Bits Bucket For December 9, 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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Name:Ben Jones
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U.S. bailout fund left many problems unsolved: watchdog.
Wed Dec 9, 2009
WASHINGTON (Reuters) - The U.S. government’s $700 billion bailout program helped stabilize the financial system, but has done little to boost lending or stave off millions of home foreclosures, a government watchdog group said on Wednesday.
Economy
In its new monthly report on the Troubled Asset Relief Program (TARP), the Congressional Oversight Panel declined to take a stand on whether U.S. Treasury Secretary Timothy Geithner should extend the program beyond the end of 2009.
The 14-month-old bailout fund, which has propped up banks, automakers and insurer American International Group,has failed to resolve key problems in the financial system, including toxic assets still weighing down bank balance sheets, a sharp contraction of credit and the moral hazard associated with bailouts, the panel said.
“Consequently, the United States continues to face the prospect of banks too big to fail and too weak to play their role adequately in keeping credit flowing throughout the economy. The foreclosure crisis continues to grow,” the panel said in its report.
The report concluded that the stability that markets have enjoyed this year was not solely due to TARP, but to an extraordinary mix of government support, including Federal Deposit Insurance Corp and Federal Reserve asset guarantees.
“The removal of this support too quickly could undermine the economy’s nascent stability,” it said, without concluding whether Geithner should continue the program through October 2, 2010.
Based on the unbroken flow of multi-million dollar bonus payments to the managers of Megabank, Inc, the TARP can only be judged a success.
Perhaps Mr Bernake should end some of the other alphabet soup talf, tiff that are out there.
Surely with the great recovery that is going on the banks must be clamoring for all those assets they gave you as collateral.
Yep. No Banker Left Behind was indeed a success!
Cash for Caulkers could seal $12,000 a home.
Under President’s proposal, homeowners would be reimbursed for energy-efficient appliances and insulation.
NEW YORK (CNNMoney.com) — President Obama proposed a new program Tuesday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy.
The administration didn’t provide immediate details, but said it would work with Congress on crafting legislation. Steve Nadel, director at the American Council for an Energy-Efficient Economy, who’s helping write the bill, said a homeowner could receive up to $12,000 in rebates.
The proposal is part of the President’s larger spending plan, which also includes money for small businesses, renewable energy manufacturing, and infrastructure.
We know energy efficiency “creates jobs, saves money for families, and reduces the pollution that threatens our environment,” Obama said. “With additional resources, in areas like advanced manufacturing of wind turbines and solar panels, for instance, we can help turn good ideas into good private-sector jobs.”
wmbz:
We really should have done this 20 years ago, and changed the building codes to require like R39 in the walls attic. Double/triple pane windows.
————————-
would reimburse homeowners for energy-efficient appliances and insulation,
One apartment I lived in was so bad that candles would flicker when the wind blew hard.
20 years ago we had an administration that made its money in oil. And I live in an apartment with windows from 1969. If it rained hard, water would come in.
Did you do anything to fix the windows, or did you sit there and blame Washington?
oxide,
Since most of our electric comes from other sources than oil/gas, I don’t see the connection.
LehighValleyGuy
Windows are not cheap to replace.
Windows aren’t that bad. I paid $4,465 to replace all the windows in my San Jose house - and that was in 2005 at the peak of the bubble when labor costs weren’t negotiable.
No one is going to replace the windows in a high-rise with 800 units at 2-3 window per unit just because I complain to the apartment manager. (It wasn’t a very good place to live anyway.)
Do you need an advanced degree to all of a sudden insulate and weatherize your house?I suppose next thing you will have to get licensed to perform the work.
Is cash for cockers next? A stud service for your neighborhood?
Oxide:
They should have installed them as they were building. This is where building and tax codes can make a huge difference .
————————————–
No one is going to replace the windows in a high-rise with 800 units
Oxide:
This is where building and tax codes can make a huge difference. If of course they were helping each other.
————–
No one is going to replace the windows in a high-rise with 800 units
Building codes? Aren’t those socialeest/commie rules that cut in to the builders’ profits and hinder the “free market?”
I lived in an house in Mammoth Lakes, CA (Eastern Sierra mountains) with the same problem (no candles but you could see hard to reach ceiling cobwebs undulating when the wind blew.) Burned through four full cords of wood (4′x4′x8′) in one winter - a very small 3BD, 2BTH.
Correction, it was three cords and change (my wife corrected me) … but they were expensive, mixed hard/softwood. Either way the single-pane, floor-to-second-story ceiling, poorly-caulked windows from the 1940s didn’t do so well in the sub-freezing temps.
Never saw double-paned till I came to MT and some of the older houses had outer windows to replace screens in the winter. No I have double-paned thermals all around.
They should have those everywhere, even Socal. You could hear everything through the windows there when I was growing up.
I just spent $3,000 to replace the windows on the Money Pit in October. I noticed the difference immediately. No drafts, no street noise and my electric bill was a lot less.
I replaced the furnace last year so I hope the tax credit is retroactive.
My apartment was being repainted this morning from all damage from the noreaster storm a few weeks ago. It will rain inside next time it rains outside from the same direction. They fix the cosmetic side of it only.
My 2,000 square foot house in Boise uses about the same amount of natural gas in the winter than did my 1,000 square foot house in San Jose. Go figure. My new house in Boise was built by an “energy star certified” builder.
For those that are unaware, it’s a lot colder in Boise than in San Jose in the winter.
It’s presently 6 deg. F outside.
its not much warmer in San Jose today
Nor here in San Mateo County.
Wusses….
It’s presently 32 deg. F in San Jose and 39 deg. F in San Mateo (city). That’s a heat wave.
-6 in Missoula, the banana belt of Montana.
“That’s a heat wave” LOL!
Yeah Dennis, it was about 8 when I went out to start mom’s car this morning.
Dennis, you’re not fooling anyone.
Boise is have its coldest streak of weather since 1972 or something…
Do renters who caulk qualify for free money? I will push our landlord in this direction, regardless, as $12K in insulation could save us a bundle on our heating bill.
Good idea, I’m going to bring it up to one of my LL’s too. Even though heat is “included.” An indirect way of promoting lower rent.
Things like this annoy me. I don’t think its secret knowledge that the US economy fuels itself off of people buying real estate. But it seems that over the last few years there has been a non-stop flow of little trinkety incentives to get people to either buy homes, fix homes, keep from losing their homes, get money for staying in their homes, and so on. None of these of course benefit renters like me.
They don’t want us to rent. They are “encouraging” us to get off our duffs and buy. They think we can afford homes just like that, as if it were 1996. Oh, and they assume that we’re all going to keep our jobs, in the same place, for the next 15 years. the gov is definitely behind the times.
That’s what I find so funny and sad about this.
With one hand, the government is doing everything it can to get people shackled up to the debt-wagon and buy a big, unaffordable house.
With the other hand, the government is doing what it can to destroy the currency, send our jobs overseas, and allow a flood of cheap, illegal labor to drive down wages at home.
Maybe if people had well-paying jobs that they could depend on for 15-years, they might be able to buy a house… and if those houses were affordable, they’d gladly buy a house. But then the bankers would only be super rich instead of ultra rich, so we can’t have that!
That “ultra-super-duper-rich” to you, peasant!
“as if it were 1996″
True, but it’s hardly ‘just’ the Gov. that’s lost sight of the New Normal. Everyone from NAR minions to creditors to ‘local’ guv’s still think another version of the 90’s is just around the corner?
We got a $500 state incentive to install a wood pellet stove a few years ago. When I did the taxes I couldn’t believe the list of green-energy incentives…anyway, almost immediately the price of pellets shot up and after the DH got over the man-building-fires fetish he realized we were actually paying more for heat.
And the stove requires electricity to run so we couldn’t even use it in a power outage.
They should add a manual backup to pellet stoves - something like a spring you wind with a crank - so that the pellets would continue to be fed into the hopper when the power is out.
“you wind with a crank”
I’m all about that but unfortunately, many people that use pellet stoves aren’t there during the day to crank them? We used to set our’s on Low during the day ( just to maintain some heat ) and then turned it up during the evening.
‘My’ experience w/ PS’s though is, once you figure them out and get them lit off, the next problem is.., how do we get this thing on a leash!
A pellet stove that requires electricity to run? Wow.
Is it just a feed to turn it on? If so I’ll bet you could spoof it from some batteries or something, if push came to shove during a power outage. I’d look into it.
I’m leery in that we have a natural gas fireplace, and thus if we ever got to a true mad max scenario we could be hosed. I’d much rather have wood or wood pellets for that reason. Though NG is really nice in that it’s easy and clean of course.
packman,
Higher end units like Whitfield have a built-in battery back up, but in many cases the unit will keep the home warm until power is restored. Unless it’s out for several days.
I’m not suggesting they’re perfect by any means but I would still prefer that to a wood burner if only for the ease of cleaning and not introducing bugs and spiders into your home?
‘My’ solution ( as a back up ) has been a Kerosene Heater and they ‘really’ kick butt. Some people complain about the fumes though.
“and after the DH got over the man-building-fires fetish”
I seriously doubt that I’ll _ever_ get over the man-building-fires fetish…
Must be some sort of evolutionary thing!
Prometheus stole fire from Zeus and gave it to the mortals. Ever since then we men have been beating our chests and setting things ablaze.
Here in Seattle, pellet fuel is no longer available. I haven’t seen it for years.
Not true. I have friends in North Bend who use their automatic (thermostat-regulated) pellet stove as their sole source of heat for a 3br/1.5bath tri-level. My friend picks up bags of pellets on his way home after work in Redmond every few weeks.
What is true is that less stores may be carrying them. There was that big pellet shortage a couple of winters ago when they were really hard to find. Makes sense to stock up and have a few months’ worth of fuel on-hand.
“Cash for Caulkers”, aka the “2010 Picking-the-fly-$hit-out-of-the-pepper” Act
Here in Southern California, such programs already exist. I was recently contacted by a 3rd party working in conjunction with the local gas and electric providers.
They came and inspected my guest house (400 square feet). No attic access, so no free insulation. No windows needing anything because I had previously installed double-insulated windows with 50-year caulking. Did a custom install of a solid-core front door with all new hardware and weatherstripping for free! Nice job, but lost the window.
Bottom line, we already pay a fee every month on both our gas and electric bill every month. Looks small, but over time adds up. I am grateful for the service, but Big Brother didn’t allow me to volunteer. I want more attic insulation, and I have attic access.
Oddly, I do not want to pay for it twice!
Look at your utility bills. The small charges are there. TARP does not need to apply extra $ to a successful and (probably) fully-funded program.
Government ‘Out of Bullets’; Consumers in Trouble: Whitney
The government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead, banking analyst Meredith Whitney told CNBC.
“I think they’re out of bullets,” Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.
Primary among her concerns is the lack of credit access for consumers who she said are “getting kicked out of the financial system.” She said that will be the prevailing trend in 2010.
Despite being able to borrow at near-zero percent interest, banks are not taking that money and putting it back into the marketplace. The Federal Reserve said Monday that consumer lending dropped 1.7 percent on an annualized basis in October, the ninth straight monthly decline.
With consumer spending making up about 70 percent of gross domestic product, the inability of even credit-worthy consumers being able to be able to borrow could put a severe crimp in future growth.
“What’s so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit,” Whitney said.
Why would a bank borrow money at zero percent interest rate and loan it long term to a private customer at 5% (the approximate rate on a 30-year fixed mortgage) when that same money could be loaned back en masse to the Federal government for 3%?
1) The mortgage is a fixed rate, and given the probability of higher rates in the next 30 years, is it the most profitable solution to loan to consumers at 5% fixed for that period of time? Why not take the short term return in exchange for long term interest rate
2) Has the Federal government ever been foreclosed upon? 60-day late? 30-day late? Heck, I bet the banks don’t even have to bill the government, call them at 5.15pm reminding them to make this month’s payment?
Which brings up the obvious point - right now some ungodly large percentage of mortgages are FHA loans - 66%, IIRC. At what point will the FHA eliminate the middleman and transition from the lender of last resort to the only lender? And when that happens…then we have a real vested interest in preventing real estate declines (also, when the government - us - own 95% of the mortgages…does that mean we own the property too? Isn’t that some leftist -ism?)
Bad Chile, I’d been thinking about that too. The other day I kidded a bit about a “public option bank,” but what if it comes to pass? What if the government is the only entity where somebody to get a mortgage, or a checking account?
Rush Limbaugh is very fond of saying that government is purposely starting entitlement programs in order to purposely make consumers dependent on the government. According to Rush, the gov is doing this in order to destroy private businesses, as part of a coming socialist takeover. But what if it’s the other way around? From what we’ve read here, private banks aren’t lending to consumers, and private companies aren’t hiring people.* If the private sector hunkers down and hoards, that creates a job vacuum and a money vacuum in the middle class. Something has to fill that vacuum, or else we’ll have tent cities and mass poverty and hunger (oh wait, don’t we have that already?). Right now the Uncle Sam is filling the vacuum with stop-gap cash, and is trying to pump private business with some liquidity to get private business hiring again, cf stimulus and cash4clunkers. Government isn’t leading this so called socialism, as Rush seems to think. The private sector, led by the black hole banks, is sucking government along.
——–
*and yes, I know the talking-point-central counterarguments that taxes are too high, or there are no incentives. But even in the business-friendly Bush era of tax breaks and less regulation, outsourcing/insourcing/automization continued apace. Most of the jobs created here were bubble jobs which have since gone *poof*, and most of the money made was accounting tricks which is also going *poof* as we speak.
I don’t think Rush has it right either - I’m a big fan of the theory of unintended consequences (eg, no one thinks past the first result of a given action) and I’m confident that is the case with any governmental agency. I really don’t think Congress or any presidential administration believes that making the FHA as big as it has is anything other than a short term solution to the problem of getting re-elected.
Well, what are the untended consequences of the two things highlighted above? (1) Banks not loaning to consumers but rather selecting the lower-return but less risky move of loaning to the Federal government; and (2) the Federal government becoming the monopoly lender for mortgages?
I really don’t care if it results in a “right wing” or “left wing” political situation, and that wasn’t my goal in asking above…
You guys don’t get it…….just because the math says that something should happen, doesn’t mean it will happen.
People who are screwed, if real estate prices keep falling:
-Anyone owning real estate.
