Bits Bucket For November 21, 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
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Welcome all HBB’ers..
Thanks again for 4+ years of lurking on my top link on the net.
As the double-dip starts to take shape this winter, I hope that all of you are tucking gold under your pillows.
My reading list:
- The Panic of ‘89
- The Days of the French Revolution
- The Guns of August
- Mandarin Chinese for Dummies
- Guns, Germs and Steel
- The Rise and Fall of the Roman Empire
Wish I could say more, but anything you say on the Internet can and will be used against you at a future date. I am in a position that makes me see the fallout of the Bubble on a macro and micro basis. Daily contact with both increasingly-desperate developers and FD makes me realize that history is about to repeat itself…keep your local firehouse happy, because this will be a scary winter.
Looks like a good reading list, I read the last two on your list years ago. I wouldn’t worry one bit about getting flamed on the internet.
The world is full of opinions, a person should do what best suits them, but do it in a hurry there may be a new law against it soon.
Knifecatcher, I don’t have time for paranoia. My family, if and when TSHTF, will be out and about in public, mobilizing community resources, to make sure every one is safe and life goes on.
Sorry, dude. We can all die horrible deaths some other day. Why is it that you gold bugs acknowledge the cyclical nature of the world and then play like you’re not part of it.
I’m here to tell you you look awful prancing through the woods with ingots stuffed in your pants.
BTW, Alad went underground and “got out while he could” uhh… over a year ago?
Sorry, but my bet is that Alad had a nervous breakdown and his play acting on our stage became irrelevant. Anybody remember the dimension shattering episode of our hyper anti-religious friend taking a spiritual sabatical with Monks in the mountains of Mexico right before he left our conversation? Not that I would wish ill on any of us, but that dog didn’t hunt.
Or maybe Alad hooked up with Oly and they are having the time of their lives…
——————————————-
Sorry, but my bet is that Alad had a nervous breakdown
“Anybody remember the dimension shattering episode of our hyper anti-religious friend taking a spiritual sabatical with Monks in the mountains of Mexico right before he left our conversation?”
Wow, I missed that one. I always thought FPSS ran him off.
I do remember April Fool’s day when posts under the name “aladinsane” showed up briefly, but it didn’t sound like him, so I thought someone was just playing with our heads.
I hope you guys are wrong about the nervous breakdown hypothesis. I like to keep intact my vision of him sitting over in New Zealand, eagerly awaiting America’s collapse while repeatedly counting his large pile of gold coins.
Thanks-
I am in the middle of the game trying to fix the problems like you say, and plan to stay on the Front lines to help turn this around. I look out at 60-story buildings from my office, so you can figure that I will not run from the fray. Some are doing their part in Afghanistan- I am doing it here. You would not believe that what I do every day is in America.
Understand that we will all have to pitch in to get through this one. I can assure you that I am doing more than my share, and know that people wise or caring enough to read this blog are doing the same.
Why do the Chinese save? Because they know that at any time their world can be turned upside-down. Respect and be wary.
This housing crisis is a symptom, and it is causing a fundamental re-ordering of the world. I agree that hiding in the woods will not work, just as running to Versailles did not help Louis and Marie.
“The German machine-gunners could not believe that the cream of British youth were trying to wear out the barrels of theit machine-guns with their chests”
-rambling historical rant off-
Have a great weekend, all- gotta go get a copy of Atlas Shrugged (without the Rand-worship)
Vegas- How does City Center look this week? I was asked to help design it years ago.
“This housing crisis is a symptom, and it is causing a fundamental re-ordering of the world. I agree that hiding in the woods will not work, just as running to Versailles did not help Louis and Marie.”
With apologies to Taleb and PB (I am not smart enough to distribute Talebisms, but here we go):
Taleb believes that most people ignore “black swans” because we are more comfortable seeing the world as something structured, ordinary, and comprehensible. Taleb calls this blindness “the Platonic fallacy” and argues that it leads to three distortions:
1. Narrative fallacy: creating a story post-hoc so that an event will seem to have an identifiable cause
2. Ludic fallacy: believing that the unstructured randomness found in life resembles the structured randomness found in games. Taleb faults random walk models and other inspirations of modern probability theory for this inadequacy
3. Statistical regress fallacy: believing that the structure of probability can be delivered from a set of data.
He also believes that people are subject to the triplet of opacity, through which history is distilled even as current events are incomprehensible. The triplet of opacity consists of
1. an illusion of understanding of current events
2. a retrospective distortion of historical events
3. an overestimation of factual information
With this philosophy, Muggy, it seems to me that NOTHING would’ve been predictable, and that all of us here at HBB would’ve been jerks lo these many years, thinking we had a pretty good idea of the direction of (at least) near-term future events.
I think the RE bubble and its 2003-2006 manifestations made it pretty obvious what must happen next — in general, if not in detail. So I reject the conclusion that nothing has a cause and that nothing is knowable.
Well randomness and the intervention of gods are, as some level, ways of modeling things that we don’t (can’t or won’t) understand. Dice aren’t really random, their end state is a function of how they are thrown. Once the cards are shuffled, the hand that you get isn’t random. Random is rather a useful model for that which we don’t know.
“I think the RE bubble and its 2003-2006 manifestations made it pretty obvious what must happen next — in general, if not in detail. So I reject the conclusion that nothing has a cause and that nothing is knowable.”
I think that what you’re saying is what Taleb would say.
Respect and be wary.
Good advice when speaking about other nations. There is still a section of our nation that insists on trusting the nature of those other than americans. I just cannot trust them.
As to the gold thing, I think it’s just that, and insurance policy. If gold goes down, times are probably good, so it’s a win-win.
Prior Preparation Prevents Poor Performance….
“Good advice when speaking about other nations.”
Sigh, stpn. You’re one of the few that gets it. The average American on the ground has no clue. And it’s useless to try and enlighten them, I’ve found.
“There is still a section of our nation that insists on trusting the nature of those other than americans.”
Lol. That’s not me. I don’t trust ANYONE, American or not.
“Trust, but verify.” - R. Reagan
There are many interations of this.
http://en.wikipedia.org/wiki/6_Ps
Where I’m from we call it the 6 Ps.
Proper Preparation Prevents Piss Poor Performance.
Agree Palmetto. Does anyone remember the story, posted here, of the church in Minnesota who sponsored some poor Somali men to come to the US? In no time, the Somalis had cheated their way into fleecing the well-meaning community, and had started throwing women out of the local coffee shop, saying, “This is our hangout now.” Or the “undocumented” woman who showed up at her kid’s school because she thought free lunch was for everybody, or the one who grabbed an entire handful of candy on Halloween. Or any number of shady characters who emigrate to a nicer country only to recruit and set up sleeper cells. I was told to never drive to Mexico, or someone will immediately ram my car and demand a bribe to brother policeman so that I’m not prosecuted.
The US has invested a considerable amount of time, government, and community effort in order to make this a largely low-corruption society, at least on the street level. Foreigners see us as ripe for the picking.
Blanket condemnation is no substitute for discernment.
“Blanket condemnation is no substitute for discernment.”
Correct. One has to wonder where the hobgoblin conspiracists where 3 years ago. Oh yea… that’s right. Everything was fine and our wonderful leadership was 100% trustworthy then.
There is still a section of our nation that insists on trusting the nature of those other than americans. I just cannot trust them.
I’m not sure I trust my fellow Americans very much, either.
In this Great Recession,I wonder how many people will give up on religion because God let bad things that happened to them vs taking up religion because bad things happened to them.
The two biggest ways you choose a religion is your parents and when you are about to commit suicide.
Then whoever “saves” you is your new found religion.
Very few people you will ever know will try out many of them and then make an informed choice. Or my choice is “None of the above”.
No, they tend to say “the Lord will provide.” And then they go to pick up their unemployment check.
Ever been to Pikes Peak on the other side of the river? I used to go up there in the middle of winter and smoke a stogie while the bald eagles flew all over the place
knifecatcher, you seem to be in the know on things. Can you answer: what would have happened if Obama had not bailed out the banks, at the expense of Main Street?
Please, don’t give me vague nonsense about “pulling back from the abyss” or “there would have been a global breakdown” or such like. I want to hear something more specific. Would everyone immediately pull out of their 401K? Would countries retrench and no longer trade? Would the computers that control our checking accounts suddenly crash? Main Street is livid, and justafiably so. It’s not enough to say “hey it could have been worse.” I have no way of knowing that. Show me exactly what the “worse” would have been.
Also, I’d like to ask: what do you think about the failed plan to cram-down principal? I know Ben Jones hates when I bring it up, but I still think it’s a legitimate possible solution. Allow mortgage debt to be partially discharged during BK (that solves contract law). The FB loses his FICO and some cash, but he stays in the house, now valued reasonably. Of course, the banks takes a hit on the houses, and on the value of all their shadow inventory, but that’s going to happen anyway.
Oxide:
Nobody likes this idea but it maybe the only one that will work.
With so many people needing cheap shelter, letting houses go into disrepair to the point of having to bulldoze tens of thousands of them is an incredible waste.
Even fixing those $1000 homes in Detroit is better then a homeless shelter or someones basement in winter.
————
Also, I’d like to ask: what do you think about the failed plan to cram-down principal?
I can’t speak to everything, but here is a list of a few things that probably would have happened:
The bank balance sheets would have been in much, much worse shape. More would have been in violation of their reserve requirements. Some would have been just bankrupt as opposed to merely in violation of reserve requirements. FDIC could not have handled the flood of work so it would have taken weeks or months to deal with the banks and some might have stopped granting access to deposits for a while leading to runs on banks that were thought to be at risk. Of course, this could have been largely handled by changing accounting rules to allow banks to hold assets at book rather than market value - oops, that happened anyway. It would have happened faster. And the banks would have stopped lending. Not just the way they have now, which is largely, but not entirely. Completely. Total risk aversion mode. They could have continued to act as conduits for loans the government was willing to buy, but nothing on their own capital.
Pension plans and other large hunks of money would have had much larger losses. In the case of pension plans, they also would have come into violation of funding rules. This would have created huge liabilities for the companies that sponsored them to “refill” the pot. Companies that were hurting and certainly didn’t have the cash to pay up and couldn’t borrow it anywhere. So the pensions would have gone belly up. Not just a few of them. Lots of them (assuming there are still lots of them). PBCC wouldn’t have been able to handle it, but when the smoke cleared, financial security for many, many baby boomers and up would have evaporated. State and local employees would have been in a state of shock.
LIBOR (interbank lending rate) would have gone through the roof. Lots of floating rate debt is pegged to LIBOR so all that debt would have become more and more expensive to carry. More bankruptcies. Lots more. Individuals and businesses. And it would not have come down as it has now. So the people with plain old ARMs (not teaser rates) that let their rates adjust and are just fine with it because it actually lowered their payments? They would be in a world of hurt and probably defaulting all over the place.
You’ll have to go elsewhere for what all that would have done to the stock market, price of food, etc. Not my area of expertise at all. But that is what I can see.
DJ, it doesn’t stop with providing someone with a “free” house. There are utilities, maintenance and repairs, property taxes, and insurance at a minimum. If someone can’t even afford a small apartment in a run-down part of town, they sure as heck can’t afford to live in a single-family house.
agreed Bill, just saying its such a waste, just like we had a main side street in disrepair for maybe 3 years people put cones in the 2 major potholes. Finally they pave it beautifully. and no sooner then a month they are digging it up for a new condoze hookups.
Thank you Polly, that’s a start.
I don’t like it when people say, “you have no idea.” Well then, tell us so we have an idea. It’s the equiv of a parent telling you to do something “because I said so.” (I don’t mean you, I mean Summers & Co.)
Small point. Obama didn’t bail out the banks. Congress and Bush did. That happened in 2008. Obama is responsible for the second stimulus and bailing out the auto companies.
“The bank balance sheets would have been in much, much worse shape. More would have been in violation of their reserve requirements. Some would have been just bankrupt as opposed to merely in violation of reserve requirements.”
Wouldn’t collapse of banks that made stupid gambles have been the best remedy for the ongoing too-big-to-fail (heads-we-win, tails-you-lose) moral hazard problem? Instead, we have too-bigger-to-fail with the worst moral hazard problem yet, going forward. Megabank, Inc can gamble like a drunken sailor, knowing full well the Fed and the Treasury have their back.
“Can you answer: what would have happened if Obama had not bailed out the banks, at the expense of Main Street? ”
There would have been a drastic contraction in the money supply as credit was destroyed. The economy requires a certain amount and velocity of money to mediate economic activity. In austrian/libertarian fantasies this contraction in the money supply causes prices to drop until the available money supply can mediate the same amount of economic activity. In reality, price stickiness causes the contraction to drastically shrink economic activity until the available money supply can mediate that economic activity. (See the Great Depression)
To try to maintain a high level of economic activity the contraction in the money supply must stopped. There are a number of possibilities with different winners and losers.
