Bits Bucket For November 28, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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The right reform for the Fed
By Ben Bernanke
Sunday, November 29, 2009
For many Americans, the financial crisis, and the recession it spawned, have been devastating — jobs, homes, savings lost. Understandably, many people are calling for change. Yet change needs to be about creating a system that works better, not just differently. As a nation, our challenge is to design a system of financial oversight that will embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause.
…
The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation.
The proposed measures are at least in part the product of public anger over the financial crisis and the government’s response, particularly the rescues of some individual financial firms. The government’s actions to avoid financial collapse last fall — as distasteful and unfair as some undoubtedly were — were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society. (I know something about this, having spent my career prior to public service studying these issues.) My colleagues at the Federal Reserve and I were determined not to allow that to happen.
Moreover, looking to the future, we strongly support measures — including the development of a special bankruptcy regime for financial firms whose disorderly failure would threaten the integrity of the financial system — to ensure that ad hoc interventions of the type we were forced to use last fall never happen again. Adopting such a resolution regime, together with tougher oversight of large, complex financial firms, would make clear that no institution is “too big to fail” — while ensuring that the costs of failure are borne by owners, managers, creditors and the financial services industry, not by taxpayers.
The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis. We have extensively reviewed our performance and moved aggressively to fix the problems.
Working with other agencies, we have toughened our rules and oversight. We will be requiring banks to hold more capital and liquidity and to structure compensation packages in ways that limit excessive risk-taking. We are taking more explicit account of risks to the financial system as a whole.
…
Independent does not mean unaccountable. In its making of monetary policy, the Fed is highly transparent, providing detailed minutes of policy meetings and regular testimony before Congress, among other information. Our financial statements are public and audited by an outside accounting firm; we publish our balance sheet weekly; and we provide monthly reports with extensive information on all the temporary lending facilities developed during the crisis. Congress, through the Government Accountability Office, can and does audit all parts of our operations except for the monetary policy deliberations and actions covered by the 1978 exemption. The general repeal of that exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation.
We have come a long way in our battle against the financial and economic crisis, but there is a long way to go. Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation.
The writer is chairman of the Federal Reserve Board of Governors.
The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation.
No mention of the fact that they **caused** the financial crisis. Additionally, I’m seeing rather massive asset price inflation…is the Fed again not seeing this very obvious warning sign?
The government’s actions to avoid financial collapse last fall — as distasteful and unfair as some undoubtedly were — were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society.
He speaks about having prevented an economic catastrophe, as if it’s all over. Who says we won’t see a downward spiral (or inflationary spiral) for many years to come? The economic catastrophe was occurring when the credit bubble was growing. What did they do to prevent the REAL catastrophe of the expanding credit bubble?
The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis. We have extensively reviewed our performance and moved aggressively to fix the problems.
Working with other agencies, we have toughened our rules and oversight. We will be requiring banks to hold more capital and liquidity and to structure compensation packages in ways that limit excessive risk-taking. We are taking more explicit account of risks to the financial system as a whole.
They can’t fix the problems if they can’t properly define the problems. Since the “finacial crisis” of 2008, all we’re hearing from the Fed and Treasury is that we need to reinflate the credit bubble and force people into greater debt again. You know…”loosen up” the credit markets and get people back to lending and borrowing.
They still don’t get it, and they are asking us to let them continue to be in charge of our monetary policies. They even want MORE power — and they expect not to be questioned!!!
IMHO, these are very dangerous people.
well said CA Renter… agree completely… Ben Bernanke can get away with this dribble for the vast majority of Americans who are not as well educated on what the real catrastrophe was, which was the housing mania and bubble that ended in 2007… all this other hullabaloo is economic hot air that essentially says “we were too lazy, fat dumb and happy to fix the financial markets while the party was in full swing”…
bozos… I still shudder when I think about Greenspans’ comments that the Fed could see or prevent the housing bubble… bunch of BS..
could see = couldn’t see
Ca. Renter …Nice blow by blow tear down of BB’s BS .I also see
these people as very dangerous . You could maybe understand
saving institutions that weren’t corrupt or not counter-productive to the Majority welfare ,but saving the very culprits that created the mess and have the ability to re-create a new mess ,and obstruct Justice and Abuse Authority in order to do it, isn’t my idea of what should be a Feds response .
I hate it when BB throw up that hes a Expert in the Great Depression .What BB is doing would be no different than bailing
out the Stock market firms in 1929 and propping up the stocks values that crashed at the time while everybody watched unemployment soar to 25% ,while people starved . I don’ think he has learned anything from his study of the Great Depression ,or he just uses his study to back people off
from seeing his hidden agendas.
If he’s such an expert in the Great Depression, doesn’t it seem like he should have been able to see this thing coming–after all, we could.
Exactly right, Wiz and Prime!
I keep hearing the media talk about spending money on black friday.I think this country has it backwards.Our government should encourage us to save and not be a throw away consumer society.They say spending is good for the economy and stocks.I think the govt should be telling americans to live within their means and conserve resources.Where did they go wrong here?
Debt plays the role today that was once played by religion and nationalism.
Of course they overlap so it’s a bit messier than that. Debtors can be made to behave like trained animals though. Scary how this shopping season is beyond Pavlovian at this point.
“Debt plays the role today that was once played by religion and nationalism”
And where were you 2000-2008? If there ever were a time when this country used phoney nationalism disguised as patriotism and sanctimonious religiosity to advance the cause of the elite, it was 2000-2008.
Does anyone think it was a mistake that the conservative “revolution” of 1980-2008 delivered every last economic issue on their agenda but not a single point on the social agenda?
“And where were you 2000-2008?”
Exeter, do you actually think you can draw beginnings and ends to historical trends around something as trivial and arbitrary as the shuffling of American presidents? I’m disappointed. You of all posters should realize the challenges of today are part of a much, much larger continuum know as the human experience.
First off, my comment was NOT referring to the fiscal policy of any specific administration but to the much more significant and wider social attitude regarding debt. Please DO NOT infuse politics into my comment.
The era 1980-2008 you cite was what is was, a chapter in an awfully long book. So, to believe that 1980-2008 was somehow worse than any other era strongly implies that one thinks another era to have been superior? And which one would that have been? Colonial America, the frontier, the Gilded Age, 20s, 30s, 40s, 50s, 60s, 70s?
This much is certain. The overly idealized postwar era is dead. Globalization will not stop. The future will not look like any political party’s version of the past. Those are the realities that drive my actions and prompted my comment.
Edgwater…. I merely commented on your debt replacing religion and nationalism quip. I don’t think it’s correct. The pinnacle of nationalism/religiosity coincided with the peak of the credit bubble.
exeter –
Shhhh! You are going to wake up the hungry troll that lives under the HBB bridge…
“Our government should encourage us to save and not be a throw away consumer society.”
Agreed but it won’t happen until financial stewardship is incentivized by reasonable yields. Forcing fixed income folks and savers into risk (stocks, commodities) by keeping yields artificially low is nothing more than a forced transfer of $$$ from the weak(us) to the strong(them). It’s criminal, it should be prosecuted.
Take a look back over the last 20 years and look who was squealin’ from the tops of mountains for “low interest rates” and you’ll find your criminals. Youtube has these thugs documented very nicely.
Bulletin for thugs: We won’t forget
You may not forget, but you will be distrac — ooh, look, Trig Palin!
And I don’t like this inequality of interest rates either. Do banks have to put 20% down whenever they borrow from the Fed?
I just read that there are $3 trillion in savings now in the U.S. People are saving again. I’m and English teacher and no expert in economics, but can’t we start lending that money to each other and leave out the banks?
I see my high school students freaking out about how to pay for college, read that the government sets the APR for student loans at 8 percent, and see that California is going to raise UC tuition by 30 percent next year. I’m not much of a conspiracy theorist, but I see a huge coordinated effort to dumb down the population by making college far too expensive. And who benefits from all this? Once again, the banks.
Can’t all those people with money in savings getting little or no return loan it to all these hard-working kids who want to go to college for a more reasonable rate? Say 5 percent? Can’t we the people start a socially responsible bank and cut out the disgusting GREED factor?
Yep, I’m “an” English teacher, not “and” English teacher.
“You may not forget, but you will be distrac — ooh, look, Trig Palin!”
And that is the sad point. The Eddie-fication of the US by cable news through sanctimonious, flag waving non-issues like Alaskan mongoloids must be reversed. Somehow, some way it must change.
can’t we start lending that money to each other and leave out the banks?
Bingo. It sickens me to see all these “personal finance” magazines telling everyone to send their money to Wall St. for safekeeping. How about looking around you, helping your neighbors and family members start businesses?
but I see a huge coordinated effort to dumb down the population by making college far too expensive. And who benefits from all this? Once again, the banks.
Colleges got expensive because of E-Z Credit. Just like everything else. It punishes responsible people who want to pay for it by writing a check, but make too much money for government handouts and subsidized loans.
Exy the union thug doesn’t like it when anyone in the media dares question Dear Leader.
Can’t we the people start a socially responsible bank and cut out the disgusting GREED factor?
By We the People, are you saying you want a “Public Option” bank? I’m only half kidding. Anyway, I thought that this is what a credit union was. And this is what most banks were in the past. If you wanted to borrow money, you have to show up at the bank, in person, with your life story. Between that and FDIC, few people lost money.
“Exy the union thug doesn’t like it when anyone in the media dares question Dear Leader.”
Trolled ya so
lmao. I’m living in his empty skull….. rent-free.
Palin-drome
“And that is the sad point. The Eddie-fication of the US by cable news through sanctimonious, flag waving non-issues like Alaskan mongoloids must be reversed. Somehow, some way it must change.”
Ex,
What you lefties fail to understand is that conservative media is catering to a previously un-served/underserved market. I am 43, I grew up hearing one sided news and opinions. You would have a few token conservatives like Pat Buchanan, Fred Barnes and William F. Buckley for liberals to gang up on using a 5:1 lib/con ratio (Excluding Crossfire).
You may have some folks swayed by conservative commentators, but most were just happy to finally hear somebody on the air echoing some of their own beliefs, but not necessarily all. Personally I am glad we have both sides out there slugging it out for market share. That is free expression, not indoctrination.
I have nothing against legitimate conservative commentators. Nut cases and extremists that get MSM air time these days, like Rush, Innanity, etc, are a different story, though…
“can’t we start lending that money to each other and leave out the banks?”
We can and we do. My business model exactly. It’s not completely free of work and/or study, but it’s pretty easy and the clientele are, for the most part, grateful.
Reuven: “College got expensive because of E-Z credit.”
+1
“I have nothing against legitimate conservative commentators. Nut cases and extremists that get MSM air time these days, like Rush, Innanity, etc, are a different story, though…”
To a leftist kool-aid guzzler like PB, a legitimate conservative commentator is someone like David Brooks who instead of praising Dems/Libs 100% of the time only praises them 85% of the time.
here’s a thought Bear, if you don’t like Hannity, Rush etc don’t listen/watch them. Every other news media out these except for the WSJ will give you all the unfettered leftist/socialist clap trap you can handle.
I paid 30% more for university for significantly less service. We didn’t have protest marches though. (Well, except for the dental students.) We had 10% unemployment, no job offers, and the spectre of inflation.
Ah, 1983 - the Good Old Days.
“…if you don’t like Hannity, Rush etc don’t listen/watch them.”
I am only vaguely aware of them; a guy where I used to work listened to the narcotics addict Rush on a daily basis, so I had to either wear ear plugs or else listen to his endless bigoted drivel. I have my occasional unfortunate brush with Hannity’s inanity at the YMCA where I work out, which occasionally has his show on.
Other than those rare occasions, I avoid their nonsense 24/7.
P.S. Failing to lick the boots of right wing extremist commentators hardly qualifies me as a leftist, except in Eddie’s black and white domain, where you are either wid-em or you are agin-em.
A lot of people don’t see saving as an attractive proposition when rising inflation, compounded by miserably low interest rates that are further taxed as income, means savers are actually losing ground. Obama has extended and broadened the Bush Administration’s War on Savers. People feel like the have to buy something, now, before their purchasing power is further eroded.
Kind of interesting that the dollar is persived as weak and threated even further by inflation but it is very difficult to borrow any…
persived = perceived
“Our government should encourage us to save and not be a throw away consumer society.”
What does the Fed’s ZIRP do to the propensity to save?
The fed is encouraging outrageous consumerism imo.People are getting their happiness from going to black friday at walmart.I wonder how many people are sittng around all jacked up on prozac and zanex this holiday season?Just watching the media telling people to go out and spend depresses me.The priorities are all screwed up.
Which country uses the most illegal drugs to escape reality of consumerism hell?
A FRUGAL christmaz???? Blasphemy Dude just plain Un American, think of all the poor people who will be put out of work if hundreds of Wallymartz close… or DJ’s who wont be able to pay bills and save…
We cant have subversives like you get any media attention..
——————–
I think the govt should be telling americans to live within their means and conserve resources.Where did they go wrong here?
Arizona dude, … “consumer’s”… spending is good for “economy” makers (fat cats) who also hold big chunks of stocks. Our government cares only about “fat cats” who own the economy, not about “consumers” like us, who need to spend to make them (fat cats) rich as it happened 2000-2008. You are very optimistic , this is the way capitalism works…
Where did we go wrong? One word, arizonadude: plastic.
Now the FDIC is using Consent Orders and outside consultants to keep Pigs afloat because “things got a little lax”.
WaterStone Bank agrees to regulators’ consent order
By Rick Romell of the Journal Sentinel
Posted: Nov. 27, 2009
WaterStone Bank, a Wauwatosa mortgage lender that racked up bad debt as it pursued an aggressive business course in recent years, has agreed to a consent order giving government regulators significant oversight of its affairs.
The order calls for WaterStone to maintain specified levels of cash reserves and prohibits extending additional credit to certain problem borrowers. It requires the bank to retain an outside, government-approved consultant to evaluate its senior management, and to report regularly on progress toward meeting the order’s requirements.
WaterStone already complies fully with the order, which formalizes a November 2008 agreement between the bank and regulators, CEO Doug Gordon said in an interview Friday. The bank said its cash reserves meet the requirements of the order and are well above levels considered “well capitalized” by the Federal Deposit Insurance Corp.
…Formerly Wauwatosa Savings Bank, WaterStone has been stung by real estate loans that soured with the popping of the housing bubble. In an interview with the Journal Sentinel last month, Gordon, who joined the bank in late 2005, acknowledged that “things got a little lax.”