-Federal, State, and local government.
-Anyone holding mortgage-backed paper.
-Anyone involved in selling real estate.
-Anyone who builds houses, or does home improvements.
-Any business who profits from a workforce with no mobility.
People who benefit from falling real estate prices:
-Anyone who doesn’t own property, and wants to buy it.
-Anyone who can build houses that significantly undercut current prices, can get the financing, and who can find people that can afford to buy a house.
-Anyone who benefits from foreclosed property.
To use a football comparison, Team “A” is a BCS school, while Team “B” is a Division II “St Marys with the Widows and Orphans”
Fundamentally, “Team B” has God/gravity on their side, but “Team A” can artificially manipulate the market for so long, that it will make “being right” meaningless.
(Personally, I don’t expect to ever own a house again, as much as I would like one).
I posted several years ago to be ready. It might be that real estate isn’t a good investment for the rest of our lives.
Agreed.
The immoral scumbags have won.
Even if housing does someday become affordable again, that will probably only happen with some “Black Swan Event” that will result in much larger problems; looking for a nice, affordable house will be the least of our worries. And let’s not forget the dwindling job situation - you need a job to afford a house.
Top it off with Tax and Trade and who knows whatever other forms of control and nonsense will fall from on-high, and we can look forward to a shambling, zombi-conomy for years to come.
“The immoral scumbags have won”
And the sooner we all wake up to that cold, hard reality.., the better. Again, there was a time when I entertained bottom-feeding but no more.
By the time housing ( primary, second or retirement ) becomes affordable, many of us will be too old to even take advantage of it.
“The immoral scumbags have won”
Thank you. We sometimes feel like an island.
The fish stinks from the head down, for sure.
I don’t think “they” can come up with a way to keep payments low enough long term for those earning the median income to continue buying/owning 300k+ homes. “They” will keep coming up with new gimmicks, I am sure it won’t be long before we see the 10/20/30 year interest only loan being offered.
What stands in the way is a changing attitude regarding debt. How many want to run out and sign up for a 30 year debt sentence given the liquidity of the asset is questionable and the appreciation fairy has been put down?
It sounds like you all are predicting a long period of deflation.
cashedin05,
Correct. Too bad more of us didn’t have that sense back IN ‘05 but whatever? I really had no designs on buying back in ( after dodging a bullet ) but after getting roped into it, had no choice but to ride it out.
At this point I’d have to say anyone over the age of 40 had better take a long hard look before they take that plunge.
So what you’re saying is, might as well buy! If it don’t work out, just quit paying and walk!
People who are screwed, if real estate prices keep falling: The essence of the housing bubble is that real estate prices will fall, one way or the other.
VaBeyatch,
Oh God NO! In fact, I’d reached a crossroads where even in 2005/6..? I didn’t care if I ever “owned” again?!? In truth, I figured I would have been about 74 y.o when it was finally… paid off.
Where’s the fun in that? I complain too much though, even though our condough has most assuredly lost value, the original price was $206k. I don’t know that we could rent as nice a place for our PITI, but damn it, I just wanted to go into the tail spin unemcumbered w/ a stupid CONdough.
I feel bad about it a little less each day as the prospects for being able to do a “quick turn” on a property diminish a little more each day! Sure, you could pick up a place in Vegas w/ a pool ( bling-bah-ling anf all ) for a song, but whatever you paid is all it will ever be worth. Tops.
I agree with you. Since the private banks are unwilling to lend, I think it would have been better for Treasury to keep the $700 billion TARP money and go into retail lending. If the private banks collapse, at least the Treasury has $700 billion as a stop-gap measure until the new, healthier private banks emerge from the ruins.
The same goes for job creation - if the private sector is unwilling to do it, then the government should create jobs directly. I think most people from the Depression era have very fond memories of the Civilian Conservation Corps.
Of course, capital owners HATE the idea of direct government job creation since it takes away their ability to depress wages further.
Why *should* the private sector lend? Is it moral to steel from one group to lend to another?
Jobs are not something you just “create”, unless there is a profit realized by the labor, (more value out than what was put in), the job is a net drain on society. The last time I checked, the market does a great job of identifying profit opportunities, while the government is great at wasting money.
Any sane private individual would rather earn a profit than “hoard”, thus the more the government does to steel profits, outlaw needed business practices via regulators who favor big business the more unemployment there will be.
Last time I checked, big businesses were doing everything in their power, including lobbying FOR rules and regulations that affected only their competitors and AGAINST rules and regulations that affected themselves, to stop the smaller businesses who had more efficient ways of making a profit and a better product.
If not outright stealing the intellectual property.
Secondly, remind me again who had to bail out who and for what reasons?
Market efficiency?
I’d take anything Rush says with a grain of salt. The man makes money by simply riling up his base and all he has to do is pull a story out of thin air, blame it on Obama, and claim that our country is going to hell and a handbasket.
I would take anything Rush has to say and flush it where it belongs.
But even in the business-friendly Bush era of tax breaks and less regulation, outsourcing/insourcing/automization continued apace.
OK, I think we all know how this goes by now, so to save us all some time, I will summarize the discussion to follow.
I will point out that regulation did not decrease during the Bush era, and support this statement with links. However, any studies that document the increase in regulation through careful research and analysis will be dismissed as biased, while bloggers who can barely spell Glass-Steagall will be praised for their intellectual depth.
Next, various Third World countries, groaning under brutal dictatorships, will be cited as cautionary tales about the dangers of too much freedom.
If any serious responses are attempted, they will be along the lines of, well, regulations may have increased overall, but they were unimportant/insignificant regulations, while the important ones were repealed. The problem is, regulations don’t come with asterisks saying Joe or Jane Blogger thinks these are important and these other ones aren’t. Each one carries the full force of law and was put into effect by someone who firmly believed they were preventing problems by doing so. And even granting that some regs are more important than others, the unimportant/irrelevant ones dilute the ability to enforce the important ones.
I agree with your post LehighValleyGuy . As I see it the
lobbyist are well skilled at creating loopholes in regulations
that enable them to get around regulations .
The craziest part of the repeal of regulations was that the
unregulated markets were allowed to play the same games as the regulated markets ,vice versa . For instance, the banks were selling their loans to the unregulated markets of Wall Street, therefore the unregulated markets were actually the determiners of the market . The regulated Banks got very involved with Wall Street gambling games such as credit default swaps in which Entities didn’t have the money to back their bets . In spite of this clear flaw in the systems ,the lobbyist are doing everything in their power to prevent the overhaul of the very thing that brought about the crash .
Housing Wizard,
While I couldn’t agree MORE, they feel we are SO beyond those concerns now. Once the Prom dress is off..?
So just as concerns w/ the Cap Gains Exemption ( ‘what’ appreciation? ) these issues are being back burnered in favor of what the PTB are determining the more pressing issues.
I dig where you’re coming from w/ the tail wagging of the unregulated dog btw. Excellent.
DinOR ..But when are they going to address the flaws in the systems …..never ?
Okay. I’ll take the bait. How about this?
The only examples we have of unregulated markets are the black markets of drugs and prostitution. Are these good examples of how we want to model our business practices or our economy?
Well said, oxide.
Brava/o.
Not so fast, they’re not out of bullets yet! Obama’s giving $600 million to community health centers! For construction and remodeling and computerized records, etc. WOWIEWOW!
http://www.reuters.com/article/idUSTRE5B81H920091209?type=politicsNews
Or rightism. Feudalism.
If you are a true capitalist, perhaps you could argue that Generation Greed should be allowed to make binding agreements to securitize their childrens’ and grandchildrens’ future earnings individually, rather than just collectively.
I’d make out as I have daughters, who are likely to be in demand in countries with growing economies and selective abortion.
The problem is that most members of Generation Greed no longer have children at home, as they are now empty nesters. And we’d have to make sure the divorced and absent parents also qualify. Any suggestions on how to get around this?
Pictures?
Money that flows into the bank stays in the bank.
The amount of money in circulation is shrinking as a result.
Hence we have deflation.
??
Gold up, stocks up, real estate up and even the price of my favorite brew went from $10.49 to $13.99 a 12-pack. That doesn’t look like deflation to me.
Table wine is getting more expensive, too ($4 bottles from earlier this year now selling for $5). I smell reflation, not deflation…
I see that as a way for the company to make higher profits without having a negative impact on their volume. I doubt if their manufacturing cost escalated by a buck.
Noticed today that the “one pound” bag of Lays Potato Chips, which dropped to 13-14 ounces a few years back, is now 11 ounces.
Towns have no money, cities have no money, counties have no money, states have no money, countries have no money.
Is this not due to a shortage of money?
That’s why in addition to higher prices for gold, stocks, housing and brew you will also have to pay more taxes to cities, counties, states and soon enough Uncle Sam.
A common misconception about inflation is that your paycheck will keep pace with rising prices, it won’t. Inflation is like another tax on people that work for a living.
Is that what you see, inflation? Rising paychecks? More money chasing less goods and services?
That’s not what I see.
Why can’t we have both inflation and deflation?
What I am seeing is inflation of items in which you do not need credit to buy. But deflation of large ticket items which require financing.
“What I am seeing is inflation of items in which you do not need credit to buy. But deflation of large ticket items which require financing.”
DING DING DING We have a winner!
What you are seeing is what is happening.
Real estate is not manufactured overseas and shipped in for mass consumption .
The debasement - inflation - of the dollar will show up last in the big ticket items that require financing, especially housing. The declining median wages brought about by unemployment will see to that. However, the ongong deflation of housing prices is occuring at the same time the dollar is being massively inflated. It is not, for example, that gold is in a bubble, but rather that the dollar has been sinking fast.
“Real estate is not manufactured overseas and shipped in for mass consumption .”
Got Chinese drywall?
“Real estate is not manufactured overseas and shipped in for mass consumption .”
But, real estate is manufactured by workers imported and shipped across the boarder.
The largest expansion of credit in history is unwinding. The Fed can only drag anchor, it cannot keep the tide from going out. Debt is being destroyed everywhere, from the credit card Mr. Joe cannot pay off at 30% interest to the vest pocket countries that are defaulting on their debt. It was a credit based inflation and it will be a credit based deflation.
The mad hatters have run up the price of oil in the past months. Of course this makes your groceries more expensive.
Paying 40% more for your favorite brew isn’t inflationary, it’s stupid.
…I am seeing is inflation of items in which you do not need credit to buy. But deflation of large ticket items which require financing…
Hence the desperate effort to artifically prop up highly
leveraged assets such as Real Estate with government
credits, artifically low interest rates, etc.
But here is another kicker: Real Estate requires an
unfinanceable component such as property taxes,
insurance, utilities and maintenance. Those costs,
(whose trendlines are rising) will further deflate
real estate asset prices despite all the subsidies.
Case in point. Deflation of “high end” real estate
prices… Those homes that cannot be financed
with “afforable” conforming loans.
turn off italics
But, real estate is manufactured by workers imported and shipped across the boarder.
The boarder needs to talk to the land lady about that.
I’m beginning to think that the “inflation in things we need” isn’t going to happen either. Not as long as the rest of the world’s business model depends on exporting stuff to the “Big PX”.
“Paying 40% more for your favorite brew”
LOL! Why I’d never even ‘think’ of it! In fact w/ a FOUR % increase, it’s suddenly no longer my ‘favorite’. But I get your point.
Speaking of Chinese products (of course, you must consider the source):
http://www.nbcbayarea.com/news/local-beat/Bay-Bridge-2013-Opening-Date-May-Be-Delayed-58498572.html
while I don’t shop there as much anymore since they’ve become the supermarket of China, I noticed that prices at WalMart have slowly been inching up. Just a year or so ago it seemed that a lot of what they sold was impossibly cheap. Its still cheap but the last time I was there a lot of the items I saw were just a tad more pricey then I thought they were worth.
-Make your company big enough, so that entry into your market is prohibitively expensive for any upstart competitor.
-Undercut your competitor’s prices
-Put all your competitor’s out of business
-Raise prices, but keep your overhead low enough to allow you to undercut any new competitors.
Wall Street’s calculation: “Why be involved in manufacturing, or any type of productive business, with all the risks that they are exposed to, and get a 3-5% return, when we can shuffle paper and make 10%?”.
Thank you Mr Dollar collaspe, a declining dollar makes import prices higher….Wally is just passing on the increased costs
—————————-
I noticed that prices at WalMart have slowly been inching up. Just a year or so ago it seemed that a lot of what they sold was impossibly cheap
The prices at the WalMarts in North West Arkansas are much higher than the WalMarts in North Texas.
Money that flows into the bank stays in the bank.
This is just smart business sense. We come across lots of borrowers every day that don’t qualify for 50 cents worth of credit. They are dead beats as far as lending is concerned. I think Americans got so used to not having a good fico score and still expecting lenders to kiss their hiney and give them money. Some people think a loan is an income and never bothered to think twice how they will pay it back.
The end to this stupidity is a good thing.
SUGuy,
Bingo! Thought about that on the walk in to the office this morning. I believe it really all started w/ auto dealerships and their practice of sweeping the neg. equity under the carpet and rolling it into the new loan.
In the past, the buyer had to bring ’some’ cash to the table to offset this difference. As fewer and fewer had even that level of resources, as usual, they just got “creative”. From there, it was only a matter of time before it carried over into home purchases.
I’m of the opinion that what we are seeing now is the result of putting the squeeze on Average Joe’s wages for the past 30 years.
Getting 3% pay raises/COLAs a year, when the underlying inflation rate is at least 5%, and over 20 years, your actual buying power is down significantly.
“Creative Financing” was just one of the results.
X-GSFixer,
More than a “squeeze” ( it’s been an all-out assualt! )
People do all this talk about addressing the whole cap. gains issue and what-not, but it’s really been the payroll deductions that have made for our demise.
Losing 2% a year for 20 years is .98 raised to the 20th power is approximately 0.668. A loss of about a third. Yeah, that is going to hurt.
Losing 2% a year for 20 years is .98 raised to the 20th power is approximately 0.668. A loss of about a third. Yeah, that is going to hurt.
Yep. Here’s the thing though. Most people don’t realize this loss, because of a few factors:
A. General prosperity gains offset them some. In other words - even after inflation takes its bite we may still end up better off. However we’ll be *less* better off than we would have been without inflation.
