Bits Bucket For January 15, 2010
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
December 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Kind of curious of what my brethren housing skeptics think of places like this (where I live, Southbury CT 06488). I am trying to find more “it’s different here places” that are starting to crumble.
WIDE-OPEN CONSEQUENCE According to real-estate-industry data, the median sales price of homes in Southbury rose 14 percent over the last year while most of the rest of the state and the nation saw prices decline. It’s difficult to say how much of the increase is attributable to supply and demand vs. intangibles such as good schools and the advantages of suburban living. But the town’s continuing campaign to buy 20 percent of local open space by 2012 certainly helped prop up home prices. With fewer acres available for housing development and fewer houses being built, existing homes are more valuable. At the same time, though, these open-space purchases contributed to the Connecticut Economic Resource Center’s ranking of Southbury as Connecticut’s 11th most unaffordable municipality chiefly because median home prices are rising faster than median incomes. Remember this factoid the next time you hear someone complain about the dearth of affordable housing in Southbury.
This articles author clearly hates trees.
What on earth does it mean to say that a price increase might be because of supply and demand or it might be because of schools and suburban living. The only reason that schools or other apects of a community increases the value of homes is because it increases demand. Now demand might change without a change in the quality of schools (because the community becomes more trendy or people notice its advantages when they were unnoticed before) or because othere places have deteriorated, but who ever wrote that crud knows even less about economics than I do and has no business pretending they understand a complex market like housing.
Oh, and buying up open space that prevents it from being developed, *could*, eventually, make a community more affordable. If other communities allowed lots of development and projected vast increases in citizen/student populations and property taxes and therefore financed building a bunch of new schools (and fire and police substations), then they might be in bigger trouble than the place that only financed buying up empty land. Not necessarily as it would depend on all sorts of other decisions, but it is possible, that the other places that allowed all sorts of development could be in trouble when the property tax collapse catches up with them.
Oh, and buying up open space that prevents it from being developed, *could*, eventually, make a community more affordable.
I’m just curious…don’t zoning laws do the same thing?
You have to assume that there aren’t any rules in place that demand higher density housing in addition to the highly zoned housing. There were places in my home town that had 2 acre zoning while our older neighborhood had quarter acre lots, but I don’t know if many places have that sort of zoning anymore, or if they do, I don’t know if they allow developers to build in just those places. It is pretty much saying that only rich people are welcome to move into town unless someone in an older neighborhood moves out or dies. It becomes a very complex political game. Also, zoning spreads people out over huge distances which still might require police and fire substations if you want to keep response times down and if you don’t spread out the schools, you have bussing costs (way less than building schools).
1/4 acre lots would be just fine if you didn’t put a huge monstrosity on it and pave the rest with a concrete driveway in front and an “outdoor room.” in back. I grew upon 1/3 acre corner lot with a house with a fairly large footprint, and it was still almost enough to homestead on.
Unless you want a huge monstrosity on it and pave the rest with a concrete driveway in front and an “outdoor room.” in back.
But you’re right. Don’t let people buy what they want. Let’s have Obama legislate what is acceptable living. I saw 200 sq ft per person and one toilet per 3 households.
If the property was to be placed into a conservation easement then no development will happen. Great Outdoors Colorado (GOCO) uses powerball $ to do such things- that is why you’ll never see Denver meet up with Colorado Springs.
As far as eminent domain goes, the Kelo case spooked many states and municipalities. Many local gov entities passed laws to prevent such shenanigans at their level. My peers thought it was a great use of “police power”. I argued is was abuse every opportunity I got. I was on the recieving end of the stink eye for a long time.
“don’t zoning laws do the same thing?”
Theoretically, yes, but zoning can be changed by deep pockets. Ask people who live in Brooklyn near the new Atlantic Yards development or other places where eminent domain has been used.
If that land was put into some sort of legal entity or trust that forbade development perhaps it would be harder to undo and increase the perceived values in the area…
Zoning can be changed by anyone that can fill out the application and pay the fee. Assuming they can get whatever board to agree w/ them… if not they can appeal. There is a political element (obviously) to any change which can throw a wrench into the works- but the courts are there for a reason if someone feels a decision was arbitrary or there was exparte (sp?) communication.
There is a coastal island in SE Georgia about 1/2 way between Savannah and the FL line, Jekyll Island. By law, 65% of the island has to remain undeveloped. Right next to Jekyll there is St Simons Island. That island has no restriction on development.
I will give you 1 guess as to which of the two nearly identical islands have higher property values.
It’s as basic a supply and demand issue as it gets. Less land available for development = more expensive land.
Eddie,
One of the things Ben Jones has pointed out over the years ( and many bus. cycles he’s experienced first hand ) is that:
“When money is cheap, We’re running out of LAND!”
( Yet when the cost of money is expensive.., there’s uh, no great sense of urgency? )
So if you want to cherry pick a tuly unique situation, I suppose that’s fine but having a hard & fast line drawn in Portland for our Urban Growth Boundary for years.., hasn’t stopped prices from slipping here.
I was responding to the Polly post where she said restricting land use doesn’t affect prices. The Jekyll / St Simons example shows it does. And this is regardless of bubbles. The difference between Jekyll and St Simons has been there for decades, in up times and down times.
Eddie,
And that’s fine, I’m sure ( In a Land, far, far away ) there are numerous other examples ( Jackson Hole etc. ) where that applies.
But for the ‘other’ 99.999% of the nation’s RE, it’s about the cost of money. Just look at the CRE vacancies reported just this morning. Perpetual demand on some mythical “isle” isn’t going to help them.
You’re right. The supply of available land has nothing to do with land prices. The reason an acre of land in rural Texas is worth .00001% that of an acre in Manhattan is due solely do the fact that money costs more in Manhattan than in Texas.
Eddiie
The BIGGEST Fallacy from the REagents is were are running out of land or they don’t make no mo land
What do you think this housing bubble was all about?????
We WERE making millions of acres of land but cutting down orange groves wheat fields, wooded tracts making More land available…
And we still have mucho millions of aces that will be made in the next decade. so yes they are making new land everyday.
Fine.
But in a situation like that town in CT, they are destroying land (available for use). And hence, the value of the existing land is increasing.
Take it to the extreme. Say the town buys up 99.9% of the land and there is only 1 parcel of land left. Do you think that parcel of land will be more or less expensive?
..But the town’s continuing campaign to buy 20 percent of local open space by 2012 certainly helped prop up home prices..
20% is tame. In the SF Bay Area, some counties have locked up 50% and more of the land. Current property owners are all for it of course, and no doubt petition politicians to further reduce and restrict open land use. And, as is expected, prices there are high and higher…
It is a way to artificially support high property prices. But i don’t see how that policy, which might have been used since ancient times to keep the riffraff out, could be fairly connected to bubble price fluctuations.
Land subject to permanent use restriction results in a fairly rigid supply of available land for development. Less available land supply greater price volatility in the face of demand fluctuations.
Less available land supply (allows or permits ?) greater price volatility in the face of demand fluctuations.
where is that written.. on a stone somewhere? What is your reasoning?
Isn’t it intuitively obvious to you?
Nope.. not intuitive to me.
There’s a strictly limited supply of something. When demand rises, the price rises. When demand falls, price falls.
Price volatility is wide swings from high to low and high, etc..
——–
Does anything else that’s in limited supply, like gold, suffer high volatility just because it’s supply is strictly limited?
Are things that are plentiful, like crude oil, shielded from price volatility just because they are plentiful?
I saw it carved in stone somwhere. Price dictates demand, not just supply. Prices get too high and you have no demand. Keep them artificially high and everyone eats cake.
pressboardbox, no argument there, but the key word was volatility. Limited supply (supposedly) encourages high volatility.
Why do you guys seem to assume that there is not a reasonable substitute for land in a particular town? If the schools and other services are comparable in a nearby town and the commute to jobs is approximately the same, then there is no reason why land set asides should have a large effect on the supply in a given area. You can just move to another, comparable town. The only real difference will be proximity to the set aside land, which won’t have much value unless access to it is actually given to the public in the form of a park or something.
Unless, of course, you grant some magic snob appeal to having the name of a particular town on your address lables which means that there will always be more demand for addresses in Snob Springs rather than Niceplaceville. I’ve certainly known people who are that stupid, but it won’t keep the market from adjusting eventually.
“Nope.. not intuitive to me.”
Sorry, I share lots of precious insights here, but nobody pays me for tutoring in remedial economics.
What happens to the land after the town buys it? Does it become conservation land?
I hate the idea of a zoning board or Alderman comprised of real estate attorneys developers and mortgage brokers having any control over that land.
i guess that since it’s owned by the public, the land is restricted to public uses.
Makes no sense to buy it from and then sell it back to private entities.
As opposed to say selling the state capitol, as was discussed here the other day. There is no permanant, and there is nothing preventing the local government from deciding that they need the money more than open space. I wouldn’t be surprised if there are developers hoping to unload land that they bought near peak and are pressuring the local government to buy it from them. Instead of spending the money on say, roads or teachers.
If the price is right it makes plenty of sense (to certain parties) to sell it back to private entities. When a deep pocketed developer wants to build on the open space, back to private hands it goes.
“But,” I hear you cry, “public outcry will surely stop this!” Listen for the future aldermen to say that they need to sell so they can spend the money on something very important, like…..roads or teachers.
I wonder if Uncle Sam could eliminate the national debt by selling a few of the National Parks. Yosemite, Sequoia, Kings Canyon should fetch a pretty penny. Yellowstone, not so much. Tough to build on a geyser.
in these parts they mainly deal with noxious weeds.
Depends. Most of the time the property is still use as a farm for example, but no growth would take place. The just take the devlopment rights away but do not restrict the ag use. Keeps it viable and maintained without massive public funding.
About just selling it off for devlopment after leal constraints are in place: If the easement is vacated then yes. But it is quite an uphill battle to do so. It is the exception to the rule. Can’t say it won’t ever happen, but it is rare.
Wow. Spellcheck is non-functional on this box obviously, sorry for the grammar quirks. Maybe I can claim to be 15 yrs old and I do it on purpose?
If you want a “it’s different here” place that is slowly crumbling, look into Maryland. The people here are insane.
Nearly all of them denied the Bubble completely on the way up (while still being completely unable to answer how housing at 5x gross income was affordable), and they even deny it on the way down. In their view, price NEVER matters because “real estate always goes up.” (nevermind when it doesn’t) and housing will always be unaffordable around here, which clearly makes no sense.
I’ve talked with plenty of educated people who should be able to do basic math, and they all think that housing is perfect just the way it is here - very costly - and they are look forward to the “recovery” when housing can be extremely costly. Because a higher cost of living is good for the economy, or some nonsense.
i agree with you … live in MD too and it is so strange. Some neighborhoods hold their value very well, and real estate here is extremely tied to how good the schools are - so some neighborhoods are holding steady, but otherwise it is falling and yet no one will admit it. very odd here.
I too live in Maryland, and last week I visited a $300,000 single family home for sale. The septic had failed, the kitchen was handbuilt from mis-matched cabinets, and there was a ‘minor’ termite problem. Supposedly the property already had 2 other offers. When I initially scheduled to view the property, there was a delay of several days, as the RE agent was ‘very busy’ due to the large number of contracts and listings she was currently handling.
