Bits Bucket For May 16, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Well, we landed in Denver last night for our weekend house hunting expedition. I am posting from a hotel in Castle Rock. A few observations.
We flew in on Southwest. It could be luck, but you know the economy is bad when you get on a plane and the front seats (with great leg room) are empty. Of course our daughter complained that she had no where to rest her feet. Kids!
Our rental car is a Chrysler Town & Country Minivan. When I get back home I am going to write Obama and tell him not to give these idiots one more penny. The car is total crap. I’ve driven better Yugo’s. The worst part is the guy at the Enterprise rental car takes us out to the lot and says “take your pick”. My daughter was trying to tell me to take the honda but no! I had to give the bucket of bolts a shot. It must have been the jet lag.
We took our Tom Tom along for the trip to help with Navigation. I seriously hate this thing. You know things are bad when you catch yourself yelling at your GPS Navigation system. The damn thing gives you way too much audible help, and then stops talking right when you need it. It might not make the trip back to CA.
I woke up with the sniffles. I’m not saying I caught swine flew on the airplane, but I guess it serves me right for pretending to cough while we were waiting in line at the airport. The wife and kid didn’t see the humor.
Okay gang I’m off. We are going to spend the day looking in one totally overpriced area, and then tomorrow we will be spending the day in another totally overpriced area. I’m sure we’ll find something that won’t lose us more than a year or two of our gross income.
Okay, maybe that was optimistic.
“We took our Tom Tom along for the trip to help with Navigation.”
I’ve got this really cool thing called a Map-Map. It’s made of paper, sometimes laminated. Got all these colorful, squiggly lines and dots representing roads and places. Fun to look at, except when you’re driving and missed the exit. It never says a word.
But seriously, I’ve noticed that a number of our brethren are purchasing homes lately. While I understand and congratulate those who whupped a good deal, I’m holding off until at least 2010. I think there’s WAYYY more pain to come. If the gov’t hadn’t gotten involved in tinkering with the banks, we actually might be seeing bottom right now. I was reading something yesterday that opined “It’s gonna get worse before it gets worse” and blistered the hell out of the concept of not allowing the toxic assets to be priced by the market.
Palmy still wanna pay cash for that concrete block shack. Used to be, I said $50,000.00. The more the gov’t tinkers, I revise my price down. $30,000. Not a penny more.
Hey Palmetto,
I’m with you….2010 at the earliest, and I believe prices are going to keep falling for at least another few years. We will avoid any of these unfinished subs especially. I agree with Les’ assessment yesterday as far as finding a finished area with no HOA and pre bubble construction. Over the last few weeks we have seen an abundance of “shadow inventory”. Many homes all around siting empty with no signs…..when are they going to be released? And how many more are in default and on their way eventually to market?
Yep, we’re not even in capitulation yet in upper-middle class regions of the San Gabriel Valley. Unwatered, decaying foreclosures still selling for $450 in the good hoods. That’s better than the $750 in ‘05, but there are no valid indicators pointing to the bottom. Now Detroit tear-downs might be a different story.
In my opinion in many areas of L.A. and Orange County prices should come down at least 50% in order to even for “rich middle class” who own those houses to qualify as buyers. I have several friends who bought houses in 96-98, who will never be able to buy their own houses even if the prices on their houses come down 50% from today’s market prices. Only if “oligarkhs” from China and Russia decide to settle down in Southern California, instead of Monaco or Luxembourg, might stop the market plummeting down till 2012…We are still in severe bubble level guys, affordability level is the one that the person who makes $60-$80000 could afford to buy a house in Burbank, Ca. or Huntington Beach, Ca., where cheapest “dog” houses are in $400-$500000.0 levels still…
400-500 still doesn’t get you into the “comfortable” neighborhoods in Culver City. That number, however, is now around 550.
Anything lower is on a funky west of Sepulveda street with no sidewalks near the freeway.
“But seriously, I’ve noticed that a number of our brethren are purchasing homes lately.”
I too wish all on this board who buy the best. For me however I’ll start looking in earnest in the Spring of 2011. I don’t mind renting at all because I don’t have to worry about maintenance, can move on a whim, and it allows us to grow tax free savings accounts. We owned our last home for 20yrs and didn’t want to rent but now after renting for 5yrs+ it’s hard to want to purchase a house unless it meets all of our expectations.
“I don’t mind renting at all because I don’t have to worry about maintenance, can move on a whim, and it allows us to grow tax free savings accounts.”
You will likely enjoy a similar advantage by waiting until 2011 to buy, as if you buy when prices are in the basement, you can later on pick up stakes and move any time without worrying about having to sell above market value in order to pay off your underwater mortgage.
My cat has kind of destroyed my rental house. I doubt I’ll see much of my deposit back.
(/mad-at-cat-face)
I have the same problem. A very destructive cat!
In the other blog there is a post of a couple whose ARM reset will take them to 11 and a half percent interest payments in 2013.
I don’t think 2011 will be rock bottom. Renting for years (even with a destructive cat) is certainly the way to have lower payments and put the excess savings in VMLTX or T-bills.
I bought a house in Wisconsin the first week in May, but I did so with a firm conviction that I was going to loose a lot of money doing so. My wife just could not stand getting another rental with the possibility of having to move when the landlord got in trouble. I know that sounds like a weak reason, willing to loose tens of thousands of dollars, but I just was not up to fighting her hysteria.
We all do things for different reasons. You do not need to justify your actions. You know the deal. You know what is likely to come from your actions. We are doing the same thing. But this will be our last home purchase, and eventually it will be worth what we paid.
Eventually, as in a decade or more from now.
Which is as it should be. The house we just bought was selling way below comps as per Zillow (which probably puts it close to the median IRL
), but we don’t pretend that it’s going to keep even that value in the next several years. But we want to keep this house for decades, so it’s all a wash in the long run.
Whatever happened to the idea of picking a neighborhood and (gasp) “settling down”?
Patience my dear friends, patience.
“But seriously, I’ve noticed that a number of our brethren are purchasing homes lately.”
Over the past several months I have put a few offers in on houses, a couple way low and one close to asking. all turned down. In SE Florida I am noticing houses getting snapped up, many NOT at bargain prices. Kind of makes me wonder why? Maybe it has to do with the Federal Housing Administration loans, which require only a 3.5 percent down payment and allow for lower credit scores and are easier to obtain than bank mortgages along with $8,000 for first time homebuyers for anyone who has not owned a house in the last 3 years. How can this be happening with Fannie asking for another what, 9 or 18 billion. So Mr. Palmetto in 2010 when these new first time buyers are entering foreclosure would probably be a good time to start looking, I will continue to look but I am afraid it is going to have to wait until the end of the housing bubbles last gasp.
