, and Paul Romer, the renowned expert on economic growth. In the paper, they argued that several financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses.
In a word, the investors looted. Someone trying to make an honest profit, Professors Akerlof and Romer said, would have operated in a completely different manner. The investors displayed a “total disregard for even the most basic principles of lending,” failing to verify standard information about their borrowers or, in some cases, even to ask for that information.
PB….Good post
The ‘looting”, I agree with. Neil bush did it on a small scale with Silverado Savings and Loan with his friends. Loan millions to buddies with no intention of repayment and walk away with the taxpayers holding the bag. That was peanuts but the GAME worked nationally and nearly ruined the Savings and Loan system.
I believe the Investor/Commerical Banks Backup Plan is massive and intentionalvery large scale. Bankers and Investors baked it into their risk equation of wild money, inflated assest commercial RE run-up and were ALWAYS prepared to DUMP it onto the taxpayers if it it ever became unprofitable. Bank failures are the Gov’t’s Nightmare and they will do all they can to them in an orderly fashion if possible.
Because of the leverage risks and massive amounts of these “pure commercial and “business” loans, they will send the banks to the Gov’t. The old traditional Savings and Commerical banks are ONE now and so intermingled that one part brings down the other, and that’s why they WANT 500 Billion back-up for the FDIC…NOW!
In Texas many people went to jail (not all and some for not very long).
Mr. Thornburgh said the Dallas Bank Fraud Task Force now has charged 50 defendants and obtained 32 convictions in the two-year-old fraud investigation. He said 100 more people had been convicted of fraud at banks and savings institutions in the area as a result of other investigations by the Justice Department.
NY Times 1989.
http://query.nytimes.com/gst/fullpage.html?res=950DE5DB1E3CF935A35754C0A96F948260&sec=&spon=&pagewanted=print
Charges seem to be lacking in this current crash though.
Thanks for pointing that out. The current debacle does bear a lot of resembalance to the S and L crisis of the 80’s. Its the shear SCALE that’s diferent. Like comparing an organ grinders pet chimp to King Kong.
“…The investors displayed a “total disregard for even the most basic principles of…(caring for anyone… other themselves)
One of the reasons I think this recession is going to be much worse than most people imagine is exactly this culture of bullsh*t we swim in. You don’t notice it until you’ve crawled up on land and had time to dry yourself off and think about it.
So, imagine tens of millions of American consumers, cut off from their credit cards and cable TV brainwashing for several months by economic necessity, and then being coaxed back into the consumerist fold. This culture looks horrible from the outside, and once you’ve been detoxed for a few months, you’re an outsider.
I’m stingy, not because I don’t enjoy fine things, but because virtually nothing you can afford to buy in this country lives up to the promises.
I’m stingy, not because I don’t enjoy fine things, but because virtually nothing you can afford to buy in this country lives up to the promises.
Sing it, sing it loudly!!!
I had to gag, seen online elsewhere: “Buy RE now: low prices (?!?) and historically low interest rates! How often in your lifetime does that happen?” (paraphrased)
Sadly, this wisdom was commented on a misers blog. I can sense the undercurrent of otherwise reasonable people starting to edge past me toward the edge of the cliff, a trembling in the distance as the herd readies itself to charge off over the edge again.
After all, the Dow is up two days in a row now. We’re saved!
PIMPCO says inflation is on the way…
March 11 (Bloomberg) — Pacific Investment Management Co. which runs the world’s biggest bond fund, joined investors Warren Buffett and Marc Faber in saying inflation will quicken, sounding a warning for Treasury investors.
U.S. government and Federal Reserve efforts to snap the recession will increase costs for goods and services as soon as 2010, Pimco said in a report today on its Web site by Chris Caltagirone and Bob Greer. Commodity producers are also delaying projects, which may limit supply and lead to higher prices when global growth resumes, according to Pimco.
“Inflation will rise,” Pimco said. Treasury securities that give investors protection against higher prices in the economy are “attractive now.”
Pimco is among a growing list of investors who are warning that programs to counter the U.S. slump will increase consumer prices as the economy starts to revive. Investor Jim Rogers, author of the books “Hot Commodities” and “Adventure Capitalist,” said this week U.S. policies will hurt conventional Treasuries, those that don’t offer inflation protection.
wmbz,
Thanks for sharing that, but not (1) single forecast by Bill Gross has been even ‘close’ to resembling accuracy since at least 3rd qtr. 2002.
If he’s “right” at this point it will break like a 24 Qtr. Losing Streak. Why do people invest at PIMCO again?
Bull market (in bonds) genius.
If I were hiring a bond manager, I’d hire someone who had gone through the 1966-1982 market not this excuse for a 27-year old bull market.
FPSS,
True, chances are most of those guys are retired by now. Many of the guys I knew that were among my mentors won’t even comment on what’s going on right now. Guys that traded gov. paper for 30 years and tracked -everything-!
Yet BG is echoing some of my suspicions in this case so I have to set aside my contempt for him.
Maybe he’d like to chase investors out of Treasuries and into…Pimco Bond Funds?
This smells like an attempt to create inflation by getting people to expect it. A very broad version of “buy now or get priced out forever.”
The only thing that shows signs of going up is taxation.
So, this global boom is going to resume its pace in one year! Hooray! We never even have to get back to normal first.
Time to buy, buy buy!
Bring back stoning to death for wrong predictions.
Blue Skye,
Sounds about right? Again, for all the best intentions, this is going to sock it to the W-2 Filers and make being a 1099 all the more attractive.
Clearly that wasn’t BO’s intent. Not to say they won’t try to come after 1099-Filers w/ a hard-on, it’s just that it’s like trying to squeeze a turd. You tell us you’re cutting off this that or the other deduction, we say “fine, never cared for it myself anyway?” and shift over to a safer “square” on the chessboard.
Given the erosion of pay and benefits anyway, how many over the next 4 years will be clamoring to claim Independent Contractor status? I know “I” would!
March 11 (Bloomberg) — Confidence in the world economy waned in March as the recession proved deeper than forecast and the U.S. mounted new rescues of financial institutions, a survey of Bloomberg users on six continents showed.
The Bloomberg Professional Global Confidence Index fell to 5.95 from 8.5 in February. A reading below 50 means pessimists outnumber optimists. Sentiment about Europe and the U.S. slid, while respondents in Asia were less pessimistic about their region, the survey showed. German factory orders fell 38 percent in January from a year earlier, the government said today.
The global economy may shrink for the first time since World War II, with trade collapsing by the most since the Great Depression, the World Bank said this month. The erosion of confidence in the financial system is exacerbating the decline; U.S. banking stocks are down 25 percent since the last survey despite a third effort by the government to help Citigroup Inc.
“The financial crisis and the economic recession are feeding on each other, and that’s adding to pessimism,” said Martin van Vliet, an economist at ING Bank in Amsterdam who took part in the survey. “We’re still in no man’s land waiting for stimulus packages to take effect. The light at the end of the tunnel is still far away.”
Fellow gets a 60 year sentence for stripping houses of copper…
SPARTANBURG, S.C. — A South Carolina man has been sentenced to 60 years in prison after pleading guilty to more than 85 charges related to copper thefts around Spartanburg.