At the same time, I personally know someone who paid $730 for a house in 2005, which is now assessed at $480. It appears the higher-priced house prices are falling, but the entry-level homes are logjammed at a pricepoint of $250-$300. It is rare in my area to see even a townhouse lower than that. They just sit on the listing sheet, for months and months and months. Yet do not expect these properties to be in pristine or ‘move-in’ condition, as most are not.
very true, a house under $250K is unusual … and yet that’s where most of the homes should be
If 300k is now the level of affordable, who are the buyers and how can this be sustained at 5x income or greater?
The loan-default-loan-default machine will only last so long when you have stagnant or declining incomes.
I think attitudes are changing. Over time people are slowly starting to rebel against the thought of spending 50% or more of take home on just a mortgage payment. This will not help home prices going forward.
Wouldn’t the preponderance of Federal Employees in and around Baltimore who have Cadillac health plans, defined benefit pension plans, and relative freedom from concerns of layoffs tend to skew the affordability calculation?
It used to be that way even around state capitols.
What the heck. I surely can’t account for it without a stretch.
Looking at the Census Bureau’s domestic net migration stats for CT, CT has had net outflows since 2000. This is despite the influx of Brazilians and Hispanics. The BLS charts on employment trends in CT are alarming. Waterbury and Hartford - the closest employment centers - are imploding. There isn’t a single employment center in the state that hasn’t had structural layoffs amongst the professional ranks. The only job growth areas are in state and local government, and in low paid services. Lawyers - the big spenders of last resort - are closing up their practices, unless they happen to be in divorce and BK. And the divorce lawyers aren’t getting paid.
Teacher’s union propaganda notwithstanding, the schools are not what they’re cracked up to be. Not a single principal in CT with whom I spoke, before I left, had ever heard of the IB program. Further, any assessment is strictly limited to intra-state comparisons - the self licking ice cream cone model. The principals’ reluctance to engage was telling. “If we don’t have it, it’s not worth having”. The kids can get into U. Conn or one of the other state schools. Unlike the case with U. Michigan, Berkeley, U. Texas, or UNC however, you will find few US applicants from out of state.
The college grad ‘brain drain’ has been going on for a generation, and is well documented.
As I recall, the North - South roads in CT are sparse. It would be, at minimum, a ninety minute hike from Southbury to get to Stamford - more during rush hour - and there is no light rail option. So, by metro NY standards, central CT is flyover country, and the folks who move there from the SE area of the state may have capitulated.
Hence, one model that fits your observation is people fleeing the SE coast and buying relatively cheap houses in the Southbury area, in which to hunker down.
As I said, it’s a stretch.
“…Not a single principal in CT with whom I spoke, before I left, had ever heard of the IB program.”
Wow, Jane. This report is mind-boggling. Thanks.
I’m from the gubmint, and I am here to help…
You can’t file for your $8,000 homebuyer tax credit.
NEW YORK (CNNMoney.com) — Did you purchase a home after Nov. 6? Don’t expect your $8,000 homebuyer tax credit any time soon.
Since Congress passed the tax credit last February as part of the stimulus program, more than 1.4 million buyers have scrambled to take advantage of it, according to the IRS.
All they had to do was file an amendment to their 2008 tax returns (the ones they filed last spring) and claim the promised refund of 10% of the purchase price — up to $8,000.
“I closed on a Friday and I filed an amendment to my taxes on Monday,” said Valatisha Jacinto, who purchased her Waco, Texas, home last March.
But that all changed on Nov. 6.
One CNNMoney.com reader wrote: “I bought a new home to get the $8,000 tax credit like many others. However the IRS has NOT ALLOWED ANYONE TO FILE since November 6th!! It has been over 2 MONTHS!!”
He’s right. Nov. 6 marked the date that the rules changed because an extended — and expanded — version of the homebuyer tax credit went into effect. And that put filing for the credit on hold.
“I closed on a Friday and I filed an amendment to my taxes on Monday,”
Paycheck to paycheck nation.
“I bought a new home to get the $8,000 tax credit like many others.”
that’s the scariest sentence. six months and he will be in default.
they make it so damn hard to care about these stupid, stupid people.
Very true. These induced purchases will devastate many, many people for whom $8,000 means more than the fundamentals: their job security, skill sets, mobility, etc.
well said edgewater. Quick gratification with no eye on the future.
I suppose for many that buyers remorse will set in some time this year if not already.’
How long can $8,000 give you wood?
$8,000 means a lot to me because it will cover one year of my housing costs.
$8,000 means little to me because it will cover (only) one year of my housing costs.
As for these people, they probably already had the car running and pointed in the direction of the nearest Home Despot/Worst Buy.
These induced purchases will devastate many, many people for whom $8,000 means more than the fundamentals
“Induced” purchases? If you induce a birth, the kid has no choice but to come out. If some herd creature signs a contract, that’s an act of their own free will. See the difference? The fools who let an $8000 incentive influence them into making a huge financial mistake deserve no pity.
six months and he will be in default
Interesting thought. I was reading up on the $8k tax credit since I’ll be getting 10% of my purchase price on the doublewide back when I do my taxes. If you sell the house within 3 years you have to pay it back. What happens if you LOSE the house within 3 years?
You get to live for FREE the next 1-2.
Regardless of that, will you have to pay the $8k back?
Carl:
Lets HOPE its the same deal….or there will be Helllllll in the media about this.
“If you sell the house within 3 years you have to pay it back. What happens if you LOSE the house within 3 years?”
Unless some special provision is made for future early defaulters, I believe that the tax code and the IRS’ interpretation would put a foreclosed person on the hook for repayment. The language seems to focus on the house ceasing to be your primary rez within 36 months, which a Trustee Sale would bring about.
From IRS.gov FAQ on credit”
“If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year’s tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit. (05/06/09)
Coming up with $8k could be kind of a brutal kick-in-the-ass for someone who just lost their house. I wonder what the odds are of the IRS catching that if they didn’t include it in their taxes the next year after losing the house?
they make it so damn hard to care about these stupid, stupid people.
For some sick reason, that made me smile.
Me too.
Or PTPN as those in da’ hood like to say!
( That’s taking it to the HNL )
Hole Nutha’ Level
Haha, that skit was hilarious.
JMS,
It was really gracious of Ray Romano, John Leguezamo (sp?) and Queen Latifah to be such sports and let the MAD cast member get all the laughs.
One of John L’s favorite lines is “It’s simple drug-enomics” from Collateral Damage. Jeez he’s funny.
Lemme guess. These are the guys that moan about government spending…until some of the spending might trickle down to them. Then suddenly: “It’s my money and I want it NOW!!!
“
Payments are being delayed and filing rules are changing due to fraud. People are receiving 8K tax credit that never bought a house. IRS decided to launch this program similar to stated income loans - no proof was required that you actually bought a home. Just send in a form saying you bought a home and “poof” 8K arrives as a credit from your 2008 return.
I don’t believe this was a mistake on the part of credit program management. They likely knew full well there would be massive fraud. Pumping dollars into our economy under the guise of a program though had some political value and seemed better than just handing it out money willy nilly I suppose.
http://money.cnn.com/2010/01/14/real_estate/homebuyer_tax_credit_delayed/index.htm?hpt=Sbin
Is America’s financial collapse inevitable? ~ World Net ~1-14-10
We were blindsided. We never saw it coming.
So said Goldman Sachs CEO Lloyd Blankfein of the financial crisis of 2008. He likened its probability to four hurricanes hitting the East Coast in a single season.
Blankfein was reminded by the chairman of the Financial Crisis Inquiry Committee, Phil Angelides, that hurricanes are “acts of God.” Financial crises are manmade. Yet Blankfein was backed up by Jamie Dimon of JPMorgan, who said, “Somehow, we just missed … that home prices don’t go up forever.”
The Wall Street titans thus conceded they did not foresee the housing bubble ever bursting and they did not consider the possibility of a collapse in value of the sub-prime mortgage securities piled up on their books.
Backing up Blankfein’s plea of ignorance and incomprehension is this: The crisis killed Lehman Brothers and would have killed every one of them had not the Treasury and Fed, neither of which saw it coming, either, intervened with hundreds of billions in bailout cash.
Yet there were those who warned a housing bubble was being created like the dot-com bubble; others who predicted the Empire of Debt was coming down – as, today, there are those warning that the United States, with consecutive deficits running 10 percent of gross domestic product, is risking an eventual default on its national debt.
The warnings come from the Committee on the Fiscal Future of the United States, chaired by Rudolph Penner, former head of the Congressional Budget Office, and David Walker, former head of the Government Accountability Office and author of “Comeback America: Turning the Country Around and Restoring Fiscal Responsibility.”
“We were blindsided. We never saw it coming.”
Nonetheless, we were able to exploit the opportunities presented in order to profit immensely.
* The Wall Street Journal
* BUSINESS
* JANUARY 15, 2010
Banks Set for Record Pay
Top 38 Firms on Pace to Award $145 Billion for ‘09, Up 18%, WSJ Study Finds
BY STEPHEN GROCER
Major U.S. banks and securities firms are on pace to pay their people about $145 billion for 2009, a record sum that indicates how compensation is climbing despite fury over Wall Street’s pay culture.
An analysis by The Wall Street Journal shows that executives, traders, investment bankers, money managers and others at 38 top financial companies can expect to earn nearly 18% more than they did in 2008—and slightly more than in the record year of 2007. The conclusions are based on an examination of securities filings for the first nine months of 2009 and revenue estimates through year-end.
…
nice.. all those people get a cut no matter if people are bubble-buying or panic-selling. As long as money flows one way or another, they dip their cup.
Recession proof industry if ever I saw it.
“Recession proof industry if ever I saw it.”
At least so long as they are first in line at the bailout pig trough…
“We were blindsided. We never saw it coming.”
-Either Jamie Dimon (and all the other Criminal Executive Officers) is a liar, or he is admitting he is really dumb. Both are unacceptable for a CEO. Shareholders should get rid of ‘em.
But, but, but we have to pay them their high salaries. No one else can do their jobs.
See my comments elsewhere in today’s bits bucket regarding the Fed’s newest conundrum (which, according to your comment, is coincidently also JPM’s conundrum).
yeah.. but.. people been warning that the deficit would bring this country down since about 1785 or so..
Carter tried to do something about it, failed, and was politically crucifed for it. Clinton DID do something about it with help from a tech breakthrough, but was still politically crucified. Obama is trying to do something about it, but he realizes that he needs to create stable jobs, rather than kick-the-can temp work or quick fix spikes which only help the stock market. Stable jobs involves spending *in a good way* and it takes time to kick in. Obama is currently being politically crucified.
I see a pattern here.
“Stable jobs involves spending *in a good way* and it takes time to kick in. Obama is currently being politically crucified’.
Hilarious!
What, precisely is Obama trying to do about it? I interpret your post to mean that Obama is making hard choices and is being crucified for it?
What hard choice has he made? The man has spent more money than his predecessor, who himself spent like a drunken sailor.
Please elaborate.
Well O’s choosing not to cut taxes in the face of enormous pressure and lobbying; eg, the opposite party filibusters anything that isn’t a tax cut. O didn’t have to do health care and the flack that comes with it on both sides.
