The Housing Bubble

Happy Labor Day, everyone.

- A card carrying union member

Mortgage Market Bound by Major U.S. Role
Classes of Borrowers Cannot Find Loans as Publicly Backed Debt Mounts
Washington Post
Monday, September 7, 2009

In the go-go years of the U.S. housing boom, virtually anybody could get a few hundred thousand dollars to buy a home, and private lenders flooded the market, aggressively pursuing borrowers no matter their means or financial history.

Now the pendulum has swung to the other extreme. Only one lender of consequence remains: the federal government, which undertook one of its earliest and most dramatic rescues of the financial crisis by seizing control a year ago of the two largest mortgage finance companies in the world, Fannie Mae and Freddie Mac.

While this made it possible for many borrowers to keep getting loans and helped protect the housing market from further damage, the government’s newly dominant role — nearly 90 percent of all new home loans are funded or guaranteed by taxpayers — has far-reaching consequences for prospective home buyers and taxpayers.

The government has the power to decide who is qualified for a loan and who is not. As a result, many borrowers among both poor and rich are frozen out of the market.

Nearly one-third of those who obtained home loans during the boom years of 2005 and 2006 couldn’t get one today, according to mortgage industry analysts. Many of these borrowers were never really able to afford their homes and should not have gotten loans. But many others could, and borrowers like them are now running into tougher government standards.

At the same time, taxpayers are on the hook for most of the loans that are still being made if they go bad. And they are also on the line for any losses in the massive portfolios of old loans at Fannie Mae and Freddie Mac, which own or back more than $5 trillion in mortgages.

There is growing evidence that many loans being guaranteed by the government have a significant risk of defaulting. Delinquencies are spiking. And the Federal Housing Administration, another source of government support for home loans, is quickly eating through its financial cushion as losses mount.

The outlay has already reached about $1 trillion over the past year and is rising. During that time, the government has pumped more money into the mortgage market than has been spent on Medicare or Social Security or the defense budget, more even than Washington has paid to bail out banks and other struggling companies.

“Politicians often find scapegoats for America’s economic woes. It is rare – if ever – that they point the finger at themselves. Yet, the basic cause of the current severe economic problem lies in the machinations of government”.

“It is clear to even a casual observer that Congress has abused its power to tax and spend. It has taxed success to subsidize failure. It has purchased votes by enacting an unending stream of entitlement programs, financed by taxation, foreign debt and a progressive degradation of the U.S. paper dollar”.

John Browne

This article includes a graph which provides an instant visual of how much worse the current recession is compared to others since 1980 in terms of its employment impact.

Recession sting a lasting ache for job market
Long-term effects seen on economy
By Dean Calbreath
Union-Tribune Staff Writer

2:00 a.m. September 7, 2009

As the nation embarks on its 127th celebration of Labor Day, there are increasing signs that the worst is over for the recession-battered job market – though that does not mean that the best has begun.

The once-dizzying pace of layoffs is slowing. The number of hours being worked each week has fallen sharply because of furloughs and job cuts, but the rate of decline seems to be hitting bottom. There’s even been a local pickup in hiring in the construction industry, which has been at the epicenter of the economic crisis.

Nevertheless, nearly 10 percent of Americans remain jobless, and there are growing indications that the recession may have some long-term effects on the way most Americans work. Many Americans who have been lucky enough to keep their jobs are working harder, putting in longer hours and getting paid less than they were before the recession began, especially after adjusting for inflation.
…

Check out my “Modest Proposal” for fixing the too-big-to-fail problem towards the end of yesterday’s bits bucket…

The comments yesterday were highly intelligent and informative. Some real quality people here, for sure. I know when to stay out of it.

alph your Siamese Twins/pay taxes comment made me laugh so hard, tears were running down my face. Good job, I was in a bad mood.

Financial crisis has deep roots in academia
Exotic mathematical models were devised by those who had no practical knowledge of the markets yet decided they knew better than the traders how markets operated, author Pablo Triana writes.
By Morgen Witzel September 7, 2009

Should the Nobel Prize for economics be abolished? That is one of the suggestions in Pablo Triana’s provocative book “Lecturing Birds on Flying: Can Mathematical Theories Destroy the Markets?”

Triana, formerly a derivatives trader and academic at the University of Madrid, makes a simple assertion. Financial models, such as value at risk and the famous Black-Scholes-Merton model, which won its founders a Nobel, have done more harm than good.

“Make no mistake, quantitative finance had a very large hand in what could well be the worst financial crisis in the history of mankind,” he writes.

Triana’s book is a critique bordering on an assault on mathematical, or quantitative, finance.

From the opening chapter, “Playing God,” Triana maintains that the fundamental assumptions on which mathematical finance theory are based are wrong. Yet the theory continues to hold sway.

And the biggest villain of the piece is the financial academic establishment. Much of its work, he says, has been unnecessary. Before mathematical finance, traders had working models for things such as option pricing. By and large, these models were effective and accurate.

