Bits Bucket For May 8, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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“Animal Spirits, the powerful new blast of behavioural economics from Nobel prize-winner George Akerlof and Yale economist Robert Shiller… The authors argue that “we will never really understand important economic events unless we confront the fact that their causes are largely mental in nature”. Our “ideas and feelings” about the economy are not purely a rational reaction to data and experience; they themselves are an important driver of economic growth – and decline.”
http://www.ft.com/cms/s/0/69bc7894-3b34-11de-ba91-00144feabdc0.html
So the guy that lays out the graph, now says it’s about feelings. Hmmm…
We Americans are an aggressive and arrogant bunch that doesn’t seem to learn very well. We stupidly charge on until we get hurt and our noses badly bloodied.
In Vietnam, there was a deadly coastal highway 1 that never controlled by the French or the US forces due to ambushes, mines, bobby traps and other pitfalls. The French and later, the Americans, called it Ambush Alley or The Street Without Joy with a 1961 book of the same name spelling out the warnings of death, danger and destruction
All the warnings were there in the Housing Market and Financial Sectors ambush. Ben saw and analysed the threat and dangers and started popping flares.
A lot of people here are glad that they didn’t buy or invest in America’s new “Street Without Joy”
That sounds like the road from Baghdad to the Baghdad airport.
Its called “Route Irish,” kinda makes you think its a nice drive in the countryside where you might just see a leprechaun if you look long enough.
I think the “1984″ style of naming things innocent names like TARP, TALF, Stress Test, etc. will cause us no end of grief.
It was all the caffeine. The Sbux bubble. Check it out.
Starbucks and CROX.
Shiller doesn’t “now” say it’s about feelings. He has ALWAYS said it was more about psychology than rational economics. Hence the phrase “irrational exuberance”.
With the tech bubble and especially the housing bubble, he has said it kept going as long as people believed houses would never loose value. Once that psychological bubble popped, the crash would follow.
Seems he pretty much got it right.
Anything to avoid pointing to the Fed as a primary driver of bubbles and busts…
LOL - yep.
It’s both though really, not either/or. The Fed is master at manipulating market psychology, because they know it actually is quite important.
A healthy 401k balance will spur a consumer to spend more. Why save, when Wall St. has your back?
The housing bubble was worldwide, so how could the Fed have been the primary driver?
Other central banks (ECB, BoE) took similar actions.
Yeah,……..the US had all the “great financial minds”, the “best and the brightest” working in “the world’s most sophisticated financial markets”.
All them overseas yokels, awed by all our expertise and sophistication, just joined the herd. Why not? Didn’t require any critical thinking, and it paid pretty well.
“…how could the Fed have been the primary driver?”
The Fed gets together with other global central bank cartel members on a regular basis, and has encouraged its peers to mimic its own actions. Collusion amongst members of the global central banking cartel could explain how the Fed could have been the primary driver.
Oh the Fed and big banks were the main enablers but there were plenty of chances to step off the train to stupidville.
I disagree. Shiller absouletly says that manias are about “feelings” and “irrational exuberance”, but fundamental value is a formula; a formula that he helped create by determining that; over time, homes follow the rate of inflation.
It really irks me some of the stuff the Shiller says; he was SO right (more right than ANY other public figure, imho), and yet, he just refuses to see the logical conclusions of his own work. It’s not about feelings, it’s about MATH (determining real value). Feelings are what cause manias.
The boom is psycologocal. The end of the boom is math. The start of the crash is about math, then it becomes about psycology. The end of te crash returns to being about math.
We’re not at the end of the crash, because the math says it isn’t over.
Interesting commentary on the rally @ CNN.
http://www.cnn.com/2009/POLITICS/05/08/johnson.economy/index.html
Commentary: Is stock rally for real?
By Peter Boone/Simon Johnson
The ongoing grim news — on rising unemployment, continued (albeit slower) economic decline, and ordinary working Americans being hammered on all sides — is being ignored by stock and commodity markets. Is America now back on track for growth?
The answer to that is almost surely no. Rising stock markets don’t necessarily mean a sharp recovery is under way. Consider the case of Japan in its first lost decade of the 1990s.
After falling 63 percent from its peak in late 1989, the Nikkei staged a 32 percent rally in one month. It then remained volatile but around the same level for nearly 10 years — because the return on assets and capital investors could earn proved so low throughout that economy.
A refinement-
Math is the trendline of market prices, psychology carries the market price above and below the trendline. The change in debt availability based on the recent, psychologically impacted trend in the market prices reinforces the direction that psychology is already pointing. The higher the max leverage in the cycle, the wilder the fluctuations around the math-determined trendline.
Soros would call this (or a variant of it) an example of his “reflexivity”.
Herd mentality=feelings.
I read a book a few years ago, can’t remember the name, but it’s central concept was the “super-organism”. Humans, being highly social animals, tend to act as a single organism as a civilization.
Many folks derive their sense of self from the organizations they belong to, being an American, a democrat or republican, Mexican-American, Italian-American whatever. And people will assume the belief structures of their super-organism even when it is against their self interest.
Kind of a detailed, scientific view of the “herd mentality”.
Sorta like the Borg
Recent message received by Chrysler bondholders: ” I am Geitnerus of Three, representative of BarObamas of Borg. You will be assimilated into our collective. Resistance is futile”
This kind of loose academic theorizing helps legitimize policy actions which use asset market manipulation to help restore confidence. Nobody seems unduly concerned about the prospect that the false price signals which result may result in highly wasteful malinvestment (for example, in 19.1 million vacant homes).
As soon as someone writes an economics book that includes the fraud, gaming, lobbying, influence and spinning and slanting and entitlement mentality, that’s the book I’ll buy and buy in to.
Can anyone suggest an online brokerage (for beginners, looking to loose everything)?
A.B.Dada recommended Ameritrade. I already have accounts at VG, but they seem very expensive.
Lol, there it is again: lose
Lol, there it is again: lose
Whose Moose
Loose is to Moose
what
Lose is to Whose
I never saw this until the Casey Serin phenomenon, and now it is everywhere. It is like that guy injected a virus onto the internet, and people just can’t spell any more.
I wonder what became of that guy.
I’m sure it’s worse then you think.
than
Is it people who are being kewl? I see it misspelled so frequently that when I see it spelled correctly my brain freezes up and doesn’t know what to do.
I’ve seen “it’s” misused so often as a possessive that I’ve started to do it myself.
No recommendation, but e*trade has been an absolute nightmare. Statements wrong 10% of the time, $50,000 sell order reported as $500,000 even though I only had $50,000 of the subject stock (took 2 months to clear up all the associated problems), they no longer let you trade the same day as funds transfer, and they cold call you looking for ways to help “you” make money.
When any person calls me offering financial advice, and I used to get over 10 a day because of my large cash balances while we were going down, apparently it sets off all kinds of bells and whistles (warning, someone is all cash, something is very wrong, they need our “help” immediately), I ask them to fax over their undergraduate and graduate transcripts, as well as evidence when they personally first started warning their clients of a possible housing bubble and risk of a significant decline in home values and stock prices. No one has ever taken me up on the offer. With the recent rise, I am higher now than I was at the peak and will probably sell some soon. I wonder how “well” I could have done with their “help.”
Tim,
I appreciate your candor. I’ve been saying this for years, many of my friends that have worked for discounters over the described them as operating like the DMV. Low paid drones that couldn’t care less about how transactions are handled.
And YES, they ‘do’ daily runs for money market balances and those “leads” are fed to “associates” to pitch you product. A well known practice in that end of the industry. Actually… it’s widely done in the bank distribution channel as well.
In truth, the “discount model” has been an utter failure. Charles Schwab couldn’t make it work either. Most are opting for a “hybrid solution” and failing miserably at BOTH!
I’ve been with eTrade for what, 6-7 years now and not really had a problem. Not had them cold-call me, not had any orders mixed up. I even called once to find out why a limit order didn’t fire (the day’s trading range showed that the limit had been hit) - the guy on the phone offered to go back and look at the tape and get back to me. Of course, he may have just gone and had a beer then got back to me, but still - he offered
That’s not to say I specifically recommend eTrade. Overall I’m neutral, I suppose, but I really don’t have anything bad to say about them.
For years, the local “Walk-over-yah” bank had a big banner up on the wall touting the wonders of the Stock Market and how it “always goes up!” and is basically the free path to endless riches, early retirement, etc. Naturally, their bank was full of jackals looking to sell grossly overpriced and underperforming, loaded mutual funds (with front loads, absurdly high expense ratios, etc.) A den of thieves they were, and nothing more.
Amusingly, since the market meltdown in 2008, they quietly took down the big banner about the wonders of the stock market. I also bet they would deny all the bad advice that they had given over the years if I asked them. Unreal!
Hell, try Wisconsin’s largest bank if you want to gamble.
M&I fined $150,000 over securities sales
By Paul Gores of the Journal Sentinel
“An investment unit of Marshall & Ilsley Corp. was fined $150,000 in a settlement over how some securities it sold to investors had been portrayed.
M&I Financial Advisors Inc. of Milwaukee is among a growing number of firms that have settled with the Financial Industry Regulatory Authority, the investment industry’s self-regulating agency, to resolve concerns about the sale of auction-rate securities.”
VP’s floating in Lake Michigan, TARP Rescues and Securities
Mischief are all part of the Casino and Big Bang Entertainment for your Bucks with these guys.
http://www.jsonline.com/business/44532632.html
RE: e*trade has been an absolute nightmare
Thanks, for the tip there Timmaroo…
You are looking to lose everything?
Go lay down for a while and allow this feeling to pass.
Muggy,
I love you.
So I agree with combo.
Lol, Combo.
I need sage advice: At the end of the day I am a simple man. I prefer spending time outdoors with friends and family, or by myself. I live very simply. Since I now work at home, spending time on the HBB is like milling about the world’s greatest water cooler at the office.
My goal is time. I enjoy time dedicated to pondering the vastness and beauty of this universe. I’ve never tried to buy time before — and that has served me well — so I guess I shouldn’t try now. The thing is, having a kid has changed me a little bit. Get what I’m saying? I don’t want money for a Ferrari, I want money so I can hike Glacier National Park for a week or two…
I don’t know what I am trying to say… I should just keep piling up the cash, yes? (and skip the trading)
Keeping all cash is as silly as buying after a 30% short term run up. Opportunity windows are short in volatile markets. Today is opportunity to sell rather than buy, but the winds change quickly.
I made 13% in 2 weeks in commodities and sold (again) today GSG at $27.64 about 5 minutes after the market opened.
I have absolutely no idea if I did the right thing or not.
But I do know that commodities can not continue to increase 5%+ a week.
“I made 13% in 2 weeks in commodities and sold (again) today GSG at $27.64 about 5 minutes after the market opened.”
Crude oil is up 10% in a week, yet demand is at the lowest level since 2001. It’s pure speculation. There are no fundamentals anymore, and the whole market, not just commodities, is all about day trading, not investing. Making 13% in two weeks is nice, but losing 13% in two weeks is not. This is insanity.
Yes, and how much of that speculation is being done by investment banks with TARP funds?
(taking some profits off the table as well. 15% on DBO in two weeks)
A WS saying: “If you don’t know who you are, Wall Street can be a very expensive place to find out.”
I suggest you google up Ed Seykota for some useful trading philosophy.
“Ed Seykota”
Not finding much useful information: he’s crazy, he’s smart, and so on
When the complete novice can’t resist buying, it is time to get out.
“can’t resist buying”
I can always resist buying; I’ve been doing it my whole life.
Muggy I am totally with your philosophy. You sound like my long lost brother from another mother.
It is like when you’re playing poker. I’ve been overseas for work a few times, and there is always a poker game a few nights a week in the dorm or compound. I’m not very good, but I know that, and I stick to the equivilant of $10US buy-in games. Show up, drink a few house beers, lose $10. I get out of it entertainment for the evening, three or four local swill beers, and get to know my coworkers. Besides, it doesn’t matter if you win, because the house beer gets taken out of the winner’s cut and the rule is the winner buys a round at the bar later that night. And that round usually takes up all the remaining winnings, if not more.
At that table, I know who the sucker is: it is the person playing to win. Winners have been known to walk out down far more than $10 for the night after the house beer and round at the bar. If it gets down to a couple people left, you can always tell the noob as they’ll play to win. The experienced people will grab another beer, make a stupid bet, and fake a loss. They’ll be out $10 instead of potentially $30. Always.
As such, it confirms the time tested advice: if you don’t know who the sucker is at the poker table, it is you. Same thing with the stock market.
“As such, it confirms the time tested advice: if you don’t know who the sucker is at the poker table, it is you. Same thing with the stock market.”
Folks, listen to this man. He is telling you the truth. If you think that somehow, because of your charmed life and the great person that you are, and because of your ability to make money in your chosen field, that therefore you are personally entitled to make money in the financial markets; you are most likely DESTINED TO LOSE BIG TIME. Financial destruction may become your unwelcome, constant and dominant companion.
Heck, it’s even worse in the financial market. At least the rules of poker don’t change once a week, people aren’t allowed to “mark to make-believe” their hands (”Yes, really, I have 5 aces!”) and at no point in the game does the FED show up with $1,000 and just give it to one player (probably the most crooked one) to Bail them out!
“At least the rules of poker don’t change once a week…”
Truer words were never spoken.
PTM-
“Heck, it’s even worse in the financial market. At least the rules of poker don’t change once a week, people aren’t allowed to “mark to make-believe” their hands (”Yes, really, I have 5 aces!”) and at no point in the game does the FED show up with $1,000 and just give it to one player (probably the most crooked one) to Bail them out!”
