Bits Bucket For March 15, 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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Trump closes down Mexican “luxury” condos, buyers out their deposits:
http://www.palmbeachpost.com/localnews/content/business/epaper/2009/03/15/sunbiz_trump_0315.html
Got to love that one; when are people going to learn about dealing with Donald T? How many people has he burned/stolen money from in the past 30 years??
“SAN DIEGO — Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump.
The Southern California couple paid $250,000 down payment on a 19th-floor oceanfront condo in Trump Ocean Resort Baja in 2006 before the first construction crew arrived.”
“Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump”.
That’s because, “people are smart” and they knew a good deal when they saw it. Besides some other savvy,edgy buyer may have ’snapped’ it up!
How much RE garbage can you get in one sentence?
I love how they try to make the buyers feel “smart” buy purchasing these overpriced albatrosses.
The thing that most buyers never ask themselves is, if this condo is such a good deal, why is the RE agent even showing it to me? They are telling me I can make 30% YOY appreciation on my “investment”, but why aren’t they just buying it themselves (especially with the era of negative am, cash back at close, have a pulse and your qualified loans)?
If it’s such a sure thing, why are you showing it to me and not signing the papers yourself? Seems like questions like this that SHOULD have been answered during the boom just never entered into the consciousness of the buyers at all.
That is a great come back, almost anytime, anyplace. When a realtor tries to convince you to jump in today’s market because “it’s the best time to buy in 100 years” the perfect response can be:
Sounds great! I’m not in a position to buy at this time, though. How about buying it yourself, and renting to me, at today’s rental market rates?
We posted that article a few days back. My favorite part:
Guadalupe Mendoza, 47, paid a $200,000 deposit at the first-day sale in San Diego, refinancing her Downey home and getting a loan from a sister. She watched a giant screen show units getting snapped up.
After signing papers, buyers were ushered to a buffet of sirloin tip and fish tacos. Cheers erupted in the hotel ballroom for each new owner.
“I did it in less than a minute,” said Mendoza, an administrator in the Los Angeles County Office of Education. “I remember my head was hurting and thinking, ‘My God, what was that?’ I was thinking maybe I should have asked questions. It was like a roller-coaster ride.”
Shear the sheep, boys, shear the sheep raw!
BWAHAHAHHAHAHHAHAHHAHAHHAHAHAHHHHHHHHH!!!
I thought it was:
BajaBajaBajaBajaBajaBajaBajaBajaBajaBajaBajaBaja!
I will be willing to bet there must be some sort of a self induced delusional state people get themselves into when they make obviously bad decisions but some how manage to talk themselves into without listening to anybody.
I see this being played out almost every day at work. There’s a Sucker born every nano second these days.
Guadalupe Mendoza, …lost her $200,000 deposit on a $667,000, two-bedroom condo in Trump Baja poses for a photo with Trump Baja brochures at her home in Downey, Calif. on Sunday, March 1, 2009.
Donald Trump is scrapping plans for a luxury-hotel oceanfront condominium across from Tijuana’s sewage treatment plant, ….
http://www.daylife.com/photo/0gPI3xx8Jwcid
late last year they were still advertising some of these Trump tower investments (I think one in Miami and one in Canada) in several Dutch magazines for investors and elderly (wealthy) people.
Those ads promised 20-25% annual returns. I hope they separated a lot of suckers from their money; if people fall for this they need the education.
some sort of a self induced delusional state people get themselves into
Most people don’t think. And when they do, they have a overwhelming tendency towards “confirmation bias”.
Whenever I consider something, I give FAR MORE weight to things that contradict it than to anything that confirms it. Only when you have ruled out all the things that contradict your position, should you then consider it.
It’s just the scientific method. Things that go against you are worth their weight in gold not the things that go in your favor.
This is emotionally untenable for most of humanity.
If you’re always considering worst case scenario (as I did with my job) you’re considered a negative nelly and a pessimist, and no fun, foolish (for not doing whatever they are doing), a tightwad, meek(!), etc.
I sacrificed early on, planned for the worst, and plugged away. Now I’m sitting pretty while others see their lifestyles (and concommittant sense of self worth) crumbling around them.
I tried not to laugh too loudly when the market crashed, but, um … oh well.
I tried not to laugh too loudly
And here’s where you are wrong!
After doing everything so right, why deprive yourself of the best that life has to offer?
March upto the debtors and tell that you wish the best that life has to offer to them: health, hearth, happiness and herpes.
Or alternately: dwellings, domicile, debt and depression.
Why do people deny themselves the basic pleasures of life, I always ask myself?
“That’s because, “people are smart” and they knew a good deal when they saw it. Besides some other savvy,edgy buyer may have ’snapped’ it up!”
Actually, I think they were going to ’scoop’ them up….. you know, like a turd
scooper dupers
Just like the Smart Rich folk in Hedge funds buying land in the Hamptons.
“Stephen and Linda Drake cast aside concerns about owning property in Mexico because they believed in Donald Trump”.
I believed in the Easter Bunny. Then I turned seven.
Loss of blind, foolish faith is such a terrible thing…or maybe not.
b..b..but, the RE Bunny, HE’S STILL coming…Right..huh..huh Sammy ?
Chump Towers
Oh God almighty, do we ever need a FPSS patented laugh here!
I prefer Professor Bear’s very appropriate “Bajajajaajaajajajaaaa!!!”
Or perhaps HA HA HA HA ha ha …… ha
Hey, ya’ll have to find the site for The Bella Condos in Atlantic City, NJ, yourselves, because I’m still a tech-dinosaur and don’t know how to do links. Over the past week, though, this place has been heavily advertising 50% off pricing for the units. Imagine the suckers who’ve already signed for one of them; I don’t know if their deals are to be renegotiated or what; I think they’d really be torn between newcomers getting the deals and just having some warm, fee-paying bodies in this White Elephant.
It seems like only yesterday The Bella was being pushed as a refuge at the shore for the ultra-sophisticated, savvy, “edgy,” crowd from NYC and Philly. Now, you can still inhabit this exclusive circle occupied by your social, intellectual and financial betters– and do it for half-price to boot!!!
jajajajaja
Now, you can still inhabit this exclusive circle occupied by your social, intellectual and financial betters– and do it for half-price to boot!!!
Exclusive circle of posers?!? In Atlantic City? That dreary depressing place where you are more likely to get mugged than get decent food?
They must be handing out free dope ’cause nobody in their right mind could actually believe this.
Or maybe even a Mexico-ho-ho-ho-ho-ho-ho….
Kudos to PB for that one, lol.
De nada.
They blew $30 million dollars and have nothing to show for it?
Viva La Mexico!!!!
I wouldn’t say there’s nothing to show for that vanished $30 million. The looks on those fleeced FBs’ faces is priceless, in a non-monetary sort of way.
Donald sure showed those Mexican Bandits a thing or two
But he didn’t have to show no stinkin’ badges!
NR
The thing that puts the lie to the “good deal” aspects is that Trump dare not go to Mexico to monitor his sites. He’d be the prime candidate for a kidknapping for ransom. People all over know what he looks like after all those TV specials.
I can imagine some drug lord would love to have Trump’s severed head spitted on a pike in front of his headquarters. Sort of a status trophy for the criminal set.
Nah, he is probably very safe. That would generate too much publicity.
The worst thing Mexican criminals could ever do would be to kidnap a cute, attractive, blond, young woman.
Opposite for a wall between Mexico and the US would become very popular.
“The worst thing Mexican criminals could ever do would be to kidnap a cute, attractive, blond, young woman.”
+1 Got that right, skroodle.
When are people going to stop trusting slime like Trump?!
That guy has done nothing but scam people over the years AND get bailed out assorted times!
Geithner Says He’ll Soon Offer Details on Toxic-Asset Cleanup
By Rebecca Christie and Lizzie O’Leary
March 15 (Bloomberg) — U.S. Treasury Secretary Timothy Geithner said he will soon provide details of his plan to help banks clean up the non-performing assets that are clogging the financial system.
“We’re going to move quickly to lay out a new financing program to deal with these legacy assets,” Geithner said in an interview with Bloomberg television yesterday during a meeting of Group of 20 finance ministers in Horsham, England. “We have and expect to see a lot of support for this program” among potential buyers of the assets, he said.
Geithner disappointed investors and was criticized by U.S. lawmakers including Senator Kent Conrad of North Dakota, chairman of the budget committee, for outlining plans to address toxic assets without an explanation of how they will work. The Standard & Poor’s 500 Stock Index slumped 4.9 percent on Feb. 10, the day Geithner announced the plan.
