Bits Bucket For March 18, 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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Been traveling — a lot — lately. And working more than ever. Just got back from a week in Paris (leisure). Restaurants were fairly empty, stores had tons of window shoppers but few buyers. Was surprised to see more Americans this time around (I tend to go 2-3 times per year), maybe it’s the weak Euro?
6 months of asking customers, friends and family about their financial situation from an honest perspective. Everyone who is debt-free (business or personal) is booming right now. Those in heavy debt are dying.
I love this “recession.” I just picked up commercial space for about 70% off prices 2 years ago in Chicago. I’m getting more heavy equipment this spring than I’ve bought in the past 6 years combined (at 10-20 cents on the dollar). I’m traveling more (prices are cheap), and happily dancing on the debt-laden graves of my ex-competitors.
What recession again? If you lose your job, MOVE. There is a TON of work in many cities around the U.S. I’ve visited for work and pleasure. Can’t move because you’re tied down to so-called “roots”? Guess that’s the choice one makes.
Yes, people who stick around to help out a sick parent are just plain stupid and lazy.
Skroodle:
And NOW We are unemployable. Its staggering how many employers today HATE you if you have a gap on your resume because you helped a sick parent, and worked free lance. What no real job in the last few years?
You are weird we cant hire you.
If you are unemployable, helping a relative makes sense. On the other hand, if you can get a job, why not HIRE someone for less than you earn per hour?
Look at it this way: if you can hire someone to take care of a sick parent for $8 per hour (you can), and you can earn $16 per hour, at least you’re making SOMETHING. $8 per hour isn’t great, but it is an income, plus is keeps your resume active.
If, on the other hand, you decide to do the work voluntarily, you earn zero, and you lose out on your resume-building.
It’s like weathly people who volunteer their time at fundraisers for charities: they’d be better off being productive (good for society) and donating money made from that productivity to charity (good for society).
I can not imagine a situation where I’d have to quit my businesses to take care of my parents. It makes more sense for me to hire someone (or two people), and then spend evenings and weekends with them as possible.
Yes AB:
Makes sense, but my parents have little cash and a paid off house. Which they signed off to me and my 2 bothers 10 years ago so the tax man cant get at it.
There are a lot of intangibles involved in the “value” of leaving work to care for a parent. The parent will find infinitely more comfort being care for by a loved one than by a hired hand, a loving child will feel infinitely more at ease knowing that their parent is safe with them, and, if the parent has an illness that will likely result in death, there is the opportunity for incredible bonding between parent and child towards the end.
Like that stuff is really worth $8 an hour!
“Look at it this way: if you can hire someone to take care of a sick parent for $8 per hour (you can), and you can earn $16 per hour, at least you’re making SOMETHING. $8 per hour isn’t great, but it is an income, plus is keeps your resume active.”
Its not about money when you’re taking care of a loved one. A good friend of mine found that out this past December when the “$8/hr. caregiver” decided that no harm would be done if he went out and ran a few errands while on the clock. He left her father in bed, put pillows around him, closed the door and left. That’s how my friend found him when she went over after no one answered the phone.
Just lie. Use a bankrupt co. tons out there.
yep, we must be fools to love our parents! (sarcasm off)
In our disposable culture, people are disposable, too.
Now, get back to work. AIG can’t get those bonuses without your contributions.
Caring for the sick(regardless of relation)? () I bet you want health insurance too! The horror of it all! You must be a socialist! A Communist!
The sick parent thing is an ugly term for me. My ex-wive had an aunt who was dying for 35 years (finally croaked this year, thank God). Her “poor son” took care of her for all of those 35 years, and now he has nothing to show for his life but that.
Parents who didn’t prepare for health issues when they were younger probably were stupid and lazy. I can point at about a dozen people I know who are in their 70s but still thin, energetic, and healthy enough to travel internationally. Those who are grossly obese with smoking-caused emphysema get no tears from me. And I’m a smoker, too.
I think it is very sweet of an adult to give up their lives to make a parent’s remaining years better. I will not be one of those children — I spend time with my parents while they are healthy and able. When it’s time for them to need full care, we’ve discussed what will be done. Even better, my folks starting planning around the age of 45 for full time nursing care expenses should they need it. I’m 35, and I’m already making those plans myself.
As life moves swiftly, I won’t be one to be 75 years old begging my children to visit me. If you decide to stay at home to take care of a sick parent, don’t complain about the economy. Don’t ask me for a handout, either. I paid enough for the boomers already out of my pockets, I’m done.
For those who actually want to live their lives
Geez, it tough this morning…who has the answer for “everything”:
1. A. B. Daba
2. wmbz
3. Rash Limpbaughs
Yeah Hwy…I was thinking the same thing…I think A B is just a little self centered…Thats okay, its his life…Personally, I would rather spend the morning walking my 83 year old mother to breakfest then spending a month in fricken Paris, but that just me…
Is there an ignore feature on this board?
Hah, I wish there was.
I spend at least a full afternoon a week with my mother. When my dad is in town, I’ll spend days on end with him. But there’s a difference between spending quality time (and being able to care for yourself and your future) and giving up your entire live for your parents.
If you give up your career for your parents, how in the hell will you survive? Will it be more entitlement programs by the Democrats and Republicans? Probably. No thanks.
Howdy scdave,
Check out my post below…A.B. Daba’s been buying “undervalued” properties since she was 17 years old! Course I might have got the math wrong…hope you & yours are well!
PS, going camping in the Mojave April 8-12, the return from the Vegas HBB International was..just…unbelievably BEAU-Ti-FUL!
GO U.C.L.A.! (Hwy goes back to cursing Kevin Love!)
Personally, I would rather spend the morning walking my 83 year old mother to breakfest then spending a month in fricken Paris, but that just me…
Well, scdave, your momma obviously raised a keeper. Seems to me both of you are lucky.
“Those who are grossly obese with smoking-caused emphysema get no tears from me. And I’m a smoker, too.”
You should write for The Onion.
no you didn’t pay for boomers. you paid for the military machine. get your facts straight.
You should see the Veteran’s Day parades where I used to live (northern burbs of Chicago). All old folk. Guess who voted and supported those wars? Boomers.
not all boomers that’s for safe and sure.
In fact there’s a whole segment of the Boomers that have stood up all their adult lives to the military industrial polluting mess morass we find ourselves in today. Many many boomers have tried very hard to steer this nation to sustainability. I am a boomer and don’t like to be included in this generalization of my ge ge ge generation.
why don’t you all just f f f f fade away
Ah, the callow certainty of youth.
the protest generation were sure as hell right about a few things.
1/ plastic people oh baby, you’re such a drag
2/ain’t gonna study war no more
3/they paved paradise and put up a parking lot
Yeah, that “Me” generation thing worked out really well. Funny how they became everything they protested against.
yeah every one of the 50 million who are boomers are what you say. jeesh talk about generalizations
Unfortunately I’m a Boomer, and can speak from experience. Yes the overwhelming majority did cut their hair and get jobs and turned into plastic people, made war, and paved over a lot of paradise. It’s ugly but true and it’s NOT a generalization.
I have to say..if you are the right kind of parent..you would do like my grandmother did..she VOLUNTEERED when the time came to go to a assisted living facility..she told my mom, “you have your own life..it isn’t your JOB to take care of mine..”
My mom still visits her mom 3X a week there and my grandmother loves it..mostly healthy seniors and she is never bored…
That’s exactly the conversation I had with my parents when I turned 18. I still set aside a little cash every month to put towards my mother’s long term care when she needs it. She’ll always have a roof over her head, too. But it makes little sense for me to leave a $80+/hour job to take care of someone when someone can do it better for $10 or $15 an hour.
VISITING someone is more important than just caring for them, too.
All the people I know “caring for a parent” usually moved back in because they couldn’t make it on their own and the parent at least has steady income and a place to flop. It can work out pretty well if the kid can take mom to the hospital, cook meals, clean house and do the shopping. It all depends. Also I see a lot of bickering and ungrateful “kids” who won’t/can’t acknowledge how dependent they are.
Bingo.
I know of two kids (well, 24 years old or so) who moved back in to “take care of their grandparents.” What they really meant was “I went to college for 5 years, have $140,000 in debt, majored in English Pornographic Guitar Recording Using Charcoal and can’t find a job so I’m going to shack up with granny.”
Good riddance.
Guess that solves the problem of finding good help.
Seriously, though, dude–you’re being pretty harsh. Don’t assume you know everyone’s circumstance.
Yeah, AB, i thought you were, like, Old.
My mother has recently been diagnosed with COPD w/emphesema from smoking. She quit 35 years ago.
So good luck with your smoking!
I started smoking due to a prescription from my MD to try it. My quality of life due to smoking is significantly better than when I don’t smoke. Sadly, much of the medical research in the benefits of nicotine and other smoking-byproducts are squashed by the socialists in this world. I’ve spoken about those benefits here before.
Will I get emphysema later in life? It’s possible. It’s a horrible disease, but I also know that the other prescriptions I can take lead to even worse side effects NOW, and would not bring the quality of life I desire right now, when I can use my time best.
My dad died of lung cancer. Here, A.B., let me give you a light.
Those socialists are squashing the medical research on the many benefits of gonorrhea too! And they want us to think we came from monkeys! I hate them!
Admit it, A.B., you’ve been hitting the sauce again.
(Hmm, maybe “Dada” was the first hint … that all is not as it seems … trum-dala trum-dala)
Keep up that smokin’, A.B.! I’m a pathologist and every puff you take helps my career stability.
I started smoking due to a prescription from my MD to try it. My quality of life due to smoking is significantly better than when I don’t smoke. Sadly, much of the medical research in the benefits of nicotine and other smoking-byproducts are squashed by the socialists in this world. I’ve spoken about those benefits here before.
HUH?
Tell you what, AB. I’ll lay off your smoking if you lay off other people’s family decisions.
Me thinks AB doth be a troll.
Could he by Spock? He has so little affect.
Who is this guy? WTF?
A.B. Dada’s been around a while, but his rant against people who take care of their parents is a bit off, IMHO.
Nothing like being a self-centered and self-righteous, I guess. His mom must have dropped him on his head when he was a baby.
Sad.
Dada;
You sound like a real winner.
“When it’s time for them to need full care, we’ve discussed what will be done.”
Let me guess; take them to the animal shelter and have them euthanized? I mean, heaven forbid you should have to be inconvenienced in having to take care of your elderly parents.
Dred
My parents can live with me if they need to. I would feed them, clothe them, and provide for their living needs — but I won’t give up my life to watch them grow older and older and finally die. It makes little to no sense.
I’ve been on my own for 22 years. In that time, I’ve seen dozens of people take time off of work to “help” a sick parent. Few of those people were able to ever recover from the years lost — and now they’re going to have to rely on others to survive. It’s a pity.
How that business selling fairy dust to the NASA program going?
So … er … you were emancipated at age thirteen?
Sorry, don’t believe you.
RE: Parents who didn’t prepare for health issues when they were younger probably were stupid and lazy.
My WW II Bronze Star and Purple Heart winning father who got his pelvis structure shattered and intestinal system “severely impaired” from the shrapnel off an exploding German 88 cannon shell while attempting to fire a bazooka at it in an open field during the during the “Battle of the Bulge”; who then suffered the indeterminate health consequences of this action throughout his entire life…yeah, I guess he was real “lazy and stupid” for allowing himself to be drafted into the armoured infantry in 1944.
You talk alot of shit, man.
+1
You father is/was a brave man.
You talk alot of shit, man.
Jeebus, no kiddin’.
He should change his name to ‘A.B. Yada Yada’.
Oh, and hd74man, your dad and others like him deserve complete gratitude and respect for their service and their sacrifice. I’m sorry to hear that he had to suffer like that.
“What’s Eating Gilbert Grape?” … just not “Feed” *Shudder*
Casting judgement about like it was confetti!
I’m detecting Narcissistic Personality Disorder…
Yes - my NPD meter pegged full red on AB Dada’s recent posts. Unless you’ve been closely affiliated with someone suffering with this mental disorder you just won’t understand the thought process.
Stupid yes, lazy no(not a easy job)..just too attached to mommy and daddy..usually brought on by a overbearing parent who gave little self confidence to their child…aiding your parent when they are sick is one thing…to give up your life for them is another…
I have a cousin who just graduated with a teaching degree in IL. There aren’t many jobs for teachers around there, but there are plenty in OH, especially if you are a guy (he is). However, he won’t move because of the whole “roots” thing, and his parents are in their forties.
It’s not always just about staying to “help a sick parent” or whatever. It’s also about refusing to head out into the real world where you might not have your overbearing Boomer parents to act as your nanny anymore.
Meh, I dunno. I’ve come to envy the “boring” ones who stayed put and found some way to make a living in the home town. I moved to pursue music jobs and ended up 1200 miles away from family. After all the friends and coworkers who were “just like family” faded away - moved or died or whatever - there you are cut off from the real thing. And it’s true, you can’t go home again.
“Meh, I dunno. I’ve come to envy the “boring” ones who stayed put and found some way to make a living in the home town. I moved to pursue music jobs and ended up 1200 miles away from family. After all the friends and coworkers who were “just like family” faded away - moved or died or whatever - there you are cut off from the real thing. And it’s true, you can’t go home again.”
Some folks measure life by money. I recognize the best times I have ever had were doing things with people I truly love, friends and family. I own a motorcycle so I can have fun with my father and brother. I co-own a boat with my best friend, so I have something fun to do with my best friend and other friends and family members.
I would rather make $20K/year living a life with these folks than make $150,000/year living among strangers. I am very fortunate that I get pretty much the best of both worlds right now. But that can change at any time.
Yup, I hear ya. I’d actually like to take care of my mother now, too, though 20 years ago I thought that would be a fate worse than death.
Ann, my wife is just in that situation now. Her father refuses to help care for himself and expects to be treated like a king. She is one of seven kids. After 5 years of he’s going to die any minute, he’s still around. One sis was assigned to be with him week days and the others are assigned a weekend even if they are 300 miles away. They have decided to assess each for extras that he wants, no need. It’s torn the family apart.
His last hospitalization landed him in rehab where his quality of care was 10 times better. He thrived there with the activities, even telling his kids not to visit him during hours of activities. But now he needs to be moved into a home and they said ‘no” we’re taking him home because he wants to die at home.
When at home he couldn’t make it to the bathroom and someone had to mop the floors (we had to pay to pull the carpet). He would sleep all day, eat and sleep some more. He would not do anything to help those taking care of him, he was the entitled one.He became dehydrated and ended up in the hospital with fluid in his lungs.
In some posts I see a do-gooder mentality, but what one should be looking at the final outcome not the wishes of the person being cared for. When I was young my parents didn’t give me what I wanted but what was best for me, and that’s what a child should do in return for their parent.
So true, salinasron. +1 from me.
I have no problem with the idea of taking care of a parent who really needs help — but can you do as good of a job at is as a professional?
I have a personal story about a relative who took in a mentally retarded young man. They are praised for it, but the young man does NOT get the attention, interaction, and entertainment that he could get in a professional care environment. Even though he is “loved” I think he could be happier in a different setting. It’s sad.
For 6 years I “volunteered” at a well known old folks home in a prestigious Chicago burb on the weekends. They thrived on interaction. I didn’t volunteer to be charitable, I did it to learn from those who came before me and had seen things I now am seeing myself in life. It was the best “free” education one could get. I also was able to compare their lifestyle with those who are holed up with an adult child “taking care of them.” Total difference in quality of life.
That’s nice. You ever been in a Medicaid nursing care facility? Didn’t think so. I was forced to do time in one (it was “volunteering” but it really wasn’t … being 13 sux). There’s a reason older people with nothing but a home and an SSI check hold on as long as they can. If they can bully a child into ‘helping’, all the better (often the child is spending the SSI check). They can maintain independence & won’t be subject to patronizing attitudes, tranquilizers, and abuse.
Once you are in Medicaid, they will take all your assets (including your house). You will have ZERO options. Even the well-run (ie, not rife with elder abuse) homes are miserable places.
“”That’s nice. You ever been in a Medicaid nursing care facility? Didn’t think so. “”
My brother used to do Medicaid fraud investigations. The stories he would tell would make sure you never ever put a loved one in such a place.
Glad to see most people still realize what the real “value” and real wealth is in and about *our* country.
Tell me again what it was that drove this whole housing debacle again?
I agree..business is booming for us as well..due to people shopping around and us having very very reasonable overhead so we can pretty much knock down the debt ridden guys who just “can’t” lower their prices…
I agree…just got a renewal on our second office location..landlord cut rent by $400 dollars a month when we told him we were not going to renew due to his competitor across the street offering a better deal…nice..just got a raise!!
Traveling this year was awesome..and booking some great stuff for the summer..
Buying some great deals all around..from office equipment to recreation(paying CA$H)…for those of us who didn’t try to live like the Joneses..we are getting their “stuff” at Walmart prices…
Congrats on staying relatively debt-free. Honestly, if you can buy something WELL below market value on credit, and have it cash-flow immediately with a profit that can pay the debt burden off in 36 months, I’m all for accepting going into debt for it — if it really is a once-in-a-lifetime deal.