The simplest and most direct is to begin printing fiat money and putting it into the hands of the people either through direct grants or job programs. As this benefits the common man and hurts the elites who have dollar denominated assets this never happens.
The government can become the borrower of last resort in an attempt to substitute privately held debt with publicly held debt.
The government can become an insurer of private debt in an attempt to keep debt levels up. This is the “heads I win, tails you lose” crony capitalism that we all know and love. Or at least the elites love it.
Having the bulk of our money supply in the form of bank credit is an inherently unstable situation that puts the benefits of seignorage into the hands of bankstas. Replacing that bank credit with fiat money takes the benefit of seignorage out of the bankstas hands and gives it back to the people.
“Pension plans and other large hunks of money would have had much larger losses. In the case of pension plans, they also would have come into violation of funding rules.”
I thought pension plans invested only in high grade financial products.
According to Fitch Moody’s and Standard and nonPoor’s, these POS’s were high grade financial products, rated AAA and all.
Ohio pension funds are suing the ratings agencies for a half-bill lost due to these flawed ratings, citing conflict of interest.
“I thought pension plans invested only in high grade financial products.”
They were allowed to buy total crap as long as they bought a credit default swap to insure it. Unfortunately the people issuing the credit default swaps had no actual money with which to make good on their promises. Without the bailout of AIG and their CDS we would already be in pension fund Armageddon.
I think having a few Krugerrands tucked away is just an insurance policy, nothing more. Not a thing wrong with that, people buy ins. everyday. Baseless paper dollars always fail, and our numb-nuts running the presses full tilt are guaranteeing failure.
Of course people call each others kooks everyday. I know I do when it comes to the OwlGore crowd. I love to chuckle at their nuttiness, and they are so easy to inflame. The sky is falling,the sky is falling, and it’s all our fault!
Your ad hominem jabs against Al Gore (and I assume global warming/climate change) are more tiresome than enraging. You’ll “believe in” science when you need to post some tripe on the internet or drive somewhere in your car, but won’t “beleive” when climate science (peer-reviewed, not some journalist’s interpretation thereof) is telling you that it is our fault and it’s a big deal. Yawwwwwwwn.
Stick with the anti-government screeds. More entertaining.
MrBubble
Here let me help you:
“Hacked emails add fuel to climate dispute
Hackers steal, release electronic data from top climate research center…
WASHINGTON - Hackers broke into the electronic files of one of the world’s foremost climate research centers this week and posted an array of e-mails in which prominent scientists engaged in a blunt discussion of global warming research and disparaged climate-change skeptics.
The skeptics have seized upon e-mails stolen from the Climatic Research Unit of the University of East Anglia in Britain as evidence that scientific data have been rigged to make it appear as if humans are causing global warming. The researchers, however, say the e-mails have been taken out of context and merely reflect an honest exchange of ideas…” Etc.
And it’s colder in Napa than it was yesterday. Guess global warming is fake!
MrBubble
Consider the source Mr. Bubble.
Climategate: the final nail in the coffin of ‘Anthropogenic Global Warming’?
http://blogs.telegraph.co.uk/news/jamesdelingpole/100017393/climategate-the-final-nail-in-the-coffin-of-anthropogenic-global-warming/
Never take seriously a wolf in sheeps clothing. Independent = ashamed Republican.
Better yet…. those who are silent after years of flag waving like to drop “libertarian” when called out on their cowardice.
Still proudly waving the flag here. Still not liking socialism/marxism/communism/frenchcanadianism/europeanism. Still loving this great country and not affraid to say it.
Independent = No party affiliation. Ashamed Republicans would still be Republicans.
Pick a better country.
Poor Mr. Bubble, no worries forget the folks that call pure bullshit on global warming, they are are all ignorant and can’t help themselves.
They will realize the error of their ways in a few thousand years.
French canadianism?
Your education level screams loudly.
I find myself skeptical about just about everything these days. I would no more trust an environmentalist on global warming, than I would a wall street analyst on financial matters. They’re both religious zealots.
I do wish for progress on alternative energy sources. The costs are more controlled and, in the long run, deflationary.
“French canadianism?”
I was just having some fun. If they can add a word like “webisode” to the Merriam-Webster dictionary, I can coin the word “frenchcanadianism”.
Agree on the neologism, cashed, but you and mbz might want to brush up on those thermohaline inversion charts….
To use a child’s name calling I guess it takes one kook to know another kook. The Fox nuts are being laughed at also.
“Climategate: the final nail in the coffin of ‘Anthropogenic Global Warming’?”
Lip — THAT is your “final nail”? Here’s this guy’s byline. Good gravy!
“James Delingpole is a writer, journalist and broadcaster who is right about everything. He is the author of numerous fantastically entertaining books including Welcome To Obamaland: I’ve Seen Your Future And It Doesn’t Work, How To Be Right, and the Coward series of WWII adventure novels.”
MrBubble,
Sir, I have no desire to get into an argument about beliefs. The fact that you don’t consider conservative sources credible (yet most likely find Al Gore, Michael Moore and Keith Oberman beyond reproach) is not that surprising. I just thought that you might enjoy reading something different.
Peace
The fact that you don’t consider conservative sources credible …
That’s what you consider a “conservative source”? You can do better than that.
The Day Global Warming Stood Still
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=513195
Scientific scandal appears to rock climate change promoters
http://www.americanthinker.com/blog/2009/11/scientific_scandal_appears_to.html
Debunking The Myths on Climate Change:
http://www.duke.edu/web/nicholas/bio217/tls14/
Climate change: A guide for the perplexed
http://www.newscientist.com/article/dn11462-climate-change-a-guide-for-the-perplexed.html
Climate Change Debunked? The Great Global Warming Swindle
http://www.masternewmedia.org/information_access/global-warming-co2-carbon-emissions/co2-climate-change-debunked-20070526.htm
Climate Depot(www.climatedepot.com)
ICECAP(www.icecap.us)
Watts Up With That?(www.wattsupwiththat.com)
Climate Debate Daily(www.climatedebatedaily.com)
Climate Audit(www.climateaudit.org)
Science and Public Policy Institute(www.scienceandpublicpolicy.org)
International Climate Science Coalition(www.climatescienceinternational.org)
The Carbon Sense Coalition(www.carbon-sense.com)
Australian Climate Science Coalition(www.auscsc.org.au)
JoNova(www.joannenova.com.au)
The Climate Sceptics(www.climatesceptics.com.au)
The New Zealand Climate Science Coalition(www.nzclimatescience.net)
The Resilient Earth(www.theresilientearth.com)
See, I knew you could do better!
Not a peer-reviewed journal among them.
You do realize that this website would be not be considered “peer reviewed” either, yet we trumpted the Bubble years before the idiots in charge - the people doing the “peer reviewing” of our economy - even admitted that something might be wrong.
Climate change as defined these days is nothing but another scam - a way to control people and resources and use fear to tax us all back to sheep-farmer status while the rich continue to live in huge mansions and fly around on private jets to conferences about how to prevent the rest of us from having enough fuel to get through the winter.
Conservation, renewable energy, etc. - they are all good and I support them, but let’s face facts: this is about rationing resources for the “little people” and finding yet another way the bankers and other rich crooks can leech off society. They couldn’t care less if they save the climate.
In these times, if you’re going to swim in the fiat currency pool, half of your “saved money” should be in PM’s preferably gold and silver (really the only two metals historically used with any transportability),possibly copper (as the Chinese are doing). That way for every drop of 10 percent of your fiatscos’ value, your PMs should rise by about that number. Net result is a decent insurance policy. Greater % of PMs and you are speculating; same the reverse. Most of us are speculators badmouthing the gold bugs.
“The Decline And Fall Of The Roman Empire” would be a better choice.
excellent point
Do you believe house prices have further to fall?
In most places, yes. Some places may be near bottom already but most markets have a ways to go yet, IMHO.
My subjective impression of where we are with respect to housing price declines:
1) There has been an unprecedented level of government intervention to stem housing price declines.
2) Those recently purchasing homes are most likely doing so because they believe the government’s suggestion that it is possible to use market-distorting interventions to restart housing bubble price inflation.
3) The actual effect on making home prices start going up again has been small compared to the massive level of intervention.
4) Given their magnitude, the interventions may not be sustainable.
5) Once it becomes clear that the effect of stimulus on home price appreciation is “smaller than expected”, demand will fall further from already abysmal levels.
6) The factors supporting an ongoing (if not increasing) supply glut are still in place.
7) Lower demand and high (if not higher) supply => lower prices.
Any questions?
Knifecatcher, you sound like a replay of talk radio of the Seventies when inflation was raging and the Trilateral Commission was establishing the New World Order.
Thanks for the laugh; I’m looking foreward to reading more of your posts.
I was kinda hopin’ that knifecatcher was TT Timmy himself, but the 60-story building thing puts that to rest. Dang.
My view is that the Power Groups gain a lot of power and were able to get laws passed that favored the expansion of their self-interest ,but that self interest set up a ‘Black Swan ” drama that would eventually play out because of cause and effect. The power groups were so sinister that they brainwashed the World that real estate always goes up ,and they controlled the media through advertising dollars in large part to create that myth .
The same Power Groups have been directional in the solutions to
the Crash ,therefore billions have been wasted saving corrupt
systems and Companies ,just so they could exist when they deserved to fail ,which would of caused a overhaul of the corrupt systems , the unregulated systems , the monopolies or price fixing ,or the systems that were based on faulty business models or fraudulent or bad faith business models .
To sum it up ,the game was to use other peoples money by taking leverage to a a risk that knew no bounds ,just to make short term gains .
The brainwashing machine was so powerful that people walked around like drones repeating the same talking points and the so-called Experts where on the bandwagon and the Politicians and Regulators were just bribed and incompetent .
So,in my view ,the bail-outs were designed to Obstruct Justice and exposer of the corrupt systems and make the wrong parties pay for this leveraged Ponzi-scheme .
“Wish I could say more, but anything you say on the Internet can and will be used against you at a future date.”
Really? Did someone rescind the First Amendment and I missed it?
How much rights can you afford?
Knifecatcher,
I think if I hadn’t lived through the late 1970s during the inflation crisis, I would right now have at least five acres of land in the far north part of California where I could grow my own food and have enough water.
But unseen variables were put into the equations: Tax cuts and supply side economics, the Club of Rome predictions failed big time, oil prices fell, the information age revved up.
I’m a trained software engineer with no property. I know how to jump start a car, change oil and change a tire. Other than that, I am not mechanically inclined, don’t know how to weld, never started a campfire (IIRC), etc.
I have to be in the city. So I wonder: when Atlas shrugs and the international riots hit, will my ATM card work at the megabank I’m a customer of? Will I be able to buy gasoline and drive to the coin dealer where I can sell my one ounce coin for $6,000?
If I was on five acres of land out in the country and I contacted H1N1 + pneumonia, would I be better off there or in Redondo Beach? A 39 year old man from RB got the flu and had to be put into a medically-induced coma to be treated. He was very close to death. But he lived and is undergoing therapy. Somehow I think if he was in, say, Lone Pine, Ca. He would die from it.
Yes, well, that’s the risk of disentangling from the system. One of the leaders of the self-reliance movement (Dave Duffy of Backwoods Home Mag) had to have bypass surgery. I had to laugh at the irony. Does he realize that heart-surgery is probably one of the least self-reliant things out there. I’m thinking of the years and years of “system” one needs to produce a bypass. Everything from years of peer-reviewed medical research to R&D for the medical instruments to the training of the surgeon to the plastics technology for all the tubing and the surgical gloves to the donated blood he likely received. (Not to mention the political peacetime in order to free up resources for such research.) You can’t do heart surgery with a Winchester and a case of Mason jars.
Correct on all counts, oxide. And funds are needed to fuel all this research and development, plus pay for the professionals and the facilities and equipment used in his surgery. Even the blood collection and storage is complex and expensive, since we don’t want to get V42.0 ( HIV ) from it, like they were busy doing to French citizens a few years ago. These are all salient points that these yahoos tend to miss.
I wouldn’t mind doing heart surgery with a Winchester on some of the bad guys.
Club of Rome predictions did not fail. They said the north must give 1-2% of its wealth to the south every year; the forgiveness of loans and the massive amounts of food, medicine and money aid in the last 30 years has forestalled the collapse; the UN says millions are starving every year; the warmers say climate collapse due to pollution/environment degradation is here. What part of the Club’s predictions aren’t at our doorstep?
