Bits Bucket For November 5, 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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Fed Signals Return to Growth Alone Won’t Warrant Rate Increase.
Nov. 5 (Bloomberg) — Federal Reserve officials signaled a return to economic growth alone won’t warrant higher interest rates, saying an increase will instead depend on when the labor market and inflation pick up.
The Fed’s rate-setting Open Market Committee yesterday restated its pledge to keep rates “exceptionally low” for an “extended period.” The panel added for the first time that its commitment depends on “low rates of resource utilization, subdued inflation trends and stable inflation expectations.”
The comments prompted traders to reduce bets for an increase in borrowing costs in the first half of 2010, given that policy makers are focused on reducing unemployment that’s forecast to rise above 10 percent. The dollar weakened yesterday and short-term Treasury yields fell.
“There are still many downside risks to the recovery,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “The Fed looks to be on hold for longer than I thought,” possibly beyond the second quarter, he said.
I keep reading rumors that mortgage interest rates are going higher, but the Fed seems committed to “containing” interest rates for the foreseeable future. Can they keep mortgage rates incredibly low indefinitely, or will other considerations eventually trump the FOMC decision to squash mortgage rates?
Some of the language in the following article is quite irritating. For instance, mortgage rates did not autonomously “tumble” from 6% down to 5%. Why not just come right out and say the Fed is controlling rates through MBS purchases if that is the case?
Further, a lower supply of new (private) mortgages is an economic consequence of the Fed’s mortgage interest rate suppression program. The price investors get for supplying loanable funds to the mortgage market is the interest rate, and if the price is artificially manipulated below the market clearing rate, there will be a short fall of loanable funds supplied to the mortgage market.
One final thought here: The Fed may well be dropping hints here and there about plans to eventually exit the mortgage purchase program, but nothing they say here should be taken at face value, as one of their favorite games is to sow a wide range of beliefs about future intentions, in order to stabilize the bid distribution. A more relevant question is whether there are other factors which may force their hand in phasing out the mortgage interest rate suppression program.
Any questions?
Nov. 3, 2009, 10:47 p.m. EST
Investors see mortgage rates rising as Fed wraps up buys
Related stories
* Fed exit ideas give bond market heartburn (Nov. 4)
* Treasurys drop after Fed says will keep rates low (Nov. 4)
* Fed maintains promise to keep rates low (Nov. 4)
* Earnings, miners boost European shares (Nov. 4)
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Some bond investors are expecting mortgage rates to rise as the Federal Reserve finishes its planned purchases of nearly $1.5 trillion in mortgage-related bonds, yet another risk to the fragile U.S. recovery.
The central bank may address its plans to unwind this program, one of its biggest of forays into the private credit markets over the past year, in Wednesday’s policy statement. Read more on the Fed.
“Once we don’t have the largest incremental buyer of mortgages, who will step up to take that role?” asked Todd White, a bond portfolio manager at RiverSource Investments.
“It probably won’t be a smooth transition, assuming rates are near where we are currently.”
Since the central bank said nearly a year ago it planned to buy up privately held mortgage-related bonds, eventually becoming the largest buyer of mortgage-backed securities, mortgage rates have tumbled to just over 5% from more than 6%. See related story.
Fed officials and many economists credit the Fed’s plans to buy $1.25 trillion in mortgage-backed securities and $200 billion in debt sold by Fannie Mae (FNM 1.09, -0.06, -5.22%) , Freddie Mac (FRE 1.18, -0.06, -4.84%) and Ginnie Mae, for weighing on rates. It’s already finished the bulk of the purchases, expected to end in March.
Other factors also helped improve dynamics in the mortgage, including a lower supply of new mortgages.
Still, given the size of the Fed’s role in this obscure but huge market, which makes up about a third of all U.S. bonds outstanding and takes up a sizable chunk of most bond mutual funds, they are worried that the Fed won’t be able to engineer a graceful exit. Any sharp rise in rates could cut off the tenuous recovery in the nation’s hard-hit housing market.
“Everyone is sitting there looking at the door,” said William Chepolis, who helps manage the DWS Strategic Income Fund (KSTAX 4.57, +0.01, +0.22%) .
“We have a lower position in the mortgage market than we have [had] in two years because I just don’t think these prices are sustainable. There will be an upward adjustment there and mortgage will follow.”
Even Pimco’s Bill Gross has busily sold off his mortgage-related securities after earlier recommending investors buy what the Fed is buying.
…
Didn’t Australia and Norway just signal US borrowing rates may not be able to be kept this low much longer? Or do other central banks have to have continued increases in interest rates before they weigh on US rates?
Funny man Jon Stuart poking fun at Hillary Clinton. http://twurl.nl/4xh3u0
The Fed has reiterated its policy of pumping money directly into the housing market. Please remind me why propping up housing prices (by pumping money directly into the mortgage market) does not constitute price fixing? Isn’t that sort of thing illegal for private organizations like the Fed?
Press Release
Federal Reserve Press Release
Release Date: November 4, 2009
For immediate release
…
To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
It seems to me that a couple of years ago we were talking about $5 trillion in MBS. I wonder if the buyback will make a dent in the losses. Not to mention the losses in CDSs.
But maybe this slow unwinding and the false hope that it engenders is a good thing for people in the long run. Even though house prices won’t come down for a long time, could we avoid a Depression? Before I thought not, but now I’m starting to wonder. Time will tell.
Credit default swaps have limited terms and I think (emphasis on think) that they do not usually match the term of the bond they are allegedly hedging. So just waiting a bit actually works to unwind the risk from the swaps. If someone wants to actually hedge the risk from owning a particular bond, they will have to pay more to do it now that folks are aware of the shakiness of the bond. Same thing for people who were just betting that a bond would have a default even without being exposed to it - they will have to pay more. This increased price, will, presumably lower the volume of speculation.
If the bonds don’t defualt before the CDS term ends, then one party has paid and the other party has received the small payments that are equivalent to insurance premiums on the bonds, but no one has paid out and no one has received the large payment that would have happened in a default event. Shouldn’t be a big deal at all.
Now, if the bonds start defaulting at a time when the orgs that actually own them can’t afford to buy credit default swaps to protect themselves, there will be large losses somewhere in the financial system. CALPERS, watch out.
By pushing down interest rates, the Fed is not only interfering in the housing market, by putting a financially-engineered floor under home prices, but also in the derivatives market, by changing the outcome of bets on the direction of housing prices. The resulting wealth transfer effects just have to be massive.
Is part of the Fed’s job deciding on the winners and losers in financial markets? Because it appears they have assumed this role. Have they done the same in previous housing busts, or is it different this time?
Agreed. I’m sure that the people who price this stuff now, are taking wild guesses at what they thing the Fed will do.
Not sure if they realized how vulnerable they were to this level of interference before.
I won’t ever pretend to fully understand the derivatives market, but it’s zero sum, right? What’s the grave concern if there’s a winner for every loser? I know they talk about “netting”, and the threat of some sort of domino effect, but why not just see what happens, and, if there’s some sort of calamity, force the crooked gamblers who win to prop up those who lost in their gigantic incestuous circle jerk? Furthermore, it appears the derivatives market continues, unregulated. Not much has changed at all, with the exception that perhaps the betting has moved on from overpriced houses to some other scam. I’m with Professor Bear in that it looks to me like the fat cat bankers and politicians are picking winners and losers.
What’s the grave concern if there’s a winner for every loser?
To answer your question - I think the main problem is that the same entities that invested in these derivatives - JPM, Citi, etc., also hold a whole bunch of bank accounts. Since their profits and losses are pooled together under the same company, if they have massive investment losses through derivatives (some other company’s gains) they have to take away profits (or assets) from the banking side - they can’t just let the investment side of their company declare bankruptcy and leave the banking side alone. If the losses are too big to absorb by the banking side then the whole company goes under, and takes the bank account assets with it.
That’s my understanding anyhow.
Meant to add - that was the whole problem with undoing Glass-Steagall. That meant that retail banks could not only use OPM for their investments (something that had always been done by banks even before Glass-Steagall), but they could now be very risky investments like equities and derivatives and such.
Most people didn’t realize that the $10,000 that was supposed to be in their bank account was actually invested in $1,000,000 worth of risky stuff; and if the investments failed they were hosed.
(In reality the $10k people were OK due to the FDIC - it’s the $2M account holders that had their money invested in $1B worth of investments that were the real problem)
“Agreed. I’m sure that the people who price this stuff now, are taking wild guesses at what they thing the Fed will do.
Not sure if they realized how vulnerable they were to this level of interference before.”
Perhaps this is an oversimplification, but it appears to me that US asset price levels are largely determined by Fed manipulation of the market, with guesses about future whims of the FOMC playing a secondary role. Fundamentals matter very little in this kind of a policy regime.
Does the Fed have a mandate to control asset prices, or did they just seize on the opportunity when it seemed expedient for them to do so?
Regarding the implications of the Fed’s decision to trump market fundamentals in artificially prop up asset prices, I would like to recall the lesson of Colin Powell’s Pottery Barn Rules for the Big Iraq Attack:
“You break it, you bought it.”
The Fed has broken the back of the market’s ability to rationally price assets.
“What’s the grave concern if there’s a winner for every loser?”
Do you recall last fall when the previous CIC astutely pointed out in the MSM, “This sucker’s going down.” It’s not zero sum when a crash is underway; rather it’s a negative sum game, in which the Fed is playing an outsized, never discussed role in determining who the bagholders are and which bagholder loses the most.
I notice that whenever I suggest questionable activities by the Fed, there is a lack of response. Is this due to ignorance or fear?
“I notice that whenever I suggest questionable activities by the Fed, there is a lack of response. Is this due to ignorance or fear?”
Professor, even tenure folks are afraid to speak up:
http://sb4af.wordpress.com/
American Railcar profit plunges.
St. Louis Business Journal
American Railcar Industries Inc. said Wednesday that its third-quarter profit dropped to about a seventh of what it was a year ago as demand for railcars plummeted.
The St. Charles, Mo.-based company (Nasdaq: ARII) reported a profit of $1.1 million for the three months ended Sept. 30, down 85 percent from a profit of $7.4 million a year earlier.
American Railcar recorded revenue of $78.1 million in the third quarter, down 64 percent from $217.2 million in the third quarter of 2008.
American Railcar’s largest customer, CIT Group Inc. filed for bankruptcy protection Sunday. CIT accounts for more than a third of the company’s third-quarter revenue and more than half its backlog of 1,160 railcars as of Sept. 30.
But American Railcar Chief Financial Officer Dale Davies said his company has spoken with CIT representatives, who assured them it will be “business as usual” as they continue to pay their bills and American Railcar continues to build railcars for them.
Maybe mr buffet should buy them out too?
Trains are so cool. Why not?
Not only are trains cool, but his dad did not give him enough trains when he was a wee lad.
Is CIT Group the same CIT that just filed for bankruptcy? Or is it a different CIT? And what would a bank want with railcars, except to house their newly homeless ex-employees?
Didn’t you hear? Buffett just bought a whole buncha trains. Now everyone wants one.
Nice post wmbz…Watching companies that build stuff that moves stuff is about as good a indicator as any other…
FHA delays the release of disputed audit of its finances.
Washington Post
Thursday, November 5, 2009
The Federal Housing Administration abruptly delayed the release of a long-awaited independent audit of the financial soundness of the agency, citing potential problems with the accuracy of some of the study’s economic models.
The audit, compiled by Integrated Financial Engineering of Rockville, was scheduled to be released Wednesday, and the agency’s top officials planned to brief reporters on its results.
But on Tuesday evening, the agency postponed the event, saying the report had yet to be finalized. In a separate statement Wednesday, FHA Commissioner David H. Stevens said the delay was related to economic scenario tests that the agency requested “above and beyond” what was originally to be included in the audit so that the FHA could “better understand a broader range of risk scenarios.”
“Based on these results, we raised questions about the accuracy of IFE’s modeling, and IFE therefore advised us that we should not treat the report as final,” Stevens said. “IFE is now running additional tests to ensure that the final report is accurate.”
Fannie Mae deja vu all over again already?
More time to cook the books.I guess the govt doesn’t mind sending 8000 checks to all the crooks who claimed the first time buyer credit.Obvious fraud and they still extend the credit, amazing.
“But on Tuesday evening, the agency postponed the event, saying the report had yet to be finalized.”
Translation: there’re still some numbers that need to be manipulated.
“…citing potential problems with the accuracy of some of the study’s economic models.”
Darn models just won’t give the ‘accurate’ answers they want.
Oh geeze. What a bunch of liars. What do hypothetical scenarios have to do with a freaking audit?
Well, when FHA wants them to use a 5-10% default rate but the auditors want to plug in 20-25% into their model, the difference could be between a semi solvent, almost “bail-out-able” company versus a completely insolvent/bankrupt company.
Just guessing on this but that is likely one of the major issues. Their models were so good the first few times around, I think we should just let FHA use whatever numbers they want.
(Sigh.) Whatever happened to the Hope and Change that was supposed to come last January?
Hope evaporated. All hopes do. That’s why hope is the most useless word in English Language. No action required, just hope and all will be all right. That’s the new American dream.
As for Change - Obama promised a change, and that’s what I got, a few change in my pocket.
Obama promised a change, and that’s what I got ??
Awh, what the hell then…Lets go with what works…Lets invade Iran, create another massive Fed bureaucracy (USDHS), and push oil back up to $140. per barrel so we can transfer the nations wealth to Dubai & Texas…
So Obama lowered the oil price down to 80? That is news to me.
Thank you Obama, my lord and savior!
Why do you assume any criticism of your God is automatically translates into support of another God you dislike. You’re playing a child’s game my friend. Left vs Right and Dummies vs Pubies is nothing but a child’s play designed for masses.
I suppose you are so knee deep worshiping Obama, you can’t even see that, no?
No…Its your narrow thinking that expects 8 months of “change” to undo 8 years of recklessness with the bill now due…
“Left vs Right and Dummies vs Pubies is nothing but a child’s play designed for masses.”
