Bits Bucket For April 6, 2009
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Maybe if this savings concept catches on, American households can save enough money to put a large percentage of the lending industry out of business. Shrinking the lending industry down to a size where it does not pose myriad too-big-to-fail threats to the global economy should be a policy priority. Busting up Megabank, Inc into little pieces, none of which qualified for too-big-to-fail bailouts, would be very helpful in this regard.
One would also need a stable currency for this to work, as the potential for the central bank to conduct a War on Savers puts any household which strives to be financially responsible at risk of having their savings inflated out from under them.
Wall Street Journal
* THE OUTLOOK
* APRIL 6, 2009
Frugality Forged in Today’s Recession Has Potential to Outlast It
By KELLY EVANS
With their jobs less secure, their houses worth less and their stock-market portfolios shrunken, Americans are saving more now. But will they still be thrifty when the recession ends?
No one will know for sure for years, but there’s good reason to believe Americans will be saving more in the next decade than they did in the last one. “It’s hard to believe we’re ever going back to the easy credit and free spending of the last 10 years,” said economist Richard Berner of Morgan Stanley. He predicts consumer spending will grow at an inflation-adjusted 2% to 2.5% annual rate over the next several years, compared with 3.5% in the decade ended in 2007.
That means trouble for retailers, restaurants and luxury-goods makers that rely on U.S. consumers. But it could also restore some balance to a world economy that has relied — too much, many economists say — on Americans’ debt-fueled spending and emerging markets’ willingness to save and lend.
David Bailey, 45 years old, who lives in Boise, Idaho, with his wife and three young children, is like many who enjoyed several prosperous years as a small-business owner until the housing market — and then the broader economy — collapsed, leaving him saddled with debt but no income. His company, Bailey Engineering, which turns raw land into subdivision plots, hasn’t generated any income in months. He has cut his staff of 16 to a handful. Faced with a massive loss in his real-estate investments, he has sold a vacation home he built himself a decade ago and is selling another property to its current renters. He has sold his SUV to eliminate its $800 monthly payment and replaced it with a used minivan he bought with cash.
“I just want to get totally debt-free,” he said. “I’ve completely changed in that regard. At this point I just want to make enough money to enjoy myself and my family — I’m not trying to get rich anymore,” he said.
Rest assured there will always be something that is “too big to fail.” Otherwise politicians would be less important and you can gaurantee they won’t let that happen.
I’m not that pessimistic, BP. It’s at least possible that somehow, somewhere, the people will be able to take the politicos down a few notches.
Economic reality might eventually take politicians down a few notches, once the people connect the too-big-to-fail helicopter drop cash infusions on Wall Street to the impoverishment of Main Street.
“Maybe if this savings concept catches on, American households can save enough money to put a large percentage of the lending industry out of business.”
Oh it most certainly will, just as it did during the Great Depression when thousands of banks went belly-up. The rub is that it’s not the best lending institutions that will survive, but instead the ones that are the most politically connected. Just as what happened during the Great Depression, and will continue to happen as long as we have a government-mandated central bank.
“What has been is what will be,
and what has been done is what will be done,
and there is nothing new under the sun.”
- Ecclesiastes 1:9
Bailey Engineering…Classic!
I guess it’s not so wonderful a life after all.
Unfortunately, my money’s tied up in HIS house and HIS house…
I would have to guess the CEO’s name is George Bailey?
Oops — perhaps David Bailey is George’s son or grandson?
Nah… In this twisted version of the future, Old Man Potter won, George Bailey is buried 6-feet under a concrete pillar in a local stadium, and Potterville is now a bankrupt slum where the houses are still too expensive. As for Old Man Potter, he’s moved to some tax haven to escape the IRS and prosecution. Fortunately, he has direct deposit for his Bailout checks, so he’s still loving life!
And Mr Potter has a trophy wife aside his wheelchair..
“As for Old Man Potter, he’s moved to some tax haven to escape the IRS and prosecution.”
I thought that he received a Clinton pardon.
Thanks for posting that PB.
I’ve said for over a year now - ever since realizing that we’re most likely headed for a depression - that we need to realize that there very good things that can come out of depressions, and this is #1 on the list.
As a father with two young kids - I see firsthand how hard it is to protect them - or attempt to protect them - from crass materialism. I hate Barbie with a passion, and now Bratz, and even Disney with all of its stupid “princess” stuff. I know that commercialism was there when we were kids, but wow has it gotten so much worse.
It’s great to see articles about people having the light go on in their heads - “I guess we’ve been spending to much”, etc. and buckling down and spending less.
RE: As a father with two young kids - I see firsthand how hard it is to protect them - or attempt to protect them - from crass materialism.
My 46YO brother’s teenage kids think that Chinese take-out; Domino’s pizza; and evening dinners at the Outback Steakhouse
every night of the week and weekend is completely normal and that’s the way life is…The oldest who is now driving age is “inheriting” the 45k Maxima, but bitches, because it’s not a “sporty” 3-series BMW like all the other kids have. The youngest is the recipient of $20k per year in tennis lessons and costs associated with an attempt to make it into the pro’s.
And my brother contstantly complains, he has no money.
Lotsa reality wake-up’s coming.
whoa.
But look at it this way, the kids sound like MBA material!
+20
Isn’t it instructive to recall that even Disney princesses of the old school spent a lot of free time just wandering around the forest singing to birds and fuzzy creatures and very very dressed down? Heck, Sleeping Beauty was cursed with falling asleep if her finger was pricked by a spinning wheel and everyone got upset because it was assumed that the princess would be doing spinning - a dull domestic chore - or at least hanging out with the people who did the spinning. I’m even excluding the ones that got put upon by nasty relatives.
And don’t talk to me about the work involved in running a royal household once she marries the prince. Talk about a lot of work. Yeah, someone else does the cooking and cleaning, but you have keep all those servants working with each other. Nothing like dropping a $100 at a restaurant for dinner and letting the owner manage the staff.
Polly, don’t stop, keep telling us the real stories behind the stories of old. Very good!
I think a behavior change is eminent but most Americans however think 10 minutes into the future.
Yes! This is the one thing that needs to change more than anything else. Why? Because it largely underpins all of our other problems.
Why are most Americans so dependant on credit? Because nobody wants to wait when it comes to buying something. Save up for the gizmo first, then buy it. (I knew we were in trouble when places like Home Depot started adding “get this item for x dollars a month” to almost every one of their price tags.)
Why is Wall Street so out of whack? Because to many investors, a “long term investment” is one you hold for a week (or less). And this isn’t even the worst of it; the emergence of statistical arbitrage trading systems means that stocks might be held for mere seconds before being traded again.
Why is the country so messed up socially? More than anything else, I’d say the factors contributing to this are poor impulse control and a failure to think far ahead into the future. After all, why bother worrying about the long-term consequences a fling might have on your marriage when it just feels so good? If you’re a teen, why bother elaborately planning your future when you can just go to college and drink yourself silly for four more years? (Your Boomer parents, after all, will probably just let you move back in after your extended bender is over.)
Why is the country so messed up socially?
Personally - and I’ve been saying this since the ’80’s - I think it’s from the decades-long, subliminal conditioning of television.
TV shows convince us that anything can be solved in 20 minutes while the commercials constantly pound home the message that we are not as good as we could be, but it’s not our fault, we just need to buy something.
The people who escape whole - and I’m not saying I’m one - from this life-long, psychological assault are few. Most of us are touched somehow.
Kill Your Television!
Lavi:
I think you totally underestimate why rap and hip hop music has been so promoted over the last 10 years.
It reinforced the dumbing down of Americans into “consumers” Just sit back and listen to all the subliminal messages….Its the first time in our history that glorified the Ghetto, and had the message to stay in the ghetto. And to speak Ghetto.
Get Rich or Die Tryin…how much more blatant can you get?
AMEN! to all of the above!
RE: Kill Your Television!
People still watching ANY form of television today; what with the onslaught of advertising which now interrupts the programming every 3 minutes; have got to be regarded as terminally brain-dead.
Perhaps the hip hop is just a result of the earlier efforts in marketing? I know the marketing side of the world uses psychologists and their research to reach the audience for their client.
The ghetto side came later in hiphop. Sure you had early “brag rhymes” but it wasn’t until the 90s that the violence really kicked in.
I’ll be honest. I download everything. I never tune into broadcast or cable TV. Zero commercials. I just finished up “Weeds,” and like the Sopranos I was rooting for the bad guys to kill the snotty American McMansion family.
You live in country that has the best pyscho warfare propaganda system ever invented by mankind.. and it’s used to sell crap and keep us divided and short sighted.
This is NOT hyperbole, but scientific fact.
Wow oh wow. You honestly think that previous generations hasn’t felt the same way about the youth? Take a look at what parents were saying about their kids during the roaring 20’s or what parents were saying about Elvis the Pelvis, rock and roll etc… This is nothing new.
Drive by shootings and not just drugs, but really, really, bad drugs, 50% high school drop out rates and mind numbing illiteracy compare to the past?
It’s not the rebellion, it’s the level of violence and very real brain damage that is also passed along to the next generation.
Well eco, you need to talk to my mom about gangs and violence in the 50s. Especially if you lived in certain parts of SF. High school drop out rates have been happening for quite some time. This is nothing new. Really bad bad drugs have been around for quite some time. You need to watch some of the old black and white propaganda films about the evils of drugs.
Yes it’s true that kids have been kids in every generation. Since the boomer generations though it has been building on itself, with each generation of kids having similar problems to their parents, but just more so. At some point it all has to come to a head. You can’t simply negate all of society’s problems by saying kids have always had their problems and “you’re starting to sound just like your mother/father”. There is a kernal of truth to that but it’s a matter of degree.
Gangs, violence, etc. is nothing new. And high school drop out rates are high? Does that count when kids dropped out in the 8th grade during the depression to go work in a factory or on the family farm? Ever hear of the “Gangs of New York”? Based on a true story. We are quite civilized by today’s standards.
I totally agree. The Boston Globe (which may get shut down at the end of the month) has a real estate “blog” where a couple shills announce topics every day. Today was about the “bad, mean appraisers” and how they are “making many people’s lives miserable”.
Give me a break. I posted back that the only people being made miserable by this are sellers of overpriced homes, real estate agents on both sides of the transaciton, and mortgage brokers. Buyers are not being hurt, they’re being saving from overpaying and saved from financial disaster.
We’ll see what kind of response I get.
RE: Today was about the “bad, mean appraisers” and how they are “making many people’s lives miserable”.
hey, hey bad chile…
Saw the same article.
How’d you like the part where the homeowner’s went nuclear because the appraiser’s didn’t hit their expectation for $460k and then went over his head to the banker to get their number. Gotta luv whining snivelers who know more than the professional who has been in the biz for 25 years.
An an -ex appraiser I especially like the part where the author noted the work involved in constructing an appraisal had doubled or even tripled but fees where stagnant, and the appraisal management company’s would only employ those who worked the quickest and the cheapest.
These mortgage bankers can’t seem to get the messege into their collective heads that it’s garbage in-garbage out and YOU GET EXACTLY WHAT YOU PAY FOR!
LMAO…taxpayer’s will continue to pay thru the nose for a system that is incapable of change.
I didn’t even read the article because I knew I’d go ballistic, which cooridnates with the “glorificaiton of stupidity” that has been going on…well, since forever I imagine.
I have to disagree with you. There is nothing long with credit, so long as it is properly underwritten and the lender and borrower share the consequences of loans that don’t get repaid. The problem is that the Fed has overseen a transition into a system where credit risk can be passed on to others who were non-parties to the lending transaction. Their policies have supported this shifting of risk at all levels — household, firm, civic, state, federal, intergenerational and international — due to the dismantling of traditional prudent lending standards, shifting of credit risk from the contracting parties on to nonparties to the transaction and providing de facto too-big-to-fail guarantees to protect lenders against the consequences of their bad actions at the expense of anyone foolish enough to hold dollars. The global economy is suffering the consequences of this abandonment of traditional lending standards.
Yes, but what drove that movement of risk? What caused so many people to believe that they needed to use that credit to buy so much stuff?
Is one consequence of the “daring” 60s and 70s the fact that just about everybody became too comfortable with risk (or at least lost the ability to adequately evaluate risk)?
“Yes, but what drove that movement of risk? What caused so many people to believe that they needed to use that credit to buy so much stuff?
Is one consequence of the “daring” 60s and 70s the fact that just about everybody became too comfortable with risk (or at least lost the ability to adequately evaluate risk)?”
Where does one go learn to adequately evaluate risk? I know it’s not taught in school. Certainly television commercials don’t end with “only purchase this product with credit after a prudent risk assessment”. Is that something that we should expect parents to pass on to children? Because if it is, they haven’t been doing a very good job.
“Where does one go learn to adequately evaluate risk?”
Start your own business. If that fails, start another one. Continue until you establish one that succeeds, at which point you will likely be able to adequately evaluate risk.
Exactly PB. Which is why I will never trust an MBA who hasn’t actually started AND LOST a business.
Well said.
As in past years around this time, I am seeing articles in the paper and on the web about college admissions. The next crop of college kids is preparing to burden themselves with $15-$20,000/year for 4 years to get a BA in psychology or history, etc. Will that mentality change? If it wasn’t for the borrowing, supported by the federal government, those college costs couldn’t have risen the way they have. Thats what happens when its easy to borrow money: prices go up. Thats why the little first house we bought in 1980 for $46,000 is supposed to be worth $300,000 now.
Amen.
And if anyone ever challenges colleges for their userious tuition rates, they often have a reply that goes something like “the tuition we charge only covers 3/4 of the cost associated with a student’s yearly attendence” (as if you should be thankful the tuition isn’t even more expensive, of course).
But how is this possibly the case? These schools did just fine back in the good old days of cheap tuition, so the only possible conclusion is that they got caught up in the frenzy of overspending along with everybody else.
A couple of years ago Harvard made more each year in its $40 billion endowment fund than the tuition paid by its students ( of course it lost at least 22% last year, probably more unless they can use that useful market-to-model valuation ).
Thats a lot of money for a non-profit to have and not spend.
This was true at many private colleges. However, why wasn’t any of that capital used to decrease students’ tuition burden?
Oh right, there was no shortage of guaranteed student loans and parents with HELOCs and fat proceeds from selling real estate around.
I think the government encourages college to keep young people out of the workforce and thus keep the unemployment rate down. How else does it make sense to get very young people in such debt for useless majors? And then the kids are told that now you need a masters degree to get a job!
The elite college propaganda is such a disservice to young people. I’ve known a few people who went to elite colleges and none of them were better off for it than if they’d gone to a state university and some are arguably worse off.
Debt enslavement is also a key part of the puzzle. Get them in debt and keep them there, and they’ll then do as their told.
Living without debt is a form of freedom, so naturally anyone in power would seek to curtail that behavior.
In the bad old days of the Soviet Union, education was “free”– but if you ever wanted to emigrate, you had to reimburse the state for the cost of your education. Again, a way for the system to trap and enslave.
There was a good reason why, under the common law, minors under a certain age could not contract for binding debts. Kids nowadays are being encouraged to sell their futures before being old enough to realize what they’re getting into.
I went to the toughest college that would take me with a ride, and took tough courses. I knew that I needed to learn how to think critically, and well, and that there would be no do-overs. My great advocate, my father, died when I was fourteen and it was clear that I was on my own. Thankfully, on the way to learning how to think and write, I also learned history, literature and a smattering of other things.
I have had what I would consider three major career changes in my life so far. The ability to think critically and write well have been prerequisites for all of them. I have never worked in my major area of study.
Not the least of the benefits of a good education: I have rarely been bored or lonely. During the dark times that visit all of us, I have been able to escape totally into a good book. (At least I HOPE I’m not the only HBB’er who has been kicked well and firmly in the a** by life! lol.)
I thank heavens every day for the experience. I had four years to get tooled out for the main event, during which interval I had three squares and a roof over my head.
Few kids are prepared to take life on after high school. I was tough, and saw the world with unsentimental eyes, and I knew I was not ready or able. College was a safe place to finish growing up, and to learn the tools of the trade of an increasingly volatile society - thinking and writing well. My other alternative would have been the military. I would have embraced it gladly.
Interestingly, my son the Marine says his Chemistry degree has helped him immeasurably. Any test he takes, he places in the percentile required to get first pick in whatever they’re testing for.
That’s my two cents, and I’m sticking to it.
Thank you so much for this post, Jane.
What is a rational amount of debt to have after those 4 years, at age 22?
Definitely nice post, jane. Agree with your position about college and majors.
Also agree with Plaid, in that colleges are too expensive, and easy lending has enabled them to increase prices as much as they have over the past 10-20 years.
Sorry to hear about the early loss of you dad, jane.
Well written heart warming account but it kind of misses the point. A college education may be valuable, but how valuable? How much debt must kids saddle themselves with, supposedly just to be able to compete in life? Are the numbers meaningless when compared to the experience? And what if that experience turns out to be little more than frat parties? If it’s a party you’re looking for dropouts know how to do that just as well as anyone……
Well, certainly many college DID expand plant and programs, leading to greater expense. But it is also true that direct government support is lower than it used to be. Proportionatly less of the expense is borne by taxpayers than used to be the case, at least for state schools.
Of course part of the difficulty that we have as a country is that higher education represents a sort of “Red Queen Race,” where ever higher educational qualifications are required for the same work. I don’t think that the average store manager at the Gap has any use for the college degree that is required for her to get the job.
My daughter is a manager for one of the mid-upper level clothing retailers. Went to college for a year and a half. All the other managers in her store have degrees (one has a Masters), and are making the same money. She has no school loans to pay off, the others are working off $40K plus loans.
Their sales are down, but they are still making plan, and is weathering this downturn fine. She woiuld like to go back to school, but won’t go, unless she goes for a degree that justifies the cost.
For me, college and especially grad school weren’t about increasing my earning potential, but about getting an education. If I worked as a custodian, I would think of my education as having no less a value.
So many young people (and old people) lack a basic knowledge of world geography, English literature, history, and politics. It is my belief that a solid education and understanding of these fields is crucial to becoming a well-rounded citizen and contributor to our society and culture.
That said, college is not strictly necessary to obtain this basic cultural knowledge and understanding, particularly with the ubiquity of the internet. However, there is no better place in the world to develop mentally than at a university.
I agree Education is good in itself.
Then why have WE FAILED as a country to do this as a requirement for a HIGH SCHOOL Diploma?
at least 1/2 of the colleges should be put out of business, and/or replaced with tech school designed around unemployment…in order to collect you must attend school daily for 6 months to be retrained and have upgraded skills.
————————————————
So many young people (and old people) lack a basic knowledge of world geography, English literature, history, and politics. It is my belief that a solid education and understanding of these fields is crucial to becoming a well-rounded citizen and contributor to our society and culture.
Wow. Your experience sure is different from mine. I went to an Ivy school, and I only really started to learn when I got out.
Sometimes the purpose of education is to learn how to learn.
Comment by LehighValleyGuy -
It’s true what SUGUy says, that an education can teach us how to learn.
It also depends what you mean by “…started to learn when I got out.”
I could probably make this argument myself. Practical on-the-job type experience teaches how to get to the bottom of things, understand people better, write concise reports, and show us industry tools — ArcView GIS is a good example of that for me.