I just booked ORD-HKG for a 5 day hop in a few months. Excited to see the fares so reasonable. Already have my ORD-CDG return in May (4 days), and thinking about ORD-SYD for Aussie springtime. United 1K will be had this year on leisure alone!
Staying debt free and having several years of living expenses does not help you if you are helping out an unemployed member of your family. I can sit out without a job for 7 years but I’m helping a sister. It’s out of gratitude because she encouraged me to stop being a “professional” college student and get a job when I was 26. However she does not know how to save money.
I know other people in the Redondo Beach area who admit they have no savings but are house-rich. A woman today told me her company might be losing a big contract and it would be bad news for her job. She said she has no savings. She’s one of the RB house-rich types.
I would have no problem helping a sibling or family member who is unemployed. They can use my spare bedroom, and in compensation for the free rent and utilities and food, they can take care of my house and cat for me while I’m away.
But to take money out of my pocket to help someone who has no concept of savings? Sorry, I won’t do it. There’s NO charity for the stupid and irresponsible. The best thing I’ve learned from those older than me who have failed and then succeeded is that many of them slept on a park bench for a week or two before realizing that there’s one way to prevent that from happening: save for a rainy day, save for many rainy days.
There are a TON of jobs out there. You can, and will, be able to keep a roof over your head at even $8 an hour (get a roommate). John Stossel on Friday’s 20/20 had a report about a young guy who decided to see if he could survive: he moved to a random town with $25 in his pocket. He didn’t mention his college degree or any history of work. Within a few months, he had a nice apartment, a decent used truck, and a reasonable job.
I have friends (and even family) who have recently put their hand out asking for assistance. I’ve offered them what I have in the past: come and sweep up my warehouse, or paint my living room, or do my laundry. Handouts never teach anyone anything.
Savings may just be a way to bleed out longer in our collapsing economy. In the long run, savers will die by inflation.
The only winning move is to default and go completely deadbeat. They are the winners.
I save, but barely 10% in USD. And what I do save is hoarded, never placed in a bank where the fractional reserve banking standard makes inflationary pressures worse.
The best form of savings is hoarding. It reduces the availability of the saved asset, which increases demand for it, which increases its value to others. Putting cash in banks or in the stock market actually makes the value of your money worth less.
This is why I prefer hoarding over saving.
Your thoughts make sense and are logical and coherent. Some even quite agreable. However, you do sound quite selfish.
What good is wealth, or a “deal of a lifetime” or “buying 10 cents on the dollar” or whatever if you can not share it with people you love, or even with people who need help and are not as close to you? You can not take it all with you to the grave brother, remember that.
Everyone has a different point of view, circumstances, upbringing, etc…Some people tick when they buy shit on ebay or liquidation sales cheap. Others, when they have a piece of mind and sleep well at night because they are “debt free”. Yet, others, however irrational, are happy to help aging parents, to the detriment of their own careers, etc…
You sound very judgmental, which is rather not typical for the WASP protestant culture in the US. I would venture to guess that you are either Eastern European (so am I) or South Asian transplant. Maybe I am wrong, but unlikely.
Either way, enjoy the trips and the cheap equipment and keep posting as sometimes you have interesting insights into things.
Best,
ik
I have a buddy who has a big income, not much in the way of assets (I don’t think) and a 1200sqft condo he paid 800k+ for. His condo is walking distance to Hermosa Beach pier - like one block up from the beach. He has a little deck from which you can see the ocean.
I’ve told him to ditch that place as his income is very volatile and it sounds like west LA is starting to deteriotate. He swears that THAT close to the beach he’s sure to do okay. I don’t know that market very well - which of us is delusional?
I’d guess 95% of the people in that zip (90254) and similar proximities to the beach are Kool-Aid drinkers, thinking their house values will always be high.
A.B. Dada…Just curious…what kind of equipment do you deal in?
I`m in the cleaning industry, on the mfg. side of things. We are down some. I have a dist. that buys used floor scrubers and referbs them and sales….he is booming.
Lane
We also buy items that we refurb, but we don’t sell them (generally), we use them to undercut our competition who buys new. One of my businesses is in the print industry. In our market the average going retail rate for our product is about $9-$12 per unit with a profit margin after overhead of about $4 per unit. Our price (retail) is $6 per unit with a profit margin after overhead of about $3 per unit. Can’t beat it. Our “loss leader” is $2 per unit with a profit of about $0.05 per unit, but it gets customers in the door.
In 2008 I acquired $50,000 printers for $6,000. They were tough to find, but I did it. I even found a $30,000 lease repo with a local bank for $3000 take-away. It was never turned on.
There are so many businesses right now that can be cash-flow immediately if you can acquire them with no debt (let the previous owners BK). I recently ran a cash-flow calc for a friend looking to acquire a bar, and he would be profitable for only a 10% negotiation downwards in price. Even restaurants CAN be profitable if you’re not burdened with debt (the local greasy spoon 1 block from my house is profitable 5 days a week).
Cool! Good points for sure.
Lane
Fed scopes out options with key rate near zero…
WASHINGTON (AP) — With a key interest rate already near zero, Federal Reserve policymakers are weighing what other tools they can use to jolt the country out of recession.
Fed Chairman Ben Bernanke and his colleagues resume their two-day meeting Wednesday, and at its conclusion they are all but certain to leave a key bank lending rate at a record low to try to bolster the economy, which has been stuck in a recession since December 2007.
Economists predict the Fed will hold its lending rate between zero and 0.25 percent for the rest of this year and for most — if not all of — next year.
The hope is that rock-bottom borrowing costs will spur Americans to step up spending, which would aid the economy. So far, though, hard-to-get credit, rising unemployment and other negative forces have forced consumers and businesses to retrench.
Against that backdrop, Bernanke and his colleagues have pledged to use “all available tools” to battle the financial crisis and turn the economy around.
One option advanced at its last meeting in January is buying long-term Treasury securities. Doing so would help further drive down mortgage rates and help the crippled housing market, economists said.
Another option put forward in January is expanding a Fed program aimed at bolstering the mortgage market. The Fed could boost its purchases of debt issued or guaranteed by mortgage giants Fannie Mae and Freddie Mac. Since that program was announced late last year, mortgage rates have fallen.
“The main message the Fed will want to convey is that policymakers still have tools and options to support the economy,” said Mike Feroli, economist at economist at JPMorgan Economics.
Fallout from housing, credit and financial debacles — the worst since the 1930s– has thrown millions of Americans out of work, driven a growing number of banks out of business and forced the government to put up hundreds of billions of taxpayers’ money to bail out troubled financial companies.
Much is riding on a new program, created by the Fed and the Treasury Department, to spur lending for auto, education, credit card and other consumer loans. The Fed later this month will start providing up to $200 billion in financing to investors to buy up such debt.
The program could generate up to $1 trillion of lending for businesses and households, the government says. It will be expanded to include commercial real estate, though that component won’t be part of the initial rollout.
“The main message the Fed will want to convey is that policymakers still have tools and options to support the economy,” said Mike Feroli
Oh, this is rich, they’re already concerned about perceptions of their relevancy this early on? Once again, a bit of desperation oozes from between the lines…when/if the ooze becomes a torrent?
Oh yeah, and the “credit is tight” message is getting so effin’ old.
Anyone who takes a 5-10 year outlook on investments should always be happy when TPTB decide to inflate the money supply. Suckers will take that easy credit, buy stuff, and then eventually go through a foreclosure or repossession. After that happens, prices will fall below a reasonable value, where we future-lookers can pick them up cheap.
My condos were bought with this view. My business hardware was, too. Even one of my vehicles was purchased during a market disturbance. I love easy credit, it means cheap-and-easy goods later on. Oh, and those who get killed by their own stupidity tend to work for far less than they’re worth, which would be a double-win for me, but I don’t hire morons.
From the above AP story:
“The hope is that rock-bottom borrowing costs will spur Americans to step up spending, which would aid the economy. So far, though, hard-to-get credit, rising unemployment and other negative forces have forced consumers and businesses to retrench.”
Ummmm, what if we don’t want to borrow? Can we still step up our spending if we (gasp!) pay cash?
“stuck in a recession since December 2007″
This still gets me. They didn’t call a recession until Dec 08. Then they backdated it to Dec 07 so they could label it the “Longest recession since WWII”.
They didn’t notice it while it was going on? Come on!
Official recessions always called in retrospect.
Economists predict the Fed will hold its lending rate between zero and 0.25 percent for the rest of this year and for most — if not all of — next year.
Bastards. How do they expect retired people - living off the interest on their savings - to survive this period? Not like most of the “late” boomers like me got any kind of pension.
Not like most of the “late” boomers like me got any kind of pension ??
Yeah…Mother is in the same spot…
Those people don’t get deeply in debt and don’t produce for their Masters, so why would the Fed care if they survive?
Against that backdrop, Bernanke and his colleagues have pledged to use “all available tools” to battle the financial crisis and turn the economy around.
Helicopters are getting ready for the Monetization Run.
But don’t worry - hyperinflation will be good for yah, since it’ll make housing go up! (and energy costs, and food costs, and health care costs, and… wait, what? No, no - your salary won’t be going up. Yeesh!)
From wmbz’ linked article, it seems the PTB can’t wrap their heads around how today’s problem started — that Greenspan’s lowering rates too low for too long spurred risky investments in assets that should never have existed to the extent that they did. That policies like this:
Economists predict the Fed will hold its lending rate between zero and 0.25 percent for the rest of this year and for most — if not all of — next year.
The hope is that rock-bottom borrowing costs will spur Americans to step up spending, which would aid the economy. So far, though, hard-to-get credit, rising unemployment and other negative forces have forced consumers and businesses to retrench.
Against that backdrop, Bernanke and his colleagues have pledged to use “all available tools” to battle the financial crisis and turn the economy around.
led to this:
Fallout from housing, credit and financial debacles — the worst since the 1930s– has thrown millions of Americans out of work, driven a growing number of banks out of business and forced the government to put up hundreds of billions of taxpayers’ money to bail out troubled financial companies.
————————–
Can we please get rid of the idiots who are holding our economy hostage?
Bammy and CONgress knew about AIG bonuses for months. Why does this not surprise me?
http://www.google.com/hostednews/ap/article/ALeqM5hEalVdubp5tGI_-bkLMyNULqCjXgD97040E00
But the Messiahites are claiming they only found out a week or two ago….so which version is the truthful one??
For sure that is one smooth talkin’ dude making use of both sides of his mouth, hands full of vaseline for everyone. I wasn’t fooled for a second by his speech about the bonuses.
And for those of you who want to get into the “Well, but Bush…” razz-ma-tazz, stuff it. That game is over, although the master manipulators hope they can keep it going long enough to keep the people fighting while the looting continues.
“…And for those of you who want to get into the “Well, but Bush…” razz-ma-tazz, stuff it. That game is over,”
Bugs: “eh,I don’t think so Doc,…”
Thanksgiving dinner with my “young repubican”… “The party of fiscal responsibility” sibilings is yet to commence, I’m quite sure there will still be emerging after-effects of the Cheney-Shrub Shadow Legacy to carry way on past desert and into the cigar & Scotch theme of “Lets Lower taxes on the wealthy, while simultaneously fighting…. x2 foriegn wars…. that will assuredly bring about… Sha-Zam-Islam-Is-Now-Democracy within apprx 6 months…” speaking of which, anyone know if Condi is helping the American peace corps in Iraq yet?
Interesting how many Democrats supported x2 foreign wars, tax cuts for the wealthy, and all of that. Also interesting how many Democrats approved Bush’s appointees.
I’d rather believe what I see as reality: anyone who affiliates themselves with any political party (including 3rds) are just schmucks to get what they deserve. Looking back at 100 years of politics, I think my view is more accurate.
Politics serves a purpose for the international banker types who actually control this country. When you can polarize the country, you can paralyze it. String twenty or thirty paralyzed countries together at the same time and you can make a great case for the New World Order.
Diehard Republicans and Democrats in this country never seem to realize that they have their exact counterparts in other countries. What an amazing coincidence that bailouts and stimulus packages are proposed all over the world at exactly the same time, by different “governments” with locally popular and unpopular “leaders” . Let the cloudiness of carefully planted and cultivated political cataracts fall from your eyes, and the events become more predictable. At least since 1913,we have been voting in and out of office people whose power and authority is predefined and manipulated by the real powers that be. Why is Turbo Tax Tim so important that the tax dodger and AIG bailout/bonus architect just HAS to be running Treasury? Look behind the curtain and see what his Dad has been doing for the last 20 years. Hint - think “China”.
“…Looking back at 100 years of politics, I think my view is more accurate.” You go girl!
Hey, you’re on intellectual roll…within hours you’ll be in competition with Rash Limpbaughs…”You folks don’t even have to think, I’ll think for you…I’m right 99.8% of the time!”
(Hwy’s going to poll his “young repubican” siblings this Thanksgiving for the number of times they say: “Thank God we had Cheney for x8 years!” & “Sarah the “Barracuda”… she is so much like Reagan.”)
The two major parties have the machinery, the connections, the institutional memory to actually get people elected. You can distance yourself all you want from them but they will still run things.
That is, until a viable third party finally gets in gear and develop the same infrastructure. Too often, after their primary lightening rod has lost interest, the party falls apart. How’s the Reform Party doing now?
For the American public, AIG now stands for “arrogance, incompetence and greed,” said Rep. Paul Hodes, D-N.H.
Some of those top politicians missed their calling in Hollywood. Maybe they can talk with the Gubernator about getting acting gigs once they retire from politics?
Lol. Deep down politicians and actors are the same type of people.
Yep. The only difference is how they roll their money. Politicians like it in thick wads, actors like it in little round tubes.
I asked my students the other day, “If Washington is Hollywood for ugly people, then what does that make academia?” Question was brought on by hundreds of posters around campus since last August publicizing some educational symposium and depicting someone who looked like bleached-blonde, quickly-balding John Lennon wannabe, bedecked with a few genuine Native American baubles, pink-tinged lenses in wire frames. He is to be the symposium’s main speaker, of course.
Oh, yeah. . . count me out, kids.
Sounds like the faux-Indian Ward Churchill.
Yeah, Dave, it actually does. One look at the guy and the title of the symposium (”Equitable Education in the Age of Bush,” or something similar) and you know from where he is coming. Hey, if I want to see/hear the US and Americans get lambasted, then I’ll take it straight from some of the HBB posters. I don’t need or want it under the guise of serious scholarship from some self-styled Pied Piper.
I get a few chuckles out of my more intelligent students each semester when I tell them, “Bet your lives that half the people who tell you they were at Woodstock, and half the people who tell you they were in ‘nam, and half the people who tell you they have Native American blood in their veins are liars.”
Except that acting still requires some work. Banking on one’s inside connections as a former office-holding lobbyist is much easier, and from all indications the pay is at least commensurate.
If an industry can screw up as badly as the financial industry did and get Washington to cleanup its mess despite popular outrage then that industry is over and above the law. Nonetheless, it’s kinda funny watching the same numb-nuts that fought for TARP act all crazy angry.
“Act” is the operative word.
It’s all an act. Washington yielded to TARP I. TARP II is in the budget. It is yielding to M2M. It has given the industry FDIC guarantees on newly issued debt. Plus, the Fed and Treasury are actively lobbying the industry’s cause.
The evidence is pretty clear. So, the only thing Washington can do now is pretend it is angry, pretend it is even more angry than the public, pretend it is with the public while it continues to yield to the industry. The cat is out of the bag, however.
+12,000, mrktMaven.
Since Obama hasn’t been in office two months yet, you mean 58 days, right?
yeah it’s all Obama’s fault.Everything.
is it me or is… Rash “porkulus” Limpbaughs…looking more & more like Mr. Potato-head?
Now that he off the narcotics, he is eating food
Now that he off the narcotics, he is eating food
And boy, does it show. Man’s got his very own weather system.
It’s not Obama’s fault. Your mistake is believing there is a difference between Obama and Bush.
Obama didn’t just pop into existence or descend from heaven on Jan 20 despite what your Faith may tell you. No, it turns out he is human like the rest of us and in fact has a history of something in the neighborhood of 47 years of existence on this planet. In the past few years, he has even been a member of the U.S. Senate.
He is also a member of the Democratic party, you know, the party that lead the push to give billions of dollars to financial firms (like AIG) to do whatever they want with.
They’re all in it together. Didn’t anyone notice how easily the $700+ billion TARP money (or however much it was) sailed right through congress with very little partisan back and forth, right at the peak of an election campaign?
Usually they will claim to be at a principled stalemate, even when passing a law to fund the Capitol’s groundskeeping service, if it’s within 12 months of the 2-year November election dates.
They’re all in it together.
Of course they are. But the political faithful would rather believe “my guy” didn’t exist before 58 days ago rather than hold him accountable for something. Seriously demented…
Fortunately we mostly only get that kind of delusion from half of the political cult around here. God help you should you get both colors in the same room…
Of course you mean 1/3 the republicans and 1/3 the democracts and 1/3 the libertarians are delusional right bluprint?
No, I was referring to the demopublican tribe. There are no other political parties represented in any significant numbers in U.S. politics. You get a green or libertarian or something else from time to time, but hardly worth discussing. And often those are really just a democrat or republican with a slight difference (e.g. Bill Maher is a good example of a democrat who calls himself a libertarian on the basis that he wants drugs to be legalized).