Then came the Black-Scholes-Merton model, which Triana says does not work and was also largely responsible for the 1987 stock market crash. What is more, he maintains, most traders know it does not work and only pretend to use it because finance theory is fashionable and criticizing the model is a heresy.

This is not the only case. The Gaussian copula model, which was intended to measure default probability, failed to identify toxic structured securities and led to massive errors in valuation and credit ratings, Triana says. Likewise, the value at risk model “failed to measure risks even half-accurately and, worse, decisively encouraged and sanctioned the wild risk-taking that brought Wall Street (and consequently the world) down.”

Old-fashioned common-sense methods were replaced by theoretical models based on math, developed by people who had no practical knowledge of markets yet decided they knew better than the traders how markets operated.

Regular Monday for me, none of this Labor Day nonsense. Working 8-10 hours as usual. I work for myself so holidays and weekends are vague concepts. Maybe in the spirit of solidarity with unions, I will bill my clients at 150% of my hourly rate today and take 4 or 5 paid coffee breaks.

Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.

By Edmund Conway- U.K. BST 06 Sep 2009

History repeating itself? President Obama has been accused by some economists of making the same mistakes policymakers in the US made in the Great Depression, which followed the Wall Street crash of 1929, pictured Photo: AP

His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.

There are “troubling similarities” between the US President’s actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.

In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House’s plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.

The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: “[Franklin D Roosevelt's] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows.”

Rowley says: “It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron.”

I searched it, aǝbɐbʇɹoɯt least now I know how to do the ya da da, upside down stuff. However, the vowels, consonants, and symbols remain incomprehensible to me.

I think it has something to do with ZOSO. (IV)

Review: The US couple behind the housing crisis Check out the cool mural.

Michael Moore’s new movie “Capitalism: A Love Story” is an all out attack on the capitalist system. His main point is it benefits the rich and condemns millions to poverty.

“Capitalism is an evil,” says the corpulent film maker, “and you cannot regulate evil.”

His main thesis is wrong, of course. People should be able to accumulate wealth (capital) if they are able and willing. If someone saves up money and buys a street cart dispensing hot dogs they should benefit from profits, if any. If the enterprise catches on and investors are willing to put money into the business so it can expand into a franchise operation, they should be free to take the risk and reap some gain. That’s capitalism. It’s not evil, and it works more efficiently for the greater good than communism.

BUT - Moore makes some valid points! The bad guys in Moore’s mind are big banks and hedge funds which gambled investors’ money in complex derivatives that few, if any, really understood and which belonged in a casino. He seems to instinctively understand there is something rotten going on in the financial world, but mistakenly blames the capitalist system instead of homing in on the fundamental cause of our woes - - the failed money unit and the paper games invented and played by Wall Street.

Mr. Moore, himself a successful capitalist, would do us a huge favor if he would apply his talent to creating a film exposé of the debauched money system in the United States and offer a solution - namely, a return to honest money. From the founding of the nation until 1913 the dollar gained some eleven percent in purchasing power. From 1914 until the present the dollar has LOST more than ninety-five percent of its purchasing power. Merely explaining WHY, it seems to us, would make an interesting film.
- J.Wrisley 9-7-09

Study: 2 out of 5 working-age Californians jobless
The Associated Press • September 6, 2009

SACRAMENTO — On this Labor Day weekend, many Californians find themselves more in need of work than a holiday.
Advertisement

A report to be released publicly today found that two of five working-age Californians do not have a job, underscoring the challenges in one of the toughest job markets in decades. The last time employment levels among this group were this low was February 1977, according to a study by the California Budget Project, a Sacramento-based nonprofit research group that advocates for lower- and middle-income families.

“The recession has been so severe that California now has approximately the same number of jobs as it did nine years ago, when the state was home to 3.3 million fewer working-age individuals,” the report said.

In just two years, the recession has wiped out job gains from the previous four years, the report said. State employment data from July shows California had 952,800 fewer nonfarm jobs than in July 2007. That’s more than the 854,600 nonfarm jobs gained between July 2003 and July 2007.

Jean Ross, executive director of the California Budget Project, recommended Congress adopt a second extension of unemployment insurance benefits.

Those checks, which pay between $200 and $1,800 a month depending on a worker’s previous earnings, are “the best way to keep dollars flowing to the local community,” she said.

Washington Post has a nice review today on the amount of housing debt currently backed by US taxpayers. The reader comments are interesting.

Rio asked for affirmation over the weekend for Brazilian housing prices. I found his comments quite interesting.

I largely remember Brazil as the country with the amazing four digit inflation rate and no way to pay the national debt. It is interesting to note that after decades of hyperinflation, everyone owned their house free and clear, and that banks would not lend for house purchases. A mortgage is great hyperinflation insurance, and you want to go all in before the party gets going, if hyperinflation is what is coming.

