Bits Bucket For July 11, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8
July 10 (Bloomberg) — Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”
“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”
The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.
The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”
Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the U.S. dollar’s future as a global reserve currency. Russia’s proposals for the G-20 meeting in London in April included the creation of a supranational currency.
He’d do better trying to prop up the Euro. I’d give even odds that some of the Eurozone countries start bringing their own currency back in the next five years - starting with Italy perhaps? The UK is looking smarter all the time putting up with all the crap they did to retatin the GBP.
So the ‘diversity’ propaganda is now worldwide. i remember when i was out of country and met up with a group of Americans for a few drinks. One of the younger of the crowd spoke of how “diversity” is what made America great.
We all had a huge laugh at his expense.
what a farce, and the kid actually believed it.
Now i here on the radio, propaganda from the Housing administration how “diverstity” builds stronger, better neighborhoods……..Oh you mean the new ghettos, from forced housing integration.
How “urban renewal” projects always need to be started after they get the white out.
So, now, on a global scale………”diversity” is the strength of the world. Yet, right.
More like, keep the host just strong enough so the parasites don’t kill it.
Think Detroit. A failing city, having gone completely over the edge to “diversity”.
Puleeezeee.
With no sense of morality to hamper them, that soviet expertise and superiority in capitalizing on the goodness and weaknesses of their enemies is superior goes without question.
With no sense of morality to hamper them, that soviet expertise
and superiorityin capitalizing on the goodness and weaknesses of their enemies is superior goes without question.aw.. screw it.. the sentence sucked from the get-go..
Medvedev can shove his coins.. individually or by the roll.
Diversity is the biggest LIE in America
Here I am promoting Zydeco music where they don’t swear or use the N word and are real musicians, and what real integration was supposed to be about.
and the resistance i get from not only bar club owners but other dj’s..is amazing, because they are not ghetto.
so much for diversity…click on my handle
The check is in the mail…
Sorry, diogenes, but Detroit was never a diverse city and never tried to be. I was born and raised there, and there were no integrated areas in years past. Whites and blacks had their own neighborhoods. Now that racism has waned there are more integrated areas, but not as a result of policy. No, you can’t blame the fall of the industrial midwest on diversity.
And call me an idealist, but I love the diversity in our country. In the USA you can overcome the challenges in your background to become a success, with a variable combination of luck, smarts, talent, and hard work. Doesn’t always work out, but it can.
The happiest, richest and healthiest countries are the most culturally homogeneous. And they protect their sovereignty.
The new global currency, like the new global workforce, is the next step in exploiting the worker class.
‘Unity by Diversity’??? Orwell couldn’t have come up with a more double plus gooder statement. It should read, “Profits by Extortion, Theft, and Usury.”
Who would own the license to mint the new “Global”?
My guess: An (internationally) independent central bank?
“An (internationally) independent central bank?”
Could such a thing exist? Who would staff it? Aliens? Olympic judges? A combination thereof?
Obviosuly this would be run the best and brightest from Lehman and Bear Stearns.
I’d hate to “lose” all of that “talent” to our “competitors.” Plus, they have so much valuable experience, it would takes years to train their replacements. We don’t have the kind of time!
Ooooh, good point! I forgot about those guys. Hate to lose them to mean mr. market. lol
Luckily thanks to massive bailouts, we have no worries about losing bank managers who are expert at casting hundreds of billions of dollars into the sea.
International governance is problematic, but possibly less-so than allowing rogue nationalistic central bankers play oligopoly printing press games with the value of country-specific reserve currencies. The license to print creates a moral hazard problem for national leaders to engage in unilateral acts of military aggression (think Rove/Cheney), only to subsequently rely on their central bankers to run the printing press in order to clear the books of war debt.
I’m forming a new lobby. It’s bound to be controversial as our first draft of legislation is called “The Bankers Must Die Act”.
mint? coin? global?
Cash money in any form is well on the road to extinction.. coins are already useless in 99% of commerce. Electronic money will soon replace what’s left of the “cash” floating around. I’d give it 10 years, tops.
——-
We already have a global currency. It just goes by different names depending on where you are.. the dollar, the pound, etc.
Some number of shells can buy what some number of acorns can buy. Acorn or shell, you can buy the same thing. What difference does it make if you use acorns or shells? None. Is there something in the name “acorn” or “shell” that makes it more money-like than the other?
Just the fact that one currency can be freely exchanged for another makes them effectively equivalent in value. If any currency can be exchanged for another what is the practical difference between them? .. aside from some nostalgic fondness or nationalist pride in one or the other.
The difference is when you have to buy oil to fuel productivity with shells, but they won’t take acorns. Shells are then in demand.
So exchange your acorns for shells, and use the shells to buy the oil.
A cashless society, which is being relentlessly pushed, is Big Brother’s wet dream. Imagine an Orwellian world where the government knows where every cent you make comes from or goes. It might end many forms of tax evasion and crime, but would give Big Brother the “Total Information Awareness” that they have long lusted after to monitor every aspect of citizens’ lives.
I think it’ll happen eventually because it is more efficient and processing costs are less. Such things are powerful drivers.
All that’s holding things back is the necessary infrastructure.. slide your card in parking meters.. the WiFi enabled cab, train and bus… at the laundromat.
I’m sure it’s possible to move cradle to grave right now, and never touch any cash.
What about anon cash cards? So, we get rid of paper and coin, but always maintain some form of anonymous payment.
Governments are like trolls. The bigger they are the slower and dumber they are. Being populated and run by bored bureaucrats who don’t give a rat’s ass about anything but getting paid and going home, Big Brother wouldn’t be able to find it’s ass with both hands most of the time, much less keep track of what you’re buying.
Just consider the reverse. Suppose we demand that Big Brother keep track of every penny spent by all citizens. Would anyone in their right mind expect they would succeed? They might successfully keep track 23.2%.. more or less… on a good day.
Enterprising people with legal or illegal intentions can, will and always have found ways to get around whatever is in their way. And I doubt something like electronic currency will have, for instance, even the least effect on how much “crime” is happening..
Of course, having a big stupid government-troll wandering around all over the place is very dangerous.. and lots of innocent people are liable to bludgeoned and trampled.. but that’s life. Once govt is allowed to grow into a monster it’s pretty much impossible to shrink it.
The world underground economy is far to big to ever allow for the complete conversion to electronic money.
Government black ops also rely heavily on cash.
I’ll take it if it’s minted out of Au or silver. Even Pb that I can melt down for bullets for the upcoming riots.
“Unity in Diversity?”
Is that like “self policing” or “military intelligence?”
Too funny.
“Unity in Diversity?”
You say that like it’s a bad thing.
Folks are much less likely to shoot their own cousins, or burn the family store of the girl who watches their kids. E pluribus unum and all that silly rot….
The level of fearful hate in this thread is striking. Do any of you have a valid passport?
Two questions:
1) What is the English translation of “e pluribus unum”?
2) What does Al Gore think is the answer to (1)?
I disagree. It is not “fearful hate”, but legitimate frustration.
“Diversity” is a concept that, intellectually, tastes like yummy jello. It pretends to be some kind of eternal truth or value, but in reality, it is a political tool used by certain specific ethnic and racial groups to advance their position in our society.
Look: “diversity”, at root, simply means “difference”. This is a neutral concept. There is no conceptual reason why “difference” is necessarily good, just as there is none why homogeneity is necessarily good. Many of us get frustrated at the elevation of a neutral concept to some kind of eternal truth in service of the political aims of only some racial and ethnic groups.
If “diversity” meant something more than skin color, then:
1) Harvard University should be poaching the best and the brightest students at Bob Jones University, in service of intellectual diversity. It would set up, and support actively, a “Christian living” dorm for those Christian fundamentalists on campus.
2) Mt. Holyoke College would be admitting male students or, at the very least, be the subject of unremitting MSM criticism for not doing so.
3) The Belizean Group–women’s answer to the Bohemian Group–would suffer the same opprobrium that the Bohemian Group has suffered–the same caricature as a fusty, discriminatory bunch of pinheads. Remember Sam Alito being pilloried in 2005 by Ted Kennedy and John Kerry for his position in the early 80s in which he questioned Princeton’s decision to admit women? Sonia Sotomayor should, by that logic, be crucified for her (very recently relinquished) membership in the group.
4) We would positively encourage (rather than dismiss in a patronizing fashion) Afghan women in the U.S. to embrace their cultural heritage, by wearing burkhas when they go out in public. What could be more “diverse” than that?
Of course, none of this will come to pass. The reason is that the hagiography of “diversity” is a tool of specific groups for specific political reasons. It has the patina of one of those terms, like “equal opportunity”, that is ultimately malleable, so that none of us knows exactly what it will come to mean in our lives. “Equal opportunity” morphed from the 60s civil rights concept of individual opportunity to some sort of racial-group-entitlement concept in the 70s and 80s, so much so that opposition to the grosser forms of affirmative action was actually denounced as racist itself.
Pardon the length of this essay. Like the other writers, I am frustrated with the disingenuousness of the concept of “diversity”, as practiced in our current political culture. Labeling it “hatred” is not a tool of understanding.
Good comments.
But just to add to the mix, a little late.
Discrimination is a very good thing. We all need to discriminate about what is good and what is bad. it is the very essence of freedom.
And as a free individual, i get to decide how i wish to apply my discrimination, whether it is racial, cultural, sexist, or whatever i so choose.
As a free individual, i get to decide who i will associate with, and whom not.
Instead, government is not “engineering” social outcomes by interfering with my free choices.
while this violates constitutional rights of free persons (govt. investigating whether i have the “right” ratio of persons in my business, school or neighborhood), it is now considered a “MISSION” of government goon squads and self -righteous persons on crusade to monitor my associations and preferences.
How did this country become so lop-sided?
[sorry if this is a double post]
I disagree. It is not “fearful hate”, but legitimate frustration.
“Diversity” is a concept that has the intellectual consistency of yummy jello. It pretends to be some kind of eternal truth or value, but in reality, it is a political tool used by certain specific ethnic and racial groups to advance their position in our society.
Look: “diversity”, at root, simply means “difference”. This is a neutral concept. There is no conceptual reason why “difference” is necessarily good, just as there is none why homogeneity is necessarily good. Many of us get frustrated at the elevation of a neutral concept to some kind of eternal truth in service of the political aims of only some racial and ethnic groups.
If “diversity” meant something more than skin color, then:
1) Harvard University should be poaching the best and the brightest students at Bob Jones University, in service of intellectual diversity. It would set up, and support actively, a “Christian living” dorm for those Christian fundamentalists on campus.
2) Mt. Holyoke College would be admitting male students or, at the very least, be the subject of unremitting MSM criticism for not doing so.
3) The Belizean Group–women’s answer to the Bohemian Group–would suffer the same opprobrium that the Bohemian Group has suffered–the same caricature as a fusty, discriminatory bunch of pinheads. Remember Sam Alito being pilloried in 2005 by Ted Kennedy and John Kerry for his position in the early 80s in which he questioned Princeton’s decision to admit women? Sonia Sotomayor should, by that logic, be crucified for her (very recently relinquished) membership in the Belizean group.
4) We would positively encourage (rather than dismiss in a patronizing fashion) Afghan women in the U.S. to embrace their cultural heritage, by wearing burkhas when they go out in public. What could be more “diverse” than that?
Of course, none of this will come to pass. The reason is that the almost spiritual embrace of “diversity” is, in fact, a tool of specific groups for specific political reasons. It has the mellow sound of one of those terms, like “equal opportunity”, that is ultimately malleable, so that none of us knows exactly what it will come to mean as a practical matter in our lives. “Equal opportunity” morphed from a concept of individual opportunity in the 60s to some sort of racial-group-entitlement concept in the 70s and 80s, so much so that opposition to the grosser forms of affirmative action was actually denounced as racist.
Pardon the length of this essay. Like the other writers, I am frustrated with the disingenuousness of the concept of “diversity”, as practiced in our current political culture. Labeling this frustration “hatred” is not a tool of understanding.
This $17 Trillion Divorce Won’t Be a Pretty One: William Pesek
July 10 (Bloomberg) — Returning from China last month, U.S. Congressman Mark Kirk had a bearish take on a high-level visit by American officials.
Treasury Secretary Timothy Geithner claimed the U.S.’s biggest creditor voiced great confidence in its debt. Kirk, an Illinois Republican, came back with the opposite impression.
“China is beginning to cancel Congress’s credit card,” he told Fox News on June 10. It “doesn’t want to lend much more money to the United States and especially is worried about the Fed’s policy of printing money to buy new debt.”
A month later, there’s no doubt about whose assessment was more accurate. Chinese leaders are clearly very concerned about the dollar. How they will react is a key question hanging over markets, and it’s time to take the discussion to the next level.
Everyone knows China wants to reduce its dollar holdings. Little is known about how that process may unfold and how much work and preparation needs to go into it. Lots, in fact.
Think of China and the U.S. in history’s most expensive divorce. The two economies total $17 trillion of output, and polls in China show little support for adding to almost $800 billion of U.S. Treasuries.
This argument can be broadened to the rest of Asia. The idea that China or Japan — with $686 billion of Treasuries — can just start selling massive blocks of dollars is ridiculous. It would devastate markets the world over and the fallout would boomerang back on Asia. If you think markets are shaky now, just wait until word of a central-bank fire sale gets around.
Copycat Selling
Sure, Singapore (with $40 billion of Treasuries), India ($39 billion) or South Korea ($35 billion) could try to dump dollars on the stealth. Good luck in this highly connected, around-the-clock world. News that a key economy seeks a first- mover advantage over peers would inspire copycat selling. Expect investors and traders to respond with massive sell orders.
Warren Buffett can discreetly trim Berkshire Hathaway Inc.’s interest in a company or a currency. How a central bank divests itself of tens or hundreds of billions of dollars on the sly is another matter.