B. As we go deeper into debt - we *think* we’re better off than we were in years past, however under the hood over time we own a smaller and smaller percentage of the stuff we take care of.
C. Technology advances also offset inflation losses. Even with zero inflation/deflation, over time technology builds up, such that better stuff can be produced for the same price (or the same stuff for cheaper price). This is most obvious with things like video games, TV’s, cell phones, etc.,though is also true even with things like food production, cars, etc., which are increasingly produced by automation.
So the bankers can obtain an ever-growing chunk of the economy, without us really noticing the pain. At some point though the bankers then own 100%, and then we start feeling the pain, realize what just happened - and start bringing out the pitchforks.
Thanks polly. That’s exactly what it’s been. A 30% reduction for J6P over the last 20 years.
As I’ve posted before, you would have to be making 58K now to equal 25k in 1980.
And we sure as hell have had more than 3% inflation since 1980.
The game is almost over.
Yet banks still lent to the deadbeats right up to the point where the banks became insolvent. AND, given a chance, they’d do it again. They are only hoarding money until they have a chance to reignite the stupidity.
You seen to think the stupidity has ended. I think they are simply looking for new ways to be stupid.
Since the banks can pass the loans to FRED & FANNIE , much in the same way that they passed loans to the Wall Street big banks during the boom , they have their money freed up within a short amount of time . Just because a Bank retained the servicing on a loan doesn’t mean they carried it on their own books .
Since the only one in town that really wants to make loans is the Government at these low long term rates ,the government (taxpayers )end up being the bag-holder . Hank Paulsons and BB set up was to pass the loans to F&F anyway ,why do you think from day one they went to rescue it and raise the limits on government so-called backed loans . Everybody that invested in F&F knew that it really wasn’t
backed by the Government and it was merely chartered by the Government and it was a private Company on the NEW YORK Stock Exchange ,even Greenspan admitted that in a interview .
Currently the Banks are charging high credit card rates to make up for the people who aren’t paying by this retroactive raising of rates . The Banks managed to block reform on capping what rates they could charge in the new credit card reform Bill . I say ,what kind of reform was that if the Banks can still gouge the customer . So what if you have to give more disclosures ,if you can still take advantage of desperate people ,than what good is it ?
Go to Frontline and see the documentary called ‘THE CARD GAME . It will give you a real insight to why they gave all the easy credit .
Banks are acting in their own self interest and unwilling to take any risk. Which would normally be fine if they didn’t need propping up by the people they are now screwing (via our tax $).
I just heard from a friend who was several years into a 15-year fully amortizing loan (he had already paid off roughly 20-25% of the principal amount). He is hitting a rough patch, but by no means destitute. A recent appraisal put the mortgage at ~60% LTV.
He went to the bank and offered a 10% paydown of the principal balance on the loan in exchange for their reamortizing the loan to a fresh 30 years (leaving the interest rate alone). This would drop his monthly payment by a large amount.
They responded that because he didn’t have “verifiable income”, they couldn’t do the restructure–despite his payment history on the existing loan, and his ability to put another 10% cash to paydown the note. He got to a guy at the bank that essentially advised him to stop paying on the note.
So he did. Now he expects to be able to get someone’s attention.
Ridiculous.
The amount of money in circulation is shrinking as a result.
Hence we have deflation.
A. Define “in circulation”
B. Doesn’t matter. You don’t have to have money in circulation to have price inflation, because (as a general statement) money isn’t used to buy stuff anymore. Debt is. And debt is still going up.
That being said - I think indeed we’re in a “lull” period in 2009, where debt is relatively flat overall, mostly due to banks’ writedowns. Price-wise overall I think we’re stagnant - with prices of some things inflating slightly, others deflating slightly - both across sectors and within sectors.
Why the F does everyone equate “strong economy” with “more borrowing”?
(Excuse me - it’s not politically correct to refer to it as “borrowing”, which has a negative connotation. So it’s “more lending”. Have to put these things in a positive light, you know. :roll:)
And why the F does rolleyes not work anymore?
Man, everything’s going to pot around here.
I don’t know about the rolleyes, but yeah…
Shouldn’t a “good” economy mean you need to borrow less?
Chile:
well um i guess we HAD that during clinton…an actual surplus…then wha happined?
———–
shouldn’t a “good” economy mean you need to borrow less
Pack, the smiley codes don’t seems to work if they “:” is next to a parenthesis. I don’t know why. Just put a couple spaces around your smilies.
Testing:
:roll:)
)
where do you find the text that generates all these little yellow face thingys?
>thingys
Not thingys, thingies.
codex dot wordpress.org/Using_Smilies
The rolleyes smiley is most properly used after government or UHS statements.
The rolleyes smiley is most properly used after government or UHS statements
In my day, we had to make our own smileys out of actual keyboard characters - none of this semi-animated gif crap - but real, hand-coded ASCII.
In my day, we didn’t have any of this fancy ASCII crap - all we had were 0’s and 1’s. Early on we didn’t even have any zeros even - we had to make do with just ones. Someone figured out that if you just subtracted a one from another one you’d get zero - so that helped.
packman: Remember back when we had coal fired computers and leather floppy disks?
Leather - yeah that was neat, though that was new after knives were invented to get it. Before knives we had to use our hands for data storage. Kinda hurt while the rock was punching in the data.
Coal was good, though before mining technology came along wood was the only option. And only deadfall since axes weren’t around yet.
I take it you’re a newbie.
Why I started off programming with a tablet-reader that read programs in cuneiform…those stone chips were a bitch.
Oooo - an old-timer. I bow.
I bet dealing with that Y-zero-K bug was a bear.
Should have seen it when we rolled over from 9AD to 10AD.
Yeah - and then 100AD. Who would’ve thought that computers would be around for so long?
And then that durn Pope Gregory came along and hosed the calendar all up. It was obvious he had never dealt with the guts of a computer system.
And don’t get me started on that Hudson dude and his DST.
Cuniform?! Man, all we had were feathers! Got any idea how many damn feathers you need to make a smiley face?! A lot, I can tell you that!
WRITE(6,*)’Hello world’
STOP
END
How many floppy discs (single or double-sided) would fit on a typical 4.7Gig DVD??
“Why the F does everyone equate “strong economy” with “more borrowing”?”
I’ve been asking the same thing since 2004 when Lying Larry Kudlow used “roaring economy” and “unprecedented borrowing” in the same sentence on his CNBC propaganda hour.
It got under my skin then and has been a basis of my homespun forecast and perspective ever since.
It’s been a long 5 years.
PS…… THE POOR BANKS!
And there’s no end in sight. Different players, same game except for doubling down on the bet.
Ah, your savior just said to “spend our way out of the recession”.
And your savior tried it….. and failed.
Your point?
We are completely and totally hosed.
Also, I thought the comment was worthy of a Bushism.
Perhaps Obama was channeling him in?
Well, if the borrowing was the result of people deciding that their incomes were secure and rising and therefore they could easily afford to take on a little more debt to have fun/pay for junior to go to dream school/buy a bigger house (and a bank agreed) or the result of a business deciding that economic conditions were such that a little borrowing to purchase capital equipment would generate enough future income to cover the debt payments, the new employees hired to operate the equipment and still make a nifty profit (and a bank agreed) then more borrowing could be the sign of a good economy.
But no one made those decisions in a rational way. So the increased borrowing looked like what could happen in a good economy, but it wasn’t.
At a micro level - personal - it’s an OK thing to have a sudden jump in debt, e.g. when you buy your first house, if indeed you’re secure in your job, you’re fairly sure your raises will exceed inflation, etc.
This is even true at a small-company level. It’s valid for a startup to borrow heavily if they’re fairly sure they have a good idea and/or business plan.
They key is that in both of the above scenarios - there’s a very good chance that the entity doing the borrowing will be able to pay back what they’ve borrowed over time, and will in fact do so under normal circumstances.
Problem is that doesn’t apply at a macro level, and at the levels we’re seeing now. The U.S. government’s debt level is now about 5.5x income, and growing, and with no hint of coming close to starting to pay it back within 10 years. The U.S.’s debt as a whole (government and otherwise) is about 350% of GDP, again with no signs of actually being able to pay it back even in inflation-adjusted terms, let alone nominal.
packman,
And that “paying BACK” part really… isn’t going to go over well at all!?
Strong Economy = people/business believe they will generate the income/profits to pay the loan back.
A strong economy based on “belief”? Sounds familiar…. kinda like a housing bubble.
“Why the F does everyone equate “strong economy” with “more borrowing”?”
If you look at the graphs of “borrowing growth rate” vs economic growth/recession, the two correlate VERY strongly.
CR had a graph of this within the last couple of weeks…
If you look at the graphs of “borrowing growth rate” vs economic growth/recession, the two correlate VERY strongly.
That’s only if you equate economic growth with GDP growth. However that’s a wrong correlation. GDP growth based on debt is false growth, because the people that are producing stuff don’t actually own it. True growth consists of GDP growth without debt growth - something we haven’t had since the 1970’s.
We discussed this some yesterday actually. What happened in the 1970’s that changed things?
A. We lost our competitive advantage over countries that had been decimated in WWII, mainly Germany and Japan.
B. We went off the gold standard, which encouraged borrowing from overseas, and directly fed the trade deficit.
Think about it from a micro level. If I’m making twice as much money as I was 10 years ago, and I “have” lots more stuff - but I’m much deeper in debt, such that my net worth is unchanged from 10 years ago - has my “economy” improved? No. My GDP has doubled, but my economic situation has not improved a whit. My situation improves only when I build up assets without building up debt, or I pay down debt without losing assets.
Now expand that to a macro level. The same is true for a country, or any economic entity.
Govt (and Fed) measures to artificially prop up the value of long-lived assets, such as housing, for example, are at cross purposes to restoring the flow of credit. What banker wants to make a home loan against falling knife collateral? Once housing bottoms out at price levels that are properly aligned with local incomes (which will happen over the course of years, not months, given artificial price supports), banks will feel comfortable lending again, even without government guarantees of their mortgage debt.
The trick for banks is to survive the bottoming of house prices.
The mortgages banks hold on these houses are their collateral. When the value of these mortgages are officially acknowledged to have declined in step with the decline of house prices then the banks become officially broke. When enough banks are officially declared broke - when the tipping point is reached - then the banking system breaks down and the economy freezes up.
That’s why there is so much effort spent in supporting RE prices.
There it is. Stay on it Combo.
“The mortgages banks hold on these houses are their collateral.”
Don’t the Fed’s MBS purchases serve to relieve banks of the falling knife collateral problem, by shifting the burden of underlying home debtors who can no longer provide the full MBS income stream from non-central banks to the central bank? The Fed certainly can pay above market prices to the banks from which it purchases MBS if it sees fit to do so; after all, they own the printing press technology, and hence can print as much money as needed to fund purchases at whatever prices they see fit to pay.
Govt guaranteed mortgage debt can help, too. If a home debtor goes into default on a govt-guaranteed mortgage, the lender is made whole on the full loan balance, rather than just the amount for which the home will sell in a short sale transaction.
This tendency for every loss to end up belonging to either the Treasury or the Fed is concerning. Even a mighty ship like the US can go under if it’s loaded to heavily.
If the government is going to back all mortgages from here on they need to make them iron-clad recourse loans, like student loans. You may be able to defer them for a while but they will follow you around for life.
“If the government is going to back all mortgages from here on they need to make them iron-clad recourse loans, like student loans.”
This is brilliant. Now I’m in favor of FBs who are underwater walking away and helping the de-leveraging process along. But it makes perfect sense that if you benefit from the government guarantee (e.g. by having a lower rate due to the lower-risk to the lender), that you should be paying that somehow.
We could just have these flow onto borrowers as a tax-liability, and be collected by the IRS.
Moral hazard mortgage problem solved!
Making the government guaranteed mortgages full recourse and undischargable in bankruptcy would at least be a step in the right direction.
“This tendency for every loss to end up belonging to either the Treasury or the Fed is concerning.”
Must — have — buoyancy. Less water in the hold would help immensely…
“Making the government guaranteed mortgages full recourse and undischargable in bankruptcy would at least be a step in the right direction.”
That would be at cross purposes to the government’s moral hazard incentives designed to lure debt beats into buying houses they cannot afford to keep.
combotechie,
And our ‘trick’ is to somehow remain solvent ( and employed… ) until housing prices bottom out! Not sure why that seems like such a hard point to bring across?
Lots of us have made plenty of money shorting and hoarding GLD, but how long will those profits stand in the face of a loss of income? Permanent loss of income?
The banks know this and trust me, making sure a handful of bottom-feeders get a steal ain’t their priority.
“The banks know this and trust me, making sure a handful of bottom-feeders get a steal ain’t their priority.”
But I’m a nice, lovey bottom-feeder.
Although I haven’t recently raised my down-payment requirements, and have slightly reduced the interest rates I am demanding, the demand for my loans has shrunk a WHOLE LOT in 2009. My point is, it’s not just that the banks are less willing to lend, it’s also that consumers who have the wherewithal to handle large debts are seeing that it’s not in their best interests to do so. Maybe they are seeing that even in the medium or long term, house appreciation might not keep up with the interest. Of course my rates are much higher than Phoney-Fraudie & FHA rates, since MH lots don’t qualify for govt support. Must expand my lending universe. But there’s no urgency, as the volume of loans outstanding on my books is still 90% of what it was a year ago. It’s just no longer easy to replace the paid-off stuff.
Thanks AZ:
You really provide a fantastic insight into hard money lending, that I heard about before but never actually understood.
What recovery? Most still see recession.
CNN survey finds 84% believe the economy is still in a recession, and that pessimism is growing despite improved economic readings.
NEW YORK (CNNMoney.com) — Economists are in broad agreement that the Great Recession is over. The American public strongly disagrees.
In a poll of more than 1,000 Americans conducted late last week by CNN/Opinion Research Corporation, 84% of those surveyed believe that the economy is still in recession.
That’s a slight improvement from the 87% who believed there was still a recession in the September survey, but it is almost the opposite view of the nation’s economists.
An official declaration of an end to the recession that started in December 2007 won’t be made until next year at the earliest by the National Bureau of Economic Research. But recent economic readings and surveys of economists all point to a U.S. economy that is growing again.
“Economists are in broad agreement that the Great Recession is over.”
