Bits Bucket For November 7, 2009
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Good Moorning Hbb.
Nice clear day here in Central NY. I am on my second cup of Hot Green Tea with fat free milk. AAhh Yes life is good. Today let’s make fun of all the deserving targets from Politicians, realtors as well as Wall Street bandits.
Hey now, let’s not leave out Education, Medical Industry, or gov’t x3+ pensionaires!
For example (From “The O.C.”):
Chapman University (Recently known as Chapman COLLEGE):
James Doti, the economist who serves as president of Chapman University in Orange, was paid a salary $440,000 during the 2007-08 academic year, which is $40,000 higher than …the salary given to the president of the United States… Doti also received $27,516 in benefits, for total compensation of $467,516, says the Chronicle of Higher Education (CHE),
Let’s go down the road 11 miles and take a peek:
UCI (University of CA @ Irvine)
UC Irvine Chancellor Michael Drake also lives in an official university residence. And, during the 2007-08 academic year, he was paid $392,000 in salary, $19,600 in retirement pay and $8,916 to cover car expenses, says the CHE table. Drake’s total compensation was listed at $420,516.
So are things going as “swimmingly” in your State for Education Compensation?
Forgot…this:
Reporter:
“I also asked him why he earned more than UCI’s Drake, whose campus has almost 28,000 students. Chapman has an enrollment of about 6,000.”
” I’d rather not comment on salary differences with Chancellor Drake,” Doti said.
& the link:
http://collegelife.freedomblogging.com/2009/11/07/chapman-president-earns-more-than-us-president/12459/
I’ll guess - because the tuition is absurdly highly than UC’s?
Higher, that is. And students/parents continue to borrow for that…arghhh…
“….When will they ever learn?
When will they ever learn?”
Chapman!! Bwhahahahahhaaha. Thanks for the lol.
Chapman is a community college in every way but its name.
Four more banks fail - 119 for the year
Banks in California, Georgia, Michigan, Minnesota and Missouri were shuttered, costing the FDIC a total of $1.5 billion.
NEW YORK (CNNMoney.com) — Five banks failed late Friday, bringing the 2009 tally to 120.
The biggest to fall was United Commercial Bank of San Francisco, which had 63 U.S. branches as well as operations in Hong Kong and Shanghai. The bank held deposits totaling $7.5 billion
http://money.cnn.com/2009/11/06/news/economy/bank_failures/?postversion=2009110619
As of the end of 2009, the total number of banks to be closed by FDIC will be?
My guess is 158.
All entries must be posted before next Friday. What would be an appropriate prize for the winner?
My made in china crystal ball tells me the number of bank failures for 2009 will be 147.
You get to lick Sheila Bair’s bungh0le?!?
That’s crude, FPSS. Don’t be such a dingleberry.
Will she win your respect if she asks for a bailout too?
I actually quite like Sheila - she has stood up to a lot of bullying from the usual suspects and has shown both sense and backbone in this sordid mess.
“…she has stood up to a lot of bullying from the usual suspects and has shown both sense and backbone in this sordid mess.”
Hear hear! But don’t let that prevent you from enjoying FPSS’s irreverance
Ooh Ohh dingle berry hahah bung hoole uh uhuhuh
Shut up beavis
Liquor in the front, poker in the rear?
I thought we were talking about sax, not gambling and alcohol consumption?
As if they could be so cleanly disentangled!
Where are your lack of manners, Professor?
EEEEeeeww!!
BTW, I hear a lot of talking heads going on and on about how there a far fewer banks failing now than there were in the early 90s. Hmm, this is absolutely because of the washout of the S&L debacle.
With many few but larger banks failing, we are still in for a very bad time. The financials have made us Japan II.
Roidy
What would be an appropriate prize for the winner?
How about a toaster - that doesn’t work.
….and a set of steak knives…..
GINSU of course with that 50 year guarantee
The only guesses I see are Bill’s (158) and SUGuy’s (147). I’ll guess 170. Prize = bragging rights.
There were 5 that went down last night. A San Francisco bank went down late:
http://www.fdic.gov/bank/individual/failed/banklist.html
Banks in California, Georgia, Michigan, Minnesota and Missouri were shuttered, costing the FDIC a total of $1.5 billion.
And who funds the FDIC?
We the taxpayers.
Republicrat voters, pat yourselves on the back.
Well sure they have sovereign (i.e. funded by taxpayer) backing, but the current coverage is still from their insurance fund that is funded by participating banks which are assessed a portion of their deposits. When the coverage runs out, and when the additional 3 years of coverage up front runs out, then yes we will be funding the FDIC. That day isn’t far off, but it is not today.
Hey, if I don’t vote I don’t get to gripe.
Roidy
P.S. BTW, I gotta gripe.
No. But to vote for politicians who are perpetuating all these bailouts and crony capitalism, then turn around and complain about how we’re being systematically screwed due to the actions or inaction of those same officials, seems illogical to me.
When Schumer, Dem of NY, wrote a memo about IndyMac, which was leaked, it cost the FDIC $11 billion. Oh you forgot or didn’t want to know. Remember the ‘Run’ on the bank. He still is in denial and thevoters of NY are too dumb to get rid of him.
They might if they knew about it. MSM mention of that was almost non-existent. After all it’s not important, say like Michelle’s garden or the new First Dog Bo. That’s where the focus lies.
Small chump change for the “private bankers” Fed to print up for next weeks auction which they BUY themselves. No problem as long as the system works? Perhaps the India government buying Gold sees something wrong coming soon?
Can we break the unemployment record set during the great depression?
Broader Measure of U.S. Unemployment Stands at 17.5%
For all the pain caused by the Great Recession, the job market still was not in as bad shape as it had been during the depths of the early 1980s recession — until now.
With the release of the jobs report on Friday, the broadest measure of unemployment and underemployment tracked by the Labor Department has reached its highest level in decades. If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.
In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous recorded high was 17.1 percent, in December 1982.
http://www.nytimes.com/2009/11/07/business/economy/07econ.html?hp
Look on the bright side: At least residential real estate prices have been
fixedstabilized, thanks to the collective efforts of myriad politicians and economic policy makers with close ties to the REIC. In fact, it appears that US residential real estate prices have settled on a permanently high plateau.Emily (author) is the wife of one of my best friends
She’s been pretty good about coverage, but I don’t mention her because I am obviously biased!
I thought we were in recovery a stocks were going to the moon?
Underemployment….what does that even mean? If someone is making $40K but thinks he deserves $50K, is he underemployed? What’s next we count everyone who has a bad boss as unemployed because those people can’t find a job with a better boss? Eventually 100% of the people will be counted as unemployed.
It’s easy to measure unemployment. It’s binary. You do or you do not have a job. Once you get into the subjective measures of under/over employment it’s no longer a meaningful metric.
I think it has to do with involuntary part time status.
Ie. you were working 40 plus overtime as a carpenter, but you you are working six three-hour shifts per week at McDonalds.
Underemployment….what does that even mean? If someone is making $40K but thinks he deserves $50K, is he underemployed?
Eddie do you open your mouth to change your foot. Just pay attention to what you are saying. Please read your post again.
Eddie lives under a bridge and hops around frustrated when he isn’t lobbying for the US Chamber of Stupidity and begging for HBB cookies.
Don’t FEED the hungry Trolls kiddies…it’s a recession!!
The hbb mantra…anyone who doesnt believe the end is near is a troll. Underemployment is a bs metric since anyone in theory could be defined that way.
“…anyone who doesnt believe the end is near is a troll.”
Thanks for another deep insight, Straw Man Eddie.
The end is behind you.
Who am I to disagree?
Travel the world and the seven seas
Everybody’s looking for something
Some of them want to use you
Some of them want to get used by you
Some of them want to abuse you
Some of them want to be abused.
Why ARE you here Eddie…to bring us YOUR version of enlightenment or to get negative attention ?
(Chorus)
“…to get negative attention ?”
Did your parents beat your behind with a broomstick?
Eddie must have been a abused child…
By the way Ed, how did that race in New York work out for ya after the Palin prescription ??
EddieTard…. you talk like you bumped your head. Forgetting your headgear again?
Heh, good old Exy with his 3rd grade ways. I understand though, this was a tough week for Mr. Democrat. Might get tougher too the next few weeks as the dream of ObamaCare dies a painful death.
NY-23….Owens lied. He said he was against ObamaCare during the campaign, then 10 minutes after the election is over he says he’s voting for it. Typical lying Dem. He’s lose in 2010.
Doesn’t matter really ObamaCare is dead. It may pass Pelosi’s house, won’t come close in the senate. Sorry Exy, you’ll actually have to pay for your health care and not get it using my tax dollars.