Authorities told the Herald-Journal of Spartanburg that 27-year-old Jackie Anderson Jr. also violated probation, so he won’t be eligible for parole.
Prosecutors say Anderson took plumbing and air conditioner parts, mostly from low income housing. They say the thefts did nearly $200,000 worth of damage to get about $5,000 of copper.
Public defender Roger Poole says Anderson cooperated with police by riding around neighborhoods and pointing out the houses he hit.
Anderson’s charges included more than 40 counts of second-degree burglary and 45 grand larcenies.
Madoff steals 50 billion dollars, and he gets to stay home.
What a country :-\
Wrong day to post this.
He is probably getting sentenced today.
Not yet!
I bet part of the deal is that his wife/sons/employees never get charged for any crimes and get to retire to a life of leisure on all the money Madoff stole from everyone.
Justice indeed.
I heard that this is why he’s pleading guilty. That means no trial and no public uncovering of who else in his family might be part of it. It’s the most defensive measure he can make - take all the heat on himself (a LOT of people had to be in on this).
I read there is no plea deal. He is just going to plead guilty and not cooperate with the prosecutors at all. There has to be a lot of pressure on the prosecutors to make them indict Mrs. Madoff, the sons, the brother, and everyone, EVERYONE who worked there and it should have started a while back since Madoff himself has apparently stonewalled. Madoff saw no advantage to himself in cooperating; he was likely to be sentenced to a long term whether he cooperated or not.
On one of the ABC reports on Madoff, a former employee said Madoff himself had been semi-retired since the early part of the decade. Its not possible that the sons and the brother didn’t know the “business” was a sham and the story that the sons turned the father in is just a story they all made up together.
RE: Madoff saw no advantage to himself in cooperating; he was likely to be sentenced to a long term whether he cooperated or not.
Throwin’ him in Ryker’s for a tad after his attempt at forwarding jewels and random cash to relatives might have given him something to think about, and maybe loosened his tongue.
You have to be a complete imbicile to believe he did this alone.
I’d indict the entire op from the Mrs. down to the underlings who drew up the fake trade sheets. Bernie’s seen his best days, so wtf is prison time to him. However, the Mrs. might fold as to where the monies are hidden if it looks like the Jr.’s are gonna get 50 to life.
Madoff=Mossad. Case closed, he’ll never talk.
PS. Mark Rich was his bag boy.
“He is probably getting sentenced today.”
He’ll kill himself rather than doing time, IMHO.
more likely a ‘heart attack’, like Ken Lay.
I’m very curious about that.
I would.
Not sure he will.
He’s rich enough. Surely he can fork out some of the loot for a “clean” exit.
I know I would.
I’ll be there are plenty of people living on the streets that would jump at the chance to upgrade to the minimum security prison lifestyle.
Guys like that don’t have the stones to kill themselves. He think’s he’s smarter than the government. And a lot of things can happen over 5-6 years.
A little P.R. money, campaign contributions here and there…..Voila! Presidential Pardon!!
I wonder if he has Marc Rich’s cellphone number.
He won’t make it that far. Dead man walking.
Ken Lay is alive and well with a different look in some other place. If you believe he died you should have been selling CDS for AIG.
The prediction is that Madoff will get a sentence of 150 years. If that’s the case, the sentence for the guy in South Carolina should be about 10 minutes.
I thought his sentencing was delayed for a few months.
But the judge could remand him to prison tomorrow. That’ll be the test, whether the judge lets Madoff stay in the $7 million apartment or puts him in prison tomorrow after he pleads guilty. If the judge doesn’t remand Bernie, its a good probability that Ruth will live out her years as a millionairess.
Hope he rots in a federal ‘f-k em up the a$$’ prision for the rest of his miserable life!
ROTFLMAO!!!! LOLOLOLOLOL! Gawd, thanks for the laugh, Sleepr, I needed it. Dang, I’m pounding my chest, can’t breathe, LMAO!
…and he gets to stay home…
With a maid, cook and who knows what else.
Appears that it only pays to steal if you do it
without getting your hands dirty…
It doesn’t matter much where the copper tubing is, but where is the 50 billion?
“Madoff steals 50 billion dollars, and he gets to stay home.
What a country :-\”
Welcome to the land of twisted justice.
Someone needs to check that scale the blindfolded woman is holding. She obviously didn’t see the crook who put it off balance and remains oblivious to it being off-kilter.
I was thinking the same thing!
Okay, let me get this straight…
$200,000 in damage yielded $5,000 in copper.
What does it cost South Carolina to incarcerate a 27 year old for 60 years?
To me it seems like the missing information here is about his previous offenses and the consequent probation.
At face value it seems like a disproportionate response to a $200,000 crime.
Ol’Bubba,
We’re in the process of picking a design for our vacation home and since it will be unattended for much of the year, I’m a little worried about having -anything- metal about the design?
Here in OR, it’s a real issue. They completely stripped the aluminum railing of the Glen Avon Bridge ( only about a 90′ drop off ) and it’s only getting worse!
Still, for this sentence to make sense Madoff would need to get a thousand years or so. Talk about making an example of someone?
Go with plastic/PEX tubing. We did in our Lake house and its great, especially when temps get low and you wonder if you really did drain everything….
“$200,000 in damage yielded $5,000 in copper”
This fellow sounds like prime gov’t (Fed & Treasury) material. SC ought to kick him up to DC where he’ll fit right in.
LOL! Yeah, on an ROI basis, he’d actually be an improvement. We’ll call him the Salvage Czar.
I thought TuboTax Tim was the new Salvage Czar ?
TIMMAYYYY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Sorry, I am silly like that sometimes.
I’ll bet that $200,000 in damage is on properties that are worth about $10,000 each.
sure seems a bit disproportionate …
We had problems with copper theft in Netherlands too last year, and for some of these cases a life sentence would be VERY appropriate. These thieves stole the copper wires for the train signaling lines, causing some severe train accidents.
Another example is a guy who stole the wiring from the lighting protection of a small historic church. Result: church burned down to the ground at the next lightning strike.
In Netherlands such thieves usually get just a warning (if there is no prior conviction) or they have to do 20-40 hours of community service (where they usually don’t turn up, because nobody checks that).
I remember stories from Argentina where people stole the copper/bronze pothole covers after the crash, causing others to fall into the potholes at night (very dangerous …). Many countries are now investigating plastic pothole covers (ours are made of some kind of iron material judging from the rusty look - probably less attractive).
The sentence in this case is probably too high but definitely it should be a stiff sentence. This is a vicious criminal, a sociopath who cares only for himself. He should be off the street until he gets old enough to be physically less able to do harm to others.
Heck, here in Texas there is a man serving 16 years for stealing a Snicker’s bar.
The state should be able to use him as a prison laborer and farm him out to industry for $10 - $15 an hour. He should be very profitable to the state unless he is disabled, ill or violent. Google “prison industries”.
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The sentence is insane. Totally out of whack with the severity of the crime, the US Justice system gone amok. I don’t see why he should get anything more than 5 years. As OlBubba points out, it’s going to cost a lot of money to keep this person in jail for the term.