So far, as a group, ‘economists’ have been wrong about almost every aspect of the financial crisis. Maybe this time is different, though…
The only developments “I” see is a more stable platform from which to view our New Normal ( and very little else? )
These economists/Wall Street pukes/Government /CNBC pukes need to GTF out of NYC and D.C., and see what’s happening in the real world.
We are going to end up with our own variation of the Hitler “Bunker Scene”, where the PTB are issuing order to troops that have been overrun/annihilated by the Red Army two weeks before.
I was at the local factory outlet mall and it was DEAD.
Now it might be because the weather wasn’t perfect, but it wasn’t that bad either, just chilly.
But when I say, I mean DEAD.
Bah, humbug and labor statistics
By Spengler
The unemployment rate in the United States fell to 10% from 10.2% in November, the Bureau of Labor Statistics (BLS) reported on Friday, which means that the real unemployment rate (including those who have stopped looking for work, or can’t find full-time work) fell to 17.2% from 17.5%. In addition, employers polled by the BLS reduced payrolls by 11,000 workers, rather than the 150,000 or so that economists expected.
Supposedly, this reflects economic recovery. I don’t believe a word of it.
http://www.atimes.com/atimes/Global_Economy/KL08Dj05.html
The untold statistic - the labor force is still shrinking. From 153,975,000 in October to 153,877,000 in November. Is it really shrinking due to more people retiring? I doubt it. More likely it’s due to people giving up on looking, and moving in with relatives for a while after their unemployment benefits run out.
These are the same people who were telling us that a 5% increase in spending (instead of raising it 10%) was a “budget cut”
Wild and wet here. I’m sipping on a blueberry smoothie, limp wrist and all.
YIKES! That didn’t come out right at all. I mean the weather is wild and wet!
“YIKES! That didn’t come out right at all. I mean the weather is wild and wet!”
Well, oxide, you did say blueberry smoothie and not blueberrry daiquiri, so there is some wiggle room there, so to speak.
Maybe for you…
[runs away]
Damn, between your comment and bink’s below on being a male lingerie model, the HBB has been turned into the Penthouse forum.
Why, oxide!
Thanks for the laugh, anyway. Now it’s time to try to go back to sleep. Insomnia strikes again…
We’ve had wild and wet weather in SD this week, and I am talking about outdoors, not indoors…
Single digits here, dry and cold.
Rancher,
We hit 8 degrees last night in Marion County ( and it doesn’t feel all that much warmer now? ) Actually, I prefer this to months on end of rain.
I hope you’re wearing your black penny loafers. They really set off the horn rim glasses.
GACK! Too much conflicting imagery.
Ex-Fed chief Paul Volcker’s ‘telling’ words on derivatives industry
Paul Volcker, the chairman of President Obama’s Economic Recovery Advisory Board, stunned a business conference in Sussex yesterday, saying there is “little evidence innovation in financial markets has had a visible effect on the productivities of the economy”.
Times ~ UK
The former US Federal Reserve chairman told an audience that included some of the world’s most senior financiers that their industry’s “single most important” contribution in the last 25 years has been automatic telling machines, which he said had at least proved “useful”.
Echoing FSA chairman Lord Turner’s comments that banks are “socially useless”, Mr Volcker told delegates who had been discussing how to rebuild the financial system to “wake up”. He said credit default swaps and collateralised debt obligations had taken the economy “right to the brink of disaster” and added that the economy had grown at “greater rates of speed” during the 1960s without such products.
When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed “nothing at all”, he replied: “You can innovate as much as you like, but do it within a structure that doesn’t put the whole economy at risk.”
Volcker is saying what needs saying when it needs to be said. We could use a lot more policy makers who don’t live in a world of self-delusional deception.
P.S. “Financial innovation” is a pleasant euphemism for “banking scam.”
Tell that to Queen of England the next time she’s handing out Knighthoods to American Economists.
The Queen is very wealthy.
“banking scam”
LOL! Didn’t -any- of these guys see “Rogue Trader” ( the Nick Lessom story and how (1) guy brought down Barings Bank w/ derivative trading? )
Even if Sir Greenissspent, gave back his Knighted “Honor” for his “brilliance”..I’d still kick in the balls!
They are getting there…..now they are coming out with cash readers at ATM’s so you can deposit cash immediately to your account, and will scan a check on your receipt…..less need for so many staffed bank branches to exist.
I can see thousands close in the next few years, not from bail failures but from better technology. It will do wonders for the Commercial RE market.
that banks are “socially useless”
Yup, I like that new feature where you don’t write the check amt on a deposit slip, you just let the ATM tell you how much the deposited check seems to be, and let it ask for your confirmation. US is sorta behind Europe, where I understand very little checking is done, mostly just electronic transfers. Either way, I agree we will be seeing fewer human-staffed bank branches. Mostly because they were probably supported mainly by the previous volume of mortgage origination fees.
Yes, those were “loan stores”. I mean no one thought they built all those branches to make everyday banking more conveinent, did they?
The other day I performed a yearly ritual - depositing the change in my cookie jar. BoA said they don’t have change counters at their branches anymore and it would take weeks as they “send out” such tasks. (Luckily Chase had one) What they did have though was three personal bankers twiddling their thumbs waiting to sell me a loan or “investment”.
What they did have though was three personal bankers twiddling their thumbs waiting to sell me a loan or “investment”.
I’ve encountered the same thing at the credit union. They’re s’posed to be the good guys of the financial world, but they’re not. They’re just as aggressive about pushing loans and “investments” as the banks are.
Arizona Slim,
I hear ya’. In many cases it’s b/c banker-types have sifted over into that distribution channel and -immediately- say, “Look at all this money sitting on deposit just doing ‘nothing’!”
Then the wheels are turned into motion! Rock & Roll baby!
OCTFCU (Schools First) is wonderful and offers full exchange for coins at no cost for members. Only been with them for 20 years and have 4 accounts, so not sure I trust them!
Securitizations would have been a much, much, much smaller part of the economy if the bonds had been rated properly.
The ratings on the bonds would have been appropriate if a price bubble wasn’t created, in part due to demand from securitization.
Which came first - the chicken or the egg?
j/k really (more or less). You’re right of course - much like analysts’ ratings of stocks should be adjusted downward regularly when prices increase above target (sometimes they are - but more often not), the agency’s ratings of the bonds should have been cut as the underlying asset risk increased due to increased prices. The problem is - none of the computer models could possibly believe we might have a bubble the size it was, and none of them factored in the temporariness of government intervention efforts.
I just see it as a shift in the reason why the loans were defaulting at such a low rate. At first, when you made bonds out of loans that were well underwritten, you had low default rates because the loans were good loans. As the standards got lower and lower, the loans had low default rates because increased demand (created by loose credit) created rising asset prices which allowed the collateral to cover the loan.
It should have been really easy to see this as the amount of time people paid on a single loan went down from the 7 or so years that people stay in a house on averaage to the much shorter time between refinances to cover the credit card bills run up on vacations.
And the shift in the reason for the low default rate should have increased the risk assessment of the bonds. Because low defaults from making good loans is sustainable, but low defaults based on rising asset prices from evaporating credit standards is not.
“You can innovate as much as you like, but do it within a structure that doesn’t put the whole economy at risk.”
Apparently Volcker is being used as a figurehead for the Obama administration. Nothing he advocates is affecting administration policies & proposals.
Also, from the timesonline article: George Soros argued that CDS should be banned. The billionaire investor likened the widely traded securities to buying life assurance {USA term is ‘insurance’} and then giving someone a licence to shoot the insured person.
Dec. 9 (Bloomberg) — Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II.
“It’s five minutes to midnight for Greece,” Buiter, who will join Citigroup Inc. as its chief economist next month, said in a Bloomberg Television interview today. “We could see our first EU 15 sovereign default since Germany had it in 1948.”
The EU’s economic affairs commissioner said late yesterday that officials are ready to help Greece with its budget deficit after concerns about its public finances sparked a rout in Greek government bonds. Fitch Ratings cut its rating on the nation’s debt yesterday to BBB+ and two other major ratings companies are threatening to follow.
“Default is not unavoidable,” Buiter said. “But unless there are radical fiscal actions, lasting cuts in spending and tax increases of at least 7 percent of GDP, the writing is on the wall” for Greece.
Alright, does anyone here not see this probable default as deflationary?
Is a lot of money about to be destroyed or is it not? Are the ones who are owed the money about to be hosed or are they not?
A simple question; I’m interested in reading your answers.
They will get bailed out like any other deadbeat that’s too big to fail. More money will be created out of thin air and given to the most appalling failures of our economic system. Bondholder have little to worry, just like bond holders of failing banks. There’s nothing deflationary about it.
If the deadbeats were allowed to fail and their bond holders would take it on the chin I would agree with you that this is deflationary, but that is most likely not how it will play out.
There is no one to bail them out.
In the past, they merely devalued their currency. Now that option is closed.
It depends on what currency the debt was issued. If the debt was issued in foreign currency, yes it would be deflationary. If the debt was issued in local currency, then by fiat the government — like we are currently doing in the US via the fantastic Fed — could issue more currency/bits to pay down or purchase the debt.
The US does not have the political will to do the right thing. Don’t bet on any of these scumbag politicians. They don’t care about your family’s wealth. They only care about the next election.
Time for a tourist visit to Greece. You used to go there to see the past. Now you go there to see the future.
LOL!
I won’t go into Greece through the front door, but the back entrance.
Been ’round the world a time or two?
BBB+ doesn’t sound like unavoidable default, or even “5 minutes to midnight.” None of the B, BB, or BBB bonds that I’ve ever owned has defaulted. Just lucky I guess. Not saying I’ve never owned any bonds that defaulted. Pan Am, Wang. But those were rated somewhere in the triple C’s. B-type bonds that I owned that turned out fine included Perry Drug, Hertz, Ford Credit (a while ago), Lyondell Chemical, can’t remember all the rest. Maybe the borrowing ability of a BBB government is impaired MORE than that of a BBB company, or maybe the problem is, the Greek govt can’t cut costs as fast as a company that’s on the ropes. ???
Geithner Said to Be Seeking TARP Extension Until Next October.
Dec. 9 (Bloomberg) — Treasury Secretary Timothy Geithner plans to tell Congress that the Obama administration will extend the $700 billion financial-rescue program until next October, according to people familiar with the matter.
While the Troubled Asset Relief Program expires on Dec. 31, Geithner can extend it by notifying Congress. A letter notifying Congress of the extension could come as soon as today, said the people, who declined to be identified. Andrew Williams, a Treasury Department spokesman, declined to comment.
The TARP, passed in October 2008 to prevent a collapse of the financial system, has drawn criticism from Congressional opponents of taxpayer-funded bailouts of banks including Citigroup Inc. The Obama administration, preparing the ground for an extension, has emphasized that the program may also be used to aid homeowners and small companies.
“There has rarely been a less loved or more necessary emergency program than TARP,” President Barack Obama said yesterday in a speech in Washington. “I’m asking my Treasury secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.”
The Congress’s TARP overseers have stated that it has failed to serve its primary intended purpose (in case anyone has forgotten, TARP stands for Troubled Asset Relief Fund). Since the too-big-to-fail banks are still up to their necks in toxic waste pits filled with troubled assets, perhaps it is time to start talking once again about setting up that Superfund-SIV?
TARP was obsoleted by Fed MBS purchases and by FASB rule changes. Being that neither of those have gone away, I see no need to extend TARP.
right on packman ,I was going to say the same thing .
Congressmen To Call For Break-Up Of Biggest Banks.
HuffPost Reporting.
Five House Democrats will call this week for a return to a Depression-era law that separated Wall Street investment banking from Main Street commercial banking.
If adopted, the measure would give banks one year to choose between being commercial banks or investment banks. The nation’s biggest — those now commonly referred to as “too big to fail” — would be broken up. The Obama administration opposes the measure.
The amendment’s five co-sponsors — Maurice Hinchey of New York, John Conyers of Michigan, Peter DeFazio of Oregon, Jay Inslee of Washington, and John Tierney of Massachusetts - want to restore the Glass-Steagall Act of 1933, which prohibited commercial banks from underwriting stocks and bonds. The act was repealed in 1999 at the urging of, among others, Larry Summers, now President Barack Obama’s chief economic adviser.
The five congressman all voted against the repeal then — and now they want it back.
Congress members are acting as though they realize they were hoodwinked by Megabank, Inc’s government lackeys (Summers, Geithner, etc…).
I think the article is saying these five all voted against repealing Glass-Steagall even back then. Maybe these five are hoping that some other reps who were hoodwinked are now seeing it differently.
Were the others hoodwinked or was their vote purchased?? That’s the thing about concentrating the wealth in a country that equates money with free speech.
If adopted, the measure would give banks one year to choose between being commercial banks or investment banks. The nation’s biggest — those now commonly referred to as “too big to fail” — would be broken up. The Obama administration opposes the measure.
One year to choose?
Let’s give them one month. The sooner the dismantling begins the better.
Yep - it’s a recovery!
At $57.5 million, this is our priciest home
DEAL between two reclusive West Australian mining entrepreneurs worth $57.5million has set a new record for the nation’s most expensive home.
After two years on the market and an original asking price of $70m, Angela Bennett sold her waterfront Mosman Park mansion this week to Mineral Resources executive Chris Ellison.
The sale, by Perth real estate agent Willie Porteous, easily surpassed the previous record sale of $45m for a mansion in Sydney’s Vaucluse.
Mr Ellison has been with the mining services company since it formed in 1994 and recently had a windfall of around $54m after selling eight million shares. He still owns 36 million shares worth about $237m. Little is known about Mr Ellison, who one source described as being a “very private person”. The business source said Mr Ellison was a hard worker who was more interested in spending his free time with his family than on Perth’s social scene. He has four children and is reportedly intending to live in the mansion and not subdivide the 7567sqm block, which stretches down to the Swan River and has a jetty and boatshed.
Real estate agent Mack Hall said the Perth property market was not back to the boom times of two years ago but activity had been increasing.
David Airey, president of the Real Estate Institute of Australia, said the sale was a sign of the strength of the state’s economy.
The Austrailian Dec 10
And I was just about to submit a lowball offer using some of my male lingerie modeling moneys.
Is this you?
Lovely picture. Amazed your post has not been eaten, can’t have HBB turning into an indecent site. Nice to have something for us ladies once in a while!
glad to oblige a fellow connoisseur of Le Beefcake.