But since I’ve left school, I don’t have the time for personal growth that I did while in school. While I could conceivably spend my evenings reading about international development, I don’t have a professor to talk with anymore. In school there is a real opportunity for ideas and knowledge for its own sake; in the working world, all ideas and knowledge must provide some practical outcome to better our place of work. This really is a dramatic difference.
If you study engineering or business or MIS, I’m sure a whole different set of pros and cons would apply. In these fields, college continues to struggle between providing industry skills and a broad, worldly education.
In today’s world, many students go to college to get a job. In my mind, if your whole goal is making money in a practical way, why not become a tradesman and skip college all together?
I’m not even talking about on-the-job experience. I was taking that for granted. I *meant* real personal growth– reading Shakespeare, the Bible, studying law and science and history.
That’s awesome. We need more people like you in this world.
Thanks, but I wasn’t trying to build myself up, just to say that to me, real education is more a function of one’s own motivation and effort than where (or if) one attends school.
And I wasn’t being facetious. Like you say, one must be motivated to learn. Disinterested folks could easily get a degree (”get an education”) yet learn nothing. The university environment worked great for me, it may not for others, and others may see it a waste of time. The resources of any large university are absolutely amazing and typically ignored by most undergrads and even many grad students.
In undergrad, I remember my required junior english class. The level off work produced by about 65% of the students would have been unacceptable even in my high school. So that class was mostly a waste and showed me how many people really shouldn’t even be in college. It’s not that they were dumb, they just didn’t care. The fact that this sort of thing was nearly the modus operandi for certain sections of the school was more than a little disturbing.
Of course, this was balanced by other classes with world-class professors that taught the classics as if they studied in the Academy.
RE: “the tuition we charge only covers 3/4 of the cost associated with a student’s yearly attendence”
The alphabet soup of head honcho’s, aka, “President”, “Head of Deans reporting to the President”, “Assistant Dean of Head of Deans reporting to the President”, et el., runnin’ the UMass system are the highest paid dudes in the state employee system with salaries in excess of $600k; pensions @ 80% of their “high 5 years; and health care for life.
Then you have, people like the former Mass Speaker of the House or various congressional cast-offs who find refuge in the system for a double or triple pension dip.
High ed today is pure extortion of the middle class.
hehehe…Good luck puttin’ all those new diploma debtor in jobs next year.
If it wasn’t for the borrowing, supported by the federal government, those college costs couldn’t have risen the way they have.
The level of borrowing — and tuition rates — increased remarkably as private lenders were pulled into the game.
Lending for higher education also tracks fairly well with the housing bubble (until the RE bust, when the two diverge). Lending for higher education was essentially flat in the late ’90s and early oughts, then rises dramatically from ‘02 to ‘08. Non-federal lending accounted for almost 25% of the total lending in ‘05 to ‘08, significantly higher than 8-10 years ago, when it was less than 10%. Private and state lending is down significantly this year, however. (Source: WSJ.)
The student loan bubble still appears to be inflated as of ‘08; it should tail off in ‘09, but we’ll see.
“The next crop of college kids is preparing to burden themselves with $15-$20,000/year for 4 years to get a BA in psychology or history”
A 4 year Party with a cover-charge of $20k a year…now that should be… History
And at the same time we have seen students take on more and more debt, they have been running away from the harder science and engineering majors. College is just a big meet up, with a high price tag. Let’s hope we can continue to pull in the top Indian and Chinese engineers and scientists, because we certainly don’t have the necessary home-grown talent.
This works well as part of the Plan since at the rate things are going, we won’t have any jobs for those American engineers and scientists anyway: everything will be done overseas and we’ll just sit around and reap the rewards from this system… rewards which won’t be the “shopping lifestyle” that many were planning on enjoying…
But it’s ALWAYS been a big meet up. It’s just that pre-war it was a meet up reserved for our social betters and a few, highly qualified scholarship students. Most people had no expectation of and employers little use for a college degree. But Bif got his finance job, and Muffy worked on her Mrs. degree, and just possibly some of Mr. Tuition Hardscrabble’s ways rubbed off on them.
Yeah what’s the use of taking a hard major anyway? History will get you into law school as easily as any other major.
We have more than enough home talent when it comes to engineers and scientists.
Witness the huge layoffs at IBM/EDS/Microsoft/etc. with the banks receiving TARP/TALF money complaining about having to jump through one extra hoop in order to hire H1-Bs.
Who wants to work hard through college in order to have to train your replacement?
Friends that try to hire technical people are telling me different. They’ve complained that they have a hard time finding *QUALITY* employees. They can find people with degrees or tech school training. But when it comes to good old common sense and logic, or good software engineering skills the applicants are falling down.
Tell them to start interviewing the applicants that are over 40.
Thanks skip. Couldn’t have said it better.
The technical jobs in areas I have over two decades of experience at doing go to new hires at rather (I hope) less than what I make. So I do the tasks that are considerably less fun that require some technical judgement and gleaning shards of useful information from esoteric manuals. The alternative, I guess, is management or “systems” engineering.
Sadly, as a frugal sort who has read the HBB for several years with resulting low housing expenses, I could survive and even thrive on a “fun job” salary. I wonder, however, if I would promptly be eased out as wierdly unambitious were I to suggest such a “downgrade”.
the entire education system is FUBAR. i am a CPA…i could have learned all i needed to become a CPA in two years maximum…but because society says i needed four years that’s what i had to do.
it’s all BS.
FUBAR? Did you happen to watch “Saving Private Ryan” on TBS last night or something?
You got that right. I taught various accounting courses at 3 different universities. Just looking at recent accounting pronouncements tells me that nothing has changed - it’s still all BS.
“It’s hard to believe we’re ever going back to the easy credit and free spending of the last 10 years,”
But, but, but… How are we going to create wealth for ourselves without easy access to credit?
People will get there eventually, PBear, but we’re far from there yet. I went to the local mall yesterday for the first time in five years. I turned it into an anthropological investigation. I walked into a Kate Spade store and looked at plastic rings for $55 and little handbags “on sale” for $300. Jewelry stores did not have the bargains I expected. The place was packed, as was the parking lot. It was depressing, so I cheered myself up by going to the discount Nordstrom Rack and buying a pair of jeans for $5.99! Then we went home and cooked a good dinner.
Two generations of Americans have grown up with phony prosperity. They like overpriced stuff, and are used to debt. I hope that they can someday experience the satisfaction of living within ones means and the peace of financial security.
Our local malls are ghost towns
$800 per month car payment?! That’s the total cost of the last car that I purchased.
Doing the math:
$800 purchase price,
$40 down,
that’s about $15/month for 5 years right?
oh wait, you paid cash didn’t you……
But… but… but our eCONomy is based upon people spending more than they make with the parasite class getting rich from the debt servicing! Whatever shall we do in a frugal future?! If this keeps up, we’ll have to build real products and have real jobs (with real salaries) as a nation vs. endless consumption based on “funny money” valuation.
Or, we can just fire up the printing presses and turn the current problem into a bigger one!
Or we become Mexico.
Our Gini index says that’s the most likely scenario as Mexico is the VERY NEXT highest on the Gini index.
2 economies. 2 governments. 2 main social classes with an overwhelmed, outvoted and outnumbered middle class.
This already seems to be well on its way towards happening. With each passing day, the DJIA looks more and more like the rich peoples’ trading index.
Social securtiy.
its $800 monthly payment
Whiskey Tengo Foxtrot!
I just bought a car for my wife. 2 years old, low-mileage (the car, not the wife) and nice (leather seats, built-in navigation, lots of creature comforts), paid cash. I’m not rich. I don’t make tons of money.
I. Will. Never. Make. Another. Car. Payment.
I made that vow when I paid off my truck. I’m done with it.
Why in THE HOLY HELL does someone make an $800/mo car payment? Even if I WERE to break my vow, it sure as hell wouldn’t be to the tune of almost a grandido per month. It would be because I can’t afford anything and MUST finance, in which case I would be financing the cheapest thing I thought was a good use of my money.
effing retard.
“Saving” and “not spending” are not the same thing.
test regular, italics, bold &copr;
Special characters:
> >
& &
¢ ¢
£ £
¥ ¥
€ €
§ §
© ©
® ®
Repudiate the debt. Why should we pay for these failed financial institutions to administer to us a screwing?
Over the weekend, it seems like there were all these stories on TV of people who had lost their jobs, their health care, etc. Real human suffering, courtesy of companies like AIG and Goldman Sachs. I’m sick to my stomach about it. These were not FBs. Just people who lost their livelihoods and their health.
The so-called “wealth” that was created was bogus and extractive. Not real “wealth” in terms of productive enterprise.
That’s a very good question, especially when it comes to derivatives contracts. Why can’t those contracts be repudiated, instead of the government doing stealth bailouts through AIG, giving tax breaks as well as direct ones? It’s to offset disastrous leveraged “investments”. They were pigs at the trough buying AAA rated garbage at 30:1 leverage, and they would utterly fail margin calls without bailouts.
The first question of letting Ayn Rand-ish heroes police themselves in their own best interest and that of the economy has been laid to rest for good, however. The real “next” question is: Can the government avert GD-II by massive intervention in the economy? This will be the great experiment that determines “responsible” fiscal policy during future economic downturns, and a living laboratory of the effects of moral hazard.
“The first question of letting Ayn Rand-ish heroes police themselves in their own best interest and that of the economy has been laid to rest for good, however.”
You’re buying into the propaganda.
“Repudiate the debt. Why should we pay for these failed financial institutions to administer to us a screwing?”
Because you don’t piss off your fellow country club members. It’s just bad form.
Well said, palmetto!
Welcome to America. It was always a big lie.
Some economists speak with independent voices. Chris Thornberg and Nouriel Roubini would be good cases in point. They courageously defended their clear vision against a torrent of ridicule from the MSM and the high priests of the economics profession.
So I disagree with Nobel Laureate Vernon Smith’s assertion that “We economists were wrong.” He, Ben Bernanke, Edward Leamer, David Lereah and many other prominent economists with bully pulpits could not see the gigantic bubble forming right before their eyes, much like the very scientific weather forecaster whose statistical model compels him to forecast “sunny”, even though a look out the window could have informed him that his weather station was about to be destroyed by a twister. I think it is time to start defrocking high priests who so vocally missed the obvious. Their failure to grasp the obvious should not besmirch the entire economics profession. They should speak for themselves.
That said, I nonetheless recommend Smith’s Op-ed, as his hindsight is 20-20.
Wall Street Journal
* OPINION
* APRIL 6, 2009
From Bubble to Depression?
By STEVEN GJERSTAD and VERNON L. SMITH
Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which — when first studied in the 1980s — were considered so transparent that bubbles would not be observed.
We economists were wrong: Even when traders in an asset market know the value of the asset, bubbles form dependably. Bubbles can arise when some agents buy not on fundamental value, but on price trend or momentum. If momentum traders have more liquidity, they can sustain a bubble longer.
But what sparks bubbles? Why does one large asset bubble — like our dot-com bubble — do no damage to the financial system while another one leads to its collapse? Key characteristics of housing markets — momentum trading, liquidity, price-tier movements, and high-margin purchases — combine to provide a fairly complete, simple description of the housing bubble collapse, and how it engulfed the financial system and then the wider economy.
In just the past 40 years there were two other housing bubbles, with peaks in 1979 and 1989, but the largest one in U.S. history started in 1997, probably sparked by rising household income that began in 1992 combined with the elimination in 1997 of taxes on residential capital gains up to $500,000. Rising values in an asset market draw investor attention; the early stages of the housing bubble had this usual, self-reinforcing feature.
…
The article said the bubbles that kill are consumer debt bubbles.
Which leads me to a thought. In the goods bought with cash era, the business cycle was driven by inventory cycles.
Now in the services bought with credit era, the business cycle is driven by consumer debt cycles.
Editorial suggestion:
“…in the services bought with credit era, the business cycle
iswas driven by consumer debt cycles.”It’s over. The fat lady has died.
Yeah, if it wasn’t for those rat-ba$tard consumers forcing banks to loan them money, none of this would have happened.
We can rail against people borrowing too much, but the banks KNEW that these people didn’t know how to do math.
Supposedly, the bankers know how to do math, and are in a better position toi determine if a loan is going to be repaid or not.
This mess wasn’t caused by spending five bucks on a “My Little Pony”, or spending an extra 300 bucks at The Gap twice/three times a year, instead of Wal-Mart or Old Navy.
THAT is why I hated the bankruptcy reform law of a few years ago. The banks complained that people were running up their credit cards and then declaring bankruptcy. But figuring out who was willing and able to repay them is SUPPOSED to be what the CC companies are good at. There are idiots on both sides of mosst bad loans.
When I got my Mastercard from USAA, I had to prove a year and a half of continuous employment with increasing pay and responsitbilities. They preferred 2 years, but the fact that I had already paid off all my student loans and my car loan during that 18 months may have inclined them to relax the 2 year standard a little.
Now THAT I will buy…
Believe it or not, there are some people/institutions that stuck with their tried and true standards. Like some of our local banks.
They don’t need TARP money. Coincidence?
“They don’t need TARP money. Coincidence?”
There is no coincidence they need no TARP money, and further, no coincidence that they had a harder time surviving than those who profited by abandoning lending standards during the boom phase. But it is the bad actors who profited by abandoning lending standards who qualify for too-big-to-fail bailout money. Expect more action in the future as a result of this unmitigated moral hazard problem.
PB - is it me, or did you read The Creature recently?
Packman — I did not read The Creature (and am not even sure to what that title refers), but I have come to realize that many things I post here are distillations from blog conversations with others whose side of the conversation may draw on written works.
Why can’t the consumer and lender both be to blame? Just because the bank is willing ot lend you money you cannot pay back does not mean you should borrow it. The bank is wrong for lending it and the consumer is wrong for borrowing it.
The high priests and the paid pundits of the economic profession were clearly lying. Every body could see the bubble otherwise we would not have had forums like these and many others where ordinary people who saw the bubble came together from across the country and discussed it. Give me a break.
While occuring, there is a much higher correlation between one’s view on whether there was a bubble during each of the last 10 years and whether they were, or were expecting to, profit in some manner therefrom, than to what their IQ or education happened to be.
I do think the source of their compensation is a critical factor in their forecasts. What do you think the weather forecast would be every day if weather forecasters were employed by the Chamber of Commerce?
“I do think the source of their compensation is a critical factor in their forecasts.”
Absolutely. Follow the money.
“…were clearly lying.”
I don’t think so, at least in all cases. One feature of bubbles is they tend to remain well hidden from many who should be smart enough to notice them, especially since they are in plain view.
Galbraith argues extraordinarily persuasively about this subject in his various books on bubbles.
It’s selective amnesia, and political calculations (”nobody wants to be the one that upsets the apple-cart.”)
I don’t think they are lying - not in the sense, of a child breaking the cookie jar and lying about it.
Early on in the bubble, when Greenspan would issue bubble-denials, I just assumed that he was lying; my thought was that he had to be smart enough and experienced enough to see it, but that were the Fed to preemptively raise rates to pop it, then they would be blamed for the resulting fallout, which would be massive and painful. If they instead let it inflate until it burst of its own accord, then they could stick with plausible denyiability. So it struck me as politically expedient not to see it.
I still lean towards that theory. Either that, or we really do have the blind leading the blind. I think I prefer to believe that they are smarter and more politically sensible rather than to believe that they are fools. Which theory seems like the simpler explanation—e.g. satisfying Occam’s Razor?
Back in 1928, the Fed had daily meetings sometimes including Saturdays about “what to do”.
The answer was clear. There was nothing they could do without getting blamed for the fallout. And when they did something that was pretty toothless, the market quickly skirted around the rules.
They are clearly very smart and politically expedient. It’s the latter that drives decision-making.
Greenspan’s 1977 NYU PhD dissertation was has something to say about housing bubbles.
“We were tickled to find that the work’s introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble. Writes Greenspan: “There is no perpetual motion machine which generates an ever-rising path for the prices of homes.”
Greenspan, however, didn’t foresee a housing mania spilling into the general economy, toppling banks and brokerage houses and paralyzing key portions of the credit system. The worst he could anticipate was that a sharp “break in prices of existing homes would pull down the prices of new homes to the level of construction costs or below, inducing a sharp contraction in building.” Back then, there were no home-equity lines of credit, derivatives or subprime mortgages. Mortgages were largely concentrated at savings and loans. Credit was harder to come by, too, because conventional mortgage rates were about 8.5% and headed significantly higher. Still, the thesis shows that the former Fed boss was focused on housing very early in his career. Thus, it casts doubt on his recent assertions about being surprised by the Mesozoic-era-size impact of this decade’s housing mania.
Greenspan wrote: “This thesis endeavors to develop an area of theory and application which, in recent years of inflation and stagnation, has taken on increasing importance: the factors which govern market prices of assets and the impact they and other key balance sheet variables have on the aggregate investment process. Econometric models have tended generally to give short shrift to such variables, either on the grounds that their impact on effective demand is negligible or that their influence was largely reflected in other macro variables and, hence, an appropriate reduced form would factor them out.”
http://online.barrons.com/article/SB120917419049046805.html
Never underestimate the human ability to discount facts that we don’t want to believe, or to highlight the facts that we do. I wouldn’t say the bubble was well hidden, but most of the people in position to take corrective action were too invested in the ‘good times’. Either way, I agree that not all the high and mighty types were lying, just comfortably self-deluded.
Probably the next question to ask is: what causes currency to fail?
Its not consumer debt.
Then basically you are saying the economic profession knows very little about bubbles especially the housing bubble. I was talking to my brother in structured finance who believes that we need another bubble to get us out of this mess. He thinks trading carbon emissions might be the next bubble wall street is trying to inflate.
I agree with PB on this one. Further up in the postings there was criticism of our educational system. These so called geniuses are from the same educational system. So why the surprise when they couldn’t see it happening?
So why the surprise when they couldn’t see it happening?
——————-
Because our society has been brainwashed into thinking these people are geniuses who can see and understand much more than our little minds can possible imagine. Because of their superiority, they **deserve** to be paid millions or billions of dollars to “keep watch” over our financial system.
Surely you’ve heard that we must not cap their compensation…or we might lose this superior talent!!!
Here’s the link
Good article
http://online.wsj.com/article/SB123897612802791281.html
The last sentence is the scary one if you buy the rest of their argument.
So are they saying this really is GD II and were just too chicken to state it baldly?
“The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we’re witnessing the second great consumer debt crash, the end of a massive consumption binge.”
Punch line from Vernon Smith’s WSJ Op-ed:
The causes of the Great Depression need more study, but the claims that losses on stock-market speculation and a monetary contraction caused the decline of the banking system both seem inadequate. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt — especially mortgage debt — that was transmitted into the financial sector during a sharp downturn.
Isn’t a huge part of the Fed’s and Treasury’s (aka Plunge Protection Team) main recovery plan to inject lots of mortgage debt into the financial sector during the current very sharp downturn? And isn’t that pretty much what already happened in the aftermath of the tech stock bust earlier this decade?
Maybe the third time will be a charm (counting the Great Depression as one and the tech stock bust aftermath as two).
What’s the end game? Everlasting prosperity? The elimination of pain and suffering? Heaven on earth?
I’m just amazed that it took mankind until 2009 to produce the visionary and omniscient leaders we have today.
snark off/
“What’s the end game? Everlasting prosperity? The elimination of pain and suffering? Heaven on earth?”