The man has spent more money than his predecessor, who himself spent like a drunken sailor.
Did you read the part about spending “in a good way?” If ALL deficit spending was bad, there wouldn’t be a banking industry.
Clinton did that all by himself? What happened in 1994 that helped forced Clinton to give up his leftist policies? Anyone? Bueller? Frye?
Telecom Act of 1996 opened the way for tons of investment into the infrastructure ( we are now frankly communicating on )
It ultimately led to the downfall of WorldCon etc. I’m sure you remember in the 90’s when they couldn’t lay fiber optic cable fast enough and were tearing up the streets and sidewalks on a regular basis.
I remember well how rosy things looked very early on in the Clinton administration and the impression that he was basking in the light of things set into motion before he took the stage. I also remember his own reference to this phenomom when he joked with Bush II about whatever happens from that second on belonging totally to Bush. Since then I have tended to think that some of these things are the confluence of what has gone on before sometimes more than what is happening at the moment. Also, that Presidents take credit for acts of Congress and God alike.
As for being crucified, how was Clinton, aside from the smashing defeat of his health care agenda, and how is Obama being crucified?
“As for being crucified, how was Clinton, aside from the smashing defeat of his health care agenda…”
Impeachment?
BO is adored. They raise their eyes and see the Savior bathed in brilliant white light. It’s difficult to determine if he’s hanging from the cross or not… sorta looks like it.
The impeachment had nothing to do with fiscal policy, rather physical policy. And it was only a spanking, not a crucifiction.
“whatever happens from that second on belonging totally to Bush. ”
Unless it’s 911 which was blamed on Clinton, or the housing bubble which was blamed on Carter (CRA, anyone?).
Eddie:
In 1994 Newt Gingrich engineered a takeover of Congress. I was a little young then so I can’t give you much detail. Clinton was more centrist than leftist — Clinton is still seen as a cop-out “triangulator” by the far left. It doesn’t really matter. The advent of the Digital Economy brought enough wealth and productivity as to cover any multitude of sins by both parties. Until, of course, Jack Welch and his ilk chose to share that productivity with Chindia.
Had more to do with lying under oath policy.
Newt “engineered a takeover”. … wow.
If you were young in ‘94, you’re still young. No offense meant. It’s great to be young.
Honestly Eddie, I think it would have been better for Clinton to have resigned. The economy was going so well (with/without help of repub congress) that even Gore couldn’t screw it up. And Gore, with the power of incumbancy, would certainly have won re-election.
Clinton became a centrist after 1994. I’m not knocking him for that. He saw the mood of the country change and changed with it. That’s what any good politician does. But had 1994 not happened, he would have continued down an Obama-esque path with equally disastrous results. Hopefully 2010 will be Obama’s 1994 and we can avert the looming disaster that ObamaCare, CapNTax, CardCheck etc will produce.
As for the tech boom…how was that any different than the housing bubble? You all deride home builders who built homes nobody really needed and made a killing. How’s that different than pets.com whose founders and early investors made a killing building a website nobody used?
Only difference I can tell is that in the 90s a Dem was president (good) and in the 00s a Republican was president (bad).
Newt “engineered a takeover”.
Did Nancy to the same in 2006? Did Barry engineer a “take over” the white house in 2008? When a conservative wins it’s a “take over” When a liberal it’s a return his/her rightful place.
Wow — Eddie and Joey are arguing on the same thread. My head is really spinning…
“I was a little young then so I can’t give you much detail.”
Did you know you can learn about stuff that happened when you were young, or even before you were born (!), in books and stuff?
The Dem takover in 2006 was absolutely engineered, although probably not by Nancy. 2006 was a grass-roots effort made possible by telecommunication. All elections are engineered to some degree, especially on the turnout side. Newt engineered it on TV with his Contract for America. (I don’t have the time or blood pressure medication needed to read political history, I have to go on memory).
The tech boom changed the way we do business. The jobs created by the digital economy are still stable and permanent*, at least at the moment. The housing bubble created a bunch of unnecessary stuff, which was evidenced by how quickly those boom jobs disappeared. And come on Eddie, you know you can’t characterize the entire internet with pets.com. It’s like saying that the floating condos on the Mississippi riverboats caused the housing crash.
———
*By stable, I mean that *a* job exists, with work to be done, even if someone in India is doing it. Unlike, say, constructing Tool Brothers homes.
…the jobs created by the digital economy are still stable and permanent*
I can vouch for this. I’ve been more-or-less gainfully employed in internet technology since 1998.
And I just saw a big bump in listings for internet-technology related jobs today.
Anyone remember when NAFTA came in?
Clinton lost his democratic base with NAFTA. The Democrats stayed home in 1994.
I see a pattern here.
Of course Reagan was never crucified over rising deficits (though it was Tip O’Neill who spent the money.)
Because bills sign themselves?
And Stockton fired himself? Because he was the figleaf of fiscal responsibility on the Reagan Whitehouse staff who “resigned” once he pissed off enough people. Because half-a$$ed support for spending cuts was there mainly to get tax cuts passed. And really, who needs that when you’ve got the Laffer curve on your side?
Laffer was right. The tax cuts led to more tax revenue. It happened in the 60s after Kennedy’s tax cuts, in the 80s and the 2000s.
Problem is in all 3 decades spending increased more than the increase in tax revenues. But don’t confuse the two issues.
round and round we go. blah..blah…blah…blah. a bunch folks who could see the housing bubble but can’t see the ineptitude of the either of “their” parties.
we reap what we sow.
michael,
Thank you. And Professor Bear, Joey really ‘is’ a good guy and I find he ( and yes ) Eddie provide some balance to the debate.
Comment by Eddie
2010-01-15 09:07:50
Laffer was right.
Laffer is a laugh. There is more involved in Laffer’s body of work than when he sketched the “Laffer Curve” on a napkin.
Please watch this 2006 video of Schiff intellectually manhandling Laffer. Laffer comes across as a complete idiot in hindsight 4 years later. The Regan economic Doctrine is on full display in this video. It is easy to see now what it has wrought.
80% of what Laffer stood for has been proven a joke and damaging to the USA.
The video makes it pretty clear.
http://www.youtube.com/watch?v=LfascZSTU4o
I agree Rio….
Thats why Laffer left Pepperdine and southern California Also…He moved to North Carolina I believe…
Oxide, I dislike the cantankerous, fiscally irresponsible, fear mongering, shred-the-constitution Republicans as much as anyone, but your statement is just curve fitting at its worst.
I agree. I was a little more out-there with this one than I usually am. I’m just trying to deflect the usual Dems-as-spenthrift talking point.
Dems are not spendthrifts?
$2T ObamaCare?
$800B porkulus?
$300B mortgage bailout?
$80B GM bailout?
And that’s in 1 year.
But you’re right the dems are fiscally prudent. Anyone accusing them of spending money recklessly has no idea what they’re talking about.
And, there it is again. Spending is automatically bad, no matter what it is spent on, or whether it’s meant to be long-term.
I’m trying…I really am…
You can do it Oxy, just step away from the barbed hook.
Thank you blue. Blueberry smoothies for everyone!!!
So to recap:
Bush spends = bad.
Obama spends = good.
Clinton bubble = good.
Bush bubble = bad.
Wait! They all knew. Blankfein, Dimon, Geithner, Paulson, Wash Mut, Bear Sterns, sheeple who borrowed too much and HELOC’ed it to boot, etc, etc, etc.
They knew. All of them did. They thought they could get out when the time came. That was the problem. When the time came they were stuck holding the bag. Goldman was stuck, also; they just knew how much of the bag not to get caught holding. Goldman went short. Dimon did, too. Fuld knew. His problem was he didn’t know he needed to short and so he took it in the shorts. I’m hearing that Fuld has become obviously unstable as of late.
Lereah didn’t know. Still doesn’t. … And won’t ever.
Fun Yuns? Oh, nevermind!
Roidy
“We were blindsided. We never saw it coming.”
That’s a lie and he knows it. As everyone now knows, Goldman shorted their own clients.
Wouldn’t that be considered insider trading?
Oh, nevermind!
The congressional committe asked Blankfein if Goldman did engage in such activity to which he answered: “Yeah, we kind of did something like that”. and congress went: “Like, I guess thats ok, then”. and Blankfein was like: “Great, let’s blow this taco stand and get back to makin’ some righteous bucks”.
-See, they checked into it. Its all cool
It must be comforting to top Fed officials that Wall Street titans were also in the dark as the financial crisis began to wreak havoc on the world economy.
Bernanke Defends Fed’s Oversight Role
By JAVIER C. HERNANDEZ
Published: January 14, 2010
Facing renewed calls from Washington to limit its authority, the Federal Reserve on Thursday defended its role as one of Wall Street’s chief watchdogs and said being able to monitor the health of banks was crucial to setting sound monetary policy.
Paul A. Volcker, a former Fed chief, said Thursday that he now favored preserving the Federal Reserve’s regulatory powers.
In an 11-page report sent to the Senate banking committee, the Fed’s chairman, Ben S. Bernanke, argued in passionate terms that stripping the Fed of its powers would leave the financial system more vulnerable to collapse.
Eliminating the central bank’s supervisory role, the report said, would “severely undermine the Federal Reserve’s ability to obtain in a timely way and to evaluate the information it needs to conduct its central banking functions effectively.”
In the aftermath of the financial crisis, the Fed has emerged as a target of much of the populist anger brewing across the country. Critics say the central bank did not do enough to respond to signs of a nascent crisis — a sharp increase in home prices, for instance — and that its actions may have contributed to the near-collapse of the financial system in 2008.
Mr. Bernanke, who is awaiting confirmation by the Senate for a second term, said that while he did not believe the Fed should be responsible for monitoring the entire financial system, he did envision an expanded role for the agency. The report said the central bank should be able to look for “systemic risk” in a highly interdependent network of banks. And Mr. Bernanke said it was essential that the Fed be able to gauge the financial health of the institutions to which it might lend money.
The report was released at a politically thorny time for the Fed. Lawmakers, skeptical of the central bank’s ability to pre-empt future bubbles, are debating legislation that would consolidate regulators and take away some of the Fed’s powers — for instance, its role in helping consumers file complaints against banks. Perhaps anticipating some of the skepticism from Washington, the Fed’s report devoted two pages to describing what actions the Fed had taken to fix what it called “shortcomings.”
…
“no one” saw the crash coming, “everyone” sees the recovery coming
whatever.
Latest Fed conundrum:
- Feign ignorance, and everyone will point out the Fed’s ineptitude.
- Confess awareness, and everyone will point out the Fed’s culpability.
This situation reminds me of what my high school tennis coach used to tell his players:
“It is better to keep your mouth shut and appear dumb, then to open it and remove all doubt.”
Some times it is indeed best to just keep your mouth shut.
Bernake would do better if he came back and talked about monitoring yield spreads, capital reserve requirements and historical loan performance. Technical. Boring and will make the congress give up.
Greenspan got it, but Bernanke seems clueless. Why doesn’t he run for Congress if he wants to be a politician, and leave banking to the Delphic oracles?
from BB’s report
“…..the central bank should be able to look for “systemic risk” in a highly interdependent network of banks.”
