Bits Bucket For December 17, 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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Looks like the citi offering went over well.Are investors finally realizing they are being fleeced by corporate america?I cant wait till citi is on the dollar menu again.
“on the dollar menu again” LOL.
Or How many shares of Citi equal an ATM Fee!?
Meredith Whitney Advisory Group lowered estimates for Goldman Sachs(NYSE: GS) and Morgan Stanley (NYSE: MS).
Soon the tellers will be forced to repeat “Do you want SHARES with that?”
Gulf states take on $; launch ‘pan-Arab’ currency…
http://www.telegraph.co.uk/finance/economics/6819136/Gulf-petro-powers-to-launch-currency-in-latest-threat-to-dollar-hegemony.html
Where does this send the dollar?
Such a currency would probably become absolutely worthless whenever their only export start declining, which because of untrustworthy reserve reports could happen at any time. I don’t think it would be much of a threat to the dollar.
Mexico’s exports are down 30% and the Cantrell
field is declining at 17% per year. The central
governments revenues are down 40% so unless
we build a wall pretty soon, expect to see a lot
more illegals crossing the river.
The collapse of Mexican oil production needs more publicity than it’s been getting.
unless we build a wall pretty soon, expect to see a lot more illegals crossing the river. Frankly, I’m more worried about bullets crossing the river. El Paso TX was recently mentioned as being the 2nd safest city in the USA, next to Honolulu. Across the bridge from El Paso is Juarez, which is possibly the world’s murder capitol due to the drug war going on south of the border. Even the Mexicans are saying conditions there resemble the Mexican Civil War of the early 1900’s when a huge number of Mexicans were killed, large groups crossed into the USA as refugees & lived in camps along the border, guarded by US troops. I would be saddened but not surprised to learn of a major atrocity on US soil due to spillover from places like Juarez.
“The collapse of Mexican oil production needs more publicity than it’s been getting.”
Absolutely. Besides the impact on Mexico and the spillover impacts on us, Mexico is also one our major oil suppliers. That’s a lot of supply to make up somewhere else and at what cost.
We need to convert Mexico into our supplier of crappy goods. Keep the locals employed down there.
“We need to convert Mexico into our supplier of crappy goods. Keep the locals employed down there.”
That can happen faster than you think it would.
A substantial global increase in shipping costs could have that effect. Say, from very expensive oil or piracy costs. Short of that, I don’t see the Mexicans catching up to the Chinese or even Vietnamese anytime soon. In the meantime, we will keep buying their watermelons and avocadoes.
In the meantime, we will keep buying their watermelons and avocadoes.
They export much more than that. A lot of “American” and “European” cars soldin the US are assembled in Mexico.
well what happened to the whole mequilladora biz that was so hot back in the 1990s? did they lose everything to China? The Mexican mfg seemed a big threat back then but I agree it would be better to have it there than where it’s gone.
A lot of the maquiladoras did get shipped off to China.
What’s kind of weird is that the Mexicans are more self sufficient than we are, in that they made most of their own consumer goods.
That’s exactly what happened. They lost a lot of it to China. A lot went to Costa Rica as well.
It’s hard to conduct business in the middle of a civil war that been going on for longer than most people think.
The last I heard mexican drug runners pulled in more money than tourism. I think that was in 2006. considering tourism is dead and oil is in decline how long until they pull in more money than the gov itself. Then factor in that they have no expenses other than hired guns and you start to see the problem. Time to legalize and take away their profits.
Tourism also might be dead in due part to the Oil bidness that for decades have allowed huge amts of sludge to destroy beaches in central Am, destroying the water supply inland as well. Oil bidness unfettered by silly environmental laws.
Mexico and Venezuela combined supply 15% of
what we consume. In three years, Mexico will
have to keep what they have for their own
internal use, which is growing, and of course
we can rely on our good friend Chevez further
south. We use just under 20 million barrels a
day so where are we going to find that extra
3 million barrels a day?
We use just under 20 million barrels a
day so where are we going to find that extra
3 million barrels a day?
Conservation? I carpool and have cut my fuel usage almost by half.
Maybe if we didn’t use big azz pickups and SUVs like commuter vehicles we might not need so much oil.
Earlier this year a car dealer was selling used Suzuki SUVs (XL7) for $14K. Most were under 20K miles (they were rentals). New MSRP was about 30K, but the only thing I could see was the poor fuel economy (16/23). I knew I would be kicking myself when gas hit $5 a gallon, so I passed.
Actually it’s a good thing if people are renting SUV’s and trucks instead of using them every day.
“We use just under 20 million barrels a
day so where are we going to find that extra
3 million barrels a day?”
The short answer is we’re going to be using less and paying more.
“…unless we build a wall pretty soon, expect to see a lot
more illegals crossing the river.”
We actually don’t need a wall, though I wouldn’t mind one. What’s more effective is to start hammering these pig companies for hiring undocumented workers at substandard wages. Take away all that cheap labor, and free up more jobs for Americans, and at better wages. When are these politicians going to be called on the carpet for this crap?
Never, because Rush and company say that’s just damn socialeest/commie thinking.
And so do the banks.
Game over.
Such a currency would probably become absolutely worthless whenever their only export start declining, which because of untrustworthy reserve reports could happen at any time. I don’t think it would be much of a threat to the dollar.
That currency would not become worthless if it were backed by something. Gold, for example.
Me thinks we’re fine - we didn’t much flinch when the euro was born -
that is until we aren’t the world’s pegged currency.
Leigh
AmTrust’s new owner may need to keep fewer workers; many face ‘payless payday’ on Friday
From the Plain Dealer:
CLEVELAND, Ohio — Two weeks after AmTrust Bank failed and was bought by New York Community Bank, the jobs picture isn’t as bright as it seemed for the bank’s 1,450 employees in Northeast Ohio.
NYCB has said it’s most committed to keeping employees who work directly for the branches, but has now determined that in the Cleveland-Akron market, that is only 184 people. Still, a bank spokeswoman said others are likely to be retained, too.
Meanwhile, about 450 current and former employees are learning they won’t get a paycheck Friday. Government regulators who seized AmTrust discovered a payroll glitch from 2005 that caused hundreds of people to receive an extra two weeks of pay four years ago. So the Federal Deposit Insurance Corp. is docking it now, including from some people who just got laid off.
That means some of those who lost their jobs without notice in the past week won’t even get a final paycheck.
The FDIC estimates that AmTrust’s failure will cost the FDIC $2 billion.
“Government regulators who seized AmTrust discovered a payroll glitch from 2005 that caused hundreds of people to receive an extra two weeks of pay four years ago.”
Uh, isn’t AmTrust in the business of handling money? Isn’t that what they are about? How could they have not caught on that hundreds of employees were receiving two weeks of extra pay?
How could they have not caught on that hundreds of employees were receiving two weeks of extra pay?
The first thing that came to my mind was, “How could hundreds of employees get an extra two weeks of pay and not one of them mention it to management?”
Fortunately though, I’m sure all of those people put that “found” money aside for a rainy day.
– Wasn’t AmTrust in the business of handling money?
– How could hundreds of employees get an extra two weeks of pay and not one of them mention it to management?
– I read an article much like this in today’s Plain Dealer section of cleveland dot com. That article clearly stated that back in 2005 Amtrust’s management knew they had made an extra salary payment, and that the affected employees were told the excess would be taken out of their final pay at the time they left Amtrust’s employment. Whether that ever actually happened, can’t say. Amtrust was once in the business of handling money, poorly. The FDIC is just doing its job. The comments by the affected employees on the source’s website are interesting.
I thought that too. But I also wonder whether there is a time limit after which the company is stuck with their own mistake? We give companies protection from law suits after a certain amount of time because they are supposed to need protection from never knowing when someone might come after them. Tax years close (you can’t ask the government for your tax refund after a certain amount of time) for a similar reason. Why not the same thing for people who are overpaid as long as they weren’t actively involved?
“NYCB has said it’s most committed to keeping employees who work directly for the branches,..”
New York City Boy now owns AmTrust?!
Don’t ask me how I know but (at least in some stores), Walmart sales are down by 1-2% in November compared to last year.
I am sure they are down in some stores but what is the overall same store sales number for november comapred to last year?I would bet the overall number would be up.Just like any corporation some stores do not perform nearly as good as others.
you are probably right, my sample is small
Circut City closings are also likely to boost consumer electronics sales at certain Walmarts since they have aggressively moved into that area and may have lost some competition.
Analyzing this year’s retail numbers is going to be very complicated. Year over year sales in a particular store are interesting indicators fo how much more people are buying when you have a fairly stable retail competition and customer population in the area, but total sales in the sector are more telling of the general economy when everything is in flux as it is now.
Of course, sales are important to the company and its shareholders, but even that is of limited interest unless you know how much discounting they had to do to get those sales.
Great point.
Even same-store sales across a whole company can be misleading, due to overall changes in the retail biz.
Even same-store sales across a whole company can be misleading, due to overall changes in the retail biz.
I’ll say. This month I’ve ordered some electronics from WalMart’s website with free shipping to a local store, more than I expected I would ever order from WM. Their deals on these items beat anyone else.
Plus, prices on a lot of goods, particularly electronics are significantly lower this year than last, so they may be moving as much or more tonnage, but receiving less revenue. Year over year retail comparisons have many variables, particularly in times of volitile pricing.
Any of you watch the show Bones? The one from this week or last week - it was on DVR so I never know when it aired - paid homage to the HBB club. One of the characters could have been Professor Bear himself, railing against evil banks on a pirate radio broadcast. He ended up accidentally killing a guy who was robbing a bank, who was himself set up by two people who met at a debt counselling seminar.
Being good stewards of liberal thought, the writers portrayed the nutjob as sympathetic in the end and the bank was of course eeeeeeevil. Why was the bank eeeeeevil? Because it wouldn’t give the dead guy a loan.
Troll alert.
PB,
( I can hardly bring myself to sit thru the -commercials- for that show! ) Someone needs to find a better use of their evening hours?
Of course. I forgot everyone here only watches PBS Frontline.
I never watched bones (can’t stand network TV in general), but this comes dangerously close to hatin’ on Angel.
You know, if actually knew what a conservative was, it would be an amazing thing.
Your a loose money democrat and too dumb to know it.
oooh that had to sting.
You could hear (or here) the slap all the way out here in LA.
He doesn’t realize there hasn’t been anything capitalist about this BS baliout-a-thon because he is a mindless follower of party rhetoric.
Summary: Republicans did that so its capitalist and OK. Plus it’s pro-business.
Never mind the interventionist approach is a complete corruption of the free markets.
One who uses the word your instead of you’re shouldn’t be in the business of calling anyone dumb. And no that is not a typo, that is a deliberate use of the wrong word on your part due to a lack of proper education.
Troll alert number 5
Eddie, if you had spent more than the last few months on this blog, you would know that Professor Bear is not a liberal. He is an equal opportunity hater of politicians. Please bait the proper people.
Did you buy that house near Atlanta for $579,000? Hopefully you put down at least 50% and lowballed, or our work with you has been in vain.
Liberal does not mean Democrat just like conservative does not mean Republican. Based on his anti-capitalist tendencies he’s a liberal in the American liberal sense of the word. Everywhere else he’d be referred to as a socialist.
But I know, I know, nobody is a socialist here. You’re all capitalists who despise “rich” people, banks, Wall St. and profits while in love with unions and nationalized health care. At least Exeter is honest in what he is. Why is PB in the closet about his true beliefs?
And no, I didn’t buy that house. Decided it was too far out of the city for my liking.
Anti-capitalist tendancies? What? You mean like hating having a federally supported central bank, perhaps the ultimate form of central planning?
Wouldn’t you as a alleged capitalist, want the big banks to FAIL when they made bad business decisions?
Would it be anti-capitalist to want to see bond investors take losses instead of a govt sponsored bailout?
How about being against government bailout of banks by passing along 8000$ tax credits. Aka more money passed along to the bank?
Or do you support bailouts for every business interest, no matter how stupid. I’d guess you would have been all for saving American Motors. I’d guess you are all for bailing out the newspaper business too?
How about bailing out people who overspent? I’d guess that would be ok too? Or just “business interests” eh?
Eddie, dear. If it will make you feel any better, I’ll cop to being an ex-limousine liberal turned anarchist. I think it’s safe to say that most on this blog, whatever our socio-political leanings, are fed up with the cronyism and the unjust application of The Rules—that’s why we come here to vent.
But we all (and that would include yourself, presumably,) care deeply about our country and its fiscal future.
A little temperance on your part would go a long way. You have some valid points to discuss, but your adversarial, bratty tone precludes serious consideration by many here on the blog. If you could lighten up just a tad, you’ll have a lot more fun–and fans. Otherwise the Prof is right– you’re just being petulant and adolescent. And trollish.
Anti-capitalist? I have yet to see any REAL capitalism by the PTB.
Small mom & pop operations, the self-employed, very small businesses in general, sure. Higher up the food chain? Cronyism, patronage and country club connections and gambling OPM (unless you’re a sucker) seem to be the rule.
Now why would a country that is 75% consumer (oh let’s say the dirty word shall we?) er, RETAIL driven want to impoverish its customers?
“Anti-capitalist? I have yet to see any REAL capitalism by the PTB.”
Some folks at Lehman or Bear Sterns might disagree …
Certainly not the guys who made their millions even though the companies were destroyed.
Somehow, I don’t think they had to sell the big screen TV to eat.
Wouldnt doubt that Walchina’s sales are down, as my favorite one for ammo had all but one of the calibers that I wanted last Saturday. Usually, little to none available for the last 8 months. Six checkouts, only one had a line of more than one person, 3 were empty. Guess theyre ready for a party but few are showing up.
Here’s an unusual retail promotion, from freep DOT com: Ikea in Canton Michigan has been closed a while due to a sprinkler leak, which has been cleaned up. As a reward for shoppers’ patience, Ikea will offer free breakfasts from 9:30 a.m. -10:30 a.m. Mon-Sat. and 10 a.m. - 11 a.m. on Sunday through January 10. Kids can eat free all day.
The IKEA in College Park MD offers free breakfasts on most holiday weekends and a few other ones too. The free breakfast costs $0.99 on other days, so, not that much of a bargain.
Unglued particle board and soggy flatpacks. Yay IKEA!
Question guys,
Now this is my take of this “mortagage modification” thing. What is the payment for a normal, no downpayment, say 30 yr mortagage, $400,000, at 5%? Now, people were getting interest only loans or these liar loans or whatever where they only had to pay on the interest instead of the principal, right? That is why the payment was so low.
Ok,
I have a “friend”. He has a house that he “bought” for about $400,000. I know he has an alt type or interest only for the first 3 or five years or something like that loan, because he has been talking about how his payments have been going up. He says he is trying to get a loan workout for a lower payment. I said to him that if the lower payment wasnt in concert with what a normal loan payment for $400,000 worth of house is, he probably cant afford his home and shouldnt have bought it in the first place. For some reason, he couldnt understand this, or didnt want to. He went on and on about how the banks were “evil” and how he was a victim in all this and they were going to kick him out on the street. When I asked why didnt he buy a cheaper house, there was a moment of an uncomfortable silence and he said, “Why should I have to, they gave me the loan, they need to fix this!” At the risk of losing a semi close friend, I stopped there. I remember seeing somewhere on TV a person had a $350,000 house with one of those adjustable rate loans. When it adjusted to where the payment should be for that type of home, the “homeowner” couldnt understand why when they were doing the loan workout with the bank, the bank wouldnt make the payment permanant to the interst only or beginning payment level.
Before I left my friend, I asked him, hey man, it’s like this, you arent going to get a Yugo payment for a mercedes, it just doesnt work like that, so you will lose the house. So when I get into arguments with people about how banks arent working out loans, I feel I have to bring them this prespective. I think it may have started to sink in.
I hope I didnt get too simplistic with you guys, but that’s what my head this thinking now. I am so tired of these “homeowners” whining that the bank wont work with them to reduce their payment to a payment that is really for a lesser principal amount. Do you guys understand what I am trying to say? Does it piss you off too?
I just want to scream, You couldnt afford the house to begin with!….
rant off
Hi Stepn. That’s why you’re an HBBer - this stuff makes us mad.
Unemployment slightly worse, dollar up, stocks and commodities down today. I think that if we move slowly in this direction and get rid of Citibank there might be some hope for a slow recovery. Any frothy news could inflate more bubbles.
Quite frankly,
I’m tired of things (money wise) not making sense. I honestly dont know of anyone needing to buy a home. Where is all this money coming from? Why is it the average person back at home is making $30K and they are building 300k homes? Alot of my friends back home are either under employed or have been laid off. Why is the stock market so high? WTF is going on? Like Professer Bear said I think once, “The fundamentals just arent there”….
I dont understand…
“I don’t understand.”
Good, that means you’ll keep searching for answers.
People who think they understand stop searching for the answers.
“I am so tired of these “homeowners” whining”
Yes, absolutely.
From what I’ve observed at the time these people made their “purchases” they thought they were being really smart, and had somehow gamed the system by taking advantage of a “once in a lifetime opportunity” of low interest rates, etc.
As they say “There’s always a patsy at the poker table. If you don’t know who the patsy is, you’re the patsy.”
Why change your mindset and share the blame when you have whoever enabled you that you can blame? Don’t want to damage your precious self-esteem.
I dont understand…
I think the problem is that you’re looking for meaning where there isn’t much meaning. As a nation, we’ve used asset bubbles to hide a number of structural problems (by which I mean problems that can’t be corrected by creative accounting) for years:
1. Rising energy costs.
2. Declining job opportunities because of [automation, geographical arbitrage, deflation, etc].
3. Ineffectively deployed and maintained infrastructure.
4. Overcommitment of resources (perpetual deficits).
Suppose the economy is a machine, a well ordered series of parts interacting together to accomplish satisfying the mundane needs of daily life. When parts of that machine fail it continues to chug along, but it’s output no longer make sense. When things go wrong, they tend to go wrong in unpredictable ways.
Eventually the economy will become more ordered and sensible again, but the intermediate stages will be messy.
Eventually the economy will become more ordered and sensible again
Don’t bet on it. Right now is the best you’ll ever see.
Don’t bet on it. Right now is the best you’ll ever see.
That’s a depressing thought.
Optomist: “This is the best of times.”
Pessimist: “I agree.”
I’m with Rancher on this one - especially because I absolutely believe that what we saw these last two decades was anything but “ordered and sensible”.
I’d still love to read a spirited defense of how the last twenty five years was not only sustainable, but also expandable.
I’d still love to read a spirited defense of how the last twenty five years was not only sustainable, but also expandable.
Not a spirited defense, but I can at least make one weak case - computers. One could say that a significant portion of our economic success since the 1980’s has been due to efficiency gains driven by computers and the internet.
Just being devil’s advocate.
(My angel’s advocate says - nah, not sustainable.)
I’d still love to read a spirited defense of how the last twenty five years was not only sustainable, but also expandable.
That’s far different than “Right now is the best you’ll ever see,” which to me implies not only short-term tumult, but no “order and sensibility” even in longer-term contraction or equilibrium.
Let’s see.. Pension funds are unsustainable.
Energy, which is the largest business in the world, is not sustainable. Crop land is being
depleted. If you don’t believe that, check
the nutritional value of Canadian wheat vs
US wheat, which has been grown much longer
on the same ground. Water resources are maxed out world wide. With the damming of
the Mekong river, ecosystems in the far east
that have sustained generations are fast failing. The list goes on.