I know the last decade has been remarkably better in Brazil, new currency, better budget control, mostly single digit inflation and a booming export trade. Aside from internal reforms, what has benefited Brazil is Globalization, Commodities Bubble, inflows of hot money (worldwide credit binge) and Uncle China.

People everywhere celebrate the rising tide as an independent personal accomplishment which cannot be removed.

Mercury Marine: OK plant to close
AP CDT, September 6, 2009

STILLWATER, Okla. - Now that Mercury Marine has reached a pact with union workers at a plant in Wisconsin, the company says it expects to lay off its 380 workers in Stillwater within two years and close its plant.

The company announced Friday it expects the layoff to take 18 to 24 months at the boat manufacturing plant. Union workers in Fond du Lac, Wis., agreed to wage and benefit concessions after Mercury Marine announced plans to consolidate the facility there with the Stillwater plant.

The Fond du Lac plant has 840 workers. Mercury Marine had indicated those jobs could move to Stillwater without a union contract that included significant givebacks. With the contract in Wisconsin, Mercury Marine spokesman Steve Fleming says the Stillwater factory will be closed.

Flew from SFO to Cinci yesterday. From 37K starting in Colorado all the way to Cinci noticed new and strange looking scar with stitches formations everywhere. It was all the new bubble housing which looks quite different from pre-bubble housing from the air. The streets (which make up the scar part) and the driveways (stitches part) are very uniform and wider than pre bubble housing, the homes are larger but very uniform placement on the street and there are no trees. Hard to explain, but next time you fly on a clear day, look down and you will see.

When Did Your County’s Jobs Disappear?
An interactive map of vanishing employment across the country, updated with the latest figures.

From Slate

www dot slate dot com/id/2216238/?ad=ins

(requires flash)

The Sad Story Behind Labor Day
by Claudine Zap
Sep 4, 2009

For most of us, Labor Day means backyard barbecues, weekend sales, and a last carefree day before school starts. But the laid-back holiday has some seriously sad history, including chaos, riots, and even death. Let us explain.

A tragic tale
Back in the days of the Industrial Revolution, workers were expected to put in 12-hour days, seven days a week (yes, including kids). Already sounds awful, right? It gets worse. In Pullman, Illinois, a company town that employed and housed workers to build posh railway cars, times had gotten tough. In response, George Pullman cut jobs and wages. It was 1893. Thousands of workers walked off their jobs in protest, demanding higher salaries and lower rents. Other unions joined, refusing to work the Pullman cars, turning the small-town fracas into a national fury.

With mail cars backing up, and riots worrying train execs, President Grover Cleveland stepped in. He declared the strike illegal and sent 12,000 troops to break the strike. Cue brutal protests and bloodshed. The strike was broken, but so was the spirit of the workers. To reach out to the labor movement, Congress rushed the national holiday into law. The bad resulted in Cleveland losing re-election. But the day off for hot dogs endures.

When is it?
Labor Day falls on the first Monday of September. This year, that would be Monday, September 7. According to the Department of Labor, Congress passed an act in 1894 making the first Monday in September of each year a legal holiday.

So, working stiffs everywhere, say it now, with feeling: Happy Labor Day.

Interesting Wash Post article on what people earn. Some of the highest are government and non profit.

http://www.washingtonpost.com/wp-srv/metro/salaries/

I AM THE PEOPLE, THE MOB

I AM the people–the mob–the crowd–the mass.
Do you know that all the great work of the world is
done through me?
I am the workingman, the inventor, the maker of the
world’s food and clothes.
I am the audience that witnesses history. The Napoleons
come from me and the Lincolns. They die. And
then I send forth more Napoleons and Lincolns.
I am the seed ground. I am a prairie that will stand
for much plowing. Terrible storms pass over me.
I forget. The best of me is sucked out and wasted.
I forget. Everything but Death comes to me and
makes me work and give up what I have. And I
forget.
Sometimes I growl, shake myself and spatter a few red
drops for history to remember. Then–I forget.
When I, the People, learn to remember, when I, the
People, use the lessons of yesterday and no longer
forget who robbed me last year, who played me for
a fool–then there will be no speaker in all the world
say the name: “The People,” with any fleck of a
sneer in his voice or any far-off smile of derision.
The mob–the crowd–the mass–will arrive then.

Carl Sandburg

I was up in Idaho Falls for the weekend participating in a sweat equity project fro my sister. (my sweat, her equity)

We drove Thursday evening going north through Las Vegas and there was no holiday traffic whatsoever. Even the construction downhill toward state line didn’t slow things down.

My touchstone of blank freeway billboards between stateline and Vegas was at 2 over the July 4th weekend. I commented on it here because I’d never recalled seeing a blank one. This weekend there were 6. Winston would say that the existing billboards are getting more done with less.

Happy L’bor day all.

‘Congressman and convict’ Jim Traficant says, “I plan to get right back in it!” to 1,200 cheering supporters yesterday. His hairpiece had nothing to say.