Ok , so your going to control the unregulated world of Wall Street that the Banks sell loans to and all that unregulated lending .Would be a lot easier to just bring back Glass-Steagall and call it a day .
Somehow BB looking for “systemic risk” in financial markets that aren’t transparent ,but yet those markets have the power to move markets ,or create competition and loan products and leverage and risk seems pretty hard to look for until they implode . They want to be able to bail them out without asking Congress for permission .
Somehow I can’t get much comfort thinking the Feds might look for risk in markets that aren’t transparent and are usually under the domain of the SEC , or the Insurance Regulators. The problem is that the Banks and Investment firms are crossing over their activities to the point where it’s like they are all unregulated , otherwise you wouldn’t of had Investment houses and Insurance Companies be the receivers of bailouts after the Feds allowed them to go to the Discount window for loans. If Credit Default Swaps have the power to bring down the regulated Banks ,than what’s wrong with this picture .
“home prices don’t go up forever”
Wrong! For over 200 years, that ‘was’ true ( Just ask Bob Shiller )
They just can’t go up 20% a year ‘forever’. Is this really the caliber of BS they’re peddling on CH? I’m disappointed, I would have thought they could come w/ better than that?
Interesting fact I learned yesterday on a grade school field trip:
The term ‘buck’ (as in “it costs one buck”) supposedly originated on the California ranchos, where one buckskin could be used as currency if you did not happen to have the paper equivalent ($1) in your wallet.
I asked the docent what a buckskin would sell for today; she estimated about $1000.
$100 maybe, after spending $200 to get it nicely tanned.
Totally just guessing, but if you could get $1000 for one there would quickly be a buckskin bubble in flyover country, IMO.
In MD most hunters don’t even bother with the “buckskin”, pretty much worthless.
And so…….completely incompetent as financial managers of loan money, because, although they are smarter than the rest of us, and need to hire the “Best Minds” and pay them millions in bonuses, No, they had no idea housing prices would collapse when money lent with zero income and zero downpayment and negative amortization loans would end up being DEFAULTED, so………they should be paid HUGE debts by the FED (taxpayers) to continue “running” these fraudulent enterprises and gobbling up tons of “profits” from stock market manipulation………………………
What a crock. We are we even listening to these crooks?
I didn’t know? No one knew? B.S. They were getting multi-million dollar Ponzi money and they haven’t even been made to pay it back.
Instead, the LAPDOG Congress is listening to excuses for greed-on-steroids that collapsed when the last “fool” got in, so they can live luxurioius lifestyles and it’s NO ONE’s Fault, but the “system” failed.
WRONG. It’s long past time for the PROSECUTIONS to begin…
BLANKFEIN………..JAIL.. DIMON………..JAIL…
Bernanke…..Jail, PAULSON………..execution, then jail.
Along with ALL the rest of the Wallstreet crooks.
THEN ………………..break them up. “too big to fail” NO way.
ANTI TRUST legislation…………re-instate GLASS-STEAGAL, break up GOLDMAN. Break up Citigroup. Clean house.
It took years of Corporate take-overs to build these megaliths. Let’s knock them down and get control of our Country again!!!
Wrong people to be talking to, Congress. Talk to investigators, then ask them questions on the DEFENSE STAND in Court.
Why did you lend money to people who could not possibly pay it back?
would be a good opener.
Right on Diogenes ,
As usual they bring in the culprits and put them on the stand in their Kangaroo Courts and quiz the crooks as if their answers aren’t pre-arranged defenses from their lawyer staff . The classic defense contrived early on was the old “we didn’t see it coming defense “. I
am sorry but I don’t think it excuses neglect or Ponzi Schemes or breaching duty to underwrite loans or rate securities proper ,or has anything to do with lying to investors while you buy a opposite trade and put defective loan products on the market in which the party had no potential to pay the loan in the future .
Neglect and breach of fiduciary duty are serious offences as well as putting defective products on the market that the parties had no way of paying the loan back while they were qualified at a 1% teaser rate . “What was your logic in giving a low down loan and qualifying the person at the teaser rate ,Isn’t that a scheme to just give a person a loan they couldn’t afford in a Ponzi Scheme?”
You have to ask yourself if you think that Wall Street had the right to create loan products that were contrived
and not sustainable and
simply were created to keep the Ponzi Scheme going ,while they were rated as if they were gold . Not being concerned with underwriting by a defense that securities spread out the risk doesn’t hold water either . Don’t even get me started on the absurd greedy leverage that the unregulated worlds of banking engaged in out of greed ,or the credit default swaps gambling casinos . They all belong in jail ,starting with Mozillo ,and their personal wealth should be stripped .
Of course Hank Paulson didn’t want personal accountability because he was one of them who made a half a billion dollars in 7 years off this highly leveraged faulty paper .
Refuting Blankfeins claim to ignorance
Blankfein himself
PHIL ANGELIDES (the commission chairman): I want to ask you about a very specific instance as a way of getting to how things worked and how things might be changing in the future . . . And it appears, at least according to public documents and other reports, that you may have simultaneously betted against securities you sold to clients. According to the reports, you sold about $40 billion in 2006, 2007. In December 2006 , you came to the conclusion the mortgage was heading south and you began to reduce your own positions. And many of the securities that you sold to institutional investors went bad within months of issuance. Now one expert in structured finance said, “The simultaneous selling of securities to customers and shorting them because they believe they are going to default is the most cynical use of credit information I’ve seen.”
Do you believe that was a proper legal, ethical practice? And would the firm continue to do that practice? Or do you believe that’s the kind of practice that undermines confidence in the marketplace?
LLOYD BLANKFEIN : Well, the way it’s . . . let me . . . the short answer is this is the practice of a market maker. And I would like to explain this. But the answer is I do think that the behavior is improper, and we regret the result — the consequence that people have lost money in it, but I just want to explain — and this is a very important — and I appreciate the opportunity to do this because there’s so much press swirling around this that I really want — I really need to explain . . .
I only hope he did not say that while under oath. Perjury if I ever heard it.
They knew exactly what was coming and in many cases were going short on the prospect. They were making so much money, it just didn’t matter.
Sometimes you just wish these guys would disappear, Jimmy Hoffa style.
No. I want them alive.
We can get a better recovery of funds if we can have their family member and them together.
You get a conspiarcy charge against the rest of the family members along with playing some games with RICO.
Then you go after the money. Then give em some nice orange pajamas.
“We never saw it coming” is such a pathetic mantra. How was it that so many ordinary people in here DID see it coming and coalesed around the HBB in 2004?
Short View: Mystery Treasury bids ~ FT
Somebody likes US Treasuries. One or perhaps a handful of mystery investors appear to have made a big contrarian bet backing US government paper.
The Treasury market is buzzing with speculation after data from this week’s sale of 10-year notes showed that 17.3 per cent of the $21bn on offer went to direct bidders – far higher than the average of about 7 per cent. This followed direct bidders taking a record 23.4 per cent of Tuesday’s $40bn of three-year notes.
Those mystery bidders must be the “households” identified in Eric Sprott’s report.
On Bloomberg today.
“Silva Says Obama Engaged in `Witch Hunt’ Against Banks”
URL: http://www.bloomberg.com/avp/avp.htm?N=av&T=Silva%20Says%20Obama%20Engaged%20in%20%60Witch%20Hunt%27%20Against%20Banks&clipSRC=mms://media2.bloomberg.com/cache/vauaWIV_bBVs.asf
This guys doesn’t get it. He’d make a real nice lamp post ornament. That expensive $2000 suit is permanent press? I’d hate to have it wrinkled when he’s just hanging there. I’m just joking. Sorta.
BTW, considering how much anger there is over all of this, what happens if the banks get “under stress” and have to be bailed out again? What is the method of doing this without people knowing that they are on the hook for it? More fun and games at Treasury and the Fed I’m sure.
Roidy
The idiom “witch hunt” colloquially implies that the targets in question really aren’t witches, eg the Salem witch trials.* But in this case, the evil witches appear to be real. I wouldn’t object to a few (metaphorical) burnings at the stake.
——-
*The theory on the Salem witch hunts is that the “possessed” girls in Salem suffered from ergot fungus poisoning from eating rye bread from a flooded rye field in the lower elevation (ie poorer) part of town. Ergot contains the same chemicals as the ones which can contaminate l * s * d. The descriptions of the girls’ rantings and seizures were very close to the symptoms of people who suffered bad acid trips at Woodstock.
oxide,
Thanks for that little bit of insight. Very informative, yet I’m sure “bad trips” weren’t just confined to Woodstock?
This is before my time; I’m just guessing here. Of course there were lots of bad trips in private, but Woodstock is where all the press and cameras were, so they got the bad trips on film.
oxide,
Even though I’ll turn 51 here in a few months, when Woodstock raged ( I was playing wiffle ball in the alley )
Most of the bad trips “I” have seen were Gov’t recreations w/ really bad actors and cheesy strobe light “special effects”. Public Svc./Reefer Madness type stuff?
Anger? I don’t think that as many people are upset about it as many people think.
People in general aren’t financial news junkies. They like government support when there’s trouble. They like govt support when there’s NO trouble.
They support what govt has currently done.. the tax credits and TARP and all the efforts, lip service or not, that promise to keep the bank / wall street boat afloat. Most people are at least invested in stocks and bonds through retirement accounts, and have money in banks, and they sure don’t want to lose it.
From their point of view efforts to stabilize the economy means their jobs are more secure than otherwise, and anything that supports their paychecks is “a good thing”.
So the banks might need another dose of money? Who cares? Relatively few, imo.
Like people employed in the FIRE sector who believe all of humanity is just as avaricious as their own colleagues, I am sure those who write newspapers make the error of assuming the rest of humanity is similarly informed to those in their personal circle.
“I am sure those who write newspapers make the error of assuming the rest of humanity is similarly informed to those in their personal circle.”
I get the impression those in the press consider their readers/viewers to be dump as rocks and one of their mandates is “to shape public opinion”.
dump = dumb
“Anger? I don’t think that as many people are upset about it as many people think.”
You don’t get out much.
i get out some.. everyone’s scared. Fright and anger are not easy to feel simultaneously. Maybe you go out when they’re angry and i see them when they’re frightened.
I often feel frightened and angry at the same time… especially lately.
Fright and anger are not easy to feel simultaneously.
You kidding? Fright and anger go together like peas and carrots.
“Fright and anger go together like peas and carrots.”
Right — the Rodney King riots immediately spring to mind as an example…
Obama is just doing the cameleon to stay ahead of public sentiment, IMO. It is a lot of blowhard at this point, but it wouldn’t surprise if a few sacrificial lambs are slaughtered near term. It’s an old tradition. All this show while Bernanke slides into home base for another term.
Like others, I wonder how the next chapter plays, as the paper-over job won’t hold up any better than the palace in Haiti when the next rumble comes through (hey, didn’t that thing collapse ten years ago in the last quake?).
joeyinCalif,
Love ya’ like a brother but I think you’re just plain wrong on Main Street’s sentiment here. I caught Juan Williams on Fox the other night and this very topic came up.
He’s usually a pretty cool customer but I haven’t seen him that emphatic about a point in a long, long time! I think he’s in as good a place as any to gauge the public’s pulse on this one.
The anger is real and in whatever small way, we here should all take our fair share of credit for getting the electorate stoked on this.
