June 4, 2009

Bits Bucket For June 4, 2009

Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum. And see the American Visionaries series from Schwarzfilm.




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448 Comments »

Comment by Pinch-a-penny
2009-06-04 05:32:23

Ahh… What a wonderfull day in this small bluish planet…
Good morning everyone, and hope that you enjoyed the Latvian failure to sell any treasury notes, soon coming to a treasury close to you, and for those behind the chinese firewall, happy Internet Maintenance day.
Hope that all thouse outsources are not too affected then when you call them up for some critical tech support, and they are unable to find their fake names and scripts over the intertubes.
Oh well. C’est la vie.

Comment by NYCityBoy
2009-06-04 05:38:47

In a way I envy those that live behind the Great Firewall of China. It is always exciting when you feel like you are sharing dangerous ideas. I bet they have little circles that surreptitiously pass along the forbidden fruits of the minds of humanity. They get to feel like they are in a special club that is separate from the masses. They get to feel like they know something that the great herd just doesn’t comprehend. I imagine Greenwich Village in the late 50s and early 60s was like that.

The conspiracy of ideas is nurtured against all of the plagues and parasites of the state. In fact, isn’t that what the blog world is all about? Are we not also fighting to dismantle walls?

Comment by Pinch-a-penny
2009-06-04 06:21:08

But is it not the knowledge shared in this blog akin to that? I mean, we share a vision that RE is way overpriced, not only here in the US, but in the rest of the world as well. That could qualify as a dangerous mindset to have, specially when Turbo Tax Timmay has such a vested interest in seeing prices keep on steadily go up!
I do think that you hit on something as ancient as most religions, the kinship that people feel when sharing what they consider significant, and finding others with a similar mind.

 
Comment by michael
2009-06-04 06:32:49

“In a way I envy those that live behind the Great Firewall of China. It is always exciting when you feel like you are sharing dangerous ideas. I bet they have little circles that surreptitiously pass along the forbidden fruits of the minds of humanity. They get to feel like they are in a special club that is separate from the masses.”

lol…i feel that way here in amerika. our masses are just too stupid to find that kind of information…i guess that’s the same as being forbidden.

 
Comment by lavi d
2009-06-04 08:35:45

Are we not also fighting to dismantle walls?

Man, you seem to be feeling extremely poetic this morning.

To the ramparts, comrades!

Microsoft, tear down this wall!

Comment by VaBeyatch in Virginia Beach
2009-06-04 10:28:30

Actually, the great firewall of China is powered by Cisco. Friend says various rumors implicate F5 as well.

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Comment by palmetto
2009-06-04 05:52:02

“those behind the chinese firewall, happy Internet Maintenance day.
Hope that all thouse outsources are not too affected then when you call them up for some critical tech support, and they are unable to find their fake names and scripts over the intertubes.”

???? I must’ve missed something. What happened?

Comment by Pinch-a-penny
2009-06-04 05:57:01

From the Guardian:
“Chinese internet users are rebelling against an internet crackdown brought in on the anniversary of the Tiananmen Square massacre.

Twenty years after the pro-democracy protests that claimed the lives of hundreds – or even thousands – of unarmed civilians in Beijing, a number of websites appear to be making a veiled protest at state censorship by referring to the date sarcastically as “Chinese Internet Maintenance Day”.”

Comment by Muggy
2009-06-04 06:38:47

BTW, for those of you in Tampa, or in other city with a bodies exhibit, you may want to pass as there is some evidence that at one point the bodies may have been from executed Chinese prisoners.

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Comment by rainmayun
2009-06-04 06:54:41

whoa. I saw this exhibit in 2002 in London.

references?

 
Comment by Blano
2009-06-04 07:06:34

60 minutes did a story about it a couple years back.

 
Comment by Muggy
2009-06-04 07:39:24

rainmayun, the wikipedia entry covers it well.

 
Comment by Silverback1011
2009-06-04 15:50:16

I refused to go see the exibition when it came to Detroit. I knew that most of them were prisoners and many of them were rumored to have been political prisoners. Gross.

 
 
Comment by desertdweller
2009-06-04 21:29:28
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Comment by az_lender
2009-06-04 08:01:31

“Latvian failure to sell any treasury notes, soon coming to a treasury close to you”

This sort of thing militates IMO towards deflation rather than inflation, a subject we debate all the time.

Comment by packman
2009-06-04 08:36:29

Why do you say that?

The Fed is currently purchasing $300B in treasuries, in order to keep yields down and thus prices up. The feeling is that it’s likely they will do more down the road.

Do you not believe that this is driven by lack of demand for treasuries, or that it’s not inflationary?

I’d be curious as to what case you could make for it being deflationary. Do you perhaps believe that the lack of ability to sell treasury notes will somehow cause spending to be curbed? If so - I’ve got a bridge to sell you. Something else maybe?

Comment by MazNJ
2009-06-04 12:28:07

This actually strikes me as several seperate issues.

Item 1:
A sov purchasing their own debts by nature is inflationary in and of itself, you are removing a debt instrument held by a presumably 3rd party, providing them cash which is then injected into the economy.

Item 2:
Lack of demand for a sov’s debt. This is not in and of itself inflationary but generally suggests inflationary expectations as in a deflationary environment, you’d prefer holding cash or a fixed income instrument paying a fixed interest rate, as each unit of currency is worth more as it experiences deflation. For a lack of demand, Reasons for this should stem from the risk-reward trade off regarding holding the debt.

To be deflationary, there needs to be a contraction in the money supply. In this case, there’s elimination of POTENTIAL money supply, but no destruction of actual money supply, so no deflation?

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Comment by lavi d
2009-06-04 08:21:08

happy Internet Maintenance day.

Good one.

Happy Chinese Cultural Observance Day to you too!

Comment by Hwy50ina49Dodge
2009-06-04 09:39:29

Ha, America can compete:

Bank of America…our motto… “Bank of Opportunity” ;-)

 
 
 
Comment by NYCityBoy
2009-06-04 05:33:34

Holy smokes! I continue to watch the hometown listings. The number of listings are way down. But so are the prices. I think the distressed properties are keeping the “wishing price” crowd from listing. They think that the distressed sales will end, in a clean and tidy manner, and all will return to “normal”. Good luck with that.

I see a brand new listing for my hometown. It’s not really a brand new listing. It was listed last year for $160,000. It is an 1,807 square foot house. The new list price is $95,000. This may be an attempt to get some bidding going. The corporate sellers better hope that their bluff works.

Let us not forget that this is in Minnesota where there was no bubble. Oh, that one cracks me up. I love that joke. Good humor is always in fashion.

Does anybody still think we are anywhere near the end of this disaster? I know that I don’t. I will let the fools worry about the green shoots that they swear they see. I don’t concern myself with green shoots when there is still so much raw meat lying around. This is a carnivore’s wildest dream. Fire up the ovens. This meal will be seven courses of tenderized flesh.

Comment by Blano
2009-06-04 05:45:58

Around me, it looks like it’s spreading, if anything.

I now have 3 houses in a row next to me that are vacant and/or abandoned, and 4 or 5 more in the other direction between me and town (about 2 miles). A few are nice, a few so-so, a few kinda trashy.

Two have realtor signs in front, a couple have at least been secured by the bank, the others just sit there. A few are nice, a few so-so, a few kinda trashy. There doesn’t seem to be any sense of urgency to get these properties on the market.

Comment by Arizona Slim
2009-06-04 08:38:36

A couple of blocks away sits a foreclosed house. It’s been unoccupied for a year and a half. (Elderly lady who lived there fell and got hurt. She was unable to live alone after that.)

The family fixed the place up and tried to sell, but couldn’t. So the house went back to the bank. And said bank is just sitting on it.

Meanwhile, the vandalism is underway. Mailbox has been trashed. Wonder when the local thugs will start on the house.

 
 
Comment by pressboardbox
2009-06-04 05:54:07

I’ll take a pound of thinly-sliced knife-catcher fingers. Deep fried they make a great snack.

 
Comment by az_lender
2009-06-04 06:13:26

Good morning Mister NYCB, I came through Toronto & Ottawa this time so did not see you, but later on I’ll see you I hope.

For a minute I thought your $95K story was referring to NYC, and I thought WTF! Ah, but Minnesota, yup.

“Does anyone think we are near the end” — of course not, nobody HERE thinks that way, esp. moi. As various presidential campaigns used to chant: Four More Years! Four More Years!

Comment by 45north
2009-06-04 07:59:32

az_lender: sort of thought of you in a shack out in the AZ desert, sitting on your porch shotgun by your side. I must revise my mental image.

I was raised in Toronto, now living in Ottawa.

Comment by az_lender
2009-06-04 08:06:44

That’s OK, “hd74man” thinks I live in Deer Isle Maine year-round (I don’t). And that I pay Maine state taxes. Emphatically not. Others who know I winter in Calif think that I summer in Arizona. Not a chance! I’m a Penna resident and did jury duty there last fall, and voted there.

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Comment by hd74man
2009-06-04 08:45:46

RE: That’s OK, “hd74man” thinks I live in Deer Isle Maine year-round (I don’t). And that I pay Maine state taxes. Emphatically not.

Maine while lanquishing at 38th in per capita income, is the No. #1 highest taxed populace in the country visa vie the ratio of property, income, and sales taxes as a percentage of income.

However I will have you know, that upon your revelation I have immediately emailed my state representatives asking that a transient dweller tax be placed on all seasonal wimps who can’t deal with Caterpiller Hill in the winter!

Maine, the way life should be.

 
Comment by Helmut
2009-06-04 14:54:10

I summer in Northport Maine.

 
 
Comment by Muggy
2009-06-04 09:00:19

“I was raised in Toronto, now living in Ottawa.”

Jealous and jealous. When my wife and I were courting in college, we spring-breaked together in Toronto and Ottawa. We froze our asses off. I love that feeling.

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Comment by drumminj
2009-06-04 09:19:19

We froze our asses off. I love that feeling.

You are a strange cat. Who loves that feeling? I certainly love bundling up..cold weather is good for making/allowing you to do that. Or having a nice fire, or wood-burning stove. But in the end I like being warm..not “freezing my ass off” :)

 
 
 
 
Comment by llking
2009-06-04 06:17:58

that seems to be the trendy things the realtors are doing nowadays. List them low to draw bidding wars. Unfortunately, some of the low price listing didn’t even get a single offer because they think it’s low but it wasn’t low enough.

Comment by nickinPA
2009-06-04 10:44:33

Had one here in PA last Feb. Four family apartments listed for 119k. Advertised in Multi-list for 49k. The “bidding war” that insued got the price to 54k. Sold to a friend of mine. I wouldn’t play the game. Was a good deal at 54k.

 
 
Comment by WT Economist
2009-06-04 06:57:04

“Does anybody still think we are anywhere near the end of this disaster?”

We survived the heart attack.

We still have cancer. Some of the medicines used to stop the heart attack spread the cancer.

And another heart attack — state and local government fiscal crisis, flight from federal debt, interest rates soaring, run on the dollar, another war — is possible at any time.

Comment by packman
2009-06-04 07:52:15

Great analogy!

 
Comment by nycjoe
2009-06-04 08:32:50

Please, some bad news quick! Feel like green-shooting myself now that lovely spouse is getting itchy again to buy a suicide house. Thrown back into fact-gathering mode to stave off disaster and buy another year of sensible renting, at least.

 
Comment by Pondering the Mess
2009-06-04 09:27:50

Based upon the actions by those at the top, brain death has also probably happened already!

 
 
Comment by lavi d
2009-06-04 08:46:05

I don’t concern myself with green shoots when there is still so much raw meat lying around

Everyone is so inspired this morning. What an incredibly apt metaphor.

See, the raw meat rots and then turns to compost which nurtures eventual green shoots.

We are still at the raw meat stage - hell, the flies have only just started buzzing.

Comment by CA renter
2009-06-05 02:15:38

Nice one, lavi d! :)

 
 
Comment by mikey
2009-06-04 09:26:58

The housing lunacy in Minnesota isn’t over by a long shot.

In God’s Country(northern MN), the Call of the Wild Dream Prices for the Chaltets on the Lake overlooking the little people can still be heard with the cry of the Loons.

City people, come and live on lake Vermilon or the edge of the BWCA. Watch the deer, bear, moose and wolves frolic were the fish are always biting. Bring money and lots of it, make me rich for my worn out shack upon the lake. It wouldn’t hurt for you to bring a good paying job up here with you as it is quite easy to starve during a long winter recession that feels like a depression.

Entertaining offers from 400k — 1 million plus. Call now and get a hand warmer and a pair of snowshoes FREE!

(a sauna and red flannel lumberjack shirts for the family included in our Tourist Summer $8k Ripoff Special if you purchase NOW)
:)

 
Comment by tgun
2009-06-04 09:40:03

Hey NYCityboy-

bbbb but it is different here… yah, sure, you betcha!! Yes, the housing (hosing) market is toast here in flyover land. Was up with the family at Lake Mille Lacs (stayed at Eddy’s Resort), did some Walleye fishing (yah, I got one, must have been the world’s smallest though…). You would not believe the number of cabins for sale and foreclosed in the central MN lakes area. It certainly appears that the second vacation home/cabin market was finally torpedoed as well. Goodbye Lusitania…

It is a beautiful day here by the way (a nice 70 degree day, not a cloud in the sky and light breeze). Been awfully dry the past month or so however.

Live in Champlin, work in Arden Hills. Been here (MN) since junior high (moved here from Detroit). Did time in the Air Force (Mississippi, South Carolina, active duty call up with the air guard to Washington DC, Ramstein Germany, Ft. Walton Beach FL, Panama Canal Zone).

Comment by Leighsong
2009-06-04 15:13:33

Moved up here to WI from Niceville -

Leigh

 
 
Comment by desertdweller
2009-06-04 21:34:48

I saw a green shoot yesterday, then today it became a dead dandelion.

 
 
Comment by wmbz
2009-06-04 05:35:23

Bernanke vs. Merkel: The Bailout Debate…

It’s not exactly an international incident, but there’s some trans-Atlantic friction developing over the handling of the financial bailout.

Ben Bernanke, the chairman of the United States Federal Reserve, said Wednesday that he “respectfully disagreed” with Angela Merkel, the German chancellor, about her recent criticism of efforts by the Fed and other central banks to stabilize Wall Street and the banking system.

“The U.S. and the global economies, including Germany, have faced an extraordinary combination of a financial crisis not seen since the Great Depression, plus a very serious downturn,” Mr. Bernanke told lawmakers Wednesday morning at a House Budget Committee hearing, after being asked to respond to the chancellor’s remarks. “In that context, I think that strong action on both the fiscal and monetary sides is justified.”

In a speech in Berlin on Tuesday, Ms. Merkel, normally quite diplomatic on such matters, broke character and forcefully denounced the decisions taken by the Fed and other central banks during the crisis, saying their aggressive actions could backfire.

“I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line,” Ms. Merkel said. “We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years’ time.”

Asked about this, Mr. Bernanke had no apologies for the Fed’s extraordinary efforts to rescue the nation’s financial system, which include a $1 trillion program intended to jump-start the credit markets.

“I am comfortable with the policy action the Federal Reserve has taken,” Mr. Bernanke said Wednesday. “We are comfortable we can exit from those policies at the appropriate time without inflationary consequences.”

Ms. Merkel, part of the conservative Christian Democratic Union, says she disagrees with the easy monetary policies instituted by the Fed and the Bank of England and thinks that they should be reversed.

Comment by pressboardbox
2009-06-04 05:45:36

Ahhh, those Germans are just jealous because they can’t print as much money as USA can. A VW printing press is no match for a GM press that goes from zero to a trillion in less than six seconds.

Comment by realestateskeptic
2009-06-04 07:01:34

Just remember the Germans actually lives thru the hyperinflation, “wheelbarrow of money for a loaf of bread” scenario, so their approach should be much different (and may turn out to be wiser in the end).

Comment by VirginiaTechDan
2009-06-04 07:33:35

Americans also lived through hyperinflation, “not worth a continental”, thus why the constitution said “only gold and silver” could be used as money and that “no state shall issue bills of credit”.

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Comment by DennisN
2009-06-04 08:05:23

A quibble. The Constitution says that “no state shall … make any thing but gold and silver coin a tender in payment of debts”. Art. I sec. 10 para. 1. This isn’t a limitation on the Federal government to issue paper money. In fact “the Congress shall have the power … to coin money, regulate the value thereof, and of foreign coin….” Art. I sec. 8,

 
Comment by az_lender
2009-06-04 08:08:25

Dennis, thanks for your Tuesday comment about your brother’s unZillowed house, and the probability of underreported distress in Wyo. That made a lot of sense. I don’t think the Wind River Indian res. matters much to my statistics though, because the pop. of Fremont Cty is only 19% Indians.

 
Comment by packman
2009-06-04 08:41:21

A quibble. The Constitution says that “no state shall … make any thing but gold and silver coin a tender in payment of debts”. Art. I sec. 10 para. 1. This isn’t a limitation on the Federal government to issue paper money. In fact “the Congress shall have the power … to coin money, regulate the value thereof, and of foreign coin….” Art. I sec. 8,

The key word there is “coin”. The fact that the word “issue” wasn’t used instead is deliberate. The founding fathers never intended paper to be money. In fact I have a $5 bill from 1928 that says that it can be exchanged for $5 of money - i.e. the bill itself isn’t considered money. It’s only recently that paper has been considered actual money - before the mid 1900’s it was considered a debt that could be exchanged for money. Thus the term “bill”. Most people don’t think about that.

 
Comment by VirginiaTechDan
2009-06-04 09:18:49

Furthermore, “regulating the value thereof” meant specifying the “weight” not the market value of the coin.

 
Comment by packman
2009-06-04 09:29:42

Furthermore, “regulating the value thereof” meant specifying the “weight” not the market value of the coin.

Yes. To clarify - that included specifying the denominations, and the weights and compositions used for each denomination.

Are you perhaps a coin collector VTD? (referring to numismatics)

 
Comment by Central Valley Guy
2009-06-04 12:12:17

I certainly wouldn’t want to trade a $5 for gold. My god, that’s 1/200 of an ounce! That’s a few miniscule shavings. I’d lose it inside a clear plastic Ziplock bag!

 
Comment by packman
2009-06-04 12:20:39

I certainly wouldn’t want to trade a $5 for gold. My god, that’s 1/200 of an ounce! That’s a few miniscule shavings. I’d lose it inside a clear plastic Ziplock bag!

I have a $5 gold coin - it’s about the size of a nickel. You can thank the Federal Reserve, FDR, and Nixon for reducing the value of $5 down to a few shavings of gold since the time it was made.

FWIW though $5 worth of silver would still make a decent-sized coin.

 
 
Comment by packman
2009-06-04 07:55:34

Just remember the Germans actually lives (sic) thru the hyperinflation

FWIW - though the Germans technically “lived through” it - a very large portion of them - and the rest of the world - didn’t live through the subsequent resulting regime and war.

God help us if that ends up being the result this time.

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Comment by 45north
2009-06-04 08:25:33

a very large portion of them - and the rest of the world - didn’t live through the subsequent resulting regime and war.

no they didn’t live through the resulting regime and war

God help us.

 
 
 
 
Comment by neuromance
2009-06-04 17:04:39

“I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line,” Ms. Merkel said. “We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years’ time.”

I had forgotten about the moral hazard issue. If the American public does not get up in arms about the causes of the meltdown, if all that gets swept under the rug, we will keep going through this until no transfusions will be able to save the patient.

The fed is furiously pumping blood (money) into the patient, but it seems little attention is being paid to the gaping wound out of which the blood is gushing.

If they don’t treat the wound with something like a Financial Products Safety Commission and preventing institutions from getting so big they present systemic risk - and holding executives personally accountable for malfeasance - it’s going to cause a bigger wound in the future, for which no amount of blood transfusions will save the patient.

The other option is we muddle along wounded, with stagflation, inflating away the debt, a sense of malaise, and a continuation of the policy of privatizing profits, socializing losses. That doesn’t bode well for the standards of living of most citizens in the future.

 
 
Comment by wmbz
2009-06-04 05:36:43

GM Bonds Signal Market Value Topping Ford’s on Federal Bailout…

June 4 (Bloomberg) — General Motors Corp. bond trading shows investors are betting its government-backed bankruptcy will create a company with a higher market value than Ford Motor Co., the only major U.S. automaker to shun a federal rescue.