You might not be as far off as you think:
“Obama didn’t get elected to warranty your muffler. He’s here to warranty your life.”
http://www.detnews.com/article/20090405/OPINION03/904050314/Obama+s+ultimate+agenda
He’s the geeky computer guy trying to sit with the cool Euro kids who won’t help him. No wait: he’s a rock star and they STILL won’t help him. How much of this embarrassment can we stand?
“What’s the end game?”
A nice little condo in sunny Florida, by the beach, where you can enjoy all the best retirement has to offer!
Yes, Muggy. A little place for you for $50/sq/ft on the beach. For PBear, an affordable place in San Diego that he pays for with cash. For me, early retirement and time for hobbies. For Ben, a nice stash of hard-earned cash from his bubble businesses. That’s will be the endgame for HBBers. Yay!
I keep thinking the gubmint will do everything within their power to avoid home prices ever reaching affordable levels. So far, any such efforts are failing miserably, though.
Unfortunately, after watching some meaningful declines in our area in Q3 and Q4 of 2008, it looks like much of this bailout stuff is keeping inventory off the market and enabling FBs to refi at very low rates (heard a couple of stories about 2-3% ranges).
We’re beginning to think we just might end up being perma-renters, as the mania as as strong as ever around here.
OTOH, a house near us just came on the market at $400K the other day. While I’m sure there were multiple offers on it the first day (no doubt over list price), this is the first house we’ve seen listed in the $400K range since we’ve been here (mid-2004). Every now and again a flicker of light is seen.
Still, we have a long way to go.
“Maybe the third time will be a charm (counting the Great Depression as one and the tech stock bust aftermath as two).”
For what? The government’s ability to inadvertently cause absolute, cataclysmic financial ruin? These same government moves arguably fanned the flames of the GD and made it worse…and the scale of this asset bubble essentially dwarfs that of the GD by far.
“Isn’t a huge part of the Fed’s and Treasury’s…”
Keep in mind some of the new debt simply replaces/refinances older debt with new terms. In addition, some of the new debt undermines (lower priced collateral) older debt. They are not gaining upward price traction. Instead, they are digging in deeper. The wheels are turning, however.
What’s more, every new dollar of government or corporate issued debt has to be repaid with future earnings. In short, we are going nowhere fast.
“The wheels on the bus goes round and round”
But one person’s debt is another person’s money. If debt is repudiated then the money associated with the debt vanishes as well.
When the banks failed in the GD they took a lot of debt - thus a lot of money - with them.
That made cash the king then as it is making cash the king now.
This is a long read, but well worth it. Puts the problems of Iceland into perspective and is a cautionary tale of the global merchant bankers. Repudiate the debt and hang ‘em high!
http://www.globalresearch.ca/index.php?context=va&aid=13055
palmetto …This article is a must read ,,,,Thanks .
I have to say, it was quite an interesting read.
I had no idea that Iceland had its debt linked to CPI. The more inflation, the more debt. That is rather ingenious.
It is worth noting that Iceland was once an island with forests full of trees and vast grasslands. People manged to f* that up within one generation.
Took a long time to get through that whole article. Can’t say I agree with everything, but the conclusion seems sound. Iceland needs to tell its creditors where to go.
Who was it that was talking up Icelandic bonds a while back?
Is it fair to say that Nobel Laureate Smith is calling Great Depression Expert Ben Bernanke’s theories into question? I love it — peer review for the Fed Chairman!!!
Maybe the Fed’s plan to reward households and firms who flushed hundreds of thousands (households) or billions (firms) of money down the toilet with new infusions of cash is not a sound plan. Who’d of thunk?
Was there really that much mortgage debt back during the Great Depression? I was under the impression there were no adjustable rate mortgages, not interest only loans, no 40 year mortgages, no pick-a-payment, etc.
I thought everything was much shorter terms and much more closely aligned with affordability?
Lending standards were very lax in the 20s, which is what led to the credit bubble.
With the GD, however, one of the main contributing factors to the initial plunge was the phenomenon of people buying stocks “on margin”. We don’t have that problem so much this time around, but our mortgage lending standards are likely even more lax than theirs, and our debt/income ratio per capita is much higher than theirs was well.
I think you are missing something important in the way the hedge fund industry and the (defunct) investment banking sector made so much money in the years leading up to the recent cataclysmic financial collapse. Got leverage?
That’s true.
“With the GD, however, one of the main contributing factors to the initial plunge was the phenomenon of people buying stocks “on margin”. We don’t have that problem so much this time around,”
How many HBBers have personal margin trading accounts?
PB has it right. The issue with margin in the 1920s was NOT just a function of the “little guy” trading on margin. There was plenty of what I call “structural margin” at work—e.g. it is embedded in the system. In the 20s, one of the popular leverage vehicles was “trust comapnies”. These would basically borrow money, buy with high leverage, and float their shares on the exchanges. Picture a 4-to-1 leveraged trust company, which owns nothing but shares of another 4-to-1 leveraged trust company, which holds nothing but a single stock. Net result is a 16-to-1 leverage on the underlying stock.
These smack strongly of today’s hedge funds, many of which don’t hedge at all; we should call them what they are: “leverage funds”.
There was also TONS of what was essentially zero-down or very-low-down financing for RE in the 20s. Much of it was not from lenders, though; to a large extent, the crazy trading in RE was based on seller-financing. I read of transactions where a property had been flipped from buyer to buyer, eleven times; in the subsequent massive unwinding of the cascading defaults, the original seller ended up with the property back after each of the buyers defaulted on their seller-financing! Crazy.
Dang. History does repeat itself.
Only when the laws, rules, lessons and regulations that were created after the mess are repealed by later generations.
My grandma’s brother bought 10 homes on margin in chi town.
They lost all but one. That one home had value by the 60’s.
So housing prices do always go up!
I wonder how many years will it take for the “real estate prices always go up” mantra to be excised from the average American’s conscious during the Great Depression?
1 year? 5 years? 10 years?
At this rate? 50 years.
The River Denial runs deep.
In the automobile industry, it’s often said that common perceptions about specific brands of cars (i.e., Volvo is safer than anything else out there, Toyota/Honda are reliable to a fault, Hyundais are garbage, etc) lag at least 5 years behind reality.
Considering that so many more people were depending on RE as an investment, I’m going to argue that this perception is going to lag at least a decade behind reality. Maybe more in the areas where price declines are coming on realllly slow.
When I tell people that prices are still falling and so now is not a good time to buy, people argue.
I’m not sure the real estate denial will ever die. It will just be put on hold for those who can’t get a loan.
It’ll never die, at least not here in Maryland.
Here, the grass is always greener, the government apparently hands out free money to everyone (not sure where to sign up for my own Bailout), and housing MUST be expensive because that’s how you know it is a good house, or something… and real estate only goes up! Except when it doesn’t… but it will go up next year… or someday…
“I was under the impression there were no adjustable rate mortgages, not interest only loans, no 40 year mortgages, no pick-a-payment, etc.”
There were interest only loans in the 20’s. That was one of my initial clues as to the riskiness of the loans of a few years ago. The last time there was much use of interest only loans in the U.S. prior to the most recent credit/housing bubble was in the 20’s.
Absolutely correct, SDGreg!
That also stood out for me when I began researching all this stuff back in the bubble years.
had their origins in excessive consumer debt ??
Yep…I recall there was a period before 1932 called the “Roaring 20’s”…
“WASHINGTON (Reuters) – U.S. congressional budget analysts have raised their estimate of the net cost to taxpayers for the government’s financial rescue program to $356 billion, an increase of $167 billion from earlier estimates.
The Congressional Budget Office had originally projected the $700 billion Troubled Asset Relief Program would cost taxpayers $189 billion.
The additional cost, which applies to TARP spending for fiscal years 2009 and 2010, was included in the CBO’s March projection of a $1.8 trillion deficit for fiscal 2009, which ends September 30.
The TARP cost projection was raised due to changes in financial market conditions, new transactions and a shift in expected timing of payments, the CBO said.
The Treasury Department announced plans to use some of the money to help avoid home foreclosures and made new deals with Bank of America and American International Group. Those programs involved higher subsidy rates than previously estimated, the report said.
Congress passed the Wall Street bailout program in October with the goal of stabilizing banks and reassuring jittery markets.”
I wish I had 1/4% of the waste. This is insain.
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 that’s what tortures me
but I voted for Obama
cause I just could not see ??
And the previous eight years, how BLIND was that ??
Well, Bush sucked hard and Obama is already waay worse.
Try again on that one Wicked.
Brilliant!
So, all of you are telling me that it’s not possible to reflate the current economy.
That further deflation is inevitable.
That the money is sitting in the banks.
That the banks are unwilling to lend.
That the unemployed can’t spend anyways.
We predicted the housing bust, that’s true.
But what makes us believe we can predicted the future?
Yes, the economy is a sham.
Yes, we are witnessing a massive theft.
And, we can see where it would be so easy to make things right.
A shift to real production, real jobs and not the mindless consumerism which has passed for an economy.
Yes, we could build infrastructure and energy sources from wind and solar.
Yes, all this is true.
But, seeing how something should be.
And seeing what the moral consequences should be.
Doesn’t make it so.
So let’s see what some of us have done.
I’ve heard for years right here the following: “don’t fight the FED” and “the trend is your friend.”
Yet in the midst of a historically unprecedented serious of moves by the FED, which they were courteous enough to at least telegraph, and one of biggest percentage moves upwards of the stock market, what do some us do?
They go in the wrong direction!
Why?
So, I have been thinking.
Could it be as simple as we see how it should be and wish it so?
As I write this, there are no post, I probably could have been a “first” but I write slowly and I am thinking my way through this and I have not checked the pre-markets, but it doesn’t matter.
The question I hinted at in the first sentence is this: could they reflate?
Could they get money into hands that will spend them and scare those of us that have money into spending it?
For years, right here in this blog, I’ve heard from our most respected posters that the government welcomes inflation, actually could not function without it, as they need to pay there old debts with present and future less worthy dollars.
So we do know what they will attempt to do.
And we know how it should be.
I’ve no desire to be a sainted dragon slayer, if any of those romantic amongst us wish to fight the government, that’s their choice.
For me this is not an academic “inflation-deflation” argument.
It’s the future and how we will fare in it.
‘we are witnessing a massive theft.’
I am curious; were you not concerned as the government ran up half a million in debt (debt that you don’t even pay the interest on, BTW) in your name before the housing bubble even started? By all means, if you are so concerned about theft, get out your checkbook and pay what you owe. But chances are, you will be the only one in this country to do so today.
This is what I don’t get about people that go on about inflation; if there is inflation, you will know it. Even man woman and child in the country will know it. It’s like a big storm raging outside; it will be impossible to ignore. Interest rates will be at double digits. Precious metals will soar into the thousands per ounce. Prices at stores would rise significantly every time you go shopping.
But you know, none of that stuff is happening. And while you worry about things that aren’t happening and even if they were, would be out of your control, there are things you could be doing to further your interests. I am busy doing just that everyday. But I feel compelled to speak up when I see posts like this. Primarily what I’m saying is this; you aren’t the US government and you aren’t the Fed and they aren’t you.
And you weren’t first.
“If there is inflation, you will know it. Even man woman and child in the country will know it.”
The question isn’t what is, but what will be.
I’m also concerned that what will be is inflation. Maybe not today. Maybe not tomorrow. But soon.
Essentially we will keep borrowing until the rest of the world cuts us off. If the rest of the world cuts us off, either the federal government stops paying its debts, stops paying the military, stops paying senior citizen benefits, or monetizes the debt. Everything else it does it pocket change.
If the dollar falls, we won’t be able to afford imports — their price would soar. Eventually this will be mitigated by increased production in the U.S., but not overnight.
“Essentially we will keep borrowing until the rest of the world cuts us off. If the rest of the world cuts us off, either the federal government stops paying its debts, stops paying the military, stops paying senior citizen benefits, or monetizes the debt. Everything else it does it pocket change.”
I get the feeling our government is like a HELOC home-debtor who can’t pay his bills but can borrow to keep up his standard of living.
Give that guy a cupie doll!
“Could they reinflate?”
I vote no for several reasons:
1. (Re)inflating such a bubble essentially requires either ongoing wage inflation or a steady supply of wide-open credit. You don’t get the former when unemployment is increasing, and it is unlikely that the latter will soon reach the levels it had in recent times. Why? Again, unemployment. Unless we kick off government-funded NINJA loans or something, it’s hard to envision how so many unemployed people would be able to buy houses again.
2. The Fed has aggressively been inflating the currency since this disaster started, and inflation robs buying power in the long run, making asset price inflation difficult.
3. Even if the US government attempted to fuel such price inflation directly and/or via the banks, there are upper limits to how much money the US government could concieveably borrow. Foreign investors will lose faith in the financial integrity of our government at some point. The Chinese have already signaled reluctance to purchase more T-bills.
4. Even if the banks try to stop up the flow of REOs to “manage price declines”, they will be undercut by desperatre FBs who have been laid off and need to sell. There will be an ongoing dynamic where FBs and/or REOs will race to the bottom simply because they NEED to sell at some kind of price.
5. In the long run, potential buyers are likely to be leaving inflated/expensive locales in droves in search of cheaper housing.
6. The corporate suffering of this downturn is far from over, and there are MANY more layoffs coming up in the future (especially if GM/Chrysler go Chap 11, which is very likely). Increasing unemployment will push RE prices to the floor no matter what the government or anyone else does.
OrangeJulius,
I contend that they will pull out all the stops in their efforts to re-flate this abortion. My speculative side says there will be money available at 0%. If that doesn’t happen it won’t be the first time I’m wrong. The moneychangers and corporate elite have been feasting on huge premiums from mortgage paper for 30 years… they will do anything to push their way to the feeding trough. If that means offering 0% to invoke new interest in housing and then ratchet up to rates, they’ll do it.
I could see that: Inflation at 0% interest.
Basically, the value of the dollar continues to slide as our currency is seen as more and more of a joke by other nations and the bailouts keep on rolling. We continue to produce nothing and get rid of what jobs we have, yet the bankers keep rates at 0% or close to it to lure in more suckers so they can put on the debt-shackles and then leverage up the “assets” (debt instruments.) Prices would rise because of energy prices drifting upwards (people moving into hard assets vs. paper currency.) yet salaries would remain stagnent and savings rates would be close to 0% also.
End results would be a semi-frozen system as the currency continues to fade while more and more money is poured into the black holes on bankers’ balance sheets (or just goes into the pockets of various bankers.)
Not sure if this would be “true inflation” but it would feel like it in that people’s savings would be devalued and everyone would grow poorer while their salaries would nominally remain the same (assuming they still have a job, of course.)
Maybe this needs to reframed slightly. There seem to be very strong arguments for broad deflation with respect to wages. For example, wages go down, but other items go down more. Alternately, wages stagnate or go up slightly with the cost of many other items going up more. If the reference point is wages, the deflation arguments appear much stronger.
So then what is the “endgame” for this situation? Bankruptcy of the US government? Skyrocketing energy prices (especially oil) squeezing the average US citizen? Feudalism? A long, gritty foreign war (because WW2 ended the GD, after all)? A civil war? State failure?
“Maybe this needs to reframed slightly. There seem to be very strong arguments for broad deflation with respect to wages. For example, wages go down, but other items go down more. Alternately, wages stagnate or go up slightly with the cost of many other items going up more. If the reference point is wages, the deflation arguments appear much stronger.”
This is one of the arguments I’ve been making all along. One other dynamic within the deflation regime is the fact that if banks quit attempting to collect on non-performing loans (as happened during Japan’s lost decade), they in turn will have less money to lend out, which yields more deflation. The banks can try to turn this around via 0% (or perhaps even negative percent) financing, but that is usually not very successful. The “endgame” here is usually either the emergence of a barter economy or the adoption of a foreign currency that is still valued.
Interestingly, in Feb 2009 Ireland noted that its average prices had deflated by .1%; this was the first time since 1960 that this had been noted there.
“And you weren’t first.”
I have no idea what this means.
But, if you are referring to seeing the bubble, I had come to the conclusion that it was a bubble before I found you. (and acted on it to a great profit)
I think you (partly) misunderstood my post.
I do understand that you see no inflation in the future.
If, you are right (and it looks that way) I will prosper greatly.
“And you weren’t first.”
I took it to mean you were not the first to post. It’s been a running joke for a few days now.
whino
Thank you.
Now I understand.
Yes, I tried to post “last” as a joke various times in the late evenings.
“It’s like a big storm raging outside; it will be impossible to ignore.”
That sounds quite similar to the housing bubble. Funny, isn’t it, how many folks ignored the obvious?
Wasn’t the runup in housing, asset and stock prices above any semblance of their intrinsic “value” a type of inflation in and of itself? The only things that didn’t go up at the same time were wages and prices of basic staples of living. If the PTB saw it in this manner, then deflation is a healthy correction of wage:price ratios.
My question is why does inflation only need correcting when wages go up along with increasing prices?
Rhetorical question, right?
Answer: Wage increases mean socialism. Wage stagnation or decrease means capitalism and free markets.
What are you, some kind of commie?
how many folks ignored the obvious?
Yep…Key word being “ignored”…
I’m watching the money supply. I think the deleveraging is canceling the money supply increase.
There is substantial potential for an overshoot or having a system awash with currency.
I do think the bailout efforts are increasing the personal wealth of certain classes of investors. Mostly the hedge fund guys, bank employees and debt holders.
I view this as further transfer of wealth to a few hands. All bad.
Also if the debt falls on the “taxpayer” and on the government books; it increases the probability of a collapse of the dollar. The debt ratio of the goverment was in the painful but managable stage. Going too far, too fast would cause a potentially much larger disruption in real economic activity.
I’m happy with this being called theft. I have no idea what to do about it though. You talk money to people, and I hardly even talk the language, mostly you get blank stares back. That or people just don’t want to know. Have no idea how to prepare for this aside from some odd advice about moving to the country and living in small hamlets.
Just because there isn’t inflation now doesn’t mean that there will not be runaway inflation in the future. And once it starts, it is very hard to get under control, especially if those in charge don’t want to control since they see inflation as a means of reducing debt and punishing savers.
It seems risky to say “since we don’t see the signs of inflation, it can’t be coming.” We all knew the housing bubble was going to burst years before prices stagnated and began to drop. Now, the FED and their cronies are meddling in various way to reinflate - again, the signs of where things are going are there.
And yes, it IS theft - theft from everyone who’s trying to save their money and live within their means. Just because there already is a huge amount of debt doesn’t mean that more is justified, especially when that new debt is basically going into the pockets of connected crooks.
What he said.
I’m (mostly) done worrying about what the Fed, the banks, Obama, Congress, etc. are doing. The non-elected ones will be doing what is in their best interests, while politicians are going to do what is expedient, instead of doing what is smart.
Knowing this, govern your finances/investments accordingly. They are quite predictable. You can react faster than they can react.
Heck, if I play my cards right in the next 5-6 years, I might be able to retire at 65 after all………the way I look at it, by not being mired in the housing market in any way, I’m 5 years ahead of the rest of the pack.
No inflation?
House prices down. But I don’t buy a house everyday.
Car prices down. But I don’t buy a car everyday.
Wages down. But I don’t run a business with employees nor does this help me if my little business fails and I have to find a job.
Here what I do buy everyday and I DO shop for deals and bargains:
Groceries - up (food, toiletries. etc.)
