Bits Bucket For April 2, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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WSJ finally publishes what we have been saying for years.
http://finance.yahoo.com/real-estate/article/106848/Home-Prices-Low-But-Still-No-Bargain
You’d think someone from here wrote that article….hmmmmmm.
I liked the last sentence of that article:
Equally noteworthy is that when the last property bubble burst, it took about eight years before the market showed really strong signs of revival. This bubble was far, far bigger.
The last property bubble was in the early 90’s, and was “reinflated” by the next bubble of cheap credit from globalized swaps, tech stocks, and fancy mortgages.
We should move away from the armchair quarterbacking and look at what is a realistic recovery. In no way should that mean a return to the roaring 00’s, but a return of pricing to 1980’s levels (requiring deflation and a wealth “redistribution”) or inflate wages relative to prices (which will “preserve” the discrepant wealth of so many bubble zillionaires).
It’s clear which direction the PTB will try to take us, despite a rising Gini coefficient. I’m really interested if they can actually do it or if Keynesian economics can no longer apply on such a gigantic scale. I’ll let you know what I think in about 10-20 years.
‘The last property bubble was in the early 90’s, and was “reinflated” by the next bubble of cheap credit from globalized swaps, tech stocks, and fancy mortgages.’
Last time I checked, the Fed had lowered the FFR to 0 and was buying Treasurys to suppress yields. Wouldn’t these actions qualify as attempts to provide cheap credit?
There is one more stage of cheap credit, beyond 0% interest rates. Care to venture?
“Care to venture?”
Sure — lending standard debauchery. But now that the Fed is so much more vigilant than they used to be, that ain’t gonna happen.
Monetary inflation serves to make real interest negative. We learned that in the early eighties.
People have to play to make this game go.
Most folks I know are only prepared to play the How-do-I-pay-next-month’s-bills game though, and are filled with fear.
“Last time I checked, the Fed had lowered the FFR to 0 and was buying Treasurys to suppress yields. Wouldn’t these actions qualify as attempts to provide cheap credit?”
Yes, they are definitely trying to _provide_ cheap credit. But for the money to flow, that requires that someone else is willing to borrow it. In my mind, that means either businesses believe they can invest it profitably by expanding/improving production, or consumers believe they can expand consumption and afford the monthly payment.
Who wants to do either of those things in a de-leveraging environment, when the future your business or your job are in doubt?
Eventually my post will show up…
The Fed keeps trying to push money into the economy and it keeps flowing back into Treasuries. Risk taking is at a minimum, and it has nothing to do with the availability of credit. This is where Geithner and the Fed have completely misunderstood the nature of the problem. You could completely recapitalize all the banks, and lending would still be WAY down.
A comic showed Dr Bernanke’s banking experiment, where he is stuffing money into a piggy-banker’s mouth saying, “If we keep feeding them money, eventually something good will come out the other end.”
I like the quotes around the word “professional.” Little wonder that history is filled with revolutions where the men are lined up, and their upturned palms are inspected; the term brain drain becomes both figurative and literal.
I’m leaning more towards “endless, muddled attempts to reinflate the Bubble that result in overall economic chaos, oscillating asset prices and rising prices in needs, with a long-term increase in the Gini coefficient.” After all, the Gini coefficient only really matters to the peasants, not the rich - they’re proud of what they stole.
Wow, it’s been a long time since I heard casual discussion of the Gini coefficient. I love this blog. I miss it when I don’t have time to keep up.
I have thought up a Gini coefficient concept for housing affordability. I will let you know if I ever get around to publishing the idea.
Maybe the MSM “journalists” are finally wiseing up and visiting this blog for real news, real truth, and the insights they’re not going to get from their industry “sources.”
C’mon, did you guys really ghostwrite that piece?
c”mon!
I posted that article yesterday, too. I was wondering what was going wrong with the Fed’s effort to create a “buy now or get priced out forever” panic support for real estate demand, which seems designed to stop home prices from dropping like a rock? (At least their efforts to push mortgage rates to the floor suggest that is what they are trying to do.)
I, for one, don’t expect the housing market, and by extension, the economy, to recover until housing prices are once again affordable, and I don’t see how trying to artificially suppress mortgage interest rates serves to hasten the return to affordability. But at least the Case-Shiller graph shows that over the long run, home prices are returning to affordability.
At the very least this is a good science experiment for future generations. We will hand our kids trillions of debt, but also provide brilliant data and references on what did and did not work to pull the country from a bubble.
“I, for one, don’t expect the housing market, and by extension, the economy, to recover until housing prices are once again affordable, and I don’t see how trying to artificially suppress mortgage interest rates serves to hasten the return to affordability.”
I agree with you. If there’s one thing that a sustainable economy is dependent upon, it’s a financially healthy populace- something that isn’t possible with grotesquely overpriced shelter. The only thing accomplished by artificially propping up housing prices would be a prolonging of any sort of economic recovery. You can’t have your cake and eat it too.
Then… let them eat cake! (now where have we heard that before?)
Unless this observation is posted farther down:
What FBs and investors didn’t count on was the punishment rents would take at this stage of the vortex. My rent just dropped by exactly 1/3, compared to what it started at four years ago. The new place is same or better quality and bigger, but the perfect size for what we want.
If rents are declining, as they are here in central FL and I suspect many places, then the rent-to-price ration is playing “catch me if you can” with hapless sellers.
Down and down and down we go.
A rental house just two blocks from where we rent has recently come back on the market. Two years ago, it rented for $5,200. Last year, it went to $4,900 and rented for some time. Yesterday I called and it’s going for 4,750. This is prime Westside in LA. I know it’s still ridiculous, but that house would not sell, even today for less than 1M. Long way to go, but at least we are headed in the right direction, which is down.
Rents are not declining in the Texas metro areas. At least, not with any significance.
I went apt shopping today. Non ghetto apts. ares till out of whack in cost-to-avg-income. A quick glance at house rentals and talking to friends and acquaintances shows the same thing.
Remember, while avg. prices may look cheap to those of you from out of state, so are the avg. wages.
So, then, the market is manipulated. over 8000 settled in at 7900 and change.
Hmmmmm.
I, for one, don’t expect the housing market, and by extension, the economy, to recover until housing prices are once again affordable, and I don’t see how trying to artificially suppress mortgage interest rates serves to hasten the return to affordability.
The only way their plan works is if the money they are printing flows into the wallets of US workers. It may prop up stock prices but at this point there is no real path to increased wages other than massive government works programs. The G-20 unified vow that no country would drive down their currency makes the FEDS plan even more tenuous.
“(Incidentally: During the bubble, did a single broker ever complain to a media outlet that reporters were being “too optimistic” about house prices, or were “talking the market up” during a dangerous mania?)”
Exactly. You didn’t hear any brokers complaining about all the media cheerleading.
Yes, prices still have a ways to fall, IMO. In one waterfront condo complex near here, prices were up to $200,000 at the peak, although to be fair, maybe only a couple sold at that price. The bulk of peak sales was about $150,000. Then there were knife catchers that purchased at around $115,000 to $120,000. Recently, there were a couple of short sales in the high 80s. This is what’s leading people in the area to think the bottom has just about been reached. NO! Gonna go to $50,000, maybe $30,000, IMO. You’ll see giveaway pricing on condos, to compensate for the pumped up condo fees.
This is what’s leading people in the area to think the bottom has just about been reached. NO! Gonna go to $50,000, maybe $30,000, IMO. You’ll see giveaway pricing on condos, to compensate for the pumped up condo fees.
Even during the run up, buyers chronically ignored the costs of condo assessments and failed to plan for special assessments, hidden fees, power grabs, mismanagement, or other unforeseen scenarios. It happened in my old building just after I sold, when some of the plumbing went FUBAR. Whack! Special assessment of a couple thousand dollars per unit and a futile attempt to recoup money from the developer, who pointed to the city inspection certificates as an officially sanctioned okey-doke. (Far as I know, the owners never recouped anything from the developer.)
Now, with rampant foreclosures, unsold units, AWOL developers, and non-dues-paying “owners,” in addition to normal wear-and-tear, would-be buyers still aren’t pricing in the common costs associated with condo ownership. It’s an unsure proposition even during flush times; when the market implodes and the economy gets mushier than a fresh bowl of grits, failing to heed the downside risk of common liability is absurd. Yet so many erstwhile owners continue to act as if the cost of owning a condo is merely the price of the unit itself. Unbelievable.
So agree. Condo buildings older than 15 years are done for it.
Seven Lakes out here in the desert is older lg sq ftg condos on golf course, gated, lease land. Fab units but w/o insulation-original intent was seasonal. Well, they have a few that have lowered prices, around 130-200k but with lease/ HOA fees of over $1,000k per month, condo prices have to go much lower.
$1k is just HOA/Lease. Not other usual overhead.
If these condos didn’t have such huge HOA/lease, they would get around 500k more or less, depending on fmv.
Season is almost over.
Sounds like NYC in the 70s……
you could not give away an apartment because the maintenance was more than renting
“By this (admittedly very simple) measure, today’s home prices are actually more expensive, in relation to average earnings, than at the peak of the 1989 property bubble. Equally noteworthy is that when the last property bubble burst, it took about eight years before the market showed really strong signs of revival. This bubble was far, far bigger.”
Not to quibble, but that this bubble actually was is far BROADER. That is, it happened in more places.
I don’t think most of the center of the country had a price bubble in the late 1980s, just the coasts. And the overbuilding bubble of that era was more on the commercial side.
I believe the NY bubbles are comparable, and will result in a comparable decrease of 40% to 60% in real dollars. Of course, without the illusion of inflation, that would hurt more.
The midwest did indeed have a bubble in the 80s and suffered the same fate when the S&Ls collapsed. (…from fraud. Amazing isn’t it?)
This time it’s broader not because of geography, but because of toxic loans. Loans made to the bottom of the barrel incomes. Which is why recovery will be a long way off. Everyone is tapped out.
Everyone is tapped out and wages will never rise enough to deplete the surplus inventory… of everything.
Gotta compete in the global economy, ya know. Can’t have living wages now can we? Wall St., er, I mean, the global economy won’t like that.
It is not geographically broader than the S&L disaster. The Midwest was hit just as hard. Silverado ring a bell? (for bonus points, name the most famous player at Silverado?)
This current mess is broader only in the sense that it included the bottom of the barrel income this time. Which means the recovery is far, far away. Everyone is tapped out.
“Is there a bullish scenario for house prices? Sure. If all the government spending to turn around the economy reignites inflation in a year or two—as some predict—house prices could begin climbing again. But if the current price deflation continues, look for house prices to keep dropping.”
That is a bit simplistic. Wouldn’t one need to get wage inflation before home prices could start inflating again? Just inflating oil prices (which seems to be the effect of current IMF inflation saber rattling) could actually make home prices drop faster, as household budgets are squeezed by higher fuel prices leaving less left over to pay the mortgage.
Yes, it’s wage inflation that they need, not just inflation. That’ s something I always see people leaving out when they discuss this topic; inflation is BAD for home prices, it means that the purchasing power is being eroded, gas that used to cost 2 bucks now costs 5. Less left over for housing. And, at the same time, the materials to build the homes also cost more, leading to squeezed margins.
Now, wage inflation; that’s a different story. That leads to more purchasing power (in nominal dollars) which should, in theory, push up the price of hard assets. But the CPI number is pretty much useless for figuring this out; if CPI is running hot is means jack to home prices. It the median wage that’s the important number, and how quickly that wage is being pushed up by inflationary pressures.
I think the rank and file would almost universally love to see wage inflation. Even if wages inflate (and they won’t in an economy with high unemployment), so much of that money goes to debt service that it can’t support price rises.
In order for the gov’t to inflate their way out of debt, they have to counter this trend of rising unemployment and decreasing consumption. That’s going to be the thrust of our arguments at the G-20. I think the French, Germans and Chinese are wanting the opposite because they see inflation eroding the value of the Euro and the Yuan relative to the currencies of their debtors…which amounts to a giveaway to the poor.
All I wanna know is one thing: where’s the wage inflation gonna come from?
More importantly, what will reverse the decades old slide in real purchasing power when 400 people apply for a janitorial opening here and the BRIC nations are striving to build up their own domestic consumption?
The 1970’s wage inflation was stoked in large measure by union contracts that guaranteed cost of living increases. Prices went up, wages went up, causing prices to go up…nice positive feedback look.
Today? Employees have almost no bargaining power.
John - FDR figured that one out. It sucked, it was scary and it cost a horrific number of lives. If necessary, politicians will have their mothers waterboarded in order to get reelected. I think we face no less than that.
Re-elect no one. Ever.
I have to agree there will be no wage inflation.
Rather I forsee a rapid escalation of the rate of unemployment and a cycle of wage declines, pushing the credit markets ever closer to collapse, for which there is no amount of money in the universe the fed can inject.
At this point we are in financial check-mate - welcome Amero …
Consider this…
Had each mortgage payment and unpaid CC etc been covered by the govt early on when the economy started to tank, the amount of bailout would be in the low billions rather than the 10 Trillion range and growing. (Yeah I know - anger and indignation here).
An example of this would be the difference between allowing an oil tanker to go aground and leak all of it’s oil before intervening or throwing a line before it went aground. Our govt’s solution is to spend time cleaning up the oil rather than preventing the catastrophy to begin with.
We needed to control the situation rather than allow the existing system to collapse. Once the damage is contained then we can start solving the problem.
Words like off-shoring, easy credit and job loss need to go away or we are all doomed. Consider how many large corporations which first saved money off-shoring our jobs are now bankrupt because their customers cannot buy their products.
“……we are all doomed.”
Depends on what your definition of “doom” is.
-The current setup works for a lot of businesses, and don’t think any of this will affect them…….so they are lobbying the Republicans to stop spending any money on anything, other than bailing out the banks, and cutting taxes.
-The Democrats figure that every “ward of the state/poor person ” is a vote for the Democrats, so the sooner all the J6Ps end up in the poorhouse, the sooner they will be able to solidify their position as the majority party.
We’re going to be Mexico/Brazil before it is all over with.
The thing that bugs me, is that all the tools that are being used to export jobs and technical know-how were developed and paid for by the US taxpayer, for the most part.
Our Gini coefficient is the 3rd highest in the world.
We are already there with Mexico and Brazil.
Ok since I am posting from Japan I should be first… no?
Japan’s Homeless vs. US Homeless
Even the Japanese homeless has more money than the US homeless, judging from the story I heard about this guy who is sleeping in the park in central Tokyo because he lost his Toyota provided housing after the automaker laid him off. Due to the high prices of Tokyo housing (even after 20 years of falling prices) he couldn’t afford anything and now lives in a park. Nevertheless, he has several million yens in the bank account (that’s tens of thousands in USD) but despite that he chose to live in the park because if he didn’t that money was going to run out in a year or two and he is not sure if he will be able to find another job within that time.
So even the Japanese homeless has more savings than the average non-homeless US household. Sad but true.
“So even the Japanese homeless has more savings than the average non-homeless US household”. Sad but true.
Completely different mind set when it comes to saving for a rainy day. I’m sure we have far more people living pay check to pay check.
Too late, lazy bones
Does Japan have a Social Security program? My grandfather, who bought stocks during the 1930s when most folks were fleeing the stock market, saw the new OASDI program that was enacted in 1935 as a long-term program to destroy the virtue of thrift. Of course, relieving Americans of the need to provide themselves with rainy day savings would have provided the depressed economy of the mid-1930s with short-term stimulus, as monies that would otherwise have been allocated to personal savings could be plowed back into the economy.
By the year of 1999, not only did most working Americans have social security and some kind of private pension to fall back on, but they also had seen huge gains in the values of their stock holdings and their homes. Why save when Mr Market is so richly rewarding you?
Mr Market is a very temperate person these days.
I seem to recall MacArthur setting up something similar to Social Security when he ran Japan.
I read today that the SS cost of living increase is projected to be *zero* for the next three years. Talk about the estoque. Bring out the next bull.
For many years I figured that because of their numbers there was no way boomers would get what they thought was coming from the Treasury, especially after Congress violated the trust fund and wrote IOUs for the money. So now their stocks are eviscerated, their bonds are shaky, their CDs earn pennies, their pensions are rumbling and their houses are worth more than they will be tomorrow but way less than they counted on.