You sound somewhat … Malthusian.
“A man who is born into a world already possessed, if he cannot get subsistence from his parents on whom he has a just demand, and if the society do not want his labour, has no claim of right to the smallest portion of food, and, in fact, has no business to be where he is. At nature’s mighty feast there is no vacant cover for him.”
— Thomas Malthus, An Essay on the Principle of Population, 2nd Ed. (1803)
So according to Malthus, a man doesn’t have the right to grow or hunt his own food?
The loss of top soil and the increasing dependence on fertilizers and pesticides is indeed a HUGE issue! I recall scientists warning of these threats long before global warming became household term.
So according to Malthus, a man doesn’t have the right to grow or hunt his own food?
I don’t think was the intent of the passage; “nature’s mighty feast” refers to resources in general, which of course would be stretched to the limit under Malthus’s overpopulation scenario. (Then again, I’m not a Malthus scholar.)00
Two years ago was with a cousin farmer in south Central No Dak. When I was growing up in No Dak that area got say 25 bushels acre of wheat. So I asked what is the yeld now. He said if the rain is right (many years is is not) he could get 60 bushels/acre. I then asked him how much did he have to juice up the soil to get that….$100 per acre.
What is the price of wheat? The commodity price is “$539″ but I don’t know what that means. That’s too much for a bushel.
That is $5.39 per bushel at some delivery point, for No Dak that was Minn (for milling or barge down the Miss), Duluth(ship through the St Lawerence) or Chicago.
Well, all the additional CO2 is causing crop yeild to go up. One of the many benifits of global warming.
Plus I’m looking forward to warmer weather here in the southbay. I’d like things to shift up at least 2 C.
$223/per acre of juiced up wheat.
$134/per acre of normal wheat.
Honestly this sounds like a no-brainer for farmers. If the subsidies are structured on a per acre basis, heck I’d ruin the soil too.
Just think of the U.S. Main Stream economic reporting media as a collection of Baghdad Bobs from yesteryear:
“There are no American infidels in Baghdad. Never!” = “The recession is ending!”
“My feelings - as usual - we will slaughter them all” = “We see plenty of green shoots in the economy”
“Our initial assessment is that they will all die” = “We have created or saved millions of jobs”
“They’re not even [within] 100 miles [of Baghdad]. They are not in any place. They hold no place in Iraq. This is an illusion … they are trying to sell to the others an illusion.” = “We pulled the economy back from the precipice, and the recovery is well underway.”
Just think of the U.S. Main Stream economic reporting media as a collection of Baghdad Bobs from yesteryear:
That’s funny. A mouth piece for the elite that will say anything, with a smile on his face, regardless of reality.
FWIW - seems to me like the stock market is very much driven by Wall Street itself lately. Wall Street is no longer just the medium of exchange it used to be - it’s actually become the fuel behind the trades.
Honestly I don’t have a firm handle on it, but my belief is based on these things:
- Naked trading has become a huge percentage of actual trading, like 40% now. We don’t actually know who are buying these stocks; IMO this bodes poorly, and is an indication that there is pumping going on behind the scenes.
- As time goes by and America’s wealth grows, an ever-increasing percentage of our savings goes into the stock market - via our 401k’s, IRA’s, etc. Most of this is via mutual funds. What this means to me is that an ever-larger percentage of stock purchases are made not based on fundamentals of a company, or even of the economy as a whole, but just as simply a place to park our money.
- Along the same lines - because of that the financial sector as a whole has grown as a percentage of the U.S. economy. As such, more and more of the money going into Wall Street is coming from Wall Street; money that was originally made via commissions from long-ago trades made by main street.
In short - I would agree the fundamentals aren’t there - but increasingly the stock market just doesn’t depend on fundamentals anymore. I’m not saying that’s a good thing, just saying it is what it is. Also I’m not saying it’s a sound system - I think there’s a very good chance it’ll eventually just crash, and crash hard and perhaps even irreparably.
However - I do think there’s a chance it may not. The largest city in Nevada was built on a zero-fundamental economic system. It has thrived - with hiccups - but it has thrived. Just think of Wall Street as the east’s version of The Strip, and you’ll understand better perhaps.
Not that I’m an expert…
GS accounts for 20% of all trades, and most to
them are internal. GS has more trades than
the next 19 big banks. GS has more insiders
working in DC. Is there a connection?
Is the market being artificially held up with
inside back and forth electronic trades?
whowoodathought……
“In short - I would agree the fundamentals aren’t there - but increasingly the stock market just doesn’t depend on fundamentals anymore.”
I’ve been having thoughts along the same line. It used to be scarce money would be carefully allocated amongst possible investments (stocks, bonds, RE, commodities, etc) based on fundamentals. Now excessive money in the hands of speculators (hedge funds, banks, etc), which are desperate for returns and willing to take greater and greater risks, are distorting values away from fundamentals. As the giant bubble in RE slowly deflates, numerous smaller bubbles are floating up constantly. The economy is a friggin jaccuzi/whirl pool.
I agree 100% with your analysis packman .
As time goes by and America’s wealth grows, an ever-increasing percentage of our savings goes into the stock market - via our 401k’s, IRA’s, etc. Most of this is via mutual funds. What this means to me is that an ever-larger percentage of stock purchases are made not based on fundamentals of a company, or even of the economy as a whole, but just as simply a place to park our money.
+10 - And we all know that people (fund managers and banks) who make a living (Mostly short term goals) investing other peoples money really do a good job assessing risk, and looking out for the long term interests of their customers.
I agree with that, plus with fixed income investments yielding 100 basis points or less, where else can you put your money? I suppose you could lock it in Tbills for 10 years and get 3%, but you’re guaranteed to get hammered by inflation and/or rising interest rates. So, when a 4.75% CD matures and the bank offers you 1.5% for five years, its not real attractive.
401-K are very problematical as they typically have only a money market fund as a safe haven. MM’s are paying maybe 25 basis points/year, practically forcing participants into equity funds. With lots of the over 50 crowd throwing max deferrals into 401-K’s thats a lot of dollars chasing equities.
So, to a large extent, the market is being driven by lots of demand, and a fixed supply tempered by an occassional bout of news induced panic.
I’m shocked! Shocked I tell you.. to find gaming of the system behind the scenes, going on!
Ya think?
“Where is all this money coming from? Why is it the average person back at home is making $30K and they are building 300k homes?”
Foxtrot
Hotel
Alpha
LOL.
Subprime lender of last resort.
Micheal,
GREAT use of the phonic alphabet!
i figured i would answer your question in a way that you would truly understand.
“Where is all this money coming from? Why is it the average person back at home is making $30K and they are building 300k homes? Alot of my friends back home are either under employed or have been laid off. Why is the stock market so high?”
The money is being conjured out of thin air to support asset prices not the real economy. It’s all smoke and mirrors. These transparent measures are reflected in Greenspan’s recent comments that the US doesn’t need another stimulus b/c stock prices are up.
Oh don’t worry too much Step. The houses aren’t 300k, just will take a little while for them to get marked that way.
Dude you are right.Your friend is like countless other people who overbought.Now it is the evil banks fault.I feel the banks should foreclose on these people and the hell with loan mods.The market is being manipulated by all this nonsense.We are not setting a good precedence for the future.When people know they will get bailed out they will take on more risk.
Live within your means!!!!!
I am sure the guy would also plead “The downturn has made it hard because…” So the government needs to do something. Everyone is a victim here because nobody could have seen this coming.
P&I per month $ 2,150, not including taxes, ins or pmi.
Right. Or more precisely, enter this formula into a cell in MS Excel:
“=PMT(0.05/12,30*12,-400000)”, where
0.05/12 = monthly interest at 5% APR
30*12 = 360 = number of months of payments on a 30-yr loan
-400000 = -$400,000 = principle (enter as a negative number to get a positive answer)
Calculation result = $2,147.29.
Various online mortgage calculators will give you the same result (including the one I linked here).
In the unlikely event the owner stays put for thirty years and makes all payments as scheduled, the bank will receive total nominal interest payments of
360*$2,147.29 - $400,000 = $373,024.40,
almost equal to the home equity the owner will ’save up’ by paying off the loan. The big question from the retirement investment standpoint is for how much the home could be sold after thirty years, compared to the $773,024.40 the home debtor forked out to pay off the loan, and how that amount compares to what he could have saved by renting a comparable property for less than $2,147.29 per month and investing the difference in something else besides owner-occupied housing. With high future inflation, the nominal value of the home after thirty years could be quite a bit higher than the loan amount paid off. I guess the Fed’s success in sparking inflation fears coupled with current rock-bottom interest rates helps explain why home prices have not corrected to fully price in the high unemployment rate.
Don’t use Excel - it’s evil. See my post below.
You’re assuming rent would stay constant for 30 years. Try running the same numbers and add in 3% increase in rent every year. By year 30 that rent is up to $5200 a month while the mortgage is still $2100.
And in year 31 when the mortgage is paid off, rent will be $65K. In year 32 rent will be $67K. And so on. So right there, $100K literally thrown away in 2 years on rent when compared to living mortgage free and only paying property tax.
Yep and we all know that most Americans buy a house and stay in it for 30 years.
Assume you can rent the same house for $1800 instead of. $2147 first year. By year 7 the rent has caught up with the mortgage at a 3% a year increase. So you save money the first 7 years, then lose money the next 23 years.
Awesome strategy.
And of course the interest paid is tax deductible, while any interest earned from the difference in rent/mortgage is taxable. I’m sure you meant to add that to your calculations but slipped your mind.
That’s what the great professor used for his example.
Because of course we all know that the mortgage is the only expense of home ownership.
Let’s ignore:
- Down payment
- Maintenance
- Extra utilities
- Taxes
- HOA
- etc. etc.
All of which - in the renter’s case but not the homeowner’s - can be applied instead towards other investments that usually make more than 3% per year.
(P.S. I’m a homeowner. I’m realistic at least though in my discussions of the cost equations.)
Troll alert number 2
“Assume you can rent the same house for $1800 instead of. $2147 first year. By year 7 the rent has caught up with the mortgage at a 3% a year increase. So you save money the first 7 years, then lose money the next 23 years.”
Don’t know about wealthy areas of Atlanta, but rents are dropping in my hood.
Why are you replying to a troll #2 Prof?
Let’s ignore:
- Down payment
- Maintenance
- Extra utilities
- Taxes
- HOA
- etc. etc.
and let’s not forget this past decades ‘granite counter tops and stainless steel appliances’ will look like the 70’s shag rugs, avocado and harvest yellow appliances and fake paneling throughout. So there are the upgrades to style. Sheesh do not forget electrical and plumbing and water heaters- yep. I know you mentioned Maintenance!
Rents are dropping or are negotiable. LL just gave my f a 300 reduction to plz stay. I got over 200. and the 5 condoz I was seriously considering as alternative are 3 mo later still on mkt. lowering their prices
“And of course the interest paid is tax deductible, while any interest earned from the difference in rent/mortgage is taxable”
You must not know about AMT. I thought you were in the top 1%.
Rents dropping like rocks in Maryland close in to DC. And we still have jobs.
“Why are you replying to a troll #2 Prof?”
Troll alert number 3
Whoever said I was in the top 1%? I got hit by the AMT once, not really as bad as people make it out to be really.
I don’t know what DC is like in Atlanta $2K a month in rent gets a house that sells for $400 - 450K, give or take.
As for maintenance, HOA, etc. All offset by the tax deduction if nothing else.
Not sure about where extra utilities come into play. The utility company doesn’t charge a rate for renters and for home owners, last I checked.
If house prices fall for the entire 30 years, then yes obvisouly renting is a better bet. If prices That’s an unlikely scenario. If prices stay even constant with inflation, which is quite likely, having a fixed payment of $2147 or rent that starts even at $1500 and then increases by 3, 4 or 5 % a year, the fixed payment wins out.
And for these maintenance costs, just what are you people planning on maintaining, the Taj Mahal? Last house I owned was 2300 sq ft. I bought it when it was 5 years old. I had a home owners warranty that cost $600 a year with a $50 co-pay for each call out. I had a pipe burst in a bathroom and a pipe freeze outside during a brutal cold snap. Both times a plumber came out I paid $50, problem fixed. In addition I replaced a pool pump, and when I sold it, painted most of the house and replaced some of the sink faucets. As for maintenance, pest control, termite control, a yard cleanup every now and then after a bad storm, gutters cleaned, HVAC service twice a year. All in all, including the warranty my cost was less than $2000 a year for all of that. Not exactly a make it or break it in deciding whether to own or rent.
Are there really realtards left out there spewing the “it’s cheaper to buy than rent” nonsense after the last three years worth of carnage? I just renewed my lease at 25% LESS than the prior year. It now runs me about 1/2 the cost of owning the house with none of the upkeep.
So far in the past three years the landlord has had to replace/repair
a) original a/c system- $4k
b) original water heater $800
c) dishwasher- $400
d) pool pump $300
e) refinish the pool- $4000
f) retile the floor- $6000
g) general repairs- $2000
h) install drainage in yard- $2000
i) repair gutters- $600
They now need a new roof at $36,000 and repair the water damage to areas of the ceiling. Did I forget to mention the value of the house has declined since I moved in by some 40%? They tried to get me to buy or lease/option. Yeah, that would have been a great move. Taxes $6500 a year. Insurance $5000 a year and going up 20% next year. HOA $2400 a year. Now add a mortgage for about $300k. lawn, pool service, etc.
No thanks. I’ll continue to rent.
Troll alert number 4
“I don’t know what DC is like in Atlanta $2K a month in rent gets a house that sells for $400 - 450K, give or take.”
i saw a house listing for 820K in the DC metro area. the listing called it a great investment opportunity because the property already had a tenant.
monthly rent for this fantastecular investment opportunity?
$ 2,500.
“not really as bad as people make it out to be really.”
how bad is it eddie…i’ll give you time to cut and paste something from google.
that “not so bad” tax increased my effective tax rate by 15%.
Please, PB. I don’t think this is trolling. In the buy v rent war, buying does, or did, have advantages.
If there’s a normal market and mortgage is about the same price as rent and somebody stays in the house for 30 years (or at least doesn’t trade up if they move), then yes, buying is better than renting. Appreciation takes care of closing costs, the tax deduction takes care of maintenance, and I guess other little expenses are cancelled out by “the pride of ownership” or whatever it is.
Of course, I have no idea what a normal market is, and I’m pretty sure we’ll never see 30 years of normal market again, or a situation where somebody sensibly stays in the same house (or similar house) for 30 years.
Eddie, I must disagree with you. How long did you live in that first house you bought?
Bought our first house in our late thirties at the bottom of the last California bubble, small, cheap, but needed a roof and some other stuff. Spent $24,000 in five years. Luckily we sold when prices were rising, moved from south to north.
Second house we were in our early forties, bought 1998, cheap, but again needed work - roof, furnace/AC, water heater, paint, carpet. Spent $30,000 in eight years, sold at the top.
If you’re not high income, it’s not worth buying when you’re young and likely to change jobs/relocate, because it’s more expensive than renting. If you have the money and enjoy a house, buy one. Just don’t mind the expense.
My house looks beautiful today - the sun is shining and my Christmas decorations look great.
OK I’ll shut up now. Sheesh, who wants to hear about an old lady’s decorations?
All offset by the tax deduction if nothing else.
Must…not…respond…to…troll….
OK - can’t resist.
I’m amazed at how no one ever calls the bluff on that that myth/misconception.
Yes indeed of course mortgage interest is tax deductible. However capital gains are taxed, so it evens out.
Say you have two people that own their houses outright; say they’re $300k houses (though the house value and price change isn’t relevant for this example). Say they’re both in a 30% tax bracket.
Person A: Decides to take advantage of the tax deduction. Takes out a $200k mortgage on his house, at 5%. Invests in some guaranteed-income investment at 5% - figuring he’s better off since the 5% borrowed is tax deductible.
Person B: Does nothing.
At the end of two years they sell their houses for $300k.
Person A: During the course of two years, has:
- paid $20k in mortgage interest ($20k in the hole)
- gotten $6k in tax refunds($14k in the hole)
- gotten $20k in investment income ($6k over)
- paid $6k in capital gains tax on that $20k gain (now even)
- sold his house ($300k up)
- thus has $300k in the end.
Person B: Only sells his house, thus has $300k in the end.
Thus the mortgage interest deduction is completely offset by the capital gains tax on the investment made with the borrowed mortgage money.
This of course doesn’t account for closing costs, time spent, etc. Also it assumes that you could get the same return on your borrowed money that you spend in the mortgage. Keep in mind that paying off a mortgage (or making a larger down payment, or simply not having a mortgage) is a guaranteed investment. Right now for instance - what guaranteed investment can you get for 5% (about the rate of fixed-rate mortgages)?
Got to correct myself on one thing. Currently long term capital gains tax is 15%, and isn’t equal to the top income tax bracket. That improves the “mortgage” side of the equation.
Nevertheless:
- The majority of people who own houses are in the 15% or 25% tax bracket (not 30% as in my example).
- There are proposals to increase the long term cap gains tax significantly.
- Generally much mortgage interest in essence *isn’t* tax deductible, since the bulk of it usually only offsets the standard deduction which would be normally used for a person/couple that didn’t itemize.
I’d guess a long drawn out discussion that the mortgage interest deduction only acts as a price support and you pay more as a result of it would be out of the question.
Basically the advantage of said deduction goes away quite quickly and prices adjust upwards. So, you get to pay additional money to the original asset holder and to the bank.
Hence the discussions about taking away that deduction.
I think we all realize the Eddie is probably lying about his income or he’d have railed about the AMT a long while ago.
Oh my goodness, yes. The first year of the AMT I missed it and computed my taxes the good old fashioned way, with lots of lovely deductions. The IRS sent me a bill for $4000. Ouch. I had to increase my withholding a lot. AMT sucks. And it’s so hard to calculate that I finally bought Turbotax.
It’s not just that You couldnt afford the house to begin with!….
It’s that by borrowing irresponsibly to buy a house you couldn’t afford to begin with, you have made the house unaffordable to a responsible borrower who could have otherwise afforded that same house.
My money’s on “didn’t want to.” At some level it isn’t so much that people were making a Yugo payment on a Mercedes, but that they were making a Ford Taurus sized payment on a Mercedes sized loan for a Ford. But, “They gave me the loan, they need to fix this”? Why do people imagine that the bank has a vested interest in keeping them in their homes? The bank just want’s its money back. Failing that, they want to minimize their losses. It’s possible that it is cheaper for the bank to do a workout than to foreclose, but only if: 1.)You won’t* continue to make the payments that you’ve agreed to AND 2.) There isn’t somebody else willing to agree to make payments on a loan amount greater than you are.
These crazy buyers during the boom drove the prices up .If they were honest a good percentage of them bought the more expensive house because they thought they would make more money in a short amount of time and they went on the toxic loan because of leverage.This is how houses were sold at the time and now the borrowers are being dishonest in saying they weren’t going for “easy money”. Sell to a greater fool and let your house give you the lifestyle you always wanted .However ,its the Lenders fault for not underwriting loans or for providing low down toxic liar loans to ‘leverage buyers that were betting on real estate going up .