Bondholders will have a claim to about a 10 percent stake in a so-called “New GM,” the government-controlled automaker that will buy the best assets of the old company. That implies a value after bankruptcy exceeding Ford’s, according to a June 1 report by Rod Lache, a Deutsche Bank AG analyst.

Based on yesterday’s closing bond prices and Deutsche Bank’s formula, GM’s market value would be about $33.1 billion, underscoring how taxpayer support will prop up the restructured automaker once it leaves court protection. Dearborn, Michigan- based Ford’s market value as of yesterday was $19.9 billion.

“You can argue it’s worth even more,” said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan. “The amount of free cash flow is going to be huge now that you’re taking off the debt.”

While Detroit-based GM may regain its standing as the biggest U.S. automaker by market value, it might do so as a smaller company.

Revenue at the new GM probably will be $120 billion to $140 billion, Chief Financial Officer Ray Young said this week. Last year’s total was $149 billion compared with $146 billion for Ford, the second-largest U.S. automaker by sales.

The projections for post-bankruptcy equity values in the week GM entered Chapter 11 reflect Treasury’s plan to get the company out of court within as few as 60 days. With $65 billion in federal help, GM will shrink its debt to about $17 billion from $172.8 billion. Ford’s automotive debt was $25.8 billion, excluding Ford Motor Credit liabilities.

‘Improved Perception’

“There is an improved perception of value,” said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tennessee. “People are buying GM bonds in anticipation of a quick exit from bankruptcy.”

Comment by Muggy
2009-06-04 06:26:25

I own two Fords, and this is really horrifying. Somewhere Alad is prancing through the wilderness, chuckling at the “Fiat” deal.

Comment by max4me
2009-06-04 07:33:16

I miss him

Comment by X-GSfixer
2009-06-04 11:46:58

I don’t. Especially the daily arguments about gold. Blah, Blah, Blah…..

Look up “Smug, know-it-all” in Webster’s, and it has his picture by the definition. :)

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Comment by desertdweller
2009-06-04 21:38:21

I miss him too. If ya didn’t agree with the gold dialogue, keep scrolling down.

 
 
Comment by ahansen
2009-06-04 21:21:17

Ditto. Miss his excellent book recommendations and all the lively conversations he sparked. Fellow certainly got some of your goats, though….

If you’re reading this, Lad, take a heli-run down the backside of Aspiring for me! YeeOWWWW!

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Comment by hd74man
2009-06-04 12:55:18

RE: Somewhere Alad is prancing through the wilderness

Well he best not be doin’ it naked.

It’s black fly season in the area of his last known siting.

 
 
Comment by packman
2009-06-04 06:31:46

No friggin’ s*.

:roll:

The sad thing is - this will somehow be modeled as a “success”; as a precedent for future nationalizations. But it’s the same “success” that strawberry pickers with $700,000 houses had. It’s amazing how prosperous you can be when you have fools willing to give you truckloads of money for nothing. The sad thing is that money was forcefully taken from people who really did earn it.

Comment by michael
2009-06-04 06:37:04

i wold we worth more to if you paid my debts.

Comment by packman
2009-06-04 06:46:01

LOL

come again?

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Comment by pressboardbox
2009-06-04 06:50:15

o sould I.

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Comment by lavi d
2009-06-04 08:54:37

o sould I.

wod

 
 
 
Comment by Jon
2009-06-04 09:16:18

“It’s amazing how prosperous you can be when you have fools willing to give you truckloads of money for nothing. The sad thing is that money was forcefully taken from people who really did earn it.”

You mean like realtors & bankers?

Comment by drumminj
2009-06-04 09:27:20

You mean like realtors & bankers?

I think he means taxpayers like those of us on this blog.

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Comment by packman
2009-06-04 12:14:48

This stolen money expanded beyond the scope of taxpayers long ago. It’s now being funded mostly through inflation, by “spenders” - i.e. virtually everyone.

 
Comment by drumminj
2009-06-04 12:26:11

This stolen money expanded beyond the scope of taxpayers long ago.

Agreed. Unfortunately, “theft” is a strong word for it, so people can easily ignore it - they still have $ bills in their pocket. It just buys far less.

It’s kind of like copyright infringement vs theft. The RIAA and MPAA want to liken it to physical theft (see the ads they have at the start of movies), but it really isn’t.

Not that I’m saying that currency devaluation is the same as copyright infringement..Just pointing out that people instinctively see the harm in being deprived of something that’s “theirs”. But not the loss due to duplication of something that is theirs (or someone elses, for that matter).

 
Comment by packman
2009-06-04 13:15:19

Yep.

IMO though all the more reason why it’s insidious. At least cat burglars will readily admit that they’re stealing from you, and not try to hide it behind the veil of “economic stability”.

 
Comment by Jon
2009-06-04 14:33:37

“Not that I’m saying that currency devaluation is the same as copyright infringement..Just pointing out that people instinctively see the harm in being deprived of something that’s “theirs”. But not the loss due to duplication of something that is theirs (or someone elses, for that matter).”

Bingo. There are a lot of insidious things like that. Tax cuts are one. Who’s against a tax cut? Though it means forcing borrowing and future taxes on the thrifty. Or (what used to be) the obligatory 3% COLA. It makes people feel like they’re getting ahead but are really just treading water.

 
 
 
 
Comment by Blue Skye
2009-06-04 06:33:14

Wow. We are paying $65B to create a company that might be worth $33B. Our share will be 60%.

“Look how much we saved!”

Comment by Mike in Miami
2009-06-04 06:56:03

That even beats our investment into AIG! Genius at work!

 
 
Comment by oxide
2009-06-04 06:56:54

The temporary nationalization of GM (whatever you call it) doesn’t bother me all that much.

What really burns me is the bailout of AIG. :mad: They are costing — what — twice the amount as GM, and what did us taxpayers get for that? For what? To change a few numbers on a spreadsheet to make the *poof* debt a little less?

At least GM is was a major industry, lots of people, jobs, and community involved, lots of hard assets (like land/factories), American legacy&trade: blah blah, and potential to re-tool to better cars or renewable structural componenets. What does AIG have other than a few PC’s and some giant egos?

Comment by X-GSfixer
2009-06-04 11:49:10

All that valuable brainpower, that came up with all those great money managing ideas.

 
Comment by CA renter
2009-06-05 02:23:36

Amen, oxide!!!

I’d much rather bail out GM than AIG or any of the banks/financial firms.

 
 
Comment by Blano
2009-06-04 06:58:35

IMHO once people realize Ford’s main competitor is not GM, but the federal guvmint, their stock price will edge downward again.

Comment by iftheshoefits
2009-06-04 07:22:49

Yep. Which gets me back to the question I keep asking - who exactly (what demographic) is going to buy the government-issue automobiles? What happens when GM sales fall off another cliff, as I suspect that they will?

Comment by Pinch-a-penny
2009-06-04 07:32:39

Exactly my question.
Unless there is a massive push towards making small parking lots, and small garages, driving a small car is not the first option for a lot of people. In fact the sales prove that bland mid sized cars like the Camry, and the Impala are the best selling cars, yet they want GM to concentrate on cars like the Aveo, that have a very small market segment.
Some small cars are really well engineered, and might be fun to drive in, but they are NOT fun to crash in; but again, GM and Chyrsler (and NO a Cavalier, or a Neon is NOT a small car, I was thinking more like an Aveo or Smaller) have never been able to produce a decent small car (and yes let the vega lovers start the broiling).
The US has just never gone that much into small cars. There was a time when small sporty British imports had a following (and many still do), but if you have ridden one lately, it is a scary proposition, as you could reasonably fit under the bumper of your average SUV, and your face would be the first contact with said bumper…

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Comment by phillygal
2009-06-04 07:40:52

I was driving a smaller car, I recall only too well looking up at the undercarriage of a 250 while stationed behind it.

 
Comment by Northeastener
2009-06-04 08:55:55

driving a small car is not the first option for a lot of people.

Had to renew my expired registration and get an inspection sticker yesterday. While waiting in line at an inspection station on Rt 44 in Raynham, I saw four new Hyundais and a new Toyota waiting in line as well. Rt 44 Toyota Hyundai is right down the street… care to guess what the models were? A Rav4, 2 Elantra’s, a Sonata, and a Santa Fe… almost all driven by senior citizens or in the case of the Elentra hatchback, a mid-20’s couple.

People are choosing or being forced financially to go smaller, cheaper. Hyundai is making huge gains in marketshare from this…

 
Comment by lavi d
2009-06-04 09:03:55

Unless there is a massive push towards making small parking lots, and small garages, driving a small car is not the first option for a lot of people.

I’m still holding out hope for my personal dark horse - a game-changing breakthrough in clean, cheap, renwable energy.

Although this would have the potential to exacerbate congestion and traffic deaths, cheap, reliable energy would go a long ways to help ease some of our more pressing problems

 
Comment by tresho
2009-06-04 09:28:42

clean, cheap, renwable energy I’m not holding my breath. I don’t think this will happen.

 
Comment by BanteringBear
2009-06-04 09:41:51

“…clean, cheap, renwable energy…”

“I’m not holding my breath.”

Me neither. If it’s cheap, the huge corporations aren’t interested. It’s delicious profits, or nothing.

 
Comment by Hwy50ina49Dodge
2009-06-04 09:43:22

“The US has just never gone that much into small cars.”

I guess the VW beetle…was waaaaaaaaay before your time? ;-)

 
Comment by measton
2009-06-04 10:02:51

remember Americans are and will be a lot poorer. Aveo type cars may become the Mercedes and Lexus of 2005.

 
Comment by Pinch-a-penny
2009-06-04 11:11:53

It may be that people are buying small cars because they have to.
I have 3 cars that are on the road. I have a 5 year old Element as my DD, a 1987 MB 300E that is my wifes around town car, and a 1976 MB 450 that is a project car, and I will not buy any new cars any time soon. I can drive the element for 10-15 years more, as I bought it new, and the 300E still has about 15 years left on it. I will pass on any new aveo style cars, as if they have the unfortunate luck of crashing into one of mine, I am pretty sure who will be walking away, and who will be pried out of the car.
Sorry, but there are too many exiting GOOD cars that still have a pretty long remaining lifespan for me to get worried about Goverment motors producing and ramming aveos down my throat. I in fact think that they will go the route of British Leyland, a perfect example of what happens to a nationalized company.

 
Comment by iftheshoefits
2009-06-04 11:17:53

It’s not that Americans won’t buy smaller, more fuel efficient cars. Heck, I intend to do so myself when my 16yo Isuzu Rodeo bites the dust.

The challenge is in designing smaller cars that are also safe, relatively inexpensive to buy and maintain (eliminates hybrids for now due to battery replacement costs), and that are not depressing to drive and ride around in.

This will take inspired design, and advanced quality in manufacture. This typically occurs only in corporate cultures that are the antithesis of GM, something that has long been established in progressive studies of corporate management techniques. Students of GM all the way from Deming to Tom Peters to Michael Moore have pointed this out.

I doubt if the most brilliant management team on the planet could turn around GM’s culture to the point that they will succeed in this endeavor, and the new ownership hardly fits that bill, to put it gently.

 
Comment by Hwy50ina49Dodge
2009-06-04 11:38:29

“a game-changing breakthrough in clean, cheap, renewable energy.” ;-)

lavi d, you must be a fan of old Diogenes:

(Diogenes sitting naked in a bathtub in the center of the town plaza…)

To “Alexander the Greatest EVER!”: “Could you more over just a bit…you’re blocking the sun” :-)

 
Comment by X-GSfixer
2009-06-04 12:07:16

The Euro market and the Far East market don’t have to worry about the distances that the US market has, especially for anyone who doesn’t live on the coasts

Paris-Berlin by car is about 600 miles, about 100 miles less than the distance between San Diego and Salt Lake City.
There are a lot of 3-4-500 mile trips out here in flyover country that are quicker (door-to-door) driving by car, than they are flying the airlines.

Try doing that kind of trip a few times a year with 3-4 people in a Honda Civic, and you will be in the market for an SUV in no time.

 
Comment by iftheshoefits
2009-06-04 15:38:50

What was I just saying about GM’s new ownership and changing the culture to build quality cars?

Barney Frank convinces GM CEO to keep his district’s plant open
@ 4:01 pm by Michael O’Brien

Rep Barney Frank (D-Mass.) won a stay of execution on Thursday for a General Motors plant in his district that the automaker had announced it would close.

No other lawmaker has managed to halt the GM ax. As chairman of the House Financial Services Committee Frank oversees the government’s bailout program, known as TARP. Frank’s staff said the lawmaker spokes with GM CEO Fritz Henderson on Wednesday and convinced him to keep the Norton, Mass. plant open for at least 14 months…

“I greatly appreciate General Motors’ willingness to take into consideration the wider needs of the company and especially the community,” Frank said in a statement. “Keeping the facility open for this extra time gives workers a chance to look at other opportunities, while at the same time continuing to provide for their families.”

 
Comment by packman
2009-06-04 15:52:31

Great - here we go. Already the government inefficiency begins - changing plant closures based not on their contribution to the company, but on how much pull the politician for that district has.

 
 
Comment by Pondering the Mess
2009-06-04 09:34:31

Considering how successful our Leaders were at getting people to buy poorly built, horribly overprices houses with toxic loans, they will probably be equally successfully at getting them to buy tiny, horribly built, overpriced cars. And, as with the Housing Bubble, those of us who refuse to comply (because we can think for ourselves) will suffer.

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Comment by lavi d
2009-06-04 10:08:33

…they will probably be equally successfully at getting them to buy tiny, horribly built, overpriced cars.

Yugo, anyone?

 
Comment by SDNewbie
2009-06-04 13:09:49

Ok, I have to ask this . . . .

Is it possible that Government Motors will realize that there are small cars that have been popular in the US (think Mini) . . . .The problem with the small cars is not so much size, but the quality of craftmanship (not present) and style.

I believe there is an opportunity for a small fuel efficient car to sell, if they make is something the American consumer wants, not necessarily needs.

 
Comment by Pinch-a-penny
2009-06-04 13:19:35

The mini is really not that small of a car. In fact if you compare it with the original, it is quite a hefty car and large car, as they beefed it up for security, and yes, they replaced the lucas systems.
I think that the idea of a mini would be appealing to a number of people, but try putting a family of 4 into it, and then, most people would want something a bit bigger, cue in the bland mid size car.

 
Comment by SDNewbie
2009-06-04 14:00:02

I agree with the Mini being “heavy.” I think that fact that it’s quite heavy for safety reasons is part of the appeal that makes it successful.

I agree with your carrying capacity statement - as a parent with two children - a Mini or Smart car isn’t really feasible. That said, I would be willing to sacrifice some storage space, for a small car that could comfortably and safely carry 4 people.

 
Comment by Silverback1011
2009-06-04 16:02:17

The real trouble for the auto manufacturers is that most posters here will not be buying ANY new car for quite awhile. People are pissed off about new cars in general, sick of the whole thing, and are planning to drive what they currently have into the ground. We have a 1992 cool turquoise ( ! ) Honda which my husband drives to do errands, a 2002 Mazda Protege which has 97K miles now and I drive to work, and another 2002 Protege which has only 45K miles on it, which we are “saving”. If one of the other cars dies, we’ll just go down to the Arab guys who take care of our cars, and get one of their retooled old models which will sell for about $ 3000. It will probably last us another 6 years. They’re good mechanics, and everyone else I work with is driving older Tauruses anyway, which is usually what the Arab guys sell. Whoops, some manufacturerer is out $ 35,000 for a new car due to that type of purchasing decision.

 
 
 
Comment by james
2009-06-04 07:51:47

Ahhhh. Maybe.

I think GM will be unable to get rid of the yoke of its union and all the talented designers/engineers/marketers exc will be gone.

Will produce cars based on political decisions.

So, while F might take it on the chin for a couple years, expect that GM will just grow less and less competative.

Comment by Arizona Slim
2009-06-04 08:44:29

I can recall, back in my youthful attendance at a certain university in the state of Michigan, that the auto industry was losing its appeal to me and my fellow students.

I noticed that many of the kids who had engineering and technical talent weren’t interested in working for GM or Ford. Instead, they were attracted to that cool new industry called “computers.”

And this was back in the late 1970s.

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Comment by Blano
2009-06-04 09:20:02

“at a certain university in the state of Michigan”

Lol, I know which one, but are you embarrassed to say it?? I’ve seen that a couple times.

 
Comment by Restonian
2009-06-04 09:39:11

“all the talented designers/engineers/marketers”

Which ones? The ones that designed/engineered/marketed the Vega, the Chevette, or the Pontiac Aztec?

American Car companies could compete with boring mid-sized sedans as recently as the 90’s - the Ford Taurus comes to mind. Then they moved to SUVs, and now if you want a “car” (not an SUV, light truck, or “Crossover” you buy a Honda or Toyota.

 
Comment by james
2009-06-04 11:07:11

Restonian (Virginia, eh?),

The talented designers probably made the vettes, trucks and Camero exc.

The guys that designed the Aztec are the ones that stay in a non-competative workforce enviroment. With the government its almost always about politics and time on the job.

 
 
Comment by Pondering the Mess
2009-06-04 09:38:26

With the PelosiMobile and Obamawagon as the main products for 2010, I’m sure Government Motors will have Big, Shining Glorious Year!

Small, crummy, unsafe cars will be forced upon renters in the hopes of either rubbing them out on the highways or getting them to buy a house - two birds with one stoned!

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Comment by In Colorado
2009-06-04 10:15:36

Nothing is stopping you from buying a used SUV.

 
 
 
 
Comment by Jim A.
2009-06-04 07:52:00

Possibly not crazy, after all the bankruptcies of GM and Chrysler, Ford will still have to service it’s debts.

(and yes let the vega lovers start the broiling).
Both of them?

 
Comment by Professor Bear
2009-06-04 09:23:09

“June 4 (Bloomberg) — General Motors Corp. bond trading shows investors are betting its government-backed bankruptcy will create a company with a higher market value than Ford Motor Co., the only major U.S. automaker to shun a federal rescue.”

Take home lesson: It still pays to be too-big-to-fail.

 
Comment by Pondering the Mess
2009-06-04 09:31:13

Nice… so, the one domestic automaker who doesn’t get on the Bailout wagon will be crushed by Government Motors and Crudsler, leaving us with assorted Green Yugos as our future car choices. Wonderful!

Comment by Observer
2009-06-04 12:14:33

All of the issues cited by all are the reasons why I will never buy a GM or Chrysler vehicle again. I have a feeling that most Americans feel the same way.

Unfortunately, they will both be support forever by the taxpayers as the politicians could never let that many jobs be lost if they truly had to pay their way.

 
 
 
Comment by packman
2009-06-04 05:40:28

Repost from late last night:

An updated version of a graph I’ve previously posted - residential mortgage debt as a percentage of GDP. I added pre-WW2 data from the David Wheelock (St. Louis Fed guy) paper done last year.

It’s interesting to see the history, and correlate it with 20th-century events. Mortgage debt went quite high during the 1920’s - rising much faster than the also-rising GDP. In the early stages of the GD, mortgage debt remained fairly flat, but GDP plummeted, thus debt as a percentage of GDP continued to rise - then eventually fell due to foreclosures and to GDP recovery.

As can be expected it dropped a lot during WW2 (keeping in mind that GDP was technically strong, though it was really wartime products) - but then since then has risen in large steps, culminating in the huge step up since the late 1990’s. It’s interesting to me also that during the 1990’s even though prices were flat and even falling to some extent - that mortgage debt was rising - keeping pace with GDP. We are definitely becoming a nation of borrowers, and it transcends economic cycles.

The thing most worthy of note though of course - the scale of the bubble level compared with the pre-GD level is… ominous. Also that we haven’t even begun to reduce it, at least relative to GDP.

I’ll throw other debt into the chart at some point, since it’s also worth noting that right now even though mortgage debt has stalled, that government debt of course is skyrocketing. So overall our debt as a percentage of GDP continues to rise unabated; the rising portion is merely shifting now to government debt. This is definitely not good for the long-term health of our economy.

Comment by Jim A.
2009-06-04 07:54:09

Eventually, foreclosures or other forms of debt forgiveness are likely to bring it down. But we’re not there yet, check back ~2012 or so.

Comment by packman
2009-06-04 08:48:55

Yeah there was some discussion on that when I first posted it a few weeks ago. It’s hard to know how much foreclosure writedowns have been accounted for in the data (Federal Reserve z1). I would imagine that’s it’s not too far off though; at least compared with the actual bank writedowns, because the banks themselves have only taken a fairly small portion of the writedowns that they eventually will; in part because of the FASB rule change.