FEMA might have found a use for all those fomaldehyde-filled trailers they couldn’t figure out how to distribute.
TxChick isn’t here, but isn’t it time to go long ankle-length dresses?
Demming was the management guru that the modern Japanese corporation credit for developing the “Just in Time Manufacturing” efficiency process.
Greenspan, Paulson, Geithner combined their brilliant brain power to give us “Just in Time Bankruptcy” efficiency process, and, with this single stoke;all Americans will be “productive” until their deathbed.
Bye-Bye retirement. Baby Boomers will be selling every piece of real estate they own..
Pension insurer shifted to stocks
Concern increases as losses mount; Failing plans could overwhelm agency
By Michael Kranish
Globe Staff / March 30, 2009
WASHINGTON - Just months before the start of last year’s stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.
The agency refused to say how much of the new investment strategy has been implemented or how the fund has fared during the downturn. The agency would only say that its fund was down 6.5 percent - and all of its stock-related investments were down 23 percent - as of last Sept. 30, the end of its fiscal year. But that was before most of the recent stock market decline and just before the investment switch was scheduled to begin in earnest.
No statistics on the fund’s subsequent performance were release
This is incorrect. BY 1999 most Americans did NOT have a pension nor substantial investments.
As current events have shown, companies can AND WILL stop their pensions. Can AND WILL not offer pensions to new hires. Can AND WILL cut wages.
That’s why Social Security was created.
‘As current events have shown, companies can AND WILL stop their pensions. Can AND WILL not offer pensions to new hires. Can AND WILL cut wages.’
Ah, yes. And which rate of deflation will be the greater, cost of housing and other necessities or wage and bennies? I am thinking the latter, simply because we live in a thermodynamically entropic universe.
No.
my county found 2 homeless” in 1978
now 3000
it’s an industry that helps gov workers grow their power and paychecks
Providing social services is a huge industry. I could introduce you to more than a few folks who see no problem on building an entire economy on that.
If they succeed, then where does all our “stuff” come from? You know, the little things in life, like power generation, foodstuffs, clean water, heating, etc.
Exactly. That’s the industry that nurtured O’Bama. And when you’ve got a hammer, everything looks like a nail.
Indeed, the social services industry is huge. For it to thrive, there must be “victims” and lots of them. It has been interesting to watch some of the recent PBS specials on victim services. You have these guys and gals all fresh-faced and enthusiastic going into these neighborhoods and going to community meetings, etc., preaching to the victims. Now, they’re obviously not making millions and I get that. But they have “jobs” and serviceable cars and health care and a decent place to go home to, etc. So there’s this whole rung of “middle class” folks that make their coffee and cakes off servicing or seeming to service the victims.
Indeed, the urban hipsters love their non-profit jobs. It allows them to be consumers and not be “sell outs”…all at the same time…at least in their own minds.
And if they’re govt workers they can retire pretty young and maybe wrangle a cushy job with a nonprofit or in the private sector and double dip.
Don’t kid yourselves, these guys are smug about it.
In Montana,
And - that- is - not - lost - on - me.
( They have ‘em up ‘there’ too? ) Wow.
that’s all we have since the timber industry went TU.
I’m jealous. I shoulda kept that Post Office job!
To be fair you don’t really need to employ too many people to provide power generation, foodstuffs, clean water, heating, etc.
In an ultimate extension of logic if we had machines that did all the grunt work then we would allow all of humanity to live a life without having to work.
Or we could follow the French model - 30 hour work weeks, long vacations, high unemployment, but still produce stuff that the rest of the world is willing to pay a premium to buy.
While I personally would like to see 100% employment and nobody having to depend on SS, I don’t see a contradiction in a highly welfare oriented state with a high standard of living.
That’s the European model, and yes, many think it can work here.
The thing is, who is further up the creek right now…us or Europe?
That is also the Zimbabwe model. I hear that they are all billionaires over there…
The problem with starving people in the world today is not a lack of food, it is a lack of “claim on food”.
To get a claim on food, you must exchange something of yours for food. Ultimately, if you just take food from the farmers and distribute it to everyone, the farmers will stop growing more food than they need for their family.
Adding other industries and activities in the mix only masks the fact that an increase in “welfare” by government violence against producers leads to a net decrease in goods (food) production.
If you don’t work, then you don’t eat unless someone voluntarily feeds you. No one has the “right to food” without working. Nor do they have the “right to a job working for someone else”.
People in 3rd world countries that are starving in what use to be self-sufficient populations is the result of the world bank making loans (from thin air) and buying goods that they “have not worked for”. Now these countries are forced to grow cash crops to pay off their debt on fiat money instead of growing the food they need.
Welfare always costs society far more if you consider it requires $0.50 to raise $1 in taxes leaving $0.50 for welfare…
People in 3rd world countries that are starving in what use to be self-sufficient populations is the result of the world bank making loans (from thin air) and buying goods that they “have not worked for”. Now these countries are forced to grow cash crops to pay off their debt on fiat money instead of growing the food they need.
And govs and weapons salesmen, oil, mineral Corps that raped and pillage the land and the peoples of those lands, villages burned, aids rampant due to men going off to find work, bringing home the disease, soldiers from all sorts of other countries murdering ..well what I am trying to say is that unless and until they or “we” get those dictators under control…but I guess not. Must be alot of money in that there raping/pillaging the people and land for selfish purposes.
Defaults Rise as Worst Is Yet to Come for Commercial Property
By David M. Levitt
April 2 (Bloomberg) — Commercial property loans in default or foreclosure grew in the first quarter as the U.S. recession cut occupancies and the credit crisis stymied refinancing.
Delinquent loans increased by 43 percent in the first three month of this year to $65.9 billion, according to data from New York-based research firm Real Capital Analytics Inc. That’s up from $46 billion at the end of 2008.
A total of 3,678 U.S. properties are now listed as in distress by Real Capital. Commercial real estate values have fallen at least 30 percent since their 2007 peak and may decline another 11 percent this year, increasing the number of properties that may be repossessed by banks, Deutsche Bank AG’s real estate unit said in a March 25 report.
“We haven’t yet seen the worst of the effects of the recession on the commercial markets,” said Stuart Saft, a partner at the law firm of Dewey & Leboeuf LLP in New York, who specializes in real estate. “That’s still to come.”
Boston’s John Hancock Tower, New England’s tallest skyscraper, was sold at auction March 31 to Normandy Real Estate Partners and Five Mile Capital Partners LLC for $661 million, about half of the purchase price of just three years ago.
Broadway Partners, founded by Scott Lawlor, paid $1.3 billion for the property in 2006 and defaulted on its loan. The building was part of Broadway’s $3.3 billion purchase of 10 buildings from Boston-based Beacon Capital Partners LLC in December 2006.
Distress Rises
The Los Angeles metropolitan area has about $7.5 billion distressed properties, a 168 percent jump from December. Las Vegas had a 54 percent increase, to $6.1 billion, Real Capital said.
Metropolitan areas with more than $1 billion of commercial properties in distress more than doubled to 11 from five. Philadelphia, Chicago, San Francisco, Austin and Houston, Texas, and Detroit joined New York, Las Vegas, Miami, Phoenix and Los Angeles.
Manhattan distressed commercial real estate has risen by 36 percent this year to $4.2 billion, according to Real Capital.
The Nobu Hotel & Residences in lower Manhattan is among properties on Real Capital’s troubled asset list. Real Capital called it a “challenged development” because Nobu has lost some construction funding. The planned 62-story tower, the Nobu sushi restaurant chain’s first U.S. hotel, was being built by investor Kent Swig and is near the New York Stock Exchange.
Wanted to stay out of SRS until the M2M decision. However, I’m an addict and couldn’t stay away. Groped SRS in premarket this morning for a small profit.
“However, I’m an addict and I couldn’t stay away.”
You are doomed.
This whole situation is kind of sad. Unlike homes ( that just sort of sit there? ) CRE actually has a purpose. Namely generating positive cash flow.
No arguing that CRE got every bit as ridiculously priced as SFH’s but there’s a lot of good mgmt. companies out there that can’t get a LOC or re-fi to save their soul. As such, the announcements of suspended ( or altered ) dividend payments is becoming a daily occurence. Further pressuring their stock price.
Me too. Doomed. I bought some FAZ today hoping the French would huff and puff and exit the G20 meeting showing their constituients they still have a set of danglers.
“Rip your face off” ETF! Thanks for the tip!
Right with you - my buy FAZ finger has been poised over the trigger all day. Friday and Monday was a great in and out day - maybe pushing my luck. Not sure how the G20 baseless lift combined with the MTM decision will play out. I’ll watch how tomorrow plays out - hopefully up on absurd news, let the weekend shine the light on reality and hit the trigger Monday AM.
I might just add a little to my position, too. Took a little advice from the (no so much anymore) man WB, buy when no one else has the guts to. Thanks for the timing tips…
My feeling on FAZ is that it is a hedge against ALL banks. So manipulations of a single bank stock don’t end up killing my bottom line. I was looking at an call option but that spooked me a bit. Got to love the volatility!
I dawdled and missed out on a quickie trade.
I’ve been trying to get a handle on the commercial real estate market in LA for some time. Is there something like the Case-Shiller index for commercial real estate?
Is there a breakout of “commercial” real estate into residential rentals vs. retail stores vs. factories?
Generally speaking, one of the better sources of information on commercial real estate would be the Urban Land Institute…
Dennis - I know zero about this stuff, but SCDave has been around here since Moses.
As far as I know, one death so far as of yesterday…
The bankers’ view of G20: an arresting bet for traders
David Teather and Julia Finch
The Guardian, Thursday 2 April 2009
At Coq D’Argent, the restaurant atop the distinctive salmon coloured building at Number One Poultry, adjacent to Bank underground station, the bankers appeared slightly drunk on the excitement of the protests down below; basking in the sunshine, ordering wine and necking oysters.
Two traders based in an office opposite RBS on Bishopsgate said they had walked across the City “to have a nice lunch and chill out”. Sipping coffee after three courses and a few Marlboro Lights, they were angry that the police didn’t seem to be making any arrests: “Its kicking off over in Bishopsgate”, they said. “The demonstrators are goading the police and hitting them with sticks, but they are just letting them. They aren’t arresting anyone.”
And these two wanted to see the long arm of the law carting a few protesters away – because they had a financial interest in arrests. “I’ll make money if they arrest more than 140″, he said. Traders, he explained were putting spread bets on the number of arrests – with the quoted spread on Bloomberg at 130-140. They were also paying out on deaths and if more than 20 demonstrators are injured by horse charges.
The riots, they said, were only a minor inconvenience: “We’ve been in this morning, made a lot of money and now are chilling out”.
Good. The banksters are over-confident.
Its like I have said before, it won’t be until they are facing a firing squad when it will dawn on them that perhaps they went too far in their quest to win all the marbles.
Don’t assume it will be “they” facing the firing squad.
It could be you.
Care to elaborate?
No, not really.
“I can hire one half of the working class to kill the other half.”
-Jay Gould
Sounds like something Charles I would have said right before he was beheaded.
Real estate lawyer weeps after jury convicts her of 18charges of conspiracy, fraud, money laundering.
By Gary L. Wright
gwright@charlotteobserver.com
Posted: Thursday, Apr. 02, 2009
Charlotte real estate lawyer Victoria Sprouse stood weeping, her body shaking, late Wednesday as she heard the jury’s verdict: Guilty on 18 of 19 charges.
Her friends gasped. Her three sisters sobbed.
Sprouse, 38, was convicted in one of the largest mortgage fraud cases in Mecklenburg’s history. She and several co-conspirators were accused of reaping millions from schemes involving more than 200 properties and $15 million in fraudulent loans.
“All I can say is I’m disappointed,” Sprouse told the Observer, still professing innocence after the jury had filed out of Charlotte’s federal courthouse.
“I’m disappointed the jury could think that mistakes, errors and sloppiness in a busy law firm equates to fraud. … I have so many supporters. I’m sorry they were let down as well.”
http://www.charlotteobserver.com/597/story/637803.html
The judge should give her an Academy Award and 25-to-life…
OK since you brought up the movies…
My response to her would echo Stanley Kowalski’s (aka Brando)
mockery of Blanche in Streetcar Named Desire:
Take a look at yourself here in a worn-out Mardi Gras outfit, rented for 50 cents from some rag-picker. And with a crazy crown on. Now what kind of a queen do you think you are? Do you know that I’ve been on to you from the start, and not once did you pull the wool over this boy’s eyes? You come in here and you sprinkle the place with powder and you spray perfume and you stick a paper lantern over the light bulb - and, lo and behold, the place has turned to Egypt and you are the Queen of the Nile, sitting on your throne, swilling down my liquor.
And do you know what I say? Ha ha! Do you hear me? HA HA HA!
Let the show trials begin! The description of her “shaking and crying” sounds like the accounts of Madame du Barry as she was dragged off to the guillotine (I have developed a morbid fascination with the French Revolution lately).
Related read; “A Life in Wax” by Kate Berridge.
The life and times of Mme. Tussaud, the P.T. Barnum of the French Revolution.
This lady stole millions from banks, and also destroyed dozens/hundreds of people’s financial futures. She deserves to go to jail, and to go there for a long time.
“Her co-conspirators included a mortgage broker, two real estate agents and an appraiser.”
Clearly she intended to do what she did and do it on a big scale. She should be put away for a long time.
I want to see a lot more similar prosecutions. Such fraud was rampant. The number of prosecutions is still well short of being proportional to the amount of fraud.
Right, and as I’ve said before, 80% of this can and should be prosecuted quite easily. Simply have all REIC members list all the properties to which they have an interest and you’ll find that most of them were interconnected.
No one else seems to be buying into it but more and more I feel there’s credibility to my Two Simulatenous Bubbles running parallel to one another? If dude jacks up his appraisal and borrows against his home ( which he has remained in! ) then that’s between he and his lender. I have no issue w/ this brand of self exploitaion.
In REIC-transcations ( nearly ALL of it ) they took turns exploiting the lender by flipping the properties back and forth to each other. Aside from a few isolated cases in FL, “I” believe this accounts for the brunt of the fraud.
I’m still of the opinion that we need to find the crappiest, mold infested, remote, run-down development in the middle of the California/Arizona/Nevada desert, surround it with chain-link, razor wire and guard towers and make it a minimum security prison for these people.
Better yet, do several of them, scattered across the country. Contract out security out to the Germans, Russians, and Chinese……they know how to run concentration camps. All Guantanamo Bay proves is that we are amateurs in the business.
I suggest Olygal be hired as Commandant of the camp in Oregon.
Rumour has it, that she already owns the appropriate uniform
I suggest Olygal be hired as Commandant of the camp in Oregon.
Yar!
Rumour has it, that she already owns the appropriate uniform.
Yar!
Oh, wait—except I have no eyepatch.
But I’ll probably poke out an eyeball running around in the forest one of these days and then I shall have everything required.
$15 million worth of “mistakes, errors and sloppiness”????
What’s a few extra zeroes, right?
I’m sure the “mistakes” were mostly in her favor, and mostly on things the client wasn’t going to notice or be aware of.
“$15 million worth of “mistakes, errors and sloppiness”????”
Maybe they’ll be “sloppy” with the sentencing and she’ll get 200 years instead of 20. She must’ve used an extra digit or three here or there so she must know how that kind of thing could just happen.
she was really busy. who could possibly keep track of all those numbers and documents? there were DEALS to close. Do you think Trump keeps track of mundane things like numbers???
I’ve got an ethics issue to bring up, so it might as well go here as anywhere.
I checked my bank account at USAA on line the other day. Saw a strange deposit. I was expecting something from my flex spending account, but this said it was a check by mail. So I looked at the image of the check. Oops. Obvious transfer from a couple’s account at a different bank to their USAA account that got put in my account. My hand was on the phone to call and straighten things out almost before I finished realizing what happened. That is what you do, right? The people at USAA took care of it while I stayed on the phone - evidently they aren’t allowed to fiddle with your account when you end the call. Reverse transaction was posted by the next day.
Here’s the problem. The USAA people were so grateful for my call. They thanked me over and over. It felt ridiculous. Why were they thanking me so much for not stealing someone else’s money? It wasn’t mine. It was “Mr. Smith”’s money. Dealing with it on the phone took less time than turning in a lost wallet to the police would have - probably a lot less.