He probably did the $200,000 worth of damage in a few months so keeping him in prison is cost effective. And he’s undoubtedly capable of doing physical harm to another person. Keep him off the streets for a long time.
I have to wonder if SC has the third strike law, that’s the only way this would make sense for that long of a sentence. If he has a strike, then any sentence is automatically doubled. Even so, that would be 30 years. Wow!
You DON’T mess around with those Southern States. I recall years back that NC or Georgia gave some black guy years for stealing a loaf of bread from some small country store.
They had Chain Gangs all over the frigging place in NC when I was a little kid living there. We had a County Judge as a neighbor and he was like God down there. It was always walk a straight line, crew cuts and “Yes Sir”, said with enthusiasm, around those people in the old days
Far too much.
Third Snickers Bar means life in jail. At $30 to$40k per year, it’s a realistic cost/benefit tradeoff for the taxpayer. And while he rots in prison in California, he can’t access the medical marijuana his doctor prescribed for his chronic condition. So There!!!
California scamming: People advertise to come to your house and “buy” your landscaping plants before you walk from foreclosure. “Owners” pocket some cash. The industrious gardeners cart away thousands of dollars in landscaping to resell, leaving holes in the ground. Prosecution? Non-existent.
Whatever happened to shame?
My grandmother’s yard was looted in the 70’s. They had just moved from the Highbridge neighborhood of the South Bronx out to LI. The event that prompted the move was someone smashing in their street-level living room window with a hammer as we were sitting around after Thanksgiving dinner.
I also remember hearing about copper thieves taking copper off of subway platform overhangs. A lot of older subway stations were wrecked by this.
Moss….
Way off topic, but I learned the other day while researching how to clean old bottles that using a copper brush wouldn’t scratch the surface. Bottle: pre-Prohibition Fresno-produced beer bottle. Copper didn’t clean it. Nothing has yet. It’s like it is coated with cement on the outside. If it cleaned up, I’d donate it to the local historical authority.
FWIW…
I’m an artist and I love hearing tips like that. I have a set of metal brushes in fact, one of them is copper. Did you try baking soda, used to use it when restoring antique dolls. Be very careful it there is any paint on it that you don’t rub it off.
i heard a comedian once say in reference to michael milken…aka “the junk bond king”.
“hmph…messed up country we live in. a black man steals a car and they call him a thief…a white man steals a billion dollars and they call him a king.”
so effin true it makes me want to puke.
Fellow gets a 60 year sentence for stripping houses of copper…
SPARTANBURG, S.C. — A South Carolina man…
Imagine that kinda “justice” being implemented in the…”South” in 2009
Economic Scene-NYT
Banks Counted on Looting America’s Coffers!
Sixteen years ago, two economists published a research paper with a delightfully simple title: “Looting.”
The economists were George Akerlof, who would later win a Nobel Prize, and Paul Romer, the renowned expert on economic growth. In the paper, they argued that several financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses.
In a word, the investors looted. Someone trying to make an honest profit, Professors Akerlof and Romer said, would have operated in a completely different manner. The investors displayed a “total disregard for even the most basic principles of lending,” failing to verify standard information about their borrowers or, in some cases, even to ask for that information.
The investors “acted as if future losses were somebody else’s problem,” the economists wrote. “They were right.”
On Tuesday morning in Washington, Ben Bernanke, the Federal Reserve chairman, gave a speech that read like a sad coda to the “Looting” paper. Because the government is unwilling to let big, interconnected financial firms fail — and because people at those firms knew it — they engaged in what Mr. Bernanke called “excessive risk-taking.” To prevent such problems in the future, he called for tougher regulation.
Now, it would have been nice if the Fed had shown some of this regulatory zeal before the worst financial crisis since the Great Depression. But that day has passed. So people are rightly starting to think about building a new, less vulnerable financial system.
And “Looting” provides a really useful framework. The paper’s message is that the promise of government bailouts isn’t merely one aspect of the problem. It is the core problem.
Promised bailouts mean that anyone lending money to Wall Street — ranging from small-time savers like you and me to the Chinese government — doesn’t have to worry about losing that money. The United States Treasury (which, in the end, is also you and me) will cover the losses. In fact, it has to cover the losses, to prevent a cascade of worldwide losses and panic that would make today’s crisis look tame.
Re/Max says local agency’s logo too similar to its own
A dispute has erupted over a trademark request filed by Rehava Real Estate Store, a small agency in North Charleston.
Re/Max, a national real estate franchise, is challenging the agency’s filing, saying the Rehava name and logo design are too similar to its own.
snip
Adam Scoville, Re/Max’s legal counsel, said he can explain.
First of all, both names start with “r” and have logos with accent lines near the letter “e,” he said.
“It goes beyond that,” Scoville added. “If you chop the top off of the ‘h,’ you (almost) have the ‘m’ in Re/Max. The next letter is an ‘a,’ and if you take the ‘v’ then you have half of an ‘x.’ ”
snip
He suspects the Colorado-based franchise is challenging the trademarkbecause of Rehava’s controversial commission rebates, which some in the industry see as a threat to traditional compensation standards.
Rehava’s commission structure stemmed from a 2006 change in state law that allowed real estate agents to offer rebates to home buyers.
The U.S. Justice Department has pushed for similar changes across the country.
Rehava promises to give back half of its commission to buyers at the closing table, which could result in a return of several thousand dollars.
skroodle,
Well we can’t have ‘that’ now can we? So now we see what this is ‘really’ about. Anyone that doesn’t follow the 6% Creed to the “t” gets the JT treatment.
Lord, throughout ALL of this, they’re first priority is -still- their damn commissions. And the rest of the REIC cheered on their feet!
Today’s free Market Hip-Tip:
Sell Every Rally (TM)
Sell what?
Do you guys really think none of them had no idea of what was going on with this housing/credit mess?
Are they all that stupid?
What was their motive to create all this mess? wealth transfer?
Most of these crooks probably got a mental red flag that something vaguely wasn’t right. But they didn’t even look three months down the road. All they saw was 1) Money NOW and 2) Hey, there are no regulations to stop us.
Add up a lot of greedy invisible hands acting independently greedy, and it starts to look like a conspiracy when it’s not. The real mea culpa may sit with the lax regulators, who should have knows this would get too big to fail. There’s more than one way to spike a punch bowl.
oxide,
Thank you ever-so-kindly. How could some “strawberry picker” in Gilroy, CA have the slightest idea what kind of game well-heeled folks in WPB are playing? Let alone where FL is on a map?
And as far as ‘they’ are concerned, does Gilroy even exist? It’s easy to get on the Conspiracy Bandwagon but in most cases that I’m personally familiar with, most house-flippers truly had no idea who their target market really was?
I mean they had no sense as to what kind of family or buyer they were even appealing to let alone a specific individual? All they knew was to spend as much time at Home Depot on the weekends as possible and go “over the top” w/ upgrades.
Don’t forget the comfort these guys take in having the exact same business model as their competitors. It’s got to be a good plan if everyone else is doing it right? The safety of the herd.
Al,
Very most excellent point. I hadn’t thought about it ‘that’ way? All I tended to see was that I was surrounded by a lot of very annoying people wearing toolbelts and brazen expectations.