Geithner’s program has three main elements: Injecting fresh government capital into some of the country’s biggest financial institutions; establishing a public-private partnership to handle as much as $1 trillion of banks’ bad assets; and starting a credit facility with the Federal Reserve of as much as $1 trillion to promote lending to consumers and businesses.
The Treasury hopes to unfreeze credit markets by providing new incentives to banks and investors to resume trading in mortgage securities and other troubled assets. U.S. regulators are conducting a new series of examinations to make sure banks have enough capital to accept losses when selling these assets, while also planning to provide government financing to the investors who might buy them.
Gauging Interest
More information about the public-private investment plan will be made available in the next week, a Treasury official told reporters yesterday, speaking on condition of anonymity. The Treasury will roll out enough information for investors to gauge their interest in the new program, along with an operational timeframe, the official said.
In the interview, Geithner said the Treasury already is well on its way to starting “a dramatic lending program to help securities markets get flowing again.” He said regulators will ensure banks have a “backstop of capital” to make sure they can “do what’s necessary” to restore lending.
‘Toxic-Asset…non-performing assets’
This brings up something I wonder about. The media started using the word toxic about this housing bubble stuff a while back. Toxic isn’t a financial term, whereas non-performing is. So why use it? IMO, being morbid about fairly mundane concepts is supposed to catch peoples attention.
For a laymen, aren’t “Toxic assets”, “non-performing loans” all the same word for losses?
When I read these proposals/announcements/plans, what I really read is who is going to take the losses?
Are the banks or taxerpayers going to take the losses?
Or is a public-private partnership going to take the losses?
“Let’s get the losses off the banks books”
“The banks have too many losses”
If they were truly assets, I don’t think there would be this huge problem.
I think when they refer to a non-performing loan they are actually talking about a single loan. You may not like the value, but you should be able to figure out what it is.
A toxic asset is much more likely to be a derivative (based on a pool of loans) the value of which is completely unknown but likely to be way lower than the bank paid for it and possibly even lower than they are currently holding it on their books. They are toxic because the low but still unknown value of all these assets would be likely to put the bank way under its capital requirements if it ever becomes known.
Well explained. Thank you.
Oxymoron alert!
Lie-Ability instead??
I think its because the media is filled with non-financial, journalism school types and they relate better with “toxic” than they do with a term like “nonperforming”.
If you pay attention to the media, they use these analogous terms all the time. They also do this in politics as well, again I think its because they don’t understand but are trying to give the perception that they do understand.
I heard someone recently comparing the economy to a patient. I don’t recall the whole metaphore but it was some along the lines of “the patient is dieing and we’re all standing around discussing…”
Analogies are fine in moderation but they have at this point become a substitute for informed discussion, at least on the hill and in the MSM.
Also, I think it may be related to laziness. How many congress people actually read the bills they vote on? How often do they take the time to really learn about an issue before expressing an opinion (either via a vote or some othe expression)? Probably next to never. They aren’t interested in being accurate, but are more interested in giving the impression they know what they are talking about/doing.
Pretty much same goes for media. They just wanna get the story out so they can go plan golf or head home and do whatever it is they do. Why bother with actually knowing wtf you are talking about?
How many congress people actually read the bills they vote on?
Well, in fairness, bills can run to thousands of pages of legalese. A number of bills are floating in different states of doneness at any given time.
I’m not defending them — especially on crucial bills (an appropriations bill, a defense bill, etc.), congresspeople and their staffs have an obligation to understand the issues, legal pitfalls, and policy implications of all the blather contain therein — just sayin’ that plowing through even two pages of legal mumbo jumbo can be migraine-inducing and cranky-making.
Well, in fairness, bills can run to thousands of pages of legalese. A number of bills are floating in different states of doneness at any given time. In fairness, our esteemed Congresspeople have created these monstrous masses of words beyond human comprehension, don’t/can’t read them, and vote them into law. They can (believe it or not) do things differently, much differently — but they don’t. The only thing they stand for, is office.
I’ll take a stab at it (take this with a grain of salt):
A “non-performing loan” is contained (sounds contained to the sheeple anyhoo). “Toxic assets” aren’t.
Yes, but the U.S. financial media has always taken the lead on propagating the “crisis is contained” line coming out of the Fed and Wall Street.
Non-performing sounds like non-informing…non-threatening
Kind of like putting up pretty Sky Blue signs with pink bunnies and daisies on of 64k High Voltage step-down electrical box with a sign reading ” Bad Investment-Please don’t touch”
Sheesh…do you really want that many crispy critters laying around ?
Well it WOULD cull the stupid ones…just saying.
We’d be up to our EAR in burnt Pork Rinds in a week Sammy
Ben, as a member of said media who has written headlines on the subject, I’ll give you a couple of predictable answers.
1. “Toxic” fits the space way better than “nonperforming assets.”
2. “Nonperforming assets” is considered financialese and a cousin of bureaucratese and cop jargon … flat as a pancake to ordinary readers, or at least to editors!
3. You’re right, it’s an attention-grabber.
“…legacy assets… Toxic-Asset Cleanup…”
Perhaps the global financial market could become more efficient if third world countries were encouraged to buy up these toxic assets?
Let them eat pollution. (excerpt from letter written by chief economist of World Bank)
This plan makes no sense whatsoever. Is it wise to impair more balance sheets with these non-performing assets?
Moreover, if the banks are going to need recapitalization after they sell these assets at a loss, aren’t they going to turnaround and pay taxpayers back the money? What’s the point of that maneuver?
They are moving around the deck chairs. Why do we need to play all these games and make this much effort to protect bond investors? Unless of course, a Citi like bond to equity conversion is also part of the plan.
If a Citi like bond to equity conversion is also part of the plan, then we are looking at some potential nationalizations or partial nationalizations. Help me sort this out.
The government takes control of these institutions, disposes of these non-performing assets in an orderly way with attached guarantees to private equity and other private investors, converts its preferred stock along with other investors to common stock, then later sells its common position back to private investors.
Like Citi, this dilutes existing shareholders of course. It’s a non-disruptive BK. What do you think?
What do you think? The US could bankroll/guarantee its own bank from scratch, free of toxic waste and other emcumbrances, and bypass the dying dinosaurs like Citibank. Having built up a successful operation, it could sell all the bank’s shares on the open market. In this scenario, Citi’s exiting shareholders would be most seriously diluted.
and starting a credit facility with the Federal Reserve of as much as $1 trillion to promote lending to consumers and businesses.
This is the first I’ve heard about this “credit facility.” Is it going to lend directly to consumers and business, or is it just going buy loans that banks make? The last thing I want is another Fannie Mae.
Nooo. We NEED more debt to get out of debt … See and a bottle of wine for every alcoholic too!
Of course with more and more jobs lost or offshored, how else are folks supposed to buy stuff to keep our wobbly economy going?
Just think of how much damage would be done to the liquor industry if you didn’t send a bottle of wine to every alcoholic!
I take exception to “needing more debt to get out of debt.” It’s conservative framing and it’s deceptive.
Not all debt is created equal. If you borrow money for beer and spa retreats, it’s gone forever. If you borrow money to put solar panels on the house and plant an apple orchard out back, it pays for itself, and is therefore money well spent.
WHY is it so difficult for the debt-haters (or, at least those who hate debt only when Democrats uses it) to make this distinction?
I think ordinary Americans are starting to figure this out. This is why they hate bailing out the banks. They know that TARP went to beer and spas.
I agree debt used for constructive purpose is debt well used. I believe the “powers” believe that the debt be spent buying expensive cars, tv’s etc.
I would be all behind programs which allowed the installation of solar units at a low interest rate to encourage this technology.
But oxide, what did people actually spend their money on during this last boom time?
Yeah, beer and spas, granite counter tops and Escalades.
For the price of an Escalade, they could have completely self powered their home.
I know this is late, but I guess that’s one arguement in favor of socialism? To save us from our greedy selves? Yeah, and spend the money on earmarks. Who watches the watchers?
Blah, there’s no easy answer.
Come to Fed Loans LLC, where ANYONE can get a toxic loan for ANY amount! No job, income, or assets needed!
How else will they reinflate this Bubble? Gotta run the printing presses!
Details?
I thought we already knew the details: The tax payers foot the bill via Bailouts and eventual hyperinflation and the crooks get to keep their stolen loot.
Maybe Turbo Tax Timmy! is still working on how to phrase that sense to make the masses support it…
What do people think of the Chinese Premier saying he is worried about his country’s investments in U.S. Treasuries?
TIPs ahoy ?
me thinks they’ll keep buying
what ever happend to the SE Asia monetary union ?
Run it up the flag and see who salutes it.
In other words, why shouldn’t he make a vague reference to being worried about default or getting paid in badly devalued dollars? Doesn’t hurt him.
Exactly. A classical political chess move: when things start to fall apart and the natives get restless, find a “common enemy” to unite and distract them.