I’m inclined to be disturbed about this. I hope they were just being southern and polite and this sort of basic honesty isn’t all that unusual, but I almost got the idea that they have problems when they track down mistakes like this on their own and have to contact account holders to tell them that they are going to take back money that was deposited in error. Any ideas?
It wasn’t just your honesty. Typical of people who post here, I’m sure that you actually know everything that should be coming in and going out of your account. On the other hand, given the way most people spend these days, and otherwise manage their finances, there must be millions of basically “honest” people in the country that would never even know that an error like this happened in their account.
They created the problem and so it was theirs to fix.
It sounds like they are grateful that you tipped them off, thereby allowing them to start solving the problem sooner rather than later.
I am always grateful when someone points out that I’ve messed up. Doing so allows me to resolve the problem so that it doesn’t get worse.
Maybe it’s because someone might have been fired if the mistake was picked up by somebody else.
I know I’ve read cases where people have been convicted of theft by withdrawing someone’s mistake, so you had no choice.
Except the guy put my account number on the back of the check (or so the USAA person said). Now admittedly, the name on my account didn’t match the name on the front of the check, but I don’t really expect them to cross check that when a valid account number appears on the back. His USAA memeber number (which he wrote down instead of his account number) was the same as my account number.
The more I think about it, the happier I am that I caught it quickly. The check was for a very specific amount. He might have moved the money to cover another payment. If they hadn’t fixed it quickly he might have fallen into overdrawn/refused check purgatory.
For some strange reason, none of the banks I use will send me an email notifying me of every transaction, in or out, to my accounts. I have to log in to each account to check on activity. I think it might be in their interest to offer that notification as an option.
ING Direct will do this for you.
I bank with USAA as well.
I wouldn’t trust most banks to do the right thing with armed guards standing over them, but in my mind USAA is a big exception.
My experience has always been that they are extremely friendly, customer service oriented, and honest. So my bet is this is just par for the course, no reason to get jumpy.
“Member owned” is a big incentive to be customer oriented, for sure.
Polly,
We call them regularly to make adjustments in several accounts we have with them.
They are ALWAYS so nice!
I can’t rave enough about USAA.
Twenty some years and only one error - fraud (not their fault) on credit card. Fixed immediately.
I can only guess that they have so few errors, and felt embarrassed.
You are a bright light in our often dimly lit society.
Leigh
OK. That finally makes me feel better. Just normal operating procedure for them. I’m sure I used to call them more, but their computerized systems are so good, I rarely find a reason to these days.
I’ve heard very good things about USAA, it does not surprise me at all. Most people at the operating level are good people… the scoundrels, in my experience, are higher up.
In the B movies the fraudster, after several wanton dalliances, is usually smart enough to skip out of the country with the money. Don’t lawyers rent VHS tapes?
RE: still professing innocence after the jury had filed out of Charlotte’s federal courthouse.
“Boo-hoo, my worthless staff did it…”
Not one of these POS mortgage and banking fraudster’s; from the high and mighty, to the low in the gutter; have stepped forward to acknowledge their guilt and complicity relative to their criminal actions.
So much for honor and falling on your sword.
All liars and manipulators right to the end.
hd74man,
Right, after our local bank went belly-up I spoke to my neighbor who’s good friends w/ one of the principals and it was obvious he was feeding her his denial:
“Jim said it was the FDIC that really “screwed them up!”
NO! The FDIC is not some bored bunch of teens inventing excuses to pick on someone that’s not in their little click.
“They were doing just fine until the downturn in the economy!”
Oh… you mean the one THEY created?
These guys are really something aren’t they?
RE: These guys are really something aren’t they?
Din/Or~
The Madoff crowd deserve special recognition especially all the “feeders”, from all over the world, who every day categorically deny any KNOWLEDGE whatsoever as to what was going at the top.
It’s exactly like the German civilian’s who would watch the legions loaded into cattle cars; then later see the smoke, and smell the stench from the crematoriums, but proclaim to the liberating GI’s, WE KNEW NOTHING.
For those who want to see more current fraud convictions, use Google news and do a search.
This country’s biggest, by far and without peer and nothing even a close second, industry for decades has been… fraud.
Back to nature, Detroit style:
http://www.detnews.com/article/20090402/METRO08/904020395/To+urban+hunter++next+meal+is+scampering+by
I read that earlier today and what he is doing is great, at the same time it is a very sad commentary about Detriot.
At least he won’t die of hunger for sure.
Reminds me of that Roger & Me scene where a rabbit breeder, also from Michigan, had a sign out front that said “Rabbits - Pets or Meat.” One of the most memorable movie scenes of all time.
The upscaled version of that will be a sushi bar at one end & a cut bait shop at the other end of the same building.
“today’s bait is on tomorrow’s plate.”
There was some great scenes in that movie Tim.
The bunnies devouring my garden begin to look mighty tempting for a pot of rabbit stew around mid-summer every year.
A little bit of heresy from me.
I’m still as bearish as ever on house prices, that’s not changed.
However, it seems to me that a lot of inflation is being factored into the equities prices.
Bear market rally?
No.
It’s the same question that I overheard at the Coral Gables farm market on Saturday: “Where do we put our money now?”
Seems to me, a lot of people are answering that question with “wherever, but not in cash.”
Which seems logical as you watch the FED chairman in 60 minutes with printing presses in the background going full blast.
He put a lot of chips on the table with QE, it’s hard to call that bet.
I myself may fold my cash hand.
Paging Combo, paging Combo
+1
Gotta love those investment tips from the Farm Market.
The patrons of the Coral Gables farm market are doing about +95% better than the rest of the US.
What does that mean; “doing better”?
+95% better as in higher net worth, cash reserves, family income, single income than others in the U.S.
I should have made it clearer: this is still a sham economy, and by not allowing the economy to heal itself and rid itself of wasteful habits, we’ve assured ourselves of a much bigger future calamity.
Absolutely. Despite all of the promises to “rebuild the economy on solid foundations”, what’s happening is anything but that. And I don’t think the ultimate calamity is all that far off in the future here; give it a couple months as jobless claims continue to increase, GM and/or Chrysler get forced into Chapter 11, and the unemployed start getting much more ornery and desperate. Then, of course, Wall Street will be again “shocked” at how bad things have gotten.
Yeah, Madoff’s clients were 95% better off than the rest of us.
Oops.
As for where to put there money? Give the maid and the gardener and the nanny and the personal secretary a raise. Put the rest back in a conservative portfolio. And put solar and wind on the manse.
“Yeah, Madoff’s clients were 95% better off than the rest of us.”
Nope, Madoff’s clients were in the upper 1%
I’ve heard a lot of noise about “all the money that is sitting on the sidelines.” I don’t buy it, not yet anyway. There is so much more pain coming - Alt-A and prime ARMs, commercial, general commerce. Not that this rally doesn’t have legs - it already does, but that doesn’t mean it will still be going two months from now.
FPSS was warning people this rally had legs.
Yeah, and all those burned hands are in no hurry to reach back into the flames.
Seems AIG thinks the bottom is over and it is HIGH Cotton from now on.
I think its a valid point. At some point, the tables turn, and many of us will want to act with some measure of urgency. Not because “real estate is going to take off”, but because the dollar maybe is going to tank and we want to be in possession of the land and house on which we live and produce.
This assumes that they artificially hold interest rates low for an indefinite period of time. If rates head back up, things could turn out much different, I would think. In any event, timing is everything.
IMHO, housing will STILL be unaffordable when the dollar hits the skids and starts to crash. I have more faith in government stupidity to destroy the dollar than I have in people waking up and no longer shelling out 5x their incomes for falling apart crudshacks, at least here in Maryland and other Alt-A / Option-ARM realms.
FASB poised to give firms leeway in valuing assets
Accounting board poised to give companies more leeway in asset values; could undercut bailout
Marcy Gordon, AP Business Writer
Thursday April 2, 2009, 1:37 am EDT
WASHINGTON (AP) — The board that sets U.S. accounting standards is expected to ease rules that force banks to value assets at current prices, allowing them to reduce their losses on paper.
In a twist, though, the expanded leeway for financial institutions could undercut the government’s new financial rescue program in which it is joining with private investors to buy up about $500 billion in toxic assets from banks, some experts say.
The independent Financial Accounting Standards Board, under pressure from Congress, last month proposed the relaxed version of the so-called mark-to-market rule. That’s a requirement that companies value assets at prices reflecting current market conditions.
The five-member board, at a public meeting Thursday at its headquarters in Norwalk, Conn., was voting on final adoption of the changes. They would allow the assets to be valued at what the banks project they might sell for in the future, rather than in the current, distressed environment.
The mark-to-market rule, also known as fair value accounting, has forced banks to take steep write-downs on some financial assets — especially securities linked to high-risk subprime mortgages — as the industry has reeled from the housing market slump.
An estimated $2 trillion in soured assets is gumming up banks’ books. As the financial crisis has ground on, more banks have foundered and failed. That’s prompted the industry and lawmakers of both parties to push for the accounting relief and flexibility.
But some fear that companies will use the leeway to boost the value of the assets on their books to “unrealistic levels,” Robert Willens, an expert on tax and accounting issues for Wall Street clients, told The Associated Press last week.
“The FASB’s relaxation of these rules might come at the most inopportune time,” he said.
This could turn every delinquent mortgage into an option-ARM. Just add on the money wasn’t paid to the principle, assume the house value will go up enough to foreclose and get it back someday, book a profit, and pay some bonuses.
According to the forecasts, option-ARM resets should beginning to go full force starting this month.
http://finance.yahoo.com/real-estate/article/105215/The-Next-Real-Estate-Crisis
“According to Credit Suisse, monthly option recasts are expected to accelerate starting in April, 2009, from $5 billion to a peak of about $10 billion in January, 2010. ”
At this time, the S&P 500 is up 23% from its 2009 low. Already pundits are calling the bottom of the bear market in stocks!
Buckle your seat belts. The sheer volume of unrefinancable Alt-As out there is likely to make the earlier “tidal wave” of foreclosures merely look like high tide in the afternoon.
There’s nothing like giving the banks leeway to legally cook their books to add illumination to the situation! The increased transparency will surely help!
That is another thing. Banks were given money to bailout, now they want to give it back.
Two things.
1- they don’t have a lock on where the money went..
wtf, it is a bank, isn’t that what banks do, count when and where money goes? WTFork.
2- They want to give the money back. With interest of course?
IF they want to give their money back, it gets attached WITH interest, cause it sure would cost us, you and me interest.
No getting around that for sure. They better not get away with No Interest returns.
I say, let Me hold the money for awhile. 6 months later.. here ya go. Thanks.
NO WAY.
“An estimated $2 trillion in soured assets is gumming up banks’ books.”
What a nice way of saying “…nuked the banks into the stone age, leaving only an afterimage of solevency.”
Eight year population exodus. Over 100,000 just in the last year.
http://www.detnews.com/article/20090402/METRO/904020403/Leaving+Michigan+Behind++Eight-year+population+exodus+staggers+state
Has anyone else seen the new TV ads for the state of Michigan? I’ve seen two in the last several days on Fox News, one touting all their great golf courses and another celebrating all their great water (lakes, streams & rivers). Wonder if it’ll help…
Some ads talk about how “unique” the lifestyle is here….all the lakes, golf, forests, etc. As opposed to what….Wisconsin, Minnesota?? None of that stuff in other states, right??
We’re in contract to buy a house for a down-and-out relative in Michigan. She has been on-and-off homeless for several years. The price is very cheap compared to rent. I hope that she can live out her remaining years there in peace and quiet.
You have a good soul, REhobbyist. Your relative is very lucky.
Say, would you be looking to adopt more relatives, by any chance? My sister and BIL could use an extra helping hand. That is, in addition to the 4 that my dad and I have extended.
Where at, if you don’t mind me asking??
You are a kind and generous person REhobbyist.
What the world needs is more people of your caliber, REhobbyist. You have exemplary good character.
Hey, way to go REhobbyist…I wish there was a device whereby I give my 55 year old sister an access card like they use in Vegas…she has to deposit $5.00 once a day to get into her sleeping quarters …then, as she as seems to always be 1-2 weeks behind in her “income”… when the inevitable plead/request comes for the $75.00-100.00 bridge loan needed that month comes to me, I can just recycle back her accumulated daily deposits.
She always seems to be able to come up with $10.00 at the drop of a hat, but $48.76 for the electric bill due on the 25th just seems always to be a hurdle she is hitting every other month or so, then comes the cascade…the $20.00 NSF hit due to a -$1.20 on the check issued to avoid the shut-off date…and then,… and then,…so it goes…
It’s tough. I’ve been there. Once you get caught in that spiral, without a good or at least decent job, you aren’t getting out.
Like the old saying: It’s good to budget money, but you gotta have some to start with.
Saving pennies in this day and age is a worthless exercise when you need to save Benjamins.
Wow, you guys are so nice. Mental illness and homelessness go hand in hand. It’s a vicious cycle. She can’t hold a job because she’s difficult to be around and she can’t get along with landlords. And her paranoia prevents her from getting any help from the government. It has caused her children so much pain. That’s the blessing of the bursting of the bubble. Previously we could not have afforded a house. It’s in very good shape and only $35,000. In Grand Rapids, Blano. I’ll fly there at the end of the month and tell you how it goes.
Blano,
IIRC MI is more “retiree friendly” than it’s neighboring states. I love Holland and the MI State Dunes.
“As opposed to what….Wisconsin, Minnesota?? None of that stuff in other states, right??”
You’re singing to the choir with that one. With the way natives talk where I’m from, you’d think our area is the only place on the planet where trees and water exist. The level of stupidity and cluelessness is mind numbing.
Those ads have been around here in Illinois for a while. Maybe they’re just expanding into new markets?
Having grown up in western Michigan, I still find that its natural beauty is in my blood. Michigan has an endless shoreline of sugar-sand beaches, hundreds of inland lakes, rivers and forests. It truly is a summer paradise, and for those who like winter sports there is good skiing (for the Midwest) and snowmobiling. What a shame that all its natural wonders, fertile farmland and fresh water have not saved the state from financial ruin.
But good topsoil, water and some natural beauty could be something on which to build Michigan 2.0 (or whichever version you are on now). Good chance to get out from under the thumb of a single powerful industry. Specialization is just lack of diversification by another name.
Everybody I know that has been to W. Michigan/Grand Rapids loves the place (including me). Summer ther is awesome. Didn’t know Michigan had beaches until I visited in 2003. (Lake Michigan is too cold, though)
I’d relocate there in a nano-second, but GR has the same problems with disappearing jobs as Detroit/Flint/etc.
There isn’t a place in the world I’d rather be in the summer than west Michigan. Most of my family is still on/around the farm there.
Where’d you grow up, if you don’t mind me asking??
Grand Rapids (aka “Bland Rapids” among my childhood friends). How about you?
North of GR……up by Fremont. Holton.
I think so. Michigan is becoming cheaper and might become a desirable location.
Plenty of water resources. Plenty of cheap, cheap housing.
If the unions die and labor laws are loosened in the next few years it will be a good place to start manufacturing again.
Lots of inexpensive golf courses all over the place. Lots of wide open space. Good hunting. Great lakes are nice. Still this is true all over the midwest.
Heck, maybe it goes back to more agriculture. I could see UofM getting to be a very inexpensive place to go to school.
All this will probably take a decade or so.
“If the unions die and labor laws are loosened in the next few years it will be a good place to start manufacturing again.”
I agree. I’ve mentioned this to several people who point to solar mfg as Oregon’s savior industry. My comment is why, with a hungry, willing-to-work-for-less workforce (due to the auto demise) and good tax incentives for business, wouldn’t solar mfgs consider a place like Michigan if they’re going to consider the US at all?
Yesterday BPSolar, a very big solar design and manufacturer announced that they are laying off 140 people at their Frederick MD facility (a very nice facility). World wide over supply at present.
If Unions die ,then we all will be making minimum wage.
Corps will never pay what they don’t have to against the competition.
I’ve been seeing a lot of ads for Michigan— in California.
Ours seem to be emphasizing the touristy advantages. Which would make sense— pretty states can get some extra cash from the tourists, and hate them at the same time!