This is so true. Knowing that the banks are toast- Seeing it first hand, hearing stories first hand of refinacing snafus and non payment to banks for 6 months and no notice of default, and researching and following financial news online… I made a fools bet with FAZ and it ripped my face off. Meanwhile the news is still crappy, albeit “less” crappy?!?! and I know banks are still screwed, that and FNM needs 10’s of billions more, at what point does this basket case implode? Oh wait- I forgot the golden rule “Never bet against the entity that makes the rules and the money” …and there it is.
At least it was a relatively puny bet, but it stings none the less to know that I was kicked in the sack by my own government.
RE: I want money so I can hike Glacier National Park for a week or two…
Yup, taking your jollies and personal enjoyment from lacing up a pair of hiking boots instead of firing up a pair of 580hp diesels on your 38 ft. pig-boat, cabin cruiser moored at the local yacht club is a far better place to be in this meltdown.
Hikers have always had the “do more with less” attitude ’cause they know the grind of humpin’ excess baggage.
Time is the most valuable commodity.
Figuring out how to take back control of your life is a high priority for me too.
Life is too short to take come of the cr@p that the corporate world considers to be the minimum “commitment”, especially when there is no commitment in return.
“Time is the most valuable commodity.”
Even if you are dying of a dreadful, incurable disease? Wouldn’t good health be more valuable in that case?
Point taken…
I’m just a little annoyed at day-job-life these days… having to work incredibly long days to fill in the gaps left by “downsized’ co-workers and then seeing more reductions among the abused survivors makes for a jaundiced view.
whyoung, I understand your frustration.
I’ve mentioned this several times on this blog before, but my childhood was shaped largely by the corporate downsizing that Rochester, NY is known for.
I’ve never really believed you “get ahead,” you just set your priorities and work toward those ends.
Glacier Park…yes. I have done it many times. The last time was 4 yr ago.
“I want money so I can hike Glacier National Park for a week or two…”
I love that area so much I purchased land there (90 miles south).
Combo is right. Forget the stupid rigged market. You will be much happier/less stressed in the long run. I have been getting my ass kicked lately.
Psssst, ya wanna make some money?
Buy what I sell, sell what I buy. You’ll be rich by Labor Day.
The old Wall Street adage:
You want to make a small fortune in the stock market? Start with a large one.
TDAmeritrade was been reliable and quick. On the broker side, they carry additional insurance for cash up to $900K with a london insurer. So far we’re really happy.
aw, is that the outfit that Sam Waterston is or was the spokesperson for? I don’t know much about them, but I was impressed by the choice of spokesperson, from an advertising standpoint.
Ameritrade absolutely screwed me. Changed their fee structure when they got my TDWaterhouse account.
Never going back there.
Scottrade might be good for a beginner. I personally like http://www.interactivebrokers.com , but that’s just me.
Muggy, I really like MB Trading, mostly for their $1 commissions. Customer service seems to be pretty good and they have free streaming quotes. They offer no research, however. They have free online seminars on how to use their platform, should you need them.
I also have accounts at Scottrade. They’re pretty good, but unless you pay extra, you don’t get streaming quotes, which - to me - puts it in the category of “beginner” platform. At $7 a trade, its a lot more expensive than MBT, but it does come with some research resources. I have my DD’s coverdell with them. They didn’t send out Form 5498s until the end of April, which landed me an inquiry letter from the IRS and the extra hassle of clearing that up. However, the appropriate tax forms for my basic trading account arrived on time.
Ahem,
http://www.echotradeonline.com
*Not to be construed as investment advice
( but check THAT platform out! )
Take it to a casino. At least they give you beer.
And you know the odds up front!
I have an even better idea.
Take one-third of whatever money you were planning to “invest” and instead go buy something you want. Maybe a flat screen tv, or video game system or a canoe.
Leave the rest in your savings. If you want to invest in something, invest locally or invest in yourself (your own business, education, etc). Even loaning someone money for something like a car makes more sense. You can be directly involved and have control (e.g. require significant cash involvement on their part, verify income, etc).
The stock market is so manipulated, there is clearly no consistant way to make an effective determination about what will happen.
“Can anyone suggest an online brokerage (for beginners, looking to loose everything)?”
“Thinkorswim” I believe it’s in the process of being bought by Ameritrade.
Yes it is.
thinkorswim is all i would have mentioned, if not for the buyout.
I use Ameritrade; I’m happy with them, trades are pretty cheap, and their active trading tools are really, really slick. I’ve only ever used ETrade (and that was years ago), so I don’t have much basis for comparison, but, IMHO, there’s not much missing from TD that I’d be looking for elsewhere.
I’m a fan of Ameritrade as well. As Michael mentioned they have a lot of useful active trading tools available for when you’re ready to progress beyond the begginer’s stage and on to the addicted stage.
Also have an Etrade and MB Trading account for backup. I wouldn’t recommend E-trade as they’ve made mistakes on statements, slow to execute orders, crapy interface IMHO, etc.
I’m another satisfied Ameritrade user.
Easy to use, a decent amount of available research, fees not too excessive (but not the cheapest, either).
I keep a notebook on useful stuff learned here and back in the day when Txchick57 was posting the recommended list of brokers was:
Tera Nova
Think or Swim
MB Trading
Realtick
Good luck.
I guess old Lurch can’t find a better way to waste other peoples money…
Another Massachusetts politician suggests welfare for newspapers!
WASHINGTON (Reuters) – The U.S. government could provide tax breaks for newspapers or allow them to operate as nonprofits to help the struggling business survive, says Senator John Kerry. The Massachusetts Democrat said Congress can help the industry, hit by a collapse in advertising revenue, debt that is getting harder to repay, and the drift of print subscribers to free online news websites.
Here’s the kicker: Without newspapers, Kerry and other lawmakers said at a Senate subcommittee hearing Wednesday, there will be too few journalists investigating governments, companies and individuals.
Reminds me of an old show on the BBC:
“Keeping Up Appearances”
A publicly subsidized OBOT Times employing tens of thousands is needed to replace the NY Times as official mouthpiece of the Democratic Party and leftist propaganda machine.
After all, SOMEONE besides Keith Olbermann, MS-NBC, NPR, and CNN needs to be extolling the magnificence of His Holiness 24/7.
Strange, the liberals think that NPR and CNN are corporate anti-Obama outlets. (for example NPR = Nice Polite Republicans.) Now you say they extoll the magnificence of Obama? Maybe they’re really neutral after all. MSNBC has gone lib for sure, but it counterbalances Fox News.
“Strange, the liberals think that NPR and CNN are corporate anti-Obama outlets.”
They must be quite young and naive, or most likely products of the new politically correct and progressive leaning educational system. Ancient old fogies like me were spared that brainwashing. We still consider the Constitution to be worth fighting for; and what politicians do as more important than what they say.
“MSNBC has gone lib for sure”
NBC, MSNBC, etc. is owned by GE. I was having this discussion yesterday with one of my sibs. I was waiting with anticipation to see where NBC and its affilates would start laying off personnel. Were this a normal “recession”, Brian Williams would have been “downsized” by now, or relegated to doing “specials” or some such thing. You might expect Matt Lauer or Ann Curry or at least someone to disappear from the Today Show roster. But, no cuts. Nothing. And then is dawned on me. GE subsidizes its media operation. It was a brilliant move on their part to purchase it. Expect nothing to reach the air that doesn’t advance the GE agenda. And their “journalists” needn’t kid themselves that they are nothing more than grossly overpaid PR flacks for the corporation.
What’s good for GE is good for the US.
Yup exactly. How can media sources be expected to be “free and independent” when they’re owned by large conglomerates? Doesn’t that essentially make them outlets for corporate propaganda?
Speaking of NPR - great segment
OT, but what an eye opener.
Behind The Business Plan Of Pirates Inc.
by Chana Joffe-Walt
There’s the pirate’s attorney/negotiator , the caterer, pirate time cards, seed $ ,etc… (no joke, for real)
http://www.npr.org/templates/story/story.php?storyId=103657301
Which liberals think NPR is anti obama? (aside from the nut cases that may think EVERYONE is anti-obama) I’ve never heard that until now and think you are making it up for some reason.
NPR is clearly a liberal leaning bunch of folks. As are most such groups (media in general). Its a function of the fact they come from liberal schools (have you ever met anyone in a mass com department?).
Having said that, I like NPR and think they do an ok job of presenting information. Better than their peers for the most part imo. They get a bit too much into the victimhood thing for my taste but at other times provide good info.
“They get a bit too much into the victimhood thing for my taste but at other times provide good info.”
The petty grievances and pseudo-oppression talk a’la “culture war” nattering of the Nixon right screams victimhood.
You’ll have to restate that in more plain language….I have no idea what that sentence means or what you’re getting at.
When I said “victimhood” I was thinking about, for example, when they do a story on foreclosures they make it sound like the subject of their story is completly blameless.
Also, they pick the most extreme cases (person got sick and parents got sick and kids got sick and a tornado came along…) and offer that case as being representative of the entire financial/foreclosure thing going on right now.
I’m not saying we shouldn’t be interested in the extreme cases, but when they are doing a story about the “foreclosure crisis” in general they shouldn’t pick the most extreme case they can find to present as the base or typical example.
“You’ll have to restate that in more plain language….I have no idea what that sentence means or what you’re getting at.”
That’s not possible. He doesn’t know what he’s getting at either.
Let me be clear ex, I wasn’t trying to attack you. Looking at it now my response looks a bit edged but wasn’t intended to be. I just don’t know what your response means.
I googled “npr culture war” and found a story from yesterday about a religous-oriented law school. Maybe your point was that the way NPR presented that story was with a conservative bias?
BP,
Right above is a perfect example of phony victimhood status…
BP, I’ll explain later this evening. I’m busier than a one legged man in an ass kicking contest at the moment.
BP, I’m telling you there is a victim culture much larger and devious than the very old and on the wane “liberal victim” syndrome.
Consveratism, long the hallmark of the wealthy elite(it’s a closed club and you’re not welcome) and their media minions portray themselves as an oppressed, marginalized majority. They are the epitome of a backlash culture on a crusade in which they get people to set aside their own material interests in favor of vague cultural grievances(God, gays, guns, etc) that are oh so important yet, their leaders know there will never be any resolution to those petty, unquantified grievances. Indignation(phony I might add) is the base reaction that advances their victim mimicking cause.
I didn’t want to say it, but it’s the people at DK who don’t like NPR. Don’t make me spell it out. I did say “liberals.”
Another Massachusetts politician suggests welfare for newspapers!
Good rant on TechDirt
The news racket is dead, mummified, and ready for a mausoleum. The joy has gone. Reporters once were once a misbegotten tribe of ashen-souled cynics, honest drunks chain-smoking their way to the grave, foul-mouthed, profane, boisterously male, believing in nothing but the certainty of corruption and the squalor that is human nature. In short, they were both philosophers and splendid company. You couldn’t chew the fat with a better crowd. They knew the world as no one else did. I mean the real world, big-city bus stations at three a.m. where things crawled forth that would unnerve the inhabitants of a rotting log, and city governments no better. They knew Linda’s Surprise Bar in Saigon and Lucy’s Tiger Den in Bangkok. Many had been in the military and survived the ritualized absurdity of GI life. Delicates and milquetoasts they weren’t…
And then…give me strength. The Ivy League took over. The ashtrays went and very nice young people from Princeton showed up. They were smart, sometimes rocket smart, knew about things the old hands had never heard of, learned fast, but they were so…nice. They ate salads. Until then no reporter had ever eaten a salad, only marbled steak and Jim Beam and other things bad for you. The old-timers watched the new arrivals with horror. It was like being invaded by Moonies.
The DC Bob began. Newspapers fell into the gummy clutches of the schoolmarmish censorship that we call political correctness. Reporters talking in restaurants began the furtive reconnaissance—the duck of the head and the shifty glance about—to make sure that no one was within earshot who might be offended. Practically everyone could be offended, indeed seemed to be looking for the chance: Blacks, Asians, Hispanics, women, homosexuals, Jews, what have you.
The National Press Club got overrun by lobbyists and flacks. It too fell into the tarpits of the Higher Priss. The big portrait of a bosomy young lady that had once graced the walls had to go. The place began to feel like a hotel lobby. Heartwarming events began, like tree fungus on a log not quite dead. Old-timers loathed anything heartwarming. You could shoot at them and they didn’t care, station them in Bangladesh and they would hold up under it. Heartwarming events were too much…
Fred Reed, on the End of Reporting as It Used To Be.
You might add that with a new generation of MBA-addled management, a bunch a damn fools who thought the business ought to be profitable started running things. The whole idea of newspapers was a way for wealthy families to slowly squander their fortunes while enjoying all sorts of social and intellectual status as movers and shakers in the community.
With a serious attempt to make money in the business, all the extra expertise and knowledge was carved out of the papers, leaving young Journalism grads to try to perform journalism, with syndicated pundits filling in the back pages. For brief moment the papers made a profit, until everybody realized the paper was not worth reading any more. A real estate boom kept the papers afloat with a lot of advertising revenue, but now that is over, and now that Craigslist has poached the rest of the classified ads, the papers are over.
And the only ones surprised are the MBAs and the Journalism grads.
“A real estate boom kept the papers afloat with a lot of advertising revenue, but now that is over, and now that Craigslist has poached the rest of the classified ads, the papers are over.”
Don’t forget to add the ongoing demise of the “Big” Three, whose extensive advertising kept many papers and magazines afloat.
In other words: everything used to be better back when I was a kid/ I miss the good old days.
Yawn.
If you want to read a book by a hard scrabble journalist, try, “My War Gone By, I Miss It So” by Anthony Loyd. Mostly Bosnia but he was there for the fall of Grozny too.
Guys, this proposal has no legs. Please, trust me on this one.
It may be noisy for a while, though.
RE: too few journalists investigating governments, companies and individuals.