On this blog it seems there are only the very occasional republican hack (I suppose they are keeping quiet after the recent clusterf*k of a presidency that particular party graciously delivered), democrat hacks seem to be overly represented (compared with the population as a whole).
Skroodle implied that Obama isn’t responsible for ANYTHING beyond 58 days ago. WTF? That is so far beyond making any kind of sense it boggles the mind, yet it is inline with the dem hacks around here.
One of the blue hacks here blames Hank Paulson (who had NO law making authority at all) and Bush (who also technically can’t vote on legislation) for passing the pre-Obama bailout bill. Both of those people certainly share blame (especially Bush who did participate in the law-making process by signing it), but the delusion comes in when they are blamed exclusively as if Frank/Dodd/Pelosi were never standing around the CNN cameras in a contest to see who could get their nose the furthest up Hank’s arse.
lmao. That’s delusion baby.
Hmm…I replied. Perhaps my post will be able to exit purgatory soon. The demopublican zealots, however, may be there a bit longer.
How long have the Dems been in control of congress? Doh!
“Blame Bush” is just a smoke screen people. For that matter, blaming the Democrats for this is as well. I’m doing a (very) few congress-critters an injustice when I say this, but Washington is a cesspool of corruption and they get away with it because of partisan anger on wedge issues.
And that’s just the pols. The true filth lies below the surface and we name them, bureaucrats.
It was pretty clear that Obama was going to be POTUS around June/July of 2008. People didn’t wake up on 1/20 and said holy shit Obama’s president, I better make some changes.
Any long term investments made (or not made) over the past 9 months were done so with the knowledge that Obama would be POTUS with a large Dem majority in Congress.
Saying anything pre 1/20 has can’t be pinned on Obama is ridiculous.
Hardly a surprise:
Corus bank warns of possible failure
March 18, 2009 5:08 AM
Corus Bancshares Inc., the Chicago lender that staked its fortune on the condominium boom, has confessed that it might not survive, the Sun-Times reports.
In a regulatory filing, Corus said it expects its independent accountants will “raise substantial doubts with respect to the company’s ability to continue as a going concern.” The warning would be attached to earnings for the fourth quarter that Corus said it needs extra time to complete.
Well, color me NOT surprised.
Corus was the same money changer to offer near 6% CD’s while every other bank offered 2.5-3.5%.
Imagine that.
Were they FDIC-insured? Just wondering.
As a general statement - IMO the whole government backing factor on things like this is *way* understated. I’m talking about FDIC, FHA, SBA, etc., plus for instance the $30B backing of JPM’s purchase of BS and other similar backing. It seems like very little of this is being included in the Federal budget forecasts, from what I can tell. As these losses go from being “potential” to being “real” - watch out.
I think it’s funny that there’s so much outrage at AIG who’s receiving $150 Billion, while at the same time Dodd’s working a bill to provide $500 Billion to the FDIC, which serves the exact same function - insurance against financial losses.
Yes, they were FDIC insured. All the same I suggested to a few people I know to get out last fall - thankfully they did.
Why would you say “thankfully they did”? The only downside to investing in these CD’s is if the FDIC itself (and by extension the U.S. government) goes bankrupt. Do you think there’s a good chance this would happen before the CD’s would mature?
Personally I wish I would have invested in them.
Personally I wish I would have invested in them.
—————
Me, too. With the Fed doing everything it can to keep rates on the floor, one of the best things I did last year was open a 5% CD with Washington Mutual a few weeks before the FDIC closed them down.
Oh, my! What went wrong? I cannot believe it! Who could have known? I’m so sad. Give ‘em some Tarp. No. Wait! Did they get bonuses? Now, I’m angry. I’m shocked! I’m really, really angry. Vote for me b/c I’m so angry.
Will you change stuff?
I’ll change “change.” Change will not just be a slogan. Change will really mean change. It will be change you can believe in, change you can count on, change that cannot be changed, change that you can take to the bank — real change.
So there were only two campaign choices? “Change” or more of the same? Which candidate campaigned on “more of the same”? Remind me.
So there were only two campaign choices? “Change” or more of the same? Which candidate campaigned on “more of the same”? Remind me.
Ah, you’ve forgotten The Real Messi@h, Santo R. Paulo, who is not a Republican despite being a Republican, and who, if only he could get people to listen, would ride in victoriously from Texas on a firebreathing, economy-fixing dragon.
Some of you guys are really getting your money’s worth out of those season tickets to the circuis.
There is only one party — the inner party. Everyone is free to believe there are two parties, however. Everyone is free to project their inner biases and ignore the observable.
Winston
we can always HOPE as well!
To quote Arrested Development…
The word HOPE and the word CHANGE is directly opposite, not the same.
Anybody have a good grasp of US History? Have we ever seen an adminstration try to use public anger as a substitute for good policy and admin to this degree? Seems like BO admin is very carefree in using this particular bullet.
Lincoln?
A Chicago bank failing? Impossible. I was told that Democrats know how to fix the economy. And since Obama and Rahm and Dick Durbin are all from Chicago and Chicago has been run by Democrats since Adam and Eve, I refuse to believe this story.
Some excerpts from an article by Lona Rubenstein, trying to say all is good in the RE market in NY’s Hampton’s.
Updated: March 17, 2009 4:23pm
Finding Opportunity Around The Corner; And A Nod To Old East Hampton
Lona Rubenstein
East Hampton - Brokers west of the canal bring to our attention George Simpson’s Suffolk Research shows Quogue and Westhampton with median prices on the climb, showing, they infer, that things are not as bad as some would have you think. Highlighted in an email is that this foreclosure mess truly is focused on five states, New York not among them, using CNBC as a source for that item.
Broker Jude Lyons, of Westhampton Beach Realty, looks at the current real estate market this way - stocks are on sale and so is real estate. “It’s a great time for young people to buy. They might look back on this time with regret if they don’t make the move now, especially if they are paying rent which is money down the drain, “ writes Lyons, reminding buyers not to forget the write-off on mortgage interest and urging anyone paying rent who is going over taxes with their accountant to ask what they would be paying on a mortgage.
So East End real estate can be a strange but lovely business - a refuge when the rest of the world is in chaos. Want a piece of it? Buy now if you can. As the broker pointed out in the beginning of this column, prices are right.
http://www.hamptons.com/detail.ihtml?id=6708&apid=13664&sid=26&cid=44&hm=1&iv=0&townflag=
ever see that housewives of NY/ SoCAL show
on bravo
I like the Orange County chicks. The NY ones, oh my freakin’ God they’re so and full of themselves I wanna throw up.
If anyone ever asked me to call them “Countess” I’d laugh so hard I’d probably pop a lung.
Posted this last night late.
UPDATE 1-IRS to allow Ponzi victims to claim theft losses
WASHINGTON, March 17 (Reuters) - The Internal Revenue Service issued new rules on Tuesday that would allow victims of Ponzi schemes like the one run by Bernard Madoff …
Under the new rules, victims would be able to take a deduction of as much as 95 percent of the amount they invested, plus investment income they thought they had earned, subtracted from any money given back to them by the government’s insurance program, the Securities Investor Protection Corporation.
______
If you are rich, you suffer no consequences.
CNBCs Kramer made jokes about this a week ago.
Every day now what I read sounds more like something from the Onion.
Even the folks at The Onion aren’t clever enough to make this stuff up.
I wonder if the gubmit will help me out on loses I took when I sold my boat….it is a terible market….I should get bailed out for my loses. “I`m holding breath”
Lane
This isn’t a bailout. If they paid capital gains taxes on fraudulently reported income they can’t be held liable for those taxes. This is already a well established part of the tax code.
However, the “victims” who used to smirk at us lesser mortals making less than 10% a year by not investing with Ponzi schemers do not deserve to get their money back by suing the SEC, as many of them contend. Putting all of your investments with one money manager is ALWAYS a bad idea, and that is no one else’s fault but their own.
“victims would be able to take a deduction of as much as 95 percent of the amount they invested…”
Not capital gains… the Capital
“As theft losses, investors are entitled to a much larger deduction than the normal “capital loss” deduction, which is typically capped at $3,000 per year.”
“Under the new rules, victims would be able to take a deduction of as much as 95 percent of the amount they invested, plus investment income they thought they had earned, subtracted from any money given back to them by the government’s insurance program, the Securities Investor Protection Corporation.
The new rules were announced by IRS Commissioner Douglas Shulman in testimony to the Senate Finance Committee.”
Quite simply, we are a double standard society on a multitude of levels…
Cripes. This has “unintended consequences” written all over it. As in - a big new friggin’ loophole.
Oh yeah, that’s the first thing I thought too.
Big can - o - worms!
At least it isn’t a credit.
It’s a deduction - same thing.
No. It isn’t. The top tax rate is currently 35%. If you get to deduct a dollar, the absolute most you can get back is 35 cents. If it were a credit, you’d get the whole dollar back.
Well I guess I assumed that any “credit” would be equal to the taxes paid on the unrealized gain - not the value of the unrealized gain itself.
It wouldn’t make sense to give someone $100 credit towards a $35 tax bill on an unrealized $100 gain. (which is probably what you meant in the first place)
Wait nevermind - guess in the Ponzi scheme case we’re talking about losses, not unrealized gains.
95 percent of the amount they invested
The amount they invested should be covered under existing theft loss deductions I think…
plus investment income they thought they had earned
Here’s a rub, if you paid taxes on money which was “earned” 5 years ago, and now you find out that money was never really there, then you shouldn’t have had to pay taxes on it, right? But the statue of limitations is 3 years on that kind of stuff. So they paid taxes on faked earnings which they can’t get back, now they get a deduction but depending on the rules of that (e.g. 95% of) they may not get back all the taxes which were paid but should not have been.
Messy for sure.
Now, if only we could deduct government theft.
Someone should try it. Enter your previous year’s federal taxes as a theft loss. On your current federal deductions.
Heck, at least you would reduce your taxes by the percentage of your marginal tax rate. And if you every got caught, claim that you had a TurboTax snafu…
Unfortunately the rules only apply for theft above a certain amount… unless you have a large income, you will not get much tax break by reporting the withholding of your employer as theft.
New plan… steal 20 grand from your friend, then have your friend steal 20 grand from you… instant tax deduction!
Don’t forget to report your 20 grand in theft income (I’d suggest calling it misc income if you don’t want a visit from the sheriff). Always report illicit income, tax evasion is much easier to convict than most crimes, and prosecuters love easy convictions.
“…Someone should try it.”
I nominate: Wesley Snipes or Don King or Leona Helmsley’s dog “Trouble”
Dan, I know you can think in 6 figures!”
“…New plan… steal 20 grand from your friend, then have your friend steal 20 grand from you… instant tax deduction!”
Yeah, I was reminded last weekend about an equitable maxim to the effect, “A court will not decide how thieves must divide their loot.” It’s hard to sympathize with someone who goes running to the law, complaining that they were cheated by a swindler whom they thought they paid to cut them in on the action. Are there innocent victims of Madoff? I’m sure. But I’m more sure there are not so many innocent ones.
My present information is anecdotal, but the housing bubble in Pittsburgh feels like it is really starting to take off. Places that I’ve kept my eye on have increased in price by 20%. I know a number of people who are buying $400k McMansions just outside the county line. When I ask them about why they decided to move, I hear this a lot: “It’s a lot of money, it feels like a bad idea, but we just needed something right now.” Sigh. It’s like the way songs only become popular here three years after the rest of the world never wants to hear them again.
On the other hand, perhaps I’m overreacting to coincidences. I’ll have to check area sales data in a few months to be sure.
Ask around and you’ll here something along the lines of “we didn’t have a bubble here so prices will continue to go up”.
Seriously…. Someone back home said that to me.
Just because prices didn’t go up “that much” doesn’t mean you didn’t have a bubble.
Bubbles are about valuations relative to fundamentals which for houses means relative to rents and incomes.
Even Detroit had an absurd bubble.
People around here just don’t get that - not at all. The once affordable history of Chicago is long forgotten it seems.
Rents are still cheap in Chicago, no?
Valuations are very very rich.
Depends, in the past week I’ve seen one beds in the new high rises downtown ask $2,300 to $2,700 per month in rent. Out in the neighborhoods it’s more realistic, in my hood a one bed can be had for $750 - of course there are “special considerations”.
There will be blood.
The once affordable history of Chicago is long forgotten it seems.
Yes. It’s all relative, though.
We had a friend over for dinner last night; he’s on break from grad school at NYU. He gaped at the size of our apartment, and estimated that his entire place (which he shares with a roommate) would fit in the back third of our apartment. We pay close to the same amount in rent. He told us that a married couple we know who moved to the Big Apple at the end of the summer are now sharing living space with three other artists in Brooklyn — their big, beautiful apartment in Ukrainian Village is long gone. Married with roommates doesn’t sound ideal in one’s mid-thirties.
And: I think our household income could potentially be 30-50% higher in NYC, but my guess is rent on an equivalent apartment in Brooklyn would be 100-110% higher.
That’s a pretty big gap.
(But I do agree: There will be blood. Condo blood. Bungalow blood. Highrise blood. Two-flat blood. Faux-loft blood.)
When I was married, we had boarders/roommates, and I wouldn’t do it any other way.
I’m flying solo now, and I do miss having a few roommates to help out with the household needs. I’m actively helping build-out a new work/live loft in the city, so I have high hopes that I can rebuild my old form of living again.
I’m helping 2 friends move out of Ukrainian Village next month. Both have been there for years, but are ready to move on to brighter pastures.
“Even Detroit had an absurd bubble.”
What would y’all say is Detroits equivalent in the south and southwest?
My best guesses would be New Orleans, Phoenix, Houston, and maybe Las Vegas.
What are the industries in Pittsburgh?
My friend (Chicago bar-chain owner) bought a pub in Pittsburgh and I guess he’s doing fine (blue collar pub). I’ve never actively visited there (passed through), but noticed it’s a close hop from ORD, and the airfare is cheap. I may consider starting something up in the region, if it is undersupplied with reasonable small-scale industry or consulting.
We’ve started to develop a technical industry around CMU. Nothing huge, but it’s something that’s been growing steadily over the past ten years. The school basically spins off little business startups from its labs when they get too big. Lots of robotics and software projects for DARPA, the DOD, and private investors.
We also have a large medical industry with UPMC. UPMC is loaded. The only other thing in the area that counts as real industry is shipping. I don’t really know much about that business, but something about our airport makes us a useful intermediate point.
So it’s not much, but it’s better than the nothing that’s been here since 1980.
BTW: If you’re seriously considering it, be careful about location. Some areas are brutal with taxes where as others will offer you all sorts of incentives.
If you open an eatery in Braddock PA the mayor will give you the key to the city.
Ah yes, the infamous Braddock mayor who tattoos the names of everyone in his town who is murdered, and who announced on the Colbert Report a couple weeks ago that he is trying like heck to get a Subway Sandwich shop to come to his town so that there will be jobs and a place to eat. Approx 3 miles from the Pittsburgh city limit, and over half the houses are abandoned.
I’m starting to hear rumblings of real estate being the “safest investment” again.
The stock market is down 50%, while real estate is only down 20%. (of course the equity in your home might be down 100%)
The bubble can’t resurrect until you get cheap credit again.
And they’re gonna go up the tailpipe to check for incomes. They might as well look for polyps while they are up there.
FPSS… I’d laugh, but yesterday I was in one of those clinic rooms where light shines where it was never intended to. Never mind. I’ll laugh. Good medicine.
The Fed can provide cheap credit and print until the dollar collapses. We aren’t there - yet - but since they can basically do whatever they want, there’s no real way to stop them.
And as long as the delusion of “next year, prices will be higher!’ continues, housing will take forever to reach affordable levels, assuming one even has an income at that point.
They might as well look for polyps while they are up there.
Ah, a free colonoscopy!
Yes, but this one they do without the muscle relaxant.
FPSS, I cut and pasted this into my “FPSS gems” file. I look at it whenever I am wondering what I should have said. Quite the arsenal of after the fact imaginary ripostes. Thanks for this one!
I always monitor rental property sales. In February, I found my first few cash-flow-positive properties available in Chicago. Quads selling for $360,000 that are renting out for $850-$920 per unit. That’s still too rich for my taste (my condos were bought at 80X rental, not 120X), but it’s getting closer in SOME areas.
I seriously think if they would accept $279,900 on that quad, I’d buy it. And that’s not so far away.
Beware declining rents in your analysis…
Cash-flow-positive now and cash-flow-negative next year is still not a good investment.
I have yet to have that happen to me, and I’ve been buying undervalued property since 1991.
This is why I target 80X as my “smack down” for buying property if I am interested. I take into account property taxes, maintenance, insurance and other costs as well.
At 80X rent, the rents would be to decline about 50% for the property to lose profitability. That’s assuming 100% occupancy, of course.
I’ve been buying undervalued property since 1991 ??
I thought you said you were 35 ?? Bought your first property as a teenager ??
Hey, A.B. Daba, do I got this right?
“…I’m 35, and I’m already making those plans myself.”
“I’ve been buying undervalued property since 1991.”
2009 - 18 years = age 17
Are you related to sTrump or Kiyosaki?