“…Federal Housing Administration loans, which require only a 3.5 percent down payment and allow for lower credit scores and are easier to obtain than bank mortgages… How can this be happening with Fannie asking for another what, 9 or 18 billion.”
How is making foolish loans to unqualified buyers inconsistent with the GSEs losing hordes of money?
“How is making foolish loans to unqualified buyers inconsistent with the GSEs losing hordes of money?”
It isn`t. The fact that foolish loans to unqualified buyers are being made while the GSEs losing hordes of money and banks need to be bailed out and stress tested to see how they will do under the weight of more foreclosures and inventory is being held off the market is my point.
I definitely think that prices have further to fall, so as I stated in another post we aren’t trying to time the bottom. But the good news is we have probably missed a large part of the drop. We also cashed out with good profits so we are in good shape.
BTW, we did find one place today that matches our needs, and is reasonably priced IMO. It has a nice lot, good solid home, nice views, and the price is $405k. I looked up the country assessors and it last sold in 2000 for $389k. So assuming we can get it done for 95% of asking, there has been no appreciation for this place over the last 9 years. It also works for us in regards to schools, location, etc. Cost per sqft. is around $120.
Of course, it will probably go lower but these aren’t tract houses. Location, lot, views, etc. are very custom.
Tomorrow we see our other area so we’ll see how it goes. But I definitely think we are pulling the trigger this time. I am seeing 2000 prices, and that is good enough for me. But you guys go ahead and wait until 2010/2011. I am sure you will get a much better deal!
We just cannot wait any longer for a variety of reasons. Sometimes life cannot stay on hold forever.
Your comments remind me of the fact “Americans aren’t happy unless they are bitching”. No negativity implied here on your part. Just something I have observed over the years.
Peace
“I’m not saying I caught swine flew on the airplane, but I guess it serves me right for pretending to cough while we were waiting in line at the airport.”
I heard a flu expert on the radio state that one could not catch the swine flu on an airplane unless you were within three feet of a contagious flu victim. But I am sure there are plenty of other less-sensationalized nasty respiratory ailments that one can pick up on an airplane, and also that I have suffered from many of these myself.
they have closed several schools in queens ny due to swine flu madness
i can hear the lawsutis coming against the city now
ny is really getting on my nerves lately too many people with their hands out thinking the city and the us govt is responsible for all their needs
i work my ass off pay huge amounts of taxes for these people who can’t stop having kids?
I played a freebie gig last Sunday at a church where the members customarily share the Lord’s Peace with a hug or a handshake. Nobody would touch each other last week, preferring instead to flash peace signs. I suppressed my urge to offer a Vulcan greeting in response.
the members customarily share the Lord’s Peace with a hug or a handshake.
ehh I hate that part. Catlicks stopped doing that for the Lord’s Prayer but still do the Peace part that way. Sweaty palms, meh.
—–I suppressed my urge to offer a Vulcan greeting in response.—–
Yes, flashing the symbol from the Prayer of the Cohanim from Jewish High Holiday Services indeed might get you in trouble in Church.
regards
-evil
“I suppressed my urge to offer a Vulcan greeting in response.”
Ahhh, what a shame!
Just let it out professor.
Ahhh, what a shame!
Just let it out professor.
Agreed!
PB, what kind of “gig” were you playing?
PB,
That would have been the logical thing to do.
Too bad you cant slide me in for some hours MG
KNX News Radio (So Ca) last night mentioned, regular flu virus going around off season too.
Just back from a week in Reno/Sparks and down with the flu!! Yeah, I did Southwest too. Guess who sat next to me on the plane from Vegas? You guessed it; not 10 words of english in a 4 hour flight. Oh well, at least the weather beat anything weve had in the last 5 months. Economically, Reno/Sparks is toast. The most used word on the street is “AVAILABLE”. You see it everywhere. More details later. Right now its Theraflu time and back to bed.
To all who have the flu…Get Well Soon.
We took our Tom Tom along for the trip to help with Navigation. I seriously hate this thing. You know things are bad when you catch yourself yelling at your GPS Navigation system.
I have a Tom-Tom, too-too! I got it for Christmas-Christmas!
I don’t need-need it, because I always know exactly where I am, although sometimes the rest of the world gets muddled and needs some firm direction. So, since I don’t require its services, I just set it to the Australian-man-voice as a homage to Steve Irwin, (Crocodile Hunter), or else I set it to the British- girl- voice and we sing pretty duets together as we zoom down the gravel road in the hinterlands looking for the Department of Natural Resources, Building A, which has unaccountably gotten up and moved somewhere else. Those dumb buildings… I swear. Good thing I’m so patient, huh?
But, in seriousness, I think what the Tom-Tom needs-needs now-now is a function where it says in a smug voice, ‘I told you that was gonna happen, didn’t I? Now meet the crazed in-breds playing banjos.”
Because then you’d seize it and throw it out the window, and THEN you’d have to get a new Tom-Tom right away.
Planned obsolescence at its finest.
Olyga, sometimes, over the wide and wonderful distance, you just plain…scare me !
..should be “Olygal”..”Beatlejuice II”, whatever, my hands tremble at the mere mention of your name.
“Olyga, sometimes, over the wide and wonderful distance, you just plain…scare me !”
And sometimes, over the wide and wondrous distance, I love it.
“I told you that was gonna happen, didn’t I? Now meet the crazed in-breds playing banjos.”
LOL!!
That O’ girl is a TRIP Prime !
hahaha
bananarepublic,
You flew on Southwest. You say the frontmost seats were empty. It doesn’t mean the economy was bad, it just means you were in SW’s “Group A,” i.e. you were among the first 30 people to check in. Now if there WAS no Group B or C, THAT would show the economy is bad.
Hey buddy, I agree getting the front seat doesn’t prove anything. We were in Group A, but the plane was pretty much empty. I fly SW frequent enough to notice the difference. But it could have been coincidence.
http://www.nytimes.com/2009/05/17/realestate/17cov.html?hpw
“It’s a great time to be a renter,” said Gary Malin, the president of Citi Habitats, which specializes in Manhattan rentals, but also has listings in Brooklyn and Queens. “The vacancy rate is higher than it has been, and rents are down across the board.”
astoria in some parts is a third world bed bug filled cess pool
My Southwest flights from Tampa to Las Vegas and back were jam packed last week. Oh yeah, I came out ahead 9 to 1. With my $1 slot bet at the airport;-)
While the Anderson School forecast seems upbeat about a quick turnaround in the SoCal real estate market, grim reality in the labor market suggests otherwise.