While I consider the Beantown Glob ($85 mil loss next year if the union guild’s don’t cave to the Times suits) a huge purveyor of liberal muddle; their series on the massive pension abuse by state government parasites has been tremendous and is going to earn them a Pulitzer Prize.
However, this Kerry initiative is REALLY just a back door attempt to EXTORT THE CONTENT of reporting via government subsidy monies.
“The U.S. government could provide tax breaks for newspapers or allow them to operate as nonprofits.”
Non-profits are tax exempt. Any that are willing to emerge from bankruptcy on that basis could do so.
“Another Massachusetts politician suggests welfare for newspapers! “
The words “buggy whip” come to mind.
Commercial Mortgage Delinquencies in U.S. Rise to 11-Year High
By David M. Levitt
May 7 (Bloomberg) — Commercial mortgage delinquencies in the U.S. climbed to the highest level in at least 11 years in April as scarce credit made it difficult for landlords to refinance loans, according to property research firm Trepp LLC.
The percentage of loans 30 days or more behind in payments rose to 2.45 percent, Trepp LLC said in a report. The delinquency rate was more than five times the year-ago number, Trepp said. The New York-based researcher’s records go back to 1998.
“It’s about as bad as it’s ever been,” said Thomas Fink, a Trepp senior vice president. “I don’t think we’re done yet. Where it’s going to top out, I don’t know, but we’re not done.”
The market for securitized commercial mortgages, which helped fuel an 88 percent rise in U.S. commercial property prices between 2001 and late last year, shut down in 2008 as financial institutions racked up losses and asset writedowns of more than $1.38 trillion related to residential mortgage defaults. Commercial property values fell 21.5 percent through February from their October 2007 peak, according to Moody’s Investors Service.
Properties bought in 2006 are now worth on average 11 percent less than their original price, and those bought in 2007 are worth almost 20 percent less, Moody’s said.
Nothing like the stench of a smelly shoe when it drops, eh?
“The delinquency rate was more than five times the year-ago number, Trepp said.”
As some indicators appear to level off, others step in to fill the void.
sounds like green shoots to me.
those green shoots you see are poison ivy
and as “beautiful” as the creatures that were trapped in Indy Jones’ Lost Ark
And yet SRS is down today. Madness.
Reason has left the building.
Ain’t that the truth.
Oops. Posted to quick.
I agree milkcrate, the PTB have definitely lost their minds.
“Policymakers are acting as if the old consumer debt-financed growth model can be revived, yet the prior distortions in the production structure remain to be addressed, and these cannot be easily papered over. The productive resources allocated over the years to the auto, housing, financial services and luxury goods sectors of the U.S. economy still need to be written off or shifted to more useful purposes.”
Rob Parenteau
Silly man, but is there any more “useful” (or noble) purpose than putting people in their dream homes, or behind the wheel of their dream cars? Is there?
snark off/
Oh the pain!
Here’s a little something from the 70s ….
For your enjoyment.
____
We know that these plates
are going down to Central America…
…and these people intend to run off
billions of dollars of this currency.
- They wanna obliterate their debts.
- What debts?
Well, all these countries, Shel, they
all owe billions of dollars to the West.
They can never pay it back.
They’re too poor. You know that.
Their only hope is worldwide inflation,
but it has to be a huge one.
I mean, so big that paper money’s not
worth anything. You use it for wallpaper.
Now, once they get these plates,
the ones that I robbed yesterday…
…which is American dollars,
now they’re all set.
Set for what?
What do you think will happen
when they run off this dough…
…and there’s trillions of extra dollars,
francs and marks floating around?
You’ve got a collapse of confidence
in the currency.
People are gonna panic. There’s
gonna be gold riots, atonal music…
…political chaos, mass suicide.
Right? It’s Germany before Hitler.
You can see that.
Jesus, I don’t know
what people are gonna do…
…when a six pack of Budweiser
cost $ 36.oo.
That’ll be awful.
Mean while Chrysler tells gubermint, screw you we want the 9 billion dollar taxpayer ‘gift’ forgiven, and we wants mo money! LOL!
U.S. Orders GMAC to Raise $9.1 Billion in Capital
By Steven Mufson and David Cho
Washington Post Staff Writers
Friday, May 8, 2009
The federal government reported yesterday that the financing arm of General Motors will need to raise $9.1 billion in new capital to ensure the firm’s stability in the face of heavy losses in mortgage and auto lending and, sources said, possibly as much as $4 billion more to cover costs related to loans for Chrysler.
The sum is among the biggest required for any U.S. financial institution subjected to the government stress test, and could prove difficult for GMAC Financial Services to raise because of the limited nature of its business and the poor quality of its loans. The firm has struggled to raise money from private investors in the past and has already received $5 billion in federal assistance.
The government could end up providing much, if not all, of the needed capital, but it remained unclear where that money would come from. Analysts said that if GMAC relies on federal funds to meet new capital requirements, the government could end up owning a majority stake in the firm.
“The government could end up providing much, if not all, of the needed capital, but it remained unclear where that money would come from.”
Thin air.
GM and Chysler are dead meat.
GM is in a sales death spiral.
Buy a car from a future bankrupt?
Pfffffffffttttttttt…
Hell-they wouldn’t fix your car under warranty in the good times-And you expect them to stand behind their stuff today?
The shake-out will leave Toyota, Honda, and Ford.
Residual UAW members of GM & Chrysler will be wards of the taxpayers until the baby boomer die-off.
hehehe…I see a future 5 year federal government funded job banks program…100% of your salary for doin’ nothing but staring at the walls!
Paid for by YOU!
No, they won’t be paid to stare at the walls, they will be paid to work the phones at every election they’re needed.
Please read the Hatch Act.
I think Hyundai and VW might also make it. Maybe GM should change their advertising campaign and hire “Joe Isuzu”? Remember him: “trust me…”
Someone explain to me why GMAC, of all companies, cannot be allowed to fail.
They are going to do the financing for Chrysler.
Because GM and companies like US Steel were once part of the US Gov’t Contingency Re-Armament Holdover Plans durring the Cold War Era.
$61 billion of unsecured long-term debt outstanding.
God only knows how much funny paper like CDOs as well as CDSs.
That’s why. Like AIG, GS, et al, they are probably up their eyeballs if not another one of the perpetrators of this mess. Which means like the above mentioned companies, if they go down, the rest of the system goes down as well.
I’ve been reading this blog on and off for a couple of years now, but this is my first post (yes a lurker, but always with good intentions).
Can anyone discuss the pros and cons of working with an Exclusive Buyer Agent (someone whose office does not take listings)? I’ve identified only one in my entire area (found through NAEBA). I like the idea of avoiding potential conflicts that come with traditional brokers, but am not sure how much weight I should give that (and also understand that conflicts still could exist with an exclusive).
Also, after many years of patience, I am now beginning my search in PA. I still think prices will continue down further, but am open and in a position to buy if a good deal presents itself. Any thoughts on my decision to entertain a purchase at this stage of our market? Where do you think we are in the cycle? While there is no need to rush, I certainly feel an urge to purchase my first home, but don’t want to overpay significantly after waiting all of these years.
but am not sure how much weight I should give that (and also understand that conflicts still could exist with an exclusive).
“Exclusive” Buyer’s Agent is just feelgood marketing speak to lure you into a false sense of security. All you need to know is this: Every realtor’s loyalty is to their own commission check. Doesn’t matter who they represent, buyer or seller, ultimately they end up in cahoots with each other to close the deal.
Are there exceptions? To be sure. However you have to do a lot of process of elimination to find them.
Where are we in the cycle?
Where in PA are you looking?
We’re on the downslope in the Philadelphia metro. There was a great valuation spreadsheet to which I always referred, it was on the National City website, but since they merged with another bank it’s gone. Their most recent data on PHL metro was that it is 3% overvalued. This is down from about 15% overvalued at the peak. Historically, there has been an overshoot to the downside before prices start to rise again.
Yesterday I posted about the growing inventory in this locale. This will create downward pressure on house prices. The low end - under $200,000 - is already starting to give.
Everyone has their own comfort zone when it comes to pulling the trigger. I know what mine is, and it’s based mainly on growing up in the business and having a gut instinct for what a place is worth. However it doesn’t make sense to disregard prevailing market conditions. Am I seeking rock bottom? No. But I don’t want to get racked either.
Right now my gut tells me to laugh uproariously at most of the wishing prices I see in this area. Waiting is a good thing. If you’ve been looking for a while, you’ve probably experienced a shift in your expectations or what you think you need in a house. You’ve also had some time to see what’ s out there.
Just speaking for the Philly metro, it’s just now starting to get softened up. I wouldn’t submit any offers on anything around here until October of this year though. JMHO
Thanks for your response phillygal: I am looking in Bucks County, which is just north of Philly as you know- mainly in Doylestown, Newtown, and New Hope given the good public school systems. Please let me know if you’ve found any good resources to analyze this local market as I’ve had difficultly finding much. I wish there was a Philly HBB
In regards to “exclusive”, what I mean is not that the broker will exclusively represent me on my transaction, while exclusively representing a seller on another, but that he and his office have not represented sellers in any capacity for many, many years now. He did at one point, so he understands that side of the transaction, but no longer (he has 38 years experience). I know he still gets more in commission if I pay more, but there is no chance of double dipping at least. I also get a sense from my conversation with him that he is committed to doing a good job for clients as referrals are worth more to him than the added commission. Of course I could be just falling for a sales tactic…which is why I posed the initial question.
“Exclusive” Buyer’s Agent is just feelgood marketing speak to lure you into a false sense of security. All you need to know is this: Every realtor’s loyalty is to their own commission check. Doesn’t matter who they represent, buyer or seller, ultimately they end up in cahoots with each other to close the deal.
That is awesome, Phillyfilly.
That paragraph just tells it so clearly.
Hard to believe it was considered only 15% overvalued at peak and now just 3%? I disagree with that data.
John - are you from PA originally? New Hope / Doylestown / Chalfont are pricey areas. Central Bucks is a good school district, but there are other less expensive areas within that district (Warrington for one). Warminster (Centennial school district) has fairly low taxes for Bucks. I’m in Montgomery Co. - just over the Bucks/Montco. border.
Hey eastcoaster. I am originally from NE Philly. I should clarify that we are looking at all areas of Central Bucks, including Warrington. We may expand our search further and I will check into the Centennial school district. Thanks for the tip. We are trying to stay reasonably close to family, while get the best schools for our children. We thought about Montgomery County also, and haven’t entirely ruled it out. It’s just a bit further from some of our family, and I often find that it feels more crowded than Bucks. Thanks again for the tip.
The last valuation was calculated using 2008 Q3 numbers. They assess the entire PHL metro, from the dives and dumps of Coatesville to the bona fide mansions in Gladwyne. So the upper end is most likely skewing the result.
I agree that 3% overvalue at this point in time is low, especially in regards to land. I had entertained the idea of building a house, but the high land cost in addition to higher property taxes on new construction just killed that idea. I’ve seen some houses - in the low and mid range - that are listed 20% higher than what anyone should pay.
What she said…… They get paid by “splitting the commision” (which means they are paind by the seller), and have the same incentive as the seller’s agent: get you into a house, with as big a commision as they can get away with.
Better to hire a professional to review all the loan docs before closing.
“Exclusive” Buyer’s Agent is just feelgood marketing speak to lure you into a false sense of security. All you need to know is this: Every realtor’s loyalty is to their own commission check. Doesn’t matter who they represent, buyer or seller, ultimately they end up in cahoots with each other to close the deal.
+1000, Phillygal.
My primary requirement in hiring a real estate agent at this point in time would be their ability and willingness to submit “low” offers with unbridled enthusiasm and conviction and not expect me to sign a buyers agreement with them in order to do so.
Sounds like a very bright move. RE agents need to realize that there are more agents than new buyers right now, and the agents can no longer act like they are a scarce resource.
Thanks for the response Kim, and great advise. If I do make offers, I certainly intend to be very aggressive in making them. I have a slew of questions to ask this guy (or any other broker I screen for that matter) when I meet him face to face, and will make sure he understands where I am coming from and that he is comfortable with making low offers.
I am licensed, and used it in a REIT position, but have done residential to understand the process (and pitfalls). I would also suggest getting a text book
(r e school)that cover disclosures, lack of buyer direct question exposure/loopholes, and things an agent can make work in their favor. It’s amazing how an uninformed buyer can have things come back to bite them, and it’s legal.
Thanks awaiting. Is there a particular text you would recommend? I want to learn enough to make an educated and informed buying decision, but I don’t anticipate going into the business, and so want to focus on learning just what I need to know to make such a decision (and not get bogged down with extranious stuff).
I really wish there were obvious re pros you could trust to work on your behalf as a buyer. This is what sent me to the exclusive buyers agents, but I sense much reluctance from everyone to trust these folks also. This is clearly the biggest purchase I will ever make, and I feel like I need to go it alone (at least to a large extent).
If you’re buying into a development make sure you know the covenants too. People buy not realizing they could be dunned for new roads, or be annexed, or can’t build a shed or somesuch and there ain’t a thing you can do about it because you signed off on it all.
RE: Can anyone discuss the pros and cons of working with an Exclusive Buyer Agent (someone whose office does not take listings)? I’ve identified only one in my entire area (found through NAEBA). I like the idea of avoiding potential conflicts that come with traditional brokers,
Unless, you’re paying this buyer’s agent a fee, they are working for a commission paid by the seller. So you are compromised.
My advice-Go find a knowledgeable, legit residential appraiser and buy a few hours of his time. Ask about what he sees as value trends and neighborhood’s with good potential.
A few hundred doled out in “consulting” monies could save you thousands.
Then go do your own due dilgence.
You’ll get squat for a Realaturd. They are always working for the seller.
Thanks for the advice hd74man. This is something I had not even thought about. I will certainly run a google search to see how best to identify good appraisers, but please let me know if you are aware of any online resources or organizations that can help direct me to a legit residential appraiser.