So why are you engaging in it here?
“…and that’s what I got, a few change in my pocket.”
Pull your hand out of your pocket…or are you trying to create “change”?
I got a little change in my pocket goin’ jing-a-ling-a-ling
Wants to call you on the telephone baby, a-give you a ring
But each time we talk, I get the same old thing
Always no hugg-ee no kiss-ee until I get a weddin’ ring
My honey my baby, don’t put my love upon no shelf
She said don’t hand me no lines and keep your hands to yourself
Fears of a New Bubble as Cash Pours In.
Real-Estate, Stock and Currency Markets, Especially in Asia and Pacific, Are Seen at Risk. ~ WSJ
Concerns are mounting that efforts by governments and central banks to stoke a recovery will create a nasty side effect: asset bubbles in real-estate, stock and currency markets, especially in Asia.
The World Bank warned Tuesday that the sudden reappearance of billions of dollars in investment capital in East Asia is “raising concerns about asset price bubbles” in equity markets across Asia and in real estate in China, Hong Kong, Singapore and Vietnam. Also Tuesday, the International Monetary Fund cited “a risk” that surging Hong Kong asset prices are being driven by a flood of capital “divorced from fundamental forces.
“Fears of a new bubble” makes it sound as though there is a risk of a bubble inflating again at some indefinite point in the future. Open your eyes and look around, central bankers:
THE FRANKENSTEIN BUBBLE OF YOUR OWN CREATION ALREADY LIVES!!!
If central bankers were weather forecasters, they would forecast sunny skies without ever bothering to look out the window to check whether it is raining outside.
The word ‘bubble’ is used over and over, the largest ‘bubble’ bar none is the fiat currency bubble. In particular the worlds reserve currency the U.S. dollar. Wonder when that bubble will burst?
Keep printing & pumping boyz!
Senate throws a lifeline to the jobless.
Lawmakers pass bill extending unemployment benefits by up to 20 weeks. Legislation also extends homebuyer tax credit into next year.
NEW YORK (CNNMoney.com) — After weeks of partisan debate, the Senate voted on Wednesday to lengthen unemployment benefits by up to 20 weeks and to extend the $8,000 homebuyer tax credit.
The closely watched legislation would extend jobless benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% would receive an additional six weeks. The proposal would be funded by extending a longstanding federal unemployment tax on employers through June 30, 2011.
The measure would apply to those whose benefits will run out by Dec. 31, which is nearly two million people, according to Senate estimates. Those whose checks have already stopped would be able to reapply for another round.
The vote was 98 to 0.
“With 15 million Americans still unemployed and vying for just three million available jobs, we did the right thing today by passing this bill and doing it in a fiscally responsible way,” said Sen. Max Baucus, D-Mont., who helped craft the bill. “Today, we gave unemployed Americans the chance they need to get back on their feet, get through this tough time and get working again.”
Sounds like a good plan (not). Fund unemployment cheques by increasing the cost of hiring and keeping employees.
I, for one, think it’s a good plan in that it keeps a subsistance level of cash flowing.
“Subsistance (sic) level”? You do realize that the personal savings rate is still near historic lows right?
Cash flow is one thing that is *not* a problem. Debt levels and productions levels are the problem - and extending unemployment benefits serves to exacerbate both.
Cash flow is one thing that is *not* a problem.
Really?
There are plenty of businesses of all sizes that would disagree with you …
packman, I generally agree with you, but I really don’t understand your point here.
Cash-flow _is_ a problem, for those with no jobs, and whose unemployment is just about to be cut off.
You have your short-term view, I have my long-term view.
Our economic growth over the past 30 years or so has been driven mostly by increase in cash flow, but as fueled by debt an not actual increases in productivity.
IMO the best thing for us is to get back to economic growth that’s fueled by productivity, with the goal of increasing savings not increasing debt.
And IMO using debt to incentivize unemployment is not the way to do it.
Sorry to be such a cold-hearted bastard.
FWIW - I was unemployed for 3 months last year as well.
30 years ago was 1979.
Let’s see.
No Microsoft Windows, not even a VisiCalc. No on-line banking, no on-line investing, no easy way to find the lower travel ticket prices except sit for two hours with a landline phone and phone book and call travel agents left and right.
Less accurate defense weapons, which means more collateral damage and more likely innocents killed.
No embedded software (PDAs, telecommunications products with cryptology to save your info, miniaturization).
30 year setback in disease research and eradication.
Want that back? I don’t.
We have improved efficiency vastly since 1979.
Cripes.
I didn’t say we didn’t produce things in the last 30 years, due to our debt.
Without all the debt we still would have had growth. Just a much smaller portion of it would have been in the financial industry itself.
Ever drive through a shopping area and notice how many bank buildings there are?
Even notice in most large downtowns how high the percentage of skyscrapers are banks?
Tons of wasted productivity. Resources that could have been used for other things but weren’t because it was all siphoned off via debt servicing.
It’s the same principle as home finance.
Case A: You could buy a new car right out of college and pay say 5% interest, then later buy a new car and finance it as well, etc. - all the way until retirement.
Case B: You buy a junker car with cash out of college, and don’t buy a new car until you’ve saved cash for it. You do the same for every car until retirement.
At some point there’s a crossover point - with case B during your life by paying cash you will have saved enough money to buy a new car with cash, whereas with case A you would still have to finance every new car, because you weren’t able to save as much money. From then on you continue buying new cars with cash, if you follow B.
When you retire - with case B not only do you have the same new-car-buying-ability as you did with case A, but you also have more savings than you would have with case A.
Who loses with case B? In the end the only loser is the banker who would have made his 5%.
Same principle applies macroeconomically. More debt doesn’t mean increased productivity - it just means that a larger percentage of productivity goes to the banking industry. Which means that there is actually *less* productivity in the non-banking industry than otherwise.
packman, I actually totally agree with almost all that you said.
The supposed growth of the last many years (not going to try to quantify the period exactly) has been fueled largely by increasing leverage instead of increasing productivity.
What I don’t understand is why you think that extending unemployment benefits tends to exacerbate the “debt levels” issue.
Is it because having some cash-flow instead of no-cash-flow allows the unemployed to continue to service some of their debts instead of wiping them away with BK?
What I don’t understand is why you think that extending unemployment benefits tends to exacerbate the “debt levels” issue.
Simple - unemployment benefits are funded directly through the government. Indirectly it’s from employers via payments to insurance - but if the insurance fund runs out (as it is in many states - e.g. CA with a big shortfall) it is funded to the states via new debt from the Federal government. So extension of the benefits payments increases this debt.
Ah. That makes some sense. I was thinking only of the individual-level debt, not the govt-level debt.
Technically you’re right packman, but you are mistaking the map for the terrain.
People without food don’t just don’t quietly go away.
“Let them eat cake” ring any bells?
In the meantime, it’s putting some kind of floor under a 75% consumer driven economy. Which keeps people from robbing and stealing from YOU.
Your experience based on 3 months of unemployment does not compare to being out of work for 6 months or longer. It’s literally a magnitude of difference.
“In the meantime, it’s putting some kind of floor under a 75% consumer driven economy. Which keeps people from robbing and stealing from YOU.”
BINGO!!
Have been seeing many, many more homeless/street people around our burg as of late. And oh yes, PLENTY of scary looking, shifty-eyed, jailhouse-tatooed thugs riding around on bicycles–cruising neighborhoods looking for that special someone they can part from their hard-earned property.
Question: What happens when the 20 week unemployment extensions run out?
DOC
Sounds like a good plan (not). Fund unemployment cheques by increasing the cost of hiring and keeping employees.
Would you prefer riots and looting?
This is a race against time, we may wind up with all scenarios playing out eventually.
Duration, duration, duration.
This merely delays those events vs. preventing them.
Is winter a better time for riots and looting? The folks who end up displaced by the actions probably would object, but the weather might cause the actions to take less time. Then again, water cannons could be much more deadly due to hypothermia risk in the winter but the threat of water cannons without actually useing them will be more effective.
Decisions, decisions, decisions…
Honestly guys, this is obvious. People who actually vote are among the long term unemployed this time. So the benefits get extended. Not hard to understand.
The same could be said about death, and yet we do all we can to put off the day we meet the reaper.
I am reminded of a friend in Mexico City. He was a member of the lower upper class, owned a business, net worth in the several million dollar range.
When things were really bad in the 90’s he dressed like a bum and drove a beat up VW bug to work. Once he arrived at the office he would change into an expensive suit to meet customers, etc. At the end of the day he changed back into a bum and drove home.
As others have said here, unemployment and welfare are for the benefit of the rich.
“When things were really bad in the 90’s he dressed like a bum and drove a beat up VW bug to work”
Mexico city? He’d probably need a “double” now. The movie “Man on Fire” was an eye-opener. Got to admit, I thought the Butt-bomb afforded the kidnapper was quite creative–and of course–well-deserved.
DOC
“With 15 million Americans still unemployed and vying for just three million available jobs,
I question these numbers.
“I question these numbers.”
I don’t.
To qualify my response: If the number of unemployed is incorrect it is because it is understated.
I agree, the unemployment number doesn’t count all the part timers, “self employed” (AKA commssion based folks) and “discouraged workers” who are also vying for those jobs.
AKA commssion based folks ??
+1….Many people are on very small base pay if any at all…
I don’t.
Maybe I question the premise of the number’s. It is a broad statement. There are plenty of jobs, just not enough people qualified to work them. That statement makes it seem like there arent enough jobs. Now if you say, there arent enough unskilled jobs, then I believe you.
There are plenty of jobs, just not that many liberal arts and unskilled “show up and move a box over there” type jobs…
“There are plenty of jobs, just not that many liberal arts and unskilled “show up and move a box over there” type jobs…”
I call B*lls&*t. There are not plenty of jobs. That’s easy for you to say, Step, with guaranteed gov’t employment. Yeah, sure, no layoffs in the services yet.
Case in point: my brother, who has been well-employed his entire adult life, and was well-qualified and educated (Masters Degree in CS) for his field, got laid off about a year ago. He has been unable to find a comparable job yet.
So I’m glad to see his unemployment get extended, so his kids get to continue eating.
That’s right.
Stop teaching history.
English, while you are at it.
If the English stopped teaching history would American syntax improve?
Downsizing (word used in place of layoffs) has happened to the military in the 80’s.
Yeah, there are “jobs” around here……..that pay $8-12/hr.
I’m able to relocate easily (no house, no wife, no local family, kids in college), so my search is nationwide. In the aerospace business the only people hiring are:
-The same low pay/crappy hours/badly managed places in Bumf##k, Egypt that were hiring three years ago.
-Government contractors, who mainly occupied with overhauling the US Army’s helicopter inventory.
(BTW……what kind of operation is Northrop Grumman running in Hagerstown, MD?)
All of these positions are wanting “experience in type”…….which means my resume gets culled in the first round.
And they start at a 50% pay cut, compared to what I was making at my previous job. I’ve taken “starting over” positions twice before, but I’m not going to displace 1500 miles (with no relocation assistance) to take a 50% salary cut working a job that sucks.
Unless of course, everybody else takes a 50% cut along with me. Which I think the PTB want, to make the US of A more “competitive”
Case in point: my brother, who has been well-employed his entire adult life, and was well-qualified and educated (Masters Degree in CS) for his field, got laid off about a year ago. He has been unable to find a comparable job yet.
I have seen a steady decline in wages in the CS field over that past 10 years. To me that says “jobs have not plentiful” in that field.
I’m seeing contraction in engineering finally. Listing and interest are at all time lows.
I don’t either I cant even get an Intern job with a record company that produces Little Stevens Underground garage because i am too old, and maybe too knowledgeable. they all want kids..
This is not fun anymore step, we are imploding
Then start a record company.
Even Pros have been dumbed down today. Lets see radio TV music all in my background. working with celebrities ditto, I am available (its only 15-20 hrs a week) a myspace and facebook and working on a website to promote rock and blues….and they want a kid?
Hang in there, NYCdj. Three of my friends who have been unemployed for various lengths of time (one for 18M+) have all found jobs in the past two months. Granted, they are part time jobs, but that might have been their preference anyway.
This is not fun anymore step, we are imploding
I keep meeting people who share your assesment. People who have parents, spouses, childrenm, relatives and friends who can’t find a job no matter how hard they try.
Thanks all….and Ben of course.
Its really good to know I am not alone. That no matter how nice i am or how well dressed at the interview, or how I am trying to keep up to date with all the new social media, or how much I would even work for free as an an intern. We have really mangled our country.
You may ask why work for free? My assessment is with all the resumes people get you need Current stuff on the top of it. So going back and taking free Microsoft office courses is great, especially if you need to pass a quick excel or power point test. Then the internship ( during the week) would be right there at the top of your employment history ..instead of a just being a free lance wedding dj
Four years no real offers even with MBA and 30-year excellent track record. Over 200 applications.
Its not steps fault…Its pretty common view with government employees…They are detached from the private sector in that the thought of being “laid off” NEVER crosses their mind…
Yeah I knew some career Army who were surprised when they were cut loose after the cold war ended, before their 20-year mark. Oops, time to reset those future plans!
Question these numbers all you want. Here on the ground in flyover country things economic are still heading south. The blip of activity that increased traffic a smidgen is now back to springtime doldrums. I just got my hours cut 20 percent. Guess the cats will have to hunt for their food one day a week. Happy holidays!
Where are you located Carlos4 ??
Located in Northern Ohio, but, according to customers, seems to be the same most everywhere in the Midwest. Zillow finally adjusting prices downward around here,but, numbers are still 10 -50 percent over real market prices.
Carlos OOPS……..
Nov 5, 3:57 PM EST
COLUMBUS, Ohio (AP) — Private air charter service NetJets Inc. says it will lay off up to 495 pilots nationwide because of a decrease in demand.
NetJets, which caters to companies and business executives, made the announcement Thursday. Chairman and CEO David Sokol said the decision was based on a comprehensive analysis of current and projected flight demand.