Governments that may be concerned about getting stuck with their dollars for good have a point. And by curtailing investments in dollars today, Asia is ensuring that the U.S. currency will be worth less a year from now. Bernard Madoff can tell you a thing or two about how this process works.
“China is beginning to cancel Congress’s credit card,” he told Fox News on June 10. It “doesn’t want to lend much more money to the United States and especially is worried about the Fed’s policy of printing money to buy new debt.”
That is just it. China became the world’s largest credit card company. They knew the deal. They sent us crappy junk and we sent them IOUs. They now act like victims. Screw them and the dragon they rode in on, acting so high and mighty now.
Somehow I don’t think most Chinese or Americans will really miss the deal. We’ll still buy what we really need from them, and vice versa.
Bingo NYCB!
As for people missing the deal, I think China will hurt pretty bad. The whole economy is built on an export model, think Japan times 10.
I’ve been thinking China will get throttled, too, what with all of the importing of junk coming to a screeching halt. Yet, the IMF calls for growth of 7.5% this year for China, and 8.5% next year. Huh? Perhaps they’re successfully peddling their cheap toxic crap to other countries in increasing amounts.
I wonder what the wrong path looks like?
Geithner: Stimulus is working and on right path
By ANNE FLAHERTY and JIM KUHNHENN
The Associated Press
Friday, July 10, 2009
WASHINGTON — Despite persistently high unemployment, Treasury Secretary Timothy Geithner said Friday the Obama administration’s economic stimulus plan is on the “expected path.”
“There’s been substantial improvements in arresting what was the worst recession globally we’ve seen in generations,” Geithner told lawmakers Friday.
Biden just said everybody guessed wrong. If there have been substantial improvements why is porkulus 2 still on the table? This is incompetence with lots and lots of zeros.
The banks and AIG have been baled out, and the crap on the books is now owned by the US Government/JQ Public; when you look at it from his/their perspective, everything is roses.
Stalin killed 50 million of his own Ivan SixPacksovs in one way or another, but everyone in Russia thinks he’s a hero.
“You’re doing a fantastic job, Timmay……”
“You’re doing a fantastic job, Timmay……”
“Heck of a job, Brownie.”
“Despite persistently high unemployment, Treasury Secretary Timothy Geithner said Friday the Obama administration’s economic stimulus plan is on the “expected path.””
You can only discount unemployment for so long. Elf boy will figure that out one day.
The only word Little Timmy used that works is ‘arresting’. Timmy should be arrested for income tax evasion along with the rest. Oh. you mean he won’t be ’cause he’s the Sec Treasury and will be going back to work for the Goldman bunch of Thieves after he leave our employ. Wow !!!
Well. What can I say.
Good.
China US Debt holdings:
Apr09 Mar09 Feb09 Jan09 Dec08 Nov08 Oct08 Sep08
763.5 767.9 744.2 739.6 727.4 713.2 684.1 618.2
Aug08 Jul08
573.7 550.0
Not this again! Great cup of coffee on this fine
Saturday morning……..
Rancher, refill over here. Just half a cup please. No thanks on the sugar, but I will have a dash of milk. Much appreciated.
Sice Oly said Bits Buckets, is Ok for stream of thought, went to James D. Brown funeral in my Christian hometown last night. (visitation). Looking at his obitury card. Phillies uniform Triple A, blew his arm one week before going up. Raised two fine sons, Todler (Tod) who was/is secret service for Bush team. Mike married Wayne Gretzy’s wife’s sister. Been drunk with Wayne a couple times, he is cool. Wasn’t there, but Janet was. Sad heart today, beautiful people, who don’t care about money or social class. I love them all, and I miss Jim.
Wow. (said sincerely)
You’re cool eco, thanks for the reply.
“The federal government consists of five parts: Congress, the president, the judiciary, the states, and the people. Each has the right, duty, and power to defend the Constitution.” ~Ed Vieira.
We went to Shakespeare in the Park last night. It was very good. It was a nice, cool night. I nearly ran into Doogie Howser when I came out of the bathroom before the show. No jokes, please. The whole night was great except for the fact that they let the pompous windbag Schumer speak before the play. I think I threw up in my mouth while I was listening to him. His role in this mess is greater than any actor I saw up on that stage. He told us all how important the arts are. Then why the heck do him and his henchman keep throwing so much money at the bankers?
They are all so phony and so bought.
doogie? bathroom?
no jokes needed
i will call you this week to make plans been really busy
but i manage to read the bits every other day or so
hello to all
enjoy the great summer saturday
Pompus windbag? You should live in Brooklyn and hear Marty Markowitz speak before similar events. (He has cut back in recent years).
Fresno allows MMA death cage fights in public park.
Wherefore art thou common sense?
death cage
?? I don’t recall ever seeing MMA bouts that go to the death. Just because there’s a physical boundary (ie a ‘ring’), it’s considered a ‘death cage’? Or is there something new they’ve added?
Rope, chicken wire, I don’t care.
Within a public park, wrong place for sanctioning blood and fists.
Let’m go rent a metal building in a private contract.
Razor wire, HV fence, have at it.
Totally agree!
You need to slide Goldman Sachs in there, somewhere between “judiciary” and “states”.
“People”? Who needs them?
And our much vaunted democracy is increasingly dysfunctional – rotten to the core, truth be known – thanks largely to entrenched special interests and a voting public clamoring for their own piece of the pie, while trying to hand the bill off to somebody else.
Buffett’s Most-Watched Index Takes a Tumble:
July 10 (Bloomberg) — For Warren Buffett, freight-train traffic has the kind of importance that Alan Greenspan attached to scrap-steel prices as Federal Reserve chairman — and it isn’t going his way.
The CHART OF THE DAY compares the number of freight carloads at six of the largest U.S. railroads this year with the same period of 2008. Shipments tumbled 19.2 percent through last week from a year earlier, the Association of American Railroads reported yesterday.
Buffett follows this gauge more closely than any other index, Bianna Golodryga, a reporter for ABC’s “Good Morning America” program, said yesterday after she interviewed the billionaire investor. Its drop worries him, she reported.
Buffett’s Berkshire Hathaway Inc. owns a 23 percent stake in Burlington Northern Santa Fe Inc., the biggest U.S. railroad by revenue. The holding’s value was $5.25 billion at yesterday’s close. Among Berkshire’s common-share investments, only Coca- Cola Co. and Wells Fargo & Co. were bigger.
Berkshire also has stakes in Norfolk Southern Corp. and Union Pacific Corp., two other U.S. railroads. The value of those shares totaled about $545 million yesterday.
Greenspan followed the scrap-steel market to gain insight into the U.S. economy’s prospects. The rate at which cars and trucks are scrapped “has a pronounced cyclical pattern,” he wrote in a study that the Fed released in 1996.
Buffett’s Most-Watched Index Takes a Tumble:
If you want Buffett to take anything seriously print it across Becky Quick’s chest. That is his most watched index. If you told him that he could slip with beak-faced Becky if he pushed to have the Fed audited he would be the biggest champion of auditing that gang of thugs. He would make Ron Paul look like a Fed-lover.
Slip was a typo but I like. I’m going to keep that one.
“Cash is everything right now,”
For GM suppliers, struggles remain
Many are nearly out of cash and may face restructuring
By Rick Barrett of the Journal Sentinel.
Suppliers that make a dizzying array of parts and accessories for General Motors vehicles are still in trouble even as the automaker emerged from bankruptcy Friday.
Once the world’s largest and most powerful automaker, the new GM is leaner and cleansed of burdensome contracts that would have sunk it without federal loans. But the automaker’s suppliers, including dozens of Wisconsin companies, are hurting.
Some of the suppliers have sought bankruptcy protection themselves, such as Grede Foundries Inc. of Milwaukee, whose executives were unavailable for comment Friday.
Many suppliers nearly have burned through their cash reserves, leaving them vulnerable to collapse if business doesn’t pick up soon.
“Cash is everything right now,” said Thomas Burke, president and CEO of Modine Manufacturing, a Racine firm that makes automotive radiators and other heating and cooling products.
The company is a major supplier to European automakers but doesn’t sell many products to General Motors and Chrysler.
http://tinyurl.com/kngo7n
LOL! I thought I was the only one who noticed this phenomenon. Always wondered what really goes on on those cross-country private jet rides where she interviews him for five minutes. What happens the other four hours? He always comes back to Beaky for another ‘exclusive’.
Speaking of freight trains I drive to Ontario CA, every day , in Fontana they have or a mile of Santa Fe Engines on the tracks next to the 10 freeway. They have been there for about a year and not pulling freight.
I’m so sick of Warren Buffet, and all of his worshipers. The guy is as evil as any of the pigmen, yet he’s put on a pedestal. He’s feeding at the Goldman Sachs trough, and getting fantastically wealthy at the expense of the common man. He’s what, the third wealthiest person in the world, but he pays his secretary the same as a fledgling accountant would? Can’t stand the SOB.
While I don’t worship Warren, I do respect him. Sure, he’s a rat bas… er, SOB just like the rest, but his public pronouncements on the economy have been better than anyone elses.
“Weapons of Financial Destruction” ring a bell? He coined it.
Keep in mind that Buffet has also pushed to raise income taxes on the wealthy and given almost all of his money away to the Gates Foundation. The guy has made a lot of money, but lives frugally and gives away his money to charity. Hard to hate that sort of behavior.
I don’t have a problem hating the behavior of giving money to anything controlled by Bill Gates.
June Numbers for Santa Clara County reflect large increases in sales for largest areas with YOY median price reductions.
Say home is 600K. Conservatively estimate an additional 15% drop through 2011, which equates to 90K loss. You can rent a nice 3 bedroom in these areas for 27K annually. Take into account property taxes and mandatory new home move-in fix-ups, and these buyers are out over 40K over only two years.
http://www.mercurynews.com/realestatenews/ci_12809735
‘increases in sales for largest areas with YOY median price reductions’
This is exactly how sales should perform according to the supply/demand curves we learn in econ 101. What I pointed out in 2005 as being abnormal, was that sales were increasing as prices rose.
yes but where is the pride in ownershp? lol
as the market continues it’s downward spiral renting is the best thing to do
how many of these “owners” would love to be able to say well when my lease is up i can find cheaper living arrangements
is it just me or has food become really expensive?
YES mg lots of product downsizing and some increase in price. But we got some great deals on chicken, pork, beef, sausages 1.99 lb at foodtown and the LL got us a new re-fridge 50% bigger then the old one so we stocked up this week…
also been noticing a lot more managers specials lately…been buying those too..had some almost outdated pre packaged marinated ribs last week marked down from $6.99 to $2.99 lb
Small town stress and distress!!
Dispute over flag protest erupts in Wisc village
WAUSAU, Wis.
” An American flag flown upside down as a protest in a northern Wisconsin village was seized by police before a Fourth of July parade and the businessman who flew it — an Iraq war veteran — claims the officers trespassed and stole his property
…In mid-June, Congine, 46, began flying the flag upside down — an accepted way to signal distress — outside the restaurant he wants to open in Crivitz, a village of about 1,000 people some 65 miles north of Green Bay.
…He said his distress is likely bankruptcy because the village board refused to grant him a liquor license after he spent nearly $200,000 to buy and remodel a downtown building for an Italian supper club.
http://tinyurl.com/mtskb3
It’s hard to feel sorry for someone who sinks a lot of dough into a biz that will require zoning, liquor, whatever laws to be changed in order to be successful- or even operate. They then shout about how much money they’ve got invested. Well, don’t spend the cash until you’ve got the rules changed. You shouldn’t be able to leverage your own stupidity.
Sounds like he’s getting some great publicity though. (sarcasm)
Maybe a whole bunch of the US taxpayers should start flying their Flags upside down…their the ONES that will be seeing a lots, and lots of distress.
Reminds me of the story about a standalone restaurant near me. It was in terrible disrepair, and a few people purchased it with great intentions, spent a boatload of money to completely renovate it (looked very nice), and then the water was shut off upon completion. It seems that the well water rights belonged to the gas station next door, owned by an attorney. They asked him if he would sell or share the rights, and he refused. So, the people applied for a permit to put in a well, but were denied by the county because their lot was too small and in close proximity to the underground tanks. They then tried to work something out, anything, with the attorney, but he’d hear none of it. In turn, they could not open, nor could they sell it. They lost their entire investment as it went back to the bank, and the attorney purchased it for a pittance. They didn’t do their due diligence before purchasing (someone even told me that the attorney was the original seller but I haven’t verified that), but the attorney is the scum of the earth.
Maybe THAT attorney, but, again, I’ll take 10 attorneys b/4 10 clients.
It makes me wonder where this generalization and righteousness comes from…
Atorneys, Attorneys, Attorneys, blah, etc.
Supply and demand get a lot more interesting when massive price movements help determine equilibrium price and rate of home sales. Think of your standard econ 101 demand curve whopped to the left by a baseball bat of larger-than-expected ongoing price declines (who wants to catch a falling knife?). Toss in some counter-cyclical government- and non-governmental intervention (e.g., Fed purchase of MBS, buy-down of mortgage yields, foreclosure moratoriums and “new home buyer” tax credits) to offset the natural tendency of people to avoid buying houses when their employment futures are in question, an unprecedented foreclosure rate is dumping supply on the market and home prices are (consequently) dropping like a rock.
The applicability of the econ 101 static supply-and-demand analysis is questionable for determining short-run equilibrium in a reflexive real world with price dynamics and countervailing government intervention. However, given the 19m+ vacant homes and prices which are still too high compared to end-user incomes in many parts of the country, the econ 101 graph suffices to explain why the long-term direction of equilibrium adjustment in home prices is still to the downside, due to a combination of simultaneous shifts of demand to the left and supply to the right.