That has the be the least subtle pad job I’ve laid eyes on.
I used to do styling for photo shoots but must admit never was assigned to “pad” duty.
usually home furnishings - lol
(insert rolleyes here)
Fluffing pillows?
FLUFF YOU
8D
no we had lightweight cardboard forms inserted into the pillowcase so that the pillow looked smooth wrinkle-free and picture perfect. God forbid it appeared that anyone had ever really USED the product…
oh well that was an emoticon gone haywire
it was supposed to be the sunglasses with big smile thingy
Cant forget the stereo receivers with a real metal faceplate and a cardboard chassis. Let alone fake food
“David Airey, president of the Real Estate Institute of Australia, said the sale was a sign of the strength of the state’s economy.”
Does anyone besides me suspect a government-provided subprime loan plays an important role in this story? I would venture to guess that U.S. taxpayers’ future loan guarantee claims payment expenses just increased to the tune of $690,000 - $486,300 = $203,700 on only this one flip. But it’s all good, because Schitigroup made over $100,000 above its minimum bid on the deal.
* The Wall Street Journal
* REAL ESTATE
* DECEMBER 9, 2009
House Flipping Makes a Comeback
By JAMES R. HAGERTY
SCOTTSDALE, Ariz. — Four years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.
Jon Mirmelli, a Phoenix real-estate investor, learned late in the morning of Sept. 28 that a never-occupied custom house on the northern fringes of this Phoenix suburb was going up for auction around noon the same day. The six-bedroom home, built on a three-acre desert plot, has a kitchen with two dishwashers, four ovens, “antibacterial” copper sinks, and a master “spa” bathroom with space for a flat-screen TV visible from the tub.
The minimum bid, as set by a unit of Citigroup Inc., which had a $1.3 million mortgage on the home, was $379,900. After several minutes of bidding among investors and their representatives, some wearing shorts and flip-flops, Mr. Mirmelli won the home for $486,300. A week later, he agreed to sell it for $690,000 to a woman who moved in this month.
…
“The banks are so screwed up,” says Mr. Mirmelli, the Phoenix investor, that they don’t always have a clear idea of the value of the property they are foreclosing on.
…
Screwed up, indeed. Shiti left $200K on the table because they don’t know the local market, including the current availability of crazy loans to buy homes for hundreds of thousands of dollars above market value. This shows once again why Megabank, Inc should stick to businesses it knows, like automotive manufacturing or home construction, and steer clear of residential housing markets.
I was told by a realtor today that it is a sellers market, go figure.
As long as government-sponsored subprime loans are available, I guess it will remain a seller’s market…
I don’t actually understand why you think a govt-sponsored subprime loan must be involved. Couldn’t Mirmelli be a guy with a pot of cash? Or couldn’t he have someone like az_lender behind him? (Though it ain’t me in this case.)
FHA loans are about 40-50% of the market now.The buy now or be priced out forever mentality is back.Now the usda has a zero down loan for all those with no money.
Az,
I think since FHA is >70% of the origination in the country right now, that they are the market driver.
If they collapse, hard money guys will be the driver.
Since it’s an under 729k purchase in Phoenix we are assuming FHA is involved.
I think it is very likely Mirmelli is a cash buyer but without the government-sponsored subprime loans he wouldn’t have the greater fool standing behind him ready to make him $200k richer.
“Couldn’t Mirmelli be a guy with a pot of cash?”
If he didn’t have a pot of cash before, then he has at least $200K in the pot now. I was suggesting the woman who bought from Mirmelli was probably ARMed with an FHA loan.
WSJ/Asia
Istithmar Loses W Hotel Union Square in Foreclosure Auction
NEW YORK—Dubai World’s private-equity arm ponied up about $282 million in 2006 for the trendy W Hotel Union Square in Manhattan. At a foreclosure auction Tuesday, the winning bid was $2 million.
WOW - now there’s a haircut!
Leigh
$282 million in 2006 became $2 million in 2009, which means $280 million vanished into thin air.
Whoever it was that was on the wrong end of this vanishing $200 million really got hosed.
[i am going from memory (reading the physical paper earlier this morning) ....]
The $280 was actually the first and secondary loans. So it would seem that the owners did the equivalent of an equity withdrawl.
Who knew that the housing ATMs that we talked about also extended to the commercial Hotel business. If regular folks bought big screen tvs, boats and cars, what did the owners of the W buy?
$282 million in 2006 became $2 million in 2009, which means $280 million vanished into thin air.
OK combo - I’m going to be blunt. Can you really be this clueless?
Do you really think that $282 million just went into someone’s account in 2006 and sat there - and now is just written off as a loss? No. They paid that $282 million to somebody. That somebody (not sure who; it’s managed by Starwood though not sure if they were the actual owners) used that money for stuff. It paid salaries, it bought other things, etc. That money went out there into the economy. It’s not gone. It’s out in the economy.
Your one-track mind has gone off into the weeds.
Now, with the miracle of fractional reserve lending it is possible the 280 million never existed.
Could have been 20M at the closing and the rest of the money was credit and debits in cyberspace?
Oh the other 18M? Glad you asked. Fees and bonuses of 8%.
Now the asset held by the bank, say a commercial CDO is now worthless.
Not sure if that was where he was going with this.
“Ok combo - I’m going to be blunt. Can you really be this clueless?”
Probably. But, let’s see; Let’s play a game of Questions and Answers, shall we?
1) If a man possessed million dollars, would you consider him to be a millionaire?
If your answer is “No” then you need to go off into the weeds, without your Zigzags.
If your answer is “Yes” then go to 2).
2) If this man loaned this million dollars to Warren Buffett and got a promisory note in return - an IOU guaranteed by Buffett- would you still consider him to be a millionaire? Even if Buffett scattered this million dollars into the wind, would the man remain a millionaire? Would he be able to raise cash by borrowing against this IOU?
If “No”, then go to the weeds.
If “Yes”, then go to 3).
3) If this man loaned this million dollars to Bernie Madoff instead of Warren Buffet would you still consider him to be a millionaire?
If “Yes”, then it’s off to the weeds with you.
If “No” then there is some hope for you yet.
Assuming your answer to 3) was “No”, then what happened to the million dollars? Where’d it go?
As I said many times, one man’s debt is another man’s money.
If a debt is defaulted on then someone is out some money.
And the way the economy is heading, a LOT of people are going to be out of a LOT of money.
The trick is to make sure you are not one of these people.
All IMHO, of course.
I don’t get it. So - what happened to the million dollars? It wasn’t actually scattered to the wind of course. Even in the Bernie Madoff case - I may not be able to get my money back from Bernie - but that doesn’t mean it’s gone. It’s only gone from me. It still exists. Presumably it was spent by Bernie on a yacht or something, and the yacht company paid its employees with it, who bought food and clothes and gas with it, etc. etc. So regardless of whether or not I get the money back - it’s not gone. It’s out there in the economy.
See?
The only time fiat money ever goes poof is when:
A. It’s created from thin air - e.g. by a central bank, then
B. Gets distributed out, e.g via loans, then
C. Gets paid back
Thus money that’s “lost” via bad debt write-downs actually causes more inflation than money that’s loaned and then re-paid.
I don’t get it that you don’t get it.
Bernie and Warren could have both bought yachts or whatever. Both could have spent the million in exactly the same way. Both would have put the million out into the economy. It doesn’t make any difference to you what they did with the million; it only makes a difference to you whether you get the million back or not.
With Warren you get the money back and thus you remain a millionaire. With Bernie you don’t get the money back thus you end up broke.
Therin lies the difference.
And there are trillions of dollars - trillions - that are not going to find their way to where they should go.
Never lost $ with Bernie - didn’t invest.
Never lost$ with Warren. Doubled down.
Happy Camper.
See next bits bucket…
I can’t follow the numbers in this article, and from the comments on the WSJ site, it seems like others are confused also. But it’s clear that the $2 million bid wasn’t buying the hotel free and clear, the winning bidder still has to pay off other liens. The last sentence of the article says that the estimated value of the hotel is $137 million.
Righto. My read:
The buyer, LEM, was a 4th mortgagee. They put in $2M cash and must keep current the 1st mortgage of $115M. They must also (though it doesn’t say how fast) bring current the 2nd and 3rd mortgages totalling $97M. They are doing this to protect their own stake for which they originally paid $20M. Istithmar loses its $50M down payment. Note that 115+97+20+50 = 282, so the numbers actually do make sense. LEM is hoping that the $137M is a gross underestimate.
“Istithmar loses its $50M down payment. ”
And THIS is the real story, IMO: Istithmar will no longer be carrying the asset on its books at an inflated price. That is the deflationary component; Istithmar bond-holders are more exposed, because with more asset-valuation wiped out than they were carrying on the liability-side of their books, their bond-holders have less fake-equity to believe that they can collect on in the future. Bond purchasers are thus less likely to extend further credit against imaginary asset valuations.
Multiply this by many many CRE foreclosures over the next couple of years, and you have deflationary headwinds.
The new owner is going to be able to undercut every other hotel in Manhattan (if they so choose) and still make a bundle.
But they will probably borrow against it and use the money to buy more real estate.
Sigh.
Oops. Didn’t see the discussion above. My bad.
you know…well…why the hell not?!?!?
http://finance.yahoo.com/news/Cash-for-Caulkers-could-mean-cnnm-1594823266.html?x=0&.v=1
Bovine-brained Wall Street traders needn’t worry their pretty little heads over all these looming sovereign debt concerns, as global market are decoupled.
The Financial Times
Flight to quality follows downgrades
By Neil Dennis
Published: December 8 2009 22:26 | Last updated: December 8 2009 22:26
The dangers of investing in debt-laden economies were brought into focus on Tuesday as global equity markets lurched lower in response to downgrades for Greece’s sovereign rating and the debt of six companies related to the Dubai government.
Investors, already rattled by a number of weaker-than-expected data releases in Europe, jumped into dollar and yen havens and the safety of high-quality government bonds.
Fitch cut Greece’s sovereign debt rating to triple B plus and kept a negative outlook on the eurozone’s weakest member – the first time in 10 years the country’s debt rating has been graded below A by a major ratings agency. This followed the move on Monday by Standard & Poor’s to put Greece on “credit watch with negative implications”.
Meanwhile, Moody’s said it had downgraded six of Dubai’s government-related issuers, expressing doubts as to whether the United Arab Emirates government would offer any “meaningful support” to help them repay debt.
Among those downgraded was Dubai Electricity and Water Authority and Emaar Properties. The resulting flight to quality saw triple A-rated government bonds move higher, pushing yields lower. The yield on the 10-year German Bund slid 4 basis points to 3.13 per cent.
Fitch’s downgrade of Greece’s sovereign debt drove wider the spread between the yields on the 10-year Greek note and the 10-year German bund to levels not seen since April. Compared with the Greek 10-year note yield, which jumped 21bp to 5.33 per cent, the spread stands at 230bp – the highest level since late April. The yield on the 10-year US Treasury fell 5bp to 3.40 per cent.
Charles Diebel at Nomura said the main concerns were whether the Greek position was fundable and the potential for contagion into other markets.
“The pressure on the Greek government to deliver is considerable given the concerns about contagion, and we would expect the credit concerns currently being directed at Greece to roll towards Portugal, Ireland and Spain also,” he said.
Benchmark bonds in Portugal and Ireland fell slightly, leaving yields for both 1bp higher.
…
I personally would feel much better if the HBB’s pet troll would not come on line to explain why this story is irrelevant, because a strong U.S. economic recovery is evidently underway now. I guess I will have to pinch hit for him, because he seems to have thrown in the towel…
he probably got laid off
Let’s see, if the ratings agencies have only now gotten around to downgrading, the pattern of their past behavior suggests that the collapse could be well under way.
That’s right. Think of the ratings agencies as providing the lagging indicator that collapse is already certain.
Will this serve to strengthen the dollar?
Having your money in Euros seems even more risky than the dollar right now.
“the Greek 10-year note yield, which jumped 21bp to 5.33 per cent”
Clearly I’m missing something here. 5.33% for a note that’s likely going to default? Not me thank you.
What I said above. BBB+ is not an “about to default” rating. Five point something is somewhere near a “normal” yield for BBB+.
“BBB+ is not an “about to default” rating.”
i’m not so sure…not in the new economy.
Yep and you can count on Moody’s rating????????????
My point exactly measton. And it’s unsecured debt. At least if I hold a 5% mortgage note there is something on which to foreclose (unless the property is in Detroit).
The golden knife drops much quicker than most falling knives…
Gold - 100 Oz Pit Only (Comex)
Market open
GC10G $1,143
Change -$20.60 -1.77%
I though gold was a sure bet, going to 5k an ounce?A fool and his money are soon parted.Too late to that party imo.
It was going to $5K an ounce, until it took a detour back towards $1K an ounce.
until it took a detour back towards $1K an ounce.
That could be an apt description of gold’s behavior the past 10 years where it started from about $250 an ounce.
To me the fact that there is a commercial on TV every 30 seconds selling gold to J6P tells me I should not be buying gold at this moment. As soon as those commercial die down, I may step in.
BINGO cougar. It’s time to get out when advertising targets J6P/main street.
Hate to admit that I sometimes watch Fox News, but it will certainly amuse y’all to know that it now seems to be getting the majority of its support from gold commercials.
It’s the same with conservative talk radio. Gold and “herbal supplements.” Oh and lots of services to “lower your tax debt” which never fail to mention some generic government bailout. I smile at the irony. The listening demographic is ostensibly the one that hates government and entitlements and taxes, but if there’s government money to be had, they are the first to stick out their hands for “my” payout.
You must admit that the advertisers buying time from FreexNews couldn’t find a more gullible group of suckers.
“To me the fact that there is a commercial on TV every 30 seconds selling gold to J6P tells me I should not be buying gold at this moment. As soon as those commercial die down, I may step in.”
Remember the old saying: “If you look around the room and you can’t tell who the ‘pigeon’ is, it’s you!”
I predict another bubble about to pop.
But gold is different!!!!!
I just got my check for the coins I sold, it will go nice toward the Mustang GT I buy when I get back home. Time to get out as far as I can see…
You timed that about perfect, Step.
You timed that about perfect, Step.
He bought them in 2001?