In regards to this particular brokers payment structure, one thing that I’ve been a bit uncertain (perhaps skeptical about) is that you can hire him either at a basic level (which involves the standard commission paid by the seller (although built into the home’s price I know), or at a comprehensive level (which includes the commission plus a fee). The comprehensive level apparently involves quite a bit of research and analysis on his end, and he’s convinced results in getting clients better deals, but I will reserve judgment until I get more details during our face-to-face.
RE: if you are aware of any online resources or organizations that can help direct me to a legit residential appraiser.
Not sure how hard it is to is to find competence in the residential appraisal field these days.
However-
If you have a relationship with a reputable local bank, visit their residential loan dept. and ask for a reference.
or…
Check with the Appraisal Institute
http://www.appraisalinstitute.org/
Look for somebody who has a SRA designation. They are usually a cut above people with only state certifications.
Most are more apt to have a grasp on things like absorption rates; idiosyncratic neighborhood criteria; valuation trends, plus I’m sure you’ll some anecdotal stories too.
I’ve always made the recommendations to relocation transferees who were going to major cities or areas where they didn’t have a clue as to what as going on.
If you find a place after you’re discussion-you can always hire the guy to do the appraisal for your own benefit (and not the lenders). However, do make note that you’re initial meeting be “informal” in nature.
Thanks a lot hd74man. You’ve given me a lot to consider and look into. I really appreciate it.
Second attempt at response (sorry if this comes up twice…and different).
Thanks for the response hd74man. This is something I was not even thinking about. I will certainly do a google search to see if I can identify a good appraiser to consider this approach. Please let me know if you are aware of any websites or resources that might help me find a legit residential appraisal in my area.
In regards to this particular broker’s compensation, this is another area that leave me a bit unclear (and perhaps skeptical). Apparently I can hire him either under a basic package (in which he gets paid the straight commission that comes from the seller, although I know it’s built into the selling price), or under a comprehensive package (where he gets both the standard commission and an additional fee, but provides a comprehensive analysis - the details of which I am currently unaware). I will find out more during our face-to-face meeting, so I will reserve judgment until that time. Based on the phone call, he is convinced that analysis they conduct ultimately saves the buyers money in that they don’t overpay…but I plan on making very low offers anyhow, so I’m not sure of the value of this. Again, trying to reserve judgment for the time being. Any thoughts??
You should get the “comprehensive” package for the regular price. How can he effectively represent you if he isn’t looking at comps and other “services” he is getting paid for. Either he is going a really bad job under the standard package or attempting to extract extra $$$ for actually doing a competent job. That marketing ploy and differentiation he has told you about would be the first (and a HUGE) warning signal for me.
Thanks realestateskeptic. Akin to your name, I am skeptical about this aspect of his services, and I will be very reluctant to use him if I find that I can’t expect the same level of service at his basic level as provided by others. I def expect to receive comps with even the basic package, but I suppose I am curious to find out what he offers for the extra $$$. He will disclose everything in datail during our initial face-to-face. I will be very careful indeed. Thanks!!
I posted to that same effect in reply to him but my post is in moderation. Mainly I said that for the info that’s now available on the net, I don’t see how this Exclusive Buyer’s Agent adds any value.
And that the others who replied to his question gave some good advice.
You know, after reading this thread, I have this huge urge to slap you upside your head.
These people have given you excellent advice, but you’re so insecure about your ability to rationally decide what’s a good deal, that you’re not listening.
Real estate agents have mortgages, bills and retirements to fund. They make squat until they close the deal.
Early on, I was too stupid to understand that if I told my agent my dream price (less than list), that that’s the price I was going to get. It happened and she was a “friend”. The buyer was happy because he got a better deal and I was happy (at the time) because I got my dream price. This “friend” didn’t fight to get me a better price, she just got the price that got the deal done.
Not sure how to respond to this. First of all, control your urges…I’m just seeking advice - not insults. Secondly, I agree that I have gotten good advice from the folks on here, which is why I asked the questions. I understand that I cannot fully trust any broker given their incentive to close the deal…and I can guarantee I will make my own educated and informed decision before I make the purchase. But I do expect to need some assistance along the way, and want to know the best place to get it.
You act like I should already have all the information I need to make a “rational” decision, even though this is the first time I will be buying a home, and the market has gone through perhaps the most unusual period in recorded history.
That all being said, thank you very much for sharing your personal story, as I found it very insightful and I will be mindful of disclosing my target price to even my own broker, and perhaps instead give a wide range well below what I can afford.
Sorry, it just seems from your responses to the above that you have a fixation on agents.
Here’s some advice I posted a couple of weeks ago to someone from my home state of CA, it pretty much applies everywhere.
Comment by Real Estate Refugee
2009-04-27 18:53:05
Here’s my advice…
(1) Wait another year. (You’ll be able to buy a better house in a better neighborhood for the same money.)
(2) Use this time to research schools and neighborhoods.
(3) Go to lots of open houses to define exactly what you want and make a list. Decide what’s negotiable on the list and what’s not negotiable.
(4) Use the local MLS to track asking prices.
(5) Use the dataquick link in the real estate section of latimes dot com to track actual selling prices.
(6) If you do the above, you won’t need a real estate agent to make an offer. If you make the low ball offer through the selling agent, the selling agent will be really motivated to convince the sellers to take it as the real estate agent gets both sides of the deal (entire commission). If you need help, hire a real estate attorney to review the contract.
(7) Perhaps pick up a book or two for first time buyers to familiarize yourself with real estate jargon so you’ll understand what they’re talking about.
Consider doing the above to be an investment in getting a better deal, thus you’re getting paid for the time spent. You don’t want to put yourself in the position of being led around by the nose by a real estate agent. A truly hellish vile thought.
Payrolls post smallest decline since October…
That’s great news, the market should do really well today. Only 539,000 jobs lost in April. If we keep that up the recovery should be just a matter of month.
/sarcasm off
The unemployment rate went from 8.5% to 8.9%.
Pick a card, any card
Layoffs slow to 539K in April; jobless rate rises May 8, 2009 9:15 AM ET
All Associated Press newsWASHINGTON (AP) - The pace of layoffs slowed in April when U.S. employers cut 539,000 jobs, the fewest in six months. But the unemployment rate climbed to 8.9 percent, the highest since late 1983, as many businesses remain wary of hiring given all the economic uncertainties.
The Labor Department tally released Friday wasn’t nearly as deep as the 620,000 job cuts that economists were expecting, and was helped by a burst of government hiring. The rise in the unemployment rate from 8.5 percent in March matched economists’ forecasts.
burst of government hiring = Census
“burst of government hiring = Census”
You are right. Could this be the first Census Taker led recovery?
Let’s have one every year! No, every quarter, no - a “real time” census - that’s the ticket.
“Burst in government hiring” = ACORN census takers, who recently were getting released from prison after doing time on voter fraud and racketeering charges.
Wow that was a leap??
Not to mention how a final determination can be made from 7 ACORN workers only being indicted and NOT YET convicted.
Google News for the lowdown.
I’m sure it has nothing to do with any political retaliation.
Number looks better than it really is:
Census temp hires: 60,000. Seasonal adjustment: 65,000. Real job loss: 655,000.
Plus upward adjustment to prior months unemployed.
From Tyler Durden.
What were the revisions for FEB and MAR? I heard they were big, but can’t find the #’s.
+30K for Feb to 681K loss, +30K for March to 699K loss.
Thanks! Let’s see what the APR revision is on June 5.
can someone shed some light on what seasonal adjustment means?
tia
You take data from a normal market…
Let’s say every year 50K people lose their job in January as seasonal retail jobs from xmas go away. Well, then when you report numbers for January, you add the 50K normally lost jobs as seasonal. If jobs in Jan went down only 30K, then you’d say that is a 20K job increase since the job loss was not as bad as normal.
Let’s say November 50K seasonal retail jobs are created. Then, when you report November numbers, you subtract 50K jobs. 70K jobs were created, that gets reported as 20K since that is the number of jobs created in addition to the normal for the month.
For March, the seasonal job losses could be ski resorts shutting down, the plant that makes the salt to sprinkle on roads goes to 1/2 shift from 2 full shifts, etc.
The problem with seasonal adjustment is that it assumes a normal market. Let’s say last November retailers didn’t hire 50K seasonal employees. Okay, then there won’t be 50K to layoff come January. That makes November’s number look worse, and January’s number look better.
The problem is, we’re looking at looking at change in the number, rather than the number. 540K jobs lost is really, really bad, and 60K oddity in seasonal adjustment is not enough to make it look good. Back in Jan/Feb when they were screaming about the need for stimulus, we were at 500K jobs lost per month.
But, we’re focused on the drop from 700K a month to “only” 540K. Well, the 60K seasonal adjustment is a significant portion of the change… Especially if we have to go back and revise this number up 30-50K or so.
But, it looks like the federal government is going to hire everyone… so, all is good.
More jobs lost = great market!
In New Future, we won’t need jobs!
After all, the Chosen One said he’d create OR SAVE 3 to 4 million jobs. So, as long as 3 to 4 million people are still employed, the market should go up, right?
A Real Estate Crime Syndicate Marketing Update
Anybody getting glossy postcards of recently sold shacks from Century21?(The Braintrust of the Suzanne commercial and purveyors of lies, distortions and obfuscations)
I got a postcard of a shack(literally) on a 1/4 lot indicating the sale price was $200k. I mean it was a shack… 800sqft, 50 year old windows, structure founded on stone piers(obviously no basement or slab). This place is nestled among mobile mansions on a dirt road, roughly 5 miles from where I live.
It perturbed my wife more than me. I suggested to her that it probably would have saled for 250-280k at the peak and we won’t get to the valley in one transaction. I was disappointed for sure but I’m skeptical that the sale was a clean arms length transaction. There are houses not far from there on asphalt roads in the 150-175 range. Real houses, not shacks.
Also, NAR is back to their old lying selves with their primetime TV commercials proclaiming their “price doubles every ten years” lie and eluding to their innocence in the Great Housing Fraud.
I saw that one. It was “8 out of 10″ economist agree that prices only go up.
I can’t possibly shoot any holes in that claim. 80% is pretty doggone good odds.
WTF….. 8 out of 10 mothers choose JIF.
NAR’s shamelessness is unimaginable.
It was “8 out of 10″ economist agree that prices only go up.
Heck. Two years ago 10 out of 10 economists insisted there was no housing bubble.
No, but I got a card from an auction house listing REOs to be auctioned off. One of them is a vacant two doors down. Open house is next weekend, I’ll try to drop by and get the gen.
Proposed: As long as the guest in this Washington Post on-line chat can get paid to give advice to anyone about anything, we have not hit bottom:
http://www.washingtonpost.com/wp-dyn/content/discussion/2009/05/01/DI2009050101318.html
It is supposed to be advice on how to handle the emotional side of the recession. For example:
Columbus, Ohio: I am stressed by the fragile economy, my job security, tremendous loss in my 401K and the fact that I am nearly 60 years old. Instead of being angry and sick to my stomach every day, how can I weather this turbulent environment without jeopardizing my sanity? Thanks.
Celeste Owens: Why worry today for what will be tomorrow, tomorrow has it’s own set of worries so live only for today. Open your eyes and find what is good about right now, this moment. It might be hard to do because you don’t FEEL like doing that but try it anyway. Push past the fear and embrace a happier more mindful you….
Also, later in the chat she wanted to say “Ditto” to something, but instead invoked the name of the Queen of Carthage. Ewww….
Run for the Pepto!
Pepto isn’t good enough.
Later in the chat the regular person got all snitty that someone caught the two of them assuming that a questioner was a woman when he said he was stressed from losing a job that paid 6 figures, taking care of his elderly mother and disabled sister and having been recently diagnosed with *prostate cancer*.
How careful a reader do you have to be to figure out that a person with prostate cancer is a man?
Or Janet Reno. (I’m just saying)
Or Janet Reno. (I’m just saying)
Janet was certainly a man amongst men
“invoked the name of the Queen of Carthage”
Polly please stop. I laughing so hard it hurts!
this cracked me up, from another complainer
“…What can I do more besides continue to encourage him and find and apply for jobs for him?”
Tell him get the hell out and apply for jobs himself - ? LOL
Was that one for a barely adult child living in basement or a significant other?
The whole thing made me want to wretch, but in an amused sort of way. I nearly lost it when she typed “Dido” for “Ditto.”
…it was for an SO…
Now that I think of it, I’ll bet a lot of guys have their gf/mother do their job apps for them, due to their own functional illteracy.
I’m shocked! SHOCKED, I tell you!!
“WASHINGTON (AP) — Fannie Mae says it needs $19 billion in additional government aid after posting a loss of $23.2 billion in the first quarter as the taxpayer bill from the housing market bust mounts.
The mortgage finance company, seized by federal regulators last September, posted a quarterly loss of $4.09 per share on Friday. That compares with a loss of $2.5 billion, or $2.57 a share, in the year-ago period.”
Q1 2008 $2.5 bn loss = $2.57 per share
Q1 2009 $23.2 bn loss = $4.09 per share
Implied numbers of FNM shares outstanding (approximate):
Q1 2008 = 2,500,000,000/2.57 = 973 million
Q1 2009 = 23,200,000,000/4.09 = 5,672 million
Can this math be correct? How could they grow the number of shares by over a factor of five over just one year’s time? Why would any company do such a thing, given the likely dilutive effect on the value of shares to the investors who own them?
There are, according to CNBC, 1.1 billion common shares outstanding.
The difference is the preferred stock. The government didn’t lend them money in the “get a loan from BoA” type sense. The government bought preferred stock. This puts the government in line in front of everyone else, even bond holders….
Until they trade their preferred stock for common, putting themselves in line AFTER bond holders so they can sell more bonds and preferred stock.