To get ROI, China may have to absorb America’s unemployed by means of indentured servant contracts, as in 18th Century colonial America. Hard to believe that was only two hundred years ago. Sure, China’s got a huge population, but what upwardly mobile Chinese wouldn’t have an American scrubbing his kitchen floors and doing his laundry rather than a Chinaman? It’s a status thing, y’know?
RE: China and our unemployed
“Ehhh, how much for the women?”
They don’t need any more dudes, that’s for sure.
great scene from a great film
Hey! They shipped one of our steel mills to China some years back; sending our unemployed millworkers there (1200 got the ax recently) just might work out. They’ll get their old jobs back and be abe to wire money back home to help with the mortgage payments like the illegals here. Why didnt Obamma think of that for a campaign promise??
Also, Dude, chinaman is not the preferred nomenclature.
I’d love to know what the average congress critter thinks of his statement this week. Is congress even aware of such trifling “details”?
Now that GE has $101 billion value maybe we should allow them to buy it, or heck let them have GM Ford and Chrysler, and put their labor tactics to work on UAW workers and make it a profitable company again.
You mean GE’s tactic of outsourcing all manufacturing jobs to China? The Chinese would love that!
The Chinese premier’s statement about US solvency is a warning. Switzerland has been devaluing its currency, which puts pressure on others to follow.
maybe Switzerland learned something from the US. Is the UBS fine for the tax evasion case denominated in US$ or in Swiss francs? And all those US bank accounts at US, would those be in US$ or in Francs? interesting stuff …
This is serious stuff and could have major implications. It comes back to the issue of trust. The ROW is losing confidence. It wants tighter regulations and guarantees if it is going to do business with us in the future.
We should be forcefully cleaning up our financial system, shutting bad banks, banning bad bank CEOs and executives from industry, and reassuring the world repairs are underway. Instead, we are playing whack-a-mole.
They don’t want to hear the Keynesian Maniac spend, spend, meme. To our lenders, that sounds like delusional FB talk.
“We should be forcefully cleaning up our financial system, shutting bad banks, banning bad bank CEOs and executives from industry, and reassuring the world repairs are underway. Instead, we are playing whack-a-mole.”
Your words sound like the voice of reason to me, mrkt.
Why aren’t we doing that? Is it because that sort of gov’t intervention is tarred with the “socialism” brush by Joe6P (and his handlers)? Is it because financial industry campaign contributions and lobbying have bought the government lock stock and barrel?
Is it because the emperor would be exposed as having no clothes and then - what? bank runs and panic in the streets? unmentionable unimaginable horrors? (The latter is what some of the “experts” on TV imply.)
Correct mrktMaven, but the very definition of criminal is to NOT do the right thing.
That’s how we got here in the first place, wasn’t it?
Think “trial balloon” to gauge sentiment of their sentiment.
Rumor has it the Chinese Premier opened a fortune cookie that said, “That wasn’t chicken, and China’s ‘investments’ were anything but.”
I think his fortune cookie said, “A fool who accepts fiat money is a fool indeed.”
The Chinese Premier is worried…what about my worries….?
I’ve got war profiteering magician’s that can bundle umpteen Billions onto the A$$-end’s of C-130’s and it make them disappear in Iraq , congressional clowns that throw Trillions around like it’s party confetti and a bunch of dollar drunk Ringmasters still trying to figure out how to glue together and sell a functioning CAR in Detroit!
This is an AMERICAN CIRCUS we are trying to run here, so sit back, relax and enjoy the SHOW Mr. Premier !
Sheesh…some peoples kids
I wouldn’t make too much of it. The Chinese are simply saying that, given our government debt load and zero efforts to slow down borrowing, there is simply no way we’re going to pay this back with current-value dollars.
The Chinese are smart enough to figure this out. The Republicans are also smart enough to figure this out, but they’re so discredited now (often self-inflicted) that every time they mention the subject they’re laughed at…
…often by the same people (many here) who know, on a personal basis, that reckless borrowing ALWAYS leads to disaster.
So we go from a possibly-controllable disaster caused (in large part) by huge mortgage debt to a total meltdown that will have us wind up as a Third World country, if we’re lucky…but we wanted “change” and we’re now in the process of getting it.
It’s the “China Syndrome”
Our spending mass went critical, the molten dollars burned a hole in floor of the containment building and are heading straight down into China’s Banks !?!
“Security..Security ..the crazy guy with the beard …by the lever-age ”
At what point would you say the Republicans got smart enough to figure this one out? A couple of weeks ago, maybe? Say what you will about tax-and-spend, but it’s not half as bad as borrow-and-spend, which the GOP has specialized in at least since Reagan. So the future is print-and-spend, right? Or maybe steal-and-spend. Options are narrowing …
LA Times
LETTERS
Not all homeowners support Obama’s housing bailout
March 15, 2009
Re: “Obama administration is urged to expand mortgage rescue,” March. 7:
The Obama administration has a plan to help “responsible homeowners” avoid foreclosure. Great. What, exactly, makes someone a responsible homeowner? Someone whose home is now worth less than what he owes on it? Or someone with a loan he never should have gotten in the first place?
Housing costs have dropped, leaving some with top-heavy mortgages. It’s a cruel world; live with it or walk away. If your loan rate is now above-market, too bad. You have no one but yourself to blame for agreeing to these rates.
Just don’t ask me, the taxpayer who played by the rules and bought a home he could afford, to pick up the tab for your mortgage. I have my own obligations and my own house payment; certainly I am not responsible for your house payment.
When and where do I get my bailout?
Richard Deight
‘I am not responsible for your house payment’
This ‘taxpayer’ isn’t responsible for 99%+ of what the government spends on his behalf. Who’s the freeloader?
Fair enough.
Itsabouttime and I got into a lengthy debate yesterday over the issue of mortgage lending discrimination (see the topical thread called “The Shakedown Of The Real Estate Market Is Upon Us”). Our differences got down to the issue of whether it is illegal for a mortgage lender to offer similar loans at different interest rates (say some “high interest” and others “low interest”) and let the borrower decide whether to accept the offer. IAT’s position (and please correct me if I am misstating it) is that this practice is illegal if proportionately more high-interest loans go to minority applicants. My main point was that this could happen if non-minority applicants generally avoided such offers.
So my question now is whether the government should offer similar monitoring of other consumer goods sales. For instance, should retail establishments be punished if they sell more high-priced consumer goods to minorities than to non-minorities? Or does the consumer bear some responsibility for shopping around for a better price? I can assure you that my spouse spends countless hours clipping coupons and shopping around on the internet for a better deal. Low-priced offers do not come for free — you have to do your homework. And given the dynamic nature of the lending market, I also don’t believe it is possible for all lenders to offer the exact same interest rate to every customer as a function of the applicant’s credit history variables. The idea that this is possible is some attorney’s fantasy.
Sounds like a good discussion.
My 2 cents:
1. If a lender is making loans based on some discriminating criteria and not loan performance, I think they would be opening the door for competition to come into the market with a mortgage rate set by the loan performance #s, not the discrimenating criteria. I don’t view it as illegal, but as a poor way to run a business. The market should take care of this. (If we don’t have a free market system, then the gov’t should step in)
2. Shopping for better deals is work, but you get paid for it. If you spend 2 hours shopping for the best offer on a flat screen TV, you are rewarded for your work by paying less. If you don’t do the work, you don’t get paid.
“I don’t view it as illegal, but as a poor way to run a business. The market should take care of this.”
I made that argument and IAT shot me down for (1) repeating something Gary Becker said a while back and (2) disagreeing with some published research which shows why the argument is theoretically and empirically wrong. I will maintain the hypothesis that Nobel laureate Gary Becker’s argument is the stronger one until I have a chance to read the rebuttals in the references IAT provided.
Umm, actually, the government does something similar. Denny’s was penalized for discriminating against customers based on race. And, it is illegal to discriminate when renting or selling a house.
Now, this is a great advantage of FICO credit scores and computerized underwriting. If the bank can show that the interest rate and terms were consistent for every person, regardless of race, then the bank is safe from legal action.
Another advantage of removing the human element is that it suppresses an individual’s ability to act on an urge to make good terms available to a white family but not a black family. Such behavior is bad for society and bad for the bank. Imagine some closet klucker deciding to loan money to Bernie Madoff but not Oprah Winfrey.
I leave open the question of how to differentiate between accurate appraisal and redlining.
The downside of course, is the FICO cannot determine if a pay stub or tax return is falsified or even if the person requesting the loan is actually alive or dead.
LLI,
Another weakness of FICO scores is that they just factor in the loans, not the business.