I left home at 13 to start a business (a BBS, if you remember those). Closed on my first ghetto condo at 17 (with a co-investor). So you have it right
That condo was around $18,000 in 1991. Still have it today, actually, and am actively living in it for the first time in 14 years.
I still tell teenagers who do summer work for me that the best thing they can do for their lives is to work REALLY hard between 16 and 19 and try to save enough to buy the cheapest condo (for cash) in the shadiest neighborhood they can tolerate, before heading off to college. The few who listened to me found life MUCH easier in their 20s without rent to pay (other than taxes and association fees). Most people from 16-19 can earn about $35,000 - $55,000 over that time frame (part time during school, full time during summer with a part time job). Even today I’m seeing 1 bedroom units in Chicago for little more than that price. Heck, I just found 3 units (not on MLS) in Chicago’s Ukrainian Village for under $40,000 — HUGE rehab jobs, but they’re available.
The Count from Sesame Street: “6-7-8 Buuuttt vait, there’s more:”
I’ve been on my own for 22 years.
2009-22 years = age 13
Did you attend HeadStart?
I think he’s actually about 15 right now, and all the talk about not looking after his parents above is just backlash for them grounding him.
My reply got lost in the shuffle (maybe its held for approval).
Moved out at 13 to start a large-scale BBS business (the Melting Point BBS in Chicago, was profitable in 1987).
Bought first condo at 17 with a co-investor.
My entire life is on Google — going back to my first email address I had in 1989. Was active on the Newsgroups (archives still online) and have always posted on forums under my real name.
I think we can add hot air to the list of renewable energy sources. It blows pretty hard sometimes.
I think we can add hot air to the list of renewable energy sources. It blows pretty hard sometimes.
And speaking of renewable energy , I’ve actually read most of A.B. Yada Yada’s posts today, instead of skipping them like normal, and I’ve gotta say that if we could only harness the power of my sustained eye-rolling, why, that’d be Seattle and Tacoma completely lit up like pretty Christmas trees.
Jeeze, I’m downright dizzy, sittin’ here…
Elanor! How do you make the little eye-rolling emoticon? And can you make it so the eyes roll around super fast, like those whizzing Roman Candle fireworks? ‘Cause that’s what I need here.
P.C. Board, C-Net, TBBS?
“How do you make the little eye-rolling emoticon?”
It’s : roll : without the spaces.
courtesy of packman from a couple of days ago. :-d
Olygal, some kind person, whose name has slipped out of my Swiss-cheese brain, posted a link in the Bits Bucket yesterday to an entire Codex list of emoticons! Or maybe it was the day before yesterday. They all kinda blend into one during the work week.
Anyway, the eyeroll is just a colon, the word “roll” and a colon. No spaces. : roll : without the spaces:
Like this?
Awwright!
Thanks, whino.
Yeah.
Va Beyatch from Virginia Beach:
When I sold my BBS, we were running a nice X.25 pipe running Galacticomm’s MajorBBS, which was hands down the BEST BBS system out there. I was lucky to get out in 1994, just before the Internet jumped into the scene. I had contemplated canceling my X.25 pipe for an IP pipe and becoming an ISP, but had enough of being in that industry for 9 years.
The BBS when I ran it was profitable, enough so that I was able to try my hand at a variety of businesses before my college years. Strange how something as simple as Telegard (no joke) can teach one at a young age that the future was communications. I’m still in contact with many users from those days, and one of my business partners and co-investors in some business startups was a competitor BBS SysOp that I hated (he was actually younger than I).
I can understand how people think I’m blowing hot air, and I have nothing to defend. Go to Google or any UUNet archive, and you’ll see me talking the same stuff online, in the public eye, for the past 20 years. Most of those here who are crying foul on the housing bubble are trapped in their own housing mess, I can understand their impatience with my brutal honesty about how little I am concerned with those who repeatedly make the same mistakes and then stick me with their bill.
Me too. But, mainly from trapped speculators, burdened with high carrying costs, noncollectable rents, and overdue taxes. This is Florida, however, delusions run deep, really, really deep.
At the same time, some wish they could sell or walk away. Unlike stocks, however, they cannot. They got Stucco. Man, did they get Stucco.
Mkt, I appreciated the play on words there. Another one I am going to try my best to remember!
The stock market is down 50%, while real estate is only down 20%.
Um, doesn’t that mean that RE is likely to have more to fall in the future?
I live east of Pittsburgh and homes in my neighborhood are not selling at the owners’ asking prices. This is a suburban area near farms. Most lots are >1 acre and most homes were built mid 70’s. One of the homes is a 3/2 on ~1.5 level acres. The owner is asking 220K and it has been on the market for ~ 1 year.
I live on the east as well. I decided to add my “sales data” disclaimer above because I’ve only seen rises in asking prices, but I haven’t any sales data to prove that people are actually getting them. The two and three bedroom split levels that fill much of Monroeville, for instance, have risen in price from $100K to around $140K over the past three years even as the mall is dropping stores and one of the area’s largest employers is getting ready to move out of the county.
On the other hand there are four people I know who have bought those $400K McMansions they sell out in Westmoreland county, and the developer seems like they’re doing a reasonable if not brisk business. This is in an area where those homes would typically run about $200K just a few years ago.
I don’t disagree with the basic premise of this blog: either these houses aren’t worth this much, or our money isn’t worth that much. In the end it will be one or the other. But in my personal world of anecdotal evidence it feels like something is changing in the attitudes towards mortgage debt, and not for the better. I hope sales data in the months ahead shows this feeling to be nonsense.
“I’ve only seen rises in asking prices, but I haven’t any sales data to prove that people are actually getting them.”
That’s really the crux of the matter - what are the prices on what’s selling. Maybe they noted there was more selling in some areas, not necessarily that area, and decided to up the asking price. But asking prices not tethered to reality are nothing more than wishing prices. Those places will just sit on the market indefinitely and never sell. In San Diego, I still see a lot of wishing prices, though even some of these are finally starting to come down though not nearly in line with declines based on actual sales.
You’re probably correct. two of my friends have recently purchased WestCo McMansions for greater than 350K. I’ve been to visit one. Nice plastic columns supporting the porch roof. Fake shutters that are screwed to the home’s exterior. The front is brick facade and the rest is vinyl siding. An 8′ strip of land behind the house for the kids to play on. They had to have “new” rather than “new to me”.
Apparently, global recession also brightens prospect of lonely bachelors (Most importantly, LOOKS don’t matter):
Japanese Women Hunt for Husbands as Refuge From Deepening Slump
By Toru Fujioka
March 18 (Bloomberg) — When Yumiko Iwate’s pay was cut last year, she and her female colleagues all agreed there was only one thing to do: find a husband.
“I want to get married soon, hopefully by the end of this year,” said Iwate, a 36-year-old employee at a mail-order retailer in Tokyo. “The recession made me realize I’m not going to make as much money as I expected, and I’d be more stable financially if I had double income to fall back on.”
Women the Japanese call “marriage-hunters” are looking to tie the knot as companies from Toyota Motor Corp. to Sony Corp. fire thousands of workers and the nation heads for its biggest annual economic contraction since 1945. Marriages surged to a five-year high of 731,000 in 2008 as wages stagnated and the unemployment rate rose for the first time in six years.
Civil Weddings
Marriages are also increasing in other countries as recessions spread around the world. The number of civil weddings in London’s Westminster Register Office, the city’s most popular, rose 8.5 percent to 1,684 between April 2008 and February 2009 compared with a year earlier, according to Alison Cathcart, the superintendent registrar. “We certainly feel a lot busier,” she said.
Japan’s husband hunters are pursuing relationships the way they might search for jobs: They interview at agencies — dating agencies, in this case. They attend networking parties or just let friends know they are ready for commitment.
Iwate started her quest in December by writing New Year’s cards to 170 acquaintances from junior high school classmates to fellow dancers at salsa lessons, asking for help finding an eligible bachelor. Her five co-workers are in on the hunt, introducing each other to potential partners and putting sticky notes on the most useful pages of the “Complete Guide to Marriage Hunting” from “an an” magazine, a weekly publication for women in their 20s and 30s.
‘Looks Shouldn’t Matter’
The issue included articles telling readers that, while it’s acceptable to choose a husband by occupation, “looks shouldn’t matter because they’re not essential to leading a married life. You need to consider men you normally wouldn’t date.”
It listed character traits by job type: “Traders tend to be adventurous and forward-looking; pharmacists conservative and stable; sushi chefs patient and creative.”
It also cautioned against playing hard to get: Being coy “is strictly forbidden; men want to seriously date women who act natural.”
Business is booming at Green, a marriage-hunting bar in Tokyo’s nightlife district of Roppongi. Men pay 11,340 yen ($115) per visit to have waiters set them up with women, who get in free. The bar is booked solid on weekends, and membership is up 26 percent this year, according to owner Yuta Honda.
ROTFLMAO
And the bar owners must be raking it in!
I like the part where it said “looks don’t matter” the most, because that means I will fit right in and get my picks of ladies. Now if this trend can just spread to the NYC area, I am all set.
I’m booking a ticket to Tokyo right away!!
This is true in the US as well. Guys with real money and little-to-no debt are scoring better in the dating market. As the article says, “looks shouldn’t matter.” Actually, looks NEVER matter, except in maybe 1 in 10 women who are truly worthless. Confidence is the only thing a guy needs to succeed.
Of course, when it comes to dating, I’m bearish. I go dutch until I know she’s not a gold digger or severely depressed (could be months to figure that out). Even while going dutch on dates, I’ll still splurge when I’m out alone (or with the boys). I’ve heard it in 2008 from a few gals who I went out with: “Why don’t you spend like that when you’re with me?” That’s usually my angle to make a quick exit. Before the exit I’ll usually ask “Why don’t you spend like that on yourself?”
I can’t believe how many guys I know (including myself in my 20s) threw a decade or more away over women who had nothing to bring to the relationship but looks. This recession is the best thing to happen to single guys looking for a positive addition to their lives: it really is cutting out the flack of debt-laden Amex-Plat-displaying mortgage sellers from the dating market. One of the pubs I hang out in has a massive headcount of mortgage selling shills who constantly complain. I love the people-listening, for sure.
Sadly, it’s hard to go dutch when the gals you meet can’t rub 2 pennies together to pay for their end. Hence, Europe beckons. Who’s joining me in May?
Smart. The north side of Chicago is home to the greatest concentration of flat broke 22-45 y.o. women on the planet. Fifteen years of observation stands behind that claim.
It’s so you have to get on a plane to even see skirts and dresses - instead of college sweatshirts and pajama bottoms.
I just got back from Paris. The ENTIRE flight was high school students from LA in their pajamas. Cretins.
I can’t get enough of Paris. Even the “haggard” (said comically) 45 year old women there are beautiful — no makeup, no hours on their hair, but great dress, amazing walk, and they’re smiling. I love it.
The North Side of Chicago is not where I would want to meet a girl to date. I’ve tried it, take about entitlement-driven failure. I would feel sorry for the blokes who end up with the rotted pitstains of humanity that I’ve taken out on single dates, but they’re getting what they deserve.
The good news is that if you’re a reasonably smart guy who can shove 20% of your income into some reasonably safe savings, you’ll have no problem finding amazing women across the pond to spend time with. And you won’t have to shell out very much to do so. Every time a guy friend of mine goes through a breakup, I’m the first one to pop the idea of dropping $600 on a R/T to Europe for a long weekend. They always come back changed for the better.
I can’t wait to see the disheveled masses of grotesque makeup and horrific MTV-infused dress in 10 years. My ex-wife, though, is still a beautiful woman, and I am still proud of every US gal I’ve dated seriously. They’re out there, but they’re rare.
Well put. By no means are my comments to be taken as absolute. It just galls me that Chicago has the chance to become more cosmopolitan, but more and more it seems like one huge overage quad.
Seriously, if you’re 35 does the world really need to be constantly reminded that you went to a Big Ten school? There’s a whole world beyond the Midwest.
And for Pete’s sake, public drunkeness is not a virtue!
“Actually, looks NEVER matter, except in maybe 1 in 10 women who are truly worthless. Confidence is the only thing a guy needs to succeed.”
I gotta respectfully disagree. Looks do matter to quite a few, and financial security to many more, especially once you’re up in my age range. Sounds like I might be a decade or so ahead of you.
Those on this board who have met me will generally agree that I am definitely not the most attractive man on the planet (I would save I tend to fall to the least attractive man in a room). I also don’t flaunt my money (I drive a 10 year old used car). Yet I always have a beautiful, smart and caring woman on my arm.
Most women are attracted to confidence over anything else. This is why poor (and homeless) rock stars can get beautiful girls, but wealthy accountants can’t.
I learned that from my dad, who also isn’t the best looking man in the planet, yet married my mother (gorgeous women then and now), and his second wife who is my age (also gorgeous). He also didn’t throw money around at women, or brag about his abilities. It was all pure confidence that sealed the deal.
When it comes to proving financial security, for me the best way to do so is to just not have to worry about things. I always keep cash on my (small bills, $20 and under), I pay cash for everything (subliminal message that I don’t rely on credit), I live WELL beneath my means (used car, small condo). Most of my frivolous spending is on hops to Europe or Asia for long weekends — and that’s usually considered “attractive” for the gold-digger set.
>He also didn’t throw money around at women, or brag about his abilities. It was all pure confidence that sealed the deal.
Ok so don’t throw money around, don’t drive fancy cars, don’t brag about your 6-figure job and maybe 7-figure savings… how does one show confidence then?
Please show the way.
See a cute dame at the grocery store or church or wherever? Go up, say hi, get her number and leave. It works. Try it, you’ll be very, very surprised.
I tried that and the dame called store security on me.
damn!
Keep your pants on next time!
“Most of my frivolous spending is on hops to Europe or Asia for long weekends — and that’s usually considered “attractive” for the gold-digger set.”
Funny—I always wanted to be considred UNattractive by the gold-digger set!
A.B. Dada - I bet your marriage was arranged.
Deranged, more like it. The next one will be even more dysfunctional if I roll my dice properly
full of shit, more like it.
Ahhhh…? Abbadabba, didn’t you once announce to us all that you had a wife and that she wears gold on all her limbs, ankles, ears, just plain ol’ everywhere? And I told you that you should hire a troupe of white pantalooned Guatemalans to push her around in a wheelbarrow, since she would probably be so laden down as to be immobile otherwise, and that there should be little pockets attached to the wheelbarrow for food and candy and other necessaries for her wheelbarrowing enjoyment. I remember this because me n’ Lost In Utarr joked about it for a few days.
Or maybe this was a different smug Chicagoan with a printing business?
Say, where IS Losty, anyhow? Losty! LOSTYYYYYYYY! Where ARE yer??! Come back! Boo HOOOOO!
And will someone tell me how to do a specific search for phrases in the HBB archives?
He’s probably lost. Maybe in Utah.
Google:
“specific phrase” site:thehousingbubbleblog.com
She does wear gold — true. I taught her the value of 22K-24K jewelry made to order in Mumbai over diamonds and pearls. She learned.
I did have a Puerto Rican attache who lived with us. Note that he’s a citizen (Puerto Rico is part of the US). At the moment I am personal-assistant-free, but that will change this spring once I decide where I’ll be working most of the time. For those unaware of that age-old debate, I am one who firmly believes that paying someone $15 an hour to do your dirty work makes sense if you can bill yourself out for more than that. When I have to drive myself around (2-3 hours on busy days), I lose that time for actual work (talking to clients, emailing suppliers, updating my newsletters, shorting financials, etc). If I earn say $80 per hour, I can lose $240 a day of productive work time. Paying someone $120 for a day of help (driving, parking, getting groceries, responding to some emails, answering phones) can save me $300+ a day in lost productivity that I can sell to others.
My marriage was the easiest divorce one can imagine, considering that her and I are still business partners in a few ventures. It was just obvious that we were in different places, and I see no harm in discussing it with others. She did get the house, but I had to fight her for it (she didn’t think it was fair to me). Pretty much the opposite battle of most failed marriages.
I have no doubt that it won’t be my last divorce, but that’s life.
“…Sadly, it’s hard to go dutch when the gals you meet can’t rub 2 pennies together to pay for their end.”
You’re just “Sarah the Barracuda”…the gift that keeps giving!
Most guys I know are interested in “what a gal can rub” too, but it ain’t pennies!
But starts with “pen” too though, right?
Really, there is no good reason for American males to get married. The divorce laws are stacked against the American males anyway.
There are differences between a marriage and a non-marriage. First, you don’t have government as the third partner when you have a non-marriage. Government is the third partner in every marriage. And in marriage when the woman turns against the man and kids are involved, say goodbye to half your assets.
Read the post about Japan above again. The women do not have confidence of their earning power and their survivability alone. Ironically, the more confident a woman is, the less she will object to a non-marriage relationship. We men are supposed to be confident for the women. Why can’t we have it the other way too?
So, what do you bring to the table, Bill and A.B. Dada?
Why should a beautiful, young girl waste her most precious assets (youth and beauty) on you if you have no intention of marrying her?
I don’t limit myself to significantly younger women, nor do I put older women off my list. Ever think that similar “sense of life” is enough for attracting companionship? I, too, am not after a woman just for her looks. However, anyone (man or woman) who lets their body get out of shape unnecessarily (obese, etc.) says a lot of what is inside their minds.