Juan Williams? Really?
jeeze.. he’s just another talking head.
I really doubt he’s got his finger on the pulse of the peons way down there on the street. Maybe he chats with the barman at them fancy DC cocktail parties..
Everyone’s got an opinion and it’s hard to say how the public feels. But there are safe ways to make a guess.
What entity conducts endless public polling before following through with action? Our government. Might we surmise that government is doing exactly what the majority of people are asking them to do? Yes… imho..
Have we ever witnessed an administration act against the wishes of the majority? Not one that got reelected, if memory serves..
joey,
Given it was Sean Hannity’s show, he was quickly squelched there too. But even it is only doormen and tarbenders, he makes more of an effort to connect than most journalists these days.
JW aside, “I” am certainly getting that vibe even here in rural Oregon.
I like to be pleasant when out and about.. say hi to the clerk.. ask how’s business. Business sux everywhere.
People are uncomfortable. Nobody comes back with “We need to audit the FED! .. or, “Why is the financial system getting so much support? .. or, “We’re printing and spreading around too much worthless currency!”
People are just happy to be working. Everyone knows someone who’s lost a job.. and maybe a house.. and maybe everything, and all are a little afraid that they may be next.
What entity conducts endless public polling before following through with action? Our government. Might we surmise that government is doing exactly what the majority of people are asking them to do? Yes… imho..
You’re kidding right
You do remember the first TARP vote where sentiment in the public ran 2 to 1 from no to hell no.
Banks still got what they wanted.
They use those polls to see how effective they have been at molding public opinion.
measton, i’m not saying it’s cut and dried that what they’re doing is exactly what the majority wants to happen, but it’s close.
I have been polled by Zogby (iirc) and they are sneaky about it.
one question was something like: In order of importance, which is most important to you? And then they rattled off 4 or 5 things that need fixing. One was improving education.
Thinking that everyone’s having a good education would vastly improve everything else on that list, i chose education.
I assume I was in the majority because next thing ya know the state passes a massive education funding bill.
If they had asked where that money should be spent, i would NOT have chosen education. Education is a luxury when money is tight, imo.
——-
Question: Should the government continue to support the financial industry or should they let everything collapse around our ears?
Answer: Oh God.. PLEASE support it.. I need this lousy job!
Kyle Shannon was laid off about 11 months ago from a job with an environmental consulting company. He took a residential energy auditor training course over the summer at Dunwoody, and just before Christmas he landed a job as an energy counselor, but he is taking a 33 percent pay cut. ~ Minnesota Public Radio ~ January 14, 2010
After losing a job as an environmental consultant about a year ago, Shannon developed another, less relaxing ritual, one that he finds hard to stop.
“My habit is to get online and immediately go to job Web sites. And I found myself doing that and telling myself, ‘Wait a minute, I don’t have to do this anymore,’” Shannon said.
Shannon, 30, recently got a job advising homeowners about their energy use with the Center for Energy and Environment. Over the summer, he took a certification course to pursue that career path.
After a nearly year-long job hunt, Shannon was delighted to land the kind of work he feels passionate about.
“I feel like I’m helping people, and people are becoming more aware of easy ways to reduce energy use, water use in their home,” he said.
For now, Shannon will have to reduce his consumption as well. He’s earning 33 percent less than what he made at his last job. He’s not too worried about it now. With income from a tenant, he’ll still afford his mortgage.
“It’s not necessarily a problem. I think I’ll enjoy this job more so than the previous job, so I think it’ll be more rewarding. But yes, the pay is definitely a lot less,” he said.
So Kyle went from lobbying for restrictive “green” policies to actually implementing those policies first hand. Great work Kyle.
Silly me, I used to think I lived in a country where I was free to set my thermostat at whatever I wanted. Now I have to get Kyle’s permission to stay comfortable.
One day Americans will wake up and ask themselves hey why is my thermostat won’t go above 60? Why is it I have to wait 6 months to see a doctor? Why is it I want an SUV but the only options available are a Honda Fit and a GM Barrack, both of which have a 1.1 L engine and can’t fit more than 3 people? By then it will be too late of course. I will be out of this cesspool and hopefully enjoying a margarita on a warm beach. But it will be sad nonetheless to see the demise of this once great nation.
I wanted to step up to the plate and take a swing at that pitch, but then I realized you are not even able to process what the above post says. Try to lay one over the plate.
“Shannon, 30, recently got a job advising homeowners about their energy use with the Center for Energy and Environment. ”
“We can’t drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times”
- Obama in 2008 on the campaign trail
Connect the dots however you want.
For a couple years we had some retard posing as a female saying incredibly ignorant stuff remarkably similar to EddieTard. Taxchick/txchick….. is that you?
Oh please. This has to be one of your dumbest posts yet.
Eddy,
But you’re not really predicting the future. You’re describing today’s life choices faced by our former working-class. They face these restrictions NOW due to economic injustices and supply-side ideology run wild. You seem to care more about what MIGHT happen than what IS happening.
Americans will wake up and ask themselves hey why is my thermostat won’t go above 60?
Because they’re unemployed and can’t afford warmer?
Why is it I have to wait 6 months to see a doctor?
Because they can’t afford insurance?
Why is it I want an SUV but the only options available are a ….
Because they’re broke?
I will be out of this cesspool and hopefully enjoying a margarita on a warm beach.
But remember, beaches without internet service are way better!
But it will be sad nonetheless to see the demise of this once great nation.
You mean the nation where you called Americans “slackers” even though it was proved by facts yesterday that American’s are the world’s most productive workers?
Just like you were proved WRONG about rents rising?
And you were also proved wrong about this recession being “garden variety”? Web search: minneapolis fed recession comparison
It shows there that by all measurements that THIS IS THE WORST RECESSION SINCE THE GREAT DEPRESSION.
Some “garden variety”…..
“What MIGHT happen”
Rio, this kind of talk comes from Rush Limbaugh’s radio show. “Obama is gonna do this, Obama is gonna do that, Obama is gonna restrict our freedoms…here’s some crap in Argentina and Obama’s gonna do it too..”
You listen to Limbaugh? Even I can’t do that.
Obama said this, not Limbaugh.
“We can’t drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times”
So are you saying Obama is a liar and he doesn’t really mean what he says? Or is Obama telling the truth and he wants to restrict what cars we drive, how much we eat and what temperature out homes can be at?
Blue Skye,
+1
Me neither. I think what the President was referring to is simply to take a long-hard-look at the excesses we indulged in all during the Bubble-nomics.
Tiger Woods can afford to have a dozen PLUS GF’s ( and right now most of us would be in trouble if our wife quit here job? )
I’m confused. I just saw someone driving their SUV. And I just saw someone at an all-you-can eat restaurant. Is BO a liar? Or was there a statement before or after that phrase to put it in context.
Perhaps, like this:
“We can’t drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times … and then just expect that other countries are going to say OK,” Obama said.
In other words, if we keep consuming like we do, we can’t expect other contries to curb their consumption too. Either everyone gets on board with curbing consumption, or it won’t work.
Whether we should slow consumption is a different question.
“We can’t drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times”
How about you post a link to the COMPLETE speech, the one that shows the CONTEXT this was said in? As opposed to a mere sound bite which can be misrepresented?
Just because he’s asking for higher CAFE standards doesn’t mean your beloved Sloburbans will go away.
I used to drive around a lot during Rush’s show. I can listen to about 10 minutes at a time before crashing the poor Corolla. But each time I tuned in, it was the same thing. The Argentina example is real.
Come on folks, why do you bother to answer or respond to a tool like him?
Quit feeding him and maybe he will just fade away.
“…I will be out of this cesspool and hopefully enjoying a margarita on a warm beach.”
See YA Haskell!
“TrueHaskell™” = “But, but, but…” = eddie “The Great”
My dream job: Sitting in a credit counseling service, listening with great empathy as each new FB spills their tale of woe. And then lunging across the desk to slap them alongside the head with a 20-lb trout.
* The Wall Street Journal
* BUSINESS
* JANUARY 15, 2010
Volcker Voices Views in a Vacuum
By KATE KELLY
Paul Volcker is talking. But is anyone listening?
In a series of appearances in recent months, the former Federal Reserve chairman has excoriated the conflicts of interest within the nation’s biggest banks, criticized the Fed for nearly overstepping its bounds, and railed against financial innovation as a harbinger of doom, telling a panel late last year that “the most important financial innovation that I have seen the past 20 years is the automatic teller machine.”
On Thursday, he was at it again, telling members of the Economic Club of New York in a lunchtime speech that banks which blend high-risk trading with traditional consumer lending face “unmanageable conflicts of interest” and should be broken up. Such steps would result in the dismantling of the likes of J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup.
A few hours before, President Obama was at the White House, announcing less severe steps: a special tax on the nation’s largest financial companies intended to make taxpayers whole for the bailouts of recent years.
The two speeches highlighted Mr. Volcker’s predicament. Having been viewed as a crucial supporter of Mr. Obama during his presidential run, he appears to have diminishing influence in the White House. And while revered by Wall Street critics on the left and right, his most deeply held views are having limited influence among policy makers.
“It’s clear that the ideas Paul Volcker is pushing now are not shared by the administration,” said Douglas Elliott, an economic studies fellow at the Brookings Institution, a public-policy organization. Given the difficulty of hiving off bank-lending units from their trading operations, adds Mr. Elliott, “I agree with the administration on that one.”
…
During the election Obama bragged that he had Volcker on his team, that’s one of the reasons many voted for him.
one of the reasons.. true.. But i wouldn’t say “many”. I’d say few.
Few who were familiar with Volcker’s philosophy, and then saw that he was appointed to head a committee that had no decision making power would be fooled into thinking he’d have any influence over this administration.
True, that. But this appointment happened AFTER the election. The impression given BEFORE the election was that Volcker (also Buffett) would be a major and influential advisor to the Obama presidency.
oh.. ok.. my memory sucks. I recall Volcker endorsing BO early on, and being appointed to some economic advisory committee before the election.. I do remember it as an election gimmick.
The point being: Volker was part of the campaign advisory team, not the Presidential advisory team. Big difference. Didn’t Pelosi just explain this?
Yes, of course.
When i first heard Volker was part of the economic team, i thought that perhaps, just perhaps, this Fascist in the White House was willing to try some austerity measures to rein in debt and corruption……….”the most transparent Administration in history.”
All lies. No more press conferences (not in more than 6 months). Closed door meetings and legislation and back -room dealing.
But no. No changes to the Wallstreet/Bankster rape of America………..ALL LIP-SERVICE. (Indignation).
And who is in the Halls of Congress….the same Banksters, having a media show that THEY were not responsible and the MONEY that they got from the FED and Treasury, well, that was necessary to save the world from destruction.
All good theater. From the Administration that specializes in the Photo Op and propaganda.
Where are the changes to the Financial world? Tough new regulations and more prosecutions for Malfeasance, Misfeasance, Non-feasance and FRAUD. No. More looking over the shoulder? A tax on our taxes?
I like best that they “paid back” all the TARP money.
How do we know? who’s got tabs on where the money is going? Anyone? Just Bernanke, Paulson, and Geithner and I guess Obama, too.
Chicago dirty politics on the national level.