Had the public refused to lie on loan applications and just backed off
when the prices started to skyrocket ,than the fake market would
of stop earlier . They were brainwashed no doubt into believing
what the commission sales people and loan officers were selling .Their neighbor told them a story about how they made 100 grand in 6 months so they wanted that to . Heck, they had TV programs showing that flipping was a sure fire way to quick wealth .
That is not to say that borrowers weren’t taken advantage of in that the professionals should not of encouraged this scheme with them . I have never seen so many borrowers willing to commit loan application fraud ,but all the way up the chain fraud was going on right up to Wall Street . IMHO of course
You have provided a very good example of one of the underlying sociological contributors to the bubble. Yes, people should have made sure they could afford the payments before they bought. Yes, they should have done the math. Yes, there was a lot of stupid out there.
BUT, since the start of mortgages in this country up until the start of securitization of nearly all mortgage loans, people have always fought to get more money from banks. Banks have always been stingy with mortgage money. No one had to worry about whether they could really afford the loan since absent a tragic accident or unexpected job loss you could always afford the loan - the bank made sure of that before they gave you the money. Checking to see if you could afford a loan was about as necessary as checking if the water coming out of the tap was infected with cholera.
I don’t think that the people who missed the transition should be protected from their folly. And I certainly think that the folks involved in fraud, even as simple as claiming to borrow for a primary residence when they weren’t, should be punished. But I get how some people, especially those who grew up in families that always had to fight banks to get any loan at all, missed the fact that the banks had completely abandoned their standards.
polly,
I’ve no qualms w/ your statements nor any of the above comments. I think where we’re missing the point though is that hardly ANY of these people in option/arms thought they would be around for the re-set!
Whcih brings us -right- back to CGE. Or “two and out!” Since by design they typically didn’t begin to repay prin. until the 3rd to 5th year ( it was going to be someone ‘else’s’ problem anyway ) And yes, those that claimed Primary Res. should be prosecuted to the full extent of the law.
D in OR is right. Not only did the buyers have no intention to pay the fully amortized loan, but the banks believed that homeowners had EVERY intention to pay the fully amortized loan. And the banks calculation on that.
Well the securitizers convinced the bondpurchasers that enough of ‘em would keep paying for long enough that the bonds would pay off. The problem is the EVERYBODY; borrowers, loan agents, banks, Wall Street Firms, and even the bondholders thought that they’d be long gone counting their money before Humpty Dumpty hit thg ground.
“The problem is the EVERYBODY; borrowers, loan agents, banks, Wall Street Firms, and even the bondholders thought that they’d be long gone counting their money before Humpty Dumpty hit thg ground.”
Yes and no. I am tired of these blame games which try to identify the culpable. Let’s just agree that a banking system dominated by the presence of a cartel whose membership consists of a few systemically-risky 800 lb gorillas which have blanket too-big-to-fail bailout insurance is quite prone to break down, due to the fully rational belief amongst Megabank, Inc cartel members that they are playing heads-we-win, tails-you’re-screwed. In short, the current system actually incentives the biggest players to take actions which appear irrational, in order to capture larger upside winnings during the boom times and subsidized insurance claims payments during the bad times.
“… the banks had completely abandonded their standards.”
If these standards were to minimize the bank’s risk then I don’t think banks abandonded them at all. They merely passed these risks onto someone else.
Which worked until …
But you have a duty to not pass on fraudulent loan packages to the eventual fund provider .
Oh oh.. but how were they fraudulent? Moody’s rated them Triple A!
[/bank]
Polly,
The entire banking fiasco started the day banks
started selling their mortgages. That was the
day when they realized they weren’t using their
own money. byebye responsibility.
Rancher,
I am going to disagree with you on this one. There is no reason, in principle, that mortgage securitization had to lead to a financial catastrophe. In a market firmly subject to a rule-of-law, particularly including a law that says banks cannot lean on the Treasury Secretary to cobble together an ad hoc bailout of subprime mortgage lending kingpins when their idiotic loose-lending gambles go sour, there would have been no reason for investors to purchase subprime MBS, as the punishing losses which incurred when the scheme collapsed would have solely been the problem of the greater fools who owned MBS when the tide went out. The problem is that the Fed and Treasury had demonstrated a long track record of too-big-to-fail bailouts, and the wizards of Wall Street correctly bet that when the SHTF, they would be reimbursed for their bad gambling debt.
TBTF encourages foolish gambles which stick anyone caught holding dollar obligations when bailouts are triggered with a dilution tax. Hopefully this topic is not under the list of subjects which would compromise the Fed’s ability to conduct an independent monetary policy, as it would be great for the Congressional auditors to get a better handle on the Fed’s role in encouraging foolish Wall Street gambles with the expectation for a heads-we-win, tails-you’re-screwed payment structure.
Spot on.
Unfortunately since we’re a “civilized society” we no longer have debtors prison. Maybe time to rethink that?
There is no reason, in principle, that mortgage securitization had to lead to a financial catastrophe. a market firmly subject to a rule-of-law.
So it would be safe for me to leave my wallet on a chair at the airport while I check on my flight. I mean the thief knows he will get arrested if caught.
Securization is cat nip to banking thieves.
So it would be safe for me to leave my wallet on a chair at the airport while I check on my flight. I mean the thief knows he will get arrested if caught.
Actually pretty much yes, as long as proper security measures - e.g. video cameras in this analogy - are in place. And if the thief knows he’ll be actually punished - as in prison - for stealing, rather than rewarded for “saving your wallet from another thief”.
When I was working on securitization transactions in my first NYC law firm, the partner in charge of the deals would not sign off on the deal unless the originator kept the “worst” 10% of the loan pool as an equity tranche. There was a tax reason for this related to making sure the structure was considered a well capitalized corporation so the other tranches could be debt, not equity. That tax reason was eliminated around the time that I stopped working in those deals. I am sure that eventually someone would have found a way around the requirement even without the tax law change, but it was entertaining to hear the clients whine at him about keeping the equity stake. He never budged on the requirement.
These were mostly loans on cars, industrial equipment and credit card receivables. I don’t recall ever working on a mortgage securitization pool.
Very interesting polly - thanks. I’d be very curious about that tax change. What timeframe was that? Do you know if that change applied to MBS as well?
There are a multitude of things like this that all summed up to equal the housing bubble push. This is why I hate when people try to point to a single cause - be it CRA, interest rates, Glass-Steagall repeal, etc. They all contributed.
“…the Fed’s role in encouraging foolish Wall Street gambles with the expectation for a heads-we-win, tails-you’re-screwed payment structure.”
What’s the difference between “Wall Street” & ‘Shane”?
answer: “you can’t remake “Shane”…the “lead” actors are all dead!”
This is why I hate when people try to point to a single cause - be it CRA, interest rates, Glass-Steagall repeal, etc. At least when they point to one cause of the problem, they are admitting there IS a problem. If we ever get out of the hole we’re in, we will have to deal with several of the causes.
“So it would be safe for me to leave my wallet on a chair at the airport while I check on my flight. I mean the thief knows he will get arrested if caught.”
I would guess petty thievery is a lot harder to notice than lending debauchery executed by some of the world’s largest and most powerful investment banks, but perhaps I am missing your point?
I would guess petty thievery is a lot harder to notice than lending debauchery executed by some of the world’s largest and most powerful investment banks, but perhaps I am missing your point
I’d say the current prosecution rate of the powerfull investment bankers suggests otherwise. I think they would have done the same thing knowing there was a good chance they’d be caught. Too much money on the table, just ask Madoff.
Packman,
“Check the box” regulations on choice of corporate entity.
I think the mortgages may have been worked through special tax entities with their own requirements, but I’m just not sure. Like I said, I didn’t work on those deals. Englishman in NJ would probably know.
I’d say the current prosecution rate of the powerfull investment bankers suggests otherwise.
That’s because what the did wasn’t technically breaking the law - at least from what I see. I think what PB is proposing is new laws simply preventing these entities from being bailed post-hoc, or at least making backroom deals to create such bailouts illegal. Thus any bailouts that aren’t explicitly agreed to ahead of time (e.g. such as a soon-to-come FDIC bailout, which already has an explicit $500 Billion backstop, as approved by Congress), would be illegal. Since they’re obvious and traceable (unlike an airport wallet thief), such illegal acts would surely prevent such bailouts. As such, the proper risk could be factored into the prices of these securities. They would be more expensive, and thus less desirable and less popular.
Actually, I have repeatedly advocated applying the Sherman Antitrust Act (or a modern incarnation, in case the historical version is no longer applicable) to break up the TBTF banks in order to foster a leaner, more efficiently competitive banking industry which does not perpetually hold a TBTF-bailout gun to Main Street’s head. The lobbying and campaign finance mechanisms unfairly allow members of the Megabank, Inc cartel to capture their regulators and the Congress, and to dangle the TBTF Sword of Damocles extortion threat over the global economy at all times. I simply don’t see how this unlevel regulatory playing field can be ended without busting up the TBTF trusts.
Agree. Let’s start with the biggest monopoly, which is the Federal Reserve.
You know I just don’t believe in too big too fail.
The other aspect of TBTF is also going to turn out to be TBTB too big to bail.
Eventually we will get that hyperinflationary scenario.
“Eventually we will get that hyperinflationary scenario.”
Anybody who doesn’t bother to hedge against that is definitely exposed.
Yes. Securitization started ramping up rapidly in the mid-90’s - not coincidentally right before housing prices started ramping up.
Question is - is there something that triggered the securitization ramp-up? I haven’t found a particular reason, though I haven’t really looked that hard yet.
One thing that I’ve seen mentioned is the Basel accords in 1988, setting rules for what banks’ leveraging. These were amended by the Recourse Rule in 2001 to allow more leveraging, but perhaps even the original accords, even though the purpose was to set limits, actually encouraged additional leveraging by imposing such limits that may have supplanted many banks’ own tighter standards. Pure supposition on my part though - if anyone has any more thoughts I’d love to hear.
If that was the case, then perhaps there was some lag time until the mid-90’s as the tools were developed to take advantage of the leveraging rules as they were set in 1988 - to allow the banks to “push the envelope” to its legal limits.
Not sure though.
More likely is just simply the advance of computer technology in the 1990’s - making it a lot more logistically feasible to manage the mush of MBS - to slice and dice as desired without adding as much overhead cost as would otherwise exist if things were done by hand.
MS Excel - first released in the late 1980’s. Visual Basic for Applications (VBA) - allowing for user-defined programming functions, was introduced as an add-on to Excel in 1993.
Might VBA be the root cause of the housing bubble?
I knew Bill Gates was up to no good…
Securitization started the day the government
forced the banks to loan in the red line areas.
There was a reason banks didn’t loan to those
that had lousy credit, they wanted their money back because it was THEIR money.
Once the banks were coerced into making weak loans, they started selling their paper and the rest is history.
It was not a financial decision, it was a
political decision to force the lending institutions into expanding the loan portolio
by making ever increasing risky loans.
Once the banks were coerced into making weak loans, they started selling their paper and the rest is history.
Supposition - or do you have any evidence of this cause/effect?
I have no doubt the banks were forced into making loans they didn’t want to make by CRA etc. I’m not sure that’s what triggered securitization though. Not denying, just haven’t seen any actual evidence.
Wikipedia
February 1970, the U.S. Department of Housing and Urban Development created the transaction using a mortgage-backed security. The Government National Mortgage Association (GNMA or Ginnie Mae) sold securities backed by a portfolio of mortgage loans. [4]
To facilitate the Securitisation of non-mortgage assets, businesses substituted private credit enhancements. First, they over-collateralized pools of assets; shortly thereafter, they improved third-party and structural enhancements. In 1985, Securitisation techniques that had been developed in the mortgage market were applied for the first time to a class of non-mortgage assets — automobile loans. A pool of assets second only to mortgages in volume, auto loans were a good match for structured finance; their maturities, considerably shorter than those of mortgages, made the timing of cash flows more predictable, and their long statistical histories of performance gave investors confidence.[3]
This early auto loan deal was a $60 million Securitisation originated by Marine Midland Bank and securitized in 1985 by the Certificate for Automobile Receivables Trust (CARS, 1985-1).[5]
The first significant bank credit card sale came to market in 1986 with a private placement of $50 million of outstanding bank card loans. This transaction demonstrated to investors that, if the yields were high enough, loan pools could support asset sales with higher expected losses and administrative costs than was true within the mortgage market. Sales of this type — with no contractual obligation by the seller to provide recourse — allowed banks to receive sales treatment for accounting and regulatory purposes (easing balance sheet and capital constraints), while at the same time allowing them to retain origination and servicing fees. After the success of this initial transaction, investors grew to accept credit card receivables as collateral, and banks developed structures to normalize the cash flows.[3]
Starting in the 1990s with some earlier private transactions, Securitisation technology was applied to a number of sectors of the reinsurance and insurance markets including life and catastrophe. This activity grew to nearly $15bn of issuance in 2006 following the disruptions in the underlying markets caused by Hurricane Katrina and Regulation XXX. Key areas of activity in the broad area of Alternative Risk Transfer include catastrophe bonds, Life Insurance Securitisation and Reinsurance Sidecars.
The first public Securitisation of Community Reinvestment Act (CRA) loans started in 1997. CRA loans are loans targeted to low and moderate income borrowers and neighborhoods. [6]
You’re only off by a decade or two rancher
The first public Securitisation of Community Reinvestment Act (CRA) loans started in 1997. CRA loans are loans targeted to low and moderate income borrowers and neighborhoods. [6]
You’re only off by a decade or two rancher
Not really actually. While CRA was first enacted in 1977, it didn’t have significant teeth until the various activities in the early and mid 1990’s.
The idea that securitization was started due to CRA is complete bunk. The first securitization of CRA loans was 20 odd years later. Securitization was done on other loans for 20 years prior to securitizing CRA loans.
Waah, we were FORCED by CRA to making bad loans…Please this is simply NOT a credible excuse. If they hadn’t discoverd that in a persistant falling rate environment there was BIG money in bad loans, they wouldn’t have been doing it. To assume that the Banking industry could have congress wrapped around it’s finger enough to repeal Glass Stegal and get a half a dozen other laws changed to their benefit but were meekly forced by CRA into making bad loans (and tons of money) is simply unbelievable.
The lack of underwriting that the securitization enabled would never have gone on for as long as it did except that for YEARS we were in a falling rate environment. Between 2000 and 2004, almost everybody refinanced, almost everybody’s house went up in value, and almost nobody got foreclosed on. Mortgages consistantly paid off early (which was a problem for the GSEs) which meant that MBSs paid off no matter how bad the underwriting was. Mortgages became short term investments, and everybody thought that they would be able to get off the ride before the music stopped.
To assume that the Banking industry could have congress wrapped around it’s finger enough to repeal Glass Stegal and get a half a dozen other laws changed to their benefit but were meekly forced by CRA into making bad loans (and tons of money) is simply unbelievable.
Thank you.
I defy the ‘CRA’s caused it all’ crowd to refute this statement.
Right polly ,the lenders didn’t make a announcement that they
weren’t underwriting loans anymore ,so that would cause a lot of people to think that if the bank gave them the loan if must be OK. Did these people know that loan agents were messing with their loan applications to make them fit the box. Real estate agents were showing people houses they couldn’t afford ,so that group breached their duty to screen and only show borrowers something they didn’t have to commit fraud to get .
In fact ,that was part of the problem that the industry was riding off the past steam of prior markets in which underwriting was taken serious . Did the average person on the street know that deregulation had occurred and nobody was protecting the deposits people made and junk paper was rated better than it should of been . Did the average person think ,”I’m getting this loan because lobbyist got a bunch of stupid stuff passed because of their greed and bought of Politicians ?
I bought my house in 1988, been there ever since and paid off the loan about 8 years ago. The loan qualification process in 1988 was so arduous that I swore that was the last mortgage I would ever apply for.
Interestingly, the mortgage was written by none other than Washington Mutual, which at the time was really the gold standard of residential lending.
How times change.
Spokaneman,
It would be funny if it wasn’t so tragic. IIRC their Waterloo was “Long Beach Lending” which originated their subslime loans. Darwin at his best!
Again, there -are- times I regret not having stayed in the same house we purchased around that very time. We’ll look back and at this rate, people that bought in the 80’s ’should’ be sheltered from downward spiral?
wamu now chase is so busy Chase ing after investment $ they literally walk around/talk around you as if you aren’t there to get at someones possibly Big deposit. You write your name on a list, and as all pple wait your turn to be called. But the “investment” counselor will literally ignore you IF you don’t look like ie: holding a folder, you are making big transfers. Guy next to me couldn’t believe it. Could go on…The guy said he went to the Korean bank and got great service.
I don’t often go into my bank to talk to someone. I always use the ATM to deposit my paycheck or get cash. But I have gone in to talk to someone, once in 1997, and again in 2004. In 1997, my wife and I lived in an apartment, and were looking to buy our first house. We made about $55K combined at the time, and had no credit issues. The banker told us we were approved for up to $190K, with a 20% down payment. I said “how about $200K”, and he said “no way - the limit is $190K”. That was the bank’s mentality in ‘97 - strictly enforced DTI limits. By 2004, our income had nearly doubled, and we wanted a bigger house. So we put down a deposit on some new construction. But between the sale of our old house, and the completion of the new house, we spent 8 weeks living at my mother-in-law’s. In the mean time, we had about $100K in cash from the sale of the old house. We went to the bank to park this cash and make some interest for a few months. This time the lady we talked to was absolutely baffled that we planned to use this money as a down payment on the new house. She was also eager to get our mortgage business. House prices at the time were rising so fast, she said we could come back in a few months, and do a cash-out refi. I said “but we want to pay down our mortgage”. The quote I remember from her was “Oh no! - you gotta get that equity OUT of there.” So in ‘04 we could have spent our $100K cash from the old house, plus some instant equity from the new house. Party-time! This was the advise the bank was giving out in 2004. I can see how some weak-willed people could have fallen for it. If we had listened to her, we would be in real trouble right now. Instead, we put down as much as we could, and borrowed just $240K. This year, we refi’d into a 15 year fixed at 4.375%. We owe $200K, and more than 1/2 of our $1600 monthly payment goes towards principle. I gotta say, my wife is one of the good ones!
Yea Chris! Hug yer wife!
Polly you are correct. When we got our loan 24yrs ago. We barely qualified with the bank. 10% down, long steady job, great FICO, although it was at 3.5X income. We were overjoyed.
I feel your frustration. Believe me. But even when I’m close to giving in to the continuing madness of it all, I pull back (largely in thanks to this blog) and revert to being content with my situation - renting and saving. I sometimes think with all the saving I’m doing, at some point the market will meet my bank account and I’ll be paying cash! Ok, probably not, but it sure is nice to see the money (even devalued as it may be) pile up.
My 5-1/2 year old son sees my struggles. He knows how badly I want a house (he usually has to come along when I look at properties). The other night he said to me that it was ok if we didn’t get a house - we could just make where we live really nice (I’m in the process of redoing his bedroom to make it more of a combined bed/playroom in lieu of waiting for a biegger place to buy). A 5 year old gets it, and so many adults don’t. I have a great kid, and it seems I’m raising him right.
Hang in there! Keep blogging with us. It keeps a person sane.
eastcoaster,
That is one of the most important ( and impactful ) posts I’ve read since reading here! Seriously, I’d never thought about this debacle thru the eyes of a child.