Mortgage debt has actually decreased by about $200B in nominal terms since the peak. That sounds about right w/respect to the writedowns that have happened, being somewhat offset by some new debt from the recent refi boom.

Comment by james
2009-06-04 11:09:45

I expect the mark to fantasy will allow the numbers to remain elevated for a long time.

I’m thinking a Japan like 20yrs. They ended up as more of a socialist state too.

20+ yrs of deflation. Wheeeee!!!!!!!

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Comment by packman
2009-06-04 11:24:59

Well, except Japan didn’t do nearly the fast-and-hard stimuli that we’re doing. While we do have deflation right now - in the end I think it’ll be much shallower and shorter than Japan’s for this reason. Most likely that’s intentional - the banks are trying to postpone the writedowns until they’re no longer writedowns, and trying to pump up inflation as much as they can in order to achieve that end.

The consequence though of course is a likely whiplash effect - yeah they’ll avoid a bunch of writedowns, but at the expense of virtually every other aspect of the economy when we have high inflation down the road (with socialism as a bonus).

 
 
 
 
Comment by az_lender
2009-06-04 08:16:36

good chart packman

 
Comment by Leighsong
2009-06-04 08:27:48

Nice work. Thanks.

Leigh ;)

 
Comment by Don't Know Nothin About Buyin No House
2009-06-04 08:59:54

GDP in 1930 was real goods for the most part that did not vanish. Our current GDP is about 22% fake, leveraged financial industry revenue that will shrink to maybe 1/6 its size. So the last bubble on the graph should be several points higher when comparing to 1930s? Might be interesting to take out much of the credit and financial components of current GDP and see how it looks.

Comment by packman
2009-06-04 09:18:39

Well, I only have so much time.

In 1930 there actually was a *tremendous* amount of credit buildup; not sure how much of the GDP was comprised of this, from a financial production standpoint.

In the end though a case could be made that even real goods and services are “false” if they’re purchased on credit - e.g. like most of the GDP 2000-2006. The majority, if not all, of GDP expansion of that period was fueled by home equity extraction (I’ve seen charts).

So I think trying to separate financial production vs. goods and services production would be relatively meaningless, and certainly very subjective.

Comment by warlock
2009-06-04 13:12:29

Hmm…

I disagree there. I think you have to separate money in its role of a signal as to what to produce etc., from the supposed value of what is produced.

The malfunctions in the issuance of credit have certainly distorted the signals on what should be produced, hence the condo explosion, and the prices thereof - but stuff has still been produced, and that has real value, it’s just not entirely clear what that value is.

Which is to say - there is a distinct difference between the 2000-2006 period where everybody was unemployed and did nothing, and the one where a large number of unnecessary, and arguably unsuitable SUV’s were produced and purchased.

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Comment by wmbz
2009-06-04 05:49:18

“Economic trends are finally beyond the control of the political class. This is the great lesson that economics has been teaching for some 700 years, generation after generation.”

~Lew Rockwell

Comment by Stpn2me
2009-06-04 06:03:26

Good lesson to learn too.

 
Comment by Muggy
2009-06-04 06:30:52

Wombats, your post, combined with the Ford post, combined with the homeless living in $2,700/mo. condos has got me down today, and it’s only 9:30 am!

 
Comment by packman
2009-06-04 06:35:04

I beg to differ with Lew. Strongly so.

Yes they can’t control the fact that there is a forest fire now raging. However they can control whose houses and cities are saved and whose are left to burn, since they own the forest service fire department.

See GM for instance.

Comment by VirginiaTechDan
2009-06-04 07:43:05

But those decisions are just noise on the much larger trend toward increased poverty.

Comment by jeff saturday
2009-06-04 07:55:57

Poverty and me
We’re pretty good company
Looking for an island
In our boat upon the sea
Poverty, gee I really love you
And I want to love you forever
And dream of the never, never, never leaving poverty
Never leaving poverty
Poverty
Poverty
Poverty
Ahaaaaah

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Comment by ahansen
2009-06-04 22:26:43

Thanks heaps, Jeff.
Now I’m gonna be humming that gad-awful song with your lyric inserted for the next six months at least….

 
 
Comment by packman
2009-06-04 08:04:06

Perhaps. Guess it depends on whether we’re talking macro trends vs. micro trends.

I think though that even the macro trends are within the control of politics; they *could* actually implement policies that turn the debt train around. However the PTB don’t actually have an interest in changing this macro trend, because it removes their ability to extract as much for themselves. They’re perfectly happy driving the world to financial ruin, because at least this means they get to be king of the resulting rubble heap.

The heads of failed economies often live quite well. See North Korea for example.

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Comment by james
2009-06-04 07:54:15

Yeah, well those rich people in Santa Barbera houses burned along with everyone else.

 
 
Comment by Hwy50ina49Dodge
2009-06-04 10:34:54

“Lew Rockwell…” ;-)

Hey are you sitting on the “john” all morning reading this “shasta”? Just wondering…you might be cutting off circulation to a vital part of your bodies red juice flow…

Comment by DennisN
2009-06-04 14:16:34

At least it’s not George Lincoln Rockwell he’s reading. ;)

 
 
 
Comment by prsxr
2009-06-04 05:52:28

Eats, Green Shoots & Leaves

(with apologies to Lynne Truss)

 
Comment by Stpn2me
2009-06-04 05:58:53

Hello everyone,

I have been looking for a blog like this!!! I have been blogging on the WSJ developements blog, but it isnt like this..

A little about me:

I am a soldier stationed with the 82nd Aviation Brigade currently in afghanistan. When I get home, me and the wife plan on buying a house. I know the market will be nice when I do. Glad to be here and look for alot more of my posts!!!

Comment by Kim
2009-06-04 06:26:33

Welcome to the boards!

 
Comment by awaiting wipeout
2009-06-04 06:39:54

Thank you for serving our nation, Stpn2me, and other former military in the hbb community.

Comment by Arizona Slim
2009-06-04 08:46:14

Adding my thanks, Stpn2me.

 
 
Comment by packman
2009-06-04 06:48:55

Stpn2me - thanks for the work you folks are doing over there. FWIW the company I work for does a lot of equipment that’s used over there, you may actually be using some to make this post in fact.

FWIW - I wouldn’t be in any rush to buy a house soon. See my posts above, as well as many others made in this blog.

Comment by Hwy50ina49Dodge
2009-06-04 11:47:43

“Stpn2me - thanks for the work you folks are doing over there”

+1

Welcome, now let me introduce you to our local HBB 20# trout named txchic… ;-)

“…When I get home, me and the wife plan on buying a house.”

Speedy Gonzales: “amid cries of “¡Ándale! ¡Ándale! ¡Arriba! ¡Arriba!” (colloquial Mexican Spanish for Come on! Hurry up!) courtesy of Mel Blanc, …Sylvester soon gets his painful comeuppance.”

Lucy: “Charlie Brown, you’re such a BLOCKHEAD!”

 
 
Comment by oxide
2009-06-04 07:01:07

How much longer are they keeping you in Afghanistan?

Comment by exeter
2009-06-04 07:40:10

Answer: Too long.

 
 
Comment by peter a
2009-06-04 07:41:27

This former 82nd Rigger is glad your here, you will get a financial education like know other here.

Comment by mikey
2009-06-04 20:28:35

Sheesh…All the 82ND Total Malfunctions are on Ben’s Blog today !

“All the Way”
:)

 
 
Comment by phillygal
2009-06-04 07:42:39

the WSJ had a real estate blog I used to follow a couple years ago.
Permabulls were ruling the roost then, what’s going on now - are they finally silenced?

 
Comment by whino
2009-06-04 07:53:17

I would also like to welcome you, Stpn2me. Don’t get discouraged if it takes awhile for your post to show up on this board, our moderator Ben does a good job at weeding thru the posts. :-D

 
Comment by bill in Los Angeles
2009-06-04 08:12:16

Stpn2me, we are looking forward to your safe return! Stay safe!

 
Comment by az_lender
2009-06-04 08:19:55

Stpn2me, I am sure the market will be nicER when you get home, but I don’t think anyone on this board would advise you to buy before 2012 or 2013. For a reason why not, google “mortgage reset chart,” and keep in mind that foreclosures probably lag resets.

 
Comment by BanteringBear
2009-06-04 09:45:21

Welcome!

 
Comment by mikey
2009-06-04 20:18:06

Welcome aboard Almost Airborne

Oldster from the 1/503d Herd, 2/325 and Little River Black Patch RAIDER/RECONDO gang.

I butchered “Blood on the Risers” into “Blood on the Hummer” about Flippers a few days ago that might amuse you if you scroll back through Ben’s posts. Keep your head down, act like a turtle and you’ll be back to the land of the Fayetteville bound Vomit Comet in no time.

Now….”GET OFF OF MY G*D***D AIRPLANE TROOP !”

;)

 
Comment by desertdweller
2009-06-04 21:50:01

Welcome,
Met a really nice marine, Larry, coming from Midwest to 29Palms then where you are. Stay safe, write often. Say HI to all Larrys for me!

 
 
Comment by Stpn2me
2009-06-04 06:01:54

test

 
Comment by skroodle
2009-06-04 06:09:16

Looks like Latvia is going to be the first to devalue. Will this cause a chain reaction in Europe?

Latvia’s central bank calls on leaders to watch words about troubled currency
GARY PEACH, Associated Press Writer
3:44 AM PDT, June 4, 2009
RIGA, Latvia (AP) — Latvia’s central bank on Thursday urged the Baltic nation’s leaders to watch what they say about the national currency as jitters spread about a possible devaluation.

The statement highlighted Latvia’s efforts to defend its currency peg to the euro amid mounting speculation that a painful devaluation is inevitable as the country’s economy nosedives.

The center-right government and central bank have so far refused to consider a devaluation, arguing that such a step would spark high inflation, massive loan defaults, and the banking industry’s collapse. It would also be a big blow to the Swedish banks that control 50 percent of Latvia’s lending market.

Comment by Dave of the North
2009-06-04 07:02:16

And if they don’t devalue, they will have high inflation, massive loan defaults, and the collapse of the banking industry…maybe sooner, maybe later.

 
Comment by Hwy50ina49Dodge
2009-06-04 11:32:43

“…It would also be a big blow to the Swedish banks that control 50 percent of Latvia’s lending market.”

“Those Swede’s… I tell ya, you gotta watch all the time…” ;-)

 
 
Comment by Rancher
2009-06-04 06:19:56

NEW YORK (CBS) ―

New York City is housing some homeless families in Brooklyn luxury condos.

The condos couldn’t attract buyers in the current housing market. Now they’re filling a need for some of the city’s “unprecedented” number of homeless families, according to a report in The Daily News.

The apartments in Crown Heights were supposed to sell for $250,000 to $350,000. The amenities include granite countertops, terraces, marble bathrooms and walk-in closets.

Developer Avi Shriki says he had to come up with a Plan B “when the market went south.” He signed a 10-year contract with the Bushwick Economic Development Group to turn the building into a shelter.

The city is paying about $2,700 a month for each apartment. The figure also covers social services, including job counseling.

Comment by packman
2009-06-04 06:37:32

The city is paying about $2,700 a month for each apartment.

And so the private -> public debt transfer gathers steam.

 
Comment by NYCityBoy
2009-06-04 06:37:54

There are no words for how disgusting this is. This developer and everybody that agreed to pay him should have their a$$e$ thrown in jail. This is not for the public good. This is massive corruption disguised as do-gooderism. The criminals are just so brazen.

Comment by WT Economist
2009-06-04 06:59:49

Funny how the new shelter is in a Black neighborhood.

They could have just let the developer go bankrupt, have the building sold to an investor, and rented at a price that those who grew up there (who were being priced out forever by gentrification) could afford. But noooooo.

Comment by rms
2009-06-04 07:26:07

But noooooo. :)

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Comment by ET-Chicago
2009-06-04 07:33:20

Or the city could’ve, you know, bargained aggressively on price. Sounds like the developer didn’t have a whole lot of options.

Expect more of these deals in the future. There are certainly enough unsalable, craptastic condos in large urban areas that won’t be used for their original purpose.

It’ll be interesting to see which local governments (if any) buy assets cheaply, negotiate hard, or innovate in other ways to address their respective homeless/affordability issues and condo glut.

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Comment by edgewaterjohn
2009-06-04 08:55:34

But the gov’t won’t buy the unwanted condos on the cheap. They’ll say they don’t want to play a role in further depressing prices so they will settle at an inflated price. Part of that inflated price will find it’s way back into the pols’ pockets via kickbacks. Meanwhile the developers will be primed for another wave of RE mayhem.

 
Comment by ET-Chicago
2009-06-04 09:09:44

Our local government won’t buy unwanted condos or unfinished parcels on the cheap, but that doesn’t preclude other municipalities from using some good judgment. While I think you’re correct about kickbacks, our local pols certainly aren’t afraid to bleed less successful developers with a blizzard of taxes, fees, and regulatory hoops. The question then becomes which developers will hang on, for how long, and at what price.

 
Comment by neuromance
2009-06-04 17:08:38

Expect more of these deals in the future. There are certainly enough unsalable, craptastic condos in large urban areas that won’t be used for their original purpose.

This is the beauty of having bought and paid-for politicians. They will happily funnel public money to their contributors. If they can wrap themselves in the flag or do-gooderism, so much the better cover.

 
 
 
 
Comment by Skip
2009-06-04 07:04:09

Only in America!

 
Comment by robiscrazy
2009-06-04 07:11:15

This is wild. Are we going back to the days of “Living in the Projects”?

Someone correct me on this, but out west here in California we don’t really have big high rise projects. We have Section 8 and try to mix people on assistance in with everyone else.

Comment by Skip
2009-06-04 08:38:50

There are several theories that point to increased crime as a result of “trying to mix”.

Comment by Arizona Slim
2009-06-04 08:51:14

And I can point to a street near here where that’s precisely the case. The Section 8 house on that block has been an ongoing trouble spot.

Now, don’t think I’m completely down on Section 8. Just to the north of me is an apartment complex that takes Section 8 tenants. And that complex has never, ever disturbed a moment of my peace. (Trust me. I don’t like noise.)

Any-hoo, this complex has very, very tough application requirements. You even have to submit a financial statement in order to be considered for a rental there. Then, if you’re accepted, you better play by the rules, or you’re gone.

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Comment by lavi d
2009-06-04 09:30:34

And that complex has never, ever disturbed a moment of my peace.

Hey Slim,

What’s today’s installment of the water vs power feud, aka, Slim v. The Inebriates?

You got me hooked like a cheap soap opera.

PS:Dave’s supposed to put my frame in the mail to me today or tomorrow!

 
Comment by Arizona Slim
2009-06-04 12:46:59

Scroll down, Lavi, the latest installment is further down the page. And it’s full of my usual snarkitude.

 
 
 
Comment by ET-Chicago
2009-06-04 08:52:19

Someone correct me on this, but out west here in California we don’t really have big high rise projects. We have Section 8 and try to mix people on assistance in with everyone else.

It seems — based on the city of Chicago’s policy changes — that the days of high-rise housing projects are over, and unlikely to return.

Sprawling, large-scale projects such as Cabrini-Green and the Robert Taylor homes have been generally viewed as failures, and the policy push now is toward smaller buildings and collections of buildings, mixed use, and spreading the Section 8 population out into surrounding communities instead of concentrating the population in one high-density place. Sounds like California policy makers are aiming at the same thing. (The usual caveats between planning and actual implementation apply.)

Comment by Skip
2009-06-04 09:59:59

Chicago is given as one of the examples. The shutdown of Cabrini-Green merely spread the crime out amongst the city and suburbs. It still has 2x’s the murder rate of NYC.

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Comment by edgewaterjohn
2009-06-04 07:14:02

That’s as effective as bulldozing them, in terms of reducing supply.

 
Comment by iftheshoefits
2009-06-04 07:35:12

Reminds me of an article I saw last weekend, where a similar failed condo project in Rhode Island has been converted to temporary dorm space:

http://www.sltrib.com/realestate/ci_12481404

Comment by Silverback1011
2009-06-04 16:11:33

Dorms like that ? I think it’s time for me to return to Ole Ivy U and work on a graduate degree. Gradually. I’d have more fun than the REAL students who care.

 
 
 
Comment by Muggy
2009-06-04 06:22:23

Posted on Tampa News Site:

Posted By Suzanne on 06/03/2009 @ 04:18 PM
My husband and I have been wanting to purchase a home for years now. However, with the cost of real estate sky rocketing, it just was not viable. Now that real estate has gone down…and we will get a tax credit, we decided to buy and closed on our home the end of May. Now, with the money we had to take out of an investment plan, we can pay the penalty with part of the incentive money. Worked out perfectly!

Comment by Kim
2009-06-04 06:49:13

In other words, though she wanted a house “for years now” the only money she had for a down payment was her IRA/401K. Brilliant.

But hey, thanks for lowering the comps, Suzanne.

Comment by edgewaterjohn
2009-06-04 08:57:54

So she sold a depressed asset to buy a declining asset?

 
 
Comment by Blano
2009-06-04 07:03:25

“Now, with the money we had to take out of an investment plan, we can pay the penalty with part of the incentive money. Worked out perfectly!”

Oh good Lord, I’m speechless.

Comment by iftheshoefits
2009-06-04 07:26:43

Hey, give her a break. She researched this!

Comment by cynicalgirl
2009-06-04 08:40:34

HA HA! Beat me to it!

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Comment by Danger
2009-06-04 11:59:49

I never get tired of that one!

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Comment by Blue Skye
2009-06-04 07:10:22

If I’m not mistaken, the penalty can be waived for a house purchase in most plans.

Comment by cynicalgirl
2009-06-04 08:41:41

That’s true, but the effective tax rate still applies.

 
 
 
Comment by Muggy
2009-06-04 06:34:28

A week or so ago I mentioned a friend may be losing his job. Well, he did. Good thing he closed on a house last Friday.

In two hours I will know if I have a job for the next 12 mos.

Need the barf emoticon, Ben.

Comment by packman
2009-06-04 06:43:53

Ouch.

Sorry, but it’s not wise for *anyone* to be buying a house right now, regardless of conditions.

FWIW - I wish I had found this blog about 6 months before I did. I did a house “transfer” (sold one, bought another for about the same price, as part of relocation) in mid 2006, and found this blog a few months later. Though it’s not a struggle - knowing what I know now I would have just done a straight sale only then, even though it would have included a quite large cap gains tax hit.

The fact that home prices are down a lot doesn’t help much right now. Despite the “green shoots”, there’s still a long ways to go yet in this downturn, and the employment situation deterioration continues at the same rate.

 
Comment by Kim
2009-06-04 06:44:28

I’ll keep my fingers crossed for you, Muggy. Good luck.

Comment by combotechie
2009-06-04 06:51:19

Ditto.

Comment by Muggy
2009-06-04 07:01:08

Thanks, guys. The good news is my wife received a professional contract (tenure), and I do freelance work. So, if I do not make the cut, we’ll still have health care, income, a place to live etc.

This is the luxury renting, and being wise with our money, has afforded us.

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Comment by exeter
2009-06-04 07:39:01

You’re fortunate Muggy. Very fortunate. But your friend sounds like a real brain surgeon.

 
Comment by Muggy
2009-06-04 08:10:00

FRICK! My evaluation was postponed (that’s o.k., if you suck, they tell you right away)!!

 
Comment by ET-Chicago
2009-06-04 08:11:52

We haven’t talked about it in a while, but my family has a similar situation right now — my wife works at a university (professional staff, not faculty), and I’ve been doing freelance work since I was laid off in addition to watching the lad.

I have to say I’m really enjoying it, even though I miss being around adults sometimes. Renting and staying debt-free has definitely eased the way, though; we were able to scale back a lot more readily than many of our friends. (I’ll bet you’re glad you’re not yoked to a mortgage right now.)

Regardless, I hope it all pans out for you and the growing family.

 
Comment by Leighsong
2009-06-04 08:33:28

Until when?

Nervously biting nails -

Best to ya Muggy -

Leigh

 
Comment by Muggy
2009-06-04 09:19:40

Hey ET! Good to hear from you. I do miss being around adults, too. Lol, I sometimes go to the mall and let my littleman wander about just to be around civilization. Desperate house husband!

 
Comment by Muggy
2009-06-04 13:40:04

“Until when?”

Next Mon or Tues… I’ll do my best to chill this weekend.