These “conversions” that all the flappin heads on TV say are no big deal, is the U.S. government admitting they are not getting paid back.
I think $100K of that a month goes to Franklin Reins.
WE HAVE A WINNER!
At that’s just this month’s installment.
Yale’s Robert Shiller on the Outlook for Home Prices
By Barbara Kiviat Wednesday, May. 06, 2009
http://www.time.com/time/business/article/0,8599,1896583,00.html
He thinks houses are not way overpriced now.
Hmm…Houses where I don’t want to live are priced appropriately. Houses where I do want to live are way overpriced!
Robert Shiller softened his stance. I haven’t had respect for him in a while.
yeah, unless my echos are calling for more residential housing price collapse and a systemic meltdown of the global financial system…..I ignore them.
the bias is in the echo chambers is a function of the squozen balls in a market that has retail investors in the leveraged short ETF’s, and they are about to go home.
Not convinced? you’re about to be.
Sounds about right to me, though some thoughts:
- Unlike Shiller I’m quite sure we will overshoot on the downside. I say this because we are indeed approaching “normal” home prices (at least per his index) but the amount of debt outstanding still hasn’t gone down nearly as much yet as actual housing prices. As a result there is a *lot* less money “waiting on the sidelines” now than in a normal housing market. Therefore demand will continue to be way lower than normal, pulling prices down for the foreseeable future - below inflation-adjusted historical norms.
- It’s funny how he’s pumping his ETFs - a bit shameless IMO.
- I like his comparison with GD - he’s right that we didn’t have a full recovery until 1947/1948, though the recovery did seem to start in really in late 1946.
“…but the amount of debt outstanding still hasn’t gone down nearly as much yet as actual housing prices.”
… while unemployment has gone up considerably.
Yes though I mostly see unemployment as a symptom of the debt, thus not so much as a separate additional factor.
To some extent unemployment itself contributes to additional reduced spending, but I think it’s small in comparison to reduced spending caused by the debt (less money to spend) plus the fact that prices are falling (less willing to spend what money exists for speculation).
Supply and demand. We built way too many houses during the boom, and are creating far too many renters and homeless through foreclsoures, job losses and lack of access to debt.
I guess it’s NOT different in Wisconsin….perhaps local real estate agencies will stop saying how Madison and Dane County are different because of all the state employees.
Layoffs, furloughs, cuts to local government seen in new budget crisis
http://www.madison.com/wsj/topstories/450286
Wait until enrollment at the UW starts to drop. Heloc money was used to pay for higher education. I would guess many will not be able to afford school.
Oh there will be a bailout for that I’m sure. After all, 9 out of 10 people believe that a college degree is an undeniable “good” and the alternative “bad.”
Hi Mad Boy,
Long time no see. I hope that all is going well with you. I also see that those Vista Ridge Drive McMansions over by Mt. Horeb and the ‘high end” Madison Condo’s are still looking for victims.
Given yesterday’s headline “consumer credit falls at fastest rate since WWII”, I figured I’d look into the history for some perspective.
Here’s a chart showing historical level of consumer credit outstanding, adjusted both for inflation and population. The current value is about $2.5 Trillion, which it’s been at for about 7 years now, after jumping up from about $1.5 Trillion in the early 1990’s (that’s the adjusted value - the actual value was about $800 Billion).
Quite the hoarding going on there I have to say.
It’s interesting, though not unexpected, that consumer credit didn’t expand at all during the heyday of housing bubble. I would imagine that while some people certainly continued going crazy building up their credit cards etc, it was offset by people that used home equity loans to pay off their cards. Heaven knows there were dozens of ads on most TV stations every night for that service. However back when home prices were flat or slightly rising - consumer credit expanded like crazy.
Just think too how much profit the banks are making continually on that $2.5 Trillion, at very high rates.
And - as a side note - just think about how that pales in comparison to the $11 Trillion in US government debt (both similar in that they’re mostly unsecured debt), keeping in mind that the government entity itself is but a very small subset of the overall population to which the $2.5 Trillion applies.
From wikipedia
Consumer credit can be defined as ‘money, goods or services provided to an individual in lieu of payment.’ Common forms of consumer credit include credit cards, store cards, motor (auto) finance, personal loans (installment loans), retail loans (retail installment loans) and mortgages. This is a broad definition of consumer credit and corresponds with the Bank of England’s definition of “Lending to individuals”. Given the size and nature of the mortgage market, many observers classify mortgage lending as a separate category of personal borrowing, and consequently residential mortgages are excluded from some definitions of consumer credit - such as the one adopted by the Federal Reserve in the US.
I’m guessing that graph does not include mortgage lending. I find it very hard to believe that consumer credit with mortgage lending was flat during that period.
Correct - if mortgage lending were in there it would be to the moon (see measton’s post below).
Just looked it up - mortgage debt outstanding as of Q4 2008 was $11 Trillion for single-family residential, so just over 4 times consumer credit, which sounds about right.
(Federal Reserve z1 data, L.2)
bis.org/publ/wgpapers/cgfs26lehnert.pdf
This site has a graph showing consumer credit vs mortgage the later is a moon shot.
Thanks for the link!
The interesting thing in that to me - in that it’s unexpected - is graph 5b and Table 1 - showing that there actually *wasn’t* a big increase in ARMs - as a percentage of all loans - during the housing bubble. There was a significant increase around 2004 (when rates rose from historic lows), but the peak level was quite a bit less than previous ARM peaks in the 1980’s and 1990’s.
That to me points out that the famous “reset chart” isn’t really as important as most people make it out to be. It’s stark in that it shows two huge lumps of resets for subprime and then prime - but (as I’ve mentioned before), you could make the same chart at any point in history and see the same thing - there will always be the same two lumps, because that’s the way ARMs work. Yes the lumps were probably somewhat bigger this time than usual - but that’s because there was more general new loans, not because of a higher percentage of ARMs.
What’s more important that ARMs resetting, and what’s really brought about the crash - is just the home prices themselves getting too high, and subsequently going down.
The fact is that some of the bigger peaks in the past occurred at relatively high interest rates. A little easier to gamble that they will go down. During the bubble we were at historic low rates with ever increasing debt. Betting that interest rates will go down with and ARM is much more risky in that setting.
Yes, and the 2004 inflection point is telling IMHO. Interest rates hit their nadir in the summer of 2003. To the extant that the increases in house prices were driven by lower interest rates, you would have expected the (smaller) bubble to have burst then. Instead people fooled themselves into abandoning traditional standards of underwriting and loan quality (by just about any measure, DTI, LTV, what have you) went bad at a hyperbolic rate.
And there is a big difference between taking out a plain vanilla ARM when interest rates are high, and taking out a 2% teaser rate ARM that will adjust up quite a bit no matter what happens to rates when interest rates are already low. The first will get you a lower monthly payment as rates go down without requiring a refinance. The second will triple or quadruple your payments (or worse) unless you can qualify for a refinance and may punish you with a prepayment penalty even if you can.
packman,
I think it would be interesting to see what happens when the adjusted consumer credit is adjusted one more time for household incomes. That should provide a better picture of people’s ability to manage the debt.
Good find people!
Thanks!
At least they have their health.
2 bond holders drop opposition to Chrysler plan
NEW YORK — Two of Chrysler’s dissident bond holders say they’re dropping their opposition to the automaker’s proposed restructuring plan.
OppenheimerFunds and Stairway Capital Management say the group opposing the plan just got too small to be effective.
Earlier this week, the group’s nine funds said they represented $295 million of Chrysler LLC’s total secured debt of $6.9 billion. That was down from previous estimates of 20 members with about $1 billion in debt.
It’s not known how much debt the remaining seven funds represent now.
In the days leading up to Chrysler’s bankruptcy filing, banks holding 70 percent of debt agreed to a deal that would give the bond holders 29 cents on the dollar. But the dissident lenders said the deal was unfair.
May 8, 2009 - 10:16 a.m. EDT
So THAT’S who was part of the opposition.
D’ya think he will get the full $25 million asking price?
LAT Real Estate
HOT PROPERTY
Lenny Dykstra’s Thousand Oaks home may be heading toward foreclosure
Sheila Cooper
The Thousand Oaks estate of former New York Mets and Philadelphia Phillies outfielder Lenny Dykstra has been showing up on the Multiple Listing Service’s pre-foreclosure activity report for the last several weeks.
The Zillow.com blog posted an item on it in mid-April.
The 7-acre estate, with Richard Landry-designed home, has been on the market for about a year.
By Lauren Beale
May 7, 2009
The Thousand Oaks estate of former New York Mets and Philadelphia Phillies outfielder Lenny Dykstra has been showing up on the Multiple Listing Service’s pre-foreclosure activity report for the last several weeks. The Zillow.com blog posted an item on it in mid-April.
The Richard Landry-designed home is listed for sale at $25 million, having been priced as low as $16.5 million in December. It has been on the market for about a year. Public records show the baseball player purchased it for $18.5 million in August 2007.
Uncle Buck is taking it on the chin today.
CURRENCY VALUE CHANGE % CHANGE TIME
EUR-USD 1.3474 0.0084 0.6273% 10:38
GBP-USD 1.5048 0.0030 0.2004% 10:38
USD-CHF 1.1227 -0.0077 -0.6786% 10:38
USD-SEK 7.7820 -0.1046 -1.3257% 10:38
USD-DKK 5.5251 -0.0376 -0.6759% 10:38
USD-NOK 6.4266 -0.0431 -0.6662% 10:38
USD-CZK 19.8060 -0.1210 -0.6072% 10:38
USD-SKK 22.3450 -0.1617 -0.7184% 10:38
USD-PLN 3.2418 -0.0208 -0.6390% 10:38
USD-HUF 206.5600 -2.2650 -1.0846% 10:38
USD-RUB 32.4540 -0.1349 -0.4140% 10:38
USD-TRY 1.5547 -0.0066 -0.4227% 10:38
USD-ILS 4.1058 -0.0192 -0.4642% 10:37
While the stampeding bulls on Wall Street grab MSM attention, the dollar’s worsening selloff on the FOREX market somehow stays under the radar screen…
CURRENCY VALUE CHANGE % CHANGE TIME EUR-USD 1.3611 0.0221 1.6482% 15:08
GBP-USD 1.5212 0.0194 1.2924% 15:09
USD-CHF 1.1077 -0.0227 -2.0078% 15:08
USD-SEK 7.6624 -0.2242 -2.8428% 15:08
USD-DKK 5.4726 -0.0901 -1.6197% 15:09
USD-NOK 6.3467 -0.1230 -1.9019% 15:09
USD-CZK 19.6080 -0.3200 -1.6058% 15:09
USD-SKK 22.1320 -0.3755 -1.6684% 15:08
USD-PLN 3.1976 -0.0651 -1.9953% 15:09
USD-HUF 203.5050 -5.3200 -2.5476% 15:08
USD-RUB 32.2670 -0.3218 -0.9876% 15:06
USD-TRY 1.5393 -0.0220 -1.4091% 15:08
USD-ILS 4.1100 -0.0150 -0.3636% 15:08
I saw that - it’s amazing how such a huge jump (1.5% in a day is HUGE) can garner so little attention.
Crude’s back up above $58 too. Gold however is flat surprisingly.
Not surprisingly - as long as JPMorgan can naked-short GLD, it won’t go much over $1,000 spot I think no matter what happens. I’ve regarded gold’s price moves as pretty much irrelevant for the last year or so. The big investment banks (JPM, Deutsche) have dug themselves into a huge derivatives hole making sure gold doesn’t break $1,000 no matter how awesomely stupid the US government’s fiscal policies are.
To me it’s all about PM availability. JPM and the central banks can only succeed in this for so long - there was a delivery near-fiasco on Comex just a month ago, rescued by a large sale of gold from the ECB to UBS. Me & DH are buying gold steadily, while it’s still low courtesy of the central banks (and their investment-bank enablers) and still *available*.
We bought as much silver as we could and for about the last 8 months it has been nowhere to be found, but spot is still below $14. We think the supply of readily-available gold in small quantities will probably run out about mid-year, while spot continues to lag.
When the big investors start moving out of short into long positions (after supply is no longer readily available and the USD is on the ropes), THEN gold spot will go up I think. I’m thinking that may be in the last few months of 2009, simply because with China aggressivly moving for a new global currency and both China and Russia wanting it to be at least partially gold-backed, I don’t see how the USD as reserve currency can outlast 2009. JMHO of course.
Anyway, we continue to enjoy the low spot while we’re buying. If gold stays low, it can only be b/c the USD retains its status and frankly I just don’t see how that’s possible.
The current spread between the 3-month T-bill yield and 30-yr T-bond yield is 4.26 - 0.17 = 4.09. Is this about the widest on record, or has it been wider at points in the past?
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
3-Month 0.000 08/06/2009 0.17 / .17 -0.007 / -.007 10:33
…
30-Year 4.250 05/15/2039 99-28½ / 4.26 0-22+ / -.038 10:52
Bloomberg dot com
I wanted to continue a thread from yesterday about unions because I think it is fairly important to understand. It seems there are some fairly vocal posters here that view organized labor as corrupt, out of date, and useless in the era of “free-trade”. Here are my responses, in the hopes that some here will begin to truly understand what it is we face.
My point is that Unions no longer protect their employees. They exist to enrich Union Leaders by providing that illusion.
Unions have always enriched the leaders. This is a straw-man arguement that doesn’t hold. “All Union leadership is wealthy and corrupt, so let’s get rid of unions”. Organized labor puts the workers on a more level playing field with Corporate and Government interests. Just because there are inefficiencies, doesn’t mean it should be dismissed.
And tell me exactly how a union will keep a company from shipping jobs overseas? Seems to me like they’re a pretty good reason to do so.