“This is exactly how sales should perform according to the supply/demand curves we learn in econ 101. What I pointed out in 2005 as being abnormal, was that sales were increasing as prices rose.”
And it was an excellent call, Ben.
I think of that behavior as typical of “bubble demand”; the mania psychology that sets in (based on price increases that are initially rational) produces new demand where demand would otherwise be declining–e.g. results that are no longer rational.
The thing I am waiting in fascination to see is whether psychology will flip sufficiently to generate “bubble supply” or “anti-bubble demand”. In other words, supply that increases so much that rational market supply increase turns into panic’ed supply increase.
If the pendulum truly swings to the same extent in both directions, I would speculate that we should see this. If so, the areas with the worst price declines should see the panic first, and decreasing clearing rates.
Or maybe I should re-write the description above with or demand, or demand-to-supply ratio; it’s not clear to me whether supply or demand should change faster.
“…e.g. results that are no longer rational…”
Not sure I get the ‘irrational’ argument. If everyone had been right in their assumption that ‘real estate always goes up,’ wouldn’t buying an overpriced faux chateau have been the logical decision? The problem is that the timing of a bubble collapse is highly unpredictable, and that a rush to the exits results when the collapse occurs, which flips the buy-or-rent decision on its head.
Zillow is looking two years ahead and publishing the expected values. They believe joe six pack will only go to zillow to check on local RE if it is a pleasant experience.
Zillow is worthless…
Their “Zestimates”, yes, but not the site in general. It’s a great place to find previous sales prices.
Yeah bantering…I was speaking to the zestimates…
“Spending went up too far, too fast in real estate boom times, and government created programs and policies that are no longer sustainable. In other words, our current woes have their roots as much in the good times of the housing bubble as in the current bad ones.
http://www.tampabay.com/news/perspective/article1017411.ece
Ends with a true statement: “When you distort taxes, you do bad things.”
That is an awesome commentary and expresses many of the points I’ve been trying to make for a long time. I’ve lived in Florida since 1980. Always thought services and infrastructure were just fine for many years. The overspending brought on by the bubble was ridiculous and to my mind, didn’t really bring many benefits. Local governments can do quite well on less, they have done in the the past.
2004-2009 Pompous Prognosticators Revisited…
2004
1. “The ability of lending institutions to manage the risks associated with mortgages that have high loan-to-value ratios seems to have improved markedly over the past decade.”
-Alan Greenspan [February 2004]
-2005
2. “Home sales are coming down from the mountain peak, but they will level out at a high plateau, a plateau that is higher than previous peaks in the housing cycle.”
-David Lereah, Chief Economist, National Association of Realtors [December 2005]
-2006
3. “I don’t know, but I think the worst of this may well be over.”
-Alan Greenspan, [October 2006]
-2007
4. “We have a very strong global economy… and I feel very comfortable with the global economy.
-Treasury Secretary Henry Paulson [March, 2007]
5. “The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”
-Ben Bernanke [March 28, 2007]
6. “In today’s environment, it is virtually impossible to violate rules.”
-Bernie Madoff [November 2007]
-2008
7. “Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009.”
-National Association of Realtors [January 2008]
8. “Although recent data suggest that the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession.”
-US Congressional Budget Office [January 2008]
9. “I don’t think we’re headed to a recession.”
-President George W. Bush [February 2008]
10. “I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”
-Ben Bernanke [February 28, 2008]
11. “No! No! No! Bear Stearns is not in trouble.”
-Jim Cramer, CNBC commentator [March 2008]
12. “Later this year, I expect growth will pick up.”
-Henry Paulson, just after Treasury had mailed out 130 million economic stimulus cheques [May 2008]
13. “Fannie Mae and Freddie Mac are fundamentally sound. They’re not in danger of going under…. I think they are in good shape going forward.”
-Barney Frank, chairman of the House Financial Services Committee [July 2008]
14. “My own belief is if we were going to have some sort of big crash or recession, we probably would have had it by now.”
-Canadian Prime Minister Stephen Harper [September 2008]
15. “We’re probably somewhere pretty close to a bottom.”
-Fund manager Barton Biggs [September 2008]
16. “The fundamentals of our economy are strong.”
-US Senator John McCain [Sept 15, 2008]
17. “We remain committed to examining all strategic alternatives to maximize shareholder value.”
-Lehman Bros. CEO Dick Fuld, shortly before Lehman went bankrupt [Sept 2008]
-2009
18. “It’s a huge bull market rally.”
-Jim Cramer, CNBC [June 2009]
“You and Mrs. NYCityBoy are just throwing your money away on rent.”
- A whole collection of idiots (May 2005 - Present)
and i am committed to throwing my money away on rent until
april 2011 at the earliest
oh well i must be a fool, maybe my wife can talk some sense into me on our vacation to the bahamas we have booked (and paid for in cash already btw) next month
Maybe I’ll buy in 2011, maybe 2009, maybe never.
Even though I’m gainfully employed and earn north of $100k, I haven’t the confidence that that job will be there 12 months from from now. We’ve been living with that reality since the late 1990’s. Contract work and defined term positions is the standard for us. It is an adjustment that we’ve made and it seems to work and has been lucrative. However, I believe that most working middle class folks are just coming to grips with this economic reality for themselves. They haven’t completely grasped the fact that a traditional middle class job that lasts your entire working career is gone, and without that rock solid income stream, so does the 30-year mortgage note. It was a system that worked for a long time but it’s over now.
And the fact that it OVER is actually a good thing. Why would anyone in their right mind borrow $200k from a bank and pay back $450k in principal and interest? Tell me how that is an investment…… That is an enormous cost that I would never recover from but I have no doubt in my mind that it is NOT an investment.
And isn’t it because so many are paying huge sums in interest to banks the very reason why everyone is so frickin’ broke right now?
To hell with the banks.
And isn’t it because so many are paying huge sums in interest to banks the very reason why everyone is so frickin’ broke right now?
Sssshhhhhhhhhhhh. That’s a secret.
Let us not forget that without those steady income streams there are not steady taxes with which to pay bribes to every special interest voting bloc. That’s a reality the politicians will not let die without a knock down, drag out battle.
exeter, I fully agree that the mortgage system is basically over. A certain number of numbskulls are still being sucked in, but many people are beginning to see the mortgage scam for what it is.
It is the scam I’ve been living on — people’s sense that they Must Have It All Now, augmented by some expectation that inflation is eternally dependable. John Mauldin has a good recent piece by Niels Jensen (maybe one of you can post a link) arguing that we are Japan Japan Japan.
Demand for my loans has been extremely soft lately.
As for my own house-purchase plans, they do not depend on a job or the expectation of a job, since I will certainly pay cash. But I’m not paying cash till I think the price decline is mostly behind us. I don’t believe that now EVEN IF Bob Shiller is saying the boom has been mostly erased. I think 60 years of inflationary thinking must be erased.
i have the same opinion for the last twelve years. It’s been a false economy. The real winners in these bubbles are those who understand markets (gold, stocks, real estate) are cyclical.
Fence sitting and having cash for several years of living expenses has been a must.
When your income goes up more than the ordinary, your job is unstable. Yeah, you have to live like your job is going to end tomorrow, so you certainly need to invest conservatively.
what are you comparing?
Is buying a home over 30 years a bad investment? Perhaps.
Is renting a house for 30 years a bad investment? Perhaps.
Which alternative is throwing money down the drain? Neither or both. It depends on the circumstances.
..but if this is just another rant about the evil banksters, I’m steppin’ off here..
People are broke because they were foolish and greedy, collectively and as individuals.
I agree with all of the above, especially what Exeter posted about the job market being contract work and defined term positions. As a late-middle-aged couple (we can’t possibly be getting OLD, can we) we have tried to make sure that we have several income streams, i.e. my permanent job with a big university ( as permanent as I can make it anyhow), my husbands’ S.S., his pension, another annuity, and our rental business. We have enough put away to live on for 3-4 years if we live modestly. For tighteners, we are going to have to make the office that he had to take back after the tremendous legal battle we fought with the ex-attorney and either sell it in this down economy, or rent it out. I am meeting with a physician tomorrow to see if he is interested in renting it or buying it on a LC. We have about 3 1/2 months before we can reposess it because of the 6-month redemption period that our period gives the people who were forecosed on, but that’s going by fast. We’re making good progess in paying back his student loans from pharm. school, so I believe we’ll be okay. But anyone who is bankng on a huge salary to pay off their McMansion is going to be hurting.
AZ Lender,
We share in common the fact that we can write a check for a house. I think that is the case with BillinLosAngeles too. There is part II of my observations that I didn’t discuss. Mobility is a primary fundamental to my ability to earn. Yeah I’d love to buy a new homestead back home in VT but what would I do there??? There isn’t even a walmart to work at. I don’t want to just “survive”. Don’t misinterpret that “survive” statement as I am not a spendthrift. We hear alot about “going without” and frugality these days. Most that have just begun to embrace frugality do so because they have no choice. It is a choice for me. I earn, I save, I’m frugal. Economic opportunity evaporates in a very big way when I decide to plant roots and write a check for a house in the wrong location. It really is a paradox. I’m fortunate for now as I have a champion (managing partner) in the ranks of my current employer(Manhattan based) but I have no doubt in my mind that I will be looking for a new employer again. I must be positioned to go where the work is.
So even in consideration of the ongoing housing price collapse, buying can be a real misallocation of savings, regardless how low prices go. And I have no doubts…… prices are going to the floor and they aren’t getting off the floor for a very very long time.
You have that right. Freedom from a mortgage is freedom to pursue opportunity. And the next several years could be very hard on the nesters.
“but if this is just another rant about the evil banksters, I’m steppin’ off here..”
Ya know what? No need to volunteer. Step the fawk off right now.
“I earn, I save, I’m frugal.”
One of my colleagues called me “cheap” this week on my biz trip. I smiled, took it as a complement, and registered his inability to gauge value.
..And isn’t it because so many are paying huge sums in interest to banks the very reason why everyone is so frickin’ broke right now?
To hell with the banks.
errr.. not exactly.
In order to be “frickin’ broke” because of high interest rates, you (not you personally.. anyone) would first have to initiate things by agreeing to borrow under conditions wherein you could not repay. You got in over your head. You made a bad decision. The bank made an offer to lend and, unwittingly or otherwise, you accepted the offer.
Since the amount of money you stupidly borrowed is the primary factor when calculating payments you can’t make, interest is a minor concern and it would be more correct to say that you’re broke because you borrowed way too much freakin’ money.
See how it works? First you agree to borrow under conditions you cannot meet.
Only after that requirement is satisfied does some lame excuse like you are ‘frickin’ broke’ due to interest rates” even begin to make any sense.
AZ Lender,
Here’s the Mauldin piece that included the Neils Jensen essay.
Must read for anyone interested in the inflation/deflation arguments.
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2009/07/06/make-sure-you-get-this-one-right.aspx
Good point: You write that check for that dreamhouse out in the middle of few opportunities and you watch your freedom evaporate.
It’s the freedom we cherish that we can brag about to all those stuck FBs who just three years ago looked down their noses at us renters! It’s our turn to laugh.
Writing a check for a “dream house” ususally entails a lot of high taxes, expensive upkeep and repairs, and an inability to sell it quickly should it become necessary to move. The die was cast for us as far as owning a house because my husband paid off his house in 1998, long before the amazing rise in R.E. prices around here. It’s a great house and is paid for, so guess what, it’s our retirement home. In the meantime, it has to work for a living by being rented out, like everyone else. One of the things I was trying to express yesterday which Ex took offence to was how people who have desperate credit problems or are otherwise in some straitened financial circumstances ( none of the renters that we’ve accepted have been under financial stress ) not only think they’re doing us an enormous favor by even walking thru the property, but then make a “kind of offer” thru their respective realtors to “take it off our hands” at some lowball or fire sale price. Since the house has more intrinsic worth to us than just a flipper, we don’t really have the desire or need to get rid of it. The level of condescension is amazing to me. Many on the blog make references to buying their dream houses at low, low prices in the future, and I hope it all works out for them. But if you already have real estate, then you have to figure out what to do with it. If it was bought in 1986 like my husband’s house, and my job is too far away to commute to from it comfortably, then a purpose has to be found for it to continue to be in our portfolio. It provides a comfortable income stream for us, plus a nice tax write off, and pays for its own maintenance and taxes.
Why be so attached to this one particular house for your retirement? The rational move would have been to sell that thing near the peak, park the money, and buy a retirement home when you’re ready to actually retire to it. Less hassle, and more reward.
“You are such a pessimist”
-Everyone who believes the MSM and government, instead of their own lyin’ eyes. (Aug 2005-September 19, 2008)
“Gloomster”
“The recession is over[paraphrase]!”
Dennis Kneale on CNBC (Cartoon Network Business Channel) about a week ago.
” I am vital to this company and it’s profitability, the little lady and I are buying our dream house and I deserve a raise Boss”
(j6P 2002-2008)
“Boss !?!…Boss!?!..Hellooo, is ANYBODY out there ??
(Present)
“California real estate always goes up.”
–A collection of millions of idiots, from when we moved to CA in the mid-1990s until the recent past.–
6. “In today’s environment, it is virtually impossible to violate rules.”
-Bernie Madoff [November 2007]
I think that’s an interesting statement, and gave his suckers a sense of security. but, i believe there is some truth in it.
it seems mr. madoff didn’t really “invest” any of the money he took from his marks.
he just banked it and spent it and sent out false statements.
having never bought any securities, the SEC has no reason to be reviewing his records. there were no trades on the market.
no one recalls every having done any business with him……and they didn’t.
so, he is correct. if he had done any trading, his moves would have been under some kind of scrutiny.
did he violate SEC rules? i’m not sure he did.
he just took money under false pretenses.
9. “I don’t think we’re headed to a recession.”