 
Comment by Silverback1011
2009-06-04 16:15:04

Hey Mugs and ET - hope you find employment that you love sooon. * If you have to find it at all, Muggy *

I thought you were a teacher, though. Do you not have tenure in your system ?

My husband is a house husband permanently. Right now he’s making last minute touches to a homemade lasagna with fresh herbs from our container garden. He’s too cool.

 
Comment by Muggy
2009-06-04 17:07:14

Hey Silver, I am basically a teacher, but the organization I work for does not grant tenure as it believes that tenure is not in the best interest of students. I have no problem with that, and I knew the risks when I signed up…

I’ve read what many of you have posted regarding education, and I agree that it’s very much a broken, outdated model… this is why I am doing what I am doing. I would love to be more specific, but I know the laws, and I can only say so much, and, well, sometimes I get a little carried away here.

 
 
 
 
Comment by In Colorado
2009-06-04 08:33:47

I remember when I was laid off back in Aug, 2001. It was my employer’s first ever mass layoff (and was done in anticipation of a merger with a Houston based PC maker which was announced a few weeks later). I recall that there were several folks I knew who were also laid off who had just closed on a house.

I also recall that the day of the first session with the outplacement firm that was supposed to help us find new jobs was 9/11. Talk about hiring freezes. Fortunately I received alomost 6 months severance back then.

Comment by Blue Skye
2009-06-04 08:53:44

Compaq?

Comment by In Colorado
2009-06-04 10:21:22

HP

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Comment by ecofeco
2009-06-04 13:55:53

Glad to hear you got severance.

So many people got screwed on that deal then and over the following years up to this day.

 
 
 
 
Comment by lavi d
2009-06-04 09:49:10

In two hours I will know if I have a job for the next 12 mos.

I got the axe in March. I lucked out and picked up a year-long contract in April. There’re jobs if you’re lucky enough to have the skills and can afford to move if necessary.

My best to you Muggy.

Comment by drumminj
2009-06-04 10:13:15

There’re jobs if you’re lucky enough to have the skills and can afford to move if necessary.

I’ve gotten calls from headhunters lately on the other side of the country. Do people really move to a place like FL or NYC for a 6 month contract? I just can’t see uprooting your life for that short of a period.

For a year, I might consider it..but you really have to have no attachments to be willing to move for that short a time..and not mind having no social life/no friends.

Comment by Skip
2009-06-04 12:59:37

Especially when that 6 month contract turns into 4 weeks.

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Comment by Silverback1011
2009-06-04 16:17:42

Yes, that happened to my husband - one contract was for 5 years, and he got 1 1/4 years out of it, and the last one was for 6 months, and he got 4 weeks. He didn’t have to move, though, just survive a broken heart yet again. He’s permanently retired now and seems to be doing better. I must brave the highways and byways each Monday, and he sleeps in and does house chores. And sees movies. He’d rather be working, but his health has deteriorated so much that it’s better for him to be making lasagna and being the wonderful guy he is.

 
 
 
 
Comment by BanteringBear
2009-06-04 09:50:04

“A week or so ago I mentioned a friend may be losing his job. Well, he did. Good thing he closed on a house last Friday.”

Throw another FB on the fire.

 
Comment by tgun
2009-06-04 10:01:46

Best of luck Muggy, we’re pulling for ya!

 
Comment by Hwy50ina49Dodge
2009-06-04 10:43:56

Lucy: “psychiatric help 15 cents!”

Charlie Brown: “Lucy…you’re such a BLOCKHEAD!”

Hopin’ for the best Mugster!: ;-)
(Hwy has both is fingers crossed behind his back)

 
Comment by VaBeyatch in Virginia Beach
2009-06-04 11:45:33

Perfect timing! Now he can live rent free for over a year by not paying mortgage! Kudos to your friend.

 
Comment by rms
2009-06-04 13:34:37

A week or so ago I mentioned a friend may be losing his job. Well, he did. Good thing he closed on a house last Friday.

The owner of a beauty salon where I get my hair cut was in the final stages of selling her house, and the buyer lost his job within days of the closing table date. The fall-out is everywhere.

 
 
Comment by wmbz
2009-06-04 06:46:14

THIS STATEMENT IS EITHER TRUE…OR IT ISN’T. “The economy had been on a false foundation for some years, and the housing sector in particular had become wildly overbuilt and rested on bad debt. What can politicians do about this? Absolutely nothing. Economic foundations are built by private investment. Government has no resources of its own to build a foundation. It can only rob people of their property and thereby divert resources from where they belong to where they ought not to be.” The fact that government has no resources of its own is irrefutable. Every nickel government has was either taken from the owner of that nickel or BORROWED from a nickel holder with a promise to pay it back with a nickel taken from someone else.

Comment by az_lender
2009-06-04 08:22:47

When I first lived in Calif, I noticed from an LA Times article that almost all the biggest employers in So Cal were govt entities. But that was almost 20 years ago, and the mini-bust of the early 90’s didn’t change things much. THIS time I think they’re in a pickle.

Comment by Arizona Slim
2009-06-04 08:54:23

Same thing’s true in Tucson. Eight out of ten of our top employers are government entities. Raytheon is also in the top ten, but, hey, they’re a military contractor (read: subsidiary of the US DoD).

 
 
Comment by Jon
2009-06-04 09:37:49

“It can only rob people of their property and thereby divert resources from where they belong to where they ought not to be.”

Very Libertarianish. The very purpose of government is to provide for the ownership of property. Without government their is no ownership, only possession. The question is do you want to pay to have the biggest gun, or pay the biggest gun? Which is cheaper?

Comment by drumminj
2009-06-04 09:47:10

Without government their is no ownership, only possession

This issue has come up a few times in the last few days….

What’s the difference between me enforcing my ownership via force versus the government doing so? We’ve just given the gov’t a big stick is all, no?

Comment by Hwy50ina49Dodge
2009-06-04 10:18:58

“What’s the difference between me enforcing my ownership via force”

O.K., pick a car.. say a new Chevy Camaro…now go as fast as you can… as far as you can…with Gov’t “resources” being able to stop you…(An Amish kid driving a horbuggy across an open field are exisempt from this scenario) ;-)

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Comment by Hwy50ina49Dodge
2009-06-04 10:46:28

(Hwy takes off his prescription sunglasses) Let me re-submit that post, geez… ;-(

“What’s the difference between me enforcing my ownership via force”
O.K., pick a car.. say a new Chevy Camaro…now go as fast as you can… as far as you can…without Gov’t “resources” being able to stop you…(An Amish kid driving a horse buggy across an open field is exempt from this scenario) ;-)

 
Comment by drumminj
2009-06-04 11:17:22

O.K., pick a car.. say a new Chevy Camaro…now go as fast as you can… as far as you can…without Gov’t “resources” being able to stop you…

You lost me…are you simply saying it’s a question of degrees? Or are you broadening the discussion to law enforcement in general (thus the speeding/fast as you can thing)?

I’ve had my coffee, but it isn’t helping :/

 
Comment by Silverback1011
2009-06-04 16:20:08

I kind of liked imagining the Amish kid driving the horbuggy across the field myself. Getting new, life changing experiences under his belt and all of that. I must be channelling OLY tonight.

 
 
Comment by Jon
2009-06-04 14:38:03

The difference is really just the cost. How much wealth do we spend as a nation in a constant arms race with our neighbors versus submitting to government violence? I don’t have the numbers and the U.S. may not be a good example. I would expect that in most societies, it is far cheaper to pay the government x amount/year versus everyone owning their own Abrams tank.

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Comment by packman
2009-06-04 10:24:41

Very Libertarianish. The very purpose of government is to provide for the ownership of property. Without government their is no ownership, only possession. The question is do you want to pay to have the biggest gun, or pay the biggest gun? Which is cheaper?

Very communistic. One of the purposes of government (not *the* purpose) is to protect property ownership. It is most certainly not to “provide for ownership”. Ownership should be gained through productive and private means first; then it’s the government’s job to help you protect it, through creation of laws and the enforcement thereof. It was never the intent of the founding fathers to force people to protect their own property via their own guns. It was however their intent to allow for such self-protection. The two (enforcement via the public law, and enforcement via private force) are not mutually exclusive; in fact they rely on each other. The law prevents one person from taking others’ possessions by force, and it also protects one who is protecting their own possessions by force.

Comment by drumminj
2009-06-04 11:19:36

The law prevents one person from taking others’ possessions by force

I’d disagree with that. Laws prevent nothing. All they do is provide a contract that basically says “if you perform this act, you’ll be punished in this way”.

If it really prevented it, then we wouldn’t need law-enforcement :)

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Comment by packman
2009-06-04 11:26:41

Well - I was including “enforcement” as a component of “the law”. It’s pointless of course to have law unless it has enforcement powers with it, so I figured that was implied.

 
Comment by drumminj
2009-06-04 11:28:29

Got it. Sorry to nit-pick. I guess it’s that so many people think “oh, XXX is bad, so we’ll pass a law against it and people will stop doing it!”…which obviously is not the case.

 
Comment by LehighValleyGuy
2009-06-04 14:57:27

Laws prevent nothing. All they do is provide a contract that basically says “if you perform this act, you’ll be punished in this way”.

Actually, they don’t even do that– they just say that you are LIABLE to be punished, not that you actually will be. Anyone who has driven on the highways knows that traffic enforcement is EXTREMELY uneven– and this is also the case with almost all the other laws on the books.

 
 
Comment by Jon
2009-06-04 14:53:31

“One of the purposes of government (not *the* purpose) is to protect property ownership. It is most certainly not to “provide for ownership”. Ownership should be gained through productive and private means first; then it’s the government’s job to help you protect it, through creation of laws and the enforcement thereof.”

I disagree. “Ownership” is a legal construct created by government. “Possession” is a reality. One can gain “possession” of things through productive and private means (or other more nefarious means), however “ownership” can only come through the social contracts created by law.

Pure communism is a great example where folks can possess whatever they have at the moment, but “ownership” of the item is by the collective, and possession is controlled by the government.

My point from the beginning is that government cannot “rob people of their property”, when it is the government in the first place that creates the legal foundation for the idea of “ownership of property”.

The ideal situation, from my perspective, is that the government maintains and enforces the legal foundation in the most cost effective manner possible.

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Comment by Hwy50ina49Dodge
2009-06-04 17:15:52

“…Pure communism is a great example where folks can possess whatever they have at the moment, but “ownership” of the item is by the collective, and possession is controlled by the government.”

Which is exactly why old Hwy is staying put right here’s in the good old US of A …with Denny Crane & Alan Shore as my pro bono lawyers…by golly, you betcha… :-)

Jon that was such a good summation, I’d like to buy you a beer, or a glass of wine or a shot of somethin’…then again that was so clear maybe’s Hwy thinks you don’t partake of such foolishness, in which case I’ll defer that drink to Losty or Olygal, and if it that they comes to be refusin’ such an offer, why I’lls just throw one back to myself… :-)

 
Comment by Hwy50ina49Dodge
2009-06-04 17:24:50

And just what is old Abe talkin’ ’bout here anywho? ;-)

“…Lincoln neatly summarized the tenets of the free labor doctrine in the only major speech he gave in Wisconsin. In the fall of 1859, Lincoln spoke at the Wisconsin State Fair in Milwaukee during a tour in preparation for his 1860 presidential bid. Lincoln criticized Southerners who “assume[ ] that labor is available only in connection with capital – that nobody labors, unless somebody else, owning capital … induces him to do it.” “Having proceeded so far,” he said, “they naturally conclude that all laborers are necessarily either hired laborers, or slaves. They further assume that whoever is once a hired laborer, is fatally fixed in that condition for life.”

Lincoln disagreed. Capital, he explained to his audience, “is the fruit of labor, and could never have existed if labor had not first existed.” Unlike the Southern system, free labor gave everyone regardless of background the chance to get ahead through hard work and self-improvement, “by the best cultivation of the physical world beneath and around us, and the intellectual and moral world within us.”2 Lincoln linked the economic component of the free labor doctrine to its idealistic component in other speeches. In 1858, shortly before his celebrated debates with Sen. Stephen Douglas, he argued to an Illinois audience that although “the negro is not our equal in color – perhaps not in many other respects, still, in the right to put into his mouth the bread that his own hands have earned, he is the equal of every other man, white or black.”

http://www.wisbar.org/AM/Template.cfm?Section=Home&CONTENTID=79680&TEMPLATE=/CM/ContentDisplay.cfm

 
 
 
 
Comment by Hwy50ina49Dodge
2009-06-04 09:49:26

“Economic foundations are built by private investment. Government has no resources of its own to build a foundation.” LOL :-)

Ha, wmbz you’re killing me…why don’t you & all your buddies get together and build an equivalent to a F-22 Raptor and go out an protect the “private economic” well being of the rest of America. ;-)

Comment by drumminj
2009-06-04 09:52:40

Hwy, isn’t the gov’t spending the taxpayer’s resources to develop the F-22? The point has been made before - gov’t can only reallocate wealth/resources.

Comment by Hwy50ina49Dodge
2009-06-04 10:13:36

Absolutley!
So now in the “modern real real world” …exactly in what part of the Earth is “Private Investment” & “Private Equity” on a safe & protected “Economic Foundation” that is guarded by a communities intellect & a piece of paper that’s says: “Hey this is my money, keep your hands off of my stack!”? China? India? Switzerland? New Zealand? Iran? Tonga? ;-)

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Comment by drumminj
2009-06-04 11:21:46

You lost me again…you’re asking where in the world exists a country/environment where what exactly is possible?

 
Comment by Hwy50ina49Dodge
2009-06-04 12:03:38

“…It can only rob people of their property and thereby divert resources from where they belong to where they ought not to be.”

They “took” money from my father to build the Grand Coulee Dam?…I would like to argue on behalf of my departed father, he gladly contributed to this Gov’t effort…” As well as for the money the Gov’t “took” from him to build the ship he was on during WWll :-)

 
Comment by drumminj
2009-06-04 12:13:51

he gladly contributed to this Gov’t effort…

That’s the thing. If it’s a good use of money, people would voluntarily contribute. Just because you can point to good things done with tax dollars doesn’t make it okay or “right” to take that money forcefully and have the gov’t bureaucrats allocate it at will.

 
Comment by Hwy50ina49Dodge
2009-06-04 12:33:00

O.K. I want a fighting line…

on one side: “We The People”
on the other side: “We The People, but my money is mine”

The “Liberty” bell rings in 30 seconds: :-)

 
Comment by drumminj
2009-06-04 12:37:51

“We The People, but my money is mine”

This is my team.

It’s all about freedom and voluntary association. It’s not that I think it needs to be everyone on their own…but billy bob over there has no right to appropriate my money to jimmy joe. However, I’m free to choose to do so.

I think you’ll find that many people will freely choose to do so. Heck, even with all of our social programs, people still give freely, without compulsion.

 
Comment by Hwy50ina49Dodge
2009-06-04 12:37:59

“Just because you can point to good things done with tax dollars doesn’t make it okay or “right” to take that money forcefully and have the gov’t bureaucrats allocate it at will.”

(Hwy using his best John Wayne voice) “Now hold on Pilgrim…I never once mention the Vietnam or Iraq wars! ;-)

 
Comment by Hwy50ina49Dodge
2009-06-04 12:54:44

“..but billy bob over there has no right to appropriate my money to jimmy joe.”

Hey, then by golly Georgia really doesn’t have to let that river water flow to those b@stards in Floreeduh…What was the South shoutin’ at them Northen Yankee’s? This here be my money, my land, my slaves…don’t tread on me & mines, we don’t want no part of that Gov’t, we likes the way we’s handle things just fineeeeeeeee.

Nothin’ like a little patiotic quibbling over the words: “We The People”
cause we’s ALL related now, all 50 States & Puerto Rico too. :-)

 
Comment by drumminj
2009-06-04 13:00:08

Hey, then by golly Georgia really doesn’t have to let that river water flow to those b@stards in Floreeduh

Well, we agree on one thing - those folks in Florida *are* bastards :) (kidding).

You raise good issues, but you’re kind of taking the argument to absurdity. Essentially you seem to be arguing that because there are complications when you take property rights seriously, then there shouldn’t be property rights.

One could easily argue that just because you own water-front land doesn’t mean you own all the water that passes through it, and therefore don’t intrinsically have the rights to it. Not that I know how you’d allocate ownership of something like that that moves, evaporates, etc.

Bringing up slavery, well..if you really think that somehow that’s relevant to this discussion, there’s probably no point in proceeding.

 
Comment by Hwy50ina49Dodge
2009-06-04 17:03:27

drumminj, hey I like this friendly ping pong of perspectives… :-)

Now like Rene Zellweger said in Jerry Maguire:
You had me at: “It’s all about freedom and voluntary association.” :-)

Well, lets skip the slavery issue, but here’s a case that involved a Mr. A. Lincoln from that time period…kinda sorta about what happens when good people disagree about things:

Bridging the Mississippi: The Railroads and Steamboats Clash at the Rock Island Bridge: By David A. Pfeiffer

“Because the boundary between Illinois and Iowa was in the center of the main channel of the Mississippi River and both railroad’s charters differed on their legal origin and terminal points, special legislation and a new charter was necessary to unite the two railroads. The problem was solved by an act of the Illinois legislature in 1853 incorporating the Railroad Bridge Company with the power to “build, maintain, and use a railroad bridge over the Mississippi River . . . in such a manner as shall not materially obstruct or interfere with the free navigation of said river.” This condition would become a crucial point in future litigation”

http://www.archives.gov/publications/prologue/2004/summer/bridge.html

 
 
Comment by packman
2009-06-04 10:27:19

The F-22 is being developed by a private partnership, not the government.

Not saying the government *can’t* produce things; in fact now it wlll be doing so - see GM. But it shouldn’t.

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Comment by Hwy50ina49Dodge
2009-06-04 11:06:29

“The F-22 is being developed by a private partnership…”

For Donald sTrump & company..US real estate magnet/citizen?

 
Comment by DennisN
2009-06-04 11:25:17

Back in the 1930’s some government types got the bright idea to build a government run aircraft factory, manned by civil servants. They produced the Navy N3A to compete with Boeing’s Stearman.

Guess what? The N3A cost more per plane than the Stearman.

 
Comment by packman
2009-06-04 11:31:32

Back in the 1930’s some government types got the bright idea to build a government run aircraft factory, manned by civil servants. They produced the Navy N3A to compete with Boeing’s Stearman.

Wow - I never new that. Got a link to any info? I don’t really see anything from doing a Google search. Thx.

 
Comment by Hwy50ina49Dodge
2009-06-04 11:57:11

“Back in the 1930’s…Boeing…”

Let’s see, Seattle…did Boeing use the local “Boeing electrical producing Dam’s” & the local ‘Boeing River” to complete their Stearman product? ;-)

 
Comment by Skip
2009-06-04 13:05:27

The development of the F-22 was paid for by the government. The Boeing/Pratt & Whitney partnership maybe private, but they aren’t using their own money.

 
Comment by DennisN
2009-06-04 14:31:37

Sorry I got the number wrong It’s the N3N.

http://www.warbirdalley.com/n3n.htm

 
Comment by DennisN
2009-06-04 14:41:14

I actually know Lonnie Autry and have seen his N3N.

http://findarticles.com/p/articles/mi_qa3897/is_200112/ai_n9015118/

The N3N cost $25K each and the Stearman cost $9K each.

 
Comment by packman
2009-06-04 15:27:03

The development of the F-22 was paid for by the government. The Boeing/Pratt & Whitney partnership maybe private, but they aren’t using their own money.

Well yeah of course. The key is that the government is the user/customer, not the producer (as is the case with GM now). This is true of many things - government buildings, computers, the judge’s gavel, staplers, etc. The government doesn’t produce these things, it buys them and uses them.

 
Comment by packman
2009-06-04 15:35:11

DennisN - awesome! Thanks for the links. Learn something new every day.

 
 
 
 
Comment by ecofeco
2009-06-04 14:01:28

Without government, you get warlords.

Trust me, you don’t want that. You really, really don’t want that.

Comment by LehighValleyGuy
2009-06-04 15:01:13

“Without government, you get warlords. ”

So we had warlords throughout the 19th century, when gov’t was about 1% of what it is today?

Comment by packman
2009-06-04 15:47:33

+1

A. wmbz was not proposing “no government”. All but the insane know that at least some government is necessary.

B. There is a middle ground between “big government” and “no government”. The key is - what roles is government supposed to play. wmbz’s implication I believe is that industry is not one of those roles, and I wholeheartedly agree.