Other travel ads are for San Diego and Maricopa County. The latter is where Yosemite is… and Merced. You HBB folk remember Merced.
I was involved in making some of those. I used to pimp Michigan as a place to set up business and visit for the state.
Then, when i could, I moved out of Michigan…
“Indeed, demographers have said the sharp population losses from 1979 to 1983, when the state lost nearly a half-million people in four years…”
I remember that period. Michigan’s license plate had a black background, and as numerous Michiganers showed up in other states they became known as the “black tag people.”
I read that article and asked myself where the eff the media has been. People have been leaving Michigan since the 1970s, for chrissakes. I know, I was one of them.
Me too, Slim. Remember the bumper sticker, “Will the last one to leave Michigan please turn out the lights?”
In other news, weekly unemployment claims are up sharply to 669,000. Continuing claims rose to a new record as well. No doubt the stock market will be up sharply as these unemployment numbers have “hit bottom.” After all, all these poor unemployed people have piggy banks full of $$$ so they can go shopping and bid up house prices and stock prices. Hahahahahaha!
Yep, futures up sharp so far.
I have seen this movie before and been mystified by it, but not this time.
The stock market typically rises during a recession when market participants believe employment is nearing a bottom. Once employment bottoms out and recovery is clearly in the cards, the market normally roars back to life. And when employers have cut their work forces to the bone, they normally are trying to realign costs with current market realities — i.e., to restore profitability. Once this happens, the seeds of recovery are sown. But the labor market cannot quickly respond to the myriad opinions of individuals with investible funds as the stock market can. Hence the stock market is a leading indicator of recovery and the labor market (i.e., unemployment rate) is a lagging indicator.
Of course, we could argue about whether a bottom in employment is actually on the near term horizon. We have been assured that is the case by the same folks who brought you “subprime is contained” and “there will be no recession in 2008.”
I suppose one could argue the balance sheet damage (esp. due to toxic assets and derivatives losses) imply that it is different this time? But then the value of the companies facing these problems are already driven to near $0; so the only problem would appear to be to dump the losses on to some bagholder’s lap?
Almost forgot — perhaps the global nature of the recession and the huge drop off in trade make this time different than other post WWII recessions as well?
PB:
Government has banned the word toxic assets.
Get with the program.
Zombie
Legacy
The new “market to whatever” rules make it so the balance sheets are fine.
People may not have jobs, but buy something anyway! Right…
This kind of nonsense seems to be the mainstream media’s MO these days - sift through a pile of disastrous economic data, pull out a couple of obscure “positive” figures, and use them as an excuse to claim that the “bull is back”.
The bull is back alright, but not in the same sense.
Your last statement is the key. Right not the scale of this downturn is still not known to most investors. Contrary to recent reports - there is not yet an indication of a bottom. “Less rate of falling” is not an indicator that we’re near a bottom, especially when a very good case can be made that the recent stimulus’s and bailouts are contributing to this lesser rate of falling - and thus the change in rate of decline is false.
packman,
Right, but what the market is trying to figure out is ( as have I ) where are we at sans Toxic Assets/MEW Contribution to GDP?
People here seem to enjoy slamming the market almost as much if not more than UnReal Estate but where would the DOW be had there never been a Housing Boom?
Had home prices appreciated in alignment with Bob Schiller’s handy dandy Inflation Plus 2% charts, and there had not been NINJA Loans, where would we be? ( Post Tech Wreck Chronology of course? )
Oh and I promise not to use the term “toxic assets” again..?
A. Shiller’s chart wasn’t inflation + 2% - it was straight inflation.
B. We’d probably be about at 3,000 - 5,000 on the DJI, since that’s where it was surely headed during the early 2000’s recession, before Greenie and the Pubs started pumping up the new bubble.
It doesn’t matter where the DOW would be *without* the boom, now that we have squandered trillions of dollars, the DOW should be far lower than it would have been without the boom.
packman,VTD,
I may be mistaken, I’ve heard RS in countless interviews say his assessment was “Inflation plus a point or two” as “The Standard”.
O-b-v-i-o-u-s-l-y we are WHERE we are, but that isn’t what I feel is the question at hand? The DOW languished from March 2000 until April 2003, so we’ve flirted with these levels before. “I” don’t know anyone ( other than newly minted guru Bill Gross ) that felt the market was “overvalued” in July 2002?
Since most here don’t have any faith in fiat currency anyway… why worry about how much paper they burn through? No one’s been more vocal about “trading one bubble for another” than “I” have, but ( if you can ) try to divorce your mind from the HOUSING market for just a minute?
“It doesn’t matter where the DOW would be *without* the boom, now that we have squandered trillions of dollars, the DOW should be far lower than it would have been without the boom.”
Exactly. How much of that growth was due to the presence of easy credit? As I’ve been saying all along, what happened wasn’t so much deflation as it was a “peeling back” of the sham economy to see what was underneath.
I may be mistaken, I’ve heard RS in countless interviews say his assessment was “Inflation plus a point or two” as “The Standard”.
Nope. E.g. see this link. “It presents housing values in consistent terms over 116 years, factoring out the effects of inflation.” No mention of inflation plus anything.
O-b-v-i-o-u-s-l-y we are WHERE we are, but that isn’t what I feel is the question at hand? The DOW languished from March 2000 until April 2003, so we’ve flirted with these levels before. “I” don’t know anyone ( other than newly minted guru Bill Gross ) that felt the market was “overvalued” in July 2002?
I think many on this board, including myself - *do* feel like the market was still too high in 2002 (though in my case that’s with the benefit of hindsight). E.g. see this chart, showing the long-term trend for DJI vs. CPI.
Since most here don’t have any faith in fiat currency anyway… why worry about how much paper they burn through? No one’s been more vocal about “trading one bubble for another” than “I” have, but ( if you can ) try to divorce your mind from the HOUSING market for just a minute?
Not really sure what you’re getting at. My point is that unless some other market-propping bubble comes along, then the stock market as a ways to go down yet. Housing is the latest market-propping bubble, so that’s what it’s all about right now - period.
Many have made the point that we’re in a treasury bond market bubble. That may well be true, but that can’t really help prop up the stock market - much at least (only very indirectly). We’re very much not in a corporate bond bubble - prices on those are plummeting.
That being said - that might actually be the next bubble, and that in fact would more directly help prop up the markets.
packman,
Probably painted myself into a corner by addressing “the market” at large and that’s almost always a mistake. I’ve never bought into broad indexes so I’ve no idea why I’d offer one as an example? Given the audience, why would it surprise that “many here” still felt the July 2002 was -still- overvalued? Pffftt.
I realize… the basis for Schiller’s graph but still, he -insists- inflation PLUS 2% is the general rate of appreciation.
If you’re not sure “where I’m coming from” note that every third post here contains the phrase “fiat currency” or some dire prediction for it? So why would anyone get bent out of shape over it’s destruction? I mean it’s “worthless” anyway, right? Please send all your worthless bills to: DinOR at P.O Box…
“I realize… the basis for Schiller’s graph but still, he -insists- inflation PLUS 2% is the general rate of appreciation. ”
I’d be very anxious for a link to that. That’s not my understanding - and it’s a very big deal, given that it’s the bulk basis for the RE industry’s claim that “real estate is a good investment”.
If I’m wrong, then I’d *love* to be corrected.
As a point of reference, here is Case/Shiller data vs. straight CPI since 1987 at least. This seems to match the previously-linked 100+ year chart, which indicates that the 100+ year chart is based on straight inflation, not inflation + something.
It’s worth noting that there seems to be *some* slight incline in the long-term trend on the 100+ year chart, but at most that’s about 0.3% or so above inflation - nothing close to 1-2%.
packman,
They’ve taken down the youtube link, and I -will- find it but I assure that is exactly what he said.
One thing I can’t disagree more on though is that it is *not about “housing” any more… I mean how can it possibly be more dead?
I think b/c as this is afterall a Housing Blog we tend to see everything as being centered around it. Uh… for the last 7 or 8 years that very most definitely has been the case. The -only- connection we have to it any longer is all the busted derivatives fallout and that’s about it?
They’ve abandoned any attempts to shore it up and I haven’t heard about it in weeks. Time to move on.
OK - allow me to rephrase then. You’re right it’s not about housing.
It’s about debt. Specifically and primarily - mortgage debt. That is what still is the elephant in the room.
The average home equity rate since WWII is 67%.
In 2000 it was 59%.
In 2008 Q4 it was 43%.
And home prices are still dropping - at the fastest rate ever (see Case/Shiller data from yesterday), so that rate will only get worse. It’s getting worse really, really fast.
What does lower home equity rates translate to? Less consumer spending. Which translates to? Less corporate earnings.
etc. etc.
HAHA!
We are just getting to the place where most (not all) people realize that something isn’t quite right.
Had a chat with an old coworker. Like me, he works for a CEO that is of a younger generation. We shared the common observation that both these CEOs have never seen a major downturn. Their whole life has been up, up, up. Both are just now realizing that business is solidly off and that adjustments need to be made. A few months ago, they forecasted rebounding numbers within a few months. Aprehension is only beginning to set in. Fear is a ways off.
We are nowhere near Despair.
You aren’t going to get a recovery until AFTER the collapse.
Biggest expansion of credit in the history of the universe. Keep your seatbelt fastened PB!
the fantasy driving wallstreet is amazing to me. Things are not as rosy as they think. Business is still horible, customers are still having trouble paying their bills, factory’s are still reluctant to ship orders because they are not getting paid. These clowns that are predicting this so called recovery are the same ones who dident see it comming and refused to even say there was something wrong when others knew there was. When people see how the PTB have lead them astray that’s when we might see the riots.
Today there were reports that Manhattan RE sales volume dropped by 48%. (Google it.)
Since Wall Street doesn’t seem to notice economic troubles until they happen in its own back yard, I figured this might cause a lousy day for stocks as investors suddenly acknowledged the awful state of RE in this country. But no can do - the market instead rockets upwards on proposed huge bailout schemes from the G20. This is starting to remind me of that period in early Fall last year where stocks kept mysteriously rising amid increasingly terrible and desperate economic news from outside New York City. It wasn’t until the Lehman Brothers collapse that Wall Street fell to its knees and started wailing about how awful the situation was. The bottom line at this point is that Wall Street almost seems not to care about the rest of the American economy; bad economic news from “out there” will be ignored if somebody promises Wall Street something they want (namely government sugar).
From CNN: “It was the largest weekly increase since October 1982, and it surprised economists surveyed by Briefing.com, who had forecast initial claims to decline to 650,000.”
“Surprised?” I don’t see how anybody would be surprised by this news. I wouldn’t bet on the “experts’” predictions.
” … Hence the stock market is a leading indicator of recovery and the labor market (i.e., unemployment rate) is a lagging indicator.”
I don’t see how this can be true this time. Since the early 1990’s, we’ve had all these jobless recoveries, and the run-ups in equity prices appear to be nothing more than bubbles allowing management to cash out their options.
As “aNYCdj” continues to point out, jobs for creative and independent thinkers are scarce, and have been for many years now. I can’t see how a rise in the stock market presages a change in this environment.
Amen. The only ‘jobs’ I ever had where independent and creative thinking were at a premium were 1) running my own business and 2) management consulting (Not IT, which has compelling stress, not the least of which is that your project’s success is to a large degree out of your control).
The running own business thing came with 80 hour weeks as a run rate. Plus, when you take a day off, not only are you not producing income, you are actually paying out cash to the vacation. But without the 80 hour weeks, you just can’t feed the pipeline, manage the work, deal with employees/contractors’ issues, AND fix the FUBARs.
Consulting has a lower hours burn rate, plus you get paid time off. What a plus, after you haven’t had it for years. I got really lucky - after getting the chops on the commercial side, I was able to move to a think tank-type place. I’m all about a steady check and a tolerable operations tempo, anymore.
If the steady check disappears, I am going to make my famous beef stew in hitherto unimaginable quantities, call it something cute, and sell it from a hot dog cart in styrofoam containers.
This is conditioned on finding a house with a garage in which to store the hot dog cart.
‘Global financial market loses $50 trillion’
Based on the study, the estimates measure the losses in equity and bond markets, including those based on mortgages and other assets, and the depreciations of currencies against the US dollar.
The estimates did not include financial derivatives such as credit default swaps that further multiplied the size of the financial markets.
http://in.biz.yahoo.com/090309/50/6zk9a.html
Considering declining asset prices does not destroy wealth, it simply transfered it to the holders of dollars.
Biggest dollar bubble EVER.
It looks as though the global banking cartel’s threat of coordinated inflation is having a predictable impact on oil prices. Too bad higher oil prices without commensurate increases in household incomes will produce the unintended consequence of lower US home prices, as households face the tough choice of stretching the budget to buy that $700,000 McMansion, or putting fuel in their gas tanks.
Oil futures rally over 5% in electronic trade
By Steve Goldstein
Last update: 5:19 a.m. EDT April 2, 2009
LONDON (MarketWatch) — Oil futures rallied over 5% in electronic trade, picking up on the enthusiasm seen in world equities markets as the G20 meeting may boost the resources of the International Monetary Fund. Crude climbed $2.47, or 5.1%, to $50.87 a barrel in electronic action.
How is coordinated action to print more money not a direct taking from citizens of the planet on fixed income pensions? I can still remember shopping with my mom back in the 1970s and overhearing an elderly woman muttering under her breath, “I can’t believe how expensive it is to buy a loaf of bread.” But I guess stealing from Grandma would come naturally to greedy bankers, no?
I would love to have a guaranteed fixed income. Unlike Grandma, mine was reduced last month and will probably be reduced again next month. And I haven’t had a cost of living raise in years (as is the case with my coworkers).
Also, I heard that up to 50% of the marketing dept in my division will be getting the axe soon. Not too surprising, as we really did have a lot of marketeers.
I would love to have a guaranteed fixed income ??
= a government job…
Contrary to popular belief, government jobs are NOT safe.
You CAN be laid off and you CAN have your income reduced.
My sister does drug and alcohol counseling for inpatients at one of the VA hospitals. They got a memo a few weeks ago informing them that they would now be getting paid by the Dept of Defense and not the Veteran’s Administration.
She told me she asked her co-workers if they understood a particular part of the memo and most had not bothered to read or think about it.
“But I guess stealing from Grandma would come naturally to greedy bankers, no?”
Their own grandmothers, no less. Nothing comes between a greedy banker and their next bonus.
I am on a “fixed” income - actually I wish it was fixed. and have lost a large percentage of my retirement fund. Why should the pain not be shared with other entitlement groups? Why should I pay and lose while some retired teacher continues to get pension increases while our taxes are raised to pay for it even though the underlying value of the pension funds are degraded to junk status along with the rest of us?
I for one will buy absolutely no items here in California which are taxable and not absolutely essential to my survival, which are not many items at all! I believe others feel the same and efforts by our govts to “tax” their way out of financial problems will fail to produce any extra revenue at all.
I hear ya GH….
Oregon will probably be seeing alot of those CA plates.
Until they realize that PERS here is underfunded and it will result in either higher income taxes (currently 9%) or higher property taxes.
Big article in the Oregonian this weekend on how PERS is underfunded by $18B (with a B).
This is why I tell people, moving to escape your problems won’t make them go away. They just re-appear in another form.
… It just occurred to me that I’ll be up in Oregon for a wedding in a few weeks, and I just cleared out my closet of all the clothes that didn’t fit. And my summer wardrobe is appallingly slim (as in, I don’t even have a pair of sandals to my name. Or any other summer-weight shoes, for that matter.)
I’d already planned to go shopping up there, but that’s an extra incentive!
We already are. Local news last night showed
retailers in closest CA town wailing about losing their customers to Medford.
Sorry SFBG,
I just reread what you said and realized that you are talking about sales tax.
*slinks off into the corner*
sleepless_near_seattle,
I must have missed that article? LOL! Yeah well, whatever. Cryin’ shame ain’t it. Maybe we shouldn’t have promised all those great benefits huh?
DinOR,
It was the front page story on Sunday, 3/29. Here you go:
www DOT oregonlive DOT com/news/index.ssf/2009/03/pers_fund_in_familiar_spot_bil.html
The jackholes around here are trying to pass a 1/2% sales tax to “fix the streets”
(Gee, I thought one of the things that a city government was supposed to do was to budget money for street repairs…….but I digress)
One of the major pitches they are making is that 60% of this tax will be paid by “out of towners”.