-President George W. Bush [February 2008]
Right for the wrong reason. We were already in a recession. Or perhaps we are headed in to a depression.
Lovin it.
How about the reverse? Those who said something correct.
“You’re a f—ing idiot.” (in response to “renting is throwing money away”)
- NYCityBoy (2005 - Present)
“These Wall Street dip$hitz have really screwed the pooch this time” (X-GSfixer, 2006-on)
“The divergence between rents and house prices is, of course, evidence of a housing bubble. Someday prices will fall relative to rents and wages. After they do, it will make sense to buy a home. Until they do, the smart money is on renting.”
- The Economist, March 3, 2005
i do not have a link, but Charles Hughes Smith has a blog site and predicted the real estate bubble will bring on a worldwide real estate and stockk market crash. This was back in 2005 or 2006
OMG — this list of ridiculous quotes by the ‘experts’ is shaping up much better than what is left behind from the similar episode during the early 1930s!
+1 wmbz…
What about that RE guy who in 05 said that FL was working of a new paradigm?
BWAHAHAHAHAHAHAHA
[hadn't seen one of those posted for a while :)]
Cap & Trade has housing inspections and home energy upgrades in it. You can’t sell if the requirements aren’t met. Either the seller or the buyer has to pick up the tab.The green lobbyists did well.
Do you think that could lead to any possible corruption scenarios? Hmmmmm.
Sounds like a lot of BS to me.
Puplava has a guest that covers the Cap & Trade housing connection today, if you are insinuating I am full of it. As usual, they pushed an extra 300 pages of the bill through at the last minute. IIRC, the Cap & Trade bill was 1200 page. Lord knows whats in it.
My keyboard/computer has some sort of delay issue.-
page s/b pages
what s/b what’s
A cap! What a great idea. Easy way to control something we don’t want. Cap this. Cap that. Cap allowable pollution. It will work at least as well as have caps on spending. Devout greenies should be ecstatic.
I think we need form a National Firing Squad to “pop a few Caps” on these thugs, criminals and hoodlums.
We can’t even afford to feed the friggin’ squirrels in GF backyards never mind a lifetime of Federal prison chow for all those Fat Pigs !!
I am for sensible green laws (but not over the top). This Cap And Trade Bill is the lobbyists agenda for a new cottage industry. Both parties want big govt. to control us from craddle to grave.
My husband says the worst invention in DC was air conditioning.
Both parties want big govt. to control us from craddle to grave.
And riddle me this: who keeps returning all these Republicrat politicians to office, where they continue to perpetrate swindles on the rubes and run up crippling debts for future generations?
You do. Unless you’re one of the five percent who voted for Ron Paul or the tiny handful of other principled politicians, marginalized by the GOP and DNC party nomenklatura, who have tried in vain to resist the march to socialism.
I like most of Ron Paul’s platform. Not all. Of all the candidates, I thought he was the better choice.
We should have a ‘Son of Joe Arpaio’ in charge of our prisons! Pink sheets and work on a chain gang for 27cents/hour.
Today’s “Kansas City Star” has my nominee for “Housing Bubble Picture of the Year”
A woman serving her kids food bank macaroni and cheese on (what looks like) granite countertops.
True they are renters (involuntarily) according to the accompanying article……but they are renting in the Blue Valley School district, which has probably the highest property values/rental rates/cost of living in the entire State of Kansas.
They could move 20-30 miles in about any direction (but north), be in a school district almost as good, and reduce their rental expenses.
My mom moved out of the same place seven years ago, because she could not afford to live there on her savings and Social Security
I used to live in this area. Since they are in Olathe and still in the Blue valley school district, then they live in a very small area where that happens. Almost all of Blue Valley is Overland Park/Leawood except for this SMALL area. Houses there are usually 170,000-350,000. The cheapest rent I found in that area was 1390/mo. Then you have the utilities etc for this 1700-2600 sq ft house. There are NO apartments in this small area for the 2 grade school boundaries. They have options but wont move due to the grade schools. Another reason I refuse to buy the KCstar paper. Doesn’t anyone do any “reporting” where they ask those hard questions such as why don’t you move to a cheaper place? I could move back to my 2br apt nearby for 650/mo. Why doesn’t the son get a job? The husband a second job? This area isn’t hit as hard as other places in the country. I could find a low paying job TODAY if I had to. I dunno, maybe it was just how I was brought up. I would have done something as soon as I knew a problem was looming rather than wait until the cupboard was bare. What is it with these people?
I bet this “victim” hasn’t cancelled her cable TV.
“A woman serving her kids food bank macaroni and cheese on (what looks like) granite countertops.”
Yum! Radioactive macaroni!!!
Just add H2O, and nuke the macaroni shells for 8-10 minutes on the granite countertop, drain, add milk, cheese, stir and…Presto…Glow-in-the- Dark kids.
Like, okay, many, many “frugal” people serve their kids macaroni and cheese occasionally. It’s not a crime as of yet. Neither is two or three kids per bedroom, or having one bathroom for the whole family. Hardly newsworthy. It must have been a slow day for the newspaper, or perhaps the reporter didn’t know that sometimes kids don’t always get fed pate de foie gras for dinner all of the time. I can say with great certainty that tight little brick ranches with 3 BR and 1 BA are making a comeback in popularity, especially WITHOUT granite countertops. If they’re foreclosures, they’re going to be even more popular for the next owners.
Call me a pessimist (many do), but I’m beginning to think the best plan of action for the Average J6P-Housing-Bubble-Blogger is to stuff cash/cash equivalants in the mattress, and to hide in the fallout shelter for about 5 years.
“Fallout Shelter” meaning a place to minimize the impact of stupid decisions already made, and future, stupid, meaningless, attempts by the PTB to bandaid the problems.
The hard part about disaster preparedness is predicting the severity of the impending disaster. Different levels require entirely different safeguards and preparations.
imo, since nobody knows what’s going to happen a person should be flexible and able to move in any direction. There might even appear some opportunities, financial or otherwise, that could be taken advantage of, but only if the means for doing so was included in one’s disaster preparedness..
X-
Good call - My wife and I are hoping to preserve our resources going forward. This alone would be quite a feat much less actually improving our situation.
aA skinny J6P drags out his money filled mattress after his long self-inflicted hibernation in his Failout Shelter living on stale bottled water, dried beans and rice.
He rips it open and shows his still crisp Bernacke US Dollars to an Investor who says “Nice, but do you have any Confederate Dollar Bills?”
“In 2005, at the height of the bubble, there were some 800,000 foreclosures. This year we are on pace to see 3.5 million foreclosures, with no end in sight.”
..and many “experts” say no real recovery for USA till the foreclosure mess is worked through.
The NRA, the lenders, and the Realtor’s are whining big time that their red, white & blue jobs are in danger.
Gonna be a while before Americans crawl out from under their shells. We are a nation that loves to party, but hangovers that last longer than they should sure dampen the urge to return to the high times. Recovery 2010? Fat chance. Time to sell the (fast depreciating fart box on wheels) RV next to your depreciating house for pennies on the dollar to pay down debt.
Time to sell the (fast depreciating fart box on wheels) RV next to your depreciating house ??
NO FRICKIN WAY !!!! That puppy is sitting in my driveway right now gearing up for the one week trip up the California coast then to Orainagain….Going to watch the Pro-Kite Flyers and run my GS pup on the beach…Towing the jeep also…Need cargo area to carry the two cases of Coors Lite
I’ve been casually shopping RVs for almost 3 years now. Prices are stuck worse than real estate. Asking 40% over NADA blue book is the norm. But I’m patient. Resistance is futile.
Buy one that is 3 years old or so from some retiree that barley used it…Should be able to find one for 50 cents on the dollar with 10,000 miles or less…I have been doing it for 30 years…I am on my fourth one…
How can you guys put up with those houses on wheels. My pack full of gear, food, book, and a .357 (loaded) weighs about 31 lbs. I can survive for a week easy in the wilderness…maybe longer. With that pack and a map I don’t need roads or trails. I can go an entire trip without seeing another human. Car camping and RV’s are ridiculous. Get out and walk.
that does sound a lot more exciting and pleasurable than using an RV. Not everyone can do it, especially when you’re older.
If you like to travel a lot, don’t like airport security or flying, don’t like sleeping in a bed that a thousand people slept in before you, prefer a particular diet or home cooking, enjoy other people’s company but also your privacy, have months of free time to explore far away parts of the country, as well as cash reserves to ignore the world for as long as you like, then RV life might be a fun way to go . Of course, not everyone can get away with this, either..
different strokes, i guess..
Age isn’t a factor. I was on my way into the desolation wilderness to camp at a lake about 5 miles in with a pretty good climb. A hiking club for seniors came up behind me and we stopped to talk for a second. They were on a day hike to the place I was going to camp. Ultimately, they were moving faster and I had to let them pass. AND…they were all women. I always move slow to avoid injuries and get a look at wildlife before spooking them…….that’s my excuse at least.
well, not age so much as health. Health isn’t directly related to age, but there is quite a bit of correlation. And both people, assuming you’re a couple, need to be in great shape.
ya know.. RV’s don’t limit your ability to go hiking around. If anything it’s the opposite. You can drive to just about anywhere in the country within a few days, and park the rig for weeks. Use it as a base camp.
In fact an RV probably expands your choices in outdoor sports and recreation. Get a toy hauler and you can bring whatever you like.. snow mobiles, motorbikes, para sail, canoe..
hmm…so you could park at Lake Tahoe and take your canoe, mtn bike, etc. Paddle, hike, do whatever then hit home base. Save $$$ on hotels. Beginning to see your point.
Get a toy hauler and you can bring whatever you like.. snow mobiles, motorbikes, para sail, canoe ??
I have one of those also….
And you expressed a number of reasons that RV’s
make sense…
Damned straight, Rob. See you on the PCT.
ahansen,
PCT goes forever. Admittedly I’ve hiked only a few sections of it in the Desolation Wilderness, Lassen Ntl Forest, and the Salmon Mountains. Never even been to Yosemite.
Heading to the Sinkyone Wilderness in Northern CA soon. Park at Usal Beach and hike into a place where you can camp in the sand on the ocean. It’s a section of redwoods that was never logged because access is so bad. Beautiful hike. One of my favorites.
Got any spots you like?
I agree, Ria. We have a long way to go before people learn the meaning of pain.
DinOr asked yesterday what people who don’t drink (and I’ll include smoking and gambling) do with their money.
The answer in my case is, be out of debt with a paid off house by age 42, all with a single income.
Admittedly there are trade offs to accomplish this beyond avoidance of vices. We only go to dollar movies or matinees, I drove $500 cars for the first 15 years of marriage, and my wife has always done the garage sale and thrift store thing. We also chose to live outside of the LA metro to minimize our housing cost.
We have been able to splurge on travel as a family and we have adequate college funds for our daughters unless they get into Ivy league.
My point is that life is all about choices. In no way is this a slam on those with vices. I have a wicked Diet Coke addiction myself. If I may bastardize Socrates, “the unplanned life is not worth living.” This bubble has been as much about the vast majority of the population not looking beyond the next minute, let alone tomorrow, as it has been about thieving REIC hacks.
“Admittedly there are trade offs to accomplish this beyond avoidance of vices.”
There’s the rub! I realize the benefits of walking the straight and narrow path seem to justify the sacrifices to members of your religious order, but most of the rest of the world does not experience life that way.
The trade offs I referred to were of the financial kind. I just can’t see what I’m “missing” by adhering to a moral compass.
Is it the STDs, or the hangovers, or single parenthood? What is it that my religious order keeps me from enjoying in life. I know you won’t accept it, but my lifestyle gives me freedom, not limitation.
Years ago when I lived overseas, the librarian at the USIS library was one of dude’s faith, from Utah or Idaho. Her job was a “spouse” position; her husband was an agricultural expert contracted to US-AID. He had a high salary with an additional 30% or so hardship duty and a housing allowance and shipping and commissary privileges to support a simulated American standard of living.
Husband lost his job suddenly, not long after coming in country. Some kind of scandal - not to do with him - caused his project to get kicked out of the country and somehow US-AID broke their contract with him.
This woman didn’t p*ss and moan for a minute, not ONE minute! (And much of the foreign community there p*ssed and moaned endlessly about everything - nothing like a dirt-poor underdeveloped country to turn Westerners into prima donnas.)
She was ready to get back home, tailor clothes for her kids from stuff picked up at Goodwill, live on basic simple home-cooked food, preserve produce that she could grow or buy cheaply in bulk. She reckoned she could pick up a little money doing upholstery. They could live on a few hundred dollars a month.
I was impressed.
“…my lifestyle gives me freedom…”
Recently seen (in person) on the gate to the Dachau concentration camp:
ARBEIT MACHT FREI
My brain gets wrapped around the axle contemplating the notion of “freedom to do whatever my church leaders ask me to do.” Life has many possibilities for those who do not willingly give away all their free time to church commitments beyond their control.
As a non-Mormon (or any religious order), I’m free to not pay tithes.
I do donate a lot to animal rescue, though, but at my discretion, and they sure don’t have big fancy buildings to support. Not picking on just the Mormons, but everyone with big fancy churches to support. Never did understand that one.
“Never did understand that one.”
What’s wrong with you? Aren’t you into material acquisition or power and control over the money and labor of vast numbers of people? Get with the program…
Did you also notice the photos of the young men who stood up for their cause, the cause of stopping the barbarism. The photos made me cry, for that kind of manliness has been destroyed. Standing up and being tortured and dying for their values, instead of looking the other way.
Dachau was a camp for political prisoners. Did I say my grandfather was there, at the end, and you have read how the conditions were like, at the end. He was there for once having been a leading figure in the Social Democratic Party, brought there 11 years after Hitler threw him out of his position.