Wall Street Journal
* MAY 16, 2009
Two Staples of Southern California Economy No Longer So Reliable
By PETER SANDERS
LONG BEACH, Calif. — A vacant former airplane factory in this city embodies how the region’s spirit of confident prosperity is being crowded out by the specter of an uncertain future.
…
Plans to turn this former Boeing plane factory in Long Beach, Calif., into a movie studio collapsed in March.
…
“The facility is back on the market,” said Debby Arkell, a Boeing spokeswoman, adding that the aerospace company continues “to work with the movie studio” planners to reach a new agreement.
Long Beach’s struggle to find a new use for the former factory illustrates one reason why Southern California has been whacked so hard by the downturn.
This corner of the U.S. could once count on two robust industries that claimed to be recession-proof: aerospace and entertainment. But this time around, neither sector is providing much lift. In March, Los Angeles County had one of the highest unemployment rates in the nation, at 11.4%; Long Beach, at 12.4%, was even higher.
Much of the aerospace industry — drawn here in the 1920s in part by weather that permitted year-round flight tests — began pulling up stakes in the early 1990s as the industry consolidated and built plants elsewhere.
Los Angeles County had 140,000 aerospace workers in 1990. Now, there are about 37,000 aerospace jobs countywide, with perhaps 5,000 in Long Beach, according to the Los Angeles County Economic Development Corp.
…
And while Hollywood is enjoying a strong year at the box office, many jobs the industry once created here have migrated as well. Locales such as British Columbia, Louisiana, New Mexico and New York have lured film and TV productions with lucrative tax packages and newly built studio infrastructure. FilmLA Inc., the private nonprofit organization that coordinates film permits in the area, said the first quarter of 2009 saw the lowest number of feature-film production days since the agency began keeping records in 1993.
Long Beach is a city looking for an identity. They have millions of tidelands oil tax revenue flowing in and have no idea how to invest it profitably, thus Long Beach ends up buying the Queen Mary, the Spruce Goose, and building a money-eating aquarium.
Long Beach is a funny place. They’ve really got that shoreline looking good. Yet the poverty is thick just blocks from the beach. This is typical of many cities along the coast of Mexico.
formerly 20th (710) and PCH. Don’t be diss’ng the old ‘hood.
I thought the Spruce Goose moved out years ago.
It did, but the mentality behind its purchase remained in Long Beach.
I abandoned the Seattle 10,000 when they bought those 37,000 non-commercial aircraft jobs in CA and another likesized chunk in Missouri.
The aerospace industry has always been subject to boom-bust cycles. This article is flat out wrong.
One of the biggest reasons for them moving was property taxes. The city and the state took them for granted and treated them accordingly.
As for the movie industry, same thing plus the famous “creative accounting” the studios are notorious for. So between the studios wanting to cut costs and the folks that actually do the production work, Hollywood is NOT the place to be.
Victims of their own success.
One of the biggest reasons for them moving was property taxes. The city and the state took them for granted and treated them accordingly.
Huh?
Aren’t they protected vis-a-vis property taxes by Prop. 13? They have been there forever.
Dammit, why are my posts having problems this week?
Florida update
Melbourne Beach on the beach side blocks to the beach mid 150s.
Tequesta, Jensen Beach same around mid 150s.
The “Treasure Coast,” places like Sebastian and Vero Beach, which still have some of that “Old Florida” in them, also with dramatic price drops.
West Coast land values around Leigh Acres, lots that went from the mid $70sK in 05 back to their former values $0
For 09 predictions I stated that Fl would see a 50% decline and some properties would go for back taxes.
Although maybe those predictions sounded far fetched, it was only an appearance; I’d seen it before.
Land was auctioned off by Sarasota County for back taxes as late as 02.
An acre North of Orlando in Lake County went for 2K as late as 01.
By the way, the glitzy South Beach, that was dilapidated boarded up buildings until the early 90s. Ocean Drive hotels were sold for back taxes in the mid 80s. Think “scarface” South Beach scene or “Miami Vice” and remember the boarded hotels on the beach. I grew up here.
Glitzy high rises also crashed mid 80s, same old same old.
So, in 09 my predictions are still on course and in certain places meet already. Imagine what it would have been like without the trillions for the banks.
Thanks for the Florida up-date Muir. Wondered what the crime was like re Melborne Beach area?
Sings…”In The Air Tonight” and dreams of the “Miami Mice’ show with lots of hot women, fast cars and absolutely NO speeding tickets.
Mikey: I got most of it, but…Miami Mice??
Mikey: I got most of it, but…Miami Mice??
What? You mean to tell us you missed ‘Miami Mice’? Where you been, man?
That was the freakin’ best show ever!
The Fed’s capacity utilization report provides a rather severe real-world-data challenge to the whimsical “green shoots” story.
Wall Street Journal
* MAY 16, 2009
Prices Drop but Threat of Deflation Is Remote
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.
…
Industrial Output Tumbles
Industrial production decreased by 0.5% in April compared to the prior month, the Federal Reserve said Friday. Output fell 1.7% in March, revised from a previously estimated 1.5% decline.
Capacity utilization shrank in April to 69.1%, a historical low since records began in 1967. March capacity use was a revised 69.4%; originally, “cap-U” was estimated at 69.3% in March. The 1972-2008 average was 80.9%.
Economists expected industrial production to drop 0.6% in April, with a capacity utilization rate of 68.9% for the month.
Over the 12 months ending in April, industrial production was 12.5% lower.
And it might recede even more, given recent data on U.S. business inventories. Government data this week said the inventory-to-sales ratio held steady at 1.44 — even though companies have been slashing stocks of goods furiously to adjust for waning demand amid the recession. The ratio indicates how well firms are matching supply with demand. It measures how long, in months, a firm could sell all current inventory. A year earlier, the I/S ratio was 1.28.
Inventory slashing took a large bite out of gross domestic product in the first quarter. GDP is the broad measure of economic activity. The latest data showed businesses in the first quarter drew inventories down by $103.7 billion, reducing GDP by 2.79 percentage points — or nearly half of its 6.1% plunge.
In the short run, liquidating excess supply of merchandise hurts orders and production and weighs on GDP. But liquidating is good for the long term, preventing a further buildup of goods that could damage the economy later on.
A 1.0% drop in March meant business inventories shrank seven straight months — the longest period of decline since February 2001 through April 2002. Because business sales also plunged, down 1.6%, the I/S ratio didn’t budge, suggesting further liquidation of excess supply and more downward pressure on output.