I never saw it as a crowded or “mature” market. Maybe that’s b/c each and every one of them was becoming so adept at using realtor-speak and had us going that their little specuvestment really ‘was’ special?
oxide,
I can’t agree fast enough with that overall assessment.
Brett,
“them”? “they”? “their”?
How about “us”?
Realtwhores knew -exactly- what they were doing when placing illegals into Option/ARM loans and didn’t care. Mortgage brokers knew exactly what they were doing when fudging income and din’t care. ( Please see SoCalMtgGuy )
We were doomed long before AG’s famous “froth” comment. What “wealth” exactly would we be transerring here? All I see is DEBT!
Fool me once - shame on you.
Fool me twice - shame on me.
Fool me three times - ???.
Apparently three strikes and you may not really be out.
(BTW - the print version of that article had a nice graphic showing the three times City Bank has been bailed out, including a picture of the founder - who was one of the causes of the 1929 crash via his pumping of stocks all through the 1920’s. I find that this happens a lot - the Washington Post for whatever reason doesn’t like to include things like that in their online “print” edition - perhaps it’s a bit too embarrassing for the electronic record? )
awesome read, thx
You don’t have to bother to re-write history if you can just DELETE it
A couple of months ago I read The day the bubble burst : a social history of the Wall Street crash of 1929 by Gordon Thomas and Max Morgan Witts.
Charles Mitchell and his National City Bank were prominent in this piece, but there was no mention that National City Bank evolved into Citi.
What does it say about our culture that these people and institutions are allowed to constantly reinvent themselves so they are positioned to wreak havoc all over again in the near future?
Wikipedia is your friend.
City Bank of New York -> First National City Bank of New York -> First National City Bank -> Citibank
Pretty much always has been one of the most influential banks, if not *the* most influential bank, in the world.
It’s amazing how much more money you can make than your competitors when the risk/reward equation is influenced by government backstops.
…motive to create all this mess?…
Plain old greed (and fear) depending on which side of the
fence you were on.
A few random examples:
Banks - obscene profits with little risk (greed)
Home buyers - “They are running out of land!!” (fear)
Add to the mix high-speed information systems (ie. electronic
funds transfer and the internet) and here we are.
You should think a little more about the box. It’s not just about money.
Here’s a hint - a quote from one of the ugliest men ever -
“Power is the ultimate aphrodisiac.”
- Henry Kissinger
Right, and what percentage of this was feeding one’s own sense of vanity? After all, *shouldn’t UPS drivers that have wives that work p/t for the school live in $750,000 homes?
You deseeeerve it! That and octal77’s drive-up window re-fi’s?
Nope, but they should be able to live in affordable homes.
potential buyer,
Agreed, and there’s no earthly reason someone with stable employment and decent credit shouldn’t be able to purchase an affordable home. Again with an emphasis on “affordable”.
This where I fully blame the REIC. “Talking up” their prospect to a point where they’re spending 50+% of their pre-tax income got completely out of control!
Hank probably kept a condom in his wallet and it dried out.
latest news
[C] Citigroup shares up 17% in early trading
U.S. foreclosures hit record level in February
By Simon Kennedy
Last update: 6:11 a.m. EDT March 11, 2009
LONDON (MarketWatch) — The number of completed U.S. foreclosures in February was 121,756, the highest monthly total since the crisis began, according to data from Foreclosures.com. The figure was a 67% increase from the 72,694 reported in January and was also well above the previous monthly high of 104,243 set last September.
The feel good holiday time “George Bailey” foreclosure moratoriums expired?
“…The number of completed U.S. foreclosures in February was 121,756, the highest monthly total since the crisis began”
No responses yet Mr. Bear…hmmm, seems like folks are kinda “burnt out” of reality numbers.
Dutch bubble update:
national (median) homeprices are still holding up near alltime highs, although some regions are now seeing 5-10% price declines relative to last year. Difficult to say what is really happening, because sales numbers are down strongly: -70% for new homes (yoy basis) and -50% for existing homes. Further declines in turnover are expected. Sooner or later prices will have to follow, but the RE mob that pretends to be our government is throwing everything including the kitchen sink at the bubble.
One new proposal (among many) is that a new government fund will buy all homes that are ‘hard to sell’ for a certain minimum price (probably last years record high valuation …) and still allow the (previous) owner to profit in case the home is resold at a profit by the fund. Homeowners no longer have to worry about selling their previous home and don’t need financing for the second home either (which currently is mostly paid by the tax office). The fund would be controlled by representatives from regional government (who have a huge interest in keeping homeprices inflated because RE is their foremost revenue stream).
The suggestion is that this new fund will form a bottom under the housing market, and make sure that homeowners can still ‘upgrade’ to a newer (more expensive) home - and as a result keep the home building industry going.
The proposal is asking for an initial investment of 0.5 billion euro, but no doubt that amount will grow quickly. There are now 180.000 homes for sales in Netherlands and no doubt most of them are ‘hard to sell’. At a median price of EUR 250K and using 1:10 leverage (?)that would require a fund investment of about 5 billion. Again: privatize the gains, socialize the losses
Another recent proposal is capping the Dutch HMD at 1 million euro (same as US?). This is only a symbolic proposal to ‘do something’ and has close to zero influence on the budget deficit and on the housing markets, as the number of such mortgages is tiny (below 1%). No doubt the owners of these homes will receive other suggestions so they can still avoid paying income taxes (that’s what the Dutch HMD is all about).
A sharp decline in sales numbers was the precursor to price declines in the bubbly areas in the U.S., FWIW.
Here in the DC ‘burbs the sales declines started in mid 2005. Prices were flat that fall, which didn’t mean much since prices normally drop in the fall some. However the spring 2006 bounce never came, and by fall 2006 prices were starting to fall fast.
Same exact thing for the west coast of Florida, which I also track.
It sounds like Dutch Wonderland is about 3 years behind the U.S. curve.
(p.s. Dutch Wonderland is a real place - an amusement park in PA not too far from here - it’s great for young kids actually)
I hope it is behind the curve, but I’m not too sure … our bubble is so much older than the US bubble (double-digit price growth started around 1991 already) that it sometimes seems to be on a different track. The dynamics are completely different due to far more government intervention.
Fascinating stuff. Thanks as always, nhz. Is there anywhere else in the world where the housing bubble has been this severe and has lasted this long?
anywhere else? not that I know of.
The last price decline in the Dutch market was in 1979 (big crash); our bubble is now nearly 30 years old and probably one of the biggest by % appreciation in the world (maybe some tiny city-states had even higher RE pricegrowth?).
Of course the Dutch are serial bubble blowers since the invention of the stock market in the early 17th century. They know all the tricks for how to start a real Ponzi scheme and keep it going
When the Dutch RE bubble pops, it’s going to be REAL loud. To Florida and California, enjoy your spotlight while it lasts.
we had a documentary on the TV news yesterday about the FL bubble burst. OMG, those prices are unbelievable - about ten times lower than equivalent homes in the Netherlands ! I’m surprised they aren’t selling these homes in droves to Dutch housing speculators …
Even though the Netherlands thinks they are about to become the FL of Europe (thanks to global warming), especially my area near the coast, of course ‘this can’t happen here!’.
nhz:
I really think you should go on a nationally publicized hunger strike over what your lovely government is doing to you over there. I can’t even wrap my mind around it.