What a mess. I guess we know we’ve gone and srewed up BIGtime when a kindergartner can see the fallout? ‘You’ hang in there as well!
And thank you, gives us all the motivation to “buck up” ( if only for their sake? )
Your son sounds like a doll. What a non-spoiled, level headed kid you raised.
Hey Step, not to change the subject, but what’s up with this war? Could you tell your commanders that we can’t win both the war on drugs and the war on the Taliban, we have to pick one or the other? Maybe you could percolate the message upwards. Thanks, LVG.
Could you tell your commanders that we can’t win both the war on drugs and the war on the Taliban, we have to pick one or the other? Maybe you could percolate the message upwards.
Yea, that would look real good on my career prospects.. LOL…..
I wouldnt do that if I wanted too, but I know we can win this. I sort of agree with you on the war on drugs in the U.S., which is what I assume you are talking about. I’m one of those we need to legalize it and tax type of people. But to say we cannot defeat an enemy is stupid. We can defeat ANY enemy, anytime, anywhere. To say we cant is to admit defeat and become submissive. I will NEVER accept defeat nor will I allow my soldiers to accept it. I would rather come home in a coffin. You will sleep well in your bed tonight because of what me and thousands of my comrades do today. I cant understate to you the threat radical Islam poses to the free world. I will fight this cancer until I die, for I refuse to let my family or my fellow americans live under an Islamic Regime…
What I’m saying is, if we left the Afghan poppy farmers alone (and left their downstream processors and customers alone) it would be WAY easier to defeat the Taliban. We’d be more focussed and we wouldn’t be pi$$ing off peaceable farmers who are simply supplying a demand from our own country.
Oh, and thanks x 10E6 for your service and dedication.
Heck if “the war on drugs,” was our main aim, we could have left the Taliban “in charge”. ‘Cause before the invasion they were REAL tough on opium farmers. Arguably that’s WHY there was a Northern alliance for us to ally with.
“Before I left my friend, I asked him, hey man, it’s like this, you arent going to get a Yugo payment for a mercedes, it just doesnt work like that, so you will lose the house.”
That’s a good argument that should be easier for most people to understand.
Pre-bubble, lenders mostly wouldn’t have made loans they didn’t think would be repaid, i.e. financed more house than a person could afford.
I think many buyers are still in that mindset when buying a house, “if they made the loan, they thought I could afford the house”. Well that clearly wasn’t true during the bubble and still isn’t true. With tighter lending standards for house loans, that expectation could some day return.
When I asked why didnt he buy a cheaper house, there was a moment of an uncomfortable silence and he said, “Why should I have to, they gave me the loan, they need to fix this!”
Last summer Janie took me to see a house purchased by Susie.
When Janie asked me what I thought, I didn’t have the heart to say Susie just got boned to the tune of about $100k. Which Janie would have taken as sour grapes anyway since I am a bitter renter.
It wasn’t long before Susie was complaining about not being able to pay her bills, why doesn’t the government DO something to help? I had to bite my tongue. Susie and husband could have purchased a more affordable house in a number of decent neighborhoods, but she just had to live in Chadds Ford.
I wonder if Susie has been the beneficiary of the “I Need to Impress Others with my Zip Code” Bailout.
I completely agree with respect to buying more house than you can afford (borrowing too much, etc.). That said, banks are being a bit tougher than they should be in many cases (in my opinion). Here is a case that I know from a friend.
1. Home originally bought for, say, $2.5MM, borrower put $1MM down and borrowed $1.5MM on a 15-year, fully amortizing loan.
2. Several years have passed, owner has been perfect on the payments, principal balance on the loan is now at about $1.1MM.
3. Home value now is about $1.25-$1.5MM (there is an appraisal at more, but who believes those).
4. Owner is running into issues with his business and would like to restructure the loan to reduce monthly principal reduction.
With that setup, he offered the bank a 10% paydown, and requested that they re-amortize the loan over 30 years. He’s not asking for a break on interest rate, or principal reduction, just a re amortization.
They said “no”, because as a business owner he can’t “prove” his income (despite having income, and having been perfect on payments for the past x years).
He was essentially told by the bank to stop making payments in order to get to the loan restructuring department.
I’m not saying the bank has an obligation to restructure any of these loans, but I’ve seen handouts to some people (ie. essentially taxpayer money going into the pockets of deadbeat borrowers by virtue of principal reductions/interest reductions, etc.), and this guy isn’t really looking for anything other than a re-amortization to reduce the pace at which he pays down the loan.
Seems to me that the bank should have been thanking him for not defaulting and impacting their balance sheet and worked with him. That restructure wouldn’t have cost the bank $1.
Now it will.
Treasury debt data out for October. China is now a net seller of U.S. treasuries for the last 6 months - some may be surprised to find.
Biggest buyers lately have been Japan, UK, Brazil, and Honk Kong.
link
So, does China need the money, or what? Their exports have fallen off…
Probably nothing to do with exports. I have a feeling worldwide Chinese exports have only gone up.
China needs the money to buy gold, secure resources (oil, gas, coal, minerals) and to spend on huge infrastructure developments.
There is also a possibility that they are now routing their purchases through Hong Kong.
Also, don’t ever trust the purchases from UK. Those are probably being funded indirectly by the US taxpayer. It’s like the good old tech bubble days when companies used to trade ad space on each other’s websites and book the revenue.
Yeah pretty sure the UK ones are from the BOE - kind of a “you scratch my back I’ll scratch yours” thing. I wouldn’t be surprised if the U.S. is buying tons of UK debt too.
W/regards to China - I think as you imply it’s just a case of them being less dependent on exports to us now. The rest of the world is coming out of this recession better than us, and as such Chinese exports to the rest of the world are increasing whereas their exports to us are flat or decreasing. Thus they’re not as driven to help us prop up the dollar.
Good question about HK - no clue about that one, except that HK purchase haven’t ramped up *that* much - and the main month they did - July - China purchases also were up a lot. So that indicates that HK isn’t acting as proxy purchaser for China.
Reducing T-bond purchases and snapping up more gold may appear to be a smart diversification move, but I suspect it will bite them in the arse before this episode is through. The dollar is oversold at this point, and eventually the stopped-clock “strong dollar policy” rhetoric out of Treasury mouthpieces will prove quite accurate.
Maybe, but it seems like the “strong dollar policy” rhetoric is just that - rhetoric.
Case in point 1.
Case in point 2.
(That’s just from articles from today. Let’s see - additional $254 billion spending in one day - that works out to be about $93 Trillion per year!
).
I’ll post this again
This year central banks will buy 13.8 million ounces (429 metric tons) this year, worth $15.5 billion, for the first net expansion in reserves since 1988, New York-based researcher CPM Group estimates. Gold fell 15 percent that year and took another 15 years to trade again at the same price as central banks from Switzerland to the U.K. cut their holdings.
India, China and Russia are now adding to reserves as gold nears its longest winning streak since at least 1948. They’re joining a rush as investors in exchange-traded funds amass holdings to rival the biggest central banks. Clive Capital LLC, manager of the biggest commodities hedge fund, had its best return since May last month, led by gains in precious metals.
Now
On September 18, 2009, the IMF’s Executive Board approved gold sales strictly limited to 403.3 metric tons, representing one eighth of the Fund’s total holdings.
I just wonder if this is some back door way to pump money to the IMF??
From the IMF web site
The IMF monitors the world’s economies, lends to members in economic difficulty.
So is this a way to covertly fund the IMF. Citizens might cry bloody murder if they saw that there gov was giving the IMF money when so many at home are in pain.
Read the other day that the UK has scaled back a bit. I still think the Anglo-Americans buying each other’s debt is high comedy.
Looks like this ship may be going down: Ledyard, Connecticut
http://www.theday.com/article/20091217/BIZ02/312179330/1018
This after Pzifer’s recent news that it’s closing its New London, CT headquarters. Southeastern CT is going to be in big trouble.
“Legal ramifications in ‘uncharted waters’ after Mashantuckets fail to make $7.5 million interest payment
It’s not the kind of milestone that warrants a parade.
Without acknowledging it overtly, the Mashantucket Pequot Tribe officially defaulted Wednesday on a $21.25 million bond-interest payment that was due in full a month earlier. At the time, the tribe made a partial payment of about $14.2 million.
Wednesday marked the end of a 30-day grace period for the balance.
The tribe, owner of Foxwoods Resort Casino and MGM Grand at Foxwoods, forwarded an inquiry about the remaining $7 million due to Joele Frank of Wilkinson Brimmer Katcher, the New York firm it hired to handle communications related to its restructuring of more than $2 billion worth of debt.
Foxwood’s expected default was mentioned in the native American law blog at turtletalk Dot wordpress dot com, original source somewhere in Bloomberg, this dated 28 August 2009: Creditors probably can’t take over assets or operations of casinos on tribal land, which are sovereign nations, as they may with commercial bankruptcies, Neuburger [an analyst at Fitch Ratings in New York] said on a conference call. That leaves them little choice other than to restructure debts and work with the tribe, Neuburger said. No tribal casino has tested bankruptcy laws.
“Bankruptcy law does not apply to tribal situations in the same way it does to a commercial situation,” Neuburger said…Three smaller tribal gaming companies have missed loan obligations during the recession, Neuburger said. In New Mexico, Buffalo Thunder Resort & Casino and Inn of the Mountain Gods Resort & Casino, and in Michigan, Little Traverse Bay Band of Odawa Indians, have defaulted on bond payments.
Wow, that’ll make lenders stampede to loan money to tribal businesses…not!
“Indian borrower”
“…the New York firm it hired to handle communications related to its restructuring of more than $2 billion worth of debt.”
In’juns = 1
Genetically “diversified” MegaBank Inc.s = 0
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
Yeah, I remember Brian Moynihan from my FleetBoston days. What a scumbag. All I can say is the employees at BofA ( particular comm. based emp. ) had best look out!
I’ll never forget when we got our new Employee Comp. Packages. They -doubled- what you had to do for -half- the payout. Oh and here’s your new medical/dental/vision non-plan ‘plan’. Real morale booster in equally difficult times.
4 Big Mortgage Backers Swim in Ocean of Debt.
Minh Uong/ New York Times
These companies, the American International Group, Fannie Mae, Freddie Mac and GMAC, are not only unable to repay the government, they are in need of continuing infusions that make them look increasingly like long-term wards of the state.
And the total risk they pose to the taxpayer far exceeds that of the big banks. Fannie and Freddie, in the final days of the year, are even said to be negotiating with the Treasury about greatly expanding the money available to them.
Though the four are not in all the same businesses, they were caught in one of the same traps: They sold mortgage guarantees — in some cases to each other. Now when homeowners default, as they are doing in record numbers, these companies are covering the losses. Essentially, taxpayer money to these companies is being used partly to protect banks and other investors who own the mortgages.
Like the big banks, these four companies would no doubt prefer to be free of government assistance, which comes with pay and other restrictions on their executives. But they appear at risk of getting onto a debt merry-go-round, where they have to draw new money from the government just to keep up with their existing government debts.
“But they appear at risk of getting onto a debt merry-go-round, where they have to draw new money from the government just to keep up with their existing government debts.”
How long are we going to let this BS go on?
IMO they should let them fail
Initial Jobless Claims in U.S. Unexpectedly Increase (Update2)
Dec. 17 (Bloomberg) — More Americans than anticipated filed first-time claims for unemployment benefits last week, a reminder that the labor market will take time to strengthen and may weigh on the economic recovery.
Initial jobless claims rose by 7,000 to 480,000 in the week ended Dec. 12, from a revised 473,000 the prior week, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance was little changed in the prior week, while those getting extended payments increased.
Federal Reserve policy makers yesterday said weakness in the labor market is restraining consumer spending, which accounts for about 70 percent of the world’s largest economy. Concerns over the lack of jobs prompted the central bank yesterday to reiterate a pledge to keep the benchmark interest rate low for an “extended period.”
“The level of new claims remains elevated,” said Steven Wood, president of Insight Economics LLC in Danville, California. “The labor market is improving, but remains soft.”
So is this a sign that Denniger’s observations are right, that they are laying off the holiday help already? After all, December is hardly the busiest month of the year at most corp HR depts.
I was in the mall at about 8:30 last night. It wasn’t totally dead, but it sure wasn’t busy. Groups of 2-3 people 60 feet apart in all the hallways. I don’t know if that’s how busy a mall is at 8:30, but during Christmas season I could that as near-dead.
It is being reported that the lowest percentage of people since 2004 have not completed their holiday shopping yet. Naturally the MSM is spinning this to mean that this weekend will be a blockbuster. So it will be especially interesting to read what people see this weekend.
Have finished or have not finished?
DC is expecting snow this Saturday. If the rest of the east coast is joining us, it should throw an interesting twist into the mix.
Eddie? how say you Eddie?
I say, “Don’t feed the troll.”
Have finished - sorry Polly. The lowest percentage have finished their shopping since 2004.
I’m a start shopping for presents at 2:30pm on the 24th kind of guy, so I say…sounds about right to me.
“I predict more ‘unexpectedly.’”
Merry Christmas from $hitigroup!
Citigroup to suspend foreclosures for 30 days.
WASHINGTON — Citigroup will suspend foreclosures and evictions for 30 days in a temporary break for about 4,000 borrowers during the holiday season.
The New York-based bank said Thursday the suspension will run from Friday through Jan. 17. It applies only to borrowers whose loans are owned by Citi. Borrowers who make payments to Citi but whose loans are owned by other investors are out of luck.
“We want our borrowers to have a much less stressful time, to spend their time with their families during the holidays as opposed to worrying about their homes,” Sanjiv Das, head of the company’s mortgage division, said in an interview.
The suspension means Citi will halt foreclosure sales and stop evicting homeowners from properties it has already seized. The company projects it will help 2,000 homeowners with scheduled foreclosure sales and another 2,000 that were due to receive foreclosure notices.
Das also said the company is working on “some long-term fundamental alternatives” to foreclosure, but declined to be specific.
I wonder if Citi’s foreclosure moratorium is made possible by the IRS’s recent gift to that corp.
Nope. That is much too small a thing to do to get that sort of tax concession.
But it might have been a very small part of the deal that got treasury to agree not to start selling stock for 90 days.
But it might have been a very small part of the deal
I do expect Citi to get into many more shenanigans as a result of the forebearance of the IRS.
More likely they were behind on processing the forclosures anyway, so they decided to at least turn it into a PR opportunity.
Bullseye!
The point is that they are thinking up a 100 different ways of giving bail-outs to banks and investment houses and insurance co by other means than just direct funds . They took a lot of heat from the 700 billion Paulson bailout ,so there are many other ways to skin a cat .
The point is that they are thinking up a 100 different ways of giving bail-outs Even more than the 50 ways to leave your lover LOL
just drop off the key, lee
and set yourself free…
No good feelings here, just the simple fact that they
don’t want to book the losses this year.
the simple fact that they don’t want to book the losses this year. Or in any year. The gummint’s repeated feeding of zombie banks is meant to postpone that financial reckoning to the Day of Judgment, or later, if possible.
OK ,one day if there is ever transparency and you see where all the money went in the different forms of bailouts ,transfers of loan packages after paying higher than book values ,incentives ,direct fundings ,foreclosures incentives and Insurance Companies ongoing payoff’s of 100% on credit default swaps ,than you will see how much the culprits actually got from the printing machine .
Why will we see it?
I’m sure there will be another Tiger Woods story that needs to be covered.
another Tiger Woods story that needs to be covered.
Amen to that. HEY look over THERE. See that shiny thing ?
From yesterday’s cleveland dot com:
Fannie Mae and the newly established Cleveland Land Bank have made a unique agreement in dealing with derelict foreclosures in Cuyahoga County. Fannie Mae is selling foreclosed homes to the land bank for $1 — and will contribute $3,500 towards demolition for each house that isn’t salvageable. The first 25 properties are slated to change hands this month and most will be torn down. Fannie Mae said the deal made sense for several reasons: It’s a way to be a good neighbor and help communities deal with demolition costs. It allowed Fannie Mae to move forward faster and dispose of low-value property from its inventory that would otherwise carry maintenance costs. And it means that distressed homes won’t languish in neighborhoods and possibly undermine other nearby houses with Fannie Mae loans.
For Gus Frangos, president of the county land bank, the deal is significant because he said a potentially large inventory of distressed homes won’t be added to the market surplus or fall into the hands of speculators. “That’s a big deal to us,” he said.
Translation ‘ The banks don’t want to pay to demo their junk .
The Cleveland Land Bank may go statewide. From today’s wmfj DOT com: The Ohio House has overwhelmingly approved a proposal that would allow more counties to take over foreclosed properties, fix them up and return them to private ownership.
“allow more counties to take over foreclosed properties, fix them up and return them to private ownership.”
Man oh man it will really pay to be an insider when that program gets started. Ya think they’ll actually ask for bids to do the fix-up or just award the work to their “preferred” contractors?
Is that a trick question?
Is this the same Cleveland?
The city of Cleveland has aggravated its vexing foreclosure problems and has lost millions in tax dollars by helping people buy homes they could not afford, a Plain Dealer investigation has found.
The city provided mostly low-income buyers with down payment loans of up to $20,000 through the federally funded Afford-A-Home program, but did little to determine whether the people could actually afford to keep their homes.
That lack of oversight persisted for years, even as hundreds of loan recipients defaulted on mortgages, many within two years, the newspaper found by analyzing property and loan records covering the period between 2000 and 2007.
http://blog.cleveland.com/metro/2009/12/how_cleveland_aggrivated_its_f.html
A note in my e-mail from Time Warner. I don’t have cable, but do use R.Runner.
You Can’t Get a 300% Raise, Why Should a TV Network?
You’ve probably heard the news by now. In a few short days, some of your favorite shows could disappear from your TV.
At Time Warner Cable, we’re not happy about this – and we know our customers aren’t happy about it either. But we want you to have the facts, and we want you to be prepared.
Even in today’s economy, some television networks are demanding massive price increases for their programming – up to 300% more than the current price we pay. And with our agreements with these networks running out at the end of December, some networks have threatened to pull the plug on their sports, entertainment – even family holiday specials – at midnight New Year’s Eve.
We know prices keep going up. We’ve had to announce a few price increases of our own and we know no one’s ever happy about that. But up to 300%? That’s going too far!
Please be assured that we will continue negotiating for a fair agreement that protects our customers’ pocketbooks. But if the TV networks follow through on their threats – we’re ready. You’ll find a helpful guide to alternative sources for programming at RollOverOrGetTough.com, so you’ll still be able to watch many popular shows even if a television network pulls the plug
Don’t let them hold your TV hostage. Go to RollOverOrGetTough.com now and let us know what you think.
Together, we just might make a difference in what America pays for TV.
Together, we just might make a difference in what America pays for TV. I insist on paying for my TV reception just what’s worth. Nothing.
Yesterday I found out one of the guys at work doesn’t have cable or satellite. I chuckled, here all this time I thought I was the only one.
Every week we get a flyer from Verizon. They keep tweaking their phone/wireless/TV packages. The lowest offer so far was
$79.99 a month for one year. This week it’s $99/month for all three, with $150 back and a free DVR for three months.
I think they can go lower.
Like you, I believe most of the so-called middle class lifestyle enhancements of the past 40 years are an expensive waste. The internet makes the cut, but Cable TV does not.
Any additional money they get would be a 100 percent increase as far as I’m concerned. I’d rather donate to public television.