The layoffs will take effect Jan. 15. The company employs more than 3,000 pilots worldwide, with most of them in the U.S.
Spokesman Ted Lowen said about 100 of the furloughed pilots are from central Ohio.
NetJets is headquartered in Columbus, Ohio, which has been the base of its flight operations since the company began in 1964.
The company also has operations in New Jersey and South Carolina.
NetJets is a unit of investor Warren Buffett’s Berkshire Hathaway Inc., based in Omaha, Neb.
Even if that number is slightly off, it’s still a stunner. Maybe now the dittoheads that listen to Rush will stop with the “I worked hard, I have a job, why can’t they find a job” phone calls.
Even if that number is slightly off, it’s still a stunner.
With that, I do agree. Something has to be created. We (as a nation) are going to have to stop waiting for a job to come open. It seems like that’s all people are doing.
Here’s where it gets tricky. Globalization continues apace and new technologies will likely have higher barriers to entry - for the “average” worker at least.
Had globalization been further along when the Internet really exploded on the scene, it is likely that the 1990s dot boom here in the States would have been muted. Considering that the man on the street thinks that politicians created the Internet, it follows that they are now waiting for Washington to “create” the next big thing too.
When new technologies and new businesses do emerge, there will be much more global competition for them than there was circa ~ 1990.
With that, I do agree. Something has to be created. We (as a nation) are going to have to stop waiting for a job to come open. It seems like that’s all people are doing.
You are setting yourself up for the biggest blasting in the history of HBB.
You are setting yourself up for the biggest blasting in the history of HBB.
Why? Because of my view? It’s pretty clear manufacturing isnt coming back, so what else is there?
You are setting yourself up for the biggest blasting in the history of HBB.
Why? It’s pretty clear manufactoring isnt coming back. What else is there for the masses?
They are detached from the private sector in that the thought of being “laid off” NEVER crosses their mind…
Get enough bad evaluations and you dont get promoted, in the military, you could get riffed…..
I agree with Step in principle. When the J O B on a silver platter fails to fall on you, it is time to get creative. I expect most of us are able to make a job for ourselves given sufficient motivation. It might pay a lot less than what we are used to.
I remember my older BIL roosting at my dad’s house after loosing his job at the mill. My dad said “The first time I come home from work and find you sitting on the couch watching TV with a beer in your hand, you’re out.” Dad didn’t believe in unemployment.
I haven’t made up a job for myself in a while, but I know from experience that I can, as long as I can lift my hand and see to do it.
I am more along the side of we killed the opportunity for innovation. Try to do anything but store useless crap in your garage (ie- experiment) and see how fast code enforcement is breathing down your neck. Even if you come up with a great idea and get a patent the item will be in stores out of China before you can make it to production.
Another pet peeve is the software lockdown and requirement to attend college classes to learn it. Classes that cost mucho $ and have a really expensive book to boot. Meanwhile the class gets to learn at the pace of the slowest one in the class. We need software that works on a once a month payment for access to ALL software job related (pay to play library?). Pay a monthly fee of $30 and all the best is yours to dink around with. A community based cable channel (or Skype) with tutorials would go along way to ensure potential employees are up to date and knowlegable without the indentured student loans at the end of the experience. We must stop holding back our creativity and workforce based on lockdown of knowledge. If the will is there let them learn!
When new technologies and new businesses do emerge, there will be much more global competition for them than there was circa ~ 1990.
I know a lot of people are banking on this “next great thing” to save our collective necks, but when I tell them that when it does appear it will be offshored so quickly we won’t know what happened they get really pi$$ed and tell me that I’m negative.
“My dad said “The first time I come home from work and find you sitting on the couch watching TV with a beer in your hand, you’re out.” ”
Gotta say, that’s brilliant. What a great way to motivate…
And sure, if your dad was providing a roof over his head and food in his belly, why should he spend the day working on something your dad considers useful—whether it’s cleaning/home-improvement/what-have-you.
Sheer genius.
Even if that number is slightly off, it’s still a stunner. Maybe now the dittoheads that listen to Rush will stop with the “I worked hard, I have a job, why can’t they find a job” phone calls.
Obviously not, we have one posting here.
“The measure would apply to those whose benefits will run out by Dec. 31″
Heaven forbid that we have people out of work through the Christmas season. These idiots still believe that if they can keep the game going through the first several months of 2010 that things will have turned around, which they will of course but not up, down.
It does seem as if the pumping efforts have lurched into an even higher gear as of late. It is absolutely fascinating to watch them keep kicking all these cans down the road.
Tickerguy’s English translation of the FOMC statement. English translations follow the official FOMC statements and are in quotes:
Release Date: November 4, 2009
For immediate release
Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up.
“We successfully talked some people into rebuilding inventory and spending money they don’t have. Suckers.”
Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period.
“We don’t count the 29.9% interest rates that Citibank decided to charge its credit-card holders in this computation; but if we did that would be considered a good thing, since raping the consumer is positive for banks. Oh, and we’re a bank.”
Activity in the housing sector has increased over recent months.
“Four year olds and cats are cashing the $8,000 homebuyer credit, as the IRS has recently disclosed. This of course supports housing.”
Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.
“A huge number of people are out of work, those who have jobs are having their wages and hours cut, your house is still going down in price and Citibank just raised your credit card interest rate to 29.9%. This is all bullish for the economy, of course.”
Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales.
“We suckered a few of you, but most businesspeople have IQs larger than their shoe size, and refuse to play our game any more. As a consequence our attempt to hose them isn’t working out so well.”
Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.
“Fraud always works for a while. We can buy trash MBS, for example, and by doing so make things look better than they are. We can also ignore the real capital position of the banks that are under our jurisdiction, including those really big ones that shorted Gold in the futures market at $1,000 and now are way underwater. Never mind that little man behind the curtain, I AM THE GREAT AND WONDERFUL OZ!”
I believe the line was “I AM THE GREAT AND POWERFUL OZ.”
Whatever happened to that cartoonist who used to post here? I wish I could find a cartoonist who could draw a caricature of Ben Bernanke as the Wizard of Oz, pulling the levers from behind the curtain and projecting the thunderous voice from on high…
Really a better one would be the Mayor in “Nightmare before Christmas”…one face for Wall St, one face for Main St.
“I can’t make decisions by myself, I’m only an elected official!”
Two Face from Batman. Flip a coin to see what face to present.
Janus
ISTR seeing a cartoon with Greenspan as”The great and powerful Maestro.”
Didn’t he call himself “Kahuna Bear” or something like that? What did happen to him? Everybody loved his cartoons. They even got posted on other sites. He just disappeared. I think we should check a basement down on Maiden Lane to see if they have him.
You are correct. It was “Kahuna Bear”
Good one, Cobalt! Too bad the MSM won’t print it.
This depresses me.
From Democrat and Chronicle, Rochester, NY:
“Tonight, the Canandaigua City Council is slated to vote on preliminary plans for the proposed Steamboat Landing Hotel & Conference Center on the south side of Lakeshore Drive.
David Genecco, a Canandaigua businessman, wants to build the $20 million complex on the site of the existing Steamboat Landing restaurant and conference center.
A six-story hotel would be built just east of the restaurant in the first stage of the project, followed by an expanded conference center built over the restaurant and to its west. Plans call for construction to begin in the spring, with the new complex creating about 150 jobs.
Genecco is also a partner in another proposal before the City Council that calls for $140 million in complex apartments, townhouses and small stores on about 34 acres a short distance from the hotel but on the north side of Lakeshore Drive.”
What is wrong with having just a lake?
“What is wrong with having just a lake?”
Because rapists just have to rape, that’s why. Nothing incites a perverted lust in a developer like unviolated land. It makes them grit their teeth and grasp their members until their faces turn purple and they burst a blood vessel.
Is castration an option for this type? (OlyGal, we are waiting for you to weigh in here…)
I was always told that rape was a crime of violence and not of sex.
I think its the same way for developers.
The disappearance of Big V and Olympia Gal have me worried about the well being of the fairer bubble bloggers.
Yeah…
I have no idea what happened to Big V.
I’m also worried and suspect that Olygal might have gotten the swine flu from French Kissing frogs and cuddling those weird clams.
I did not know that Oly & Big V do not post anymore…Is that the case ??
Haven’t heard from them in awhile but I don’t know why. They may just be on an extended vacation? Or maybe they ran off together when some of the guys got a little too anti-female? (
Just kidding. I don’t see Big V sharing her attentions with frogs.) I just hope they haven’t been to Cleveland recently.
I’ve been half assuming Big V got herself a job. Can anyone comment?
The reference to French Kissing Frogs and cuddling clams was just a jab to see if I could draw Olygal out. She maybe a little burnt out or just plain pouting again.
We know you’re lurking OUT THERE little Ms Bugbreath !!
“on the site of the existing Steamboat Landing restaurant and conference center.”
Unviolated land?
Oh, sure. The old “she was asking for it” defense.
“on the site of the existing Steamboat Landing restaurant and conference center.”
That building is really small, and calling it a conference center is a stretch. It’s unviolated in comparison to the ‘artist renderings.’
Having grown up in NH, I understand how the tourism industry can be a major job generator. I think its natural for an area as beautiful as CNY to consider monetizing that beauty. I felt NH developments in general were done tastefully and added to the community. Portsmouth is a case in point. Obviously things got out of hand in Conway.
An interesting difference between NH, NY though is I never felt in NH that the general public was denied access to the scenic areas. There are some areas here where that is in question. Even after accepting state aid for clean ups and for fish stocking lake-side residents strongly feel it is “their lake” due to the astronimical taxes they are asked to pay. So I do feel the avg NYer may have more to lose when these developments move in than other locations. Also the tastefulness of said development has been pretty uneven in this state. It appears the oversight hasn’t been as restrictive.
To Portmouth, to Portsmouth it is a gallant town…..
And there we will have a quart of wine with a nutmeg brown, diddle down!
Our gallant ship the Mermaid, the Lion hanging stout
Will make us to spend there our sixteen pence all out!
This is not good for Rochester being a suburb of Syracuse.
America’s Fastest Dying Cities
8. Rochester, N.Y.
Net Migration Since 2000: -12,560
2008 Population (Est.): 206,886
Decline Since 2000: -5.7 percent
Change From 2007-2008: -0.2
2009 Market Home Value: $102,874
http://realestate.aol.com/pictures/finance/dying-cities?pg=4
Net Migration Since 2000: -12,560
It would be interesting to see net migration c. 2007-2008 when compared with the boom years. I have a feeling that migration has slowed to trickle.
I love to stop at the pier there and eat a hoagie from Wegman’s, sitting on a public bench and looking out over the lake. The rows of tiny boathouses are inspirational.
Progress seems always to be measured by increasing the tax base.
A Florida Lawyer Involved in a Scam of Hundreds of Millions of $$$? Oh, the Humanity!
BY JAY WEAVER AND AMY SHERMAN
jweaver@MiamiHerald.com
Scott Rothstein, the flashy Fort Lauderdale lawyer who investors say fleeced them out of hundreds of millions of dollars and whose partners say wiped out his law firm’s finances, is cooperating with federal investigators and identifying others who may be involved in his alleged scam, sources familiar with the probe said Wednesday.
Rothstein and his defense attorney, Marc Nurik — seeking to cooperate with the feds — disclosed details of his alleged Ponzi scheme to prosecutors, FBI agents and IRS agents at the U.S. attorney’s office in Fort Lauderdale, the sources said.
Investigators are not only looking into allegations that Rothstein bilked investors by selling them “fabricated” civil settlements, but also into accusations that he stole from his law firm’s financial operations and from clients’ trust accounts, the sources said.
Rothstein had secreted away millions of dollars into foreign bank accounts in recent months as he prepared for the possibility of fleeing, the sources said. It’s unclear how much — or if any — of that money could be available to repay possible victims.
Rothstein, 47, had left for Morocco on Friday as news of his alleged investment scheme started leaking around Broward County. He came back mid-day Tuesday to face a federal investigation and the loss of his Las Olas Boulevard law firm, Rothstein Ronsenfeldt Adler. The once high-flying firm, formed in 2002, has only $500,000 left in its bank account, a lawyer said.
Rothstein apparently drained vast sums of money from the firm, his partners say.
Most of the firm’s lawyers have agreed to forgo their paychecks due Nov. 13.
On Oct. 31, Rothstein sent his law partners a text message that indicated he was contemplating suicide, sunsentinel.com reported Tuesday night.
Rothstein mused that he had three options — kill himself, live life “on the lam as a fugitive” or go to prison and risk being killed there because he had made enemies, said the law firm’s co-founder, Stuart Rosenfeldt, according to the website. Rosenfeldt talked to Rothstein, urging him to “choose life.”
In court papers, the firm has accused Rothstein of secretly running a fraudulent investment scheme that sold falsified structured settlements from employment discrimination and whistle-blower cases to investors who were promised lucrative returns for fronting the payouts.
Rothstein’s investors had $500 million deposited in a Canadian bank on Oct. 23 and that money was gone seven days later, said William Scherer, an attorney representing 12 investors he says lost about $80 million. Among them: Rothstein’s neighbor, businessman Doug Vonallmen.
“I’m not surprised at those numbers given what I know about the case so far,” Scherer said.
Rothstein and his firm gave millions to politicians and charities across South Florida. Scherer said that Rothstein met some potential investors through the charities and gala functions and was viewed as a talented and charismatic attorney.
“…met some potential investors through the charities and gala functions and was viewed as a talented and charismatic attorney.”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
Add this to his “Who’s Who in America” updated profile:
“…secretly running a fraudulent investment scheme that sold falsified structured settlements from employment discrimination and whistle-blower cases to investors who were promised lucrative returns for fronting the payouts.”
“Rothstein mused that he had three options — kill himself, live life “on the lam as a fugitive” or go to prison and risk being killed there because he had made enemies…”
Take Door #1! DOOR NUMBER ONE!
$500 MILLION. I wonder how many jobs that might have created?
Oh wait, it was ONE.
“Scott Rothstein, the flashy Fort Lauderdale lawyer…”
Wonder where this greedy parasite worships?