UPDATE 2-China backs state firms on oil options losses
Mon Sep 7, 2009 5:14am EDT

BEIJING, Sept 7 (Reuters) - Beijing has publicly put its weight behind some state-owned firms struggling with oil derivatives losses, saying it will back them in any legal action against the foreign banks that sold the products.

In a statement on Monday, the State-owned Assets Supervision and Administration Commission said that some state-owned enterprises had sent letters to their trading partners about oil structured options trades, confirming a report in Caijing magazine last week that had sent shudders through the banking community.

“(SASAC) will support companies to minimise losses and protect rights through negotiations and holdings management. We also reserve the right to launch legal suits,” the agency said.

The move is the latest by SASAC to curb the over-the-counter derivatives business after a series of corporate commodity and forex hedging deals went spectacularly bad over the past 10 months, costing Chinese state firms billions of dollars.

Bankers were unhappy with the latest developments.

“If they declare bankruptcy, it is different. But if these companies are still in business, it is not acceptable for them to just walk away from the losses,” said a Singapore-based banker, who like others declined to be named due to the sensitive nature of the matter.

The agency did not specify the names of state firms and their trading partners involved in the issue.

A Singapore-based bank source told Reuters last week that Air China 60111.SS(0753.HK), China Eastern (600115.SS) and shipping giant COSCO (1919.HK) had issued almost identical notices to their foreign investment banks.

Major global providers of commodity risk management such as Goldman Sachs (GS.N), UBS (UBSN.VX), Morgan Stanley (MS.N) and JPMorgan (JPM.N) were not immediately available for comment.

The LA Times has an interesting summary of the problems the hotel/casinos in Las Vegas are facing. It has a lot of information about the dollar value of various investors’ losses.

http://www.latimes.com/news/nationworld/nation/la-na-vegas-strip7-2009sep07,0,7804731,full.story

Boyd acquired and imploded the storied Stardust hotel. By the time of Echelon’s groundbreaking in June 2007, the project had expanded into a complex of four hotels totaling 5,300 rooms, a convention center, two theaters and a luxury retail mall. Its new price tag of $4.8 billion made it the second-costliest project on the Strip, behind only the $8.4-billion CityCenter.

“We continue to look at the project, and we don’t see a natural restarting point,” Boyd Chief Executive Keith Smith said in an interview. “We’re taking the rest of 2009 to analyze our options.”

Peter Schiff is supposed to be announcing today whether or not he will be running for the US Senate in the state of Connecticut. Watch out for that.. it could be the beginning of a sea change in US politics if he runs and wins. His biggest challenge will be to defeat his fellow Republican candidates to get the nomination.

When referencing Saul Alinsky above, note who Alinsky himself paid homage to below:

Saul Alinsky died in 1972. He was a Marxist grassroots organizer who spent much of his life organizing rent strikes and protesting conditions of the poor in Chicago in the 1930s. However, unlike Christian socialist and activist for the poor Dorothy Day, Alinsky’s real claim to fame was as strategist for anti-establishment ’60s radicals and revolutionaries.

Indeed, Alinsky wrote the rule book for ’60s radicals like Bill and Hillary Clinton, George Miller and Nancy Pelosi. He considered Hillary Rodham to be one of his better students and asked her to join him in his efforts as an organizer of radical leftist causes. But Hillary had other fish to fry on her climb to national prominence.

Alinsky had a true genius for formulating tactical battle plans for the radical left. He wrote two books outlining his organizational principles and strategies: “Reveille for Radicals” (1946) and “Rules for Radicals” (1971).

“Rules for Radicals” begins with an unusual tribute: “From all our legends, mythology, and history (and who is to know where mythology leaves off and history begins – or which is which), the first radical known to man who rebelled against the establishment and did it so effectively that he at least won his own kingdom – Lucifer.”

The Sad Story Behind Labor Day
by Claudine Zap

Sep 4, 2009

For most of us, Labor Day means backyard barbecues, weekend sales, and a last carefree day before school starts. But the laid-back holiday has some seriously sad history, including chaos, riots, and even death. Let us explain.

A tragic tale
Back in the days of the Industrial Revolution, workers were expected to put in 12-hour days, seven days a week (yes, including kids). Already sounds awful, right? It gets worse. In Pullman, Illinois, a company town that employed and housed workers to build posh railway cars, times had gotten tough. In response, George Pullman cut jobs and wages. It was 1893. Thousands of workers walked off their jobs in protest, demanding higher salaries and lower rents. Other unions joined, refusing to work the Pullman cars, turning the small-town fracas into a national fury.

With mail cars backing up, and riots worrying train execs, President Grover Cleveland stepped in. He declared the strike illegal and sent 12,000 troops to break the strike. Cue brutal protests and bloodshed. The strike was broken, but so was the spirit of the workers. To reach out to the labor movement, Congress rushed the national holiday into law. The bad will resulted in Cleveland losing re-election. But the day off for hot dogs endures.

When is it?
Labor Day falls on the first Monday of September. This year, that would be Monday, September 7. According to the Department of Labor, Congress passed an act in 1894 making the first Monday in September of each year a legal holiday.