Sheesh, I was watching this clown outfit for the gov’t suits and a Friday afternoon surprise visit for nearly 3 years.
http://tinyurl.com/yehr6z9
“It requires the bank to retain an outside, government-approved consultant…”
Does this sound suspiciously like privatizing a portion of the FDIC’s duties to anyone else? And a government-approved consultant rakes in the bucks…
“No mention of the fact that they **caused** the financial crisis.”
You bring to mind a story I once heard about a fireman who was arrested for arson. His excuse was that he was setting fires in order to practice putting them out.
Or the window repair guy who was going around at night breaking windows in business parks and strip malls…
Job preservation — and the Fed is going to put up one heck of a fight to keep their lucrative (to them and the people they serve) jobs.
“but there is a long way to go.”
That’s right, just let home prices fall and we’ll be there. It’s that simple, Mr. Bernanke.
What it costs you to buy a house is not their concern.
Just let home prices fall and…
watch many, many more banks collapse? (gulp…)
Nov. 28 (Bloomberg) — Mark Pittman, the award-winning investigative reporter whose fight to open the Federal Reserve to more scrutiny led Bloomberg News to sue the central bank and win, died Nov. 25 in Yonkers, New York. He was 52.
Pittman suffered from heart-related illnesses. The precise cause of his death wasn’t known….
A rare American hero. What a striking contrast to his “peers” in the American financial media.
Hmm, Viktor Yushenko. Someone should investigate the possibility that Pittman suffered from heavy-metal poisoning.
When I began to read the article P-Bear posted, I did so without paying attention to the author. At about a paragraph and a half in I thought this guy must live in a parallel universe. After seeing who the author was I didn’t bother to finish it. This reminds me of one of the latest Mac/PC commercials where the PC guy is telling us that all of the earlier problems have been solved, “Trust Us”.
The Fed is nothing more than a vampire and we are a herd of fat kentucky hogs.
F-you Ben B.
I guess he felt it was time to jawbone the dollar up to keep it from crashing.
Of course, strengthening the dollar, the right way, of raising intrest rates is out of the question.
Even if they did have the cajones to raise rates, we have to cut spending and a whole lot more to give the rest of the world confidence in the promise that those little green pieces of paper carry.
“…jawbone the dollar up to keep it from crashing.”
Barn door left open
All of the horses have fled
Hurry, shut the door!
“We have extensively reviewed our performance and moved aggressively to fix the problems.”
How about those monotheistic hiring practices at the fed? The U.S. is not an apartheid xenophobic country.
Sorry BB but I’d rather some agency other than the FED evaluate your performance and tactics, it should be run by Ron Paul and Ralph Nader. The findings should be reportedtp the rest of us. If you’ve done nothing then we will let you retain your powers. I’ve you’ve violated the law and the constitution you and your pals go to jail. The US gov can also reclaim money stolen by the bankers.
It is awfully hard for members of an organization whose defining qualities are hubris and self-importance to accurately perceive said organization’s tragic flaws.
The day’s most cogent comment.
I don’t know about all of y’all, but I felt an upwelling of anger as I read through that. Future Americans, I apologize.
Bernanke is a megalomaniac. There is no other explanation for his “we saved the world” rhetoric. The guy’s extremely dangerous.
‘There is no other explanation for his “we saved the world” rhetoric.’
One has to wonder if he is not just using this as a ploy in his
reelectionreappointment campaign. Or even whether he is using reverse psychology to reduce the risk of his reappointment, without appearing to want to do so…In short, I disagree with your opinion that there is ‘no other explanation.’ There is almost always another explanation, if you give the situation a little thought.
Perhaps I just choose to believe he is a megalomaniac. I think I’m right.
I agree 100% Griz.
Call me cynical, but I can only see this vigorous effort by the Fed to block the proposed Congressional audit as an overt attempt to stifle public debate on the best way forward for financial reform. If they are so worried about maintaining central bank independence, why don’t they start by pushing to rescind the executive order which established the President’s Working Group on Financial Markets, which forms an explicit working connection between the Treasury and the Fed, with the treasury secretary (himself a central banker) in the dominant role. Wouldn’t that increase the independence of monetary policy and reduce the risk of future inflation more than blocking a Congressional audit aimed at getting to the bottom of what was fair and what wasn’t in the fall 2008 crisis response?
How independant shoud a bank be which singlehandledly has the power to destroy the US, either inch by inch or yard by yard?
Sheesh, PB, tin foil hat a bit too tight for ya? Only crazy **conspiracy theorists** believe in the PPT.
Isn’t it funny how much heat one can enjoy for committing the peccadillo of repeating a story with verifiable references? On the other hand, some who post here (Eddie comes to mind) never, ever post any documentary evidence of any of the pure BS they bring up, and get a free pass. In certain respects, life just isn’t fair.
Oh you mean like the proof that global warming is occuring based on nothing more than a powerpoint presentation?
Who mentioned global warming, you whack job?
It does get annoying, doesn’t it?
yes they want us to leave them alone because they are ‘arresting’ the crisis that they created. this ‘arresting’ involves borrowing money from my children and grandchildren to pay the banksters for reckless behavior that they didn’t see. nice logic! now how much does a degree from Princeton cost?
If Wall Street had “collapsed” in the fall of 2008, would the managers of Megabank, Inc still be employed, much less receiving massive bonuses while much of Main Street America is jobless?
And how much worse than 17.5 pct U6 unemployment would Main Street currently be seeing if the Fed and Treasury had not unveiled the TARP?
I guess we cannot ever rerun history to find out what would have happened instead of the status quo.
I was having a discussion with my sis yesterday, regarding the banksters. She brought up an interesting point: during the downturn, people are expected to take less pay, fewer hours, sell their homes for less(yeah, ok, bear with me here), get less for their merchandise, services, etc. Wouldn’t it be nice if we all had the hubris and confidence in our own products and services that the banksters do, and demand generous pay and bonuses because “everything would fall apart without us”?
Wouldn’t it be nice if we all had the hubris and confidence in our own products and services that the banksters do, and demand generous pay and bonuses because “everything would fall apart without us”?
That’s not how you look at things at your place of employment?
I have a lot of confidence in my ability, and what I bring to the table. I might even go so far as to say that everything would fall apart without me. Sadly, I don’t have the full force of the government behind me to enforce my claims. Sigh.
“I have a lot of confidence in my ability, and what I bring to the table. I might even go so far as to say that everything would fall apart without me.”
You clearly need to pursue a second career in banking, as you obviously are well-qualified.
Of course, you would need to step it up a few notches before you could qualify to become a central banker. Once you convince yourself that you make the sun come up in the morning and set at night, and waving your arms around the right way makes the tides ebb and flow, then you might consider this as a future career.
then you might consider this as a future career.
I’ll seriously consider that next time I get laid off
Doesn’t anybody get concerned about how big the Credit Default markets are, or the derivative markets on Wall Street are. 500 trillion in that market and apparently it isn’t regulated . Apparently 1.6 million contacts are made per day in those markets . Apparently its a highly leveraged market game .
If you look at the fact that AIG couldn’t pay on their credit default contracts ,and apparently a lot of bets are made without real reserves to back the bets ,this is some kind of Casino game that Wall Street dreamed up . It seems like a gambler can bet on Company A losing or winning ,while not even being a real party of interest (being the insurer or the insured of the actual risk ).
While Insurance is a good concept in general and is something that is
suppose to lower risk , having bets on insurance bets takes it to another level, especially if this is another leverage game .
My problem with de-regulation and leverage and unregulated Wall Street Gambling Casinos is that if you have a financial market that has the power to bring down the interconnected players and bring the whole
house of cards of the financial system down ,than why are these Casino games allowed ?
In law they have a concept of “Real Party of Interest .” If you buy a stock you are a real party of interest ,or a real owner .Should I be able to take out a insurance policy on the mailman I don’t even know .
I’m telling you guys that not only were the CDO’s that came about on
Wall Street underrated for their risk ,but all these other side bets and
money generating leverage games that Wall Street has dreamed up
are underrated for their risk to the entire financial systems . Wall Street looks to much like a short term gambling casino than a Investment opportunity to invest in the Corporations on the New York Stock Exchange on their long term growth or yields .
Our system was far more stable for decades when Wall Street and Banks
were kept in a tight box on what they could do and couldn’t do .
Selling empty promises is always extremely lucrative and always a disaster for the system. That’s why the libertarian dream of “unregulated” free markets will always fail.
My problem with de-regulation and leverage and unregulated Wall Street Gambling Casinos is that if you have a financial market that has the power to bring down the interconnected players and bring the whole
house of cards of the financial system down ,than why are these Casino games allowed ?
Excellent question, Wiz.
Something tells me this argument is not going to fly very well in future crises:
“…the government’s case for bailing out XYZ Corporation has rested on the notion that the company was too big to fail.”
Hint to policy makers: If you make sure that no firm ever is allowed to reach a size where its collapse would threaten the global financial system, then you will not ever have to worry about bailing out another TBTF firm.
And in case you decide to keep a few TBTF firms around, please charge
them a sufficiently large insurance premium to cover their future bailout claims payment risk so they have no unfair competitive advantage against their smaller, more competitive, economically efficient, less systemically risky brethren.
* The Wall Street Journal
* OPINION
* NOVEMBER 27, 2009, 7:04 P.M. ET
Lack of Candor and the AIG Bailout
If AIG wasn’t too big to fail, why did the government rescue it? And why do we need to turn the financial system upside down?
BY PETER J. WALLISON
Since last September, the government’s case for bailing out AIG has rested on the notion that the company was too big to fail. If AIG hadn’t been rescued, the argument goes, its credit default swap (CDS) obligations would have caused huge losses to its counterparties—and thus provoked a financial collapse.
Last week’s news that this was not in fact the motive for AIG’s rescue has implications that go well beyond the Obama administration’s efforts to regulate CDSs and other derivatives. It’s one more example that the administration may be using the financial crisis as a pretext to extend Washington’s control of the financial sector.
The truth about the credit default swaps came out last week in a report by TARP Special Inspector General Neil Barofsky. It says that Treasury Secretary Tim Geithner, then president of the New York Federal Reserve Bank, did not believe that the financial condition of AIG’s credit default swap counterparties was “a relevant factor” in the decision to bail out the company. This contradicts the conventional assumption, never denied by the Federal Reserve or the Treasury, that AIG’s failure would have had a devastating effect.
So why did the government rescue AIG? This has never been clear.
…
Questions to ask about AIG Bailout :
Why is it that a Insurance Company was allowed to make insurance
bets they couldn’t back in the unregulated World of Credit Default Swaps.
Apparently the Casino was making a bunch of bets on real estate going up or down and AIG ended up losing . The Lenders that might of been burned on their credit default swaps bets with AIG’s demise were counting on being made whole by those bets and would of been compromised had they not got those 100% pay-offs . It would of put
Goldman in the position of standing in line and only getting a portion of the 13 billion they had coming from AIG .(Do we care ). By Goldman getting 100% payoff by AIG ,no need to borrow from Tarp and need to pay it back ,while your waiting in line for how much you end up getting from the BK of AIG .
So,we have regulated Banks going into the unregulated worlds of
credit default gambling and here lies the rub . This is why you had
unregulated entities and Insurance Companies and Investment houses all of a sudden being allowed to come to the Fed Discount Window
for cheap loans when that is usually only a regulated bank benefit .
Than these unregulated entities and Insurance Companies end up getting bailed out .
What a racket that the so-called regulated entities get taken down by the unregulated entities ,insurance companies and Investment houses gambling and leverage games. So the regulated entities because unregulated in that they were dealing with the unregulated .
So …what do you see is wrong with this picture ?
“So …what do you see is wrong with this picture ?”
That people still believe in “free market ” voodoo? That people still believe regulations are “bad”? And that bailing out the very cheerleaders of “free market” for their failure is not hypocrisy.
Other than that, ya got me? *shrug*
Well if my other post ever shows up…
Let’s try this again…
What’s wrong with this picture?
Besides the fact that people still believe in “free market” voodoo? That people still think regulations are “bad”? That they think bailing out the cheerleaders of “unregulated free market” isn’t hypocrisy?
Ya got me. *shrug*
Why the hell can’t I make a long post on this thread?
* The Wall Street Journal
* REVIEW & OUTLOOK
* NOVEMBER 28, 2009
Dubai’s Debt Reckoning
How one bursting bubble could feed the next one.
The credit problems of a unit of Dubai’s state-owned investment company have given financial markets a scare, but put us down as thinking the event is left-over business from the mid-decade mania more than it is a sign of immediate new economic troubles.
CLICK!
Like subprime mortgages and Citigroup’s off-balance sheet “structured investment vehicles,” Dubai’s debt binge was made possible by the Federal Reserve’s global subsidy for credit. As a Middle East outpost without oil wealth, the city-state used easy credit in an effort to build itself into the next Singapore. And it has made some impressive strides as a tolerant entrepot for traders and investors looking for an entry into the Arab world. Its openness to the world’s money and people is certainly a better model for Middle East development than is Saudi Arabia.
On the other hand, the city-state clearly got carried away during the boom, and its property market in particular became a bubble as overbought as condos on the Las Vegas strip.
In the wake of Wednesday’s request for a debt holiday, investors immediately put on their post-Lehman Brothers “contagion” hats and fled for safety. The otherwise sickly dollar rallied, while gold, oil and stock markets world-wide all fell. Nevermind that no one could say who except the creditors of Dubai World’s real estate subsidiary would be harmed by the request for an interest-payment moratorium. European banks have nearly $84 billion in exposure to all of the United Arab Emirates, of which Dubai is merely one, while U.S. banks seem less vulnerable.
…
all we need to do is convince the masses that buying houses and condos on man-made islands of sand in an extremely safe, comfortably cool, progressive, culturally open and an environmentally pristine area is a great investment … should be a piece of cake..
All Dubai has to do is make itself a tax haven like the Cayman Islands, and they’ll be out of debt in no time.
I could see realtors in Dubai becoming the new definers of hubris. After making islands of sand, they could tell us “buy real estate now - they aren’t making any more land!”
My preferred version of your sales pitch:
“…they aren’t making any more
landsand!”Jesus has a parable about builders building a house on sand.
Here are a couple of versus from a song my kids learned to sing at church:
The foolish man built his house upon the sand
The foolish man built his house upon the sand
The foolish man built his house upon the sand
And the rains came tumbling down.
The rains came down and the flood came up
The rains came down and the flood came up
The rains came down and the flood came up
And the house on the sand washed away.
I don’t expect many LDS investors were buying houses (or other real estate) built on the sands of Dubai.
See my post below about the Wasatch front. Generational wealth is being squandered to pay for bad bets by Utes who have been told that house debt is the only “good debt” by church leaders.
‘…house debt is the only “good debt” by church leaders.’
Did they admonish their members to ‘buy low, sell high’?