Gasoline - up
Electricity - up
Nat gas - up
Insurance - up
Car maintenance - up
Storage - up
The occasional fast food - up
Housing Rents - not up but not down either
Broker and trading fees - up (though I don’t use either)
Bank fees - up (though I don’t use a bank)
Entertainment - up (I don’t do entertainment in general)
Misc processing fees in general - up
In short, everything I need to live everyday is NOT deflating. In fact, I’ve seen as much as a 50% increase in some things! This is reality for me… and million of others as well.
Combined with declining wages and it’s twice as bad.
Deflation? I wish.
Phone bill up.
Gas and electricity up.
Water up.
I hear you.
Just one thing to think about….
When you buy a product, any product, how much of the price of said product goes to serving debt? How much of it is profit, how much of it is taxes, and how much of it is material/labor?
Right now, I do not have hard numbers, but I would not be surprised that the cost of the products are highly dependant on cheap financing, and ez credit, but as we know those will come back to bite you in the end.
How much of the local/state/fed taxes go to pay debt?
If all this debt gets repudiated, how much lower could the cost of those same products/services/taxes be?
How much can you working at a fixed rate, pay for increases in those products/services/taxes? If the debt service on these goes up, (as it invariably will) how much more products/services will you go out and buy?
At the end of the day, it still comes down to how much people that earn money are willing to part for it. If they are unwilling, no matter how cheap/expensive things get, they will just sit on the shelves. That is not true about food, but food has many ways of being cheapened, You can always learn how to cook, replace meat with beans, add water to the soup, etc. and make yourself some tasty meals with home grown veggies.
One of the best examples was last years oil bubble, where people actually drove less, and made less unnecesary trips. It dropped consumption so fast that large stockpiles of oil built up overnight.
Same with all the other products, houses, food, beany babies….
Didn’t Soros make a lot of money by betting against the bank of England??
I saw what they did to the protesters in front of the Bank of Scotland, I can’t even imagine what would happen if you mess with the Bank of England.
Muir,
You question is one I guess that most of us have on top. Here is my suggestion: Make a list of what you see personally, first hand. What does it add up to?
Here is what I see:
Manufacturing is falling off a cliff.
Building of new manufacturing plants is stopped.
Many of my friends have lost their jobs. Most of the rest are at risk.
My BIL has lost half his retirement fund in his 401K.
My niece’s two houses in Cali are worth half what she owes on them.
My best friend from college says his business is off by more than half. Mine is off by more than half.
My state government has a huge budget shortfall. Taxes are going up. People are getting laid off and projects are stopping.
My teacher friend has to pay more out of each paycheck to her retirement fund (it lost a lot of money in its investments).
Boats like mine can be had for 1/4 or less of what they cost two years ago, or five years ago, or ten.
This adds up to only one thing for me.
IMO, the government WANTS you to think there will be inflation, real soon and real big. That doesn’t make it so. The sheep believe it though.
blue,
“the government WANTS you to think there will be inflation, real soon and real big. That doesn’t make it so.”
You are right.
Unless, of course, they are successful in convincing a lot of people that there will be inflation.
I do not know if they will be successful.
(your observations are very objective, and, undisputed)
>IMO, the government WANTS you to think there will be inflation, real soon and real big. That doesn’t make it so. The sheep believe it though.
It’s more than just “sheeps”. There are some really smart people, those who saw the housing bubble early, who are also in the inflation-is-coming camp. However, none of them believe high inflation will be all that good of a outcome vs. deflation. Either way we are screwed and will be paying the price for this mess for many years to come, whether it is deflationary spiral or high inflation. Nobody except sheeple believes that it will be inflated just right so that it offset deflation and causes no unintended consequences as a result so the pain is minimized.
“Boats like mine”
That reminds me, I had the pleasure of watching some reckless spring-breakers run aground in a rental boat yesterday.
Ah, life’s little thrills.
There are three types of sailors.
Those that have run aground.
Those that are about to run aground.
And those that lie about it.
blue,
I tried to answer.
Your observations are undeniable. (and accurate)
then there’s this:
“the government WANTS you to think there will be inflation, real soon and real big. That doesn’t make it so.”
But what if they are successful in convincing the “shepple?”
I’m not smart about these things, but I would think fear of inflation spurs consumption and borrowing, especially in Real Estate.
blue,
That is exactly what I am saying.
“I’m not smart about these things, but I would think fear of inflation spurs consumption and borrowing….”
And, as far as “smartness,” I’m not smart either.
IMO, the government WANTS you to think there will be inflation, real soon and real big.
Why would that benefit the government? What benefit is there to me thinking there will be inflation, when I don’t have a job?
One thing that’s always missing from the “inflation” discussion is a definition of the term. Monetary inflation? Inflation in price of goods? Or are we only talking about housing here?
“What benefit is there to me thinking there will be inflation, when I don’t have a job?”
None, and even less when it’s considered that inflation would lessen and not contribute to the chances of you finding a new job.
drumminj,
The theory is that people have money, but are afraid to spend it because of price deflation. If govts can convince people that price inflation is coming, then people will buy now because it’s cheaper. But you’re right about the jobs thing. People that don’t have money or employment don’t spend regardless of inflationary expectations. I’m inclined to believe deflation is coming because of this (and Blue Skye’s list of facts).
I have one area of doubt. In it, the rich of the world keep on spending and creating inflation while the middle class and poor struggle and fail. It’s already happening from a global perspective, so maybe it’s just a case of the protected Western World joining in.
There ain’t gonna be no inflation until people (either here, or abroad) are being paid enough to bid up prices. I don’t see that happening anytime soon.
I think you folks are missing my point.
You are saying there won’t be inflation because of lower wages and lower asset prices (deleveraging). I agree there won’t be wage inflation, and assets will get cheaper.
What might get expensive in a currency crash is that which is imported (energy, most consumer goods) and could be exported (food).
We are going to get poorer somehow. That’s one scenario for how. Powerless or not, that seems to be the preferred scenario relative to ongoing pay cuts and debt defaults.
X-GS fixer,
Some people are getting paid very well still. In a world of limited resources, the rich might happily compete with each other while leaving us common folk in the dust.
WT,
I’m trying to wrap my head around this one. I know currency collapse can happen in relation to other currencies, but most nations seem to be printing fairly evenly. On the other hand if every money supply goes up 10 times, prices of goods should go up around that much. Conceivably wages could stay stagnant, or at least go up considerably less. Under that scenario, yes, we would end up poorer. But with the money supply going up 10 times, where is the money going if not into the pockets of wage earners? If it ends up in the hands of a few uber rich types, how will it act as demand for the stuff we need? I don’t really care if they bid up the price of private jets and islands, as long as they don’t use of too much food and energy. I understand the overall theory of money supply causing price inflation, but can’t see how it will actually work without wage inflation too (the short term pain really sucks as wages try to catch up with other prices).
“I know currency collapse can happen in relation to other currencies, but most nations seem to be printing fairly evenly.”
So it seems. But what does this mean — everyone else is devaluing to keep our currency worth more so we can go on spending 6% less than we produce?
At some point, people will stop lending to us, and since demand for dollars is driven by the demand for American debt and not American goods and services, the $ will fall hard. In fact, I’d imagine that government intervention and an irrational flight to the buck is all that’s stopping it.
Then the price of imported and exportable goods go up, and locally produced goods that are produced using imported energy and materials too.
Comment by Al
2009-04-06 09:08:57
drumminj,
The theory is that people have money, but are afraid to spend it because of price deflation. If govts can convince people that price inflation is coming, then people will buy now because it’s cheaper. But you’re right about the jobs thing. People that don’t have money or employment don’t spend regardless of inflationary expectations. I’m inclined to believe deflation is coming because of this (and Blue Skye’s list of facts).
I have one area of doubt. In it, the rich of the world keep on spending and creating inflation while the middle class and poor struggle and fail. It’s already happening from a global perspective, so maybe it’s just a case of the protected Western World joining in.
———————-
Had to copy the whole thing because I think this is right on target.
There is **plenty** of money out there. Lots and lots and lots of it. This money is waiting for asset prices to fall, and they are waiting to control as much of the world’s assets as they can.
Real estate — not just a house here or there, but large swaths of land and commercial space. Also, they are buying/will buy bulk purchases of residential housing. Some will be fixed up and sold at a profit, some will be rented out.
To a somewhat lesser extent, IMHO, they want companies/stocks that are severely underpriced, and bonds/debt instruments that are severely underpriced.
This money is not stupid, and has all the right connections.
There is the other side of this trade consisting of the current holders of these assets, and they want asset prices to rise.
IMHO, all the bickering back and forth in D.C. is the battle between these two groups. The rest of us do not matter.
They are gonna do what they are gonna do. Get yourself in position to benefit before they do it. Keep in mind, however, the invisible hand typically overwhelms the very best interventions.
Given that the current plan seems to be encouraging moral hazard, I hope you’re correct.
mrktMaven,
“keep in mind, however, the invisible hand typically overwhelms the very best interventions.”
I also hope you are right.
I would find pleasure in seeing them fail.
__
“Get yourself in position to benefit before they do it”
I think this is what Ben totally missed in my post.
He wrote this: “would be out of your control…”
He’s wrong.
I have a feeling that he is more coldly analytical than the folks at the Farm Market.
I went to visit a number of high-rise apartment towers in downtown Chicago this weekend. Almost all of them have lowered their published “asking” rents. Upon visiting in person and touring the apartments, every single one offered a much lower price without any prodding or asking.
Demand is definitely there, but they are overbuilding. Rents still aren’t “cheap” and the discounts are not as large as I’ve heard about in NYC - there is still a steady stream of people coming in from the suburbs and the exurbs who can no longer afford to commute now that their house value is dropping like a rock. You can let it get foreclosed and also let your car get repossessed - you don’t need them in these neighborhoods. I know of 5 more apartment high-rises under construction just in my little corner of downtown. This is going to keep rents from rising for a long time…
“lowered their published “asking” rents…every single one offered a much lower price without any prodding or asking.”
This is a complete reversal to years ago. Normally (whatever that means..?) you would expect to see an attractive rate advertised and then get there and discover the add-on fees, small print costs, ridiculous other schemes…They get you in the door with a low advertised price.
But this! You see an attractive rate and it’s actually lower when you go to see it. The world is upside-down.
Long cold winters and humid summers packed with mosquitoes? Thanks, but no thanks!
No wimps allowed
Yeah!
Says your northern sister!
Leigh
The summer in Chitown are quite pleasant. And there are not many mosquitos.
Except on the Cook County Board…
I could not live there because I am a Cali
but Chicago is my favorite place to visit…Great people & a great town…
wimp
My Chicago high rise lease (from a private owner) is up May 1. My landlord first started asking me about extending in January. By mid-March, he was chomping at the bit. I re-signed for another year. He didn’t even hint at raising the rent. Simple math tells me he is subsidizing me to the tune of $1,000/month.
Perhaps my landlord has noticed all the other high rises going up around this neighborhood. Also, I wasn’t shy in telling him the TWO out of the six units on my floor are now in full-blown foreclosure.
Simple math tells me he is subsidizing me to the tune of $1,000/month.
That’s a heavy hit to the bottom line. Then again, there’s a pretty substantial residential glut in your neighborhood.
Some friends are still leasing commercial space down the street from you on Grand Ave. That particular owner has been trying to find a nightclub or similar tenant for several years now, and a couple thousand dollars a month separate his wishing price and the price he charges his “temporary” tenants, who’ve been paying below market rates for roughly two years now. In this case, though, the owner has had the building for many years, and (probably) still generates positive cash flow even with his ground floor paying peanuts.
Similar to downtown Seattle (Belltown) - found non-published reduced rates especially if you sign for 15 or 18 month leases.
Only problem - the building that we live in and love - not doing it yet - but hopefully will this summer when we need to renew
N. Korea fires rocket and saves the U.S.”\
Next up, Poland defaults on their loans, Ireland breaks away from the EU, EU collapse, China has internal problems (feeding its people) and a revolution starts–and the wealth of the world flees to the last safe place, saving ths U.S. economy.
The biggest danger to the EU is Germany leaving. The only member paying more than its fair share.
Back from Asia, and woke to find this Monday’s writing by John Hussman to be more pessimistic than he has been the last few months, after the introduction of PIPP, which puts FDIC at risk for speculation by private investors, and thus the bank depositors at risk (which is not what we signed up for if you even have $1 in the banks):
” Last week saw a continuation of the impenetrably misguided policy response to this financial crisis, which seeks to address the downturn by encouraging more of what got us into this mess in the first place. The U.S. Treasury’s toxic assets plan, for instance, looks to “leverage” public funds (with the FDIC providing the �6-to-1 leverage�) in order to defend the bondholders of mismanaged financials who took excessive leverage. At the same time, the Treasury plans to limit the �competitive bidding� to a few hand-picked �managers� who will be encouraged to overpay thanks to put options granted at public expense. This is a recipe for the insolvency of the FDIC and an attempt to bail out bank bondholders using funds that have not even been allocated by Congress. The whole plan is a bureaucratic abuse of the FDIC’s balance sheet, which exists to protect ordinary depositors, not bank bondholders.
On Thursday, the stock market cheered a move by the Financial Accounting Standards Board (FASB) to relax FAS-157 (the �mark-to-market� accounting rule), allowing nearly insolvent financial companies to use more discretion in the models they use to assess fair value. Of course, the irresponsibly rosy assumptions built into these models have been a large contributor to this near-insolvency, because they virtually ignored foreclosure risks.
Notably, the one thing policy-makers have not done is to address foreclosure abatement in any serious way. The only way to get through this crisis without enormous collateral damage to ordinary Americans is by restructuring mortgage obligations (ideally using property appreciation rights), restructuring the debt obligations of distressed financial companies (ideally by requiring bondholders to swap a portion of their debt for equity), and abandoning the idea of using public funds to purchase un-restructurable mortgage debt (�toxic assets�). See On the Urgency of Restructuring Bank and Mortgage Debt, and of Abandoning Toxic Asset Purchases.
Look. You can play hot potato with the toxic assets all day long, and only outcome will be that the public will suffer the losses that would otherwise have been properly taken by the banks’ own bondholders. You can tinker with the accounting rules all you want, and it won’t make the banks solvent. It may improve �reported� earnings for a spell, but as investors who care about the stream of future cash flows that will actually be delivered to us over time, it is clear that modifying the accounting rules doesn’t create value. It simply increases the likelihood that financial institutions will quietly go insolvent. I recognize that the accounting changes may reduce the immediate need for regulatory action, since banks will be able to pad their Tier 1 capital with false hope. But we have done nothing to abate foreclosures, and we are just about to begin a huge reset cycle for Alt-A’s and option-ARMs. As the underlying mortgages go into foreclosure, it will ultimately become impossible to argue that the toxic assets would be worth much even in an �orderly transaction.� “
Sorry that should be PPIP, not PIPP. Too many acronyms nowadays.
The people in charge couldn’t care less about the people: if they cared, would they have encouraged people spending beyond their means or sending our jobs overseas?
The whole show right now is just about making banks look great so the crooks can get another quarter’s worth of bonuses. Then, next quarter, they come up with some new scam. The whole nation could be ablaze or falling into ruin, and they’d still sit there, like kings of old, trying to get the largest chunk of burning buildings or worthless paper added to their petty little empires. It always has been about them and nothing more.
Until they lose their heads over saying something stupid like “Let them eat cake!”
Dubai: How not to build a city
http://www.thestar.com/news/insight/article/613885
According to a recent story in Abu Dhabi’s new English-language newspaper, The National, locals overwhelmingly view traffic accidents as the major cause of death and injury among children. No kidding. Anyone crossing a road in these parts is fair game. To step out means taking your life into your hands.
A friend of mine went there a few years ago. The cabble seemed to be running a lot of red lights. When my friend pushed the cabdriver, his response?
“Who’s smarter? Me or the light?”
Ha ha.
The answer? The light. It’ll be there long after he’s dead.
Good answer.
Point: cabbie
Cabbie, until the 1-in-10,000th approach to the intersection when another super-smart cabbie is driving into the intersection from the cross street at exactly the same moment. At that point, the planet will tragically lose two very smart cabbies.
lol
Rural redneck intersection check at night: Turn your headlights off before blowing past the stop sign. That way you can see if someone else is approaching, by their headlights. I’ve ridden in a car where this trick was pulled (once).
My theory is that if you are going to blow a light or stop sign. blow it at 100mph, instead of 50mph.
You cut your exposure time/risk by half, if you blast thru @ 100.
Same for speeding on the Interstate………if you are driving 90 around here, you might as well make it 150, if your car can do it. Either way, you will be going to jail.
They have jail in the afterlife?
Davao City, Philippines, one of the largest cities in the world by area seemed to have about half a dozen traffic lights, few if any were turned on. Presumably, drivers were ignoring the inanimate objects since doing so brought no loss of face to their family and it is seemingly culturally better for all traffic to stop and filter through the uncontrolled intersection at a snails pace in all 6 directions than for anyone to be forced to wait while others were allowed to go through easily, safely, and efficiently by taking turns.
Being asian (though Catholic) they don’t ignore the traffic cop though: that would be an insult to an actual person.
Dubai,
Its like LA on meth.
Dubai, Its like a malignant melanoma on Gods ass.
No, I don’t like Dubai
God’s false ass built out into the sea on rock which was once part of the mainland and is now part of the new found land.
Ok, that’s scary because half of LA is already on meth. (I think the other half are on coke)
Dubai is like Las Vegas on meth.
Mayo Says Loan Losses Will Exceed Depression Levels
Mike Mayo, who left Deutsche Bank AG to join Calyon Securities, assigned an “underweight” rating to banks on expectations that loan losses will exceed levels from the Great Depression.
“While certain mortgage problems are farther along, other areas are likely to accelerate, reflecting a rolling recession by asset class,” Mayo wrote in a report today. “New government actions might not help as much as expected, especially given that loans have been marked down to only 98 cents on the dollar, on average.”
“…loan losses will exceed levels from the Great Depression.”
Not to worry, so long as banking entities like the Fed and the IMF still have functioning virtual printing presses…
I was recently offered a considerable pay raise if I’d consider relocating to Tempe, AZ. I’ve gotten some information about things that are well represented by numbers (crime rate, cost of living, etc) from google, but I’m more curious about what people who’ve actually been there think of the place. So, any opinions?
BTW: I’m not really considering buying a house if I move, so that doesn’t factor in much. If I’m going to be nomadic for money, it’s sort of silly to go buying houses everywhere I go.
I like Phoenix. Of course I only go there for conferences. Go if your family doesn’t mind, if you’re still young and flexible enough, and if the extra money helps you get where you ultimately want to be.
Its very hot from mid-MAY through mid-Oct but nice the rest of the time. Air quality not so great either but thats all of Phoenix and surrounding valley.
Tempe is a College town near the airport. If you don’t have kids its probably a fun place.
I like a lot about Phoenix. My permanent residence is there. It’s in Ahwatukee. It’s a quick drive to Tempe. Everything I want is in Phoenix. When it’s too hot, I take a weekend break and go to Flagstaff. But usually I work out of state (New Jersey, Maryland, Los Angeles…) where it’s cooler. For some things I cannot find in Arizona that I enjoy, I simply head to other areas. Phoenix is too social conservative for me. I am finding that laws in Arizona of late are becoming heavy-handed. It’s not the same as in 1996 when I moved to AZ from Cal and felt like a responsible adult for the first time in many years. Government at all levels is getting too intrusive. I’m becoming more reactive and turning back to my libertarian roots once again. No place is perfect. But taxes are low enough and my municipal bond fund has better quality bonds in AZ than I can buy in Cal.