The internet makes the cut, Before I retired & before the internet, I used to wonder what I would do with all the extra time & how I could possibly keep myself informed. It’s truly an advancement in civilization. On the other hand, that old saw which goes “If you put a million monkeys in a room with a million typewriters for a million years, they will eventually re-produce all Shakespeare’s works” has been proven WRONG.
They have to be typing randomly to make that work.
Here I’ll get things started
asl;fjpoiibuopijwlerkj;lakdjfklayopbuiiops lasjfd;lasjdf;jhp’ welkrj;laksdjf a oaiusdfuiopi;lkj ;lkejr;laksdjf ousdifoiualk
dlal;sdkjfl;askdjf
How long before you randomly get to this:
Greenisspentfinancialinnovationconundrum?
“…Don’t let them hold your TV hostage. Go to RollOverOrGetTough.com now and let us know what you think.”
Here’s what I think: let ME pick my own 50 channnels for $29.99 A$$faces
“…The industry strongly lobbies against federal “family tier” and “a la carte cable television” bills that would give consumers the option to purchase individual channels rather than a broad tier of programming.”
My lil’ brother got behind on his cable bill, did youall know that “they” block everything but:
1. Religious programming
2. Home shopping channels
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
We dropped cable in January and went strictly broadcast. I won’t go with dish because they never tell you up front what the rates will be after the teaser ends.
Only thing I will miss is watching seeing the UM Grizzlies in the Division I championship tomorrow. So I guess we will have to go to a bar to watch it (and dance later).
Last week’s game between Montana and App. State was one of the best games I’ve seen in a long time. Game’s only 2 hrs away from me, might head up there to watch it.
wear your hbb shirt, maybe we’ll spot you in the crowd
Something tells me that Eddie is too cheap to buy a HBB tee shirt.
You know you can get a 24 month fixed contract with Dish right? And then if the rates are increased, you walk.
I live half way between Wash and Balt (25 mile either direction) and we have a small hill interfering with reception…signals are weakso that they will not interfere so broadcast is a problem. However we only got cable 3 yr ago way after the kids were gone. I am thinking of cancelling and putting up a big attenna (no HOA).
Wow this article is absolutely stunning. San Francisco the worst run city in the US. With a $6 BILLION budget for a city of 800,000, it has example after example of corruption and bungling. Maybe Washington politicians of a certain persuasion can use this as a model for the national government!
tinyurl.com/ye4ch2w (put http:// in front)
“Last year, the Civil Grand Jury could not find — we reiterate, could not find — up-to-date budget numbers for the city’s Branch Library Improvement Program. The numbers that were available aren’t pretty”
“In 2002, the San Francisco Chronicle revealed that the city had, for decades, been siphoning nearly $700 million from its Hetch Hetchy water system into the San Francisco General Fund instead of maintaining the aging aqueduct.”
“This city is a mecca for people in search of a government handout that they can hand out. According to a 2009 analysis, San Francisco spends around 41 percent of its discretionary budget — about half a billion dollars — on nonprofits, mostly to provide social services for the poor, homeless, elderly, and others.”
By contrast, Charlotte NC has a population of 687K (2008) and the 2010 budget (operating as well as capital improvements) is $1.85 Billion
San Fran $7400 per person
Charlotte $2700 per person
Wow!
A bit of apples to oranges. SF of course is a way more expensive place to live, thus has higher wages (justifiably so) of its muni workers. Also SF’s capital costs are probably higher because it’s such a dense city, and way more hilly - e.g. it’s logistically a lot harder (i.e. more expensive) to put in a new water pipe, to pave the roads, etc. (Though being more dense it has less road mileage per person)
Or maybe the explanation is SF is a bastion of liberal insanity while Charlotte isn’t. Nah, that’s just crazy, it’s the hills. And it’s also the hills that cause the corruption.
Troll alert number 6
Eddie - I’m not an advocate of liberalism, by any stretch. But I am an advocate of intelligent conversation, and that includes discussing all relevant factors of an issue - not giving blind knee-jerk reactions that focus on one’s preconceived viewpoint and ignore all data that doesn’t support it. To do so is to, simply put, lose the argument, and usually covert people to the other side of your viewpoint in the process.
Don’t.Reason.With.Trolls.
* The Wall Street Journal
* DECEMBER 17, 2009
Debt Downgrade Deals Greece a New Blow
BY BRIAN BLACKSTONE AND JOHN KELL
Greece suffered its second debt-rating downgrade in a week, undermining the country’s efforts to reassure markets that it can repair its battered finances.
Standard & Poor’s Corp. cut its rating one notch to triple-B-plus and warned of future downgrades. The euro slipped slightly against the U.S. dollar on the downgrade, adding to recent declines that have pushed the common currency to its lowest level against the greenback since early October.
…
I can’t speak to the moral epiphany Mr Lansing believes is sweeping over American households, but the reason my own household is spending less this Christmas is that a number of our income sources dried up this year. This includes some of my wife’s music students whose parents used to pay good money for lessons and now get them for free because the primary breadwinner in the family is out of work.
* The Wall Street Journal
* DECEMBER 17, 2009
Spendthrift to Penny Pincher: A Vision of the New Consumer
Next spring, Fine Living Network, a cable channel created in 2002 at the height of America’s infatuation with affluent living, is slated to be phased out. In its place, Scripps Networks Interactive Inc. will launch the Cooking Channel.
Gone will be “I Want That!” celebrating diamond-encrusted sinks, and “Dream Drives,” showcasing America’s richest zip codes. Instead, viewers will see shows focusing on instructional cooking at home.
“It’s not so much [that we have] a different audience but an audience that’s acting different,” said John Lansing, president of Scripps Networks Interactive. “Their value system is shifting from aspiring to material wealth to aspiring to a life better lived.”
…
When the Cooking Channel shows how to pickle tumbleweed, we will have finally reached the bottom.
LOL
(First we need the “Broiled MegaBanker w/Onions” episode though)
Gee , isn’t there already a cooking channel (FoodNetwork)?
Food Channel isn’t about real cooking, any more than HGTV is about real people in real homes. When’s the last time you saw one of those ego chefs go to Kroger?
I like the stuff they have on PBS. They are reasonably realistic.
I like Alton Brown’s show.
They used to be about real cooking. I remember when Emeril first started. He had a taped half hour show and he acted normal.
BAM!
Out of work? New Duke-CFO survey offers little hope for job seekers.
(Localtechwire)
RESEARCH TRIANGLE PARK, N.C. – Well, the evidence just keeps mounting that the economic recovery (if it truly EVER materializes) is going to be a jobless one. The latest nail in the coffin of the hopes for many people trying to stay alive economically came Wednesday when chief financial officers said they expected the jobs picture to remain grim.
Kate O’Sullivan, writing in her blog at CFO magazine about the latest quarterly CFO survey from that publication and Duke University, wrote grimly:
“The economic recovery is shaping up to be a jobless one … While CFOs say they will increase capital expenditures and technology spending … they note that employment at both U.S. and European companies will continue to decline.”
Not enough bad news? Check out these two findings from the survey:
* “U.S. companies expect to reduce domestic workforce by 1.6 percent in 2010, while the number of outsourced jobs will increase. Two-thirds of companies say their employment will not return to pre-recession levels until 2011 or later.
* “Among companies that recently instituted furloughs or reduced workforce, overtime, wages, 401(k) matches, or company contributions to health and other benefits, most say these cuts will not be restored in 2010. Nearly half of CFOs feel these and other cuts have reduced their company’s long-term growth prospects.”
See? I told you the PTB have decided that our RETAIL driven economy doesn’t need customers.
It’s Alice in Wonderland, folks.
Today’s washingtonpost DOT com: gold trinkets redeemed for food money: In this corner of northeast Ohio, from Warren to Youngstown, where the old steel mills along the Mahoning River stand like rusted-out mastodons in the weeds, the recession was a final cruelty piled on top of three decades of disappearing jobs.
The recession here wasn’t a black hole at the end of a sustained boom, or downgrading from Target to Wal-Mart or cutting out $3 drinks at Starbucks. It was a confrontation with survival.
As other areas of the country start to revive, the recession’s full force is still on display here. Winter has descended. Unemployment benefits are running out. New jobs have not appeared. And the door keeps swinging open at Uptown Gems & Jewels.
What “other areas of the country” are “reviving”?
Here’s the final kicker:
This article could have been written VERBATIM, in the 80s, the 90s, and the ‘01 recessions. I was there and read the same articles.
That’s 30 YEARS of constant decline.
Shaolin Temple’s kung fu monks prepare IPO
The 1,500-year-old Shaolin Temple, the birthplace of kung fu, is preparing for a 1bn yuan (£85m) initial public offering (IPO), government sources have confirmed.
Shanghai ~ 17 Dec 2009 (UK ~TIMES)
A joint venture between Dengfeng, the city where the ancient Buddhist temple is located, and the state-run China Travel Service (CTS) will be listed in either Hong Kong or Shanghai in 2011.
CTS (Dengfeng) Songshan Shaolin Cultural Tourist Company Ltd will have the temple’s annual ticket sales of 150m yuan as part of its revenues. However, a government source said that the temple’s buildings would not be included in the new company.
More than 1.6 million tourists visited the site in Henan province last year in order to visit its prayer halls and see the temple’s monks perform their kungfu show. The Shaolin Temple also performs a stage show that has toured London and New York.
According to legend, the destruction of the temple by its enemies in the 17th century helped to spread martial arts across China as five fugitive monks carried their kung fu with them.
“Your IPO is NO good! My IPO is SUPERIOR!”
Why do investors keep worrying about Fed tightening when the Fed insists it will keep money loose? The rise in jobless claims bolsters the case for indefinite continuation of ZIRP.
U.S. stocks retreat at open
• Live: Senate Finance’s Bernanke debate
CURRENCIES AND COMMODITIES
Dollar’s revival heats up
The greenback marches to multi-month highs, with Fed questions and Greece worries as catalysts.
As Fed policy-tightening worries persist, stocks suffer opening-bell losses. Citi gives up 8% as its massive share offering gets a cool reception.
…
Sounds like MSM spin.
Maybe it’s not that they are worried about tightening, maybe it’s that they are worried that despite an extreme loose money policy things may not be getting better.
Reporting from the Bosporus today. It was interesting both flying into Attaturk and from the overlooks to see how much idle shipping there is. I don’t have a touchstone to normal but it is pretty obvious that most of the ships at anchor are unladen. If I were a captain I can think of much worse places to hang out waiting for a load.
I haven’t read much lately do to travel. Is the recession still over?
do=due
No the recession’s still on.
Our annual Christmas bash is off this year. Usually it sets the boss back about 3k. Instead we had a potluck holiday luncheon today.
And we didn’t get the traditional $30.00 to buy a Thanksgiving turkey either - (belt-tightening you know). Which is a huge joke given how much this company makes.
Eh, when we visited in July ‘07, the number of ships at anchor just off the coast in the Marmaros Sea was amazing. My understanding is that the ships aren’t really idle; they’re just queued up waiting for their turn to transit the Bosporus into the Black Sea.
Understood, but it is pretty easy to tell a ship with cargo from an empty because of the waterline.
Were they bulk cargo ships (as opposed to container ships)? Most of the ones I saw were bulk cargo ships which were empty. It seemed unusual until I thought about it and realized that the Black Sea is home to a lot of bulk material exporters. Also, see http://tinyurl.com/cs76x which was taken in 2004. All the little dots between Attaturk airport and the Golden Horn are anchored ship waiting their turn for passage through the Bosporus.
Waterline. Also known as the “Plimsoll Line.”
Check him out on Wikipedia.
I’ll add, I saw no evidence of a queue at all. Both times I had a clear view of the passage during daylight there were one or two large ships making passage with about 1 mile between and in both directions.
I’m no sailor but I am traveling with a naval historian and he also noted the light traffic.
We saw the same thing, but were told that the spacing was due to the fact that they need to leave room between ships in case one develops a problem (a shipwreck between two large transport vessels would be extremely costly as it halt all shipping in and out of the Black Sea until they could be removed). Also, you’ll notice that ships traverse the strait only in one direction on any given day.
Finally, shouldn’t you be asleep?
Just woke up.
Citigroup Does the Impossible: It Screws Us Taxpayers Again!
Dec 17, 2009 Henry Blodget in Investing. The Business Insider.
The nausea we feel with respect to Citigroup
(C) and our Treasury Secretary just hit a new high.
Perhaps it’s true that civilization would have ended if we had just allowed Sandy Weill’s colossal junk pile to finish blowing itself up. But at this point that seems a more attractive alternative.
In case you missed it, here’s the latest outrage:
As of yesterday afternoon, the United States taxpayer owned 34% of Citigroup’s common stock
, in addition to a massive amout of TARP preferred stock. The US taxpayer did not own 34% of Citigroup’s common stock by choice. We owned it because our government decided to bail Citigroup out not once, not twice, but three times.
In the last of these bailouts, the Treasury Secretary Tim Geithner gave Citigroup the latest in a long series of gifts, by converting some of our preferred stock to Citigroup common stock at $3.25 a share. This conversion price was too high and resulted in an invisible bailout/gift that most people missed. It also left taxpayers with the dubious privilege of holding Citigroup common stock.
Common stock is lower in the capital structure than preferred stock, meaning that it will be the first thing to be wiped out if Citigroup starts losing boatloads of money again. As Citigroup investors know all too well, common stock also carries with it a high possibility of loss: If the stock price falls, we’re toast (whereas with preferred stock, we get our money back when the company redeems it).
Given all that, the first taxpayer holding that Citigroup should have sold should have been the common stock.
Citigroup’s stock has been trading at $4 for several months. It is heavily traded. We could have dumped our entire stake in the company over the past few months for a reasonable gain. Instead, we just sat there, waiting to be reamed again.
It is one thing to sell a few 100,000 shares once in a while. It is another thing to sell 1 billion shares. Massive share volumes, if not done correctly will cause big market swings….especially with a dud like Citi.
Liberals’ Dream of Single-Payer Health System Dies
Proposal’s demise came as Democratic leaders and the White House sought agreement with Sen. Nelson. 12-17-09
WASHINGTON (AP) The liberals’ longtime dream of a government-run health care system for all died Wednesday in the Senate, but Sen. Bernie Sanders of Vermont vowed it will return when the realization dawns that private insurance companies “are no longer needed.”
The proposal’s demise came as Senate Democratic leaders and the White House sought agreement with Sen. Ben Nelson, D-Neb., to become the 60th supporter of President Barack Obama’s health care overhaul — the number needed to overcome a Republican filibuster.
Nelson has met three times in the past nine days with Obama. While he is seeking stricter curbs on abortions in the insurance system the bill would establish, he also has raised issues in his home state that are unrelated to the health care legislation, according to an official with close ties to the senator. The official spoke on grounds of anonymity to discuss private conversations.
Sanders, an independent and socialist, said his approach is the only one “which eliminates the hundreds of billions of dollars in waste, administrative costs, bureaucracy and profiteering that is engendered by the private insurance companies.” His remarks drew handshakes and even a hug or two from Democrats who had filed into the Senate to hear him.
Sanders acknowledged conditions and slow the rate of growth for medical spending nationally.
Ah, the good old AP. Slinging overwrought headlines since its inception. A dream deferred does not equal dead. “Gov’t run healthcare” does not equal “single payer healthcare”. But trying to cut through the BS propaganda put out by Big Insurance and Big Pharma is a task too daunting for our media, and apparently for those in Congress who want to see some long-overdue reforms in the health care payer system.
“But trying to cut through the BS propaganda put out by Big Insurance and Big Pharma is a task too daunting”
Big Pharma = Cult
Big Insurance = CULT
Official CORPORATE sponsor: “TrueDeceiver’s ™” Inc.
My guess is that the other banks have taken this time to load Citibank full of the most toxic BS they have. In exchange of course for the few remaining assets. Citi and AIG will become the bad bank that Paulson wanted all along.
Yes, a very bad bank indeed. The CEOs will be getting big czar-approved bonuses however.
Bringing back Glass-Steagall?
by Karl Denninger
John McCain may be searching for redemption here….
Dec. 16 (Bloomberg) — U.S. Senators John McCain and Maria Cantwell proposed reinstating the Depression-era Glass-Steagall Act that split commercial and investment banking to rein in Wall Street firms in response to the financial crisis.
“Under our proposal, too-big-to-fail banks would be forced to return to the business of conventional banking, leaving the task of risk taking or management to others,” McCain, an Arizona Republican, said at a Washington news conference. A former bank regulator said splitting up companies is “crazy.”
I will reiterate what I said back in the summer and fall of 2008: I am absolutely convinced that McCain’s endorsement of the TARP bailout bill, and his refusal to stand up and take a strong position in favor of the common man, is why he lost the election.
Reinstating Glass-Steagall would be a near-total reversal of his previous position. It would be recognition of the facts: Banks that are allowed to gamble in the financial markets inherently are gambling with the sovereign credit of The United States, and inevitably transfer their losses to the taxpayer while keeping ALL of the profits for their overpriced staff and executives.
This is often said to be of “benefit” to the public because these banks are public companies. This is a flat lie: Goldman typically bonuses out roughly half of their gross profits, with only a minuscule piece being paid in dividends to shareholders. Other banks have similar compensation policies.
There is no “free market” way to prevent such distribution. You can only prevent it by prohibiting lending and/or depository institutions from speculating in any form or fashion in the markets.
For those firms that wish to speculate they should be free to - with their own funds (that of their shareholders or bondholders) but they must be accountable to the last penny for each dollar at risk, and unable to transfer that risk to the taxpayer.
Wall Street will, of course, fight any such law tooth and nail, because speculating with other people’s money and being able to force the taxpayer to eat all risks of loss is the time-honored fashion by which these institutions steal hundreds of billions of dollars from taxpayers each and every year.
This has ratcheted up the government’s obligations to the point that there is a very real risk the government may be unable to meet its obligations. That, of course, would be an unmitigated disaster and quite literally could result in the end of our Republic.
“…Reinstating Glass-Steagall would be a near-total reversal of his previous position.”
Flip…Flop …or would that be…Flop-Flip?
(Hwy grabs his $.50 Molly Ivins book from the library sale, puts on his flip-flops and heads to the jacuzzi…)
FWIW - while I think it may be a proper thing to do (I’m torn), I do think the effects are somewhat overstated.
While there were obvious effects like the creation of Citigroup and JPM/Chase, it’s worth noting that Bear Stearns, Lehman Brothers, Merril Lynch, AIG, Fannie Mae, and Freddie Mac were all unaffected by the repeal of G-S, since they weren’t bank holding companies.
Goldman Sachs did become a bank holding company, though mostly in name only to enable it to get cheap loans from the Federal Reserve. While I think this may have contributed some, I don’t think nearly as much so as their general behavior.
One thing that can’t be denied is that the housing bubble actually started before the G-S repeal. 1997 vs. 2001. So while I think it did contribute to the size of the bubble and therefore the hardness of the crash*, it certainly didn’t trigger the bubble.
*Maybe. One could argue that without the G-S repeal the bubble would have still been the same size, but would have taken longer to reach its peak. It’s all supposition.
I can’t say for sure why, but I can say the bubble was already inflating by 1997 in Colorado.
Yep.
FHFA data even shows Denver home prices rising significantly above CPI starting in 1992 even. They definitely got a head start, though the bubble wasn’t as high as FL, CA, etc.