Wow - I really have to LOL at sour grapes from all the anti-gold people on this board. You guys are getting pathetic. (Not you so much PB - you seem more reasonable than most).
So - being that it’s getting really old, here’s a back atcha:
VIEW AND WEEP, SUCKAS
and STFU.
http://tinyurl.com/7ggvd
And here’s your collapsing 30 day gold chart. Enjoy.
Talk to me when it actually gets down to pre-”bubble” levels, like around 500 (though it actually was 240 not so long ago). Then I’ll gladly eat a big plate of crow.
Until then (whopping 20-day swings aside) - it’s pretty soundly whipped everything else for about 9+ years running.
Who will buy all of your gold when it hits 5K per ounce? Just asking.
OK you do realize how price values work right? That in order for gold to “hit” 5k per ounce - that means that some party or parties are actually buying it at that price - right?
That’s your who.
If there’s no one willing to pay 5k an ounce, then it would never hit 5k an ounce.
I understand how commodity pricing works and I am sorry my question was directed at you, I should have used the word ”the” in place of “your”. The same question was asked when homes doubled and tripled in value.
With incomes stagnating or dropping, double digit unemployment and a mountain of uncertainty ahead, I just wonder who will be out there to provide liquidity for this or any other asset that keeps moving up in price? Look what happened to oil.
When gold is $5000/oz, you who do not have it will be up the nastiest creek imaginable; not as bad as “The Road”, but the days of the obese gov’t fed American will be no more. Its insurance now, not investment.
My grandmother used to tell me that an ounce of Gold should be equivilent in value to a decent new suit. In the 20’s a suit could cost 20 to 30 dollars. Today a decent suit will run you 300 to 400 dollars not 1200 dollars.
My grandmother used to tell me that an ounce of Gold should be equivilent in value to a decent new suit.
But that was before we off shored our suit making.
Here’s a longer term comparison:
“across 2,500 years, gold has retained its purchasing power, relative to bread at least” which is seemingly proved when one considers that “It is said that an ounce of gold bought 350 loaves of bread in the time of Nebuchadnezzar, king of Babylon, who died in 562 BC” which is roughly what it buys today, a stretch of 2,500 years, while the dollar, on the other hand, has lost 97% of its buying power since 1913, less than 100 years ago,” dailyreckoning.com
Only a fool is a promoter of any commodity forever.
A friend in Sarasota is buying a house for 70K that 2 years ago went for 230K . He says it needs some work . Isn’t Sarasota full with thousands of cookie-cutter houses like that ?? is that even a good deal ? Seems high to me , but we are from rural fly-over country .
In and around sarasota there are scores of new 3/2 ranches built in 2005-2006, some never lived in. None that I observed needed any work. They were basically brand new with 2006 sale prices in the $260-320 range.
Asking price? $70k. I think your friend is getting gypsied.
Exeter, can you provide a couple of MLS numbers as examples? What neighborhoods? We’re only seeing 2/2 condos in the 70K price range in Sarasota when we check realtor dot com. At that price we may decide to catch a 3/2 SF knife when we visit next month.
You do mean Sarasota, and not North Port or (heaven forbid) Cape Coral.
I will later. I’m up to my a$$ in alligators at the moment.
jess
Remember most house there, don’t have a basement or an attic you can store stuff or stand up in….so $70k is really for a lot less house then in flyover country.
aNYCdj,
Well, I must say, I never thought of it in ‘those’ terms? Probably a lot less yard too. Having a place w/ zilch storage really doesn’t matter if it’s a B & B or vacation home ( where you’ll only be for a short while ‘anyway’ )
But as we’re learning w/ our 1,200 s/f condo, you’re definitely giving up ’something’? We rearranged some furniture to make room for Christmas decorations and I swear it was like one of those ‘thumb puzzles’.
Yes flooRiddah is very low lying so a basement would be below the water line and get flooded a lot. And no attics it would get so hot you would have literally have to AC the attic in summer or heck boxes oily rags might catch fire…
Dec. 9, 2009, 12:04 a.m. EST
Panel: TARP averted crisis but it hasn’t achieved other goals
Congressional Oversight Panel says problems remain in the financial markets
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) — The government’s $700 billion bank bailout program may have stopped a global financial meltdown, but it hasn’t achieved its other goals, a watchdog panel said Wednesday.
In its study, the Congressional Oversight Panel for the bailout funds reported that many problems in the financial markets and broader economy remain 14 months after the legislation, dubbed the Troubled Asset Relief Program, was approved by Congress.
“While the TARP, along with other strong government action, can be credited with stopping an economic panic, the program’s progress toward the other goals set by Congress — goals that are necessary for reestablishing stability in the financial system and providing the tools for rebuilding the American economy — is less clear,” the report wrote.
The report entitled “Taking Stock: What Has the Troubled Asset Relief Program Achieved?” said the bailout statute sought to use taxpayer funds to increase the availability of credit to consumers and many small businesses.
However, the panel reports that so far, TARP hasn’t achieved that goal, as the availability of credit remains low today.
It also said that the TARP hasn’t stopped a massive rush of bank failures, with 130 institutions collapsing so far in 2009.
The report said that TARP has also failed to achieve another one of its key objectives — to remove toxic mortgage-backed securities from bank balance sheets. COP Chairwoman Elizabeth Warren contends that maintaining toxic assets on the books of big banks is contributing to their inability to lend funds to consumers.
“These banks may be considered ‘too big to fail,’ but at the same time, they may be too weak to play a meaningful role in keeping credit flowing throughout the economy,” she said in the report.
…
Where “crisis” is defined as “ultra rich immoral scumbag bankers might not have kept their jobs and reaped huge profits.”
So, in regards to preventing that “crisis,” TARP was a success!
I don’t know if anyone noticed, but the Dems have reached a deal to drop the public option. What’s interesting about it is that I called my Senator yesterday to protest the bill as a whole, but said if they’re gonna go through with it, then Congress, staffers and the Fedgov should by law have to sign on to the same deal. I was told that provision was in the bill, if there was a public option, all gov employees would have to go on it.
Now it makes sense why it was cut.
Do you have a reference for this?
“A team of 10 Senate Democrats — five liberals and five moderates — had worked for days to find a substitute to the government-run “public” insurance option included in the Senate healthcare bill after moderates voiced concerns about it”.
“The government-run plan has been one of the biggest hurdles for the healthcare overhaul, which is President Barack Obama’s top domestic priority”.
“Democratic Senate sources said the substitute would create a non-profit plan operated by private insurers but administered by the Office of Personnel Management, which supervises health coverage for federal workers”.
Clipped from CNN
It would appear that the sickness care plan is morphing into a cluster~F. Which comes as no surprise, except to those that believed they were going to end up with”free” sickness care. I have yet to read of anyone that knows what is in the 2000+page what ever the hell it is plan/bill.
Typical gubment in action.
Democratic Senate sources said the substitute would create a non-profit plan operated by private insurers but administered by the Office of Personnel Management, which supervises health coverage for federal workers
And the wealth stripping will continue. When they tried this with Medicare they shoudn that the gov had to pay incurance companies 14% more per person than the gov pays for basic medicare. Now when you consider the vast sums of money going to health care stripping 14% for management and insurance companies is a vast theft.
I’d like someone to explain how this plan will be a free market. It will be a “you give a political donation and you get to strip 14% of heatlh care dollars from the tax payer for x number of years.
To me, without a Public Option this bill just takes our complicated health system and makes it 10x more complicated, without benefiting anyone, and severely punishing small businesses.
Not that I liked anything about the bill in the first place, though I do support some high-deductible, say $10K, risk pool that everyone participates in, administered with a government option. That would have protected a lot of people against catastrophe, and not cost a lot.
I agree with your entire comment.
That’s a great idea. Low-cost, gov’t backed catastrophic coverage. No one should go bankrupt trying to pay for major health expenses.
I’ve sent the following message to the Prez and other elected reps. Numerous times, in fact:
I’m a freelance graphic designer and photographer, and have been for many years. If I treated my clients the way health insurers treat theirs, I’d be out of business. Abusing the people who’ve granted me the privilege of being in business just wouldn’t be smart.
Note that I used the word “privilege.” That’s what being in business is. I earn the right to stay here by doing right by my clients.
As for employer-based health insurance, the sooner that system disappears, the better. Why? Because in order to get that coverage, you have to disclose the most personal aspects of your life to your employer. And, in most cases, those things are none of your employer’s business.
As for me, I’m self-employed. Which means I have to try to find affordable insurance in the individual market. For several years, I’ve been covered, if you want to call it that, by a Health Markets (formerly called Mega Life) policy sold via an organization called the National Association for the Self Employed (NASE).
After I purchased the policy, I learned that this insurance company has been sued by several state attorneys general. There have also been class action suits. Do a Google search on “NASE class action” and you’ll find plenty of information.
I’ve tried to get on the Arizona state plan for small business people, the Healthcare Group, but guess what? Our legislature recently passed a law that excludes sole proprietors from this plan. Thanks a lot, legislature.
So, I continue with NASE/Health Markets. Let me tell you, if and when that nationwide public plan goes into effect, I will cheerfully kick that NASE/Health Markets policy to the curb.
All I can say is, I hope I live long enough to do so. I’m 52 years old and already avoid/delay regular checkups and tests because I fear that, if something is found, the cost of treatment will bankrupt me to the point where I will lose my house.
So, that’s where things stand for me. Too bad that such things are allowed to happen in the richest country on earth.
“All I can say is, I hope I live long enough to do so. I’m 52 years old and already avoid/delay regular checkups and tests because I fear that, if something is found, the cost of treatment will bankrupt me to the point where I will lose my house”.
I am 53 in a similar situation, in that I am a long time self employed individual. I am married but to be added to my wife’s policy at her place of business would cost an additional $780.00 per month.
So I play ping-pong on a yearly basis from once ins. group to another, due to the twice yearly rate increases. I rent a catastrophic hospital policy with a $5000.00 deductible, the highest I can get. Usually around $200.00 per month.
Presently I have no ins. will start to look after the first of the year. Health care needs to be over-hauled, no doubt, however what ever the government comes up with is bound to be a boondoggle.
I wonder how many of us Boomers, particularly between say 55 and 64 would retire and make room for some of the next generation if we weren’t working for health insurance. I am in that boat, I could and probably would retire in the next year or two. I could go on my wife’s policy for around $500/month but the way things are, we might need a fall back if she were to lose her job. You just never know. I am probably not insurable on the individual market due to an congenital heart condition.
I have always thought that a Medicare buy-in for those unable to buy insurance elsewhere at true actuarial rates (age adjusted, not pre existing conditions rated) makes a lot of sense.
Presently I have no ins. will start to look after the first of the year. Health care needs to be over-hauled, no doubt, however what ever the government comes up with is bound to be a boondoggle.
That’s just it health insurance is already a boondoggle. If we have a public option we will immedieatly save the 22-24cents on every dollar that health insurances, advertising, and management strip. Medicare advantage provides the same services as Medicare for at least 14% more than it costs medicare to do it on it’s own. Nothing more than a wealth stripping enterprise. From the sounds of it this is what we are going to get from the gov now shich is utter crap. The helath insurance companies have won again.
You folks have illustrated the problem perfectly.
No mention of how this paid for is ever explored. Statements of a need to overhaul are all that are offered.
Lets explore the facts. Here they are:
Medical care is not free. Advances in medical care cost even more. Everyone wants advanced medical care. Advanced medical for all will be tremendously expensive and the costs will rise as medicine advances more. The Boomers ARE entitled to subsidized advanced medical care. Those subsidies WILL be paid by future generations, thus Boomers will avoid liquidation to pay their bills and will get to keep their homes and other possessions that they cherish.
The result:
Children and grandchildren of Boomers will NOT get to buy nice homes and possessions UNTIL they have paid for the medical bills and retirement expenses of their parents and grand-parents.
This is NOT an accident. Not a one of them will forgo a check or subsidized medicine, despite the toll they know they are taking on the future.
It is not that they don’t care about their kids and grandkids, but their stuff really means a lot to them, and being narcissists, they are collectively incapable of genuine concern for others.
There are already individual major medical policies available.
At the age of 52, I’ll have to say that finding an affordable policy that doesn’t 1) require me to blow through thousands of my life savings before it 2) may/may not cover something, is a challenge.
By way of contrast, my homeowner’s insurance policy, which also is an individual policy, has an annual premium of less than $500. And the deductible is $1,000.
As Senator Trent Lott found out, collecting on your homeowner’s policy is not always easy. State Farm had absolutely no qualms about screwing over sitting senator.
Hospitals generally consider people with high deductible catostrophic insurance as uninsured.
I’m sure there are many individual exceptions (perhaps many on this board), but they say that the vast majority of the folks in these plans can’t pay even a small fraction of the deductible. So, unless they are sick enough for the hospital bill (at the negotiated rate) to substantially exceed the high deductible, they cost the hospital almost as much as uninsured poor people.
Hospitals generally consider people with high deductible catostrophic insurance as uninsured.
I didn’t know that! That’s horrible. Will they turn me away unless, as I’m lying, bleeding, I log into my bank account and show them the balance? What do they want?
I didn’t realize the TARP was intended as a stock market price support? But I suppose stocks dropping like a rock could qualify as “troubled assets”…
Stocks shelter under TARP
U.S. stocks stumble out of the gate as the treasury extends the TARP program through Oct. 2010.
it’s up now. Guess the herds think this would prop the stock market in the foreseenable future…bunch of dorks
+1
“dorks”
Rule No. 1 of disaster capitalism:
When a crisis is in progress, the rule-of-law goes out the window, and top policymakers can do as they please, so long as it is packaged as part of the crisis response.
NY Times today has an editorial by Paul O’Neill called: “Tear Down That House.” He recommends tearing down abandoned, foreclosed homes and turning them into “greenspace.”
I’m all for this, but not for the reasons O’Neill states. I’d rather have empty lots near me than homes that could possibly house Section 8ers.
It’s already happening in Detroit, Cleveland, and other Rust Belt cities, editorializing or not. There are pictures of some Detroit neighborhoods that look unrecognizable, like it’s a pastoral setting instead of a major American city.
I’m all for it — I only hope it happens in some suburbs and exurbs as well.
IIRC from my Michigan history lessons, much of present-day Detroit was farmland during the 1800s and early 1900s.