“I was recently offered a considerable pay raise if I’d consider relocating to Tempe, AZ.”
Often, pay is lower relative to many other parts of the country. So, the opposite is a plus.
It is obviously hot from May to September. Temps drop from their peaks at some point in June or July, but the wee bit of humidity that creeps in really can be bothersome at that point. Of course, if it is 70 in your house and office and you stick with covered parking, it is less bothersome.
Tempe has some neat stuff. I see some Broadway road shows at ASU Gammage a few times per year. The university obviously has a large presence there.
The State and most municipalities are in pretty bad financial shape. I know such a statement would probably apply to most of the Union, but maybe it is more severe here than average. So far, the primary solution appears to have been creating a statewide photo radar revenue, pardon me, “safety” program. I believe that there is some requirement that potential teacher job cuts receive notice in April, and I understand many of those notices have gone out in Mesa and elsewhere. All in all, expect some literal and figurative potholes in AZ.
You can drive out to Queen Creek/Pinal County some time and see one of the “ground zeros” of the Housing Bubble.
“An employment trends index decreased sharply in February, the 19th consecutive month of decline, in a report released Monday.
The Conference Board’s Employment Trends Index stood at 91 in February, falling 3.2% from the previous month and down 21.7% from the previous year.
The index has declined for 19 consecutive months, falling faster than at any other time in the report’s 35-year history, the release said.
“Job losses just keep going,” said Gad Levanon, senior economist at The Conference Board. “That drop in earnings means consumer spending will probably not rebound in the upcoming few months so the labor market will have a hard time rebounding.”
The Employment Trends Index includes eight labor-market indicators, including initial claims for unemployment insurance and percentage of respondents who say jobs are “hard to get.”
“There’s not even the slightest signal of a turning point,” Levanon said. “All eight of the indicators are going down sharply.”
A “huge, very scary” increase in the temporary help and part-time workers readings shows many job seekers are settling for underemployment because they can’t find the full-time jobs they want, Levanon added.”
“There’s not even the slightest signal of a turning point,” Levanon said. “All eight of the indicators are going down sharply.”
That’s ok. Time to buy a house. They’ll be hitting bottom within six months and you just cannot really time the bottom. You don’t want to rent forever, do you?
Ok, /snark.
My wife just realized this weekend that there are no jobs out there. My MIL wants us to buy a way too expensive house… NOW and have my wife as a stay at home mom. My latest avoidance is that ‘home prices shot up so fast you must have two incomes to buy.’ There is always a retort. I keep my responses civil…
Got Popcorn?
Neil
About the only thing I am sure of is that house prices will continue to go down.
And I am talking nominal prices.
And in 5 years, if there is inflation, then inflation-adjusted, they will continue to go down.
(Who took my popcorn away?
)
If your MIL brings it up again say as sincerely as you can how nice of her to offer to buy you an expsensive house.
Tell ‘em you’d be happy to move in when they pony up the (recurring) payments… That’ll get you in good with them I’m sure.
Just keep finding good excuses of why you can’t buy right now. Act like you are trying but it just isn’t working… Tell them that there is no funding from your bank, they will buy that right?
You are doing the right thing but pretending to be on the other side just might make life a little easier in the short term.
I want some perp walks. This crisis is getting SO predictable, and I’m just not having fun this Monday.
Roidy
I want a flying white pony too but it just doesn’t seem to be happenin’, does it now?
I had lunch with a friend from Switzerland. He claims that many Europeans (rightly or wrongly) apparently applaud the collapse of our economy, since they blame us for the world’s economic problems. Every day the stock market falls and they read about our suffering, Europe’s hoi polloi get the equivalent of a perp walk.
The Euros can go pound sand. Last time I checked, they use the same math as we do.
Since their educational systems are so much better than our (don’t believe it? Just ask them), you would think they’d have figured all this out, and run screaming from the exits four years ago.
Besides, Europe has its own set of economic problems that are at least as embarrassing as ours. West Europe’s loans to East Europe, anyone?
So, does that mean I can’t have a perp walk? Why not? I got some really good ones in Enron and those junk bond idiots in the 1980s.
Please may I have a few perp walks? Just a few.
Roidy
Google News is your friend.
There are so many fraud cases, arrests, convictions, sentencing and investigations that there is no way the MSM can cover it.
They would have to have an hour long show every day to do so.
Google mortgage or securities fraud. 6,000 unique news articles.
Yes, but they’re picking all the low-hanging fruit.
It would be nice to see some of the big names go down.
What a breath of fresh air. She needs to set the record straight more often.
Meredith Whitney: Bank Profitability Is an Illusion
http://finance.yahoo.com/tech-ticker/article/225873/Meredith-Whitney-Bank-Profitability-Is-an-Illusion?tickers=xlf,c,bac,wfc,%5Edji,%5Egspc?sec=topStories&pos=8&asset=TBD&ccode=TBD
Here’s a link to the transcript from Forbes.
http://www.forbes.com/2009/04/05/meredith-whitney-transcript-intelligent-investing-credit.html?partner=yahootix
From the article at Forbes:
“Well, the consumer has money. Well, most consumers still have money. There’s over $7 trillion in cash on consumer-balance sheets. But they’re spending at lower-end stores. They’re not “living la vida loca” at Neiman Marcus and Saks Fifth Avenue. And there’s no sense of urgency to buy.”
Again, I question where are all these analysts seeing this sidelined money?
Is it all in savings accounts? Is it in Treasuries or money market accounts?
Are these all the same monies each analyst is refering to when they talk about their predictions of recovery? Do they all refer to the same trillions when they predict outcomes?
If so, then some other sector would have to collaspe when these monies come rushing in from the sidelines.
Great article!!
“lending will go back to where my deposits fund your mortgage and your deposits fund my mortgage. That’s where it’s going to go. Because as we know it, the shadow-banking industry, in terms of securitization as a vehicle to fund loans is not coming back, right. Maybe it comes back in three, five years. I don’t know.
But for certainly in the next couple years, it’s not coming back. So, to fulfill that you can’t expect that type of liquidity to come back. So, the regional banks are going to have to pick up a larger percent of market share, a larger percent of the movement within consumer liquidity.”
[here's a play---->]
“They’re not equipped yet. And the large banks aren’t also equipped to lend with the veracity that they did before. They still have shrinking capital bases. So, I think, and they’re risk averse, too. So if you’re the greatest correlation between defaults and borrowers is distance, right–or lender and borrowers, is distance. So, you’ve got to get closer to your borrower to understand, really, the sensitivities of that borrower. And the big banks, you know, won’t be able to do it. They’ll have to pass some market share onto the smaller ones.
So, would you buy some of the smaller ones now? Or you’ve just got to wait for this thing to start to shake out even more?
You know, I bet most people couldn’t even name some of the smaller ones. I think that on pullbacks, you can buy a basket of small stocks that are clean, obviously non-TARP-based stocks.”
___
“So, your bottom line is, there’s more to growth than borrowing?
Meredith: “Yes, yes. You say it so much more eloquently than I do.”
They are “finding” all this “unspent money” in the same place that Level 3 valuations come from… mark-to-fantasy, er, model.
From Yahoo;
In the wake of the bursting of the housing bubble, you’d think there’d be a significant number of investigations into criminal wrongdoing and accounting fraud, similar to what occurred after the S&L crisis and bursting of the stock bubble in 2000.
But two years into the crisis the FBI “doesn’t have a single major conviction or indictment of anyone,” notes William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri - Kansas City.
Black, who was counsel to the Federal Home Loan Bank Board during the S&L crisis of the 1980s and blew the whistle on the “Keating Five” in 1989, reiterated what he told us in November: Though the FBI warned of an “epidemic” of mortgage fraud in 2004, they subsequently made a “strategic alliance” with the Mortgage Bankers Association, which Black calls the “trade association of perps.”
Indeed, as much as 80% of the fraud during the boom was “induced by the lenders,” who either encouraged people to lie on loan applications or actively altered documents to make them more likely to be approved, says Black.
How extensive was the fraud?
“There was the appearance of fraud or misrepresentation in almost every file,” Fitch Investors declared in late 2007 after reviewing nonperforming subprime MBS (the same stuff they, S&P and Moody’s rated triple-A).
Black estimates there are as many as 500,000 cases of mortgage fraud that need to be investigated. Furthermore, such extensive mortgage fraud led to accounting fraud, which led to securities fraud at any/all publicly traded mortgage lenders. As with the FBI, the SEC was “completely ineffective” in stopping such crimes, much less investigating them now, he says.
Among the biggest mortgage lenders, IndyMac was put into FDIC receivership, Countrywide was acquired by Bank of America, Golden West was acquired by Wachovia, and WaMu was ultimately acquired by JPMorgan.
This is relevant because the government’s current practice of keeping banks’ senior management and boards intact (unlike, say GM’s) is effectively prohibiting any investigation of possible (likely) wrongdoing at those firms.
It is for these reasons Black says the FBI’s current level of 800 cases per year is “no longer symbolic prosecutions, it’s shambolic prosecutions.”
Though the FBI warned of an “epidemic” of mortgage fraud in 2004
I do not recall that at all.
I do recall Paladin having a hecka time getting anyone at the FBI to take him seriously when he reported massive real estate fraud.
I do not recall that at all. To refresh your memory, simply Google “mortgage fraud epidemic 2004 FBI” The news article from 17 Sept 2004 will be your first hit.
This says to me that they don’t have the participation they were expecting. It is almost a carbon copy of the FED’s program, which the deadline was extended and the reported results showed failure.
Treasury extends deadline for toxic asset program, loosens criteria for participation
WASHINGTON (AP) — The Treasury Department is trying to ensure broader participation from hedge funds and other private investors in its bad asset purchase program by loosening the criteria for those who want to take part.
Treasury on Monday relaxed a requirement that companies have at least $10 billion in capital under management in order to participate, and emphasized that the program is open to small and women- and minority-owned firms.
The department also said it’s extending the application deadline for private fund managers by two weeks until April 24.
The three criteria will be viewed “holistically,” the department said Monday, meaning private firms won’t have to satisfy all three. The other two are: a demonstrated ability to raise at least $500 million of new capital and demonstrated experience in investing in mortgage-backed securities.
When they open it up to ebay, I’ll start to s(!t my pants.
(Chances are they would have a buy-it-now price that is way too high)
is open to small and women- and minority-owned firms.
Not enough suckers signing up.
There was an objective criterion. Nobody came up. Then they lowered it to $10B.
I think a “small” or “women-owned” or “minority-owned” firm would be able to figure out quite objectively by themselves without any help whether they have (a) $10B, and (b) want to participate.
This is a major snow job. It’s gonna fail epically.
“Not enough suckers signing up.”
That is exactly what I thought.
So then they open it up to smaller suckers to bleed dry. Next up is the trip to Congress to complain about how they dident understand the contract and beg to be made whole.
“…and demonstrated experience in investing in mortgage-backed securities.”
Why is this considered a good thing? Perhaps because if they weren’t sufficiently indoctrinated into the group-think, they might start asking those pesky “Hey! How much are these things really worth?” questions that got us into this mess
in the first place.
In case you haven’t seen the interview of William K. Black on PBS’ “Bill Moyers”, here it is
http://www.pbs.org/moyers/journal/04032009/watch.html
He blames fraud for the current crises. (However, he excuses the behavior of the actual people who did the lying on “liars loans” and blames only the sellers.)
Politically savvy. Find a minority to blame, and if they are truly blameworthy, all the better. Provide rationalizations for larger groups.
We had a white collar riot with 50 million participants. Someone ought to say so.
Kunstler cracks me up (from today):
“We’ll soon find out whether an organism the size of the United States can run an economy based on one family selling the contents of its garage to the family next door.”
Do most families have food items amongst the discarded garbage they have piled up in their garages?
“Do most families have food items amongst the discarded garbage they have piled up in their garages?”
Yes Costco sized Dog food bags and families of roof rats which feed out of the bottom of the humongous dog food bags , at least in Moorpark CA were I lived in a Townhome for 16 years.
Never again will I buy a Townhome.
“Like so many Americans, she was trying to construct a life that made sense from things she found in gift shops.” - Kurt Vonnegut, Jr
I miss Kurt and his fine sense of the ridiculous and ironic. “Wide Open Beavers”. “Po-tee-weet?”
Life was never the same after we learned Billy Pilgrim had become unstuck in time.
Or Poughkeepsie, NY for that matter.
The earnings are coming! The earnings are coming! Oh, the humanity!
The Quiet Coup
http://www.theatlantic.com/doc/200905/imf-advice
Wow - Talk about the pot calling the kettle black! The IMF is actually attempting to claim that it’s not run by the finance industry? The hypocrisy abounds.
Additional comment - one thing I’ve noticed recently is a lot of media capitulation to conspiracy theorists, agreeing that - by golly they were right - the politicians really are in the bankers’ back pockets, and at the expense of the average Joe!
However they’re doing so aimed exclusively at the U.S., or in some cases a few different individual countries like the U.K. etc. And of course the solution (implied or otherwise) therefore must be world government! Thus ignoring the other part of the conspiracy theory - that the same thing happens on the world stage on an ever-increasing basis, through organizations like the IMF, the U.N., the World Bank, etc.
What happens down the road when the same capitulation happens on an international scale? Are they going to propose that the Martians come in and govern us then?
Hey! It’s sunny again today! What’s going on here?
*narrows eyes suspiciously *
Oh, and Bill in LA! BILLLLLLLLL! Bill? Bill!
Bill, I’m sorry I was insensitive yesterday. You needed solace and all I did was giggle about how naughty I was in olden times, back in high school with the stoner kids under the bleachers in PE*, and then urge Muggy to not listen to anyone who was a fitness freak, as you were, because I announced that this was ‘unnatchrell’.
I apologize.
Also, it could very well be that being a fitness freak is indeed natchrell, and seemly, in some people. Just not in me.
Maybe it’s just a difference in terms. I run around in the woods a lot and kayak and stuff, only I only do it for fun. If I ever thought it was on purpose to be good for me, man, I’d stop it that very instant.
Anyway, please forgive me, and don’t jog up and kill me or anything like that.
*Ahhh! The good old days…
*starts to sing ‘Memories’ loudly and prettily *
Uh, didn’t see your post. I’ll take door number 2 (gambling) and forgive you in advance.
Be careful. He may jog up in a pair of those old 70s jogging shorts cause you to laugh yourself to death.
you mean the aqua-colored Dolphins?
Hahahaahaha! Funny!
Not my way. For running, I would never wear short shorts - I’m a heterosexual. But I don’t run much anyway. You don’t see my humbleness when you read my writings. My way is low key. The guys who lie about their incomes and certain other details get the women, but only for a one night stand.
“all I did was giggle about how naughty I was in olden times, back in high school with the stoner kids under the bleachers in PE*”
Uh?*
*Makes note to self to find time to read yesterday…
On a more serious note:
“I run around in the woods a lot and kayak and stuff, only I only do it for fun”
I’ve long thought that the best forms of exercise are the ones where you’re enjoying yourself too much to notice that you’re getting exercise…
I encourage all to read this. Having spent time in Turkey myself, I can tell you this speech went over very well with the people. Obama is a uniter.
http://news.yahoo.com/s/politico/20090406/pl_politico/20927
why doesn’t he start by uniting this country first?
Obama is a uniter(sic).
Right… just ask anyone from Notre Dame.
Uhhh, the majority from Notre Dame want Obama to speak. Kind of hypocritical. The Catholic Church is against the death penalty, yet Bush who is for the death penalty, didn’t seem to have any problems having him speak. So we have another uniter woohoo.
The reputation of Notre Dame is taking a nose dive over this. Here’s an idea. Instead of trying to protect the lives of the unborn, maybe the Catholic church could try to protect the lives of the BORN, you know, like those that died needlessly in Iraq?
The Catholic Church is and always will be a total joke. No more or less crazy than Heavens Gate members.
And how do you propose that he does that? What would you like to see him do?
Public hangings would be a nice start.
I cannot argue with that.
Cripes - can we cut out the political trolling please? It’s quite stale. All you’re serving to do is make your man look bad.
I see. So when the other team does something right you prefer to not talk about it. Yet, if anything goes wrong we will endure hours upon hours of right-wing bullshit.
Got it.
OK, so Michelle:
A) What do you mean by “the other team”? I didn’t realize we had teams here. This board is quite nonpartisan actually, from what I see. As am I. Actually many of us are not only non-partisan, but quite anti-partisan.
B) What exactly is he “doing right” here? He’s on a diplomatic mission in Turkey, and cozying up with Muslims - which Bush also did (apparently you missed that part of the article). He also seems to be encouraging Turkey to join the EU. Being that the EU is basically just one of the stepping stones to world socialism, I don’t know how you can see that as “doing something right”.
C) Who is this “we” - are you a member of Obama’s administration? Oh wait I forgot - you’re his wife it appears.
D) Darn straight when things go wrong people will slam Obama. Just like Bush did for years when he did things wrong on his watch. Better get used to it. Obama’s on a record-setting pace.
I have to say - you are a snappy dresser there.
Packman, I agree with you other than the snappy dresser part.
Seriously, can you leave the biased political comments at home? This isn’t a political blog, it’s a housing bubble blog. It got tiring a long time ago.
Related to the discussion above regarding college costs, I’m in somewhat of a quandary and would appreciated comments from HBBers. Because you’ll give it to me straight, with attitude.
My very bright 18 year old niece has been accepted to UCLA. She would be an out of state student there, so you can imagine the costs. Her family is in the low income bracket, so lots of financial aid may be coming her way. I would like to help her financially with whatever the grants and scholarships don’t cover. However, of course I don’t want to throw money away unnecessarily.
Does anyone here have any knowledge of UCLA for undergrads? Forget about the pitfalls of college freshman party syndrome, etc etc—what I’m looking for is some insight into UCLA for a science-oriented undergrad. Everyone I know is a Midwesterner!
I don’t have any advice to give, Elanor, but I do think that’s very neat of you, that you plan to help out your niece.
Neat, or a demented busybody? I’m not too sure myself.
Maybe you can be both! Multi-task!
Undergraduate experience at UCLA can be overwhelming to the uninitiated and unconnected. Unless your niece is comfortabe socially, she might be better off doing a couple of years at a local state school, then transferring for junior and senior year after she’s completed her core requirements elsewhere.
MUCHO cheaper as well, and she’ll still get the degree.
Most undergrad classes taught by (semi-clueless,) TA’s, or else huge impersonal lectures. It is also hugely competitive– especially in hard sciences.
I grew up in LA, and was utterly lost there. (Got into a math theory class with Lew Alcindor, however, so it wasn’t a complete loss.)
Absolutely agree. There is no reason to burden ones self with enourmous tuition costs. Many local community colleges have transfer agreements (TAG) with larger four year institutions. Once you complete the agreed upon courses and achieve the proper grades, you have a sort of “reserved” spot at the four year university. Community college is much less intimidating, work study can also be done to aid in costs and the student will usually know many others there. I believe that community college is THE BEST choice for most students. It allows them to continue to grow and gain confidence and indpendence without the need for them to leave home (free rent?) or the safety (moral support, etc) of the nest. Some students may be ready for or even need the four year experience. From my personal observations (I am WAY over-educated!