For instance, I’m turning 50 this year and my body fat is under 10%. I’ve been putting health as my main interest in life for over 32 years. It’s only fair that I should want that in all my female companions. I guess I bring health to the table.
For instance, I’m turning 50 this year and my body fat is under 10%. I’ve been putting health as my main interest in life for over 32 years.
You can only do that if you don’t have a family. It’s entirely fine to make that decision, but humans would die off within a generation or two if we all made that same decision.
It’s only fair that I should want that in all my female companions. I guess I bring health to the table.
As long as you’re honest about your intentions, there’s nothing wrong there, either. However, your “health” will matter much less to someone who is not committed to you.
Not trying to harsh on you, Bill!
Just bringing another perspective to the table.
Oh, puhleeze. Guys with money have always scored better on the dating market. Besides, I doubt anyone dates you anyway, AB Dada. I think you’re 15.
There’s a blurb this morning that the State Department is warning Americans to stay away from Roppongi due to numerous reports of drink spiking and subsequent robbery.
Roppongi, is a vile place IMHO. We stayed there all of 30 minutes a few years ago. I understand why the Japanese tolerate the area, but they’re smart to keep it quarantined.
It’s the red light district of Tokyo. But still it is much safer than most big cities in the world. I am headed to Tokyo 3/28, probably will drop by just to check it out. In my previous 3 trips to Tokyo I haven’t had the chance to visit that area.
Roppongi Hills complex is way nice, the top floor lounge and art museum are top notch. Down on the streets it’s a different story.
I don’t sit on a plane for 15 hours for a bunch of obnoxious Jamaicans to hustle me. If I want that kind of treatment I’ll go to Europe.
Have fun, you’ll likely catch the blossoms. I’m planning a return in August - good for the skin, really opens the pores.
I always prefer to be hustled by Jamaicans in Jamaica.
It’s not just that it’s the red light district - it’s the red light district for disreputable foreigners. Quarantine is about the right way to describe it too.
– w
Kabukicho in Shinjuku is the red light district of Tokyo. Roppongi is the ex-pat hangout because a lot of the foreign embassies are nearby. There is a Hard Rock Cafe and Tony Romas in Roppongi, or least when I was in Japan. I haven’t had a reason to go back to Roppongi.
If it’s the women who are so desperate, why are the MEN paying to get in?? Sounds bass ackwards to me.
Good catch.
The women are there because of the $$ barrier to entry placed on the men.
The guys use the high entrance fee as bait.
Then that means the guys are idiots and they all deserve each other.
This is SO true. When I was in the bar business, we actually sold MORE of a certain drink because we overpriced it. Some people attach value to things that are overpriced.
When I was in the live concert market, we NEVER did a free show. Free tickets were thrown out. When people paid for tickets, they’d go even if they weren’t 100% behind the idea of attending.
And on and on…
Hahahaha!
Cha-CHING!!! Cash-out divorce in 7 years, average, and it’s even better than flipping a house! You get steady alimony payments from “Mr. Sucker” and can then shop around for the next meal-ticket.
For the guys, well… this option is somehow less appealing!
So, we’re back to “buyer beware!” in yet another market! Not surprising!
I love this line, too: “looks shouldn’t matter because they’re not essential to leading a married life. You need to consider men you normally wouldn’t date.”
I guess that means “consider dating guys with jobs vs. the normal biker thugs you date.” Interesting concept!
Note: I’m an equal opportunity cynic and fully admit that guys aren’t any better in their own way, though marriage laws (divorce, child custody, etc.) are stacked against them in western nations.
Marriage laws are stacked against suckers.
How hard it is to say “Marriage is fine, sign this prenup”?
Of course, some will say “If you love her, you won’t ask for a prenup.” My retort to that is that I’ve asked every girl I dated if she would be against a prenup, and all those who are still responsible, successful women today were FOR the idea, while those who said “no way” are losers married to losers.
Well, glad you’ve had such luck, though prenups can be tossed by a judge if he/she so chooses.
The whole thrust of the above article is that these women are basically looking for a meal ticket since they need more money and the economy is crud. Getting room-mates, reducing one’s living expenses, etc. - those are all acceptable ways to survive a Recession. But to basically fake romantic interest and claim to love another when all you’re really looking for is more cash is low. I’m not fond of being considered nothing more than an ATM with legs, and I assume you don’t want to be treated that way, either.
Besides a pre-nup, also insist on sharing credit reports.
Saved me from marrying a sweet guy - live in sin instead, more prudent.
While I personally have never done it, I don’t see any problem with trading faked desire for a roof over one’s head. In Europe it’s called “sponsorship,” in the US it’s called Sugardaddyism. Not my idea of a good time, but I think it would be far superior for most people to just be honest about it and live with it.
I’ve told quite a few friends who have done the sugar daddy/baby thing (gals and guys): just don’t get married.
I also think pre nups can be tossed out by judges. In marriage and divorce laws, American judges are usually the man’s enemy. No marriage, no pre-nup, and you are all set. You just need to meet the confident women.
“…..consider men you normally wouldn’t date.”
Yeah, that’ll work.
“In a normal world, I would be out of your league, but I’m trolling for someone to split the bills with…….”
Bidding wars in pricey Boston suburbs.
Anyone seeing this in other parts of the country?
http://www.boston.com/realestate/news/blogs/renow/2009/03/spring_has_spru.html
It is MA… There seems to be an endless supply of over-educated “rich” trust fund babies around here that go out and buy houses in the spring. I wonder how on earth they are justifying the prices..
Although if you put up a house for sale in Newton for 100K you will have the mother of all bidding wars on your hands.
Is that an article?
It reads like an advertisement from the Mass realtors association.
This sounds like more of the ‘buy now or be priced out’ forever drivel we’ve read for years. Credit is tightening. Any price appreciation will be small for years.
Standard sales tactic is to create a false sense of urgency.
Got Popcorn?
Neil
If prices are unaffordable at these rates just wait until rates normalize to inflation.
The affordability index doesn’t work when interest rates are out of wack.
That’s the problem, though: prices can never normalize when the money supply isn’t fixed. Rothbard, Mises, et. al talk about “malinvestment” due to money supply adjustments by a central bank.
For my spending, I always set prices to a more fixed value asset (such as gold) rather than a fluctuating value asset such as USD or EUR. It’s not a perfect match, but it does help me assess what items seem overvalued and undervalued.
The other key figure is to make sure you negotiate when buying medium-to-big ticket items. If you can’t get an amazing price (seriously amazing), you’re overpaying. I needed a new fridge a few weeks ago, and I spent about 2 hours negotiating at various big box stores. None of them budged, but I left my card with the price I was willing to pay. Yesterday I had a voice mail from one of the stores accepting my price (saving me almost $250 off their sale price). Even “sale” prices don’t convince me to spend. Amazing prices do.
Yep…There will be a “push” due to Extremely low interest rates…They better be prepared to stay for a long while because IMO, the future holds 8-10% mortgages…What impact do you think that will have on valuations…
Oh, I have no doubt that mortgage rates will have to return to something more “normal.” Even 8-10% is too low if you consider that the return to savers who would normally back up that loan would only be 3% here. I’d say most people would be happy with 6% savings interest, so a mortgage rate of 9-11% seems more realistic.
Valuations mean little because so many people are stuck on “what will it cost me per month?” and then only look at the next 12 payments. It happens with cars, with large-ticket items bought on credit, with homes, etc. Few consider upkeep, insurance, taxes, etc.
“…the future holds 8-10% mortgages”
Calling the wacky wabbit:
Mortgage interest rates @ 14+ % (Kilroy was here!)
“Bring it on…. Fat Boy FED!”
…the last line uttered: “Kill the Beeeeeaaaasssssssstt!”
You crack me up Hwy…:)
the future holds 8-10% mortgages…
The question is when. How long has Japan’s central bank pushed ZIRP? Now the Fed is performing quantitative easing through the purchase of long-term Treasuries. If history provides any insight, we could see low rates and low mortgages for years, if not decades.
I think betting on lower valuations from higher interest rates at this point is probably a bad move… you might wake up a decade from now and realize you could be 2/3 through a 15 year mortgage, five years from not having a house payment, and the FFR is still essentially 0… Don’t fight the Fed, they have bigger bank than you.
It’s amusing/infuriating listening and reading to the pundits about AIG. Few get it right: the fault lies in the Government for giving them taxpayer money in the first place (and the second place, too. They’ve gotten two payments, haven’t they?)
But what’s most aggrivating is hearing comments like this from VA congressman Tom Perillo:
I am outraged that middle-class taxpayers who have worked hard and played by the rules are watching their retirement savings and home values shrink, while those who caused our economic pain continue to prosper.
Fact is “middle class taxpayers” who DIDN’T play by the rules and bought houses they couldn’t possible afford have or will get tax breaks and handouts worth over $100,000 apiece! No taxes for forgiven mortgage debt and cramdowns is a $35,000 gift for every $100,000 forgiven or crammed down. Plus add the value of imputed income that would have had to pay rent for these mandated “delayed foreclosures”. As a percentage of income, these “middle class taxpayers who…played by the rules” are getting better deals than AIG execs.
The only victims here are the folks in the top 5% of earners, who Barack H. Obama has clearly and explicitly targeted to pay for our new Socialism.
Don’t get me wrong: AIG is reprehensible. But you don’t give a reprehensible organization Taxpayer money with no strings attached and THEN complain about it.
Its nice to see this issue come back to haunt the perpetrators responsible for repealling it.
UK bank crisis prompts interest in Glass-Steagall
“There are good arguments in favor — to separate the utility functions of a retail bank taking household deposits and running the payments system from the casino trading of an investment bank, and good arguments against — the difficulty of maintaining a credible boundary between those institutions that are eligible to receive government support and those that are not,” King said.
Provisions of the Glass-Steagall Act which enforced barriers separating banks, brokerage firms and insurers were repealed in 1999. The act was inspired by the belief that commercial bank speculation with depositors’ money in the stock market helped cause the the financial crash of 1929 and the Great Depression that followed. For decades afterward, banks were separated into commercial ones that served Main Street with deposits and loans and the deal-making investment banks on Wall Street.
“Eliminating barriers to financial services competition will allow American companies to better compete in the global economy,” said then-President Bill Clinton, who backed the repeal.
But ten years later, the dissent of Sen. Byron Dorgan, a North Dakota Democrat, has a certain ring: “I will bet one day somebody is going to look back at this and they are going to say: How on Earth could we have thought it made sense to allow the banking industry to concentrate, through merger and acquisition, to become bigger and bigger and bigger; far more firms in the category of too big to fail? How did we think that was going to help this country?”
Dorgan was one of only eight senators to vote against repeal.
A panel headed by Paul Volcker in January suggested some steps reminiscent of Glass-Steagall.
http://biz.yahoo.com/ap/090318/eu_britain_banking_us_law.html?.v=1
But ten years later, the dissent of Sen. Byron Dorgan, a North Dakota Democrat, has a certain ring: “I will bet one day somebody is going to look back at this and they are going to say: How on Earth could we have thought it made sense to allow the banking industry to concentrate, through merger and acquisition, to become bigger and bigger and bigger; far more firms in the category of too big to fail? How did we think that was going to help this country?”
There seem to be at least two issues:
- The size of financial institutions in general
- The role of particular types of financial institutions
Dorgan was dead on with his “too big to fail” concern. I don’t necessarily want to back to the pre-1990’s era when every time I moved to a new state I had to find a new bank. However, there are other problems with too much size, especially if regulation is lax. A single bank failure or a couple of bank failures should never put the entire financial system at risk.
Why do people think we should “compete” against the rest of the world by throwing caution to the wind and encouraging corruption? That’s what the rest of the world tends to do, and that’s what makes them suck so much.
Dorgan for president.
+1. You read my mind, dude.
I do that, it’s great at parties.
At a media conference Wednesday in New York, NBC CEO Zucker said the “Daily Show” host’s recent rips on CNBC, its “Mad Money” host Jim Cramer and business media in general were “completely out of line.”
Stewart has had strong words for CNBC, making the point that reporters who cover Wall Street should have done more to warn of the financial meltdown through critical reporting, instead of acting like market cheerleaders.
Zucker says that while “everyone wants to find a scapegoat,” to suggest that the business media or CNBC was responsible for the economic meltdown is “absurd.”
Quick Survey - Did anyone see anything substatial on CNBC that wasn’t completely drowned out by the stocks and houses only go up crowd prior to the collapse? I don’t watch it much but from what I’ve seen I’d have to say no. The only news outlet that I saw significant coverage of the forming bubble and the risks was from PBS.
Joe Rogers has been on many times over the past several years.
‘At a media conference Wednesday in New York, NBC CEO Zucker said the “Daily Show” host’s recent rips on CNBC, its “Mad Money” host Jim Cramer and business media in general were “completely out of line.”’
FU Zucker…
I’ve found the Bloomberg coverage more balanced than the continual rah rah coverage on CNBC. CNBC deserves all the criticism it’s receiving and more.
“Zucker says that while “everyone wants to find a scapegoat,” to suggest that the business media or CNBC was responsible for the economic meltdown is “absurd.”
They would rather mislead their viewers than upset their advertisers. They are, at a minimum, major enablers of the greatest financial meltdown in history. That is their legacy.
CNBC and NBC is owned by GE. GE is a business. That is their legacy.
“Zucker says that while “everyone wants to find a scapegoat,” to suggest that the business media or CNBC was responsible for the economic meltdown is “absurd.””
I agree with this statement, however it just shows how Zucker and his ilk do things. At no point did Stewart accuse the CNBC of causing the meltdown. He accused them of ignoring it while pretending to be business journalists. Just assign a false argument to Stewart and disprove it, therefore Stewart isn’t credible. Complete garbage.
Well Zucker, blaming the poor performance of your business reporting on a comedian is absurd.
It wasn’t poor performance it was Wall st. theatre. CNBC helped many people make many millions of dollars all the way down at the cost of the little guy who thinks Cramer is god.
“Should the downward spiral in home prices, neighborhood condition and equity deterioration continue, more and more mainstream borrowers are likely to walk away from their homes.” ~Credit Suisse
Nice verbage. Got a link?
Still goes to show you that even the big banks don’t get it. When the day comes that people walk away from their homes (meaning paid for, free and clear title), it might be over ridiculous property taxes, terrible ghettofication, or weather-related repeated emergencies.
No one walks away from their home today. Some people who own 0% or less on the homes they’re living in walk away, but it was never their home to begin with.
I’d say that items 1 and 2 (Extreme property taxes and the nation-encompassing ghetto) are not impossibilities - not by a long margin…
You hear a lot of whining from school adminstrators, etc, that “prop 13″ is the cause of all their problems, so uncapping CA prop tax is a possibility.
Now, even with Prop 13, CA property tax is above median for the country. Combined with high sales tax and second highest income tax, there’s NO GOOD REASON for CA to be broke…
If there was no Prop 13 it would have been awful during the bubble. You would have seen people forced to leave their homes because someone with EZ-mortgage-money paid too much for a house next door to them.
The Chicago Sun-Times has a great web page somewhere that you can look up public school rats pay. You can sort by region, job title, etc. I’m shocked at how many people in the area are making over $200,000 per year and aren’t even school superintendents.
When my friends complain about property taxes, I just go to that page, look up their zip code, and print them a nice 2 page spreadsheet and remind them that they’re letting this happen by not attending school board meetings and yelling at their neighbors who are employed in that decrepit system.
Prop 13 is a mess either way — with it or without it. It hides the reality of the problems we face with even local government: it’s gone mad. And the maggot-brained voters wanted it that way.
Reuven, what do you mean?
CA property tax starts off at 1% of the assessed value of the home, and can only increase by, what 2-3% per year, max? So you in the second year you might be paying 1.2% of the assessed value. That’s really low.
Not to mention the shady brother-in-law deals as well as outright corruption and quid pro quo.
“That’s really low.”
What is 1.2^20? 38.33
So after 20 years and your home still not paid off you could be paying 38% of your original valuation in property tax?
How about we cap government spending at to increase by inflation rate plus population growth max each year. With productivity increases that still means increased services going forward. California’s budget doubled in the last 10 years.
What’s that? The public employees unions would never allow that, and they are the ones who really run Sacramento? OK, nevermind.
Please forgive my brain fart. Real answer to the above 1.48% after 20 years, but that is still 50% increase in taxes over 20 years!
Big V,
If we deported all the illegal immigrants, I bet our budget problems would be fairly well fixed.
We tax more than enough. We need to stop spending so much, especially on services for illegals (schools and prisons being two of the largest components of our budget). Fix that problem, then they can ask us for more once we see what our true budget should look like.
Peter Schiff gave a superb speech over the weekend at the “Austrian Scholars Conference”. There’s a link to the video on the “CampaignForLiberty” website home page.
A must see!
MARK HULBERT
‘Putting down their chopsticks’
Commentary: Newsletter editor Seiver predicts much lower bond prices
By Mark Hulbert, MarketWatch
Last update: 12:01 a.m. EDT March 18, 2009
ANNANDALE, Va. (MarketWatch) — Both stocks and bonds have fallen by nearly the same amount over the past 90 days.
The Dow Jones Industrial Average, for example, is 16.2% below where it stood on Dec.17, even after taking its strong recent rally into account.
