Bits Bucket For May 15, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Coffee: the drink that makes you do stupid things
faster with more energy…. good morning everyone!
Same thing happens with testosterone.
You shouldn’t be drinking testosterone.
Good morning Rancher. That’s a good one.
Thank you, kind Sir. I borrowed that from an old
hand painted sign hanging in a local coffee shop.
The sign in my local coffee shop reads; Unattended children will be given an expresso and a puppy.
It’s almost worth offering to babysit your relative’s kids at that point, just to see the looks on their parents faces when they get home.
“The sign in my local coffee shop reads; Unattended children will be given an expresso and a puppy”
I like that !
“The sign in my local coffee shop reads; Unattended children will be given an expresso and a puppy”
I like that !
AND a drum set.
http://www.kansas.com/213/story/813591.html
Economist turned bank robber?
“An FDIC economist has been charged with the attempted robbery April 11 of a Kansas City-area bank.”
Before reading the article, I was guessing he must either work for the Fed or the Treasury.
The new “Big 3″ of banditry—21st century-style!!
Nope - if he worked for the Fed or Treasury, he’d be robbing taxpayers with a pen and maybe sharing some of the loot with the banks.
NY Times economist reporter who doesn’t understand debt:
http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html?_r=1&pagewanted=all
Very entertaining read. Good reminder to think with the big head and be careful who you pair up with.
Shopping at Baby Gap and other mall stores should have been nixed right away once they realized more was going out than coming in. I’m betting the wife was divorced previously for a reason.
These folks had tons of kids and lived a reckless life. Man, I’m single, no kids, live in a 1 bedroom, shop at thrift stores, and save money. I have every reason to be irresponsible because no one is counting on me. They have children that depend on them which means no room for error.
Shesh……People are insane.
Now it BEGINS Wisconsin…your banks suing each other and into name calling using the “I” word.
“M&I argues in the lawsuit that, given Guaranty’s financial condition, preferred stock in Guaranty Bank “is of little or no value.” In contrast, M&I says, Guaranty’s REIT subsidiary had assets in excess of $62 million.”
…”M&I states in its suit that Guaranty Financial was “insolvent” at the time of the transfer because it was unable to pay its debts as they came due and the sum of Guaranty’s debts was greater than the fair market value of its assets”
Huh…They’re INSOLVENT !?!….M&I jumped upon 1.5 Billion in of TARP money faster than a hungry cat pounces upon a slow moving fat mouse with a belly full of cheese.
http://www.jsonline.com/business/45058232.html
Thanks for the article Mikey.
I’m moving my accounts out of Guaranty this week. They’re closing the branch nearest me (one of those long-hour grocery store locations) this summer.
I’m relieved to know it wasn’t just the handful of free jawbreakers I would take every time I cashed a check.
Y/W
Yeah..sadly…it’s becoming harder to locate a 4-5 star “Safe and Sound” rated bank, (for what that is worth) in some places in Wisconsin.
Not to mention with good candy jars.
Wow. It just keeps getting weirder.
The dumbest person in FL (not housing related)…
http://tinyurl.com/puot8s
For those who don’t live here, let me just tell you, this is a “classic” SoFL move. The driving in this area is beyond poor, it’s mind boggling.
Too bad these morons go away without a scratch, they would be strong contenders for the Darwin award!
“PALM BEACH GARDENS — The construction worker was amazed. As he and colleagues worked on the shoulder of busy Interstate 95, near Military Trail, a motorist had slowed almost to a crawl and was shouting as if he was lost and needed directions.
“The worker said he (the motorist) was screaming something he couldn’t make out, and the construction worker was saying, ‘Go, go, go!’” Florida Highway Patrol Lt. Tim Frith said.
In seconds, four other cars had slammed into one another to a stop behind the inquisitive driver.”
This is addressed to any of you down in SoFla. I left the area in 2004 (West Boynton) but still keep in touch with friends there. Is the West Boynton/Lake Worth area as bad as it appears (value wise) on paper. A friend of mine said that her model townhouse (purchased 2005 for 245k) are now selling in foreclosure in the 80k range.
love your name..missingfl..however..I don’t miss it!
Especially since the people I sold my house to at 800K are now sitting in a home worth less than 400K..I sold and relocated exactly since I knew this was a super bubble in progress in SFL…it was so obvious..my husband and I use to joke that we could not afford to sell our home and move back in the front door…we could never understand how a low wage paying state could have people buying homes at such inflated prices..even today we still could not move back to our old house with the cost of taxes and insurance there…we went from paying 9K a year in insurance with a 70K deductible to paying a $900 insurance bill with a $1000 deductible!..why move back??
We decided if we could find a buyer “smart” enough to meet our dream price we would move..we never actually thought it would happen…but when it did we took the money and ran!!
You did better than me… sold in early 2006 for 450K, comparable homes now in the mid to upper 200’s. Probably could have gotten 475 if I’d put it on the market six months earlier, but boy howdy, I am NOT complaining.
Now living in a nice 2000 square foot modular on 90 acres of mountain land, having spent 1/2 the proceeds….
Where are your 90 acres? (Just wondering closest city, state)
ann,
No offense but the wife and I sold our home ( we later learned ) well prior to OR’s peak, and funny.., but I don’t feel like a “winner”?
Oh, you still came out on top, I surmise.
It’s the people who gloat and brag fall to the bottom of the Bag of Respectability. They all wear a badge that says, ” I Got Mine!”
Yes, those areas are taking a pretty good beating. West Boynton has WAY too much supply (many mega-developments went out up there), and Lake Worth.. Well, most of LW is pretty seedy/dangerous. There are nice areas, but, from that value drop, I doubt your friends TH is in one of them!
How about all of the geezers down here that will NOT, under any circumstances, get over 35 MPH in the I-95 entrance ramps? Nothing like having to merge with traffic going 40 MPH faster than you. Drives me crazy.
Yeah, that’s a truly death-defying experience. And why you should NEVER drive in the right lane of 95/TPKE, you’re going 80 and have people merging in at 25.
I’ve lived/worked in many different places over the years. I’ve never seen anything as bad as FL driving. Other areas have their problems, we have them ALL, and all co-mingled on one highway. Illegals (no license), geezers (can’t hold a lane), psychos (going 120), bigger psychos (going 120 on a crotch rocket), and aggressive, northeast style drivers. It’s a recipe for disaster every single day (and usually does result in some horrific crash; I can’t remember the last time I went from WPB to Miami without seeing something wrapped up in one of the lanes).
“I’ve never seen anything as bad as FL driving.”
Have you been to San Antonio? San Antonio drivers are the worst I’ve ever seen and Texas has the most uninsured drivers in the nation.
“…Texas has the most uninsured drivers in the nation.”
I heard, misery loves company
You are completely right about San Antonio.
The first time I heard 1604 refereed to as the “death loop” I thought they were kidding.
My sister got hit by a brand new car while in the Taco Cabana drive thru. No insurance.
My sister got hit by a brand new car while in the Taco Cabana drive thru. No insurance.
Hah, I got rear-ended in the Taco Bell drive through once. Was at a dead stop. Heard the engine behind me rev and the girl just plowed into me.
If I understood the situation correctly, she wasn’t licensed - was carrying her mom’s license. Guess she confused the pedals? Didn’t seem worth getting them in trouble for - just filed the claim through their insurance and collected my check.
and aggressive, northeast style drivers.
when folks move in from another region, someone should hip them to the unspoken NE corridor driving rule:
Turn signals are for wusses.
What’s a turn signal?
Turn signals are for wusses.
Unfortunately, driving in Texas makes the lack of use of turn signals more challenging. People there also often drift out of their lanes a bit, but then drift back in.
So, as an attentive driver you have to make a judgement call - are they just a crappy driver, drifting out of their lane, or are they actually making an un-signaled lane change (still a crappy driver move, IMO)?
It’s amazing how one actually develops a sense for which of the two it actually is.
A bunch of years ago, a study was done on why people did not use turn signals. Much to my horror, 7% of those who responded said not using turn signals “makes driving more exciting.” Who knows if that many people really think like that, but the sheeple aren’t getting any smarter, so it may be true!
I wonder if a chunk of those 7% just can’t read, wouldn’t admit it, and picked that choice randomly, ’cause, seriously, more exciting? exciting?
In NYC, you give up the element of surprise when trying to change lanes if you’re dumb enough to use a turn signal. You give the other guy a chance to speed up and cut you off! The prevailing strategy, according to a cab driver I talked with, “You see a space, fill it.”
+1, Cali too.
If you drive around without signaling in WA, it’s only a matter of time until you get pulled over and ticketed. Not smart.
Really, BB? So far I find that people don’t signal much up here either. Good to know they pull people over for that.
Now if they’d just get people for riding in the left lane even when posted “keep right unless passing”.
The problem is that the bulk of the blue-hairs that live in south Florida just got their first driver’s license. They didn’t have to drive when they lived in NY or NJ - they just took the subway everywhere.
I used to live in Boca Raton - when I went to the DMV I witnessed this:
- Man taking eye exam, can’t identify a sign on the screen.
- DMV person “No - that’s not right Mr. Johnson - try again.”
- Mr Johnson: “Is that a stop sign?”
- DMV person “No - try again.”
- Mr Johnson: “A yield sign?”
- DMV person “No - try again”.
Seriously.
That’s when I knew I was in trouble on the roads.
Not only that but seniors only had to take the eye exam once every 6 years. A lot of degeneration can happen in 6 years. I think that may have changed recently though.
Since when do you get to “try again” on an eye exam? It is either right or wrong. If you get too many wrong you fail, right?
I actually had the lady at the DMV in Texas try to help me on the eye exam….to me, they all looked like zeros with a line through them. She said “just guess…I’ll help you out - the first letter is a ‘D’”.
In retrospect, I think the machine was broken or had vasoline on the lens or something. After going to my eye doctor later, they told me my vision was fine, and gave me a note to take to the DMV….was too lazy to ever go stand in line there though, and just took the restriction on my license.
Since when do you get to “try again” on an eye exam? It is either right or wrong. If you get too many wrong you fail, right?
One would think. Remember though - we’re living in the new “you’re not allowed to fail” society now.
Michael Fink,
You forgot the quaint habit of INDICATING lane changes in Florida by pointing and waving…loaded GUNS.
I’ll put Boston’s insanity on the roads against any other city, any time, any day. Nothing compares.
Agree.
With one notable exception:
Naples, Italy.
Ciudad Mexico or Ciudad Guatemala. I lost my right rear view mirror in traffic to a heavy truck in Ciudad Gauatemala.
At the time I was living in L.A. When I returned I remember thinking L.A. traffic was pretty tame.
Sidewalk-driving is FUN!
“If you don’t like the way I drive, stay off the sidewalk”
Old bumper sticker.
Riding in a taxi in Rome. Ahhh talk about fun. Wheeee!
How about all of the geezers down here that will NOT, under any circumstances, get over 35 MPH in the I-95 entrance ramps?
The best way to deal with this is to slow down much more than them and let a wide gap open up between them and you. If you work it right, when you’re half way up the ramp, they will be absorbed in the traffic and you can then mash the accelerator, get up to speed and slip in like god intended.