Shores9, is that you? Seriously… be honest.
No, [herein starts my prediction] Obamacare will pass, even if it has a trigger for the public option. And then next year, the Dems will ram the public option through by reconciliation. Since the public option isn’t supposed to start until 2013 anyway, it won’t matter a whit. [herein ends my prediction]
And there is nothing wrong with “ramming through” legislation. For example, the vaunted Bush tax cuts were rammed through by reconciliation.
It’s been a tough 52 weeks for EddieTard and his rightwing ilk.
Eddie, I wish I could agree w/ you about O’care. Have been sending emails and snail mails to all Senators in whose states I can conjure up any mailing address. (Thatsa lotta Senators.) Urging them to oppose any health plan based on coercion and taxation. Admitting I could support a SMALL appropriation to curb Medicare fraud. That might even pay for itself.
However, I agree w/ majority here that Something Or Other will probably pass both houses, making our Form 1040’s even more complicated than before.
A person with a computer science background working at Walmart would also qualify IMO. It is not about what you think you deserve, but if you can get employment in your primary trade, which is where your earning power band will be.
I do however believe not everyone needs to work to get everything done which needs to be done given modern technology and dirt cheap offshore labor.
I sometimes joke that I have if you were to put them all in the same room 5 full time Chinese laborers working to produce the junk I buy.
That said, what does this tell us about our work ethic society? What do we do with all the unemployed? At some point they will raise up in arms and start killing those of us who still have a job for food, which is not a desirable outcome. At best we will end housing them in a prison.
I sometimes joke that I have if you were to put them all in the same room 5 full time Chinese laborers working to produce the junk I buy.
That said,
Huh?
Get your ammo from Cabelas before they stop you from owning ‘arms’.
Also wrong. The U3 stats drop you off if you were unemployed for more than a year.
Not easy to measure in normal times because people retire early or take optional time off. And it gets noisy in recessions.
Still seem like a garden variety recession to you?
Still seem like a garden variety recession to you?
I went through the 1982 recession as a working adult with a family of four…That recession was induced by a 18% prime rate…This recession is occurring with interest rates at historical low’s…Common sense will tell you which one is worse AND which one is a game changer…
+1, scdave. It was pretty easy to end the 82 recession by dropping rates once inflation was under control.
And we end this one how? Um, I don’t see any way other than working off the excesses, and marking down bad debt over a period of years.
“garden variety recession”
Yes, I like that little phrase! This is a consumer led recession. It is NOT 1982. I am but a simple physicist. I really don’t understand such insights as “garden variety recession”.
Roidy
P.S. No, I’m not a quant. I do lab experiments. Dangerous experiments. Of course, I used to love to blow things up in the back yard when I was a boy.
I am missing your point about the difficulty of measuring underemployment; if someone was pulled down $100,000+ for the past 10 years, and now they are making under $25,000 while they are still healthy and in their prime earnings years, that just might be indicative of underemployment. Think former corporate managers cleaning toilets at BigBoxMart.
Just looking at the binary variable of employed or not severely clearly understates the impact of a brutal recession, which is probably a key reason the BLS prefers to stick with that measure of unemployment for its headline number. Economists also favor it, because it does not require much thinking effort to understand it.
“…Economists also favor it, because it does not require much thinking effort to understand it.”
Mr. Bear, are you saying you think eddie is an economist of some sort?
I strongly suspect he is either an economist or a Realtor™
He keeps denying the latter, but if he is a Realtor™, then lying would be part of his stock in trade.
Im an economist now. Sure why not. Last week I was a health insurance lobbyist. Before that a realtor / re investor.
Can I be an astronaut next week?
I get a vague reading of “Time and Motion” and “Incentives” studies in Eddies posts. He’s a Company man of some kind.
Maybe he is here to downsize the HBB and outsource Ben to China.
Some…HBB people ARE missing !
Eddie, what do you think of Alan Greenspan’s proposal to bust up Megabank, Inc? Got any inside dope on what they are going to do to try to stop the inexorable trust busting exercise?
“Can I be an astronaut next week?”
How about politics? Like many successful politicians, it is hard to tell whether you are as dumb as your comments suggest, or you are just trying to appear dumb to stir up controversy.
No clue. Wont affect me much I dont believe. Might actually lead to more work. I worked on a project when daimler sold off chrysler that was a goldmine. Megabank splitting could be years worth of nillable hours.
As i said before, as long as im taken care of i dont care what they do. Bailout, break up, dont break up…its all a side show.
So I am a politician, realtor, economist, re investor, health insurance lobbysit who works for a megabank. If you say so.
Can I be an astronaut next week?
Sure why not? Make some more uninformed / not-thought-out statements like your thoughts on “underemployment” and you’ll have your ass kicked to the moon and back by next week.
Underemployment: (n) Realtor with expired license and no customers, now turning tricks
or maybe that is the definition of overemployment, not sure
Hbb Mantra #2: When a straw man won’t work, use a non-sequitur.
How about addressing the absurdity of counting someone who is employed as “underemployed” because he doesn’t have the dream job? But no, that would break the “unemployment is a billion percent” theme here.
“When a straw man won’t work, …”
I thought you said you were working? Me confused…
“How about addressing the absurdity of counting someone who is employed as “underemployed”….. ”
The BLS does not even attempt to count “underemployed”.
“Sure why not? Make some more uninformed / not-thought-out statements like your thoughts on “underemployment” and you’ll have your ass kicked to the moon and back by next week.”
LMAO!!!!!
Can I be an astronaut next week?
I already thought you were an astronaut, Eddie. Your head is so far up your anus that I figured there is no other profession for which you would be qualified.
I used to employ 1 artist who worked from here home in Oregon.
The federal government now gets a monthly report from me where I tell them that I will not rehire this employee. They tell me this counts for 700 jobs lost.
I agree with Eddie, underemployment has no meaning, unemployment is to big a job for the government to track honestly.
if someone was pulled down $100,000+ for the past 10 years, and now they are making under $25,000 while they are still healthy and in their prime earnings years, that just might be indicative of underemployment. Think former corporate managers cleaning toilets at BigBoxMart.
Actually, going from corporate management to cleaning toilets would be usually be a step UP in employment, in terms of value added to the economy.
“Megabank splitting could be years worth of nillable hours.”
I used to really like nillable wafers with milk as a young man, after school, watching Top Cat.
A very personal and concrete example is for you, Eddie, to lose your job working with MegaBank making six figures and ended up being a part-time janitor making $9 per hour at one of those run-down NYC hotels charging less than $300 per night.
It happens, it just didn’t happen to you.
Not really. I am not employed by megabank. Megabank is a client of the business I own. I have $0 w2 income and so would never qualify as unemployed.
Besides if the only work i could find was $9 an hour that is my new employment. Saying i am underemployed implies i am entitled to always make what i make now. Are you suggesting anyone who makes $x one year but less than $x the next is unemployed or underemployed?
I didn’t say you were employed by Megabank, I said working with Megabank. I knew you didn’t work for Megabank directly.
My definition of under-employed means 1) I wanted to work full-time but can only get part-time job and 2) I was trained to do something that makes $x per hour but could only find a job that makes $y per hour, where y is “significantly” less than x, however you want to define it. In the context of a functioning economy, it matters because if directly impacts one’s spending power and thus the consumer spending part of the economy.
Unemployment does not fit the definitions above because technically you still have a job, it’s underemployment we are talking about. However the impact on the economic output can not be ignored, which is what you seem to be implying.
I thought the stats were based on hours. Did you work 40+, if not do you want to? If yes then you’re underemployed.
>Saying i am underemployed implies i am entitled to always make what i make now. Are you suggesting anyone who makes $x one year but less than $x the next is unemployed or underemployed?
In the context of figuring out the “potential” of economic growth, it definitely matters how many people are under-employed because it directly affects consumer spending and for a country as dependent on consumer spending as US is, you betcha. After all, if the economy is booming as you claimed, then the # of of under-employed folks should be diminishing. Only in the “Eddie’s World” does under-employment not matters.
I wish I could move to “Eddie’s World”. You accepting immigrants or what?
And that is subjective. Did I work 40? I did week 1, I worked 33 week 2, I worked 48 week 3. I am now working 37 in week 4 when the survey is taken.
Am I underemployed?
My world is reality. Your world is the exceptions.
I see the 99.99% of the planes that land safely and dont think twice about flying somewhere. You see the .01% of planes that crash and think anyone who thinks of flying is crazy.
My idea of underemployment is anything less than three times a week.