, addicted to school! ), I would say that most do not.
Just my 2cents…
Stars End
It’s a solid second-tier school with isolated pockets of excellence.
Caltech and MIT it most definitely is not. And even among state schools, Berkeley and Austin it also is not.
What’s the real question?
Whether it’s worth my shelling out beaucoup bucks for her to go there, or whether she should attend a second-tier school closer to home with in-state tuition.
Oh, there’s a lot of family drama involved in the whole story, but I’m not gonna bore anyone with that tale.
BTW, she didn’t get into Berkeley.
Here’s my take on it which some might call wishy-washy.
The reason to go to a “better” school is that it has a higher degree of bright students and that means intense competition. This also assumes that she is going to be able to (a) stand up to the fairly intense atmosphere, and (b) is interested in the subject at a “serious” level.
It’s very hard to gauge this ahead of time. Typically, most “science-y” students (physics, math, engg., etc.) hit the “wall” roughly 1.5 years into college when they are forced at gunpoint to have to decide for themselves whether they are going to cut it in this game, or do something else with their lives. This is not a very pleasant thing I assure you.
Oh yeah, FPSS, I hear you! When college students hit the second-year organic chemistry or advanced calculus or physical chemistry or whatever, those classes quickly separate those who will continue on in the ‘hard science’ field from those who won’t. My own reaction was to waffle: in the summer after my first year, I changed my entire curriculum from pre-med to liberal arts, and then had to go around to each science professor begging to be allowed back into their classes when I changed my mind back. :rolleyes:
The way I see it, every bright student should have the chance to find out if they can cut it in the competitive world of the best school they can attend.
Hey! Why didn’t my eyeroll work? Or is it :eyeroll: ?
As a structural engineer that did five years at a sub-par, tier 82 in-state school, then used that experience to get into a top-5 school on a full ride assistantship, here is my advice for your niece.
Stay in state for engineering. Get good grades. Study hard. Don’t get in debt, engineering doesn’t pay as well as you think. Then apply for grad school at a few places that has a good grad program in your field.
In my experience at the low-level state school I was taught by full professors that had office hours, and once I hit the third year I was surrounded by students that were driving to do well because over half of them were the first in their family to go to college. They wanted to be engineers - they were passionate. Most were petrified of getting anything less than a B because they were paying for it themselves.
At the top five school I was teaching students entry level classes from the same text that I had just used a few years earlier (and I was getting paid for it). The students didn’t care beacuse the bank of mom and dad always bailed them out. The professor I TA’d for would argue against me when a student deserved a ‘D’ or an ‘F’ even if the kid never submitted a homework assignment and consistently had the lowest grade on an exam - that kid would get a ‘C’. Most students didn’t even want to be engineers, they were just in the engineering program to make themselves look good on business school applications.
colon roll colon
I agree with Bad Chilie. Most undergrads try to “find themselves” during the first couple of years at school. Unless the student knows since 5th grade what he/she wants to do, it is a waste of money to go to an expensive school for ones undergrad. Get into a decent university for a bachelar and go to the best school you can get to for your MSc or PhD afterwards.
By the way, I am speaking from experience in engineering and science. I have a PhD in EE, my wife has a PhD in biology and is a lecturer in a second tier university, and my sister and BIL are professors in chemystry and material science in tier one university. I have no idea how the thigs stand for business or liberal arts.
I don’t know about the current state of the student loan system, but back several years ago when I was in college it was pitifully easy to get a loan to cover all tuition and boarding.. and at a very low rate. These loans didn’t even have to be paid at all until you finished schooling completely. I can’t imagine anyone using their savings or a HELOC to pay tuition unless things have drastically changed.
I paid for the last two years of college using loans at a state school and was able to pay if off a few years after I left. I think payments were under $100/month.
In the ’70s, when I was in college, it was actually possible to get out of college debt-free via a combination of financial aid and part-time jobs. Loans back then also had low interest rates. Between that and the inflation that occurred in the next couple of decades, paying off student loans was also no hardship.
Those days are loooong gone.
“In the ’70s, when I was in college, it was actually possible to get out of college debt-free ”
It was possible in the late ’80s as well; maybe harder, but existence proofs are out there.
It was also possible in the 90’s and the 00’s but we are talking statistics here not existence proofs.
Elanor — My sister went to UCLA out-of-state a few years ago and stuck through it because “It’s UCLA!” and presumably much more prestigious than the in-state school she could have attended. But she was miserable most of the time. Most of her classes were huge, like 200+ students and there is a *lot* of cheating. After the first year she had to move off campus because there wasn’t enough housing for everyone and was paying $600/mo to rent 1/2 a room in Westwood before deciding to join a sorority just to have a better place to sleep. Being out-of-state, white, and from a middle class family she also found it impossible to get an on-campus job, which is something that can really help when applying for grad school. Outside of So. Cal the UCLA degree doesn’t have much more weight than any other state U. Of course after you get your first job it really doesn’t matter where you attended college
If you’ve got the moola and she the smarts, she’ll be a lot happier working and traveling for a year, then going to a smaller private school like Caltech or one of the Claremont Colleges (if she wants So. Cal). Or to take her first two years at a local school and then transfer to whatever school in the US has the best department for her major/interests.
Here are some student stats for UCLA:
Admissions
Freshman
Admission: 55,437 applied; 12,660 admitted; 4,735 enrolled
Test Scores
SAT critical reading scores over 500 91%
SAT math scores over 500 94%
SAT writing scores over 500 93%
ACT scores over 18 98%
SAT critical reading scores over 600 67%
SAT math scores over 600 76%
SAT writing scores over 600 71%
ACT scores over 24 80%
SAT critical reading scores over 700 20%
SAT math scores over 700 40%
SAT writing scores over 700 27%
ACT scores over 30 39%
MIT:
Admissions
Freshman
Admission: 12,445 applied; 1,553 admitted; 1,067 enrolled
Test Scores
SAT critical reading scores over 500 99%
SAT math scores over 500 100%
ACT scores over 18 100%
SAT critical reading scores over 600 94%
SAT math scores over 600 99%
ACT scores over 24 100%
SAT critical reading scores over 700 59%
SAT math scores over 700 87%
ACT scores over 30 87%
Anyway, its considered a top tier public university. But its clearly not in the same league as MIT
now eliminate all the party people at the state school that go for the fu fu degrees and do the comparison again.
From your own numbers there are more students at UCLA with high test scores than at MIT. Hell it looks like there are more students with the highest test scores at UCLA than all the students at MIT.
MIT has a pretty small enrollment, but a big influence on the world of engineering.
Not saying that you can’t get a top notch education at UCLA. Just that the average MIT student is higher caliber than the average UCLA student.
Austin??? What the…?
Having been affilitated with both Caltech and UCLA, I found Caltech more nurturing (!) and UCLA more challenging.
Caltech has turtles, though. And better scholarships. UCLA is the better cultural experience and the more likely to admit her to med school–if that’s her goal.
My niece went there, as did my grandparents and cousins. It is a family tradition I screwed up by graduating from CSUF. An undergraduate degree from UCLA holds a lot of weight in Southern Cal, obviously depending on the major. What may I ask, are her other choices for schools?
But you can do a lot worse than UCLA. It is one of the elite universities. Also the campus is very nice.
UCLA != elite university
Sorry to be a jerk. But as a consolation, check out the acceptance rates and necessary qualifications for legacy students compared to non-legacies at “elite” universities. Quite shocking and goes against the idea of the even playing field.
MrBubble
UCLA != elite university
Don’t tell that to the UC crowd, especially UC Berkeley, UCSD and UC Davis.
Ah yes, the “legacy” admissions racket. A fine tradition since the early days of universities.
I reserve the term “elite” for the Ivy League, MIT and a few other select schools. My list is a lot shorter than the list of schools that consider themselves to be elite.
After watching what those “elite” Ivy League grads did to Wall Street and this country, I think you might want to look at a community college instead. An Ivy League degree isn’t worth the paper it was printed on.
But seriously, it depends on what you compare UCLA to. It is a very nice campus, and if you gave it a second look you probably would agree.
Just my 2 cents.
Hey- quit popping my bubble-
We’re paying 5K a Month for our kids East Coast Ivy.
He’s doing Pre-Med & Genetics, non of this Art/Communication major BS stuff (or we would have kept him in State)
It’s AMAZING who he is meeting & rubbing shoulders with…I like to think that’s a large part of what we are paying for!!!
Did your family disown you for not attending the family alma mater, bananarepublic? Me, if I hadn’t gone to U of M, my daddy would have written me out of his will.
Thanks for your input. Getting the word from people who’ve been there, or had family members there, is valuable.
Elanor,
Is there any reason why your niece can’t go to a community college first and take the hard sciences and math courses there? Not only will she find out whether this is the route she wants to go, it is cheaper in the long run.
Excellent suggestion, SF.
My company hires heavily from the pool of BS grads at UCLA (Biotech). From what I can tell the grads in microbiology and biochemistry are preponderantly Asian. A white girl from the midwest will likely feel quite a lot of culture shock, or enjoy being quite different from most people on campus.
UCLA is not on my list of approved schools for my daughters. It’s too much money for what little prestige it gives.
My hard-working neice went there, transferred from JC…and majored in Sociology. Meh. So she’s been struggling. It is such a heeyuge campus that I don’t think you can characterize the student culture one way or the other.
Bill, guess what, this is for you. In reverse honor of your fitness-ness I just now got thirsty, but instead of getting up to get a drink of water I reached over and plucked the daffodils out of the vase on my desk and drank the bouquet water instead, leaving an inch it it, before putting them back. And I raised the vase in a toast and said ‘To Bill in LA’s successful fitness regime and eternal youth’, when I drank out of it.
Try drinking POM, the original flavor. It’s expensive but it’s higher in anti-oxidents than red wine and green tea. One serving per day for several months…
What? And lay off this delicious daffodil water?!
oddawalla
How was the bouquet?
Green, with delicate notes of dirt and bug.
Ooooffff!
Please don’t ever run with scissors or handle sharp pointy objects Olygal
LOL! You kill me, Olygal…
Hi all, I was curious if anyone has had some experience with owner occupied multifamily? Pros/Cons? The market for multifamilies in southern NH is dropping pretty quickly, and I was looking at it as an investment for the future. Live in one side and rent the other, and then eventually rent both sides once the mortgage is paid off. The market is the same for condos and condex’s here, which is another option. Just looking for an honest opinion, I have a feeling my realtor would think it’s a great idea, so I thought I would start here!
Thanks in advance!
Do you really want to be a landlord in this market?
Correct me if I am wrong but wouldnt this be the best time to buy an investment property? With all these people defaulting on their loans they are going to need somewhere to live and renting is their only other option.
How quickly do you expect to have the mortage paid off ? You’re looking at a miniumum of 15 years in one spot, and it’s rare to stay in one spot that long these days due to jobs.
As quickly as possible. We would buy a house based on one income, and whatever I make go towards the principle. This is just an option I am looking at, the single family houses are not dropping at all in this area, so I am just looking at alternatives. I have been a patient fence sitter for two years now and the market is just ticking me off.
You might be even more ticked off if you buy now and become 25% (say) underwater a year from now.
I’ve been a fence sitter for SIX years and not about to buy just as the tide is turning. But I understand your frustration; houses in my area are not going down much either.
Look at your residence as a place to live first. Don’t start thinking about “investments for the future” yet, unless you really REALLY relish the niceties of being a landlord. You don’t know how lucky you are to be out of the game at this point in time.
What to invest in then? Stay mostly in cash, put some into PMs (today looks like a great day to start a position), energy, and some “safe” fixed-income investments. Personally I’m shorting the market in addition to the above, but you might not want to go there.
Lesser fool, you have a good point! I do believe the market is still going down but I am just getting impatient I guess. The prices in my neck of the woods are still way to high for me to be interested in a single family yet. People still think a 900 sf cape is worth 200K, whats even worse is people get into bidding wars over these properties and drive the price above the listing price!Spring really brings out the crazy people! It will be nice when this market stabilizes, whenever it does. Thanks for the comments!
Given your ID, is it a good idea to even buy a place until you leave the service ?
“Lesser fool, you have a good point! I do believe the market is still going down but I am just getting impatient I guess.”
If you think the RE asset-class is “still going down”, why would you even THINK of buying TWICE as much of the asset-class as you actually need for your family??? That’s crazy-talk.
If you think the RE asset-class is “still going down”, why would you even THINK of buying TWICE as much of the asset-class as you actually need for your family???
Are you serious?
A cash-flowing property is like an interest-paying bond. Your return is relative to the price you pay, the amount you borrow (leverage), the cost to finance, and the net cash flow. Here’s a trick question: If Corpsman finds a property that nets him 10 percent cash-on-cash, but the value of the property drops 10 percent, how much has he lost?
Answer is nothing, as long as he doesn’t sell. He doesn’t book a loss unless he sells at a lower price than what his purchase (basis) price plus his realized gains on cash-flow are. This is no different than holding a bond to maturity… unless you need to sell, you don’t… you just hold and continue to book cash-flow.
Plus, he gets the added benefit of having a place to live. Let’s make sure to give Corpman both sides of the question…
Opportunity cost of capital.
He’s lost a lot more than 10% because of the fact that he is leveraged and bought too early.
The price you pay determines the return you get.
“Are you serious?”
Definitely.
“A cash-flowing property is like an interest-paying bond.”
I have two words for you: “declining rents”.
The biggest risk is buying a property that _appears_ to cash-flow, but which no longer does next year, or the year after. In that scenario, you find youself feeding an alligator, and your ability to do so depends on the safety of your job (declining) or other sources of positive cash-flow (likely declining).
If you can’t handle the negative cash-flow, good luck selling that alligator for anywhere near what you paid when you disclose those new, lower rents to other investor-minded buyers. Any intelligent investor will base their offer on their required CAP rate and the rents they expect to receive.
I’m seeing declining rents everywhere I look.
Opportunity cost of capital.
Opportunity cost is only applicable if your money had the opportunity to earn a rate of return higher than the one currently being earned. 10 percent is certainly a very reasonable number given the cost of capital and price in today’s market. I don’t know anyone today who would turn down a ten percent return…
He’s lost a lot more than 10% because of the fact that he is leveraged and bought too early.
That 10 percent was an annual return… like I said, there is no loss without a sale.
I’m seeing declining rents everywhere I look.
Then you’re in an overpriced market where rents and incomes aren’t in equilibrium. Where I am, rents didn’t break from incomes like they did with Boston. We also don’t have the higher-ed system creating a demand/supply imbalance.
My rents continue to hold steady. My vacancy rate is less than 5 percent in the period I’ve owned the property. If I’m worried about cashflowing in an environment with dropping rents, then I allocate more capital to paying down the loan balance, thus improving my month-to-month cash flow at the expense of reducing my return.
Given my return on cash is almost 12 percent, and if I had to pay down my mortgage in order to continue to cash flow in a declining rent environment, I might expect to see a return of 6 percent, I’m not really worried. Cash in my MMF is earning a paltry 2.5 percent…
Excel is a great tool. If you expect declining rents and need to price accordingly, the right spreadsheet will tell you all you need to know. Then make offers accordingly…
there is no loss without a sale.
You should run for the Treasury. Apparently, you believe in leprechauns too.
ROTFLMAO
Opportunity cost is only applicable if your money had the opportunity to earn a rate of return higher than the one currently being earned.
Sorry, this is flat-out false. If prices are falling opportunity cost also consists of sitting out the price decline, and that is as genuine a return as anything else.
And in liquid markets, you can short stuff too (not housing naturally.)
This is the purest of pure BS from someone that really doesn’t get the concept of opportunity cost.
If prices are falling opportunity cost also consists of sitting out the price decline
You’re absolutely correct. I was mistaken… you could sit it out and earn a risk free rate of return while prices continue to fall. Let’s see… earn a return greater than the risk-free rate of return now or wait/hope for better returns in the future. A few things come to mind: A bird in hand…, no wait, maybe pigs get fed, hogs get slaughtered would be more appropriate.
Here’s a question for you, FPSS: What’s Warren Buffet’s holding period for an investment? Why?
“there is no loss without a sale.”
“Unrealized losses” are still losses—just ones you have not faced up to yet. You _have_ lost relative to the alternative scenario where you waited for RE to bottom before buying in. You may not want to admit it, but you have. When a stock I buy is underwater, I may not yet have realized the losses by selling, but it is still a loss on my books.
“Where I am, rents didn’t break from incomes like they did with Boston. ”
My forecast is that the near-depression economics will still cause job-losses and resulting demand-destruction and declining rent, even in markets that to all appearances were not bubbly.
“My rents continue to hold steady.”
I wish you luck with that over the next couple of years. Seriously, no snark. Could you report back occasisonally, since that’s good data for us? Also, would be interested to know what area you are seeing this in.
“if I had to pay down my mortgage in order to continue to cash flow in a declining rent environment,”
That sounds like you are operating on creative financing. Paying down traditional financing does not affect the payment, and thus does not affect your cash-flow. Are you using interest-only financing, or pay-option? If you are using creative financing, I hope you have deep pockets, since they tend to allow higher leverage. Remember, leverage giveth, and leverage taketh away.
“If you expect declining rents and need to price accordingly, the right spreadsheet will tell you all you need to know. Then make offers accordingly…”
I actually agree here; if you got an amazing bargain on the purchase price (e.g. lowball offer), which would provide for LOTS of padding in terms of cash-flow (against the possibilities of increased vacancies and declining rents), then perhaps a purchase could make good sense. Purchase price does to a large extent define your return.
But I’m certainly seeing nothing that fits that bill near me!
Primey, Primey, Primey, why you arguing with the pig?
There are so many better things in life to do.
When a stock I buy is underwater, I may not yet have realized the losses by selling, but it is still a loss on my books.
I agree completely with you on the example of stock. Where this gets soft is when you start talking about income stream. A better example to use is that of a bond paying interest. If the value of the bond goes down from your cost basis, have you realized a loss? Not if you hold to maturity, unless you talk about opportunity cost as FPSS did. But my point is still that if your return is greater than the risk-free-rate-of-return, then we’re really talking about theoretical maximizing of returns. Which is why I make a point of saying hogs get slaughtered… in the real world, it is very difficult to judge and execute real opportunities for profit without increasing risk of loss.
This is the fundemental question regarding MBS’s on bank balance sheets. Of course with banks, the issue is one of capital imparement and mandated reserve requirements.
That sounds like you are operating on creative financing. Paying down traditional financing does not affect the payment, and thus does not affect your cash-flow. Are you using interest-only financing, or pay-option?
This is a reference to paying down the principal balance and performing a refi to change the repayment terms. The big question is whether interest rates will be favorable at that point. My theory is we’re heading down the path of Japan and ZIRP is here to stay for the forseeable future. A gamble, but what isn’t today…
Could you report back occasisonally, since that’s good data for us? Also, would be interested to know what area you are seeing this in.