Organized labor at the micro (company) level might not provide much protection against offshoring jobs and from a capital standpoint… a corporation could always file bankruptcy, reneg on labor contracts and reorganize, shipping jobs to lower cost locales. The power of organized labor is at a macro level: it provides the threat of service disruption and political clout that can bring about equitable negotiations. See the recent (and frequent) strikes and labor disputes in France as an example.
Organized labor in this country has become too fragmented. Much of “working” society now holds negative views of Unions, without realizing that this benefits Wall St., not the individual worker. Too many have forgotten that Henry Ford believed in paying his employees enough to be able buy the products they produced.
Free trade is the antithesis of this belief. Free trade is an agenda pushed by Wall St. to further corporate profits at labor’s expense. Wall St. spends vast sums of money on politial donations and lobbying efforts to further a free trade agenda. The only way for labor to counter this is through organization.
This is a war… a war between labor and capital. Labor has been losing for years. If the trend continues, the decline in “quality-of-life” for the average American will accelerate while wealth concentration at the top will continue. Look at the decline of our industrial base. Look at the decline of our cities and towns.
How many US industries have been gutted by free-trade policies in the last 30 years? Why has the American worker’s wages and quality of life continued to decline over the last 30 years, while wealth concentration at the top of society has increased? Why does no one in our government discuss “Fair and Equitable Trade” as opposed to “Free Trade”? When you can answer these questions you will see the link between the demise of organized labor and the ascent of Wall St. Choose a side and choose wisely, as it may be your industry that is next to move overseas…
Eastcoaster,
Read the book “What’s the matter with Kansas”. It details many of your points. Sadly, so many voters who champion immeasurable unquantifiable causes that will never be won (gays, guns, flags) vote against their own economic interests. It appears that getting J6Pack to rally around petty issues as a means to get them to vote against their wallets is losing its effectivness though.
The guy that wrote that book grew up in Leawood, Ks…..which has more in common with San Francisco, or your more liberal boroughs of NYC, that it does the rest of the state.
I hate books that make a point of telling me how stupid I am.
I’ve been on both sides of the union/management equation, in the same shop. The utopian version of unions is presented above…….but, my personal, “where the rubber meets the road” experience is that unions end up spending 80% of their time protecting the morons that screw up the works for everyone, both bargaining unit and management.
The classic example is the guy that filed a grievance when he was terminated. Seems that instead of making the afternoon parts run, he went home and spent the afternoon moving his yard, and was seen by a supervisor who lived in his neighborhood.
His rational for filing a grievance? “Nobody told me, and it’s not in the employee handbook, that it’s against the rules to do go home and mow the yard while on company time.” Of course, the union spent 6 months working this grievance.
Another guy was reinstated because “The employee handbook doesn’t say that I can’t threaten other employees with a handgun……..”
The only reason there was a union at all, was the 10% of the management that was as idiotic as some of the bargaining unit.
The UAW is biting the big one, because they didn’t see what was happening in the bigger world, and priced themselves out of the market. I know UAW people who would rather see GM go down the tubes, than give anything back to keep the company competative…..at least intil the actual spectre appeared on the horizon. Then it was too late.
The fact that he’s from Leawood Ks (Johnson County) doesn’t necessarily discount all the ideas in his book.
I have friends who live in Johnson County Kansas who, in spite of identifying with the Democrats, have become Republicans because thats “where the action is” and think it best serves their interests to support moderate republicans over dems who won’t win.
Wall St. spends vast sums of money on political donations and lobbying efforts to further a free trade agenda.
And it pays off - so far $700+ billion dollars. You can’t argue with success like that!
Remember when Ross Perot brought up “Fair and Equitable Trade” back in the early 90’s when NAFTA was being debated (Can I pay my workers a $1 a day? Yes you can, in the Yucatan!). Americans laughed at him.
Why would a politician put himself up for the same ridicule or even worst today?
Even the media is afraid, look at the flack Lou Dobbs gets every time he mentions “Fair and Equitable Trade”. He is immediately labeled a racist.
Well stated. The demise of the unions in this country, has allowed Wall Street to further divide the country by class. The serfs, who can’t seem to realize,, that when one person stands up to management..they get canned, but if the entire work force stands up, management has to negotiate.
So, you best work buddy gets called into the bosses office and is told he is being let go do to outsourcing, what are you going to do? Sit there cowering ,in your mind thanking heaven it isn’t you, OR,
are you going to have everyone in your office come to the local bar tonight, to entertain the idea, that if they outsourced Joe, you all will walk out the door.
Oh, but you can’t do that! You might risk getting fired and you know, that you can’t live financialy any longer than a month without a paycheck.
Keep yourself in debt, keep bowing to you masters, they know, that they own you. Take their financial advice…buy, buy, on credit. Buy a new car, a 47′ tv, a new house…just keep the sefdom going..Wall Street and the bankers will make sure you have enough to live on.. $7.50/hr.
Only by a collective organazation can power be achieved. Just ask the bankers who own this country at your expense.
“This is a war… a war between labor and capital. Labor has been losing for years. If the trend continues, the decline in “quality-of-life” for the average American will accelerate while wealth concentration at the top will continue.”
There are workers overseas who are thrilled with the situation and are seeing an improved quality of life. Do they not count?They are willing to do the work for less, and thus will win in a capitalist economic system. Unless unions can organize on a much broader scale, they can not be effective.
There are workers overseas who are thrilled with the situation and are seeing an improved quality of life. Do they not count?They are willing to do the work for less, and thus will win in a capitalist economic system.
Those businesses do not have the same labor laws protecting workers, they don’t have the same environmental laws to deal with pollution, and often pay less in taxes and/or receive government subsidies. This isn’t a level playing field and is an example of a “free-trade” based capitalist system, not a “Fair-trade” based system.
You ask if foreign worker counts… do they pay taxes here? Do they contribute to the benefit of society here in the US? No. Business is war, there are sides, winners and losers… the winners in “free-trade” are the financiers and investors and the country producing and exporting the goods. The losers are the workers who lost their jobs through unfair competition for labor and the country importing the goods (negative trade balance).
If US produced goods and services are sold to the foreign country in question, then hopefully we have achieved a balance of trade and both societies benefit. The current implementation of trade is purely one-sided and fueled by debt at the consumer and governmental level.
Warren Buffett briefly bounced the idea of import/export credits for creating a fair trade system.
On the surface, the problem appears to be that America is losing its industrial base because of global wage arbitrage. But it is actually more sinister than that. Trade imbalances should be rectified in a free trade system by changes in the relative value of the dollar. Have a trillion dollar deficit w/China? The dollar should trade at a 1/4 of its value, driving up the price of Chinese goods until they become cheaper to manufacture here. But that doesn’t happen because the Chinese & Japanese peg their currencies to the dollar screwing up the system at American expense.
Warren Buffett’s idea would have given credits to American exporters. Importers would have to purchase the credits in order to import. This would balance trade, increase import prices & subsidize exports. Putting US manufacturers on an even playing field.
It was of course quickly dismissed by the treasonous “free traders”. And I don’t use treasonous lightly. Those who support the gamed system at the expense of this nation should be hung.
Unions won’t save anything with the current political system we have in play. The ‘macro union’ that will protect us from business already exists. It’s called the registered voters. But I don’t see them voting any decent union leadership to helm the ship any time soon. They let themselves get divided by abortion and gay marriage and gun control and keep voting for the same self destructive policies they have before.
Unions do the same thing. Voting themselves pie-in-the-sky retirement plans and demanding that nobody gets fired ever is small scale social security.
You’re never going to convince me that the UAW is a good thing. If they ’self-fired’ their bottom 5%-10% performer every year and didn’t collude with management to pump short term profits by taking lower pay hikes in exchange for enhanced retirement benefits (that will never get paid out), I MIGHT believe they were trying to do right by their members.
When unions were fighting against 12-14 hour work days with no vacation or sick time, they did some good. When they’re fighting for free health care forever, they’re causing problems.
Unions are in bed with the rich business owners, and so is our government. Organizing new unions or voting in a dem/repub really is rearranging furniture on the titanic.
“They let themselves get divided by abortion and gay marriage and gun control and keep voting for the same self destructive policies they have before.”
BINGO. They are truly the aggrieved “middle americans”. They are the soldiers in the backlash culture cultivated by the extreme right. And they suffer the greatest consequences. Yet they send their grandstanding “culture warrior” politicians back to DC…… at least they used to.
There are problems on both sides. The far left and far right both refuse to vote for anything other than hot button issues.
And whenever one party or the other gets in power, they swerve deeper left or right. And when they get kicked out, they go ‘middle ground’ again. But only until they garner enough votes to kick the other bums out. Then it’s a hard right or left again.
Can you tell me why the workers of Google, Amazon, Yahoo, eBay and Microsoft are not unionized? After all they all face competition from overseas.
Read some Adam Smith to understand why trade is a good thing. Or if you’d prefer not, think of it this way; do you like having the option of buying a Toyota, Honda or Nissan3? Or would you prefere a world where your only options were Big 3 POS cars/trucks? Because without trade a Chevy Cavalier would cost $30K and would last 1/2 as long as what one lasts today (well maybe not, you can’t get much worse than what a GM product is today, but it would cost more).
Hello Troll.
Heh, yeah OK I guess since I don’t espouse the virtues of unions and socialism I’m a troll. How about addressing the question instead? Or better yet give an example of one industry that is heavily unionized that has also prospered in the past 20 years.
Autos? No unions killed that one.
Airlines? Unions are killing that one.
Steel? Unions more or less killed that one too.
Remember the Chevy Vega? That was a classic oil burner.
Northeasterner,
I appreciate your post because I’ve thought about these issues quite a bit. I would like to make a few points in response.
First, I believe that labor unions are the wrong solution to the problems of low pay/ poor working conditions/ unstable jobs. The first two of these problems stem from the monopoly power that corporations exert over the employment (not to mention consumer and investment) markets. The best solution is eliminate the corporation laws that grant those monopolies, not to create additional large bureaucracies in the form of labor unions.
Secondly, I firmly believe that “free trade”/outsourcing are NOT the main causes of the distress in the labor markets. I work in the software industry and I think that it is not outsourcing, but collapse in demand (again, caused by instability stemming from government-granted monopolies) that is the main problem facing the tech industry. Free trade, in macroeconomic terms, is always a positive.
Thirdly, we have to keep in mind a cycle that recurs throughout history: It takes skilled labor to build products, it takes time and training to acquire skills, and the skills will become obsolete at unpredictable intervals, leading to job insecurity. The question is, what is the best way to mitigate the financial problems that people experience from job dislocation? Is it through personal savings, through the government, or through unions?
Fourth, you speak of a war between labor and capital. This is obviously unproductive. A healthy economy requires COLLABORATION between providers of labor and capital, with the understanding that each needs the other and each has a necessary ingredient to offer. In all cases, government-granted favors to (or even recognition of) one side or the other are an impediment to this collaboration.
You make some good points LehighValleyGuy. Here’s my take on a few of them:
I firmly believe that “free trade”/outsourcing are NOT the main causes of the distress in the labor markets.
I too work in the tech industry. We are seeing the slow motion dismantling of the high-tech industry in the US. Microsoft, Oracle, and IBM are some of the largest overseas outsourcers in the pure play tech space. They are investing heavily in Indian staffing for research and development when many of those jobs used to be US-based. In fact, it was this very blog that mentioned the article regarding patents that IBM applied for algorithims to improve outsourcing efforts. Other industries are also in the process of off-shoring their tech and IT groups, the Financial industry being one of the major ones.
The question is, what is the best way to mitigate the financial problems that people experience from job dislocation?
Gov. Patrick has allocated millions of dollars for retraining dislocated workers in Fall River, MA. This is a policy that will fail before it has even been implemented. Why? Because the program is training workers for jobs that don’t exist. You can provide all the money for education you want, but if there are no jobs, then all you’ve done is delayed the day of reckoning. I realize that many could look for jobs in Boston, where I currently work, a mere 50 miles away, or relocate to another state, but the reality is that most don’t have the ability to get to Boston reliably (or aren’t willing/able to commute 3+ hours a day like me) and are too broke to move to another state. Many don’t want to lose their support network of family and friends by leaving the area they’ve always known. The problem of mass dislocations isn’t financial mitigation, it’s protecting productive industries that employ people and produce useful goods and services from the ravages of free-traders playing labor arbitrage with the blessings of the US government.
This is obviously unproductive. A healthy economy requires COLLABORATION between providers of labor and capital
I agree and I think the answer is responsible capitalism and flexible labor leadership with a government that enacts policy to faciliate the collaboration. I think the Warren Buffet idea mentioned in a post above is a good starting point. We also need leaders who are less about their own net worth and welfare and more about the common good. Unfortunately, there are too few actual leaders in business, labor or government that make the grade.
Krugman NYT
Actually, a multiyear period of economic weakness looks likely in any case. The economy may no longer be plunging, but it’s very hard to see where a real recovery will come from. And if the economy does stay depressed for a long time, banks will be in much bigger trouble than the stress tests — which looked only two years ahead — are able to capture.
Finally, given the possibility of bigger losses in the future, the government’s evident unwillingness either to own banks or let them fail creates a heads-they-win-tails-we-lose situation. If all goes well, the bankers will win big. If the current strategy fails, taxpayers will be forced to pay for another bailout.
But what worries me most about the way policy is going isn’t any of these things. It’s my sense that the prospects for fundamental financial reform are fading.
Does anyone remember the case of H. Rodgin Cohen, a prominent New York lawyer whom The Times has described as a “Wall Street éminence grise”? He briefly made the news in March when he reportedly withdrew his name after being considered a top pick for deputy Treasury secretary.
Well, earlier this week, Mr. Cohen told an audience that the future of Wall Street won’t be very different from its recent past, declaring, “I am far from convinced there was something inherently wrong with the system.” Hey, that little thing about causing the worst global slump since the Great Depression? Never mind.