No, they just have taught over the years to avoid debt like the plague, with the exception of the purchase of a modest home. I’ll not fault the leaders when the members redact the word “modest” in their own minds.
Ah…yes….San Francisco and other coastal California communities. Beach property - always the wise investment!
Especially for the filthy rich.
It seems that, “A place in the Sun”, has been over-rated world wide.
“US banks seem less vulnerable” [to Dubai default]
except for Citigroup, right? which is “us” , right?
I am curious as to whether peer review in other disciplines besides climate science faces similar “issues”?
* The Wall Street Journal
* REVIEW & OUTLOOK
* NOVEMBER 27, 2009, 7:02 P.M. ET
Rigging a Climate ‘Consensus’
About those emails and ‘peer review.’
The climatologists at the center of the leaked email and document scandal have taken the line that it is all much ado about nothing. Yes, the wording of their messages was unfortunate, but they insist this in no way undermines the underlying science. They’re ignoring the damage they’ve done to public confidence in the arbiters of climate science.
“What they’ve done is search through stolen personal emails—confidential between colleagues who often speak in a language they understand and is often foreign to the outside world,” Penn State’s Michael Mann told Reuters Wednesday. Mr. Mann added that this has made “something innocent into something nefarious.”
Phil Jones, director of the University of East Anglia’s Climate Research Unit, from which the emails were lifted, is singing from the same climate hymnal. “My colleagues and I accept that some of the published emails do not read well. I regret any upset or confusion caused as a result. Some were clearly written in the heat of the moment, others use colloquialisms frequently used between close colleagues,” he said this week.
We don’t doubt that Mr. Jones would have phrased his emails differently if he expected them to end up in the newspaper. He’s right that it doesn’t look good that his May 2008 email to Mr. Mann regarding the U.N.’s Fourth Assessment Report said “Mike, Can you delete any emails you may have had with Keith re AR4?” Mr. Mann says he didn’t delete any such emails, but the point is that Mr. Jones wanted them hidden.
The furor over these documents is not about tone, colloquialisms or whether climatologists are nice people. The real issue is what the messages say about the way the much-ballyhooed scientific consensus on global warming was arrived at, and how a single view of warming and its causes is being enforced. The impression left by the correspondence among Messrs. Mann and Jones and others is that the climate-tracking game has been rigged from the start.
According to this privileged group, only those whose work has been published in select scientific journals, after having gone through the “peer-review” process, can be relied on to critique the science. And sure enough, any challenges from critics outside this clique are dismissed and disparaged.
This September, Mr. Mann told a New York Times reporter in one of the leaked emails that: “Those such as [Stephen] McIntyre who operate almost entirely outside of this system are not to be trusted.” Mr. McIntyre is a retired Canadian businessman who checks the findings of climate scientists and often publishes the mistakes he finds on his Web site, Climateaudit.org. He holds the rare distinction of having forced Mr. Mann to publish a correction to one of his more famous papers.
As anonymous reviewers of choice for certain journals, Mr. Mann & Co. had considerable power to enforce the consensus, but it was not absolute, as they discovered in 2003. Mr. Mann noted in a March 2003 email, after the journal “Climate Research” published a paper not to Mr. Mann’s liking, that “This was the danger of always criticising the skeptics for not publishing in the ‘peer-reviewed literature’. Obviously, they found a solution to that—take over a journal!”
Mr. Mann went on to suggest that the journal itself be blackballed: “Perhaps we should encourage our colleagues in the climate research community to no longer submit to, or cite papers in, this journal. We would also need to consider what we tell or request of our more reasonable colleagues who currently sit on the editorial board.” In other words, keep dissent out of the respected journals. When that fails, redefine what constitutes a respected journal to exclude any that publish inconvenient views.
…
Faked data. End of story.
End of story? They’re still going to try to cram Cap and Tax down our throats. Hopefully as a result of these revelations they won’t succeed.
Faked data. End of story.
Which data?
The data supporting the theory that the earth is warming?
Or the data that supports the supposition that people are causing/exacerbating it?
Sorry for the length, worth it.
Mises Economic Blog ^ | 10/29/2009 | Stephan Kinsella
Physicist Howard Hayden, a staunch advocate of sound energy policy, sent me a copy of his letter to the EPA about global warming. The text is also appended below, with permission.
As noted in my post Access to Energy, Hayden helped the late, great Petr Beckmann found the dissident physics journal Galilean Electrodynamics (brochures and further Beckmann info here; further dissident physics links). Hayden later began to publish his own pro-energy newsletter, The Energy Advocate, following in the footsteps of Beckmann’s own journal Access to Energy
I love Hayden’s email sign-off, “People will do anything to save the world … except take a course in science.” Here’s the letter:
***
Howard C. Hayden
785 S. McCoy Drive
Pueblo West, CO 81007
October 27, 2009
The Honorable Lisa P. Jackson, Administrator
Environmental Protection Agency
1200 Pennsylvania Ave., NW Washington, DC 20460
Dear Administrator Jackson:
I write in regard to the Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, Proposed Rule, 74 Fed. Reg. 18,886 (Apr. 24, 2009), the so-called “Endangerment Finding.”
It has been often said that the “science is settled” on the issue of CO2 and climate. Let me put this claim to rest with a simple one-letter proof that it is false.
The letter is s, the one that changes model into models. If the science were settled, there would be precisely one model, and it would be in agreement with measurements.
Alternatively, one may ask which one of the twenty-some models settled the science so that all the rest could be discarded along with the research funds that have kept those models alive.
We can take this further. Not a single climate model predicted the current cooling phase. If the science were settled, the model (singular) would have predicted it.
Let me next address the horror story that we are approaching (or have passed) a “tipping point.” Anybody who has worked with amplifiers knows about tipping points. The output “goes to the rail.” Not only that, but it stays there. That’s the official worry coming from the likes of James Hansen (of NASAGISS) and Al Gore.
But therein lies the proof that we are nowhere near a tipping point. The earth, it seems, has seen times when the CO2 concentration was up to 8,000 ppm, and that did not lead to a tipping point. If it did, we would not be here talking about it. In fact, seen on the long scale, the CO2 concentration in the present cycle of glacials (ca. 200 ppm) and interglacials (ca. 300-400 ppm) is lower than it has been for the last 300 million years.
Global-warming alarmists tell us that the rising CO2 concentration is (A) anthropogenic and (B) leading to global warming.
(A) CO2 concentration has risen and fallen in the past with no help from mankind. The present rise began in the 1700s, long before humans could have made a meaningful contribution. Alarmists have failed to ask, let alone answer, what the CO2 level would be today if we had never burned any fuels. They simply assume that it would be the “pre-industrial” value.
* The solubility of CO2 in water decreases as water warms, and increases as water cools. The warming of the earth since the Little Ice Age has thus caused the oceans to emit CO2 into the atmosphere.
(B) The first principle of causality is that the cause has to come before the effect. The historical record shows that climate changes precede CO2 changes. How, then, can one conclude that CO2 is responsible for the current warming?
Nobody doubts that CO2 has some greenhouse effect, and nobody doubts that CO2 concentration is increasing. But what would we have to fear if CO2 and temperature actually increased?
* A warmer world is a better world. Look at weather-related death rates in winter and in summer, and the case is overwhelming that warmer is better.
* The higher the CO2 levels, the more vibrant is the biosphere, as numerous experiments in greenhouses have shown. But a quick trip to the museum can make that case in spades. Those huge dinosaurs could not exist anywhere on the earth today because the land is not productive enough. CO2 is plant food, pure and simple.
* CO2 is not pollution by any reasonable definition.
* A warmer world begets more precipitation.
* All computer models predict a smaller temperature gradient between the poles and the equator. Necessarily, this would mean fewer and less violent storms.
* The melting point of ice is 0 ºC in Antarctica, just as it is everywhere else. The highest recorded temperature at the South Pole is -14 ºC, and the lowest is -117 ºC. How, pray, will a putative few degrees of warming melt all the ice and inundate Florida, as is claimed by the warming alarmists?
Consider the change in vocabulary that has occurred. The term global warming has given way to the term climate change, because the former is not supported by the data. The latter term, climate change, admits of all kinds of illogical attributions. If it warms up, that’s climate change. If it cools down, ditto. Any change whatsoever can be said by alarmists to be proof of climate change.
In a way, we have been here before. Lord Kelvin “proved” that the earth could not possibly be as old as the geologists said. He “proved” it using the conservation of energy. What he didn’t know was that nuclear energy, not gravitation, provides the internal heat of the sun and the earth.
Similarly, the global-warming alarmists have “proved” that CO2 causes global warming.
Except when it doesn’t.
To put it fairly but bluntly, the global-warming alarmists have relied on a pathetic version of science in which computer models take precedence over data, and numerical averages of computer outputs are believed to be able to predict the future climate. It would be a travesty if the EPA were to countenance such nonsense.
Best Regards,
Howard C. Hayden
Professor Emeritus of Physics, UConn
“The term global warming has given way to the term climate change, because the former is not supported by the data. The latter term, climate change, admits of all kinds of illogical attributions. If it warms up, that’s climate change. If it cools down, ditto. Any change whatsoever can be said by alarmists to be proof of climate change.”
This exemplifies a technique which writers of holy books long ago perfected. If you state your prediction in sufficiently broad terms, then anything that happens will prove you were right, and hence your power to rule the planet will increase. Climate change is no more nor less than green religion, appropriated by demagogues like Ahnold and AlGore to their political ends.
Not a religion. Not trusting in a Higher Power. Rather Narcissism.
The problem is the supposition that the results of honest but unfinished inquiry can/should translate into public policy. Mike McElroy (Harvard), an early investigator of the possibility of global warming and of the ozone hole, was probably pretty honest when he was young, and his discoveries certainly were worthy of note and of further study. But then he started spending more time in Washington than in research, as did a wave of his colleagues. Probably a big part of the problem is that the research itself is govt-supported, so will usually tend towards the conclusion that govt must increase. (?)
“The melting point of ice is 0 ºC in Antarctica, just as it is everywhere else. The highest recorded temperature at the South Pole is -14 ºC, and the lowest is -117 ºC. How, pray, will a putative few degrees of warming melt all the ice and inundate Florida, as is claimed by the warming alarmists?”
The statement above should convince you that this guy is dishonest or an idiot
The Greenland ice sheet (Kalaallisut: Sermersuaq) is a vast body of ice covering 1.71 million km², roughly 80% of the surface of Greenland. It is the second largest ice body in the World, after the Antarctic Ice Sheet. The ice sheet is almost 2,400 kilometers long in a north-south direction, and its greatest width is 1,100 kilometers at a latitude of 77°N, near its northern margin. The mean altitude of the ice is 2,135 meters.[1] The thickness is generally more than 2 km (see picture) and over 3 km at its thickest point. It is not the only ice mass of Greenland – isolated glaciers and small ice caps cover between 76,000 and 100,000 square kilometers around the periphery. Some scientists believe that global warming may be about to push the ice sheet over a threshold where the entire ice sheet will melt in less than a few hundred years. If the entire 2.85 million km³ of ice were to melt, it would lead to a global sea level rise of 7.2 m (23.6 ft).[2] This would inundate most coastal cities in the World and remove several small island countries from the face of Earth, since island nations such as Tuvalu and Maldives have a maximum altitude below or just above this number.
I love these arguements
He says
The higher the CO2 levels, the more vibrant is the biosphere, as numerous experiments in greenhouses have shown. CO2 is plant food, pure and simple.
Yes so is nitrogen, but because the farmers up the way dump nitrogen into the water those living downstream have to contend with putrid and sometimes deadly blue green alge.
A warmer world is a better world. Look at weather-related death rates in winter and in summer, and the case is overwhelming that warmer is better
Yes never mind the drought and desertifcation.
The real water wars start when the glaciers are gone and temps rise causing more evaporation.
CO2 concentration has risen and fallen in the past with no help from mankind. The present rise began in the 1700s, long before humans could have made a meaningful contribution.
According to this graph C02 levels are well above historic levels nothing to see here just move along
en.wikipedia.org/wiki/File:Carbon_Dioxide_400kyr.png
Measton,
You are becoming Eddie for the AGW theory.
Oye vey.
My take was that the data on warming was faked. Also that the agency doing the faking was the main repository for the historical data.
It will either get whitewashed or it will set back environmental protection unreasonably. My bet is whitewash.
In progress. Nothing to see here, move along.
Algore is an idiot.
Then why is he the one with our money?
My take was that the data on warming was faked. Also that the agency doing the faking was the main repository for the historical data.
Do you have anything at all to back this up or do we just have to accept your take on things.
The vast majority of thescientific community supports that rising co2 levles will increase ttemperatures. There is clear evidence that warming is already occurring. Yet so many put their faith in crazy people like the guy above. Never mind that conserving energy would help our country in the long run anywqay. Never mind that our oil addiction finances Irans nucs, Saudi terrorism, and Chavez.
The vast majority of thescientific community supports….
There’s the sum total of global warming “science”: declaratory statement consisting of unsupported assertion of consensus. BFD.
This thing is breaking everywhere. Latest at the Times Online that will explain exactly what is wrong here. Get over it.
http://tinyurl.com/yauqogh
How about we just go with..
Do you want clean water for you, your kids, your grandkids…?
Do you want clean air…
Do you want food that doesn’t ruin your body via GMo foods?
Geeez, can’t we just get along?
Or shall we just ruin the entire world due to “capitalism, greed and outright selfishness? Just because we can?
DD…+10
Which data?
The data supporting the theory that the earth is warming?
Or the data that supports the supposition that people are causing/exacerbating it?
Yes.
There’s more evidence of warming than there is of Jesus Christ. And not just date. The anecdotal evidence is overwhelming.
Sorry…*data
I guess with my background I’m more dubious of the computer models than I am about the data.
I got my MA in applied math. from UCSD back in 1977. Much of my work was in math modeling in physics (comparitively simple stuff) and operations research (trying to math model complicated systems). You can solve Schrodinger’s equation simply for a hydrogen atom - other atoms require numerical computations. And anything as complicated as Earth’s climate - or economics - is vulnerable to the many problems that may cause large errors when trying to model complicated systems with necessarily simplified models.
Life on Earth lives in an equilbrium system. More CO2 means more plant growth which lowers the CO2 back down. Even lots of tropical deforestation doesn’t stop this: according to the BBC the Taiga forest processes more CO2 than do all the tropical forests combined.
“…is vulnerable to the many problems that may cause large errors when trying to model complicated systems with necessarily simplified models.”
…is vulnerable to the many problems that may cause large errors when trying to “control” complicated systems with necessarily simplified human understanding”
You guys sound like real estate agents quoting Lawrence Yun.