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Comment by wmbz
2009-06-04 06:56:03

“The current account deficit is down as we are less reliant on foreigners to finance our deficits; the government’s deficit is increasingly covered by the domestic private sector as private sector borrowing is down.”

- Ben Bernanke

 
Comment by Georgia Girl
2009-06-04 06:59:24

Good luck, Muggy. I really enjoy reading your posts, as I was born in Tampa and like to keep up. I live in Atlanta now, but lived there for a while in 2004 and 2006. The living is much easier and safer in Atlanta. But I still like Tampa.

 
Comment by WT Economist
2009-06-04 07:12:50

Here’s a report from the American Planning Association about converting large white elephant houses to multiple dwellings.

http://www.planning.org/pas/at60/report5.htm

The punchline? It’s from 1949, and it’s about large Victorians in central cities being vacated as the middle class moved to the suburbs.

“There have been two major pressures for the conversion of large single-family dwellings into multiple-family use: one, periodic housing shortages; and two, the difficulties of present-day small families in maintaining such structures as single-family residences. Most cities have some large single-family residences that were built in once fashionable districts to house the wealthy families of the community. With the advent of the automobile, and with the increased congestion of the city, the wealthier families living in these districts often moved to the suburbs, leaving behind them units too expensive for most other families, who could not afford the servants or even the fuel needed to maintain these units.”

“During the past fifty years, the number of families in this country has increased greatly, but the average family size has decreased; therefore, smaller, as well as more dwelling units have been required.”

“Rather than keep the vacated large single-family houses empty and permit them to become tax delinquent, the argument has been advanced that these houses should be converted to provide two, three or more apartments, with separate cooking, bathing and other living facilities”

Comment by iftheshoefits
2009-06-04 07:28:47

What do they say - history doesn’t repeat, but it sure does rhyme…

 
Comment by phillygal
2009-06-04 07:53:05

Imagine the horror of Jane McMansionville when her neighbors’ foreclosed houses end up as boarding homes.

Comment by awaiting wipeout
2009-06-04 08:48:54

My other half said this would happen, and my argument was HOA bi-laws would prevent it, and homeowners would sue. OK, I’ll have bbq sauce with my crow. In our former So Ca town, they build 5,500-6,500 sq ft McMansions. Why would you want a home that big? 4,000 sq ft was too big for us. 1/2 the house was unused.

 
 
Comment by Muggy
2009-06-04 08:32:48

“these houses should be converted to provide two, three or more apartments, with separate cooking, bathing and other living facilities”

Gotta store those pesky consumers somewhere!

 
Comment by edgewaterjohn
2009-06-04 09:04:40

The living conditions in many of those subdivided mansions became apalling by the G.D./WW II era. Often units were walled off with cardboard and bathrooms were communal.

Of course those were structures of stone, brick, and heavy timber. Some actually survived the ordeal, believe it or not.

Comment by Sleepr Cell
2009-06-04 15:02:49

Pretty much every urban neighborhood in Washington DC fits that bill and most of the houses are pretty decent. Of course the culture of the 20-something professional “group house” is well entrenched here and it only works because there IS so much money in this area that it makes sense to convert these old victorians properly.

Most of the victorian row houses had the “main” entrance effectively on the second floor and a “service” entrance below into 1/2 in-ground basement. This lends itself very well into a two unit conversion with the bottom two floors served by the ‘basement’ entrance and the upper floors served by the ‘main’ entrance

The problem going forward though is that suburban McMansions, lousy construction quality not withstanding, just are not designed in a way that they can be easily converted.

Add the fact that they will NEVER have the life span of the brick, stone, and heavy timber construction of the last century. Suburban McMansions are pretty much useless as anything but a soruce of cheap construction materials.

 
 
 
Comment by llcarlos
2009-06-04 07:15:30

Here is an article about Manitobans buying in the southwest United States. The same RE agent was featured in the same type of article over a year ago. She knows somebody.

http://tiny.cc/bejDF

 
Comment by cougar91
2009-06-04 07:44:01

Mel Gibson forced to lower price on Greenwich, CT mansion:

In Greenwich, Big Discounts on Big Homes
By PETER APPLEBOME
June 3, 2009

Even in tough times, some things never change. So workmen were busy on Wednesday unloading a Gatsbyesque armada of vintage cars for this weekend’s Greenwich Concours d’Elegance, a show of classic yachts and automobiles from makers like Rolls-Royce, Pierce-Arrow, Lagonda and Cord.

But, alas, in tough times some things do change. So just as harried home sellers elsewhere are deciding to drop prices in the face of the real estate meltdown, some in Greenwich are, too.

The difference is that given stratospheric starting prices for houses the size of mega-malls the adjustments tend to be a little more drastic than that of your neighbor who dropped his asking price from $599,000 to $559,000. Instead, in Greenwich, we’re no doubt seeing some of the biggest price drops in the history of residential real estate.

Take for instance the modest spread on Old Mill Road, billed as “an Elizabethan-inspired Tudor manse of museum-quality details” with pool, tennis court, greenhouse, stable and grazing sheep on 75-plus pastoral acres.

The owner, Mel Gibson — that Mel Gibson — might have preferred to sell in a better market, but with a messy divorce pending, this is the only one he’s got. So the house, originally listed for $39.5 million, after two nearly $5 million whacks is now down to $29.75 million.

Even in Greenwich a $10 million drop in the asking price of a house counts as real money. But the Gibson house is hardly alone. The champ here — and maybe anywhere — is the 40-acre, high-plateau estate on Round Hill Road that had been owned by Leona Helmsley. The 21,897-square-foot house went on the market a year ago for $125 million. The price got knocked down by $30 million in October and by another $20 million in March, which is a $50 million price cut in a year.

Comment by DennisN
2009-06-04 11:35:50

I would guess the market for really really expensive places is nearly dead. There are quite a few people who have the money. But they don’t want to own someone else’s “used fantasy”. I mentioned this the other day.

Hearst Castle, Filoli, the Ralston mansion, Villa Montalvo - CA is full of fancy fantasy homes that now belong to the state or an artist’s trust. or a college.

Comment by Silverback1011
2009-06-04 16:27:18

There is a ranch in Mexico for sale for $10M that I want to buy. It’s got 28,000 very green acres, some improvements, and for a little more you can buy the original land grand document from the Crown of Spain. It’s never been split up, and looks like heaven to me. I’d have to have a lot of extra moolah for my plane, bodyguards, etc., but boy, what a spread. Now that’s what I’d spend my millions on. See the pictures !

http://www.yrealestate.net/cloreto1.htm

 
 
 
Comment by wmbz
2009-06-04 07:46:46

Richard Russell… April, 2009

The market situation has seldom been more confusing. Many analysts are convinced that we are in a new bull market. Others (me included) believe we are in a bear market correction (rally).

Because of the confusion, I’m going to step out and make a few guesses (might as well, since nobody really knows what’s going on).

1) I believe that we’re in a secondary (upward) correction of a bear market. I’m going to guess that this correction could rise further or at least last longer than most people are expecting. A bear market rally is supposed to convince the majority that a new bull market has started. The rally will often continue until a large number of investors are back on board, and then the bear will kill them as it fades away, leaving the new optimists high and dry and with losses.

2) Gold is in a downward correction of its primary bull market. Gold may decline or stall until it convinces the majority of gold-fans that the gold bull market has died. Holders of “paper gold” and gold futures and options will be frightened out of their holdings. What we’re experiencing now is the big correction that often occurs prior to the third speculative phase in gold. Holders of physical gold (coins, bars) will do best, since they will tend to hold on to their gold positions no matter what.

So what are the markets trying to do? They’re doing what they always do, keep investors in the equity bear market and keep investors out of the gold bull market. Why would they do that? Because that’s the very nature of markets. Markets tend to thwart the majority. And that’s logical and self-evident. If markets existed to make money for the majority, then most market participants would be millionaires, and we know that sadly, that is not the case.

Comment by rosie
2009-06-04 08:21:32

Sounds like a reasonable analysis. Get some gold and hold on tight.

 
Comment by VirginiaTechDan
2009-06-04 09:29:34

It is impossible for the majority to make money in markets because for every winner there is a loser. Now I suppose that over multiple transactions a minority could consistently be on the winning side, but a majority can never consistently be on the winning side unless the loser is the government wealthy enough to take over half of the wrong side of every trade.

Any stats that contradict the above fact ignore changes in the currency.

Comment by Blue Skye
2009-06-04 12:50:39

But it is entirely possible for the majority to loose money in the “market”. A few big winners and lots of little loosers!

Comment by drumminj
2009-06-04 12:56:09

But it is entirely possible for the majority to loose money in the “market”

Wouldn’t investing, by nature, be equivalent to “loosing” their money into the market? ;)

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Comment by sf jack
2009-06-04 08:11:35

I’m only half joking when I ask - are the realtors behind this?

Not only is the Fed and the Obamadministration attempting to reflate housing (”bubble prop”), now half of Silicon Valley is perhaps trying the same thing!

*****

“Google’s move to reprice options picks up steam”

Andrew S. Ross

Thursday, June 4, 2009

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/04/BU3317VO8C.DTL

 
Comment by Prime_Is_Contained
2009-06-04 08:33:00

polly, tried to post this link for you 3 times yesterday, but it never made it through… Here goes nothing! :-)

ftalphaville ft com /blog/2009/05/29/56408

 
Comment by robiscrazy
2009-06-04 08:35:20

Anyone remember the tune that these lyrics go to? This song has got to be appropriate somewhere on this blog.

Good Times.
Any time you meet a payment.
Good Times.
Any time you need a friend.
Good Times.
Any time you’re out from under.

Not getting hastled, not getting hustled.
Keepin’ your head above water,
Making a wave when you can.

Temporary lay offs.
Good Times.
Easy credit rip offs.
Good Times.
Scratchin’ and surviving.
Good Times.
Hangin in a chow line
Good Times.
Ain’t we lucky we got ‘em
Good Times.

Guess what year it was written?

Comment by Arizona Slim
2009-06-04 08:57:05

During the 1970s. It was the theme song of a sitcom called “Good Times.” It was one of the first prime time sitcoms that featured black people.

Comment by robiscrazy
2009-06-04 09:10:10

YES. Arizona….you are correct!

Don’t you think today it’s more applicable to suburban whites instead of inner city blacks?

“Any time you’re out from underwater“…….

…..”Easy credit rip offs.”

 
Comment by DennisN
2009-06-04 11:38:31

Are you forgetting Amos & Andy?

Comment by robiscrazy
2009-06-04 16:33:17

Were they connected with Good Times?

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Comment by wmbz
2009-06-04 08:38:44

Gold Advances on Speculation of Weaker Dollar, Faster Inflation…
By Nicholas Larkin

June 4 (Bloomberg) — Gold rose in New York and London today on speculation that inflation and a weaker dollar will boost the metal’s investment appeal. Platinum climbed to an eight-month high in London.

The U.S. Dollar Index, a six-currency gauge of the greenback’s value, is down 5 percent the past month. Gold, which typically moves inversely to the currency, has added 7.2 percent in the period. The European Central Bank is likely to follow the Bank of England in maintaining the pace of asset purchases, economists said.

“Given background fears of inflation and fiat currency devaluation, the metal will continue to be viewed favorably by investors,” James Moore, an analyst at TheBullionDesk.com in London, said today in a note. “We doubt it will be long before gold tests the high from February.”

Gold futures for August delivery rose as much as $6.40, or 0.7 percent, to $972 an ounce and was at $971.10 on the New York Mercantile Exchange’s Comex division at 8:47 a.m. local time. The metal, which dropped 1.9 percent yesterday, last traded above $1,000 on Feb. 24. Bullion for immediate delivery in London added $6.71, or 0.7 percent, to $969.78 an ounce.

Gold fell to $967.25 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $976.75 at yesterday’s afternoon fixing.

Comment by Blue Skye
2009-06-04 09:39:38

“Given background fears of inflation and fiat currency devaluation, the metal will continue to be viewed favorably by investors,”

Here is the key point. By “investors” I take it to mean speculators. Governments are the real players here, the speculators operate in the margin (in my imagination) and their furvor, or lack thereof, can only make for short term price trends.

Accumulating “stores of wealth” is for rich countries, with a surplus. How many countries will fit that bill going forward? They print fiat when there isn’t enough of it, not when there is too much. Will governments build up gold stockpiles while their people hunger and riot? I expect the opposite.

I am still preoccupied by China’s public announcement that they have been buying gold. I suspect it is foreplay.

 
 
Comment by robiscrazy
2009-06-04 08:46:13

Yesterday’s news, but it’s a good laugh. Hey, what will the US army do for parts and replacement vehicles now that China owns Hummer? Isn’t that a national security issue? What if we war with China….will they still sell us parts?

Schwarzenegger: Hummers will be fuel-efficient
By JULIET WILLIAMS Associated Press Writer
Posted: 06/03/2009 04:53:09 PM PDT
Updated: 06/03/2009 05:35:19 PM PDT

SACRAMENTO—Gov. Arnold Schwarzenegger is expecting improvements to his beloved gas-guzzling Hummers, now that a Chinese company is taking over the brand.

http://tinyurl.com/ogdgpe

Comment by packman
2009-06-04 08:59:30

Hey, what will the US army do for parts and replacement vehicles now that China owns Hummer? Isn’t that a national security issue?

Pretty sure that the military Humvee isn’t actually made by the same company. The commercial company was a spinoff - even for H1 I believe. Most people don’t realize that.

Comment by Rancher
2009-06-04 09:40:26

The hummers are nothing more than dressed up
Chevy Tahoes. Nothing more. The real Hummers
are made by AM General and have been around
for 30 years and are 100 times tougher than
the phony, glitz clad, soccer mom’s suburban
chariot.

 
 
Comment by exeter
2009-06-04 09:04:24

H1’s….. another relic of the dark years of 2000-2006. Put a knife in it and ban them from highways permanently.

Comment by drumminj
2009-06-04 09:25:44

H1s are actually the military spec ones, no? The really wide, rugged beasts, not to be confused with the blinged-up Yukon or whatever the H2 was?

Comment by exeter
2009-06-04 09:41:57

You’re correct. I meant H2’s.

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Comment by bluprint
2009-06-04 14:05:16

I’m not sure if they have the same chasis…but I’m fairly certain they lack the snorkel anyway…

I don’t get the H1, unless you want to drive an actual army issue hummer. That I get. My dream: Own a military deuce and a half. :)

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Comment by bluprint
2009-06-04 14:10:02

Here’s something I found on the subject:

While military Humvees have a snorkel kit extending the exhaust and air intake to roof level, making it possible to operate in 60 inches of water, Civilian Hummers cannot use the snorkel kit because the dash, fuses, alternator, power steering cap, transmission controller, radio, and engine controller are not waterproof.

And according to that site, civilian H1’s were still made by AM General but without, evidently, the same waterproofing and snorkel ability.

 
Comment by lavi d
2009-06-04 14:15:54

Own a military deuce and a half.

I always wanted a halftrack - but I don’t think they make ‘em anymore.

 
Comment by Carl Morris
2009-06-04 14:41:25

Old but running deuces can be bought for under ten grand…live the dream.

 
Comment by bluprint
2009-06-04 14:46:28

I will…just don’t have the space or time for it yet.

 
 
 
Comment by Hwy50ina49Dodge
2009-06-04 09:56:17

“…Put a knife in it and ban them from highways permanently.”

Let’s let the “Legal” system deal with this issue…for instance, is an injury claim the same if you are personally hit by a scooter… the same amount than if your are hit by a $250,000 Winnebago RV with an AllState sticker on the bumber? ;-)

 
 
 
Comment by Professor Bear
2009-06-04 09:35:00

Never mind that many already considered San Diego home prices overvalued back in Y2K, or that the median price is a false indicator of value when almost nothing is selling at the high end — the fact that the median sale price has retreated to 2002 levels means San Diego home prices must now be undervalued.

Housing called undervalued
Report says S.D. prices are 21% below norms
By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. June 4, 2009

San Diego County used to be one of the nation’s most overpriced real estate markets, as much as 40 percent above historic norms, according to the IHS Global Insight financial analysis company.

Yesterday, in a dramatic turnaround, Global Insight said housing prices in San Diego are 21.2 percent undervalued.

“It’s definitely coming back from the boom,” said Global Insight economist Jeannine Cataldi.

The median price for a single-family home was $327,300 in the first quarter, the company said. Based on historic trends for household income, affordability and appreciation, the “normal” value should have been $415,300.

That contrasts with the peak of the boom market, in the third quarter of 2005, when Global Insight found the median price of $506,500 was above the norm by $144,100, or 40 percent.

From the peak, local housing prices have fallen 35.4 percent, back to a level last seen in the fourth quarter of 2002, the company said.

This was the fourth consecutive quarter that San Diego housing prices were below what the company considers to be the normal price. It was the biggest gap since the second quarter of 1999, when the median price of $190,400 was $53,400, or 21.9 percent, below the theoretical norm.

Comment by sf jack
2009-06-04 10:10:11

So, I suppose it’s “normal” appreciation when houses go from $191,400 in Q2 of ‘99 to $327,300 in Q4 ‘02?

Over 14 quarters, we have ($327300/$190400)^(1/3.5)-1 =

17% annual appreciation!

Yeah, that’s normal.

(check my math!)

******

Actually, this is probably closer (Q2 1999 to approx. Q2 2009):

($327,300/$190400)^(1/10)-1 =

6% annual appreciation!

So how does that compare to 1% over inflation??

Thanks a lot, Global (lack of) Insight.

 
Comment by beachchic
2009-06-04 11:27:57

And the O.C. is 11% undervalued. WTF??? We still have a ways to go before affordability is met.

 
Comment by SDGreg
2009-06-04 13:08:08

What’s next, a Global Insight “study” showing California state workers are undercompensated and California taxpayers are undertaxed?

 
 
Comment by BanteringBear
2009-06-04 09:59:05

Here’s an idea: buy a sh!tload of oil with TARP money, and actually take delivery. Just lease a tanker, park it offshore, hold it off the market to manipulate the price, and later sell it at an absurdly inflated price to the cold, shivering masses.

“JPMorgan Chase & Co., the second- largest U.S. bank by deposits, hired a newly built supertanker to store heating oil off Malta, shipbrokers reported, in the company’s first such booking in at least five years.

The bank hired the Front Queen for nine months, according to daily reports from Oslo-based SeaLeague A/S and Athens-based Optima Shipbrokers Ltd. David Wells, a spokesman for JPMorgan in London, declined to comment.”

http://www.bloomberg.com/apps/news?pid=20601110&sid=aYqgZUNoD7Tw

Comment by tresho
2009-06-04 12:14:34

JPMorgan Chase & Co., the second- largest U.S. bank by deposits, hired a newly built supertanker to store heating oil off Malta Why not? Fiat money is worth less & less daily, it just makes sense to sink $ into commodities. China’s doing it. Would anyone complain if JPM had purchased gold bullion instead? I think not.

Comment by packman
2009-06-04 12:26:41

Wow. Just wow.

Given the current oil glut - this speaks volumes about the coming inflation.

 
Comment by Hwy50ina49Dodge
2009-06-04 12:46:28

“…it just makes sense to sink $ into commodities. China’s doing it.” ;-)

That’s must be quite a contrast …a 5.1″ Chinese businessman walking around the African Savannah, looking to buy commodities… especially, with that Arab guide by his side. ;-)

Comment by packman
2009-06-04 13:10:56

China’s being a little more active than just “sinking $” (Yuan actually) into commodities in Africa -

More like slavery - at least as claimed by Peter Hitchens.

FWIW - I don’t consider poor pay, poor working conditions, lack of medical treatment, etc. to be criteria for slavery; because all those conditions are relative and subjective. My one and only criteria for slavery is - are the people being forced to do it against their will; this is not relative and not subjective.

I didn’t see where Hitches addresses that aspect in the article. Instead actually he implies the opposite:

“The diggers feared - and their evil, sinister bosses had worked hard on that fear - that if people like me publicised their filthy way of life, then the mine might be closed and the $3 a day might be taken away.”

So - not slavery; contrary to Hitches claims. But definitely active involvement by the Chinese - not just strolling through looking for metals.

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Comment by packman
2009-06-04 13:11:59

China’s being a little more active than just “sinking $” (Yuan actually) into commodities in Africa -

More like slavery - at least as claimed by Peter Hitchens.