The Club of Rome published their “limits to growth” bestseller book in 1972, about 37 years ago.
“They predicted a rapidly growing global population combining with rapid resource depletion to spark violent social upheaval. Limits to Growth suggested that disasters and die-offs were imminent, and that the survivors would live in a world of misery and scarcity.”
The “Limits to Growth” ideas failed miserably.
http://en.wikipedia.org/wiki/Limits_to_Growth
Propaganda. Limits never predicted imminent die-off.
If he were in Lone Pine, he wouldn’t have caught it in the first place—or more likely would have developed so many immunities from constant exposure to hanta, pneumonic plague, valley fever, anthrax, parvo, west Nile, et al, that nothing would affect him.
Stimulus breaks end Monday for SBA loans.
Kansas City Business Journal
Say goodbye to the 90 percent guarantee and reduced fees that sparked a rebound in Small Business Administration lending.
In a few days, the SBA will run out of the $375 million in economic stimulus money that enabled the agency to make these enhancements. Sarting Monday, borrowers and lenders will have to make a choice: They can be put on a waiting list to receive these breaks as stimulus money becomes available, or they can apply for a regular SBA loan with higher fees and a lower government guarantee for the lender.
The SBA expects additional money to become available to make loans under the stimulus provisions because not everyone who is approved for a loan will go through with it. But loans on the stimulus waiting list run the risk of not being financed at all.
As recently as Wednesday, SBA officials said they expected to be able to make loans under the stimulus provisions into December. But loan applications surged this week as borrowers and lenders tried to get their applications in before the stimulus money ran out.
SBA lenders, small business groups and the Obama administration have urged Congress to find money to extend the stimulus enhancements, but Congress so far has failed to do so.
The porkulus gave $375M to the SBA to help small business. That’s .05% of the total money spent. Nice to know Obama has his priorities straight.
For once Eddie, I agree 100% with your intended point. (You beat me to saying almost the same thing.)
You act like creating customers with money doesn’t help small business.
Didn’t you get the memo? We no longer need the average consumer in our consumer driven economy.
I wonder how many Nail salons, Doggie day care or consignment stores got the money?
Did someone say nail salon?
Btw, OylGal no longer posts because she is an elected official, yes?
“Btw, OylGal no longer posts because she is an elected official, yes?”
What !?!
…and here I imagined her deep in the mud, going down fighting valiantly to the end, battling with the mother of all geoducks.
Muggy,
“OylGal no longer posts because she is an elected official, yes?”
Do you have any knowledge about what you posted?
“Do you have any knowledge about what you posted?”
Only extrapolations from what I’ve read here.
BTW, I’m not trying to ‘out’ anyone. I sure as hell would deny all of this if a colleague asked.
Muggy,
Not asking you to out her. I just miss her postings and I am worried about her. In the past she has usually let us know she will be incommunicado for a length of time.
Maybe she’s just incredibly busy all of a sudden.
Yeah…she either got married or upgraded to Windows 7…must be real busy.
I think Ate-up ate her up. They both disappeared at the same time.
I hear you on Windows 7. I just bought a new laptop with 7. The new Idiot Explorer would crash about 75% of the time, crashing windows along with it. Luckily, when IE was having a good day I downloaded and installed Firefox. Which is why I’m able to post at all.
Wonder if this d-bag will be exempt. Plus I thought Barry was going to get us out of these endless wars ASAP. Said so during his run.
Upper-Bracket Tax May Be Needed for Afghan War Cost, Levin Says.
Nov. 21 (Bloomberg) — Higher-income Americans should be taxed to pay for more troops sent to Afghanistan and NATO should provide half of the new soldiers, said Carl Levin, chairman of the Senate Armed Services Committee.
An “additional income tax to the upper brackets, folks earning more than $200,000 or $250,000” a year, could fund more troops, Levin, a Michigan Democrat, said in an interview for Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend.
White House Budget Director Peter Orszag has estimated that each additional soldier in Afghanistan could cost $1 million, for a total that could reach $40 billion if 40,000 more troops are added.
That cost, Levin said, should be paid by wealthier taxpayers. “They have done incredibly well, and I think that it’s important that we pay for it if we possibly can” instead of increasing the federal debt load, the senator said.
Levin has it all wrong. Here’s an excerpt from Major General Smedley Butler’s “War is a Racket” written back in the 1930s:
“The only way to smash this racket is to conscript capital and industry and labor before the nations manhood can be conscripted. One month before the Government can conscript the young men of the nation – it must conscript capital and industry and labor. Let the officers and the directors and the high-powered executives of our armament factories and our munitions makers and our shipbuilders and our airplane builders and the manufacturers of all the other things that provide profit in war time as well as the bankers and the speculators, be conscripted – to get $30 a month, the same wage as the lads in the trenches get.
Let the workers in these plants get the same wages – all the workers, all presidents, all executives, all directors, all managers, all bankers –
yes, and all generals and all admirals and all officers and all politicians and all government office holders – everyone in the nation be restricted to a total monthly income not to exceed that paid to the soldier in the trenches!
Let all these kings and tycoons and masters of business and all those workers in industry and all our senators and governors and majors pay half of their monthly $30 wage to their families and pay war risk insurance and buy Liberty Bonds.
Why shouldn’t they?
They aren’t running any risk of being killed or of having their bodies mangled or their minds shattered. They aren’t sleeping in muddy trenches. They aren’t hungry. The soldiers are!
Give capital and industry and labor thirty days to think it over and you will find, by that time, there will be no war. That will smash the war racket – that and nothing else.”
While I agree that wars should be paid for up front, the comparison with conscripts no longer holds, since the only conscriptive element in the current military recruitment system is the absence of other employment opportunities.
Just replace the word with “recruits”.
War IS a racket.
BTW, the Moyers program was very interesting last night. It was basically a review of the Lyndon Johnson dilemma over the Vietnam war. Snippets of old recorded phone conversations, over photos of the various people he was talking to. Sort of a compare and contrast with the current situation in Afghanistan. I wonder if, like Johnson, Obama is concerned about re-election, not necessarily his own, but that of his fellow partiers.
Sheesh, the whole situation just sucks so profusely.
You are right AZ the military was Never an option for any of my peers in HS or College it was the farthest thing for my our minds. Now when I lived in South Carolina it was one of the 2 best options next to a post office job for the locals.
Well for the most part, todays generals were lieutenants and captains during the Vietnam war. They remember commanding unwilling draftees in an unpopular war. Most of them DON’T want a draft. They would rather command volunteers. We’ve had an all volunteer service for long enough that there is a tradition of military service among some families of those poorly served by the economy.*
*partly because having children young is highly correlated with doing poorly in th economy.
“since the only conscriptive element in the current military recruitment system is the absence of other employment opportunities.”
Which I contend is the majority of enlistees even in the best of economic times.
We need a draft in a very big way.
So us “rich” guys will be paying for Afghanistan, Iraq, health care, free mortgages, social security (when the cap is lifted). Anything else?
Education. You forgot about the overhaul of the education system.
What country would you move to if all this takes place?
Of course, the old stand-by “DO IT FOR THE CHILDREN”. Never mind that we pay twice as much per student as everyone else yet 1/2 the kids graduate from high school as functional illiterates. The answer is always spend more money.
There’s no if about it. It’s happening. Read this blog for all you need to know. The country has turned from a work hard, get rewarded mentality. To a do nothing, sit on your butt all day and tax the “rich” to get rewarded mentality. That works well for a while. But as Maggie Thatcher said, the problem with socialism is eventually you run out of other people’s money.
Thailand, Singapore, Costa Rica, Guatemala, E. Europe are some of the options we’re looking into. I think it’s safe to say that E. Europe won’t be going back to communism anytime soon. They lived in a worker’s paradise for 50 years and 20 years later are still trying to undo the damage. It’s such a shame most Americans haven’t a clue of the destruction socialism brings to a society. They’ll learn soon enough, I just won’t be here to pay for it.
We agree Eddie…we need to force kids to learn to read, write and speak English without swearing or using the N word….of course that will be viewed as racist and would destroy the rap and hip hop markets
————————————-
as everyone else yet 1/2 the kids graduate from high school as functional illiterates. The answer is always spend more money.
Costa Rica is going socialistic, Guatemala is
so-so, Panama is better. We have friends who’ve lived there 30+ years and wouldn’t
live anywhere else, and they know central
and SA very well.
Amen, Rancher. Some family friends got the bright idea to re-locate to Costa Rica. They were listening to stories of how it was 30 years ago, unfortunately. They weren’t exactly made to feel welcome. And there are “community groups”, the members of which monitor newcomers VERY closely to ensure they aren’t working and making money within the country. They were often tailed by a villager when they even went out to shop in the local market. Creepy. If you’re behind the gates or walls of an expat community, it’s OK, but it isn’t recommended to go much beyond those gates or walls.
So I’m told, anyway.
The country has turned from a work hard, get rewarded mentality. To a do nothing, sit on your butt all day and tax the “rich” to get rewarded mentality.
I wish I could disagree with you.
On the other hand, how did all these people come to sit on their hands? Oh, right, they “worked hard” and their jobs were outsourced anyway. Outsourcing has crept far enough up the food chain to where smarts and a college degree and even “hard work” are no longer enough protection. And since it was the rich who profited from all this job loss (witness the stock price whenever layoffs are announced), maybe they should be taxed.
As for the low-skill jobs which have been taken over by insourcing, well how do we solve that? Force businesses to pay illegal labor equal to legal labor? Or force legal labor to live and work in the same conditions as illegal labor?
When all the Canadians and Euros started buying those delightful little fincas down there 40 years ago, the farmers took their
new found wealth and left for the cities where most of them were broke a few years
later. The place has turned into a welfare
state and taxes have gone through the roof.
Native “ticos” are all struggling now to make
a decent wage and the only thing they have
going for them is their “eco-tourism” gig.
I know one guy who bought an incredible stone castle years ago and spent two years
and a considerable amount of cash to renovate the place who now just wants out.
Eddie,
If you’re one of the rich people out there who is making more than $200,000, would you care to tell us how you’re earning that income?
He’s not. He has some strange penchant for his masters. Isn’t that phenomenon common with rape victims?
Mike, sometimes it’s possible as an engineer working 45 to 50 hours per week in a twelve month period to bring in an unadjusted gross income above $200,000.
Rancher, it wouldn’t surprise me that Costa Rica is going socialist. What with lots of Americans used to taxes, regulations and the nanny state moving over there.
Life is not necessarily rosy outside the U.S.
The whole world will go dark when Atlas Shrugs. I’d rather be in the dark in America where at least we can decide to return to rule of law and the Constitution.
China will likely gobble up Central America, Australia, and New Zealand without Pres. Obama raising an eyebrow.
Bill,
Back in the sixties, as a job shopper metallurgist in aerospace, adjusting for
inflation and everything, making $200k
a year would be easy.
Bill,
That sounds possible. You must some sort of contractor who receives around $80/hour. Of course, you’re a smart guy, so your adjusted gross income would be quite a bit less than $200,000, wouldn’t it? If that’s the case you wouldn’t have to worry about the Democrats raising taxes on income above $200,000.
‘The country has turned from a work hard, get rewarded mentality. To a do nothing, sit on your butt all day and tax the “rich” to get rewarded mentality.’
Have spent the majority of my life in regular contact with and at times surrounded by people who believed in working hard for life’s rewards, I have to disagree with you. I admit that my sample is highly biased.
My personal concern is that our politicians like to promote programs that unjustly reward politically favored minorities for their class status rather than in exchange for productive work. The sense of unfairness which results undermines the incentive for individuals to make positive contributions to society’s greater good, and increases the incentives to cheat in order to get ahead.
Mike, most years my AGI is considerably below the tally on December 31. 2010 won’t be one of them. My direct deposit this week is 40% less than it was the previous week because of a tax break going away. I’m making Obama happy.
Overhaul of the education system? What, you mean it’s not working?
Overhaul of the education system?
A.
B.
C.
D. None of the above
All one learns is school is sports and how to take multiple choice tests.
The unions and the politicians don’t want smart high school graduates.
From a Physics Test
The Universal Gravitational Constant varies with;
A. Latitude
B. Longitude
C. Altitude
D. None of the above
My guess is D. It wouldn’t be a Universal Constant if any of the other examples were correct, now would it? (Constants tend not to vary much…)
Wasn’t it the “free mortgages” that made the rich wealthy to begin with?
Yes. Because everyone who is “rich” made their money in mortgages.
How about because they’re the only group who had any income growth in the last 30 years after adjusting for inflation and the way things are going they’ll be the only ones who could still survive intact w/additional taxation burden?
Or is the answer not to tax anyone and let it all just fall apart?