Those are frightening words. They suggest that while the Federal Reserve and the Obama administration continue to insist that they’re committed to tighter financial regulation and greater oversight, Wall Street insiders are taking the mildness of bank policy so far as a sign that they’ll soon be able to go back to playing the same games as before.
So as I said, while bankers may find the results of the stress tests “reassuring,” the rest of us should be very, very afraid.
“Finally, given the possibility of bigger losses in the future, the government’s evident unwillingness either to own banks or let them fail creates a heads-they-win-tails-we-lose situation. If all goes well, the bankers will win big. If the current strategy fails, taxpayers will be forced to pay for another bailout.”
Sounds to me like a ‘business-as-usual’ situation for Megabank, Inc.
Well they’ve certainly leveraged their economies of bail. –Not mine, but I am fond of it.
Rodge is a partner at Sullivan & Cromwell. Sullivan is the NYC law firm with the closest ties to Goldman.
Just wanted to share.
“I am far from convinced there was something inherently wrong with the system.”
How could any Megabank, Inc banker, whose bonuses are largely intact despite his firm’s having destroyed multiple $bns of other peoples’ money, possibly disagree with that view?
I want in the investment bankers union. Strongest union that ever was. Lose billions, demand bonuses, get bonuses. What local is that?
Those fools seem to have no idea they are playing with fire and their stupid, insane actions and desperate and maniacal attachment to the status quo WILL lead to WW3.
Which will NOT be good for us this time around.
5/7/2009 11:31 AM ET
401(k) funds putting locks on your cash
Investors trying to pull cash out of their retirement plans, or simply replace the weaker options, are finding their money trapped even as their balances dwindle.
By The Wall Street Journal
Some investors in 401(k) retirement funds who are moving to grab their money are finding they can’t.
Even with recent gains in stocks, the months of market turmoil have delivered a blow to some 401(k) participants, freezing their investments in certain plans. In some cases, individual investors can’t withdraw money from certain retirement-plan options. In other cases, employers are having trouble getting rid of risky investments in 401(k) plans.
When Ed Dursky was laid off from his job at a manufacturing company in March, he couldn’t withdraw $40,000 from his 401(k) retirement account invested in the Principal U.S. Property Separate Account.
That fund, which invests directly in office buildings and other properties, had stopped allowing most investors to make withdrawals last fall as many of its holdings became hard to sell.
Now Dursky, of Ottumwa, Iowa, is looking for work and losing patience. All he wants, he said, is his money.
“I hate to be whiny, but it is my money,” Dursky said.
I’ve been trying to get my retirement plan to offer a TIPS fund. They offer 3 intermediate bond/treasury funds, 4 international, 3 big cap, 3 mid cap, and 3 small cap and target retirment funds. All of which I see as risky. They have a non FDIC insured money market account with Wells Fargo, and that obviously does not inspire confidence. I’ve even toy’d with quiting my job and moving it to a roll over and then returning to work.
Last summer I was successfull in getting them to retain the treasury fund which is where I kept 90% of my money going into the crash but now I have few good options.
Next step pitchforks and fire.
How long can they keep them locked up? I believe a ton of hedge funds were doing all they could to avoid locking the doors, but most had to last fall/winter.
Eventually, they will have to unlock the doors, and when they do I think it will be another MASS wave of liquidations.
401Ks are as dead as Dodos. Too many people are getting burned by crap like this.
My former employer filed Chapter 7 a week or so ago. One of the things coming out in aftermath is that all of the 401K deductions since January 1 were deducted from paychecks, but never actually made to Fidelity.
You would think that someone would go to jail, but hey, those guys have rights. I’d waterboard them, but that isn’t part of the game-plan anymore.
We are in a rapid conversion to a “COD” economy.
COD is how I operate. And I really do mean CASH. Now. Before I leave. Sorry no “net” nothin’. I have bills to pay, too.
I’ll take checks occasionally, but they get deposited immediately AND I make sure they have sufficient funds.
Fannie Mae seeks $19B in US aid after 1Q loss May 8, 2009 11:08 AM ET
All Associated Press news WASHINGTON (AP) - Fannie Mae issued a grave warning about its future on Friday, saying it needs $19 billion in additional government aid as job losses grow and risky loans made during the housing boom go bad at a disquieting pace.
The mortgage finance company, which already got a $15 billion government bailout in March, warned it may need even more money and won’t be profitable for the foreseeable future.
Wait. Fannie Mae is still trying to be a viable company? When did this happen? I thought they were a giant, bloated, zombie-goverment buyer of bad mortgages that existed soley for the function of keeping the biggest ponzi-scheme in history going. What an effing joke!
Evidently, it is going to take another $19 billion to keep the biggest ponzi-scheme in history going.
They’re going to keep spending until something breaks.
When/where that happens, is unclear.
“The mortgage finance company, which already got a $15 billion government bailout in March, warned it may need even more money and won’t be profitable for the foreseeable future.”
Yep, and you can forget about the secondary market touching mortgages with a ten foot pole for as long as the GSE’s are bleeding money.
JPMorgan Chase and others are shoring up balance sheets by reducing or eliminating these financial lifelines to entrepreneurs
For small business owners, a line of credit can be a lifesaver, giving them a buffer against cash-flow problems and enabling them to handle regular expenses such as payroll. But beginning in March, according to documents obtained by BusinessWeek, JPMorgan Chase suspended credit lines for a large number of business owners. According to someone familiar with the matter, the move affected thousands of businesses. They had been clients of Washington Mutual before Chase bought the ailing bank in September 2008. The documents show that Chase tasked a special group inside the bank with responding to inquiries from borrowers.
The bank can expect plenty of those, at least partly because in many cases the businesses whose lines were cut had not missed loan payments. Instead, their credit score or their financials had deteriorated, and credit-line agreements typically give banks the right to change the terms of the line if there is a change in the borrower’s financial situation. In this case, the changes in the terms are dramatic. If business owners can’t convince Chase of their creditworthiness, they have three options: 1) pay off the balance in full; 2) agree to a conversion of the line of credit into a term loan; or 3) go into default.
Business owners who accept the conversion to a term loan will likely see dramatically higher monthly payments. A business owner may be able to keep a line of credit open with interest-only payments, but term loans typically have to be paid off — interest and principal — within three to five years. Plus, they may carry higher interest rates.
Mark Fitchett, the owner of $300,000 music school operator L&M Music in Long Beach, Calif., would certainly agree. He had been a Washington Mutual customer before the bank was acquired by Chase. He had four overdraft lines of credit of $10,000 each, one for each of his schools and one for the parent company, and has been drawing on them at the beginning of each month to help pay the music instructors that contract with his company. In late April, Fitchett was checking his account online and noticed that two of the lines were not showing up. That day a letter arrived saying that, due to an adverse change in his “financial condition and/or credit history,” Chase was blocking him from drawing on those two lines. Fitchett said he called Chase, but still doesn’t understand what change prompted the move. He’s trying to get the lines reinstated, but he’s also shopping around for a new line. “I’m thinking now about how I’m going to cover the first week [of paychecks] next month,” Fitchett says.
More green shoots.
There lies the credit crunch. Chase doesn’t have the cash to loan out, and believes these entrepreneurs won’t last out the recession. Best to get their cash back while they can.
This action on a giant scale with giant companies is what caused the Great Depression. The feds have kept this from happening so far with boat loads of taxpayer money and freshly printed $$$$. It will be interesting to see how long they can keep this up.
As yes, credit scores. Private computer model that sums everyone up as a number. Those that don’t use debt suffer the most.
The Commerce Department said Friday that wholesale inventories dropped 1.6 percent in March, much larger than the 1 percent fall that analysts had expected. That followed a 1.7 percent drop in February, the largest monthly decline on records that go back 17 years.
Wholesalers also saw sales plunge 2.4 percent in March, the fifth decline in six months.
The drawdown in inventories at all business levels has contributed to a sharp contraction in the economy. The gross domestic product fell at an annual rate of 6.1 percent in the first quarter of this year after a 6.3 percent drop in the final three months of last year, the steepest six-month decline in a half-century.
The ratio of wholesale inventories to sales edged up to 1.32 in March, meaning it would take 1.32 months to exhaust inventories at the March sales pace. That was up from an inventory-to-sales ratio of 1.12 in March 2008.
But economists are hopeful the cutbacks in stockpiles mean that businesses are getting their inventories more in line with sales and that a rebound in consumer demand will trigger increased production.
Wholesale inventories are goods held by distributors who generally buy from manufacturers and sell to retailers. They make up about 25 percent of all business stockpiles. Factories hold another third of inventories and retailers hold the rest.
Consumer spending, which accounts for about 70 percent of total economic activity, posted big drops in the last half of 2008 but grew in the first quarter of this year. That’s one of the positive signs economists have used to support their view that a recovery could occur in the second half of 2009.
Again how much of an increase is going to occur with rising unemployment, rising underemployment, wage reductions, benefit reductions, and cut backs in lending??
Crickets.
From today’s LA Times [links are post-killers apparently]:
Chairman of New York Federal Reserve resigns
Stephen Friedman steps down after questions are raised about his role as a director of Goldman Sachs and his purchases of stock in the company.
By Neil Irwin
May 8, 2009
“The chairman of the Federal Reserve Bank of New York resigned Thursday after questions were raised about his role as a director of Goldman Sachs and his purchases of stock in the company, which is regulated by the New York Fed.
Stephen Friedman, a onetime chairman of Goldman and economic advisor to President George W. Bush, said his staying on would be a “distraction” for the central bank.
Goldman came under direct supervision of the New York Fed in September, when it was granted emergency permission to change its charter to become a bank holding company. Rather than step down from either board, Friedman requested a waiver from normal Fed rules to continue serving, actions reported Monday by the Wall Street Journal.”
Goldman came under direct supervision of the New York Fed in September, when it was granted emergency permission to change its charter to become a bank holding company.
This always pissed me off. These guys didn’t have to play by the already loose banking rules and then when the S Hits the Fan they quickly become a bank to take advantage of the benefits. Our gov is run by criminals.
Run by criminals?
Gee, ya think?
But hey! Take pride, deep patriotic pride!.. in the fact that we are the most corrupt nation (by amount of money alone!) that any other nation on the planet! Heck, maybe all of them combined!
WOO WHO! WE’RE NUMBER 1! WE’RE NUMBER 1! WE’RE…
Not really. You think you’re “the most corrupt” only because you folks are the most open about what’s going on…
The USD being the reserve currency of the world, has given it a privileged status. Maybe this is why the US has led the world into prosperity, then into Depression. My perception is that other countries are just as corrupt…but their citizenry is just not as outspoken about it. The best blogs I’ve found are still American, probably b/c Americans by ‘national character’ are politically outspoken.
FWIW, you could take some small comfort from the fact that you perceive more about government corruption in the US, and have more dialogue about it on blogs, than other countries. “Free speech” about government is still a reality there to some degree, more so than with others simply because the (few) informed US citizens are loud, aggressive, and keep the dialogue going.
The U.S. central bank is comprised of a seven-member Board of Governors in Washington, and 12 regional Fed banks.
Some of the regional directors are appointed by the Washington-based board. Those directors are not allowed to own shares of bank holding companies, a status that Goldman Sachs won in September to secure access to Fed lending facilities.
Friedman bought Goldman shares in December 2008 and in January of this year, which became public with a Wall Street Journal report on Monday.
Friedman obtained a waiver of the bank stock ownership rules, which the Journal said was granted just before he bought stock in January, that allowed him to hold them until the end of this year. Last week, he said he would resign by then.
DEFENDERS AND DETRACTORS
The top lawyer at the New York Fed said Friedman had done nothing wrong.
“It is my view that these purchases did not violate any Federal Reserve statute, rule or policy,” the bank’s general counsel, Thomas Baxter, said in a statement.
Denis Hughes, the deputy chair of the New York Fed’s board and president of the New York State AFL-CIO, will now be the acting chair, the New York Fed said.
While the Fed was deciding whether or not to grant Friedman a waiver, he bought 37,300 Goldman shares on December 17, for an average price of $80.78, according to regulatory filings.
On January 22, he bought 15,300 more shares for average prices of $66.19 and $67.12, according to filings with the U.S. Securities and Exchange Commission. The January purchase brought his total holdings to 98,600 shares.
Goldman shares closed on Thursday at $133.73, meaning Friedman has profited handsomely, earning more than $3 million in total on the two purchases.
Must be nice to have inside info and get a waiver to buy stock and make a 3 million dollar profit. Where do I sign up. I love the fact that in addition to granting the waiver the top lawyer for the FED says the guy did nothing wrong. Well there you have it.
Hang them both in the village square at high noon.
I’d come and bring my knitting.
Hmm, why am I thinking “Marie Antoinette”?
hehehe…nope, you should be thinking “Madame Defarge”…
Does this sound like demand is increasing??
May 8 (Bloomberg) — Ship owners are being forced to pay to carry oil from the Middle East to the U.S. for the first time in at least a decade after demand collapsed and the fleet expanded.
Supertanker owners make no rental income from the voyages and are paying $3,445 a day toward fuel costs, data from the Baltic Exchange in London show. Rental rates normally cover fuel costs. The journey to the Louisiana Offshore Oil Port from Ras Tanura, Saudi Arabia’s largest export facility, earned owners as much as $104,663 a day in July.
Later on they suggest that if it continues they will moth ball supertankers.
Demand must be increasing because gasoline keeps going up. Right?
Can’t be those much maligned, unfairly accused and unnecessarily derided, speculators, now could it?
Naw…
The Big Lie: Stress Test Optimism Just Wall St. Propaganda, Former Bank Regulator Says
Posted May 08, 2009 12:12pm EDT by Aaron Task in Newsmakers, Recession, Banking
Results of the stress test brought a collective sigh of relief from Washington D.C. to Wall Street Friday, and stocks were rallying again on a growing sense the financial crisis has past.