I can only laugh when Americans call the German system “socialism” - what brainwashing. Just because there was a social contract, that big capital should not destroy human dignity and life, and treat the worker like cattle. And you know what, my grandfather was let go just before the end, because the Nazis were calculating that they are losing the war and he’ll die anyway, he better die elsewhere. He didn’t. And after the war, the capitalists / industrialists and him were a team, rebuilding. Together.
sagesse –
I apologize for the Dachau reference, which was admittedly too extreme as a characterization for religions which sentence their members to voluntary hard labor contracts. Seeing first hand and reading descriptions of life at Dachau was a sobering look at an inordinately cruel episode in history which I will never forget. As I pointed out to my family members, the most disturbing aspect of the experience for me personally was the realization of how easily the whole experience could recur, given the right social ingredients.
“could recur” ???
Some would think it already is.
What the Nazis did during the third and less that glorious reich which lasted far less than a thousand years was evil, pure and simple.
I support the freedom of religious practice in America and that freedom should extend to those who wish to practice no religion as well. The pendulum in America is swinging today toward elimination of that freedom.
I am a happy tithe payer. I have seen the effect of thos etithes in my travels worldwide. Church members in the poorest places are able to meet together and learn the gospel in a clean, reverent place just as those from the most affluent areas do.
The LDS church has a great deal of wealth, it is true. There is an enormous effort to use that wealth to lift it’s members out of poverty and with no paid clergy one can feel quite sure that the moneis are going towards that end.
“My point is that life is all about choices. In no way is this a slam on those with vices. I have a wicked Diet Coke addiction myself. If I may bastardize Socrates, “the unplanned life is not worth living”
Socrates didn’t plan life that well, he fool drank hemlock instead of coffee and DIED.
“…Diet Coke addiction…”
That’s OK. The LDS rules say ‘no hot drinks’ — caffeine is an acceptable drug habit, so long as it is not consumed in a hot drink version.
P.S. The bewildering rules of caffeine consumption are one of the reasons I know the church is not true. God is not this inconsistent.
The bewildering nonsense of my father up in heaven loving me more than my own father, yet he looks on as me and all his other children are murdered, starved, beat, cancered, diseased, crippled, bludgeoned, car wrecked, raped, tortured, etc. all over the world…Ah, now that’s true love!
That’s how I know the christian church is not true. A father would never do this to his children. God is not the inconsistent.
Thanks for that — the cold caffeine drinks were enough to steer me clear of the LDS faith. Regarding Christianity in general, you (and Mark Twain) make a far more compelling case than I did. Ironically, many LDS folk love Mark Twain, somehow overlooking his damning literary indictments of Christianity.
You guys haven’t read much Christian teaching. The Bible itself explores this type of paradox, e.g. in the book of Job.
The Bible also explores ritual sacrifice of a child by his own father. Luckily Bog decided to not require him to go through with the heinous deed (thank Bog for that!).
Religion has an answer for everything. Prayer answered? Proof gawd exists. Prayer not answered? Proof gawd exists but your wish wasn’t part of his plan.
Job really explains a lot to me about how much love gawd has for his children. If you look a little more objectively at the bible, I think you might figure out that gawd is quite a sadist. I really love how he deals with pharaoh. Naturally that’s the old testament and jeebus comes along to explain how “it’s different here”.
Soft drink vs. coffee is enough to keep you from belief? Wow.
As far as belief in a God who allows his children to suffer goes I can only say that he is just and merciful. If you don’t believe in the eternal nature of the human soul then of course you wouldn’t understand.
This life is a test. In Gods time (1000 years = 1 day) the natural life of a man is about 1.75 hrs long. If we are eternal beings like God when we are done with our life it will seem at most like we had left him for an afternoon.
Children who die in infancy are saved through the grace of Christ, those who die without ever hearing the gospel will have opportunity to accept it in the next life.
There is no incongruity that cannot be explained in the scriptures. Those who would prefer to depend on the wisdom of man instead of the wisdom of God through his prophets are free to do so.
Don’t speak of Socrates to a man who may not have much time on his hands to examine his own life. Doing so is not part of the LDS program, which can be summarized (quoting from the words of Kurt Vonnegut, Jr’s Book of Bokonon) as follows:
“Busy, busy, busy”
P.S. I don’t mean this as a personal attack, Dude, but I do personally have issues with the faith you practice.
If you’re like most, I imagine you have problems with everybody’s faith but your own. That’s why you chose the faith you did. Oddly enough, there are billions who feel the same way about your faith. Even more oddly: is it like 90% of kids pick up the same faith as their parents? What an odd coincidence!
I find most pernicious of all the faiths which claim to be universal, and indoctrinate their membership with a mandate to convert as many as possible into the fold. I was indoctrinated in such a faith, but had the intestinal fortitude to break free when I was a sixth-grader (in a religious school). It took me maybe twenty more years to shake free from the Weltanschauen my religious upbringing fostered. I have been a happier human being ever since (breaking free of faith cured my depression, in fact!).
By contrast, I know many in the LDS fold who are severely depressed — in fact, I could list family members on my wife’s side who either attempted or succeeded to commit suicide. The mental straightjacket of the LDS meme seems particularly deleterious to intellectuals. So long as you don’t bother thinking deeply about much of anything, I suppose it is a pleasant enough way to avoid life’s vicissitudes.
Interesting. Can you point to a nice study where it shows that LDS members have a higher incidence of depression, suicide, etc.? Seems to me you’re projecting your experience onto a large group of people. I can point to a great many LDS people who aren’t depressed, have great families and enjoy life.
I may have my facts wrong, but it seems like christians claim they’re the one, true faith and they’re certainly universal and most of them are happy to tell you all about their faith - or what’s wrong with somebody else’s - and why they’re right and everybody who believes differently is wrong.
Tell me about the crusades and the inquisition, etc. What was that all about? Mormons?
An awful lot of bad things have been done in your gawd’s name.
Wait a minute…I’m confused. Are you for gawd, ar agin’ ‘im?
Michael how about “E” on a multiple choice test…….. NONE of the above.?
I find that to be the best choice, I only go into a house of worship when i get paid for it. Videotaping/dj a wedding, party or bar mitzvah.
Then i can criticize anyone because i have no gawd to promote.
Millions die each year over My gawd is #1, and yours isn’t!
A female friend of mine grew up in an LDS household. She has had a history of depression since a little girl. She is not a practicing LDS type anymore, but still suffers from unearned (my word) guilt. particularly because she still lives in that small church-going town and sees the same people who were cruel to her for decades.I can write pages about the persecution from organized religion toward women I knew from a small town in the high desert of California where I lived. one of the women became a self-labeled hedonist. She was one of the funnest girlfriends I had. her ex husband verbally abused the kids. Her ex is very religious. He had the whole church group against her.
Bill, there are horror stories for every religion. There are horror stories for atheists. There’s just plain horror. Man is an animal and human existence is often brutish regardless of religion. I guess because there are so many ex-Mormons here it gets singled out?
“Can you point to a nice study where it shows that LDS members have a higher incidence of depression, suicide, etc.?”
Though I do not have such a study in hand, but the article posted below offers some hints. I have long suspected LDS folk have a higher incidence of depression, suicide, etc., but perhaps I am just generalizing from my supposition that I would become suicidal if I joined their church.
This brings to mind a famous Winston Churchill anecdote:
Lady to Churchill: “If I were your wife, I would poison you.”
Churchill’s retort: “If I were your husband, I would drink it.”
And another, from one of my former professors, who is Jewish, to the LDS missionaries who knocked on his door:
Professor: “Does your religion believe it is alright to kill someone?
Missionaries: “Absolutely not.”
Professor: “Then I cannot join your church. If I did, it would kill my mother.”
Religious pressures contribute to mental illness in Utah
July 8, 9:55 AM
Shame and other religious pressures have often been powerful weapons of religion to bring about condoned behaviors and quell deviant ones. Unfortunately when used by human authorities to correct behavior these pressures also results in depression, self-loating and suicide. All forms of religion have stooped to this sort of pitiful behavior occasionally. Christianity is no exception. Mormonism, as a sect of broader Christianity, has also contributed to shame induced mental illness.
Whether it is seen as a side-effect of the belief system or related to its core beliefs, the end result is the same — Utah suffers almost double the national rate of clinically diagnosed depression. Obviously there are many factors in Utah that could also be suspect in these high rates of depression and other mental illness, such as availability of treatment facilities. But to ignore the unique religious environment as being a major contributer would be folly.
In a story done by ABC news, Dr. Curtis Canning, a Logan based psychiatrist, described how “Obedience, conformity and maintaining a sense of harmony” are unspoken but widely recognized behaviors, which all contribute to what he calls “the Mother of Zion syndrome.” One of those mothers, interviewed simply as Wendy, had this to say, “Marriage and family are so important that there was a huge amount of pressure to make things work. I was supposed to try harder, and buck up and that would make me happier and keep my husband from abusing me.”
In 2005 Utah ranked third in the nation for meth use, and most of the users are mothers. The issue has become such a phenomena that KUTV ran a story about Meth Moms. It seems reasonable in a state that is over 70% LDS (and a higher percentage of Christian in general) that the religious structures here in Utah cannot be dismissed from blame. What has gone wrong that so many people in Utah are driven into drug use, illicit and prescribed, and deep depression by their religious beliefs?
…
I love it when my gut-level hunches prove on target!
Ranking America’s Mental Health: An Analysis of Depression Across the States
Depression is a chronic illness that exacts a significant toll on America’s health and productivity. It affects more than 21 million American children and adults annually and is the leading cause of disability in the United States for individuals ages 15 to 44.
…
Utah was the most depressed state. Among adults in Utah, 10.14 percent experienced a depressive episode in the past year and 14.58 percent experienced serious psychological distress. Among adolescents in Utah, 10.14 experienced a major depressive episode in the past year. Individuals in Utah reported having on average 3.27 poor mental health days in the past 30 days.
…
I was raised by an Irish Catholic father and a Japanese Buddhist mother. Excellent combination. Despite 12 years of the nuns and daily Mass, my mother was constantly pointing out the inconsistency and hypocrisy, so I emerged unscathed and guilt-free.
Prof, it must be the fact that the Jackson Five are from here…or maybe it’s too much green jello.
Utah has some of the most beautiful scenery in the world and lots of sunshine, so not from that…
And I’ve read a number of studies citing Utah’s high rates of depression and such. Don’t know if it’s related to the Mormon Church or not. Colorado also has a very high suicide rate, or used to, among young people, anyway. One study attributed it to living amongst trophy lifestyles and working poverty wages.
I find that, in general, *people who are told what to do by anything/anyone, whether religion or .gov or whatever, tend to be more depressed. And why not? It’s your freedom…
*maybe I should say intelligent people
Michael –
One of the beauties of adhering to no faith whatever is that you don’t have to waste your precious time and energy defending nonsensical dogmatism against well-deserved critical attack.
Not their love of humanity, but the impotence of their
love, prevents the Christians of today—from burning us.
Beyond Good and Evil
–Friedrich Nietzsche–
“Jackson Five are from here”
‘Dja mean the Osmonds? My recollection is the Jackson Five are from Gary, Indiana.
“The mental straightjacket of the LDS meme seems particularly deleterious to intellectuals.” There you have it, Lost, what I said earlier, about SL/Kanab.
Yup, I meant the Osmonds, man, my lack of “culture” is getting in the way again. And Sagesse, absolutely right. Some of the most depressed people I’ve ever met were of the fundamentalist ilk, whether Mormon of elsewise. So very oppressed and not even aware of it, except at a very deep level, where it counts, deep in their souls. Totally brainwashed. I have a number of them in my own family.
If we’re created in the image of God, well, God is very creative and wouldn’t like all that oppression, IMHO.
Professor Bear, thanks for all the responses and the link! The stats seem damning but the reality is there’s no causal link to Mormonism that I could see.
“If we’re created in the image of God, well, ” gawd is everywhere, therefore the universe must be man-shaped.
I’ll give you my take on that study. There are a great number of mormons in Utah that believe in their heart the truth of the church but are not living even the very basic tenets. I could easily see that could cause a depressive state. Again, it’s a choice one needs to make so they should either abandon their belief or live it. It’s the in betweens that have problems.
PB, why don’t you bring up the studies that show that active mormons from Utah live longer more happy lives than the population in general? Oh, wouldn’t make you r arguement either.
Samuel Clemens, are you kidding me? Who woulda thunk a Missourian would be anti-mormon. My G-G-grandma was forcibly exiled from her paid for home in the middle of winter by those folks way back when. Those feelings ran deep and in some cases still do.
Socrates certainly liked his wine, and probably would have thought a non-drinking life not worth living.
I’m not sure what his opinion on caffeine would be since the ancient greeks had no caffeinated products whatsoever that
I’m aware of. I’ve always found it interesting what great works and deeds were done by the ancient Greeks, Romans, etc. without any readily available stimulants. Could the modern world function without coffee and tea?
This was supposed to post up yonder where folks were talking about socrates, caffeine, and diet cokes.
The best reason I can find for the difference in the law of health in the Bible vs. the mormon code has to do with modern science.
Coffe and tea are both hot drinks made with boiled water, wine is made for getting drunk I suppose but way back when it was made as a way to preserve grape juice, same for beer etc.
If we have clean water to drink from the tap, what healthy purpose do those products serve?
When the Word of wisdom was given it was a counsel, not a commandment and it wasn’t until the late 1800 that memebrs of the church were asked to strickly adhere to it in order to be considered in good standing.
Lastly, Mormonism is all about the freedom to choose. No one is excluded from worship services. We would even allow Anthony Mozillo to attend. The church is a hospital for sinners, not a social club for saints, and any church goer of any denomination that you meet that doesn’t understand that deserves to be corrected.
I wish all of you joy in life. That’s what I seek for myself and I know my faith helps me down that path.
Who moved away California’s cheese factory?