There are a few Dutch blogs and websites about the bubble, but they have few visitors. Our regional newspaper sometimes publishes my warnings about the bubble, but that’s about it. Denial is still everywhere, the bubble/entitlement mentality is unshaken over here.
The Netherlands will get what it deserves for its epic misconduct; too bad that probably will happen many years in the future, when most of the people who are responsible for the mess have run off with the loot.
Good for you for trying to warn people via the newspapers.
It does indeed sound like things are starting to crack there, nhz. It’s not easy, but falling sales are the first sign.
Thanks, as always, for your contributions!
my replies in this thread are not coming through, sorry …
another statistic from today: the amount of homes for sale in Netherlands is now enough for 15 months, and the supply of apartments for sale is enough for 30 months. This is at the average yearly turnover rate, with the current record low sales volume it is far worse…
As long as our government is encouraging homeowners to cling to their wishing prices with all kinds of new subsidies, tax incentives and bailout funds, one can calculate that the required correction in the housing market is going to take many years
Good luck to all the SKF holders. Down almost 100 in a few days.
Bear market rallies are vicious. It’s a technical thing (= demand & supply) owing to the nature of shorting (borrowing shares to sell.)
But I think there’s one more puff left in this cigar butt. Not yet though.
What do you think would be a good entry? I was tempted in the 160s this AM, but didn’t pull the trigger. I feel safer waiting for the low-to-mid 150s.
I’m thinking 140-ish or less but this is not a strong opinion and I am willing to be convinced otherwise.
in at 100-120, back out at 175….
I was tempted at 150-ish last time, decided to wait for a bit lower, and then watched it spike up, up up. Drat. Can’t catch them all!
Will probably wait for a while again; this rally might go on for a bit.
When it comes to SKF, I’m the cat that jumped on a hot stove.
If you’re so bad at timing it, you should tell me. I’ll do the opposite.
I’ll take on all the capital risk, and I’ll toss you a (very fine) meal or seven with the proceeds. LOL
Headline of an article in today’s Wall Street Journal: “Fed didn’t cause housing bubble” by Alan Greenspan…
It would seem that Mr. Greenspan is trying to protect his legacy and possibly the growing public resentment of the Federal Reserve as to its part in this economic debacle.
Ha ha - good luck with that. This is one time that too many people see through the smoke screen. GS’s mistake was making it too obvious. Heck one of the very first websites documenting the problems was “The Mess That Greenspan Made”.
IMO the PTB really screwed up this time. They’ve made lots of money through the years expanding and contracting credit behind the scenes, but this time they overdid it, and are getting a big black eye because of it. Unfortunately the American public is just too apathetic and impotent - or really a combination of both - in order to do anything significant about it. So this will go down as a sad chapter in our history, but in the end nothing much will change.
“GS’s mistake” - meant “AG’s mistake”. Getting my scum mixed up.
Why can’t the MSM resist the continuing urge to attempt rehabilitate the legacy of this tool? Just ignore him, because time is most certainly not on his side.
Because journalists reflect the 6th grade critical reasoning ability of the general populace. IMHO.
Condos Sales Near Downtown in Austin, TX
====================
On Sale! Bridges on the Park Now 20% Off?
March 02, 2009 21:25 Filed in: News
In a highly unusual strategy, Bridges on the Park has announced a “March Sale” in which they have reduced unit prices by 20%. With the reduction, prices start under $300,000 for a 1 bedroom 1 bath unit and under $400,000 for a 1,349 square foot 2/2 unit. The pricing reduction shifted the price per square foot from $350-$430/SF to $285-$340/SF.
Bridges on the Park is a six floor 104 unit project on a 2.5 acre site just south of the lake and the hike & bike trail on South Lamar. The project was recently completed.
During construction, Bridges on the Park raised prices to their current rates after lining up a surprisingly strong waiting list for reservations. When the final prices were announced and the economy turned south, the reservations did not turn into sales as expected. Now Bridges on the Park has restored prices to levels closer to the originally announced amounts. While a highly unusual sales tactic, for new buyers looking to get close to downtown at reasonable price, this is very good news.
Thats just funny. 400 G’s for a 2 bed condo? Whats the tax on that in Texas…3%, or 12,000 per year plus HOA fees.
Reasonable price? I am gonna have to look that up in the dictionary because I thought Reasonable meant something else.
Official warns Congress not to force lending
Treasury official warns Congress not to force banks into making loans deemed risky…
WASHINGTON (AP) — The official in charge of the Treasury’s $700 billion bailout program for the financial sector warned Congress that the government should not force banks to make loans that bankers may deem risky.
Neel Kashkari, interim assistant secretary for financial stability at Treasury, told a congressional oversight panel Wednesday that bad lending practices were at the root of the financial crisis and cautioned Congress not to “micromanage” institutions that receive government funds.
“However well-intended, government officials are not positioned to make better commercial decisions than lenders in our communities,” he said.
Kashkari, who was put in the job under the Bush administration, testified amid growing impatience among members of Congress who want to see evidence that the taxpayer money is actually loosening credit markets.
Lawmakers on a subcommittee of the House Oversight and Reform Committee voiced frustration with what they said was a continued lack of clarity from the Treasury on how banks were spending money they have received under the Troubled Asset Relief Program. Under the program, the federal government has used more than $300 billion in taxpayer money to infuse financial institutions with cash, much of it by purchasing preferred stock and other assets.
Subcommittee chairman Dennis Kucinich, D-Ohio, complained that at least three financial institutions that have received TARP money — Citigroup Inc., Bank of America Corp., and J.P. Morgan Chase and Co. — have made foreign investments.
“If the banking system is in serious enough trouble to require massive amounts of federal support, shouldn’t that federal support be channeled to the domestic economy?” Kucinich asked.
WASHINGTON (AP) — President Barack Obama called Wednesday for international allies to sign on to more aggressive steps to jump-start their own economies, warning that U.S. efforts to pull its own economy back from the brink will falter without global coordination.
Looking for volunteers? Billy, don’t be a hero!
the first reactions in Europe were not very positive …
In the little Alternate Reality bubble I live in, the new Great Depression didn’t seem to personally affect me. I was more like an observer.
Until now!
FORTUNOFF (the NY Retailer) is going OUT OF BUSINESS. Excuse me while I say Kaddish and sit shiva for them.
January 2008 NYT
“People briefed on the negotiations said NRDC had no plans to close any Fortunoff stores and would like to expand the number of its full-line stores, from four to perhaps dozens.”
YEAAHHHHHHHHHHHHHHHHHHHH!!!
No more ads on CNBC. Who do I thank?
I think the ads on CNBC must be local operator inserts. We don’t see them out here.
Well, DUH!!!!
You’re in California, and that firm doesn’t exist out there.
I just wanna put a harpoon through the chest of whover designed that ad. That would totally make my day!
What do these people sell?
Jewelry.
And the ad involves a really screetchy woman who gets all excited while her schlubby husband looks on.
Oh, and the MIL is right there peeking which is just poo-inducingly disturbing.