I wish Oxide got her question above answered…just what is falling all apart and would some of us actually be better off? I like reading Dmitri Orlev when I try to imagine the potential routes we’d go down because he has lived through a similar collapse but the Russian struggle cannot be compared to a world wide economic collapse would be.
Gee. I must have read a pack of lies by Stanley and Danko. Most millionaires got that way by starting their own businesses, according to The Millionaire Next Door.
IF the purpose of government is to protect lives and property then it seems to me that those who have more wealth should pay proportionally more taxes than those who have little. In other words; if a person’s net worth is $2 million, their total tax burden should be 1,000 times that of a person whose net worth is $2 thousand- the wealthy have more to lose.
Repeal the income tax, replace with a national sales tax (not a VAT).
“… replace with a national sales tax …”
And drive the economy underground.
There have always been underground economies.
It will drive it furthur underground. Those who skip paying taxes will have an edge on those who won’t.
This will select-out the taxpayers and will leave only those who are nimble at tax skipping and hence tax revenue will decline.
“This will select-out the taxpayers and will leave only those who are nimble at tax skipping and hence tax revenue will decline.”
Sounds familiar.
Decline of tax revenue is a good thing, IMO. Doing more with less can be a most rewarding challenge.
Income tax is essentially a war tax that was made permanent.
“Those who skip paying taxes will have an edge on those who won’t. ”
That’s the case today and always has been the case. The method of taxation doesn’t increase or reduce incentive to cheat. And it’s harder to cheat with a sales tax since it requires two parties (you and the seller) for the cheating as opposed to 1 party (yourself) when cheating on income taxes.
The chances are good the sales taxes you pay never make it to where they were intended to go. Pay close attention to the register when the owner of a small business (not the hired help) rings up your purchase and you’ll see what I mean.
This is especially true in these times when there is a scarcity of cash and hence shrinking profit margins.
The underground economies are here now- out here in Cali the “minorities” all have two sets of books in their businesses- I can take my Mexican, Chinese, Korean or Vietnamese friends and get a much better price paying cash for something than I get with a credit or debit card. I wouldn’t doubt that’s a huge part of the budget problem out here- uncollected sales tax receipts. But, since Sack-ramento is too lazy to go after them, the scam continues. You want a real pay raise? beat the tax man!
combo, as a resident of Florida (which has no state income tax) in the “stuff” business, I can tell you that most business owners in Florida know better than to try to get around paying state sales taxes. I personally know two people who learned the hard way. It put the fear of God into me, so much so, that I pay tax on items that I re-sell. I consider it a form of insurance. If I ever get a sales tax audit, my accountant will be informing the auditor that we will be retrieving the sales taxes I paid, but didn’t have to. Of course, that money will likely go to the accountant, but that’s why it’s insurance. My fellow dealers think I’m nuts, but it gives me peace of mind. I also document everything like mad and file promptly every quarter.
I had an “oh, crap” moment while watching Marco Rubio (state politician gunning against governor Crist for a Senate Seat) on a local punditry show. Rubio was all for eliminating property tax and raising sales taxes. The interviewer got smug and said “Well, people will just go across state lines or buy on the Internet”. Rubio smiled and asked the audience if they knew they were supposed to pay tax to Florida on anything they purchased on the ‘net. I’d just purchased a laptop. Thankfully the state was having a tax amnesty at the time, so I just filed and sent them their $15.00 or whatever it was.
Yup many of the bodegas don’t even ring up certain sales…I notice its from regular customers…hint hint wink wink
The chances are good the sales taxes you pay never make it to where they were intended to go
“Yup many of the bodegas don’t even ring up certain sales… I notice it from regular customers … hint hint wink wink.”
The bodega (whatever that is) saves on taxes two ways by doing this: Since the sale is never registered as having occured not only is it the sales tax that takes a hit, the income tax takes a hit as well.
The cost of the sold item to the store is the same whether it is rung up or not, but if the revenue for the sale is not recorded then that means the profit margin is reduced. It is even possible, if enough sales are not rung up, that the store (or restaurant or whaterver) can show a loss at the end of the year and end up paying no income taxes at all.
A bodega is a small multi-purpose Mexican/Hispanic store-restaurant. They sell Hispanic groceries, they have a little deli, they sell phone cards and Western Union to wire dinero to the casa de familia. In the “community” there’s one on every street corner.
The literal translation of “bodega” is warehouse.
They are also great places to get 40’s of Bud when you’re visiting your friends in NYC and on your way to a rooftop party.
The are a couple of interesting points here. There may be sales tax cheating out there, but we all know that cheating on income tax is rampant. For many people who don’t receive a W-2 or 1099 form at the end of the year the government essentially trusts them to report their true income.
This may one benefit of the property tax. The county revenue department here in Maricopa County, AZ has billboards up around Phoenix reading “If you own property, you owe property tax.” It must be pretty difficult to cheat on your property tax. Some experts in California say part of the problems they have with their budgets is that they rely too little on property tax.
Of course, I’ll check back on this blog in a few minutes and probably see a few posts about how people can cheat on property tax.
Aha, so NOW we know who is behind the War on Savers. It’s krazy bill !!!
Under Bill’s plan, it would make sense to go into debt.
Doesn’t it make sense that those with much to protect pay much for protection? I am speaking of protection from both without and within. The social programs and police in this country help prevent revolt and the armed services prevent the hungrier nations from looting America.
No one objects to paying property insurance in proportion to the value of the property; doesn’t the state act as insurance against seizure by the envious or hungry hordes?
You’re kidding, right? You really think that the reason that some people are rich and others are poor is become some people are hard-working, good savers and others are lazy spendthrifts?
We may see that in the near future. There may be fairly large numbers retired people living near poverty working crappy little jobs at the age of 80 because they spent their working years foolishly neglecting to save, but intense saving is not how most rich people get rich.
To me Bush was the greatest president in creating Underground jobs, but now OH wants a crack at the title.
It’s a relay race. At the end, they will all share the credit.
Krazy Bill,
The hard part is to prove someone’s net worth. There is no way this can be done.
But rest assured, Atlas will shrug before the government will even get to the point of attempting to count up each individual’s net worth.
Every socialist’s wet dream is to be able to tax the net worth of the producer.
Atlas Shrugged?
You’ve got to be kidding. “Let them eat cake” ring any bells?
The Eddie Willers types (the loyal blue collar worker friends of the producers who go on strike) are important in the lower tech economy and properly should have been saving 15% or more of their income in gold, cash, international stocks.
When I was in my 20s, I knew several friends who were also earning low income like me, but they rented rooms and they had lots of money. Our salaries in the 1980s were in the $25,000 range in California.
The other choice is to produce a new “mouth to feed” in your 20s. To them I say yes, let them eat cake.
Forget what was 25 years ago. Wages did not keep pace with REAL inflation over the 25 years.
20 years ago, a modest apt might run about 1/4 of your monthly pay. Now it’s 1/2 and rising. How can it be rising? Because wages are still dropping.
$25,000, 25 years ago, is equal to about $50,000 these days. Yet most blue collar workers are currently making… $25,000. If they’re lucky! (I just finished 4 years at a local high tech factory where anyone making $14 was cut years ago and $11hr was pushing your luck, no overtime, no raises in 6 years and not even a full 40hr week, at a plant that employed around 3000)
24 years ago my monthly rent was $375 and my salary was $22500. That’s 20%. The apartment had a “kitchenette” in the form of a camper refrigerator (with glovebox-size freezer in the top) and a microwave oven. I had to do the dishes in the bathroom sink. no washer and no dryer.
Currently my rents I pay on two apartments amount to 14% of my annual income. One apartment is in LA and it has all the amenities I want except a washer and dryer and no dishwasher. The Phoenix apartment has all the amenities I want and has an extra bedroom and two full bathrooms.
So yeah I’m getting a better deal these days. Who says getting older means you are not living better?
I was mistaken:
$25,000 from 1980 = $58,914 today.
That’s factoring a 3% increase each year.
Krazy bill ,you have a good point . Would a poor persons life change that much if the Country got taken over . The more cash/assets you have the more freedoms you can enjoy in life .
I remember from a old Woody Allen Movie ,Woody played a poor guy
who started questioning how his life was even going to change that much if some other Country invaded his Country .
This was well covered in 1984, way in the back of the book. Eurasia, Eastasia and Oceania fought over the same pool of cheap labor. One or another would control it, but the plight of the laborers never changed. Usually they didn’t even know who their masters were.
UPS to hike prices by 4.9% for ground packages.
SAN FRANCISCO (MarketWatch) — UPS said late Friday that it will hike its rates by about 4.9% for ground packages in 2010. It will also implement a net increase of 4.9% on its air express and international shipments originating from the United States. The new rates will take effect on Jan. 4.
They are getting real expensive.I guess they only have one competitor left.I will not be shipping much anymore.
Yes dude its is expensive, but in the hundreds of ebay sales I’ve done only once did they damage anything. seems the new ups driver didn’t close the back door and some packages fell out in the rain , mine was a box of 75 records the box broke some records got damaged. ….they paid the insurance promptly. the buyer was disappointed but got close to 50 records free out of the deal.
at least the uspo has the cheap media mail, but i either double box it or get sheet of Styrofoam to prevent damages.
I will attest to that. If using the post office you should package for reentry. I have seen boxes fly through the air In the distribution centers like a game of 21.
“On his recent trip to Asia, President Obama found China, Japan, and South Korea in no mood to hear more American lectures.”
~Victor Davis Hanson
But are they in the mood to be bowed to, groveled to and apologized to? If so they should have absolutely loved this past week.
You need to look at what Nixon, and Bush Junior did with their bowing kissing and groveling.
No doubt. I remember The Dallas Morning News running a big photo of Bush holding hands with the Saudi king. The funny thing was, right next to it ran a totally unrelated story about gay marriage.
I think there was some kissing involved between Dumbya and King Fraudi too. Imagine what was going on behind closed doors?
Hanson is a conservative shill for Idiot Bush and a huge supporter of Rumsfeld. Therefore, I must conclude that Obama’s Asia trip was a smashing success.
And why his poll numbers are now under 50% consistently. Keep guzzling the Olbermann kool-aid if it makes you feel better.
Eddie, I’m starting to like you.
The reasons for the poll numbers are obvious.
And it seems that Hanson is still guzzling the Rumsfeld Kool-aid.
Because a lot of chumps believed he could turn things around in less than a year, and not see that won’t be the case.
But hope springs eternal for some.
chumps believed he could turn things around in less than a year ??
Thats not how he got elected IMO…He was elected because the the neocons finally pissed enough people off that they were reduced to a minority of voters…Palin was the icing on the cake…See NY#23 for the consequence of just her presence in a political race…The right wing republican party has been reduced to cult status…They are no longer relevant…
The neocon part of the Republican party was all about anti-abortion and cramming religion down people’s throats. They did not give a hoot about economics. They don’t even understand economics. Many of them are socialists. Look at the $560 billion Prescription Medical Benefit pushed by Bible thumping Repugnant GWBush!
This is why I do not shed tears for the demise of the neocons. I’m more concerned about the road to serfdom.
‘The neocon part of the Republican party was all about anti-abortion and cramming religion down people’s throats. They did not give a hoot about economics. They don’t even understand economics. Many of them are socialists.’
The neocons are a very small group. You don’t join them, they pick you. They are socialists and their tilt is atheist. It’s all more about zionism than anything.
The neocons are a very small group. You don’t join them, they pick you. They are socialists and their tilt is atheist. It’s all more about zionism than anything.
neo con = newly conservative
They care nothing of abortion or religion but they recognize that they can get people who do, to vote against their economic and political interests.
Neoconservatism is a political philosophy that emerged in the United States of America, and which supports using American economic and military power to bring liberalism, democracy, and human rights to other countries.[1][2][3] In economics, unlike traditionalist conservatives, neoconservatives are generally comfortable with a welfare state; and, while rhetorically supportive of free markets, they are willing to interfere for overriding social purposes
Neoconservatism to bring liberalism? You are smoking funny weed again measton.
Leave this to the big boys. You can run along now.
He’s right. You obviously haven’t read Chomsky.
You run along.
The Japanese have no right to say anything. Having engineered 20 years of economic deflation on a zero interest rate policy.
the asians don’t like us now because we are out of money. they don’t like sucking on a dry t*tty. the Asian definition of “free trade” is stealing. Uncle Sam has been Uncle Sucker since the end of WW2.
Slight correction. They don’t like that the plush t*itty they’ve been sucking on has gone dry. I often wonder where China would be now if it hadn’t been for American jobs and money going there.