The Fed report Friday said April manufacturing production fell 0.3%, after plunging 2.1% in March. Manufacturing capacity utilization slid to 65.7% from 65.8%.
Business equipment fell 0.6%. Construction supplies were down 1.1%. Home electronics decreased 0.6%. Computer and electronic products decreased 0.2%.
Machinery fell 0.7%. Furniture dropped 2.8%.
Manufacturing of motor vehicles and parts rose a third straight month, up 1.4% in April after rising 0.3% in March. For the year, however, auto and parts production was down 32.1%. The economy’s troubles discourage consumers from spending, especially on big purchases like cars. And uncertainty over the fate of General Motors and of Chrysler isn’t good for sales.
The auto industry was operating at 42% capacity in April.
Excluding motor vehicles and parts, industrial production would have decreased 0.5% in April. Production ex-auto in March fell 2.3%.
Selected high-technology industries dropped 0.4% last month.
Output in the mining industry plunged 3.2% in April after falling 2.6% the prior month. Mining capacity receded to 82.5% from 85.2% in March.
“Oil and gas field drilling and support activities continued to drop,” the Fed said.
To the Gang:
I am on a Sleepy Saturday Morning Reading Jag, and just thought I would write to tell you guys how much I love reading the blog. Yesterdays entirely disjointed comments, (Oly Highlites as always) left me with the distinct impression everyone on here is bi-polar.
Palmy, get me a concrete shack next to you. I’ll use you as my comp!
Then, I’ll devalue you by being your neighbor!!
ATE-UP
“Yesterdays entirely disjointed comments, (Oly Highlites as always) left me with the distinct impression everyone on here is bi-polar.”
Ah yes, God made us human,
but Prozac made us friends!!
Tee Hee!!
Salinasron
bi-polar ? …WHO..US? Hardley !
Ben’s AZ Purple Haze server won’t allow a single post to go through unless you are a board certified paranoid Schizophrenic with the papers to prove it.
“Hi”
HEY, how did you get in here and why are you watching me ?
“…everyone on here is bi-polar.”
Are you suggesting my posts are inconsistently grim in tone?
When I believe the outlook truly includes signs of “green shoots”, I will retire my blog handle.
Green shoots? Have you ever seen puncture vine? It’s green and painful.
Hey Professor…
I remember in the past you had a different handle, but I can’t seem to recall it now. Was it Getstucco?
If it was, did you retire that handle?
It was GetStucco.
“Where have you gone Joe DiMaggio?
“A nation turns its lonely eyes to you.
“What’s that you say, Mrs. Robinson?
“Joltin’ Joe has left and gone away.”
Getstucco sounds like you should be wearing a black shirt.
No, Professor Bear. No…Never.
..and just thought I would write to tell you guys how much I love reading the blog. Yesterdays entirely disjointed comments, (Oly Highlites as always) left me with the distinct impression everyone on here is bi-polar.
Well, me and all my split-personalities ALSO love reading this blog!
That makes us like twins, ATE!
How about I’ll be the Good Twin. You can be the Evil Twin. They seem to have more fun, anyway.
Today I’m going to catch up on computer stuff and read the days I missed ’cause I was peaky this last week. No, that’s not obsessive, nohow! It’s just that if you miss a day of the HBB it’s like missing a soap-opera episode, you lose track of the excitements.
Oh, btw, speaking of, I’ve learned that the Spanish Language channel is wonderful. I never liked soap operas until now I’ve seen them in shouting, threatening, lurid Mexican glory. Oh, the wasted years…
Thanks, ATE!
Just me, though, or the rest of the personalities, too?
HAHAHAHAAH! *laughs in merry chorus *…
Everybody.
Oh, goody. Now we’ll all stop slapping each other and go look in the mirror and primp instead.
Professor Bear’s California economic outlook:
Lots more pain ahead, mixed with a supersized serving of denial.
California budget woes may force government overhaul
By Jim Christie
Reuters
Friday, May 15, 2009; 6:53 PM
SAN FRANCISCO (Reuters) - California’s government may see a dramatic overhaul because its budget is in such disarray and on track for a staggering shortfall of at least $15.4 billion, lawmakers and analysts said on Friday.
Gov. Arnold Schwarzenegger called that deficit estimate “certain” on Thursday, warning the budget gap for the next fiscal year would swell to $21.3 billion if voters reject budget-related ballot measures in a special election on Tuesday.
Surveys suggest voters will reject the measures.
In either case, the most populous U.S. state faces sharply reduced spending, with Schwarzenegger, a Republican, seeking deep cuts in education and health and human service programs. Additionally, 5,000 state employees will receive pink slips and the state will need to borrow $6 billion with a revenue anticipation warrant.
Lawmakers responded with vows of fiscal austerity. But Assembly Majority Leader Alberto Torrico said a more dramatic effort may be needed.
“We are in dire need of streamlining,” he told Reuters. “We should have a conversation about what our priorities are as a state. … I don’t think we can go through this budget and try to offend the least amount of people.”
Did the Anderson School forecasters take the state budget mess into consideration in their upbeat California housing forecast?
United States
California
The ungovernable state
May 14th 2009 | LOS ANGELES, SACRAMENTO AND SAN FRANCISCO
From The Economist print edition
As California ceases to function like a sensible state, a new constitution looks both necessary and likely
ON MAY 19th Californians will go to the polls to vote on six ballot measures that are as important as they are confusing. If these measures fail, America’s biggest state will enter a full-blown financial crisis that will require excruciating cuts in public services. If the measures succeed, the crisis will be only a little less acute. Recent polls suggest that voters are planning to vote most of them down.
The occasion has thus become an ugly summary of all that is wrong with California’s governance, and that list is long. This special election, the sixth in 36 years, came about because the state’s elected politicians once again—for the system virtually assures as much—could not agree on a budget in time and had to cobble together a compromise in February to fill a $42 billion gap between revenue and spending. But that compromise required extending some temporary taxes, shifting spending around and borrowing against future lottery profits. These are among the steps that voters must now approve, thanks to California’s brand of direct democracy, which is unique in extent, complexity and misuse.
A good outcome is no longer possible. California now has the worst bond rating among the 50 states. Income-tax receipts are coming in far below expectations. On May 11th Arnold Schwarzenegger, the governor, sent a letter to the legislature warning it that, by his latest estimates, the state will face a budget gap of $15.4 billion if the ballot measures pass, $21.3 billion if they fail. Prisoners will have to be released, firefighters fired, and other services cut or eliminated. One way or the other, on May 20th Californians will have to begin discussing how to fix their broken state.
“…A good outcome is no longer possible.”