The whole thing is so designed to push buttons that you wanna kill. And they (used to) play it all day long.
They sold the most fabulous housewares. I registered there about 14 years ago. Nice jewelry department too, very contemporary stuff.
Never saw the ads, don’t live in the area anymore, also don’t watch that channel ever. Think I’m going to hug my ice bucket, buy a little wine for my goblets and maybe get some flowers for my crystal vase that all came from there.
Housewares. I’m sad too. Got many wedding gifts from there. Neat jewelry department too.
Hey, anything beats sugardaddy-dot-com ads they’ve been running. Thinly veiled prostitution makes them look so… I dunno… desperate.
It will be a sign this economy is recovering when we see real ads on CNBC again.
Hey, that’s awesome. I need to look for these ads!!!
I can`t believe he didn`t win. Not relevant but amusing.
Belle Glade candidate charged with bat attack near polls
By JASON SCHULTZ
Palm Beach Post Staff Writer
Tuesday, March 10, 2009
BELLE GLADE — A minister and political candidate was arrested tonight amid accusations he swung a bat at a woman outside a polling place, authorities said.
The Rev. James Richard Harris, who is running for the City Commission against Mary Ross Wilkerson in today’s election, was arrested on a charge of aggravated assault with a deadly weapon around 6 p.m. in the parking lot of the Belle Glade Elks Club at 300 S.E. Martin Luther King Blvd., according to a Palm Beach County sheriff’s report.
According to the report, Harris and a 47-year-old woman named Tamara Martin were speaking to people in the parking lot of the polling place. Martin was talking to people she had gone to high school with when Harris approached her and shouted, “Why are you talking to my people?”
Martin told Harris they were her classmates and Harris yelled back, “These are my people and you need to get out of my face,” witnesses told deputies.
As the argument continued, Harris told another witness he was going to hit Martin and then went to a nearby golf cart and pulled out a red baseball bat, according to the report. Harris threatened Martin with the bat and swung it five feet away from her, the report said.
When deputies arrived, two witnesses, identified as 33-year-old Joseph Smith and 57-year-old Larry Lohman, told deputies that they heard Harris saying, “I’m going to crack me some heads.”
Harris was still armed with the bat when deputies arrived, according to the report. He denied threatening Martin and said it was a misunderstanding.
He claimed he armed himself with the bat because “people were trying to talk to his people,” according to the report.
Other witnesses showed up and claimed Harris was defending himself because the group of people Martin was talking to had a red hammer, and that the hammer was in Martin’s truck. The truck was searched and no hammer was found, according to the report.
Harris was arrested and booked into the Palm Beach County Jail. According to unofficial results from the Palm Beach County Supervisor of Elections Office tonight, Harris lost to Wilkerson, who got nearly 80 percent of the votes cast to Harris’ 20 percent.
Sounds like somebody went off his medication. And good job wasting the po-po’s time with some silly lies. The cops ought to have put them in jail for 24 hrs for that b_s, but with the over-taxed jails the powers that be don’t want the police arresting for every little thing. Basically they’d have to get in a shoving match with an officer to get hauled off.
I don’t want to trivialize arresting someone, but, geez, BSing to officers with no consequences is not going to lead anywhere good. Look, people with the heat on are always going to out-and-out lie to protect their skin, but the idea you can just blow smoke up an officer’s a*ss to retaliate at someone for calling the cops on your anti-social ‘boy is really troubling.
I posted this a couple of days ago, but I don’t think the post ever showed up. My apologies if this is a repeat.
Things are finally starting to get a little bit interesting for me in AZ. My feeling is that we have moved to about the 3rd inning of the game here in housing bubble land. The first couple of innings were boring, but were used to setup the excitement of the innings to come.
I have been following a particular house in a Circle G neighborhood in Gilbert, AZ at Seville. Circle G neighborhoods are custom homes on 1 acre lots that went from $400k houses to over $1M properties during the boom. Friends of ours put money down with a builder in the fall of 2005 to have a home built in the above mentioned neighborhood. This was about the time I put my house on the market to sell. I thought it was probably not a good time to buy. But, my friend (who works for countrywide), knew better. Long story short - he paid $1,019,000 for the house with $40K down. This 40K was borrowed from the house he was in at the time. He also took a 200K HELOC on the house for pool, landscaping and a basketball court in the yard.
The home went into forclosure and was given back to the bank last year. I saw that in Jan. 2009 the house was sold for …. $550K. $1.2m became $550K in just over 2 years.
My feeling is that this is just the beginning. As more folks that owe twice what their houses are worth see how far upside down they are, they are going to get a clue and stop paying immediately.
One thing that has been mentioned on this blog is that in the past CA housing bust, prices were lowest 18 months after forclosures had peaked. Even if forclosures peaked this month, we are still at least 18 months away from bottom. Sure is hard to stay on the sidelines sometimes. I don’t know about others, but even though I bet that housing would drop, it sure is surreal to see it unravel right before our eyes and it sure is hard to continue to sit on my hands. But for the good of this community, I’ll do it!!
It would also be interesting to see the correlation between huge bubble (i.e. Phoenix) vs big bubble (i.e. Denver) vs high bubble (i.e. Seattle). Use your own cities for reference. I think that dip will be very fast in huge (Phoenix) vs a long timeperior for the dip in high (Seattle), where the condos in downtown and in Bellevue will take 5-7 years to get to the bottom.
Just my thinking
http://tinyurl.com/dywhxj
Link to the house I am referring to.
NYT
Miami Condo Colossus Is Monument to Excess
“Mr. Perez, the chairman of the Related Group (an affiliate of Mr. Ross’s New York-based Related Companies) and the undisputed condo king of South Florida, has peppered the waterfront with residential units in recent years, but he has never built anything on the scale of the $1.25 billion Icon Brickell.
At the point where the Miami River meets the Biscayne Bay, it has 1,646 condos, a 28,000-square-foot fitness area and a two-acre pool deck with a 12-foot-high limestone fireplace. The 22-foot-tall sculptured columns, 100 of them, marking the entryway were inspired by the monumental moai statues on Easter Island and cost $15 million.”
and further down, the money shot:
“Bigger is not better”
(Nice pics of the Moai statutes in the NYT article)
= FAIL.
The idea of “buying a condo” with a buncha people whose finances may or may not be dubious is absurd.
Probabilitically, it’s guaranteed to fail unless you can go over it with a tooth comb.
This is not a diss against condos - I have seen friends in successful ones but as a general rule, they tend to be small ones where you can actually get a clean grasp of the finances and the inputs to those finances (= incomes.)
FPSS,
I live in a 5 unit complex and thus far, it’s been fairly much like you describe, no issues to date. But that doesn’t mean things can’t deteriorate down the road?
I liked it better when I rented it!
This blog has “burnt” me permanently about making assumptions about OTHER people’s finances. Generally, they’re a shambles.
My first RE purchase was a simple one BR condo when I got my first “real” job. I was secretary of our HOA and saw my primary mission as to compose minutes that, while essentially truthful, did not belie our precarious financial position (e.g., “the board discussed the monthly financial statement” versus “some of the board members freaked out because several speculators have not paid their fees in several months”).