Of course, the people behind you will wax wroth, but when they see you speed up and merge, it might dawn on them that you were actually thinking about your driving - quite uncommon these days no matter where you are.
Then you have the guys who try to pass you in the merge lane or right AS you merge… even though you’re already doing 70+.
Quit whining and be nice to our parents that we sent down there.
Good morning Senators Shelby’s Corker McConnell, good thing that Kentucky/Tennessee/Alabama/South Carolina have all their Southern folks driving around in Kia’s/Hyundai’s/Toyota’s. I wonder what sort of car their “spiritual” leader the “Grand Wizard” Rash Limpbaughs drives around in?
They’ve been awful quiet lately about trashing GM/Ford/Chrysler & about returning any Gov’t monopoly monies…
Really? I kinda thought Corker had opposed the GM/C bailout. (And why not, if “his” autoworkers were doing OK.) But I could have it wrong. Explain your thinking?
Buying KIA/Hyundai not only do you get an awesome car, you get to keep those stupid high paying mfg. jobs in Korea!
VW hurry up dang it, we need those low priced $$$$$ German designed cars so people in Tennessee can vacation in Michigan!
Destroy GM/Chrysler/Ford = good for Tennessee… simple.
From Mr Corker:
‘We want those plants to stay open,’ Mr Corker said in an interview. ‘We realize the company has got to be restructured and tough decisions have to be made.’
“The U.S., through its citizens, through its banks and through its workers, is delivering a company with a bow tied around it to Fiat,” says Senator Bob Corker, Republican of Tennessee, who has been critical of help for Detroit in the past but now says he does favor a more balanced deal to rescue Chrysler. “Fiat isn’t bringing much to the table,” he said. “I’d like them to have more skin in the game.”
“Toyota has a loss. A big one:
“Yesterday, Toyota Motor Corp announced its operating results for its fiscal 4th quarter: a loss of $7.7 billion, leading to a loss of $4.4 billion for all of 2009. That’s a more than $20 billion swing in the wrong direction from the previous year.”
“Looking towards the next 12 months, management at Toyota said thing would probably be even worse.”
“Senator Bob Corker said he knew how to fix it: “Just get Toyota to reduce salaries of employees down to less than what the UAW makes. The trick is to keep cutting wages until workers in America can compete effectively with peasants in China, working in sweatshops for $4 a week without health insurance or pesky environmental regulations.”
OK, he didn’t really say that. But remember just a few weeks ago when he held out Toyota as the model of the car company that GM should aspire to be, and that the way to get there was to chop American wages? Maybe there’s just a little more to it than that.”
UAW workers are paid $73 an hour. That’s $150K a year for working on an assembly line for crying out loud. And when I say “working” I am stretching the definition of that word quite a bit.
On the other hand Kia’s starting pay at its Georgia plant is $17 an hour. I think even that is too much to pay someone for tightening lug nuts all day, but it’s a hell of a lot closer to the value that worker is providing than the (probably) drunk UAW slob in Detroit putting together a Chevrolet.
And no matter how union apologists spin this, there’s no way around the fact that UAW workers are simply grossly overpaid. And until that stops, GM, Chrysler and Ford will continue to lose billions of dollars every year.
“UAW workers are paid $73 an hour.”
Well, you think it’s cheap to take an American family of x4 on a vacation to see “The Great Wall of China” via a Airbus made 747?
“I think even that is too much to pay someone for tightening lug nuts all day,”
Hey, that makes me wonder…what’s the technician $$$ cost when a Volvo check engine light comes on in say…Greenwich, NH?
New UAW hires make $12.
Most of that $73 goes to pay retirees and retiree medical.
Either way, it takes 20 hours to make a car. Even at 100/hr that would only be $2,000 out of the price of a $30,000 Ford Taurus. Labor is a only a small part of the game.
No - it takes 20-30 hours to *assemble* a car. It takes a heck of a lot more than that to *make* a car, if you include making all the parts. Everyone seems to somehow conveniently forget that.
A 90% margin on anything - especially a car - is ludicrous. Even computers don’t have 90% margin.
A 90% margin on anything - especially a car - is ludicrous. Even computers don’t have 90% margin.
I don’t know about that…depends how you compute “margin” I suppose.
The company I used to work for used to sell computer equipment (analog and digital input/output cards) for 4x cost to produce, I believe. But of course they had to recoup R&D costs, etc.
Margin = Selling price minus manufactured cost, including BOM (Bill of Materials; i.e. parts) generally. Though I can’t say for sure whether it includes the cost of manufacturing or just the BOM cost - it may depend on the company.
And yeah the bulk of Margin goes towards operational costs - R&D, HR, facilities, management etc.; including taxes and pensions and such. What’s left over is profit (or loss, if negative).
It’s amazing how wrong you folks are.
PCs sell on comparatively low margins, but servers are marked up 1000+%. You read that right. 1000+%.
Again, as for the TOTAL cost of building a car you are trying to lump in the suppliers with the line workers. Nobody is talking about the suppliers cost or their labor, just the line workers, and assembling a car does NOT mean just bolting the parts together. It means the whole enchilada of whatever is performed at the factory, which is less and less. Not the suppliers.
This type of sloppy analysis and rational are why this country is screwed in the first place. Nobody want to do real research, let alone go out in the field anymore.
Billionaire Rupert Says Crisis May Provoke Unrest, Inflation
By Thomas Mulier
May 14 (Bloomberg) — South African billionaire Johann Rupert said the financial crisis may lead to inflation and social unrest as savers find they’re too poor to retire, while pension-fund managers deserve to be jailed for incompetence.
Rupert, speaking at the annual presentation for Cie. Financiere Richemont SA, the luxury-goods company he controls, said he doesn’t see any “green shoots” of economic recovery. He said governments may resort to inflation to reduce the burden of increased debt from stimulus programs, such as U.S. President Barack Obama’s $787 billion package.
“If this thing carries on, my generation will have to work until they are 75,” the 58-year-old Rupert said. Governments are “going to have to find the capital in the markets, which will crowd out the private sector, or they’re going to have to tax the living hell out of consumers, or inflate their liabilities to oblivion. There are not too many other options.”
Rupert told analysts at the meeting that they’re too young to remember Red Brigade terrorism in Italy or the 1968 Paris uprisings, when the French state sent tanks into the streets.
“Things can get volatile very quickly,” he said. “This is a very turbulent situation. It could flat-out turn into big inflation if not managed properly over the next two or three years. The saver is going to start rebelling.”
Spain needs to reduce unemployment from its current rate of about 20 percent to avoid future social problems, he said.
Tobacco Fortune
Richemont’s brands include Jaeger-LeCoultre watches and Cartier jewelry. It’s the second-largest luxury goods maker in the world, trailing only LMVH Moet Hennessy Louis Vuitton SA.
Rupert has become increasingly outspoken since he assumed sole control over Richemont following the death of his father Anton three years ago. Last October, he said investment bankers too young to remember a serious recession helped cause the financial crisis.
Rupert himself worked in banking at Chase Manhattan Bank and Lazard Freres in New York before founding South Africa’s Rand Merchant Bank in 1979. He set up Richemont in 1988, which was built on proceeds from his family’s Rembrandt Tobacco Corp.
Governments should promote economic growth, which is the only way to improve states’ finances, Rupert said today. Protectionism and increased tariff barriers between countries could lead to a “second Depression,” he added.
“All of the excess leverage in the system is being assumed by governments, in some way or other,” he said. “They’re going to have to de-lever sometime.”
He sure has a way with words. And I fully expect to have rampant inflation AND the hell taxed out of me. I don’t think it has to be an either or situation.
I expect inflation too. That’s why I didn’t sell my house at the peak of the bubble when I could have made $100,000. I was tempted, but thought, “if we have inflation like in the 70’s, my profit will be worth nothing and rents will be $2,000+ a month”. So I decided to stay put.
You could’ve sold and bought gold, oil, or cans of spam as an inflation hedge.
Personally, I’m stocking up on spam.
Indeed, this is what I expect:
- Runaway inflation spawned by the idiotic idea to save the failed banks and prop up the Bubble. If you don’t live an area where housing prices have been destroyed by Sub-prime, affordable housing is probably out the window for good since the Alt-A and Option-Arm crowd will be “saved” now that the Fed and the rest have a better understanding of how to prop up the Bubble.
- Runaway taxes spawned by endless bailouts, printing of money, and spending on various crazy ideas (all of which assumed an ever-increasing amount of tax revenue based on “housing only goes up!” while ignoring demographics, loss of jobs, etc.)
- Horrible job market for years. We are still stuck competing with slave labor in 3rd world nations, and now business have a new business model: fail and wait for Bailout money. That plan requires few workers and yet also doesn’t require them to sell products, so who cares if the ex-consumers have a job or income.
ROTFLMAO!!!
Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2)
By Roger Runningen and Hans Nichols
May 14 (Bloomberg) — President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”
Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”
Earlier this week, the Obama administration revised its own budget estimates and raised the projected deficit for this year to a record $1.84 trillion, up 5 percent from the February estimate. The revision for the 2010 fiscal year estimated the deficit at $1.26 trillion, up 7.4 percent from the February figure. The White House Office of Management and Budget also projected next year’s budget will end up at $3.59 trillion, compared with the $3.55 trillion it estimated previously.
Two weeks ago, the president proposed $17 billion in budget cuts, with plans to eliminate or reduce 121 federal programs. Republicans ridiculed the amount, saying that it represented one-half of 1 percent of the entire budget. They noted that Obama is seeking an $81 billion increase in other spending.
i knew i shouln’t have left that barn door open.
oh well…
It is not possible that the man is this stupid.
Is it?
This is prep work for the introduction of health care reform. The next step is to show how much we can save if we create more gov’t to manage health care.
” If you think health care is expensive now, wait until it’s free”
P.J. O’Rourke
And he is correct!
Remember
Medicare provides medical care for a fraction of the cost that private insurance does, pennies on the dollar.
Preventetive care costs a fraction of Emergency room visits, which you eventually pay for one way (higher hospital bills) or another (higher taxes).
Medicare provides medical care for a fraction of the cost that private insurance does, pennies on the dollar.
While on paper what you say may be true, you can’t simply look at that in isolation. The negotiated/cheaper costs of medicare may only be possible due to subsidization by the non-medicare folks.
It’s kind of like the argument that clearly drug costs are too high here in the US, since in Canada they’re far cheaper. I’m not saying this is necessarily the case, but it’s most certainly possible that there would be far less research if a high-margin market like the US didn’t exist.
My point is simply that it’s not as simple as you seem to suggest.
Actually, for hospitals, the Medicare schedule pays above actual costs for all but the smallest ones. They are usually designated “critical access hospitals” and are paid based on actual costs plus a very small additional amount rather than on the schedule. The actual cost is way way way below charges, which are really just a place for the hospital to start negociations with private insurers. Private insurance on average pays a little better than Medicare, but not by much. Medicaid reimbursement is substantially lower than Medicare and often gets below actual costs, though some states may have fixed that at least for some services. And Medicare is starting to move to a system where they refuse to pay at all for certain “avoidable costs” like when you have to do a second surgery to take out a sponge or instrument that was left inside a patient or when a patient falls down and breaks something because they need help going to the bathroom and no one comes to help them.