That’s a pretty low blow.
Why do you always first resort to personal insult in a disagreement?
Because ad hominem attacks work?
I’ve been trying to refrain from posting on this issue, as it has absolutely nothing to do with real estate or mainstream economics, but I’ll make the following comments, after spending a little bit of time looking into these articles (and I fully admit I only spent a couple of hours looking at the leaked e-mails):
1) Obviously, if these individuals did, in fact, falsify or hand-pick certain data points to support a pre-determined conclusion, then they are not scientists at all, but in fact are enemies of science. There should be an investigation into the allegations being made here, and, if those allegations are found to be meritorious, the individuals involved should be punished to whatever extent the law (US, UK, etc.) provides.
2) Having said that, I’ve read a number of these e-mails, and most of them do not strike me as particularly sinister. It’s perhaps unfortunate, but not the least bit surprising to me that scientists of a particular ideological stance would jockey and strategize in order to have their position heard above the opposition. I would bet that there are similar e-mails traded back and forth among the skeptics as well.
3) The e-mail that I do find potentially disturbing is the one that mentions “hid[ing] the decline.” This e-mail apparently relates to an article by Briffa et al. The use of the term “trick,” in and of itself, doesn’t bother me so much — that term could be used in a number of contexts to refer to various techniques for data analysis. The “hide the decline” language is a little more troubling, but the explanation given by RealClimate doesn’t strike me as too far-fetched (divergence after 1960, which the authors had pointed out in the first place).
4) But fine, suppose you throw out the Briffa study, which related to temperatures as measured by tree rings over a thousand (or so) year span in Siberia: a) how do you get from there to conclude that there is a vast conspiracy among hundreds or thousands of climate scientists to falsify data and steal government funding? b) aren’t there plenty of other studies out there showing similar patterns (if not hockey sticks, at least statistically significant warming patterns over the past 100 years — put aside the problems with demonstrating human causation for the moment)?
I’d be interested in hearing more from someone who is knowledgeable in this area (i.e. someone who can discuss this subject in detail from a scientific perspective and can present the arguments from all sides of the issue, and not just parrot a political viewpoint).
MG
Bravo Martin. Thank you for posting your thoughts on this.
“It’s perhaps unfortunate, but not the least bit surprising to me that scientists of a particular ideological stance would jockey and strategize in order to have their position heard above the opposition.”
Science and religion don’t mix. But that doesn’t stop frail humans from constantly trying to mix them.
Bad wording. Let’s try this: those who are convinced, rightly or wrongly, that their currently-proposed theories are correct.
And I was being charitable to most skeptics in implying they are in this category, frankly.
MG
az_lender received a PhD from Caltech in atmospheric science. I am no longer in any position to profit from (or lose by) any particular conclusion on the subject of global warming. The preponderance of all the evidence I ever ran across is that the planet will probably warm by several degrees Celsius, as a global average, during the coming century, due to mankind’s industrial addition of CO2 to the atmosphere. One cannot assign a specific probability to this conclusion since, as one commenter noted above, there is no single perfect model, and every model misses many details, perhaps even major factors. It is important to point out that my political leanings are libertarian, before saying that I find the scientific evidence presented in the Al Gore movie to be mostly credible but not at ALL supportive of “cap and trade” or of any other specific legislative fix that does not lead to a reduction in the human population.
az-lender …Posted this question late ,but what does several degree warming over a century exactly do to the World?
Isn’t there a compromise means by which the Paul audit could be conducted which steered clear of questions that potentially compromise central bank independence? Or is it the mere fear of having auditors looking up their skirts which creates the threat to independence? Don’t almost all other large corporate entities in the USA face similar tensions?
* NOVEMBER 27, 2009, 11:04 P.M. ET
Bernanke: Dodd, Paul Bills Would Hurt Economy
By JON HILSENRATH
Federal Reserve Chairman Ben Bernanke counterpunched against congressional critics, warning in a Washington Post opinion column that Capitol Hill efforts to audit the central bank and curtail its regulatory powers could be dangerous for the economy and fragile financial system.
…
Spendthriftery ain’t all that any more…
* The Wall Street Journal
* BUSINESS
* NOVEMBER 28, 2009
Dubai Jitters Infect Debt of Sovereign Spendthrifts
By NEIL SHAH and CHIP CUMMINS
LONDON — Dubai’s debt debacle is stoking a new fear for investors across the globe: potential government default by heavily indebted nations.
The Dubai government roiled markets this week with its move to delay debt payments owed by its flagship holding company, Dubai World. The company is stressed by tens of billions in debt that funded spending on glitzy real-estate projects from the Middle East to Las Vegas.
On Friday, investors feared Dubai’s move would plunge global financial markets into the kind of chaos seen earlier this year. But while Asia suffered heavy losses, markets regained their poise as the European and U.S. trading day progressed. By late Friday, European stocks finished 1.2% higher, while in the U.S., the Dow Jones Industrial Average closed down 154.48 points, or 1.5%, at 10309.92.
Deeper stress lines were felt in the sovereign-bond market, where the cost of insuring against defaults in places like Hungary, Turkey, Bulgaria, Brazil, Mexico and Russia rose, fueled by concerns that emerging-market nations may have trouble honoring their debts even as the economy heals. The worry is that sovereign debt may now represent another aftershock of the global financial crisis.
The iconic Emirates Towers dominate the skyline in Dubai. Uncertainty over Dubai continued to unsettle traders around the world.
“First, people were worried about mortgage debtors. Then, highly leveraged banks. Now the ball has rolled all the way to Dubai,” says Mattias Westman, chief executive of Prosperity Capital Management, which has about $3.5 billion under management, almost all of it in Russia. “It’s just a lack of confidence in debtors.”
…
More
* Dubai Fallout Hurts Stocks
* Credit Markets Hang In After Dubai
* Emirates’ Capital Feels Heat From Dubai
* Heard on the Street: Dubai Panic Is Overdone
* Heard on the Street: Dubai Investors Face Uncertainty
* Some Dubai World Unit Creditors Form Group
* Dubai Debt Freeze to Hit Property Recovery
* Opinion: Dubai’s Debt Reckoning
* Complete Coverage: Crisis in Dubai
* Discuss: How much will Dubai hurt markets?
* Readers React: ‘Wait until Monday’
I didn’t catch all the details… but on NPR they said there are also complications because the debt is structured in a religiously acceptable way.
It gets tricky when you have to structure debt in a way to make it culturally acceptable in a country whose official religion classifies borrowing money as a sin.
“…the debt is structured in a religiously acceptable way”
GoldenmanSachs: “Give unto Caesar what belongs to Caesar”
Geez Mr. Bear, sounds vaguely religious to me somehow.
I think of Islamic banking as the art of describing the borrowing and lending of money as something else. For example, have you ever heard of anyone leasing a house? (Scroll down this link to Islamic Home Financing for the details.)
Please jump right in here and correct me if I am missing something.
“…Further, this initiative will be consistent with the well-established public policy of encouraging home ownership and making Muslim stakeholders in Britain.”
Has a ring of “familiarity” …sounds like: “Cult”
The status quo is about to change big time. The queen city of real estate froth, Dubai, has been hit by the tsunami. We’ll find out on Monday if the PPT can repeat Friday’s phony stock market performance. Hold on to your …..PM’s.
Not to worry — it’s all contained
P.S. Gold sold off on Friday along with lots of other risky assets, so holding on to PMs may not provide much security at this point.
To Combotechie cash is king.
To Warren Buffett cash is the worst investment you can have.
To investors cash is dry powder.
It seems to me that if you have cash AND gold right now then you are truly hedged. If you have 100% of one or the other then you are not so hedged. You could go even farther and say if you have cash, gold, guns, food, real estate and stocks then you are truly hedged.
Gold sold off last fall and the bugs that bought it are smiling today. It seems that diversification of assets is still the key to success. It’s that basket and eggs thing.
I agree. Great post!
It seems that diversification of assets is still the key to success.
Yes, assuming it’s true diversification. Some cash, some non-USD cash, some PMs, perhaps some stocks, other commodities, perhaps even real-estate.
Sadly, to most people, “diversification” means owning small-cap, mid-cap, and large-cap, growth and value stocks. And that’s it. Which is better than just holding small-caps, but leaves one open to getting killed by, say, a 50% drop in the stock market.
I’m pretty happy with my pile of cash and USD-hedges at the moment. But I sure wish I’d bought some stocks 3 months ago.
“It seems that diversification of assets is still the key to success.”
Totally agree with you there. But there are substitute assets for gold. I personally lack the desire to deal with it — too risky in normal times, or even minor crises. I suppose there are some states of the world where it would come in handy (e.g. outright societal disintegration and anarchy), but even in those extreme scenarios, there are other ‘assets’ which would prove more valuable — e.g., a good, internationally diversified social network.
In fact, if your personal belief system can handle it, I recommend to anyone who wants the ultimate in precautionary diversification to join the LDS church. They have an international network of highly homogeneous churches around the globe. If my wife and kids ever needed to find refuge outside the US, they would have many options. This, IMHO, would be a more valuable ‘asset’ for a worst-case scenario than gold. Of course, the gold might help you purchase a flight out the country in case of currency breakdown.
I would guess other church organizations could potentially offer similar ‘personal insurance’ services, but I am highly impressed with the degree of international penetration the LDS church organization has achieved.
I would guess other church organizations could potentially offer similar ‘personal insurance’ services, but I am highly impressed with the degree of international penetration the LDS church organization has achieved.
Their goal, plain and simple, is to take over the world and kill anyone who gets in their way. I hope they don’t succeed.
We’ll find out on Monday ??
More like Sunday night with the Asian markets…I wonder if the Russian terrorists attack on the train will have any impact…
The Precious™ is starting to look mighty bubblelicious, neh?
* INVESTING
* NOVEMBER 27, 2009, 8:26 P.M. ET
Time To Prepare for the Next Bubble?
By GREGORY ZUCKERMAN
As low interest rates around the world help create potential bubbles in everything from stock markets in Brazil and China to pockets of real estate in Asia and Australia, it may be time to prepare for the next big, financial bubble.
But don’t count on gold to keep your portfolio safe.
The yellow metal once was a haven for investors, one that was sure to rise in times of trouble. It’s now being scooped up by those, like hedge-fund manager John Paulson, who are convinced that major currencies, such as the U.S. dollar, will lose value as governments shovel money at various problems and expand the money supply.
The argument has virtue, and gold has been rising as the dollar weakens. But gold no longer automatically climbs in price during times of trouble. Often, in actually tumbles.
On Friday, gold dropped about 1%, even as global markets wobbled on concern that Dubai is having difficulty handling its debt load. During some periods in late 2008, as financial markets tumbled, gold also fell, as investors raced to sell every investment in their portfolio, even gold.
Protection for the next bubble will have to be found elsewhere.
On the heels of the tumble in markets in 2008, most experts predicted it would be many years before investors would have to worry about the painful bursting of another bubble. Some academics argue that financial markets are becoming more efficient, further reducing any potential danger.
John Paulson ignored similar advice to pull off the greatest trade in financial history.
Mr. Paulson and a band of unlikely investors, anticipated the collapse of the housing market and the resulting sell-off in stock prices by bucking this conventional wisdom. There’s reason to think investors should learn from their methods.
John Paulson and a band of investors, the subject of “The Greatest Trade Ever,” anticipated the housing collapse; investors can learn from their methods.
For one thing, a rash of financial bubbles in recent years — including housing, energy, technology and Asian currencies – suggests that markets are becoming harder to navigate, and are more prone to overshooting. Veteran investor Jeremy Grantham has identified 28 bubbles in various global markets since 1920.
Investors of all sizes read the same articles, watch the same business-television programs, and chase the same hot tips, pushing them skyward. They then head for the exits at the same time, leading to heavy losses. There also are more ways to lay bets. Exchange-traded funds, for example, have enabled even individual investors to make big wagers on almost any slice of the stock, commodity, debt and currency markets.
The appetite to lend likely has been sated for a while, but it won’t be long before bankers convince themselves of the next easy way to score sure profits. Low interest rates — as exist today — tend to fuel this boom-and-bust dynamic. That may be one reason why emerging-market nations like Brazil are seeing an eye-popping surge, and some real estate markets are soaring.
…
“But don’t count on gold to keep your portfolio safe.
The yellow metal once was a haven for investors, one that was sure to rise in times of trouble.”
You can count on the Boyz at the Fed and their gang to instantly and heavily short gold and other PM’s at the first sign of any financial “trouble”. This is a key part of their management of economic expectations and perception. Day to day or incident to incident, don’t count on “gold” to “do” anything, except “sell-off” the day of a perceived “crisis”.
However, when your currency is being thoroughly and continuously diluted and debased, gold acts as insurance against the decimation of your purchasing power over time. Compare the “price” of gold in Swiss Francs or South African rands over the last two years. A much different chart than the dollar vs gold.
The latest rise from $800 to nearly $1200 is not so much a bubble in gold prices, but a collapse of the value of the dollar, IMHO. People who cannot fathom how the dollar can continue to lose so much value in the future should ask themselves exactly what mechanism will close the growing city, state, and Federal deficits, and fully fund the multi trillions committed to entitlement programs already in place.
Bernanke is shooting for inflation and is getting devaluation and is still too myopic, and dumb, to realize the difference. May there be a special place in hell reserved for this tiny little specimen that tries to call himself a man.
After watching and listening to the Fed and Wall Street speculate and potificate on interest rates and the Fed Fund rate specifically through this debacle and seeing the Fed Fund rate look like a sine curve graph over the 20 years or so, I am 100% convinced now that we should remove humans from setting monetary policy as we (or they) STINK.. Fed Fund rate should be set and left alone .. period.. good, bad or ugly and remove all the speculation from the Market .. what would they talk about then on Bloomberg and MSNBC ?
It does seem like the Fed’s habit of predictably dropping the FFR to the neighborhood of 0 percent at the first sign of economic crisis tends to fuel beliefs such as “real estate always goes up” or “the stock market always goes up.” And the TBTF bailout policy gives extra incentives for speculation by Megabank, Inc, as recently exemplified by their disastrous foray into subprime mortgage securitization.
Does the Fed realize that it’s highly predictable economic rescue policies encourage foolish speculation which is prone to result in frequent bubble formation and collapse?
NYCB …I’m so glad that somebody has the same view of Bernanke as I do .
+1
I guess I am more sympathetic to his situation than you guys. I reasonably expect the economic situation could be a lot worse at the moment than it is, multi-million dollar Megabank, Inc bonuses and 17.5 percent U6 unemployment notwithstanding.
You give him the benefit of the doubt in that you assume things won’t get much much worse. What about if all he’s done is draw out the X axis and turned the downturn into a cliff dive?