The fact that 54% of the electorate bought into his BS is sad. The fact that about 45% of the electorate is still buying into the BS a year later is proof positive that this country is finished.
“a year later”
While some people rapid cycle, it is well established that significant human mood swings have a six year rhythm. This explains much.
the seven year itch……
why some presidents get two terms……
Mr. Bill Bonner is constantly picking on overblown government. He claims it has grown too big for our pocketbooks.
“Washington, DC is full of government bureaucrats who earn 30% to 50% more than people in the private sector. In the private sector Mr. Market puts his thumb up or his thumb down. The job is saved. Or the job is cut. But here in the federal city his thumbs are in his pockets.
“For example, every day, we drive by the NIH - National Institute of Health. Thousands of cars go in and out every day. The NIH was set up in 1930. It had 140 employees, which seems like more than enough. Today, it has 18,442. The same sort of employee inflation happens at every government level on practically every government project. You set up an agency or a commission. Then, you can’t get rid of it. As the saying goes, ‘nothing is more eternal than a temporary government agency.’
“But are Americans any healthier thanks to the NIH’s 18,000 + employees?
Hmm, yes they are. The NIH is providing money for basic research. Yes, this is a good thing since there is no company nor institution that has the chops for it.
Is the NIH efficient? No. Do they need to be? I’m really not sure. Does the NIH need 18,000 people? IDK.
Look, I do basic research and some of that is funded directly or indirectly by the NIH. This is not a slush fund nor party money. We do real work. Hard work. Expensive work. If you do not have the NIH, then you don’t get the basic research and developed talent that feeds the health industry.
Now, why health care is so expensive? I’d look to Big Pharma and health insurance. I would also look at tort reform and at minimizing care mistakes. My wife told me of a Marine that went to Afghanistan and came back whole. He then went into the hospital for an appendectomy and ended up brain damaged because of an OR mistake. I don’t the particulars in this case, but it would not surprise me to learn that there were preventable mistakes that are considered “freak accidents”.
There is no such thing as a freak accident. There is only human error, system error, or mechanical failure. No other errors exist or are possible.
Normally the freak accidents are a combination of errors in all three of the types that combine to become a big mess.
Remember that all hurricanes start as sweet summer showers. All errors start out small and preventable. They get bad when we don’t fully understand the “failure modes” of the system.
Roidy
I agree Roidy. The NIH puts out good stuff. How the world uses that stuff is a totally different beast. If one would like a good example of good research deflected by special interests read the first several chapters of “Eat, Drink, and Be Healthy” by Walter Willet.
The NIH is providing money for basic research.
The NIH does not provide any money that is not first forcibly taken from someone else. The visible effects are the research, the invisible effects are the research that did NOT happen because the economy was taxed elsewhere. Please read Hazlitt’s “Economics in One Lesson.”
Please read Hazlitt’s “Economics in One Lesson.”
Great book!
My guess is that it would have very little impact on gubmint worshipers though.
Please read Hazlitt’s “Economics in One Lesson.”
Will do….It’s free online. But if your argument is that private research would do a better job than publicly funded, I disagree. Way too many examples of for profit research turning foul, skewing results, hiding negative results and such. The public way isn’t perfect but as far as building knowledge, it is pretty good.
Speaking with a Brazilian MD and current Oxford Ph.D AIDS research candidate, she described the world public health organizations as much more co-operative than private ones in sharing data to solve the big problems.
She said we need both private and public health organizations and that politics gets in the way of scientific research.
The visible effects are the research, the invisible effects are the research that did NOT happen because the economy was taxed elsewhere.
Right, and industry will be self-regulating. If not for the NIH’s stupid tax, we would have had twenty drugs for erectile dysfunction! Damn the NIH. (oh yeah, we might not have a treatment for Aids but who cares!)
The NIH (and many other government agencies) came about, because the “private sector” wasn’t getting the job done. It’s as simple as that.
“The NIH puts out good stuff. How the world uses that stuff is a totally different beast”.
Which may explain why the inhabitants of the U.S. have become so obese. Appears they don’t give a damn what the NIH puts out.
“Which may explain why the inhabitants of the U.S. have become so obese. Appears they don’t give a damn what the NIH puts out.”
You’re right wmbz, they don’t give crap about the NIH, but they sure as He!! care what MONSANTO puts out, especially anything related to HYBRID CORN SYRUP…in fact I”ll bet ya I can find a more than few inhabitants of SOUTH CAROLINA they can prove my point!
wmbz, in another angle on the ever expanding nature of our governments, both state and federal
If Coakley Loses . . .
“That said, it is now clear that Coakley may lose. What happens if Coakley loses? What would it mean? One thing for sure - it would mean that the Democratic political message is not working.”
http://www.talkleft.com/story/2010/1/15/103424/623
IMO the message is working but Independents and some Dems are saying we don’t like the message
If Coakley loses, it will send seismic waves through the political establishment. I don’t know much about Brown, but would be delighted to see liberal Democrat Coakley get routed by a “Tea Party” endorsed candidate. Especially if he turns out to be a stand-up guy who will give the finger to the corrupt GOP establishment as well.
Here is yet another writer who confuses ill-gotten personal financial gain with productive value to society.
The Financial Times
COMMENT
Letters
Curing cancer comes second to profit
Published: January 15 2010 02:00 | Last updated: January 15 2010 02:00
From Mr Christopher J. Kilbridge.
Sir, To appreciate the disproportionate compensation to banking compared with long-term value created for society, one only has to contemplate that the projected 2009 bonus pool for Goldman Sachs of more than $20bn will exceed the 2010 fiscal year budget of Nasa, or the gross domestic product of Iceland. The bankers need to justify to the Financial Crisis Inquiry Commission what annual contributions to the economy and society justify such outrageous rewards.
Consider that the 2009 Nobel prize for medicine was given to a trio of US scientists whose work, reflecting more a career than a year’s productivity, would advance work on a cure for cancer; their reward was $1.42m (to be split three ways!). Meanwhile Nasa recently launched the WISE mission to map the heavens to detect the next species-busting asteroid that could impact earth, with a mission cost of only $320m. For banks such as Goldman Sachs to award their employees many billions of dollars for a year’s work can only imply they have either already found the cure for cancer, or averted a collision between the earth and a comet (and just not told us).
…
Sir, To appreciate the disproportionate compensation to banking compared with long-term value created for society, one only has to contemplate that the projected 2009 bonus pool for Goldman Sachs of more than $20bn will exceed the 2010 fiscal year budget of Nasa, or the gross domestic product of Iceland. The bankers need to justify to the Financial Crisis Inquiry Commission what annual contributions to the economy and society justify such outrageous rewards.
I’m sure what ever justification they come up with Congress will agree 100% and then go to their dog dish for a Goldman Sach’s treat ($$)
Investors are already looking beyond the Grand Kabuki of financial reform to the high likelihood that the future of Wall Street will closely resemble its recent past.
Markets Brief
Weak Grilling Lifts Stocks
Peter C. Beller, 01.13.10, 07:30 PM EST
Top bankers face government panel over financial crisis, but bank shares gain.
01/15/2010 8:11AM ET
The government’s mild interrogation of bank executives helped lift financial shares and the broad market to moderate gains on Wednesday. The chiefs of Goldman Sachs, JPMorgan Chase, Morgan Stanley and Bank of America appeared before a bipartisan panel investigating the financial crisis just as year-end bonuses at some of the Wall Street firms have stoked popular resentment against outsized pay at firms that took taxpayer bailouts.
…
JPMorgan Profit Rises on Investment-Banking Fees (Update1)
Jan. 15 (Bloomberg) — JPMorgan Chase & Co., the second- largest U.S. bank, said fourth-quarter profit more than quadrupled on higher revenue from investment-banking fees. Shares of the company fell as the retail bank posted a loss and credit provisions increased.
Net income climbed to $3.28 billion, or 74 cents a share, from $702 million, or 6 cents, in the same period a year earlier, the New York-based bank said today in a statement. Twenty-two analysts surveyed by Bloomberg estimated per-share earnings of 60 cents.
Chief Executive Officer Jamie Dimon, 53, has earned a profit in every quarter of the financial crisis, offsetting loan losses in consumer banking and credit cards with fee income. The bank boosted loss reserves for consumer loans by $1.9 billion, bringing the total to $32.5 billion.
Little-known secret of disaster capitalism:
When weak hands fail, strong hands prosper.
If this is difficult for you to understand, I recommend a viewing of the movie Avatar.
“If this is difficult for you to understand, I recommend a viewing of the movie Avatar”.
I’ll wait until it’s available at my local Li-berry (southern pronunciation)
I read somewhere that the movie made some folks puke, wearing 3-D glasses?
Uh-oh… wifey and I are going to the 3-D version tonight (I saw it in 2-D with sons last weekend). I have to make sure she has a light meal before viewing.
Since you’ve seen it once maybe you can answer this:
Why did Sigourney Weaver’s avatar have to wear tank top and bermuda shorts when all the blue cat girls wore thongs and pasties?
And what was up with the braids, the blue cat people all had some kind of braid. For a while I thought Peaches and Herb had invaded Pandora. And Nick Ashford even.
“Why did Sigourney Weaver’s avatar have to wear tank top and bermuda shorts when all the blue cat girls wore thongs and pasties?”
That detail eluded me on the first viewing. I am looking forward to checking it out in 3-D tonight — will report back to you…
OK — I have no further insights to add on the choice of female costumes. But happy to report my wife did not suffer a bout of nausea while viewing Avatar through 3-D glasses…
JP Morgan is sitting on a gargantuan derivatives pyramid. If and when that blows up, “too big to fail” will be revealed as a total fallacy.
More and more, it seems like the key to “Wall Street financial success” is the ability to hide dead bodies indefinitely in such a way that only firm insiders realize a death has even occurred. Enron was a good test case regarding the potential to sustain such a strategy for an indefinite period of time. Lehman Brothers, Bear Stearns, Fannie Mae, Freddie Mac, Countrywide, Merryl Lynch, and many other fraudential firms whose names presently elude me also were good test cases.
Consumer Protection Agency in Doubt.
Dodd Weighs Dropping Idea of Creating Independent Body in Bid to Get Financial Regulatory Revamp Passed This Year
Senate Banking Committee Chairman Christopher Dodd is considering scrapping the idea of creating a Consumer Financial Protection Agency, people familiar with the matter said, an initiative at the heart of the White House’s proposal to revamp financial-sector regulations.
The Connecticut Democrat, who announced this month that he wouldn’t run for re-election this year, has discussed the possibility of abandoning the push for a new agency during negotiations with key Senate Republicans as a way to secure a bipartisan deal on the legislation, these people said.
Is he now seeking a position in the FIRE sector?
No, it sounds like Lieberscum is readying the shiv…again.
THE PROBABILITY OF A CRISIS WILL BUILD DURING 2010
13 January 2010 by TPC
So says the team of equity analysts at Barclays. Although policymakers helped avoid the second Great Depression, Barclays believes we have simply kicked the can down the road. As their head of U.S. equity strategy said in November, the likelihood of Japanese style de-leveraging stagnation remains very high.