Imagine I’m a door-to-door mortgage broker. I have two towns in my territory, Pleasant-ville and Crime-town.
In Pleasant-ville, I pull up to homes and am invited in for brownies and iced tea and I sell loans.
In Crime-town, I’m scared to get out of my car, have been mugged twice in the last three months and someone keyed my car that last time I was there. I hate that place.
F.U. Crime-town, the only way I’m going there is if I’m making outsized profit on the loans I’m peddling.
Due to my car damage, my missing wallets, etc, the cost of business is higher in Crimetown. That’s my business cost and has nothing to do with your FICO score and everything to do with my risk/reward calculation.
I don’t care what race you are in Crime-town or Pleasant-ville. This is my business decision.
“And, it is illegal to discriminate when renting or selling a house.”
Presumably the reason co-ops were invented.
Financial discrimination was addressed in the Fair Housing Act of 1968 in an attempt to level the playing field.
From my perspective, the typical mortgage was 15-yrs and paid for by one income whereas some ten years after the 1968 act the typical mortgage was 30-yrs and required two incomes; BTW, this was in San Jose, California.
red-linning…It was a common practice…
“…typical mortgage was 15-yrs and paid for by one income…”
And what about the size of the house that 15-yr mortgage could buy? My view is that the mass entry of women into the labor force has provided many households the opportunity to buy bigger houses, at the expense of kids growing up with less parental involvement. At least in coastal California, it remains hard to find housing priced at levels where the typical family can afford to make a purchase, although affordability is steadily improving. It is funny that leading politicians are trying very hard to prop up prices (at least judging by their rhetoric), rather than letting the market continue to drive prices in a direction where homes are affordable, which tends to make it much easier to attract and retain a qualified work force.
“My view is that the mass entry of women into the labor force has provided many households the opportunity to buy bigger houses”
my view for Europe is that the mass entry of women into the labor force (after about 1980) has forced many households to buy the same house based on two incomes (and income multiples etc. for the loans have gone up at the same time, from 2.5-3.5x then to 6-10x now). The problem with the kids is similar over here (and for sure a very serious downside of all this), despite (thanks to?) the huge subsidies for professional daytime childcare.
Dutch politicians don’t want ‘affordable housing’ and well behaved/educated kids, that’s for sure.
Regarding two income households — Read The Two Income Trap by Warren… very interesting ideas about the impact on real estate prices, lifestyles, etc.
“Dutch politicians don’t want ‘affordable housing’ and well behaved/educated kids, that’s for sure.”
Dutch politicians, or at least the Dutch politicians that don’t need bodyguards everywhere they go (and who know who I mean) would rather prefer that The Netherlands have no more Dutch kids, behaved or not…and simply rid the world of the curse called “Western Society”.
It blows peoples’ mind when I explain the demographic path that Europe has chosen as punishment for their history…but I guess my (American) kid will have to deal with a very unfriendly Europe in his lifetime.
Oh yes. Europe would be a much better place if we let the population double to 1 billion or so, in some fraction of the land mass of North America.
Population of the UK at the height of the British Empire? 15 million.
Less is more.
simply rid the world of the curse called “Western Society”…Europe would be a much better place if we let the population double to 1 billion or so
There’s a huge difference between a stable population base & one that is collapsing to nothing. I prefer to believe Western Europe is bent on demographic suicide & will be replaced by culture(s) not so inclined.
Without getting too complicated, the lending deal is not off the shelf–it depends on a lot of factors, including the collateral and the buyer. That makes the product more opaque. Also, it’s not a cash and carry deal, it’s a contract. Consumer contracts (including marriage) tend to come under regulation because, let’s face it, Joe Consumer is not the brightest bulb on the Hanukkah bush. (If IQ is average 100, that means half of all people have below-average IQ… and 100 makes you a “B” student, what with grade inflation … remember them … now, do you think they understand anything they sign, that includes marriage license, extended warranty, or their driver’s license?!?)
So… take a car purchase … lots of rules about that because a non-mechanic can’t truly evaluate the thing … 3-day lemon law for example. Libertarians everywhere cringe, but it’s illegal, for example, to take a car that was totalled, clean up the body, repaint, and sell as new. Why? Because you make it legal to cheat and it messes up the whole market (and puts the only honest guy out of business, because the majority of purchasers purchase infrequently).
When you can be confident about what you purchase, instead of having to become an expert every time you buy something, your productivity increases. (You are also more willing to buy–which helps the economy.) USA has prided itself on its very high productivity. That is based on rule of law–and appropriate consumer regulation.
We can have laws and a civil society, or we can have a Hobbesian mess. That ain’t good for quality of life OR the economy. So maybe men aren’t men any more, but we’ve come to suspect they were rolling around in the bushes spreading VD anyway.
Libertarians everywhere cringe, but it’s illegal, for example, to take a car that was totalled, clean up the body, repaint, and sell as new.
=========
I hear libertarians also like to torture puppies and kittens.
I hear libertarians also like to torture puppies and kittens. Lame.
For the economists out there.
I recently had a conversation with my dad about Social Security using a little basic math.
Number of birth by year(rounded to nearest 25K).
1930: 200K
1935: 225K
1940: 225K
1945: 300K
1950: 350K
1955: 400K
1960: 425K
1965: 350K
1970: 350K
1975: 325K
1980: 350K
1985: 375K
1990: 400K
1995: 400K
2000: 400K
For each person born in the 30s, there were 1.8 people born in the 50s.
For each person born in the 40s, there were 1.2 people born in the 60s.
For each person born in the 50s, there were .8 people born in the 70s.
My argument on Social Security is pretty straight forward. We increase the rates from 3% to 12% between 1950 and 1980. We then switched to lifting the cap at 2x the rate of inflation, from $26K in 1980 ($65K in today’s money) to $106K today. In 1980, 30% of the population was above the cap. Now it is less 5%.
By constantly increasing the taxation rate, then multiplying by 1.8, we were able to pretend that 1+1 = 8. (withholding + interest) * tax rate 20 years later * population ratio 20 years later. For my grandparents, 1+1 could equal 8 because the tax rate 20 years later was 2-3 x what it had been 20 year prior and they had 1.8 population ratio.
(1+1) * 2.25 * 1.8 = 8
So, for this to continue to work, we’ll have to increase the tax rate at a MUCH, MUCH faster pace to accommodate that .8 ratio.
(1+1) * 5 * .8 = 8
So, 20 years from now, we’d have to be paying 60% SS tax? 12% x 5??????
Social Security is a Ponzi that was based on more and more money coming in, and that simply can’t continue!
Now, a new topic…..
My dad’s argument is that had he not had to pay so much Social Security, he would have been able to save more.
My opinion is that no matter WHAT the Baby Boomers invested in or where they had put there money, they would not be able to get it back.
Money is a claim on future labor. It is a store of wealth, and most wealth is the result of human labor…..
With the huge number of Baby Boomers, no matter where they put their money it would have (AND DID) create a bubble. With so few GenX to buy those assets (provide the labor in exchange for that claim) there is no way all the Baby Boomers could get back what they thought they could.
Had they put there money in real estate… too few people to sell all the R/E to. Had they put it in gold, too few to sell the gold to. Had they put it in the bank, the bank would have lent it to us, letting us run up way too much debt that we can’t pay back. Had they put it in stocks, stock prices would have gotten too high and then crashed as they tried to get out. Had they put it under the mattress, the government would have had to print money out of thin air to keep the money supply up then we would have had hyper inflation as all the money stuffed under mattresses came out.
In fact, all these things (except the money under the mattress) DID happen. Had my dad not had money taken out of his check to pay his parents Social Security, then he would have just had more money to put in places that he can’t get it back out of….
My dad says this is all bunk since economics is not a zero sum gain. Right, but we also can’t make 2 = 8 generation after generation, especially as the ratio of births fell from 1.8 to .7.
So, my question to the economists is, who’s right?
They’re right. If the geezers put their $ in gold they would have gotten $35 x about 20; they would have been set for life. You’re wrong about no one to sell gold to; most gold bought nowadays is by individuals from Asia. There will be a great foreign market for gold ….probably forever.
….On this note. My coin dealer has a little old lady come into his shop about once every month or two. She brings in only $5 gold pieces, mostly average to fairly good condition. He gives her a fair price and saves me a few. She inherited them from her father who was paid in gold in the early 1900’s; every week he set $5 aside and kept it in the mattress. I dont know if he lived long enough to enjoy them in his “later years” but she certainly is. Now, I’m repeating the process at about 50 times the face value. Seems like folks were cheated out of their personal “security” by gold’s confiscation and replacement with fiat. That 3% increase in taxation for SS sound suspiciously like inflation. Thats too much math for me, differential equations always gave me a migraine.