That info is only for hospitals, not doctors. I don’t have any specific knowledge about doctors.
“President Barack Obama… current deficit spending unsustainable”
Oh! Thanks for letting us know.
If only Obama was in a powerful position to reduce government spending, I bet he’d do something about it. Maybe he should talk to the President.
Good one.
Yeah…afterall, cheney HAS emerged from his undisclosed location !
He’s not the same president who flushed a trillion dollars into the pockets of the bankers a few months back? Or, did he just vote “present” on that bill - I can’t recall…
Obama triples the national debt in 100 days and then says it “‘unsustainable”
And the dems called Bush stupid for the debts he racked up…
He was stupid for racking up those debts.
I wonder if Obama is doing the quintessential pre-bankruptcy move of loading up on as much credit card debt as possible, hiding the toys as fully as possible, and then telling the creditors to suck it.
If international finance is going to collapse, it’s better to be the one who collapses it than the one caught in it, I guess.
Either that or he’s stupidly just realized he boned us with more debt.
Please, Obama inherited this problem(s) after eight years of Conservative Republican governing!!!
Please…
He inherited a mess and has done not one thing to repair the damage. He is in fact creating a much more severe problem…Period.
Knock it off you two! If you’ve been in the presence of a politician you know they’re mostly brainless aliens.
They all suck.
So wrong! Obama inherited nothing, but the Iraq war and the debt accumulated caused by the war. As for the financial problems we have now, wasn’t it Obama, back on the campaign trail, that said he was all for bailing out AIG and the banks. he also had to vote on all the Bush spending…or do we forget, its the congress who passes the budget. The democrats were in charge of the last Bush budget passed.
If Obama had done the right thing, his vote would be used as evidence of his disdain for the existing financial chaos. he voted present.
Frank, Dodd and Pelosi are responsible for this nightmare, they had the control. How quick we forget, the democrats, backed off on SEC regulations, forced banks to lend to unqualified people and took hugh sums of money from Goldman and AIG.
I still believe Putin should be president of the US. The entire congress would be in prison, somewhere in Siberia.
He has trippled the debt??
So the national debt is now 30 trillion?????
Remeber GW doubled the national debt when times were good, he cut taxes for the richest Americans who were already getting a larger and larger piece of the GDP pie. I’m against the bank bailouts but all for spending to create jobs. No spending could cause the deficit/GDP to rise even more.
I thought for a minute it might have been OK if they used about a quarter of the dough to prop up the FDIC and then let the “bad banks” fail. But then you’d be rescuing the wrong people, I guess.
You gave it thought for about 59 seconds more than any of our nation’s leaders.
Weird..for some reason I had this silly notion that Congress actually appropriated funds and passed the budget…silly me.
Yes, the president has veto power, but really, people…get off it. The president isn’t the king of the united states. They all suck, they’re all corrupt, and none of them are fully responsible for this mess. The budget couldn’t be passed without passing both houses of Congress and getting signed off by the President.
Rather than arguing “Bush” vs “Obama”, you should be arguing about “Democratic congress” vs “Republican congress”.
Sigh
Obama triples the debt and then says he will cut the debt in 1/2.
That’s like me saying I will go on a diet of steak, beer and cake for the next year and gain 50 lbs. But it’s OK you see because I will go on a diet next year and lose 5lbs a year for the next 3 years. And magically I will be skinnier in year 4 than I was today.
The sad thing is that a good chunk of the population actually thinks he’s doing a good job. I don’t blame Obama for doing what he’s doing. He is what he is and will do what he will do. But for the life of me I can’t see how the very same people who 12 months ago were screaming about debt this and debt that now think Obama’s spending spreee is just super duper.
This whole “financing the debt by borrowing from other countries” is a total myth that needs to be put to rest. Currently only about 10-15% of our debt comes from other countries. 85-90% of it is internal.
Debt increase per month: ~$150B
Debt purchased by furreners per month: ~$20B over the last year
Myth
I wasn’t aware of that. Where does the money come from, then? Money borrowed from social security?
I’m not really sure, but I would imagine U.S. treasury purchases are from various sources:
- SS, as you mention
- The Fed ($300 Billion this year)
- Private investors and/or pension funds etc
There are lots of Pension, IRA, and 401k “guaranteed” funds, and now even lots of ETFs I believe, that buy treasuries. That’s part of the reason why I think that:
A. There won’t be any significant market rally anytime in the near future; everyone’s been shifting money into guaranteed funds that have been feeding these treasury purchase. It’s not feasible to shift them back though, due to B.
B. If there were an attempt at major shift out of treasuries, the yields would absolutely go through the roof, and general interest rates with them. This is just simply because there wouldn’t be enough buyers for the massive amount of treasury bonds flooding the market right now due to the $1.X trillion annual deficits in 2009 and 2010.
Thanks for the response, packman. Good to keep in mind.
Regarding B, are you saying that as soon as that happened, people would shift back into Treasuries for the guaranteed, risk-free return? Obviously (well, as of right now), the gov’t can stop people from moving out of treasuries. So, while I agree with you on the effect that would have, I don’t see what mechanism is in place to necessarily stop that from happening.
I would say that the mechanism is the markets themselves. There’s never a sudden simultaneous shift by all investors from one asset class to another; it’s gradual.
I think there has been a significant shift the past couple of months, which is what’s been driving this rally, and also driving treasury yields higher. There was a big pop down in yields on March 18th due to the Fed announcement - but even with that push down yields are still much higher now than at the stock market bottom in early March.
This can’t continue though. Note that mortgage rates have also gone up the past few weeks - back above 5%. If rates continue up - it’ll kill the housing market even more than it’s already killed (as such).
So something has to be done to keep rates down. This can be one or both of two things:
A. Do something to scare people again to pull money out equities and back into Treasuries. We’ve actually been seeing this the past 4-5 days. I’ve been amazed at how obvious the “top calling” on this rally in the MSM has been this week. Maybe it’s coincidence, but it sure seems concerted to me.
B. Do some more QE to push down rates. This however will further exacerbate the inflation problem (eventually).
P.S. caveat - I’m not an economist - so I may not really know what the h*** I’m talking about.
I did sleep at a Motel 6 last night though.
I did sleep at a Motel 6 last night though.
I stayed in one of those recently on my drive to Seattle, when the interstate was shut down in OR (due to snowpack. Of course, in the morning it was open after “clearing” it, and was a much more dangerous sheet of ice, but I digress).
It’s been a long time. I was surprised how “bare bones” it was, but in a pinch it’s a good deal.
I stayed in one of those recently on my drive to Seattle, when the interstate was shut down in OR (due to snowpack. Of course, in the morning it was open after “clearing” it, and was a much more dangerous sheet of ice, but I digress).
It’s been a long time. I was surprised how “bare bones” it was, but in a pinch it’s a good deal.
LOL - yeah when I toured the country with my parents back in the early 80’s we stayed at one almost every night - almost every one in the country was $19.95 a night, and everyone was identical, down to the same blanket patterns, same pool, etc. That was before they got super-scummy list most are now.
Good times.
I’m with Packman
cash, treasuries over the last week, and some short.
The only stock I own is a utility.
Have you ever bought a US Savings bond? Well then you owned part of the debt.
Nope, I never have, actually. I had some bought for me though. I think I have one lone series E savings bond (EE?) in my firesafe…I think when I looked it was still earning 6.5% interest, so I’m hanging on to it as long as I can
I’m starting to think that Obama has a personality disorder.
Classic narcissism, as is the case with most politicians.
en.wikipedia.org/wiki/Narcissism
The other day there was a thread about common interest communities, prompted by a post re: the FL trailer park that houses sex offenders:
Enter the Boomers.
“You’ve got some of these alums that have been extremely loyal for 40 years, and they still go to football games and wear the sweatshirt,” he says. “Now they have the opportunity to retire and spend the last years of their life there.”
jeebus get a life
Now, now. A lot of universities rely on those rabid fans to make big fat donations.
Now more than ever — almost every school has a 20%+ endowment loss to make up and/or serious state budgetary shortfalls. May the rabid alumni set them free …
Right on. There’s just ’something’ sort of… I don’t know, “chicken-hawkish” about old dudes pretending to be interested in the game when they’re really there just to ogle the “young stuff”.
IMHO
I still bleed blue and white. Always will. We are!…
phillygal,
Too funny! “Assisted RV Living”! Just too much, party on Dudes!
“We don’t have a golf course, but we have a cabaret.”
And you won’t even have to teach anyone the lyrics to the show tunes!
I don’t think the idea of themed retirement communities is all that bad, if it keeps the seniors active.
Of course I think the college thing is silly, but I see that there is a huge portion of the the US population that clings to their degree and the college they graduated from is if it’s the only thing in their lives.
I can’t criticize. I don’t give a flying fork for Harvard U, but I put a large amt of energy every year into conducting a reunion of persons who went to a certain summer camp in the 40’s 50’s and 60’s. The past is part of the present.
I was very hopeful about the flue. I thought it may kill a few million here and there; reducing the population would be a good start to solving some of the problems.worlwide. (specially in China & India)
Not only is your death wish for millions of people sick, but it is also foolish. Anyone with half a brain could tell the swine flu evoked an overreaction by both politicians and the news media.
Merely an exercise in manipulation of the masses.
Who, who, who!
The 1918 Spanish flu that killed relatives on both sides of my family started out as a very mild variety flu; about a year later it came back from overseas to bite them in the rear. My grandmother told me stories of how her dogooder husband would take care of ill neighbors, sometimes finding whole families dead within hours of infection; she always blamed him for bringing it home to kill her 1 year old within 24 hours of showing any symptoms. So, call it overreaction or foolishness if you want to; flus are designed to morph, and, they just love crowds.
My grandmother told my father that on Monday you’d see someone on the street and they’d look fine, on Tuesday you’d hear they were sick, and on Wednesday they’d die. Not just whole families died, whole blocks died. She claimed that the real death toll was never made public.
That being said, our media is pretty quick to ‘chicken little’ any situation. Remember SARS? The Bird Flu?
Those flue things are dangerous! Few people realize that they need to be cleaned regularly.
I’d be more worried about the in-house hospital staph bacteria and MRSA pneumonias than this “swine” flu.
“Bugs..they’re everywhere..they’re everywhere!”
“Man, I HATE bugs.”
That’s some bad Juju dude. Don’t play golf during a thunderstorm anytime soon…..
Charity begins at home. The gun is in the nightstand on the right side of the bed. Have a great day.
+1, Natalie. I love these people who go on about over-population but somehow exempt themselves from being part of the problem.
-1, Natalie. He never said he was exempt from the herd-thinning. And the ones who don’t acknowledge that there could be a problem are the most likely to have selfishly caused it.
So your only solution to over-population is mass extermination? You were just being sarcastic, right? Do you honestly believe that only ppl that would be against mass extermination are those that over populated the planet? I know you were just kidding. The sad part is that some ppl actually have those views. Let’s just be happy that they don’t normally get put in positions of power or decision making.