So, working stiffs everywhere, say it now, with feeling: Happy Labor Day.

In their day, big red hats may have been the equivalent of granite counter-top and Sub-Zero appliances on Easter Island:

Mystery of the giant headgear on the Easter Island statues has been solved by a team of British archaeologists, By Jonathan Brown
Monday, 7 September 2009 (U.K. Independent)

“It is one of the great mysteries that has baffled explorers, archaeologists and anthropologists alike – what was the meaning of the giant Easter Island statues and what role did they play in the demise of this once-complex civilisation? But since the first non-islanders arrived in the remote archipelago half a millennium ago, another equally profound question has niggled away at the backs of their minds: where did they get those hats?

Now British experts, the first to work on the island since the legendary Edwardian archaeologist Katherine Routledge, believe they are a step closer to resolving the puzzle of the huge red boulders which sit astride the massive monolithic heads in the world’s most remote inhabited place.

Dr Colin Richards from the University of Manchester and Dr Sue Hamilton from University College London have discovered the existence of a road used to transport the outcrops of volcanic rock leading to a previously unstudied “sacred” quarry where the material was mined. They have also found an axe believed to have been left at the quarry as an offering confirming the site’s quasi-religious meaning to the ancient Polynesians. Dr Hamilton believes the “hats” may have represented a plait or top knot worn by the elite chieftains, who were engaged in a bitter struggle for prestige and power, which was symbolised by the building of ever-taller statues known as moai created in memory of their ancestors.

But while more than 1,000 statues have been found on the island only 70-75 hats have been discovered, suggesting the headgear was an added symbol of power – and perhaps even an early example of Pacific “bling”.

As well as weighing several tons the “hats” are carved from a crater full of red scoria, a volcanic pumice whose colour symbolises high birth and status. They may have been later additions to existing statues to boost them beyond their rivals.

“Chieftain society was highly competitive and it has been suggested that they were competing so much that they over-ran their resources,” said Dr Hamilton.

It is believed these elite leaders mobilised vast teams of workers to harvest the rock, which was then transported several miles on rolling tree trunks to the three-storey high statues, which were placed on special platforms to enhance their position of grandeur. Dr Hamilton said: ‘The quarry is in a secret place which is invisible from other parts of the island and the noise of production would have been contained by the crater. These people lived in a successful and well-organised society – the Easter Island of 500 years ago was a managed living environment.”

The academics, who will spend a month each year for the next five years investigating their findings, which include an obsidian adze – a seven-inch axe-like tool which was used for squaring up logs or hollowing out timber – believe the first “hats” appeared between 1200 and 1300. This coincided with a dramatic increase in the size of the statues across the island.

Situated some 2,500 miles off the coast of Chile, Easter Island, known to its indigenous people as Rapa Nui, has long been a magnet for adventurers. Katherine Routledge arrived in 1914 with her husband William as part of a pioneering British expedition to map the famous statues. With the help of a local man they excavated 30 figures and recorded the island’s unique legends and oral histories. The exact cause of the dramatic decline of Easter Island, named by a Dutch explorer in 1722, is hotly debated but is agreed that it was brought on by a dramatic crisis possibly as a result of resource depletion, war or disease.

It was annexed by Chile in 1888 and in the 1960s was pressed into service by NASA as an emergency landing site for its space shuttles. Today Easter Island is a magnet for 20,000 eco tourists who are in danger of swamping the 3,500 native Rapanuins. But scientists working there are battling to keep the indigenous traditions alive. Each major excavation by the British team has been accompanied by a traditional “umu” ceremony with locals dressing up in white feathers and building ovens out of hot stones to offer cooked offerings to placate the island’s spirits.

“We are excavating a living culture so we have to be very careful. There are very strict rules about what we can and cannot do and we have to respect them,” said Dr Hamilton.

Dr Richards added: “It is clear that the quarry had a sacred context as well as an industrial one. The Polynesians saw the landscape as a living thing and after they carved the rock the spirits entered the statues.”

Eau de Humanite’:

Proposal to ban smelly people from buses causes a stink
US civil rights group believes the 14th amendment of the constitution may protect the smelly.

By Emma Hartley
9:28AM BST 07 Sep 2009 (UK Telegraph)

Honolulu city council has gone back to the drawing board after a proposal to ban smelly people from its buses proved unworkable.

The Hawaiian council had considered making it illegal to have “odors that unreasonably disturb others or interfere with their use of the transit system”.

Had it passed into law, anyone convicted of being smelly could have been fined up to $500 and given a six-month jail term.

But lawyers from the city and the American Civil Liberties Union (ACLU) said it was vaguely worded, would result in subjective judgments being made and may even have been unconstitutional.

Professor Robert McKeever, head of department at London Metropolitan University’s department of law, governance and international relations, said that it was the equal protection clause of the 14th amendment that the lawyers were considering.