And just where is aladinsane? He meanders through the Sequoias for free, then splits to NZ so he can be always be a day ahead of the destruction…
Wow..aladisane made it all the way to NZ.
The last time I saw him, he was on the beach dragging his crate of gold, a rubber raft and a six pack of Gatorade. He borrowed some of my Coppertone Kids Continuous Spray S PF 70+ and some old girly magazines and told me he was just ..”Going Fishing !”
I thought I saw him north of Reno trailering a German 88 camouflaged to look like a backhoe behind a Hummer1. Pyramid Lake has some nice trout.
Well, I must admit I’m quite astounded that Alad has resisted posting for this long a time. I was completely sure he’d be lured back in, if only by Bill in LA’s hot defense of dear old clunky-writin’ Ayn Rand, or else by the water situation in CA which looks quite awful, or else by my own enticing discussions of the incredible bargains I recently got at the Grocery Outlet…
But no. Alad? Alad?
Hey! I just thought! Maybe he’s trapped under a pile of gold bullion that toppled over while he was fondling it?
Yes, it could happen… I myself often have to dodge all my piles of collapsing golden coins.
(Seriously; teasing aside, Alad—wherever you are, I hope you’re having fun and breathing good air by good trees.)
“Seriously; teasing aside, Alad—wherever you are, I hope you’re having fun and breathing good air by good trees.)”
What a great wish!
I’ll add my bit: “breathing good air by good trees”, at least some of whom are old enough to be to your great, great, great, great, great, great, great, great, great, great gran—and still huggable to boot.
I’ll add my bit: “breathing good air by good trees”, at least some of whom are old enough to be to your great, great, great, great, great, great, great, great, great, great gran—and still huggable to boot.
Now that’s a great wish.
…Californians will have to begin discussing how to fix their broken state.
Is that like a “failed” state?
They really just need one new proposition in California…
Proposition XX. All state propositions passed by the initiative process shall have the force of normal legislation and shall not be construed as a constitutional amendment. This proposition shall apply retroactively to all propositions passed since the present constitution came into effect.
This would permit the legislature to do its job.
This, by the way, describes the present situation in regards initiatives in the state of Idaho. We seem to do just fine here.
“Lawmakers responded with vows of fiscal austerity.”
Lol. Theys guys should do stand-up.
Theys = These
I put in an offer on the Del Mar Fairgrounds yesterday. It’s slightly less than the $1,000,000,000 Arnold is asking.
I suppose he’ll counter.
(do I qualify for the $8,000 tax credit?)
Sorry, it’s not “newly constructed”.
Make sure you list all the Porta-Lets in your contract addendum.
They’re movable, so might not be considered fixtures.
When are we going to face up to the Illegal mess?
Why should they get services when millions of Americans are too rich at $10hr to qualify?
When we grow a backbone.
Oh, yeah, that’s on my list. Can I get one of them on eBay? And is shipping included with the original backbone?
You people need to go back to bed. Don’t you realize it’s Saturday?
Taking Mr. Cole to the “Bug Fair” @ the LA Natural History Museum…LA, nice place to…visit for a day.
“I saw a guy roller skating…naked…in the middle of the street…” Jimmy Buffett Fruitcakes album
Some funny things are going on in Wisconsin’s largest banks lately.
Now the top woman in the States 2nd largest bank..suddenly resigns !?!
This woman was a top dog in the US banking industry.
Well, I suppose that we are lucky that she didn’t drown …washing dishes at home or in the shower as we’ve had a few strange drownings of bank big shots at our largest bank in the past couple of years
President of Associated Bank, Lisa Binder, resigns
…”Binder decided to “take a step back and think about her priorities,” and spend more time with her family and community projects, Beideman said”
…Wow, THAT is one well thought out unique axe line.
…”Associated in November accepted $525 million capital infusion from the Troubled Asset Relief Program, commonly called TARP money, from the U.S. Treasury. Three months later, battered by heated reaction from shareholders, politicians and the general public, Beideman canceled a planned five-day excursion to a posh Caribbean resort for 100 top-performing employees”
…WHAT..NO big bash at the clothes-optional beach !?!
…”In September, Binder was named by U.S. Banker magazine as one of the “25 Most Powerful Women in Banking.” She is currently serving a one-year term on the board of directors of the American Bankers Association”
We at Associated hardly knew you Lisa but as you well know…
“When Debt come in the Door, Love goes out the Window”
http://www.jsonline.com/business/45189917.html
spend more time with her family
Isn’t that the standard line when a politician resigns when he’s caught with his hand in the cookie jar?
Yes. Yes it is.
So yes. Yes she is a crook.
It looks like Wall Street’s evil plan to create a financial disaster and charge it off to Main Street is working perfectly.
Remember when BB said subprime would be contained to $200 bn? So far, he only appears to be off by a factor of 15 or so (15 * $200 bn = $3,000 bn).
Leaders
The banking industry
Three trillion dollars later…
May 14th 2009
From The Economist print edition
There is no single big remedy for the banks’ flaws. But better rules—and more capital—could help
COULD there be a better time to be a bank? If you have capital and courage, the markets are packed with opportunities—as they well understand at Goldman Sachs, which is once again filling its boots with risk. Governments are endorsing high leverage and guaranteeing huge parts of the financial system, so you get to keep the profits and palm off the losses on the taxpayer. The threat of nationalisation has receded, reinvigorating the banks’ share prices. Money is cheap, deposits plentiful and borrowers desperate, so new lending promises handsome margins. Back before the crash, banks’ profits just looked big; today they might even be real.
The bonanza is intentional. Governments and regulators want the banks to make profits so that they regain their health faster after roughly $3 trillion of write-downs. It is part of the monstrous bargain that bankers have extracted from the state (see our special report this week). Taxpayers have poured trillions of dollars into institutions that most never knew they were guaranteeing. In return, economies look as if they have been spared a collapse in payment systems and credit flows that would probably have caused a depression.
There is a big problem with this whole story, IMO, which is that the architects and overseers of this epically monumental financial disaster have not suffered commensurately with the pain they have inflicted. In fact, many of them are comfortably retired now while the next generation suffers the fallout, while others are still captains of the financial industry. We need a good house cleaning to clear the air, IMO.
Special report
A special report on international banking
Rebuilding the banks
May 14th 2009
From The Economist print edition
A tamer banking industry is already emerging from the debris of the old, failed one, says Andrew Palmer (interviewed here)
Illustration by R. Biesinger
BANKING is the industry that failed. Banks are meant to allocate capital to businesses and consumers efficiently; instead, they ladled credit to anyone who wanted it. Banks are supposed to make money by skilfully managing the risk of transforming short-term debt into long-term loans; instead, they were undone by it. They are supposed to expedite the flow of credit through economies; instead, they ended up blocking it.