Anything less than 3x/week is my idea of zexual frustration.
“My idea of underemployment is anything less than three times a week.”
LOL… I like your definition, Blue Skye!
I totally agree, counting someone as not in the “job they deserve/want” as underemployed is a lot like saying you lost 100k off your wishing price for your 1,000 sq ft place in Malibu.
The definition is those working park time hours who were or want to be full time workers. It has nothing to do with pay. It is about hours.
That’s the definition.
“It has nothing to do with pay. It is about hours.”
In a free labor market, lower pay = more hours. Pay is the price of labor, and hours the quantity demanded.
Heh. I was right; WT says so. Neener neener Eddie.
No, lower pay does not necessarily mean more hours… employers, such as retailers, often have a 35 hour week for their on-the-clock “full-time” employees. So a few minutes extra clocking in early or late will not result overtime pay.
Employees who do go over 40 hours without express permission of their supervisors will be punished. Supervisors are required to keep their costs down as much as possible and are also subject to punishment if overtime is paid.
In corporations lower paid “para-professionals” (who are on a base salary, but entitled by law to overtime in certain circumstances) are supposed to clock (or fill in timesheets) in so their hours are recorded, but in many cases it’s not enforced and/or discouraged.
And lots of jobs are part time so no benefits need be given.
You can do a before-after comparison of earnings to measure the effect of the recession on household incomes. Contrary to Straw Man Eddie’s assertion, this is not rocket science.
before-after comparison of earnings to measure the effect of the recession on household incomes ??
Exactly Pbear…
Oh it’s a recession now? I thought it was a depression. So can I take that as a sign of the economy improving?
“Oh it’s a recession now? I thought it was a depression.”
Oh no—don’t worry, it’s only a recession now, Eddie…
It will be a depression in another 18months, when the appetite for stimulus wanes.
You guys are a trip. Last year about this time you were all convinced this was it. The end was here. The financial meltdown to end all financial meltdowns was upon us. Dow would his 3000. Maybe even 2000. Unemployment would be 35%. Houses on the beach in Florida could be had for $10K soon enough. And yet somehow in such a deflationary environment gold would also be $5000.
And here we are a year later, Dow is back above 10K, unemployment is 10%, houses are selling in FL again and there are bidding wars in AZ and Calfornia. No riots in the streets, no soup lines, no bank runs, no panic. Just your garden variety recession no different than any other recession in the past 60 years.
So now the great depression that was upon us in 2008 has been postponed for another 18 months to mid 2011. Got it. I’ll make sure to put that on my calendar.
no different than any other recession in the past 60 years.
Eddie is playing with everybody! He’s having fun and laughing and stuff…
He’s too smart to really mean the funny stuff he says. It’s obvious because of all the hot buttons and (intentionally) ignorant buttons he loves to hit to drive people crazy…
He’s funny and he makes me crack up a lot!
RioAmerican in Brasil, do you speak portuguese?
do you speak portuguese?
Well, I’d say I speak Portuguese somewhere between the beginning and intermediate levels.
For my age and the time I’ve been here, I’d give myself a B minus.
I am half Portuguese Rio…I can follow a conversation sort of but I cannot speak it…Wish I could…I guess with my past history I could turn to Rosetta Stone and pick it up pretty quickly or better yet why don’t I just move to Rio for a year
It’s a beautiful but tough language. You’d like Rio or at least certain aspects of it I’m sure.
It’s a little hot today though and the dollar is weak right now.
You guys are a trip. Last year about this time you were all convinced this was it. The end was here. The financial meltdown to end all financial meltdowns was upon us. Dow would his 3000. Maybe even 2000. Unemployment would be 35%. Houses on the beach in Florida could be had for $10K soon enough. And yet somehow in such a deflationary environment gold would also be $5000.
are you kidding me, the feds had to backstop every bank, if you recall there were runs on money market accounts and even some banks. we were very close to mass banking panic. lets see 100 billion to fannie mae 100 billion freddie mac, buying of all kinds of MBS paper by the feds. I would say we were very lucky. the stimulus spending will end and then the economy will have to stand on its own. the fed is pumping the system to the max and with rates near zero is it no wonder the stock market is up. i’m not in the doom and gloom camp, but it was one hell of a ride and the wreckage is substantial for many people. it has not affected me besides the fact i bought a house for 1/3 the bubble years! but, i am wondering what the future holds since we are going to double our debt and will the foreigners continue to loan us the cash cheaply or will it lead to higher interest rates, inflation, and a collapse of the dollar. eddie you are lucky too that the economy has not hurt you, maybe you should have a little more compassion for those who got laid off and are unemployed or underemployed!
This economy will never stand on its own. The consumer will never return ala 2006. Stimuli into perspective might keep things stuttering along for a few more years. Eventually the printing press will have to be ramped up and then the scenario is any doomers guess. Hey,even Zimbabwe kept up that game for 3-4 years. Im sure our boyz are up to the task. I sure wouldnt want to be one of the upper class when that breaks.
Jay,
/
What you described happened in 2001-2002, 1982-83 and 73-75. Adjusted for inflation houses in Texas are still 1/3 the price they hit in the mid-80s. You make it sound like there has never been a bubble before that crashed.
As for the foreigners….jezuz, can nobody here take 5 minutes off the xenophobic angle? Yes those Eeeeeevil foreigners buy US debt. Like they have been for 250 years. Who do you think funded the Revolution? Bueller? Bueller? Fry? The answer is those eeeeeeevil foreigners, the French.
But they’re Europeans so in your world they’re not really foreign right?
“…are you kidding me, the feds had to backstop every bank, if you recall there were runs on money market accounts and even some banks.”
No point arguing the facts with Straw Man Eddie. He will just twist them right back in your face.
Righto. Although in some ways Eddie is on “my” side politically, his perspective on the currect recession/depression/whatever seems 100% inane.
Underemployment….what does that even mean?
It’s easy to measure unemployment. It’s binary. You do or you do not have a job.
In a complex world, the ability to differentiate subtleties is an important tool to help make sense of it all. Understanding the impact and importance of subjectivity helps too.
Answers are not always found in black or white but sometimes they come in shades of gray.
And you’re either with me or against me on this one.
Underemployment….what does that even mean?
For the benefit of yahoos, allow me to explain. It means you’re working considerably less than forty hours a week, and making considerably less than what you need to get by.
Ahh there’s that rock solid, easily measured metric “considerably less”. Is that 5%, 10%, 20%, 40%, 50%?
And is “considerably less” the same now as it was 10 years ago? If not then how do you compare today’s “underemployed” with the “underemployed” of 1999? Maybe in 1999 people were satisfied working 30 hours a week but today people want to work 40 hours. So someone working 32 hours in 1999 was not underemployed. But someone working 33 hours a week today is.
That’s what happens when you try to use subjective metrics. You get crap.
“If not then how do you compare today’s “underemployed” with the “underemployed” of 1999?”
The BLS definitions for U-1 thru U-6 have not changes since 1994, Eddie. So it is easy to compare, and consistent over time back to 1994.
If you are so offended by the way the BLS counts unemployment, why haven’t you been complaining about it for the last 15yrs—why only now, Eddie?
If anything, the definition changes in 1994 cause them to UNDERSTATE true unemployment.
This is one of the more boring debates I’ve seen in here. But I’ll concede that Eddie has a point. To some extent “underemployment” is in the eye of the beholder. In layman’s terms I’d say it means working well under your desired productive capacity.
but, it also means an economy that is not creating the necessary employment opportunities for continued strong sustainable growth. i believe that is the point of measuring underemployment.
Enjoy the troll food, Eddie
Sorry PB…it’s my fault. I didn’t spike little Eddies World (aka cookies and milk), with enough Thorazine today.
How about getting hours cut by 20 percent….but get the work done!!
That’s exactly what is going on, Carlos - productivity is at an all-time high. I’m sure that Eddie sees that as a very good thing. I, not so much.
No, you’re right. We should strive for unproductive workers. Why have someone do 100 units of work in 10 hours when they can do it in 100 hours for the same pay? You’ve just multiplied employment 10 fold.
If you don’t understand why productivity is a good thing ask yourself why having a minimum wage of $100 an hour is a bad thing. When you get the answer for that question, you should figure out why a productive workforce is better than an unproductive workforce.
The lack of even rudimentary economic / financial theory displayed here on a regular basis is staggering.
“The lack of even rudimentary economic / financial theory displayed here on a regular basis is staggering.”
Exhibit A: Eddie’s Realtor™ math example of a couple of weeks back. Could you please repost it, so we can eviscerate it just once more? Please, please, PLEASE???