FWIW - I don’t consider poor pay, poor working conditions, lack of medical treatment, etc. to be criteria for slavery; because all those conditions are relative and subjective. My one and only criteria for slavery is - are the people being forced to do it against their will; this is not relative and not subjective.

I didn’t see where Hitchens addresses that aspect in the article. Instead actually he says the opposite:

“The diggers feared - and their evil, sinister bosses had worked hard on that fear - that if people like me publicised their filthy way of life, then the mine might be closed and the $3 a day might be taken away.”

So - not slavery; contrary to Hitchens claims. But definitely active involvement by the Chinese - not just strolling through looking for metals.

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Comment by X-GSfixer
2009-06-04 16:10:17

The Chinese “communists” are the “capitalists” that the US Republicans dream about being.

 
Comment by Hwy50ina49Dodge
2009-06-04 16:24:41

“….But definitely active involvement by the Chinese - not just strolling through looking for metals.”

So, that begs the question, just exactly how many African’s are living in China? Maybe they’re just on a “scouting” mission? ;-)

 
 
 
Comment by BanteringBear
2009-06-04 13:12:07

Why not? Because they’re into the TARP, that’s why. Do you not see a problem here? The taxpayers who need this to heat their homes are getting screwed. Are you blind?

Comment by ecofeco
2009-06-04 14:33:19

You have problem with Corporate Communist Capitalism©®™, comrade?

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Comment by packman
2009-06-04 14:55:16

Given the current supply glut - do you really think the banks’ withholding a few tankers are going to make a difference?

The price rise right now is most definitely not driven by lack of supply; if it were then we’d be at $20/bbl right now instead. No the current prices are driven by expectations of inflation. Withholding a few tankers isn’t what’s driving prices up.

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Comment by BanteringBear
2009-06-04 16:17:46

To be honest, I think they may get their asses handed to them on this deal. But that wasn’t my point. The idea of these @ssholes who got bailed out running up the price of oil with taxpayers money during this extremely difficult time really chaps my hide. What’s largely been ignored are the negative effects that the massive speculation in oil by the big banks had upon this economy. The same people who destroyed things continue down the same path, untouched and unaccountable. It’s sickening.

 
 
 
 
Comment by ecofeco
2009-06-04 14:31:07

“…in the company’s first such booking in at least five years.”

Wow! Now THAT’S some fancy doublespeak!

Couldn’t they have said “…in the company’s first booking in five years.”

Comment by tresho
2009-06-04 16:06:12

Now THAT’S some fancy doublespeak! I don’t think so. The article said monitoring of tanker bookings only started five years ago, while before that time there is no record.

 
 
 
Comment by Hwy50ina49Dodge
2009-06-04 10:02:55

Oil at $147.00 a barrel = “Supply & Demand” :-)

BINGDA:
“…Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader on the New York Mercantile Exchange.”

BANGADA:
“…he used a Wall Street job to vault into a comfortable lifestyle that included his apartment — bought for $960,000 four years ago”

BOOM:
“…His salary has plunged from $200,000 to $25,000.”

From Ordering Steak and Lobster, to Serving It:

by Mary Pilon Monday, June 1, 2009 Wall Street Journal

 
Comment by not a gator
2009-06-04 10:05:13

NY Daily News: CIty turns upscale buildng in Crown Heights into homeless shelter

Granite countertops. Terraces. Marble bathrooms. Walk-in closets.

The homeless are livin’ large in Brooklyn.

The city is paying hundreds of thousands of dollars a month to rent luxury condos in a Crown Heights building for homeless families, the Daily News has learned.

“It’s like a hotel. It’s the nicest place I’ve ever lived in,” said Nelson Delgado, 36, who moved into a swanky two-bedroom, two-bath pad two weeks ago.

HA HAHAHAHAHAHAHA!!!!

 
Comment by Arizona Slim
2009-06-04 10:14:49

Hey, everybody! It’s time for Slim’s daily Water Line Fiasco Update!

This morning dawned bright and cheerful here in Tucson. And, gasp! I slept in almost all the way to 7 a.m. (I’ve been losing a bit of sleep of late. See Fiasco reference above.)

Any-hoo, I decided to take Oly’s advice and present a publicly cheerful countenance. Especially when in the presence of my colossally stoopid neighbors to the west.

And, Oly, that advice has already come in handy, even though this day is still young.

The electrical contractor responsible for installing the temporary overhead line to my neighbors’ house showed up, and they needed access to this property. Reason: They needed to tie in to the Tucson Electric Power pole that’s just east of this property. Permission granted.

The contractors got the neighbors’ temporary line hooked up, and, I assume, their electrician disconnected them from the temporary tap-in to their neighbors to the north.

And here’s why I’m so cheerful: The neighbors are convinced that the big payoff is going to come from complaining to the Arizona Registrar of Contractors about my plumbing contractor. And, I surmise, their electrician is egging them on. When the AZROC inspector came out here on Tuesday, that electrician was just full of bluster — all but shouting about what a topnotch craftsman he was, disparaging his competitors, etc.

I can’t help but think that the electrician’s aim is to get paid. I’ll bet he’s thinking that the AZROC compensation fund is the treasure chest that will provide the funds to pay him for the work he’s doing next door.

But that depends on AZROC agreeing with his argument. As I’ve mentioned before, there are several things working against such a scenario. One of them is Tucson Electric Power customer service’s statement that the original outage was caused by a blown fuse at my neighbors’ house. And there was the matter of the police being called out when the neighbors got into it with my plumbers. I don’t have a copy of the police report, but I did provide the case number to the owner of the plumbing company. He was very happy to receive that information.

If AZROC rules against the neighbors, well, methinks they’ll have to hire an attorney to sue my plumbing contractor. And, as we all know, attorneys don’t take every case that walks through the door. They also like to be paid for the work that they do on the cases they accept.

Which brings us back to that electrician. He’s going to want to be paid too. So, here’s my prediction: The AZROC ruling will go against him. Which means that in order to get paid, he’ll have to go to collection, thus evaporating his “I’m on the side of these beleagured neighbors” act.

Comment by Hwy50ina49Dodge
2009-06-04 11:03:07

Hey Slim, I’ll be right back outside to watch…the popcorn is almost done… :-)

 
Comment by rfw
2009-06-04 12:58:27

You probably don’t want to hear this but I am going to be very unhappy when this is settled and over.

 
 
Comment by sfrenter
2009-06-04 10:33:52

Just had to amble down the street to an open house yesterday.

Rental for many years, 1000 sq. feet tops, very rough despite the staging. Cheap siding, no yard at all, vacant house next door (kids have been fighting over selling it for 5 years, rumor has it), badly maintained rental on the other side….

749K. WTF.

After seeing the price, I couldn’t help telling the realtor, “the bubble has burst, even here in San Francisco”.

It will be interesting to see when and if it sells, and for how much.

Wish I had a buck for everytime someone insisted that “real estate never goes down in SF”. According to zillow, our SFH rental has lost 250K in value in the last 2 years. Not that the landlord should care, we pay 25K a year in rent and her taxes are pre-prop 13.

Comment by robiscrazy
2009-06-04 12:46:44

My friend (teacher) and her husband (doctor) sold their unit in a 2 unit up/down apartment/duplex thingy in Pacific Heights back at peak. They lived in the bottom half and the people who lived in the upper had kids with hardwood floors (can you say noisy).

According to them it was like paying a premium for living in an apartment. So, they rented a place in a nearby neighborhood for much less. Still have not purchased.

 
Comment by ecofeco
2009-06-04 14:38:44

$700K for 1000sqft is beyond stoopid. Anywhere.

 
 
Comment by wmbz
2009-06-04 10:34:58

WASHINGTON (Dow Jones)–U.S. Congressional Republicans introduced legislation Thursday to convert the government’s investment in General Motors Corp. (GMGMQ) and Chrysler LLC into company shares that would be distributed to every American taxpayer.

The legislation, pushed by four Republican senators, would subvert the Obama administration’s plan for the U.S. government to take a 60% ownership stake in GM and 8% in Chrysler. Instead of the government holding the shares, the Treasury secretary would be required to distribute GM and Chrysler stock to the roughly 120 million Americans who submitted tax returns for 2008, said Sen. Lamar Alexander, R-Tenn., the proposal’s author. The secretary would have one year to complete the task once GM emerged from Chapter 11 bankruptcy.
“This is the fastest way to get the stock out of the hands of Washington and back into the hands of the American people who paid for it,” Alexander said.
The bill reflected growing opposition by Republicans to the administration’s car-industry rescue. House Republicans in recent weeks have called for hearings on the use of financial-rescue funds on GM and Chrysler. This week, Rep. Jeb Hensarling, R-Texas, who sits on the congressional panel that oversees the Troubled Asset Relief Program, said the panel will hold a hearing on the matter this summer.

Comment by packman
2009-06-04 10:44:40

LOL. I heard about this yesterday. Obviously this is just to make a statement, and will not actually pass. Imagine the logistical nightmare. Are they going to print billions of stock certificates and send them in the mail to those that don’t have brokerage accounts?

IMO there’s more to this than meets the eye - e.g. it’s a backdoor way to get everyone to set up financial accounts through the government. Otherwise it’s incredibly stupid.

Comment by Arizona Slim
2009-06-04 10:52:46

Umm, if I set up a Treasury Direct account, wouldn’t that be a financial account through the government?

Comment by packman
2009-06-04 12:01:57

Yes - I have one too, but what percentage of taxpayers have TreasuryDirect accounts? I’m guessing not many. Is it really feasible (or desirable) to force people to set up such accounts in order for them to receive their new GM stocks?

FWIW - I think it’s *feasible* to distribute GM stock to everyone, and even to do so without everyone setting up such accounts; e.g. it’d be similar to sending E-series savings bonds or the like. But would such a thing be even remotely cost effective?

And how about other shareholder activity - proxy statements etc? Imagine the cost of that if all of the sudden there are 200 million or so new separate shareholders of GM.

This is the crap that no one thinks about. Too-big-to-fail = too-big-to-handle, and that’s very much a bad thing.

My guess is that the government’s stake will be spun off (*if* it’s spun off) will be done so via some private investor partnership or something, with some kind of government backstop guarantee (ala Bear Stearns) and the proceeds being “returned” to the American people by negating the $65 Billion expense that would otherwise occur. The problem is finding such a large buyer or set of buyers.

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Comment by Hwy50ina49Dodge
2009-06-04 10:51:24

“…U.S. Congressional Republicans”

There’s that word again: Tennessee
There’s that “other” word again: Kentucky
There’s that “other, other” word again: Alabama

“They” just won’t stop until auto workers are paid $8.75 an hour and quit complaining about living in a trailer outside of town… ;-)

Comment by ecofeco
2009-06-04 14:44:29

Then they should have quit some time ago.

This is the current average wage of most factory workers. Don’t believe the crap you hear on MSM. Less than $10hr on the production floor is what is really being paid no matter the industry.

I live in a large manufacturing region in the south and know firsthand that’s the prevailing average.

Comment by Hwy50ina49Dodge
2009-06-04 16:19:39

You know Ray Bradbury, the writer, once said that he believed the only way some blacks got free from the “Southern Boys” states was because of the automobile…they just drove away one day…might be some truth to that concept.

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Comment by wmbz
2009-06-04 11:51:37

I’m sure Chavez already sent Barry this memo…

Venezuela to Declare Chemical Plants ‘Public Utility’: Deputy
By Robin Saponar

June 4 (Bloomberg) — Venezuela said it will declare chemical plants “public utility” as it bans private sector chemical facilities in the country, National Assembly Deputy Angel Rodriguez said today in an e-mailed statement.

Comment by Prime_Is_Contained
2009-06-04 12:00:22

There’s nothing quite like private-property takings by the government to reassure investors that your country is a safe one to invest in!

 
Comment by Hwy50ina49Dodge
2009-06-04 12:18:49

Ha, he’s clearly on that well worn path that leads to …”Nationalizing the Presidency” :-)

King, Czar, Emperor…it’s not like he doesn’t have any role model’s around the globe anymore, right? We’re does America get its oil…oh, yeah from the president of Nigeria… ;-)

 
 
Comment by wmbz
2009-06-04 11:53:11

Oil Rises to 7-Month High, Gasoline Surges, on Goldman Forecast
By Mark Shenk

June 4 (Bloomberg) — Crude oil rose to a seven-month high and gasoline surged after Goldman Sachs Group Inc. said prices may reach $85 by the end of the year as demand recovers and supplies shrink.

Oil climbed more than 5 percent after the bank increased its year-end forecast from $65 a barrel and withdrew its prediction that prices will dip prior to a rally. The advance accelerated after a report showed that fewer Americans filed claims for unemployment benefits last week.

“There seems to be a growing realization that oil will end the year in the $80 area, and this is spurring some buying,” said John Kilduff, senior vice president of energy at MF Global in New York. “The market is taking a little bit of solace from today’s unemployment numbers.”

Crude oil for July delivery rose $3.26, or 4.9 percent, to $69.38 a barrel at 1:55 p.m. on the New York Mercantile Exchange. The contract is heading for the biggest gain since April 9. Futures climbed as much as $3.48 or 5.3 percent, to $69.60, the highest since Nov. 5. Prices are up 56 percent this year.

Gasoline for July delivery rose 7.74 cents, or 4.1 percent, to $1.979 a gallon in New York. Prices reached $1.9836, the highest since Oct. 14.

Comment by packman
2009-06-04 12:11:25

LOL at the “7-month high” phraseology. It’s been going up for weeks now - it was at a 7-month high Tuesday, and Monday, and last Friday - etc.

If it hits a 1-year high within the next month (i.e. an all-time high; above 145) - then *that* will be a meaningful headline.

 
Comment by Hwy50ina49Dodge
2009-06-04 12:13:20

“…by the end of the year as demand recovers…”

There’s that word again: “nonmanipulation” ;-)

 
Comment by edgewaterjohn
2009-06-04 12:13:29

At lunch today I watched a fella change a gas station’s price signs, regular jumped from $2.89 to $3.06 in a few short seconds.

$0.17/gal. less for someone to spend on housing.

Comment by drumminj
2009-06-04 12:18:56

$0.17/gal. less for someone to spend on housing.

If you’re driving so much that $0.17/gal makes a difference in the housing you can afford, well….something’s not right. I drive very little these days, but let’s play with numbers…

Say I drive 100 miles a day to and from work. That’s roughly 20 days a month…so 2000 miles a month. Assume I get 15mpg…that’s 133 gallons a month. At $0.17/gallon, that’s just under $23/month.

If $20 a month makes a huge impact on your housing decisions, I think there are probably other costs/factors that are much more important.

Comment by Hwy50ina49Dodge
2009-06-04 12:27:44

Hey since David Carradine has been found dead in Bangkok, why not a Taoist quote:

“Why is the sea king of a ten thousand streams? …because it lies below them” ;-)

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Comment by edgewaterjohn
2009-06-04 13:32:03

Bullseye! Big things start out small.

 
 
Comment by whino
2009-06-04 12:48:55

“that’s just under $23/month.”

Other necessities will go up in price also, we all know those extra costs get priced into other goods and services

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Comment by Hwy50ina49Dodge
2009-06-04 12:24:33

Memo to Rick Santelli: “Are you listening commodities traders?”

Filed under: “How to improve the current American economy, raise gas prices” :-)

Comment by iftheshoefits
2009-06-04 16:22:57

You’re boy’s in charge now. Tell him to take care of it.

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Comment by Observer
2009-06-04 12:32:45

Does this count as a “green shoot”? If so, rising gas prices must be good for a consumer-driven economy. I would expect the market to be up on this good news.

 
Comment by ecofeco
2009-06-04 14:49:20

I wonder if the speculators realize they are shooting themselves in the foot? (rhetorical question: of course they don’t)

Comment by iftheshoefits
2009-06-04 16:24:57

But the really smart one’s aren’t shooting themselves in the foot. They’ll make money again, on the way down. The rest that are piling on because they don’t want to miss the trend… not so much.

 
 
 
Comment by packman
2009-06-04 12:07:51

10-year note back up to 3.7 again today. Seems like the auctions must not be going well.

Green shoots - meet flamethrower.

Comment by Professor Bear
2009-06-04 12:20:45

You’ve got it all wrong, buddy. The steadily increasing l-t bond yields are a sign that the green shoots theory is correct, as they reflect optimism about the nascent economic recovery underway.

Comment by packman
2009-06-04 12:37:22

Oh I’m quite sure that there are green shoots out there, if that’s what you mean. But they’re stimulus driven, and thus don’t have deep roots.

What I’m saying is that they will wither and die under the environment of higher interest rates, as driven by these treasury auctions. Think about all the ARM resets that have yet to happen for instance, and all the home sales that will be postponed that much longer - driving prices down that much further - driving that much more foreclosures - etc. etc.

Comment by Arizona Slim
2009-06-04 12:49:08

Ooooo! Higher interest rates! Can I get them on my savings?

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Comment by Professor Bear
2009-06-04 15:40:45

“Can I get them on my savings?”

Can you qualify yourself as a bank?

 
 
Comment by Professor Bear
2009-06-04 12:51:59

“But they’re stimulus driven, and thus don’t have deep roots.”

I am quite sure Terry Schiavo’s vital signs also picked up once they had her connected to the life support machinery.

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Comment by Hwy50ina49Dodge
2009-06-04 13:33:42

Geez, Mr. Bear using a Republican “We’re right, you’re wrong” sit-u-ation to “electrify” the base at all this foolish spending…shame, shame, shame ;-)

“Within a week, when the Schindlers’ final appeal was exhausted, the Florida Legislature hastily passed “Terri’s Law,” giving Governor Jeb Bush the authority to intervene in the case.”

 
Comment by packman
2009-06-04 19:01:06

I am quite sure Terry Schiavo’s vital signs also picked up once they had her connected to the life support machinery.

Ha ha yeah - good analogy.

One might also use a blood transfusion analogy to make a case for pumping money into dying companies. However that analogy breaks down since, unlike money, when new blood is created to replace the donated blood it doesn’t reduce the value of all the other blood in the world.

I’m just WAITING for somebody to make that analogy to me. I’ve got my handy-dandy comeback ready and waiting.

 
 
 
Comment by Hwy50ina49Dodge
2009-06-04 12:40:29

“…as they reflect optimism about the nascent economic recovery underway.”

This from someone who holds…what? x163 weekly “Eeyore Awards” ;-)

 
 
 
Comment by amoney
2009-06-04 12:19:53

Would you buy a house with $90,000 in equity?

http://honolulu.craigslist.org/kau/reb/1203391753.html

This woman is tripping.

Comment by robiscrazy
2009-06-04 16:20:54

Boy, she’s convinced it’s worth $639K, but is willing to sell it for $549K? Poof $90K equity! According to her if you wait 2-3 years it will be worth 700K! On the market since Dec 2008. Not going to turn out well.

 
 
Comment by San Diego RE Bear
2009-06-04 12:37:40

Finally!!!

SEC charging ex-Countrywide CEO Mozilo with fraud
SEC charging former Countrywide CEO Angelo Mozilo, 2 other execs with civil fraud
On Thursday June 4, 2009, 3:28 pm EDT

http://finance.yahoo.com/news/SEC-charging-exCountrywide-apf-15442116.html?sec=topStories&pos=main&asset=&ccode=

Comment by Kim
2009-06-04 12:59:56

Green shoots!

 
Comment by Hwy50ina49Dodge
2009-06-04 13:00:13

I hope he hires the same defense lawyer as Crispy & Cole in Bakersfried :-)

 
Comment by Hwy50ina49Dodge
2009-06-04 13:02:14

Crissy Cox, darn near nabbed him…just ran out of time at that Cheney-Shrub appointed position. :-)

 
Comment by bink
2009-06-04 13:52:13

Wooooooo!

But I guess “civil fraud” means no jail time?

Comment by DennisN
2009-06-04 14:25:40

It’s a lower standard of proof when compared with a criminal trial.

 
 
Comment by ecofeco
2009-06-04 14:52:17

Be still my beating heart!!

 
Comment by Rental Watch
2009-06-04 16:56:23

Jury trial demanded by the SEC…he’s toast (even more than his complexion would imply).

Correct me if I’m wrong, but criminal trial means jail, but his family may keep substantial ill gotten gains? Civil means (in addition to lower standard of evidence) the potential of forfeiting all ill gotten gains, as well as the potential for punitive damages?

There is no way he’s going to get past a jury of jobless Californians…

 
 
Comment by whino
2009-06-04 12:39:35
Comment by edgewaterjohn
2009-06-04 13:26:41

Today the MSM tried to make hay over WMT’s announcement that they would be hiring 22,000 workers this year.