U.S. Treasury bonds of more than 20 years’ maturity have lost 17% over the same period (as judged by the Barclays 20+ Year Treasury Bond Fund ).
And though there is widespread disagreement about what the stock market’s direction is going forward, Treasury bonds’ longer-term direction is almost certainly down.
That bearish bond forecast comes from Dan Seiver, a visiting finance professor at San Diego State University and editor of an investment newsletter called the PAD System Report. I checked in with Seiver earlier this week, since it has been three months since I last spoke with him and the confidence with which he then expressed his bearish opinion about bonds has been amply vindicated.
HOPE EVERYONE CAN MAKE THE NEW ROUND OF ANTI-TAX, ANTI-WASTEFUL SPENDING, ANTI-BAILOUT “TEA PARTY” ON APRIL 15, COMING TO A CITY NEAR YOU!
Could you “quiet” down?, you’re scaring my visiting Amish friends!
I hope you’re not planning on pouring more sweeted tea into the ocean. Do you how many barnacles probably got a sugar high off that stuff? It’s not good for them.
Link? Details?
Wake me up when we see a real head on a real stick.
Efficient Markets Theory, RIP. This was a nice fantasy out of academia which served Wall Street’s fleecing operations very well, but the empirical evidence strongly supports the notion that it was complete bunkum as an explanation for the way actual markets work (or don’t work).
latest news
[FNM] Fannie Mae Feb. refinancing volume largest in nearly a year
MARKET SNAPSHOT
Market meltdown refutes ‘efficient markets’ theory
By Kate Gibson, MarketWatch
Last update: 12:30 p.m. EDT March 18, 2009
NEW YORK (MarketWatch) — The stock market collapse calls into question the soundness of one cornerstone of modern financial theory — the idea of “efficient markets” — since all the components that conspired to produce the mess were in plain sight, contends one analyst.
“Anything that purports to describe the last 18 months as ‘efficient’ seems like a cruel joke,” said Nicolas Colas, chief market strategist at BNY ConvergEx Group.
The premise behind the term holds that available information about a given security is quickly baked into its price, yet Colas says in the latest market decline, stock prices ignored the news until the situation threatened the likes of a Lehman Brothers.
“All the factors that created the market’s collapse were hiding in plain sight in brokerage firm 10-K filings and news reports about the housing and mortgage markets. Hundreds, if not thousands, of individuals knew the risks in the collateralized debt obligations and credit default swaps marketplaces. Many of them even work in one place — New York City,” said Colas.
“We suspect the academic community will have a hard time explaining away the destruction of half of the value of the U.S. stock market in a little over a year after it took 70 years to create much of that same wealth,” the analyst said.
What’s missing from the Efficient Markets Theory as an explanation of real world market behavior?
The distortionary effect of government intervention in markets — specifically the moral hazard inducing effect of too-big-to-fail bailout insurance programs.
It’s a model. To be used as a frame of reference. People that take that stuff literally, or think there is a literally perfect example of that in the real world (and who depend on it for a financial move) are going to have their @$$ handed to them.
Kinda like how finance teaches us that govt debt is “risk-free”.
Good point. Models are fine, provided they are self-consistent and nobody mistakes them for reality.
Perhaps they are better when some mistake them for reality…as long as “some” is “not you or I”.
The Map is not the Territory
— Alfred Korzybski
See my comment about Cramer and CNBC above. They weren’t in error, they were misleading people intentionally.
TADA! Inefficient markets.
How can opacity lead to inefficiency?
asymmetric info
Anyway this whole story is based on the premise that CDO’s or other such things caused “the mess” when in fact the inefficiencies caused a bubble and the contraction is a correction.
This analyst, Nick Colas, implies the information should have been obvious, but he obviously doesn’t get it himself and should probably spend some time with Ludwig von Mises.
But what should you expect from a guy whose parents named him “nick colas” or “nicolascolas”, wtf?
OT, but do you still have my email?
How does a household survive quantitative sleazing?
lmao
exactly. I knew you would get it.
An efficient market doesn’t guarantee success. All the efficient market theory says is that price reflects all known information.
Might property prices appreciate at an unsustainable rate in an efficient market? Yes.. because people do act irrationally.
And while it may be difficult to quantify and factor in, widespread irrationality is legitimate information.
You can rationalize all you want, but collapsing asset prices and a never-ending stream of worse-than-expected economic reports seem to strongly contradict the notion of omniscient market participants who instantaneously adjust their portfolio allocations to take into consideration new information as envisioned by efficient market theorists, unless market participants are on average a lot dumber than finance professors like to imagine.
i realize that journalists like Kate Gibson need to fill space, and are running out of new and exciting things to say, but efficient market theory had nothing to do with the market’s collapse.
Start by acknowledging that we experienced a massive housing bubble and the entire sequence of events that followed is logical, easily understandable and even predictable.
“…logical, easily understandable and even predictable.”
What you wrote here coupled with the huge price crash, collapse of Wall Street and repeated MSM announcements that ‘nobody could have seen it coming’ does not quite seem consistent with the Efficient Market Theorist’s fantasy land, where current prices reflect all current and predictable future events.
PB -
That is the question. Why so many did not see this coming. I always like to blame everthing on technology.
At work, our scope of responsibility and speed at which we execute our scope of responsibility is exponentially increasing every year. To cope from an organizational perspective, the animals are running the zoo. No top down hierarchical rule anymore and no true accountability anymore anywhere. Very very small biz is a possible exception. Everything is matrixed to the max in organizations - including money management. How can anyone predict anything in such an environment? My guess is things will get even more unpredictable, and at a faster rate of change.
Yes, data processing allows the idiocies of Management to be embodied in the policies of huge Fortune 500 companies. Reality does not intrude. All Managment believes in is the numbers hown on their computer screens.
Only the laws of this nation which are nothing more or less than huge barriers to entry allows ther Dinosaurs to continue to triumph over the Mammals …
The sole proprietorship of yore relied on long term quality to market for them and assure their survival.
The modern corporation continually cheapens their product for short term profit.
Price is NOT Value.
The corporation deals in Price. The sole-proprietorship/partnership/etc. deals in Value.
It has a lot to do with personal responsibility.
It’s trivially easy to demolish the strong form of the efficient markets hypothesis using information theory. However the same argument also supports markets as being more efficient than any alternative.
As for that last comment - the daily price for a small portion of the total available stocks tells you absolutely nothing about wealth - which anybody actually capable of the independent thought needed to justify a title like ‘analyst’ should be able to figure out on the back of a napkin.
– w
I heard an analyst this morning commenting on how AIG had a market cap of a couple of billion. He then went on to say that this meant that AIG is worth 2 billion. Has this guy ever looked at a balance sheet?
I know this is way off topic, but my eyes just about popped out of my head when I saw her weekly expenses.
Wife divorcing ex-CEO: $43 million not enough to cover $53,000 a week in living expenses
His wife says the money isn’t enough to maintain her $53,000-per-week living expenses. Their divorce trial started Wednesday because they were unable to reach an out-of-court settlement.
http://biz.yahoo.com/ap/090318/expensive_divorce.html?.v=2
You know, the English…after all these thousands of years, going around the global… conquering nations…being kicked out or just leaving…they should have just focused on Sweden, it would have vastly improved their future genetic phenotypes.
She’s right. If she managed 6% APR return she’d only have 49K/week. She’d have to give up the gold bathtub!
I heard a day or two ago a story on NPR that made me wonder about what banks are doing. The story was some kinda sob story about a broke/foreclosed-on realtor in Florida, but what interested me was an anecdote about how she supposedly helped a guy (who they also interviewed) buy a house. It was a foreclosure and according to the story the mkt value at that point was ~140k and he bought it for 88k.
My question, has anyone seen evidence of banks selling a house below market value? If you consider (as I do) “fair value” to be a price a thing would sell for after a reaonable amount of time on the market (which would be defined by the conventions of the market in question), it seems plausible a bank may want to exchange some amount of the price for a quick sale.
So does anyone here have any idea if they are actually behaving like this now?
The 3 banks I am in contact with in the Chicago area all are willing to negotiate more today than 6 months ago, but you need to know what they have in each area — their exposure per area can effect their negotiation options.
One local bank seems to be willing to accept 70 cents on the dollar, which is still not low enough IMHO.
In southern Florida (Ft. Lauderdale, etc), a family member was able to negotiate down to 60 cents on the dollar in a condo building. The one bank had 6 empty units, and I still think my family member overpaid.
70 cents on the dollar
On what dollar? Outstanding loan amt? FMV?
Oops, you said discount from FMV, I thought you meant discount from their current payoff cost.
In terms of buying below what one might consider FMV (meaning, comps of realistically matched properties and what they’re selling for), I’ve only seen a few close in the past few updates. Sadly, the number of banks that are giving me information has dropped since the bankers who were giving me that information are no longer with those firms or have been elevated in job title and can’t share with me stories at lunch break.
In the complex I live in now, I own two units and co-own a third. Another landlord owns 17 units, and we’re both seriously watching the foreclosures and making offers to the banks. None of the properties have changed hands, and the units are VACANT now with no tenants (banks can’t have tenants). It’s a mess. My one unit that I bought 18 years ago for $18,000 had a comp sell for around $149k IIRC — ridiculous considering the units rent for $799 (meaning they are probably worth $96,000 at MOST, and $64,000 for me to buy them). People are suckers. I’d vacuum the entire complex up if I could afford it and the price was right, though.
But I keep watching. Do you talk to any local bankers? They can be excellent resources if you’re actively shopping.
I don’t really (talk to bankers that is). I know one guy that works for Regions but I don’t see him often. Also being in grad school (taking 12 hours) and working full time leaves me with no time to socialize…
FWIW, one of our carpenters just visited his brother in FL. An REO across the road from his brothers place is listed at $50k or so. The realturd insisted the bank would not move on the price. She further said it was a bargain. She got all tight lipped when carpenter made the point that if it’s such a bargain, why has it been for sale for 9 months…..
Yeah, I understand the “mkt value” in the story is questionable. According to the story, they specifically called it the “appraised” value so I take it to mean perhaps there was at least a 3rd party appraiser involved. The guy bought it with a loan (he was broke too) so there must have been an appraisal.
In any event, while the details of this particular story are unknowable in the way that is often the case in the MSM, I’m just curious about what banks are really doing. We talk about all kinds of stuff here related to the housing and economy shift; economics, politics, finance, etc. But this is one area we don’t get into as much as I would like. Hard, boots on the ground details. So, I was just curious if anyone had any insight on this. Thanks for the anecdote.
“My question, has anyone seen evidence of banks selling a house below market value? If you consider (as I do) “fair value” to be a price a thing would sell for after a reaonable amount of time on the market (which would be defined by the conventions of the market in question), it seems plausible a bank may want to exchange some amount of the price for a quick sale.
So does anyone here have any idea if they are actually behaving like this now?”
_____
I do know. (At least as FL is concerned)
The answer is no.
I will say that I am seeing prices in SF continuing to fall.
We need a FIREsale to put out this FIREstorm. Liquidate the biggest dumbest financial and insurance companies in the system. AIG is a fraud. It never had the money to pay RE loss claims. The financial institutions buying RE protection insurance from AIG should have known but they did it anyway.
No insurance company has enough money in reserve to cover all claims.
Imagine if every car crashed into every other car.. or every house burned to the ground.. How many claims would be settled? 5%? Less?
Good point, but is it not irrelevant?
AIG never had the money to cover CDS losses related to RE. Moreover, most of the ‘normal’ policyholders are protected. This whole thing was a boondoggle from day one. AIG is being used as a conduit to prop up large systemic fraud.
AIG is being “used”. On that we agree.
“AIG is being used as a conduit to prop up large systemic fraud.”
+1 Exactly!
So Ned Flanders was right…insurance is gambling.
Absolutely wrong. Insurance of quantifiable risks like auto collisions and life expectancy is running a casino (the house always wins). What AIG did was gambling, with the bet that Uncle Sam would open up the Treasury to them when they blew up, due to the fact that they are too big to fail. It looks like the AIG gamble paid off handsomely.
“Imagine if every car crashed into every other car…”
You put your finger on exactly why the type of loss AIG guaranteed (CDS as protection against bond defaults) doesn’t quite qualify as insurance. You never have a situation with insurable risk where everything blows up at the same time, while this sort of thing happens routinely every decade or so in financial markets.
I think the point is that AIG recklessly underestimated the risk it was insuring against, just like everyone else.
You can’t insure against pure uncertainty (aka unknown unknowns). The only near-certainty was the too-big-to-fail guarantee claims payments.
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.
–Donald Rumsfeld–
I wonder if AIG anticipated this response to their rich bonuses when many other Americans are getting thrown out on the street?
AIG CEO, some staff get death threats over bonuses
Liddy wants identities of recipients kept private to keep employees safe
By Alistair Barr & Sam Mamudi, MarketWatch
Last update: 3:46 p.m. EDT March 18, 2009
SAN FRANCISCO (MarketWatch) — American International Group Inc. Chief Executive Edward Liddy and employees at the insurer’s troubled derivatives unit have received death threats amid a national furor over big bonuses the company recently paid.
Liddy said Wednesday he has asked most recipients of more than $160 million in bonuses to repay at least half the money. But he warned that staff may resign when they return the cash, making it more difficult to unwind AIG’s remaining $1.6 trillion book of derivatives.
He also said the identities of the bonus recipients should not be made public, because that could put employees in further danger. He read one of the threats, which said AIG (AIG:American International Group Last: 1.31+0.35+36.46% 3:51pm 03/18/2009) staff and their families should be executed “with piano wire.”
I watched Liddy’s face turn as red as a tomato when Fwank asked him for the names of the employees that got the bonuses. I thought he was going to have a stroke right there at the table.
Also, Kanjorski blew his top and had all the protest signs stripped from the hands of the protesters by the guards and then threatened to have them forcibly removed if he saw another sign displayed in front of the camaras.
Quite a dog and pony show from CONgress!
Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. . . . Purge the rottenness out of the system
— Andrew Mellon
Mellon is correct. The only quick cure for a Depression is to let it run its’ course without Government inetrvertion. Such intervention oly prolongs the agony.
But the intervention is NOT to alleviate ther agony but the protect those on high ( The Big Boys / The Pig Men/ The Banksters ) who had a large part in the speculation that led to the bust …
If you must have intervention then it ought be along the lines of the RTC during the S&L crisis. Orderly liquidation overseen by the government. But Liquidation!
We are getting treated to the long, slow, torturous non-cure this time around. Luckily, as J M Keynes would point out, “in the long run, you are dead,” which means not all of us will have to stick around forever to see this thing through to the eventual resolution a long, long time into the future.
Condo Conversion Problems in Austin, TX
——————————–
Problems at the Sabine: Residents Sue Developer
This week, 35 residents of The Sabine filed suit against the developers for list of problems that the condo owners say have been ongoing for month. The Sabine is an 80-unit condo conversion project of a mostly-empty office building on Waller Creek into a new condo project adjoining the Hilton Garden Inn on 5th Street near I-35. The project was completed last year although many units still remain on the market.
According to the residents:
- The building seems to have serious elevator problems. In fact, a 12/29 elevator inspection exposed 19 code violations including some that were described as serious safety problems.
- Problems with water leaks, window seals, and sound-proofing.
- Failure to pay property taxes on more than 40 units — a delinquency which may result in additional litigation
While it is difficult to tell how long it will take to resolve these issues, the problems do indicate quality issues for the newly completed condo conversion project. Litigation like this is rare, and shows that residents are angry and ready to revolt. These problems certainly illustrate the risks of being the first occupants of any building. Buyer have little choice but to take the developers word that they will deliver a quality building without cutting corners.
Being a long time renter in multi-unit apt buildings, I can just imagine what it is like living in that place. Water leaks, hearing every step of your neighbor and elevator problems. I think the name alone would have sent me running. The Sabine. Oh the humanity.
I posted this late evening yesterday.
A Few More AIG Culprits (with bonus pandas)
Saturn Scott
“In addition to all of the nicely deconstructed madness over the AIG bonuses, there’s this second story today, about the ways that AIG used its bailout money to essentially bail out other firms. Reading about this made little sense to me, so I went crawling through the Internet today to see if I could make it make sense to myself. Since I do this through writing, anyone who passes by here today is either a victim or beneficiary of my compulsion.”
The rest of the story:
http://tinyurl.com/cpzqjm
It was a ’secondary’ bailout of the Usual Suspects. All the PTB want is to preserve the Masters of the Universe so that afterwards they may begin the game over again …
We are cattle to them …
Damn.
Google those three; all worship same the faith.
Good article, SF. Thanks for posting that.
Kinda makes one mad, no?
Fed to buy 300 bil in treasuries and 750 bil more of agency MBSs on top of the 500 bil already announced.
There is still no such thing as a free lunch.
CURRENCIES
Dollar plunges on Fed Treasury-buying plan
By Lisa Twaronite, Deborah Levine & William L. Watts, MarketWatch
Last update: 3:03 p.m. EDT March 18, 2009
SAN FRANCISCO (MarketWatch) — The U.S. dollar plunged against major rivals Wednesday afternoon following the Federal Reserve’s decision to expand its financial rescue strategy to include purchases of $300 billion in longer-term Treasury bonds.