Rogers Says Roubini Is Wrong on Bubbles as Gold, Stocks Rally.
Nov. 4 (Bloomberg) — Jim Rogers, the investor who predicted the start of the commodities rally in 1999, said that Nouriel Roubini is wrong about the threat of bubbles in gold and emerging-market stocks.
Many commodities are still down from record highs and equity markets aren’t on the brink of collapse, Rogers, chairman of Singapore-based Rogers Holdings, said in an interview on Bloomberg Television today. The price of gold will double to at least $2,000 an ounce in the next decade, he said.
Roubini, the New York University professor who warned in 2006 about the coming financial crisis, said on Oct. 27 that investors are borrowing dollars to buy assets and creating “huge” asset bubbles. Rogers said that he’s not buying stocks now, though he may buy more gold.
“What bubble?” Rogers said, when asked if he agreed with Roubini’s view. “It’s clear Mr. Roubini hasn’t done his homework, yet again.”
Roubini told a conference in South Africa last month that investors were doing “the mother of all carry trades” by buying assets with borrowed dollars. He said emerging-market equities are showing a bubble, that gains in some developing- nation currencies are becoming “excessive” and that the rally in oil is “not justified by the fundamentals.”
The MSCI Emerging Markets Index has gained 62 percent this year and crude oil has risen 47 percent.
‘That’s a Good Year’
Rogers countered Roubini’s arguments by saying that Chinese stocks and sugar, silver, coffee and cotton have all dropped from their historical highs by at least 50 percent.
When asked if gains made this year pointed to a bubble, he said: “It’s not a bubble if something is up 100 percent this year, but down 70 percent from its high. That’s not a bubble, that’s a good year. That’s a great year. Maybe it’s too high for this year, but that’s not a bubble.”
Yeah, whatever, Jim. What’re ya shilling these days?
Whenever a guy with a vested interest makes a pronouncement, I view it with a jaundiced eye.
“What bubble?” Rogers said, when asked if he agreed with Roubini’s view. “It’s clear Mr. Roubini hasn’t done his homework, yet again.”
The bubble must be fully reflated by now, as evidenced by bubble naysayers once again browbeating the doubters.
Should have said “green shoots doubters“…
As long as central banks are pumping fresh money into the markets commodities will go up, have to go up. Will they quit pumping anytime soon? I doubt it. Confidence in paper currency (and not just the Dollar) is eroding and people are heading for the exit. Beneficiaries is everything that can serve as a store of value including real estate. It is not so much that the value of commodities is going up, it is paper currencies going down.
As long as central banks are pumping fresh money into the markets commodities will go up, have to go up. Will they quit pumping anytime soon? I doubt it. Confidence in paper currency (and not just the Dollar) is eroding and people are heading for the exit. Beneficiaries is everything that can serve as a store of value including real estate. It is not so much that the value of commodities is going up, it is paper currencies going down.
What he said.
We are experiencing worldwide QE right now. It’s not that the fundamentals of commodities are improving, it’s that the fundamentals of paper currencies are eroding.
Let’s see:
Equities - not far off record highs, still very expensive P/E wise
Treasuries - at/near record highs
Commodities - near record highs
Precious Metals - at/near record highs
Real Estate - down from record highs, but still high historically
Being that pretty much every asset/investment class is expensive right now - are they really all in bubbles?
Or perhaps is it just that the common denominator in the measure of all these asset classes - paper money - is actually weaker than actually stated, e.g. via faulty CPI numbers?
Ditto. (and no PB, I won’t send you my worthless fiatscos)
Apparently, Mr. Roubini is smart enough that he doesn’t have to do homework.
Jim Rogers, the investor who predicted the start of the commodities rally in 1999, said that Nouriel Roubini is wrong about the threat of bubbles in gold and emerging-market stocks.
So - if I make a prediction and wait 10 years for it so occur (sort of) then I am a genius like Jimmy??? Give me a freakin’ break. Let’s look an inflation adjusted figures and he turns out to be a moron……
Gold bugs are to gold as real estate agents are to houses.
Shhhh! And don’t poke large ferocious animals with a sharp stick!
God I hate when you guys post SAT questions!
With apologies to alladinsane, I cannot understand why a blog based on the expected implosion of real estate thru Wall Street’s “creation” of products bringing $500,000 mortgages to every minimum wage worker has so many posters who ridicule gold.
Yeah, you cannot eat gold, you don’t really use it up like oil, and industrial uses are not significant. Yet, from the time of ancient civilizations, gold has been money. Gold is a store of value. What other way can humans have amassed wealth that transcended wars, revolution and economic collapses?
We all were very skeptical of securitization and option ARMS which promised mortgage liquidity to all and watched the whole system blow up. Now, why are many of these same people willing to watch tens of billions of dollars be created electronically? Our Federal Government has trillion dollar deficits as far as the eye can see, yet we are supposed to have hope that things will magically change for the better as taxpayers find wonderful new jobs paying substantially higher wages? The current shell game is no different then a bunch of people playing monopoly, and then one player decides to start writing “1,000″ on a piece of paper and expecting others to accept this new money for debts and purchases!
While bubbles are created when people mindlessly throw money at tulip bulbs, Las Vegas strip condo-hotel rooms, or globe.com stock shares, I believe much of the gold purchases are rationale investors influenced by the Jim Rogers and Peter Schiff’s of the world and don’t want to be holding what we believe may be the next subprime mortgage bond - the US dollar.
We have a long way to go. We have bailed out the tasseled loafers Rolex crowd on Wall Street. I agree with Susan A. If the benefits of financial innovation are what we see today, then let’s heavily regulate.
Roidy
P.S. Of course this will not happen. The brutal power that the rich hold over us is never more apparent. There will be more bailouts as needed.
“Wall Street Cries ‘Feed Me’ or World Will End: Susan Antilla”
Nov. 3 (Bloomberg) — In the musical comedy “Little Shop of Horrors,” a dangerous and gluttonous plant dubbed “Audrey II” signals its insatiable appetite for human blood with a baritone demand, “feed me.”
In the real-life Shop of Horrors, the evil plant is gone. In its place is our voracious financial industry, which has been partaking in menacing feedings while stirring up fear of the havoc to come if it doesn’t keep getting what it wants.
A year after the world’s banking system almost collapsed, you might think financial bosses would be agonizing over how they would be depicted in history books, and anyone with a job would be offering to stick around and clean up the mess for a pittance.
You’d be both silly and wrong, as we all know by now. Finance’s version of Audrey II is thrashing about with threats that, crisis or not, they’d better get their extravagant pay and light-touch regulation. Anything less and — real horrors — financial innovation will decline and the world as we know it will end.
We’ll get to that financial innovation silliness in a minute.
A poll of Bloomberg customers released last week revealed that 21 percent of traders, analysts and fund managers polled in the U.S. expect their 2009 bonuses to be bigger than last year. Another 24 percent expect their bonuses to be about the same, which is pretty good when you consider the employment woes of the rest of the nation. Frustrated taxpayers wonder how they got into a mess where $700 billion of their money went to bailing out people who today are poised to pocket record amounts in some cases (9 percent in the Bloomberg survey).
Argument Trumped
In the financial industry, though, the attitude of entitlement trumps any argument that there would be no job, no employer and no paycheck without the bailouts.
In fact, those Bloomberg customers said any limits on pay will boomerang. Asked “Do you think limits on executive compensation in the financial industry will do more to control excessive risk-taking or more to discourage useful innovation?” 65 percent of the ones working in the U.S. said limits on pay would choke innovation.
Knowing what we do about innovation in finance, we wouldn’t want that to happen.
Are there actually credible people worried that capitalism will be brought to its knees if restrictions on pay, and related reforms in regulation, are imposed on Wall Street?
Easing the Rules
NYSE Euronext Chief Executive Officer Duncan Niederauer, who is either tone deaf to the public’s disgust or secure in the belief that the public’s anger doesn’t matter, told the Wall Street Journal last week that he’s worried that regulatory changes in the works in Washington will determine whether New York City can compete in the world. I’m having a déjà vu moment. Didn’t we try, and fail, at the idea of ratcheting down our rules to the levels of competing countries?
The high standards of the Sarbanes-Oxley Act give “the perception of heavy regulation” on the NYSE, he said, and a proposed tax on securities transactions (intended in one bill to be used to refill the coffers Wall Street depleted) could have “disastrous consequences” for entrepreneurs trying to tap into the U.S. equity markets.
I’m glad Niederauer brought that up, because the notion of a smart person having a great idea and building a business to the point where it goes public is just what I think of when I hear the word “innovation.”
Talk of Innovation
I’m perplexed, though, when I ponder what Wall Street means when talking about innovation. That’s not for any lack of examples, but for an understanding of what Wall Street adds to the goal of smart allocation of capital when it does its innovating.
I get it when the tech geek huddles in a garage for three years with a couple of pals and comes up with a blockbuster idea that brings pleasure to consumers or profits to companies, and then takes the company public. But why am I supposed to be losing sleep that new rules might impede the creation of the new, new thing in tax evasion? Or high-frequency trading? Maybe a new flavor of collateralized-debt obligation bearing a delusional AAA rating?
If you sift through position papers of financial trade groups, there’s a lot of noise about the need for regulation. But read far enough and you hit that paragraph that explains why the writer’s constituents don’t need to be overseen with serious diligence.
And then, inevitably, you will meet with that foreboding warning that regulation will threaten innovation. In a “Dear Senator” letter published by the Financial Services Roundtable on July 8, politicians were warned that a proposed agency to protect consumers would “jeopardize the safety and soundness of many firms and stifle innovation by requiring firms to offer ‘plain vanilla’ products.”
I, for one, am willing to take my chances. Bring it on with your threats to force plain-vanilla investments on consumers. Wall Street, if you really want to frighten us, you need to do better than that.
(Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.)
To contact the writer of this column: Susan Antilla in New York at santilla@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601039&sid=afCVGLt3daN8
I, for one, am willing to take my chances. Bring it on with your threats to force plain-vanilla investments on consumers. Wall Street, if you really want to frighten us, you need to do better than that.
Bravo, and the horror of 20% down mortgages that must be held in majority by the lending institution and that CEO’s compensation must be tied to the performance of these loans.
Old Butch:
John was in the fertilized egg business.
He had several hundred young layers (hens), called ‘pullets,’ and ten roosters to fertilize the eggs.
He kept records, and any rooster not performing went into the soup pot and was replaced.
This took a lot of time, so he bought some tiny bells and attached them to his roosters.
Each bell had a different tone, so he could tell from a distance, which rooster was performing.
Now, he could sit on the porch And fill out an efficiency report by just listening to the bells.
John’s favorite rooster, old Butch, was a very fine specimen, but this morning he noticed old Butch’s bell hadn’t rung at all!
When he went to investigate, he saw the other roosters were busy chasing pullets, bells-a-ringing, but the pullets, hearing the roosters coming, could run for cover. To John’s amazement, old Butch had his bell in his beak, so it couldn’t ring. He’d sneak up on a pullet, do his job and walk on to the next one.
John was so proud of old Butch, that he entered him in the Renfrew County Fair and he became an overnight sensation among the judges.
The result was the judges not only awarded old Butch the No Bell Piece Prize but they also awarded him the Pulletsurprise as well.
Clearly old Butch was a politician in the making. Who else but a politician could figure out how to win two of the most highly coveted awards on our planet by being the best at sneaking up on the populace and screwing them when they weren’t paying attention.
LOL!! +100
HAHA!
Manhattan Retail Rents Drop Amid Rising Unemployment (Update2)
By David M. Levitt
Nov. 4 (Bloomberg) — Store rents in Manhattan fell in the third quarter in seven of 10 districts as unemployment and the recession cut spending.
Fifth Avenue from 42nd to 49th streets in Midtown was the hardest hit with rents falling 30 percent from the second quarter to $441 a square foot, broker CB Richard Ellis Group Inc. the broker said today in a statement. Retail rents on Fifth Avenue from 49th Street to Central Park, among the world’s most expensive shopping areas, fell 4.1 percent to $1,643 a foot.
U.S. shopping center vacancies hit a 17-year high in the third quarter as unemployment and cutbacks in consumer spending forced store closings, Reis Inc., a New York-based real estate research company said on Oct. 8. Rents fell to their lowest since the first quarter of 2007.
“We are seeing big-box discounters like T.J. Maxx and Kohl’s actively seeking space, because they have been drawn back by the unusually affordable rents,” Alison Lewis, senior managing director of CBRE Retail, said in the statement. “Landlords are being more flexible in offering short-term deals.”
…
1000 SQ FT and they usually include the bathroom and storage in that total equals $1.643 million a year or $4500 a day just for rent.
——————————————-
among the world’s most expensive shopping areas, fell 4.1 percent to $1,643 a foot.
Fed Chairman Ben Bernanke and his colleagues warned Wednesday that rising joblessness and tight credit for many people and companies could restrain the economic rebound in the months ahead. The Fed Funds rate remains one-quarter percent. That means the Federal Reserve is keeping its foot on the accelerator, inflating the money supply in the hope of pushing the economy into high gear.
The Fed is pushing on a string and is very nervous about its ability to heat up the economy. What has worked before is not having much effect this time.
It has taken nearly 70 years to get to this point. The damage can’t be reversed in only a few months.
“Everything we know about classic economic theory suggests the US economy should be experiencing Zimbabwe-like hyperinflation right now, thanks to the nearly $2.2 trillion(reported) the US Federal Reserve has pumped into the system.
“But we’re not… yet.” Keith Fitz-Gerald examines the reasons hyperinflation has not hit us…so far. One reason, he says, is banks are hoarding cash.
One reason, he says, is banks are hoarding cash.
Are banks really hoarding cash? It seems more like banks are buying commodities. Combotechie, I haven’t seen you saying cash is king in a long time. Have you changed your mind?
Cash is a prince, not a king. Build up enough reserves to fund your rent, food, clothes, travel, and entertainment for a year or more and you can fiddle like a grasshopper when you are unemployed.