Eddie, stop putting words in my mouth. I never said that we should strive for unproductive workers. But you can only push people so far - look at what our soldiers are having to put up with. I watched my grandfather, a Pennsylvania coal miner, die a horrible death, an old man at age 61. They squeezed the life out of him from the age of 14 to 61 in the mines. He was productive all right, and it drove him to an early grave. Some of my patients are telling me that they are afraid to take vacations for fear that they’ll be the next to be laid off. This record productivity impl suffering for those who perform the most difficult, menial jobs.
It’s easy to work long, hard hours when you have an interesting job that pays well, like I do. When I’m doing surgery I don’t notice if I’m hungry or have to go to the bathroom. Those who don’t have good jobs should have breaks and work conditions that are as comfortable as possible.
Why fear what is deliberately being engineered by the combined efforts of the Fed, the Treasury, the Congress and their partner institutions in other nations’ governments? Why not laud their bubble reflation success? The only thing we have to fear is fear itself.
Just try not to let your rational expectations get the best of you while swimming in an irrationally exuberant sea of frenzied froth.
* The Wall Street Journal
* NOVEMBER 4, 2009
Fears of a New Bubble as Cash Pours In
Real-Estate, Stock and Currency Markets, Especially in Asia and Pacific, Are Seen at Risk
By ALEX FRANGOS and BOB DAVIS
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 of supply and demand.”
Behind the trend are measures such as cutting interest rates and pumping money into the financial system, which have left parts of the world awash in cash and at risk of bubbles, or run-ups in asset prices beyond what economic fundamentals suggest are reasonable.
…
“Once the rockets are up, who cares where they come down?
That’s not my department,” says Wernher von Braun.”
Tom Lehrer
“Once the money goes out, who cares where it comes down? That the choice of the market” says Ben Bernanke.
We need someone like Lehrer for this era.
“…in equity markets across Asia and in real estate in China, Hong Kong, Singapore and Vietnam.”
Ha, the “Domino’s” will fall…without one spent US bullet!
Kool-Aid,… it does your country good!
“Ha, the “Domino’s” will fall…without one spent US bullet!
Kool-Aid,… it does your country good”
lol…You are on a roll this morning.
Finally, some good news! yeah bubbles for everyone. NWOB
* The Wall Street Journal
* OPINION
* NOVEMBER 6, 2009, 9:58 P.M. ET
The Man Who Predicted the Depression
Ludwig von Mises explained how government-induced credit expansions led to imbalances in the economy.
By MARK SPITZNAGEL
Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today.
Mises’s ideas on business cycles were spelled out in his 1912 tome “Theorie des Geldes und der Umlaufsmittel” (”The Theory of Money and Credit”). Not surprisingly few people noticed, as it was published only in German and wasn’t exactly a beach read at that.
Taking his cue from David Hume and David Ricardo, Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money supply, and how this was magnified by government intervention. Left alone, interest rates would adjust such that only the amount of credit would be used as is voluntarily supplied and demanded. But when credit is force-fed beyond that (call it a credit gavage), grotesque things start to happen.
Government-imposed expansion of bank credit distorts our “time preferences,” or our desire for saving versus consumption. Government-imposed interest rates artificially below rates demanded by savers leads to increased borrowing and capital investment beyond what savers will provide. This causes temporarily higher employment, wages and consumption.
Ordinarily, any random spikes in credit would be quickly absorbed by the system—the pricing errors corrected, the half-baked investments liquidated, like a supple tree yielding to the wind and then returning. But when the government holds rates artificially low in order to feed ever higher capital investment in otherwise unsound, unsustainable businesses, it creates the conditions for a crash. Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse.
…
Thanks for the post Mr. Bear.
“Not surprisingly few people noticed, as it was published only in German and wasn’t exactly a beach read at that.”
Hey to get “distributional impacts” for old Ludwig ideas, can someone get him an updated, re-colored photo (lose the beard, hip the suit) & a Hollywood studio with a good specials effects unit.
nothing’s going to change my “time preferences,” but then I’m old, too.
Herr Spitznagel oughtn’t complain too loudly, lest an attempt to remedy the situation destroys the arbitrage opportunities that arise from the juxtaposition of Keynesian economic governance against Austrian economic reality.
Keynes is long dead. Long live Keynes!
…
Fast forward 70-some years, during which we saw Keynesianism’s repeated disappointments, the end of the gold standard, persistent inflation with intermittent inflationary recessions and banking crises, culminating in Alan Greenspan’s “Great Moderation” and a subsequent catastrophic collapse in housing and banking. Where do we find ourselves? At a point of profound insight gained through economic logic, trial and error, and objective empiricism? Or right back where we started?
With interest rates at zero, monetary engines humming as never before, and a self-proclaimed Keynesian government, we are back again embracing the brave new era of government-sponsored prosperity and debt. And, more than ever, the system is piling uncertainties on top of uncertainties, turning an otherwise resilient economy into a brittle one.
How curious it is that the guy who wrote the script depicting our never ending story of government-induced credit expansion, inflation and collapse has remained so persistently forgotten. Must we sit through yet another performance of this tragic tale?
Mr. Spitznagel is the founder and chief investment officer of the hedge fund Universa Investments LP, based in Santa Monica, Calif.
Please Lord, just one more bubble. This time I promise I will not screw it up!
You’re going to screw it up. The only bubble you can time is real estate.
I dunno. Maybe I just got lucky, but I did talk my dad into selling almost all of his stock holdings in Spring 2007.
P Bear - I did the same thing in spring, 2007. But I have not a clue what to do now, or when stocks will reach their bottom. You are the first to complain about the PPT.
“…or when stocks will reach their bottom.”
Given the Fed’s apparent willingness to let Uncle Buck go to waste, who is to say stocks have not already bottomed out (in nominal dollar terms, at least)?
At the risk of seeming dense, doesn’t Mises’s warning pertain to precisely the sort of hair-of-the-dog remedy currently being administered by the likes of Timothy Geithner, Lawrence Summers and Ben Bernanke?
“Mises’s solution follows logically from his warnings. You can’t fix what’s broken by breaking it yet again. Stop the credit gavage. Stop inflating. Don’t encourage consumption, but rather encourage saving and the repayment of debt. Let all the lame businesses fail—no bailouts. (You see where I’m going with this.) The distortions must be removed or else the precipice from which the system will inevitably fall will simply grow higher and higher.”
Seems to me Keynesianism has been shown to work rather well in the post GD period. We’ve had fewer and milder economic crises since we began following his policies.
However, it requires financial regulation to prevent credit bubbles. We lessened or removed those regulations and created a monster credit bubble, which is the most difficult crisis to cure with lowered interest rates.
But we’re faced with the same alternatives if we ‘let the chips fall where they may’– legitimate viable businesses will be destroyed en masse in a deflationary death spiral. No one knows where or when it would end.
Surely there’s some middle ground between allowing the economy to collapse and giving mega-million bailouts to banksters. Regulation, perhaps? And an end to 2big2fail.
Surely there’s some middle ground between allowing the economy to collapse and giving mega-million bailouts to banksters. Regulation, perhaps?
Are you volunteering to wade through the 100,000+ pages of regulations that already exist and explain to us which ones make economic sense and which don’t and why?
“….legitimate viable businesses will be destroyed en masse in a deflationary death spiral.”
Is it better to let the government decide which ones are “rescued”, perhaps even putting them in a better position to out compete “legitimate viable businesses”? Think about the financial institutions and what we have just been through. Some of the chosen ones are now reporting record profits.
Seems to me Keynesianism has been shown to work rather well in the post GD period. We’ve had fewer and milder economic crises since we began following his policies.
Personally I wouldn’t define “lack of economic crises” as success. IMO what’s been going on for about 70+ years now is basically sawdust in the transmission. Or botox, or whatever - pick your analogy. Perhaps the best is just that of heavy makeup. We’re applying thicker and thicker layers to try to mask the problem - increasing reliance on debt, but eventually the makeup itself actually makes the problem worse by weighing down the face.
Eventually the price of “lack of crashes” will be total annihilation of the system. This may be the time, though perhaps not. If it isn’t, then I the next one about a 99% chance.
My only hope - for future generations - is that when it does happen that it’ll be seen for what it is, rather than being masked by other events.
For instance there’s a very good chance that the U.S.’s demise will be brought about directly via another world war. If we enter such a war, we will most likely lose - simply because we can’t afford it.
US Fed Debt vs GDP:
- Going into WW1: 8%
- Peak during WW1: 35%
- Going into WW2: 45%
- Peak during WW2: 120%
- Current: 85%
If that happens - then I fear that the U.S.’s demise would be blamed on “losing WW3″ instead of “collapse of debt”, since too few people will look under the hood and see that the primary cause of loss of the war was lack of funding.