Saturday, July 11, 2009
Letters: Who broke the economy?
Letters to the editor for July 11, 2009
The Orange County Register letters to the editor for July 11, 2009
From Assembly speaker, Karen Bass, we get the statement about the governor – “He broke it, he should fix it.” This mess has been coming for years now. Over the years due to regulations from Sacramento you have seen major industries paying good wages leave to be replaced by sales jobs paying minimum wage. There used to be three auto plants in California that are now gone. The tire manufacturers are gone. Long Beach and Orange County use to be the home to many aircraft manufacturers and for the most part they are gone. One manufacturer after another leaves, only to be replaced by sales types of jobs.
Then cities started calling themselves sanctuary cities, bringing in the poor and uneducated who push wages down even more. They tend to have more children. These low-paying jobs either get paid under the table (with no taxes collected) or offer low wages with little to no taxes because of the number of deductions.
Now Sacramento cannot figure out why no money is coming in. The $25 hour jobs are replaced by $8 per hour jobs. Those in Sacramento do not live in the real world. No matter how bad the economy gets, those in Sacramento never suffer like the rest of us do.
…
Looks like the NUMI plant in Fremont could be in trouble…
I am leaving soon and taking a needed skill out off this state.
You are right, PBear. I live in Sacramento. The Bee had a front page article this morning about the pain of furloughs for state workers. It was laughable. One guy is golfing at the cheap golf course. A family is loading up on stuff at the packed local Costco on furlough Friday. Another family took a “bargain” Disneyland vacation. We have a long way to go.
That’s interesting, about needing all of those $25 per hour jobs. I’ve seen posts on this very blog about how factory workers should all be making $ 12 an hour with no benefits, how stupid it is to expect an employer to supply you with a lifetime pension that you ‘earn’ plus health ins., how ( to my amazement ) that 20 years in a job is enough for anyone and then the worker should retire, leaving the slot empty for the next generation, how evil unions are, etc., etc., etc. So which is it ? We should ( most of humble folk, anyway ) all work for $ 8.00 - $ 12.00 per hour with no bens. and lick the boots of our masters the whole while, or we should try to retain those highly-unionized $ 25 an hour jobs because our municipalities need them to survive ? We can’t have it both ways as a society, you know. Either we’ll settle for teachers and nurses and factory workers making $ 20,000 and still being able to buy the “stuff” turned out by the richies, or we’ll have a strong middle class. I always get quite a laugh when I read the condemnation of people who have tried to better their own existances by taking better paying jobs in their vicinities, even be it at a G.M. plant unionized by the U.A.W. They should have turned those horrible jobs down and kept working at $ 10 per hour, but still bought the “stuff” that their masters were having manufactured in China and imported for our massses to buy. The schizophrenic thinking of some here is quite funny to me.
U.S. must triple treasury bond sales this year
Peter Hodson, View from the Street, Financial Post
Published: Friday, July 10, 2009
The United States is broke and getting more broke by the day, yet foreign investors keep buying U.S. treasuries.
What do you think you would say if your financial advisor called you up one day and pitched you a stock in the following way: “Have I got a company for you! It used to be a powerhouse, now - not so much. It has way too much debt. It has giant looming future obligations from its pension plan. Some of its subsidiaries are, effectively, bankrupt. It is a serial issuer of new securities. It depends on friendly investors for survival. This year, those investors are expected to come up with three times as much money as last year to support the company. It is laying off workers. Nobody has made any money on the company this year but how much do you want to buy?”
No serious investor would consider buying such a security. Yet, replace “company” with “U.S. government treasuries,” “subsidiaries” with “California” and “pension plan” with “social security” and you have effectively where the United States stands today.
…
Investing is relative in this case. Other alternatives (countries) are worse off than US with respect to likelyhood of remaining solvent long term, so China, Japan, etc have nowhere else to go. We are sort of like Michael Jackson. He was 400M in debt, but held 1B worth of Beatles songs, so people kept lending to him.
“We are sort of like Michael Jackson. He was 400M in debt, but held 1B worth of Beatles songs, so people kept lending to him.”
In the US’s case, our claim to fame is our military industrial complex and the largest prison system in the world. Guess that makes us the world’s biggest mafia based on the number of hitmen we employ. We can extort capital from anyone.
gee, you forgot to say, it is a really bully with a teeth to back it up.
CIT’s fatal flaw: A failure to qualify as a “too-big-to-fail” financial entity, whose collapse would threaten to bring down the global economy.
Isn’t it plainly obvious that the Plunge Protection Team has established a global financial order fraught with moral hazard for firms to grow into too-big-to-fail systemic risk threats, in order to qualify for free bailout insurance protection? What we need is some trust busting, not continued subsidized (free) bailout insurance for too-big-to-fail financial entities. If the transition away from the current too-big-to-fail financial management regime is a bit rough, so be it — the global economy will be far more sound after this flawed policy is relegated to the dustbin of financial history.
Wall Street Journal
* HEARD ON THE STREET
* JULY 11, 2009
CIT Offers Litmus Test for Washington’s Faith in the System
By PETER EAVIS
What does Washington really think about the condition of the financial system? Watch how the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. react to deepening problems at lender CIT Group.
The prognosis is grim. The FDIC, likely unnerved by CIT’s asset quality, hasn’t yet approved the company’s application to issue government-guaranteed debt. Failure to issue such debt could strain CIT’s liquidity. Fitch Ratings has said that if CIT isn’t approved “over the very short term,” it would cut its ratings to a level implying default is a “real possibility.”
The situation remains fluid. But a CIT failure would raise a big question for the Treasury and Fed: Is the financial system strong enough to bear a crisis at CIT, which has $68 billion of liabilities?
…
This gloomy news should be bullish for the stock market, as bad news is good and good news is bad. Buy stocks now or get priced out forever!
US-BUSINESS Summary
Reuters
Saturday, July 11, 2009; 1:43 PM
Dow, S&P 500 in fourth weekly fall as economy weighs
NEW YORK (Reuters) - The Dow industrials and the S&P 500 fell on Friday, dropping for the fourth straight week, after Chevron Corp warned about its quarterly results and consumer confidence fell to it lowest level since March. But the technology-heavy Nasdaq eked out a gain in light volume after Goldman Sachs upgraded the U.S. hardware and software sectors.
…
Another of auction of unsold loft condos in Austin - waaaay south of downtown. Snap them up, kiddos!
partial link: austintowers.net/Austin_Downtown/files/bel_air_auction_austin.html
And checking on them I found a too-creepy promotional site:
partial link: perryhenderson.com/belair.php
summary: perry pimps b00bs to sell condos
Talks intensify over closing Calif.’s $26B deficit
By JUDY LIN – 1 hour ago
SACRAMENTO, Calif. (AP) — Against a backdrop of IOUs and expanding government furloughs, Gov. Arnold Schwarzenegger and legislative leaders expressed optimism Saturday that they were moving toward a compromise that could end California’s fiscal calamity.
Negotiations to close the state’s $26.3 billion deficit restarted after two weeks of inaction and partisan bickering. Top lawmakers from both parties said a budget-balancing deal was possible in the coming week.
“I would say we’re getting very close to a general framework, but there are still outlying questions,” said Assembly Minority Leader Sam Blakeslee, a San Luis Obispo Republican, after emerging from a closed-door meeting between lawmakers and Schwarzenegger.
…
I feel sorry for those guys.
Determining precisely how many more tens of $$Billions in debt Calif can be force fed without killing the goose is hard work.. so many variables to consider..
California vendors fight for their cash
Small business owners plan layoffs and furloughs if they’re saddled with hard-to-redeem IOUs.
By Maggie Overfelt, CNNMoney.com contributing writer
July 12, 2009: 10:00 AM ET
NEW YORK (CNNMoney dot com) — As if struggling to stay afloat during a faltering economy isn’t difficult enough, hundreds of small business vendors that rely on contracts with California are facing another hurdle: There’s a good chance the state won’t be paying any of their invoices this month.
After the state legislature failed to agree on budget solutions earlier this month to close a $26 billion gap, California started issuing IOUs for a variety of payments it owes — including most of its vendor bills, personal income tax refunds, and funding for local governments. “This means that the state is casting off its cash-flow problems onto hundreds of families and small businesses in California,” says Jacob Roper, a spokesman for the state controller’s office.
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Back from a week at the Jersey shore (N. Wildwood to be exact). Observations - TONS of properties for rent. That’s pretty unusual for mid-season. Also tons of properties for sale. On my block alone, I’d say there were about 10 condos for sale (that’s just the block, not the entire street).
My same experence two weeks ago in Ocean City NJ
Same problem ( unfilled rentals ) observed in Traverse City last weekend on a trip we took.
Darth Cheney is missing the good ole waterboarding days.
Cheney told CIA to withhold information: report
Sat Jul 11, 2009 6:44pm EDT
WASHINGTON (Reuters) - The CIA withheld information about a secret counter-terrorism program from Congress for eight years on orders from former U.S. Vice President Dick Cheney, the New York Times said on Saturday.
Citing two unidentified sources, the newspaper said Central Intelligence Agency Director Leon Panetta disclosed Cheney’s involvement in closed briefings to congressional intelligence committees late last month.
…
Cheney was a key advocate in the Bush administration of using controversial interrogation methods such as waterboarding on terrorism suspects and has emerged as a leading Republican critic of Obama’s national security policies.
…
…and there was Valerie Plame.
A lot of people have been waterboarded without lasting damage, including me. The Air Force has survival schools such as Fairchild in Washington State were this was part of the curriculum. Maybe it still is. I don’t know for certain.
To listen to the ignoramus Pelosi and other lamebrains, it is torture.
To me, torture is being burned, blinded, dismembered, stabbed, starved,disemboweled, having your arms repeatedly broken, etc.
John McCain was tortured by the North Vietnamese for years.
Now, just looking at Pelosi and listening to her spew her shrill ignorance and self-serving lies is torture for me. Waterboarding itself wasn’t.
The US classified waterboarding as ‘torture’ after WWII because the Japanese had used it against US soldiers. You can’t have it both ways.
See…Waterboarding Used to Be a Crime - washingtonpost.com
“After World War II, we convicted several Japanese soldiers for waterboarding American and Allied prisoners of war.”
“You can’t have it both ways” So the Japanese used the same waterboarding techniques that we did? From what I understand they ended up killing some people with the way they did it ours is not like what they did. Get your history straight, or keep bashing our guys like half of America, your choice.
I think I’d check my own history….It’s pretty well documented that the US has killed a number of it’s “War prisoners” through the use of its so-called ‘enhanced interrogation’ techniques–or whatever bullcrap phrase they currently use to describe torture. Just because they apply a phony name to it doesn’t make it go away. It is what it is. Have you seen the photos from Abu Ghraib?
Now, how is exposing the truth bashing anyone except those who might wish to remain deluded? Should we hide the truth from those that might find it painful?
Yes, we must work keep ‘our guys’ deluded and in denial for the good of the country.
Death to the truth. Long live Cheney and Rumsfeld!
Sorry ’bout the double post. I thought the first one had been eaten.
What does the Geneva Convention say about it?
Attorney General May Open Interrogation Inquiry
By JOHN H. CUSHMAN Jr.
Published: July 11, 2009
WASHINGTON — Attorney General Eric H. Holder Jr. is considering assigning a prosecutor to investigate whether government personnel tortured terrorism suspects after the attacks of Sept. 11, a Justice Department official said Saturday.
The official, who spoke anonymously because the decision had not yet been made, confirmed accounts by Newsweek and The Washington Post, posted on their Web sites on Saturday, adding that while President Obama had said he wanted to look ahead rather than back at past interrogation practices in the campaign against terrorism, he had also said that his administration would adhere strictly to legal standards in addressing the questions that have continued to arise about how prisoners were treated by the Central Intelligence Agency.
“The Department of Justice will follow the facts and the law with respect to any matter,” the department said in a statement released Saturday. “We have made no decisions on investigations or prosecutions, including whether to appoint a prosecutor to conduct further inquiry. As the attorney general has made clear, it would be unfair to prosecute any official who acted in good faith based on legal guidance from the Justice Department.”
…
Count your blessings, count them one by one. My hunch is that the predicted return to growth this quarter will not materialize, as economic statistical releases these days are generally “worse than expected.”
Geithner Says Pace of Economic Decline ‘Slowed Dramatically’
By Catherine Dodge
July 11 (Bloomberg) — Treasury Secretary Timothy Geithner said that while the pace of decline in the U.S. economy has “slowed dramatically,” there are still “enormous challenges.”
…
Investor concern that a recovery from the deepest recession in half a century may be delayed pushed stocks down for a fourth week. The unemployment rate rose in June to 9.5 percent, the highest in almost 26 years, and U.S. employers cut 467,000 jobs, according to a government report released last week.
The world’s largest economy contracted at a 5.5 percent annual pace in the first quarter of the year, capping the worst six-month performance in half a century. The economy probably shrank at a 1.8 percent rate from April to June, according to a Bloomberg survey of economists, who also predicted a return to growth in the current quarter.
…
Don’t know where FPSS is today, but I guess I will have to fill in for him. BTW, the option ARM reset chart suggests the rate of option ARM resets will continue near its current level through much of 2011. Got popcorn?
BwaHaHAHAHAHAHAHAHAHAHAHAHAHAAHAHAHAHAHAAAAA!!!!
Wall Street Journal
* JULY 10, 2009, 4:20 P.M. ET
UPDATE: Option-ARM Mortgages Turning Worse Than Subprime
By Marshall Eckblad
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–For the third straight month, option adjustable-rate mortgages are generating proportionally more delinquencies and foreclosures than subprime mortgages, the scourge of the housing crisis.
A further acceleration of troubles among the loans could mean higher-than-expected losses for Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM), as well as the Federal Deposit Insurance Corp.’s own insurance fund.