I am getting lots of calls from headhunters for contract engineering these days. So I can see my field getting out of a dip. I had nothing for months. But lots of phone calls now.
Probably because companies laid off too many people. They aren’t secure enough to go back to formal hiring yet. Congrats Bill. You’re a temp.
But I agree on storing up a year of grasshopper fiddling.
“Combotechie, I haven’t seen you saying cash is king in a long time. Have you changed your mind?”
With thirteen $trillion of “wealth” disappearing, with the mortgage reset chart indicating a $trillion of mortgages will be reset in the coming next two years, with banks “extending and pretending” when it comes to their mortgages, with the bank regulators changing the rules as to what the term “underwater” means, with the towns broke, the cities broke, the counties broke, the states broke, and the country broke, with unemployment lines getting longer, with etc, etc, etc …
Yeah, I still think cash is king.
“Supply side” is dead. Until they figure this out, all they will create are zombies.
NPR’s “Market Place” gets it! I was amazed Wednesday evening to hear host Kai Ryssdal explain that measured in today’s dollar the price of gold 29 years ago was $2,200.00.
Today’s price is only half that, of course. With the spot price of gold nudging $1,100.00 expect lots of references to “record high” from media, except Rhyssdal. It’s a pity other reporters and commentators can’t also understand the inflation effect.
Look. When comparing prices over time the negative effect of money inflation must be taken into account or the comparison is worthless. Period.
Did you see my post yesterday, nobody answered it, but it made the exact same point.
My point was about it being an inflation hedge, but when you measure it in inflation adjusted terms its a loser, big time.
Comment by realestateskeptic
2009-11-04 12:19:32
So if we measure the ultimate inflation hedge in terms of inflation we get what:
“In January 1980, gold hit $834, or approximately $2200 in today’s dollars on an inflation adjusted basis. In early 1980, gold was seeing daily moves as high as 10% and was seeing six month gains as high as 170%.”
That coupled with the fact that at 1,100 ounce, it is worth two times as much per ounce as it actually takes to mine it, so there is incentive to get supply to match demand, real, imagined, manipulated, bubblized or otherwise.
A short term timing trade, probably. A look term investment, I don’t see how it makes any sense at all.
But it’s never gone to zero!
Wear it around your neck, depending on the location of your next flat tire…it might go to $0 rather quickly.
Wear it around your neck, depending on the location of your next flat tire…it might go to $0 rather quickly.
Depends on the nature. A $50 Buffalo piece will always have an absolute bottom value of $50, since it is legal tender. It won’t go to $0.
However that being said - $50 itself has no value if you’re stranded in the desert with a flat tire and no one to help you; doesn’t matter if it’s a $50 paper bill, a $50 gold piece, or a stock certificate worth $50; all would be worthless in that context.
What is its value to you if some takes it from you? (was Hwy’s intended meaning)
Well - in that case it still has the same value it did before. But it’s no longer *your* value - it’s the thief’s.
Wear it around your neck, depending on the location of your next flat tire…it might go to $0 rather quickly.
and so may your blood pressure!
lol Hwy
FWIW - the logic is bad, because gold’s run to $800 29 years ago was certainly a bubble. IMO if gold were $2200 today it would be a bubble as well. Personally - even as a strong gold proponent - my thumb-in-the air estimate of gold’s current worth is roughly $1,000.
Agreed, but do you short it, or do you think the irrational exuberance crowd will run right over you and kill your smart trade even though you “know” you are “right.” Eventually we can prove we are right but may run out of $$ long before that can take place?
The problem is that it’s virtually impossible to even begin estimating gold’s “fundamental” value. You can estimate the commodity value of it - i.e. its worth for electronics mostly, but that’s only probably about $200 per ounce or so. The rest of its value is derived from it use as a currency - including both current value and speculation of future value. That is based pretty much on where you guess things will go economically and politically.
As such - I don’t actually see even huge price gains as “irrational”; unlike real estate for instance - which does have an easily-estimable fundamental value. Because so much of gold’s price is by its nature speculative, and so much of speculation is big-picture estimation (essentially guesswork) and not rationale.
Basically it’s like long-term day-trading, with your inputs being not just investor sentiment, but also the sum of all economic conditions, plus the sum of all geopolitical conditions.
How can its commodity value be less than the cost of extraction?
Dude,
When markets don’t function properly, it is very common to see commodities selling for less than the cost of production. It is usually a short term condition as the market will correct. With energy, you have contango and other issues, but grains, natural gas and many others can trade below production costs for periods of time. Sort of reverse bubble that defies logic for a while.
Right now the average cost to extract an ounce of gold is $550. If you can sell it for twice that, wouldn’t you extract as much as you could as fast as you could. If everybody does this, then supply increases and prices should decrease back form $1100 and closer to $550, but markets are far from perfect and add in speculation and you get what we got.
Of course the commodity “value” could be considered very differently than what it trades for.
I understand all that, and I’m familiar with how much it costs at present to produce an ounce. Do you not think Pman’s commodity value guess above a little out of whack?
How can its commodity value be less than the cost of extraction?
Easy - if the reserves as such that it would take years, or decades, to consume it; which is the case with gold.
The cost of salt is very, very much less than the cost it would take to extract it from ocean water as well. But salt is cheap because there’s so much of it in reserve - in underground deposits easily extracted.
Right now the average cost to extract an ounce of gold is $550.
Per Wikipedia actually it’s $238.
Just below the recent $240 bottom price of gold incidentally; though presumably back then - in 2001 - extraction costs were probably a bit lower.
Great, now I am definitely shorting GLD…. not…. I don’t trust the powers that be and sheeple who will run off the cliff with them.
But gold IS money! It CAN’T be in a bubble! /goldbug rant.
Paging Aladinsane……Mr. Insane??????
He’s off visiting his gold stash in whatever foreign country he hid it in!
I’m thinking so many fence sitters have been beaten into the market that there may be a shortage of available housing market knife catchers next year.
The Biz Beat
Will tax credit for ‘move-up’ homebuyers spur you to act?
6:01 am November 5, 2009, by Henry Unger
Late Wednesday, the Senate voted 98-0 to extend the first-time homebuyer tax credit of $8,000 to April 30.
The Senate also took action to spur sales to “move-up” buyers, AJC reporter Bob Keefe writes.
Legislation, which still must be passed by the House, would provide a $6,500 tax credit for homebuyers, as long as they had been in their previous home for at least five years.
The tax credits would be limited to homebuyers who make $125,000 or less as an individual or $225,000 or less as a couple. The cost of the home being purchased may not exceed $800,000.
If these provisions become law, will it push you off the fence? Why or why not?
No, it won’t push me off the fence.
I don’t mind the $8K credit — they will quickly run out of buyers anyways. The $6500 for people in their homes five years — well, that’s not too bad either, as long as FHA/Fannie/whoever actually verifies income and primary residence.
However, I hope that the $6500 isn’t the first step on an incremental march toward that $15K for all.
It will be the start towards a larger credit, IMHO.
The Bailouts will get bigger and bigger as they try to draw in more fence-sitters and “bitter renters” into the wonderful world of debt. They have to - the Vampire Squid (banks) needs to grow, and to do that, it needs suckers.
But what if “move up” buyers only play half the game? Selling to take advantage of the propping efforts, but not following through with a buy - because of those exact same propping efforts?
Its my understanding that you only get it IF you buy. So if you sell and rent, no credit for you (although you might get a slightly higher sale price than if the government chose not to interfere).
“…although you might get a slightly higher sale price than if the government chose not to interfere…”
Sorry if I wasn’t clear. But your quote above was the point I wanted to make. As a likely seller early next year, I have to ask myself: “is it better to sell with this program in place, than without it?” and also “what is the likelihood of increases and extensions of this program in the future”?
So here’s a question. I’m getting paid quite a high salary right now, but because I”m on contract I’m on the hook for my own benefits. So my AGI is quite high, but after paying for my benefits would fall below the $125k cap.
Of course, due to the f’ed up tax law, one can only deduct medical expenses in excess of 2% of your AGI, so that’d be little help for me.
Not that I’m looking to buy a house, but is it just me or am I getting hosed here by the tax structure and the income caps on programs like these?
Yes.
Are you a W-2 or a 1099 drumminj? Depending on which you have some options. If W-2 you might be able to set up a medical reimbursement account. If 1099 you get a full write on page one of the 1040, not on the Schedule A. (The medical deduction is 7.5%, not 2% so you’re even more screwed.)
If you e-mail me at sd.re.b at hotmail dot com I can get some more info from you and maybe give you a couple hints to help out. The $125,000 is based on your AGI I assume, so there might be some other ways to get it down. (But don’t buy a house! The people truly getting hosed are the ones catching the falling knives for the benefits of the bankers.)
Thanks for the response, San Diego RE Bear. I’m a W-2 (recharging the unemployment insurance, and no self-employment tax…woohoo!).
I only started in july this year, so my income will be far below the cutoff for anything like this….and I’m obviously not looking to buy, was just commenting on how people in my situation get screwed by tax policies. Makes the healthcare debate even more silly. Just end the tax benefits to employer-provided health care already, and even the playing field!
Imho 8K is a very small amount of money when you consider buying a house which for most people is the largest purchase they will ever make. I would not even take it into consideration. To me personally it is about the deal, price, and location. In this market most people can negotiate an 8K price reduction without any problems. Just my two cents.
I agree with that. When I bought the 8K didn’t enter the calculation at all.
…but there is a caveat. Those with no pot to piss in can use the 8K as downpayment, which props up the sales prices up to about 266K.
Is it just me, or does the idea</a. that a “fence sitter” would be incentivized by an $8K credit to purchase a “move-up” home with an $800,000 loan seem preposterous to others? Perhaps I am just confused about the whole “affordability” concept…
Sorry for the misfire. I was referring to the following passage in the piece linked to my previous post:
The Senate also took action to spur sales to “move-up” buyers, AJC reporter Bob Keefe writes.
Legislation, which still must be passed by the House, would provide a $6,500 tax credit for homebuyers, as long as they had been in their previous home for at least five years.
The tax credits would be limited to homebuyers who make $125,000 or less as an individual or $225,000 or less as a couple. The cost of the home being purchased may not exceed $800,000.
Never mind the 8K..just the idea that homebuyer who makes $125K is allowed to buy an $800K house is preposterous. Even the working couple at $225K is risking it. If one spouse loses a job, they are really hosed.
Conundrum = “If one spouse loses a job, they are really hosed.”
Yes and when considering a two income household, they have twice the chance of losing one of their jobs.
when considering a two income household, they have twice the chance of losing one of their jobs.
That’s not really accurate– if the probability of the first spouse losing a job in any given year is p, and the probability of the second spouse losing a job in that year is q, then (assuming the events are independent) the probability of losing both jobs in that year is pq. The probability of losing one or more jobs is
pq + p(1-q) + q(1-p) = 1 - (1-p)(1-q) = p + q - pq
while the probability of losing exactly one job is
p(1-q) + q(1-p) = p + q - 2pq.
For small values of p and q, the pq term can be neglected and your original statement is approximately correct.
[Sorry, I guess I've been reading too many Prof. Bear posts.]
“…That’s not really accurate– if the probability of the first spouse losing a job in any given year is p, and the probability of the second spouse losing a job in that year is q,”
What if they both work in real estate?
Good point. And actually, the two jobs are not all that independent, especially if the spouses met each other in a work-related event.
Job loss probabilities are not independent, as the economy is COUPLED.
“Is it just me, or does the idea</a. that a “fence sitter” would be incentivized by an $8K credit to purchase a “move-up” home with an $800,000 loan seem preposterous to others?”
Preposterous? Not at all!!
I can see em’ now, ready trade-up from that over-priced POS they bought in 04′…once again oogling over the shiny, sparkly decor draped over the freshly-re-spiked punch-bowl. Only this time–spiked with LSD and a pinch of that new drug they give PTSD sufferers–to forget past trauma. Hot-tub’s ready too!! Jump right in Stupid!! Never mind its boiling-hot and teaming with heat-insulated piranhas!!! Bon’ appetit’
DOC
Please explain the insane notion that offering tax credit to buyers of $800,000 homes will some how help the jobless. What kind of two-bit whore economists does the Congress rely on to come up with these ideas?
Congress set to clear aid to jobless, homebuyers
By JIM ABRAMS (AP) – 4 hours ago
WASHINGTON — Congress is one vote away from sending the president legislation that continues aid to more than a million jobless people and extends tax breaks to hundreds of thousands of prospective homebuyers and struggling businesses.
The legislation, recognizing the lingering distresses of the recession, passed the Senate Wednesday on a 98-0 vote and could come up in the House as early as Thursday, sending it to President Barack Obama for his signature.
House Majority Leader Steny Hoyer, D-Md., said the bill was “vital to Americans who have lost their jobs as a result of the deepest recession in over three-quarters of a century.”
…
The unemployed will be able to get jobs as bankruptcy/credit repair advisors?
Or as loan brokers for all those foreclosures still on the banks’ books.
The two things have nothing to do with each other. The housing tax credit was an amendment tacked on to the unemployment extension bill.
How are they going to reflate the housing bubble if they discriminate against flippers?
How to apply for homebuyer tax credit
By The Associated Press (AP) – 4 hours ago
The Senate has voted to extend and expand a popular tax credit for homebuyers that was scheduled to expire Nov. 30. The House is expected to schedule a quick vote on the bill, part of a package that also extends unemployment benefits for people out of work more than a year. How the homebuyer tax credit would work:
___
Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.
800K? Why not 8M, it’s only a small leap (in the absolute number of people covered) to go from 800K to 8M.
What are these people thinking?? 800K? That’s so crazy high that it leaves me at somewhat of a loss for words. So, now we’re deeply in the business of subsidizing people making over 1/4 of a MILLION dollars a year? Seriously?
My head hurts thinking about it.
Yes that 1% credit is really going to motivate the 800,000 home buyer. ??????????
How are they going to reflate the housing bubble if they discriminate against flippers?