(part of the data I keep in a spreadsheet, being the data squirrel I am).
Something to keep in mind was that Denver prices were stagnant prior to that. Its a boom and bust kind of place.
Blizzard Dumps Snow on Copenhagen as Leaders Battle Warming
Dec. 17 (Bloomberg) — World leaders flying into Copenhagen today to discuss a solution to global warming will first face freezing weather as a blizzard dumped 10 centimeters (4 inches) of snow on the Danish capital overnight.
“Temperatures will stay low at least the next three days,” Henning Gisseloe, an official at Denmark’s Meteorological Institute, said today by telephone, forecasting more snow in coming days. “There’s a good chance of a white Christmas.”
It hasn’t had a white Christmas for 14 years, under the DMI’s definition, and only had seven last century. Temperatures today fell as low as minus 4 Celsius (25 Fahrenheit).
http://www.bloomberg.com/apps/news?pid=20601130&sid=a5wStc0K6jhY
Sometimes life is just too funny to describe.
Damn near every time the enviro cons & kooks show up for a group hug, the weather sets new record lows or snows. Hard to get people to buy into the scam that we will all soon be burnt to a crisp, when you are freezing your azz off!
Climate change accounts for extremes in weather on both ends. An average global temperature increase of 1 degree can account for a destablizing of weather, be it extreme cold, floods, or drought. But of course, you can keep banging your drums about “global warming” like a good Faux news flat earther. It’s like a catchy slogan that precludes critical thinking.
“But of course, you can keep banging your drums about “global warming” like a good Faux news flat earther”.
Sorry, But your supreme leader Al (the earths core is millions of degrees)Gore came up with the term “Global Warming”. I’m sure you forgot that, funny how that works. It’s just not “convenient” so now it’s climate change. Back in the early 70’s the enviro kooks were telling everyone that would listen, that we were heading into an ice age. They were suggesting we dye the ice caps black to absorb heat, some thought we may need to set off a nuclear device, the matter was so “urgent.”
It was then what it is now, pure BS based on junk science, believe what you will but don’t try and change simple facts.The earth changes,it has been for quite a while now and cows farting aren’t going to kill us off. Be sure and send in many donations to the save the earth fund though, they need more money to jet around the globe peddling propaganda.
“It was then what it is now, pure BS based on junk science, believe what you will but don’t try and change simple facts.”
The climate science is solid. The deniers engage in propaganda because that’s all they have.
There’s no question that the CO2 level in the atmosphere is rising, due to the burning of fossil fuels. Any “deniers” who deny that will get my scorn. But the global warming proponents have sure not convinced me that the temperature really is rising, or that if it is, that it’s due to CO2. The 0.035% concentration seems a little low to have that much effect. I do think we should be making efforts to curb our CO2 emissions. Even if it’s not yet a problem, the accelerating rate of increase scares me. I think this is a reasonable opinion on the subject, but since GW has been seized as a political issue, I’ll probably be called a “denier” for doubting the ridiculous doomsday scenarios that the proponents throw around.
“The climate science is solid. The deniers engage in propaganda because that’s all they have”.
Whatever you say, the rest of us poor fools are just not that smart. You win! Now what? No propaganda on your part of course.
“Whatever you say, the rest of us poor fools are just not that smart. You win! Now what? No propaganda on your part of course.”
There are plenty of smart and inquisitive people that post on the HBB. That’s a very good thing. It’s not a matter of being smart. It’s a matter of being knowledgeable in the appropriate areas.
In matters of climate, I’m going to defer to peer-reviewed climate scientists over industry paid shills every time.
So let me distill the anti-climate “arguments” here:
” Comment by Lip
2009-12-17 10:21:35
Blizzard Dumps Snow on Copenhagen as Leaders Battle Warming ”
Lip intimates that whenever there is a conference about climate change or global warming, it is cold and as such is ironic. That “fact” is easy to prove false and speaks toward your confirmation bias.
“Comment by wmbz
2009-12-17 10:57:27
Damn near every time the enviro cons & kooks show up for a group hug, the weather sets new record lows or snows.”
wbmz uses the same tactic as Lip and spices it up with an ad hominem attack. Sweet!
“Comment by wmbz
2009-12-17 13:39:13
“…your supreme leader Al (the earths core is millions of degrees)Gore came up with the term “Global Warming”… early 70’s the enviro kooks were telling everyone that would listen, that we were heading into an ice age…”
Where do I even begin? Ad hominem attack a-plenty and pure falsehoods (or ignorance) that Al Gore coined “Global Warming” tinged with an inability to understand the scientific process (i.e. as new data are found, theories are refined or refuted).
“It’s just not “convenient” so now it’s climate change.”
So that’s another sort “get your story straight you silly scientists” jab. Global warming is the driver and the result is climate change. You can call it “Fred” for all care.
“Comment by Chris M
2009-12-17 14:31:35
But the global warming proponents have sure not convinced me that the temperature really is rising, or that if it is, that it’s due to CO2. The 0.035% concentration seems a little low to have that much effect.”
Chris, I will try to refute your argument with a story. I just put dimethyl mercury in your coffee, but it’s only 0.035%. Such a small amount couldn’t matter, right?
It’s pretty easy to calculate the GWP of 35 ppm of extra CO2 in the atmosphere (if you assume that it remains there and doesn’t help to acidify the oceans, for example.). I had to do similar calculations for a class I took with Steve Schneider.
“Comment by Lip
2009-12-17 14:25:48
they’ve even been scooped by the fake news at Comedy Central”
Do you have any idea how retarded that sounds?
“the rest of us poor fools are just not that smart”
You said it, wmbz. Not me.
MrBubble
PS: I forgot the usual suspects like “scientists are only in it for the benjamins” and other such rubbish.
In matters of climate, I’m going to defer to peer-reviewed climate scientists over industry paid shills every time.
So what of the thousands of PHD’s in the field that are not paid shills, that disagree? I know, they got it wrong. Never mind, and 5 decades from now when the new”scare” comes about it will be the same thing. Just read history man, it’s been done before. It is NOT different this time.
If you want to talk numbers, wmbz, I’d guess there’s about a thousand to one ratio of scientists who believe in ‘climate change’ versus those who don’t. If you don’t realize it’s a tiny portion of scientists, most well-paid by big biz, that dispute the theory, then you know very little about the subject.
The rest of your response makes no sense, as usual. “Just read history man, it’s been done before.” What’s been done? Science has perceived a danger that big biz would rather ignore because it will hurt their cash flow? Like asbestos and cigarettes? Both of which had their ’scientist’ defenders. Yes, it has been done before, hasn’t it?
SaladSD,
Funny that you should mention the liberal booie man called Faux News. A simple google search will turn out hundreds (if not thousands) of links. My favorite this second:
Comedy Central Scoops Network News on Climate-Gate Scandal
“I know this isn’t going to be popular with a few in this forum, but being as no one wanted to take note of the thousands of prominent scientists who don’t subscribe to man made global climate change. I think some most make note of how the media has become less an investigative lens through which the truth is sought.
ABC didn’t cover it. CBS didn’t either. And NBC apparently wouldn’t go near it.
The network news broadcasts have ignored a growing scandal over evidence of a potential climate cover-up — and now they’ve even been scooped by the fake news at Comedy Central.
“The Daily Show with Jon Stewart” produced its “reporting” on Climate-gate Tuesday night, when Stewart quipped, “Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!”
“Why would you throw out raw data from the ’80s? I still have Penthouses from the ’70s!” he joked.
Uh…those were jokes, get it?
And are you bad at using quotes or purposely deceptive?
Link to my favorite web article
http://www.ludingtontalks.com/forum/topics/comedy-central-scoops-network
I would say that their efforts to fight global warming have been an obvious success!
Has anyone else noticed how the wackos don’t use “global warming” so much as they now use “climate change?”
With that sleight-of-hand, ANY deviation from the recent mean (temperature, rainfall, whatever) can now be made to be our fault.
Nice trick! Too bad so many suckers still buy into it.
Bill, As I said up above, remember in the late 60’s early 70’s when the expert wackos said we were heading full steam into an ice age? We needed to DO something fast! SOS!
P.S. The so called scientific ‘experts’ said the same thing back then. “The scientific data is solid” no need for further discussion, we must act now.
links, ever?
Here you go, a blogger kindly put this list together, circa 2006:
http://www.logicalscience.com/consensus/consensusD1.htm
Words are cheap. Follow the money.
If we don’t go along with this global money transfer, the world will stop liking us so much. Gasp.
Follow the real money, the Big money, to exxon and their paid shills.
The United States alone puts BILLIONS of tons of airborne pollution into the atmosphere EACH year.
Try to wrap your head around the size of a BILLION TONS of anything. Now remember that it’s deadly. And you’re breathing it.
Billions of tons of anything cannot be dismissed. Except by the truly mad.
Derrick Coleman’s mall loan is in default.
Detroit group suing his company after payments stopped.
Detroit — The Detroit Economic Growth Corp. is suing former NBA basketball star turned businessman Derrick Coleman after he defaulted on a $200,000 loan for a retail development he had hoped would spur the rebirth of his old neighborhood.
Coleman built the retail strip mall near Linwood and Clairmount in 2008, calling it Coleman Corners. Several stores opened, including a pizza place, cell phone store, barber shop and Coleman’s Snyx Sneaker Studio.
But according to the lawsuit filed Wednesday, Coleman and his company DD One stopped making monthly payments on the loan in June. With interest and fees, Coleman owes $204,800, according to the suit. The loan was granted in June 2008 but it’s not clear how many payments Coleman made. The development was estimated to cost nearly $1.6 million, according to loan documents.
A representative for Coleman wouldn’t comment directly on the lawsuit because he hasn’t seen it, but blamed tough economic times for the struggling development, now nearly vacant. Only the barber shop and a Hungry Howie’s remain open, said Mort Meisner, a spokesman for Coleman.
The Detroit Economic Growth Corporation repeatedly has loaned money to entrepreneurs and been stung after the money was not paid back.
What’s Einstein’s definition of insanity again?
Or is it just another form of corruption?
IF we are looking for a jobs program this sounds promising.
KATO, Japan (AFP) – Seeking to turn an environmental problem into an economic opportunity, high-tech companies in resource-poor Japan are mining mountains of toxic e-waste for precious materials.
One model project, the sprawling Panasonic Eco Technology Centre, sits in lush rice fields an hour’s drive outside of Osaka city.
Inside, workers and humming machines disassemble flat-panel televisions, refrigerators and air conditioners, sorting their metal and plastic components into boxes for recycling.
About 90 percent of dismantled parts are reused in one way or another, says Yutaka Maehara, a manager at the plant.
Among the most precious parts are metals such as copper that are becoming more expensive on the world market, while the plant also isolates toxic components such as heavy metals and dangerous gases.
You could put a lot of people to work doing something beneficial. NO more unemployment or wellfare checks.
A lot of people? As other companies start doing the same thing, at some point the market gets crowded, supply of their byproducts increases, and poof, prices come down until there’s no profit.
Then those evil, nasty corporations have to close plants and lay people off.
Anyone know anything about Sheridan, CO? The city owes us money and I heard they couldn’t pay their firefighters, had outsourced their E911 etc. Was this a bubbly place?
Its a Denver suburb, and judging from it median incomes its a poor one:
From wikipedia
“The median income for a household in the city was $34,984, and the median income for a family was $38,500. Males had a median income of $29,655 versus $22,500 for females. The per capita income for the city was $16,635. About 9.0% of families and 11.8% of the population were below the poverty line, including 15.3% of those under age 18 and 11.3% of those age 65 or over.”
Very hispanic and low income. Was it bubbly? I doubt it. Most houses on the MLS are in the low 200K price range.
Hearing anything about cities going BK there?
Now wait…you made a good case for Sheridan being low income, and then said most of the stuff in the MLS is 200k+. Why did you then turn around and say you doubted it was bubbly? To me, you just made the case for why it WAS bubbly. We would call it bubbly if all the numbers were multiplied by 5 (income and house prices), wouldn’t we?
$38,000*3=$104,000
That would be reasonable for the average house, under traditional underwriting standards.
Why is 2x affordability “non bubble”
Redmond Oregon, you can get a house for 100k, houses that used to go for 200k, and it is starting to sound reasonable.
Too bad we paid 200 per sq ft on our house and mortgage, when now we can find something similar for 100/sq ft.
Just because prices are sticky on the downside only says its still bubble gum hubba bubba.
But even though an “appraiser” told us it was worth 400k in 06, does not mean we cant move next door and pay $800 per month in rent, as opposed to our 2500/month carry costs on the house.
Some on the HBB has informed me that since we have 100k in the bank, it is our obligation to keep paying our mortgage instead of buying a house for cash for security and to lower cost of living, it is somehow morally superior to stay and pay since we signed on to the mortgage, regardless of the fact that we cant afford the payment once the savings are gone.(wife checks groceries, I am a substitute teacher in a pool of 1200 out of work teachers which equals one day/month of work). Eventually we gotta do whats best for us and not for Bofa. Also, wont we suck resourses out of welfare/food stamps/Oregon health plan for kids health insurance, etc. if we spend everylast penny on this home, foreclose and end up pennyless jobless and homeless?
Housing wizard insists that we lied on our application, or at least my wife did, on a NO DOC loan. I am tellin ya, all it took was a fico and 20% down, and my wife making 10k per year or less qualified for a 312k mortgage! No income proof required!
“it is somehow morally superior to stay and pay since we signed on to the mortgage”
mike, I give you absolution. You are free to walk. Go forth and borrow no more.
Freedom is right through that door Mike.
Mike - you don’t owe anyone here a darn thing and you certainly can’t live your life based upon what other people think who don’t have to deal with this situation.
Some of us will say walk in this scenario, some of us will say suck it up. But at the end of the day it’s not our life’s savings that is disappearing.
I wish I had some great nugget of advice for you, but there’s no easy answer for what you are going through. Work with your wife - that’s a much more important relationship than any here - and know most of us get how hard your situation is and just wished it, and this whole stupid bubble, had never happened.
Re Bear
thank you for your candor, I just keep hoping against hope that the situation will somehow change for us so we don’t have to move.
Once we whittle our savings down to 100k, and we have confirmed we can get a decent house for this sum, in the same schools, then we will plow it into a home, rent it out for 600/month until the sherriff comes and boots us.
That beat the 2% milk that CDs are paying
This is upon advice of the city attorney, walking is a cold cold way to send the message to the banks, appraisers, and the whole industry that somehow 100% appreciation per year is not sustainable. It is OK that no-one can give any great, advice. My wife rocks though, she is the keeper. This blog is the eye opener I wish I had BEFORE our last “flip”, then I could have…cashed out in 05.
To me, you just made the case for why it WAS bubbly.
The median prices are much lower than the overall metro area.
There were select neighborhoods in Denver that got very bubbly, with double digit annual appreciation, in particular those near downtown, but in most other places on the Front Range prices were rather flat during most of the 2000’s bubble. Maybe 2-3% appreciation per year at most.
Sheridan probably has the lowest median prices in the metro Denver area.
Hearing anything about cities going BK there?
Nope, just furloughs and such. Our hometown (Loveland) let go of a few people and tax collections are flat to barely growing.
Now the state gov’t, that’s another story. Their revenues are down and they are slashing spending left and right. They can’t raise taxes because of TABOR.
Funding for higher ed has become so precarious that Colorado State University is considering privatization.
thanks for the absoulution, Prime. Absolutely no sarcasm comes across on the net, so I’ll take your comment at face value. Boy I do wish we had the income to support our mortgage, but I realize that we would need 100k annual income, not just 100k cash! Maybe I should go to law school with the dough to get a better income, besides teaching is too hard on my body (MVA, whiplash, etc.) I can hardly watch my two kids, much less 35 ill mannered middle schoolers or whoever I am sent to babysit that day. Alas, poor yorick let the flogging commence. Eddie? Everyone else has had a crack at me.(I take that back in part, several have told me to walk, away, with my head held high at that). Stick it to the man types, I suppose. How else can one send an effective message to Bofa in Charlotte, that takes up to a year to assign a negotiator if we try the short sale route?
We shall go forth and buy a starter home and give the bank the house that was worth $440,000, according to the appraiser.
Sure its in a nicer location than our first unit in this development, but we bought one (same unit, townhome 1871 square feet, etc) for $208,000 in 2005.
By 2007, magically it was worth $440,000
The one we sold to buy this one we sold for $350,000, After holding it for one year! the purchaser of it must be smarter than us as he has it on short sale for $175,000, 33k less than we originally bought it for from the developer.
But realtors keep lowering the price without a bank negotiator to lead me to believe that short sales are scams to keep homerentors in their homes and payin something if for a short while.
Why not offer them at $1 then get some offers, and then say sorry, Bofa will not take that dollar, the negotiator wants $275,000! Fake prices on short sales are clogging the system!
Imagine buying a Christmas tree, tag says $1. Bring it to register, and they tell you that you need to wait for an approval of the price, and the negotiator will get back to you by next holiday season with a price of, say $17.50. The one dollar price was just to reel you in, sucker!
Luxury-Home Owners in U.S. Use ‘Short Sales’ as Defaults Rise.
Dec. 17 (Bloomberg) — Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.
“The rich aren’t as rich as they used to be,” said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc., whose listings include a $2.9 million property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. “People have reached the point where they can’t afford the carrying expenses of a $2 million home.”
Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier.
As defaults on the biggest mortgages rise, borrowers such as Steve Holzknecht are turning to short sales to exit loans that now are larger than the market value of the house. In such a transaction, the lender agrees to accept less than a 100 percent payoff on a mortgage to expedite the property’s sale.
Holzknecht, 53, last month cut the asking price for his 7,280-square-foot home in Kirkland, Washington, by $550,000 to $1.25 million, lower than the balances of his two mortgages. Holzknecht, the former owner of Four Suns Inc., a Seattle luxury homebuilder that went out of business two months ago, constructed the Craftsman-style home in 2000. He declined to identify his lenders or the amount he owes.
“Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.”
At least subprime is contained at this point.
Isn’t a short sale just a really polite equivalent of jingle mail?
I don’t see the difference in terms of the outcome for the bank, but perhaps the devil is in the details.
Big difference is risk of course. With jingle mail there’s a risk the bank may lose huge $$ - they just don’t know. The risk remains after the transaction, until such time as the bank sells the property. With a short sale the bank does lose $$, but it’s a known entity, with subsequent risk gone after the transaction.
“With a short sale the bank does lose $$, but it’s a known entity,…”
Known known versus known unknown — got it!
I thought the whole idea was NOT to know?
I thought the whole idea was NOT to know?
Well yeah - I was speaking under the premise of a sane banking system. Being that we don’t have that you’re right - many banks are better off foreclosing, saving the writeoffs for a rainy day, then having the Fed/guv just change the weather for them so the rainy day never comes.
“…then having the Fed/guv just change the weather for them so the rainy day never comes.”
Extending enough forbearance to last through this hurricane season may prove quite challenging.
“I thought the whole idea was NOT to know?”
More at appearing NOT to know — think plausible denial.
Also, think of the banker, Mr Poe, in Lemony Snicket’s A Series of Unfortunate Events, who somehow perpetually misses the evil Count Olaf’s ongoing scheme to rob the Snicket children of their inheritance.