Like TPC, the bank argues that 2010 will be a year of halves. While the first half is likely to be characterized by more of what we saw in 2010 (improvement in corporate profits and accommodative government actions) the second half is likely to be characterized by an increasing burden on the consumer as the baton is handed from the public sector to the private sector. Barclays says this passing of the baton has the potential for an even greater crisis as higher taxes, higher interest rates and lower government spending create increased risks.
Barclays remains more bearish than the consensus. Global economic growth is likely to disappoint as spare capacity fails to lead to a sharp rebound and unemployment remains high. They see the probability of a crisis increasing as 2010 goes on:
To be fair, the probability of a new crisis builds with every year we stall meaningful reform.
The banks have gone back to their old ways, except their bigger and more systemically interconnected than before…and emboldened by the implicit elimination of moral hazard.
their bigger = they’re bigger
Gawd, that reads just like a pothole on a scenic road lined with McMansions.
The major corporation that I work for is planning 5-6% layoffs in response to expected reductions in defence spending in coming years. I doubt we are alone in this.
This is after a successful 2009 in which we met both revenue and income expectations. By the end of the month, the company will be handing out (modest) bonus checks with one hand, and pink slips with the other.
* The Wall Street Journal
* REAL ESTATE
* JANUARY 15, 2010
Why a Key Mortgage Index Jumped
New Year’s Eve Surge in Cofi Is No Shot in the ARM for Homeowners; ‘Wow, What Happened?’
By CARRICK MOLLENKAMP
Late in the day on New Year’s Eve, holders of adjustable-rate mortgages across the country got a jolt when the rate used to calculate their loans jumped by two-thirds, sending their loan payments up by 9% in many cases.
The surprise increase had nothing to do with the Federal Reserve raising interest rates or the loans themselves. It was triggered by a surprising and unexplained jump in something called Cofi, an index used as a benchmark to set rates on many of these loans.
“Wow, what happened?” was the reaction of Randy C. Bowers, the president and chief executive of Malaga Financial Corp., a bank in the Palos Verdes Peninsula area of California. Mr. Bowers said he thought it might have been a misprint.
Instead, at 3 p.m. on Dec. 31, the Federal Home Loan Bank of San Francisco, which oversees Cofi, announced without explanation that the rate had jumped 0.835 percentage point to 2.094% from 1.259%. The index is called the 11th District Monthly Weighted Average Cost of Funds Index, or Cofi for short. The 11th district covers California, Arizona and Nevada.
For a $250,000 adjustable-rate mortgage, the rise in Cofi could increase a monthly mortgage-loan bill by more than $100, according to two mortgage brokers. It isn’t known how many borrowers have been affected by the increase. Cofi in the past served as a benchmark for popular option adjustable-rate mortgage loans that give borrowers a choice of how to pay the monthly mortgage bill, though it isn’t known what portion of these loans was tied to Cofi.
“This change is material and impacts already weakened consumers when they can least afford it,” said Chris Freemott, president of All American Mortgage Corp. in Naperville, Ill.
…
So for a more probable 750k loan, the payment only goes up $300/month? Folks, if you’re spending $750,000 on a house you SHOULD be able to squeeze $300 per month out of your budget.
My sentiments, exactly.
A 9% increase in payments is chump-change.
I’m waiting for the “RE-SETS” of the Option-ARM loans coming due this year and next, when the real payment, based on cheap loans rates gets sent.
From $600 month, negative amortization, to $3500/month to satisfy the mortgage over the remaining 25 years. They always default.
The concern over a 9% payment increase just shows how clueless these media people are. I guess it’s worth reporting, but hardly earth-shaking news.
A huge number of these option ARMs have already defaulted. I’m not sure the resets are going to have as big an impact as I was expecting previously (or hoping previously).
Consumer Prices in U.S. Increased Less Than Forecast (Update1)
Jan. 15 (Bloomberg) — The cost of living in the U.S. slowed in December from a month earlier, indicating the economic recovery is showing few signs of stoking inflation.
The consumer-price index rose 0.1 percent, less than forecast, following a 0.4 percent gain in November, Labor Department figures showed today in Washington. Excluding food and energy costs, the so-called core index also increased 0.1 percent.
Companies may have little success raising prices with unemployment projected to average 10 percent this year, the highest annual rate in seven decades. Federal Reserve policy makers have said they expect “subdued” inflation in coming months, allowing them to keep interest rates close to zero to help fuel growth.
“Consumer pricing pressures remain very subdued,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who accurately forecast the rise in the core rate. “It gives the Fed further leeway to continue keeping rates where they are well through 2010.”
Geithner Gets a Bad Rap in the AIG Scandal
By Michael Grunwald Friday, Jan. 15, 2010
If you’re the kind of person who would be outraged if a paramedic smudged your lipstick while giving you mouth-to-mouth resuscitation, you should definitely be outraged by the latest AIG “scandal.” House Republicans have unearthed e-mails suggesting that at the height of the financial panic of 2008, lawyers at the Federal Reserve Bank of New York — then led by current Treasury Secretary Timothy Geithner — may have discouraged AIG from disclosing details about payments it made to banks with its government rescue money. It’s not at all clear that’s what happened, and in any case it looks like Geithner had nothing to do with the situation. But if you booed Lassie for tracking mud on the carpet after saving that kid in the well, you might want to join the angry chorus calling for Geithner’s head.
…
10:1 Geithner is the (well deserved) sacrificial scapegoat after the 2010 midterms.
2:1 Dems lose the House
1:3 Dems lose the Senate
1000:1 Dems lose their “supermajority”
Dems are not going to lose the House, they’ll just have a smaller majority.
Dems are not going to lose the Senate, they’ll just have a smaller majority. They aren’t really losing the 60 votes because they never really had the 60 votes. I suspect we’ll see a lot more Reconciliation in the Senate, which can’t be filibustered.
Barring a huge Dem loss, Geithner isn’t going anywhere.
I’m not at all sure that Timmy is that secure. The economy isn’t going to get significantly better any time soon. When the search for scapegoats goes into high gear, his name is close to the top of the list, especially considering his close ties to Wall Street.
Jim, I understand. But O-man has defended Timmy — personally — so many times that O probably can’t get rid of Timmy without looking like a flip-flopper himself. You would need a big event like a Dem loss or a huge meltdown.
Oxide,
You have to know that I hate to be derisive, but if there is nothing to worry about, why are the Dems so worried about loosing the MA Senate Seat that has been occupied by the Dems since 1948. MA has three registered Democrats for every Republican!!!
FYI there’s a tsunamic coming your way and the only way to avoid it is for the Dems to throw Obamacare over the side of the boat. IMO the Dems are going to loose both the House and Senate because they can’t help themselves when it comes to spending other people’s money.
Concealing material financial information of a public company is a CRIME. Geithner is involved in criminal activity and is not above the law. He should be prosecuted.
Remember Arthur Andersen? Remember the WorldCom, Tyco, and Internet Collapse? People went to prison.
Public Employees don’t have a free pass to violate security laws.
We need to AUDIT THE FED and then End it.
Vote Ron Paul.
Imprison Geithner, and all his “buddies”.
“We need to AUDIT THE FED and then End it”.
+100
Ain’t gonna happen, unfortunately!
Aw, why not just “extend and pretend” … the whole empire … for a few more generations?
I hope the Congressional audit team asks a few questions about how much the Fed spends on their PR/propaganda effort. I am guessing quite a lot…
That lipstick was not on the economy’s mouth…
Bloomberg
Strengthening U.S. Recovery May Intensify Fed Debate on Exit
January 15, 2010, 07:03 AM EST
More From Businessweek
By Craig Torres
Jan. 15 (Bloomberg) — Federal Reserve officials are more confident the U.S. economy is moving toward self-sustaining growth, giving urgency to discussions about the tactics and timing of an exit from record-low interest rates.
Kansas City Fed Bank President Thomas Hoenig said Jan. 11 the central bank should end purchases of mortgage-backed securities because the market is “healing.” Philadelphia Fed Bank President Charles Plosser said the next day that the recovery is “sustainable even as the fiscal and monetary stimulus programs eventually wind down.”
Policy makers are still studying ways to drain $1 trillion in excess cash from the financial system and debating how to signal a rate increase that economists say is at least 10 months away. The first test of their exit strategy will come in March, when the Fed’s purchases of $1.25 trillion of mortgage-backed securities are scheduled to end.
“They’ll tell themselves the unusual support is no longer necessary, the recovery is self-sustaining,” said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington who served as director of the Fed’s Division of Monetary Affairs under Chairman Ben S. Bernanke. “Deep down, they probably also believe they have the option of starting up again.”
…
We needs Mo’ Money…Hey, TTT & B.B. print faster!
The U.S. Senate will be forced to discuss raising the federal debt limit again next week. Probably about mid-week. Congress raised the ceiling a little on December 24th, but the big bite must be made soon if the administration is going to continue running humongous budget deficits.
A new S.C. website, The Nerve, discusses it.
*South Carolina’s debt has gone from $2.4 billion in 2003 to $8.1 billion in 2009. That’s a roughly 300 percent increase over 6 years.
I am starting to really warm up to Phil Angelides. Is there a chance he will run for California governor?
* The Wall Street Journal
* JANUARY 15, 2010
Financial Inquiry Extends to Past Regulators
By JOHN D. MCKINNON And MICHAEL R. CRITTENDEN
WASHINGTON–The chairman of the commission investigating the 2008 financial crisis said Thursday he planned to probe the actions of regulators back to the Clinton Administration, broadening his inquiry beyond bankers.
Former California Treasurer Phil Angelides said in an interview he wanted to know “what did the FBI, the Fed, the Department of Justice and others know about subprime lending; when they know it, and why didn’t they act?”
Mr. Angelides said former Federal Reserve Chairman Alan Greenspan and current Chairman Ben Bernanke likely would be called to testify at future commission hearings. He also mentioned former Securities and Exchange Commission heads Christopher Cox, William Donaldson and Arthur Levitt as likely witnesses.
“Whatever people they feel can shed light on the causes of the recent market events should be made available to them,” said Mr. Levitt, who served from 1993 to 2001. Messrs. Greenspan, Bernanke and Cox declined to comment or didn’t respond to inquiries.
Mr. Angelides’s comments came after the commission heard Thursday from current regulators, who detailed how various government agencies—including the Federal Reserve and the SEC—failed to attack the fraudulent mortgages and toxic assets that contributed to the financial-market meltdown in 2008.
…
criticizing the FBI would be like putting down a rabid dog that the owner knew was rabid and let it “play” in the school yard playground during recess after the owner beat it with stick to get it good and playful.
hmmm…didnt really come off like i wanted. didn’t mean to equate the FBI to rabid dogs….just was trying illustrate the forseeable danger its “owner” should have had.
“Experts ” Puzzled- lol
December retail sales DOWN
http://www.azcentral.com/business/articles/2010/01/14/20100114biz-mktsector0115.html
By this point even the J6P knows that the “experts” are spin doctoring shills for the PTB.
U.S. Michigan Consumer Sentiment Index Rose to 72.8 in January.
Jan. 15 (Bloomberg) — The Reuters/University of Michigan preliminary index of U.S. consumer sentiment rose to 72.8 in January from 72.5 a month earlier.
The consumer sentiment index was forecast to rise to 74, according to the median of 68 economists surveyed by Bloomberg News. Estimates ranged from 71.5 to 76.