Ah…The social security debate again…Means testing is coming along with a increase in the minimum age to qualify…Add to that an increase in taxes on the benefit over some minimum income level and the SS problem is solved…Now, someone like myself who has been self employed for the last 35 years and has had to pay “Both Sides” of the tax may not like it very much but I am planning on not receiving a social security check at all…
that sounds exactly like where Netherlands is heading. I’m self employed too and not expecting anything for the huge amount of taxes I have been paying for SS (in Netherlands, up to about 40K euro income almost all tax, over 40% from gross income, is for social security, disability payments etc).
For unemployment/disability this is already the actual situation for some: if you own a company you have to pay this huge tax as well, but you don’t receive any payout except for the absolute minimum after you have run out of money. Pretty unfair compared to people who have never worked in their life, or only worked a few weeks and sometimes collect huge payouts despite having significant assets (they get the payout despite owning a home, car etc.).
Wow…Netherlands tax appears to dwarf ours…
The economists have been wrong for years. Here are 3 primary examples:
1. Greenscam lowered interest rates to 1% in 2003, despite the dot-bomb stock market bubble just a few years earlier. This touched off the most speculative credit boom in US history, which crashed just 3 or 4 years later.
2. In 2007 Bernanke-panky said the subprime debacle was “contained” and would cost between $50-$100 billion. Latest estimates are in the range of $3-$4 trillion. The reality is that losses will be 30 to 80 times the original estimate.
3. Last week Bernanke-panky said recovery could start in the second half of 2009. Common sense tells me he’s off by at least 5 years and probably 10 years.
Trust your common sense - you’ve arrived at the right analysis.
I’m not an economist but I’ll play. I agree with your dad. A nimble investor could trade all the markets you described and come out ahead of SS. However, I see your point about broader social good and people’s inability to trade markets and so on.
Apart from the demographics you describe, another problem with SS is Washington has already spent the money. There is no ‘lock-box.’ Is Washington really serving the broader social good like promised? Or, is it taking us for a Ponzi-ride?
“However, I see your point about broader social good and people’s inability to trade markets and so on.”
The problem has always been too many Mazie types laying eggs and too few Hortons to do the hard work. It was a problem back in 1940 when the children’s story book was hatched.
Well, you really can invest money now and receive increased riches later. You use the money to pay for some labor and materials in the three examples below. The result of that labor is something (often abstract) that yields more riches than in the past. And, as an investor you try to claim your share of the yield.
First, one can build (with labor) labor saving factories. So, the existence of the factory means much more can be produced with the same labor. Second, one can invest (labor) to design longer lasting products. So, products built with the same labor last longer, again improving the value of the labor. Third, one can invest (labor) to design more efficient processes.
Now it is really difficult to figure out how to invest this money to give future returns. Functioning stock and bond markets are a good way to “solve” this problem.
When can I get a functioning stock and bond markets.
You don’t have to sell stocks, gold or anything else just to the people born in the United States.
“Money is a claim on future labor. It is a store of wealth, and most wealth is the result of human labor.”
That’s exactly the point I make that people don’t get. Forget the pieces of paper, whether dollars, stocks, bonds, or government IOUs. Everything the retired get comes from working people using less than they produce.
And the alternatives? Use savings to produce machines to do the work in the future so you can retire? They’ll wear out or become obsolete, and we didn’t do it anyway.
Send the money overseas to make people there better off, and people there support you in retirement. That’s what the CHINESE are trying.
I read some where that the number of people who turn 62 and opt to draw Social Security is 80+.
This changes a lot of the demographics.
I read some where that the number of people who turn 62 and opt to draw Social Security is 80+.
Are you saying 80% of people in that demographic start drawing benefits at 62? Or 80% of those who retire early opt to start receiving benefits at 62?
that still sounds good compared to Europe…
Even though my government is now talking about starting retirement benefits from 67 onwards, a majority of current people over 55 are no longer working but collecting some kind of prepension, early retirement, ‘disability’ benefits etc. And those over 55 that are still working often work just a few days a week, mostly for the social contacts (and sometimes to have a better lifestyle).
In France government workers are entitled to retirement after 30 years on the job (so sometimes before they turn 50), if I remember correctly. And even Emperor Sarkozy has not been able to change this (yet).
Chill, in local gov’t in US many can retire after 20 years service.
Now, while I think this is perfectly fair for a ditch digger or bus driver (often, they are disabled even before they make it to 20), it is ridiculous for an office worker.
They could class these jobs separately, but of course the mighty office worker thinks he is better than front line physical or risky labor and ought to have more “goodies” (above and beyond the fact that he is paid more for his “knowledge” and also has much cushier working conditions). So this will not happen. At least not in the South.
(In the North, there was a time when the union blue-collar labor often had better deals in contracts than the white collar labor (though they do sit at a desk and use their noodle rather than banging hammers or whatever). This caused a great deal of resentment–although there was the supply/demand, as in tons of college grads being pumped out vs. few who even desired to go into trades.)
For a real scream, the mayor and county commission are NOT in the city pension system (though why they should get pension at all, as politicians–good grief–is a good question) but in the state pension system (cushier–for now–I suspect it is the more poorly capitalized of the two) as HIGH RISK workers. I.E. State Troopers! This kind of larceny is the cost of ignorance, my friends!
Everyone is drawing as soon as they are turn 62. All of my parents friends are.
I will. You’d be foolish not to. It may just go away.
Beyond that cynical view, there’s a good reason to start at age 62. A little-known aspect of Social Security is that if you start at age 62, then at your full-retirement age (mine’s 66) you have an OPTION to pay back in cash a lump-sum equal to all you have received. This permits you to then begin drawing at the higher rate.
Basically an interest-free loan of about $70K for four years.
“Basically an interest-free loan of about $70K for four years.”
True. But for it to become a loan one must pay back the $70K. There’s the rub for most folks.
I have a large amount of cash saved up. I’ll probably be one of the few people who take advantage of this option.
Actually the main point is that you can determine your long-term health at a later date. When you turn 66, you and your doctor can make a better guess as to how long you will live. If it’s short (e.g. lots of heart and cancer problems) then don’t pay it back. But if the doc says you will live another 25-30 years, then pay it back and take the larger monthly payments.
if the doc says you will live another 25-30 years Do not believe any such predictions unless they are in writing and come with a sizeable life insurance payout if they turn out wrong. Death is predictable but its timing isn’t.
I would take a deal where I let SS keep all the money it has stolen from me - about $105K, I release my claim to any and all benefits in the future. And in exchange they leave me the hell alone and stop stealing 12.4% from me every year.
Instead what will happen is the SS cap will be lifted, the 12.4% will turn to 20% and since I am Obama rich, I will get $0 in benefits.
We are in Bizarro World now with AIG. Unless bonuses are paid, the derivatives could blow up. However, the derivatives blew up b/c large bonuses were paid for making bad bets. My head hurts.
At the same time, the company said in documents provided to the Treasury, any steps that encourage specialists at AIG Financial Products to leave could open the U.S. government to further risk because of the hazards still posed by the $1.6 trillion portfolio of complex derivatives those employees are working to dispose.
Washington Post: A.I.G. Planning Huge Bonuses After $170 Billion Bailout
Not too worry, all will be explained by the Fed chief tonight in 60 minutes.
“The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street.”
Ya think?
Is it time to invest in pitchforks and tar?
feathers too
…send in Oly’s tracking goats and hunt them all down
‘…send in Oly’s tracking goats and hunt them all down’
Yar! That’ll teach ‘em!
Why settle for pitchforks? The monthly county gun show was overrun by attendees; prices up, supplies up, sales up. More ladies than ever. Many more young folks. Salesman of the year awarded to….Barak Obama. The consensus talk says that Democrats will not risk losing congress by reinstating the gun ban for at least two more cycles. Even Pelosi is against one, for now. Whoda thunkit?
People in the US have been buying guns and hoarding ammo almost since we bumped into indians and started calling ourselves Americans. Survey follows
Please raise your right hands and keep it up if:
1. You HAD TO FIRE your guns…yesterday.
2. You HAD TO SHOOT someone …yesterday.
3. You HAD TO CLEAN, snuggle or hug a gun….yesterday.
Please raise your left hands and keep it up if:
1. You are AFRAID of mice, strange sounds and non-human things that go “bump in the dark”
2. You are AFRAID of shadows, cracks in the pavement or strange faces other than the one in your bathroom mirror.
3. You HEAR NAR voices in the shower, heavy tank tracks and see blue UN berets everywhere.
Everyone got their HANDS UP…Great!
“This is a STICK-UP”
It seems to me that AIG would want all of those specialist to go work at the competition…
why isn’t the US military grabbing the opportunity to deploy some of these human weapons of financial mass destruction abroad? Let them reorganise some banks, insurers and pension funds in the Middle East, China, Russia etc.?