“It was passed in the 1860s and its purpose was to give freed slaves equal treatment under the law. Since then it’s been extended to cover gender and gay equality.

“The idea is that the law may not favour one group over another, so presumably the lawyers are thinking that you can’t give preference to nice-smelling people over foul-smelling people. It sounds ludicrous but in the US anything is possible.

“Of course some people have a medical condition that involves bad body odour and if they were not allowed on the bus because the driver thought they were smelly they could bring a civil action against the bus company and possibly even local government, if the company were municipally owned.

“It’s the most litigious society imaginable and there’s bound to be someone in Honolulu who smells and would like to vindicate their right to travel on public transport.”

Unlike the US stock market, it sounds like the Chinese market is directly manipulated by government intervention.

* SEPTEMBER 7, 2009, 7:28 A.M. ET

Asian Stocks Extend Rally On Market Support By Beijing

By Matthew Allen and V. Phani Kumar
Of DOW JONES NEWSWIRES

Chinese shares in Hong Kong and Shanghai extended their rally Monday as investors rushed to buy property and metals stocks on improved sentiment over Beijing’s recent efforts to support the market.

Hong Kong’s Hang Seng Index ended 1.5% higher at 20629.31, taking gains into a third-straight session, while China’s Shanghai Composite Index stretched its rally into a fifth successive session, rising 0.7% to 2881.12.

“With the help of a slew of market-boosting measures in the past days, investor confidence is being restored,” said Zhou Liu, analyst at Huatai Securities. Still, “it’s too early to say the stock market has reversed a downward trend, as liquidity worries remain,” he added.
…

Just when they thought it was safe… ‘Jaws’ shark sightings force beach closure on busiest weekend of U.S. summer.

07 September 2009 (UK Mail)

It was the film that scared many people out of the water for good.
Now officials are preventing life from imitating art by closing down several Cape Cod beaches after up to five great white sharks were spotted swimming near by.
Three of the sharks were spotted in the area just 75 yards from the shore by a spotter plane patrolling the area near the town of Chatham. All three appeared about 10 feet long and weighing half a tonne.

Steven Spielberg’s 1975 hit ‘Jaws’ was set on the fictional Amity Island off Cape Cod, and tracks the terror that ensues when beaches are left open over the Labour Day weekend - despite evidence of a great white shark.

The shark featured in the films was a monstrous killer. Fortunately, the sharks spotted off Cape Cod this weekend so far do not appear to be giants with a taste for human flesh.
Senior biologist Gregory Skomal and his crew were able to tag two of the three with electronic tracking devices. He claimed the sharks were eight and ten feet long.
The monstrous shark in the original Jaws film was meant to be about 25 feet long, weighing five tons.

State officials are also warning other swimmers in the area to be on the lookout for sharks this weekend.
‘The tags, which use satellite-based technology to record where a shark travels, allow scientists to better understand migratory patterns,’ the division statement said.
The tags will record their location, and information on ambient light and water temperature, every ten minutes until January 15. The tags will then drop off and upload their findings to a passing satellite.

Great white sharks are relatively rare in New England, the division statement said, but have been seen feeding near seal colonies.
One such 7,000-strong grey seal population can be found on Monomoy Island, near to Chatham.
Massachusetts, the New England state that is home to Cape Cod, has recorded only four shark attacks since 1670, two of which were fatal. The last fatal shark attack in Massachusetts happened in 1936.
Despite the relative rarity of attacks, sharks - the great white in particular - has a hold over the public’s imagination, a fear that Spielberg tapped in to with the films that made his career.

State officials are also warning other swimmers in the area to be on the lookout for sharks this weekend.

Fascinating article about the self-storage industry. I NEVER want to accumulate so much stuff that I need to rent long term storage. Our house rule is: new thing in, old thing out.

http://www.nytimes.com/2009/09/06/magazine/06self-storage-t.html?pagewanted=1&em

UN Says New Currency Is Needed to Fix Broken ‘Confidence Game’

Sept. 7 (Bloomberg) — The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.

UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since World War II. China, the world’s largest holder of dollar reserves, said a supranational currency such as the International Monetary Fund’s special drawing rights, or SDRs, may add stability.

“There’s a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management,” Heiner Flassbeck, co-author of the report and a UNCTAD director, said in an interview from Geneva. “An initiative equivalent to Bretton Woods or the European Monetary System is needed.”

The 1944 Bretton Woods agreement created the modern global economic system and institutions including the IMF and World Bank.

Enhanced SDRs

While it would be desirable to strengthen SDRs, a unit of account based on a basket of currencies, it wouldn’t be enough to aid emerging markets most in need of liquidity, said Flassbeck, a former German deputy finance minister who worked in 1997-1998 with then U.S. Deputy Treasury Secretary Lawrence Summers to contain the Asian financial crisis.

Emerging-market countries are underrepresented at the IMF, hindering the effectiveness of enhanced SDR allocations, the UN said. An organization should be created to manage real exchange rates between countries measured by purchasing power and adjusted to inflation differentials and development levels, it said.