“…you assume things won’t get much much worse.”
I said nothing of the sort.
“What about if all he’s done is draw out the X axis and turned the downturn into a cliff dive?”
I do think that drawing out the x-axis is exactly what he has intended and succeeded in doing.
The real question is whether this will amplify or damp the eventual y-axis effects. I’m guessing the former, but I can also see reasonable arguments for the latter.
May there be a special place in hell reserved for this tiny little specimen that tries to call himself a man.
You know, I’ve read and considered the opinion that the idea of heaven came into existence to make the toil of the average person bearable (ie “my life may suck now, but I’ll be rewarded with eternity in heaven”). And please note, I’m not saying this is the truth, nor attacking religion here.
It’s interesting to think that the idea of hell kind of serves the same purpose. Rather than aerate the bankers with pitchforks, we rationalize that they’ll burn in hell…
Rather than bank on the existence of hell and eternal damnation, I vote for aerating them, personally…
誰もがバーを取得するとしている
バーの名前は、バー、天国と呼ばれ
天国のバンド、彼らは私のお気に入りの曲を再生する
再生は1より多くの時間、一晩で再生
天国、天国に配置すると、場所も、何もこれまでに発生
天国、天国に配置すると、場所も、何もこれまでに発生
ある党は、誰もそこにある
皆とまったく同じで時間のままにします
このパーティーが終わったのは、再度開始されます
それは何が違うのは、されると正確に同じである必要はありません
天国、天国に配置すると、場所も、何もこれまでに発生
上で、再度開始されますが、このキスをされ
それは何が違うのは、されると正確に同じである必要はありません
これは、すべてのようにエキサイティングなことができるのは、何も想像するのは、これほど楽しいことができるのは難しい
天国、天国に配置すると、場所も、何もこれまでに発生
天国、天国に配置すると、場所も、何もこれまでに発生
Talking Heads: Heaven Lyrics Turned Japanesa…
For Oly Gal and Shorty, the English version:
Everyone is trying to get to the bar.
The name of the bar, the bar is called Heaven.
The band in Heaven plays my favorite song.
They play it once again, they play it all night long.
Heaven is a place where nothing ever happens.
Heaven is a place where nothing ever happens.
There is a party, everyone is there.
Everyone will leave at exactly the same time.
Its hard to imagine that nothing at all
could be so exciting, and so much fun.
Heaven is a place where nothing ever happens.
Heaven is a place where nothing ever happens.
When this kiss is over it will start again.
It will not be any different, it will be exactly
the same.
It’s hard to imagine that nothing at all
could be so exciting, could be so much fun.
Heaven is a place where nothing every happens.
Heaven is a place where nothing every happens.
Said Barnicle Ben Bernanke……
Drummin, Freuid had that exact same thought. He thought it mighty convenient that Jesus promises EXACTLY what humans wanted most and had the least of: health, safety, enough to eat, happiness…
If Heli-Ben really wants inflation he just needs to mail monthly checks to every household in the country. While some will be either saved or used to pay off CC’s plenty will be spent by “consumers”.
Of course we all know this isn’t going to happen.
“If Heli-Ben really wants inflation he just needs to mail monthly checks to every household in the country.”
+1.
Here’s an exercise to try: imagine the effect on the economy and the currency of the Fed mailing out $100 checks to every household, every month. Then try it with $1000/mo. Then $10K; then $100K; then $1M.
Then ask yourself what prevents them from devaluing the currency to any degree that they desire. From what I can see, fear of pitchforks is the only limiting factor.
Prime:
Or pay everyone’s credit card down by $1000…much easier to do.
Inflation has been shown time and time again to have nothing to do with J6P’s wages and everything to do with corporate profits, Wall St. expectations and executive bonuses.
Again, let me know when that deflation starts. Besides RE, consumer prices just keep rising in my world.
There’s a lot of talk of deflation while the banks are accumulating reserves. Sooner or later they’ll open the spickets and start loaning out the accumulated money. Then we’ll see the inflation.
and start loaning out the accumulated money ??
Loan it to who, for what and at what rate ??
I think the last thing you typed is the most important. At what rate would you lend money right now? Due to the artificial holding down of interest rates you would have to lend out today at perhaps 6%?
Banks don’t want to do that. They are deathly afraid that the Fed (a private bank) will lose control of rates and then those loans will look disastrous on their balance sheets.
This notion that banks aren’t lending right now is ridiculous. They are lending every penny they have. They are lending to The Fed, The U.S. Government and U.S. agencies via such things as investments in Fannie, Freddie, Ginnie, FHLB and other various MBS that are being backstopped by The Fed directly and the government indirectly. It is just that banks are not doing much lending to the private sector unless it is revolving debt at a high interest rate. The Fed’s manipulation of interest rates will ensure that this process continues.
“They are lending every penny they have. They are lending to The Fed, The U.S. Government and U.S. agencies via such things as investments in Fannie, Freddie, Ginnie, FHLB and other various MBS that are being backstopped by The Fed directly and the government indirectly.”
Can you blame them? What would you do if you were a bank? Loan money to federal agencies and enjoy a positive rate of return with a federal guarantee of principle, or to a private entity at artificially suppressed (risk premium sterilized) ‘market’ rates, with significant risk the interest payments you receive are insufficient to cover the risk of default?
Exactly my point Pbear…
So money going into banks, in effect, never leaves.
When people make their housepayments or credit card payments or payments on any sort of loan to the bank this money doesn’t get recycled back to main street like in the good ol’ days, instead it goes to buying up Treasuries. This gradually REDUCES THE AMOUNT OF MONEY IN CIRCULATION.
The reduction of money in circulation makes money harder to get and thus it INCREASES ITS VALUE.
“When people make their housepayments or credit card payments or payments on any sort of loan to the bank this money doesn’t get recycled back to main street like in the good ol’ days, instead it goes to buying up Treasuries.”
This has been one of the main reasons for J6P’s declining wages.
As for the value of the money, did you see my post last week on inflation? In order to have the same buying power that 25K did in 1980, you would now have to be making 58K. That number reflect 3% per year to present.
I’m not seeing an increase in value there, are you?
Oops, that should read:
That and investing in paper investments that invest in other paper investments, (fantasy and not physical) has been one of the main reasons for J6P’s declining wages.
“In order to have the same buying power that 25K did in 1980, you would now have to be making 58K.”
Thank you for the history lesson. I could make a similar statement starting from, say, the year 2000 or any other such year when the explosion of the money supply really got going.
But the money supply isn’t exploding anymore; The money supply is SHRINKING for reasons outlined in my above post.
For the record and to add to the reasons in my previous post (and to ward off nit-picking in defense of my oft-unpopular stand regarding money, cash, the economy and so forth) the money supply is also shrinking due to debt repudiations and bankruptcies.
When debt vanishes into thin air it takes an equal amount of money with it. And because one person’s debt is another person’s money a lot of folks are royally screwed due to this vanishing act which, at the last count, totaled some thirteen trillion dollars.
Yep. Even though they make filing BK harder, there are still record filings.
When debt vanishes into thin air it takes an equal amount of money with it. And because one person’s debt is another person’s money a lot of folks are royally screwed due to this vanishing act which, at the last count, totaled some thirteen trillion dollars.
——————-
But what if much of this repudiated debt is converted into govt-backed assets/loans? If the FDIC, FHA, etc. are making those investors whole, the money isn’t really disappearing, is it? Obviously, there will be consequences later on as they wrestle with the higher taxes/dollar devaluation issues, but I think it’s possible that the govt can paper over the losses to a large extent.
‘You can count on the Boyz at the Fed and their gang to instantly and heavily short gold and other PM’s at the first sign of any financial “trouble”.’
This is spot on, and a point which I seldom see mentioned by gold bugs. Paulson and others going long gold at the moment are essentially betting against the ability of the Fed, the IMF and other players in the international banking system to creatively balance their discretionary use of their printing press (which, among other purposes, can be used to create money out of thin air with which to purchase gold on the spot market) against the animal spirits (fear, panic, inflation expectations, etc) that make gold want to go up in value. I personally put more faith in the bankers’ ability to manipulate the price of gold than I do in animal spirits’ ability to drive it ever higher. Don’t fight the Fed!
The problem is, and you are aware deep down, PB, 0 interest rates. And they will remain at zero as long as the unemployment rate does not show improvement. And you, yourself, are aware the shadow inventory will come out of the shadows and cause more home price declines. The US government’s policy is obviously to artificially support the RE industry and to try to counter price declines. The policy is also to keep the value of the dollar low so as to encourage more exports and again keep unemployment from getting much worse.
I have a 3-to-1 hedge of government securities to precious metals, but my bet is gold and silver have a lot more upside. I think $2000 spot price for gold is much more likely to be seen before $600 spot price.
Cheers!
“The US government’s policy is obviously to support the RE industry and try to counter price declines.”
Yep, doing so acts protect bank collateral. It’s all about saving the banks.
A good thing, this saving of the banks. The banks are where the financial part of transactions are cleared. Without these financial clearinghouses transactions won’t happen.
Don’t fight the Fed!
Fighting the Fed via buying gold has been a very profitable approach for the past 10 years or so.
I expect this will continue for the next few years… and then we’ll have a new monetary system based on gold.
I would not regard buying gold as “fighting the fed.” You are playing by their rules when you buy gold and you win. Just like buying GS stock would make you a winner. GS is in charge of government so of course its stock should win!
‘John Paulson and a band of investors, the subject of “The Greatest Trade Ever,” anticipated the housing collapse; investors can learn from their methods.’
If he was right about housing, then he is almost certainly going to be right about currency collapse and gold going to the moon, right?
He looked a one graph to make his bet, too… inflation adjusted wages vs inflation adjusted home prices… the same fricken graph that seems to have escaped the intellectual limits of Alan Greenspan and the rest of the Fed… go fricken figure..
not rocket science.. economics 101 really, but the Fed couldn’t see it and actually lowered the FFR during the peak speculation period… just amazing.. and, Paulson would have made another 4-5 B had the government not bailed out the banks and housing the way they did..
second attempt at this post..
And the one piece of info that Pauslon used and went back to again and again to make his bet was the graph showing historic wages vs home prices adjusted for inflation.. the bubble jumped off the page … that piece of info or graph was beyond the intellectual capacity of Alan Greenspan and the Fed who “couldn’t be expected to see or predict bubbles”… unbelievable.. their incompetence and lack of responsiblity makes my skin crawl… and Greenspan is looked at as some Economic Sage… what a joke of man..
And Paulson would have made another $5-6 B on that bet of his had the fed not bailed out the banks and housing market..
There has never been a better time to buy — provided you can afford to repay the principle balance and related non-interest costs (e.g. property taxes) on the home you choose to buy.
* The Wall Street Journal
* REAL ESTATE
* NOVEMBER 25, 2009, 2:29 P.M. ET
Mortgages Tie Record Low of 4.78%
By AMY HOAK
Rates on 30-year fixed-rate home mortgages averaged 4.78% this week, matching an all-time low in Freddie Mac’s weekly survey of conforming mortgage rates, released Wednesday.
The mortgage averaged 4.83% last week and 5.97% a year ago. This week’s average matched a low set the week ending April 30.
“Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year’s peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage,” said Frank Nothaft, Freddie Mac chief economist.
Fifteen-year fixed-rate mortgages averaged 4.29% for the week ended Nov. 25, a new low since Freddie Mac began tracking it in 1991. This week’s average is down from 4.32% last week and 5.74% a year ago. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.18% this week, down from 4.25% last week and 5.86% a year ago. The ARM hasn’t been this low since Freddie Mac started tracking it in 2005.
…
“The battle over authority is funded on both sides – rulers and ruled – in terms of money. The world’s central banks are keeping the banking system going by inflating the money supply. This is now creating a crisis of authority. I think there are two men who represent this battle in the United States: Ron Paul and Ben Bernanke. Obama is a minor character. If McCain had won, he would be a minor character. If the governments lose this battle, this will create a crisis of legitimacy.” ~Gary North
If you are of the opinion the future of the monetary system has some importance don’t miss Dr. North’s thorough review of current events. He notes there is growing political awareness that the Federal Reserve for the first time in over 90 years is vulnerable to public criticism. Its enemies, whether from the right or left, are now in a position to embarrass the FED, says North. The Fed has never faced this. Federal Reserve officials have never faced a barrage of complaint to this extent. Where is it leading? What does it mean to YOU? Digits and Revolution
http://www.lewrockwell.com/north/north786.html
The Fed suffers from what can only be called Victory Disease. Brush up on the Japanese and the Nazis at the start of World War II. They suffered from the same disease. Anybody know how that turned out for them?
interesting point and agree completely..
Victory Disease=Arrogance/Pride=The only real epidemic of mankind
Oh I dunno, the rest of the 7 Deadly Sins seem to hold their own.
Mark Pittman, Reporter Who Foresaw Subprime Crisis, Dies at 52.
Nov. 28 (Bloomberg) — Mark Pittman, the award-winning investigative reporter whose fight to open the Federal Reserve to more scrutiny led Bloomberg News to sue the central bank and win, died Nov. 25 in Yonkers, New York. He was 52.
Pittman suffered from heart-related illnesses. The precise cause of his death wasn’t known, said his friend William Karesh, vice president of the Global Health Program at the Bronx, New York-based Wildlife Conservation Society.
A former police-beat reporter who joined Bloomberg News in 1997, Pittman wrote stories in 2007 predicting the collapse of the banking system. That year, he won the Gerald Loeb Award from the UCLA Anderson School of Management, the highest accolade in financial journalism, for “Wall Street’s Faustian Bargain,” a series of articles on the breakdown of the U.S. mortgage industry.
“He was one of the great financial journalists of our time,” said Joseph Stiglitz, a professor at Columbia University in New York and the winner of the 2001 Nobel Prize for economics. “His death is shocking.”
Pittman’s fight to make the Fed more accountable resulted in an Aug. 24 victory in Manhattan Federal Court affirming the public’s right to know about the central bank’s more than $2 trillion in loans to financial firms. He drew the attention of filmmakers Andrew and Leslie Cockburn, who gave him a prominent role in their documentary about subprime mortgages, “American Casino,” which was shown at New York City’s Tribeca Film Festival in May.
‘One Reporter’
“Who sues the Fed? One reporter on the planet,” said Emma Moody, a Wall Street Journal editor who worked with Pittman at Bloomberg. “The more complex the issue, the more he wanted to dig into it. Years ago, he forced us to learn what a credit- default swap was. He dragged us kicking and screaming.”
Years ago, he forced us to learn what a credit- default swap was. He dragged us kicking and screaming.”