(The stats above only show federal debt - like stats for other private debt are similar, indicating that we simply won’t have the ability to borrow enough money to fund a significant war)
Read the handwriting on the wall: Megabank, Inc is on death row.
Weekend Edition
Nov. 6, 2009, 9:01 p.m. EST
Radical fixes for ‘too big to fail’ gain support
Bank of America, J.P. Morgan, Wells, Goldman among break-up candidates
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) — If policymakers and regulators tackled the issue of too big to fail head on, the largest U.S. financial-services companies would be downsized dramatically, leaving the industry looking more like the utility sector: safe but slow-growing.
Bank of America (BAC 15.05, -0.08, -0.53%) , J.P. Morgan Chase (JPM 43.48, -0.39, -0.89%) , Wells Fargo (WFC 27.12, -0.17, -0.62%) , Goldman Sachs (GS 171.78, -1.62, -0.93%) and Morgan Stanley (MS 32.60, +0.18, +0.56%) are among the leading candidates to be broken up or shrunk significantly under such a drastic scenario, which has gained noted supporters in recent weeks.
“What you will have is another public utility sector, with banks growing roughly 4% a year, funded by deposits,” Richard Bove, a financial-services analyst at Rochdale Securities, said in an interview.
For a vision of such a future investors need look no further than Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 4.06, 0.00, 0.00%) , which is already being broken up under part-ownership by the government, Bove and other analysts say. American International Group /quotes/comstock/13*!aig/quotes/nls/aig (AIG 35.48, -3.80, -9.67%) , almost 80% owned by taxpayers, is also being slowly unraveled.
Since the financial crisis hit last year, the U.S. government has spent hundreds of billions of dollars investing in the nation’s largest financial institutions, lending them cheap money and guaranteeing their debt.
While the effort probably averted another Great Depression, it’s created a cadre of financial-services behemoths that are too big to fail.
…
“…leaving the industry looking more like the utility sector: safe but slow-growing”
Oh goody, “Utility Banks”, what a wonderful idea! Where are we gonna place ‘em on the Monopoly board Mr. Bear? Can we just re-label something?
I’ll buy “Dubai Sovereign National” for $175.00
Next: “Goldenman Wealth Transfer & Consolidation” Bank for $250.00
“Goldenman Wealth Transfer & Consolidation”
Excellent
Here is a voice of support:
Investment Banking
Greenspan Calls to Break Up Banks ‘Too Big to Fail’
October 15, 2009, 3:48 pm
Alan Greenspan, the former Federal Reserve chairman, said Thursday that banking regulators should consider breaking up large financial institutions considered “too big to fail.”
Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always back them up. That squeezes out competition and creates a danger to the financial system, Mr. Greenspan told the Council on Foreign Relations in New York, according to Bloomberg News.
“If they’re too big to fail, they’re too big,” Mr. Greenspan said. “In 1911 we broke up Standard Oil — so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”
…
Looks like even Mr. Magoo’s hindsight is 20/20. Is he sure this isn’t all just a little froth?
Still, it’s nice to see that the big boyz are finally getting it. But I guess once you’ve made your fortune, you develop a desire for a safer economic world in which to enjoy and maintain it?
They’re starting to realize they’ve looted all they safely can.
He always was fond of driving while looking through the lens of the rear view mirror.
I told my friends before Greenspan was knighted that he would go down as the worst Fed Chairman ever and they remember me saying it.
BUT, he testified before Congress that he made a mistake. (”found an error in his model”)
AND, now this bank breakup thing.
Is there a chance that part of it was just a mistake? Could he have been that dumb?
No. They all knew what they were doing and were even warned about it years in advance.
eco:
Isn’t that the Trillion dollar question… did they know full well what a disaster could happen… or were they surrounded by clean faced summa cum laude clueless assistants and relied on their “educated” advice.
“we” broke up Standard Oil? lol
I didn’t know AG was that old, did you?
He sure looks like it.
How courageous of him to support bold action taken 98 fricking years ago. Way to take a stand!
1911 Standard Oil?
I think Sir Greenisspent has lost his “short term” memory…he seems to have forgotten about AT&T…(Hwy bets he still has the standard wall phone with dial in the kitchen, avocado green)
1982: AT&T Breakup …(Mr. Greenissspent age 73)
January 8: The Justice Department and AT&T agree to a consent decree to end a battle that first started in 1974. AT&T agrees to divest itself of its local telephone operations (the “Baby Bells”)
Thank you Judge Green.
And most of those fragments of Ma Bell have since re-united. So much for Judge Green.
“I think Sir Greenisspent has lost his “short term” memory…he seems to have forgotten about AT&T…(Hwy bets he still has the standard wall phone with dial in the kitchen, avocado green.”
Hell, I have a Red Phone from a USAF cold war Strategic Air Command Ready Room…but no one ever calls.
Beck also has a red phone. The White House has his number, but no one calls to correct him !!!
From the point of view of those of us who already had telephones when ATT was broken up, the whole episode seemed to be just an irritation: it created an excuse for everyone involved in providing your telephone service to tell you that any problem you were experiencing was someone else’s fault.
Bubba “Bill ” Stayed here.
Even the Rich Are Treating Their Houses Like Piggy Banks
LOS ANGELES — In recent years, millions of Americans looked at their houses and saw big, fat piggy banks. And it occurred to them to take out big, fat new mortgages.
Few did it on the scale of Ronald Burkle.
Mr. Burkle, the grocery-store billionaire, has $56 million in loans against two houses, including $9 million added last year. One is his iconic Beverly Hills mansion, “Green Acres,” a 44-room Italian Renaissance palazzo built in the 1920s by silent-film star Harold Lloyd that more recently was a favorite overnight rest stop for Mr. Burkle’s buddy, Bill Clinton.
Mr. Burkle declined to say how he is using the money. There is no indication he needs it to pay the water bill.
http://online.wsj.com/article/SB125755151124534805.html?mod=WSJ_hpp_sections_personalfinance
Sounds like the housing ATM bubble still hasn’t popped for some in the highest echelons of the housing market?
It did for Old Ed McMahon. “Heeeeeeerrrrrrrrrrrrrrrrreeeeeeeeeessss Johnny!”
He borrowed money at 2.25 PERCENT, i don’t blame hit at all for taking as much as he could. He could buy a bond at 5% and pocket the difference. My only wish is that I could borrow millions of dollars @ 2.25 percent:(
Hey Burkle -
Check inside all the cabinets and dresser drawers. Harold Lloyd may have left some scripts there which could help you figure out how to stay balanced on a balustrade, thirty stories up.
Bill in LA,
Would you like to get a coffee or breakfast one day? You seem like an interesting guy and it would be fun to chat real-estate / general life philosophy with you, I think. Plus, I can show you my car that you encouraged me to buy =p.
Cap’n
You LA folks are past due on a get together. Seating should not be a problem these days. Besides you get two birds for one gathering…spending & stimulus.
Yeah it would be fun to talk about this stuff. I am in my Phoenix apartment this weekend but returning to LA Sunday. Maybe next weekend @ a Mimi’s Cafe in the South Bay area around 8:30ish?
I’d also enjoy getting together with Bill.
Ok guys and gals
Mimi’s at 25343 Crensha BLVD Torrance, CA 90505
or for just coffee how about Starbucks at 21209-A Hawthorne Blvd
across the street from Little Company of Mary Hospital?
November 14 Saturday? 8:30am? I’m leaning toward Starbucks since no reservations are needed.
That weekend I’m away. I’ll be around the 21-22 and Dec 5-6.
I like those dates better too, but will make every effort to get from Morro Bay to Los Angeles for any HBB gathering in the mid-Nov to mid-Dec time frame. (I’m in Sidney Nebraska with my car, but it will be in MB some time this coming week.)
What car did you buy? I’ve been hunting for a good AWD or front wheel Diesel. Something big enough for my 65lb. dog. And I’m going to pay cash, so nothing over 25K.
rufita
Wait until Captain Credit Crunch drives it into the meetup place.
Okay I will keep tuned in. November 21-22 and December 5-6 look good.
I did not bring my laptop with me to Phoenix and my Smart Phone is awkward to work with on blogs. So I am replying today.