That will be the next iteration.
Yes! A $20k credit if you can flip it before closing. Also, a $10k voucher redeemable for travetine tile, granite countertops, and stainless appliances. $5k credit to you if you can get your brother-in-law to buy a house with an additional $1k for everybody he refers. MLM meets bailout/stimulus. Instant reflation.
What about second homes?
The credit will probably be extended to flippers and specuvestors the next time it is scheduled to end.
The knifecatcher encouragement program has been renewed.
The Biz Beat
Power Breakfast: Senate OKs unemployment extension and home-buyer credit, major toll projects, CNN, Toyota, Intel
5:34 am November 5, 2009, by Henry Unger
When Democrats and Republicans want to work together, they certainly know how.
The U.S. Senate late Wednesday unanimously passed legislation extending unemployment benefits and also significantly expanding a homebuyer tax credit that was championed by Republican U.S. Sen. Johnny Isakson of Georgia, AJC reporter Bob Keefe writes.
…
“…that was championed by Republican U.S. Sen. Johnny Isakson of Georgia”
Won’t get a Christmas card from Rash Limpbaughs, more lost eBay money for Isakson family.
I-Suck-Son is has been taking envelopes from builders for years as has KayBeetleBailyHutchinson. Hutchinson+Centex=Corrupt.
Wall Street bonuses seen up 40 percent in ‘09:
(Reuters) - Wall Street cash bonuses are set to increase by about 40 percent this year, the Wall Street Journal said citing a report by compensation consulting firm Johnson Associates.
In a report to be released later on Thursday, Johnson Associates projects that the biggest increases in year-end cash bonuses and equity awards will go to employees in rebounding businesses such as fixed income and equities, the paper said.
However, those working at hedge funds, private-equity firms and prime-brokerage operations would see a decline in their incentive pay to the tune of 15 percent to 30 percent because of lower return on investments, the paper said citing the report.
Bonuses typically comprise the bulk of annual compensation for the highest-paid Wall Street employees.
Johnson Associates’ compensation report would come at a time when huge pay packages for banks and other financial firms have ignited public anger.
Oops — I guess the House has to vote on the knifecatcher encouragement program before it is renewed.
Question for the economic historians in the virtual room: Has Uncle Sam acted to put a floor under housing prices in previous housing busts?
U.S. House May Vote Today on Homebuyer Credit, Jobless Benefits
By Brian Faler
Nov. 5 (Bloomberg) — The U.S. House may vote as soon as today on a $45 billion plan to expand a tax credit for first- time homebuyers, extend jobless benefits and provide tax refunds to money-losing companies.
The measure won Senate approval yesterday on a 98-0 vote, and House passage would send it to President Barack Obama for his signature into law. House Majority Leader Steny Hoyer, a Maryland Democrat, said the chamber may act on it today.
The plan would be the first major extension of provisions in February’s economic stimulus plan. The $8,000 homebuyers’ tax credit, slated to expire this month, would continue until April 30, and be expanded to include people with higher incomes and some who already own homes. That would cost about $10 billion in the fiscal year that began Oct. 1, according to Congress’s Joint Committee on Taxation.
…
Being that the senate vote was 98-0, I’ll bet the house vote is 434-1.
(Guess who the 1 is)
Do you mean our Dennis will vote NO?
Dennis as in DennisN? Is he a rep?
Ron Paul.
Isn’t he in the Senate?
PB - shame on you. No, he’s a Rep (14th Texas). Otherwise there’s no way that bill would have gone 98-0 in the senate.
“Otherwise there’s no way that bill would have gone 98-0 in the senate.”
Unless my math is off there’s two no-shows. Maybe the swine flu only affects housing bears and the two senators who didn’t vote were home recovering?
(How do we get RP into the senate so he has at least a 1% influence instead of an .2299% influence?)
Just bust up the too-big-to-fail trusts, and the other details of banking regulation would be inconsequential. So long as the too-bigs are big enough to capture their regulators, it doesn’t matter whether regulatory authority is vested in the Fed, the WH or the Mayberry Police Department.
* NOVEMBER 5, 2009
Clash Looms on Banks
By DAMIAN PALETTA
WASHINGTON — A key Senate lawmaker is readying legislation that would dramatically redraw how the financial system is regulated, setting the chamber on a collision course with both the House of Representatives and the Obama administration, which have championed markedly different approaches.
The bill, which is being readied by Senate Banking Committee Chairman Christopher Dodd (D., Conn.), would strip almost all bank-supervision powers from the Federal Reserve and Federal Deposit Insurance Corp., according to people familiar with the matter. In their place, the bill would create a new agency in charge of supervising all banks and bank-holding companies, even the country’s largest and most complex institutions.
Mr. Dodd’s proposal also would create a powerful council of regulators, overseen by an independent White House appointee, charged with monitoring risks to the financial system.
…
If you think having a bank regulator under more direct control of Congress than the FED is a good idea, review history, and read this article:
http://online.wsj.com/article/SB125737628347529375.html?mod=article-outset-box
“Politicians are putting pressure on regulators to ease up on small community banks across the U.S., a move some say could increase the cost of cleaning up the financial crisis.”
“Bank regulators say they are increasingly being called in to meetings with lawmakers or their staffs to hear complaints about their examinations, in particular relating to loan write-downs and new appraisals on real estate.”
“Some former regulators say the efforts resemble efforts made by lawmakers in the early 1990s that prompted bank examiners to relax the rules at the height of the savings-and-loan crisis. That prolonged the life of some weaker banks and let them dig deeper financial holes.”
I know people involved at the time. At the OCC, under political control, individual bank examiners were called by politicians and threatened with the loss of their jobs and pensions if they didn’t allow a campaign contributor’s bank to hide their losses.
And I haven’t forgotten the “community bankers” running to Congress when the regulators wanted to stop their excess concentration in construction and commercial real estate lending, and getting their way. That’s what the regulators want them to write off now.
“…it doesn’t matter whether regulatory authority is vested in the Fed, the WH or the Mayberry Police Department”
Now just one dog-gone minute Mr. Bear…Andy did give Barney x1 bullet, that’s x1 more than Crissy Cox ever put in his gun!
“Mr. Dodd’s proposal also would create a powerful council of regulators, overseen by an independent White House appointee, charged with monitoring risks to the financial system.”
Likely independently wealthy, but that’s about it.
Did you ever wonder what kind of thugs rise to the top of Megabank, Inc? If so, this book looks like it might provide useful insights. I am adding it to my Christmas wish list.
* BOOKSHELF
* NOVEMBER 2, 2009, 9:24 P.M. ET
The Road to Ruin
Why did so many prestigious institutions make disastrous bets on American mortgages?
By JAMES FREEMAN
Some bosses get angry when they get answers they don’t like from subordinates. Former Lehman Brothers chief executive Richard Fuld apparently didn’t like their questions.
In “The Sellout,” Charles Gasparino reports that Mr. Fuld once told a trader, after an especially irksome inquiry, that he wanted to “break [his] legs.” A question from the floor at an employee town-hall meeting about Lehman’s troubled balance sheet caused Mr. Fuld to exclaim: “You deserve to have your legs cut off!” After a dinner in which he urged the wives of Lehman employees to “support their husbands” as they went off to “battle” each day, one wife asked: “Is this guy out of his mind?”
Not entirely. In the early summer of 2008, as Lehman Brothers faced huge losses from commercial real estate, Mr. Fuld rationally believed that the government would, if necessary, bail out his firm. After all, the feds had just bailed out Bear Stearns in March. According to Mr. Gasparino, Mr. Fuld thus passed up an offer in the range of $25 per share from Korea Development Bank to buy Lehman. In September, he was shocked to learn that the government had decided to let Lehman fail, and he presided over the largest bankruptcy in American history.
Mr. Fuld is just one of the characters populating “The Sellout,” Mr. Gasparino’s splendid account of the financial meltdown. Lehman’s fate, not to mention Mr. Fuld’s rhetorical excess, is emblematic of the confusion, miscalculation and distress of the whole episode. At the heart of “The Sellout” is its own irksome inquiry: Why did so many large and prestigious institutions make disastrous bets on American mortgages?
…
“Why did so many large and prestigious institutions make disastrous bets on American mortgages?”
Because they figured they can dump their spoiled goods on unsuspecting suckers when the time comes. What they didn’t forsee was that “the time” came faster and harder than they anticipated and that the pool of suckers evaporated too quick once everybody was rushing for the exit.
Maybe they all foresaw the TARP, but failed to guess Big Hank might throw a couple of Goldman Sachs rivals under the bus to strengthen the political justification for the biggest lump sum transfer payment in American history from Main Street to Wall Street.
Think of Bear Stearns and Lehman Brothers as akin to children of aboriginal tribes who got thrown into the volcano as sacrifices to the gods of prosperity…
Nice,
I’m sure on the way up the volcano they were told that the tribe planned a big party with lots of treats at the top.
“Why did so many large and prestigious institutions make disastrous bets on American mortgages?”
It had to do with the distance between the coma and the decimal point, and the ability to distribute that spread, rapidly, to millions of people… wherein those people are left with a pleasant smile on their faces but an uneasy feeling in their stomach…and the prospect of enduring 30 years of of unfailing discipline.
“Why did so many prestigious institutions make disastrous bets on American mortgages?”
“%&*# you , I got mine,” comes to mind.
It’s the old patent-medicine timelag: By the time you figure out the medicine doesn’t work, the scheister took your money and is on his way to fleece the next town. AKA Bush Administration Tax Cuts & Banking.
Why is this so difficult to understand?
It is mighty nice of the Fed to supply massive amounts of zero interest loans to fund Megabank, Inc’s high stakes casino gambling activities, while Main Street America is thrown onto the wheels of the recession bus as it plunges over the cliff. Heads they win, tails we’re screwed.
* The Wall Street Journal
* HEARD ON THE STREET
* NOVEMBER 5, 2009
Goldman Benefits From Debt Gold Mine
By PETER EAVIS
All banks benefit from the Federal Reserve’s zero-interest-rate policy, but Goldman Sachs Group appears to be benefiting more than most.
The Wall Street firm’s filing on Wednesday contained an eye-popping number: The interest rate on its long-term borrowings was a minuscule 0.92% in the third quarter, down from 3.53% in the third quarter of 2008. This $203 billion of debt is Goldman’s largest single funding source, so as its cost plunges, its bottom line benefits, as long as assets it buys yield more and trades pay off.
…
The sad thing is - most of these guys will be gone out of the U.S. when the SHTF; when they should end up paying for their sins.
I recall reading somewheres about gaining the whole world and losing your soul.
And something else about the smoke of their torment shall rise forever and ever.
Unfortunately that’s all just a myth. Another yoke on the sheeple (pun intended).
Without the thought that the pigs at the top will be punished in the afterlife the sheeple might get mad and try to make them pay right now.
That’s the beauty of the grim reaper. He does not discriminate between the rich and the poor. The grave is very equal opportunity.
This is a follow up to Grizz from yesterday.
“You’re flat out wrong, SV guy. The only problem I have is when rich people cry poor. Did I strike a nerve, or something? I have a vague memory of someone of means getting fleeced on MT acreage. Are you feeling poor, lately?”
Grizz,
My problem with you has been your constant bashing of Alena. I don’t agree with everyone here and a few posters actually irritate me. But I don’t engage in personal attacks. It detracts from our overall experience and is totally unnecessary. As far as me getting fleeced on land, I would make that same deal again today. As far as feeling poorer, I’m not rich and surely not poor. There are no worries here, just one more step in a long term plan. I will not get into an exchange with you over this. This will be my only reply to you.
Sorry HBB’ers, I know it’s off topic.
SV, I surely hope you weren’t simmering about this all night long.
I’ve often though an interesting experiment would be to create fifty-or-so obnoxious phrases, such as “Another idiotic post from a complete moron”, then go to a message board, select a poster at random and program my computer to unleash these phrases one at a time as responses to each post the selected poster makes.
Then, say, go down to the beach and enjoy the day.
Not by a longshot Combo, just felt like defending our queen Bee’s honor.
our queen Bee’s honor
Ours? Sorry. Leave me out of your monarchy. I don’t worship people, places or things.
I would call Oly the queen bee….
I just wanted to tell Faster Pussycat Sell, Sell that I had really taken one of his comments very seriously a few days back. Its stayed with me ever since and I think of it daily.
It was when you were advising one of the posters if they were going to be buying a home to pay it off as soon as possible, to get his wife back to work if that’s what it took. I had been approaching housing very conservatively but your comments that day definitely moved it up a few more notches. Thank you.
Paul Kanjorksi (D-PA) wants to break up the too-big-to-fail banks.
By VICTORIA MCGRANE | 11/4/09 6:06 PM EST (Politico) (excerpts)
Rep. Paul Kanjorski (D-Penn.), a senior member of the Financial Services Committee, has proposed the most explosive provision so far in the debate over financial reform, seeking to empower federal regulators to preemptively break up financial firms deemed “too big to fail.”
Financial industry officials say Kanjorski’s proposal would kill American jobs, send top financial companies fleeing for foreign shores and generally imperil the American economy. [boo-hoo] Large multi-national corporations would bypass hobbled American banks for competitors in Hong Kong or Europe that are still big enough to provide the multi-billion-dollar lines of credit global firms require.
“That type of bill is going to send a near-death knell through the financial markets,” said Rep. Mike McMahon (D-N.Y.), who’s Staten Island district relies heavily on Wall Street … Kanjorski said he would unveil the actual legislative language in the next week or two.
But Kanjorski clearly doesn’t believe the underlying bill goes far enough. He says the powers granted to the Fed are “limited power… its not clearly defined.”…The power he envisions is so sweeping, in fact, that he believes the president should have to sign off on any final decisions.
House Financial Services Chairman Barney Frank (D-Mass.) said he supports Kanjorski’s amendment – although Frank described the measure as the power to break firms up on a case-by-case basis, which sounds more limited than Kanjorski’s vision.