The costs of this failure are massive. Frantic efforts by governments to save their financial systems and buoy their economies will do long-term damage to public finances. The IMF reckons that average government debt for the richer G20 countries will exceed 100% of GDP in 2014, up from 70% in 2000 and just 40% in 1980.
Despite public rage over bank bail-outs, the industry has also comprehensively failed its owners. The scale of wealth destruction for shareholders has been breathtaking. The total market capitalisation of the industry fell by more than half in 2008, erasing all the gains it had made since 2003 (see chart 1).
Employees have scarcely done better. The popular perception of bankers as Porsche-driving sociopaths obscures the fact that many of the industry’s staff are modestly paid and sit in branches, information-technology departments and call-centres. Job losses in the industry have been savage. “Being done” used to refer to hearing about your annual bonus. Now it means getting fired. America’s financial-services firms have shed almost half a million jobs since the peak in December 2006, more than half of them in the past seven months. Many have gone for good.
The other thing we need, that nobody on high has yet faced, is a large shrinkage in the FIRE sector, especially financial services. One could argue that Mr Market is already getting the job done, but so far, the Fed seems to view the correction as cyclical rather than structural. If you look at how bloated the financial sector got in the past thirty years of management by ever respiking the punchbowl with stronger and stronger monetary alcohol, it is easy to see we have reached a structural tipping point of no return.
“There is a big problem with this whole story, IMO, which is that the architects and overseers of this epically monumental financial disaster have not suffered commensurately with the pain they have inflicted. In fact, many of them are comfortably retired now while the next generation suffers the fallout, while others are still captains of the financial industry. We need a good house cleaning to clear the air, IMO.”
*****
You said it, PB!
The majority of pain from this thing is going to be felt by taxpayers under 50.
We are (borrowing from Chris Thornberg) “going to be hammered.”
No one who caused this thing, and there are plenty, has paid any price.
“There is a big problem with this whole story, IMO, which is that the architects and overseers of this epically monumental financial disaster have not suffered commensurately with the pain they have inflicted. In fact, many of them are comfortably retired now while the next generation suffers the fallout, while others are still captains of the financial industry. We need a good house cleaning to clear the air, IMO.”
You think!?
This is Capitalism at its very best.
(Now show ATE-UP that he was right and express your seething anger)
Put me solidly in the Ol’ Perfessor’s corner on this one. I wish I could write that FIRE participants in the Atlantic City, NJ, area were suffering visibly, but I really cannot. Mortgage brokers who were parroting the old “tap your home equity” line five years ago now hold out themselves as “mortgage workout specialists” and seem to be doing just fine; the same realtors who made out on the way up appear to be making out well on the way down; the financial advisors who were touting one thing five years ago now just tout another and still fly in their Beemers at 60 mph around the 25 mph circle on which I live. I want them all to crash and burn– and maybe they are behind the gaudy facade they have erected. However, I really want to see it out in the open, where their misfortunes might serve as lesson for others not to lie, cheat and steal as they have.
This venting business is more about exhilaration than anger — like playing racquetball, and watching your opponent recoil with fear when you hit a deafening kill shot off his weak lob.
“Remember when BB said subprime would be contained to $200 bn? So far, he only appears to be off by a factor of 15 or so (15 * $200 bn = $3,000 bn).”
PB, I love your optimism. I think it will be more like 10-15T.
So you are thinking the bubble fallout damage will be ‘contained’ to only one full-year’s worth of U.S. GDP or so? You are a great optimist yourself, Prime
Interesting to watch the market place:
1. This time last year people were selling Retro T-birds with low mileage (under 15K) for $20K or less (Private owners). I just made a survey on-line and now dealers and private owners are asking around $25K and mileages are around $40K and up.
2. Talked to some people buying property this past week. One a second home! All told me that now was the best time to buy because it was a buyers market and mortgage rates were down. I told them I’ll wait for a cheaper price, accept a higher mortgage in return, will buy on location, location, location, and will not buy into a gated community with HOA fees. Ah, they decided to change the topic of conversation.
It’s no where near the bottom when assets have elevating wishing prices and people think something should be valued based on past faux-naif pricing.
I got into a fender bender a couple of weeks ago. Dealing with repairs, I got a little peek into the auto economy in the OC.
The insurance guy was saying his work was down because 1) people were driving way less (so fewer accidents) and 2) people couldn’t pay their deductibles so they didn’t get stuff repaired.
The auto body shop was dead. The one guy in the front office was chatting with a friend on the phone. He said someone was selling their Ferrari and wanted “the cheapest paint job possible”. Office guy was aghast.
He also told his friend that business was way way down. Office guy said people were cashing out their insurance claims and not getting things repaired. He said “it will catch up to them, of course.” I wasn’t sure what that meant.
OC people aren’t fixing their cars. That’s a big deal - parading around in fancy car is the number one pastime around here.
WOW that IS important, in my bi-polar mind.
It’s a sign that the faux-wealthy are starting to pay the piper.
Shiny cars are a huge priority here. These folks live in $5M houses, and they can’t spring for decent paint on the Ferrari? What’s happening to all the other necessities, like monthly botox? Doggie spas? $5 cupcakes?
I’ve wondered what was going to happen to these folks in the downturn. If basic businesses are hurting so badly, then few of these people were saving anything. I live on income below the US median, and I can get my fender fixed.
My traffic ticket lawyer has enough business from me in my little old green 2001 Buick Regal. This WAS SUPPOSED to be a “Dad’s Sleeper Car Thing”, you know, INVISIBLE, which my lawyer and the dealer guarranteed would AUTOMATICALLY put ALL cops and their radar guns to dead sleep when I “hit the gate at 98″
Yeah right lawyer-guy ! The rich people in their fancy high-performace cars must have a stealth system, a different highway or something because the cops seem to be all over me before my fancy little radar detector…coughs farts and scatches out the words “REDUCE SPEED –REDUCE SPEED — YOU’RE BUSTED AGAIN”
Maybe if I get a BMW or something fancy that looks like I HAVE money and influence, maybe they’ll leave ME ALONE.
my name is mikey and…REDUCED SPEED….is NOT an OPTION !
my name is mikey and…REDUCED SPEED….is NOT an OPTION !
My own position is that the sooner I get to where I’m going the more relaxed everyone else will feel—-I’m talking about all those other humans who lack the precious gift of ADHD and who perforce do not exist on hummingbird-time but are instead forced to go through life all sequentially and slowly-ish. You know the ones; they have to blink and watch calories and sleep and it takes them a while to notice turn-signals and other such tedious things in their daily activities.