And by all means, don’t forget the Snicket children’s dear Aunt Josephine!
Aunt Josephine: Oh, God, I hate it here.
Violet Baudelaire: Well, Aunt Josephine, have you ever thought of, maybe, moving someplace else? Maybe, if you moved away from Lake Lachrymose, you might feel better.
Aunt Josephine: Oh, I could never, never, never, never sell this house.
[pause]
Aunt Josephine: I’m terrified of realtors.
Lemony Snicket: There are two kinds of fears. Rational and irrational. Being afraid of realtors is an irrational fear.
[in a flashback]
Realtor: [shows her card to a tentative Josephine] Is this a bad time?
Aunt Josephine: [screams at the top of her lungs]
[in the present]
Klaus Baudelaire: [to Violet] We gotta get her out of the house.
I guess I should have said “Baudelaire children of Snicket’s creation”…
“The rich aren’t as rich as they used to be” said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc.
Gee whiz, not only that, but the smart aren’t as smart as they used to be; the young and beautiful aren’t as young and beautiful as they used to be; and the woods aren’t as full of low-hanging buy-side fruit as they used to be.
Real Estate agents, however, are still as obnoxious as ever.
“The rich aren’t as rich as they used to be,” … “People have reached the point where they can’t afford the carrying expenses of a $2 million home.”
(yawn) Typical REIC spin. These HELOC princes and princesses never could afford the homes from the beginning.
The rich are different than you and I. They have more money to lose.
Oh dear. The rich are.. aggrieved. How terribly… tragic.
Please excuse me while I BUST A RIB LAUGHING LMAO!
.In India, investors who have purchased gold from banks there, find themselves stuck with it “We are not allowed by the Reserve Bank of India to buy back gold coins and bars sold by us,” assistant general manager of the ICICI bank , Amarjit Walia told PTI. Alok Ranjan, regional business executive of Tanishq, a [jewelry] chain with country-wide presence said, “We cannot disturb our floating cash. Consumers may exchange the gold for jewellery, but in that case we deduct a substantial amount to neutralise our cost in melting gold and adding alloys like silver and copper to make it fit for making jewellery.”
Anjali Jewellery director Ananya Chowdhury said, “Our position is the same as that of others. Moreover, we do not know whether the gold was genuinely procured or not. It is a security issue. We do not want to be dragged into legal hassles.”
Just a little note to the stock market followers out there. The DJIA traded over 10,500 on ten different days between November and this month December 2009. However, it only closed over 10,500 on one day, this past Monday Dec 14, at 10501.05.
Today Thursday Dec 17, it is currently at 10,335.32, or down 165 points from the high close of Monday. Of course I could be wrong, but it looks like we may be already backing off from an important top in the market. My personal belief is that most equities are ridiculously overvalued and dangerous to hold at these levels.
Have a great day.
That’s always the question. Is the market rolling over or is it consolidating before the next leg up?
“There’s a minor god on the trading floor who allows each person to pick the top correctly once, pick the bottom correctly once, and be wrong as many times as he/she wants.” (WSJ from several years ago.)
Does this apply if you bought at the top once and sold at the bottom? Will I still be wrong all the other times???
As the old saying goes: If Santa Claus should fail to call, bears may come to Broad and Wall!
Maybe with all the ice melting up at the North Pole, the polar bears could all migrate south to take up residence on Wall Street?
And maybe snack on some hedge fund managers, then head over to GS or CitiBank for the main course…
Pepsi Not Advertising in Super Bowl Next Year 17 Dec 2009 AP
Pepsi will not advertise its drinks in next year’s Super Bowl, ending a 23-year run so the company can focus on a new marketing effort that will appear mostly online.
Pepsi beverages have been advertised in the Super Bowl since 1987. Frito-Lay, a unit of parent company PepsiCo [PEP 60.18 -0.50 (-0.82%) ], will still advertise.
The company wouldn’t say how much it spent last year on Super Bowl ads, but it bought several minutes of commercials.
The Feb. 7 NFL championship game will be televised on CBS.
The nation’s second-biggest soft drink maker is plowing marketing dollars into its “Pepsi Refresh Project” starting next month as its main vehicle for Pepsi. The project will pay at least $20 million for projects people create to “refresh” communities.
The shot heard round the NFL.
That’s the opening round, but what happens when the major television contracts come up for renewal and the ad revenue isn’t there to increase the payout? It’ll be very interesting times if the sports revenue pie gets smaller which it well may.
Oh, goody!
Angels AL Baseball Stadium:
Current “Marquee” Ad signs facing the freeway:
1. Der Wienerschnitzel
2. Vita Water
3. Big O tires
4. Jet Blue
Previously:
1. Countrywide
2. Ameriquest
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
“Billionaire” sports teams = CULT!
Study: Mortgage bank profit margins drop 34%
Washington Business Journal
A study by the Mortgage Bankers Association found that independent mortgage companies and mortgage subsidiaries of banks saw their profit margins shrink by one third in the third quarter compared to the second quarter.
The District-based Mortgage Bankers Association study, based on 306 mortgage companies, found that the average profit made per loan origination was $902 in the third quarter, down from $1,358 per loan in the second quarter.
“Production profits were still healthy in the third quarter of 2009, although not at the same level that we saw in the second quarter,” said Marina Walsh, associate vice president of industry analysis at the Mortgage Bankers Association. “For lenders in our study, average production volume dropped 33 percent in the third quarter 2009, along with a drop in the refinancing share of total originations.
The overall decline in production volume combined with a heavier purchase share resulted in higher per-loan production expenses, which pulled down production profits.”
The figures were not surprising to Craig Strent, vice president and co-founder of Apex Home Loans Inc. in Bethesda, who said interest rates were the culprit.
Ariz. teacher on leave for taking choir to Hooters.
PHOENIX – An Arizona music teacher whose students performed at a presidential inauguration event is on administrative leave after taking 40 high school students to a Hooters restaurant.
Paradise Valley school district spokeswoman Judi Willis says choir director Mary Segall accompanied the students to a performance in downtown Phoenix last week, and during the outing, they ate lunch at Hooters.
Willis says Segall explained that the restaurant, known for its waitresses’ somewhat revealing attire, was the only place that could accommodate a group of that size. But district officials believe there were other options for lunch in the area.
The teacher plans on retiring in January, and Willis says she does not know if she’ll return before then.
Love those onion rings with that spicy mustard!…I’ll be taking Mr. Cole there for his 8th anniversary / Boston Celtics game…he likes to take the small ‘rings and holds them up to his eyes and looks around, plus the gals push him on the swing!…the ‘noise” can be a bother though, & their prices $$$$$$$$$$$$ are waAAAAAAAAAy out of line…it’s a good thing they have “happy hour” specials, otherwise…forget it!
Can any readers here who are capable thereof please offer their convincing reassurances that since the U.S. is decoupled from the rest of the global economy, we needn’t worry about these rumbles overseas of potential sovereign defaults?
Dec. 16, 2009, 7:00 p.m. EST
Debt disaster fears rumble from Athens to London
Game of chicken for bond spreads: Will E.U. honor ‘no bailout’ clause?
By Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) — Rumors of a debt disaster are swirling around Europe, from Athens to Madrid and all the way to London.
Investors have rushed to sell Greek bonds since the newly elected government of George Papandreou made a startling revelation: the deficit will soar to over 12% of gross domestic product this year, well above previous official projections.
Greece’s predicament has escalated concerns about contagion in other European countries whose finances are in poor shape. Just this month, the ratings of Greece have been cut both by Fitch Ratings, and, late Wednesday, by Standard & Poor’s, and major agencies have warned Spain and Portugal of possible cuts.
The market reaction has been swift, and brutal. The euro has dropped below the key $1.50 level. Credit-default swaps on Greek government debt — essentially, bets that Greece will default — have ballooned.
…
Debt disaster rumors are good for the strength of the dollar relative to close substitutes…
EUROPE/AFRICA/MIDDLE EAST
CURRENCY VALUE CHANGE % CHANGE TIME
EUR-USD 1.4347 -0.0184 -1.2670% 15:24
GBP-USD 1.6164 -0.0170 -1.0440% 15:23
USD-CHF 1.0467 0.0082 0.7903% 15:23
USD-SEK 7.2870 0.0941 1.3077% 15:23
USD-DKK 5.1861 0.0652 1.2740% 15:23
USD-NOK 5.8693 0.1071 1.8583% 15:23
USD-CZK 18.2770 0.2221 1.2301% 15:23
USD-SKK 20.9950 0.2627 1.2670% 15:23
USD-PLN 2.9254 0.0469 1.6295% 15:24
USD-HUF 193.4970 2.7498 1.4416% 15:24
USD-RUB 30.8340 0.5669 1.8730% 12:59
USD-TRY 1.5193 0.0122 0.8129% 15:23
USD-ILS 3.7955 0.0205 0.5430% 15:23
USD-KES 75.5500 0.3500 0.4654% 09:21
USD-ZAR 7.5264 0.0958 1.2886% 15:23
USD-MAD 7.8822 0.0702 0.8986% 15:23
Yes! A link! Thank you thank you!!
You are welcome. I am glad you finally realize that my special mix of exchange rates is chosen on the basis of laziness rather than in interest to provide a biased picture. I do believe that list collectively contains the closest substitutes for the dollar out of Bloomberg’s various exchange rate tables, especially in light of the well known fact that the U.S. and Asian economies are decoupled now.
Sovereign credit worries are apparently just the medicine Uncle Buck needed to recover from death’s door.
* DECEMBER 17, 2009, 4:31 P.M. ET
Treasurys Soar On Sovereign Credit Worries; 10-Yr Yld Below 3.5%
By Min Zeng
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Rising concern over sovereign credit risks in Greece spurred global investors to sell riskier assets Thursday afternoon and seek the safety of highly liquid Treasury securities.
U.S. stocks and commodities tumbled. The euro was battered against the dollar and the yen as investors perceived the problems in Greece, a euro-zone member country, mirrored worsening public finances in the region. Greek bonds were dumped, and the cost to buy financial instruments to insure against possible debt default by the Greek government shot up.
The safe-haven flows lifted Treasury prices that have been sold over the past week following upbeat economic data and a round of poorer-than-expected auctions. The 10-year note’s yield slipped as low as 3.472%, retreating from 3.622% earlier this week, the highest level since August. The two-year note’s yield dipped below 0.8% again.
“Greece’s news over last few days continues to keep credit concerns front and center,” said Brian Varga, head of U.S. Treasury trading in New York at Standard Chartered. “When solvency is questioned, counterparties, customers, lenders, suppliers, etc., all pull back in an effort to minimize exposure to losses–quite a precarious situation indeed for those currently in the crosshairs of the market.”
…
My read is that the Fed is either currently throwing the greatest curve ball in monetary policy history, or they are going to make good on their promise to withdraw market stabilization measures as the economic recovery continues apace. Under the latter scenario, those staying long houses, stocks and gold are likely to realize losses when hyperinflation fear mongering gives way to the sobering prospect of a strong dollar policy which goes beyond rhetoric to substance.
In the former case, anyone who is not currently long stocks and houses or other real assets will wind up as a bag holders whose real (inflation-adjusted) net worth takes a big hit.
Happy gambling to all
The Financial Times
Dollar’s revival damps demand for stocks
By Jamie Chisholm, Global Markets Commentator
Published: December 17 2009 07:20 | Last updated: December 17 2009 21:35
21:15 GMT. The dollar shot to its highest level in three months on Thursday after traders perceived the Federal Reserve had adopted a more upbeat tone regarding the US economy following its decision to leave interest rates at historic lows.
However, in a sign that the the carry trade mantra of “strong dollar equals weak stocks” is still afforded some heft, global stock markets turned lower on the greenback’s advance.
The FTSE World Index fell 1.7 per cent: the steepest daily decline since October. The global banking sector gave back all and more of the previous day’s gains after Citigroup’s stock offering attracted disappointing demand.
The S&P 500 in New York fell 1.2 per cent to 1,096, with a worse-than-expected report on initial jobless claims and a downbeat forecast from FedEx also weighing on sentiment.
London’s FTSE 100 shed 1.9 per cent to 5,218, and the FTSE Eurofirst 300 dropped 1.3 per cent to 1,019. Resources stocks were particularly weak as the strong dollar hit commodity prices.
News that Standard & Poor’s had also cut Greece’s credit rating further damped spirits and reminded investors that sovereign debt risks remained. The yield on 10-year Greek government bonds at one stage jumped 25 basis points to 5.82 per cent, taking the spread with German Bunds close to 270bp. However, later the spread tightened to 250bp. The Athens stock market fell another 1.2 per cent.
The dollar’s gains had accelerated once it breached the $1.45 level to the euro, later leaping 1.3 per cent to $1.4346 and gaining 0.9 per cent on a trade-weighted basis to 77.72, its highest level since the start of September. Sterling fell 1.2 per cent to $1.6142 after UK retail sales unexpectedly contracted in November.
The yen fell only 0.1 per cent against the dollar, however, to Y89.89 and jumped 1.2 per cent versus the euro to Y128.96. The yen’s relative strength signalled that part of the dollar’s bounce was down to the re-emergence of risk aversion, of which the yen is usually also a beneficiary.
The Federal Reserve’s statement after its rate decision on Wednesday contained few surprises, but some investors later focused on the central bank’s confirmation that a raft of money market support mechanisms would be removed at the start of February.
This, coupled with the Fed upgrading its assessment of the US economy, convinced some market players that the timetable for monetary tightening has shuffled forward a touch, and this reasoning lent further support to the dollar’s recent rally.
…
My read is that the Fed is either currently throwing the greatest curve ball in monetary policy history, or they are going to make good on their promise to withdraw market stabilization measures as the economic recovery continues apace.
I’ll go with the curve ball. There is no way in the world they can withdraw their “assistance” without immediately precipitating a crash of major proportions. All they can do is hint that they will, to unnerve the speculators.
I refer you to the 1979-1982 period (the “double-dip recession” of the Reagan years) as an example of how far the Fed will go to defend the dollar against loss of its reserve currency status. The short answer: They will go pretty far.
That was then, this is now.
History doesn’t repeat itself, but it rhymes.
I don’t know, but if you hum a few bars…
BTW, I cannot reject your scenario out of hand. That is, it seems completely plausible that the Fed might endlessly signal that it is going to raise rates soon in order to reduce Mad Money flows into housing and other speculative asset classes, while never really intending to take away the easy money punch bowl until a lot more inflation happens.
Silicon Valley house prices rise 13.9% in Nov. from a year earlier.
Mercury News ~ 12/17/2009
Silicon Valley’s real estate market showed signs of improvement in November, with the median price of a resale house up year over year for the second month in a row.
According to a report today from MDA DataQuick, the median resale house price in Santa Clara County was $550,000 last month, the same as in October and up 13.9 percent from a year earlier.
The number of sales completed last month increased 47.2 percent from November 2008.
The trend in the valley reflected improving conditions throughout the Bay Area, with fewer foreclosure sales and a greater number of properties selling in more expensive communities.
“The latest stats show just how much the Bay Area market has changed in a year,” DataQuick President John Walsh said in a statement. “Financial distress is still a problem with many borrowers, but for now cheap foreclosures have lost their leading role in this housing drama.”
One might think that with rumors of sovereign debt default in the air, faith in (virtual) paper money would be crumbling in favor of The Precious™, but apparently that is not the case.
What was that line again, Combo?
METAL STOCKS | Commodities’ crystal ball
Losses deepen for gold
Greek woes and Fed views lift the dollar, reducing the metal’s investment appeal.
Has the gold bubble already popped, or is this just a debt cat dip?
“Greek woes and Fed views lift the dollar, reducing the metal’s investment appeal”.
I can’t see why this comes as any surprise? Regardless of anyone’s opinion of the dollar, it is still the Worlds reserve currency. So when things get dicey around the globe with debts and perhaps solvency, it would seem that the dollar would gain ground. Gold was/is not in a bubble(imo)”it” has been reacting as people have, to the uncertainties world wide. I think folks are now conditioned to use the word ‘bubble’ for just about anything on a rise.
The problems for the dollar have not diminished though, shifted for the moment but not diminished. Notice how folks love to hate the FED but swoon when BB trots out some reassuring words. It wasn’t that many decades back when the mighty British Pound Sterling was the worlds reserve currency, and the mere mention that it may one day lose it’s position was laughed and sneered at. How’d that work out.
‘Gold was/is not in a bubble(imo)”it” has been reacting as people have, to the uncertainties world wide. I think folks are now conditioned to use the word ‘bubble’ for just about anything on a rise.’
First sign that an asset class is developing a bubble: DENIAL.
PB - are you gay?
(j/k - you see where I’m going though right?)
I will neither confirm nor deny that statement, for fear of sparking a gender preference bubble.
P.S. I am j/k, too … about as plain vanilla hetero-monago-familial as a guy can get.
“First sign that an asset class is developing a bubble”: DENIAL.
I am not denying anything but think what you will, I guess ones opinion of what constitutes a “bubble” vary greatly. What is it about gold that bugs you so? You don’t own any, so why on earth should you care. It makes absolutely so sense to me to spend anytime on something that has no effect on ones life.
“What is it about gold that bugs you so?”
Nothing. I call bubbles as I see them.
P.S. You might have surmised by now from the frequency of my posts that this era of serial bubble creation is a source of endless fascination for me. I like to give my unvarnished opinion of what I see; sorry if it seems like I am trying to offend, as I am not.
“You don’t own any, so why on earth should you care.”
P.P.S. What you don’t own can hurt you, due to opportunity costs. For a hypothetical example, suppose there were only two asset classes you could chose from: U.S. stocks and a dollar-denominated passbook savings account. If you never bought any stocks, and rampaging inflation drove the value of claims on real assets (like corporate ownership shares) sky high in nominal terms while driving down the real value of the dollar, your passbook savings account would turn out to be a losing proposition, thanks to the huge runup in inflation and nominal stock prices.
“sorry if it seems like I am trying to offend, as I am not”.
I can’t be offended, no problem. I learned many years ago that everyone has their own view point, based on their experiences. I only concentrate on things I have control over.
“I only concentrate on things I have control over.”
Yep, as your x2,186 posts regarding “the gubmint” attest to
“Yep, as your x2,186 posts regarding “the gubmint” attest to”
So you have been self-appointed as the post counting czar. Good going you deserve it, what with all that counting numbers and all. The gubmint finally found a good use for you, it’s a very noteworthy appointment, you are bound to proud.
It fits your qualifications well, and that’s important. Perhaps your next goal in life will be the daffy, bugs and goofy czar. I’ll put in a good word with Barry for you. Who knows you may his next ‘unexpected’ dinner/breakfast guest. He only wants the best for you! Carry on.
“…sorry if it seems like I am trying to offend, as I am not.”
Except for Eddie. Merry Christmas to you, too
We are brimming with holiday vitriol today, no?
One more thing, wmbz:
Since I began thinking hard about economics about fifteen years ago, it has gradually dawned on me that I have a somewhat rare talent, which is that I don’t naturally subscribe to the herd mentality which infects the thinking of the majority of professional economists I have either met or read over the years, including some otherwise very bright and highly-published individuals. This first truly hit home at the peak of the dot com bubble around the year 2000 — when others were foaming at the mouth with irrational exuberance, I was explaining in private conversation why they were delusional.