Pooh, I did my part by failing to reproduce. So I feel completely entitled to point out that the burgeoning human population is the world’s one and only environmental problem.
FWIW - anyone who has two kids or less actually is contributing to population reduction (includes two kids since occasionally one dies before reproducing).
(BTW - I have two kids
)
“…human population is the world’s one and only environmental problem.”
Here’s my take: there is no such thing as “problem.” Since mass, energy, blah, etc. is conserved, any arrangement of atoms here is, uh, “fair,” be it nuke, Buckeye fan, Elmo, alloy…. remember, there are mushrooms growing in Chernobyl.
Enjoy your atomic configuration as conditions allow.
Enjoy your atomic configuration as conditions allow.
Life. The whim of several billion cells to be you for a while.
“I did my part by failing to reproduce.”
Martyr status only arises from conscious sacrifice, not lack of opportunities.
Sorry I couldn’t resist. I know nothing about his opportunities, and it wasn’t personal, just a trailing thought.
“…Enjoy your atomic configuration as conditions allow.”
Mugster, come on…you’re a “Trekie” ain’t ya! …Mr. Spock
Don’t blame overpopulation on reproduction. Blame it on modern medicine that allows people to live longer.
I wish I could be that sharp.
Well done Natalie.
“I wish I could be that sharp.”
You are, Muir. You’re just to polite to risk crossing the line from ZING! to inappropriate.
Aww geez, “too polite”
Troll.
Roidy
So long as you aren’t one of the dead, right?
I just posted a long (data-supported
) tinfoil hat theory about plunge protection of San Diego home prices at the end of yesterday’s bits bucket, in case anyone is interested in that sort of thing. Not sure if it has gone through the filter yet…
I am wondering if Ron Paul’s proposed audit of the Fed comes to pass, will they take stock of the various price manipulation interventions the Fed has in play?
General question about the Fed’s operations:
Is it “legal” for them to attempt to peg whatever asset prices they choose to peg to the dollar?
In case I was unclear, the quotes around “legal” reflect my supposition that the Fed’s operation does not answer to the U.S. constitution.
The Fed can do whatever it wants and answers to no-one.
One can rightly ask if anything they do is legal, but when it comes to Bubble-blowing, I expect them to try everything. We’re already at ZIRP, but the helicopters haven’t really gotten into gear - yet.
Much of what the Fed does technically isn’t legal, meaning it’s far beyond the scope of their authority as granted via the Federal Reserve act.
PB,
I’ll make time to read that. Should we share it w/ Rich Toscano at Piggington’s to see just how much ‘tin’ is in that foil?
I find that Platinum foil works much better. It’s… a tad pricey though, so only for the *really* serious CT’s.
I was thinking that the Audit the Fed bill was just a mechanism for educating legislators about fractional reserve lending and the true nature of the Fed. Even if that’s all it accomplishes, it would be a good success.
I’d be elated if it went far beyond that minimum level of inquiry. In particular, I would like to know:
1) How do they decide whom to make the beneficiaries of their interventions, and whom to screw?
2) What interventions do they use to fix prices, beyond the commonly understood setting of the Fed Funds rate, and the recently announced measures to suppress l-t Treasury bond yields? For instance, do they target the stock market and housing market?
3) Many economists at the Fed have a strong dislike for J K Galbraith, who was known as the U.S. “price czar” during WWII. Do they currently employ similar measures to what Galbraith used to fix prices, back in the day when it was not quite so unfashionable to rig markets as it is presently?
I keep flashing on Alan Greenspan’s little comment “You can’t legislate human greed.”
Yes, you can. We have laws against all types of base human impulses and actions from our uglier natures. We prohibit murder, rape, robbery (except by Wall Street), tax evasion, swindling, inappropriate property development, truancy, etc.
Ok, that being said, we better figure a way out of this disaster that actually works. We are running the risk of having a (or several) very serious regional war(s) as a result of this collapse. Not only is Asia in trouble but Europe is overtly collapsing as well. Eastern Europe and the Balkans are becoming more unstable. China is not what we are being told. There are 1 billion people who are shutout and another 150 million who were in and are now out. China is not Shanghai or Hong Kong.
We, the United States are running a higher risk of internal terrorism and revolt. Too many people are having their lives ruined either by personal choices or actions by those external to them. This makes people angry. Very Angry.
Housing has not bottomed, and neither has the job market. There is a lessening of job losses from “Armageddon” levels to “Fall of the Roman Empire” levels. I guess that’s improvement. The same is said of the housing market although I don’t believe this. My problem with both is that there are always upticks and down ticks in data any general trend.
Green shoots? Are you sure that “oo” is not a typo? That what was meant was an “i” but the “o” was a little sticky?
I still say wash out the housing markets, the banks, and put a leash on Wall Street. “Propping up” is not working. This is too big and can’t be fixed like that.
Roidy
<>
Wasn’t that Mr. Mcgoo’s job?
When will people see the federal reserve scam for what it really is….a ‘legal’ way to transfer wealth to a small group of elite via the issuance of too much credit and the ability for that group to collect the collateral when the credit holders inevitably defaults.
This will be the third time in the history of our country of this occurrence.
Google 1st and 2nd bank of the United States.
I keep flashing on Alan Greenspan’s little comment “You can’t legislate human greed.”
Yes, you can.
______________
The ‘Maximum Wage’. Tie to company performance or the salary of the lowest-paid white collar worker. Only applies to those who are hired/appointed. Those who start their own companies are exempt from the maximum wage.
“maximum wage”
That’s a possibility. A better approach, IMO, is to ask how it is that the supposedly “free market” winds up paying executives so much more than they’re worth on any objective measure. Could it be that things would get done faster/better/cheaper by small businesses, rather than by artificial government-chartered monopolistic conglomerates? Could it possibly be? And if so, what would be the best remedy? No points for saying “more regulation.”
Thanks for bringing this up, LehighValleyGuy. Corporate entities certainly aren’t a part of a true “free market”.
Perhaps if the individuals at the helm were civilly liable for the actions of the company (couldn’t hide behind corporate personhood) they might actually be worth the big $$$ they get for the risks they are taking. Otherwise, it’s just another government construct that bastardizes the supposed “free market”.
I suppose I should say criminally liable as well.
Maximum wage is good. So is regulation, especially antitrust. Break them up if they get too big. No more “too big to fail” cr@p.
You just need it on publicly traded companies. You want to be able to issue stock? Maximum Wage applies to you.
Man, I’d love to see the pandemonium if that got introduced as a bill.
Some legislators would have a chance to actually earn my vote. I’d love to see a bill like that.
Absolutely agree with that!
I’ve thought of this, too. Rather than a cap, however, I’d rather see a ratio: execs can make as much as they want, but it can’t be more than XXX % higher than the wage of the lowest paid person in the company. It would be a good way to tie the greed and megalomania of those at the top to tangible benefits to the rest of society. If the CEO makes a billion a year, then the janitor is getting six figures.
And no outsourcing or “independent contractors” (who really work for the company for all practical purposes, but are “independent” as a means to weasel out of giving them benefits) allowed, so comapnies can’t weasel around it.
The best remedy
1. Create a new tax bracket for 1 million and up
2. Make all forms of compensation taxable at income tax rates. Unless CEO agrees to take stock each month that has to be sold in exactly 5 years to make management think long term instead of how do I manipulate earnings so that I can sell my stock at an inflated price. You could create an even lower tax rate for compensation if they were paid in stock that could only be sold 3-5 years after they leave the job.
“And no outsourcing or “independent contractors” (who really work for the company for all practical purposes, but are “independent” as a means to weasel out of giving them benefits) allowed, so comapnies can’t weasel around it.”
As a someone who has contracted and hires contractors all the time, I say BULL SH*T to your statement. Many years ago I quit my job and went indy. I did the same work yet made 2-3 times the income. Oh I didn’t get benefits, oh, no, how did I ever get by?. Here’s how. Instead of making $80K a year and receiving health insurance, I made $200K a year and bought my own health care for $200 a month, which was really $150 a month since it is fully tax deductible.
So let’s see an extra $120K a year income with an added $2K a year in health insurance costs. Yeah you’re right, those companies sure are screwing over the little guy on that deal!
The reason companies don’t wane employees is simple. It’s flexibility. If a 3 month task needs to be completed, it’s much more efficient to hire someone for 3 months pay them a lot of money per hour and send send them away than hire a full time employee that will be there for years to come with nothing to do. I have no employees, but at any given time I have 3-5 contractors working for me.
Get out of the 1950s mentality where you graduate from college, work at IBM for 40 years and get a watch at the end. That ain’t happening anymore.
But they said publicly traded companies…. not private contractors subbing out work.
I think he was refering to warm body jobs. Think security, food service, lawn service, etc., etc.
These jobs are outsourced so they do not have to provide benefits or worry about unions. Notice how small businesses are always excused from any employee regulations that are beneficial to the employee?
Its more than that. These days I see more of the “temp” badges at work than the full time employees badges. We just fired one of our on site outsourcers and replaced them with another one. The temps were invited to apply for work with the new outsourcer (at about 20% lower) pay.
Sure, contracting can work for you if you have a hot specialty that is in short supply and high demand. But for most people being a temp means low pay, no benefits and no chance for advancement.
“Sure, contracting can work for you if you have a hot specialty that is in short supply and high demand. But for most people being a temp means low pay, no benefits and no chance for advancement.”
Boo hoo. So we have to legislate that companies hire these people full time and pay them benefits? The reason they are in dead end jobs is because they produce no value for the employer, be it temp or full time.
If someone has a marketable skill, they will make good money, whether full time or contracting. Conversely, if one has no skills and nothing to offer an employer, they will make min wage whether full time or contract.
I’ve worked in some companies where there were “temps” (as you call them) at the VP level. Sure they were long term temps, 12-24 month contracts, but they were temporary workers nonetheless.
Again, I say wake up to the new realities. The days of 40 years with a company, starting out in the mail room and working up the ladder to middle management are long gone. You can either adapt and become one of those “temp” VPs or you can sit around and cry about how unfair like is.
So KJ, in a society whose economy is 75% consumer driven, are you saying the consumer shouldn’t make a living wage because they don’t have whatever esoteric skills of the month is required?
And no, KJ, most people are NEVER going to be rocket scientists, pro athletes, famous movie stars, or captains of industry. But it’s those “most people” who are the engine our economy.
When falling wages meets higher costs, what happens?
As for the days of company lifers, that was never really the case to begin with. However, perhaps during your college years you may have been introduced to the concept of “stability?” It seems to be something desired in most sciences and technologies.
Changes for change’s sake or too quickly is often known as “anarchy.” Something usually NOT desired.
Love your post, eco!!!!!
Eco,
What you are proposing was tried for 70 years. From each according to his ability, to each according to his need. Didn’t work then, will never work.
Change is always happening. Those who embrace it prosper. Those who fight it fail. No better proof that the wasteland that is Detroit which is still stuck somewhere in 1965 in its economic outlook.
ACH,
Unfortunately, that’s a fairly accurate assesment. Well said.