“The most important lesson of the global crisis is that financial markets don’t get prices right,” Flassbeck said. “Governments are being tempted by the resulting confidence game catering to financial-market participants who have shown they’re inept at assessing risk.”

The 45-year-old UN group, run by former World Trade Organization chief Supachai Panitchpakdi, “promotes integration of developing countries in the world economy,” according to its Web site. Emerging-market nations should consider restricting capital mobility until a new system is in place, the group said.

The world body began issuing warnings in 2006 about financial imbalances leading to a global recession.

Customer Beaten to Death by Wal-Mart Employees

At Wal-Mart, theft is not tolerated. At least not at the Wal-Mart in Jingdezhen, China, where a customer died at the hands of Wal-Mart employees who suspected her of stealing.

walmart china 600×393 Customer Beaten to Death by Wal Mart Employees picture

It started out when one of the Wal-Mart employees suspected a female customer of theft. The customer was then under surveillance for a few minutes before being approached by the staff.

The Wal-mart employee requested to search the customer’s bag and the female customer refused to hand it over, stating that it was a violation of her privacy.

receipt snatch Customer Beaten to Death by Wal Mart Employees picture

Next thing she knew, more Wal-Mart employees gathered around her and started beating her up.

The customer managed to send an alert to her family through her cellphone and when her mother and sister showed up at the store, the staff members were still pummeling her. They begged and pleaded for them to stop but to no avail.

Finally, the police showed up and put a stop to the incident and the victim was then rushed to the hospital.

Unfortunately, she died of wounds shortly afterwards.

So far, Wal-Mart has not commented on the incident and it is unknown if any of the employees were arrested.

Obama will urge kids to go to private school
By: Scott Ott
Examiner Columnist
September 4, 2009

News fairly unbalanced. We report. You decipher.

A draft copy of President Barack Obama’s planned September 8 address to America’s public school children, tells students that “If you want to grow up to be like me, you should beg your parents to put you in private school, right now.”

Although Obama attended public school in Indonesia early in life, he soon switched to a private Catholic school, and from fifth grade through graduation went to a private college-prep school in Hawaii. His own daughters now attend a private school in Washington D.C..

“Do you think you’re going to get into Harvard University with your one-size-fits-all public school diploma?” the president will reportedly say. “Come on! Don’t make me laugh. You’ll be lucky to survive through graduation. Seriously, you gotta get out of this mediocrity machine. Go ahead! Get up right now. Run for the door. What are you waiting for?”

While the White House would not confirm the content of the leaked speech draft, a spokesman acknowledged that “You don’t get to be as smart and cool as Barack Obama by sitting in P.S. 152, listening to some union lackey droning on, and then eating government surplus in the cafeteria.”

On Tuesday, the president will bypass parents, taking his message directly to kids in the classroom “in hopes that you’ll pester Mom until she gets a second job to pay private-school tuition so you can escape the swirling vortex of ignorance and despair that is our government-run school system.”

“The only thing standing between you and success,” the president will allegedly say, “is the mentality that the government will take care of you. Once you shake that, there’s no limit to your achievement. Pay any price. Bear any burden. Just get your fanny out of that fiberglass chair, go buy yourself an Oxford shirt, a pair of slacks and a clip-on tie, and go to a place that faces constant economic pressure to improve.”

I went to Long Island this lovely weekend. Nice day of swimming on Saturday, then it turned too cold…

On my way back, I stopped in Garden City, and made a wrong turn into one of the strip malls off of Old Country Road. The entire HUGE parking lot was empty. All stores except three - Toys-R-Us, Panera Breads, and one other - were empty of tenants and available for rent.

Doesn’t look like recovery. Looks rather like the beginning of the Depression. (Although, other sites were as busy as ever, so maybe it’s just this one unfortunate location?)

“Do you think you’re going to get into Harvard University with your one-size-fits-all public school diploma?”

Plenty of kids did, and didn’t have to pay for Harvard either. Sadly, it’s not how much you pay that will determine how well they teach you.

So is anyone around the SF Bay area seeing home price drops like the ones discussed in the recent Forbes “40 most stressful cities” series? Six out of the top twenty “most stressful” cities identified were in CA. Here are the year-on-year median home price declines (Q1 2008 through Q1 2009) for these cities in rank order:

San Francisco -42.7%
San Jose -42.3%
Riverside -39.9%
Sacramento -34.5%
Los Angeles -34.1%
San Diego -28%

In Depth: America’s Most Stressful Cities

To find the most stressful cities, we examined quality of life factors in the country’s 40 largest metropolitan statistical areas, or metros–geographic entities defined by the U.S. Office of Management and Budget for use by federal agencies in collecting, tabulating and publishing federal statistics. We looked at June 2009 unemployment figures provided by the Bureau of Labor and Statistics and cost of living figures from the Council for Community and Economic Research. We examined median home-price drops from Q1 2008 to Q1 2009 that were provided by the National Association of Realtors. Population density based on 2008 data from the U.S. Census Bureau and ESRI also factored. Last, we examined the number of sunny and partly sunny days per year, based on 2007 data from the National Environmental Satellite, Data and Information Service, as well as air quality figures, based on 2007 data from the U.S. Environmental Protection Agency.