I have met precious few other independent thinkers over the years — the majority of professional economists I have ever met think like highly-educated bovines. As a public service, I share my unvarnished ursine impressions of economic reality on this blog for all who are sufficiently interested to read them.
First sign that an asset class is developing a bubble: DENIAL.
So anytime you deny that an asset class is in a bubble, that means it is? Okay, I’ll deny that the dollar is in a bubble.
Clearly the dollar (and any other fiat currency, for that matter) is in a long-term bubble — in fact, the recently departed Paul Samuelson has a paper on that very topic if you are truly interested. I am talking about the short-to-mid term here — let’s say the next five years or less to fix ideas.
I have refered here to the “greatest expansion of credit in history” since my first post.
The question is: Are we done yet?
It must really reassure the gold bugs to know that The Precious™ can get hammered on the slightest hint that at some point in the indefinite future, the Fed might have to raise interest rates, or at least to stop hammering them into the ground.
Losses for gold futures deepened Thursday to close at mid-November levels, pressured as investors bid up the U.S. dollar on concerns about Greece’s ability to pay its debts and on expectations the Federal Reserve was inching toward raising rates.
My apologies - I should have alerted everyone to short gold.
How do I know? My Father-in-law was bragging about how well his gold stocks were doing and how the dollar is going down.
This is the same guy who was bragging about his energy stocks last year. Funny how not much is mentioned regarding those stocks anymore.
“My Father-in-law was bragging about how well his gold stocks were doing and how the dollar is going down.”
Another primary indicator of bubbles: Shoe-shine boy anecdotes like this one.
Other recent examples of note:
- Home-sweet-home Time Magazine Cover
- Flip That Yacht story in the WSJ
Okay, let’s make a bet. I’ll bet that gold is higher in US$ at the end of 2010 than at the end of 2009. Who’ll take the other side, for $100 US?
If I were a gambler willing to take your bet, I would just figure out some way to short the gold and not worry whether you were good for the money… (in fact, I am very, very short gold — don’t own a single gold filing to my name).
Perhaps this fellow can get elected and at the very least annoy a few in the D.C. cesspool.
http://www.youtube.com/watch?v=VP2p91dvm6M
I’m off for some beach time on a little island with lots of rum. An early Merry Christmas to you all. Try to lighten up a little and enjoy the holidays.
Professor: yes I know, I know, my gift to you is a week without me. You really are that predictable.
Have a great time! Merry Christmas! Rum is a good thing.
Mom and dad is generous to their retard son.
Sweet little EddieTard needs a little money so he can go drink some rum on the family vacation.
BwaHaHAHAHAHAHAHAHAHAHAAHAHAAAAAA!!!
Troll alert number ??? (lost count…)
Careful and don’t let the sharks get ya.
Wait, on the other hand, dip yourself in some fish oil/blood, tie a fish-head to your arse and attach a seal fin to your legs and have fun in the water.
Damn was that too mean?
“Damn was that too mean?”
Yes.
I like seals and don’t want anyone cutting off their fins. :O
“Yes.”
I was about to compliment you on your good heart, until I read the last line
Build a cool sandcastle, Eddie– but watch out for the tsunami.
Foreclosure backlog estimated at 1.7M
Backlog of foreclosures estimated at 1.7 million, likely to hold back home prices, report says.
WASHINGTON (AP) — About 1.7 million homeowners were on the verge of foreclosure in the fall, a looming “shadow inventory” of homes that will be put up for sale in the coming years and weigh down prices, a report said Thursday.
The number, up from 1.1 million a year earlier, is likely to keep rising through the middle of next year or later, said Mark Fleming, chief economist of First American CoreLogic, the real estate research firm that released the study.
Already, the foreclosure backlog is equal to nearly half the 3.8 million unsold new and existing homes currently on the market, First American said.
“We’re going to be dealing with high levels of distressed (sales) in the marketplace for at least a couple of years,” Fleming said. “It’s not just all going to disappear.”
Jives with FDIC data I put out yesterday, which showed banks claiming about $400B in non-performing loans (90+ days overdue), as of the end of September at least. 1.7M times $235k per loan is $400B.
OTTAWA (Reuters) - BlackBerry maker Research In Motion reported a 58 percent jump in quarterly profit on Thursday, as sturdy demand from holiday shoppers helped fend off growing competition, sending its shares sharply higher.
No surprise here the good ‘ol crackberry can’t leave home with out it.
Is there anything bankers won’t do for a buck
Credit swiss
Mr. Holder and Manhattan District Attorney Robert Morgenthau detailed a decadelong effort by the bank to carry out transactions from Iran, Libya, Sudan, Burma and Cuba.
The men announced a $536 million settlement by Credit Suisse, one of several banks accused in a long-running case that has netted roughly $1 billion in fines. The bank, which paid the biggest of the fines, reached a 24-month deferred prosecution agreement, meaning it could face criminal prosecution if further problems occur.
Mr. Holder said Credit Suisse built a business based on actively helping its clients avoid detection by U.S. authorities on their financial transactions. The bank produced a pamphlet titled, “How to transfer USD payments” and told Iranian clients that bank employees would check each message individually to make sure it would avoid detection.
The men announced a $536 million settlement by Credit Suisse, one of several banks accused in a long-running case that has netted roughly $1 billion in fines.
When will corporate fines correspond to upside corporate profit? $536 million sounds like a lot, but I’m sure its a small fraction of the profits made over a decade or more. Jeez. At least in this case there’s a deferred prosecution agreement hanging overhead — otherwise the settlement is little more than a slap with a few strands of linguini.
Yep and this is the problem with tort reform.
If Ford makes a Ford Pinto that bursts into flames they weight the cost of fixing the problem with the cost of law suits. Limit lawsuits to 10k a piece and boom no fix for flaming Ford Pinto.
When will corporate fines correspond to upside corporate profit?
I don’t see how a corporate fine of any magnitude– or even a corporate criminal prosecution– is supposed to act as a deterrent. Is an exec going to think twice about engaging in illegal activity because the BANK might have to pay a fine?
I say, pierce the corporate veil– or better yet, don’t create one in the first place.
PORTLAND, Maine – Ever since the invention of the automobile, paved roads have meant progress. Now some cash-strapped towns and counties are finding progress too expensive, and they are tearing up battered roads and putting down gravel.
The high price of pavement and the sour economy have driven municipalities in states such as Michigan, Pennsylvania, Indiana and Vermont to roll up the asphalt — a mile here, a few miles there, mostly on back roads — rather than repave.
Next up pulling up gravel and making a donkey path.
Next up pulling up gravel and making a donkey path.
Donkey path too big, too expensive? Make a goat path.
Modern gravel roads are really gravel asphalt.
I grew up driving on a LOT gravel asphalt roads. They really aren’t that bad and far easier to maintain in regions with climate extremes. They are perfect for little traveled back roads.
I’ve also driven on a LOT dirt back country roads. I’ll take the gravel over dirt or badly potholed asphalt, any day.
http://www.telegraph.co.uk/finance/economics/6819470/Moodys-warns-of-social-unrest-as-sovereign-debt-spirals.html
Moody’s warns of ’social unrest’ as sovereign debt spirals
Britain and other countries with fast-rising government debts must steel themselves for a year in which “social and political cohesiveness” is tested, Moody’s warned.
Wow — Moody’s graduates from doling out AAA credit ratings for everyone who can breath to mongering fear of social unrest. Heckuva job, Moody’s!
What irony. The very company that gold plated the toxic junk, thus helping to create the world’s current economic problem, now warns of the consequences.
Day late and a (TRILLION) dollar short there guys.
His proposed solutions do not address the regulatory capture problem of a banking system dominated by systemically important 800 lb gorillas that are deemed too big to fail. And for all I know, that could be the point.
Economics in Action
What Went Wrong and How Can We Fix It?
A look at the economic crisis
By James D. Hamilton, PhD
“As long as house prices continued to skyrocket, few of even the most dubious loans went bad because the borrower enjoyed a big enough capital gain to be able to refinance at a profit. And precisely because lenders were diverting such huge sums of money into housing, U.S. house prices continued to climb rapidly, doubling between 2000 and 2005.”
I love it when professors offer straight talk.
Here is some of my own: Don’t buy until real (inflation-adjusted) home prices retrace to at least 2000 levels, and we’re not there yet. What goes up, must come down seems to fit this situation quite well.
It is worth mentioning that I personally know someone who did not buy in San Diego when he came here in 2000 because (according to his UHS dad), home prices were “too high” and “would have to eventually come back down again.”
Also worth reminding everyone that the stock market crash began back in 2000. Luckily for real estate investors, housing and the stock market were decoupled back then.
Geez — I keep remembering more stuff to add:
The dollar also started on a long-term downtrend relative to the rest of the world circa 2000. I think the dollar crash has had its run at this point, especially given the tremendously negative anti-dollar sentiment that wafts around the blogosphere these days.
Muggy’s chunk-spewing littleman: 3
Landlord’s Berber carpet: 0
—————
I have talked the wifers into renting until the end of the next academic year, which buys me about 16-18 months. After that, I think I will have to buy.
Good for you and good for littleman.
Get a baby sitter once in a while and reward her for her prudence!
No need to throw in the towel after 18 months if conditions warrant otherwise. Extend and pretend, just like the financial experts at Megabank, Inc and their political lackeys do…
Non-monetary policy question for GAO auditors to add to their list of questions to ask the Fed:
What made you decide to offer zero percent loans with few strings attached to Megabank, Inc but throw state governments under the bus?
* The Wall Street Journal
* DECEMBER 18, 2009
States Scramble to Close New Budget Gaps
Previous Fixes Fall Victim to Sagging Revenue, Political Fights and Court Rulings; Ohio Finds Itself $851 Million Short
By AMY MERRICK
The patches used by states on their ailing budgets just months ago are now failing.
Ohio lawmakers were expected late Thursday to vote on a compromise reached with Gov. Ted Strickland to avoid cutting education budgets an average of 10% on Jan. 1. In Arizona, lawmakers met in a special session Thursday — their fourth on the budget this year — to grapple with a new deficit. And in New York, Democratic Gov. David Paterson said Sunday he would postpone paying $750 million of state bills to avert a cash crunch.
Many states eliminated expected deficits earlier this year with budget cuts, tax increases, short-term borrowing, accounting moves and planned gambling expansions.
But despite a slight improvement in the U.S. economy, states are now finding those measures didn’t go far enough. Tax collections continue to trail projections in some states, and court rulings and political battles have blocked some gap-filling moves.
Plus, some legislatures didn’t fully deal with the deficits, leaving the toughest decisions to governors. All states, except Vermont, have at least a limited requirement of a balanced budget.
Only a few states now have cash-flow problems. But if revenues continue to fall below expectations, the list could grow, said Scott Pattison, executive director of the National Association of State Budget Officers.
“That’s certainly a concern for bond-rating agencies,” he said. “It shows how bad things are.”
…
My proposed solution to the Byzantine banking sector regulatory overlap:
Give all current banking regulatory agencies joint and several regulatory power. In fact, it would not be a bad idea to create a few more independent bank regulatory agencies, just for good measure. Hopefully with sufficient numbers, the bank regulators could tie down Megabank, Inc the same way the Lilliputians tied down Gulliver.
P.S. Now that I know Sheila Bair is a Kansan who writes cautionary financial tales for children to read, I wish her all the best with staying the course on banking regulation. I don’t get the impression that she is an industry whore like Turbotax Tim. The more she does to stifle the banksters’ business, the less Main Street Americans are likely to get hosed. And “Rock, Brock, and the Savings Shock” is a title headed for my kids’ stockings this Christmas.
* The Wall Street Journal
* DECEMBER 18, 2009
Agencies in a Brawl for Control Over Banks
By DAMIAN PALETTA
WASHINGTON — In the darkest days of the financial crisis a year ago, Sheila Bair was hailed for having predicted the housing bust. Today, the chief of the Federal Deposit Insurance Corp. is fighting for her agency’s future.
The FDIC was set up in 1933 as part of a successful attempt to rescue the banking system, and its deposit guarantees helped save the industry in the present crisis. But as lawmakers hash out the biggest overhaul of financial regulations since the Great Depression, the FDIC could wind up a shadow of its former self.
Connecticut Democrat Christopher Dodd, the Senate Banking Committee chairman, has proposed revoking almost all of Ms. Bair’s powers to supervise banks, as part of a sweeping financial-regulation bill now under consideration in the Senate.
That would leave Ms. Bair in charge of an agency whose primary role is to clean up banks after they fail, with little part in monitoring them before problems erupt. So, Ms. Bair has been working for months to beat back the idea.
She has met with nearly all of the 23 lawmakers on Sen. Dodd’s panel, including at least once with the chairman. In the fight to reshape regulation, Ms. Bair has clashed bitterly with Treasury Secretary Timothy Geithner, irked some of her own employees and angered bankers who say the FDIC chairman is stifling their businesses.
There are early signs her forceful lobbying may be working. The House version of the financial regulatory overhaul, which passed last week, is much more FDIC-friendly, thanks in part to her frequent presence on the Hill, say some representatives. Aides say Sen. Dodd is now considering a new proposal that would allow the FDIC to retain its oversight of smaller, community-owned banks, while creating a new agency to oversee national banks.
Ms. Bair’s struggle is part of a broader battle over the future shape of the apparatus that regulates the U.S. financial system. In the wake of the crisis, virtually every agency involved stands accused of being asleep at the switch, and officials who led the response are under fire. Federal Reserve Chairman Ben Bernanke, who by the end of next month faces a Senate vote on his re-appointment to a second four-year term, is trying to fight off an assault on the central bank’s powers. Mr. Geithner is frequently blasted by the left for being too close to Wall Street.
“The FDIC is scrappy, we always have to fight to be heard,” Ms. Bair, 55 years old, said in an interview.
Before being tapped to head the FDIC, Ms. Bair bounced between Washington, academia and the private sector in a series of mostly low-profile jobs. She studied philosophy as an undergraduate at the University of Kansas, working for a time as a bank teller, then graduated from the law school. Later, she headed to Capitol Hill as a lawyer for Sen. Bob Dole, a Republican from her state.
Enamored of politics, she ran for a Kansas seat in the U.S. Congress in 1990 but lost in the Republican primary by fewer than 1,000 votes to local banker Dick Nichols. (People close to Ms. Bair say she has no plans for another run, and intends to work in academia or run a nonprofit when her FDIC term ends in 2011.)
She went back to Washington for a post on the board of the Commodity Futures Trading Commission, the agency that regulates derivatives trading, then worked in government relations for the New York Stock Exchange before being tapped in 2001 as an assistant Treasury secretary.
She left after a year to teach finance at the University of Massachusetts, saying she wanted to spend more time with her family. There she wrote a children’s book about financial education, “Rock, Brock, and the Savings Shock,” a cautionary tale about twin brothers and the perils of overspending.
…
Rock, Brock, And the Savings Shock (Library Binding)
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Where is the Fed’s financial education effort? All I see from them is hair-of-the-dog encouragement to blow money on unneeded consumer goods, such as extra houses and other sundry items.
Predictions for 2010:
1) So long as the Man of the Year stays away from mistresses, he won’t have to worry about developing a Tiger Woods problem.
2) If he sneezes while facing the wrong direction, global financial markets may catch fatal pneumonia as a result. In the interest of financial stability, let’s hope he has already taken both the seasonal flu vaccine as well as the H1N1 variety.
Dec. 16, 2009, 6:44 p.m. EST
Man of the moment has rough 2010 in store
Commentary: Ben Bernanke’s 2009 was easy
By David Callaway, MarketWatch
SAN FRANCISCO (MarketWatch) — Ah, to be recognized as “person of the year” on the same day Tiger Woods was named “athlete of the decade.”
There are almost no similarities between Federal Reserve Chairman Ben Bernanke, honored by Time Magazine Wednesday, and the out-of-bounds Woods, who was named as a top athlete by the Associated Press, except one. Both are going to have a lousy 2010.
For Woods, the reasons are obvious. For Bernanke, it’s because after a year in which he received high honors for basically sitting on his hands, next year is when he and the Fed have to finally steer the economy out of this mess.
The Fed’s decision to leave interest rates near zero, and unchanged Wednesday and for “an extended period,” was the right one. Why kill the rally in equities, commodities, bonds and emerging markets with only two weeks left in the year? But judging by the market reaction — muted — it simply postponed what everybody knows is coming next year, a turnaround in interest rates.
On the economy: stability or growth?
Europe has long advocated for a stable economy; the U.S. has preferred a dynamic one. WSJ’s David Wessel says those mindsets are clashing once again during the current crisis.
It’s not that rates are going to shoot higher all of a sudden. With the Fed’s benchmark overnight lending rate now in a range between zero and 0.25%, it would take seven quarter-point rate increases just to get to 2%.
The issue is that the markets understand that the turning point itself will signal a re-evaluation of global assets. Investors have grown used to the easy practice of selling the U.S. dollar and buying everything else. But gold, stocks, bonds and other commodities don’t move in lockstep in normal markets. The move to raise rates will reshuffle the deck in ways many experts can only guess at.
…
I smell lawsuits, the collapse of an environmental extremist stranglehold on scientific objectivity, and the end of Al Gore’s WH prospects.
This is going to be awesome to behold, folks! The beauty of science is that the still small voice of truth has a way of overcoming efforts to silence it, in the long run.
* OPINION
* DECEMBER 17, 2009, 10:47 P.M. ET
How to Manufacture a Climate Consensus
The East Anglia emails are just the tip of the iceberg. I should know.
By PATRICK J. MICHAELS
Few people understand the real significance of Climategate, the now-famous hacking of emails from the University of East Anglia Climatic Research Unit (CRU). Most see the contents as demonstrating some arbitrary manipulating of various climate data sources in order to fit preconceived hypotheses (true), or as stonewalling and requesting colleagues to destroy emails to the United Nations Intergovernmental Panel on Climate Change (IPCC) in the face of potential or actual Freedom of Information requests (also true).
But there’s something much, much worse going on—a silencing of climate scientists, akin to filtering what goes in the bible, that will have consequences for public policy, including the Environmental Protection Agency’s (EPA) recent categorization of carbon dioxide as a “pollutant.”
The bible I’m referring to, of course, is the refereed scientific literature. It’s our canon, and it’s all we have really had to go on in climate science (until the Internet has so rudely interrupted). When scientists make putative compendia of that literature, such as is done by the U.N. climate change panel every six years, the writers assume that the peer-reviewed literature is a true and unbiased sample of the state of climate science.
That can no longer be the case. The alliance of scientists at East Anglia, Penn State and the University Corporation for Atmospheric Research (in Boulder, Colo.) has done its best to bias it.
A refereed journal, Climate Research, published two particular papers that offended Michael Mann of Penn State and Tom Wigley of the University Corporation for Atmospheric Research. One of the papers, published in 2003 by Willie Soon and Sallie Baliunas (of the Harvard-Smithsonian Center for Astrophysics), was a meta-analysis of dozens of “paleoclimate” studies that extended back 1,000 years. They concluded that 20th-century temperatures could not confidently be considered to be warmer than those indicated at the beginning of the last millennium.
…
I don’t get the writer’s point; wouldn’t the chance to capture federal subsidies make banks want to be in the student lending business?
* OPINION
* DECEMBER 17, 2009, 8:33 P.M. ET
Banks Don’t Belong in the Student Loan Business
They get billions in federal subsides that can provide financial aid to needy students.