Nov. 5, 2009, 3:04 p.m. EST
Poor property prospects
Commercial real estate nowhere near a recovery as bottom is year away at least
Related Stories
* Window lengthens for first-time buyer tax credit (Nov. 6)
* The pain of renting a home you once owned (Nov. 5)
* Mortgage rates creep up (Oct. 29)
* Long-term mortgage rates edge higher (Oct. 22)
By Steve Kerch, MarketWatch
SAN FRANCISCO (MarketWatch) — Commercial real estate vacancies will continue to rise and rents will continue to decrease across all property sectors before markets hit bottom, probably sometime in the middle of 2010, according to a report released Thursday by PricewaterhouseCoopers and the Urban Land Institute.
“It’s pretty grim, the worst decline since the Great Depression,” said Stephen Blank, ULI senior resident fellow for real estate finance. “As one participant in the report said, getting through 2010 will be a test of who can survive.”
“We’re looking at a sober year for 2010 and probably not much different for 2011. It all depends on the economy and the consumer and unfortunately we don’t see much of a resurgence,” said Jonathan Miller, author of the report, Emerging Trends in Real Estate 2010.
What To Do If the Fed’s Wrong On Inflation
Jamie Cox of Harris Financial explains the apparent disconnect between the high price of gold and the Federal Reserve’s lack of alarm about inflation. Interview with Simon Constable of “The News Hub.”
Unlike in previous real estate recessions, oversupply is not the problem. Blank said the development pipeline of new projects is at its lowest point in the 31-year history of the Emerging Trends in Real Estate report. The report is based on more than 900 interviews with leading real estate developers, lenders, investors, brokers and property managers.
“The problem is not supply. It’s how do we get demand back,” said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California at Berkeley. And that demand “is all about jobs. We’ve lost 8 million jobs, the most since the Great Depression, and until we create jobs we can’t fill space.”
…
Awesome map of an FB paradise.
http://www.tampabay.com/specials/2009/interactives/foreclosures/cp.shtml
Hey, looks like some local Sheriff’s deputies might be gettin’ some over-time pay $$$$$ if I’m reading the chart on the left side correctly.
We should saw off Floridahh from the rest of the country and let it float out to sea. Personally I think Texas is an ugly state.
Run highway run
As I walk through the valley of the shadow of death
I take a look at my equity and realize there’s not much left
Cause I’ve been HELCC’in and flippin’ so long that
Even my ma’ma thinks that my property is gone
But I ain’t never crossed a banker that didn’t deserve it
Me, be treated like a realtor, you know that’s unheard of
You better watch how you talkin, and where you walkin
Or you and your appraisers might be lined in chalk
I really hate to refi, but I gotta loc
As it deflates I see myself in the house of smoke, fool
I’m the kinda G the homeowners wanna be like
In my driveway in the night
Packin’ Uhauls the street light
Been spending most our lives living in the FB’s Paradise
Been spending most our lives living in the FB’s Paradise
Keep spending most our lives living in the FB’s Paradise
Keep spending most our lives living in the FB’s Paradise
Better get Coolios permission before you record that! Oh his people said it’s cool? Then you should be good.
That path has already been traveled. Amish Paradise stands.
Ruling: Parody
That map is awesome. If anyone finds similar maps for North County San Diego, please post.
P.S. If you click on individual homes on that map, you can see where the current owner lives. Many of those homes are owned by absentee investors who live in all corners of the US.
Hey Losty, why don’t you “winter” in Florida…you wouldn’t even need gas money to move…just a dolly & wheel barrow, look’s like there’s a “squatter’s respite” every 300 feet.
The Brits might be getting it right.
Brown Says G-20 Should Consider Tax on Speculation
Nov. 7 (Bloomberg) — U.K. Prime Minister Gordon Brown said the Group of 20 nations should consider measures such as taxing financial transactions to penalize excessive risk taking and limit the burden on taxpayers of bank failures.
“It cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us,” Brown told G-20 finance ministers and central bankers at a meeting today in St. Andrews, Scotland. Tighter capital rules and pooled bank resolution funds could also be considered, he said.
http://www.bloomberg.com/apps/news?pid=20601080&sid=aEbwLvzaLk04
Politicians with close ties to Megabank, Inc are none too fond of Mervyn King’s (and Alan Greenspan’s) proposal to break them up. It’s going to happen, and politicians who stand in the way should be drummed out of office.
Brown rebuffs governor over banks
By George Parker and Chris Giles in London
Published: October 22 2009 03:00 | Last updated: October 22 2009 03:00
Gordon Brown, UK prime minister, yesterday issued a thinly veiled rebuke to Mervyn King, Bank of England governor, over his call for Britain’s biggest banks to be split up to avoid a future financial crisis.
Mr King argued that integrated banks should be split into separate “utility” retail operations and risky investment banking arms, saying that banks should not be allowed to exist if they were “too big to fail”.
But his comments drew a frosty response in the House of Commons from Mr Brown, whose government opposes what it regards as a simplistic and out-of-date response to preventing a future crisis.
Mr Brown argued that Northern Rock had to be rescued, even though it was a simple mortgage bank, while Lehman Brothers - which was allowed to fail with disastrous consequences - was an investment bank without high street customers.
“The cause of the problem is that banks had been insufficiently regulated at a global level and we have got to set standards for that in the future,” he said.
Mr Brown’s faith in better regulation is at odds with the view of the governor, who told a Scottish business audience on Tuesday it was “a delusion” to think tougher regulation would prevent future financial crises.
…
It would be simpler to eliminate negative real interest rates.
Not terribly likely though.
Haven’t you heard the Fed is going to start raising interest rates any day now, since the recovery is strongly underway?
“My bubble is smaller than your bubble.
“Bubbles, frothy stock markets and booming property prices are not a problem in the U.S., U.K. or continental Europe at the moment,” said Barry Eichengreen, a former senior policy adviser at the International Monetary Fund who now teaches at the University of California at Berkeley. “They are a problem for China and other emerging markets. It’s their central banks that need to tighten, not ours.”
We’re in a severe bubble. It’s gonna hurt real bad when this one bursts.
Watch out for the Canada and the UK to have severe problems.
+10 Amen to that.
“It’s gonna hurt real bad when this one bursts.”
What’s gonna stop them from keeping this one pumped up forever? I don’t see any reason for them to try raising interest rates again like they did (disastrously) circa 2005.
How does the GSE “rent to forestall foreclosure” program support the Ownership Society concept? It seems to work against home ownership, by (1) turning former home owners into renters; (2) supporting unaffordable prices, thereby keeping prospective owners priced out of the market.
Are the GSEs’ missions still ‘affordability’, or have they been retasked with helping to sustain unaffordable prices, using Main Street tax dollars to prop up the value of banks’ real estate assets and keep prospective new buyers on Main Street priced out?
One could argue that tax payers are not directly paying the tab on various housing price support measures, but I would argue the dilution effect of the Fed’s balance sheet expansion and the transfer effect of providing tax credits and other subsidies to home buyers and owners constitutes stealth taxation. Further, this form of taxation does not finance public good production (e.g. building roads, providing for law enforcement and national defense, etc) but rather represents a private wealth transfer from others into the pockets of home owners.
What a choice: Lose your home to foreclosure, move out and start fresh somewhere else, or give your home back to the lender and rent the home you once owned. Certainly staying makes life easier and it’s probably better for your credit rating. And if you love your home, who wouldn’t want to stay?
But to rent what you once owned? That’s got to hurt.
I wonder where the most “renters” will be living? which states will become apartment complexes?
Most new renters in ca, az,fl, and nv would be my guess.The govt will be the next slumlord millionaire!!!!!!
“I wonder where the most “renters” will be living? which states will become apartment complexes?”
I’m with whoever said it yesterday — being a prop mgr for the gubmint will probably a good gig in the coming years.
In a year or two the govt will probably opt to sell the house back to the “tenant” for far less than what they previously owed, 100% financed, with the note at below market rate.
Cramdown through the backdoor. And by renting, the FB has already proven that he really wants to live there.
Not a bad idea.
“Cramdown through the backdoor.”
Easy to calculate the value if anyone is interested. Simply take the present value of the 31 pct of buyer’s income (or whatever cap applies to the monthly nut) at current market rates and subtract from the outstanding principle balance on the loan and to get the effective cramdown.
So, then should we all “buy now, it is a great time to buy”
If you look carefully at the amortization table of a typical 30 year FHA loan with 3.5 pct down, it’s easy to conclude most bubble buyers were actually renters of money masquerading as homeowners. Moreover, a lot of these tools were using interest only ARMs or worse.
Winston is getting pretty desperate. This is just another ploy to hide the true state of affairs at the GSEs. The PTB are more determined than ever to distort the facts.
In fact, this past weeks dog and pony show, with the unemployment numbers coinciding with the unemployment/tax-credit expansion, shows they are more united than ever.