I stumbled upon some fairly damning evidence yesterday whilst walking the dog and running into our local postals carrier. ( She knows pretty much -everything- that goes on around town )
She mentioned that the FDIC has TEN auditors working 8 hours a day to rifle through the books of our LBF ( Local Bank Failure ) They’ve been there since late Feb. Additionally she noted that the (former) bank prez. bought a home shortly ‘after’ they rec’d their Cease & Desist Order and paid CASH!!! Since the seller was a “friend” of hers ( read ’source’ ) it was revealed the banker didn’t even so much as dicker on the price! Full Price Offer, no questions asked!
Can you say ’sheltering assets’? And this is what’s so frustrating about REIC’sters. Given the snail’s pace RE transactions unfold, along w/ banking enforcement, there’s always ample time to squirrel away assets and cover your tracks. My guess is that the Officers & Directors are peeved just based on all the fraud THEY know of where people have gotten away scot-free!
“We, the United States are running a higher risk of internal terrorism and revolt. Too many people are having their lives ruined either by personal choices or actions by those external to them. This makes people angry. Very Angry.”
Roidy, I share your concerns here. I’ve been saying for a couple of years that my biggest fears in this downturn are the geo-political ones: angry, hopeless, desperate people are far more easily swayed to support xenophobia, fascism, and the like.
I hope it doesn’t get that ugly, but I fear that it may.
You’ll like this one then. He raises the hair on the back of my head and gives me cold chills as I listen to this. We really shouldn’t let the super rich run things. I don’t think they are any more or less corrupt and self centered than you or I… but that is the problem! The sheer amount of wealth opens the door for a huge amount of damage just because of the effect of scale.
http://fora.tv/2009/04/14/Jeffrey_Sachs_Global_Effects_of_Crisis#chapter_01
Roidy
“I keep flashing on Alan Greenspan’s little comment “You can’t legislate human greed.”
ACH, as I keep telling people, the PTB will often tell you exactly how they are going to screw you… you just have to pay attention and understand that they REALLY mean what they are saying and insert the proper word, in this case “You can’t legislate OUR human greed.”
Another way to interpret it is “WE can’t(or won’t) legislate OUR human greed.”
You get the picture.
What they really mean is “You can’t legislate OUR human greed, you peasants.”
I am sure we have been over this before, but what is wrong with the CPI? How could 40 pct of the index be housing, and house prices fell at the fastest rate in American history over the fast twelve months (as reported by none other than the NAR), yet it picks up almost no deflation?
Wall Street Journal
* MAY 15, 2009, 8:34 A.M. ET
Prices Suggest Little Deflation Risk
By BRIAN BLACKSTONE
WASHINGTON — Annual U.S. inflation measures plunged deeper into the red last month, as falling energy and food prices brought consumer prices down by their fastest 12-month rate in over a half century.
Still, data for April continue to suggest the risk of sustained price declines known as deflation remains remote, since the drops are still mostly centered in energy and energy-related products.
…
Housing, which accounts for 40% of the CPI index, fell 0.1%. Rent increased 0.2%, and owners’ equivalent rent rose 0.1%. Household fuels and utilities prices slid 1.7%. Lodging away home advanced 0.5%, partially reversing some of its steep price decline in previous months.
“prices fell at the fastest rate in American history over the
fpast twelve months”My Freudian slip is showing.
They don’t actually measure house prices for that, PB. If they did, Social Security payments would have gone through the roof during the bubble. Owner’s equivalent rent is some mystical calculation that ignores prices and mortgage costs. Instead it probably measures the average cost to paint a focal wall that month.
Today’s WSJ, page C1, has the answer to your question PB. They must be psychic. Basically it says that the cost of housing in the CPI doesn’t measure the cost of buying a house (that would make too much sense). It measures owner’s equivalent rent, the cost if that owner rented the same house. So because rental prices didn’t go up anywhere near as much as house prices 2000-2006, the housing part of CPI didn’t go up that much. Now, as people get foreclosed on and have to move into rentals, rental prices are staying steady and the CPI reflects that, instead of the fact that house prices are tanking.
My takeaway from this is that the housing part of CPI is completely worthless.
Arguably, this isn’t unreasonable. People CHOOSE to become FBs rather than renters. By its very nature purchasing a durable good like housing instead of renting IS always a speculative decision. In a normal market you’re speculating more on the future value of the equivalent rent that you will secure by purchasing instead of renting, but it is always an investment decision.
The problem IMHO is that you really CAN’T get a good number for OER. In a normal market, the option of ownership is only available to the reasonably prudent, and advantageous only to the fairly settled, because you need to qualify for a mortgage, and hold for several years to reap any advantage. Becuase of this, in aggregate, the rental stock of housing is different from the stock of housing designed for owner/occupiers. So there’s simply NO good way to get OER for for owner/occupied housing.
“Becuase of this, in aggregate, the rental stock of housing is different from the stock of housing designed for owner/occupiers.”
Another reason this is not possible has to do with the shifting heterogeneous composition of rental and owner-occupied housing. In a ‘normal’ housing market, one tends to find the rental housing at the low end of the quality distribution and the owner-occupied housing at the high end, with little overlap, as most anybody with sufficient means tends to prefer owning a higher-quality home over renting a lower-quality domicile (e.g. multifamily home or apartment).
During the housing bubble mania, the incursion of flippers into suburbia severely perturbed this traditional relationship between the low and high ends of the market, as flippers and specuvestors made serious incursions into traditionally-owner-occupied territory. Case in point: The home we rent was owner occupied from the time it was built in the early 1980s until a real estate investor bought it in 2004, just before we started renting it. Nowadays I see plenty of listings for high-end housing with rent offers above $36,000 a year. I don’t know how many of these stay perpetually vacant.
Seriously, if they would have counted home prices in CPI, they would have stopped this whole bubble from forming, as they would have been pushed to raise rates starting far earlier, and far higher.
But think of the bankers!
How could they have gotten rich from the Bubble AND the Bailouts if we never had a Bubble.
“Rochester-area billionaire Tom Golisano said he’s had enough of New York’s high taxes and is changing his residency to Florida — where he figures he’ll save a stunning $13,800 each day in personal income taxes.”
http://democratandchronicle.com/article/20090515/NEWS01/905150342/Golisano+cites+high+taxes+as+reason+for+move+to+Florida&referrer=NEWSFRONTCAROUSEL
Rochester could use one less fat bloated weenie. Good riddance.
I’ll have to respectfully disagree. Tommy does a lot for the town and kept the company there against virtually every consultant and “analyst’s” better advice.
They are an anchor employer and from what I’m told, he’s the kind of guy you can run into at the bowling alley and buy him a beer. ‘My’ grudge w/ ADP/Paychex ( other than screwing up your check ecan-and-every-time ) has been the practice of withholding. These payroll services companies basically become their own bank!
Back when this thing started I was amazed ( w/ money markets going under ) that all of the repo agreements etc. didn’t blow up in their face? Or more to the point, the American Worker’s face.
Before he became GOLISANO, he came to the movie theater where I worked as a teen… he was always a nice guy.
I can’t blame him. Frankly, I’m surprised he stayed there as a “resident” that long. I thought every rich person knew you need to have a S. Florida house.
Or Texas or NH.
Good riddance Goli….. He’s the same corporate thief who tried to buy the NY governorship back in the 80’s…. or whas it the early 90’s….. Some time back then. Nevertheless, the tax squealin’ by these gazillionares won’t work.
Can we at least agree there are sexier things in life than processing payroll..? It’s thankless job. ‘My’ problem was they always handled my withholding incorrectly.
Additionally, they always wanted YOU to refer THEM clients and dangled their huge stable like candy. You just knew they were never going to refer you jack! ADP was worse, you’d feed them referrals for payroll services and then they’d say;
“You made ‘your’ pitch and we made ‘ours’ and hey, let the best man win!” ( Yeah, f@ck you )
OK, oracles of the HBB: which direction will the market go today? I’m taking a day off from work, drinking waaaay too much coffee (hi Rancher!), and watching the bouncing stock ticker. It’s raining, and even I won’t garden in the rain.
I predict the Dow will increase if it doesn’t decrease or remain unchanged. As long as those two items don’t occur, then the sky is the limit.
Roidy
See, this is why I hang around here. Brilliant analysis.
DOW 25000 Baby!
Green palm fronds all over the place!
A virtual primeval eoraptor-infested forrest.
Smoke ‘em while you have them!
Could I have a $98 hot dog and $150 beer to go with that 25000 Dow?
“Could I have a $98 hot dog and $150 beer to go with that 25000 Dow?”
Hey SDGreg, what”… makin’ vacation plans to tour Wall Street & go to a Yankees game?
“Hey SDGreg, what”… makin’ vacation plans to tour Wall Street & go to a Yankees game?”
At least I’d get to see a .500 team. Nothing like blowing a rent check on a box seat to see a mediocre, grossly overpaid team. Maybe the Yankees do have something in common with Wall Street, except the Yankees take a rent check and Wall Street takes your retirement.
“Forecast for tonight: dark” The weather report from George Carlin
I think that the appropriate quote on this board is “But the radar is also picking up a squadron of Russian ICBMs….So I wouldn’t sweat the thundershowers.”
“OK, oracles of the HBB: which direction will the market go today?”
http://tinyurl.com/o2cmyj
Hahahahaha! That’s great.
Hey mugster, at least you’re near a fire hydrant!
If you do a complex Elliot Wave Theory analysis you will know which way the market will go today. At the end of the day, if your analysis turns out to be wrong, then you will easily be able to figure out where you were wrong, tweak the variables to fit the new day’s worth of data, and then go back in time to this morning and comfortably know which way the market will go. Be careful, that last step is a doozy.
If the deer are eating the new leaves off the
orchard trees, the market is going to go down.
If the geese are sh&%$^ing on my lawn, the
market will go up..
Never fails.
The famous goose p00p indicator — I love it. Sounds like the mysteries of horseracing.
Crisis is over…Tarp everywhere…
Don’t forget the part about where you misinterpret the data and realize you’re still in wave 2, 3 or 4 versus wave 3, 4, or 5. Seems to be a common theme with Elliot Waves.
Don’t know about today, but I’m going to say it’ll be lower in six months. Of course, this is just wishful thinking, as I cling to the theory that “cheap” means the 1974 bottom, inflation-adjusted. That is to say, about 3000 on the Dow.
az
I would like that also.
But, wouldn’t that put the Fl house at $15K?
Not that I think both of us would not sacrifice a bit to see some sanity in our lifetime.
Troy’s celebrated solar house left in dark
Facility touted as next big thing still shut
Shawn D. Lewis / The Detroit News
Troy — It was supposed to be a shining example of the green movement — a completely independent solar-powered house with no gas or electrical hookups.
Seven months ago, officials gathered for a ribbon-cutting ceremony to celebrate the $900,000 house owned by the city of Troy that was to be used as an educational tool and meeting spot.
But it never opened to the public. And it remains closed.
Frozen pipes during the winter caused $16,000 in damage to floors, and city officials aren’t sure when the house at the Troy Community Center will open.