Okay…….might work for a Wal-Mart shopper. But suppose the only reason I considered coming here was to buy a high ticket item, like a car? On a $30,000 car, that would be a $150 tax for the privlege of driving to the dealer.
I’m still wondering which will come first:
1. 14+ % mortgage rates
2. +/- 10 cent price change in a gallon of gas…over 365 days
The interaction between stock market gains and oil price increases has been very interesting recently. Note that on days where the DJIA surges upwards the price of oil also increases by a substantial amount. On down days for the stock market, oil prices plunge. This sort of behavior implies than when a *real* recovery starts (not the dead cat bounce we’re currently experiencing), gasoline/oil prices will also probably reach oppressive levels again. This could easily put the brakes on any genuine recovery, and I’m betting it will also be one of the factors that eventually halts the current rally.
Home selling moves to a new stage
Neighbor with cookies
As desperation sets in among home sellers, some are using actors to simulate lively neighborhoods in otherwise empty developments.
http://marketplace.publicradio.org/display/web/2009/04/01/pm_new_staging/#
the swine! LOL
Oh you’ve GOT to be kidding me.
How much money is wasted in today’s markets with all the advertising/marketing/pitchmen/staging/etc that gets done trying to find a sucker to buy something at an over-inflated price? If they just stopped all the incensent ads for everything, and instead focused on a great product at a great price, would the world be a worse off place? Advertising has gotten completely out of control, it’s become a self-serving industry that, frankly, IMHO, just doesn’t work as well (or at all) as it used to because of the saturation level we’ve reached. EVERYTHING has an ad; because of that, nothing really does. Whenever I shop for high-end electronics I try to pick companies that focus on their LACK of advertising and LACK of middle-men in the transaction.
I recently bought a relatively expensive set of speakers, of course, I looked at all the usual suspects (Bose, Infinity, Klisph, etc). But I wound up going with Axiom, a company that prides itself on tireless research to develop the best product they can at a reasonable price point. They do very little/no print (the expensive kind) of advertising, and have no middle-men at all (orders direct from the factory). That’s what I look for when I shop, sites that talk about value, lack of waste, and the best possible quality at the lowest possible price. The ONLY way to get that is to have little/no advertising budget.
Also, on a side note, I bought a subwoofer from an independent company (Epik) who really does NO advertising at all. This thing shreds the performance of subs costing 5X as much (in many tests, it’s eclipses the most expensive subs that money can buy for 1/10th (or less) the cost). It’s been my experience that the smaller the company, and the more focused on technology they are, the better the product you will receive.
I seem to recall an article posted 3 years ago about houses that were staged with furniture + actors portraying people living in the house.
It had to have been some place in California.
Well I remember a post about a condo development that hired models (male and female) to lounge around not wearing much in units that were visible from the one where the big open house was held.
At least that is more creative than burying a statue of a saint.
I’m waiting for someone to “stage” the neighbor’s dog coming over and crapping on your lawn.
You just bought yourself a great set of speakers!!!!
That was one of the best purchases that I have ever made.
Great sounding speakers!!! Better than the brands that you mentioned (this is my opinion here).
Someday when I don’t live in an apartment, I’ll get the proper speakers to go with the QSC amps I got from ebay. Still need the interface to put the amplifiers on the computer network as well.
Michael Fink,
Welcome aboard! I’ve been saying that for years. Everyone chips their teeth endlessly over WS and then completely blows off the impact from Madison Ave?
“Born to Shop” is a great read and goes into great detail describing why our kids insist on certain prdts. without even so much as making a value judgement?
If you love off-brand quality electronics you really should take up guitar! The whole industry is small shops that cater to -very- picky customers.
“If you love off-brand quality electronics you really should take up guitar! The whole industry is small shops that cater to -very- picky customers.”
Then why do places like Guitar Center exist?
RE: I wound up going with Axiom,
Hey Mike, you’re showing your age (laugh)
Nobody does “hi-fi” audio in the Age of the iPod, ‘cept old hippies.
BTW…did you AB the Axiom’s against either the Paradigm 5’s or Martin Logan Vantages?
I’d like to put in a good word for the Paradigms, I have a pair of Titans and a Sub and they have been wonderful! I picked em up in Canada when the dollar was strong (right after 9/11–we got searched at the US border quite convincingly but Canada was typically low key).
I’m speechless. A new low. That’s beyond outrageous.
This is good. I think they do this stuff for real in Pyongyang, trying to create an image of a bustling and thriving city for the benefit of the (few) tourists.
Check the date on that article. I think you have been fooled…
Indeed. Last year on April 1 they (Marketplace) did a story on “in-kind” income tax returns. It was cleverly set up and they had an interview with a woman who was puzzled about exactly what to do with some appliance she had received from the IRS.
Collectively “punkd” as it were. Oh well.
They did that on “King of the Hill” in an epsiode aired just last night in fact. Peggy was an agent and had to sell a house with some very scary looking owners - so she hired attractive actors to play the owners.
Life imitating art? Or is this just an old trick? They probably did do this in TX first.
It reminds me of the movie Funny Farm, when Chevy Chase and his wife pay the irritating townspeople to act like folks out of a Norman Rockwell painting in order to sell their home.
Sounds like the King of the Hill episode from last night. Peggy Hill was a realtor attempting to sell a house during the housing downturn. Peggy hired actors pretending to be the home owners and neighbors during the open house.
Here’s a video snippet of Peggy’s rehearsal.
http://odeo.com/episodes/22486835-King-Of-The-Hill-Real-Estate-Rehearsal
I was so looking forward to posting this link.
However, I think it might have been an April Fool’s joke on their part. Immediately following the story, the announcer said that you could find an archive of April Fool’s stories from years past on their website.
It was the best funny I heard all day…. joke or not.
I heard Barak say not so long ago that we need to stop these boom bust cycles. Market up 25% in less than a month and look at the bubble in bonds going on. I also need to know how everything got better overnight? A month ago we were in trouble and now the media and politicians are rosy. I believe they are stepping up the BS on the economic data. Tomorrows employment report will probably come in better then expected due to more BS and false confidence building.
Makes me wonder if they are doing this to make things worse on purpose so they can pursue there radical BS agenda. This ain’t about politics. I know a lot of Dems and they don’t feel like this group represents their best interest.
“Makes me wonder if they are doing this to make things worse on purpose so they can pursue there radical BS agenda.”
Why wonder? Rahm already made a statement about not wasting a crisis. Although I’m sure the statement is not original with him. 9/11 certainly was an “opportunity” for the sprawl of Homeland Insecurity.
Look, the only mistake anyone makes is thinking that the govmint acts rationally. It doesn’t, most of the time. It’s sort of a collective looney bin. And most people just can’t confront that. So they use terms like “incompetence”. Sure. Incompetence like an insane person would be incompetent.
So, the question is, how do you deal with insanity? Just for starters, you don’t go along with it.
Internal incompetent memo to DHS:
Locate this Palmy guy, bang on and break down his door, roust him hard and advise him that “This incompetency thing is d’mn HARD US GOV’T WORK!” Flash your sheilds and credentials a lot, show him a suppository and mention that we have a fun filled vacation jet idling on a nearby undisclosed runway if he continues to “difficult”.
See if the guys over IRS can tax him twice and or at least audit him back until he was 12 yrs old.
PS Tasers are optional but he is a usual suspect, known trouble-maker and a somewhat happy member of dreaded cyber-terrorist HBB.
Thx and Hugs
Rahm
“I believe they are stepping up the BS on the economic data.”
BINGO. I think the PHSI release for FEB09 subsequent to the actually sales figures for the same month is evidence of that.
Yep. Doesn’t the whole “rally” reek of being a contrived joke? Wasn’t its kickoff some kind of “leaked” email from Citibank CEO Pandit claiming that the company had “operationally” made a profit (which really means nothing because “operational profits” don’t include write-downs, if I remember correctly). Next, we get a stream of fudged and distorted government economic data to offset the horrible (and more accurate) independent data. The latest chapter was the G20 summit today, which apparently gave Wall Street everything it had put on its Christmas list and resulted in another fake DJIA surge.
But the facts are still sobering. March set a record for the newly unemployed, Chrysler is likely to be bankrupt in 27 days if it can’t make a merger deal with Fiat (good luck with that), there is serious talk of delisting GM from the DJIA in preparation for its own bankruptcy, auto sales are down 40+% for the Big Three, and even Manhattan RE sales volume is starting to crash.
But the “bull is back”, don’t worry.
Not only that but impairments are a long process so most banks only do them at the end of a quarter (every bank with bad assets looks great for the first 2 months of a quarter).
Double plus good!
The worst is over. Wily Winston strikes again. Mark to whaa?
I’m feeling kind of euphoric myself. I have an asset that I thought was only worth $200, but I awoke this morning with the idea that it is worth $2000!
My good fortune is amazing!
The government is everywhere now. If you want a new car, they’ll give you cash and a loan. New house? More cash and loan. Retirement accounts isn’t doing well? They’ll change the rules to make it better. Running out of cash? They’ll print more. It’s all double-plus good. Go Winston! Go Winston!
Trillions spent…and still NOTHING FOR ME….i have a car i have a place to live…what i need is cash oh and a job
In the time you’ve been complaining on the HBB, you could have moved somewhere that there are more opportunities. You could watch youtube videos for education and lie on your resume, get your feet in the door at some new field and do the job well (using what you learned on the intarweb).
People that hire still tell me they can’t find good people. Granted this is IT, but they are saying the applicants are straight up clown shoes. From what they say, it sounds like the H1B Visa stuff might really be needed after all.
I do a lot of hiring for IT. It’s a strange field. People who are good at IT tend to be good at math + have a lot of creativity. You should be very good at quickly solving logic problems.
The top performers can be 10 times more productive than average performers. You don’t find too many fields where that holds.
Give Dj some slack. VaBeyatch.
Holye molye
Jon:
People that hire still tell me they can’t find good people.
WHO WILL WORK FOR FREE AS AN INTERN
Even major companies want you to have a $2000 computer with the latest software to be an intern
I’m not usually a complainer…but your friends are BSing you..
Good people are being tossed to the street and dumb ones stay on the payroll. I don’t have to lie I have been working freelance…but the people reading resumes are clueless 23 year old chicky poos…not ADULTS.
The last 10 years we have hired every stupid moron you could find…and it shows.
Testify aNYCdj.
I do IT as well and I’ve often talked to guys who make more money than I and beyond the “p!ssing contest” that normally ensues, (you know, the tech guy from SNL) most of them know far less than I do.
I too keep hearing “good people are hard to find.” Really? Have you tried looking harder and paying more and not using your idiot HR dept (who can barely turn ON their PC) and relying less on certs and more on experience? Of course not.
Beyond that, it’s endemic everywhere. The pointy haired boss who doesn’t want to hear bad news and fix the problem is NOT a stereotype, but real and in the majority. So are the employees.
Oh, and anyone who thinks they know exactly where those opportunities are, I’m all ears. Unless of course you know nothing about my field or haven’t been paying attention to the economy lately.
But if you have a “for sure” job lead, lead me know. You know, put up or shut up.
That’s Change You Can(’t) Believe In!(R)
In an ironic twist, the new leeway for banks could undercut the government’s new financial rescue program in which it is joining with private investors to buy up about $500 billion in toxic assets from banks, some experts say.
From wikipedia:
Situational irony is the disparity of intention and result: when the result of an action is contrary to the desired or expected effect.
Is this really ironic? Is it an unintended consequence? Fwank seemed to be in a hurry to get a new rule in the recent hearing when he told FASB if they didn’t do something quickly the legislature would have to act. What upcoming event was he trying to get ahead of?
The first quote is from the yahoo story. linky
Try that link again.
Jim Cramer declares “The depression is over”. Boo-yah.
Time for me to horde some more cash since the depression is going to accelerate given Jim’s above prediction.
+10
He misspoke, he meant that the “recession” is over, which means, we are in the murky transition “twilight zone” known as the: “Dawn just before the dark”
All I can say is: America, land that I love…(Hwy begins humming…home, home on the range…)
I honestly think this is an “eye of the storm” of sorts. Market fundamentals are getting increasingly worse while Wall Street’s henchmen slap each other on the back and tell themselves the worst is over.
When the combined effects of the recent mass layoffs, the Alt-A’s, the eventual bankruptcies of GM and Chrysler, and the ongoing slide in RE values kick in fully, we’re going to be in for a world of hurt.
This is exactly what happened before the GD.
No Private Hedge - Geithner’s Toxic Recycling Plan Nixed By Big Fund
Bridgewater Associates, the $71 billion money-management firm, has come out against participating in Treasury Secretary Tim Geithner’s plan to get private investors to buy banks’ toxic assets — a week after saying it was interested in it.
In an investor note obtained by The Post, Bridgewater founder Ray Dalio gave Geithner’s plan two thumbs-down, arguing that the hopes of would-be buyers probably won’t be met by what the government is offering, especially when it comes to the sale of so-called legacy securities.
In the note, which is entitled, “Why We Decided Against Buying in the PPIP and Why We Doubt That It Will be Broadly Subscribed,” Dalio cited economic and political concerns with Geithner’s Public-Private Investment Program, dubbed PPIP, saying the numbers just don’t add up — at least when it comes to PIPP’s legacy-securities program.
PPIP aims to remove toxic assets from the system by giving private investors, such as hedge funds and mutual funds, leverage to buy assets through two programs. The legacy-securities program enables those investors to buy older residential and commercial mortgage-backed securities that have been at the heart of many banks’ troubles.
“When the program was first announced, we were originally interested” because the leverage the government was promising made the assets cheaper. “However, as things now stand, very little leverage is actually being offered via the ‘Legacy Securities Program,’ ” Dalio wrote, pointing out that the leverage offered is just 1-to-1.
There’s a good article in the latest New Yorker about a guy with a booming foreclosure business in LA:
In 2006, Leo Nordine sold seventy-five houses for the banks; in 2008, he sold two hundred and eighty-two. This year he expects to sell a house a day. Nordine, forty-six, is one of Los Angeles’s leading R.E.O. brokers (bank-derived shorthand for “other real estate owned”). He has a knack for pricing houses aggressively, so they sell fast.
Only the summary is available online for non-subscribers.
That’s been my experience in DC, too. Houses (REO, private or short sales) sit and sit unless they are priced aggressively (and those are contracted in a week).
Even the center of the universe isn’t immune:
http://www.nytimes.com/2009/04/02/realestate/02real.html?ref=nyregion
“Relatively few apartments are selling, and when they do, prices are down 20 percent or more from a year ago. Large, luxurious apartments on Fifth Avenue, Park Avenue and Central Park West, and new condominiums with many unsold apartments, have been particularly hard hit. One report, prepared by two brokerage firms, Brown Harris Stevens and Halstead Property, showed the number of closings of condos and co-ops down by 58 percent in the first quarter of 2009, compared with the same period a year earlier, as buyers were scared off by worries over the economy, portfolio losses and fears that apartment prices would continue to fall in the months ahead. The drop in sales was worse than the decline in the auto industry. In March, sales at General Motors were off 45 percent from March 2008.”
L HAUS in long island city what crazy numbers:
Save for your future home while living there.
Apply up to 6 months of rent to the purchase price.
Example:
RESIDENCE 5N 1BR/1BA ONE YEAR LEASE
MONTHLY RENT $2,334
PURCHASE PRICE $535,000
APPLIED RENT #1 (100% of FIRST 4 MONTHS RENT) $9,336
APPLIED RENT #2 (50% OF SECOND 4 MONTHS RENT) $4,668
MAXIMUM APPLIED RENT $14,004
BALANCE OF PURCHASE PRICE DUE AT CLOSING $520,996
The purchase agreement must be executed 60 days prior to lease expiration. Price Protection and a 3-2-1 Rate Buy-Down are not available in
conjunction with Rent-To-Own.
Rent-To-Own offers buyers the opportunity to live in a residence at
L haus and apply a portion of their monthly rent to the purchase of the
residence. Participants can choose to rent any of the homes available
for sale at L haus and apply up to six months of market rate rent to the
purchase price. This built-in savings plan will accelerate a buyer’s ability
to purchase the home by allowing them to save on rent payments that
would otherwise be lost and live in their chosen home while deciding
whether or not to purchase. Additionally, this program offers buyers the
option to continue to rent for the duration of their lease. This unique
flexibility provides potential buyers an additional level of comfort should
their plans, finances or employment status change.