This news is stale, but not sure it was posted here. I hope to see Senator Dodd lose his seat in the Senate before this bubble is finished deflating.
* The Wall Street Journal
* OPINION: POLITICAL DIARY
* OCTOBER 23, 2009, 5:01 P.M. ET
Dodd Can’t Dodge
By JAMES FREEMAN
Updated: Connecticut’s Chris Dodd managed to avoid testifying before the Senate ethics committee about his VIP mortgage loans from Countrywide Financial. Unfortunately for Mr. Dodd and fellow VIP Sen. Kent Conrad, a committee on the other side of the Capitol appears to be reviving the investigation.
On Friday House Oversight Committee Chairman Edolphus Towns announced in a press release that “we need to clarify unanswered questions about Countrywide Financial’s VIP program, so I am issuing a subpoena to gather information about how that program worked and whether it provided special benefits to government officials.”
Mr. Towns added, “In line with the commitment to an ethical and accountable Congress, the subpoena to Countrywide covers records that could show special treatment for Members of Congress.”
…
Looks like Mark Twain was too generous in his appraisal of congressmen.
Is this part of Megabank, Inc’s final credit binge before they are busted up and replaced with a competitive banking system? I thought we had usury laws in this country, but I guess the Megabanks are above the rule of law, at least for the time being.
Nov. 6, 2009, 8:01 a.m. EST
Credit-card countdown: Higher rates abound
Credit cards gouge consumers ahead of new law
By Jennifer Waters, MarketWatch
CHICAGO (MarketWatch) — If you’re one of the millions of Americans holding a credit card, this isn’t necessarily news: Credit-card issuers are hiking interest rates, penalties and fees in full force ahead of stringent new laws that take effect in February.
In fact, some 400 credit cards from the nation’s 12 largest bank issuers — accounting for 90% of the $89.8 billion in outstanding consumer credit — are still using most of the same tactics that the Federal Reserve has called “unfair or deceptive” and that will be outlawed in fewer than four months, according to a new report from the Pew Health Group’s Safe Credit Cards Project.
“Until the law takes effect we’re seeing that all the major credit-card issuers on the bank side are continuing to engage in these unfair and deceptive practices,” said Nick Bourke, project manager of the Safe Credit Card Project. “The numbers of unfair and deceptive practices have grown and in some cases are worse.”
…
Oh goody! Now that’s not deflationary at all, no sirreee, not in the least.
If you don’t like these “deceptive and unfair” practices, pay off your credit card, then take your scissors and cut it into tiny pieces. Problem solved.
I thought the whales of Megabank, Inc had run out of plankton to consume by now, but I guess that’s where Cash-4-Clunkers and Dough-4-Dumps come into play?
Better yet cut them up don’t pay and claim poverty to a judge when sued 2 years later….its all good.
Preach it, Sammy. CC FB’s get about as much sympathy from me as RE FB’s.
You might be surprised to learn that usury laws are rather fast and loose and offer no real protection.
http://www.usurylaw.com/
The tag line on the link to this MarketWatch article has a very familiar ring to it. Search the blog archives if you want to know who coined it.
U.S. banking »
TOPICS: BANKS WELLS FARGO | CITIGROUP | j.p. Morgan | GOLDMAN
Too big to fail or too big to bail?
As Congress continues its rancorous debate on bank bailout legislation, there’s growing support for more “radical” approaches — such as dismantling megabanks before their size becomes a potential danger to the system. Among the early potential targets in some observers’ sights: Citigroup.
…
http://www.huffingtonpost.com/2009/11/04/this-loan-is-an-example-o_n_320388.html
From the “Victim” chronicles. This illiterate hick couple fell “victim” to predatory lending, although they were clearly in on the swindle to the extent that their small inbred brains could grasp such a concept. A stellar example of why lenders should be tightly regulated, and cretins shouldn’t be allowed to procreate or to sign financial documents without a competent and ethical advisor reviewing the deal on their behalf.
IDIOCRACY, here we come.
It looks like their combined non-inflated income is $4k/month, most of it the wife’s. That’s decent money for a couple who claims they’re illiterate.
“Want a fixed rate this time!”
Wow.
IDIOCRACY, here we come.
I know, and she said:
“They knowed me and my husband were illiterate,”
That’s terrible English!
Even a 7 year old knows it should go:
“They knowed my husband and I were illiterate,”
Gee Wiz!
They knowed me and my husband WAS illiterate. (Right?)
Interesting answers to these questions?
Fixing Too Big To Fail
Problem 1: Several financial companies that were not traditional banks were deemed too systematically important to be allowed to fail through the normal bankruptcy route.
Problem 2: The largest financial institutions took on too much debt and leverage and had too little liquidity to survive a financial shock–they were too risky. When regulators pointed this out to financial institutions, such as Lehman Brothers, they had little regulatory power to force any preventive actions
Problem 3: When it came time to let financial firms fail in 2008 and 2009, regulators found that we didn’t have the ability or the authority to smoothly oversee an FDIC-style wind-down of the TBTF institutions. The normal bankruptcy procedure turned out to be far too blunt for firms like Lehman to fail without spinning the financial market out of control. Regulators turned to what they felt was their other tool–giving lots of money to the firms.
Problem 4: Once an institution was declared to be systematically risky, this both changed its behavior, since its executives believed that taxpayers would catch it as it fell, and the behavior of investors, who believed their investments have an implicit government guarantee. Our government’s actions created moral hazard.
http://www.thenation.com/doc/20091123/konczal
Problem 5: The PTB benefit immensely from the situation at hand. Thus there is far more incentive to appear to fix the situation, than to actually fix it.
Should the stimulus project create jobs?
Well, yes. The chief purported basis for February’s $787 billion stimulus bill was to reduce the ever growing number of Americans unemployed. Back then, it was a mere 7.6% in January. Now it has risen by more than one-third standing at 10.2% in October. An article today in the New York Times explains precisely why so much of the spending has been so ineffective: because it was aimed less at creating jobs and more at satisfying other goals.
In this case, the Times questions a wind farm project seeking $450 million in stimulus cash. It would produce just 300 jobs in the U.S. That’s a cost of $1.5 million per job. Here’s some detail:
http://business.theatlantic.com/2009/11/should_stimulus_projects_create_jobs.php
I am already looking forward to thanks giving. Too bad for me as I am a vegetarian but none the less I am looking forward to spending quality time with the family after a very loooooooooong time.
Thanksgiving Sides, Light and Heavy
When I plan a holiday meal, I think of each category–main dishes of poultry and meat, starches, vegetables, salads, chutneys, gravies and sauces, breads, and desserts. Like everyone in America I start with turkey, and I add brisket for a variety. I don’t do a fish because if someone is a non-meat eater there are so many vegetarian choices that there plate is easily filled.
http://food.theatlantic.com/cooking-from-the-south/thanksgiving-sides-light-and-heavy.php
Oops its time for lunch
Looking for HBB wisdom.
We sold our house at the tail end of 2004 in Lodi CA for a handsome profit (purchased in 1998 and did not HELOC). Put the money in the bank and have been renting a modest patio home since while adding substantially to our new house fund. Recently we found a very nice new custom home in a new 8 lot (half acre each) subdivision. The subdivision is located in a nice farming community about 10 miles east of Stockton/Lodi CA. There are only 2 houses built at this time; the one we are looking to purchase, and another which is currently owner occupied. The other 6 lots are owned by the small developer who is solvent and trying to build-to-suit or sell the remaining lots. There are CC&Rs containing building restrictions and an architecual control approval process for future houses built. We are in escrow for appoximately 50% of bubble peak price. We are putting 50% down which will leave us with plenty of cash reserves and a PITI payment of slightly less than our current rent after tax advantages.
Yesterday our realtor disclosed to us that the only other house in the subdivision is going into forclosure.
Now we need to decide how to proceed. I have very little doubt that the house we are purchasing will continue to decline somewhat in value (inflation adjusted at least) for the next year or two. However, my wife and I are very pleased with the location, design, and quality of the house, and after 5 years, are ready to get out of the city and settle in a country setting with out too much upkeep (half an acre vs 10 acres). Obviously the addition of the forclosure will not bode well with equity preservation for us. The three options we are considering are:
1. Complete the purchase per our current contract.
2. Ask for financial concessions in light of the looming forclosure.
3. Walk with our deposit. (We are still in our inspection period, and contingencies have not been removed).
I have been a regular reader and occassional contributor to this blog since the end of 2004 and have great respect for the collective wisdom of its members. Your constructive advice in this situation would be greatly appreciated.
Adopt
First do [3] and then ask for [2].