“It’s not safe right now, and there’s no estimated opening time because it depends on when we can get funding,” said Carol Anderson, director of the city’s Parks and Recreation Department.
That surprised the Oakland County Planning and Economic Development Department, which advertised tours of the house for its Tuesday Oakland County Green Summit.
“No, I didn’t know anything about it,” said Steve Huber, spokesman for county planning.
So they budgeted $900k for a ‘house of the future’ attraction, but didn’t budget anything for upkeep? How’d they think that was going to work out?
So they budgeted $900k for a ‘house of the future’ attraction, but didn’t budget anything for upkeep?
This sounds like many households across America, the future is now.
Housing only goes up, so surely the House of the Future (unaffordable to Workers of the Present, much less those of the Future), would clearly appreciate at an annual rate of 1,000% so they were just planning on flipping it before winter.
Reminds me of a Larkin cartoon where the midnight cleaning guy unplugs the refrigerator in a cryogenic preservation room. Priceless!
http://www.nytimes.com/2009/05/15/business/economy/15norris.html?ref=business
“Herbert and Marion Sandler, who controlled World and served as its co-chief executives, were among those who deplored the excesses of their competitors. Their loans, they said, called for minimum payments to rise by just 7.5 percent a year, so people would not face a sudden payment increase that could throw them out of their homes if the mortgage could not be refinanced. All that was true. But since the loans had no provision to stop the amount borrowed from continuing to rise even after the value of the home fell sharply, the loans allowed for the possibility — now all too real — of creating a class of zombie homeowners with no real stake in the homes they occupy. Only $325 million of the loans — less than a third of 1 percent — will reset by the end of 2012.”
“Wells Fargo has written the value of the pick-a-pay portfolio down by about 20 percent, and is offering to restructure some of the loans. But many of the owners may have no reason to seek such a restructuring. It would take a big concession to lower their monthly payments, and an even larger one to get the principal value of the loan down to the current value of the house. The result may be perverse: a prolonged foreclosure crisis, with Wells Fargo watching helplessly as the condition and value of some houses depreciate for years to come.”
“since the loans had no provision to stop the amount borrowed from continuing to rise even after the value of the home fell sharply”
And why should they? They’re paying less than the interest on the principal, so the overall amount they owe goes up. Basic finance. What does the value of the home have to do with it?
Now that Herb and Marion are billionaires… nothing.
Just a little heads-up that the Bailout Bubble is in full swing. All those hundreds of billions and trillions being pumped into “too big to fail” prop- up, PPT price-keeping and rescue plans is what makes up the “Bailout Bubble”. As usual, the MSM cannot even identify, illuminate, or isolate any aspect of it as it happens.
This is necessary so that the phrase “no one could have seen this coming” is available for future use by the so-called regulators and politicians.
But it WILL eventually pop with the ususal catastrophic results…
“The Worst Is Yet to Come”: If You’re Not Petrified, You’re Not Paying Attention
Posted May 15, 2009 09:31am EDT by Aaron Task in Investing.
The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was “preposterous” to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.
“We’re in a complete mess and the consumer is smart enough to know it,” says Davidowitz, whose firm does consulting for the retail industry. “If the consumer isn’t petrified, he or she is a damn fool.”
Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: “The worst is yet to come with consumers and banks,” he says. “This country is going into a 10-year decline. Living standards will never be the same.”
This outlook is based on the following main points:
* With the unemployment rate rising into double digits - and that’s not counting the millions of “underemployed” Americans - consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity.
* Rising unemployment and the $8 trillion negative wealth effect of housing mean more Americans will default on not just mortgages but student loans and auto loans and credit card debt.
* More consumer loan defaults will hit banks, which are also threatened by what Davidowitz calls a “depression” in commercial real estate, noting the recent bankruptcy of General Growth Properties and distressed sales by Developers Diversified and other REITs.
As for all the hullabaloo about the stress tests, he says they were a sham and part of a “con game to get private money to finance these institutions because [Treasury] can’t get more money from Congress. It’s the ‘greater fool’ theory.”
“We’re now in Barack Obama’s world where money goes into the most inefficient parts of the economy and we’re bailing everyone out,” says Daviowitz, who opposes bailouts for financials and automakers alike. “The bailout money is in the sewer and gone.”
Well, I noted with some pleasure this morning that TARP has suddenly been extended to six major insurers, including Hartford and Prudential. The reason why I was pleased is that a couple of months ago I bought bonds in both companies at prices like 65(cents on the ultimate dollar). We have one HBB poster here who is always complaining about “the bailout of the bondholders,” to which I once retorted that anybody with $1000 can be a bondholder. Sorry if I sound smug today. Don’t forget I’m the one who lost many tens of thousands on the Iceland debacle.
“Don’t forget I’m the one who lost many tens of thousands on the Iceland debacle.”
How?
I forgot.
In October 2008, the effects of the 2007/08 global financial crisis brought about a collapse of the Icelandic banking sector. The value of the króna plummeted, and on 7 October 2008 the Icelandic Central Bank attempted to peg the króna at 131 against the euro.[4] This peg was abandoned the next day.[5]
http://en.wikipedia.org/wiki/Icelandic_kr%C3%B3na
“Don’t forget I’m the one who lost many tens of thousands on the Iceland debacle.”
That’s such an awesome thing to say. I hope someday my friend’s and I are drunk around a campfire and someone blurts that out.
“Sorry if I sound smug today. ”
You have a right to sound smug! I salute your foresight, az_lender… Nice work.
Rather than b!tching about the bailouts, people should be trying to think ahead of the curve and divine what segments will benefit. I know I’ve benefited by having the Fed prop up the banks that have been on the other side of some of the swaps owned by the ETFs!
“Rather than b!tching about the bailouts, people should be trying to think ahead of the curve and divine what segments will benefit.”
VFICX because corporations can’t print their own money but have to work hard to pay it off
The dollars I’m witholding from this economy are my “no confidence” vote in my local, state, and national gov’ts.
I hear ya edgewaterjohn, especially after I saw that Calipers list of $ 400,000+ yearly gov’t pensioners…but I’m thinking such an attitude is going to make my “paper” greenbacks in my hand… turn into: sand
Ya, fight da good fight, til ya can’t fight no mo.
What else is there for us to do?
One of these years, these serial bottom callers are going to nail a bottom call.
Home price fall nears bottom, report says
Anderson Forecast sees recovery for S.D. County
By Dean Calbreath Union-Tribune Staff Writer
2:00 a.m. May 15, 2009
Although 2009 will be a “throwaway year” for San Diego County, with double-digit unemployment, growing office vacancies and declining retail sales, local housing prices will hit bottom this fall, heralding an eventual recovery, UCLA’s Anderson Forecast predicted in a report to be released today.
The Anderson Forecast, one of the state’s most followed teams of economic analysts, predicted that housing prices will start rising steadily by the second quarter of the year, starting with a rebound in the price of existing single-family homes.
“When it is generally perceived that selling values have reached a bottom, sideline buyers will enter the market and conventional home sales will dominate the real estate recovery,” UCLA economist Mark Schniepp said. “Reported selling values for homes will reverse, slowly at first, and then rise more convincingly.”
The median price, which is projected to average $325,374 this year, will rebound to $490,966 by 2013, according to the forecast. That would return the median price to its levels of early last year, but would be well below the inflation-adjusted 2005 peak average of $602,327.
CLICK!
…
“I’d like them to point out the last time the real estate market improved while unemployment was escalating upwards,” said Bruce Norris, founder of The Norris Group, a company in Riverside that specializes in real estate investments. “They’re making a prediction that something will happen that’s never occurred before.”
“That would return the median price to its levels…” that are somewhat / more or less / kinda sorta / …in alignment with the National family income.
Geez, I almost went to U.C.L.A.
“They’re making a prediction that something will happen that’s never occurred before.”
And one more that will be wrong. Quite a streak they’ve got going. Wishing prices are still astoundingly high and we’re going to hit the bottom this fall? No way! If nominal prices are 50 percent higher in 2013 than now, it will only be because the dollar is much, much weaker.
I would be surprised if nominal housing prices are aren’t lower in 2013 than now.
“They’re making a prediction that something will happen that’s never occurred before.”
They must not be Bayesian statisticians, as a Bayesian would tend to come up with a subjective probability in the neighborhood of 0 for something that never occurred before.
For those who are interested in keeping score, is the rosy outlook most closely related to a new record in the level of foreclosure notices last month, the Chrysler bankruptcy, GM stock hitting the lowest level since the 1930s, the just reported largest year-on-year decrease in U.S. home prices in history or the news that California’s budget outlook is “worse than expected”?
Economic Report
May 15, 2009, 10:32 a.m. EST
Consumer sentiment rises in May on rosier outlook
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — U.S. consumer sentiment rose in early May on a rosier outlook, though the data remained relatively low, according to a survey released Friday by the University of Michigan and Reuters.
The consumer sentiment index rose to 67.9, the highest reading since September, from 65.1 in April. Economists polled by MarketWatch had expected a May result of 68. The index hit a 28-year low of 55.3 in November.
Consumers’ expectations jumped to 69 in May from 63.1 at the end of April. Their views on current conditions fell to 66.2 from 68.3.
Recent readings of consumer sentiment have been on the rise due, in part, to optimism over the White House’s policies, a rallying stock market and a possible bottom for the recession. The data suggest that Americans “don’t feel that great about the present,” according to a research note from Ian Pollick, economics strategist with TD Securities.
“Rather, it is the future that they are more hopeful for…Likely, this is a function of equity market strength coupled with ‘green shoot’ stories seen during the month,” Pollick wrote.
Does the U.S. government have a ministry of economic propaganda, or is that task outsourced to the Fed?
Dear Professor Bear,
You ask, “Does the U.S. government have a ministry of economic propaganda, or is that task outsourced to the Fed?”.
It might be might be more accurate to say that the Fed outsources direct control of the population to the U.S. government.
Your comrade in futile resistance,
Cobatblue
Sheesh…and here I thought NAR was running the whole US Domestic PsyOps Program for the taxpayers last thin dime .
Why don’t we ask Rupert Murdoch or GE to investigate that proposition?
It sure is nice to know we are approaching a bottom with the consumer still tapped-out and their financial situation getting worse!
From Yahoo:
U.S. consumers’ mood rises in early May: survey
“Consumer confidence rose in early May as consumers became increasingly convinced that the economy is in its final stages of contraction, and paradoxically, that their personal finances would remain dismal and keep their spending at reduced levels for the foreseeable future,” the Reuters/University of Michigan Surveys of Consumers said in a statement.
Confidence remained shaky overall however, with the majority of consumers in early May reporting their financial situation had worsened due primarily to income declines, shorter work hours and lost jobs, according to the survey.
The confidence is bouncing because spring 2009 is a critical juncture. In the popular conscience, downturns should always end right about now. On April 30, this became the longest postwar recession.
3Q is when things are really going to get interesting on Main St.
Oh yeah. 3Q is when the recovery starts. My guess is there will be enough number fudging and massaging that the 3Q will show something that can be spun to success.