I’m not sure what value a single data point will provide you, but I’d be glad to let you know any changes as they occur. In terms of location, this is Southeastern Massachusetts. High unemployment in my city, but my neighborhood has held up very well (one of the nicer ones in the city). I’ve mentioned here before that most of the owners in my neighborhood work for the government, healthcare, or are retired and are long-time owners. Also, the available stock of apartments in this area is terrible, with many older apartments lacking amenities. My competitive advantage is that the apartments are new/newer, and the rent is at the low end of market.
if you got an amazing bargain on the purchase price then perhaps a purchase could make good sense
I got a good deal on the price, but realize now that the deferred maintenance was higher than I had anticipated, hence why I mention overpaying. I buy properties that need work. This provides a buffer from the premium priced properties that need nothing. As I have said before, the tax code for rental property is in your favor, especially when you have high income and need a place to “hide” it. This property provides income and a place to live while waiting for stabilization in the sfh market. It works for my family, but might not work for others. To each his own. As I posted though, Corpman deserves to hear all sides of the arguement.
You have to temper the advice you get here because many are way too gloomy in regards to real estate of any type.
I do this now with a 4-family. My family lives in one unit and I rent the remaining three out, one to family. The upside is that my tenants pay the mortgage, leaving lots of free-cash-flow in my monthly budget. I can deduct or depreciate 75 percent of almost everything I spend on property management, operations, or rehab. It also cash flows so when the time comes, I should be able to rent out my apartment and move into a single-family without the need to sell first. It provides some insurance against inflation, should inflation win out over the current deflationary trend. Lastly, it will provide a decent income into retirement.
The downside is that I have to deal with tenants, maintenance on an older building, and maintaining a large cash reserve against tenant non-payment or expenses like a new furnace or roof. Unless I hand over management to an agency, I am tied physically to this area. Also, at least in Mass, rental law favors tenants. You have to be careful in terms of limiting liability, especially with lead paint laws and such.
We purchased in 2004 and definitely overpaid as compared to prices today, but my family has had a place to call it’s own for the last 4-and-a-half years, we’ve built value in terms of improving the property, and most importantly, we’ve given our budget flexibility to weather the financial storm in relative (financial) comfort… physically we’re tight, but that is a small price to pay for financial piece of mind. As long as you approach property management as a business, focus on positive cash-flow, and negotiate a good price relative to the current market trend, I don’t see how you can go wrong.
I’m seeing lots of 4-tops coming up for sale in Seattle recently. I think investors are just realizing that they missed the good window for selling, now that they are seeing weakness in the rental market and declining prices in the resale market. I think they’re screwed. They’re asking-prices are about twice what I think it would make any sense to buy at.
“We purchased in 2004 and definitely overpaid as compared to prices today, ”
In a year when things have declined even more, you will have overpaid even more. And when rents declines really start hitting in your area, and vacancies, you may have to re-evaluate whether it ever actually cash-flowed for the long-haul at the original purchase price.
“there is no loss without a sale.”
Do yourself a favor and don’t buy any more property.
Dude, he’s clearly clueless. Drop it. This is a waste of our time.
Suspending mark-to-market doesnt’ change where the market is.
now that they are seeing weakness in the rental market
So what does declining rents in Seattle have to do with rents in Mass, Boston, or my city for that matter? Why is real estate local? Because fundementally it comes down to the rental market and incomes, which are local…
They’re asking-prices are about twice what I think it would make any sense to buy at.
It sounds to me like you’re looking at non-distressed sellers. We’ve seen time and again on this blog that the current market is being set by distressed REO sales. That’s where you need to look for your bargain… everything else is just a wishing price right now.
Suspending mark-to-market doesnt’ change where the market is
Actually, it sounds like you should run for Treasury as clearly you have it all worked out. Funny thing is that the whole mark-to-market thing is being debated in the financial community right now. Since FPSS is the resident expert here (I mean that seriously), I would defer to him as to why that debate is occuring? I don’t think this is a waste of time at all as it cuts to the heart of investments in illiquid assets…
Never wrestle with a pig. You get dirty, and the pig enjoys it.
- Charlie Munger
Never wrestle with a pig.
Dude, that’s nice brushoff, but it doesn’t answer the fundemental question of how you value an illiquid asset that generates a revenue stream over time.
So, are you going to enlighten our fellow blog readers who are probably interested in this or are you just going to call me clueless, make some sarcastic remark, and switch to discussing your garden or your what you’re cooking?
Never wrestle with a pig. You get dirty, and the pig enjoys it.
Man who picks bottoms has stinky finger
- Chinese saying
My last post must have gotten eaten…
So, the question remains how do you value an illiquid asset that produces an income stream over time?
Let’s summarize:
Blano had nothing to say beyond “don’t buy any more property”… I’m not sure he understands the concept of income vs. price in an investment vehicle or mark-to-market vs. mark-to-model accounting. Maybe he just likes being snarky.
FPSS wants you to time the market, waiting for the best possible return on your money. Not much surprise there since he probably trades for a living. Also, asset prices should be valued at whatever the current market price is and discount future income completely (interest, dividend, net-cash, or otherwise), so we’ll disregard the income piece of “income property” as an investment. Better yet, let’s not talk investment and just talk cooking.
Prime_Is_Contained’s main concern in income-property is declining rents. So far the most valid point I’ve seen yet. So, how does one deal with declining rents? The first is obviously with the model you used to determine the profitability of the investment. If rents decline, then income declines, so too must either the price paid or the cost of capital utilized. So, we make two projections, one best case and one worst case in terms of income and price, since we have no control over the cost of capital, and price the deal accordingly. Where’s that handy excel spreadsheet?
Now, we’ve said nothing about location demographics, area vacancy rates, deferred maintenance on the property, protection from liability, proximity to important area features like hospitals and highways and such and a host of other variables. This is hard stuff, people… obviously I’m clueless and soon-to-be-broke from having to write down the value of my investment property to nothing (good thing I didn’t quit my day job). While I’m at it, I should write a letter to W. Buffet and let him know that market timing is the key and his success was just an anomoly.
Look, buy property or don’t. It matters not at all to me. The condo I bought in ‘00 I sold for a nice profit in ‘03. The multifamily is all about income and I don’t plan on selling. The only thing I know for certain is that you have to be in the game to win a hand. Of course, the key to longevity in the game is not betting everything on one hand. Hopefully Corpsman got an education and everyone else got some entertainment. Now excuse me while I go count my cash from this month’s rents…
There’s a really simple end-result to all this. If you are so brilliant, and can make money off of it, knock yourself out! Why argue with us?
Get rich! Fly a jet! Call it “The Indefensible” like Buffett.
Why beat us poor yokels up with it?
Why beat us poor yokels up with it?
For starters, I think it was you who called me clueless, while I have had nothing but respect for you and your posts (until today).
Second, I’m answering Corpsman’s question regarding multi’s. I own one, and have been experiencing rental property investment and management for almost five years. Does that make me an expert? No. Does it give me some insight? Yes.
Third, who said anything about getting rich? On 12 percent returns on one property? Fasty, you better than anyone else on this board should know this isn’t about getting rich quick, but about refining the method(s) of earning a return greater than the risk-free-return. Come on now, I expect better than that from you. The best lessons are learned in the field and all that jazz.
And you never did answer any of my questions regarding “Mark-to-market” accounting and the challenges of valuation of income-producing illiquid assets. Over beers next time I’m in NY? I expect to be down there sometime in the next few months…
OK, so now we’re really conversing like adults. This, I can handle.
You’re like my friend’s father. You have to go through a eighty-seven fogs of bluster before you get to an argument that I actually want to bother to engage in
Why not take it now? Because I think you can do better in commercial with far less work than a SFH or a MFH. Also, you can do better with the MFH with pluging rents. (Of course, it’s always about the numbers but I would plug in fairly steep numbers on the plunge.)
Oh, and mark-to-market is real. It’s aboute as real as it gets. I once saw someone fired on the spot for even expressing doubt about the concept. Undoubtedly, I am terribly “old school.”
Reasonable arguments all.
I’m sure the opportunities in commercial will outweigh anything we’ll see in residential, but I think there are serious barriers to entry for small players, not the least of which is financing… I’m not comfortable with the idea of balloon payments on short term notes. Prices would have to drop considerably for me to take the risk. I’ve toyed with the idea mind you, but I’m not sold.
Of course, the deal on the John Hancock tower in Boston made me drool: 660 million, a 50 percent haircut from the previous sale, financed 97 percent or so the article read. Had I a group of investors who could raise 20 million, maybe I’d have myself a corner office with a view. I predict much lower commercial lease rates in Boston’s future…
“If you never try, you never fail.”
- Homer Jay Simpson
“renting is their only other option”
Correct me if I’m wrong, but I think they may also have the option of moving back in with mom and dad, etc.? Increased vacancy rates in many areas would indicate that this is what is really happening out there.
Baseball! Baseballlllllll!
Ah, it’s time for baseball…
Hey, scdave, did you really play for the Tacoma Rainiers?
A Seattle-area anecdote:
I was chatting with a guy I know last night who works in commercial real-estate management for a relatively small privately-held firm in the Seattle area. My understanding is that they have approximately half-a-million sq-ft under management.
I asked him what he was seeing in terms of going rents. He said they off approximately 15% from the peak at the moment, but that if you counted incentives as well, it would be more than that.
Interesting… I hadn’t realized rents were down that much in Seattle, one of the later arrivals to the bust.
I didn’t know that either. And thanks for the anecdotal evidence.
Communities print their own currency to keep cash flowing:
By Marisol Bello, USA TODAY
A small but growing number of cash-strapped communities are printing their own money.
Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.
The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.
Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.
Ithaca Hours has been out there for over ten years at least. It sounds like a good way to hide money from the IRS, except then you are limited to trade within the Ithaca community, or else paying the dollar exchange rate, which implies you lose money when you trade outside of Ithaca, as you have the option to spend dollars inside of Ithaca but not Ithaca Hours. Besides, the dollar has the full faith and credit of the US Government behind it while Ithaca Hours do not.
Just sounds like your basic emerging market currency to me.
Arbitrary devalued, illiquid, tax evasion internally via non-reporting, nobody really wants it, and everyone inside always prefers a stronger currency particularly if there’s no reporting.
This is practically a textbook definition of what constitutes an “emerging market”.
Gee, a share of GLD or a share of SKF? Better yet, save the dollars and go fishing.
I’d take the share of SKF.
More goods on Summers (if this was discussed this weekend, I missed it). From Dan Froomkin’s WhiteHouseWatch column for WaPo online:
The latest White House Friday-night document dump had its desired effect, as it’s Monday morning and there’s little to no attention being paid to how stupendously beholden it turns out President Obama’s top economic adviser, Larry Summers, is to the financial industry that he is ostensibly trying to rein in.
Summers, it turns out — according to financial disclosure statements released by the White House late on Friday — was paid $5.2 million for his part-time work for a massive hedge fund last year. He also raked in more than $2.7 million in fees for speaking engagements at such places as Citigroup, Lehman Brothers, Merrill Lynch and Goldman Sachs. For one speech alone last April, Goldman Sachs paid him a cool $135,000.
All of a sudden, Obama’s expressions of outrage over the culture of excessive pay on Wall Street are a bit harder to take at face value.
And the advice Obama is getting from Summers, his economic guru, is looking very suspect.
I mean, come on: How tough are you going to be on someone who paid you $135,000 in one day?
Froomkin is one of the best political reporters out there today, IMO. He went after the previous guys mercilessly, but has shown no tendency to slow up on the current administration, particularly in the economic realm.
I’m shocked! Shocked I say, and outraged!
“How tough are you going to be on someone who paid you $135,000 in one day?”
This is what I keep trying to explain to you regulo-philes. The accumulation of ever more abstruse and obscure regulations only serves to create small clubs of insiders who alone can understand and follow them. Inevitably the interests (and incomes) of the regulators and the regulated become fused together, and the public interest is forgotten completely.
This really stinks, but may go a long way towards explaining why Summers and protege Geithner are so fond of too-big-to-fail bailouts.
Financial Times
Summers criticised over Wall St links
By Andrew Ward in Washington
Published: April 6 2009 22:33 | Last updated: April 6 2009 22:33
Lawrence Summers, the chief White House economic adviser, faced criticism from political ethics watchdogs on Monday after it emerged that he earned millions of dollars from Wall Street financial institutions before joining the Obama administration in January.
While there was no suggestion that Mr Summers did anything improper, critics said his lucrative relationship with a large hedge fund and several investment banks threatened to undermine public trust in the administration’s economic plans.
He received nearly $5.2m in compensation over the past year for a part-time advisory role at D.E Shaw, the hedge fund, according to financial disclosures released by the White House. He was also paid about $2.7m for speaking appearances, including several to banks such as Citigroup, Goldman Sachs and JP Morgan, which have received federal bail-out funds.
Haven’t seen it posted yet…but it might have been.
http://www.newsweek.com/id/192461
Meredith and Maria were just on CNBC just a minute ago.
Meredith mentioned STT and the computers kicked in and the stock jumped 3% in 2 seconds in front of my screen.
Meredith rocks!!!
Moyers interview with William K Black worth seeing .
http://www.pbs/moyers/journal/04032009/watch.html
Maybe we will get a new generation of bankers who are not so highly overpaid as the recent cohort, and who also are not so prone to throwing money into the sea.
Financial Times
A chance for bankers to refocus their talents
By Gillian Tett
Published: April 6 2009 19:52 | Last updated: April 6 2009 19:52
A few weeks ago, some science and engineering students at London University lobbed me a question. “Lots of people on our course used to go to work for banks, but now that seems a really bad idea, so where do you think the job opportunities will be in the future for graduates like us?”
Where indeed? It is a question of great import right now – not just for current students but for policymakers across the western world. Until three years ago, smart, numerate students took it for granted that one of the fastest ways to become rich and successful was to dive into the world of complex finance, producing structures such as collateralised debt obligations (CDOs).
Now, however, those CDO dreams have crumbled. By late last year, large western banks had shed more than 125,000 jobs. Thousands more have gone since then, many in high finance. The betting in the management consultancy industry (which is cutting back too) is that some 300,000 global jobs linked to banking could vanish before the crisis ends.
That is striking, given that the City of London was thought to employ some 350,000 financial workers two years ago. An entire financial army, in other words, is being demobilised – of all ages and ranks.
Some optimists (and students) hope the trend will be temporary in nature. History, however, suggests otherwise. Take a look, for example, at some fascinating recent research by Thomas Philippon and Ariell Reshef, two US-based economists, on human capital and wage trends in the 20th century banking and non-banking worlds.
This analysis suggests that between the 1930s and early 1980s, pay and skill levels in finance were roughly comparable to those in the rest of the business and professional world. However, from the early 1990s, pay and skill levels soared until by 2006 bankers were earning 1.7 times what other comparable business employees took home. No wonder graduates flocked to finance.
But – more interestingly – the research also shows that an almost identical rise in the wage and skill levels of finance workers relative to other business spheres was also seen in the 1920s. It was only in the late 1930s, or after the Wall Street crash, that banking pay and skills fell to levels comparable with other industries (where they stayed for almost five decades).
Surely the “bright minds” could see the clear link between the behavior of the banks (credit expansion) and how their salaries were being paid. If not, they don’t even deserve the so-called outsized remuneration for not understanding “causality”.
As for what will they do? Dunno. Make a better drug, a better product, something. Same as always in the history of capitalism minus the maniacal periods.
PTB is gonna break SKF, all the way down to 40.
Whats the 40 dollah put on June Contract on SKF?
kinda hard to find,
aint it.
You mean Jul contract?
It’s trading at 2.55.
You’re thinking of the July call. It traded all of 20 contracts and there’s no bid.
That’s hardly a ringing endorsement of your position, is it?
Well, according to the venereal New York Times, apparently the sheeple have “pride”. Who coulda thunk it?
Look around you. On the train platform, at the bus stop, in the car pool lane: these days someone there is probably faking it, maintaining a job routine without having a job to go to.
The Wall Street type in suspenders, with his bulging briefcase; the woman in pearls, thumbing her BlackBerry; the builder in his work boots and tool belt — they could all be headed for the same coffee shop, or bar, for the day.
“I have a new client, a laid-off lawyer, who’s commuting in every day — to his Starbucks,” said Robert C. Chope, a professor of counseling at San Francisco State University and president of the employment division of the American Counseling Association. “He gets dressed up, meets with colleagues, networks; he calls it his Western White House. I have encouraged him to keep his routine.”
BWAHAHAHHAHAHHAHAHHAHAHAHHAHAHAHHAHAHHHHHHHHHHHH!!!
Well at least this person is not killing his entire family because he doesn’t have a job.
Oh come on, you love a good decapitation story just as much as I do! Quit pretending otherwise.
What to look for, what to do in the coming dollar debacle, part one:
http://www.youtube.com/watch?v=UlDNMB6wYmI
Or, instead of going the way or Argentina we could go the way of Japan.
Or maybe go the way of neither.
Yeez,
That’s one depressingly funny video.
1, 2, 3…. Testing
123 Len Barry:
1-2-3, oh, that’s how elementary it’s gonna be
C’mon, let’s fall in love, it’s easy (it’s so easy)
Like takin’ candy (like takin’ candy) from a baby
A-B-C (A-B-C) fallin’ in love with you was easy for me (easy for me)
And you can do it, too, it’s easy (it’s so easy)
Like takin’ candy (like takin’ candy) from a baby
Baby, there’s nothin’ hard about love
Basically, it’s as easy as pie
The hard part is livin’ without love
Without your love, baby, I would die
[mostly instrumental with (1-2-3) (1-2-3)]
It’s easy (it’s so easy)
Like takin’ candy (like takin’ candy) from a baby, yay
One and one are two (one and one are two)
I know you love me and oh,oh, how I love you (how I love you)
Don’t try to fight it ’cause it’s easy (it’s so easy)
Like takin’ candy (like takin’ candy) from a baby, yay
1-2-3 (1-2-3) oh, that’s how elementary it’s gonna be (it’s gonna be)
C’mon, let’s fall in love, it’s easy (1-2-3)
[Fade]
Oh, that’s how elementary
Give me a F! (F!)
Give me a U! (U!)
Give me a C! (C!)
Give me a K! (K!)
What’s that spell ? (FU*K)
What’s that spell ? (FU*K)
What’s that spell ? (FU*K)
What’s that spell ? (FU*K)
What’s that spell ? (FU*K)
Well, come on all of you, big strong men,
Uncle Sam needs your help again.
Yeah, he’s got himself in a terrible jam
Way down yonder in Vietnam
So put down your books and pick up a gun,
Gonna have a whole lotta fun.
And it’s one, two, three,
What are we fighting for?
Don’t ask me, I don’t give a damn,
Next stop is Vietnam;
And it’s five, six, seven,
Open up the pearly gates,
Well there ain’t no time to wonder why,
Whoopee! we’re all gonna die.
Yeah, come on Wall Street, don’t be slow,
Why man, this is war au-go-go
There’s plenty good money to be made
By supplying the Army with the tools of its trade,
Just hope and pray that if they drop the bomb,
They drop it on the Viet Cong.
And it’s one, two, three,
What are we fighting for?
Don’t ask me, I don’t give a damn,
Next stop is Vietnam.
And it’s five, six, seven,
Open up the pearly gates,
Well there ain’t no time to wonder why
Whoopee! we’re all gonna die.
Well, come on generals, let’s move fast;
Your big chance has come at last.
Now you can go out and get those reds
‘Cause the only good commie is the one that’s dead
And you know that peace can only be won
When we’ve blown ‘em all to kingdom come.
And it’s one, two, three,
What are we fighting for?