What a telling admission from an editor of a major US financial news and opinion media outlet. She and her colleagues didn’t WANT to know the truth. And still don’t. It’s much cozier to be in bed with the financial sharks they’re supposed to be covering.
Darn ,why do the good dye young . This really is a loss and this guy dies at 52 years old …..to bad .
And that mother-fer Greenspan will live to be 104.
With occasional tickles of Andrea’s tongue in his over-sized ears!
Hwy, that is just gross.
But it’s dang funny! Hey! I had big ears all my life! Yikes!
ewww. Ear Hair!
Cotton to condos
November 28, 2009 ~ Charleston, S.C.
The Cigar Factory through the years:
1882: Building is constructed for use as a cotton mill.
1912: Building is purchased by American Cigar Co.
1944: More than 1,000 workers launch a six-month strike over wages and working conditions.
1973: Factory shuts down.
1981: Building is added to the National Register of Historic Places. Around the same time, a company renovates the property and calls it the Business and Technology Center.
2005: An affiliate of Jupiter Realty Corp. buys the renamed Cigar Factory for $14.7 million.
2007: The Simpson Group Inc. buys the office building for about $20 million with plans to redevelop it into residential condos and space for businesses.
2009: Bank regulators seize the Cigar Factory’s construction lender May 1. Work is halted Nov. 25.
Wmbz Follow up:
Now the FDIC says no to commercial lending….
http://www.postandcourier.com/news/2009/nov/28/project-on-hold/
“1944: More than 1,000 workers launch a six-month strike over wages and working conditions.”
2009: 642 of the above workers are helping the current economy by utilizing the least expensive “Medical Industry” the world has ever known. There would be more “financial” help but some potential contributors have died due to complications of enjoying a promoted US “bidness” product called: cigarettes
Clipped from The Daily Reckoning.
The US has $2 trillion worth of short-term bills that must be refinanced in the next 12 months. It must also refinance about $1 trillion more of notes and bonds. That’s without adding any additional debt! So put a deficit of $1.5 trillion on top of that and you have $4.5 trillion of financing for the US alone.
But the US is not the only one fishing in this pond. Japan’s national debt already measures 200% of its GDP and is increasing rapidly. So far, Japan’s deficits have been financed internally. The Japanese saved 20% of their household incomes in 1980. But the Japanese are aging. When they retire, people cease saving and begin drawing on savings to cover living expenses. At the current pace, the household savings rate should fall to zero in 5 years. Then, who will buy Japan’s bonds? Who will cover Japan’s deficits? The same people who are supposed to cover America’s deficits?
Taken all together, the world’s governments will need $1 trillion per month, in financing, over the next 12 months, according to an estimate in the Financial Times. Who has that kind of money? Total US savings are only $700 billion. Even the Chinese, if they put their entire cash pile to it, could only fund the deficits for about 67 days’ worth. Warren Buffett? Less than 48 hours.
There is also the problem of paying the interest on rising debt loads. Thanks to the forgetfulness or credulity of the world’s lenders, borrowers now benefit from exceptionally low rates - just like the ‘teaser’ rates once accorded to sub-prime lenders. But the tease will come to an end soon. Even the Obama Administration forecasts interest payments to rise from $200 billion at present to $700 billion by 2019. This assumes interest rates only regress to ‘normal.’ But “hot money” from the feds has acted like spent nuclear fuel; every fish in the financial pond now seems to have two heads and a bag over both of them. The freaks of November 2009 may be replaced by things perhaps no less strange, but in a different way. The last time gold was over $800 lenders to the US government demanded yields in excess of 18% in order to part with their money. That was odd too. But it had very different consequences for investors.
I think Japan is the canary in the coal mine here.
I’d say Dubai is a better example.
Dubai has NO economy.
Japan has a economy. They make things that people want. There’s a difference.
What are you talking about? Dubai is the world leader in island manufacturing. Meow!
Japan makes Suntory, no?
Whisky manners, my good man, whisky manners!
The Japanese have offshored their industries as well, they just aren’t as far along as we are.
Japan is the canary in the coal mine here ??
I agree…
The canary is gasping for breath right now in Japan.
Maybe he ate the pufferfish that wasn’t cooked just right.
“Taken all together, the world’s governments will need $1 trillion per month, in financing, in the next twelve months, according to an estimate in the Financial Times.”
“Who has that kind of money?”
Whoever it is, they are the ones that are going to be calling the shots.
Cash rules.
Either that or the printing presses will be working overtime.
Now I’m hiding in Honduras
I’m a desperate man
Send lawyers, guns and money
The sh|t has hit the fan
- Warren Zevon (Lawyers, Guns and Money)
And when we see a few m ore canaries die where will the remaining cash go? Will we have inflation or deflation or anarchy?
Climategate Documents
Not sure if anyone is intestested in seeing the actual emails and other documents about Climategate, if you are see the Climategate Document Database at this location.
http://www.pjtv.com/?cmd=browse-events&event-type-id=10&event-id=1913&event-context-theme-id=1&c=10&s=coverage&r=true&p=1&t=overview
not sure what to make of this ??? … if the presumption is that we are not experiencing global warming or our planet’s environment is not under pressure, then I equate this and you to the housing mania heads that helped put us in the financial mess we are in by ignoring the obvious… the planet is heating up… the environment and most of the animals and mammals that live on it are under pressure… period..
Unless the “heating up” part is a lie. Then the rest is Chicken Little.
Oh for the good old days when hairspray and refrigerators were going to kill us all.
The actual scientific data does indeed show a correlation between carbon dioxide levels in the atmosphere and global temperature.
Unfortunately for Al Gore and the egghead carbon tax mafia, the correlation is that carbon dioxide levels tend to rise FOLLOWING a global temperature rise. Historically, carbon dioxide levels peak about 800 years after temperatures peak, and then carbon dioxide levels bottom about 800 years after temperature bottoms.
Of course, that sort of data had to be denied and suppressed so that the social engineering types could entrench the propaganda and mindset that once again, capitalistic business activity was the enemy and the super-smart elite progressives should therefore control the world.
+100 Hammer on the nail. Thanks.
I can comprehend that part, just based on the inverse solubility/temperature relationship with water. 800 years! Do you have a clue where you read this little bit?
Here’s a little 10 min video that ties together a few themes and facts. The 800 year reference is shown on a graph.
http://tinyurl.com/ydoqtkb
You clowns need to take a few pics spaning 50 years of the Arctic and Antarctic and pull and study some data on the same and get back to me … until then, you’re idiots in my book .. the polar caps tell the story… or is Al Gore running some conspiracy to shrink them ? I equate you clowns to the FBs and HHs that helped rip this country a new one by ingoring the obvious …
Matthew,
Scientists developing the climate data “massaged” the numbers to minimize the cooling trends and maximize the warming trends. They have predicted warming but apparently the last 10 years have been stable or shown some cooling.
So what should we do? No doubt man is contributing somewhat to whatever is happening. IMO we should all try to limit our waste in whatever we do. But should we wreck our economies and manadate a new way of life all for the sake of faked scientific reports? I think not.
I’ve spent a lot of time on the ocean over the past 25 years sailing around the world.. I know what the hell I’m talking about.. I don’t listen to Fox news, I study oceans..
“…the planet is heating up… the environment and most of the animals and mammals that live on it are under pressure… period..”
Geez, all this blah blah blah about true / not true…let’s face the simple & real TRUTH…6 Billion + humans on Earth are living in such a responsible way, that each of their very existences is actually “Improving” the conditions for all “living things”…plants & animals… Tumbleweeds & Elephants have a very bright future, imho
Geez yourself pal.. and piss off while you’re at it..
“Lost in translation” Mr. Matt, I’m in agreement with you.
And having sailed solo naked under many a full moon, I have much in common with whales when it comes to pissing…location wise.
sorry for my rant.. I have a unique view on the oceans and tend to get very defensive when I hear some ingorant mouth spouting all is well..
Don’t bother, matthew, you’ll just drive yourself nertz. Even today, a lot of folks believe that a blastocyst is a baby, that the planet is 8000 years old, and that the holocaust never happened. There’s no point trying to discuss the science with people who have neither the frame of reference nor the intellectual rigor to comprehend it.
Just walk away from underwater motel and hotel loans - the next trend in a decomposing economy?
MIAMI (AP) — Like many home owners, hotels are starting to drown in debt.
They have been enticing travelers all year with sweet deals: credits for in-house spas and restaurants, up to 50 percent off five-star rooms, even free nights.
But all that discounting hasn’t stopped occupancy from dropping an average of 10 percent. The result? Hotel loans have begun falling into delinquency faster than any other kind of commercial real estate debt.
The rising defaults paint a grim picture for an industry with increasingly more rooms than guests, and more hotels still opening every day. It’s a problem that could get worse before it gets better, with demand expected to remain weak and ambitious new projects planned before the meltdown worsening the room glut.
The oversupply means room rates should stay low for at least another year, good news for consumers but not so great for hotel owners and the banks that lent them the cash to build or buy.
The rise in delinquencies is sharp. Five times more hotel loans are behind on payments this year than in 2008, according to mortgage data firm Trepp LLC, which tracks those traded by investors. In October, 8.7 percent were distressed, compared with 1.5 percent last year.
That’s almost double the 4.8 percent rate for commercial property and the 4.5 percent rate for stores.
“Right now is an absolutely horrible time to be in the hotel business,” said Ben Thypin, senior market analyst for market research firm Real Capital Analytics.
What happens when a hotel loan goes bad? Banks are much less willing to seize them than houses because running a hotel requires know-how. But some hotel owners are just handing back the keys where property values have plummeted.
I simply don’t book rooms till the last minute any more. There is SEVERE overcapacity in the business. EVERYWHERE.
They are screwed.
Why would you rent in advance if you are renting by the hour? Meow!
I leave that expertise up to you.
Unlike married folk, I actually get a lot of action. No payin’ neither.
There is only one way to always have romance….
For God’s sakes, get a room…
ziiiiiiiiiiiiinggggggggggggggggggggg…..
Good to hear from you again FPss.
So banks don’t know much about the industries to which they have been lending, huh? That’s comforting.
EdgewaterJohn,
You’re asking for too much competence.
Why would bankers be qualified to run hotels or rehab historic buildings? Don’t you suspect that a hotel run by a bank would be likely to lose more money than a hotel run by an operator with a previously successful track record in the industry?
The banks are trying to salvage as much as they can from the loans.
Jay
Whoops, looks like cities will have to find another tax revenue.
Hi SanFranQL!:
Did you and your family have a nice Thanksgiving?
Greg
Yes we did. Thank you for asking
How was your Thanksgiving?
SanFranciscoBayAreaGal,
Watch out - I think 8-Up maybe ATE-UP OlyGirl…maybe you’re next!
8-Up maybe ATE-UP OlyGirl…maybe you’re next!
Yes, G -8up was gone for awhile digesting, or something..so, watch out?!?!?!
http://www.dailymail.co.uk/news/article-1231563/Is-Britain-brink-financial-armageddon.html
A grim counterpoint to Bernake’s “All is Contained, the Fed has saved the day” dissembling reassurances.
Isn’t it an open question whether the 1930s economy recovered of its own accord, or due to Keynesian meddling? A sample of size one hardly ever delivers statistically significant results.
* NOVEMBER 28, 2009
An Economist’s Invisible Hand
Arthur Cecil Pigou, overlooked for decades, provides a guide to the financial crisis
…
Mr. Pigou pioneered the study of market failure—the branch of economics that explores why free enterprise sometimes. During the 1930s, Mr. Keynes lampooned him as a reactionary because of his suggestion that the economic slump would eventually recover of its own accord.
But while Mr. Pigou believed capitalism works tolerably most of the time, he also demonstrated how, on occasion, it malfunctions. His key insight was that actions in one part of the economy can have unintended consequences in others.
Thus, for example, a blow-up in a relatively obscure part of the credit markets—the subprime mortgage industry—can undermine the entire banking system, which, in turn, can drag the entire economy into a recession, as banks refuse to lend. “The actual occurrence of business failures will be more or less widespread according (to whether) bankers’ loans. . . are more or less readily available,” Mr. Pigou wrote in 1929. Today, that might seem obvious. But just two and a half years ago, when the subprime crisis began, most economists, Mr. Bernanke included, believed it would have only modest consequences.
…
“…His key insight was that actions in one part of the economy can have unintended consequences in others.”
Let’s look at habits of addiction!
cigarettes: $5.60 pack of 20
SFH w/detached garage: $437,000
The ultimate goal of any “bidness” is to make a profit $$$$$$$$$$
Having repeat customers also helps!
“California has hit and passed the bottom of this real estate cycle,” Leslie Appleton-Young, vice president and chief economist of the Los Angeles-based Realtors group, said in a statement today.
Buy now or get priced out foreverrrrr
We have seriously a long way to go. Where are the incomes?
Keep asking the basic fact. Where are the incomes?
Is that the same thing as bridges to nowhere?
sarcasm tag off.
How about the road to nowhere built for $233 million in Ketchikan, Alaska in 2008.
http://tinyurl.com/4sbzyb
“But the three-mile access road that was built on the island is ready for residents to take a drive to nowhere. It was paid for by some of the $223 million in federal funding that sparked ridicule among opponents of congressional “pork-barrel” spending.”
+ 1 for the cat….Show me the money…
Who needs incomes when you have a printing press technology and plunge protection measures in play? Housing and stock prices always go up, regardless of fundamentals.
Well, why isn’t it working, Poindexter?
I didn’t mean to suggest it would work, just that this is the mindset which is driving policy. If I thought it would work, I most Iikely would have bought an overpriced house and pocketed my $8K tax credit already.
Leslie Appleton-Young has x2 jobs
Full time: “True Believer™”
Part time: “True Deceiver™”
Leslie Appleton-Young is my hero, er heroine. She’s spending all her energies (and I hope a lot of her own money) trying to convince others to commit their money in hopes of SAVING THE SYSTEM, something that shouold be of benifit to us all.
She deserves our thanks and our support.
I heart Leslie and I heart the NAR.
Hasn’t someone removed her vocal chords yet already ?
And for some real news looks like investors figure the FED will keep rates low for some time and whats this about Housing taking another downturn in CA its made a bottom.
I beleive the Media is trying to hang Appleton -Young CA RE expert what a joke the RE industry became.
Nov. 23 (Bloomberg) — For the first time in seven decades, Treasury bills are paying no interest while stocks continue to appreciate — a divergence in U.S. financial markets that might be perilous if Federal Reserve Chairman Ben S. Bernanke didn’t know all about 1938.
That’s when the Standard & Poor’s 500 Index climbed 25 percent even as bill rates tumbled to 0.05 percent from 0.45 percent. As 1939 began, stocks began a three-year, 34 percent decline after the Fed increased borrowing costs prematurely to stymie inflation that never materialized.