Crush the mo-fo developer. You already have him by the short and curlies.
The other 6 lots are owned by the small developer who is solvent and trying to build-to-suit or sell the remaining lots.
It sounds like the developer isn’t one of the slash and burn nimrods who had no prior experience and just came in to capitalize on the boom. You should be able to work with him.
If I were in your situation my main concern would be the remaining undeveloped lots. If they are built to suit overextended buyers, you may have more than one foreclosure compromising your house’s value. At least if the houses were built and occupied you could check the loan info in the county records to get a feel for how much of a hole the owners were in.
But then the flip side of the coin is if the developer has enough of a cash cushion to ride out the storm, you’ll have some nice vistas looking out your windows while the houses remain unbuilt.
A Cali poster would have a better idea of your location and advise you accordingly. All I have to offer is that my boss was in a similar situation and kept rebuffing offers from the builder (to buy the house) until the builder offered the price boss was willing to pay. It took a couple years, but during that time boss and family were model tenants, and at the end the builder was just so happy to unload the property.
A few questions for you then I will give you my thoughts;
#1. Is the street that accesses the subdivision privately or publicly owned ??
#2. Check the governing entity (city/county) and see if they have a weed abatement ordinance ??
SCDave,
The streets are public. But we are discussing, with the developer, the possibilty privatizing the two small cul-de-sacs that make up the subdivision, and installing electric gates. He designed the subdivision with this option in mind.
I doubt there is a city weed ordinance, but there are defensable space (fire protection) laws that would serve the same purpose.
I say schedule the house warming party, invite nearby HHBer’s and uncork the champagne
Go for it. Make a realtor happy.
So crackheads will move in next door once they depart in the middle of the night? And you are all alone with an abandoned house next door.
It had better be real cheap for that deal…..50% off just aint enough
——————–
Yesterday our realtor disclosed to us that the only other house in the subdivision is going into forclosure.
You already accepted that you were paying more than the house would be worth in the future, the future is just happening faster than you guessed.
Buy a riding lawnmower?
I vote for solution (3). There are other places to look.
I sold about 6 months before the peak in late ‘04 as well, and just recently bought a home that met all our specifications. I figure I’m about 18 months early if my goal is to pick bottoms, but I also bought the house at 50% of peak market value and it is perfect for us.
Can you think of any realistic situation in which this house could bankrupt you? If not and its right for you then buy it.
Could someone please send me links to drummin’s plug-in and lavi’s search thing so I can pass them on to people here who are interested in checking out HBB?
Thanks.
Here ya go:
http://home.avvanta.com/~drumminj/joshuatree.html
In reference to Eddie’s comment that he thinks the math illiteracy on this site is staggering…it is amazing that so many smart people could be wrong, and he is the only one who can pencil anything out. Just saying…too late to get in the mix, and glad of it.
Haggling with condo owners or RE who rep condo owners today.
They seem to have a twisted view of pricing.
It is hard to tell what Eddie is really about. Nobody with the amount of energy to perpetually irritate people is as st00pid as he pretends to be when he posts here. (I admit, he has me fooled at times…)
Why do Fed officials want an uncompetitive financial system populated by 800 lb too-big-to-fail behemoths? Wouldn’t it be better for US economic performance to break up the Megabank, Inc cartel and restore the net benefits the banking sector could potentially provide to the US economy, rather than allowing Megabank, Inc to continue operating as a giant leech, sucking the blood out of Main Street free enterprise?
November 07, 2009
Fed official: ‘Too big to fail’ too big to ignore
By AARON LONDON
Staff Writer
While Washington, D.C., is awash in financial regulatory reform talk, any legislative or administrative response will not succeed if the “too-big-to-fail” issue is not adequately addressed.
That was the message in a recent speech by Federal Reserve Board Gov. Daniel Tarullo before the Exchequer Club in Washington, D.C. A copy of the speech is available on the Fed Web site at federalreserve.gov.
Tarullo said the notion of too big to fail is hardly a new concern.
“In one manifestation, too big to fail was an extension of the classic problem of bank runs and panics,” he said. “If a large bank failed — whether because it was illiquid after a deposit run or insolvent after severe losses — the entire banking system might be endangered.”
Tarullo said under such circumstances, governments usually felt they had little choice but to intervene. That attitude led to a lack of market discipline on the part of investors and companies and the lack of discipline with the expectation of government assistance in bad times meant that bad times were more likely to occur.
Tarullo offered a three-cornered regulatory response to the too big to fail problem that would enhance the safety and soundness of large financial services companies and reduce the risks of a handful of systemically important failures damaging the overall economy.
…
That was the message in a recent speech by Federal Reserve Board Gov.
There’s your answer.
The problem is that the chicken farmer is consulting the red foxes to determine how to deal with the gray foxes. In the end they’re all foxes. You don’t ask bankers how to deal with a banking problem.
To truly deal with the banking problem we have to go outside the banking community. I’m not an accountant, so it’s hard to say exactly who that would be - most likely state comptrollers, or something like that.
In the end though - nothing significant will be done until the core of the cartel itself - the Federal Reserve - is broken up. And I don’t mean the meaningless 12 regions thing - it has to be full dissolution. That’ll never happen unfortunately.
How did the West allow the fraudential sector to execute a coup fraud-tat? Welcome to The Truman Show.
From The Sunday Times
November 8, 2009
The great bank hold-up
The £63billion bailout is a big bet by Alistair Darling on the banks and the economy
Iain Dey and David Smith
Jason Strong wakes up at 7am every morning in his Taylor Wimpey home, swinging his legs out of bed on to his Carpetright carpet. His wife Jill is already showering in their Twyfords bathroom suite.
Jason trudges downstairs to find his latest copy of the Crawley Observer lying on the doormat — alongside a bill from Sutton and East Surrey Water.
Everything he has touched since he woke up was produced by a company now part-owned or recently re-financed by Royal Bank of Scotland — and so in turn by the British taxpayer, which now owns 84% of the bank.
Through the taxpayer-backed banks, the government is bankrolling almost every facet of the British economy.
…
Even as green shoots of recovery are growing into mighty oak trees, the global banking system is totally FUBAR.
* November 6, 2009, 5:26 AM ET
Returning Banks To Private Ownership Will Be Uphill Struggle - So Why Bother?
When will US banking regulators catch on to the simple notion that if you carve up Megabank, Inc into tiny pieces, none of them will be systemically risky enough so their collapse will threaten the global economy. Competition would be restored to the banking sector overnight, as there would be no 800 lb banking gorillas who could use their too-big-to-fail status to undercut competitors in the lending market by paying investors below-market yields on MBS and other securities, reflecting the implicit guarantee of taxpayer-funded bailouts and other forms of Treasury-provided guarantees in case they were facing imminent default on their debt.
Let’s level the playing field in the banking sector and restore the US financial economy to a prosperity-based model instead of a government-sponsored parasitic-bankster model.
No more taxpayer- (or Fed-) funded bailouts would ever be needed again. Where is the downside?
Europe October 28, 2009, 1:09PM EST
Britain Could Break Up Big Banks
Even as the EU approved carving Northern Rock into ‘good’ and ‘bad’ banks, Britain’s government wants go further by splitting up RBS and Lloyds
By James Moore
Britain’s government wants go further by splitting up RBS and Lloyds
I’m guessing Barclays has something to do with that.
Seems like the exact same thing going on here in the U.S. The PTB are trying to take out their next closest competitors - in our case there’s lots of talk about breaking up Citibank, but for some reason we’re ignoring JP Morgan and Goldman Sachs.
They’re going for the jugular this time.
Earth to economists: Recession isn’t over
Posted by Carla Fried
November 7, 2009 8:09 am
Last week’s stream of economic data points to the emergence of a great divide. On the positive side, annualized third-quarter GDP was up 3.5 percent compared to the prior quarter. (Keep in mind that this is an “advance” estimate from the Dept. of Commerce. Stay tuned for revisions.) But consumer spending for September fell 0.5 percent. That’s the biggest dip since December 2008 when we were in the midst of the financial crisis.
While massive government spending is behind the GDP uptick, consumers aren’t exactly in a spending mood, given an official unemployment rate that we learned this week hit 10.2 percent.
“Only economists see the recession as being over; the man on the street sees it a little differently,” sums up David Rosenberg, chief economist at Gluskin Sheff. (For the record, Rosenberg is one economist who definitely does not see the recession as over.)
…
“…consumer spending for September fell 0.5 percent.”
Annualized rate of consumer spending decline (extrapolated from September rate):
((1-0.005)^12-1)*100 = -5.8 percent.
Recessrecessrecessrecessrecessrecess…