For example, a one-bedroom, onebathroom
home selling for $535,000
will cost a buyer approximately $2,400
per month to rent. When a buyer is
ready to purchase the residence, they
will have already saved $14,400 to apply
towards their purchase.
11-02 49TH AVENUE, LIC 718-94-LHAUS(54287) http://www.LhausLIC.com
Lease.
Rent-to-Own
Buyer Assurance Program
Isn’t being critical of M2M akin to being critical of gravity?
“When I knock over this glass of milk, the milk should not spill to the floor but instead remain suspended in mid-air until such a time that I can collect it all back in the glass again.”
Pretty much.
Changing accounting rules cannot turn insolvency into solvency. If it could, why wasn’t it done in history before?
I feel a déjà-vu coming on. Remember I had to argue the same thing about how banning shorting cannot change the value of a company.
This is the same.
I’m looking and I can’t find any real info on this. The Yahoo story says FASB voted to “…adopt new guidelines …”. Marketwatch merely says they are meeting today to talk about, although the articles are about 2 hours apart so that could explain the discrpency.
Marketwatch says they are meeting to discuss changing some rules for “mortgage assets” that are expected to continue to cash flow but are “illiquid”. This actually seems reasonable to me (although it may present some new problems).
In any case, I wish I could get information closer to the source instead of having to read it through the filter of a bunch of reatard journalists who have no friggin’ clue what any of it means.
The problem isn’t the performing loans.
The problem is the derivatives. Everybody knows this.
When this bursts, it’s gonna be epic.
Right but its conceivable you could have some MBS that perform but get lumped in with some that don’t. Under current rules you would have to treat them all the same and use market prices. I wouldnt be surprised if FASB allows them to use cash flow valuations even if the securities fall under “trading” or “available for sale”. That could make a difference on the balance sheet and still be a reasonable valuation technique.
But I’m not disagreeing with you here. If the “good ones” are only 1% of all the securities we’re interested in for this discussion, then it doesn’t really help much.
“The problem is the derivatives. Everybody knows this.
When this bursts, it’s gonna be epic.”
This continues to be the reason why AIG is being kept afloat, right? If AIG collapsed and all of the insured assets had to be valued, there would be a rapid loss of faith in the market as everyone realized that most of those assets were either valueless or not far off, right?
Basically.
…and people and countries who lose trillions of dollar just don’t shrug it off and say “Them the breaks.”
Nope. They come looking for the folks who lost it for them. And they wouldn’t be saying “please” or observing little inconveniences like “human right.”
And they won’t just be looking for one or two guys…
I’m familiar with a large owner of a bunch of presently and formerly AAA sub-prime securities. They own roughly $100 billion of the suckers. Using market prices the things are worth say $60 billion, and they’ve made impairments of say $40 billion. So these are disasters. However when you look at cash flows that they haven’t recieved it comes to about $9 million. They estimate that they’ll not receive about $5 billion in cash flows they’re scheduled to receive. While their estimates are probably rosy, that’s a very wide gulf considering that their securities ammortized almost 30 billion this year.
Well. This is just less transparency.
Zombies.
The banks are shells that are in the business of enriching the bondholders and executives. Nothing else.
Probably busy funneling money to hedge funds, using TARP (TRAP) funds to buy back stock. Money from many to help the few.
Probably busy funneling money to hedge funds, using TARP (TRAP) funds to buy back stock. Money from many to help the few.
BINGO
Probably?
It could make for good shorting opportunities…
Lost Decade of Investing
From Bloomberg:
Starting in 1979, and taking any month you choose, rolling 20-year Treasuries have beaten the Standard & Poor’s 500 Index with income reinvested. “Astounding,” is how Arnott describes it. There’s even a specific period when 20-year Treasuries did better over 40 years (February 1969 to February 2009).
Link here
Ah, but “the market only goes up!” and “invest for the long term!” Right…
For years, the local “Walk-Over-Yah” bank had a big poster on one of the walls in the lobby with a graph of the stock market and how it beats every investment since “it always goes up!” Strangely, some time last year they took it down and I haven’t seen it since! Funny how that works!
Speaking of banks…have I got a story for ya.
I use only ING Direct, but my wife still uses Fifth Third Bank because I still can’t quite convince her that internet banking is safe. Anyway, she goes to the bank yesterday and gets hit up by the teller for some new service called “Fifth Third Early Access”:
(From the informational flyer)
*Fifth Third Early Access*
When you need money, but don’t have time to wait
Fifth Third Early Access is a short-term form of credit that allows eligible Fifth Third personal checking customers to take an advance on their next qualified direct deposit.
Quick and Easy to Set Up:
* No application is required. To enroll, simply stop by any participating Fifth Third Bank location or enroll online at Fifth Third Internet Banking.
* Once you take an advance, funds are available immediately.
* Eligible customers can take an advance and check balances conveniently:
o At most Fifth Third Bank ATMs in states where Early Access is available
o Online at Fifth Third Internet Banking
o At any Fifth Third Bank location in states where Early Access is available
* Your Fifth Third Early Access line of credit is limited to half of your combined monthly direct deposits of $100 or more. The advance limit is rounded up to the next multiple of $20, but it cannot exceed $500. Calculations are based on a 3-month moving average, so if the direct deposit activity changes, the advance limit will also change.
Sounds like a payday loan, right? Ah, but the teller told her it wasn’t the same because it “wasn’t at payday loan rates”. Funny thing is, ING will let you “overdraft” up to $2k depending on your income, and you simply get charged the “market” interest rate compounded daily until you pay off the overdraft.
If this is the kind of “lending” banks are using bailout money for, that’s ridiculous.
Wells Fargo has this too and has had it for a while. As much as I hate that bank, I use it for our household operating account out of habit.
Once, I realized one of my automated debits would be short by about a hundred due to some absent-minded error, and I thought this feature was pretty slick. About $10 in fees and interest for a day versus a $25 overdraft charge. Plus I could do it over the phone without having to talk to a human. But if you lose track of it, those interest rates and fees can add up fast.
50% of banks’ incomes over the last 2 decades came from fees and misc. other “gotchas.”
There’s a pretty coherent argument by David Rosenberg on yahoo. It’s well-thought, articulate and logical.
If you look at the comments, they are all of the form “you’re just jealous you are missing out”
This is a classic bear-market sucker rally.
I sure didn’t think I’d be underwater buying SRS at 50.
If the market goes up further, I’ll be buying more.
Waiting for now.
Sitting tight on SRS and SKF seems like a smart move for now.
This is extraordinarily similar to the suspending shorting thing.
Anybody who sat tight made an absolute fortune two weeks later when you had the early Oct blood-bath.
This is like déjà-vu all over again!
I do hope you’re right, FPSS. But then, you usually are!
Did the fundamentals change because of the change in accounting rules?
If not, then sit tight.
“Anybody who sat tight made an absolute fortune two weeks later when you had the early Oct blood-bath.”
This is very true. The current situation reminds me a lot of the strange “anti-gravity” properties stocks seemed to have in the early Fall last year, were they seemed to just keep levitating despite an unrelenting stream of nasty economic data. Give it 4-6 weeks - Chrysler will likely be bankrupt by then - and then grab your popcorn and watch the carnage.
“Did the fundamentals change because of the change in accounting rules? If not, then sit tight.”
I think the fundamentals got WORSE because of the change in accounting rules. Markets should hate hiding cr*p assets, and love clarity and illumination of what is on the books.
So if anything, I think the change should be a net-negative for stocks, in that the lack of clarity should inspire fear.
“If the market goes up further, I’ll be buying more. Waiting for now.”
I bought more SKF, SRS, and a small dab of SPX puts today.
Hope I’m not wrong. If this rally REALLY has legs, I may buy more in a couple of weeks. Looked like a good opportunity to me, though.
Started nibbling here at 46 and change.
Added more today @45. Also bought IYR Jun 33 puts @7.5 and 8. I have learned not to hold SRS/FAZ/SKF for longer than I need to because of erosion. When my SRS and FAZ get to some reasonable profit I will bail, leaving me with my IYR and IYF puts (plus selected stock puts like SPG).
Yes the puts will eventually expire too, but I’m hoping I bought at the sweet spot (in terms of exp month) for maximum profitability. My IYF puts are for August.
The disconnect right now between sets of “fundamentals” is amazing. You hear all about (see various links in this BB) how manufacturing orders are up, car sales are up, home sales are up, etc.
Yet the one thing driving this whole downturn - falling home prices, and the resulting foreclosures and hit on equity withdrawals - hasn’t improved a whit.
So I believe you’re right - this is a sucker’s rally.
This to me just points out how much of a sham last September’s problems were. If there was really such a liquidity problem caused by erosion of the underlying MBS - then why isn’t the erosion still causing problems? There’s no way the bailouts are close enough in scale to match the ongoing erosion.
The whole mark-to-market thing driving this rally seems like nothing more than sawdust in the gearbox, to sell this rally to the public and squeeze more $$ from investors. The car will eventually break down though, because the gearbox isn’t actually fixed.
Much like the victims of the Holocaust, who boarded the trains not quite believing things were as bad as they were, all facts to the contrary. Many chose to believe the most optimistic rumors about what was happening “in the East”.
Too many Wall-Streeters (and people in general) spend too much time talking to others in their circle of friends/business associates, and pretty soon they have convinced themselves that we have bottomed. All economic data and trends to the contrary.
I tend to be a pessimist, and try to plan for it, while being pleasantly surprised when the worst doesn’t happen.
(Part of the conditioning for working in the business I’m in).
Do you have a link by chance?? I can’t seem to find it. Thanks if so.
“Depriving” governments of revenue…. Good! Make do with less.
Tax dodgers multiply as underground economy cushions job cuts…
By Emma Ross-Thomas
Bloomberg News
Posted: 04/01/2009 12:30:00 AM MDT
Carlos Cruz has a strategy for surviving the worst global recession in 60 years: pay less in taxes and pass the savings along to customers.
“I’m declaring half as much as I used to,” said Cruz, 29, who runs a painting business in Madrid. “Prices have fallen by 30 percent and customers will choose you for a difference of as little as 50 euros ($67.70),” said Cruz, an Ecuadorian who has lived in Spain since 2001.
The production of goods and services that are lawful, though not declared, may grow the most as a proportion of total output since 2000, according to Friedrich Schneider, a professor at Austria’s Johannes Kepler University of Linz.
The shift, measured by tax analysts and economists using surveys, money-supply data and anecdotal evidence, is caused by businesses going off the books to cut costs and workers taking informal jobs to survive rising unemployment. It offers a buffer against the ravages of the crisis and may help explain why the slowdown hasn’t prompted more social unrest.
“The good news then is that the recession, as captured by the official statistics, may not be as severe as it appears,” said Edgar Feige, a professor at the University of Wisconsin- Madison who has studied the underground economy for 30 years. In past slumps, unregistered activity increased as a proportion of the official economy, he said.
Schneider defines the underground economy as “the legal production of goods and services, but withholding tax and social security payments.” It encompasses informal work on building sites for cash, and small textile and shoe workshops that trade off the books, while excluding crime.
In 21 of the 30 countries in the Organization for Economic Co-operation and Development, Schneider estimates the informal economy will equal 13.8 percent of official gross domestic product in 2009, up from 13.3 percent last year. On that basis, its value will climb by $200 billion to $5.59 trillion in those nations from $5.39 trillion, using constant 2008 GDP because data for this year isn’t yet available.
The relative size of the market shrank each year since 2001-2002, when it amounted to 16.7 percent, Schneider’s data show.
Growth in the underground economy is depriving governments of revenue just as their countries are reeling from the effects of the recession and stimulus measures.
It’s “an unsustainable situation for the public coffers,” said Armando Fernandez Steinko, a sociology professor at Madrid’s Complutense University.
Cruz was the only contractor willing to talk openly about avoiding tax by not declaring income among more than 20 who were asked about it. Other people are also declaring half of what they once did, he said.
Everybody that I know that are in a “Cash” type business are doing quite well..They pay very little tax compared to their actual income…. hiding at least 50% if not more…
While the rest of us pick up their slack. Thieves.
If you make enough laws, you can make anyone a criminal.
If you make enough laws, you can make anyone a criminal ??
Ain’t that the truth….And its “selective” justice also…
It always bothers me when governments refer to tax dodging or tax cuts as “lost revenue”.
Or referring to almost worthless paper as a “non-performing asset”.
Just like a thief who forgets to take a gold bracelet from a display would refer to it as “lost revenue”.
“Geithner’s Non-Recourse Gift Keeps on Giving to Bill Gross.”
Link here
Otherwise knows as “Why I continue to invest a portion of my portfolio with Bill Gross and his Total Return Fund”… if you’re going to play the game, might as well play with the winning team. I know Bill Gross’s influence peddling in Washington to benefit him and his shareholders isn’t right, but there’s (morally and ethically) right and then there’s profit. I want profit…
Go PumpCo! Go PumpCo!
Does anyone else find it amazing that the kind of “tough love” that US prescribed to Japan and Malaysia and Indonesia and Mexico seems to be in short supply at the moment?
We’re getting spanked alright, cept it isn’t about love.
Daddy wears a white shirt about town, and is respected by all.
Hypocrisy is so rampant right now, FPSS, that no, I didn’t even notice. Hypocrisy is the baseline.
Who are you and what have you done with my cat?
You are SURPRISED to see hypocrisy? Evidently you aren’t at all familiar with the U S of A what so ever. Just to fill you in a bit, the “fiscally conservative” party has run up the largest deficit in history. This is also historically the “anti-war” party who have been spearheading an illigitimate war for a decade now.
The “socially conscious” party has a member of the ku klux klan not only in its midst but as a leading party member for decades. He is held in very high regard. This is also the party that is supposedly “for the little guy” and “against big business” but who led the charge for a multi-hundred-billion dollar jackpot for the rich bankers, at the little guy’s expense of course.
You should really get out more.
That Democratic Klan man is third in line to the Presidency.
““fiscally conservative” party has run up the largest deficit in history.”
Should be, “had run up”, the fiscally liberal party is now in control, and their defecit makes the shrub’s efforts pale in comparison.
“Momentum” ring a bell? You know, basic science and all that.
Rewarding bankers for bad decisions ring a bell?
At every turn, both the last admin and the current one have chose big banks over ordinary citizens EVERY SINGLE TIME.
If you want “tough love” you gotta go see barney frank.
You mean fraud and hypocrisy go together? Who knew? I’m shocked I tell you! How could anyone have foreseen this?
Looks like the stock market is going to go up, up, up. Factory orders rose in February.
New orders received by U.S. factories rose in February, government data showed on Thursday, breaking a six-month streak of declines and bolstering hopes the economy may be beginning to crawl out of the depths of a recession.
The Commerce Department said factory orders rose 1.8 percent in February after a revised 3.5 percent drop in January, initially reported as a 1.9 percent decline.
Economists polled by Reuters had expected a February increase of 1.5 percent.
Orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence, jumped 7.1 percent after a steep 12.3 percent drop in January.
Orders for durable goods rose 3.5 percent, revised from the previously published 3.4 percent increase, while orders for nondurable goods edged up 0.3 percent.
Inventories decreased 1.2 percent, down for a sixth consecutive month. That was the longest streak since March 2003-January 2004.
“Wall Street Jumps on G20 Hope, Mark-to-Market Change”
That’s the top headline on Yahoo finance right now. Could someone remind me, am I supposed to go long or short hope?
Always go long hope.
Hope you have enough food.
Hope you have enough ammo.
Hope you have enough water.
Hope you don’t stand out in a crowd.
“Remember Red, hope is a good thing, maybe the best of things, and no good thing ever dies.”
Short hope, long common sense.
Orders are one thing…….getting PAID for the orders is something else.
Chrysler Supplier Dispute Closes Second Canada Plant (Update1)
By Mike Ramsey
April 2 (Bloomberg) — Chrysler LLC, under a 30-day government deadline to reorganize, shut a second Ontario factory because of a dispute with a maker of transmission parts, crippling plants accounting for a third of U.S. sales.