=================
I don’t how to comment on this, except for the bit about large multinational corporations needing billions in credit. Look, if your company “needs” to borrow more money than a bank will lend you, you can either: a) save up the cash b) cobble your loan from more than one bank. c) do without. — Just like the rest of us mere mortals.
Apologies if a double post but: Fannie Mae to rent out homes instead foreclosing
http://tinyurl.com/yf8ubul
I guess I can’t blame them if they truly want to save certain neighborhoods.
Tooting my horn a bit, from 8 months ago:
(emphasis added)
It appears they jumped the gun waiting for rates and inflation to make housing unaffordable, and are already moving into the step of renting out government-owned housing.
Backdoor communism. They won’t take your house by force - they’ll take it by finance.
Good call. :thumbs up:
Can’t help wondering if this is all tied in with the so-called auditing problems of the FHA? As in, no money left to actually help in the refinancing of buyers in peril.
Nah, I’m just being a conspiracist!
“Backdoor communism. They won’t take your house by force - they’ll take it by finance.”
HALLELUJAH! SOMEBODY GETS IT!
You have problem with Corporate Communist Capitalism©®™, comrade?
Maybe time in financial Siberia change your mind, yes?
(tinfoil hat alert and really OT)
has anyone ever contemplated that the driving force behind the entire global warming…save the planet myth is the reality of peak oil.
that maybe the governments of the world think that “saving the planet” by reducing the use of hydrocarbons is an easier pill for the sheeple to swallow than just telling them we are running out of gas.
No. Too many of the PTB are connected to the energy industry, and would thus profit very handsomely from the price spike if they furthered the notion that we’re actually running out of oil etc.
For this reason IMO the opposite is true. We actually have more than advertised, and peak oil is exaggerated to boost prices.
What a relief! Here I thought I had heard that U.S. and Mexican, and North Sea production were all in decline, and that the Saudis are pumping in more seawater than ever to keep production levels up.
Obviously oil reserves are *declining* - the definition of that would be extraction minus creation. Since creation happens at a minuscule pace (it took millions of years to create what exists), then of course reserves are declining, and of course as they decline it’ll take ever-more-interesting measures to get it out, like seawater pumping.
The question is how *fast* are they declining, and therefore how many years left do we have, without it getting extremely cost prohibitive to get out the “hard to get” stuff. And also how much are we discovering new fields. You did hear about the recent big discoveries in the gulf, and off Brazil - right?
It’s hugely, hugely complex. There are many other issues beyond water injection in play, determining the cost effectiveness of extraction. Temperature is a big one - there are lots of deposits that are so deep that can’t be extracted currently because the oil is simply too hot for current equipment; but technology is helping that as new heat-resistant materials are developed. I have a friend in the business who knows all about this stuff.
Also it’s worth noting that U.S. production is probably actually held back some simply strategically. If/when push comes to shove - wouldn’t it be really nice for us if non-U.S. countries ran out of oil first, since we saved ours?
Peak oil isn’t about reserves, it is about production. You go ahead and keep adding reserves all you want. If as you admit the reserves added can’t currently be extracted then that goes to prove PO, not oppose it.
The Obama administration’s decision to close Yucca Mountain puts a crimp in plans to ramp up the use of nuclear power. Brilliant. That should satisfy the greens, who also fight to prevent wind turbines along ridgelines (where the wind is strongest) because of visual pollution, and oppose a solar collector farm in the desert (where there are the most sunny days) because new power transmission lines would have to be built.
People CAN’T be that stupid. So what’s the real motivation?
It looks like only 3 or 4 news organizations covered the Yucca Mountain story.
The law originally states that the nuclear waste problem needed to be solved in order to build new plants. I believe parts of that have been relaxed. Now, at least, builders are allowed to begin the paperwork process for new plants — which can take five years before anyone picks up a shovel. Nuke will probably ramp up without Yucca.
The greens are slowly changing their tune. They have to choose between No Nukes and No Climate Climate Change.
And Obama didn’t “close” Yucca. The DOE submitted its application to the NRC as stipulated. The NRC has 3-4 years to review it, no matter who is in charge. The Yucca project itself was frought with overspending, crony contracting, gaping holes in the planning (like transport), and bad science in general. I’d be interested to see what the NRC decides.
As for the waste itself, they are looking into monitored storage. It’s probable that we will need to reprocess that waste later, so it’s best not to bury it in a permanent dump.
The Yucca project itself was frought with overspending, crony contracting, gaping holes in the planning (like transport), and bad science in general.
As I recall, the transportation issues alone — both in practical and security terms — were/are a major migraine.
Perhaps Bill in Carolina wouldn’t mind having unsecured nuclear waste traveling through his town in an ordinary truck or railcar, but the majority of Americans think that might not be a great idea.
Thanks, oxide, for your very informative comment.
Read the article. Funding has been cut to just where some panel will have funds to operate into next year. Where there were once as many as 4,000 workers at Yucca there are now about 50. Probably just a security force.
Spoken like a true NIMBY.
One of the reasons the USA is toast. No matter what you do, your opposition can/will double the costs of your project, in the hope that it will make it unprofitable/too expensive to do.
This is not just a “business” problem. It’s a problem for both extremes of the political spectrum.
China = The prototype for “Government of the Future” (whether you like it or not).
“One of the reasons the USA is toast. No matter what you do, your opposition can/will double the costs of your project, in the hope that it will make it unprofitable/too expensive to do.”
Nailed it.
I know what the real motivation was: funding. You know what the worst thing is that a scientist can do in a project? He finishes it. Because then the funding is over, and he has to go looking for more funding — and good scientists are lousy salespeople. Soft-money scientists live in constant fear, especially when they start out.
That’s why all the science papers end with “more research is needed.” That’s why innovation is stifled. And that’s why projects tend to run too long. Science jobs hang on a thread like any other, so they try to stretch money out as long as they can.
Where there were once as many as 4,000 workers at Yucca there are now about 50. Probably just a security force.
Yes, that is correct. And why would they need all those workers? After 20 years of studies and design, they put down their pencils and handed in a license application. You don’t do studies after taking the final exam, you only can only wait for it to be graded.
Hey guys,
Off topic, but….what do you think of this?
http://www.ft86.net/toyota-ft-86-images-pictures.html
It’s the new toyota we have been waiting for. I never understood why toyota didnt make another supra. Well, it’s coming! This is a car I would buy…
Make sure you don’t buy the floormats.
I think that’s the one they’re making with Subaru…with just the NA flat four and may never even get a turbo. Not exactly in the same league as the old Supra turbo. Looks nice, though.
Fannie’s rentin’ ‘em out:
http://finance.yahoo.com/news/Fannie-Mae-to-rent-out-homes-apf-3320393724.html?x=0&sec=topStories&pos=5&asset=&ccode=
According to austintowers.net, downtown condo sales were high in Sept and Oct. WTF?
Austin Towers: The condo who shagged me.
hip -
OT reply to your question last nite:
no I’m not in the Maynard Ferguson tribute band!
If you put some sheet music in front of me I can bang it out on the piano, barely. And I have to say that I was a little surprised you knew about Sun Ra of all people.
I saw him somewhere in West Philly, it was some kind of community performance venue, just a big row home really.
Don’t know why it would surprise me, though, you being from Austin, a strong music town.
I once took a jazz survey class from Sun Ra! Amazing experience. Man had played with EVERYONE.
X,
Sun Ra was touring and recording a lot when I was a college student in the 70s.
Do foreclosure auctions count as sales?
This article says “according to the MLS.” I don’t think that foreclosure auctions would be included in the MLS database.
I also don’t trust this RE website any farther than I can throw a pitchfork. I think something is fishy here…
Former Mayor Will Wynn is making radio spots talking about how there will only be 400 more condos available in the next five years, reified by austindowntownfacts.com.
One hears (from the occasional acquaintance that knows such people) that the developers of the Spring, Austonian, and Barton Place (not downtown, south of river on Barton Springs Rd, the one that displaced nice rv park and 100-year old pecan trees) are nervous.
I’ve been out of town for a week, but the last week I was in Austin, the weather was absolutely glorious. I happened to be driving around more than usual, particularly through downtown on Lamar and Guadalupe / LaVaca - streets with lots of condo & apartment towers and VMU condos & apartments.
As usual, I did not see one single person on a balcony, not one, nor a balcony door open - in unusually nice weather after an absolutely killing summer. What are those balconies for? In my neighborhood, I saw people out all over - in yards, on porches, in the streets - and lots of open doors and windows.
(Oh, and to follow up on a previous discussion, realtors do put bicycles (as well as pairs of chairs with a table between) on balconies as staging. My Rolfer had a client who was looking at “lofts” — she noticed that some units had chairs and bikes on the balconies but when she drove by at night she could see that those units were lit up but empty.
Around here, condos have balconies tacked on whether they make sense or not.
You’ll see balconies overlooking the highway, balconies right next to the El tracks (wear your industrial ear protection!), balconies with scenic alley views (we do have nice alleys compared to most big cities, but c’mon), and balconies that abut other condo windows or balconies, with only a few meager feet in-between (”Howdy, neighbor! Is that a Recession Steak you’re grillin’?”).
A balcony does seem like a natural place to stash a few bikes if you paid $300K for 1000 square feet of living space, however.
we do have nice alleys compared to most big cities, but c’mon
Hip - are those condos still going for 400k?
Skip - Which ones are you asking about?
The article on austintowers.net included the following:
It sounds like prices are dropping, because $275,000 is the lowest asking price I had heard for a downtown unit.
And what if one is neither a first-time buyer nor a current property owner? What if one has previously owned a home, but sold it, say, 2.6 years ago and have been renting since. Am I now one of the only 36 Americans who do NOT qualify for this new purchase credit? What luck!
Well, I suppose if you wait just a few more months (push it to the final month in the deadline even), you’d be eligible for an $8K credit instead trying for the $6K, right?
Its the people who have only rented for a year or two that are SOL. Like me - I won’t have reached the three year deadline by June. However the last house I owned, I did own for 5+ years. I’m not too enticed by the tax credit though. I’d much rather have a lower sales price.
I was wondering the same thing.
Watching…
Maybe they think you’re a flipper who cashed out? And anyone who bought a home the past three years — well they think you’re a flipper too.
American worker productivity surged in the third quarter and new jobless claims fell to their lowest level since January, the government reported today, more signs of a nascent economic recovery. But no one’s cheering just yet.
With businesses reluctant to hire, economists forecast the unemployment rate will tick up to 9.9%, when October’s figure is reported tomorrow.
“I think we’re going to lose another million jobs between now and the middle of next year,” says our guest Leo Hindery, managing partner at InterMedia Partners. Hindery, a former cable executive, has also advised President Obama and John Edwards on economic policy. “There need to be some prescriptions,” he says.
His proposed game plan?
Genuine manufacturing policy. With less than 12% of U.S. GDP stemming from manufacturing, the sector must be energized to stabilize and offset an economy now hinged on consumer spending and services. Domestic labor costs are not what’s costing Americans jobs, Hindery says. The real culprits are illegal subsidies, currency manipulation and poor environmental practices by our trading “partners,” most notably China.
Buy domestic program. While critics cry foul, with charges of protectionism, Hindery argues U.S. policies simply need to be in line with other industrialized nations. But how do you implement “Buy American,” when for example a GM car includes Chinese parts? The solution lies in buy domestic programs for the federal government, Hindery says.
Infrastructure spending. A billion-dollar, years-long infrastructure commitment will create jobs, and upgrade our sagging roads, bridges and mass transit systems.
He’s right, but there are still far to many people who think that paying a living wage and improving our infrastructure is somehow wrong. Even some of the J6Ps who would benefit are against this.
People like that would have been called “traitors” in the past.
Bob Prechter: Bear Market Rally Is Over, Stocks Headed For New Lows. Nov 05, 2009 Investing, Recession
With the Dow Jones Industrial Average once again marching closer to 10,000, many investors, especially those who missed the rally since March, must be asking themselves: Is now the time to finally pull the trigger?
Robert Prechter, founder of Elliott Wave International, implores retail investors stay away… for now. Prechter, who was bullish near the lows in March, now says the stock market “is in a topping area.”
Why?
Several factors:
* Slowdown in upside momentum. Recent intraday rallies are petering out before the close.
* Bullish Sentiment. Investors who were bearish near the lows, are now just as bullish after a 60% run in the S&P 500. To Prechter, “that’s a dangerous place to be.”
* General overvaluation of stocks.
Prechter, the author of Conquer the Crash, says this is akin to the market in 1966-74 or 1929-32, where massive bear rallies gave way to another “big leg down.”
He’s predicting another crash in 2010 that will bring stocks below this year’s low. His word to the wise, “be patient, don’t rush it” keep your money in cash and cash equivalents for now and wait out this bear market.
He thinks it’ll be another 5 or so years before we turn the corner but the good news is when we do, it’ll be the buying opportunity of a lifetime.
“Cash is the financial equivalent of a big, soft pillow. It helps you sleep better at night.”
~Chris Mayer
Team Barry & the boyz, best get to pumping, commercial RE is one big ass shoe!
Commercial mortgage lending down 54%
Washington Business Journal
Commercial and multifamily mortgage lending in the U.S. fell 12 percent from the second quarter to the third quarter and is down 54 percent from year ago levels, according to the Mortgage Bankers Association.
The drop includes a year over year decrease in lending for all types of commercial properties. Loans for retail properties are down 62 percent. Loans for office properties are down 56 percent, MBA says.
Apartment lending is down 40 percent.
“Tight credit conditions coupled with scant demand for new loans meant that commercial and multifamily mortgage originations remained low for the third quarter,” said MBA vice president of commercial real estate research Jamie Woodwell. “A pullback by Fannie Mae and Freddie Mac in their multifamily activity outweighed increases in commercial and multifamily lending by insurance companies and commercial banks.”
Apartment developers, like AvalonBay Communities, are facing less demand and falling rents as unemployment rises. Alexandria-based AvalonBay, the nation’s second largest apartment community owner, expects rental revenue to fall as much as 6.25 percent this quarter.