The dollar index (US Dollar Index Future - Spot Price Last: 84.75-2.19-2.51% 2:42pm 03/18/2009) , a measure of the greenback against a basket of major currencies, fell to 84.573, down from 86.471 shortly before the central bank’s announcement, and from 86.861 late Tuesday.
The euro rose to $1.3422, from $1.3105 before the announcement and from $1.3013 late Tuesday.
The dollar fell to 96.25 Japanese yen from 98.29 yen ahead of the Fed news and from 98.55 yen late Tuesday.
“The U.S. dollar has been crushed, even the emerging market currencies have rallied,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. “The key consideration might be that quantitative ease is currency-negative — as it was for sterling, yen and Swiss franc.”
“However, an alternative explanation is that with today’s move the Fed has finally gotten ahead of the curve and this will boost confidence of a recovery later this year,” Chandler said in emailed comments.
Time will tell whether the null hypothesis (dollar is toast), the alternative hypothesis (recovery is on the way) or both will hold.
UDN going off like a rocket ship!! FIREworks.
Fed just announced they’re buying $300B of treasuries. Dow up about 180 in 10 minutes period. Gold up $40 in the same period.
Wow.
798 on SPX. Is it going to fade or will wily Winston wager his wanker?
I just bought a tiny stake FAZ, so I’m hoping it fades. I have a sinking feeling I got in too early though.
Have to admit…SKF is looking good at 109 now. But I’m a scardy cat.
great googly moogly
skf@105.5
yes we can
I had a buy on SKF actually (I’m forced by my accountant to put 25% of my pay into a SEP each period) at 104.50 and it didn’t fill so I guess I was lucky. I think SKF is looking soooo pretty though.
SKF is getting close but I’m not in yet.
Who here feels really stupid right now?
(raises hand)
I got back into some homebuilder shorts last week after they popped back up some. I’ve lost 35% now in 5 days.
(shakes head)
At least I’ve got some Precious to keep me warm.
803. Go Winston. Go Winston. It’s ur b’day. It’s ur b’day.
Uh oh - back down to 792. Some people are starting to realize this may not be such a good thing afterall.
787
It’s all good. Winston is 2 BIG 2 FAIL!
OK - the references to Winston are over my head. Explain please.
Winston Smith — 1984 — George Orwell. Winston works in the Ministry of Rectification, MinRec. In charge of rectifying the news so that it is always double plus good. Provides wonder-terrific statistic that are later revised downward. Markets roar every time Winston delivers the good news.
double plus good day for US gold bugs, up more than 60$ in a few hours and 10% gain in the gold stocks. I think Bernanke got a lot of bang for the buck!
Less impressive in Euros though, euro gold price is nearly unchanged from yesterday.
And do NOT forget Goldstein - the revolutionary off in the distance that challenged the State and was used to induce fear in the plebs so they would support the State.
Turns out Goldstein was a creation of the Inner Party.
Hmmm … This couldn’t happen - could it?
“Who here feels really stupid right now?”
Packman?
The cash King is dead. Long live the new King!
Amazing how the same shenanigans happen all over the world at the same time!
If you would like a great summary of what is happening, take a look at this from Denninger:
“Be warned Ben….
The BOE executed their first “QE” operation today.
The “bid to cover” was an astonishing 7.35.
This means that for every bond purchased 7.35 were tendered, or made available by willing sellers.
Back in January I posted a Ticker in which I made clear what was likely to happen if Bernanke actually attempted to do (as opposed to threatening) QE:
Bernanke bluffed and the bond market called it. He cannot monetize several trillion in new issue plus the entirety of the 10 and 30 year bonds out there to stop a bond market sell-off. In addition, the market no longer believes him, as evidenced by today’s price action. A serious bond-market sell-off will ramp the cost of all credit, including mortgages and commercial loans. If he tries to monetize the result will be current bondholders tendering into his buying, forcing him to essentially “consume” the entire float. That stunt will cause the dollar to implode and we wind up exactly like Iceland. Overnight. Ben knows this; ergo, he is screaming like a petulant child while the market laughs at him just like the market forced Paulson to do what he said he wouldn’t with Fannie and Freddie. Bernanke had better shut the hell up before he precipitates a bond market dislocation; traders can and will try to force him to make good on the threat.
Ding. The BOE now has seen exactly what happens when you promise as a government to overpay for something - everyone hits your bid immediately!
This is a form of crack that the government cannot afford to loose into the market - as soon as the buying pressure is removed rates will start to rise again, forcing yet another purchase.
Ultimately The Fed winds up owning all of its own government’s bonds, having destroyed the private capital market for sovereign debt (just as it has done for other securitized debt by threatening to overpay for those issues!)
The difference is that if this happens for sovereign debt then deficit spending becomes impossible on an instant basis; this would in turn force a nearly 75% contraction of government spending.
The outcome of this event would be the immediate destruction of Social Security, Medicare, half the military budget and half of all other government programs.
PS: Bernanke knows this, which is why it hasn’t happened yet. Let’s hope he continues to remember it, because the destruction of our government is very, very un-funny, and this would likely precipiate exactly that in a “vast and fast” form.”
Never underestimate the amount of poop these guys can scoop.
WALL ST. JOURNAL: The Federal Reserve said Wednesday it will buy up to $300 billion in longer-term Treasurys and raise the size of lending programs already aimed at reducing mortgage rates by another $750 billion, a forceful reminder that officials still have powerful tools to combat the recession.
This is an act of pure desperation. It means that the Fed will own ANOTHER $1.05 trillion of taxpayer-backed federal paper. The Fed does not have money in the till, of course, but most of the lucre will be created with mere key strokes on computers. Some of it will come off the presses over at the Bureau of Engraving and Printing.
This will not soften the recession, which - if it extends beyond April - will be the lengthiest downturn since the First Depression.
“This will not soften the recession…”
I am sure the thinking is that a weaker dollar will stimulate U.S. exports. What is the reasoning behind your assertion that this will not soften the recession?
Pancho ‘TBTF’ Brenankee is gonna Smoot this Hawley out.
Maybe Hawley plants will start producing and selling more hogs in response?
Asian exports are down near 50 pct. They will respond in kind and down the wabbit hole we go….
” What is the reasoning behind your assertion that this will not soften the recession?”
I don’t know his reasoning but my reasoning is that there are still far more dollars going “poof” each month than dollars being created.
Just a diversion away from the A.B. Dada “I’ve got the answer for everything” column…….
Dear Meredith Whitney.
I saw you for the first time last night on Charlie Rose. I would respectfully like to put in my resume for the position of “Meredith Whitney’s Boy-Toy”. This does not have to be a full time position. I am willing to perform as a contractor/consultant any time you are in my area.
Why, you might ask yourself, do you need a fifties-something guy such as myself as your obediant man-servant? Excellent question. One that I would expect from someone as brilliant as yourself.
-As a newly minted “contract-employee”, I have plenty of opportunities to schedule my “duties” around your schedule.
-You are different than the average female, in that you seem to seek the unvarnished “truth”, rather than listen to the fantasy/B.S. that CEOs use to seduce investors, and some guys use to get women in the sack.
Although I can be very diplomatic during normal conversation and correspondence, I have been repeatedly told by my dating age daughters that my straightforward, no B.S., “tell-the-truth-and-you-don’t-have-to-remember-what-you-lied-about” style is a major hinderance in the normal male-female relationship game, you would probably find my candor a breath of fresh-air, after listening to Wall Street/Investment Banker types all day.
-When I say “Yes, you are right, Meredith….”, I can say it without being insincere………..because, I BELIEVE you “ARE RIGHT”.
-I give good “back rub” after a stress-filled day of listening to jackasses.
-If for any reason, additional “boy-toy” type services are requested/required, my maturity has helped me develop the discipline to delay my personal gratification for an extended period of time if need be, as I have found that this ability is usually rewarded. (It ain’t bragging, if you can back it up……
…….)
We can discuss my obligations and duties at your convenience, whenever you have an opportunity to visit my area.
Signed,
Your humble and devoted admirer and man-slave,
X-GSfixer
LOL.
You go X-GSfixer
“Meredith Whitney’s Boy-Toy”
You are going to get your arse beat if her hubby finds you (I refer you to a viewing of Napoleon Dynamite for an idea of what I mean).
Did you get dumped?
Even I like a break from my schpiel. FWIW, I never believe I have answers to anything, just contrarian viewpoints that have historically paid off by being right more than they’ve been wrong.
As for Meredith Whitney, her AND her mantoy both have gayface, so I think she’s out of the market for your, err, services. I wouldn’t say that to his mantoy, considering he’s a “pro” “wrestler” but then again, he does bounce around in tights under bright lights and wears makeup. Hmm.
Hahahahaah! Nice, X-GS.
That’ll absolutely charm the pants off her! Er…you know what I mean.
Her Sig-other is a Pro-wrestler? Hey, I may actually have a shot at this!! (If that’s the type she has the “hots” for…..).
The spandex tights might be a problem……..
I work on airplanes……I can lay down trash-talk on other dudes as good as any pro-wrestler. And I don’t need a script.
Maybe he will get into some kind of steroid-induced trouble, and I’ll help out with the “anger issues”.
Hey, it’s a contract position……..
Me: Picture ex-NFL left offensive tackle sized guy (6′5″)…….
(Disclaimer: didn’t actually play NFL….was a baseball guy. “Little” brother played for a Big 12 team, and no, they went to bowl games, didn’t play for Iowa State)
Job still on death-watch. Last paycheck and expense checks
bounced, (but it was a “clerical error”…..got a new check the other day, waiting to see what happens to that one).
Would love to say adios to this B.S., but it seems that about half the people in the General Aviation business have been given layoff notices since November 1. Half of my “network” is laid-off, and in the same position I’m in. Part of it due to economy in general, a lot of happening because anytime a company has layoffs, they feel the need to throw the flight department under the bus first. Congress guys browbeating the automakers CEOs about it DIDN”T HELP…..40-50% reduction in Business Aircraft flying worldwide since 3Q/2008.
I have been repeatedly told by my dating age daughters that my straightforward, no B.S., “tell-the-truth-and-you-don’t-have-to-remember-what-you-lied-about” style is a major hinderance in the normal male-female relationship game,
Your daughters are right, it’s sad to say.
You enumerated what you have to offer, but what’s the bottom line? How much for your services?
I told BF that when I win the lottery he gets: a) to quit his job - I’ll spot him his monthly take home pay - b) a new truck, and c)cookbooks from my favorite chefs so he can spend his days cooking me sublime meals. What’s not to like?
Will work for food.
(With apologies to “Dumb and Dumber….”
Me: “You’re telling me the odds are one-in-a-hundred?”
Meredith: “More like one-in-a-million……..”
Me: “So your telling me I’ve got a chance?”
Her current BF can keep his spandex. I’m going to get one of those orange tuxes…….great way to impress the ladies.
I already have a truck, so just ditch that loser and hit me up.
Oh Blano, you don’t give up, do you? Even after so many face slaps by various HBB gals?
Someone, somewhere will see the light, someday.
“Defeat doesn’t finish a man……..quit does. A man is not finished when he’s defeated. He’s finished when he quits.”
Richard Nixon
Like I mentioned to exeter, she ain’t all that bad, plus she’s got a brain to boot AND seems to know how to use it. How often do you find that combination???
I now duck out to the mall with my daughter to avoid all the estrogen-driven bomb throwers.
Nice.
Who made fun of me for buying preferred shares of ING with a >20% interest rate?
I’m up 50%! Not all banks suck.
enjoy the fun as long as it lasts … ING sucks for sure.
+1 to FPSS on the TBT call and not to bet against the Government
now we have QE I wonder what this will do ?
“Don’t fight the Fed!”
They’ll never be trusted after this maneuver. After the shock wears off, the blow-back will be harsh. If WS representatives thought they had a problem b/4, they ain’t seen nothing yet.
And my $100 SKF call looks better and better.
I bet you it will go below $90.
I’d still like the short ETF’s. Nothing has changed.
Monetizing T-bonds and F&F debt doesn’t change corporate balance sheets. DUH!!!
Yes.
-1 though to FPSS for slamming gold the other day though.
exactly; fight the FED, buy Gold while you still can
There are far better ways to make money than gold.
They will monetize so front-run them.
Faster Pussycat, how do you front run them?
Also, Are you born in the year of the Tiger? I am .
If the “true” worth of roses is $10 and a buyer of “last resort” shows up with “freshly printed real money” to buy them at $12, what would I do?
Hand them the roses; take my money and go home.
On a side note, if they bought $1M worth of roses, how much inflation did they “actually” create?
The answer is NOT $1M.
Number of roses bought = $1M/$12 = 83,333
Overpaid by = $2
Inflation = 83,333 x $2 = $166,666.
Hope this clarifies things.
Oh, I should also note that if there were another 100,000 roses sitting in the wings, their price would NOT be $12.
Now that the buyer of last resort has gone home, and no more candy is gushing forth, the price would sink back to $10 because that’s what the free market will bear.
LOL
Does Ber-spanky not understand this basic principle of Econ 101?
None of them do. It’s show we got into this mess. They mistook the map for the terrain.
But my analysis is freakin’ “obvious”. That’s how demand and supply works even if you are “printing money”.
There’s no difference between roses and T-bonds or F&F bonds or stocks or trinkets or tortoises.
Just because the Fed overpaid for some asset doesn’t mean that the free market is gonna go out and overpay for it too.
Overall, this has virtually no impact minus the temporary bounce. In fact, it sets it up for a great play.
I like obvious things - I’m the Clown Prince™ of obviousness.
“In fact, it sets it up for a great play.”
That Treasury ultra-short fund may be worth thinking about after the temporary run-up is wrung out. Though I’m not sure it will return to “market” price fast enough for an ETF to be a good way to play it, due to the built-in decay in the ETF.
“Now that the buyer of last resort has gone home,…”
They have? I thought they had many more tools in the hair-o-the-dog stimulus shed?
I thought they had many more tools in the hair-o-the-dog stimulus shed?
So you will get one more play, and one more play until the plays stop.
The goal is not to play with them - it is to play in the “other” children and anticipate their anticipation.
As I said, there are far better plays than gold.
For example, the $hitti common-preferred arb is gonna blow sky-high.
Come to mamma babeeeeeeeee, mamma needs some sugar too! LOL
From the Agora 5Min…
This sounds promising. Former Citigroup economist Lewis Alexander just got a job as Treasury Secretary Tim Geithner’s “counselor.” If his role as Citi’s chief economist from 1999-2008 didn’t raise an eyebrow, check out his forecast for the housing market in 2007:
“I think that’s not going to spill over more broadly into the economy,” Alexander told PBS in February of that year. “I think we’re going to have a normal kind of housing cycle that’s going to last through the middle of this year.”
Terriffic… he’ll fit right in. Lunch conversations between he, Geithner and Bernanke ought to be scintillating.
“We do want foreign capital to come in here and we want private capital,” our favorite stammering rep, Barney Frank, said yesterday. After emerging from a House Financial Services Committee meeting, Frank found a few mics to spit into… and the off-the-cuff pontifications proffered forth. This was our favorite:
“We just had the Chinese raising the specter of not buying our Treasuries. Well, that would be troubling. I think they’re bluffing, personally.”
Ha!
Bluffing? We thought bluffing meant you were acting strong despite a lousy hand… like this:
This game is played with the cards up… and China’s holding all aces.
well, China lost a LOAD of money today thanks to Bernanke and the other idiots at the FED; they must be really pissed. I wonder what card China will play next.
I’m guessing it’ll have something to do with Taiwan.
I would *not* want to be living there these days.
I read that the Sixth fleet is no longer patrolling the Straits of Taiwan - to avoid antagonizing the Mainland.
Anyone have any info on this?
Didn’t they make money since yields will be going down which would push up the value of their current Treasury holdings?
It just got much harder to find buyers for said debt since they will be producing a great deal more of it. Supply and demand.
From a Chinese perspective, the relevant issue is the countervailing effect of lower interest rates (which increases nominal long-term bond prices) versus a lower dollar (which decreases the value of dollar-denominated assets to overseas investors).
How did China loose money? They own treasuries which are up. The problem is they now have to buy more of them at artificially high prices in order to keep their currency low and their export machine running. Unemployment is their big fear. It’s Russian Rullet and each round one more bullet is added to the revolver. China’s turn to spin.
It’s quite discomforting that a blathering civil servant fancies himself an expert at geopolitics and global finance.
Well I lost $230 on a 100 share bet on TBT today. Got out as fast as I could but it was really scary. On the other hand my gold shot up $800. Where does one put cash now? The Fed is destroying any savings in US$.
Personally I think TBT is a good long-term bet still. There’s only so much QE that can happen before the pitchforks come out. Then what? The only option is to raise rates.
Eventually the economy will get so bad they won’t care about trashing it anymore - they’ll care more about the very existence of our financial system.
Protectionism is building here and abroad. Trust is waning. Global markets for products will get smaller not larger. They’ve opened pandora’s box. When Japan used QE the rest of the globe was not in recession.
Well since the British got away with buying their long Gilts I guess the flood gates are wide open now. Get this, today the CPI numbers jumped and the U.S. dollar sank to a two-year low versus the euro. The trade balance is shrinking fast as the volume of imports sank. So if the foreign exporters (who are the one buying our debt) have fewer dollars to recycle it sounds like the Fed will have to buy a lot more than the 300 billion they announced today.