The parts shortage could ripple through the Auburn Hills, Michigan-based company’s 10 remaining North American factories unless it’s resolved, said Max Gates, a Chrysler spokesman, in an interview today. The Brampton, Ontario, plant shut today makes the Chrysler 300, Dodge Challenger and Charger. Chrysler’s minivan plant in Windsor was idled yesterday.
Auto parts suppliers are ceasing operations as banks pull financing, said Craig Fitzgerald, an automotive supplier financial consultant at Plante & Moran in Southfield, Michigan. Those shut downs will disrupt supplies to automakers repeatedly in the next 18 months and reduce the number of small parts makers, he said.
“I think you will find a significant increase in temporary supply disruptions,” said Fitzgerald, in an interview today. Fitzgerald said he has seen 10 small suppliers stop operating in the past two weeks as banks stopped financing the businesses.
Chrysler’s Gates declined to identify the supplier or describe the nature of the dispute that shut the Ontario factories. Chrysler is trying to get access to tools and equipment to make the transmission parts itself at a plant in Etobicoke, Ontario, Gates said.
Now might be a good time to get that Chrysler minivan trannie overhauled, if you have the misfortune of owning one.
Nah, they can just part out any of the thousands of unsold cars sitting in lots around the country.
A Canadian station I listen to gave the supplier name (don’t recall it) and said it was because the supplier lost it’s financing for ongoing operations. If the report was correct, there was no “dispute” per se.
Chrysler: We want our parts!
Supplier: We can’t deliver them because we don’t have money to order materials.
Chrysler: But, we want our parts!
Supplier: We can’t deliver them because we don’t have money to order materials.
Chrysler: But, we want our parts!
…
There’s your dispute right there.
RE: the Chrysler 300, Dodge Challenger and Charger.
Rented an ‘08 Charger last weekend in ‘Frisco…A true POS, like the Sebring I had in OH last year.
Will somebody fookin’ kill this beast?
30 years to learn their lesson from the ‘79 debacle, and the song remains the same.
Dow above 8000. So where do you think it will end today?
14000 or 6000. What diference does it make. The real economy is where you need to look.
Yes, I’m well aware where I need to look rosie. Just wanting to stir the pot. You need to take a chill pill and relax.
SFBAG…Just saw Grease the other day @ the Golden Gate…
scdave,
I’m going to see Wicked in May. Love those musicals.
Hi, SF gal,
No idea, of course.
Really wish that my idea of an inflation adjusted discounted DOW would take traction in some discussion.
But it doesn’t.
Is it really that ridiculous an idea?
G20 is now to be called ‘Money Printing Cartel’. hope nobody cheats on his qouta…
I’m thinking somewhere in the neighborhood of 7,978 or so.
Quite the end-of-day dive there.
Very interested with the earnings since 1st QTR just ended for most companies. Of course they will say that the future is bright but I see a bloodbath in the second qtr.
20 day EMA above 50 day SMA again. Oh, the Euphoria! IF the major downtrend is still intact, we might be nearing that time again.
Olygal, DEEEElightful story last night about you being all quarky and rescuing rosemary and such.
FPSS, with your herbs, keep in mind that most houseplants die from too much watering, not too little. Most need to get their feet dry ocassionally so that they don’t rot. You can buy a cheap water-meter that helps a lot in avoiding the overwatering, or just wait until you’re sure they’re getting thirsty—look for hints of thirstyness around the edges of the leaves, etc.
A few years back I discovered I had a green thumb; my weakness is that I tend to have a hard time tossing any, and it’s fun to propagate them. At one point, I had a veritable forest of greenery in my office!. I had to start giving them to friends to avoid getting entirely lost in there. Now I have to be stingy and tell them they’re not allowed to breed so quickly.
I actually knew that.
I lived with a roommate back in school and he had 180+ plants (not kidding!) which I would water when he left for the summer.
Um, those pot plants must have been awesome…..LOL
Good drainage for the house plants also.
Yeah, working on that. Need my “beasts of burden” (aka friends) to get back so we can schlep some garden supplies over.
This is the part where no car really kinda blows.
I’ll never be your beast of burden, at least not until you cough up your nettle stuffed pasta recipe!
FPSS, with your herbs, keep in mind that most houseplants die from too much watering, not too little.
Good advice. I’ve been guilty of watering a few plants to death myself.
Another nice thing about rosemary, for those with cats: cats don’t seem to care for rosemary. My cats munch on basil, dig up thyme, massacre pepper plants, love to destroy bromeliads — but they leave rosemary, succulents and cacti alone.
I’m really quite excited about these herbs.
Irrationally so, I think. I’m giddy.
It’s like getting a new toy except you can eat the toy.
“It’s like getting a new toy except you can eat the toy.”
Oh, the comments I’m biting back.
Oh, the comments I’m biting back.
Hahaha! No kidding. I ’bout swallowed my own face, I was makin’ such an effort.
“Irrationally so, I think. I’m giddy.”
TOTALLY understand that emotion! I felt the same way last year when I planted my first garden in many years.
Ooooh! Tell us all about it, Primey!
I wish I had your way with words and could make it an interesting tale, but I doubt that’s possible, Olygal!
My little garden patch was pretty small last year—probably about 4 x 8 or so. Four tomato plants (a couple in fun colors), a couple of peppers, some lettuce, carrots, arugula, mint, basil.
I got the garden in a little late for the PNW’s shortish growing season, so I was partly just experimenting to see how things worked in that spot. But it was still tons of fun.
The giddy part was mostly that I just had to go visit it pretty much every day after work, just to see how things were changing! It was great fun to watch—I was not quite as giddy as I got when I first filled my POS car with biodiesel, but close.
This year I want to get it in earlier. I’m thinking of doing starts under flourescents in my basement to give them a bit more of a fair start this year.
I have HEARD (don’t know if its true or not) that rosemary will keep deer out of your garden also.
Blu - that’s pretty interesting. Presumably because it’s the most pungent. Maybe they associate the aroma of cooking rosemary with Roast Uncle Rudolf that they saw on a plate through the window last season.
Ha. I was cooking some deer a few nights ago outside on the grill, while a few other deer were standing about 50 yards away. I yelled to them we were eating one of their own (it came from the same herd).
But I used thyme and molasses as a marinade, not rosemary. So maybe this year I should pour molasses around my garden?
Speaking of deer, did you guys hear the story recently about the family of 5 that hit a deer with their SUV?
It jumped, came through the windshield and landed in the cargo compartment in the back. No one in the vehicle was injured (except the deer).
I’d have gone straight to 7-eleven and bought a powerball ticket!
I’d have gone straight to to an outdoor door or Wal-Mart, for a grill, charcoal and a good skinner. Wouldn’t let that sucker die in vain, no way.
LOL. I feel ya on the felines.
My heard just obliterated 6 cantaloupe seedlings. Its weird, the cats leave them alone when they are in the seed starter tray but as soon as I plant them in a larger container they go after it like moles on crack. They took out several of my jalapeno plants as well.
Don’t let them watch you plant them. Monkey see, monkey do.
I’m going to start breeding these guys. I wonder what they eat? Maybe they’ll live in my house plants.
Awwwww, aren’t they adorable! Wait until Olygal sees them! Although she probably already knows and has ordered a couple hundred or so for delivery.
I’d be careful about taking those guys to the bar. Someone’s not paying attention and puts their drink down…. Of course, you could market this new trendy coaster.
I’ll just acclimate them to alcohol like I did for myself. Then I can keep them in drinks and not worry about anyone stealing them. (the drinks)
Might backfire. I would never steal alcohol, but cute little drunk froggies doing the backstroke in a margarita - who could resist that?
AAAAAAAAAHHHHHHHH!
*screams piercingly, entirely overcome with joy! *
Here in Phoenix its almost immpossible to water plants too much. In the west watch out for hard water maybe add a small dose of white vinegar to help netralize the PH when growing plants in pots. Most city water is on the high PH side being that low PH would mess up all the metal pipes and leach out lead and what not.
Rain water is netural to acid. back east probably acid as in acid rain.
Do you remember yesterday the talk about someone helping potential home buyers with their mortgage if they become unemployed? Well it’s here in California. The next gold rush is on
What will it take to get people to buy a home during a brutal recession?
“The California Association of Realtors today is rolling out an offer to pay first-time buyers’ mortgages for up to six months if they lose their jobs. It’s among a variety of incentives the real estate industry is dangling as it desperately tries to lure customers…”
The rest is on sfgate dot com. Scroll to the business and technology section.
The can only end badly.
These gimmicks are all the rage today, but just think, in a few short years we’ll look back at these misguided efforts whilst doubled over in laughter.
Oh, heavens… I meant that as a joke when I suggested that as the next Bubble… ARGH!!
And naturally it’s in Clownifornia (no disrepect to the sane people in that state.) ARGH!!!
Why not just send everyone a check for a trillion dollars and be done with it?!
“no disrepect to the sane people in that state”
Don’t worry, there only like maybe 5 of us, and 2 don’t read HBB.
We have a local builder, Mungo Homes that offers to pay your mortgage for up to 12 months in the event you lose your job ” through no fault of your own” if you buy one of their homes.
They have been making this offer for over 90 days now.
Surely they can do this only because they’ve taken out an insurance policy of some sort, yes? And surely that requires them to verify someone’s employment status and likelihood of maintaining their job before a sale? That aught to put a damper on sales. (Either that or they plan on going out of business soon)
Oh, and don’t call me Shirley.
Combine this offer with a new car offer, lose you job, and get a year with a free house + car and then another free year before they can kick you out.
The levels that debt desperation can reach are mind boggling. Some real creativity going on - I have to say.
Much in the same way a drug addict has to get really creative after they’ve been discovered.
Oh and meant to add - so then this means we’ll be hearing about CAR bailouts in the not-too-distant future?
What’s the CAR’s budget? Surely it can’t be anywhere close enough to sustain significant losses - one would think anyhow. Though I know there was quite the realtor bubble there a couple of years ago. I personally knew of several engineering managers that became realtors after being laid off from the company I worked for. Had to scratch my head on that one. These were people that were previously making well into six figures completely changing fields.
“it can’t be anywhere close enough to sustain significant losses”
These are realtors we are talking about. Without a doubt the insurance to pay the mortgage is a line item in the closing statement. The realtors won’t lose a dime.
The very fact that you would have to offer a incentive like that
is proof positive that the reason people are not hot to buy is because of fear of job loss . Fear of job loss is a viable fear in the greatest financial meltdown we are ever going to see .
The sales people keep trying to get people to do stupid things . In this environment you need to be able to move to where the jobs are maybe ,so paying you mortgage for 6 months isn’t going to save you . Again ,what if the real estate company goes BK and they can’t pay their incentive .
RE: The California Association of Realtors today is rolling out an offer to pay first-time buyers’ mortgages for up to six months if they lose their jobs. It’s among a variety of incentives the real estate industry is dangling as it desperately tries to lure customers
Copycats…
Ford and GM just ramped up the same marketing deal-lose your job, and they make the payments for anywhere from 6 months to a year.
No fear though…Feds will cover after the fraudster’s scam and loot these scheme to death.
Risk…we got no stinkin’ risk.
LOL! Free rent for 6 months. It’s like giving a $500K mortgage without verifying their income. Can you verify if these buyers can keep a job for more than a year. I know alot of people like that unfortunately….
“Olygal, DEEEElightful story last night about you being all quarky and rescuing rosemary and such.”
It’s all of those rainy nights and beer that puts her in the quarky mood(or state). Depending on the relative humidity, ambient room temperature and available drugs, she frequently quarks into and out of Washington State.
I believe that it has something to do with “beautiful dark nights with steady rain and drippy trees”, an available computer and one slightly bent but happy, non-mammal XY FrogType female Sex chromosome
You understand me!
I…I’m so happy….
* spontaneously blinks in and out of phase rapidly, overcome with happiness at being understood *
Some were a little concerned that you’d phase into a cheap beer can and get stuck there for all eternity.
I, on the other hand, had bet heavily that you’d just drink the contents and figure a way to sneak out when you woke up
GREE,GLBM;RKTB’OIQ [T]09U
I have no idea how that gibberish got there. My keyboard batteries must be getting low.
NOoooo….Sheesh wmbz…and I just placed a buy order on all of them
LOL!!
Dangit I just shorted all of them!
The chart on the first one looks extremely bullish.
Over on Brownstoner, they have a new feature that allows readers to play appraiser by typing in what they think a house on the market is worth.
Take this example.
http://www.brownstoner.com/brownstoner/archives/2009/04/house_of_the_da_667.php
“The house traded for $595,000 in 2004. Now it’s asking $899,000.”
The average reader appraisal? $825K. My appraisal? $450K.
Down on its luck: Florida Lottery mailing out coupons to boost sales
By Nick Sortal | South Florida Sun-Sentinel
April 1, 2009
Here’s what our economy is coming to: Even the Florida Lottery is handing out coupons.
The lottery sent a coupon flier to 7.8 million homes last week, with buy-one, get-one free offers and information on a new “second-chance” drawing.
Lottery sales are down about 7 percent from last year, and there’s a need to generate interest in some of its lesser-known games, the Lottery’s Jackie Barreiros said.
There are four buy-one-get-one-free coupons: for the $1 and $2 scratch-offs, the Fantasy Five and Mega Money. There also is $2 off any $5 scratch-off ticket and $5 off a $20 Billion Dollar Blockbuster ticket.
Total savings if you use the whole sheet of coupons: $12.
The Lottery’s goal was to deliver coupons to every household in the state. If you didn’t get your coupons, the district office in West Palm Beach will give them to you, she said. But you have to sign for them.
It’s the first time since 1996 coupons have been issued.
Lotteries are a tax upon the permanently st00pid.
Or a voluntary tax. Here in California, a portion of the proceeds is supposed to go directly to teachers… and surprisingly enough, they do. I actually have a friend who is a teacher who gets a check from the lottery commission each year.
It’s truly astonishing, especially given my cynicism about California politics.
Sometimes you are simply buying hope. Without the ticket you have no hope, with the ticket you have a very small .00000001 chance of getting rich. The value of hope can outweigh the actual value of the ticket (probability of winning * the amount you win).
It isn’t a move I would make, but it is rational for some that need a little hope to get through the day.
I don’t mind dropping a buck here or there on a Lotto ticket when I’m getting a coffee.
FPSS, not all lottery ticket purchases are “st00pid”.
I’ve bought tickets twice in my life. I only do it when there have been no winners for such a long period of time that the jackpot has grown to the point where the tickets have a positive expected value.
That in my mind is the difference between investing and gambling—gambling always has a negative expected value.
So in those two cases, I viewed those the tickets as merely near-infinitely-risky investments.
Guess I fall into that category. I will play once in awhile. Especially when the winnings are big.
WMBZ - I got one of those. I admit, I’ll sucker into it. My wife has me into the BOGO mentality.
For those who think their lotteries truly benefit education in a meaningful way, check out the history of Florida’s. A best friend and an employee were involved with the commission/board that created it. Sure, the legislature had promised, and advertised, that the money was for education. all of it, as I recall. But as soon as it passed, they subtracted an equivalent amount from the part of the state budget that funded education, so that education got little or none of the benefit of the new form of gambling.
The lotto people made it worse, as governments do. The first formula worked well and brought in tons of money. So they got greedy and added a lot of numbers to the mix - I think ten additional, to a total of 53 - that totally screwed the odds of winning. They thought they could fool the ticket buyers and that lasted a year or less - receipts haven’t recovered yet. Remember that the payout was only 50% with the original numbers.
My bet is that now a lot of JSPs will just use that dollar to pay the new tax on their cigarettes.
“Sure, the legislature had promised, and advertised, that the money was for education. all of it, as I recall. But as soon as it passed, they subtracted an equivalent amount from the part of the state budget that funded education, so that education got little or none of the benefit of the new form of gambling”.
Chip…
Same thing here in S.C. when they were ’selling’ the lotto scheme. ALL of the profits were to go to edumacate the chidrens! Didn’t take long for that to change once the dough started rolling in. Same old political BS.
I remember the first thing they did with the SC lottery was buy new school buses…not exactly what I thought the lottery was for.
WMBZ and AZ - at least they’re consistent. I remember during my schoolin’ and military trainin’ - the one thing to look out for is if the other guy is consistent. Might suck, but it exposes their weakness.