LOL. is it just ME or does anyone else think those ‘moai’ statues look like giant hammered turds? I’m an architect myself but I’m not getting it.
and do I even need to point out the obvious ‘living beyone ones means’ disaster metaphor of Easter Island? Hubris always has a nasty payback
It gets weirder.
It’s right next to the Miami circle.
___
“The Miami Circle, also known as The Miami River Circle, Brickell Point, or The Miami Circle at Brickell Point Site, is an archaeological site in Downtown Miami, Florida. It consists of a perfect circle of 24 holes or basins cut into the limestone bedrock, on a coastal spit of land, surrounded by a large number of other ‘minor’ holes. It is the only known evidence of a prehistoric permanent structure cut into the bedrock in the United States, and considerably predates other known permanent settlements on the East Coast. It is believed to have been the location of a structure, built by the Tequesta (also Tekesta) Indians, in what was possibly their capital. It was discovered in 1998, and is believed to be somewhere between 1700 and 2000 years old”
I thought they decided those were just 80 year old septic tank sites.
Nah.
They are just squabbling over how old the site is.
It’s for real.
And as you go over the small bridge, unless you know it’s there, all you see is an empty field with some stones.
(With the Moias facing it)
Fall (or Conversion) of the ex-Bears:
Recently several noted long-term equity bears / short-sellers have turned bullish (or at least not 100% bearish anymore), a partial list below:
Doug Kass
Bill Fleckenstein
Jeremy Grantham
Steven Leuthold (when you run the Grizzly Short Fund, what do you call your fund now that you turn bullish?)
I am not sure how this pertains to market direction, but it is worth noting that while main street mutual fund redemption reached very high level in Q4 and Q1-to-date, these guys are now turning bullish (do the opposite of the crowd I guess). The easy money on the short side has been made, and now may not be worth the risk. Even if the market goes down to the 1930’s Great Depression type of fall (89% decline), almost 2/3 of that carnage may already have occurred.
Thoughts?
Something tells me that the market isn’t done going down until the big technology companies get flushed, for example Apple.
Well, if the market lives up to its reputation of causing the most pain possible, then it’s reasonable to think that even a few of these guys will have to pay a pound of flesh - or two.
My 401(K) allocation has been 100 pct stocks since some time in last year’s second half. It is too early to know if I will later rue this foolhardy attempt to catch a falling knife, but I at least will not have to regret sitting all huddled and frightened in fiatscos while the printing presses are running on full blast.
Wow. You’re a brave soul, PB!
That being said, after being short since late 2004, I got out of all my short positions in mid-October. Sitting on my hands for now, and watching carefully what’s going on. Next move will probably be long, but that could still take a few years.
Being short right now is no safer than being long, IMHO. I think the market will drop further, but it will also rip some bears to pieces in the process.
Good luck to you, Mr. 100% long!
4 states now with double digit unemployment.
http://www.detnews.com/apps/pbcs.dll/article?AID=/20090311/BIZ/903110437
Rally dahlings, what will Biff and Buff do?
http://www.bloomberg.com/apps/news?pid=20601213&sid=a2pWxeFXrGR0&refer=home
I just wanted to introduce myself: “Hi!”
I have lurked here for YEARS but only recently have been able to post comments due to some kind of computer glitch that was way down on my list of things to resolve.
I also want to thank the bears on this board for my not-quite-awful 401k situation. Last year, you all freaked me out enough that I moved some things around, and while I still have to drag myself into work, hopefully I won’t have to be doing so another 50 years from now like so many others.
WOOOOOOOOOOOO!!!!!
Welcome aboard. We’re a hardy but cruel crew. We only judge people by the “correctness” of their arguments. So get a thick skin.
But we’re very indulgent about food, and booze!
especially food.
and booze
with guns.
And FROGS!
And unicorns.
But no candy-crappin’ unicorns™.
Wow bink, now there are a couple of disturbing photographs! That’s not Olygal by any chance, is it? It would explain a lot. And be exactly how I pictured her although I have to admit the jair color is way different - I was thinking either brassy blonde or pink.
jair = hair. Heavy sigh.
I judge people for all sorts of reasons, pussy. Don’t be such a generalist.
I choked on my drink before I went back and saw who you were replying to.
Jack Daniel’s is a blood level kin in here, food is just a pesky habit
Ahoy, ahoy, speak for yourself.
Food is the addiction to dilute the JD in our blood.
Welcome MommyK! Nice to have other moms on this board. Not that the rest of you HBBers aren’t a whole lot of fun, but so many of the mommies in my life are completely clueless about housing, economy, and all this stuff, and its neat to chat with others who “get it”.
So welcome, and glad some of your hard earned savings is protected.
Welcome MommyK.
Most of us posters bark is worse than our bite
Hope to see more of your postings.
Chicks always welcome.
Ok, I’ll ask……single or married mommy???
Married. And it always bugged me that I could not respond to posts here that characterized men as thrifty and spare and women as spendthrifts and packrats. I love my hubby, but it makes me nuts how he insists on saving money by buying stuff because its on sale even if we don’t need it!
“I love my hubby, but it makes me nuts how he insists on saving money by buying stuff because its on sale even if we don’t need it!”
Well then, you would like me much better.
Welcome aboard.
It’s hard times when Ernie and Bert get walking papers.
March 11 (Bloomberg) — Sesame Workshop, the nonprofit organization that produces “Sesame Street,” is cutting 20 percent of its workforce because of the recession.
I sense another fiscal responsibility week around the corner.
WASHINGTON (MarketWatch) - The U.S. federal government budget widened to $192.8 billion in February as tax receipts plunged to the lowest level in 14 years…. Outlays were flat compared with a year earlier at $280.1 billion, while receipts dropped 17% to $87.3 billion, the lowest since February 1995. In February, individual income taxes fell 64% to just $8.7 billion. That’s the lowest monthly total for individual income taxes since May 1985.
“while receipts dropped 17% to $87.3 billion, the lowest since February 1995. In February, individual income taxes fell 64% to just $8.7 billion.”
Most people would be shocked to learn that their income taxes are only 10% of the federal government’s revenue. I myself am surprised at the numbers actually. Is it really that little?
I am under the impression that corporate taxes are a relatively large portion of income.
I thought I read somewhere that they were roughly equal to income taxes - but that leaves 80% unaccounted for, so maybe it’s much more. Still I find 10% a little hard to believe.
According to the Tax Policy Center for 2007
45% Individual
35% Payroll
15% corporate
3% excise
2% other
I’ll post the link next so this post dont get blocked.
http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm
OK - from looking at the article - this is the key sentence explaining:
” February is typically the month with the lowest receipts, as the government pays out refunds to those who overpaid their taxes the year before. In addition, no quarterly taxes are due in February. ”
Thanks for the link bluprint.
As for individual income tax revenues, just think how larger the workforce is today than 1985. Must be a whole lot of un/underemployment out there right now that’s not getting reported.
There is.
Or there are more people working under the table.
Sheesh…Now the IRS is gonna audit eveyone just to ask for a LOAN
The RE agents are breaking out the big guns to solve the nation’s housing crisis: ARTISANAL CHEESES!