Therefore I consider that when I drive somewhere at Warp 8, this is actually a valuable public service, in a very real sense.*
*So where’s my medal?
He said “it will catch up to them, of course.” I wasn’t sure what that meant. “
This means they are getting a check from their insurance company and not getting the car fixed. Might be straight up, might be insurance fraud.
Also, in many states, you can’t drive for long if your car is not in reasonable repair. That’s a ticket for sure and a tow is it’s bad enough.
I’m definitely seeing more accident damaged vehicles around, typically body damage, not necessarily safety related items. This is something I’ve seen a lot in other parts of the country, but something I’ve rarely seen in California until recently.
Either they just put in a Bid or was just accepted..either way he is &86%$3$$$
———————–
. Ah, they decided to change the topic of conversation.
1. This time last year people were selling Retro T-birds with low mileage (under 15K) for $20K or less (Private owners). I just made a survey on-line and now dealers and private owners are asking around $25K and mileages are around $40K and up.
I’m seeing this across the board with most used cars out here. Advertised prices are as high as ever.
I don’t subscribe to The Economist’s brand of socialism. I would prefer to see banks that lost fortunes go out of business, to be replaced by other banks which don’t throw money into the sea.
Special report
A special report on international banking
Rebuilding the banks
May 14th 2009
From The Economist print edition
A tamer banking industry is already emerging from the debris of the old, failed one, says Andrew Palmer (interviewed here)
…
The forgotten art
With government backing assured and impending losses somewhat more predictable, the big banks are slowly starting to lift their heads from the floor….
Even the biggest victims of the crisis expect to return to profitability this year. Galling as it may be to contemplate the returns that will once again accrue to banks, the rest of us badly need them to make money.
Will our savings be confiscated to keep government going?
If I hold my breath will this calamity pass?
Your savings have already been confiscated to keep the FIRE sector going.
You mean Prop 1A?
No. I mean TARP, TALF, etc etc etc.
If my worth is in dead stocks how can they tax that?
If my income is marginal, will they confiscate my tax deductions?
“I don’t subscribe to The Economist’s brand of socialism. I would prefer to see banks that lost fortunes go out of business, to be replaced by other banks which don’t throw money into the sea.”
Wooo there.
Don’t throw “Socialism” into that fray.
They want to “recapitalize” the banks; CAPITALIZE —–> CAPITALISM.
Ain’t my fault O turned out to be a super-Capitalist.
I just saw this the other day:
You have problem with Corporate Communist Capitalism©®™, comrade?
How do you do those little trademark thingies? Ya commie?
“Even the biggest victims of the crisis expect to return to profitability this year.”
Those banks are “victims”?! Those banks should be out of business and the people that were running them should be serving hard time.
(via Bridgewater.)
This is why Ray Dalio is richer than I am.
but are not sufficiently directed at the root problem of excessive indebtedness to produce permanent healing.
How many whizbang band-aid solutions will govt. come up with before capitulation? Or will it just be a slow bleed, with each one of the “helpful” govt. initiatives eventually revealing the weak hands…
…such as mentioned above thread, the new buyers enabled by govt. programs, many of whom are overextended and will end up in foreclosure anyway.
There’s only two things that will fundamentally change the power structure of this country:
WW3 and/or a depression.
Maybe both.
Lesson not learned from the housing bubble collapse: Demand-subsidized low income housing policies are a folly which sets many of the near-term beneficiaries on a path of financial ruin.
Subsidized loan program aids first-time homebuyers
By Lori Weisberg
Union-Tribune Staff Writer
2:00 a.m. May 16, 2009
Low-and middle-income households interested in purchasing a first home can now get a financial leg up through a federal program that offers subsidized loans that will substantially lower monthly mortgage payments.
The only catch is that the homes must be bank-owned properties in communities with large concentrations of foreclosures.
Offered locally through the city and county of San Diego, as well as Chula Vista, the program is designed to transform renters into homebuyers while also injecting new life into neighborhoods hit hard by the subprime mortgage meltdown.
Countywide, more than $17 million in “neighborhood stabilization” funds have been doled out by the federal Department of Housing and Urban Development, with the bulk of the money going toward expanding homeownership.
The San Diego Housing Commission announced yesterday that it is accepting applications from interested first-time homebuyers, while Chula Vista and the county launched their programs in March. They have yet to close any loans.
Housing officials blame the slow start on a federal regulation stipulating that bank-owned properties be purchased at a discount of 15 percent below appraised value.
Given the high demand in recent months for distressed properties, which oftentimes draw multiple offers, local jurisdictions worry that it could be hard to close deals for first-time buyers.
“It’s difficult for people to get these foreclosures because there are a lot of offers, and when you add the 15 percent discount on top of that, it makes it harder,” said Mike Dececchi, chief of the county’s community development division. “The banks want to move these properties as quickly as possible, and some are a little leery.”
They have yet to close any loans.
Sounds like the new program is working pretty well…
Loans for all!!!!!!!!!!
Something has to stimulate the economy.
The only catch is that the homes must be bank-owned properties in communities with large concentrations of foreclosures.
Hellz yeah, I want to be the first one to get a loan for my very own habitation in a Future Ghetto of America. I’ll even be able to paint the walls ANY COLOR I want!
Where do I sign up?
Really.
Beware of geeks bearing grifts.
Some Insurers Wary of Treasury Bailout; Ameriprise Declines Funds
By David S. Hilzenrath
Washington Post Staff Writer
Saturday, May 16, 2009
Ameriprise Financial, one of six life insurers offered federal bailout funds Thursday, said yesterday that it is turning down the money.
“While we appreciate Treasury’s approval of our application, we have elected not to accept funding,” Jim Cracchiolo, chairman and chief executive, said in a statement. “We have carefully evaluated our current position and expectations for the future, and we are confident that our current capital position and access to potential additional funding sources are more than adequate.”
Subprime is contained….
Dead People Sent Stimulus Checks
The Social Security Administration, which sent out 52 million checks, says that some of those checks mistakenly went to dead people because the agency had no record of their death.
http://www.foxnews.com/politics/2009/05/15/dead-people-sent-stimulus-checks/
Free money in America…if that doesn’t raise the DEAD…nothing will !
Heck, the dead still get to vote in Chicago.
Night of the living stimulus.
Night of the living stimulus.
Nice.
You know, I’m really eager to watch that one. Is Ving Rhames in it?
…Hey, where’s my popcorn gone to?
I am going with Duane L. Jones, the original was a classic.
A bitter harvest indeed.