Yep. From what I see anyhow the Fed is trying to artificially prop up demand, so that prices don’t start plummeting. It smacks of desperation, and desperate actions only get you so far. When inflation hits 10% there are going to be some awfully pissed off people - anyone that’s bought any long-term debt (e.g. treasuries) within the past say 15 years at 2-5% now is getting -5% to -8% returns. That’s not going to wash - especially with furreigners; and some of them have some nasty weapons.
So eventually interest rates going to need to go back up again, and hard. But the economy’s already in depression - so I’m not sure that would actually help stifle inflation any.
In other words - we may well just be screwed.
maybe I’ll sell my treasuries and buy corporate junk bonds.
don’t like owning somthing that is manipulated or in other words I wouldn’t buy from a Ebay seller if I knew he would buy his own auction if he didn’t get his price.
You could invest in this company:
http://www.pnmac.com/
It’s a great story … it really is, (if you are into irony):
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVYn.SXOHh48&refer=home
Known as PennyMac and led by Stanford Kurland, the firm is paying an average of 30 cents to 50 cents on the dollar for the loans and the FDIC is sharing some of the risk,
yes stuff like that although I will probably buy a corporate high yield mutual fund
BOHICA!
Love it!
Paging Doctor Ben Dover…
Things I’ve heard lately. Unemployment is 8%, that means 92% of Americans who want to work have jobs. And now on CNBC the guy with the ponytail said 92% of Americans pay their mortgage on time. True?
Yeah - kind of like how 3/4 of all people during the GD were employed. It’s all in how you spin it.
92% paying mortgage on time is horrible.
Uh…exactly what do you call unemployment?
No job? Well then, add in the people who still have no job after 1 YEAR. Do that and the unemployment rate would be 18% in the USA.
Dodd admits to inserting the language into stimulus bill allowing AIG and other firms to pay out bonuses. He adds, however, it was at the behest of Treasury. He initially said he didn’t know how the language got into the bill. Inner party politics at work.
If the heat stays on they’ll tear one another to shreds. What a show! TTT gets the shaft?
It’ll blow over. It always does.
This whole episode reminds me so much of: I’m shocked–SHOCKED!–to learn that there is gambling going on in here!
I’m optimistic that Dodd will succumb to collateral damage from the collapsing bubble, same way as David Lereah did before him. History may ultimately prove me wrong, but I am going to savor this optimism while it lasts, and I intend to gloat like a kid who was handed a bag full of lollipops if history eventually makes me look smart.
He’s tearing himself to shreds.
A video link to the admission by Dodd:
http://edition.cnn.com/2009/POLITICS/03/18/aig.bonuses.congress/index.html?eref=edition#cnnSTCVideo
Not only do these people not have a message, they can’t even figure out which message they want to send.
Hasn’t even been 60 days and the Bushies are looking better all the time.
latest news
[$INDU] Dow Jones Industrial Average up 91 points at 7,487.21
Financial fears grow
More consumers are just a paycheck or two away from ruin
By Jennifer Waters, MarketWatch
Last update: 7:03 p.m. EDT March 18, 2009
CHICAGO (MarketWatch) — Americans are in a collective state of financial depression as many admit they could only cover their bills for two months at most if they found themselves suddenly jobless, a nightmare more and more worry may come true.
The results of a bevy of surveys found a growing number of consumers are only a couple paychecks away from a household collapse even as many scramble to shore up savings. Rainy-day funds appear to be a distant memory as households burn cash to cover food and energy bills as well as mortgage and car payments.
A large number of households say that even one missed paycheck would spell financial ruin. And even in households that remain well off, the surveys show a festering fear that financial problems are lurking.
“This is flashing so bright red,” said Paul Ballew, senior vice president of Nationwide Insurance Co. “Roughly 60% of the population was ill-prepared (financially) before the meltdown.”
QE reaaaaaaaaaally helps these people.
LOL
Thank god we don’t have a 75% consumer driven economy.
Oh wait…
I did a quick back-of-the-envelope calculation of what this move today means.
It’s not even a freakin’ rounding-error on most people’s net wealth via inflation. You probably waste 100-1000x more money when you buy an extra coffee when you may or may not need one (depending on net wealth, of course.)
I know people love to get all excited and demonstrate and wave flags and chant slogans but me and my long division are just gonna sit here in peace and drink some beer.
me too. well, a scotch anyway.
OK - guess I’m bad at math.
$300 Billion / 300 Million people is $1,000 per person, is it not?
Obviously this isn’t really directly helicopter drops of money - but doesn’t it have at least somewhat of that effect, by replacing $300 Billion that would have had to have otherwise been spent buying treasuries? And therefore $300 Billion that’s available to the economy for other uses?
WRONG = FAIL.
Read my comments about how to calculate above.
SIGH. It’s an uphill battle teaching basics. I’ll stick to the beer.
Cheap cab for moi…if it costs more than $5 a bottle, it’s inflationary to buy it…
This is the right point in time to point out this fact.
Did you know that the main reason to “preserve” wines via all that tannic stuff and all was to ensure a “fixed cost” for a large amount of product?
Preservation = cheap way to get great wine in the future.
Inflation is not a new thing. Coin clipping is about as old as it gets.
Fannie Mae plans bonuses of up to $611,000 for 4 executives; Freddie Mac has similar plans
* Alan Zibel, AP Real Estate Writer
* Wednesday March 18, 2009, 4:18 pm EDT
WASHINGTON (AP) — Fannie Mae plans to pay retention bonuses of as much as $611,000 each to key executives this year as part of a plan to keep hundreds of employees from leaving the government-controlled company.
Rival mortgage finance company Freddie Mac is planning similar awards, but has not yet reported on which executives will benefit.
The two companies, which together own or back more than half of the home mortgages in the country, have been hobbled by skyrocketing loan defaults. Fannie recently requested $15 billion in federal aid, while Freddie has sought a total of almost $45 billion.
Fannie Mae disclosed its “broad-based” retention program in a recent regulatory filing with the Securities and Exchange Commission. The company was only required to disclose the amounts for the top-paid executives, who will pocket at least $470,000 on top of their base salaries. The bonuses are more than double last year’s, which ranged from $200,000 to $260,000.
A company spokesman declined further comment.
50 percent of $165,000,000 may not cut it…
Gallup dot com
March 18, 2009
Outraged Americans Want AIG Bonus Money Recovered
by Lymari Morales
WASHINGTON, D.C. — Three in four Americans (76%) want the government to take actions to block or recover the bonuses insurance giant AIG paid its executives after receiving federal bailout funds.
hello vozzie,
QE already here with the mother of squeezes. Squeeze me baby till I lose control.
Is $hitti common-preferred arb the next Volkswagen-Porsche?
Who’s gonna blow, who’s gonna blow? Come to mamma, come to mamma; mamma needs some sugar too.
Some Friends of Angelo are also Friends of AIG
NewsTimes dot com
Danbury, CT
Dodd says he was key to allowing AIG executives to keep bonuses
Redding AIG executive contributed to Connecticut Democrat’s campaign
By Rob Varnon
STAFF WRITER
Updated: 03/19/2009 12:08:52 AM EDT
Sen. Chris Dodd for the first time Wednesday acknowledged he was instrumental in creating legislation that cleared the way for disgraced executives at taxpayer-rescued AIG to walk away with hundreds of millions of dollars in bonuses.
The Connecticut Democrat also had to explain the receipt of more than $100,000 in campaign donations from AIG workers, including some from Leonid Shekhtman of Redding.
Dodd vowed to return any tainted contributions from company executives, but that issue will likely be dwarfed by the huge AIG executive bonuses.
In an interview Wednesday afternoon, the senator said he had hoped an amendment he drafted to limit executive pay under last year’s Targeted Asset Relief Program would have ruled out hefty bonuses.
“I thought we covered that,” Dodd said. His amendment passed the Senate, but was later relaxed by the conference panel that works out differences between versions of legislation passed in the two chambers of Congress.
AIG was very democratic with respect to the pols they bought… of course, these campaign contributions look like very small potatoes compared to the size of bailout monies recently poured in to AIG, or even to the magnitude of bonus payments (or 1/2 the bonus payments, for that matter…). AIG apparently got a huge return on their investment in campaign contributions!
Will Obama, McCain, Dodd Return Contributions From AIG Employees?
AIG Gave More Than $630,000 During the 2008 Political Cycle
By JONATHAN KARL
March 18, 2009
AIG employees kept doling out donations to politicians, including presidential candidate Barack Obama, after getting bailed out with federal funds last year, raising the question of whether those politicians will now return the money.
AIG executives gave more than $630,000 during the 2008 political cycle even as the company was falling apart
According to the Center for Responsive Politics, which tracks campaign finance reports, more than $120,000 of that money was donated after AIG received its first $85 billion in federal bailout funds in September. The company has since received a total of $170 billion in taxpayer cash to prevent its collapse.
Their generosity included more than $23,000 to Obama’s campaign.
Both Obama and Republican presidential candidate John McCain raked in much larger sums from AIG earlier in the year. Obama collected a total of $130,000 from AIG in 2008, while McCain accepted a total of $59,499.
Obama and Congress Knew All About the AIG Bonuses a Year Ago
March 17, 2009
BEGIN TRANSCRIPT
RUSH: Don’t you just love the new tone, the new civility that has been brought to Washington via Obama’s teleprompter and the new administration, folks? Yes, AIG employees are now getting death threats from outraged Americans over these retention bonuses. I have to warn you people, we’re going to spend some more time on these bonuses today ’cause there’s some things that you don’t know about all this that you need to know. Sit tight, Rush Limbaugh, the Excellence in Broadcasting Network. Three hours straight ahead. It’s a thrill and a delight to be with you. The telephone number if you want to be on the program today is 800-282-2882, and the e-mail address, ElRushbo@eibnet.com.
As a tease, ladies and gentlemen, one salient point about the AIG retention bonuses. I want to read a short little blurb here from the San Jose Mercury News: “AIG disclosed its retention-payment program,” bonuses, “more than a year ago, and the amount of the bonuses had been widely reported. But as the payments were coming due in recent days, the White House began to express its indignation.” All of this is phony baloney, plastic banana, good-time rock ‘n’ roll trumped up. Every bit of this is an act, everybody involved in these bonuses and the outrage knew they were coming. They have been part of the plan at AIG for over a year, so why was Obama’s teleprompter angry yesterday? This appears to be a coordinated distraction, AIG now being targeted and pummeled by Andrew Cuomo, the attorney general in New York with subpoenas. The bonuses were well known. The amounts, the payment schedule, everything was known. And you want to hear something funny? Chris Dodd last night floated the idea of taxing AIG bonus recipients at 90% so the government could recoup the $450 million the company is paying to employees in its financial products unit. Within hours, Dodd’s 90% tax rate spread to both houses of Congress with lawmakers proposing an AIG bonus tax.
The Talented Mr Geithner
George’s Bottom Line
Reporting and analysis from ABC News Chief Washington Correspondent and “This Week” Host George Stephanopoulos
The ‘Unflappable’ Mr. Geithner
March 18, 2009 6:33 PM
Geithner House Republicans smell blood.
Congressional Democrats are frustrated with aspects of his performance.
But Obama administration sources insist that Treasury Secretary Tim Geithner is “unflappable” and that there’s “no daylight” between him and President Barack Obama on how to handle AIG or the broader financial crisis.
The betting against Geithner holding his job into next year may have risen on Intrade over the last week, but Obama’s backing all but guarantees that Geithner won’t be going anywhere anytime soon.
Despite the never-ending credit crunch, there seems to be no shortage of bonus money to go around these days for executives of FUBAR financial firms.
WaPo
4 Fannie Execs Each to Get $400K in Govt.-Okayed Bonuses
At least four Fannie Mae executives are slated to receive more than $400,000 in bonuses each this year as a result of the company’s government-approved retention program, The Post’s Zach Goldfarb reports.
The executives include chief operating officer Michael Williams ($611,000), deputy chief financial officer David Hisey ($517,000), and executive vice presidents Thomas Lund ($470,000) and Kenneth Bacon ($470,000).
Each of these executives earned about $200,000 in retention payments last year and salaries ranging from $385,000 to $676,000.
Fannie Mae’s chief executive, Herbert M. Allison, did not receive any salary or retention payments. He received $60,000 in compensation related mostly to reimbursements.
Fannie Mae, which suffered $59 billion in losses last year, has requested $15 billion in taxpayer assistance, and has said it expects to need plenty more.
1/2 of $165,000,000 ain’t gonna cut it, Liddy.
‘Let’s go get AIG!’ Comedian demands mob attack bosses with pitchforks as Congress threatens to claw back $165m bonuses
By David Gardner and Mail Foreign Service
Last updated at 1:06 AM on 19th March 2009
A U.S. comedian has called for an angry mob armed with pitchforks to attack insurance giant American International Group as the fury surrounding $165million bonuses paid by the bailed-out company intensified.
‘Let’s go get AIG!’ cheered Stephen Colbert, host of Comedy Central’s ‘The Colbert Report’, a satirical news show similar to Jon Stewart’s ‘The Daily Show’, last night.
His audience nearly drowned him out with cheers as he waved a pitchfork at the cameras.
‘Colbert Report’ host Stephen Colbert waves his pitchfork as he called for a mob to attack AIG executives on his satirical Comedy Central show last night
Colbert’s call came as the U.S. Congress is threatened emergency legislation to claw back the $165million (£118m) of bonuses paid by the bailed-out company.
Furious Senate Democrats wrote to Edward Liddy, the man brought in to run AIG after the bail-out last September, saying it was ‘entirely indefensible’ for bonuses to be paid by ‘a company that would not exist any more but for a $170bn taxpayer funded rescue’.
Yesterday New York Attorney General Andrew Cuomo dumped more fuel on the fire when he revealed that AIG paid $1million or more in bonuses to 73 employees - 11 of whom no longer actually work for the company.
One employee got a $6.4 million (£4.5million) bonus and the top seven received more than $4million (£2.8 million) each.
‘These payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG,’ said Mr Cuomo.
‘Thus, last week, AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout. Something is deeply wrong with this outcome,’ he added.
The 370-person Financial Products unit he targeted is based primarily in Connecticut and London. It is not known how many employees in the London office were expecting bonuses.
The firestorm in the U.S. surrounding the insurance giant - which was considered too big to fail - sparked comments from a U.S. senator who suggested failed bosses at the company should kill themselves over its collapse.
In a radio interview, Republican Charles Grassley, a member of the Senate finance committee, said: ‘The thing that would make me feel better is if they’d follow the Japanese example and come before the American people and take that deep bow and say, “I’m sorry”, and then either do one of two things: Resign or go commit suicide.
‘And in the case of the Japanese, they usually commit suicide before they make any apology.’
Hair of the dog hangover cures often lapse into binging…
Wall Street Journal
* MARCH 19, 2009
Fed in Bond-Buying Binge to Spur Growth
Dramatic Plan to Purchase $300 Billion in Treasurys Causes Biggest Drop in Interest Rates Since ‘87; Perils of Printing Money
By JON HILSENRATH
WASHINGTON — The Federal Reserve ramped up its effort to revive the economy, declaring it would buy as much as $300 billion of long-term U.S. Treasury securities in the next few months and hundreds of billions of dollars more in mortgage-backed securities.
The Fed had already cut its benchmark interest-rate target to near zero. Unable to go lower, the central bank now is essentially printing money to raise the supply of credit and thus push down the longer-term rates paid by families and companies on mortgages and other key loans. The impact was immediately felt.
Ain’t it a bit late in the day to worry about a ballooning Fed balance sheet, given that it already ballooned sky high last fall?
Wall Street Journal
* HEARD ON THE STREET
* MARCH 19, 2009
Federal Reserve Slaps Paper Over the Cracks
By PETER EAVIS
The problem with desperate measures: They can end up stoking fear, not confidence.
That is the main risk with the Federal Reserve’s tactic of buying $300 billion in long-term Treasurys and up to $1.25 trillion of mortgage-backed securities issued by Fannie Mae and Freddie Mac.
The 10-year Treasury price jumped, causing the yield to fall almost half a percentage point to 2.533%. But two fear indicators flashed red after the announcement: Gold soared 6% and the dollar weakened.
It is unusual for a central bank to print money to buy large amounts of financial assets. Such unorthodoxy succeeds only if its purchases are temporary, and sufficient to kick-start credit markets and the economy.
Any sign their impact is fleeting would raise expectations of further buying. If the Fed responds and balloons its balance sheet, inflation fears intensify, hurting the dollar and pushing gold higher.
Dollar Rally Crumbles as Fed Ramps Up Printing Press (Update2)
By Oliver Biggadike and Ye Xie
March 19 (Bloomberg) — The rally that pushed the dollar to the highest levels since 2006 is in jeopardy of crumbling as the Federal Reserve starts buying Treasuries and ramps up its purchases of mortgage debt, adding to a flood of greenbacks.
“The implications of today’s Fed decision are unambiguous,” currency strategists at Citigroup Inc. wrote in a research report within a half hour of the Fed’s decision yesterday. The dollar “should weaken,” they said.