All you need to know about state lotteries can be summed up in one word: GTech
Google it.
Do I play? Once in a while. I spend more on beer in one week than I play the lotto all year.
Yahoo News
1 in 10 American’s on Food Stamps
So much for the American Dream and to MSM call for a Bottom
http://news.yahoo.com/s/nm/20090402/us_nm/us_hunger_usa
You know, I’d be totally in favor of food stamps with nary a complaint if they would make one simple change to the program.
Any food product with added sugar is strictly forbidden.
Think of the children!
…and you know what else?
I wouldn’t even ban sugar itself as an option.
“I believe in free markets that are rigged by the banks”. - B Obama
“We believe in strong regulation that controls banks that rigged the free markets” Cheney-Shrub
“The more numerous the laws, the more corrupt the government.”
Tacitus, Annals, Book III
Words of wisdom from a corrupt Roman empire. Oh yeah.
From the LA Times. Mark April 2nd 2009 down - it will forever be known as The Day That World Socialism Came To Be.
Straight from the pages of Atlas Shrugged. Amazing.
Never mind that all of these things were agreed before the participants even got on their planes. There virtually never are any any true surprises at these meetings - as DinOr or someone mentioned yesterday, they are just very, very expensive photo ops.
IMF plans to sell 403 tons of gold to raise money… I wonder if this will be real gold, or paper gold.
It’s real - it says so right here…
Oh I’m sure it’s real gold. The big question is - then what?
Will gold prices then eventually rise more, as it did after Brown dumped 400 tons (coincidentally almost exactly the same amount) at the bottom of the market in 1999?
(P.S. where’d you see that 403 tons figure? Got a link?)
G20 supports IMF’s plan to sell 403 tons of gold
You can manipulate the gold market for several decades by doing this.
There is simply not that much demand.
This is the main reason I don’t like gold. Too easily manipulated.
“This is the main reason I don’t like gold. Too easily manipulated.”
Me too actually.
Thought it’s overridden somewhat the insurance value, at least as a portion of holdings. If gold wasn’t manipulated, I’d have a *lot* more than I do.
(thanks for the link VTD).
And it was brought to you by a bunch of free market, capitalism-loving Republicans. Imagine that.
Dude, get a clue. I won’t even respond, you’re so thick-headed. I have reams of data, but there’s no point, because you’d not see any of it in your blind partisanship.
Wow ,a new “World Order” ,I just can’t wait . What a crock .
What about “Freedom ” being the highest goal of a Society ,and all prosperity and growth will follow if you have freedom to even choose growth or prosperity if you want it or not . They sound like a advertising campaign of a Corporation or the REIC .
All face NAR HQ, humbly bow your heads and PRAY TO and FOR that Fat Commission Check in the Sky.
If someone makes too much money on the sale of a property might not the new government make it illegal to earn more than 250K on your house?
I am just a zombie but why aren’t they attacking real estate profits more aggressively?
Wiz - at the risk of being flamed for politik-think, isn’t that exactly what libertarianism is about? Libertarians don’t want to take over anything. They believe that government should be for resolution of disputes and national defense (not offense). “The libertarian does not want to impose values; threaten countries with sanctions or embargoes, trade quotas or regulations; restrict movement and travel; censor speech, or any other abomination like that. He simply does not want to control people at gunpoint (or through taxation, which after all is nothing more than gun-backed positivist legislation).” (JF Carpio 2006)
I might add that libertarians do not want to borrow other peoples’ money in other to give “foreign aid” to third parties. That is insane.
I used Zillow to look at homes in 93021 and it looks like all the recently sold homes sold above the zestimate. OK I think the zestimate is always high so what I am looking at is dozens of knife catchers back in CA.
I don’t even bother to look in Phoenix 85044 where I live now in a RENTAL house.
(Ventura County) So Ca -Our former McMansion model is down from $1.3K at the peak, to $725K on real…com, yet on Zillow it’s showing at $833K. It it isn’t moving at $725K, good luck with a zestimate of $833K. Zillow is BS in my opinion. We’re taking about a 4,000 sq ft home on a decent lot, with a view.
93021 is Moorpark, iirc. We bought our first home in Mountain Meadows new in 1983. Great climate, but what fishbowl living, and such zoombie yuppies. Then we move to Wood Ranch, and buy this oversized “pos -we sold it. Now we are renting too.
Figures don’t lie, but liars do figure. And some accounting rules enable lying.
New Accounting Rules for Mortgage-Backed Securities
By FLOYD NORRIS
Published: April 2, 2009
The Financial Accounting Standards Board voted on Thursday to give more discretion to bank managements in reporting the value of mortgage securities. The changes seem likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is currently willing to pay for them.
The changes had been demanded by members of Congress and by bank trade groups, but were bitterly denounced by some investors and by a group led by two former chairman of the Securities and Exchange Commission.
We’re doomed.
Does this mean that homeowners can mark their homes to “model”, say 2005 prices, since they are holding it on their books till “maturity” and hence go back to pulling equity out of their homes?
The Group of 20 wealthy and developing nations agreed Thursday not to pursue competitive currency devaluations, a vow that analysts said could make it more difficult for individual countries to weaken their currencies to support their economies.
Alright the bet is who will be the first to break this vow and what level of unemployment will cause this.
My guess is the USA and official unemployment of 10%.
Why does this G20 episode keep reminding me of the Tower of Babel?
This strikes me as a two-faced BS PR campaign.
Every country that is pumping out liquidity via its central bank is pursuing currency devaluations. We’ll just all tell ourselves that the goal is not “competitive”, and all will be well.
So next week?
The vortex. Sort of like the actor or the bug that clings to whatever while the vortex rages and the camera runs. The vortex always wins.
It has been a while since I visited the best blog that I have read during the past four years:
I am still a bit of a short-term pessimist, considering the following-
1. Housing prices must return to historic economic underpinnings (i.e. in relation to real wages, etc.).
2. Debt burdens at all levels (individual, family, city, county, state, Federal) must be reduced to historical or sustainable levels.
3. Legacy costs must be reduced (the market seems to be doing this by default) in relation to the overall cost burdens in the economy. Legacy costs have grown disproportionately large-to unsustainable levels. Thirty percent of the population cannot live for 25-30 years off the production of those still working.
4. Some semblance of manufacturing/wealth creation must be re-enthroned as vital to our culture and economy. We cannot all be cream skimming financial/social-service industry leaches (I work in insurance:->). We seem to have reached a point in our historical evolution as a culture where anything that uses the earth as a means of production is thought of as somehow inherently evil. EVERY nation/culture in the history of the earth has either built things or dissappeared. The idea of an “Information-based Economy” has been oversold.
5. Finally, there is far too much confidence that “what worked in the 1930s will work now” across the political and academic landscapes. Hello, this is not 1929, and our economy and world are not at all like the world that existed in 1929. Assuming the same outcomes, given the significant differences that exist between the two paradigms, demonstrates our ignorance and unwillingness to greet the current challenges head-on.
I am bullish on the future of America, but not because of current political policies. There is far too much “deck-chair rearranging” going on. Failure is not the problem; fear of failure is what is wresting our future from our grasps. It may seem ironic that, in the short-run, it is failure that can make our long-term futures brighter!
RE: I am bullish on the future of America
You must not be reading up on the current efforts on getting rid of the dollar as the world’s reserve currency.
Personally, I’m getting my parachute packed because it’s gonna be a long, long fall.
Regardless whether you love or hate the Obama’s, they are making a great impression in Europe. Overnight they are helping to fix some of the damage done to our reputation by Chimp, Darth Vader and Company.
Of course, some will point to the riots and somehow associate that with Obama, but they are little people looking to tear down the country.
President Obama and the First Lady are making a GREAT impression!
One thing i CANNOT WAIT FOR, though, is the first time the military is used by President Obama. Expect every single PREVIOUS RIGHT-WING WAR MONGER to show outrage over it.
Honest question. Are you people human? The question needs to be asked. Because I cannot tell and I am leaning towards…NO.
Who exactly are you referring to as “you people”? Without trying to defend the prior administration, I am tired of “hyperbole” being the sole criteria for leadership, both domestically and internationally. Just because an individual looks good, or sounds good, does not automatically qualify every policy decision that he/she makes in the economy or the military. Sure that prior administration turned a deaf ear to diplomatic efforts. However, it may turn out that the current administration will swing the pendulum much too far the other direction. I do not see the anti-war critic’s rapid-fire condemnation of the increase in troop deployments (at least 20,000, to date) in Afganistan.
Yes, the current Western European regimes like President Obama. And he is trying to mend fences. However, the Eastern-European nations are shaking in their boots for fear that their security interests will be quietly abandoned by the current Administration.
Hey Shane, not sure why you read so much into my post. The fact that the Obama’s are making a good impression IS a good thing. And they are. As to whether the current admin swings to pendulum too far, as of yet I see no proof of that. They are simply trying to undo some of the damage done by the prior regime.
I didn’t condemn the increase in troops in Afghanistan because I actually believe that Afghanistan (and Pakistan) are where the problems are really at. I am not really anti-war. Sometimes you have no choice, and some wars are worth fighting.
Obviously those 2 conditions were not met in Iraq. We had a choice, went anyways, and it wasn’t worth it. Basically Chimp committed treason by doing it.
Freedom Fries anyone?
Banana - unless or until someone attacks us (the 50 states), why should we do anything militarily about anything? In other words, why isn’t “it” Switzerland’s or Norway’s or Guinea’s or India’s or Japan’s problem?
If you think we should intervene, rather than defend, how do you propose that we should “pay” for any of this intervention? If you do not think that military action in any event not related to an attack on our soil is interventionism, would you please explain that?
IMHO Obama is welcome and lauded in Europe because they know he is not operating with the best interests of the American people at heart. He is one of them.
Anybody who believes that how well a leader is liked is a good measure of his/her competency is a fool.
I see. Obama is now one of “them”. Sounds spooky.
And since the world and almost 70% of this country hated Chimp with a passion, I guess we were all wrong all along about him.
LMAO!
Give it up.
I never said I liked the shrub. Do you really think that if someone is critical of Obama they must be a lockstep ‘pub?
Do you wish the US were more like France? Most of the lockstep Dems I know pine away for Europe like it’s a long lost comfort blanky.
Obama is in many respects much more dangerous than Bush. A well liked, well spoken, smooth leader in a time of financial upheaval, who does that bring to mind?
…and I’m not thinking FDR.
“And since the world and almost 70% of this country hated Chimp with a passion, I guess we were all wrong all along about him.”
If someone posted a reference to “Chimp” in comments regarding Obama, what would be your reaction? Additionally, the opinion of anyone who openly expresses hate toward someone else politically or otherwise is not worth diddle to me.
It could also be that they are in shock after dealing with a moron for 8 years. Talk about a contrast!
+1 dude.
Generally I measure a politician’s worth by how much they’re liked by other politicians.
As an inverse relationship.
RE: President Obama and the First Lady are making a GREAT impression
Yup, the iPod gift to 80 year old Queen Liz and Prince Phillip exhibited real class.
The Queen is a techie. She loves techie gadgets. If you do a little bit of research you would find out the I-pod was loaded with video footage and photographs of her 2007 United States visit to Richmond, Jamestown and Williamsburg in Virginia. They also gave her a rare songbook signed by Richard Rodgers.
Queen Liz and Prince Phillip in a real sign of class gave the Obamas an autographed silver framed picture of themselves.
Neither of which gifts were made in the country from whence they came. Lovely. Here is my gift, thank the Chinese!
Don’t you know, the Chinese owns all of us.
So, I was thinking today… and it’s always dangerous when I do that.
The thought I was entertaining is an unconventional one at the moment. This downturn is actually a HUGE gift in hidden form to a few of the less-competitive big automakers.
The reasons is that the recession/possible-depression gives them a free “level-set”. Those who have been competitively disadvantaged by debt-structure, pension-expenses, medical-expenses, etc basically have just gotten a free “reset”. They can take advantage of the BK process without any sense of guilt or culpability—cause that stuff just happens in a depression, right? Assuming they survive, they will come back much stronger than they were before. The worse shape they were in before the downturn, the more they benefit from this effect. They should be able to emerge with a capital-structure and expense-structure that is much more competitive with the more healthy companies.
The GM board and execs should be jumping for joy, if they look at this from a long-term perspective.
Maybe I’ll pick up some of their stock as a flyer after the BK and when there is really blood in the streets.
We been saying debt jubilee through the courts over and over again. Problem is the PumpCo’s of the world suffer. Hence, all the protection.
Not to mention the real losses on real shares on purchase of which the government really got owned.
An interesting take on the GM reorginization deadline from Denninger:
“The government has provided a history now that says that if you are a holder of CDS written by AIG, you will get 100 cents on the dollar, even if the notes don’t default. In addition that 100 cents is above what you would normally get even if there IS a default, because normally you have to tender the defaulted bond or the payout is limited by the recovery, and recovery on a defaulted bond is almost never zero.
So in this case the winning play, if you’re a big bondholder, is to tell GM to suck eggs; you’ll get paid 100 cents on your CDS even though AIG has no money, because the taxpayer will make you whole on those CDS, even if the bonds have a recovery in bankruptcy.
In other words you could conceivably get more than 100 cents if you hold those bonds - so long as you also hold a CDS as a hedge.
It must be nice to be able to screw the taxpayer for more than a 100% payout, right?
The bondholders “committee” is all made up of big players who presumably are hedged, ergo, this has to be assumed to be part of their “thought process” - if not the controlling factor.
Small bondholders on the other hand (who have no hedge, unless they were smart enough to buy lots of PUTs a few months ago) are just going to get plain old-fashioned screwed.
Since the only way GM survives is for it to get the bondholder committee to agree to restructuring it therefore follows that the only way this can happen is if the administration (and Fed!) makes very clear that all funding to AIG has been cut off and therefore no further “pass through” payments will (or can) occur.
That is, The Obama Administration has to bankrupt AIG to save GM, or we will instead see the banks again rip off the American Taxpayer through yet another “passthrough” CDS payout stream AND GM will go bankrupt.”
I’m in agreement with you on your analysis. Do you think the Accounting Board ruling today will affect the bond holder’s plans? What if AIG doesn’t have to revalue their liabilities at risk much like the new Mark to Market rules? I still think the bond holder need to feel more pain.
Not mine, Denninger. He’s thought of as a conspiracy nut, but this particular argument might have merit.
The triggers in question are related to the bankruptcy, not valuation of the bonds, so I don’t think the FASB decision makes a difference.
The more they meddle the more paradoxical situations like this they create. Unintended consequences running rampant and multiplying like bunnies.
Going to bed. World news for April 3 - buncha crap.
Folsom Prison
A tax on beer is coming
it`s rolling round the bend
and I aint smoked a Newport since
I don`t know when
and I voted for Obama
cause I just could not see
now a tax on beer is coming
and that`s what tortures me
When I was just a baby
my momma told me son
if someone sounds like Karl Marx
you better turn and run
but I voted for Obama
cause I just could not see
now a tax on beer is coming
and that`s what tortures me
I bet Joe Bidens laughing
and smokin big cigars
Pilosis tellin GM
to make electric cars
buy I make less than 250
so I just could not see
that Obama`s tax and spend plan
was gonna torture me
I talked with my bro in Philan tonight and he says that homes he bought for 400k in 2002 are now selling for 60K to 80K. The mobiles (yea there are moble homes on lots) sell for under 20K. You cant turn this blood to water. Obama?????
Folsom Prison Johnny Cash
A beer tax is a coming
it`s rolling round the bend
and I aint smoked a Newport since
I don`t know when
and I voted for Obama
cause I just could not see
now a tax on beer is coming
and that`s what tortures me
When I was just a baby
my momma told me son
if someone sounds like Karl Marx
you better turn and run
but I voted for Obama
cause I just could not see
now a tax on beer is coming
and that`s what tortures me
I bet Joe Bidens laughing
and smokin big cigars
Pilosis tellin GM
to make electric cars
but I make less than 250
so I just could not see
that Obama`s tax and spend plan
was gonna torture me
Was talkin to my neighbor
said a job search makes him bored
he stopped payin on his mortgage
and he`s drivin a free Ford
and a beer tax is a coming
as I can plainly see
and I voted for Obama
and thats what tortures me