Germany warns US on market bubbles ~ Frankfurt
Germany’s new finance minister has echoed Chinese warnings about the growing threat of fresh global asset price bubbles, fuelled by low US interest rates and a weak dollar.
Wolfgang Schäuble’s comments highlight official concern in Europe that the risk of further financial market turbulence has been exacerbated by the exceptional steps taken by central banks and governments to combat the crisis.
Last weekend, Liu Mingkang, China’s banking regulator, criticised the US Federal Reserve for fuelling the “dollar carry-trade”, in which investors borrow dollars at ultra-low interest rates and invest in higher-yielding assets abroad.
Speaking at a banking conference in Frankfurt on Friday, Mr Schäuble said it would be “naive” to assume the next asset price bubble would take the same guise as the last.
He said: “More likely today is a scenario in which excess liquidity globally creates a new [sort of] asset market bubble.”
I can’t see how the final sentence fails as a perfect description of the immediately preceding asset bubble! Guess I am “naive.”
“…a new [sort of]…”
I think this may have gotten lost in translation. My understanding is that he meant we have recently had tech stock, housing and commodities bubbles, and it is not possible to predict which asset class will next soak up the liquidity tsunami central banks are currently flooding into global markets.
I’d like to make an apology to members of the blog and to Paul Allen regarding my truly tasteless comments of a couple of days ago. I can only plead temporary insanity due to extreme frustration with an employee of an internet service that I use. First of all, as yensoy so aptly pointed out, Allen was long gone from Microsoft before the onset of the H1B program. I think I had him mixed up with Ballmer, actually. My brain is awfully full these days regarding the the various captains of industry, etc.
Turns out, Allen has been “doing the right thing” for a very long time now. (Well, except maybe for his real estate development). Giving a LOT to charity and so forth.
I wish him long life and a speedy recovery.
And those of us who have no idea what you’re talking about do wish you a speedy recovery from your guilt, Palmy. Usually enjoy your posts. Hope the few bloggers you are addressing do see your retraction.
“Usually enjoy your posts.”
Thanks, az. You wouldn’t have enjoyed that one, though. It was petty and vicious and Allen was the wrong target. A cheap shot at someone who didn’t deserve it. I’m not good at retrieving posts and that one is definitely not worth retrieving, I hope no one bothers. It wasn’t one of my finer moments. Like you, I’m hoping the HBBers who were disturbed by it see my post above.
“Usually enjoy your posts.”
So do I. And you are not alone in wanting to retrieve posts.
Time to move on, Palmy. Your memory of this post is most likely stronger that the rest of ours combined.
And I very much doubt if Paul Allen read it.
Thanks, combo. I got slapped good (and rightly so) by yensoy.
While I, too, doubt that Paul Allen read it, I just recently found out that it is possible to sweep the ‘net for references to people, places, things, etc. Mostly e-commerce entities do this.
I’ve just been a tad out of control in recent weeks, suprised Ben hasn’t given me a warning.
Eah, well let one out every now and then. Remember when I called that dying little lady a loser?
No worries palm.
After Allen recovers, we can talk about his takeover of the lake Union area of Seattle, and all the “nice” things he got the city to do like build a streetcar.
I’ll also tell you how an Allen company stiffed me of a couple of hundred bucks about 10 years ago.
Let’s wait for him to get better
Meanwhile, want to talk about H1-Bs? I can give you my first hand opinion.
Hey, yen, I wuz out for a while. But, sure, I’d like to hear your take on H1B. If I recall, you mentioned pros and cons, and I’d like to hear both. If you’ve got the time. Or maybe in another thread.
Not me, Palm. Your ++’s far outweigh your –’s.
Re: Yesterday’s discussion about the Mortgage Reset Chart and its importance, there’s a 2009 version available: Google-up “mortgage reset chart 2009″ if you want to get a copy.
A stare-and-compare with the older versions shows the reset peak to have moved foreward a bit, from the summer of 2011 to the beginning of 2012.
However, we’re still looking at about $1.5 trillion of mortgages to reset/recast.
This chart goes to the heart of my reasoning why economic recovery won’t happen next year as many predict.
Very good, combo. As I was saying, this thing is always moving forward, because the writing of ARM/IO/neg-am notes didn’t stop in 2007. But the fact that the peak moved forward by less than half a year, in the two years since the last chart, does indicate a sharp slowing in the issuance of resettable loans. (More of a slowing than I actually thought.)
And how can banks think “economic recovery” is going to happen when THEY own a huge RE inventory mostly vacant. Hahahaha.
I heard recently that vacancy rates are at a 45 year high and rental rates are dropping. Of course home builders are showing increased sales and projections of increased production next year. With foreclosure rates continuing to climb and expected to climb and remain high, for the next couple years, the cycle of devaluing then foreclosing may continuing longer than most people think.
Where and for what kind of rental? I’ve put off moving to FL for the time being. So I’m looking for a new rental in Atlanta. The place we’re in now is OK, but it’s an old house and it’s starting to show it’s age. And now that winter is here, the 20 year old crappy single pane windows, lack of insulation reminds me why I want a new house to live in.
Everything I’ve looked at so far that is nice is imo overpriced rent wise. People are basically asking what it takes to cover the mortgage that was taken out 1, 2, 3 years ago. I’ve made a couple of offers below asking rent and each time the answer was ‘I’d take it but if I don’t cover the mortgage, I can’t rent it to you’. These people will eventually foreclose I’m sure, in a year or so, but what good does that do me today? And once foreclosed, that’s one less house that is even available for rent, making supply lower by 1 and increasing the number of tenants by one.
And then you have the builders who are starting to rent out their unsold houses. They’re a little more realistic on rents. But, in almost all cases, these houses are in new subdivisions where 1/2 the lots are unfinished and you’d be one of 2 or 3 people living there with 10 empty houses surrounding you just begging to be vandalized, squatted in, etc.
And finally you have the ghetto rentals of which I am sure there are plenty of and prices are rock bottom. But again, doesn’t do me much good if those prices are down 30%. They could be down 100% and I still wouldn’t move in.
I don’t know what the apartment situation is, but that’s not an option either, so again, not relevant.
Rents are high but dropping steadily here ( Seattle ). I just moved from a not-very-good two bedroom apartment to a very nice three bedroom house which is $250/mo less than the apartment. I tried to negotiate a rent decrease with the apartment managers, who refused to budge despite their steadily increasing vacancies. There are a lot of vacancies in this area compared to two years ago when I moved to the apartment.
Eddie,
After reading your post, I am persuaded that San Diego has a much more favorable rental market than does Atlanta.
And of course these days, people are defaulting long before their reset/recast date. That also moves the max forward in time.
It’s going to cause peoples heads to explode, when the next leg down starts. Especially, the suckers who bought the hype about it being a great time to buy a house and rushed out to get their $8,000 tax credit.
I may not be getting much of a return on my savings, but I expect my eventual returns to come via house price deflation.
Shoot, even with T-bills you are better off than buying a house the next three years!
13 week are now at 0.01%
1 year at 0.26%
WOW!
While house prices will most likely drop another 10% in 2010 and 10% in 2011…
I recently got a 2.25% 13 month CD at Westmark CU here in Boise….
“While house prices will most likely drop another 10% in 2010 and 10% in 2011…”
Sounds about right to me. By 2011, I expect coastal bubble markets will be sufficiently close to the bottom so it will make sense for end-users to start sifting through the bubble rubble for something that makes sense as a long-term buy-and-hold purchase.
I personally cannot wait for the opportunity to ridicule those smart under-30 folks who expediently took the Dough-4-Dumps bait and caught themselves falling knives.
“While house prices will most likely drop another 10% in 2010 and 10% in 2011…”
To flesh out the mathematical implications, that would be a 19% drop over two years ( ((1-0.1)^2-1)*100 = -19%), which translates into a home equity loss of 0.19*500,000 = $38,000 on home purchased for $500,000. That is an amount well in excess of the annual after-tax income for a typical first-time-home-buyer household in SoCal, and would offset the $8K Dough-4-Dumps tax credit by a factor of nearly five. Got negative ’savings’?
It’s a little embarrassing to have to always post these grade school arithmetic examples here, but I suspect that many recent first time buyers forgot to do any basic math before jumping in to a home purchase.
Prof, I believe:
.19 x $500,000 = $95,000
I won’t make further comment.
“0.19 * $500,000 = $95,000″
Well whad’ya know? Multiply all my previous comments by a factor of three or so.
NYCB — your occasional graciousness is only exceeded by your frequent vituperation of worthy targets.
Those who refuse to do arithmetic are doomed to speak nonsense.
– John McCarthy
Apparently I am not exempt. Note to self: Always actually plug calculations into Google before posting.
Too funny.
Professor, take a bow with a gracious sweep
of the arm.
The mortgage recast tripwire is just one of many, all of which will have slow motion dominoe effects. To my simple mind, it took decades to set up this deadfall matrix, so the deconstruction will take a long time.
I don’t know very many people who can see (imagine) beyond the next move. A strategy for a generation of economic decline makes the most sense to me, but my friends are just looking at three months from now.
Of course, what is not shown on that chart, and requires some imagination to ponder, is how long it will take past that mid-2012 reset peak to work through the (shadow?) inventory glut of high-end homes. I am thinking at least three more years (through 2015), based on other lingering issues (continued high unemployment, baby boomers who want to retire and downsize their households with McMansions they want to sell but don’t need to sell, rising interest rates, lack of qualified buyers who want to catch falling knives, etc etc etc).
Only in South Carolina- a Second Amendment Weekend!
“SC offering shoppers tax-free weekend on guns.”
http://www.google.com/hostednews/ap/article/ALeqM5gzGdiQMAkR-90GiPPWT5xO7bFMVAD9C2MV0O0
Is there anybody lurking from Rochester, NY? What are you seeing in Pittsford and Brighton?
Fairport has been in my range for a long time, but I’d love prices to fall enough to live near or in the ‘hood where I grew up (Powder Mills Park Area).
Btw, home of the mushroom house!
http://farm4.static.flickr.com/3612/3377655662_40b33e1f8c.jpg?v=0
LA Meetup summary (real names left unsaid here, out of respect for everyone’s privacy):
We had a nice Los Angeles meetup in the South Bay area this morning at Starbuck for over an hours.
Combotechie, Dave, and Greg (HBB names) and I met and discussed the continuing debt crisis.
Combotechie brought up the topic: What happens to the banks’ holdings when the foreclosures that they are holding back from the market have to be put on the market at huge price drops?
Dave discussed some local observations. A high end house in Topanga Canyon that was up for sale at $1.1 million in the summer is up for sale in the $700s. High end home prices falling down like that will put pressure on “lesser” upscale areas such as PVE, Hermosa Beach, and Manhattan Beach. Some downtown LA area condo prices that were in the $600s per square foot are in the $200s per square foot.
Greg is interested in multiple unit dwellings and Dave discussed a Santa Monica 5-unit place that is in the $900k range. A $700k range is break-even. Greg and I are in favor of letting the market work - no stimulus, no artificial prop up of RE.
I think all of us agree that the plan by the Treasury Department, the big banks, GS, Ben Bernanke, etc is to keep interest rates at 0% another three years to stave off the inevitable.
But that is all they can do - stave off the inevitable. Combotechie had a color print of the reset chart and said it’s all you need to know. Combo is the “cash is king” guy.
I hope to just be able to load up more on government securities and ride the real money (gold) bandwagon while the inevitable collapse is staved off for three years or so!
Bill
So many interesting things and our minds were racing. It was like a blog all over again. You guys bring up interesting issues.
$57 trillion of total bill for obligations, including Medicare and social security entitlements. There is no way that taxing the rich Americans will pay for it. Even if they double the income tax of every household earning over $100,000 there is no way to pay for it all.
And if they do double the federal income tax on the so-called “middle class” you will see the big tax revolt.
Government Sacks knows this. They are just hoping to stave off the inevitable. They have their parachutes ready with funds in different baskets: Gold, Yuan, rubles, farmland in South America, U-name it. The rest of us will get screwed.
Simple story: One way or another, promised benefits to Baby Boomers (you and me, pal) will be scaled back over the next three decades. It is quite obvious there is no way to pay for all the promises, and anyone who suggests otherwise is either a liar, a fool, a politician or all of the above.
I’m not sure if that’s enough. Maybe it will bring the $57 trillion down to $20 trillion, but I certainly would not miss Medicare or social security. I’m more worried about my sisters. They are older than me and have no savings.
I would personally prefer to bail out my sisters myself than to have any stranger bail them out. And I’m not being sarcastic. I just do not want to socialize anything.
So I have to save not only for myself, but for my sisters. They don’t know that. They know I live very cheap and they do not know my income or my net worth. If somehow I get a mental shift and get married, then I cannot help my sisters. Work until they drop is what they will have to do.