I think some of the city dwellers would rather use the crisis to move the Section 8ers to better housing in the suburbs or sunbelt. Turnabout is fair play, and besides why not?
Look if the gov is going to spend money to make people homeless Why not use this money to put people to work building schools or installing high speed interent or solar or wind. This would create jobs and allow people to purchase these homes. Energy saving works would put more money in peoples pockets down the road.
Why not use this money to put people to work building schools or installing high speed interent or solar or wind.
Nice thought. But the construction, telecomm and energy industries would never let it happen without some sizeable, ahem, considerations to themselves.
Prices slashed on 25% of homes in Miami in Q3
South Florida Business Journal.
Twenty-five percent of homes listed for sale in Miami have had their prices reduced at least once between June and December, according to Trulia. The national figure is 22 percent.
The San Francisco-based real estate Web site found the average price reduction in Miami was 15 percent, while the national figure was 11 percent, up slightly from 10 percent in the previous quarter.
Statewide, 23 percent of listings had price reductions in the last quarter, with an average reduction of 13 percent, or $53,591.
Nationwide, total listings fell 9 percent in December from the previous month, with the total amount slashed from home prices falling to $24.7 billion in December from $28.1 billion in November.
“The tax credit extension has provided sellers with a much bigger window of opportunity, creating significantly less pressure to sell now,” Trulia co-founder and CEO Pete Flint said in a news release. “With economic indicators showing positive signs during the past couple months, many sellers will be poised to wait to sell. They want to sell at the highest price possible and, as inventory levels are seeing a 9 percent decrease from the previous month, there will be less competition amongst sellers, leading to less price reductions in the near term.”
Cities that have experienced significant increases in percentage of listings with price reductions in the third quarter include:
* Kansas City, Mo. – 40%
* Omaha, Neb. – 39%
* Houston – 32%
* Minneapolis – 29%
* Arlington, Va. – 28%
Cities with the highest percentage of declines for listings with price reductions between June and November include:
* Las Vegas – 30%
* San Jose, Calif. – 30%
* Long Beach, Calif. – 25%
* Honolulu – 23%
* Albuquerque, N.M. – 22%
TARP bailout extended 10 months.
Treasury chief Geithner tells Congress he’s renewing bailout through Oct.
December 9, 2009 ~ CNN
WASHINGTON — The controversial $700 billion federal bailout program will be extended through Oct. 3, 2010, Treasury Secretary Tim Geithner said Wednesday.
The Troubled Asset Relief Program will be scaled back and spending limited to newer programs aimed at stopping foreclosures, making loans to small businesses and propping up the credit markets to make loans more available.
What if your small business avoids loans like the plague? There are small businesses that (gasp!) finance things out of retained earnings, rather than debt.
Sounds like they are trying to create an unlevel playing field in favor of debt-financed (aka bank-dependent) small businesses…
Cessna closing 3 Columbus plants.
COLUMBUS,GA —(AP) Cessna Aircraft Co. says the company will close its three Columbus plants within six to 24 months.
The Wichita, Kan.-based airplane manufacturer has employed as many as 600 people in Columbus. Cessna told its remaining 315 workers the news on Tuesday.
The Columbus operation assembles various parts that are shipped to Cessna facilities for assembly of small business jets and general aviation aircraft. Company spokesman Doug Oliver says that work will move to plants in Independence, Kan., and Mexico.
In August 2008, Cessna opened a $25 million, 100,000-square-foot plant in Columbus and announced plans for 150 jobs over five years. Instead, the company has steadily laid off workers in the down economy. A hundred cuts were announced in January, followed by 89 in April and 50 in August
“In August 2008, Cessna opened a $25 million, 100,000-square-foot plant in Columbus…”
Poor civilian aviation. It gets whalloped so bad during recessions that by the time it starts to peek its little head out of its hole - its suddenly time for another recession.
And the Machinists Union here in Seattle wondered where Boeing was going to get qualified people to build 787’s in Charleston?
Oh swami I see a mini REEEL estate Boom in north Charleston very soon…maybe get those ghetto folks to move out….
N Charleston has a high crime rate…no so much when i lived there
You got that right, the plant construction is being fast tracked and the GC is bringing contractors from all over the place. They will be redoing major roadways and running full tilt to finish on time.
The red carpet was and is being rolled out for Boeing. Huge tax breaks and being non-union swung the deal, as everyone knows.
Alert!! 10 Yr Bond auction/sale comes in way off expected bid - long bonds sinking like a stone… Gold & Oil down hard again. Black swans are appearing like lighting & distant thunder… The Ten Year went from 3.38 to 3.44 yield like BOOM! World Sovereign debt is cracking around the seams and CDS spreads are blowing out big.
Thanks for the heads-up, BlueStar.
Obama Can’t Spend TARP However He Pleases: Oversight Chair
11:31 am December 9, 2009
By Frank James
Elizabeth Warren, the Harvard law professor who heads Congress’ bank bailout oversight panel of outside experts, put President Barack Obama on notice that he can’t spend money from the fund on job creation without getting congressional approval unless he wants a fight from her.
“put President Barack Obama on notice that he can’t spend money from the fund on job creation without getting congressional approval unless he wants a fight from her”.
I wish her the best of luck. She may find herself “unexpectedly” replaced.
I doubt that will happen.
I thought the TARP law explicitly said that there would be no oversight of the expenditures?
Business In The Beltway
The Incredibly Ambiguous TARP
Brian Wingfield, 12.09.09, 05:11 PM EST
The White House says it will wind down the bailout program, but it’s in no hurry.
WASHINGTON — Treasury Secretary Timothy Geithner sent a letter Wednesday to congressional leaders informing them that he would extend the Troubled Asset Relief Program until October 2010, which he’s allowed to do without Congress’ approval.
Hours later, President Barack Obama gave a brief statement to the press, reiterating remarks he made in a speech Tuesday: “We will wind down the TARP.”
Huh?
…
Climategate: Barack Obama’s rule by EPA decree is a coup d’etat against Congress, made in Britain. Gerald Warner ~ UK Telegraph
Who needs tanks on the lawn when you have the Environmental Protection Agency? Barack Obama’s use of the EPA to pressurise the Senate to pass his climate change Nuremberg Decrees shows his dictatorial mentality. He wants to override Congress, which is hostile to his climate gobbledegook because it is representative of the American electorate, and sideline the nation’s elected Senators by ruling by decree, courtesy of the EPA. This is a coup d’état.
And what is the justification for this undemocratic action? The allegedly imminent threat from “Anthropogenic Global Warming”. There is always a supposed threat, when tyrants take the stage. The President of the United States has just reduced his moral authority to the level of any Third World dictator heading a “Government of National Emergency”. Fortunately, the world’s leading democracy, which he is trying to subvert, has guarantees of liberty so deeply embedded in its Constitution that US citizens are well placed to fight back.
In the first place, regulation can be challenged in a way that laws cannot. So the EPA’s proposed ruling on so-called “Greenhouse Gases” can be opposed extensively with litigation, to the point that the ruling might not yet be in force when Obama demits office. In the second place, the EPA is funded by Congress. So, if the Agency is being used to bypass or neuter Congress, why should legislators not play hardball and retaliate by cutting off its funding? The EPA may look formidable, but its situation is rather as if Rommel were buying the fuel for his tanks from the Allies.
If you ever wonder how all of this came about, you have to watch the Congressional Committes. Last night I was watching a re-run where the member were recommending that the government cram down all of the excess to value loans, and recast the loans, as the only one that would hurt would be the rapacious lenders who cheated the borrowers.
they seemed to have no idea that investors would be hurt, or , perhaps, they didn’t care.
Then a Rep from texas was demanding that people tell the truth to the Power (government) about the tremendous loss of wealth happening to the people.
Oblivious to the fact that a person underwater on their loan, unable to make payments, has no wealth, and has never had any wealth.
they seem to believe that if you have a home worth $200,000 with a 100% loan, you have a wealth of $200,000, and if it drops to $100,000 you have lost $100,000 of your wealth , and the government should give you back that wealth, by cramming down the loan to $100,000.
The buyer would still have no wealth, and the investor would have lost $100,000 so any loss of wealth is to the lender!
But , perhaps, I am wrong!
They actually asked the panel of witnesses if anyone could see any problem with cramming down the loans to protect the wealth of the neighborhoods, and the witnesses could see no problem with that.
Strange economics in the Democratic Party!
JackO
“They actually asked the panel of witnesses if anyone could see any problem with cramming down the loans to protect the wealth of the neighborhoods, and the witnesses could see no problem with that.”
I can see a problem with that. A big one. Can you imagine what that will do to interest rates for the rest of us who want to own a house someday?? Hmm…I suspect they’ll be higher than the current 5.5% to compensate for the ridiculous risk in writing a 30-year loan that can be crammed down when the buyer decides they’re unhappy with their equity position.
The investor has already lost their wealth. They loaned $200K on an asset that has dropped in value to $100k. There are two possible outcomes for the lender/investor:
1. No cramdown available: Borrower will default, lender will foreclose and will recover no more than $100K in a foreclosure sale (probably less because of the foreclosure glut, possibility of property damage, unpaid property taxes, etc.). Even in recourse states, borrower can file bankruptcy to eliminate personal liability to the lender (in many cases lender won’t bother to sue, knowing that you can not get blood from a stone).
2. Cramdown available in Chapter 13: Borrower commits to pay 100% of their disposable monthly income (after taking into account reasonable and necessary expenditures) to service their unsecured debts (which should, to reflect reality, include the undersecured portion of their mortgage). If they do this over the term of their Chapter 13 plan (3-5 years), then the remaining balance of the loan will be “crammed down” to fair market value of the collateral. Note that borrower may end up paying more than $100K, if they have the means to do so. Note also that the house bill first requires the borrower to apply for loan modification before proceeding to bankruptcy. So lenders have a strong incentive to modify loans (eg: just write the principal balance down to a number the borrower can afford to pay–maybe the lender can salvage $140 or $150K out of the deal if they act reasonably). You may have heard that–surprise surprise–the “voluntary” loan modifications are not working.
Cramdowns may seem “unfair,” but remember that the alternative is worse for the lender. Just as borrowers in the bubble had “phantom equity,” lenders now have “phantom collateral.” Pretending that lenders have better options available will only assure the worst possible outcome for all involved.
Aging computer system holds up unemployment checks to 117,000 Californians. LA Times
Some haven’t received unemployment checks for more than a month because the state Employment Development Department’s computers aren’t programmed to recognize extensions approved by Obama.
An estimated 117,000 Californians haven’t received their unemployment checks — some for more than a month — because of what state officials blame on an archaic computer system.
The people whose checks have been held up are among the neediest of the unemployed — those who have been out of work so long that their benefits have expired.
Under legislation signed by President Obama on Nov. 6, they were supposed to get unemployment checks for an additional 14 weeks or more.
State Employment Development Department officials say they are doing everything they can to issue the checks, even postponing some staff furloughs to deal with the demand for services. But they say the state’s 30-year-old computer system isn’t programmed to recognize the extensions, requiring technicians to write new code.
I’ve got this great idea on how to re-flate the economy. GIve the banks trillions and have them “invest” the money in the stock market. Then have them manipulate the market higher by trading back and forth between themselves. Next, have them pay huge returns on the government’s investment and make lots of noise about it. I think if we do this, the public is so dumb that they will never think its a scam and the plan will work. Should we try it?
UCLA sees double-digit jobless rate until 2012.
December 9th, 2009
California will see the employment picture gradually improve over the next year, but the statewide unemployment rate will remain in double digits until 2012, according to UCLA’s quarterly economic forecast released today.
“We’ll have the kind of recovery where we will underperform the U.S.,” said Jerry Nickelsburg, the UCLA economist who did the California forecast.
The forecast projects U.S. gross domestic product will grow at a 2.2% pace next year and 2.6% in 2011.
Meanwhile, California is expected to lose 652,000 jobs this year and another 41,000 in 2010.
But by 2011, job growth will kick into high gear, with the state adding 211,000 jobs. UCLA, however, predicts state unemployment to average 12% next year and 10.8% in 2011.
The stubbornly high unemployment rate will be due, in part, to population growth — more people will be competing for the jobs that are created.
This loan mod. program is a complete waste of resources. Which means ‘they’ will keep slogging along, gumming up the works until they screw it up 100%.
Only 10,000 permanent loan modifications so far.
Report: Only 10,000 borrowers completed loan modifications under Obama program through Oct. (AP)
The Treasury Department is expected to release updated results Thursday, but data through October show that fewer than 5 percent of homeowners who completed the trial periods had their mortgage payments permanently lowered to more affordable levels.
The results spotlight the limited success lenders are having in getting borrowers through the trial period, according the oversight panel report.
The biggest challenge: only one in three homeowners who have signed up for the Obama administration’s program plan have sent back the necessary paperwork.
Elizabeth Warren, chair of the watchdog panel, told reporters that the program is “not working” and that it had failed to make a dent in the record level of foreclosures, which continues to rise. More than 14 percent of homeowners with a mortgage are either late on their payments or in foreclosure.
Under the program, eligible borrowers who are behind or at risk of default can have their mortgage interest rate reduced to as low as 2 percent for five years. They are given temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete the required paperwork, including proof of income and a hardship letter.
There is no “if” about it, the senate WILL pass a/the bill, that’s what the hell they do. So all of the working “stiffs” of which I am one, will get the shaft, sans petroleum jelly.
Study: Employers would cut health benefits to avoid excise tax.
By:Tom Johansmeyer
If the Senate’s proposed Patient Protection and Affordable Care Act passes the Senate, the working stiff will probably be affected. A study by Mercer finds that 63% of employers would cut the health benefits they offer in order to avoid an excise tax included in the bill.
Mercer, a division of Marsh & McLennan Companies (MMC), reveals that 25% of employers offer health insurance programs that would be “too generous” under the act, making them subject to a 40% nondeductible tax on the excess value.
Excess value is defined as benefits above $8,500 for employee-only coverage and $23,000 for families — beginning in 2013. Retirees, workers in high-cost states and workers in high-risk jobs would have higher annual cost thresholds: $9,850 and $26,000 for individuals and families, respectively.
Twenty-three percent of the respondents to Mercer’s survey say the would maintain their existing plans, but the additional costs would be passed along to their employees. Only 2% say they would keep the plan and absorb the tax for their employees. And, a mere 7% claim they would ditch the high-cost plans. Smaller employers, which usually offer only one medical plan, say they would terminate it at a response rate of 9%.