Who here even dares to think that half of those will be anything close to full-time?

Yeah, buy up those $375,000 condoze with a PT greeter gig - and pay off your student loans too! Oh, and don’t forget a new Chevy every three years.

Comment by whino
2009-06-04 13:42:11

“Who here even dares to think that half of those will be anything close to full-time?”

Yep, they will provide them with part-time jobs with no benefits to boot! I hear it all the time. I know someone who worked their for 7 years and she never made over $8 an hour. When she started having medical problems and the insurance premium went up she was fired for smelling perfume bottles while she was off the clock and on her break. Real good employer there!

 
Comment by ecofeco
2009-06-04 14:55:11

22,000?

Only 6 MILLION more to go!

 
 
 
Comment by X-GSfixer
2009-06-04 12:46:14

Waay off topic but…..

Sixty seven years ago today at this exact time (0915 Midway Time), LT Commander John Waldron sighted the smoke of the Imperial Japanese Navy’s First Air Fleet, beginning the first of three attempted attacks by the Torpedo bomber Squadrons (VT-8, VT-6, and VT-3) of the US Navy carriers Enterprise, Yorktown and Hornet.

They were flying Douglas TBD torpedo bombers, and obsolete type that could barely manage 100 knots when loaded with a torpedo. (three of their four targets could do 32 knots or better, which meant that it would take them a half hour to get into a position to drop their torpedos).

Before noon, 38 of the 41 airplanes that started the attacks were shot down, or ditched due to battle damage before returning to the carriers. Of the 76 men who went into the water, 4 were recovered by US forces, and one was recovered (and executed later in the day) by the IJN destroyer Arashi. The remainder were KIA, or never recovered.

I’ve always felt a special regard for the “old guys” in these squadrons. These were guys who had survived 10-15 years of Navy Aviation in the 20s and 30s, and were well aware that their chances of survival were slim……especially after talking with the pilots of the carriers Yorktown and Lexington, who had been the first Navy pilots to encounter the Mitsubishi “Zero” fighter in the Coral Sea in early May.

They knew their survival hinged on having a fighter escort, but for various reasons, two of the three squadrons didn’t get it. Didn’t matter, they knew their torpedos were the best “ship killers” that we had, and went in anyway.

Sorry for the OT, but I was wondering of anyone besides myself knew (or cared) anymore.

Comment by Lost in Utah
2009-06-04 13:04:46

Vals at Angels 50 take a century, so fly the frenzied felines, crud or no crud.

- code talk used during WWII in the S. Pacific.

I know a guy who flew with Pappy Boyington, he’s still alive but can’t see so well. A true character.

My uncle was in the navy in that area. Those guys were all characters.

 
Comment by lavi d
2009-06-04 13:11:32

Sorry for the OT, but I was wondering of anyone besides myself knew (or cared) anymore.

There is a restaurant in El Segundo near LAX named “The Proud Bird” (fairly certain that’s the name)

It is decorated with tons of aviation-style stuff. In the hallway outside the restrooms are several photos of US WWII aircraft in action. One shot is of a bomber, taken from above, presumably from another bomber. The plane in the pictures has lost half of one of its wings. It, and the men aboard are, without a doubt, doomed.

That picture, and the thought of that picture will always give me chills and simultaneously make me grateful.

 
Comment by Muddyfoot
2009-06-04 13:16:11

It just sucked that none of the torpedoes hit home. At least they drew the Japanese CAP down and that allowed the dive bombers to have a much easier go of it. Kind of interesting how Midway played out, turning point in the Pacific. I had a great uncle who was on the USS Oklahoma, survived that and was transferred to the USS Massachusetts so yeah I care, thanks for the reminder!

 
Comment by tresho
2009-06-04 13:20:51

They knew their survival hinged on having a fighter escort, but for various reasons, two of the three squadrons didn’t get it.
Meanwhile, Japanese naval forces were so busy shooting them down and killing their pilots, they neglected to keep some of their antiaircraft guns aimed up, and some of their own fighters at high altitude. So the US dive bombers up high had a clear shot at sinking 3 IJN flattops in a few minutes, and another one later. The TBD crewmen who were KIA never learned of their very real contribution to victory at Midway. “All gave some, some gave all.”

Comment by X-GSfixer
2009-06-04 14:56:55

Anyone interested in this topic should read the new book “Sharttered Sword” by Jonathan Parschall and Anthony Tully. They have gained acces to a lot of Japanese documentation about their carrier operations that shed a lot of new light on Midway.

-It wasn’t so much that the torpedo bombers drew the Zeros to low altitude….the Zero could climb from seal level to 20K feet in 5-6 minutes. The problem was that the axis of their attacks was from a different DIRECTION than the dive bombers, which drew the Zeros 20-30 miles in the wrong direction
.
The main contribution the torpedo bombers made was to prevent the carriers from turning into the wind, and to be forced into evasive action to avoid the torpedo bombers…..every attack lasted almost 30 minutes, which was 30 minutes less that the Japanese carriers could move their attack aircraft to the flight deck.

-Most accounts say that the IJN was almost ready to launch a strike against the US Navy’s carriers when the 10:25 dive bomber attack occured. the authors demonstrate conclusively that there wer only a few fighters on the decks of the carriers at this time…..all the attack aircraft were still on the hangar decks, fueled and possibly armed, waiting for a 30-45 minute lull in fighter launch and recovery to spot the attack aircraft on the flight deck.

Which meant that all those attack aircraft were sitting in an enclosed, unarmored/protected space, with all those high explosives and high octane aviation fuel. (as I recall, one estimate had 50 TONS of explosives and avgas exposed on the hangar decks of one of their carriers).

-The US Navy’s Torpedo Fiasco should have put some people in prison…..both our air launched and submarine torpedos were flawed in design, testing, and manufacture (by the government’s torpedo shop)……..Deep running, defective magnetic and contact exploders, circular runs (which sank two US submarines that we know about), warhead too small to sink a big target with 1-2 hits……. the list goes on.

Submariners were raising questions about their problems as early as 2-3 weeks after Pearl Harbor. The Navy Ordnance pukes didn’t admit to any problems, so we didn’t have decent torpedos until early 1944.

I’ve never considered sports stars as heros. I was fortunate enough to grow up around a bunch of them, when they were in their late 30s-40s (and still bad-a$$es)……..the husband of my grade school librarian won a Navy Cross for putting a 1000 pound bomb into a Japanese carrier (and going for a swim) in June 1944.

Comment by lavi d
2009-06-04 15:15:34

so we didn’t have decent torpedos until early 1944.

Wasn’t there a John Wayne movie about that?

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Comment by Blue Skye
2009-06-04 15:47:04

My Dad was in the Night Fighters Squadron, which is a little later chapter I think.

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Comment by tresho
2009-06-04 16:12:34

the Zero could climb from seal level to 20K feet in 5-6 minutes. So why didn’t they? And what difference would it make if they had? The dive bombers descended at about 500 feet/sec, so went from 20K feet to 1K feet in 38 seconds. Nothing I read about the dive bomber attacks indicated they had much of a problem with Zeros up to the point where they dropped their bombs.

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Comment by dude
2009-06-04 20:10:28

Thanks for that reminder X.

 
 
Comment by Kim
2009-06-04 12:46:47

SEC charging former Countrywide CEO Angelo Mozilo, 2 other execs with civil fraud

http://finance.yahoo.com/news/SEC-charging-exCountrywide-apf-15442116.html?sec=topStories&pos=main&asset=&ccode=

IAT
Three down, thousands to go.

 
Comment by Observer
2009-06-04 12:47:11

I love the headlines about the market action today. Most say stocks are up due to a drop in jobless claims. Give me a break… the jobless claims dropped from 625K the prior week to 621K this week or 4K and that’s not even a 1% drop. Couldn’t the 4K just be considered sampling error? It if follows the past, the number will be revised up anyways.

The spin is definitely on, trying to entice every last cent into this market before the next large drop.

Comment by drumminj
2009-06-04 12:49:37

Don’t forget the number from last month is the revised number. So it’s likely this number will be revised as well.

Comment by packman
2009-06-04 13:48:06

FWIW - I think last week’s number wasn’t so much revised as it was corrected - see below. Originally it was reported as 6.608M, but this doesn’t make sense, since the previous week it was at 6.660M. They would have made a *huge* deal out of a gain of 52k jobs. Also 6.608 -> 6.788 is way to big of a change to be an estimate revision; normally revisions are on the order of just 10-20k or so, not 180k.

(I track these numbers fairly closely; IMO it’s the best gauge of what’s really going on. Up until this past week there was zero signs of supposed green shoots.)

 
 
Comment by packman
2009-06-04 13:18:41

Keep in mind too that’s *new* jobless claims.

Continuing claims rose from 6.608 million to 6.735 million.

Lipstick on a pig.

 
Comment by packman
2009-06-04 13:24:52

And FWIW - it seems like this is just an outright error on the part of the report’s author, and a really bad one at that:

Highlights
Jobless claims data show improvement, finally. Initial claims in the May 30 week fell 4,000 to 621,000 (prior week revised 2,000 higher to 625,000). The trend of the last two weeks is under the four-week average which is at 631,250. Continuing claims ended more than four months of uninterrupted weekly gains, down 15,000 in the May 23 week to 6.735 million. The unemployment rate for insured workers, which has been ticking consistently higher, held unchanged at 5.0 percent. Were it not for pending layoffs in the auto sector, today’s report would have raised talk that labor contraction had reached its peak. The Labor Department will post the monthly employment report tomorrow with expectations looking for little to no improvement from April.

Market Consensus Before Announcement
Initial jobless claims eased in the May 23 week but the overall report points to a rising pool of unemployed. Initial claims came in at 623,000, down 13,000 from the prior week. But the alarming news in the report was a sizable 110,000 jump in continuing claims for the May 16 week. The gain was the 19th in a row and at 6.608 million sets another record high.

So 6.608M -> 6.735M is down 15,000?

(scratches head)

Must be the new math.

Comment by packman
2009-06-04 13:29:35

I just noticed that the he/she states “in the May 23 week” in the report for last week, but last week was the May 30 week. So - another error.

 
Comment by packman
2009-06-04 13:40:43

Update - apparently the “Market Consensus” section’s value of 6.608 is what’s erroneous. It had been initially reported as 6.608M, but apparently was corrected later to 6.788M, but this week’s consensus statement wasn’t updated to reflect that.

So indeed it appears the continuing claims are down - at least from the numbers reported. That sounds… wrong.. to me though. There’s no way the continuing claims went down all of the sudden like that. New claims have been consistently in the low 600’s, and continuing claims had been consistently rising by about 100k or so a week. This week new claims were still in the low 600’s, but continuing claims dropped? No way. Was there some employer that all of the sudden hired a chunk of 120k last week? I don’t think so.

Statistical anomaly and/or incorrect measurement.

Comment by whino
2009-06-04 13:49:06

“Was there some employer that all of the sudden hired a chunk of 120k last week?”

Census? See the link I posted a couple of threads above. It contains some census hiring figures that might be of interest to you.

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Comment by packman
2009-06-04 14:17:31

Thanks for the link. It sounds like from reading that though that there should now be a new surge of “again-unemployed” people. I wonder how that counts in the stats? Does some who’s

- employed (and counting against continuing claims)
- hired for census temporarily (no longer counting against continuing claims)
- goes back to being unemployed after census job done

count again against continuing claims?

Either way - the numbers stated in the article aren’t big enough to make a 120k difference. They hired only 60k the whole month of April - average of 15k a week. And those numbers should have been reflected in April, not end of May.

Perhaps there’s some other explanation - like some expiration of benefits or something.

Either way - the new claims value of 620k indicates that there isn’t actually any improvement. Anything above 500k per week is still a quite fast rate of job loss; in fact anything above 400k I believe is considered recessionary. Back in early 2008 after the recession officially started new claims were around 300k per week in fact.

 
 
 
 
Comment by wmbz
2009-06-04 13:33:35

I’m sure they don’t mention the current U.S. unemployment rate is now 9.2%.

 
Comment by ecofeco
2009-06-04 15:00:14

Also remember that benefits are running out.

 
 
Comment by wmbz
2009-06-04 12:50:34

LOS ANGELES (Reuters) - An SEC official said the SEC has filed civil charges against ex-Countrywide CEO Angelo Mozilo, former Countrywide COO David Sambol and former CFO Eric Sieracki.

Comment by tresho
2009-06-04 13:11:17

SEC enforcement director now speaking live on Bloomberg DOT com (go to TV) about this.

Comment by Professor Bear
2009-06-04 20:00:00

Will this case serve as a precedent to nail other housing bubble profiteers who sold at the top based on inside information that a crash was imminent (I am thinking of home builder CEOs who cleared the decks circa August 2005)?

 
Comment by Professor Bear
2009-06-04 22:48:29

I am curious whether the SEC might review some of the stuff that went down while W was in the WH — such as the curious propensity of home builder stock prices to stay aloft even after a bust was in the bag? Or the massive cashouts of stock by the likes of Bob Toll and other builder CEOs in August 2005, when the insiders saw a top even while they were officially denying it and encouraging knifecatchers to buy their stock at the all time record high price?

I was following the share prices of the builders with great interest in August 2005. They would lurch downwards like a major selloff was about to take place, only to mysteriously bop back up as though guided by a visible hand.

 
 
 
Comment by whino
2009-06-04 12:56:24

Frightening numbers in this article!

Benefit spending soars to new high

http://www.usatoday.com/news/washington/2009-06-03-benefits_N.htm

Comment by drumminj
2009-06-04 13:15:36

Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009

One frustrating part about this is much of this money is flowing through private banks. For example, my UI benefits are paid out via a Chase Check card. So they can collect on the float, any transaction fees, etc.

Nothing like adding a middle man. Perhaps it looks better on the immediate balance sheet for the gov’t organization, but the middleman is taking their money from someone (eg the receiver of the benefits…)

 
Comment by Observer
2009-06-04 13:20:13

Is there really any much doubt that we are heading for all intents and purposes, bankruptcy? Just a matter of time.

Comment by Professor Bear
2009-06-04 13:24:57

An organization heading for bankruptcy actually has a choice between changing course and getting expenditures in line with income, or going belly up. I don’t necessarily see the inevitability of Uncle Sam and Associates’ destiny that you see.

Comment by ChrisO
2009-06-04 14:15:00

That would require a dramatic change in mentality that I don’t see on the horizon.

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Comment by Observer
2009-06-04 14:29:18

When you have a printing press at your disposal you technically can’t go bankrupt.

However, with the moral hazard that now exists in large parts of the economy, the rapid rise of deficits, higher interest rates, nationalization of health insurance, politicalization of a number of Fed rescue programs, nationalization of the auto industry, an anti-business climate in DC, too big to fail industries and businesses popping up seemingly every week, and California technically bankrupt I would say yes, the current path is towards bankruptcy.

There is a choice but in the current environment there is no realistic reason to believe the correct choice will be made before the die is cast.

Change you can believe in.

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Comment by Professor Bear
2009-06-04 15:37:53

“When you have a printing press at your disposal you technically can’t go bankrupt.”

Exactly. An alternative plan to bankruptcy is to decide whom to screw with the printing press operation and how to do them.

 
 
 
 
Comment by SDGreg
2009-06-04 13:52:30

“The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans’ income is now coming in the form of a federal or state check or voucher.”

“In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.”

Comment by Observer
2009-06-04 14:33:03

But all is good. Don’t you know? Personal income rose last month despite massive layoffs for months now. A consumer spending binge is just around the corner. Soon everyone will be spending their unemployment checks on flat screens at Best Buy to support China, oops, I mean the economy.

Comment by ecofeco
2009-06-04 15:08:38

Doubleplusgood!

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Comment by Professor Bear
2009-06-04 13:07:00

Given the appearance of a conflict of interest, shouldn’t TTT recuse himself from the effort to reflate housing prices?

Hint to would-be home sellers: LOWER THE LIST PRICE BELOW CURRENT MARKET VALUE, AND YOU WILL BE HIT WITH A FLOOD OF OFFERS.

Geithner faces sluggish market, rents out NY home
Treasury secretary grapples with sluggish market — for his own suburban NY home

* Jennifer Peltz, Associated Press Writer
* On Tuesday June 2, 2009, 6:57 pm EDT

NEW YORK (AP) — The real estate market’s troubles are hitting close to home for Treasury Secretary Timothy Geithner.
FILE - This March 9, 2009 file photo shows the home of Treasury Secretary Timothy Geithner in Larchmont, N.Y. (AP Photo/Stephen Chernin, file)

After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn’t sell and recently rented it out instead, according to real estate agents familiar with the deal.

Geithner put his five-bedroom Tudor near leafy Larchmont on the market for $1.635 million in February, after heading to Washington for his job as the nation’s top economic official.

A few weeks after the asking price was dropped to $1.575 million, the home was rented for $7,500 a month on May 21, said the agents, Scott Stiefvater of Stiefvater Real Estate and Debbie Meiliken of Keller Williams Realty New York.

Neither was directly involved in the rental; the name of the broker and agency that arranged it were not immediately available.

Comment by Arizona Slim
2009-06-04 13:53:43

Here’s my take on the sitch: Geithner isn’t trying terribly hard to sell his house. Why not? Because he suspects that he’ll be moving back to the leafy Larchmont area before too long.

 
Comment by Hwy50ina49Dodge
2009-06-04 18:32:00

Aw, come on Mr. Bear..he’s got a new job, more money, why humiliate yourself and then have to socialize at those DC socials…what would be real interesting is if it was rented to… Monica Lewinsky :-)

 
 
Comment by Professor Bear
2009-06-04 13:22:57

I can’t help but wonder how many hedge funds rushed in to buy toxic MBS on expectations the Fed would soon snap them up at above-market prices.

Fed damps hopes on mortgage-backed securities
By Aline van Duyn in New York
Published: June 4 2009 20:16 | Last updated: June 4 2009 20:16

The US Federal Reserve on Thursday damped expectations that it was preparing to prop up the market for distressed bubble-era securities backed by mortgages.

Hopes that the Fed would in the coming months start providing financing to investors seeking to buy residential mortgage-backed securities (RMBS) – many of which have lost their triple A credit ratings – have pushed prices on these assets higher in recent months.

 
Comment by wmbz
2009-06-04 13:31:08

Alabama County Seeks SEC Help in Crisis as Suit Looms (Update1)
By William Selway

June 4 (Bloomberg) — Jefferson County, Alabama, asked the U.S. Securities and Exchange Commission to help it escape bond deals that have left the county struggling to avoid bankruptcy for more than a year.

The appeal follows the disclosure by JPMorgan Chase & Co. that it may be sued by the SEC for its work on bond and interest-rate swap sales for Jefferson County’s sewer system in 2002 and 2003. The financings converted $3 billion of the debt to floating-rate bonds, a bid to drive down its borrowing costs that backfired because of the financial crisis on Wall Street.

Jefferson County, home to Birmingham, has been unable to win backing from creditors or state lawmakers for plans to restructure the debts. In a letter to SEC Chairman Mary Schapiro yesterday, County Commission President Bettye Fine Collins asked that creditors be pressed to accept a deal if they committed wrongdoing.

“In light of the enormous harm and damage to Jefferson County and its citizens from any violation of the securities laws determined by the SEC, a simple monetary settlement is not likely to fix the underlying problem,” Collins wrote.

Jefferson County’s bond deals unraveled after insurers that guaranteed the bonds against default lost their top credit ratings because of losses on securities linked to subprime mortgage loans. When investors dumped the county’s floating-rate bonds, interest rates surged as high as 10 percent. Most of the debt is now held by New York-based JPMorgan, Bank of America Corp. of Charlotte, North Carolina, and others who agreed to act as buyers of last resort.

 
Comment by SDNewbie
2009-06-04 13:43:19

Angelo Mozilo charged with Fraud!!

http://news.yahoo.com/s/ap/20090604/ap_on_bi_ge/us_sec_mozilo Yay!

Comment by Arizona Slim
2009-06-04 13:57:21

Fun tidbit from the above story: “[A] person familiar with the matter said a criminal probe into Countrywide’s lending practices continues in Los Angeles. The person requested anonymity because of the ongoing probe and said no charges were imminent.”

 
Comment by measton
2009-06-04 14:43:48

Who will be our generations Keating 5? or will it be a Keating 50

Dodd will surely be involved.
Who else got discount loans or free flights to tropical resorts?