Corcoran Takes East End to N.Y.C. Renters
By Kate Maier
(March 10, 2009) Corcoran agents from the East End are taking the show on the road next Thursday for an exposition at the company’s 660 Madison Avenue office that will showcase rental properties from Montauk, Amagansett, East Hampton, and beyond to potential customers who live and work in Manhattan. More than 30 agents from the North and South Forks are expected to show properties via laptop computer between 6 and 8 p.m. in a 12th-floor office space above Barney’s.
Corcoran
Outdoor dining area at a Sagaponack 4.6-acre “retreat” that is among Corcoran’s summer rental listings
This is the first time Corcoran has organized a field trip, going out of their way to bring the product to the doorstep of the customers who make up the bulk of seasonal renters. With a slow start to the rental season, executives are pulling out all the stops to seek a competitive edge.
“The rental market is definitely lagging behind last year significantly,” said Rick Hoffman, a regional senior vice president at Corcoran. But on the upside, he said, “properties that have never been rented before” are up for grabs, as the economy has compelled many who wouldn’t normally consider renting their homes for the summer to give it a try.
“I think it’s really exciting, something that’s very unique, and I think it’s innovative,” he said, adding that “being Corcoran and having the largest residential market share in New York City and the Hamptons” was advantageous. Agents from Manhattan and Brooklyn were looking forward to the opportunity to connect their clients with real estate professionals who are familiar with the East End, he said.
Artisanal cheeses from Lucy’s Whey in East Hampton and wines from the Wolffer Estate in Sagaponack will be served to give potential renters a taste of what the area has to offer.
“I think for those people who have always felt they’ve been shut out of the Hamptons market, this may be the summer of opportunity,” Mr. Hoffman said.
http://www.easthamptonstar.com/dnn/BusinessRealEstate/CorcoranontheRoad/tabid/8184/Default.aspx
I should go. Just for the cheese.
But then I would have to deal with the RE types. So I’ll pass.
Good opportunity for a drive-by.
“But on the upside, he said, “properties that have never been rented before” are up for grabs, as the economy has compelled many who wouldn’t normally consider renting their homes for the summer to give it a try”.
Hmmm, maybe also many who wouldn’t normally consider using food stamps will give that a try”.
Oh..NO!!
Is Big Bird headed for the Soup Pot or Elmo facing the bread lines ?
NEW YORK – The crisis on Wall Street is plaguing Sesame Street.
Sesame Workshop, the nonprofit producer of “Sesame Street” and other kids’ programs, is cutting about one-fifth of its work force because of the economic downturn
Sorry HBB kiddies
http://news.yahoo.com/s/ap/20090311/ap_en_tv/sesame_workshop_layoffs
Oil @ $147.00 a barrel…gasoline @ $4.60 per gallon = supply & demand:
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!!
“…Oil officials from Saudi Arabia have said that instead of trimming production even more, OPEC should focus instead on making sure its members are in compliance with the previous cuts, analyst Phil Flynn said.
Flynn said Saudi Arabia may not be interested in trimming production more if other countries won’t do the same.
“Are the Saudis getting sick of carrying the load for the cheaters in the cartel?” Flynn said in a research note. “Are the Saudi’s getting ready to break ranks and force the other members of the cartel to either cut back more or just shut up?”
I hope by now we all know that last year’s “supply and demand” was gamed by the speculators.
Yes, but since then they’ve lost their bet. There is always the other side of the coin.
No it wasn’t.
Check out the U.S. crude stocks chart - third one down. Note how stocks went below the “normal” range during the bubble. They’ve since crossed back over and are now above the bubble range - which makes me wonder why prices aren’t lower now than they are actually. Nevertheless there was a valid concern that stocks were significantly depleted. Yes prices were driven by speculation - but so are *all* investments.
Thanks for the warm welcome. Virtual margaritas to all (fresh-squeezed limes of course). I use this name on some of the mommy boards so I thought I would stick with it here. Re-reading my message about how I’ve read here for a long time and enjoyed some financial benefit therefrom, I guess it’s also time for a non-virtual contribution to Ben…
Sea salt on the margaritas?
Lawd, yes! What other kind (*) is there?
(*) Well, there’s rock salt.
(**) Oh, and don’t get me started iodine-freaks (***). Tempt me, and I will shove my foot with FACTS so far up your @ss that you won’t be needing any salt for a very long time!
(***) Not denying need for iodine, just the quantity that is required to function quite swimmingly.
OK, shove away. Are you saying that we get enough iodine from other sources? Or that the extra minerals in sea salt have some dietary value? Please explicate.
Are you saying that we get enough iodine from other sources?
Basically.
Particularly, if you eat a restaurant meal, I dunno, once a month.
To me, everything is about taste. “Processed” salt has a “funny” taste, and yes, my friends have tried it. I’ve nailed it every time in a blind test.
Most people get plenty of iodine. This is not the 1820’s. So skip the cr@ppy salt and get the good-tasting salt. It’s just as cheap too so I fail to see the problem.
Sea salt is not going to break my budget. And I like it better.
My point, exactly!
My daughter cooks with coarse kosher salt. She uses sea salt the rest of the time.
I use the kosher salt to do the basics like salt the pasta water. And then I bung coarse sea salt into a “serious” pepper grinder to grind salt onto anything I want.
Ben shouldn’t leave us alone. Look at how far off topic we get.
Good food = less money wasted = more money for savings.
It’s indirect as a topic but not terribly surprising.
Point taken
We salt pasta water, put it on corn on the cob and the occasional baked potato. Where else is it truly needed if you don’t want to stroke out?
“Ben shouldn’t leave us alone. Look at how far off topic we get.’
I don’t know that this is very far off topic. I have had salt rubbed in to my wounds on a regular basis here.
Freddie Mac seeks $30.8 billion in government aid after posting $23.9 billion 4th-quarter loss
Alan Zibel, AP Real Estate Writer Wednesday March 11, 2009, 4:51 pm EDT
WASHINGTON (AP) — Freddie Mac is asking the government for $30.8 billion in aid after posting a gargantuan loss of more than $50 billion last year as the U.S. housing market worsened.
The mortgage finance company posted a loss of $23.9 billion, or $7.37 per share, in the fourth quarter of 2008. That compares with a loss of $2.5 billion, or $3.97 a share, in the year-ago period.
The recent loss was driven by $13.2 billion in hedged trades, $7.2 billion in credit losses due to declining housing market conditions and $7.5 billion in writedowns of the value of its mortgage-backed securities.
The request for federal aid comes on top of $13.8 billion the company received last year.
Apparently a black hole.
I wonder if any of this is in our President’s 2009 “transparent” budget.
Gurus and gurus in training,
Which is your favorite currency short for a one year term, entry in the next 6 weeks?
Me? Peso.
There are so many to choose from: GBP, ZAR, NZD, HUF, PLN.
MXN is not a bad pick either.
I was thinking about the euro as well but for the near term the Mexipeso stands out. The combo of declining petro dollars, remmitences for workers abroad, and declining tourism could really cause a collapse ala 80s.
Is there any remedy the US could take to avoid that? I know we bailed them out in the 90s to avoid a collapse, could we do that again or is the problem just too big?
Si, senor.