Now, sooner or later the truth will out and in a way that no one will like. I’m still not sure how this “economy falling off a cliff” feeling went away. It sure looks like it to me.
Roidy
“I’m still not sure how this “economy falling off a cliff” feeling went away. It sure looks like it to me.”
I think that we’ve reached terminal velocity and people are mis-interpreting the fact that our fall is no longer accelerating as some sort of positive sign.
The landing’s going to be a bitch though
I thought all the green shoots were going to save us!
Yep….come late September, things should definitely start to become….Verrry interesting!
“Recent readings of consumer sentiment have been on the rise due, in part, to optimism over the White House’s policies, a rallying stock market and a possible bottom for the recession.”
I have plenty of somewhat clueless coworkers that remain fixated on the stock market. If the stock market is up, all must be well. Never mind the fires all around.
Yes, the stock market is key to most Americans’ confidence. One almost wonders if this whole rally and “green shoots” nonsense was entirely fabricated.
Certainly, there is some funny business going on in the housing/foreclosure market right now.
Last night I phoned my sister in Mesa AZ. The house next to their SFH is REO, and the house next to that house is REO. Both were the result of job loses. One of the houses was supposed to close last month on a short sale (sister met the buyers). However just before closing the bank backed out.
Oh, my sisters hours have just be reduced from 40 to 20, as an office manager.
We have lived in Mesa, AZ for the last 15 years.
If you drive down Main St., Broadway, University, or Southern, you will see “Space Available” signs or banners at about 75% of the commercial properties. About 1 mile from where we live, at the intersection of ValVista and Brown, a commercial development of about 15 units that was supposed to be medical or dental or R.E. offices was finished in January. Not ONE unit has ever been occupied. So where there were a couple of acres of orange trees last year, there are empty office buildings today. There are brand new empty office buildings all over Mesa.
There are also SFH foreclosures everywhere.
“Construction” was one of the biggest industries here for the last decade or two. “Realtor” and “mortgage broker” were jobs that paid well. Not anymore. This is the 3rd largest city in AZ, and it is in an economic tailspin unlike anything its residents have ever seen before.
10+ people at my old school were tapped this week. Some of them are amazing teachers — there are some really horrible teachers with tenure. The whole system is messed up.
I have always felt the way tenure at non-college schools was a bad thing. In colleges, tenure is earned through publications. In K-12, it’s earned by keeping a seat warm. Really what they need to do is switch to a performance based system for those schools. When cuts need to be made, you cut from the bottom performers.
Man, I write pretty poorly. It must be all those crappy tenured grammar school teachers’ fault!
Here in Sacramento, some school districts are doing just that. But accurately measuring performance is a tall order. Whereas one teacher might have a class full of English speaking students, another might have a class where 80% of the kids are recent immigrants, with single parents, on welfare. The result is that teachers fight over the students most capable of scoring high on performance metrics, creating a nasty situation that has nothing to do with teaching.
Test every kid at the beginning of the year. Test them again at the end of the year. Measure the change.
If Class A (English speaking ) went from 85% to 82% and Class B (welfare immigrant moms) went from 25% to 45%, then the teacher in class B is doing a better job and deserves a raise/bonus while teach A needs to be told to straighten up.
You can get a little more creative too and factor out things like family income, English proficiency, etc and come up with a true measure of teacher performance. It’s not that hard really.
The problem with that is that there is a much higher turnover rate in poor schools.
You might start with a group of 20 or 30 kids at the beginning of the year and end up with only 5 or 10 of the same kids at the end of the year.
Also, these kids are much more likely to be truant or go on “vacation” for weeks or months in the middle of the year vs. the students in the better schools.
The aptitude to progress over the year is not just related to teacher performance, but is more closely correlated to the students’ innate abilities (I.Q., early learning experiences, etc.) and to their home/cultural environments.
A bears bear.
http://finance.yahoo.com/tech-ticker/article/248398/%22The-Worst-Is-Yet-to-Come%22-If-You‘re-Not-Petrified-You’re-Not-Paying-Attention?tickers=%5EDJI,%5EGSPC,DDR,XLF,GM,RWR?sec=topStories&pos=9&asset=&ccode=
Inspired by yesterday’s California thread
In the Glowing Black Cloud Mountains, there’s a land that’s fair and bright,
The handouts grow on bushes and you sleep out every night
Where the houses all are empty and the sun shines every day
On the birds and the bees and the refi trees,
The HELOC springs where the bernanke-bird sings
In the Glowing Black Cloud Mountains
With apologies to Harry “Haywire Mac” McClintock
Now that song will be in my head the rest of the day. Not that that’s a bad thing!
Say, where’s Olygal been? She’ll appreciate your song, especially if you add a verse that includes frogs.
Olygal doesn’t get out of her cage until after lunch today. She was throwing grapes and banana slices again last night.
Got my HBB tee shirt yesterday and have been wearing it ever since. Nobody throwing tomatoes so far.
They might have to use those Mexico import variety’s, kinda soon for the AZ early boys ain’t it?
We have had ripe tomatoes on the vine for past 6 weeks. “Early Girls”
Yesterday the high was 106, so no more blossoms will come out. The ones already out will usually produce no matter how hot it gets, as long as they don’t croak from lack of moisture.
Nobody throwing tomatoes so far.
Tomatoes. ha ha.
A wonderful thing - women wearing t-shirts with lots of writing - on the front
HBB quiz question #5:
Which of the two below is the most “efficient” at reducing Americas waist line?
Jenny Craig: “We change lives”
Sir Greenissspent: “The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.”
Just finished cooking bacalao (Bacalhau) a la Vizcaina.
Must say, my first attempt was a success.
I never eat out.
Much healthier and cheaper to shop and cook your own food.
Except for fish, I’m a veggie (no dairies) lots of fresh fruits and veggies.
Have no health insurance and I cut my own hair (very well also.)
Guess I’m not a “typical consumer.”
“Guess I’m not a “typical consumer.””
No, not yet at least,
but perhapse if we weather the current storm and people wake the F-k up to what really matters in life you will be.
Thats MY hope at least.
recipe please?
No Health Insurance. My guess is you are very single and very young. Even still, it is still a risk. Would be interested in hearing how you get comfortable with that. Have you been uninsured for a while or just a more recent thing?
Excellent health.
47
Feel VERY confident with that.
___
recipe
http://www.foodnetwork.com/recipes/40-a-day/bacalao-guisado-codfish-stew-recipe/index.html
___
hmmm… no questions on excellent haircuts!
Wow, these guys are smart, business sucks, debts up to your eyeballs, change your name…
GMAC renames bank unit Ally Bank, drops own name…
NEW YORK (Reuters) - GMAC LLC, stung by billions of dollars in losses at its auto finance and mortgage units, on Friday scrapped its own name from its banking unit, which it will now call Ally Bank in an effort to gain customers.
Sanjay Gupta, the bank’s chief marketing officer, said the company wanted a name that would help it shed the baggage that many Americans now associate with banks, which have taken hundreds of billions of dollars of taxpayer money after losses from bad loans and investments piled up.
“We fully expect more customers will use us,” Gupta said in an interview.
GMAC’s conversion to a bank holding company in December was a central part of the Detroit-based company’s survival plan, and allowed it to get access to new government funding.
While GMAC got a $6 billion bailout in December, including $5 billion from the Troubled Asset Relief Program, regulators ordered it last week to plug an $11.5 billion capital shortfall to protect itself in case of a severe recession.
Nineteen large banks underwent government “stress tests,” and of the 10 told to raise capital, GMAC had by far the biggest shortfall relative to its size.
Many analysts believe GMAC will need another bailout. Gupta declined to discuss specifics about efforts to raise capital.
GMAC Bank has long offered interest rates on deposits above the industry average. Many lenders that have done so since the global credit crisis began in 2007 had particularly large funding needs, including the now-vanished Countrywide Financial Corp, Wachovia Corp and Washington Mutual Inc.
Ally Bank offers a 2.8 percent annual rate on one-year certificates of deposit, while the industry’s average is 2.29 percent, according to Bankrate.com.
The bank’s deposits increased 16.5 percent in the first quarter to $22.5 billion, including $11.0 billion of retail deposits, $9.5 billion of brokered deposits, and $2.0 billion of other deposits.
GMAC’s owners include automaker General Motors Corp and private equity firm Cerberus Capital Management LP. The company is expected to get more federal funds to help support its new status as the preferred lender for buyers of vehicles made by Chrysler LLC.
In other news….
The Nazi party renames itself Puppies and Bunnies, drops old name…
NEW YORK (Reuters) - The Nazi party, stung by billions of murders it committed, on Friday scrapped its own name from its past, which it will now call Puppies and Bunnies in an effort to gain members and public acceptance.
LOL.
Consumer price drop is biggest since ‘55
Government says 0.7% annual decline is the largest in nearly 54 years. Monthly prices unchanged.
Since 1940 the Consumer Price Average (CPI) has had only two down years….1949 and 1955. 2009 may be shaping up to be the third. The Labor Department said the CPI declined 0.7% on an annual basis in April, only the second year-over-year decline in nearly 54 years following March’s 0.4% drop.
How should we consumers respond? Logic and reason say keep the lid on unnecessary spending. Buying things we didn’t need with money we didn’t have got us into trouble in the first place. There’s not much point to returning to the old habit.
Luckily, housing (= 40 pct of the CPI consumption bundle) only dropped in value by 0.1 percent or so, according to the news release. If housing were dropping by much more than that, we might have to worry about deflation.
P.S. If my recollection is correct, then back in the mid-1990s, the last time I had a careful look, housing was only about 28 percent of the CPI consumption bundle.
“…then back in the mid-1990s, the last time I had a careful look, housing was only about 28 percent of the CPI consumption bundle.”
Then: more mobile homes
Now: more McMansion’s with stucco
Kinda - sorta good summation of someone who just came “down the river”
“I had assumed we would start by renting a house or an apartment, but it quickly became clear that it was almost easier to borrow a half-million dollars and buy something.”
My Personal Credit Crisis:
http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html?_r=1&hp=&pagewanted=all
You missed my comment yesterday that if I ever saw that guy homeless, I would make sure to p*ss all over him after drinking a bottle of Chateau Margaux 1982.
The level of delusional thinking just left me gobsmacked. And he’s writing a book - the “standard” Hail-Mary play in American life. For whom? Other losers like himself?!?
Incredible.
“…p*ss all over him after drinking a bottle of Chateau Margaux 1982.”
Speaking of p*ssing…I’ll be covering aladinsane “golden” scent in the Sequoias next week!
(although it will not be a “nutritional” as your’s fpss) 
“Between humongous loan balances and high rates, we had hung ourselves with the rope they gave us. In the previous December alone, we charged $2,845 on the Chase card for Christmas gifts, food, gasoline, clothing and other expenses. The charges included almost $350 for groceries, $700 in clothes from J. Crew, $179 at GapKids and $700 for airplane tickets for two of Patty’s children to visit their father in Los Angeles”.
This ignorant/arrogant POS is getting what he/they deserve, I love it when the so called ’smart’ set go down in a ball of flames! LOL!