Comment by Professor Bear
2009-06-04 20:16:12

Chris Dodd Admits To Adding Loophole In Stimulus That Allowed A.I.G. Bonuses

http://www.youtube.com/watch?v=1GoK0539Gl4

 
Comment by Professor Bear
2009-06-04 20:21:03

Dodd Family-AP
Thomas Dodd reads to Chris, his youngest son, in 1946
Like Father, Like Son

Thomas Dodd left the Senate in disgrace. Now his son Christopher faces his own crisis.

By Evan Thomas, Mark Hosenball and Suzanne Smalley | NEWSWEEK
From the magazine issue dated Jun 8, 2009

 
Comment by Professor Bear
2009-06-04 20:24:10

Politics
Republicans Eye Sen. Dodd’s Conn. Seat
by Brian Naylor
Listen Now [4 min 13 sec]

Morning Edition, May 21, 2009 · Sen. Chris Dodd, the chairman of the Senate Banking and Housing Committee and former presidential candidate has survived a series of scandals. Dodd faces a re-election bid in 2010, and the five-term Democrat looks vulnerable.

 
 
 
Comment by wmbz
2009-06-04 13:54:00

Way OT… Did anyone see that necklace King Abadaba gave Prez. Barry. Damn, big Gold bling, would make Mr.T jealous! Those mid-east oil boyz love gold. Now Barry has a huge hunk of the precious.

Comment by drumminj
2009-06-04 14:04:46

Are gifts given to gov’t employees considered property of the gov’t? If he got the gift because of his position, it seems like it should be taxpayer property?

Comment by measton
2009-06-04 14:46:03

I believe it belongs to the gov, I saw a show on that had something about the presidents gift room and they had old gifts laying around. I wonder if heads of state can regift. At the very least they should be able to melt that puppy down and give it to another head of state in a new form.

 
 
Comment by lavi d
2009-06-04 14:11:50

Did anyone see that necklace King Abadaba gave Prez. Barry

He best stay out of the UK with it.

 
 
Comment by aNYCdj
2009-06-04 14:17:30

ITS HEREEEEEEEEEEEEEEEEE!!!!!!!!!!!!

NYC Turns Luxury Units Into Shelters For Homeless
NEW YORK (CBS) ―

New York City is housing some homeless families in Brooklyn luxury condos.

The condos couldn’t attract buyers in the current housing market. Now they’re filling a need for some of the city’s “unprecedented” number of homeless families, according to a report in The Daily News.

The apartments in Crown Heights were supposed to sell for $250,000 to $350,000. The amenities include granite countertops, terraces, marble bathrooms and walk-in closets.

Developer Avi Shriki says he had to come up with a Plan B “when the market went south.” He signed a 10-year contract with the Bushwick Economic Development Group to turn the building into a shelter.

The city is paying about $2,700 a month for each apartment. The figure also covers social services, including job counseling.

The Department of Homeless Services provides temporary emergency shelter to homeless individuals in a safe environment. There are a variety of ways for the homeless in New York City to receive services. Go to the DHS’ website for more. DHS.

Comment by Professor Bear
2009-06-04 15:35:38

“NYC Turns Luxury Units Into Shelters For Homeless”

Affordable housing at its best!

 
 
Comment by drumminj
2009-06-04 14:32:11

Wow, just heard a radio ad about seatbelt patrols here in Seattle…

The ad basically said that people who don’t wear their seatbelts are abnormal, commit DUIs, and are “creepy”. You think I’m paraphrasing, but really, that’s the persona they describe.

What the….?

Comment by ecofeco
2009-06-04 16:31:47

While I have no doubt the ads are stupid, wearing your seatbelt is a VERY GOOD IDEA.

Comment by Lost in Utah
2009-06-04 17:00:40

Not if you’re four wheeling and need to jump out fast.

Which I’ve never done but came close…

 
Comment by drumminj
2009-06-04 17:28:50

wearing your seatbelt is a VERY GOOD IDEA

I agree..my brother went into the windshield when I was a kid. I’m always buckled, and as are my passengers. I won’t start the car moving otherwise.

However, this ugly propaganda is just appalling.

 
 
 
Comment by X-GSfixer
2009-06-04 15:25:04

Re: Karl Rove’s rant in today’s WSJ.

Is it just me, or is it patently ridiculous for the WSJ to give this jackhole ANYPLACE to spew his opinion?

The case could be made that GWB and Co. have been and are totally FUBAR, and anyone associated with that administration should have the common decency to go hide in a cave for 5-10 years, before offering any opinions on how the current administration is doing.

But, since the Republican Party is intellectually and morally bankrupt, and the only plan they have going forward is “more of the same”, I guess that “meet the new Boss…..same as the old boss” is all we can expect. A thorough house cleaning is in order, but from all visible evidence, it ain’t gonna happen.

Signed,

X-GSfixer, life-long registered Republican and Red-State resident.

Comment by Professor Bear
2009-06-04 16:06:22

While I don’t subscribe to the accusation that the mess on our hands is 100 pct due to W and his men, the suggestion that Obama is somehow more responsible for the situation at hand after 100 days in office than W and his men after eight years in office amounts to Darth Cheney making a mockery of his ignorance of economics.

Comment by Hwy50ina49Dodge
2009-06-04 16:12:42

Run, Mr. Bear…run! ….Cheney still has his Halliburton paddle, he’s got his “angry eyes on” and he’s headed your way! ;-)

Comment by Professor Bear
2009-06-04 19:35:51

“Run, Mr. Bear…run!”

If history is a guide, if Dick decides to go bear hunting, he is as likely to hit his hunting partner in the face as to hit the target.

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Comment by packman
2009-06-04 17:59:17

the suggestion that Obama is somehow more responsible for the situation at hand after 100 days in office than W and his men after eight years in office amounts to Darth Cheney making a mockery of his ignorance of economics.

Absolutely agree.

However that being said I don’t see where in that article he blames him for the problems. What I do see is that he blames Obama for attempting to point to a turnaround where there is none yet, which IMO he’s correct on.

However *that* being said - Rove does set Obama up for failure by stating that “The economy will be his responsibility long before next year’s elections.” Well Mr. Rove - yes it’ll be his responsibility in the respect of it being his job (partly) to try and turn it around; but he already has that responsibility now. He certainly will not responsible, in the blame sense, for the problems that are certain to still be in place. King Solomon would take a lot more than a scant 18-20 months after taking office to turn around the mess left by the Bush administration.

 
 
Comment by Hwy50ina49Dodge
2009-06-04 16:08:20

“…anyone associated with that administration” ;-)

So you’re thinking “Lost Wages” isn’t taken any bets on the: Palin / Jeb Shrub III …or… Cheney / Palin …or… Cheney / Jeb Shrub III …or Palin / Limpbaughs …or…Limpbaughs / Jeb Shrub III GOP ticket for 2012? :-)

 
 
Comment by Central Valley Guy
2009-06-04 15:26:51

Here’s a blast from the past (oh, apparently the housing bubble story was dead all the way back in 2003, which I think will be news to Ben et al).

http://www.marketwatch.com/story/rip-housing-bubble-story-circa-2000-2003?siteid=mktw

Comment by Professor Bear
2009-06-04 16:50:54

This article needs a lot more daylight, IMO, especially the quote from Shiller. He has a nice housing price index, but he did not understand what he was seeing back in 2003, and still seems confused today, frequently suggesting that more optimism is all that it will take to right the economy.

And if Kerch thought the bubble story seemed old back in 2003, I wonder what he thinks of it today? :-)

Resident Authority
Jan 21, 2003, 12:03 a.m. EST
A grave issue put to rest
Can the media please nail shut housing bubble’s coffin?

By Steve Kerch, CBS MarketWatch com

LOS ANGELES (CBS.MW) — As news goes, the housing “bubble” story is old, really old. But it remains remarkably spry in its dotage, still able to kick up its heels and make a spectacle of itself.

The idea that housing prices, which have been on a fairly steady upswing in most parts of the country since the end of the 1990-91 recession, would come tumbling down was born in the aftermath of the collapse of the Nasdaq stock market in early 2000.

Journalists picking through the debris of the tech wreck began hearing from the pundits who predicted that the next such disaster would come in home prices, which were sure to be taken down as a consequence. That crash, however, might lag the market by two years or so.

It’s nearly three years and countless tons of newsprint and hours of talking heads later and home prices continue on their merry way.
Isn’t it over?

By now, you’d think that nobody would need to convene a housing summit to rehash the “bubble” arguments, as they did last week in Los Angeles. And you’d think 200 or so real estate professionals, economists and scribes would have something better to do than attend such a summit. You’d think that the story would die a natural death. But there remain a few who cannot do the decent thing and pull the plug.

Different cities are in different bubbles. Well, we’re not sure they’re bubbles,” said Robert Shiller, a Yale economics professor who studies consumer behavior and who is the co-developer of a set of home-price indexes. “But the concept of a bubble is something irrational.”

 
 
Comment by Central Valley Guy
Comment by Professor Bear
2009-06-04 16:03:46

No one saw it coming except for a few bloggers (supposedly) wearing tinfoil hats. It is all in the blog archives for anyone who doubts me and cares to verify.

Countrywide’s Mozilo Saw Loans as ‘Toxic,’ SEC Claims (Update1)
By David Scheer and Karen Gullo

June 4 (Bloomberg) — Former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and two of his top deputies were sued by regulators for allegedly hiding the home lender’s deteriorating finances as the subprime mortgage crisis unfolded.

While publicly reassuring investors about the quality of his loans, Mozilo issued “dire” internal warnings and engaged in insider trading accelerating stock sales to reap about $140 million, the agency said in the suit at Los Angeles federal court. In one e-mail, he described a “particularly profitable subprime product as ‘toxic.’” He also wrote that Countrywide was “flying blind” and had “no way” to determine the risks of some adjustable-rate mortgages, the SEC said.

“Each of the defendants was aware, but failed to disclose, that Countrywide’s current business model was unsustainable,” the agency wrote in the suit, which also named former Chief Operating Officer David Sambol, 49, and former Chief Financial Officer Eric Sieracki, 52. All three defendants denied the agency’s claims.

Sieracki denies wrongdoing and bought, rather than sold, Countrywide stock during the period the SEC claims he believed the company was withholding information from the market, said his attorney, Shirli Weiss.

No one, not the government nor the most sophisticated of market analysts, foresaw the precipitous and pervasive economic crisis that affected virtually all markets and businesses in the country, including Countrywide’s,” Weiss said in a statement. “Mr. Sieracki’s actions and statements are completely inconsistent with fraud, a fact the SEC will not be able to contradict.

To contact the reporter on this story: David Scheer in New York at dscheer@bloomberg.net; Karen Gullo in San Francisco at kgullo@bloomberg.net.
Last Updated: June 4, 2009 17:52 EDT

Comment by Hwy50ina49Dodge
2009-06-04 16:10:09

“Shirli Weiss?”

Geez, someones a worse typist than me? :-)

Comment by Professor Bear
2009-06-04 19:15:52

Weissenheimer ;-)

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Comment by lavi d
2009-06-04 16:00:30

Las Vegas Sun, June 18th, 2008

“U.S. Sen. Harry Reid and developer Harvey Whittemore heralded the “birth of a city” — Coyote Springs, 43,000 acres of desert with water rights that over 40 years would give rise to more than 150,000 homes.

“’People said I was crazy,’ Whittemore said. ‘I think people are a little bit jealous … I am the luckiest guy in America.’”

(Followup to DinOr’s post in today’s DC-area thread)

Comment by Lost in Utah
2009-06-04 17:05:26

I had a talk with a Navajo guy who was a plumber. He was working on a development with the name “Coyote” in it. He said the place was bad juju because Coyote is the Trickster. He was dead serious. He told me a number of very strange things that had happened to him and his brother while working there.

So, they can blame the name if the place tanks. It had nothing to do with poor planning and being confident but clueless. :)

 
 
Comment by jeff saturday
2009-06-04 18:42:14

I wonder how many people this realtor has screwed

Hobe Sound, FL 33455
8 $217,000
3 Bed, 2 Bath, 2,577 Sq Ft
Property Type: Single Family Home
Brokered By: Keller Williams Of the Treasure Coast
“Honey!!! Bring the Check Book, Hurry”!!!!. That’s what you will hear when you see this pool home for this great, low price…. more

 
Comment by Professor Bear
2009-06-04 19:31:05

This happened in 1996, the last year my wife and I bought a home. Unfortunately, we did not have the foresight to lock, as home prices truly had already bottomed out that time. This time it’s different, as we still have the gauntlet of 2 1/2 year’s worth of Alt-A and prime option ARM resets to run.

U.S. Mortgage Rates Jump to Highest Since December (Update3)
By Brian Louis

June 4 (Bloomberg) — Fixed U.S. mortgage rates jumped to the highest level this year, signaling the Federal Reserve’s plan to lower borrowing costs has stalled.

The average 30-year rate rose to 5.29 from 4.91 percent a week earlier, Freddie Mac, the McLean, Virginia-based mortgage buyer, said today in a statement. The last time the rate was higher was Dec. 11, when it was 5.47 percent. The average 15- year rate rose to 4.79 percent from 4.53 percent.

“That’s quite a jump,” said Donald Rissmiller, chief economist at New York-based Strategas Research Partners. “The more rates go up, the more we need home prices to go down to equalize consumers’ payments. It’s those payments that have brought about a level of stability in housing unit sales.”

Rising rates may deepen the U.S. housing slump and sideline consumers hoping to refinance or purchase their first house. The number of Americans signing contracts to buy previously owned homes climbed 6.7 percent in April, largely on cheaper financing costs, according to the National Association of Realtors.

This week’s rate increase translates into an additional $31.79 a month for a buyer purchasing the median-priced U.S. home of $170,200 with a 20 percent down payment.

They have this comparison wrong. The correct statement is, “this week’s rate increase translates into a decrease of

“If people hear that rates are going up, I think they hesitate a little bit,” said Tom Burris, a mortgage banker at Supreme Lending in Dallas. “After a while the reality sets in that 5.5 is much better than 8 percent that we had ten years ago. It’s a good rate, it’s a fair rate.”

Comment by packman
2009-06-04 21:00:52

That would be… a flame thrower.

:)

 
Comment by Professor Bear
2009-06-04 22:53:35

Sorry, I accidently hit the ’send’ button before I finished the math (never do math and try to post it while drinking!) but I have the full version just below…

 
 
Comment by Professor Bear
2009-06-04 19:57:56

U.S. Mortgage Rates Jump to Highest Since December (Update3)
By Brian Louis

June 4 (Bloomberg) — Fixed U.S. mortgage rates jumped to the highest level this year, signaling the Federal Reserve’s plan to lower borrowing costs has stalled.

The average 30-year rate rose to 5.29 from 4.91 percent a week earlier, Freddie Mac, the McLean, Virginia-based mortgage buyer, said today in a statement. The last time the rate was higher was Dec. 11, when it was 5.47 percent. The average 15- year rate rose to 4.79 percent from 4.53 percent.

“That’s quite a jump,” said Donald Rissmiller, chief economist at New York-based Strategas Research Partners. “The more rates go up, the more we need home prices to go down to equalize consumers’ payments. It’s those payments that have brought about a level of stability in housing unit sales.”

Rising rates may deepen the U.S. housing slump and sideline consumers hoping to refinance or purchase their first house. The number of Americans signing contracts to buy previously owned homes climbed 6.7 percent in April, largely on cheaper financing costs, according to the National Association of Realtors.

This week’s rate increase translates into an additional $31.79 a month for a buyer purchasing the median-priced U.S. home of $170,200 with a 20 percent down payment.

They screwed up their illustration because they forgot to factor in the household monthly income budget constraint. The correct calculation is as follows:

Suppose a household could just manage to afford a monthly payment of $31.79 (after making a 20 pct downpayment) to buy a house for $170,200. Suppose this is only possible with an interest rate of 4.91 percent, and their monthly payment will be $723.47.

Now that rates have jumped to 5.29 percent, unless they got a raise or found a lender willing to relax underwriting standards, they can still only afford a monthly payment of $723.75 (assuming the same monthly payment as previously). Now with a twenty percent downpayment, they can only afford a home at a price of pv($723.75 at 5.29%)/(80%) = $163,036, 4.2 percent less than they could have afforded a week ago. This illustration assumes they have a downpayment of $36,600 saved and ready to plow into a home purchase.

 
Comment by Professor Bear
2009-06-04 20:02:33

I just wrote a long post showing the rise in interest rates over the past week implies roughly a 4.2% drop in housing valuations (based on 30 year fixed financing). Follow up remark: A 1-week drop in value of 4.2% occurs at an annual rate of decline of roughly 89 percent:

((1-0.042)^52-1)*100 = -89 pct.

Comment by packman
2009-06-04 21:05:42

LOL.

10-year treasury yields went up .17 today (3.55 to 3.72). How’s that extrapolate out over a year, math whiz?

Comment by Professor Bear
2009-06-04 22:38:22

103.72*exp(360*log(103.72/103.55))-100 = 34.04 pct.

Luckily trees don’t grow to the sky (or in mathese, interest rates follow a mean reverting process which never exceeds certain stochastic bounds).

Comment by packman
2009-06-05 05:02:14

Clap. clap. clap.

(Yeah interest rates can be a pretty mean thing)

:)

P.S. I’m awake now - though off on vacation for a week+. I’ll miss the musings.

(Comments wont nest below this level)
 
 
 
 
Comment by Professor Bear
2009-06-04 20:27:44

This news is right up there with that of the Norwegian town whose pension fund got burned buying Wall Street’s toxic assets.

Wall Street Journal

* REAL ESTATE
* JUNE 5, 2009

Big-City Skyscraper Burns Ozark Town

SPRINGFIELD, Mo. — Losses at the police and firefighters’ pension fund have thrown this Ozark city into its worst budget crisis in decades. The city wants to slash spending on health care, parks and roads. Skunk trapping may have to go, too.

One of the pension fund’s problems: It’s an investor in a $1.1 billion speculative office skyscraper rising in New York’s Times Square in the middle of a commercial-property bust.

 
Comment by Professor Bear
2009-06-04 20:33:56

Gee — the serial bottom callers have been busy at their occupation for well over a year now, with no sign of a let up. I wonder how long prices will have to continue falling before they finally give up? Perhaps the Japanese experience could offer guidance. I don’t know when their serial bottom callers threw in the towel, but home prices have been dropping there for two decades already.

Wall Street Journal

* June 2, 2009, 10:36 AM ET

Bounce in Pending Home Sales Could Signal More Price Drops
By Nick Timiraos

The number of potential home buyers who signed contracts to purchase existing homes jumped by its largest margin in eight years and rose for the third straight month in April. But watch out below: that could mean banks are ramping up price-destroying foreclosure sales, dropping prices further in upcoming home-price reports.

The pending home sales index rose 6.7% in April from March and 3.2% from a year ago. Pending home sales should predict actual sales about 45 days later, so the existing home sales report for May, to be released at the end of June, will show how many of these pending sales actually close. The two usually track each other fairly closely.

Sales are up largely on sharply reduced prices from sales of bank-owned foreclosures, which have brought more investors and first-time buyers into the market. But there are two headwinds pushing against this rising affordability: mortgage rates spiked last week, and unemployment continues to creep up.

There’s another reason to dampen some of the enthusiasm that’s likely to come out about these numbers: pending home sales made a similar jump last April, leading to lots of speculation about a bottom in housing.

 
Comment by Professor Bear
2009-06-04 20:40:53

FPSS — Is this a case in point illustration of the gap between bid and asked prices that evidences a major crash is underway? Who’d a thunk that even the Treasury Secretary would get stucco?

Wall Street Journal

* June 3, 2009, 3:37 PM ET

As High-End Stalls, Geithner Stuck Renting Out His Westchester Home
By Nick Timiraos

Treasury Secretary Tim Geithner is getting a lesson in how sales at the high end of the housing market have stalled: He hasn’t been able to find a buyer for his five-bedroom home in a tony Westchester County hamlet of Larchmont, N.Y. Instead, he’s renting out the unit, according to the Associated Press.

Mr. Geithner reduced the price on the home that he bought in 2004 to $1.575 million, which is $60,000 less than what he listed it for in February and $25,200 less than what he and his wife paid for it five years ago. A couple weeks ago, the Geithners opted to rent out the home for $7,500 per month. (Luxist has photos.)

Comment by cactus
2009-06-04 20:49:10

Landlords sure take their RE seriously out in CA I almost forgot how obnoxious it is with regards to RE in Cali.

 
 
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