Easy Money | How the Subprime Market Unraveled
Criminal past no barrier to mortgage field
Ex-cons who got loan-originating licenses commit scores of frauds that cost customers millions
Killers, Drug Dealers and Latin Kings.. Oh My Milwaukee !
It’s too hard see but thuggery good broker reading
http://www.jsonline.com/watchdog/watchdogreports/41270712.html
Ya just can’t make this stuff up!
Just wow.
Leigh
“Criminal past no barrier to mortgage field”
I’m shocked…I could never imagine that this could happen.
AIG Still Living in Denial As It Pays Out Millions in Bonuses
Bailed-out insurance giant AIG will no doubt be a heated topic of discussion today, with The Wall Street Journal and other news organizations reporting that the failed and essentially insolvent company is vowing to pay out $450 million in bonuses to its “top performers” — you know, the folks in the financial products unit, many of whom contributed to bringing the company to ruin and helped tank the entire economy in the process.
We should all have jobs like that.
My favorite non-explanation comes from AIG’s leader Edward Libby, who said in a letter to Treasury Secretary Timothy Geithner that AIG had to pay those big bonuses to keep all of its super-talented staff, The Washington Post explained. Those highly prized folks might leave the firm, Libby said, “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”
Those employees might actually have a point. When a company takes $170 billion in taxpayer money to keep itself afloat, there’s always the possibility the government might have a few things to say about how those funds get spent.
And this is one of those times.
Clearly, the Obama administration is ticked off about this whole thing, or they wouldn’t have leaked the bonuses payments all over the media. But that’s not enough. This whole mess raises a raft of concerns that aren’t assuaged simply by knowing that Geithner is really, really mad.
If they want to leave their employ lets help them out with an accelerated plan; raise taxes on bonus money and double it if taxpayer funds are involved. The only bonuses for this boondoggle should go taxpayers who have met their financial obligations and dont work in any taxpayer funded position (maybe with combat being an exception). Removing the feeding trough from the drones, scammers, bankrupts and trumps in this false economy might just help in obtaining some confidence in us. Unfortunately a rush to Galtville is more likely.
we have the same problems in Netherlands (and UK) with all of the bailout bankster firms. And the arguments for keeping the bonuses and sometimes even raising incomes (happened both in UK and Netherlands recently) are the same as well. The kleptocrats say they don’t like it, but they do nothing - of course not, in a few years they will be offered fat jobs at the boards of these same companies.
I would love some AIG crooks to look at the Netherlands and compete for jobs with the scum at ING, ABNAMRO AEGON etc., where the maximum pay level is still over 1 million euro (instead of just $ 500.000), despite the fact that they are on government lifesupport. They claim they need the high bonuses otherwise they cannot find competent professionals (judging from the past, I’m sure they will find more competent workers by lowering salaries and bonuses …).
Hey AIG guys&gals, we have some juicy jobs for you over here and you can still play the RE game fully leveraged too in Netherlands!
CNBC news anchor Steve Liessman SP? took credit today on Meet The Press for exposing the housing bubble in 2006.
The first show I ever saw about a housing bubble was CNBC’s “Town Hall: The Real Estate Boom” in April 2005 was hosted by Bill Griffeth.
It was the first time I ever saw David Lereah on TV. All of the real estate folks were completely convinced that there was nothing stopping the real estate tsunami.
I saw a similar program later on. I know Shiller was there, and I’m pretty sure he was battling Fun-Yun. Fun-Yun was so condescending that I had to shut it off.
The first indication I saw of the Housing Bubble (besides here) was that 2005 Business Week article which exposed WaMu and their deferred interest and how Option ARM’s operated. I think a lot of credit should go to Robert Talbott too.
They never should of started this bail out crap . When the market crashed the Government than should of made the decision on who was worthy of restitution , who should of gone to jail ,after they took over the banks ,and we should of moved on to how to get the economy going again by job creation . Further we should be looking at how Globalism came into play in the crash in terms of the exscessive money supply and the effect on jobs for Americans and what price you pay for outsouring your manfacturing and failing to provide your Country cheaper energy needs . How did Globalsim improve America or the majority in America ? I got cheap crap from China while my neighbor went into debt to keep up with inflation and their life style . Wow ,that was a great benefit to America ,this GLobalism . Now the Americans get lower salaries and even fewer benefits and jobless people are living in tent cities as a result of some of the aftermath of Globalism that seems to of only benefited Big Business and parties that took advantage of the differences in differnt Countries wage scales .
Suffice to say that if you told me 50 years ago that I would be affected by a 75 cent a hour wage of a Chinaman ,I would of thought you were crazy ,derranged ,and maybe on drugs for even thinking that a Commuist Country with a population problem would influence my pay scale here in America and it would be hard to find anything that wasn’t produced elsewhere .
That foreign junk wears out twice as fast and it toxic ,Im telling you its toxic and they don’t have the same rules of production . We should be decreasing our dependance on foreign oil also
for God sakes . Look to who benefited from the mixing of the Worlds economies ,while every Country was playing by different rules and pay scales ,and you will get the answer as to who doesn’t want it tampered with .
I am not sure if globalism is the culprit here. I think the real culprit is the mispricing of risk. Capitalism by nature is kind of like a pyramid where the top 90% of the gains are consumed by the top 10% of the people. So to survive on the scale of our economy with millions of firms there is not enough domestic demand. To replace this demand the firms had to find overseas markets and expand globally, its a natural extension of capitalism. There are some benefits to this for producers a lowering of costs and for consumers an indirect subsidy of something like 10-15K per year in savings on goods and services. So I would not blame globalism for our troubles, I think it is lax regulations, mispricing of risk, currency controls, big government and an inability to accept losses and let firms go bankrupt that is the core of the problem.
I’ll take “Transnational Financial Corporations” for 1000 Alex.
Wow, CORS shares down to 0.16 apiece. I reminiscence. I first caught wind of this blog in early 2006 when I was looking into bank stocks for long-term dividend yield investments. I looked into Corus and a Yahoo board comment on their delinquent condo loans did not make sense to me at first. I thought all real estate was good and crapping candy. One thing led to another and I found this blog.
LOL
The game is not for amateurs.
And large dividends are a clear sign of disaster looming. Better as potential shorts than “investments”.
Hard times hit:
http://losangeles.craigslist.org/wst/clt/1076120163.html
What next the Oscars…MTV awards?…….. NAR’s best Real Estate salesmen of the year gold plated trophy?
Thanks for the enjoyable link.
This’s just comical. Who would WANT an Emmy that they bought on Craigslist? What, you gonna pretend you won it? Maybe scratch the name off and write your own name with Magic Marker and show it to your friends? Actually, that would be pretty funny. But not 8,000 bucks worth of funny.
When I was in college I worked at a latch-key program in Provo, Utarr and I ended up with a big old box of old trophies someone gave to me, (not Emmy’s, alas, golf and baseball and stuff) and I brought it to school for my little kids. I invented contests and handed out the trophies to the winners. When we were waiting in line for the lunch to get there was when we had the ceremonies, and everyone would clap and the happy winner would march up to get the prize. ‘Best Fainter’ was a biggie, and the winner would receive extra acclaim and prestige. It seems to me that Amberley J. won that one twice. She was an awesome fainter.
‘Most Ear-Shattering Squeal’ was another. I can’t recall who won that one the most, but they were all valid contenders. That’s why I’m deaf now.*
*I’m not really deaf now.
The real question is: who is it?
There can’t be that many possibilities.
Quick, someone smarter than me, figure it out!
I need my daily dose of schadenfreude.
Olygal was responsible for teaching little girls “The Ear-Shattering Squeal” and giving them trophies for it. For some reason, I should have suspected this.
The most frightening and un-nerving noises known to mankind other than being near the recieving end of a massive USAF B-52 Arch Light bombing run.
Sheesh Olygal
Unless accompanied by a real tight slap.
It’s quite an antidote along with cattle-prods although possibly untenable in this society but plausible deniability is a wonderful thing.
All my friend’s snotty bratty kids never pull that cr@p with me. In fact, we get along quite fine, and they are quite happy to hang out with me.
Wonder why it works that way? It’s called the “Shamu Defense” - if they know you won’t give in, they won’t be bratty.
I really like and enjoy happy little kids. I guess that’s because neither one of us has grown up yet
But the unexpected “squeal” stops my heart or at least gives me long run of ventricular tachycardia while I try to determine if I’m still among the living.
It does sound like she and those little kids knew how to have a lot of fun together though
Happy kids are perfectly fun. There’s nothing more than I enjoy than running around like a madman with them, and I do that quite often.