Family Dog Survives 98 Days on Deserted New Jersey Island.
December 09, 2009 FOX~News
Buddy, a four-year-old beagle, was reunited with his New Jersey family on Monday after 98 days spent on an uninhabited New Jersey island.
Just sit right back and you’ll hear a tale — a tail, really — about a brave beagle and a family’s refusal to give up.
Buddy, a 4-year-old beagle, was reunited with his New Jersey family on Monday after 98 days spent on unihabited Gull Island in New Jersey’ Manasquan Inlet. The Kelleys, of Eatontown, N.J., lost control of Buddy on Aug. 31 as the family attempted to switch the dog’s leash while frolicking on Dog Beach in the Manasquan.
Two months later, Buddy — who had lost so much weight he was little more than skin and bones — was spotted along railroad tracks near the deserted island.
“The Coast Guard said they had seen him digging in the sand,” Edith Kelley told FoxNews.com. “He might’ve been looking for clams or sand crabs.”
Exactly how the dog survived is unclear, but Kelley said Coast Guard officials told her the dog might have survived on dead seagulls found on the island. But by the time a local man, “Muskrat” Jack Neary, successfully trapped Buddy on Monday, the once-35-pound dog had dropped to just 19 pounds.
Kelley’s husband, Charles, said he still can’t fathom how Buddy made it back home.
“I’m still walking around in a funk, it’s hard to believe,” he told FoxNews.com. “I mean, is this true? It’s hard to believe.”
Edith Kelley, whose son Patrick cares for Buddy, said the family is simply “ecstatic” to be reunited with their “miracle” dog.
“I couldn’t believe it — after 98 days,” she said. “And he’s behaving like he never left. He didn’t go feral.”
Paterson: New York Has Now Run Out of Cash.
Governor David “Downer” Paterson was at the Museum of American Finance on Wall Street earlier today to talk about how screwed New York is. He called the state “ground zero for the recession” and said, “We have a ‘lack of cash’ crisis in this state. We are in a very deep quagmire. New York is now at the breaking point. We are about to cross the financial Rubicon into fiscal disaster.” To bail water, Paterson promised to begin delaying payments for services in order to keep the state solvent. And he’s ready to defend the stop-payments in court.
“I will probably be sued for this, but I will not let New York State run out of money on my watch,” Paterson said to a group of civic, business and labor leaders. “People will remember who stood in this financial period and tried to address it and who buried their head in the sand.” Some Democrats and advocacy groups have said that impounding the money would be “illegal,” and vowed to sue. (The $2.7 billion gap-closing plan approved by the Legislature is $500 million short.) “The governor is trying to force a constitutional crisis to get his poll numbers up,” one Senate Democrat tells the Post. “It’s a very dangerous game.”
Paterson also stepped up to defend Wall Street firms that have been heavily criticized for continuing to pay large bonuses to employees. He maintained that in most cases the bonuses help compensate for the relatively low pay doled out to some in the financial industry! “We need to stand behind the engine of our economy in New York, and that engine of the economy is Wall Street…
“We need to stand behind the engine of our economy in New York, and that engine of the economy is Wall Street…”
Engine of wealth extraction from Main Street to Wall Street …
Right on, Bear!
Then tax every transaction even 1/4 of a cent per share…
I cant wait till Spitzer runs again.
Oh sure, then they’ll just move Wall Street to New Jersey!
Sure we can all be proud of the Waldo Exchange:
http://www.city-data.com/neighborhood/Waldo-Jersey-City-NJ.html
Good one PB …..aNYCdj… perfect way of getting money by taxing
the churning of gambling games .. How about a dollar a transaction .Did Spitzer think of that one ?
“New York Has Now Run Out of Cash.”
Luckily BB’s printing press technology is still in operation, and helicopter drops can deliver cash to Wall Street as needed.
I guess California is out of range from those East Coast-based choppers?
…and that engine of the economy is Wall Street…
They are doomed.
Hopefully the U.S. Congress can one-better this program, so Megabank, Inc managers will leave the country.
The Financial Times
Bankers fury at UK bonus supertax
By Patrick Jenkins and Brooke Masters in London and Francesco Guerrera in New York
Published: December 9 2009 20:15 | Last updated: December 9 2009 20:15
Bankers in the City of London reacted with fury to UK government plans to levy an immediate 50 per cent supertax on banks’ bonus payouts, saying the move played into the hands of rival financial centres.
In his annual pre-Budget report, outlining government spending and revenue plans, Alistair Darling, the UK finance minister, announced a 50 per cent levy on discretionary bonus pay-outs to curb big bank bonuses that have provoked public anger. He said banks that had been battered by the financial crisis should be rebuilding their capital rather than paying out generous bonuses to their staff.
Mr Darling justified the exceptional levy by arguing that banks had generated excess profits as a direct, or indirect, result of the government’s bail-out of the banking system. The windfall tax will apply to all banks and building societies, including groups that operate in the UK under a European Union branch system.
The levy, to be paid by banks, will come on top of the marginal tax applied to individuals’ bonus pay-outs. “We hope it will be a disincentive for banks to pay bonuses,” said one Treasury official.
…
The lending practices of Wall Street and the Banks ,which also enabled Corporate America to profit at the expense of the Majority ,should be taxed in terms of a retroactive fine or penalty or a form of windfall profit tax . I guess you could throw private Health Insurance Companies into that mix also ,who picked peoples pockets ,but also in some cases
caused lack of insurance coverage that resulted in preventable deaths .
And don’t be surprised if it comes up that part of the Health reform is designed to have the public take on the obligations of the underfunded
Corporations and Government health entitlements that they can’t pay with the 55 and older .
The lobbyist get the Politicians to make Laws and Acts and than the
unintended consequences show up ,only to be passed on to taxpayers
or its felt in the steady decreasing purchasing power of the Majority .
It reminds me of the AIG bailout in which they couldn’t pay their insurance bets ,but they sure did love those premiums when they were getting them . The Corporations, etc, bought the good will and loyalty of their workers by these promises and now it’s time to
make someone else pay .
I’m getting sick and tired of this World revolving around the invest in Wall Street games and Corporate bottom lines ,as if investments should be the sun that earth revolves around . It’s totally absurd that
30% of the average income should go to health premiums for example ,but this is how pricing have been twisted by the allowance of monopolies and favorable laws to special interest .
Firms owned by Clinton pollster received $6M in stimulus funds
Almost $6 million in federal stimulus funds was given to two firms run by Hillary Clinton’s former presidential campaign strategist, The Hill newspaper reported Wednesday.
Mark Penn, who worked as Clinton’s pollster during her 2008 presidential run, reportedly received $5.97 million from the $787 billion stimulus package so he could preserve three jobs at his public relations firm, Burson-Marsteller.
http://www.nypost.com/p/news/national/firms_owned_by_clinton_pollster_5r6xasXGmpBcS0DNnUQiPK
I just might have to break down and buy now. Just been informed by property management that the house is being sold! Only moved in one year ago. This is the 2nd home to be sold from under me and I think I’m finally done. Its gets old fast constantly changing addresses.
Beware, you might be stuck with it for a really long time.
If you have a written lease it goes with the sale. Breaking a lease works both ways
That is why I got a PO box.
Ack, it was 80 earlier today and the humidity is currently 93%.
NOT CHRISTMASY
Also, I booked flights for the holidays, and in the time between when we checked flights, discussed our options, and booked them, the price went up about $80.
WTF! I gotta day trade my flights now?
Let’s see here… seeing if there is anything else I can bitch about.
Charts would help!
So I have about 20% worth in gold and silver. I bought in 2007 and 8. But as the value of G & S goes down, my dollars are worth more. It’s all about capital preservation to me. Actually, I’d be much better off if G&S went down and the dollar went up. So what do you think? I have no stock holdings, although I am teaching myself to trade with about 8% of worth. I started in April, and have lost about 1% net worth, but have learned a lot in the meantime. I consider it tuition to learn the ropes. Any serious comments appreciated.
In other words, I see my position as a hedge. As the dollar is devalued, I have gold to make up for it. As gold and silver is devalued, I have dollars to make up for it. This is what I’m doing with my ill-gotten gains from selling early in the housing market. ( I didn’t really earn this money, so I feel like I’m not really entitled to it. Nonetheless, I want to preserve it for my family best I can.)
Give yourself some credit for being smarter than the average bear, not to mention for taking action when many were jeering the ‘gloomsters.’
Thanks. But What do I do now?:)
Diversify across asset classes (including dollar hedges) and you are good to go…
Thanks! Probably that would be the best action.
How not to win a war - prosecute our own men:
December 09, 2009
Stop Prosecuting Our American Heroes
By Chuck Hustmyre
In what must be one of the most outrageous criminal prosecutions in American history, the U.S. military is dragging three Navy SEALs into court to face criminal charges. Their crime: punching a terrorist in the mouth and giving him a bloody lip.
The alleged “victim” of this so-called assault is not just any old anti-American, murderous barbarian Muslim terrorist. No, the man who got the schoolyard fat lip was Ahmed Hashim Abed, the same man the U.S. government suspects planned the ambush, murder, and mutilation of four U.S. civilian contractors in Fallujah, Iraq in 2004. After the ambush, terrorists hung the charred bodies of two of the American contractors from a bridge.
Two of the SEALs — Special Warfare Operator 2nd Class Matthew McCabe and Special Warfare Operator 1st Class Julio Huertas — were arraigned Monday. The third SEAL, Special Warfare Operator 2nd Class Jonathan Keefe, will be arraigned later, according to the Navy. McCabe and Huertas will be tried next month.
According to a military official, Petty Officer McCabe is charged with assaulting a detainee, dereliction of duty, and making a false official statement.Petty Officer Keefe is charged with dereliction of duty and making a false official statement. Petty Officer Huertas is accused of dereliction of duty, making a false official statement, and impeding an investigation.
The U.S. military spent five years tracking this barbarian murderer, a “high-value target” whose code name was OBJECTIVE AMBER, and these three SEALs were part of the team that captured him. Now, because one of them may have given this terrorist a fat lip, they face a year in prison and the wrecking of their military careers.
It may not have even been one of the SEALs who slugged this terrorist detainee. For a while after his capture, Abed was in Iraqi custody, where it’s apparently still legal to smack around a guy who has been murdering people and trying to destroy the country.
There is also the possibility that NO ONE hit this terrorist. In an al-Qaeda training manual recovered in Manchester, England and later translated by the FBI, captured terrorists are instructed to always claim they were “mistreated or tortured during detention.”
PC gone mad.
Protect the guilty and punish the innocent. It’s upside down. Just like the housing bubble fiasco.
Can you provide context for this and your previous comment?
Maybe not, but we are the “bigger picture” people, don’t you agree? It’s fairly amazing that it was clear to us what was going to happen in 2006, while the rest seemed totally clueless. Sorry to hear your neighborhood isn’t declining anymore. Mine, neither. The nice places just stay up there for now. Anyway, best of luck, prof. And happy holidays.
Interesting …I just saw a documentary on PBS NOVA called Becoming Human Part I .
Anyway what is interesting is that this group of Scientist in the documentary are claiming that rapid climate changes in Africa for about 200 thousand years is the factor that created the bigger brains of the eventual humans . First they said that monkeys starting to stand up right
started to create more brain power ,but there was a long period of static brain development . Than they find evidence of rapid weather changes in
Africa from drought to tropical forest ,which they surmise that the monkeys that adapted to climate change grew bigger brains ,leading to present day humans . I have heard theories that fire was a factor that
helped with the brain development .
Anyway ,I thought that this was interesting in that the subject of climate change is being discussed right now ,and it might be the reason we became what we are as humans to begin with . In other words ,we developed bigger brains because of the need to adapt to sudden weather changes .
Those of us who were renting before the housing bust don’t have to endure the shame of walking away from an underwater mortgage in order to achieve the new American dream.
Are people who fail to walk away from their debt traps properly termed stupid or irrational?
* The Wall Street Journal
* REAL ESTATE
* DECEMBER 10, 2009
American Dream 2: Default, Then Rent
By MARK WHITEHOUSE
PALMDALE, Calif. — Schoolteacher Shana Richey misses the playroom she decorated with Glamour Girl decals for her daughters. Fireman Jay Fernandez misses the custom putting green he installed in his backyard.
But ever since they quit paying their mortgages and walked away from their homes, they’ve discovered that giving up on the American dream has its benefits.
Both now live on the 3100 block of Club Rancho Drive in Palmdale, where a terrible housing market lets them rent luxurious homes — one with a pool for the kids, the other with a golf-course view — for a fraction of their former monthly payments.
Rethinking the American Dream
The housing bust has brought big changes to the 3100 block of Club Rancho Drive in Palmdale, Calif. See details on the homes, debts and residents.
“It’s just a better life. It really is,” says Ms. Richey. Before defaulting on her mortgage, she owed about $230,000 more than the home was worth.
People’s increasing willingness to abandon their own piece of America illustrates a paradoxical change wrought by the housing bust: Even as it tarnishes the near-sacred image of home ownership, it might be clearing the way for an economic recovery.
Thanks to a rare confluence of factors — mortgages that far exceed home values and bargain-basement rents — a growing number of families are concluding that the new American dream home is a rental.
Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out. That’s freeing up cash to use in other ways.
Ms. Richey’s family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently. “We’re saving lots of money,” Ms. Richey says.
…
ROTFLMAO! Nice way to “save” money…
“…Before defaulting on her mortgage, she owed about $230,000 more than the home was worth.”
No worries, someone, somewhere…will “snap” this babeeeeeeeeeeeeeeeee up…maybe from Canada!
So with what I’ve posted below, do you think the environment is de or in flationary? I’m shocked that this question has not been settled by now, frankly.
BTW, I wasn’t talking about you, Ben. I hold you in highest regard.
According to the WSJ interactive graphic, CA has the highest percentage of stragegic defaults of any state (31% for all of 2008). Percent of defaults considered by Wyman and Experian to be strategic in each year:
2004 2%
2005 2%
2006 7%
2007 20%
2008 31%
It looks to me like word is out in California that strategically walking away is the best option when you are deeply underwater.
Walking Away = Hip
Get Hip America!
Bubble returns on assets (and their collapse) at FDIC-insured institutions