Fortunately for me, I am blessed with three sisters who all work for a living and also live debt free (i.e., the only debt they hold is more than completely covered by the collateral value of assets the debt was used to purchase). I am quite sure my siblings and I are on the extreme outlier end of the American household distribution of indebtedness (at least the middle-class portion thereof).
Unfortunately for all Americans, at least some top government officials seem to still favor programs (such as Dough-4-Dumps, low-downpayment FHA loans, super-low returns on savings which encourage household gambling in risky assets, etc) which encourage households to take on more debt and financial risk than they can prudentially manage. It will be interesting to see whether the government eventually shifts its paradigm to one which encourages household saving, prudential risk management, and rebuilding America’s wealth base. Hair-of-the-dog stimulus won’t cut it.
Perhaps the Congressional audit of the Fed could explore how, with the Fed’s encouragement for households to gamble on Wall Street’s risky assets, America was able to turn itself from one of the world’s most independently wealthy saver nations to one of the world’s most economically dependent debtor nations over the course of the past three decades, and what might need to be done to reverse the situation.
There would also revolts if there are massive cuts to Social Security and Medicare. So what’s the solution?
i cannot imagine a bunch of 60 year olds or 70 year olds fist-fighting cops. Some of them would take to serial shooting in the form of Ft. Hood though. But I think the revolt on their part will be civil disobedience of taxation.
Retirees are an easy target as bagholders, since they often are more than slightly clueless about what is going on, and they very seldom get violent when screwed over by the government.
Careful PB, some of US are retired.
I should also bear in mind that pitch fork owners are often of retirement age.
Good God, that’s all I need is a bunch of boomers shooting up the country.
If you’re a broke, American Boomer, you deserve it. You pissed away one of the greatest booms of mankind.
Bill,
Three years is a real stretch, I don’t see it happening. I don’t know one person in my little
financial group that thinks we have a year.
Rancher,
I am curious about your reasoning. My best guess is that the economy will continue turning out “worse than expected” at every turn for much longer than one more year, giving the Fed plenty of reason to extend ZIRP indefinitely (three years sounds like a reasonable enough guess to me).
And how long can they continue to print money and then lend it back to themselves? We have
the worlds worse case of financial Siamese twins - Treasury/Fed-GS
I’m thinking they can continue doing so as long as the economic numbers keep turning out “worse than expected.” Since I don’t see any real signs of recovery (other than green shoots due to government life support fertilizer), I am expecting three more bad years.
If the green shoots work out “better than expected” (at least relative to my gloomy views), history may show I gambled wrong. I see no way to avoid the gamble at this point in this unprecedented cycle, with unprecedented levels of government stimulus to offset the bust…
I think it’s a matter of “pick your poison…”
Raise interest rates to where they should be and the economy goes quicker into a tailspin.
Or…
Keep interest rates at 0 and the economy will go into a slower semi-controlled dive so that the GS (Government Sacks) types have enough time to use their parachutes. It will be a slower death for the rest of us.
I agree. The second option seems like the obvious choice.
Rancher’s prediction seems to depend on the controlled burn turning into a conflagration (e.g. “disorderly decline” in the dollar), and I personally see no signs that this is going to happen. (I don’t mean to suggest it can’t happen, just that I don’t currently see any evidence that suggests it will happen…)
P.S. If you guys have another LA meetup, schedule it for later in the day and I will try to join you.
It would be great for you to show up. “Greg” has our contact info and I think we will probably meet again somewhere in LA’s vast area in the next three months.
I’m glad to see we are on the same page. ZIRP for several years will give more people a chance to take advantage of buying more gold and T-bills and paying off more debt. It will give a chance for us super savers to save even more.
Please! Please hold on for a year!! At least until the end of August.
Three words: Resolution Trust Corporation
Its not just the banks they’re trying to save; just think of the tremendous property tax drops that are looming….for every year this depression continues. local governments around here are toast. City workers are pressing for mayoral recalls because of layoffs; they want more taxes!
Ron Paul Reception in Phoenix, AZ, Friday evening, December 4, 2009
The good doctor will be in the Phoenix area in support of Campaign for Liberty, an educational organization that sprang from Dr. Paul’s exhilarating 2008 campaign for the presidency.
A $250 donation to Campaign for Liberty earns entrance. Attendance will be limited to 80 persons.
http://www.blog.cmi-gold-silver.com/ron-paul-reception/
Just found out about this and will be attending if at all possible.
Lip
Last time we had negative rates, didn’t a US stock market crash ensue?
I guess it’s different this time.
* NOVEMBER 21, 2009
Negative Rates, But Panic Is Gone
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By EMILY BARRETT
Treasury-bill rates are hovering near zero, and in some cases even turned negative—levels unseen since the peak of the financial crisis last year. But it isn’t panic sending investors to the safety of short-term government debt.
Instead, investors who have reaped huge returns from stocks and corporate bonds this year are parking some money in bills that will tide them over until next year.
Hedge-fund managers, banks and portfolio managers “have had a great year and don’t want to risk losing their lofty returns for 2009,” said Kevin Giddis, head of fixed-income sales, trading and research in Memphis, Tenn., at Morgan Keegan.
The benchmark three-month bill rate was 0.010% late Friday; bills maturing in January were at a rate of negative 0.01%.
…
“The benchmark three-month bill rate was 0.010% late Friday; bills maturing in January were at a rate of negative 0.01%.”
Plain ol’ cash beats out a negative 0.01%.
Why would anyone trade cash for something that pays out a negative 0.01%?
I suspect the answer has something to do with ’saving options’ for large institutional investors, who have far more than than the FDIC insured limit in cash which they want to park under a mattress.
I’m not buying “new” 52 week T-bills for at least the next five months if the rates continue to drop. The new Series I savings bonds are a much better deal. Hold them for a year and the 3 month interest penalty upon selling still makes them a better deal than T-bills.
I’ll continue to re-invest my maturing 52-week T-bills though. And I have to keep in mind the $5,000 limit of electronic savings bonds and $5,000 limit of paper savings bonds.
How do journalists know whether it is prudence or panic which drives short term interest rates to negative levels? I strongly suspect they are talking up their arses (a highly frequent occurrence over the duration of the financial crisis).
Americans save more but earn less as rates fall
By STEVENSON JACOBS (AP) – 21 hours ago
NEW YORK — The U.S. is finally becoming a nation of savers. Now if only we could get something for our money.
Interest rates are sinking to near zero for the first time since last year’s financial meltdown, dampening spending as Americans earn less on their bank deposits and investment accounts.
It’s hardly encouraging news for an economy that sorely needs people to buy things.
Rates are falling near zero this time because of prudence, not panic. Financial firms are polishing up their balance sheets at the end of the year by buying government debt, a much safer investment than most others.
The dive in interest rates comes as Americans sock away more money. Today’s personal savings rate of 3 percent is nearly double that of a year ago. Economists say it could rise as high as 8 percent as households try to rebuild savings shredded by the recession.
Yet all that saving isn’t exactly paying off. Personal income from interest hit $1.26 trillion in 2007, according to the Bureau of Economic Analysis. This year, that number is on track to fall by $40 billion — even though people are saving more.
The bureau says interest income fell 7.4 percent each month for the past three months. It means people who rely on interest from savings, such as money in certificates of deposit, are earning less.
“Savers are getting killed by these low rates,” banking analyst Bert Ely said. “They’re getting next to nothing.”
…
“‘Savers are geting killed by these low rates,” banking analyst Bert Ely said. ‘They’re getting next to nothing.’”
I disagree. Even at a negative 0.01% rate of return a saver makes out in a deflationary environment where prices are in decline.
This is when cash truly is the king.
Plus, the rate of return granted to savers due to deflation is tax free.
But isn’t the Fed hard at work using the printing press technology in an attempt to offset deflationary pressures? What makes you think they will not succeed in this most primary policy objective?
Nice silver lining: The government does not tax the “opportunity gains” of holding on to cash to purchase consumer durables in a later period for a lower purchase price. I am saving up for another cash purchase of either a fiddle or an automobile at some point over the next couple of years — which it will be depends on where I see the largest amount of deflation. I am leaning in the fiddle direction, as the impact of this recession on opportunities for live performing musicians has been utterly devastating (speaking first hand here, as all my paid gigs have dried up over the past year…).
This zero percent thingy forces me to think through some likely happenings:
If I were a money manager for a hedge fund or mutual fund or whatever I would be under enormous pressure by my clients to perform, meaning to give them a good return on their money.
But there are no good returns, at least none that don’t entail a lots of risks. Right now the best return one could get for the least amount of risk is to go to cash.
But if cash has the best risk/reward ratio, why would investors need money managers for this? Why not just go to cash themselves and save the commissions they’d pay to the money managers?
Hence, to keep their investors happy (and hopeful), and to keep them from going away (and taking their money with them) money managers have to stick their necks out - stick their necks out much further than prudence should allow.
Maybe that’s why we end up with this bull market in equities when the fundamentals just aren’t there?
“Maybe that’s why we end up with this bull market in equities when the fundamentals just aren’t there?”
Bull markets against a backdrop of poor fundamentals often end with crashes.
I am leaning in the fiddle direction, as the impact of this recession on opportunities for live performing musicians has been utterly devastating (speaking first hand here, as all my paid gigs have dried up over the past year…).
Interesting.
I haven’t played out very much since the birth of my child, but friends of mine (both pro and semi-pro) have continued to get decent-paying gigs. I know we’re in different subsets of the musical world, but it seems like live music is still alive and kickin’ …
At any rate, a good musical instrument is as good a place to spend one’s money as anything, provided one has the shekels to pay for it.
“I know we’re in different subsets of the musical world, but it seems like live music is still alive and kickin’ …”
This country has some great gig scenes, including Chicago, LA, SF, Boston, DC and NYC. San Diego is not among them.
“At any rate, a good musical instrument is as good a place to spend one’s money as anything, provided one has the shekels to pay for it.”
My former violin teacher accumulated wealth by purchasing fine violins made by contemporary makers whose reputations were growing. He made 1000 percent total returns over 25 years in some cases. One maker he liked was Chicagoan Franz Kinberg. These instruments went up by maybe 10X…
This country has some great gig scenes, including Chicago, LA, SF, Boston, DC and NYC. San Diego is not among them.
Ah yes, sometimes I forget how lucky we are.
My former violin teacher accumulated wealth by purchasing fine violins made by contemporary makers whose reputations were growing. He made 1000 percent total returns over 25 years in some cases.
Beautiful, well-crafted objects one can actually use and enjoy — much better than caressing a cold, lifeless ingot!
“Ah yes, sometimes I forget how lucky we are.”
Then again, we never have 0 degree F temperatures in January with 40 mph winds blowing off Lake Michigan. And throughout my life, I have always manage to find musical opportunities whenever I bothered to look around. There are plenty of very world class musicians around San Diego; it’s just that there is not nearly the base of support for local musicians here that major cultural centers have to offer.
Let me know when that deflation thing happens. My local Wal Mart just raised prices across the board.
One evening an old Cherokee told his grandson about a battle that goes on inside people. He said, “My son, the battle is between two “wolves” inside us all.
One is Evil. It is anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.
The other is Good. It is joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion and faith.”
The grandson thought about it for a minute and then asked his grandfather:
“Which wolf wins?”
The Old Cherokee replied…… ” The One You Feed”.
Sincere thanks to Ben Jones for feeding the Good wolf within us.
Wow ….I really like that story PB.
This must be a proverb for the Cherokee on the reservation. Out in the wilderness life is short, nasty and brutish according to Hobbes, and I believe it.
If you only remember one thing, remember this:
Old age does not exist in nature.
“Old age does not exist in nature.”
My very smart and well educated daughter once told me this:
Among primitive people old age is usually respected and revered. Even when the old and frail are well beyond carrying their weight and doing their fair share as far as contributing to the tribe they are kept around, even given prominent decision-making positions as Elders. Why is that?
It’s because it is not what they DO that is important to the tribe, it is what they KNOW. They are the tribal repositories of knowledge, of experience, of wisdom. The direction they give to the lower ranking tribal members may prove to be the deciding factor that determines prosperity or extinction.
A famine may hit the tribe, or a drought, or a plague, or any number of things. The young are at a loss as to what to do, not so the old; They’ve been there before, or they have passed down from THEIR elders knowledge of what to do and how to do it. It is this knowledge and wisdom that establishes their worth to the tribe.
Combo,
I apologize, I didn’t set that in the right context.
Your daughter is right and what she related to you is the correct. What I meant
to say is that in Nature there is no old age.