While almost no one expects Bernanke, a self-described “Great Depression” buff, to raise rates before mid-2010, bond investors say with unemployment above 10 percent and housing taking another downturn, they have no qualms about lending the government money for nothing to ensure their capital is preserved. Stock investors, meanwhile, say the worst is over and that low borrowing costs coupled with the $12 trillion of fiscal and monetary stimulus will bolster earnings.
“As 1939 began, stocks began a three-year, 34 percent decline after the Fed increased borrowing costs prematurely to stymie inflation that never materialized.”
And the reason inflation never materialized was…?
Could it be because of the War .
Let’s hope that is not the only way out of a Great Contraction (to paraphrase Rogoff and Reinhart).
a FED that creates money out of thin air blowing bubbles and who is going to do the work that backs the new money ? Chinese ? My kids ? Nobody ?
“A lot of these markets have been driven by excess liquidity and are not necessarily supported by economic fundamentals,” said Thomas Girard, a managing director at New York Life Investment Management who helps oversee $115 billion in fixed-income assets. “Clearly there is a class of investors that are nervous,” said Girard, who is avoiding bills and instead buying high-rated corporate bonds.
Brazilian president Luiz Inácio Lula da Silva has said that ‘gringos’ should pay Amazon countries to protect the rainforest - Associated Press
guardian.co.uk, Friday 27 November 2009 12.02 GMT
Brazil’s president said today that “gringos” should pay Amazon nations to prevent deforestation, insisting rich western countries had caused much more environmental destruction than the loggers and farmers who cut and burn trees in the world’s largest tropical rainforest.
President Luiz Inácio Lula da Silva was speaking before an Amazon summit at which delegates signed a declaration calling for financial help from the industrialised world to halt deforestation, which contributes to global warming.
“I don’t want any gringo asking us to let an Amazon resident die of hunger under a tree,” Lula said. “We want to preserve, but they will have to pay the price for this preservation because we never destroyed our forest like they mowed theirs down a century ago.”
In Brazil, the word “gringo” generally refers to anyone from the northern hemisphere.
Lula convened the meeting to form a unified position on deforestation and climate change for seven Amazon countries before the Copenhagen climate summit. But the only leaders who attended were Guyana’s Bharrat Jagdeo and France’s Nicolas Sarkozy, representing French Guiana, leaving top Lula aides and environmentalists to admit the gathering will have a muted impact.
Other countries sent vice-presidents or ministers, and the presidents of Colombia and Venezuela embarrassed Brazil by cancelling at the last minute.
Sarkozy supported a recent proposal by Lula to create a financial transaction tax that would be used to build a fund to help developing countries protect their forests. Details will be discussed in Copenhagen.
Maybe Brazil should shop trying to sell their ethanol and orange juice to the rest of the world.
Yesterday, I was having dinner with some friends here in Austin, and some of them starte ‘pressuring’ me about my living situation: leasing an apartment.
Since in Austin we have no seen any major ‘crisis’.. unenemployment is like 7% and no major decrease in home value , all my friends are ‘happy’ homeowners who strongly believe I am throwing my money away in rent.
Their argument are always the same: owning a home is an investment, think long-term, you’re wasting ur money, etc, etc
It’s very hard to argue with these people specially when there’s a feeling in the enviroment that Austin is different.
It’s very hard to argue with these people specially when there’s a feeling in the enviroment that Austin is different.
Well, to be fair, Austin’s employment numbers have held up pretty well. But ask your friends how many houses were built in Austin in the past 5 years (check out Pflugerville, and Circle C, NW Austin, and all that). And how many people moved to the area from California, or bought investment properties?
I think the real important thing to keep in mind is that the gov’t has massively intervened to keep things as “stable” as they are across the country. The doom-and-gloom scenarios discussed here weren’t accounting for that. So things aren’t as bad as expected…..yet. But what happens when the gov’t stops throwing free money around?
I dont have to ask them.. several of my coworkers moved from CA. Tons and tons of home were built in the suburbs… I lot of people escaped the high prices/lifestyle of the west and east coast and moved to Austin.
Another comment… there have been a decent # of layoffs in Austin. And I know of quite a few places that have handed out pay cuts as well (National Instruments, for one, who employs what, 3000 or so in Austin these days?)
There is a similar feeling along the Wasatch front in UT. Sure, there were specuvestors who crashed and burned, but the market is still ridiculously overpriced.
I spoke with my little brother at dinner Thursday about this. His take is that there is much bailing out going on of the younger generation by the last of the Greatest and by Boomers. He cited case after case of people he knows who got cash from g’pa or dad to avoid the squeeze.
This can continue for how long?
Not long. 1 maybe 2 more years. Even the sugar parents are getting hit.
But Austin being Austin… it’s different there alright, just ask hip in zilker.
photo article showing lot more seniors at food handouts.
Folks that would not have been seen before.
I guess we could have hit up our moms and dads for cash to buy an overpriced home in SD. Come to think of it, everyone we know personally who bought since 2005 used this approach.
What’s the price per sq ft for a house in Austin? Can you make a huge down payment and pay less than renting? If the answers are $100-150 and yes, buy one. If not, tell your friends that it doesn’t make financial sense.
If the answers are $100-150 and yes, buy one
The trick with Austin is you have to factor in the ~3% annual property taxes. Paying $400/month in taxes on a 200k house isn’t much fun.
And watch out if the future tax overhaul eliminates the tax deduction for property taxes…The 3% then becomes 4%…
Geez I’m paying $1,200 a year in property taxes for a house appraised at $225K here in Boise. That’s $100/month.
Doesn’t Texas have no state income tax? They have to make up for it somehow…
Texas has no state income tax. What they do have it over 60 “fees” and taxes on various services and products, like Gasoline, Miscellaneous Gross Receipts, Sexually Oriented Business Fee (of which we have a lot in this Baptist Bible Belt of Repression region.
window.state.tx.us/taxes/ for the full list.
Sexually Oriented Business Fee (of which we have a lot in this Baptist Bible Belt of Repression region.
And a “church or tent” literally on every corner, especially down Wacko way. If you can cobble together 2 sticks to look like a cross, you got yersef a Church that will enable you to get off tax free.
Also, TX has a horrible Monopoly electric situation.
Went snowshoeing yesterday morning with a random group off meetup.com. Spent some time talking with a woman who appears to be eyeing condos in the area (Seattle). Since they’ve dropped in price from $500k to $400k, she thinks it’s likely a good deal and she thought prices would begin moving up again in a year.
I’ve found that I just don’t have the energy to confront this line of thinking anymore. I tried to subtly raise the issue of HOA and assessments in a condo, if the other units are empty or in foreclosure. Mostly I just let it slide, though I really want to just grab people and shake them, wondering what they hell they’re thinking.
Sadly I didn’t really have the opportunity to chat up the woman who works in CRE.
Meanwhile, my friend-turned-realtor is still having issues renting (or selling) her old house, as well as her new husband’s condo, as far as I can follow. I wish being “right” about this whole thing were more readily apparent.
“Since they’ve dropped in price from $500k to $400k, she thinks it’s likely a good deal and she thought prices would begin moving up again in a year.”
WARNING: Sexist remark dead ahead (don’t read any further if you cannot handle political incorrectness)
Is it only women who confuse 20 percent ($100K) ‘discounts’ on condos with 20 percent ($0.40) discounts on a pound of tomatoes at Albertson’s, or do men make similar mental accounting errors?
LOL, PBear! Is your wife still bugging you about buying a house in Rancho Bernardo?
She never bugged me about it, and to her credit, she does not get confused about ‘home price discounts’ like the straw woman of my example does.
P.S. My wife also grasps the fact that Suzanne was a m0r0n.
Suzanne wasn’t the one who was the moron. Suzanne was talking to the moron (or morons).
“SHOP, SHOP, SHOP”
http://www.azcentral.com/arizonarepublic/opinions/articles/2009/11/28/20091128sat2-28.html
http://www.larouchepub.com/other/2009/3646underwater_deal.html
“Have we got an (underwater) deal for you!”
The touted success of the stimulus program is exemplary: Behind all the lying claims lie non-existent jobs, created in non-existent Congressional Districts, in a non-existent recovery. Washington keeps talking about its success, but the people who have to live with the results know better. People who are worried about where their next mortgage payment—or their next meal—will come from, are not impressed with press releases.
A raft of reports released recently show how the American standard of living is being rapidly destroyed, while certain Wall Street interests are being propped up. In medical terms, the Obama Administration’s policies amount to letting the patient die, while keeping the tumor on life support.
The truth that the MSM won’t touch.
The ‘truth’ that LaRouche will stretch as far as possible without breaking it outright…
you quote a nazi douchebag and you wonder why nobody take you seriously.
“…quote a nazi douchebag…”
Would you care to be more specific? Or not…
Don’t play stupid, you know exactly what I meant. Ive noticed a trend with your political heroes…Ron Paul, Lyndon Larouche. Who’s next David Duke?
David Duke is the GOP’s favorite son in the south.
Nice try EddieTard.
Eddie, you are a class one liar and the undisputed straw man king of the blog.
Now I finally get it. Eddie is so thick that he did not understand from my comment that I think LaRouche plays fast and loose with the ‘truth’ — the same way Eddie does
same way Eddie
Guess he didn’t notice the ” ” and the will. Pearl Vision is giving a disc. Can’t do much about comprehension. Speed reading musta got in his way of that.
Larouche is total wack job. But he is right about this:
“…the American standard of living is being rapidly destroyed, while certain Wall Street interests are being propped up. In medical terms, the Obama Administration’s policies amount to letting the patient die, while keeping the tumor on life support.”
But like most nut cases, they can sound lucid and rational, but once you scratch the surface, you realize there is a major problem.
“It’s too late…to fall in love with Sharon Tate…
But it’s too soon, to be asking me what words I want carved on my tomb.”
Jim Carroll
“You made it 60 years as a ghost in a body. I love you. Come see me when I am near the rooftops and you the stars at night.
~ ~an aspiring angel”.
(Jim died here awhile back. This was a comment I reviewed, and thought was nice).
Jim Carroll ranks with the most neglected artists in history. His work is very powerful, and ( Hey, Oly… How do u spell… Prolefected)?
http://www.larouchepub.com/other/2009/3646shrinking_obama.html
The incredible shrinking Obama Presidency. Is Turbotax Timmy on the way out?
Lyndon LaRouche = New Age equivocal fiend that lies like truth
Does that charlatan cult leader LaRouche still run for various elective offices in Virginia?
Isn’t it disingenuous for the Feds and the talking heads to not talk about how the Feds ,who use to be in charge of the regulated banks ,had to bail out
other unregulated entities like Insurance Companies ,unregulated entities and Wall Street investment Houses .
In other words ,you really can’t call institutions like regulated Banks regulated if they deal with unregulated entities and those entities can take them down because they aren’t regulated or their Casino bets are leveraged
beyond what is allowed for regulated Banks .
So rather than talk about to Big to Fall entities ,it’s more of a issue of
the unregulated and the regulated get to play the same games and deal with each other ,so the unregulated can take the regulated down ,or the regulated becomes like the unregulated because of no distinction on the
games that are allowed for the different entities . The unregulated worlds got to dictate loan product and breach underwriting standards ,which effected the regulated Banks .
So instead ,all of a sudden you have the Feds wanting broad powers to oversee the unregulated and the regulated ,and I guess you would have to throw Insurance Companies into the mix also .
So,doesn’t the issue really go back to Glass-Steagall being dropped .
In other words ,its the big Casino Gambling House that is to big to fall unless the separate functions of entities are put back into defined boxes on what is going to be allowed for these various different function entities . Its not how big a Bank is ,its how much its allowed to play the different games . It’s not how big a Investment house is ,its what unregulated games it can play and how it can play lender on a unregulated basis and other Casino game ,like Credit Default Swaps and
mess up the regulated system .
Insurance companies are unregulated? What planet are you on?
They are in terms of being able to invest in the unregulated .
Comment: There sure are a lot of great discussions here today without EddieTard throwing troll wrenches into the mix right and left.
And yet you feel compelled to comment about me nonetheless. Odd.
I personally find it oddly fascinating that you feel compelled to comment on this blog. Certainly there are plenty of other blogs better suited for followers of Rush Limbaugh than this one?
Eddie,
You’re a good sport.
Eddie, just like religious nut cases of any stripe, many folks on this blog only want to hear and repeat the accepted orthodoxy.
“…only want to hear and repeat the accepted orthodoxy.”
In sharp contrast to those who hang on Rush’s every word?
Rush? No no. It’s Hannity. Geez man keep up with the loony left. Rush is so 2008, the new boogeyman is Hannity. Did you not get the latest memo from Keith on this? Tsk, tsk, tsk.
Rush = old bigot
Hannity = new bigot
Both are bigots; what is the difference?
What do you find so appealing about bigotry, Eddie? And is the fact that we now have a black president just driving you insane? If so, I suggest you start your own bigotry blog, where you and other bigots can rant and fulminate amongst yourselves to your little hearts’ content.
Have you noticed how “Eddie” only seems to post during regular business hours? Like when most people are, um, working?
Personally, I love Eddie because s/he’s such a brat soooo obviously headed for a majorly rude awakening– and yet still seems to enjoy pushing our buttons as much as we enjoy snarking back.
Eddie may be a troll, but for now Eddie is “our” troll.
No problem with Eddie, but I wish he’d post a little more about real estate and/or economics.
MG
Or start his own blog, as I have oft suggested…
And the rest of you post between midnight and 7 am? Besides since i apparently have 8 jobs ranging from car salesman to PR rep to health care lobbyist, I work 32 hours a day.
Business hours on Saturday?
Billa is back. How was your holiday, Bill?
Very relaxing and very healthy thanks! How was your vacation?
Here is a sign of the depression. Went to the mall today with the mrs. and baby. Didn’t buy anything since I despise shopping at malls. But Santa is there for pictures. I didn’t even try to fight this one as I know for the next 4-5 years I will be spending time getting the Santa pic with the kid.
Here is where the signs of the depression come in. the price is $25 for 2, count ‘em two 5X7 portraits. You’d think at $12.50 per photo, nobody would be buying, what with the greatest financial crisis ever happening and all. A 90 minute wait seemed to say otherwise.
Keep it up. Balance is important. You have an amusing way of getting under the skins of the regulars. As a long time lurker and seldom poster tin foil hats are always under the surface. P.S., buy gold.
(Put on your)… tin foil hats … (and) … buy gold (, they aren’t making any more ya know?).
rosie. “…’….Balance is important …”
So you think you can get to the truth and get balance by a lie on the one end and the truth on the other end ? I would say that Eddie
doesn’t balance out anything ,he just ignores facts that make his contentions not valid .