Can’t grow gourds that way.
I’m surprised that nobody has posted this chestnut yet….
http://www.nytimes.com/2009/05/16/nyregion/16foreclose.html?_r=1&hp
Minorities Affected Most as New York Foreclosures Rise
. . . But the storm has fallen with a special ferocity on black and Latino homeowners, the analysis shows. Defaults occur three times as often in mostly minority census tracts as in mostly white ones. Eighty-five percent of the worst-hit neighborhoods — where the default rate is at least double the regional average — have a majority of black and Latino homeowners.
And the hardest blows rain down on the backbone of minority neighborhoods: the black middle class. In New York City, for example, black households making more than $68,000 a year are almost five times as likely to hold high-interest subprime mortgages as are whites of similar — or even lower — incomes.
This holds a special poignancy. Just four or five years ago, black homeownership was rising sharply, after decades in which discriminatory lending and zoning practices discouraged many blacks from buying. Now, as damage ripples outward, black families in foreclosure lose savings and credit, neighbors see the value of their homes decline, and renters are evicted. . .
Nature doesn’t care who we are.
Neither does the economy.
World to end. Minorities hit hardest.
Ernest,
You must be a fellow member of the great-right-wing-conspiracy.
That’s actually the somewhat old joke I was suggesting.
I haven’t seen this posted here, although I could have missed it. The author was interviewed on All Things Considered yesterday. NYT finance / economics writer who got stuck in mortgage / credit card debt hell.
http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html?_r=2&hp=&pagewanted=all
Well, I see that I must have missed it TWICE.
FPSS response to Hwy’s posting last night:
“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.”
So Fasty, would you be having any snack with that bottle of Margaux?
I didn’t think that far ahead but now you have me thinking. Hmmm …
Well, certainly humble pie for him but what will I have?
Now tell us the true origins of the meaning of ‘humble pie’, okay, Fasty? Come on! I know you know!
Dish!
…(Haha, get it?)
(I know this bit of food trivia, too, this time. Because I recently made someone eat it. Although I couldn’t decide on the right wine, at the time.
)
umble = innards of animals (heart, liver, etc.)
That’s it?
…do you have swine flu, or something?
Come on, what would you have with that bottle of Margaux? I mean, I’m not asking you to pay for it or anything…
Article should be on the must-read list when they teach the housing/credit bubble 30 years from now.
Holy cow.
Ho. Ly. Cow.
Unbelievable.
(but it was dem po’ people I tells ya…)
Good article. Good find hip in zilker.
A new South Austin classic - chaise longue yard furniture made of recycled grocery carts. I haven’t decided whether to buy one or not. I wish he made Adirondack chairs.
http://austin.craigslist.org/art/1170857566.html
I had a bit of dyslexia: Thought I saw “chase tongue” in there somewhere.
I’d rather have Adirondack chairs made traditionally, myself.
BiLA,
I was just being pretentious and using the original French spelling of chaise longue instead of the perfectly acceptable American usage. (”Would you like pommes frites with your burger, sir?”)
Ideally, I would like to have 4 or 5 traditional ones, just the chair not the leg part, and one shopping cart Adirondack chair too.
eco, I just accessed the CL post from the post above.
It’s been removed.
my cousin owns a victorian in austin and his front yard is full of vintage trailers, you must know the spot. .
I don’t know it, but it sounds like fun. Let me know about where it is and I’ll drive or bike by when I am in the area.
From an article by Bob Chapman, “Get Rid of the Fed” -
A private Fed runs the Public good supposedly, Fed hides AIG counterparties payments in secret, incestuous relationships between Wall Street and Fed mean insiders control the market economy, a shadow banking system that monetized debt and destroyed the lives of untold numbers of people, our lives and our economy would be better off without the Fed. The Secrets of the Federal Reserve: The Federal Reserve Act was legislated in 1913 to end recessions, panics and depression. Over that almost 100-year period they have been eminently no more successful then their predecessors. The Fed is a private corporation, which guides US monetary policy. Its staff is from Wall Street, banking, and transnational conglomerates and occasionally from academia. Of the 12 Federal Reserve banks the New York bank is the most powerful. The staffing of the Fed at the least is incestuous, because the member banks take part in the staffing, as they filter to the Fed what actions they should take. That is done by the FOMC, The Federal Open Market Committee. As a further example the recent stress test done by the Fed was done on many of their owners. Sadly the public is unaware of this and even business majors and those with business masters degrees do not know that the Fed is privately owned or what they actually do. For those of you who would like to get a better understanding read G. Edward Griffith’s, “Creature from Jekyll Island” and “The secrets of the Federal Reserve” by Eustace Mullins.
Recently we discovered that $101.4 billion was originally secretly funneled through AIG to AIG counterparties - parties that were owed these sums by AIG, which had not collateralized derivative contracts. That is like writing insurance and having no collateral reserves set aside for losing events. The Federal Reserve in their wisdom paid off AIG’s debt with what eventually will be taxpayer debt. This is wrong and it should not have been done secretly. When demanded by a Federal Judge to reveal to whom these monies were paid and under what circumstances, the Fed said it would harm their reputations and it was a “state secret.”
The biggest gun in the Fed arsenal is the New York Fed. The recently appointed Secretary of the Treasury Timothy Geithner was the NY Fed’s previous governor. Mr. Geithner had worked in government previously and was in part responsible for the Asian financial disaster in 1997-1998. He is also a Goldman Sachs alumnus. He is part of a never-ending exchange of the denizens of Wall Street and banking being appointed to government positions. In fact Wall Street and banking have been running our government for a long time. Many say for too long.
Link to the full Chapman article on the Fed:
http://tinyurl.com/qr4g9u
Ah, then there’s the old link I found with a CNN article dated August 8, 2003:
Title?
Will rising interest rates unravel all of the gains of the recent housing boom?
http://money.cnn.com/2003/08/07/pf/yourhome/worstcase/index.htm
Maxine Waters held a town hall meeting to discuss the stimulus package. In my bright yellow handout, I note 13 pages of plans to give money away and not one sentence on how they plan to pay for it. Maybe that factoid was in the appendix…let’s see, where was that darn appendix?
One woman got up to complain about the fact that she couldn’t find any work in construction. Instead of giving the obvious answer that, duh, the reason is that construction employment has imploded, Waters directed her to some govt. program.
Some other takeaways:
- Big support for “single payer” and universal health care.
- Big backlash against insurance companies.
- Withdraw from Iraq and Afghanistan.
- Deficits now are only due to the problems Obama inherited.
Didn’t see any Ron Paul stickers…
ex-Wreck
mm