By the time an animal is approaching old
age, he becomes prey. The only time you’ll
ever see an old animal is either in a zoo
or on a farm, conditions that are antithetical
to nature. The weak die first.
Sorry Combo,
I should have said “In nature there is no
old age”. Only in zoos and farms are non-
domesticated animals ever found old, in
the natural world, the would have fallen prey
as soon as they got weak.
“I apologize.”
Lol. No apology is necessary for any of this. We’re just talkin’ (or typing, or whatever).
Your post merely reminded me of something my daughter once told me so I thought I’d pass it on.
She also told me:
In today’s modern society the old are not respected partially due to the rapid change in technology. When a teenager knows more about a computer than an fifty year old will ever know, for example, it’s hard to convince the teenager that he doesn’t already know everything there is to know about other things and that the old guy is out of touch and over the hill.
Just something to think about, IMO; Maybe help us understand our world a bit.
This rapid change in technology changed changed our culture in other ways.
In the early days of radio famlies generally had only one radio thus radio programs and music were directed to the whole family. Music was termed Popular Music, and that’s what everyone listen to. Later on technology advanced to the point where every family member could have his own radio and this caused radio music to splinter off to various types of music. This splintering of music help lead to the splintering of famlies; today it is not unusual for an entire family to be involved in their own little worlds listening to their own music over their own headsets.
Same thing happened with television. Early tv was expensive so families had to settle for one tv set. Hence tv programing was designed to fill the needs of entire families. Today each family member may have their own tv set, and programing evolved to meet the seperate needs/desires of each of these family members. The splintering widened.
The automatic dishwasher changed things. Traditionally mother and daughter would collect the dinner dishes and would stand side-by-side at the sink while doing them - one washing, the other drying. There’s a lot of dead time in wahing dishes, time for one-on-one talk between mother and daughter, time for them to really get to know each other. It might only be fifteen minutes a night but those are some important fifteen minutes.
Enter the automatic dishwasher: Now the dishwasher does what mother and daughter used to do. Now there are no longer fifteen minutes/night for mother and daughter to catch up on each other’s lives. The splintering widens some more.
So basically old guys like me can be replaced by optical storage media.
That makes me feel special.
Prof B: What is it with this “Tungsten Plated” Gold gig? If this is THAT big, “Fort Knox gold is plated w/ Tungsten” (Oly, How spell?) then the sh#t should really hit the fan…
I just caught this on a couple reputable blogs…
Is this New News or something?
How are you doing Prof. B. ?
I tried to find out what happened to Oly, but still don’t know. Lavi told me to look @ 10/27/09 comments, I did, and nothing out of the ordinary. Miss the old gal, like we all do I suppose…
Of course, I meant gold-plated. I am Tungsten tied. This could be WWIII if true…
Oly must be busy. Maybe she has a new beau?
Why doesn’t the Government pass a law that the Corporations have to do their fair share of bail outs ,so Corporations have to raised salaries by 30%
until their profit margins are zero for at least 5 years ,or a 20% tax for 5 years for windfalls from the fake housing ponzi scheme . People are only making .50 or so on their savings accounts so the banks can make windfalls
during these trying times .
If you think this is a nutty idea ,look at what they have done to Main Street . Main Streets over all wealth had been affected by 30 to 50% if you look at the drop in the Stock market ,loss on 401K’s and of course loss of wealth on real estate and jobs ,(And don’t forget future cost of bail-outs that will be thrown on Main Street ).Why is it that Corporations don’t have to chip in . Corporations were a great beneficiary of the boom ,in that people where buying over-priced items ,and it was a windfall for Corporations based on a
credit system that came about because of the Ponzi scheme .
Instead ,you have Corporations laying off people right and left ,they are reducing salaries and benefits and they are attempting to keep high profit margins at the expense of Main Street ,while they transfer the social costs to the government by unemployment and welfare for the
down trodden . Corporations are contributing to foreclosures in that they are firing people they could keep .If Corporations weren’t making money ,Wall Street would not be doing as well as it is doing right now ,
in spite of it being a bubble .If anything, Corporations are outsourcing more jobs ,actually re-locating to foreign Countries , giving less service while paying cheaper salaries ,while I think the USA is getting up to a real unemployment rate of 17% .
So ,my point is that its real clear that Main Street ,or the actual working people of America , or the middle class ,are the ones that are paying for everything
while the Special Interest Groups demand their right to have their same profit margins . Do you think Wall Street cares if people live in a gutter for years to pay for the folly of the greed machine ,that is still operational .
Congress loves to enact unfair laws ,so why don’t they mandate that Corporations have to give a 30 % raise to their employees or give a
20% crash penalty tax to Government for 10 years so they pay back their unfair windfalls because of a fake real estate Ponzi-scheme.
They expect the taxpayers to pay for fake markets ,so why not everybody chip in .
How about making a law that Corporations can’t fire people . How is this any different them some of the crazy tampering with Contract law that they have been doing lately .
I’m just saying that there seems to be certain self-interest entities
that are getting all the benefits and they aren’t paying any of the
price from a period that they benefited from being ,the period of 2000 to 2007. How about a new law that any CEO that benefited from the faulty credit markets has to give back their gain . The American people have had to give back their gains . Actually I think the
Power Brokers knew that if the crash was allowed to proceed on standing law ,they all would of ended up in Court being sued and they
would of had to give up their gains .
What will that do to me, a shareholder? 55% of my net worth is into stocks. Kill the corporation and you kill my stocks.
That’s an excellent reason not to own stocks. Of course, owning T-Bills in a 0% environment is masochism too. What does that leave? Hmm, let me think…
“What does that leave?”
Cash.
HAHA, right on cue.
Couldn’t let the opportunity slip by.
Good point Bill ,I didn’t think about the shareholders . I would just say that under ordinary circumstances it would not be advisable to have that high of a percentage of your net worth in Stocks ,but right now its the bubble of choice . In fact Bill ,aren’t you getting a little nervous about having that much in the stock market ?
But ,its true my proposal would no doubt take stock prices down at least 20% or more . By the same token everything the government has done has taken my assets and income down by the response to saving certain industries .
I’m not saying that you kill the Corporations ,but should they get windfalls and make high margin profits when Main Street takes all the hardships and loss of wealth and buying power ?
The 45% of my assets outside of stocks is enough to keep me going for years (PMs and government securities). I have no qualms about another year of $22,000 in my 401k (over age 50), $6,000 in my IRA and my company match of $2,800 or so.
Most Democrats in Congress are millionaires who own stocks. They buy but hardly ever sell. They won’t enact a wealth tax and they won’t kill corporations. Most Dems do not want to be taxed. If you want to protect yourself against the taxes by the Dems, invest the way they invest.
Financial Engineers are at it again.
Investment Funds Profit Anew, This Time Paring Mortgages
As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess.
Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.
But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.
While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.
http://www.nytimes.com/2009/11/22/business/22loans.html?hp
Oh. My. God.
“But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.”
Certainly the central planners who summarily made provision for
federal guarantees of FHA-refinanced mortgages foresaw that this would be a new (taxpayer-funded) gold mine for Wall Street?
Any predictions on how soon the FHA will get its bailout?
Nov. 21, 2009
PARALLEL UNIVERSE: Is Federal Government Creating Next Housing Meltdown With FHA Loans in High-Cost Areas?
By David M. Kinchen
Huntingtonnews dot net Real Estate Writer
In the words of Capt. Renault in “Casablanca”: “Round up the usual suspects!”
I’m referring to the next housing/finance crisis, which will most likely occur in high-housing cost states like California as the Federal Housing Administration (FHA) guarantees home loans on expensive real estate purchased with almost nothing down.
The New York Times writes about this in its Nov. 20, 2009 issue, citing Mike Rowland, 27, and two friends who — with the help of FHA mortgage insurance — bought a nearly $1 million two-unit apartment building with a down payment of only $33,000. Link:
I saw the story at the same time I accessed the Mortgage Bankers of America (MBA) web site to retrieve the latest loan delinquency numbers. The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of all loans outstanding as of the end of the third quarter of 2009, up 40 basis points from the second quarter of 2009, and up 265 basis points from one year ago, the MBA said.
Bottom line: The delinquency rate breaks the record set last quarter. The records are based on MBA data dating back to 1972.
What’s the connection with FHA?
MBA Chief Economist Jay Brinkmann notes that “The foreclosure rate on FHA loans also increased, despite having a large increase in the number of FHA-insured loans outstanding. The number of FHA loans outstanding has increased by about 1.1 million over the last year. This increase in the denominator depresses the delinquency and foreclosure percentages. If we assume these newly-originated loans are not the ones defaulting and remove the big denominator increase from the calculation results, the foreclosure rate would be 1.76 percent rather than 1.31 percent reported.”
Brinkmann adds that the “usual suspects” are present in what could be the next crisis: “Once again the states of Florida, California, Arizona and Nevada have a disproportionate share of the mortgage problems. They had 43 percent of all foreclosures started in the third quarter, down only slightly from 44 percent both last quarter and the third quarter last year. They had 37 percent of the nation’s prime fixed-rate loan foreclosure starts and 67 percent of the prime ARM foreclosure starts. As of the end of September, 25 percent of the mortgages in Florida were at least one payment past due or in foreclosure.”
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Who says there is no work in real estate?
Go Ahead and Yell. He’s Everyone’s Punching Bag.
Norman J. Radow brings out the worst in some people. They scream at him. They sue him. He has even been punched in the face.
What has he done to deserve this? In a word: workouts.
As founder of Radco Development Solutions, Mr. Radow is on the firing line in the continuing battle over failed residential real estate deals. Banks hire him to resurrect developments gone awry, particularly those half-empty condominium towers and gated communities that sprang up like weeds during the boom and are now in foreclosure.
http://www.nytimes.com/2009/11/22/business/22real.html?ref=business
The Great Unknowns of Credit Card Bills
Three years ago, the Haggler’s credit card bill seemed to stop showing up in the mail. Another month went by — no bill. The month after that, still nothing. Each month, the Haggler would call the issuer, Bank of America, and pay over the phone, then ask the same question: “Why did you stop sending me a bill?”
We’re still sending you a bill, came the company’s reply each time.
Guess what? The company was right. It just was sending the bill in a restyled envelope, with no trace of “Bank of America.” In other words, it looked like junk mail, and the Haggler kept throwing it away.
http://www.nytimes.com/2009/11/22/your-money/22haggler.html?ref=business
Here is a guy whose argument is likely to be branded “tinfoil hat” by the MSM. Why can’t we have a rational discourse on the way to fix our financial system without stooping to name calling and straw man tactics? Is it too hard for defendants of the status quo to poke holes in arguments which they choose to demonize or ridicule?
Topic: Federal Reserve
END THE FED - HR 3996, the Automatic Bailout Bill of 2009
My comments as those masters of disaster, the U.S. Congress, create a horrible bill, the Financial Stability Improvement Act of 2009, and on the fate of Ron Paul’s Audit the FED bill, HR 1207.
by Jake Towne, the Champion of the Constitution (libertarian)
Saturday, November 21, 2009
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While Frank proclaims the bill supposedly protects the taxpayer from bailing out Wall Street, the truth is Congress intends to grant the Federal Reserve even more powers to mishandle and crash the economy as they did with their money-printing, excess credit, and low interests rates to cause the last bubbles, residential and commercial real estate, to form and then collapse.
Possibly the worst part of the bill is what I term the “Emergency Bailout Authorization,” or per Section 1109, officially known as the Emergency Financial Stabilization.
“Upon the written approval of the Board of Governors of the Federal Reserve System… and the Board of Directors of the Corporation [Author's Note: This the FDIC.]… and with the written consent of the Secretary of the Treasury (after consulting with the President), the Corporation may extend credit to or guarantee obligations of solvent insured depository institutions or other solvent companies that are predominantly engaged in activities that are financial in nature, if necessary to prevent financial instability during times of severe economic distress. There shall be available to the Corporation to carry out this section amounts in the Treasury not otherwise appropriated, including for the payment of reasonable administrative expenses.” (pages 43-44/253)
HR 3996 will also formalize the today’s President’s Working Group on Financial Markets, or the “Plunge Protection Team” formed after the 1987 stock market crash to perform interventions in the financial markets and lead Presidents to make misleading statements like “the financial markets are strong and solid… This economy of ours is on a solid foundation… core inflation is low” from January 2008. The new group will be named the Financial Services Oversight Council and consist of economic central planners Treasury Secretary Timothy “Turbo Tax” Geithner, FED Chairman Ben Bernanke, FDIC Chairwoman Sheila Bair, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Director of the Federal Housing Finance Agency, the SEC Chairman, NCUA Chairman, and the CFTC Chairman. (pages 5-7/253)
HR 3996 will cede power to the FED to force companies to obey the FED’s orders if the company’s actions or size pose a threat to their own “safety and soundness” or to the “financial stability of the United States,” which are both incredibly vague and undefined terms.