I guess I’m making a distinction between screaming at the top of your lungs for fun and screaming because they are snotty and whiny.
I do not allow the latter behavior.
It’s called the “Shamu Defense” - if they know you won’t give in, they won’t be bratty.
Well, why the HAIL is it called the ‘Shamu Defense’? That don’t make a lick a’ sense. Killer whales don’t have any fingers! They can’t hold a cattle prod! Besides, the blubber would transmute a shock, surely? I’d think killer whales would spurn cattle prods. And how they gonna get hold of one in the first place? Off eBay?
Actually, you know, that could be. Killer whales have big brains, and probably good feedback ratings. I’d sell a cattle prod to a killer whale, any day. If I had a cattle prod and a killer whale wanted it. Look, whatever, the image is degenerating, but you know what I mean.
say, Fasty, this mean that you eat little kids when you get hungry? I bet it does. You did say you were a ‘pure omnivore’ the other day.
Look, this is all just confusing me.
*makes decisive, multi-purpose sort of hand-gesture indicating a complete spurning of all things pertaining to confusing killer whales and cattle prods and cannibal Manhattanites *
Well, why the HAIL is it called the ‘Shamu Defense’?
The animal trainers tell you that you should reward the behavior you want to promote, and ignore the behavior you want to play down, no matter what. Just ignore. Don’t even acknowledge its existence. Pretend it doesn’t exist. (You’re really training that they can’t push your buttons that way.)
The positive reinforcement for stuff you want, and the complete indifference to stuff you don’t leads very quickly to only behavior that you want.
It works for training ALL animals. I leave the part about children and lovers as an easy corollary for the reader.
Well, I posted a long explanation, and it has to do with how animal trainers train animals, and children and lovers are basically just animals that you need to train.
The animal trainers tell you that you should reward the behavior you want to promote, and ignore the behavior you want to play down, no matter what. Just ignore. Don’t even acknowledge its existence. Pretend it doesn’t exist.
Really? That’s all smart-like and stuff. I approve of that. I’ve always just more-or-less operated on the assumption that everyone would do what I said, when I said it. But now I see that I should learn tricks and smart-stuff, so that everyone feels rewarded.
But, and I just thought of this, what if they DON’T do what you say? Can you eat them, then? ‘Cause I bet that’s a super-good extinguishing technique, right there.
=:)
That’s all smart-like and stuff.
Since I am not possessed of “natural” talent in this field, and we all have to work with whatever talents we are given, I have a few words to say about this.
The trainers claim that even response in anger is a response, and they will “get you”. No response (= indifference) is superior.
Empirically, this works with ALL the animals, and I’m a big fan of whatever works.
Olygal was responsible for teaching little girls “The Ear-Shattering Squeal” and giving them trophies for it.
AND little boys. I’ve never been a fan of restricting valuable skill-sharing solely based on gender. Jeeze, mikey, everyone needs to have some seriously good ear-shattering noises in their repertoire! Just like everyone needs to know how to change a tire and use a chainsaw. And I just thought of this, in these examples, then you can do them all together. Multi-tasking.
And not just bellowing and squealing—some of the most superior and elegant fainters I’ve ever encountered were 2nd grade boys. They’s so little and resilient, see, that they can flop right over like they been pole-axed. I recall one, his name was Lincoln, gosh, what a great kid, he could make his eyes roll up in his head and everything.
Ahhh…memories…
*starts to sing ‘Memories’ loudly and prettily *
And, now that I consider it, I’m going to say, Mikey? I bet you’re a SUPER fainter. And I mean that in the very best way, like eyes rolled up and twitches and tongue hangin’ out and everything.
You’d a won a couple of trophies, easy. I can sense it. It’s a magic fainty sense I have.
Hahahahaah!
*faints off chair elegantly *
Sorry Oly, mikey doesn’t do the faint or pass out.
I have a re-match to wrestle with the Devil someday and I plan on keeping him on his toes and out of my Jack Daniels until Hell freezes over
If it were an Emmy for a show you happened to be a big fan for, I could see wanting it.
Heck I’d love to own David Lean’s Oscar for “Lawrence of Arabia”.
There’s a thread over at the HTF trying to figure out who this guy is who wants to sell his Emmys. Prime contender is two guys who helped to produce Sesame Street.
Heck I’d love to own David Lean’s Oscar for “Lawrence of Arabia
That was a great movie production
What is the computable value of the USD?
How can we determine what a dollar is worth? Is it the currency in circulation + debt?
Or is it something else?
IIRC, in 2006 or 2007 there was about $300 billion in circulation and I do not know how much debt was out there. The gold in Fort Knox was/is 147 million ounces or about 143 billion USD at the current spot of $970. So we’ve not enough gold to back what we have out. What sets the value?
Just trying to figure this out.
“What sets the value?”
The value is set by what it can be exchanged for. This “what” can be variable or it can be fixed.
If the “what” is labor then the value is most likely fixed. Ten dollars will buy you one hour of labor at ten-dollars and hour, or a half hour of labor at twenty dollars an hour.
It the “what” is tomatoes then the value is most likely variable because of seasonal considerations.
Hope this helps.
Yes it does combotechie, thanks. If I may ask further, are the other currencies in worse shape than the USD and is that why the Dollar remains relatively strong despite the dilution induced to try to free up credit?
In my view the dollar remains strong because trillions of dollars are doing a vanishing act (reverting to thin air from whence they came) which makes any remaining dollars scarce thus more valuable. The diluting dollars springing forth don’t come anywhere close to replacing the number of these vanishing dollars.
An investor’s primary job in this environment is to make sure his dollars aren’t among the ones that are vanishing.
This is only my view; There are others with different views.
I can see your point because, despite every effort to set the bottom by TPTB, the commodities underlying this entire pyramid scheme, this, pun intended, house of cards, is coming down and thus what was a $500k home and possibly $600k worth of multiple mortgage notes, and what was sliced and diced in, oh gee shall we say what 30:1 derivatives of $18,000,000 is now quickly vaporizing … yes I see that.
And yet, the original loan of $500k was paid to some one or some bank, and the second and third HELOC of another $100k went out to someone, and someone bought the $18,000,000 derivative and thus some one or entity was enriched by $18,000,000. So there was $18.6 mil that changed hands. Even if it was later invested and has now fallen under the ubiquitous cloud of vaporization it did exist and may still, but I doubt it because fools and their money are soon parted. That’s one example. IIRC the Credit Swiss chart showed at least 1.5 trillion is original loan dollars in ARMs. I was looking at both sides of the transaction, thinking something remains somewhere, but it’s all turning to nothing.
So, yes, I see your point, and I see what a drop in the bucket the bailout and printing press contribution is when stacked up against the leveraged monies.
OT 3/15:
Just a reminder-if you’re not already doing so today- to be ware.
love,
Cassandra.
“Well, the Ides of March are come,” and the seer said to him softly: “Ay, they are come, but they are not gone.”
Love right back at ya.
Drove by a small subdivision of new McMansions just outside of Atlanta, sign said, “We will take your home as a trade and throw in $15,000.” Priced in the 200’s, but too far out and no reason to live there.
Saw a slew of them a couple of weeks ago. Some seemed beyond desperation - no sales staff, nothing. Just a few occupied houses, a lot of unoccupied ones, a whole lot of empty building lots, and silence.
What town was this in?
Financial Times
Summers ‘outrage’ at AIG bonuses
By Alan Beattie in Washington and Julie MacIntosh in New York
Published: March 15 2009 19:04 | Last updated: March 15 2009 21:27
President Barack Obama’s administration expressed outrage on Sunday at $165m of bonuses paid by the troubled insurance group AIG, as the company revealed that European banks had benefited heavily from its massive government rescue.
Lawrence Summers, Mr Obama’s senior economic adviser, said that AIG’s behaviour was “outrageous”. But he added that the administration’s ability to force the company to cut the bonuses was limited.
It’s all gonna come crashing down.
Candy-Crappin’ Unicorn™ and Turbo-Tax Timmay are gonna realize that there are a buncha real budget constraints in the real world.
Don’t tell me you believe in macroeconomic budget constraints? Now I am beginning to understand why you are not an academic economist.
I was NEVER an academic economist. I was a lot of academic things but never an economist.
For starters, I am smart which rules out the economics profession.
And for seconds, I think good macro is just micro so yeah, I guess I DO believe in macro- budget constraints.
Plus, I can read a balance sheet which means I must be very well trained.
http://www.aig.com/aigweb/internet/en/files/Counterparties_tcm385-153017.pdf
—-
Outrage-Ostatic,
Odrama O’Deflection,
O’known Uh-Oh’s.
Don’t short now, short later.
This is like candy to the bulls.
You see it as well I do, voz-tastic!