Don’t ask me, I don’t give a damn,
Next stop is Vietnam;
And it’s five, six, seven,
Open up the pearly gates,
Well there ain’t no time to wonder why
Whoopee! we’re all gonna die.
Come on mothers throughout the land,
Pack your boys off to Vietnam.
Come on fathers, and don’t hesitate
To send your sons off before it’s too late.
You can be the first ones in your block
To have your boy come home in a box.
And it’s one, two, three
What are we fighting for?
Don’t ask me, I don’t give a damn,
Next stop is Vietnam.
And it’s five, six, seven,
Open up the pearly gates,
Well there ain’t no time to wonder why,
Whoopee! we’re all gonna die.
-Country Joe McDonald
I didn’t think Ben would let me get away with that one..but you are a gal….
Asked you a question
I didn’t need you to reply
Is it gettin’ heavy?
But they’ll realize
Is it gettin’ heavy?
Well I thought it was already as heavy
As can be
Is it overwhelming
To use a crane to crush a fly?
It’s a good time for Superman
To lift the sun into the sky
‘Cause it’s gettin’ heavy
Well I thought it was already as heavy
As can be
Tell everybody
Waitin’ for Superman
That they should try to hold on
Best they can
He hasn’t dropped them
Forgot them
Or anything
It’s just too heavy for Superman to lift
Is it gettin’ heavy?
Well I thought it was already as heavy as can be.
Tell everybody
Waitin’ for Superman
That they should try to hold on
Best they can
He hasn’t dropped them
Forgot them
Or anything
It’s just too heavy for Superman to lift
-The Flaming Lips
I can go in two different directions with songs; here’s one
Darkest of night
With the moon shinin’ bright
There’s a set goin’ strong
Lotta things goin’ on
The man of the hour
Has an air of great power
The dudes have envied him for so long
Oooh, Superfly
You’re gonna make your fortune by and by
But if you lose, don’t ask no questions why
The only game you know is “Do or Die”
Ah-ha-ha
Hard to understand
What a hell of a man
This cat of the slum
Had a mind, wasn’t dumb
But a weakness was shown
‘Cause his hustle was wrong
His mind was his own
But the man lived alone
Oooh, Superfly
You’re gonna make your fortune by and by
But if you lose, don’t ask no questions why
The only game you know is “Do or Die”
Ah-ha-ha
The game he plays he plays for keeps
Hustlin’ cards on ghetto streets
Tryin’ ta get over
(That’s what he tryin’ to do, y’all)
Takin’ all that he can take
Gamblin’ with the odds of fate
Tryin’ ta get over
Tryin’ ta get over
Tryin’ ta get over
Tryin’ ta get over
Woo, Superfly
The aim of his role
Was to move a lot of blow
Ask him his dream
What does it mean
He wouldn’t know
“Can’t be like the rest”
Is the most he’ll confess
But the time’s running out
And there’s no happiness
Oooh, Superfly
You’re gonna make your fortune by and by
But if you lose, don’t ask no questions why
The only game you know is “Do or Die”
Ah-ha-ha
Superfly
Superfly
Superfly
Superfly
“Tryin’ ta get over…
-Curtis Mayfield
And here’s the other direction:
The road is long
With many a winding turn
That leads us to who knows where
Who knows where
But I’m strong
Strong enough to carry him
He ain’t heavy, he’s my brother
So on we go
His welfare is of my concern
No burden is he to bear
We’ll get there
For I know
He would not encumber me
He ain’t heavy, he’s my brother
If I’m laden at all
I’m laden with sadness
That everyone’s heart
Isn’t filled with the gladness
Of love for one another
It’s a long, long road
From which there is no return
While we’re on the way to there
Why not share
And the load
Doesn’t weigh me down at all
He ain’t heavy he’s my brother
He’s my brother
He ain’t heavy, he’s my brother
-Hollies
Rodger Houston we have a go for throttle up.
What happened? Did Ben sleep in today?
It’s sunny here again. I don’t think I like it—I’s getting all parched-like. Why, soon my thriving moss colony I’ve been keeping on my head will dry out!
rain its that stuff that falls from the sky right ?
Humidity: 6%
Wind: Calm
Visibility: 10.0 miles
Dew Point: 32 °F
Precipitation: 0% Chance of Rain
Air quality: Good
Pressure: 28.67 in
UV: 8
Observed at: Ahwatukee - Knox - 48th, Phoenix, AZ
Updated: 11:25 AM MST on April 07, 2009
rain its that stuff that falls from the sky right ?
Yep. Silver and blue and magic.
I’m with you, Oly. The best time to explore the NW is when its damp and the fog is slowly rolling over the tops of the Doug firs.
This weekend it was VERY evident how many people come out only when it’s fair weather. Sheesh traffic was nightmarish in Portland.
The malls I passed were jam-packed. “The weather’s nice! I know, let’s go to the MALL!!” I think most of these people would function better in PHX or SD if they need the sun to enjoy themselves…
I’m with you, Oly. The best time to explore the NW is when its damp and the fog is slowly rolling over the tops of the Doug firs.
I knowed you was a genious the first time I ever met you.
I think most of these people would function better in PHX or SD if they need the sun to enjoy themselves…
Let’s you and me buy all of them tickets or loan them gas-money to get there!
Who has ever eaten fiddleheads? I never have and I want to. I’m looking in a fern catalog right now.
I have. We can get them fresh in the produce section, or you can buy them frozen.Heat them in a pan with butter, garlic as well if you like. A bit like swiss chard or bok choy.
I have. One of my absolute favorites.
You have to pick them while they are relatively young, and clean them. I can provide any number of recipes including a sensational Indonesian one.
I can provide any number of recipes including a sensational Indonesian one.
Sure, why not? Speaking for me, since I HAVE NONE HANDY, I’d just love a tantalizing recipe… *grumble *
…But wait. I can think of it as preparation for the lovely day in the future when I will have scores and scores of ferns popping up out of the spring-warmed soil, coiled and green and eager for me to eat them, and on that day I shall squeal and hop up and down and then go look at these recipes.
Do they taste anything like fish heads?
No. Although you can make a nice stargazer pie with fish and the heads pop out of the crust and look to ths stars. Good with fiddleheads.
That sounds wonderful. I’ve always preferred my food to be inquisitive.
Me, too!
‘When the woman gazes long into the fish-head pie, the fish-head pie gazes back into her. Then she eats it, and shouts ‘That was totally yummy! Gimme some more, quickly, man! And she eats that, too. What a pig this woman evidently is.’
Or something like that.
- Friedrich Nietzsche-
Cream of fiddlehead soup is a tasty treat. It’s been 15 years, but I still remember that soup.
MrBubble
Fiddleheads’re good! Try ‘em! Though they can be expensive at the farmer’s market (or wherever). They’re one of those things I mean to hunt for when I’m in Michigan, but keep getting distracted by food and booze and wet dogs and such distractions.
I’ve sauteed them with shallot, butter, a little white wine — good.
(PS — I’ll link to some pictures of the lad this week sometime.)
Now I KNOW I must buy the right ferns and grow my own fiddleheads.
That’s my vision.
I had never heard of fiddlebacks before. Initially thought you were refusing to fiddlebacks. Yuck!
How long do you cook these things?
Um, yeah…change the first “fiddlebacks” to “fiddleheads” and “refusing” to “referring”. It’s been one of those days.
You clearly need some fiddleheads. Or just more beer. Or a potato!
Here, have a potato. (Hands him a potato)
Oh fiddle dee dee
Nyuk, nyuk.
Found stuff.
http://gonewengland.about.com/od/fiddleheadsrecipes/Fiddleheads_Recipes_Fiddlehead_Fern_Recipe_Collection.htm
I might be buying a car this Thursday evening in Brooklyn. Any NYC HBBers want to meet?
For the braver souls among you, anyone want to provide backup for a cash transaction?
When i sold my other car i parked it at the mechanics garage 2 blocks away….told him he can take it anytime he just needed to put on the plates…then i high tailed it to Norwalk CT and turned in my plates to dmv…so at 1050am the car was no longer in my name
i didn’t care what he did with it….he showed up a few hours later with his “sisters” plates from PA…yeah sure
You mean a communal purchase?
If that works we could buy some condos in Miami.
Nope, it would just be nice to have a friend along, even if only of the internet variety.
Whaddya mean ‘only’ the internet variety?
Anyway, why are going to Brooklyn to buy a car? Don’t they have cars where you come from?
Well, I’ve never met any of my internet friends cara a cara, so they are “special” in that way, but not the short bus way.
They have cars here in Socal, but I’m hunting a very specific car. I came really close to getting one in Olympia, that would have been fun, I’m sure.
I came really close to getting one in Olympia, that would have been fun, I’m sure
Yar. I’d a loaded yer new car up with bags and bags of fresh drippy stolen oysters, and pretty daffodils, and some extra daylily clumps I just acquired from the grounds crew, and bluebell bulbs, and some homebrew. And then packed it all in good with pretty green moss. Moss is super!
But no frogs, because they are home-bodies and wouldn’t like SoCal.
Then I’d show you the Best Dive Bar in The World, and, if’n we lived through that experience—not everyone does, sadly— there would be midnight dunken kayaking on Totten Inlet. I do that often. And it’s great! Especially when the moon is almost full, like now. You could even have the kayak painted to look like a giant ripe banana.
Yes, that’s right.
There’s about 7 sea lions out hanging around out there right now, barking and yarking and carousing* all over the place. They are really quite noisy, and unlike harbor seals, they show no fear of kayaks, which is good.
I guess….
Except they’re pretty big and when their heads pop up right there next to you they seem to be thinking ‘I wonder what a little pink drunken person floating in a giant banana tastes like?’
Or, I guess it could just all go super baaaaad and we’d end up shooting mental blast-beams at each other at the Farmer’s Market.
Sigh. I hate it when that happens….
*I can just tell that’s what they’re doing. It’s obvious from the timber of their noisy barks.
I suddenly find myself wishing I’d been willing to pay more for that car in Olympia.
WTF happened to BJ? Did he get a visit from banking/wall street CrimeSyndicate thugs?
He said he would be working on foreclosures today.
Maybe that’s what he’s gettin’, if you get my drift.
Ok ladies, report in……who’s missing???
I’m very disappointed in no BB today. Maybe we all should have bought T-shirts?
I just hope Ben hasn’t been kidnapped by grouchy FB’s.
Maybe he is busy preparing for the film crew visit and tour.
Or maybe he is out skipping merrily across a pretty meadow, picking daisies! Or bluebells!
Ben tiptoeing through the tulips?
He’s going to plop you in AZ Purple Haze blog purgatory for that one Olygal!
He said yesterday that he was going to be out on business.
Well, maybe his business is picking daisies in a meadow. Did you think of that, huh huh huh?
Ben tiptoeing through the tulips?
He’s going to plop you in AZ Purple Haze blog purgatory for that one Olygal!
No, he is not either gonna!*
Ben is sensitive and thoughtful and stuff. I can tell this from looking at his photos. Especially the one in the bathrobe in Vegas, when he’s propped up on the counter, and the one with the quart jar of moon-shine cuddled up in his hands on what looks like a houseboat at sunset.
So there!
Ben surely loves tulips, and frogs, and bees, and probably even writes poetry sometimes.
Right, Ben? Right?
*Don’t do it, Ben!
Yeah, this totally rots.
Yep, I’m definitely “jones-ing” for some more HBB.
C’mon Ben, I need my stuff!
I heard that clicking on the “Donate Now” button and entering a credit card number makes today’s BB magically appear. But that may just be a rumor.
I like those type of rumors.
My CC must be defective.. all I got was David Lereah.
Funny, all I got was Suzanne researched this.
Manhattan office rents fell the most in at least 25 years in the first quarter as financial companies slashed jobs and relinquished space in the U.S. recession.
Rents dropped 6 percent from the fourth quarter to $65.01 a square foot, commercial property broker Cushman & Wakefield Inc. said in a report today. The decline is the most in records dating back to 1984.
For those inclined to catching falling knives.
Observation ….house across the street has a 1 brdroom with a deck to the back yard…last time it was available it was empty 1 whole day, now its going on almost 2 weeks and a for rent sign in the window.
Lets take it over to the forums guys.. I know its a bit slower, but it can also be a bit more organized with Most recent posts coming to the top.
Forum - what a concept! Haven’t been there in awhile. Maybe that will help me get my bear fix. (Missing ya Ben!)
I think we can all agree that whatever moves the government makes, it will be the wrong moves. We can agree on this as Dems or Repubs alike. So what comes next? Personally, I am going on the assumption that the pain MUST be felt. We cannot use financial tricks to get ourselves out of this mess. So…how is the pain going to be felt? Here’s my scenario…
In our government’s attempt to avoid or minimize the pain, this printing of money is going to set off a serious bout of inflation. I am expecting double-digit interest rates within 2-3 years. That would knock down the economy, causing unemployment to rise much higher. And it would force all of us to pay up, in numerous ways, for the sins of others.
I don’t see any way out of this. In the end higher interest rates guarantee we pay the piper.
JMHO
“I think we can all agree that whatever moves the government makes, it will be the wrong moves. We can agree on this as Dems or Repubs alike.”
I can agree with that.
Stay on ‘em BR.
RIP America
“Your business and political overseers GAMED you…Bigtime “
Would default have the same end-result?
Yes, but the winners and losers would get exchanged.
Yes, but the winners and losers would get exchanged.
Would that be the funny part? Or would it not be the funny part?
I can’t decide.
In one you win; in the other, you (and the frogs) don’t.
Decide which one you want after that.
RIBBET
In one you win; in the other, you (and the frogs) don’t.
Hmmmm. * puts on thinky face *
…Oh, I know! I want the one where the frogs win!
Speaking of frogs, and yes, I know I do that a lot, walking down some of the roads here at night is to rejoice in the sound of spring. The noisy, full-throated sound of hoppy Spring.
Hey, where’s my sea-lion post? I am all excited about sea-lions this week. And my kayak painted to look like a giant ripe banana.
I can NEVER tell what will get through the filters.
Mmmmmm … frog legs … mmmmmm … in a spicy Thai sauce.
Wow BR, I almost agree with you.
I agree that, “I’m from the government, and I’m here to help”, are some of the scariest words ever uttered. I disagree that the short term result will be inflation, though I’m hedged for it in a couple of ways.
The givernment(tm) is not keeping up with the wealth destruction, not even close. Go ahead and take a look at the current guestimates for equities losses. Just that one assets class make the fedgov intervention look like nursery school.
*test*
Sea li*ons, kay*aks pain*ted to look like bana*nas, mos*s, hea*ring the sound of hoppy Spring, and…actually I for*get the re*st. Su*mpin’ or oth*er.
Oh, and btw, Fasty?
Gon*na kil*l you for tha*t las*t pos*t.
You know what?!? They DON’T taste like chicken.
LOL
My post vanished too but basically it pointed out the fact that they DON’T taste like chicken.
…And eat you in a spicy Thai sauce.
Oooh! I just thought! I shall call this sumptuous dish: ‘Perfect Omnivore with French Terragon and Some Peanuts’.
Huh huh huh?!
Hahahahahahah!
Now, don’t be mad: you know you’d be delicious.
Firstly, it’s tarragon, and it wouldn’t quite go with peanuts.
Oh, yeah?
Secondly, regarding the peanut blending, well, how will I know, until I try?
* falls off chair laughing at this bon mot *
Well, when you try it, try it with frog legs so we both can have a laugh.
Hahahahah!
*falls right back off chair, ’cause that’s funny *
Hey, wait, that’s not funny!
*bounces abruptly back upright *
I AIN’T EATING FROGS.
Technically, you won’t be eating the frog just the leg.
Aaaaaaaaaaaaaaaaaaah! *wild scream of not eating frog-ness! *
Serious, how many times have you eaten frogs? Tell me now. Tell us ALL now. And be honest.
About a dozen times-ish or so.
What’s the real question?
“I AIN’T EATING FROGS.”
Maybe you should before they eat you:
http://www.imdb.com/title/tt0068615/plotsummary
(Nah - I’m just kidding. They only eat pussycats.)
“What’s the real question?”
How many times has a frog eaten you? (Place innocent face here.)
What’s the real question?
That’s a good question, and here’s my answer:
1. Shall I forgive you for eating frogs? And:
a. did you eat them from ignorance? Or else:
b. because they just tasted good? Or to:
c. show off? Or:
d. were you really hungry?
‘Cause that’s the ONLY excuse! Plus the ‘they tasted good’ excuse. But that’s it. Otherwise, nohow!
And, secondarily:
2. Shall I really forgive you, or shall I:
3. Pretend to forgive you, and then go out in the forest later and complain to the frogs about your wicked ways, and see if they can find you and teach you to be respectful of frogs, like IIIII am.
“What’s the real question?”
How many times has a frog eaten you? (Place innocent face here.)
Oooh, do we even have an ‘innocent face’ emoticon? ‘Cause I can see how that’d come in handy, especially with SDREBear and her sneaky comments.
The answer is simple. Like everything, it started in curiosity and repeated because they tasted good.
Besides, it’s the omnivore’s conception of food conditional on environmentalism. I wouldn’t eat an endangered species, etc.
The frogs that are edible are bred for food. I don’t see a problem.
The frogs that are edible are bred for food. I don’t see a problem.
True? *gasp *…They breed frogs for food?! What sort of decadent place IS this planet?
*grumble *
Well, I didn’t know that. And I’m pretty sure I’m not happy about it. But on the other hand, I do attempt to taste almost everything I encounter, so I should make allowances. But I don’t feel like it, so I won’t.
Answer that, Mr. ‘I-Got-Every-Answer.’
*grumble *
What sort of decadent place IS this planet?
The same place that breeds chickens for food.
They get a good life (for a while) free of predators. We get protein at the end. It’s how it works.
Besides many species would never have survived without this barter in the first place. Domestication was the ultimate Faustian bargain.
Firstly, it’s tarragon, and it wouldn’t quite go with peanuts.
People say stuff like that.. but they’re frequently wrong. Like when I mixed whipped cream and green olives with pimentos. People said it wouldn’t work.. but it does. Try it!
Ahhhh…?
Well, okay. For you. I guess. But if I puke I’m gonna be mad, and I’m gonna make a note of it.
I’m on so many people’s books nowadays I feel like Bill Buckner. Heck, that Battlestar Galactica post alone probably put five extra logs on my fire.
I’m on so many people’s books nowadays I feel like Bill Buckner. Heck, that Battlestar Galactica post alone probably put five extra logs on my fire.
Nah. I already forgived you. And I bet many others did, too. Partly because everyone on this here HBB appears to have advanced ADD. But you know what, bink? Take the gifts you are given, is what I say…
….hey! There’s a pretty moth! I must go catch it and look at it!
*leaps up to catch pretty moth *
Gah! I read that as “pretty mouth” and almost fainted. Those of us near the Appalachians have to be extra careful when associating with strangers.
Those of us near the Appalachians have to be extra careful when associating with strangers.
But I am not a stranger.
Hahahahahah!
Those of us near the Appalachians…
Is that where you got the idea for the whipped cream and Spanish Olives combo? That’s explains some stuff…
Nah, I got the idea to mix whipped cream with olives when I was waiting tables and couldn’t afford an actual meal. The bar condiments were under our control and we’d spend many minutes sitting there waiting for the bartender to acknowledge our orders. Other mixes didn’t go so well. Cocktail onions really don’t go well with anything.