© Sheldon Kralstein/iStockphoto
To find the most stressful cities, we examined quality of life factors in the country’s 40 largest metropolitan statistical areas, or metros–geographic entities defined by the U.S. Office of Management and Budget for use by federal agencies in collecting, tabulating and publishing federal statistics. We looked at June 2009 unemployment figures provided by the Bureau of Labor and Statistics and cost of living figures from the Council for Community and Economic Research. We examined median home-price drops from Q1 2008 to Q1 2009 that were provided by the National Association of Realtors. Population density based on 2008 data from the U.S. Census Bureau and ESRI also factored. Last, we examined the number of sunny and partly sunny days per year, based on 2007 data from the National Environmental Satellite, Data and Information Service, as well as air quality figures, based on 2007 data from the U.S. Environmental Protection Agency.
…
16. San Diego, Calif.

This coastal metro posted a 28% year-over-year median home price drop. The cost of living doesn’t make things easier: it ranks as the sixth highest in cost of living among the 40 metro areas we examined.
…
15. Sacramento, Calif.

With a June unemployment rate of 11.6% and a year-over-year median home price drop of 34.5%, it’s a good thing the number of sunny and partly sunny days in the Sacramento metropolitan areas is high, measured at 265 days in 2007.
…
12. Riverside, Calif.

The unemployment rate in the Riverside metropolitan statistical area in June was the second worst in the country at 13.7%. Its year-over-year median home price drop ranks as the fourth worst at 39.9%. Its air quality ranks as the third worst, giving residents many reasons to stress.
…
10. San Jose, Calif.

San Jose’s year-over-year median home price drop was 42.3%, making it the second most stressful city in this category after San Francisco. Unemployment is also high, at 11.8% in June, not making for a good match with its high cost of living–ranked third.
…
6. San Francisco, Calif.

The Golden Gate city takes the No. 1 spot for its 42.7% year-over-year median home price drop. It holds the No. 2 spot for high cost of living. Its sunny weather and good air quality, however, lower its rank on the stressful cities list.
…
2. Los Angeles, Calif.

Despite its warm weather, Los Angeles proves to be the second most stressful city due to its population density of 2,732 people per square mile and its fourth- highest cost of living. It ranks eight in year-over-year median home-price drop, at 34.1%.

This does not look much like a green shoot, does it?

Anyway, looking on the bright side, the stock market is certain to have a very good day tomorrow!

Sep 8, 2009, 12:01 a.m. EST
Job outlook hits worst-ever level
Employers’ hiring plans at lowest point in Manpower survey’s history

By Andrea Coombes, MarketWatch

SAN FRANCISCO (MarketWatch) — Employers’ hiring plans for the upcoming fourth quarter dropped to their lowest level in the history of Manpower’s Employment Outlook Survey, which started in 1962.

A net -3% of employers said they’ll hire in the fourth quarter, down from -2% in the third quarter, on a seasonally adjusted basis, according to the Milwaukee-based firm’s survey of more than 28,000 employers. Before this year, the survey’s previous low point was a net 1% hiring outlook for the third quarter of 1982.

A year ago, a seasonally adjusted net 9% of firms said they would hire in the fourth quarter. The Manpower survey measures the percentage of firms planning to hire minus those intending layoffs. Manpower doesn’t measure the number of jobs. The survey’s margin of error is +/- 0.49%.
…

This is just so silly. The US stock market has proven its ability to rally again and again on either no news whatever or even terrible news. What could possibly stop this from continuing indefinitely?

Time to Reassess if Stocks Can Gain More

After a Big Run, Market Appears Vulnerable; Despite Happy News, Consumer Spending Lags Behind

BY E.S. BROWNING

As investors return from the Labor Day weekend, they are preoccupied with one big worry: whether the enormous stock rally of the past six months can continue.

The days after Labor Day historically are a time to reassess and evaluate. The bottom line is that after a series of positive surprises in economic and corporate reports has pushed the Dow Jones Industrial Average up 44% since March 9, the stock market remains on precarious footing.

As long as the happy news keeps coming, the gains can continue. But the more good news investors get, the harder it is to surprise …

This sounds like a dreadful malaise. Can one die from it?

* SEPTEMBER 8, 2009

Bonus Fever Continues Among U.K. Bankers

BY ADAM BRADBERY

LONDON — Most bankers based in the U.K. expect their bonuses to be larger in 2009 than in 2008 and haven’t experienced a change to their pay structures, according to a survey from eFinancialCareers.com, a financial jobs Web site.

The findings suggest that bonus season will show U.K. banks once again at odds with regulators and politicians, who are converging on changes to the way finance workers are paid.
…

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