I’m flabbergasted. An economics reporter for the NY Times? And he gets himself into this kind of trouble.
We are truly doomed.
$22B Bailout for Life Insurers: Mystery of Thursday’s Rally Revealed! But Why Now?
Posted May 15, 2009 11:47am EDT by Aaron Task in Investing, Banking
Updated from 11:47 a.m. EDT
News the government is going to shower the life insurance industry with $22 billion of TARP funds solves one mystery: Why related stocks were curiously strong Thursday, prior to public disclosure.
Update: “The evidence is compelling that the big institutional money was betting on this TARP approval for the insurers,” writes Jon Najarian, co-founder of OptionMonster.com.
“The other darker option would be that the big money was tipped off that the TARP news was pending. For my money I say there is no such thing as a coincidence on Wall Street!”
Najarian notes there were some unusually large bullish bets on several insurers Thursday via the options market:
* Lincoln Financial (LNC) - 21,000 calls yesterday vs. 30-day average of 5,500
* Prudential Financial (PRU) - 8,500 calls vs. 30-day average of 6,500
* Hartford Financial (HIG) - 114,000 calls vs. 30-day average of 21,100
* Principal Financial (PFG)- 8,700 calls vs. 30-day average of 1,600
“As smart money usually does, the buyers of these calls sold quickly” on Friday, he reports. “Or as I like to say, they took the money and ran!”
Earlier: Beyond the outrage of possible (even likely) insider trading ahead of the TARP announcement, this news raises other riddles Barack Obama, Tim Geithner and Ben Bernanke need to address:
* Why does the line insurance industry need $22 billion of taxpayer funds?
* Why now, in the wake of the post-stress test bank capital raises, market rally and growing sense the financial crisis is over?
* How will the industry respond to the possible overzealous government oversight that comes with TARP funds?
* What horse trading, if any, went on between the life insurers and the administration? Obama wants to remove about $12.8 billion of tax breaks from the life insurers to help pay for health insurance on the one hand, but is giving the industry a $22 billion boondoggle on the other.
Today when I think about the FIRE economy, stock market, RE whatever this old Jonny Cash song just keeps going round in my head.
Leverage Is A Burning Thing
And It Makes A Fiery Ring
Bound By Wild Desire
I Fell Into A Ring Of Fire
I Fell Into A Burning Ring Of Fire
I Went Down, Down, Down
And The Flames Went Higher
And It Burns, Burns, Burns
The Ring Of Fire
The Ring Of Fire
Well now, whenever I see and hear Nancy Pelosi on TV, I’m reminded of the squalling larva baby in the movie Eraserhead.
Eraserhead that was one werid movie. The baby looked like ET if I remember correctly ? I worked night shift at a company while going to school and the night shift manager watched Eraserhead over and over again on the VCR TV we had there. Rolled it around and had us watch his favorite scenes.
Night shift manager got fired eventually for breaking into HR and seeing what everyone made, medical history etc.
werid many of us smoked at that place and we made defense electronic components. Cigarette butts all over the place reminded me of the defense plant in “Buckaroo bonzii”
The golden age of the San Fernando valley
Yep, the JT sure provides a “burning ring of fire”.
ROTFLMAO!!!!
“…FedEx letters bearing the bad news began arriving Friday morning at GM franchises around the U.S. The letters state that dealers were judged on sales, customer service scores, location, condition of facilities and other criteria.”
Well if it’s not happening ’till next year…why use FedEx “overnight”?
Run Hwy,… run!
LOL
Gots to make dem pension payments, even if it’s with other people money! Problem is taint enough!
YRC Worldwide Inc., one of the nation’s largest trucking companies, will seek $1 billion in federal bailout money to help relieve pension obligations, the chief executive said Thursday.
By ALEX ROTH and ROBIN SIDEL
The move comes as the trucking giant struggles to shore up its finances. The company’s ability to weather the recession will have significant implications for the trucking industry and large customers across the country.
Chief Executive William Zollars said the company will seek the money to help cover the cost of its estimated $2 billion pension obligation over the next four years. Under a complicated system that Mr. Zollars labeled unfair, roughly half of YRC’s contributions to a multi-employer union pension fund cover the costs of retirees who never worked for the Overland Park, Kan., company.
[yrc and federal bailout] Reuters
YRC faces a $2 billion pension obligation over the next four years, and will seek Troubled Asset Relief Program money. Above, YRC worker Keith Graham loads a truck in Holland, Mich., in September 2007.
By applying to the U.S. Treasury for money under the Troubled Asset Relief Program, Mr. Zollars said he hopes to “get the conversation started” with federal authorities about reducing the company’s pension obligations. He said YRC will submit an application to the Treasury Department as early as Friday.
Experts say the company’s odds of actually getting TARP money appear to be slim. A Treasury spokesman didn’t return a call seeking comment.
“My experience dealing with Treasury is that with TARP funds they are relatively narrow in how they view things,” said Frank Bonaventure Jr., a lawyer who has represented banking clients seeking these funds. “They have not been very expansive in terms of how it is applied and what industries could get it.”
The move comes at a time when YRC is taking steps to cut costs and raise cash. With $1.5 billion in revenue for its most recent quarter, YRC owns at least 20% of the national market share in the less-than-truckload industry, in which trucking companies combine multiple customers’ loads into a single truck.
Last month, YRC reported a $415 million first-quarter loss, with a 30% drop in freight tonnage. Some customers fled amid fears about the company’s financial health and its ability to smoothly merge its separate Yellow and Roadway brands. YRC has been working on the integration for several months.
The company recently negotiated a 10% wage cut for its 35,000 Teamster employees and requested to put up some of its property as collateral in order to defer three months’ worth of payments to its pension plan. It also notified investors that it might violate the terms of its bank covenant, although Mr. Zollars said Thursday that YRC “continues to work closely with our bank group and would expect no issues around the second-quarter covenant.”
Now that damn near every business, state and municipality is applying for welfare aka BARF money. I am going to apply for a billion dollars due to the fact my family has had to cut back a little bit on our expenditures.
Now that the it’s no longer shameful to be on welfare may as well join in on the fun!
Speaking of “welfare”, I’d like to rant about my unemployment experience today.
So, a few weeks ago I picked up some contract work from an old employer. Not much - 10 hours - but I made more in those 10 hours than I would have gotten from the UI check. So, when the time came to submit a “payment request”, I fill out the info that I worked and made $XXX.
What happens? They put my current and future payments on hold until I call them to give them information about what I made.
Let me say that again - my benefits for all other weeks were being withheld because I worked and MADE MONEY.
So, it takes me two weeks to be able to actually get through on the phone lines and give them the information they need - the name and address of my employer for whom I worked. That’s it.
Meanwhile, I’ve not gotten paid yet for my contract work, and not received UI benefits for several weeks because the payments were on hold because I sought out work and actually made money.
Talk about a backwards system. Someone should tell them about the internet and web forms - like I couldn’t just type in the employer information when I fill out the form telling them that I received wages and how much.
Sigh.
Silly question…..but why did you report the income in the first place?
I am assuming this work you did was not W2 employment. So then it doesn’t count as “income” does it? Since non-W2 income doesn’t count towards qualification for UI, you’d think it wouldn’t count against UI benefits either.
Either way, next time if this comes up do this: pay the $100 to form a corporation with your spouse as the owner. Your employer pays her/his corporation. The corporation holds on to that payment and only disburses proceeds at the end of they year to the shareholder, by which time your benefits will have run out nonetheless.
You as Mr. Drummi have no income to report to the UI people.
Why report it? Because I’m legally required to. To withhold that would be considered ‘fraud’. You’re right that 1099′ed employees don’t get UI benefits, but that’s because it’s the employer/company that pays. As a 1099 “employee” you’re technically self-employed.
Regardless, your scheme would require A) for me to have found someone to marry me, and B) to have an employer willing to go along with it. Sadly I think that B) is more likely than A), but B) would be hard to come by regardless.
Oh sorry, for some reason I thought you were married.
(B) is very common. Most contractors I know are incorporated. The ones I hire are all INCs or LLCs. I pay invoices to companies, never to people. There is no reason an employer wouldn’t want to do that. Nothing illegal about it and very common.
Ahh. Well, the only reason I’m doing contract work is due to lack of W-2 employment. Perhaps I’d consider a move to working as a contractor at some point, but right now it’s just to fill in the gaps.
The Bilderberg group is holding their 2009 meeting this weekend in Greece.
Got my tinfoil hat on this afternoon.
Any of you have thoughts on this organization and what they’re up to this year? Maybe population reduction or the American Union?
My guess would be a lot stronger IMF finger-pointing and involvement in “helping” us get out of our financial crisis.
“It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
- David Rockefeller (at Bilderberg meeting in 1991)
Pff. They can’t even unify Europe.
When you think about it, though, a world government would actually be a good thing. That way, when we do mount a revolution, we can get rid of all of it in one fell swoop.
The supranational sovereignty of an intellectual elite and world bankers is surely preferable…..
Oh yeah….that’s what needs to happen. Turn control over to world bankers. Didn’t the big globalized banks cause the mess we are in? Oh wait, of course they did….it was a way to wreck society and cause a transfer of power and wealth to them.
More tinfoil please, the rays are getting thru.
And we all know how well his predictions turn out! ;-0
Bernanke: investor demand for TALF will grow
http://finance.yahoo.com/news/Bernanke-investor-demand-for-apf-15263286.html?.v=5
I didn’t have a chance to read the thread above about driving until now. I recently learned about South Park online, so I watched my favorite episode again.
After South Park senior citizens totally terrify the population with their murderous driving, they fight against giving up their drivers licenses. So funny.
http://www.southparkstudios.com/guide/710/
Muir, I don’t know if you’re still around. Thank you for the morning star link. I just watched the video — fortunately, I understand all of that, and thank goodness I loosely figured that’s what happens.
Anyhoo, it seems to me that — given the rate over time — a trailing stop is exactly what one should do on an inverse ETF (as I did earlier this week). The minute the fund trends down too much, you’re out. A stop order that is too low would kill you over time. This is a totally different strategy than, say, holding Ford. Like the guy in the video said, timing isn’t enough, the direction has to be right, too.
Maybe we’ll chat more on this another day…
I still have mixed feelings on trailing stops and limit orders. My experience so far has been that whenever I set a trailing stop, it gets hit and then the price bounces and continues higher. If I don’t set a stop, of course it plows through my mental stop and I end up losing more money than if I had used a stop.
Perhaps I need to learn a better way of computing my trailing stop point, but so far they’ve always worked against me.
Of course, right now I wish I HAD kept my trailing stop on SKF @ 106. Tuition in the school of hard knocks, I suppose
Went to wamu now chase to get what used to be okay to do, a printout of transactions, as something needed to be looked at.
What a pain in the ..that was. Got a lecture from the clerk about how this never is supposed to happen without a $10 chg. A lecture about I should be using the online. I just wanted to smack her like the jack nicholson video.
So far at least the Downey/US bank isn’t skrewd up with Lecturers. Still a small bank atmosphere..so far.
So, the banks are still going to skrew up and make it hard.
Personally I refrain from doing online banking. Security reasons.