“The realization of the issues related to option ARMs is just beginning,” says Chris Marinac, director of research at Atlanta-based FIG Partners.
Known as Pick-A-Pays - a brand name popularized by Wachovia Corp. - the mostly adjustable-rate loans were typically issued to creditworthy homeowners, and allowed borrowers to make a range of monthly payments. The payment options include a partial-interest payment that adds the unpaid interest to the loan’s balance. On many of the loans, balances have risen while values of the underlying properties have plummeted amid the nationwide housing crisis.
As of April, 36.9% of the loans were at least 60 days past due, while 19% were in foreclosure, according to data from First American CoreLogic, a unit of Santa Ana, Calif.-based First American Corp. (FAF).
By contrast, 33.9% of subprime loans were delinquent as of April, while 14.5% were in foreclosure.
The loans are heavily concentrated in the worst-hit regions in the housing market, including California and Florida, making option-ARM borrowers inordinately vulnerable to declining property values.
…
How can Toll Brothers afford to offer loans at below-market rates? Given that Toll Brothers homes typically cost north of $400,000, I am having a hard time imagining how an 8.75% interest rate might not cripple the typical US borrower? (8.75% of $400,000 = $35,000 per year — a very substantial share of the median US income.)
Wall Street Journal
* JULY 10, 2009, 5:33 P.M. ET
UPDATE: Toll Brothers Rolls Out An Adjustable-Rate Mortgage
By Dawn Wotapka
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Toll Brothers Inc. (TOL) is bringing back the adjustable-rate mortgage: The luxury builder said Friday it is offering a 7/1 ARM for 3.75%.
The deal for contracts signed on or after Saturday is available for loans under $417,000 - the majority of the company’s buyers - in many communities nationwide. It is a special that comes as ailing builders report increased traffic, but it is unclear if this will bring jittery consumers to the closing table as unemployment and foreclosures mount.
Meanwhile, the builder said it isn’t worried about the reputation that ARMs have gotten, because this rate won’t quickly reset with crippling or unexpectedly high payments. After the seven-year rate lock, the loan’s lifetime cap is 8.75% - well above industry averages for 30-year fixed rates currently above 5%.
Given that many owners stay in a home for just a few years, “some buyers may choose not to pay that 30-year premium,” said Don Salmon, chief executive of TBI Mortgage Co., Toll’s mortgage subsidiary. “I think this is a viable product for many consumers.”
For those staying in the house for seven years, it’s a great deal, said Joe Snider, vice president and senior credit officer with Moody’s Investors Service.
Should the buyer desire a 30-year fixed-rate loan, that is 4 3/8%. A true jumbo loan could get a 7/1 ARM at 4.75%. The fixed-rate for loans above $417,000, but below $729,000 is 4.5%. There are no points for consumers.
The rates, which are among the lowest the company has offered, could be pulled at any time, it said.
…
Tulare County foreclosure rates double
By Brett Wilkison • bwilkison@visalia.gannett.com • July 10, 2009
The latest snapshot of Tulare County’s housing market shows a region still struggling under the weight of increasing foreclosures and mortgage delinquencies, which have shot up since spring 2008.
The countywide foreclosure rate of 3.2 percent, according to the most recent data and the 12-month total for foreclosure filings ‘ 8,359 ‘ doubled between May 2008 and May of this year, according to a July report from First American CoreLogic, a real estate information service.
The mortgage delinquency rate, often used to predict future foreclosure filings, nearly doubled over the same period, to 9.7 percent, according to the report. The new figures were not unexpected.
“It’s another sign of the hard times,” said Tim Burns, neighborhood preservation manager for the city of Visalia, where more than 1,000 of the city’s 40,000 residential units are in some stage of foreclosure. “But I can’t say I’m surprised.”
…
Something Lurking in the Shadows
The real estate market faces another problem as well: shadow inventories. According to Rick Sharga, Vice-President of RealtyTrac, an organization that tracks foreclosure information, there are approximately 600,000 properties nationwide that have been repossessed but are not for sale.Banks fear flooding the market with these properties because it will cause home prices to drop further resulting in greater write-offs by the banks. RealtyTrac estimates that only 30% of foreclosed homes have been listed on the Multiple Listing Service (MLS).
The glut of foreclosures show no sign of slowing down any time soon. The San Francisco Chronicle reported that the typical year sees 160,000 foreclosures. Currently, 80,000 homes are being foreclosed each month. This equates to a record 12% of homeowners that are behind in their payments or in foreclosure. Even scarier, the large number of foreclosures are not contained to the subprime market. While 25% of subprime loans have defaulted, six percent of prime loans are entering foreclosure. Prime borrowers typically have solid credit and reliable incomes. In fact, the Mortgage Bankers Association shows that the prime mortgage foreclosures have doubled in the past year and now comprise the largest share of foreclosures.
This trend looks to get even worse over the coming years as the number of Prime and Alt-A mortgages reset. The chart below shows the massive amount of Alt-A, Prime, and option adjustable rate loans resetting. These resets do not peak until July 2011. The option adjustable rate loans are probably the most nefarious threat to the housing market. These are also known as negative amortization loans. These loans allow the homeowner to choose a payment option. These options are a payment based on a 30 year loan, 15 year loan, interest only, and negative amortization.
Negative amortization means that the homeowner is not even paying the interest each month. The amount of unpaid interest is added back to the principal. Essentially, the mortgage balance rises each month. This has allowed home payments to remain low,but it caused the payments to explode upon reset. At reset, the homeowner will be forced to make a payment based on the 30 year (in most cases) mortgage. This means the homeowner is now paying all the interest and part of the principal on a loan that could be substantially higher than the original purchase price due to the negative amortization feature.
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179. The consequences of our actions seize us by the back of the neck, utterly indifferent to our subsequent “reformation.”
Beyond Good and Evil
–Friedrich Nietzsche–
“These resets do not peak until July 2011.”
Am I missing something, or is it safe to predict that there will be no housing bottom until after 2011?
Just 24 more months? It seems too good to be true, but probably is about right.
Where have the years gone..
“Until after” means some time after 2011 at the earliest.
Pretty likely, but not guaranteed by the reset chart.
Imagine if the lending markets “magically” healed, buyer demand “magically” returned, and those with resets could easily sell for more than the had paid initially? If so, they would not be in trouble.
Practically speaking, yes—they’re in big trouble, and their resets will add to foreclosures, and boost supply, which will push the market further down.
2011 may be too soon to look for a real bottom.
Somewhere around the time the wave of resets ends we’ll have a pretty solid supply number.
Once supply is known, the market can start roughly determining prices. This will result in some number of actual sales (demand).
Then we’ll have solid supply and demand numbers, and a stable market. That is the “bottom” as I see it.
I don’t define “bottom” as the lowest price of the era.. or a return to some previous price (like we’ve reached pre-2001 or pre-bubble prices). I see the bottom as an end to the mayhem.. an end to market instability.
To me, bottom is the point where all important factors are known and fair prices can be set according to measured, stable market conditions.. a moment when RE pricing reflects and responds to changes in market forces and factors, rather than to fear and emotions.
Prices will surely keep moving around afterwords. There may even be pockets of what appears to be further mania.. but that’s natural, as even stable markets are always moving around, trying to maintain equilibrium.
Nice post Bear…
More bonus payments for thievery are in the works. Shouldn’t the discussion be about prison time?
AIG Plans Millions More in Bonuses
Troubled Insurer Is In Talks With U.S. Over $250 Million
Senior Treasury official Kenneth R. Feinberg, left, with other federal officials, is in talks with AIG over $250 million in bonuses that will come due in the next nine months.
By Brady Dennis
Washington Post Staff Writer
Saturday, July 11, 2009
American International Group’s recent discussions with President Obama’s compensation czar have centered on whether the company should pay about $250 million in promised bonuses that come due during the next nine months.
AIG has asked the government to rule on several categories of bonuses, said a person familiar with the discussions. These include millions of dollars in payments owed to top corporate executives in coming days, and the troubled insurer has been seeking senior Treasury official Kenneth R. Feinberg’s consent in an effort to provide the company with political cover.
But of greater concern to both sides is what to do about the vastly larger sum that comes due in March 2010, when AIG is scheduled to pay more than $200 million in bonuses aimed at retaining executives at AIG Financial Products, the unit whose complex derivative contracts nearly wrecked the insurance giant last fall.
A public furor erupted earlier this year when AIG paid about $165 million in retention bonuses to Financial Products employees. The contracts that guaranteed those awards also promised similar payments in March 2010, and AIG has been examining the issue in hopes of preventing another debacle, company officials have said.
…
NO BONUSES TO BAILED-OUT FIRMS — PERIOD!!!
SPECIAL REPORT Road to Rescue
AIG bonuses: $235 million to go
Troubled insurer AIG has asked the government’s ‘pay czar’ to review hundreds of millions more in bonus payments to employees of its most crippled division.
NEW YORK (CNNMoney.com) — Bailed-out insurer AIG again found itself in the crosshairs of bonus rage on Friday over its plans to pay $2.4 million in executive bonuses next week.
But the larger issue is how AIG will deal with its obligation to pay roughly $235 million still owed to employees of its crippled financial products division.
…
Nice series of articles, PB.
The corruption that has become standard operating procedure in this country boggles the mind. Who wudda thought we’d become the very thing we rallied so hard against during the Reagan years–a kleptocracy modeled after the Soviet Union. Even Latin America has become more democratic than we are.
Seems what we need now is a US version of Che Guevara to turn this thing around. If that’s even possible at this point.
Nation’s Housing
Carefully crafted strategies behind some mortgage defaults
Would you, under any circumstances, default on your home mortgage, even if you could afford to make the monthly payments? That’s a trickier question…
By Kenneth R. Harney
Syndicated Columnist
WASHINGTON — Would you, under any circumstances, default on your home mortgage, even if you could afford to make the monthly payments?
That’s a trickier question than you might assume, according to new research from the University of Chicago’s Booth School of Business and Northwestern University’s Kellogg School of Management.
The study found 26 percent of the record numbers of home-mortgage defaults across the country are “strategic” — that is, calculated economic decisions to bail out of loans by owners who have the money to make the payments but can’t handle the negative equity they’re carrying caused by local property-value declines.
Nationwide, according to data from Seattle-based Zillow dot com, 22 percent of all homeowners in the first quarter of 2009 were “underwater,” in negative equity positions with mortgage debts that exceed their home values.
In some parts of California and Nevada, more than half of all households have negative equity. In a few localities, the size of the equity deficit is staggering.
…
UC employees face furloughs to bridge deep budget divide
By James P. Sweeney
U-T SACRAMENTO BUREAU
2:00 a.m. July 11, 2009
OAKLAND – Ending a week in which California’s two public university systems laid out grim consequences of deep state funding cuts, University of California officials yesterday said they hope to close an $813 million gap without additional student fee increases or enrollment curbs.
However, more than 100,000 UC employees will be asked to take furlough days. That will amount to pay cuts of 4 percent for those who make $40,000 a year or less, with a graduated scale that tops out at 10 percent cuts for those who make more than $240,000.
In addition, most campuses are deferring at least half of planned faculty hires and 724 employees have been laid off systemwide, UC officials said.
“The potential of these cuts is devastating,” UC President Mark Yudof told reporters at the UC headquarters. “Obviously we’re going to try to maintain quality.”
…
I keep expecting the glut of expensive bottles to suppress the price of wines in my price range (under $5/bottle), but so far, no luck…
RUNNING A BUSINESS
JULY 8, 2009
Luxury Wine Market Reels from Downturn
By JIM CARLTON and DAVID KESMODEL
ST. HELENA, Calif.
Many of America’s high-end wineries are reeling from the economic downturn, as even wealthy drinkers slash spending on fine wines.
The slump comes as Americans continue to drink more wine overall. Recession-weary consumers, however, are buying more mid- and low-priced wines, causing a sharp falloff in sales of wines priced at $25 a bottle and higher.
The shift is pinching the profits of luxury vintners in Napa and Sonoma counties and forcing many to cut prices and seek new distribution channels. Some hard-hit wineries have quietly put themselves up for sale. There is likely to be “a lot of M&A activity in the short-term,” says Mike Jaeger, president of Wilson Daniels Ltd., which helps luxury winemakers market their products.
The slump follows a long boom period for high-end wines fueled by Americans’ rising wealth and interest in wine. In previous recessions, the high end — less developed than it is now — was relatively unaffected. “Nobody in the world has seen something like this,” says Claude Blankiet, a maker of fine wines. Revenue at his Yountville, Calif., company, Blankiet Estate, has slipped 40% this year, he says.
Total U.S. wine sales rose about 5% in terms of volume in the first quarter from a year earlier, but wines priced at $25 a bottle and up fell about 12%, estimates Jon Fredrikson, an industry consultant with Gomberg, Frederikson & Associates in Woodside, Calif.
One sign of the times: Auction Napa Valley — the premier charity and social event of the year — raised just $5.7 million last month, down sharply from the $10.4 million raised last year.
…
This WSJ article appears to have scoured the US housing market for examples of high-end homes where prices are rising, but it failed to do so, at least year-on-year. I put no stock in the current meagre dead cat bounce in prices, as the market is heavily distorted by government interventions intended to stem price declines.
RELATIVE VALUES
JULY 10, 2009, 11:50 P.M. ET
Green Shoots
DENVER
$3.49 million
10,000-square-foot contemporary home of five bedrooms and seven baths in the city’s Hilltop neighborhood
DETAILS: Built in 2007, the four-story home has seven terraces, a six-car garage and includes city and Rocky Mountain views. There’s a large outdoor kitchen and patio.
THE MARKET: The S&P/Case-Shiller Home Price Indices track values in 20 U.S. metropolitan regions. For April, the latest reading available, Denver prices rose 1.5% from March. For the 12 months ended in April, Denver posted the smallest year-over-year price decline, 4.9%.