Facing recession, community health systems forced to cut health care for illegal immigrants
Data on health care for unauthorized immigrants is hard to come by, because community clinics and hospitals usually do not ask patients for their immigration status. But the Pew Hispanic Center estimates that of the 11.9 million illegal immigrants living in the United States, about 59 percent have no health insurance. That accounts for about 15 percent of the nation’s approximately 47 million uninsured.
http://biz.yahoo.com/ap/090315/health_care_cuts_illegal_immigrants.html?.v=1
UH about freakin time……..us real live Americas need it a lot worse then they do…
Just putting this out there after 3 weeks gone by, I think it’s still a great analysis:
Wednesday, February 25. 2009
Posted by Karl Denninger at 12:38
The Singular Problem With Credit
I keep getting “pushback” from people in the mortgage industry and elsewhere, especially related to my Youtube Videos, with all sorts of claims that “we can’t go after all the fraud in the mortgage business - get over it”, along with similar missives.
Folks, you need to understand something very clearly, because Bernnake and the rest of the policymakers have laid out the truth for you - if you care to listen.
Fully 2/3rds of credit provided in our economic system is non-bank lending.
That is, it is hedge funds, sovereign wealth funds, pension funds, insurance companies and both foreign and domestic private investors who have extra capital they do not need at the moment, and they are willing to lend that money into the economy.
These are the buyers of securitized debt instruments.
This market is closed.
Both ASF (American Securitization Forum) and Federal Reserve statistics say that there has been essentially no securitized debt issuance over the last six months.
None.
That market is closed because this class of investors was gang raped by the pernicious and outrageous fraud up and down the line within the market.
Arguing over whether the banks are responsible for not verifying information provided (they are), automated approvals are responsible (they are), ratings agencies are responsible for being essentially purchased rubber stamps (they are) or borrowers who fraudulently overstated income and understated debt (they are) misses the point.
The point is that all of these factors are in fact elements of fraud.
All of these are willful and knowing misrepresentation - either by omission or commission - of the risks and true credit profile of the collateral, borrower’s character and capacity, market assumptions used in modeling or all of the above.
The fact of the matter is that this 2/3rds of the credit provided to our market has left and is not coming back until the misrepresentation ends and they can be assured that it will not happen again.
That is, these people are demanding their pound of flesh using the most powerful weapon they have - their checkbook.
Thanks for posting this item.
WSJ dot com
* MARCH 16, 2009
AIG Faces Growing Wrath Over Payouts
By LIAM PLEVEN, SERENA NG and SUDEEP REDDY
Troubled insurer American International Group Inc., now 80% owned by U.S. taxpayers, spent the weekend deflecting mounting criticism of how government funds have been funneled to various banks and used to pay employee bonuses at the business unit that almost sank the company.
After calls for more transparency, AIG disclosed Sunday that roughly two-thirds of the $173.3 billion in federal aid it received has been paid out to trading partners such as banks and municipalities in the U.S. and abroad.
The disclosures came as AIG was lambasted for about $450 million in bonus payments planned for employees at a business unit that lost $40.5 billion last year. The unit’s woes pushed the company to near-collapse, forcing the government bailout.
The disclosures highlighted the increasingly close but uncomfortable relationship between AIG and the U.S. government, which six months ago was a restless creditor and now has little choice but to be a patient ally.
“Something is terribly wrong with this picture, and the reckless behavior at AIG must stop immediately,” said Rep. Elijah Cummings (D., Md.), in a statement Sunday. He called on AIG’s government-appointed chief executive, Edward Liddy, to resign over the bonus-payments issue.
It seems that hardly anything of great importance is revealed until after it’s already happened, such as the payouts to the trading partners. $115B is already gone. So the media pounce on the bonuses, which are about 1/250th of the gone money. Sure, it’s good to slam the bonuses, but they’ve therein distracted everyone’s atention from the really big money that got away.
If the gummint owns so much of AIG, then the employees are effectively employees of the gumming, IMO. Gummint employees don’t get big bonuses like that, so screw these folks. Not to mention rewarding failure.
Lots of government workers in traditional public sector jobs (the kind taxmeupthebooty likes to complain about nonstop) must by now realize they are working for the wrong branch of government.
This young lady thought one…ONE million dollars a lot of money. A poor child who saved pennies.
This lady thought…fifty million dollars a lot of money. A middle class one who saved pennies.
This woman thought…a billion dollars a lot of money. Yeah, every penny counts after all these years.
This goddess thought…see would never comprehend a trillion dollars. Yet, the savings of coin turned into a middle class dream.
This priestess knows…not to throw away her pennies. She knows life is not about how many coins she saves, but how she utilises the change.
Leigh
Do taxpayers have any say in how much money gets poured into financial black holes?
Wall Street Journal
* MARCH 16, 2009
AIG Faces Growing Wrath Over Payouts
By LIAM PLEVEN, SERENA NG and SUDEEP REDDY
Troubled insurer American International Group Inc., now 80% owned by U.S. taxpayers, spent the weekend deflecting mounting criticism of how government funds have been funneled to various banks and used to pay employee bonuses at the business unit that almost sank the company.
After calls for more transparency, AIG disclosed Sunday that roughly two-thirds of the $173.3 billion in federal aid it received has been paid out to trading partners such as banks and municipalities in the U.S. and abroad.
The disclosures came as AIG was lambasted for about $450 million in bonus payments planned for employees at a business unit that lost $40.5 billion last year. The unit’s woes pushed the company to near-collapse, forcing the government bailout.
I don’t claim to know whether it is “taxpayers” or someone else who is on the hook for monies lost in this largest ever bank robbery in the history of civilization, but it appears the banksters have not only gotten away scot-free, but added insult to injury by rewarding the chief perpetrators with bonuses paid directly out of the U.S. Treasury.
Surprise, surprise, Goldman Sucks is at the top of the AIG payout list!
AIG details $105 billion in payouts
Cash used to cover collateral payments, wind down derivatives contracts
By Sam Mamudi & Simon Kennedy, MarketWatch
Last update: 9:22 a.m. EDT March 16, 2009
NEW YORK (MarketWatch) — American International Group revealed on Sunday details of $105 billion of government funds that it paid to U.S. and international banks including Goldman Sachs, Deutsche Bank and Societe Generale.
the banksters have not only gotten away scot-free, but added insult to injury Have faith, O disgusted one! It’s not over yet, not by a long shot.
Thanks for the uplifting thought!
New York Times
News Analysis
Bracing for a Bailout Backlash
By ADAM NAGOURNEY
Published: March 15, 2009
WASHINGTON — The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama’s agenda.
The administration’s sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses — Lawrence H. Summers, director of the president’s National Economic Council, described it as “outrageous” on “This Week” on ABC — marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger.
“We’ve got enormous problems that need to be addressed,” David Axelrod, Mr. Obama’s senior adviser, said in an interview. “And it’s hard to address because there’s a lot of anger about the irresponsibility that led us to this point.”
Paging Aladinsane…
Wall Street Journal
* ABREAST OF THE MARKET
* MARCH 16, 2009
Dollar and Gold Are Suddenly Inseparable
By DAVID GAFFEN and JOANNA SLATER
The dollar and gold are no longer ships passing in the night.
For the better part of this decade, the price of gold and the value of the U.S. dollar tended to move reliably in opposite directions — when gold went up, the dollar went down, and vice-versa. The reasoning is that a weaker dollar can feed into worries about inflation. That in turn prompts investors to turn to gold, a hard asset in limited supply whose value typically rises in inflationary times.
Lately, though, gold and the dollar have been rising in tandem as frantic investors seek safety from contracting world economies, teetering banks and radical governments stimulus plans. Investors world-wide are stashing bullion. At the same time they’re buying the U.S. dollar — the world’s so-called reserve currency held by central banks and institutions — as worries about other economies escalate.
The strange coupling has puzzled some strategists and investors, and at least some say that the two may continue to move together for the foreseeable future as investors focus on the perceived strength, or weakness, of the world’s banks and economies.
Since the start of this year, gold prices have risen 5% as the dollar’s value against a basket of major currencies has increased 8%. By contrast, in the last three months of last year, gold fell 4% and the dollar rose 3% — following the pattern investors had come to rely on.
The correlation between the two — a method of measuring the tendency of two assets to move together — was negative 0.81 from 2006 until late December 2008, according the Bank of Tokyo-Mitsubishi UFJ. (A correlation of 1.0 means they move in the unison, while negative 1.0 means the opposite.) From the beginning of 2009, it has flipped to positive.
The recent coupling “goes against the economic theory, so now you have a lot of new economic theory,” said Richard Bernstein, chief investment strategist at Banc of America Securities Merrill Lynch research.