Dont worry Eddie the plan is by March none of them will pay off the Sears Best Buy Target etc credit cards They will only pay the cards they have at their bank..
Welcome to credit crash #2
So who is the “FB”…the person buying thousands of $$ worth of goods and never pays for it or you who buys nothing?
Besides I’ve been hearing this for years now. Everyone’s buying on the visa and they will default. Where are all the defaults already? Could it be that maybe just maybe the answer is that people have money to spend and it’s not 1933 like you all seem to think it is? nahhh, that’s just crazy talk.
Eddie .Its getting pretty close to the unemployment figures of the 30’s ,but I guess thats not relevant in your mind .Where are all the defaults ? I guess you have to ask the banks what they lost ,because simply saying ,’Where are all the defaults ” isn’t enough to prove that they are not there as you are suggesting .
Beside Eddie, a good portion of credit card debt was refinanced into
mortgages that are defaulting with massive amounts of foreclosures ,thats where some of the defaults went, to answer your question .
On CC defaults, I suspect you won’t hear anyone telling you they have a few defaults and that they dont’ answer their phones. I suspect they might have kept one CC clean and workable. When you hear the truth from some of your friends, it surprises you what we all hide, until the moving van shows up.
Who’s depressed?
I drove on Hawthorne Blvd on Black Friday and in the Del Amo Mall area in Torrance.
All parking lots were more than 90% full both sides of Hawthorne Blvd. It looked like Black Friday 2005, 2004, and 2003.
Methinks a lot of people in sunny L.A. cranked up their credit card balances/debt for the holidays, but for the previous ten months they were probably paying down a lot of debt. I would venture that they are probably back to where they were in April or May on their balances.
I expect this will be a “better than expected” holiday shopping season, and discount retail stocks will do “better than expected” in Q1.2010. I am making a subjective judgment here based on the line of 1000+ shoppers I joined early yesterday at Target.
On the pessimistic side, I expect BigBoxMart discount chain retailers (WalMart, Target, etc) to do far better than upscale retailers. In fact, it may prove to be quite like a depression for luxury retail outlets. There just are not enough Wall Street banking bonuses to go around.
Full parking lot does not equate with buying. My friend the people watcher says: don’t look for cars or people. Look for bags.
That said, you’re probably right. Pay down the card during a frugal summer, run it up again for Christmas. After all, even with high unemployment, 80% of the people are still employed.
See, as a man, I cannot see myself wanting to drive to a crowded mall, wait 40 minutes to park my car, look at prices of things, and come back to the car empty handed. That would take about 3 hours of my time at a minimum. And to come out empty-handed. And maybe with some flu virus I inhaled while browsing at the shops with tons of people.
When I can just shop in internet. In fact, rather than drive 7 miles to IKEA to buy two $7.99 floor lamps, I’m ordering them on-line.
I cannot stand crowds.
No, I don’t think most of those people in the parking lots want to risk illness and take a big chunk of time from their day just to be with angry crowds of shoppers and come out empty handed. I just don’t believe it.
Not to shamelessly plug my blog, but I just did a search of our local paper and came up with a rash of recent embezzlements, mostly by women. Is this kind of thing going on everywhere?
http://tinyurl.com/yl9njyz
This is astounding. I’m a woman but I can’t relate at all.
I cannot say that it’s mostly women doing embezzling these days. Most of the people who embezzled money from my father and me were men. In my case, one woman embezzled a lot of money from me a few years ago. If she knew my real income she would have taken thrice the amount of money.
IMO, most people are dishonest and will (figure of speech) “throw you under the bus” if it means more money for them.
Also I want to stress that it does not matter if you meet a person at church. A minister stole $20,000 worth of business equipment from my father back in the 1970s. This reaffirmed my suspicion of anyone who hides behind the Bible or the American Flag, especially.
I pay for background checks of women I go out with now. All the ones I met since 2001 were dishonest. Also I am interested in meeting women who undergo government background checks (have to have no drinking problem, no gambling, no divorce based on cheating in marriage, no credit problem). That way I don’t have to pay (beyond my usual taxes) the government to do the background check for me.
Um…of course I am only looking at the workplaces. You don’t ask for security clearances on dating sites on the web!
It’s better for your health to be alone than to live with someone who betrays you.
Bill:
I always believed in woman’s equality when I get paid I take you out and pay when you get paid you take me out and pay
or she’d better have a Dolly Parton figure or she’s history.
Aren’t there accounting controls businesses can use to keep this stuff from happening?
It kinda cracks me up. There are small retail businesses up and down the main drag that seem to repose all faith and trust in the front-office gal to take care of the money while the men do the Real Work.
She’d never dream of ripping anyone off! lol
I don’t get it either.
Without getting into specifics, there have been three cases of embezzlement by women in our area in just the last six months.
A trend? I think the sample size is way too small.
Whoa! I posted the above before Bill in LA’s post showed up. It’s a joke, right?
Bill, if it’s not a joke, why not just pay by the hour?
“…why not just pay by the hour?”
Love is $100/hr. True love goes for $150/hr. (Plus a surcharge for shots.)
Nice!
Those were dating sites on the web, not the type of thing you are thinking
It was match.com. I was seriously interested in a steady girlfriend in those days.
Actually the woman who embezzled money from me lived upstairs from me for a few months and was not a girlfriend.
Also, the business where you would be “paying by the hour” is illegal and I don’t want to be arrested. The arrest record stays with you. I am for legalizing “pay by the hour” though.
Ha ha, good old match.com. A friend of mine tried that a while back. He met two of the women in person. One was crazy. The other was psychotic. There’s a reason the women on dating sites need a dating site to meet a man.
A friend2 friends of mine tried that a while back. They are both happily married with kids.Just as many crazyassdudes as fems on the ’street’ as on a site.And some are really decent folks.
Very true, DD.
My DH and I met online over 11 years ago, and we are very happily married today.
11 years ago was one thing. The internet back then had fewer dishonest people, more computer-geeky people who follow the laws.
It’s much different these days. The most honest woman I met was from on-line match sites 12 years ago. The least honest ones I met since 2001. I stopped that nonsense back in 2006.
It’s workplace romance only for me. But it will be discreet.
Hey Bill in Carolina,
Maybe it is a trend after all! Montana saw it, you saw it, and I saw it, albeit four or five years ago.
I helped an LA County Sheriff Deputy track down the woman who stole from me. I had a lot of info about her. He caught her, but she was held for other charges. They could not pin the thing on her about the embezzling.
Also, the business where you would be “paying by the hour” is illegal
Not down here.
http://prostitution.procon.org/viewresource.asp?resourceID=000772
50% of the world is where prostitution is legal. In America it is severely restricted, due to the curious coalition of feminist Nazis and Bible thumper puritans.
In addition to Brazil, pay-for-sex is legal in Mexico, most of Central and South America, most of Europe, Canada, Australia, New Zealand, Israel, Turkey, Indonesia, Cyprus, Greece, many former Iron Curtain countries. Curiously, most of Asia bans it.
Many honest hard working Americans (customers and providers) have been arrested, some to an extent of becoming felons, due to repeat victimless crimes. These people are hence discriminated against in jobs and housing for something that most nations don’t think is the government’s business.
Of course 3 is too small a sample. But we’ve had 15 in the last 2 months, it seems like..sometimes you have to pay attention to anecdotal. In fact, that’s what brought me to this blog. Open your eyes and ears - women are desperately wantin’ da bling.
“Open your eyes and ears - women are desperately wantin’ da bling”
Is embezzlement the preferred method of acquisition? or,are there “other” means?
Run Hwy,…RUN!
In the last 20 years, what do you think is the hiring ratio of men to women in these “Bidness” “Professions”:
1. Office Manager
2. Care-Taker for wealthy elderly people with diminished capacities above the age of 89
True, but I’ve just never seen so many stories like this in such a compressed period of time here.
Ripoff of the elderly is the career of the future IMO>
“Ripoff of the elderly is the career of the future”
More & more… what I see:
“Reverse Mortgages Here!”
But being this is a modern “Bidness”, it must be “legitimate” and comes with an “ethical” code of practices & practitioners …right?
Don’t shoot the messenger:
Elder abuse reports skyrocket in Orange County
November 25th, 2009, posted by Teri Sforza, Register staff writer
http://taxdollars.freedomblogging.com/2009/11/25/elder-abuse-reports-skyrocket-in-orange-county/44651/
…Reports of financial abuse form 29 percent of the total, she said.
A recent report by the National Institute of Justice found that about 11 percent of people over age 60 suffer from some sort of abuse every year. Consider:
* New York philanthropist Brooke Astor’s son was convicted last month of stealing from her, as she suffered from Alzheimer’s disease.
* A San Diego postal worker pleaded guilty last month to taking more than $50,000 from a woman on her route.
* A home aide worker near Fresno was convicted last year of involuntary manslaughter after giving an 85-year-old woman a lethal overdose of drugs and ransacking her house.
In 2004, 12 percent of Americans were over age 65. By 2050, that figure will grow to 21 percent , the U.S. Census Bureau says. These issues will only get more and more acute.
Ripoff of the elderly is the career of the future IMO
That’s a very scary situation. My only hope is a nephew and niece. The nephew is a n’er do well. The niece is in college and has a lot of growing up to do yet. I want to see her get married to a college educated young man and have a job.
The boomers are desperate, and gen Xers even moreso..I keep trying to figure out how I’m going to get rid of enough of my paper records, computer trail etc so that someone can’t rip me off at a future vulnerable point.
Seems like you’d have to turn everything over to a third party at some point…meh…almost better to be a pauper in some ways.
I know it’s a broken record. But the best thing you can do is be stubbornly healthy in diet and exercise. That is, Mediterranean diet of lots (five to ten servings) of fresh vegetables, fresh fruits, and a serving of fish and four to eight oz of red wine per day. A few ounces of Pom, and a few cups of green tea.
Jack LaLanne works out for two hours per day and he’s 95 years old. His mind is sharp as a tack. I don’t know if he and his wife had any children. LaLanne’s father died of heart failure in his 50s.
They better have a long established relationship with a law firm dealing in estates.
Nothing odd about it. Women have been the preferred office employee for decades. Therefore the odds have risen as well.
There is a lot of sexism (against men) and age discrimination (against older) at the professional and semi professional office environment level for a long time.
Hey, how’s about a economic science-fiction theme?
1. The US National economy as it relates to the US medium National Income?
2. The Global Econ-ohmy without the US eCONomy
3. GoldenmanSachs as a non-profit charitable hospital…(for the under-privileged)
4.
Hormones, incentive, experience “make best traders”:
“…The study looked at male “high-frequency” traders, who buy and sell financial products but only hold positions for only a few seconds”
“…Quick, look over there!”
See what happens when you combine: 31% Speedy Gonzales with 31% Road Runner & 31% Wily E. Coyote & 7% Bernie Made-OFF
http://www.reuters.com/article/scienceNews/idUSTRE5AO02K20091125
LOL, hwy!
http://s.wsj.net/public/resources/documents/info-NEGATIVE_EQUITY_0911.html
Don’t know why this isn’t recognized as a URL, it works fine in my browser.
Nevada (just as an extreme example) appears to top the FB list, with 65% of all mortgagors under water.
The rising defaults (for hotels ) paint a grim picture for an industry with increasingly more rooms than guests, and more hotels still opening every day. It’s a problem that could get worse before it gets better, with demand expected to remain weak and ambitious new projects planned before the meltdown worsening the room glut.
The oversupply means room rates should stay low for at least another year, good news for consumers but not so great for hotel owners and the banks that lent them the cash to build or buy.
The rise in delinquencies is sharp. Five times more hotel loans are behind on payments this year than in 2008, according to mortgage data firm Trepp LLC, which tracks those traded by investors. In October, 8.7 percent were distressed, compared with 1.5 percent last year.
That’s almost double the 4.8 percent rate for commercial property and the 4.5 percent rate for stores.
“Right now is an absolutely horrible time to be in the hotel business,” said Ben Thypin, senior market analyst for market research firm Real Capital Analytics.
What happens when a hotel loan goes bad? Banks are much less willing to seize them than houses because running a hotel requires know-how. But some hotel owners are just handing back the keys where property values have plummeted.
In most cases, it is investment funds falling behind on payments, not major hotel companies. They generally don’t own much property, instead franchising brands and earning a percentage of sales.
Most of the 1,231 U.S. hotels and casinos with troubled financing are remaining open. So, in the short term at least, consumers can expect to see deals on room rates for at least another year. Executives at STR Global, the hotel research firm, expect demand to rise 1.6 percent in 2010, but average rates to drop 3.4 percent.
Not in the 20 years the firm has collected hotel data has supply and demand been so far apart — not even in the early 1990s recession or after Sept. 11, 2001.
More help is on the way!
Lenders to get push to help homeowners
Administration wants more detail on who is and is not getting aid
By Renae Merle
Washington Post Staff Writer
Sunday, November 29, 2009
The Obama administration plans to announce on Monday efforts to step up pressure on lenders participating in its massive foreclosure prevention program in a push for transparency that should provide new details about the industry’s performance.
The $75 billion federal program, known as Making Home Affordable, got off to a slow and frustrating start, but the administration has recently noted that more than 650,000 borrowers had signed up for it. Now the program, which lowers mortgage payments to 31 percent of a person’s income, is facing questions about how many of the enrolled borrowers are actually qualified to receive its assistance.
A recent report by the Congressional Oversight Panel, which is monitoring the government’s Troubled Assets Relief Program, found that fewer than 1 percent of borrowers in the program had moved from an initial trial modification into a permanent one. Borrowers must make three payments and provide extensive documentation to convert into a permanent loan modification.
Homeowners and consumer advocates have complained that even after submitting and resubmitting information, some borrowers have been told, with little or no explanation, that they do not qualify for the program after all.
…
The climate change peer reviewers are circling the wagons.
Hacked climate emails called a “smear campaign”
Wed Nov 25, 2009 4:54pm EST
by Stacy Feldman, SolveClimate solveclimate dot com
(SolveClimate) Three leading scientists who on Tuesday released a report documenting the accelerating pace of climate change said the scandal that erupted last week over hacked emails from climate scientists is nothing more than a “smear campaign” aimed at sabotaging December climate talks in Copenhagen.
“We’re facing an effort by special interests who are trying to confuse the public,” said Richard Somerville, Distinguished Professor Emeritus at Scripps Institution of Oceanography and a lead author of the UN IPCC Fourth Assessment Report.
Dissenters see action to slow global warming as “a threat,” he said.
The comments were made in a conference call for reporters.
…