CAFFEINE FIX: Dazbog Coffee, two miles away, serves Russian-inspired coffee drinks including White Nights Espresso.
TODAY’S FORECAST: Isolated thunderstorms, high 88 degrees
SOURCE: Dee Chirafisi and Andi Leahey, Kentwood City Properties, http://www.denverdee.com
CLEVELAND (Gates Mills)
$3.75 million
Ten-bedroom Georgian home of about 6,200 square feet on seven acres, with six baths, two powder rooms in the village of Gates Mills, about 16 miles east of downtown Cleveland, within its statistical area
DETAILS: The three-story, 1929 home comes with a pool, two guest cottages and terraced gardens. It overlooks a polo field and hunt club where about two dozen hounds sometimes roam with their trainers.
THE MARKET: Home prices rose 1.2% in April from March but fell 10.5% from a year earlier. Cleveland prices fell before a lot of other cities, says Hoby Hanna, president of Howard Hanna Real Estate in Ohio, and he hopes “we’re one of the ones to come out of it sooner.”
Private Properties: Melvin Belli’s Former Home Listed for $39.5 Million
CAFFEINE FIX: Starbucks Coffee is about a mile away.
TODAY’S FORECAST: Mostly sunny, high 87 degrees
SOURCE: Georgia Murray, Howard Hanna Real Estate, georgiamurray@howardhanna.com, (440) 423-3100
DALLAS
$3.65 million
4,300-square-foot brick home with four bedrooms and three bathrooms in the city’s Highland Park neighborhood
DETAILS: Built in 1994 and recently updated, the home includes a wine cellar with a 1,500-bottle capacity, exposed beam ceilings, a library and a landscaped stone courtyard.
THE MARKET: Prices rose 1.7% in April in Dallas—the most in the Case-Shiller report—but fell 5% in the 12 months ended in April. The luxury market is off “probably 30% to 40% since last year,” with recent signs of life in the $3 million-$5 million range, says Pierce Allman of real-estate firm Allie Beth Allman & Associates.
CAFFEINE FIX: A half mile to La Duni Latin Kitchen & Baking Studio
TODAY’S FORECAST: Mostly cloudy, high 86 degrees
SOURCE: Allie Beth Allman & Associates, 214 354 1099, aballman@alliebethallman.com
—Sara Lin
Even cherry picking outliers makes the real estate situation look pretty grim. If you had told the troll brigade who read and posted here three years ago that by 2009, home prices in the most resilient US markets would be falling 5 percent year-on-year, they would have called you a tinfoil-hat donning gloomster.
The US now has a puppet financial system.
With assets less toxic, banks have other troubles
By JIM KUHNHENN – 2 days ago
WASHINGTON (AP) — The bundles of bad home mortgages that panicked the Bush and Obama administrations have turned out to be not so toxic for the financial industry after all.
After assembling $700 billion to deal with the problem, the government is devoting a relatively modest $30 billion to buy troubled mortgage-backed securities. With that on the back burner, the big threat to the economy is now believed to be troubled credit card, commercial real estate and commercial industrial debt.
These bad loans, made worse by the severity of the recession, could be responsible for two-thirds of banks’ losses.
“The commercial real estate time bomb is ticking,” Rep. Carolyn Maloney, D-N.Y., said Thursday at a congressional hearing.
On that front, the administration is still looking for a solution. A so-called “legacy loan” purchase plan by the Federal Deposit Insurance Corp. announced last March has fizzled.
At the end of the first quarter of this year, banks held about $1.8 trillion in commercial real estate loans. About 7 percent of those loans were considered delinquent, almost twice the level a year earlier, Jon D. Greenlee, the Federal Reserve’s associate director for banking supervision and regulation, told Congress on Thursday.
“Yes, the need to buy toxic assets from the banks is less present than it was,” Sen. Chuck Schumer, D-N.Y., told The Associated Press. “There are still lots of other problems.”
It’s hard to imagine today the dread with which Wall Street and top government officials viewed the mortgage-backed assets that banks were carrying last September. Lawmakers were told that these securities had so been so devalued that they had pushed the entire economy to the edge of a precipice. Congress moved swiftly to pass the $700 billion Troubled Asset Relief Program.
As initially planned, the program would have bought, managed and sold these toxic assets to allow banks to recapitalize and free up more lending. But then-Treasury Secretary Henry Paulson and other members of President George W. Bush’s team soon found that it was nearly impossible to assign a price to those assets. Instead, the Bush administration and later the Obama administration reassembled TARP into about a dozen separate programs.
The government now is making large, direct infusions into hundreds of financial institutions, and helping lenders modify mortgages. The government also is using loans and other subsidies to prop up the largest firms, including banks, automakers and an insurance company.
…
On Wall Street: Credit crisis is far from over
By Aline van Duyn
Published: July 10 2009 19:52 | Last updated: July 10 2009 19:52
Looking for a souvenir of the credit crisis?
The Museum of American Finance, located on Wall Street, sells a set of five posters from its credit crisis exhibit.
“Depicts key events from February 2007 through early March 2009 and also features an overview of the crisis, important terms and explanations of key moments.” At just $12, it is an affordable gift, too.
The problem with such posters is that they suggest the crisis is over.
But it is not, a fact that is starting to dawn on many investors. Until recently the market tone was being set by talk of “green shoots” and economic recovery. Now, there is more talk of weeds – or even manure when the state of the US economy is described.
That the crisis is not over is also clear from comments by policymakers.
Take, for example, the launch this week of the investment funds that will juice up returns with cheap loans from the US government and buy assets such as troubled mortgage-backed securities that banks may want to sell. The programme – the public-private investment programme (PPIP) – has been scaled back considerably, and a plan to use it to buy loans as well as securities backed by loans – called legacy securities or assets – has been iced. “While utilisation of legacy asset programmes will depend on how actual economic and financial market conditions evolve, the programmes are capable of being quickly expanded if these conditions deteriorate,” the Treasury said. “Thus, while these programmes will initially be modest in size, we are prepared to expand the amount of resources committed.”
So, what could make things worse?
Well, they are the same culprits that caused the problems in the first place: continued falls in house prices and the rapidly accelerating drop in commercial real estate values.
Another crucial element is unemployment. The hundreds of billions of dollars of losses notched up in the banking system due to the property price collapses have come before households start to really feel the effects of job losses.
These continue to accelerate, and it is clear that will mean more defaults on mortgages, credit cards and other loans. Already, the rise in defaults on supposedly safe, so-called “prime” mortgages is causing big concerns.
…
Attribution: Financial Times
Here is the link to the article from their home page:
From Markets July 10, 2009
On Wall Street: Credit crisis is far from over
‘Green shoots’ turn to weeds
Commercial alarm: Mall, office building owners defaulting as loan rates double
By ALAN ZIBEL
The Associated Press
Sunday, July 12, 2009
WASHINGTON — Owners of shopping malls, hotels and offices are defaulting on their loans at an alarming rate, and the commercial real estate market is not expected to hit bottom for three more years, industry experts warned Thursday.
“The commercial real estate time bomb is ticking,” said Rep. Carolyn Maloney, D-N.Y., who heads the congressional Joint Economic Committee.
Delinquency rates on commercial loans have doubled in the past year to 7 percent as more companies downsize and retailers close their doors, according to the Federal Reserve. Small and regional banks face the greatest risk of severe losses from commercial real estate loans.
The commercial real estate market’s fortunes are tied closely to the economy, especially unemployment, which hit 9.5 percent in June. As people lose their jobs, or have their hours reduced, they cut back on spending, which hurts retailers, and take fewer trips, which hits hotels.
Funding for commercial loans virtually shut down last year as the financial system unraveled. Industry executives say financing is still extremely difficult to obtain, even for financially healthy properties.
While that may seem like an abstract problem, it has real-world consequences. New construction projects have come to a virtual standstill. That means reduced tax revenue for local governments and fewer construction jobs, said Jeffrey DeBoer, chief executive of the Real Estate Roundtable, an industry group.
The commercial property industry is “not going to turn around until consumers and businesses start spending money again,” he said.
Total losses in securities backed by commercial property loans could be as high as $90 billion in the coming years, according to Deutsche Bank analyst Richard Parkus. He says even more losses - up to $140 billion - are expected from construction loans made by regional and local banks, rather than those sold as securities held by investors.
“We believe the bottom is several years away,” Parkus told lawmakers.
Earlier this year, the government launched a program intended to spur lending to consumers and small businesses. The program, known as the Term-Asset-Backed Securities Loan Facility, was opened to commercial real estate loans last month.
But the effort has struggled to get off the ground. In mid-June, investors passed on their first chance to buy newly issued securities backed by commercial real estate loans. Later this month, the government is expected to make the program available for existing commercial mortgage securities.
Industry groups are now pushing for the government to extend this program through the end of next year and launch new government programs to support commercial real estate loans.
The pain is already spreading through the economy. In April, the second-largest owner of shopping malls in the nation, General Growth Properties Inc., buckled under $27 billion in debt and filed for Chapter 11 bankruptcy protection.
And GE Capital, the financial arm of the conglomerate General Electric Co., has seen its profits from commercial real estate snuffed out in recent quarters.
It went from making $476 million in the 2008 first quarter from its portfolio of office buildings, retail centers and manufacturing facilities to a loss of $173 million in the first quarter of this year and warned that losses on its commercial real estate loans and property holdings could reach $6 billion this year.
At the hearing, a Federal Reserve official said the central bank is paying extra attention to banks’ books as losses from sour commercial real estate loans keep mounting.
Jon Greenlee, associate director of the Fed’s division of banking supervision, told the panel that the central bank has stepped up training of its bank examiners so they are ready to deal with rising losses from the commercial real estate industry.
Asked whether commercial real estate poses a threat to the financial system, he said, “we view it as a very key risk … and we have put a lot of emphasis on it.”
‘…and the commercial real estate market is not expected to hit bottom for three more years, industry experts warned Thursday.
“The commercial real estate time bomb is ticking,” said Rep. Carolyn Maloney, D-N.Y., who heads the congressional Joint Economic Committee.’
Luckily commercial and residential real estate are decoupled — AREN’T THEY???
Is this an attractive investing opportunity, or an opportunity to lose lots of money? I guess it depends on how likely it is for CA to default on its obligations. So long as they can issue i.o.u.s to cover their overdrafts, where is the risk?
San Diego Union-Tribune
Dean Calbreath
Fiscal crisis takes toll on California’s bond ratings
2:00 a.m. July 12, 2009
As our friends in Sacramento continue their trench warfare over the $23.7 billion budget deficit, one thing they seem to forget is that by the very act of stalling on budget compromises, they are tacking billions of dollars onto our ultimate debt.
Thanks to our budgetary slugfest, the three major bond rating agencies – Fitch Ratings, Moody’s Investors Service and Standard & Poor’s – have lowered their ratings on state and municipal bonds.
…
The lower those ratings go, the riskier California bonds look to investors. The riskier they look, the more money the state and its municipalities have to shell out to attract buyers.
“Every dollar that goes to bond investors represents a dollar that you can’t use to educate kids, provide health care or take care of the elderly and infirm,” Dresslar said.
California general obligation bonds now pay around 6 percent in interest, compared with 4.20 percent on U.S. Treasury bills and around 4.5 to 4.75 percent on bonds from states such as Texas that have been less affected by the financial crisis.
To put California’s problems into perspective, keep in mind that we’re not the only state facing severe budget problems.
A recent report by the Center on Budget and Policy Priorities, a budget analysis group in Washington, D.C., found that only two states have been able to balance their budgets this year: North Dakota and Montana.
Thanks to the recession, which has resulted in a sharp drop in tax revenue and increased demand for public services, most states have had record-breaking funding gaps.
Arizona’s funding shortfall equaled 41 percent of its budget, second only to California’s gap of 58 percent, the center says. (That figure includes $34 billion that California has already clipped out of the budget in addition to the remaining deficit.) The gaps in Alaska, Nevada, Illinois and New York were all above 30 percent, and a dozen other states were above 20 percent.
…
NY Times
University of California Makes Cuts After Reduction in State Financing
By TAMAR LEWIN
Published: July 10, 2009
The University of California will use a combination of furloughs, deferred hiring and cuts in academic programs to make up for an $813 million reduction in state financing, its president, Mark G. Yudof, said Friday.
Mr. Yudof said the actions amounted to a major retrenchment for the university, which has long been regarded as the nation’s leading public university.
“The impact of this cut is devastating,” Mr. Yudof said at a press briefing. “There is no way that we are going to be able to look every student in the eye and say, ‘Tomorrow, the University of California will be just the way it was yesterday.’ ”
Most of the university’s campuses will defer at least half of their planned faculty hirings, Mr. Yudof said, and the Berkeley campus expects to reduce faculty recruitment from the usual 100 positions a year to 10.
Chancellors from the individual campuses will present their cost-cutting plans next week to the state Board of Regents, which must vote on the entire budget.
…
Is it still too early to say that real estate is the worst possible investment?
SPECIAL REPORT Road to Rescue
What’s killing banks on Main Street?
Bad loans are only one part of the problem; disastrous investments and risky funding sources have also helped to bring about the latest batch of bank failures.
By David Ellis, CNNMoney dot com staff writer
Last Updated: July 10, 2009: 5:01 PM ET
NEW YORK (CNNMoney dot com) — On just about every Friday afternoon, bank regulators announce the latest batch of bank failures…they’ve shuttered 52 so far this year and the pace could well pick up.
Behind these causalities is a dangerous mix of risky funding techniques and loans to local businesses that simply went bad.
Most of the banks that have failed so far this year were ultimately done in by the large number of loans they issued to local residential and commercial real estate developers, who in turn were hit by the flagging economy.
…