Don’t you believe it, says William Black, an Associate Professor of Economics and Law at the University of Missouri - Kansas City.
“It’s in the interest of the financial community to send this propaganda out,” Black says. “It’s remarkable not that they do it but that it still works.”
In other words, this isn’t the first time we’ve been told “the crisis is over” and that “banks are well capitalized” - and probably won’t be the last.
The professor and former financial regulator foresees another wave of foreclosures and future bank losses of more than $2.5 trillion vs. the government’s $599 billion estimate.
Simply put, the stress tests weren’t strong enough to be considered “wimpy,” Black says. Furthermore, Fannie Mae, Freddie Mac, AIG and IndyMac were deemed to have “passed” much more stringent government stress tests before their respective failures, he notes, recalling the grim history:
Fannie and Freddie: In July 2008, Treasury Secretary Paulson testified that Fannie and Freddie were “adequately capitalized” under the test. In August 2008: “even in [Freddie's] most severe stress tests, [show] losses … less than $5 billion.” Actual losses: 20 to 40 times greater.
AIG: “It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those [CDS] transactions.” AIG claimed in 2008 “Using a severe stress test … losses could go as high as $900 million.” Actual losses: 200 times greater.
IndyMac: Sold over $200 billion of “liar’s loans.” Actual losses: 160 times greater than its tests.
Rating Agencies: Their stress tests gave AAA ratings to toxic waste. Actual losses: more than an order of magnitude greater.
”The examinations and stress tests are shams — always precise, always farblondget,” Black claims.
So while others are celebrating the end of the crisis, ask yourself this: If the government sees up to $599 billion in additional bank losses, why are they requiring banks “only” raise $75 billion? That suggests the government thinks the banking sector is overcapitalized by $525 billion.
“Once people learn they’re being lied to, they react very badly,” Black says. “And of course this is not the first lie.”
Maybe you really can fool some of the people all of the time.
“The professor and former financial regulator foresees another wave of foreclosures and future bank losses of more than $2.5 trillion vs. the government’s $599 billion estimate.”
What’s the score so far, versus BB’s early estimate that subprime losses would be contained to $200 bn?
An economic note, FWIW:
I work for a microdiagnostics company that does business worldwide. Our customers are large medical centers and universities and some very large clinical labs. Our product is in a highly specialized niche. With 14+ years on the job I don’t remember the last time we didn’t have a record sales year.
Q1 orders are down 18%. I don’t have access to dollar volumes but I expect them to be off as well. There haven’t been any layoffs but the mood is very frugal. I’m thinking my bonus will not be 40% of salary this year.
My point is, this industry has been bulletproof in the past from any downturn. If this recession deepens going forward I think things will get very interesting in the world at large.
BLS says health care jobs have been increasing 17,000 per month this year and 30,000 per month in 2008. Well that’s net, of course.
The reason it’s “net” is I know firsthand my sister had to look for her new job for five or six months and it’s on the opposite side of the country. California health care seems to be in a depression.
My fil is the ex-CFO of our local hospital and is currently president of the foundation that uses $$$ from the hospital to do certain kinds of “off balance sheet” (his words) initiatives.
For the first time ever the hospital lost money last year and is bleeding hard this year. Apparently insurance companies are having an incredibly difficult time raising prices on employers. Which means hospitals can’t raise fees. In the meantime, the hospital is having to cover millions of dollars (by federal law) of emergency room visits by newly minted part time workers who make too much for medicaid but not enough to pay exorbitant hospital bills.
Nobody has money to pay medical bills, millions losing their insurance, thus nobody goes to the doctor unless they absolutely have to.
Oh, and I missed the autotalk yesterday. My entry is a ‘99 Suburban with 282K miles. I bought it when it had 70K for $19000. That is $.089/mile.
282k miles on a ‘99? Damn. I have 160k on my ‘99 4Runner. I feel the need to do another cross-country roadtrip now…sigh.
A request to the financial braintrust on the board. I’m am but a simple caveman, and I’m having a hard time recalibrating my thought processes to this:
What mental gymnastics do the Wall Strret idjits use to call the loss of 500,000 jobs “good news”, because “it wasn’t as bad as we thought it would be”?
As Spock might say, “Logic would suggest that the market should be down, but not as down as it would be if the jobless rate was 1 million/month…..in fact, if you consider that the economy has to generate 125,000 jobs/month to stay even with the people entering the workforce, the loss of jobs is actually CLOSER to a million…..and when you consider that the only gains were in government and health care (a quasi-government institution…..)”
“Under what matrix does Wall Street calculate that approx. 750,000 people a month being laid off, or unable to find work to begin with, calculates into an INCREASE in the value of stocks, considering that everyone’s customer base is decreasing, and won’t be increasing for 2-5 years, by some estimates”
Or, as Bill Munny might say “Logic has nuthin’ to do with it”.
Which begs the question: If Wall Street is run on emotion, and not math/logic, should happy talk of the PTB/government/mass media be considered “market manipulation?”
I’m going long in one-arm bandits, blackjack, and the ponies…….
To see what the stock market is going to do, I just watch the government. When they come up with a new idea and finance it, no matter how bad it is, the market goes up on the strength of that financing. TARP made it go up, PIPP made it go up, ‘quantitative easing’ made it go up - I think the stock market responds more to government now than to on-the-ground business or the economy.
Wall St. logic is simple: What’s mine is mine and what’s your is mine.
See?
More like ‘…what’s yours will soon be mine.’
ROCHESTER, N.Y. (AP) — Jody Taylor dodged the bullet twice in the past year when the industrial-coating factory where she works as a machine operator went through a series of layoffs. But her hours have been cut back to a four-day workweek.
Taylor has joined the burgeoning ranks of the “underemployed” — the 8.9 million Americans who would prefer full-time jobs but must make do with part-time work.
Their numbers have shot up from 5.2 million a year ago, the U.S. Bureau of Labor Statistics reported Friday. The April total was down only slightly from 9 million in March, the most since record-keeping began in 1955, the agency said.
The ranks of the underemployed have swelled as tens of thousands of businesses resort to shorter workweeks, furloughs and seasonal shutdowns to avoid deeper cutbacks. Often, these involuntary part-timers get to keep at least some of their benefits.
Congratulations, Jody. You are not Unemployed.*
*U3 government-standard unemployment
Would it be wrong to cut out a star from yellow poster board and marker in “50% OFF” and affix it to the Realtor sign at a high end condo building that has sold 0 units?
It would be wrong if you didn’t post a pic of that…
+1
I think technically it’d be vandalism, no?
I can see why you’d get amusement from it, but I’m not sure it’d make much of a statement to anyone else.
I was thinking of making it a clip on type of thing, so there is no damage to their sign.
It’s one thing to complain on all the forums and blogs. Perhaps more people need to get out and make statements.
I was noodling around in the Maryland real property database http://sdatcert3.resiusa.org/rp_rewrite/ at some of the vacant and rental houses near me, and they’re all listed as Principal residence:yes. It will be interesting to see what happens as the state cracks down on this sort of RE tax fraud.
John Authers reports on expert views from a finance conference in Orlando, FL.
Among other very fascinating interviews, Richard Thaler explains how recent bursting bubbles have laid to waste the Efficient Markets Hypothesis (a point I have made here from time to time myself)…
The “Efficient Markets Hypothesis” was Utopian at best and only believed by people with either very low IQs or espoused by thieves and liars.
The entire system was gamed and no matter what happens in the near future, it will be again.
Russell Napier, author of “Anatomy of a Bear,” talks w/ John Authier in Orlando, FL…
The interview features some frightening prophetic statements:
- Predicts a rise in l-t US T-bond yields to 6 pct over the next 2 years will cause a “cataclysmic bear market.”
- Take home quotes:
“Financial history suggests the critical number (for a cataclysmic bear market) is a yield on Treasurys of about 6 percent.”
“The worst investment in the world is US Treasurys”
“The last bear market in US Treasuries lasted from 1946 to 1981, and there is no reason to expect the next one will be any shorter.”
My added two bits: If he is right, housing has lots farther to crash, as mortgage rates are highly correlated to l-t T-bond yields, and much higher mortgage rates will result in much lower home prices.
The last bear market in US Treasuries lasted from 1946 to 1981, and there is no reason to expect the next one will be any shorter.
Yes, there is - just like you can’t be half-pregnant, you can’t go off the gold standard twice.
Hasn’t there been a steady rise in long-term yields since Bernanke announced his Quantitative Easing experiment? First an immediate big drop, then a slow, steady rise thereafter?
I can’t help thinking now that he’s started this path, Bernanke’s just going to have to keep it going…who else is going to buy long-terms, especially in increasing amounts? Which if pattern is anything to go by, is just going to keep the yields going up. What could change that?
I might be misunderstanding the whole thing, but to me it looks like a steadily-increasing pattern of (in effect) the US buying its own bonds as foreigners ease out of doing it.
I’m just trying to put a picture together reading on different blogs. Be sweet I’m still learning!
Usually the interest rate spread between 3-mo T-bills and 30-year Treasurys is 3 pct. During the credit crunch, I believe it was squeezed quite a bit tighter for a period of time. Now the spread is 4 pct. If I get sufficiently motivated, I will put together the data and post a thumbnail historic retrospective of major turning points later this weekend. Stay tuned
I will! I LOVE that we live in the age of the Internet. I’m a secretary and I feel like I’m working toward an econ degree (in between laundry loads on this sunny autumn morning). It’s like a modern printing press revolution, just in time to save some of us from the Greatest Depression in history.
Looking forward to it PBear…I keep all this stuff on file at home and at work, so I can figure out and then explain to my bosses what’s going on.
Can anyone remember who made these prophetic remarks way back in 2005?
“Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices. This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.”
And what would be the current policy response to the aftermath of a protracted period of low risk premiums? Buy l-t Treasuries, thereby suppressing risk premiums to unnaturally low levels.
JACKSON HOLE, Wyo., Aug. 26 2005
” Even as he was being praised for fostering two decades of rising prosperity, Alan Greenspan, the chairman of the Federal Reserve, warned on Friday that people have been unrealistic in believing that the economy has become permanently less risky.
In the first of two speeches at a Fed symposium about the “Greenspan legacy,” the Fed chairman implicitly took aim at both the torrid run-up in housing prices and at the broader willingness of investors to bid up the prices of stocks and bonds and accept relatively low rates of return.
[your quoted paragraph here]
“Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher prices,” he said. “This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.”
Mr. Greenspan also noted that consumers were more willing to spend money based on an apparent increase in wealth, rather than increases in their earnings, when part of that wealth was based on gains from stocks or real estate that could readily disappear.”
–
Well they can’t buy T-Bills forever, therefore I have no idea what they will do then.
LOS ANGELES (Reuters) - The slump in Las Vegas may be bottoming out, but odds are good that a coming wave of new resorts will hinder any rebound in hotel rates or casino revenue.
That could put a cap on profits at recession-battered casino companies.
Companies like MGM Mirage, Las Vegas Sands Corp and Wynn Resorts Ltd this week reported stronger-than-expected first-quarter results, helping to boost their heavily battered stock prices.
“I see that starting in September — maybe October, more appropriately — we are going to have an accelerated booking pace … I hesitate to use the word getting back to normal, but I think we are getting close to getting back to normal in 2010,” Sheldon Adelson, Sands’ chairman and chief executive, said on a conference call on Tuesday.
Analysts, however, warn that there is no concrete evidence as yet that the bottom of the downturn is in sight in Las Vegas.
“There has been some talk of things turning around in Las Vegas … but I don’t see any real evidence,” said Majestic Research analyst Matthew Jacob.
MARCH ROOM RATES DOWN 32 PERCENT
Las Vegas Strip casinos won 17 percent less money from gamblers in the first three months of this year than they did a year earlier, according to Nevada gaming regulators.
As the recession stalls travel demand and airlines trim flight capacity, the number of visitors to Sin City has fallen about 9 percent over the same period; and the average daily room rate fell nearly 32 percent in March from a year earlier.
Meanwhile, Strip projects like CityCenter, Fontainebleau Las Vegas and the Cosmopolitan, planned when there was no end in sight to the gambling boom, will start opening later this year, adding by 2010 nearly 16,000 luxury hotel rooms to the gambling corridor’s existing supply.
That’s an increase of about 11 percent from the current total of 141,000 rooms, which reflects the opening last December of Wynn’s Encore and the debut in January 2008 of Las Vegas Sands’ Palazzo.
The total also includes expansions at the Hard Rock Hotel & Casino, set to start opening this summer, and new timeshare towers at Planet Hollywood.
The largest project is the 67-acre CityCenter, a multi-tower joint venture between MGM and Dubai World that will begin a phased opening in October.
“The opening of CityCenter later this year will add additional hotel and gaming capacity to an already struggling Las Vegas market and is likely to impact MGM’s 100-percent owned properties,” Buckingham Research analyst John Grassano said in a research note on Wednesday.
MGM, the largest Las Vegas Strip operator, owns nine other properties along the gambling corridor, ranging from the high-end Bellagio to the more mass-market Circus Circus.
“There will never be a serious government inquiry about the cause of this crisis because politicians were deeply complicit. They will not turn the light on themselves.” - heard on the radio.
All the serious information we ever got about the doubling in oil prices and the collapse was some pointless kabuki with the oil execs in DC.
Good way of describing it.
Apparently wSJ reporting that banks needed close to a trillion dollars on stress test but they rolled it back after banks complained to under 100 billion
http://online.wsj.com/article/SB124182311010302297.html
I haven’t seen the full article.
Thankfully, Obama will be in office soon and all this pandering to financial institutions, lack of transparency and robbing the taxpayer on their behalf will stop soon.