In addition, company downsizing has dampened demand for new office space across the country.
I swear I just saw this.
Wolf Blitzer, voice cracking with emotion, unironically asks Gen. Wesley Clark, re the Fr. Hood shootings,
“How do you prepare for something like this?”
How do you prepare for the possibility of being gunned down by one of your supposed brothers-in-arms? It isn’t possible.
This wasn’t the first time an American Muslim soldier attacked fellow American soldiers.
http://tinyurl.com/yaco7ak
Step knows and sees what most Americans do not want to see or believe.
Is it Islam per se that’s bad? I admit, I cannot believe it’s Islam per se. I had a Muslim girlfriend living with me for three years. She’d be beheaded if she was from Saudi Arabia and they found out we were in the same room even. This girl would not wish ill on anyone. But Muslim per se…
CNN came in 4th place during the month of October. Even HLN had more viewers. So probably about 12 people saw what you’re referring too.
What I would like to know is what religion this killer is? I swear it’s a complete mysetery to me. I know he’s a doctor and he’s a major. I’m sure he’s not muslim since that would surely make the headlines of this story.
I’m pretty sure he’s Muslim if it’s true he yelled Allahu Akhbar before opening fire as is being reported.
But due to fear of backlash, perhaps the networks are working hard not to overstate that fact.
Are green jobs still “green” if they’re moved to China? A little trouble in the Kenseyian wunderland.
AP
Thu Nov 5, 1:15 pm ET
MARLBOROUGH, Mass. – A solar panel company is moving some jobs overseas after receiving $58 million in state aid and being touted by Massachusetts Gov. Deval Patrick as a symbol of the state’s economic future.
Evergreen Solar Inc. said Wednesday it is moving panel assembly jobs currently done at a plant in Devens to China next year.
Oopsie.
Ben, I just sent you $25
I would like to give you $50, but, uh, you know I got those kid critter thingies. I only have one request: please do not use it for a down payment on a house, o.k.?
Fannie Mae posts $19B loss!
Franklin Raines still not in prison!
Is a $19B loss somehow unusual for them?
Goldman Sachs Received H1N1 Vaccine Before Several Hospitals
http://www.businessinsider.com/goldman-sachs-received-h1n1-vaccine-before-several-hospitals-2009-11
I cannot believe this. Earlier this week Kunstler predicted violence against Wall St. This could do it.
This has got to stop. Simply unbelievable.
If they stay on their present course, they may wish to consider anthrax viruses for all their employees.
Dang! My Freudian slip is showing again. I meant to say “anthrax vaccines for all their employees”…
Bear
I think you were right the first time…where is a terrorist when we need one……..
“America, what a country!” Yakov Smirnoff
“…and banking firm …Goldman Sachs… getting 200 of the 5,300 doses it asked for, Scaperotti said.
She said 16 of the city’s 25 biggest employers had vaccine, including Columbia University, Citi Group and others, as well as the Federal Reserve Bank, which is not among the top 25 employers.”
Flu shots for Wall Street stirs ire in New York:
http://www.reuters.com/article/newsOne/idUSTRE5A44QI20091106?sp=true
Let me guess: Goldman used TARP funds to corner the market on H1N1 vaccine? (Just a guess!
)
edgewater’s post above reminded me of what I heard on the radio this afternoon about the W Texas wind farm that I posted about a few days ago, the one where the turbines were to be manufactured in China. The article I linked to then and quoted from hadn’t mentioned stimulus funds, but:
From today’s NY Times site:
Hey, today was Phil ‘n’ Wendy’s 10th anniversary. From NY Times 10 years ago (repeal of Glass-Steagall), with a shout out to Larry:
http://www.nytimes.com/1999/11/05/business/congress-passes-wide-ranging-bill-easing-bank-laws.html
The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.
”Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” Treasury Secretary Lawrence H. Summers said. ”This historic legislation will better enable American companies to compete in the new economy.”
Our future Fed chairman?
Or will they promote the guy who cannot figure out how to do his own taxes right?
I have a colleague who is fond of saying, “Possession is 90 percent of the law.” By and by, my appreciation for her point is steadily increasing.
The silver lining: We “possess” the rental home in which we live. Will Fannie go to bat for us against our land lord if we run out of money with which to pay our rent?
* The Wall Street Journal
* REAL ESTATE
* NOVEMBER 6, 2009
Fannie to Rent to Owners in Foreclosure
By NICK TIMIRAOS
Fannie Mae will allow homeowners facing foreclosure to stay in their homes and rent them for as long as a year, as part of the government’s latest effort to help troubled borrowers, while keeping more foreclosed properties from hitting the housing market.
Fannie Mae plans to allow homeowners facing foreclosure to stay in their homes and rent them. WSJ’s Constance Mitchell-Ford breaks down whether this will really help troubled borrowers, in the News Hub.
The “Deed for Lease” Program lets borrowers who don’t qualify for loan modifications transfer their property to Fannie Mae in exchange for a lease. Borrowers-turned-tenants will pay market rents, which in most cases are lower than the cost of mortgage payments, and might be offered extensions when their leases expire.
Fannie Mae wouldn’t say in its Thursday announcement how many homeowners it expects would take advantage of the program. The company acquired 57,000 properties through foreclosure during the first half of the year.
Borrowers have to demonstrate they can’t afford their current mortgage, but can pay the rent. The borrower’s mortgage servicer has to show the borrower didn’t qualify for a loan modification.
“If you keep more people in their homes, it’s better for the community. It’s better for the financial institutions that own those homes,” said Jay Ryan, vice president of equity investments at Fannie Mae. “Hopefully, less foreclosure product on the market will help stabilize those communities.”
…
“Borrowers have to demonstrate they can’t afford their current mortgage, but can pay the rent.”
Would it be possible to buy a home you cannot afford, immediately stop making payments on the mortgage, then claim ‘market’ rent at an affordable level?
Why make a payment at all? Why not just sign some mortgage papers, move into the house and live there for years for free while waiting to be evicted?
Or, better yet, buy a house and immediately rent it out to someone. You get to collect rent money as you stiff the bank.
You can tell how bad this economic downturn is by the extent to which traditional so-called “recession-proof” sectors have been hammered.
To add to this laundry mat example, I had an interesting exchange last weekend with the Sri Lankan proprietor of a deli up in The OC. Not only did he sell sandwiches, but the walls of his shop were covered from floor to ceiling with every variety of alcohol produced and consumed by mankind.
I asked him about the sandwich business, and he indicated that sales were down by a large amount, thanks to the recession. I commented that at least the alcohol must be selling well, as people tend to drink more during times of economic hardship. He said that even alcohol sales were off by over twenty percent since the onset of the recession; the only thing selling well was the cheap vodka.
* The Wall Street Journal
* SMALL BUSINESS
* NOVEMBER 4, 2009
After the Boom
Even Laundries Tumble in This Economic Cycle
By KEVIN HELLIKER
Chicago
The same recession that ended Brian McChristian’s finance career is raining quarters into his washing machines.
“My sales are up 10% to 12% this year,” says Mr. McChristian, who early last year bought the Austin Community Coin Laundry in far west Chicago after losing his loan-officer job.
Taking Refuge in Laundry
Brian McChristian bought wholesale laundry and vending machine supplies for his business, the Austin Community Coin Laundry in Chicago’s Austin neighborhood.
Corporate castaways have long taken refuge in businesses thought to be impervious to recessions such as self-storage facilities and car washes. In the coin laundry business, a 20% down payment was enough to get operations spinning. No experience required. Inventory management: What inventory? Sweeter yet is how coin laundries collect receivables: A quarter at a time — prewash.
In dim economic conditions, moreover, the all-night laundry glows all the brighter. People still wash clothes in a recession. The jobless often can’t afford to fix washers that break at home. Foreclosure often separates the evicted from their appliances. Says an ad at bizbuysell.com: “Recession Proof, Prototypical coin Laundromat.”
Yet in a measure of the potency of this particular downturn, some coin laundries are closing, and many others are battling sales declines. Job loss and economic woe are forcing Americans to cut back even on their laundry costs, either by using the home equipment of friends or relatives or by wearing items multiple times between washes. Even urban flight and reverse migration due to economic hardship appear to be agitating the industry.
“Now more than ever the adage that we’re recession-proof is being tested,” says Brian Wallace, president of the Coin Laundry Association.
…
Is it proper to call the relationship between the Fed and Goldman Sachs a “public-private partnership”? Gambling is mighty fun when you have 90:1 or 89:2 odds of winning a huge bonus bonanza every day at the casino!!!
Goldman benefits from trading bonanza
By Francesco Guerrera and Michael MacKenzie in New York
Published: November 4 2009 18:42 | Last updated: November 5 2009 00:13
Traders at Goldman Sachs recorded only one daily loss in the third quarter, highlighting the trading bonanza sweeping Wall Street as central banks continue to pump billions of dollars into the financial system.
The performance – revealed on Wednesday in a regulatory filing – compares with two losing trading days in the previous quarter and confirms that the authorities’ drive to revive markets after the crisis is yielding huge windfalls for some banks.
…
Trading in the US fixed-income market this year has been dominated by the Federal Reserve, which recently finished buying a planned $300bn in Treasury debt, and is on track to complete buying $1,250bn of mortgage securities by the end of March. These purchases have helped keep market rates low and also normalised the relationship between government bonds and other fixed-income securities.
Dealers say banks have made big profits by the timing of Fed purchases of government debt and subsequent Treasury debt sales, and by betting that the relationship between Treasury bonds and other fixed-income securities would normalise.
Greed is good, and gambling is better.
* NOVEMBER 5, 2009, 11:18 P.M. ET
UPDATE: Asian Shares Rise On Wall Street Cue; Jobs Data Eyed
(Adds information, quotes, updates/adds market levels)
By Kate O’Keeffe and Kirsty Green
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)–Asian shares were broadly higher Friday, taking their cue from Wall Street’s strong performance overnight. Hopes that governments around the world would remain committed to stimulus measures were supporting sentiment, though there was some caution ahead of tonight’s U.S. nonfarm payrolls data.
Hong Kong’s Hang Seng was 1.9% higher and Japan’s Nikkei 225 rose 1.1%. China’s Shanghai Composite was up 0.6%, Korea’s Kospi Composite advanced 1.4% and Taiwan’s main index was 1.0% higher.
Australia’s S&P/ASX 200 was 1.7% higher and New Zealand’s NZX-50 added 0.5%. The Dow Jones Industrial Average shot up 2.1% Thursday, though futures were down six points in screen trade.
“This week’s rash of central bank meetings have concluded. And the take away message is that the major central banks have not begun to remove the extraordinary liquidity provisions,” said Brown Brothers Harriman. “The key point is liquidity, which we believe is a critical driver, remains ample,” which will encourage risk-seeking behavior.
…
Last updated November 5, 2009 11:24 p.m. PT
Experts: Extended tax credit to boost local housing recovery
By GERRY SPRATT
SEATTLEPI dot COM STAFF
Nov. 30 was supposed to be the deadline, and it loomed large.
The expiration of the $8,000 federal tax credit for first-time homebuyers was dreaded throughout the real estate industry as the potential killer of the modest rally in home sales since the spring.
It might not be a boom yet, but it certainly won’t become a bust now that Congress has agreed to extend and expand the credit. President Barack Obama is expected to sign the bill Friday. First-time buyers still will be eligible for an $8,000 credit if they meet the criteria. And now buyers who already own homes can claim a $6,500 credit if they have owned their current residence for at least five years. Purchase agreements must be signed by April 30 and sales must close by June 30.
The Seattle-area market, which has lagged behind the national scene in both the bust and the recovery, will benefit from the new law, experts said. Especially now that current homeowners can get in on the action.
“I have been concerned that that recovery didn’t have legs because many of the sellers had too little equity to re-enter the market as buyers,” said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. “In many ways I think the most significant feature of the law now awaiting the President’s signature is the extension of a credit to current owners who have been in their homes for at least five years.”
If Thursday’s report from the Northwest Multiple Listing Service is any indication, the tax credit has been a big incentive for first-time buyers to get into the market. Pending home sales were up more than 64 percent in Seattle and almost 71 percent in King County in October over the same period a year ago. The bulk of those taking the plunge appeared to be first-time homebuyers trying to beat the credit deadline.
Now, the addition of current homeowners should stimulate activity in the mid-range and luxury markets.
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* The Wall Street Journal
* NOVEMBER 6, 2009
Fannie Arrives at a Deal to Sell $2.6 Billion in Unused Tax Credits
By NICK TIMIRAOS
Fannie Mae said it reached an agreement to sell about $2.6 billion in unused low-income-housing tax credits to unnamed buyers and received approval for the deal from its federal regulator, the Federal Housing Finance Agency, in a filing Thursday with the Securities and Exchange Commission.
But the Treasury Department has yet to approve the deal, setting up a potential clash between two government agencies over how best the government should run Fannie and its smaller rival, Freddie Mac, the two mortgage-finance companies that it took over through a legal procedure known as conservatorship one year ago.
The Treasury is considering whether to allow Goldman Sachs Group Inc. and Warren Buffett’s Berkshire Hathaway Inc. to purchase Fannie’s tax credits, according to people familiar with the matter. Those credits are nearly worthless to Fannie and require the company to post losses every quarter as their value declines.
Fannie had $5.2 billion in low-income-housing tax credits at the end of September and said on Thursday it has recorded $520 million in losses related to affordable-housing-tax-credit and related investments in the third quarter.
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A tax credit is worth a lot more to someone in 50% tax bracket than it is to someone in a 25% tax bracket hence buying and selling tax credits could make for some interesting transactions.
If corps can sell tax credits to each other, why can’t individuals do the same?
I can envision exchanges set up where tax credits are bought and sold just as are stocks, and bankrupt companies bought solely to be stripped of their tax credit assets.
How neat would it be to buy stock in a bankrupt company that is allowed to pay out a dividend in the form of a tax credit?
By a stock at, say, one dollar a share and maybe get a three dollar tax credit dividend.