“If the Board determines, after notice and an opportunity for hearing, that the size of an identified financial holding company or the scope or nature of activities directly or indirectly conducted by an identified financial holding company poses a threat to the safety and soundness of such company or to the financial stability of the United States, the Board may require the identified financial holding company to sell or otherwise transfer assets or off-balance sheet items to unaffiliated firms, to terminate one or more activities, or to impose conditions on the manner in which the identified financial holding company conducts one or more activities.” (page 19/253)
When financial holding companies are identified as “undercapitalized” they “shall not, directly or indirectly, acquire any interest in any company or insured depository institution, or engage in any new line of business [without permission of the Council.]” (page 30/253)
Section 1105 gives the FED the power to force financial holding companies into bankruptcy: “an involuntary case may be commenced by the Board of Governors of the Federal Reserve System against an identified financial holding company.” (page 38/253)
Section 1701 gives the FED “in unusual and exigent circumstances” power to authorize immediate bailouts and assistance to any “individual, partnership, or corporation.” (page 253/253) This enables the FED to neatly bypass Congress when the next crisis occurs.
HR 3996 will be a colossal failure. There is simply no way a centralized body of bureaucrats like the newly formed Financial Services Oversight Council can adequately oversee every major corporation in the United States. Far from guaranteeing the taxpayer will not be robbed to pay failed Wall Street businesses, the bill secures “automatic bailouts” for the banksters and powerful corporations. While some may seem the regulations and control as helpful preventative actions to prevent economic strife, “too big to fail” is an outright lie. An orderly bankruptcy process of debt liquidation and asset reevaluation sold by the insolvent firms and bought by solvent, stronger firms results in the quickest possible recovery.
We must realize that much of the government-sponsored regulations merely serve to increase the size of government bureaucracy, which increases the end cost to the consumer, prevents competition from smaller firms, and creates a higher barrier of entry for new businesses. By their very nature, bureaucratic regulatory agencies are doomed to inefficiency and failures, and can do nothing than a series of private, competing accreditation firms cannot do both profitably and far better.
Many, including our Congress, have forgotten that the free market is the most just, most humane, and most prosperous economic system the world has ever known. The current false economy is primarily due to the counterfeiting, plundering and meddling of the central bank, the Federal Reserve. Read more about my thoughts on bailouts and corporatism here. If for some reason HR 3996 does not pass, it is my humble opinion that Congressman Paul should move for a discharge petition for HR 1207. Any co-sponsor that chooses to not sign the petition is, in my mind, a traitor to transparent government and the Republic.
…
An economy without checks and balances, rules and regulations, is nothing but a 3rd world cesspit.
There will never be a truly “free market.” It would disintegrate almost overnight. But not before millions are hurt or killed.
‘There will never be a truly “free market.” It would disintegrate almost overnight. But not before millions are hurt or killed.’
Where do you get this?
I agree the pure free market is an unattainable ideal, but we could do lots better by having markets lots freer than what we have currently. I frankly don’t understand the basis for your dire assumptions, unless you are talking about a different kind of free market than I have in mind (e.g., one governed by a rule of law, not a Wild Wild West version).
Sorry. I thought this worth posting twice.
Out of curiosity I wondered how much you would have to make these days to equal a 1980 wage of $25,000.
I factored a 3% pay raise each year as a conservative cost of living raise.
$59,000 is what you would to be making today to have the same purchasing power as you did in 1980.
Now does anyone here actually believe REAL inflation was 3% over the last 29 years?
Want to guess what the REAL minimum wage should be? (that $3.10 in 1980)
Here is a simple-minded test (not conclusive, just indicative): Gasoline currently costs what, $3/gallon? W/ 3% annual inflation over 29 years, the price back in 1980 should have been around $3/1.03^29 = $1.27. Sounds in the right range to me…
I remember gas breaking the buck then. A friend asked me if I thought gas could go over $1, I replied that I thought the dollar could fall below the price of a gallon of gas.
In 1978 I took a job for about $19K. Long way around the block and I live now about the same lifestyle as I did in ‘79. I figure about $60K of my gross goes to this. So my answer is x3.
This excludes the housing bubble. I had a mortgage then on a $27K house. Now I rent one about the same size.
The Megabank-REIC power block is losing its grip.
The most important news of the year: Wall Street-Washington megacomplex fails to block Fed audit
November 21, 4:56 PM
Post-Partisan Examiner
D.K. Jamaal
Whoa.
The most important economic development of the year just occurred, but you probably will not hear about it.
The oligarchs propping up the Wall Street-Washington corporate megacomplex failed miserably yesterday in their bid to block a bipartisan initiative to force transparency at the Federal Reserve and oblige the Fed to submit to a rigorous audit.
The oligarchs were led by lisping Democratic Congresshack Rep. Barney Frank who – surprise, surprise – reneged at the last minute on his pledge to support an audit of the Fed and instead moved to protect his corporate Wall Street dominatrix slave masters and block the bill.
The people, meanwhile, were represented by the post-partisan union of libertarian Texas Republican Rep. Ron Paul and liberal Democrat Rep. Grayson.
Grayson and Paul – both alleged nutjobs according to the lamestream media – won in a landslide. They garnered a shocking large 303-vote veto-proof majority in support of their bill.
To say that this is a sea change in American economic policy is a massive understatement. Administration after administration has allowed the Federal Reserve to operate like rogue tyrants with no accountability for their secret overseas dealings and shady collusion with Wall Street financial firms. Together, they have pillaged and looted the coffers of American families and sacrificed the middle and medium classes upon a cross of gold.
Some people think the Fed is corrupt and/or unconstitutional and out to be abolished outright. That likely will not happen. Long-held Supreme Court precedents hold Congress’s authority to create a national bank. And the election of a President popular, powerful, and populist enough to outmaneuver Congress through executive orders and abolish central banking — like Andrew Jackson did — is not on the contemporary horizon.
But Americans can hope, at least, that Congress might serve as representatives of the people and an actual watchdog to the Fed, rather than as representative of big money and the Fed’s lapdog.
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THE two-WAY
NPR’S NEWS BLOG
Is Ron Paul Right About The Fed?
November 20, 2009
By Mark Memmott
…
It’s a complicated issue, of course, but we wonder:
Should there be more oversight of the Fed?
Thank you!
Yes 93% (2,243 Clicks)
No 7% (157 Clicks)
Total: 2,400
(This question will close Sunday at 10 a.m. ET.)
U.S. Mortgage Delinquencies Reach a Record High
By DAVID STREITFELD
Published: November 19, 2009
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Many analysts say they believe that foreclosures, instead of peaking with the unemployment rate as they traditionally do, will most likely be a lagging indicator in this recession. The mortgage bankers expect foreclosures to peak in 2011, well after unemployment is expected to have begun falling.
There was one sliver of good news in the survey: the percentage of loans in the very first stage of default — no more than 30 days past due — was down slightly from the second quarter. If that number continues to decline, at least the ranks of the defaulted will have peaked.
“It’s arguably a positive, but it doesn’t undermine the fact that there are still five or six million foreclosures in process,” Ms. Zelman said.
The number of loans insured by the Federal Housing Administration that are at least one month past due rose to 14.4 percent in the third quarter, from 12.9 percent last year. An additional 3.3 percent of F.H.A. loans are in foreclosure.
The mortgage group’s survey noted, however, that the F.H.A. was issuing so many loans — about a million in the last year — that it had the effect of masking the percentage of problem loans at the agency. Most loans enter default when they are older than a year.
When the association removed the new loans from its calculations, the percentage of F.H.A. mortgages entering foreclosure was 30 percent higher.
The association’s survey is based on a sample of more than 44 million mortgage loans serviced by mortgage companies, commercial and savings banks, credit unions and others. About 52 million homes have mortgages. There are 124 million year-round housing units in the country, according to the Census Bureau.
Full disclosure: I myself added the suggested editorial changes seen below.
FHA may hike fees on home loans
By Kenneth R. Harney / The Nation’s Housing
Sunday, November 22, 2009 - Added 5h ago
Federal Housing Administration mortgages have been the go-to financing option in recent years for home buyers who can’t come up with big down payments.
But that could soon change.
In the wake of an audit that found FHA reserves far below congressionally mandated minimum levels, the agency is actively exploring ways to pump up its finances.
That means consumers who want FHA-insured mortgages could soon face higher insurance premiums, bigger down-payment requirements and a variety of other unspecified moves.
The possible changes come as FHA loans have zoomed from barely 3 percent of the mortgage market a few years back to nearly 30 percent today.
Where consumers with small down payments and slightly flawed credit once got subprime loans, many now take out FHA mortgages because the private subprime market has collapsed.
FHA officials won’t discuss precisely what charges they’re looking at making to current loan programs, but here’s a look at some of the possibilities:
Higher down payments . FHA mortgages currently require a paltry 3.5 percent down payment - a level critics say is too low to discourage homeowners from missing payments or risking foreclosure.
Rep. Scott Garrett (R-N.J.) introduced legislation last month requiring a minimum 5 percent down payment for all future FHA loans.
Ed Pinto, who served as Fannie Mae’s chief credit officer in the 1980s, even wants to see a 10 percent minimum.
However, many industry players counter that raising FHA down-payment rules could scuttle the agency’s core mission: Helping people of modest means
buy homescatch themselves falling knives.…
Houston Control — we have a problem.
Mortgage applications fall to 12-year low despite attractive rates
By Courtney Schlisserman
Bloomberg News
Mortgage applications for home purchases in the U.S. have fallen to the lowest level in 12 years, indicating the housing market is facing a hurdle with unemployment at a 26-year high.
The Mortgage Bankers Association’s index of applications dropped 4.7 percent in the week ended Nov. 13 to 210.6, the lowest level since November 1997. The total applications index fell 2.5 percent to 611.7 from 627.5.
President Obama earlier this month signed legislation extending the first-time homebuyers tax credit through April, while the Federal Reserve’s program to purchase housing debt is valid through March.
The stimulus aims to spur demand that’s threatened by mounting unemployment.
“Now that the Fed’s program has been extended and the government has extended its program, I would expect things to improve,” Christopher Low, chief economist at FTN Financial in New York, said before the report. “If you don’t see an improvement within the next couple of weeks, that would indicate a problem.”
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Other “non subprime” MD loans at least one month behind (FHA, etc) = 77,000 - 48,000 = 29,000. (Hopefully I did it right in my head that time…)
The mortgage crisis deepens
About 10% of Md. borrowers seen as good credit risks lag; trade group blames unemployment, falling home prices
By Jamie Smith Hopkins | The Baltimore Sun
November 20, 2009
The mortgage crisis has worsened to the point that about one in every 10 prime borrowers in Maryland and nationwide - homeowners judged to be good credit risks - were behind on payments in September.
The Mortgage Bankers Association, releasing those numbers Thursday, blamed unemployment, which is at a 26-year high in Maryland and the United States. Falling home prices are another factor, because owners who owe more than their properties are worth cannot easily sell them.
High-interest “subprime” loans, on the other hand, are no longer the big problem. That is sobering news, because lenders and housing counselors can do more for an employed person who has fallen behind on a subprime mortgage than for a prime borrower who is out of work and cannot afford anything.
“Bad loans are easier to address than bad income situations,” said Mark A. Kaufman, the state’s deputy commissioner of financial regulation.
All told, the Mortgage Bankers Association counts nearly 150,000 Maryland homeowners who were at least one month behind on payments at the end of September. The trade group estimates that its survey covers about 80 percent of the market, so the total is probably higher.
About 77,000 of the homeowners - just more than half of those counted by the trade group - were prime borrowers. About 48,000 were subprime borrowers. The rest had other loans, such as those insured by the Federal Housing Administration.
Barn door left open
All the horses have now fled
Hurry, shut the door!
Expect tightening from the FHA
Saturday, November 21, 2009
For the past several years, the Federal Housing Administration has been the go-to financing resource for cash-strapped home buyers who can’t come up with a big down payment. It has zoomed from barely a 3 percent market share to nearly 30 percent of home-purchase loans. But now, wildly popular FHA-insured mortgages could be on the verge of becoming more expensive and tougher to obtain.
In the wake of an independent actuarial study that found the FHA’s insurance fund reserves far below the congressionally mandated minimum, the agency confirmed that it is actively exploring ways to pump up its reserves — including raising insurance premiums and minimum down payments and a variety of other unspecified moves.
How might these changes affect home buyers and refinancers? FHA officials won’t discuss precisely what they’re looking at. But here’s a quick overview of some of the possibilities:
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