We must pay careful attention to the media’s presentation of the soothsayer’s estimates of the polster’s estimates of the mood swings of the shoppers, especially when reported to the third decimal place.
GOP, Dems in “Death Embrace”: U.S. Budget “About to Go Off a Cliff,” Cal Prof Says
Posted Jan 15, 2010 09:30am EST by Peter Gorenstein in Investing, Recession, Politics
Raise taxes or cut spending? Washington must take action on both fronts to curb U.S. debt or run the risk of a dollar crisis, according to a report by the Committee on the Fiscal Future of the United States, a panel of bipartisan experts.
“The Republican and Democrats are in a death embrace and about to go off a cliff,” says Alan Auerbach economist at University of California at Berkeley. Not a member of the panel, Auerbach has studied the government debt for 15 years. He tells Tech Ticker the near-term “challenge is to take credible action on the deficit without damaging the economic recovery.
But even after the recession recedes, debt levels will continue to rise to “unsustainable” levels, he says, estimating the GDP-to-debt ratio will be greater than 100% by 2026.
A few politicians are trying to act but without much support. Senator Judd Gregg and Senate Budget Committee Chairman Kent Conrad are struggling to create a bipartisan fiscal commission to tackle the problem. There’s likely not enough support to pass the measure, which gets a full Senate vote next week.
Debt Nation default look for it when the big investment banks short the dollar and Treasuries
Just one of our(S.C’s) many bloated state agencies that needed to cut back. The howls will be forth coming, especially when the ax falls on our extremely over weight education dept. Many states will find that 2010 is gonna hurt! It’s a good thing, but won’t be seen or reported that way.
Department of Natural Resources faces budget crisis, at least 50 layoffs on the way.
John Frampton, director of the South Carolina Department of Natural Resources announced yesterday that the agency is facing a budget crisis and can no longer make its payroll.
The agency has been hurting for a while and has tried to remedy the situation by taking numerous cost-saving actions, closing 16 offices and combining the fisheries and law-enforcement divisions.
The attempts have failed.
A letter was distributed to all 689 personnel yesterday that warns employees to expect a staff reduction of at least 50 people as well as 10-day furloughs in the coming fiscal year.
LOL! I love these clueless morons… Everyone knows the earthquake was caused by the fact that the earths core is millions of degrees.
Actor Danny Glover believes that the Haitian earthquake was caused by climate change and global warming:
Says Glover: “When we see what we did at the climate summit in Copenhagen, this is the response, this is what happens, you know what I’m sayin’?”
Yea, Yea, but don’t be so fast to ridicule Danny Glover. I don’t think you are aware of the entire scope of credentials possessed by the one you are condemning. It’s easy to forget that some people are qualified to speak on certain matters no matter the politics involved.
In his long and distinguished acting career Danny Glover has played MANY diverse roles INCLUDING, politicians, academics, AND SCIENTISTS.
This is what happens when they go off script.
I saw the clip on GritTV, couldn’t believe what I heard. It’s like he’s trying to out-Robertson old Pat.
Global warming now causes earthquakes?
Oh, heavens… that sounds like an Onion article?!
The earth’s crust hangs in balance, and seismic activity can be triggered by things going out of whack, especially events that can change the local gravitational field. Which is why large dams and man made lakes are problematic - the huge mass of water accumulated in these lakes changes the gravitational field by a tiny amount, just enough to trigger a rebalance which results in a tremor. Likewise, pulling water out of the ground, and we are talking about huge amounts of water which could easily happen over the course of several years (groundwater depletion).
So it’s not as simple as saying that the earth’s core is molten. Yes it’s molten and we have to live with it. But we need to understand and minimize the risks of altering geophysics too drastically.
The earth’s crust hangs in balance
Ah yes, earth in the balance. If we so much as stomp on it, we could set off a devastating chain of events. Before the arrival of humans, of course, there were no earthquakes or volcanoes and things were totally mellow. NOT!
While is disagree that the Earth’s crust hangs in the balance, I disagree with the way you are framing your argument. Just because there were volcanoes, etc. before humans, doesn’t preclude our ability to affect the planet. I hear this argument all the time, “Oh, the planet was hotter and had high atm CO2 before humans, thus we’re not the problem” and that line of argument is intellectual rubbish.
MrBubble
Of course there were volcanoes and earthquakes. You’re making a strawman argument and missing the point. Read before posting, the idea is to minimize additional risk by avoiding risky behavior.
There were home mortgages and bankrupcies before the Fed as well. Doesn’t mean the Fed can’t be held accountable for the current situation.
The outer core is molten, yes. The inner core is solid.
Maybe. So you say. We’ll take that on faith. Maybe. Depends on what you want.
Stockton parts supplier to lay off entire work force
154 workers, 7 managers will lose their jobs
January 15, 2010 12:01 AM
STOCKTON - Kyoho Manufacturing California, which opened a 260,000-square-foot auto parts plant in Stockton in 2008 employing more than 200 workers, has filed notice it will lay off all of its 154 staffers beginning April 1.
Kyoho is among the 10 car parts makers in San Joaquin County that supply the New United Motor Manufacturing Inc. plant in Fremont. General Motors Corp. and its NUMMI partner, Toyota Motor Corp., announced last year they would cease production in California.
It is not the first NUMMI supplier to announce layoffs, nor will it be the last, a San Joaquin County employment official said.
NUMMI … announced last year they would cease production in California.
That is a real bummer. They made good cars. One of my ex-employee’s father worked there. Dang.
It’s not our fault we are inefficient, it’s dem damn machines…
White House budget director blames old computers for ineffective government. ~ The Hill ~
A big reason why the government is inefficient and ineffective is because Washington has outdated technology, with federal workers having better computers at home than in the office.
This startling admission came Thursday from Peter Orszag, who manages the federal bureaucracy for President Barack Obama.
The public is getting a bad return on its tax dollars because government workers are operating with outdated technologies, Orszag said in a statement that kicked off a summit between Obama and dozens of corporate CEOs.
“Twenty years ago, people who came to work in the federal government had better technology at work than at home,” said Orszag, director of the Office of Management and Budget. “Now that’s no longer the case.
“The American people deserve better service from their government, and better return for their tax dollars.”
The White House release that included Orszag’s comments said one “specific source” of ineffective and inefficient government is the huge technology gap between the public and private sectors that results in billions of dollars in waste, slow and inadequate customer service and a lack of transparency about how dollars are spent.
so in order to be more efficient they need to spend even more money.
BYOC
1. A perfect way to create jobs - inefficient workers
2. A way to justify more spending on computers.
Loan sharks target poorest households with 825% APR loans ~ UK ~
Number of households borrowing from loan sharks has risen by 22% to 200,000 in the past three years, a report finds
Thousands of households have taken out loans with interest rates averaging 825% during “the worst Christmas in a generation” for illegal doorstep lending, according to a new report.
The Real Cost of Christmas, commissioned by affordable housing provider Circle Anglia and written by the Financial Inclusion Centre, found that more than 100,000 of the UK’s poorest families will spend 2010 crippled with a combined debt of around £82m after borrowing money from loan sharks to pay for Christmas.
The value of the loans is an estimated £29m, but average interest rates of 825% will mean that people end up paying nearly three times the initial amount they borrowed.
The report says that on average people borrowed nearly £300 with an average repayment period of one year.
Andy Doyland, chief executive of operations at Circle Anglia, said: “These figures are very concerning and demonstrate the scale of illegal lending across the UK.
“We hope that by turning the spotlight on loan shark activity we can help more people to seek help and get sound financial advice.”
CBO: Two Cheers For Trickle-Down Economics. ~ Capitol Hill ~
Thu., Jan. 14, ‘10 Stimulus - Taxes - CBO - Obama
A new analysis of potential stimulus options from the Congressional Budget Office concludes that cutting employer payroll taxes would provide a bigger boost to GDP and employment than a similar cut in employee payroll taxes.
Of all the options measured, an across-the-board cut in employer payroll taxes provides the third biggest employment bang for the buck from 2010-2015. Coming in at No. 2 is an employer payroll-tax cut for firms that expand payroll.
Both of those payroll-tax options trump the employment impact of infrastructure spending or aid to states. This may reflect, in part, CBO’s judgment that aid to states and infrastructure spending wouldn’t ramp up until 2011.
CBO estimates that by far the biggest bang for the buck, both in GDP and employment terms, would come from increasing aid to the unemployed, since those extra dollars of support are highly likely to be spent.
President Obama advocated a hiring tax credit in January 2009, but his idea was left out of the $787 billion stimulus. He’s been talking it up again in recent months, and CBO’s analysis increases the chances that he will get his wish.
WASHINGTON (AP) — American families were squeezed last year as their inflation-adjusted weekly wages fell 1.6 percent — the sharpest drop since 1990 — well below the 2.7 percent consumer inflation rate
Lower standard of living ahead for most Americans Bankers excepted and possibly certain CA state workers although I’m not to sure about that ?
Effective inflation = increase in cost of living relative to American family incomes was 1.6 + 2.7 = 4.3 percent…
Verizon Wireless cuts basic voice fees by $29 a month.
NEW YORK (MarketWatch) — Verizon Wireless on Friday lowered its basic wireless service fee by about $29 a month in a move that could force similar moves by AT&T and other competitors, as it positions itself for wide use of video on smart phones.
It’s also offering nationwide unlimited voice-and-text plan for $89.99 a month.
While Verizon Wireless CEO Lowell McAdam said the new pricing plans, along with an array of other programs related to data and voice services, will help drive revenue growth over time by reducing customer churn while growing its share of the data business.
Wii wins.
Nintendo’s Wii game console sold a record 3.81 million units in the U.S. in December, eclipsing Microsoft’s Xbox 360 and Sony’s Playstation 3 during the critical holiday shopping season, according to numbers released this afternoon by the NPD market research firm.
The PlayStation 3 sold 1.36 million units for the month, compared with 1.31 million units for Microsoft’s Xbox 360. It’s the first time monthly sales of the PlayStation 3 have topped 1 million units, NPD reported.
China’s Round-The-Clock Auto Factories Still Cannot Meet Demand.
Jan. 15 (Bloomberg) — Nissan Motor Co.’s factory in central China is making cars almost 24 hours a day, yet Pan Xiaowei still waited three months for her new Tiida compact to arrive at the dealership.
“It wasn’t like this a couple of years ago,” said Pan, 34, whose husband runs a property development company in Shandong province. “We used to buy and get a car straight away, and now you have to pre-order and wait.”
China overtook the U.S. last year as the world’s largest automobile market with sales surging 46 percent to 13.6 million, according to the China Association of Automobile Manufacturers. Nissan, Ford Motor Co. and Honda Motor Co. are running their Chinese factories at full capacity, with overtime and weekend shifts, and still can’t deliver enough cars.
So why don’t they import cars to meet their unmet demand?
Why is protectionism OK in China?
Why is protectionism OK in China?
Good question, maybe someone should ask them?
… Pan, 34, whose husband runs a property development company in Shandong province.
This can’t end well.
Because their politicians are worried about rioting mobs of unemployed people, and our politicians are not.
Tin-foil hat time: Why are we sending so many National Guard units to Iraq/Afghanistan? The US Army is not permitted to act as a “police force” inside the United States, but the National Guard is.
Nothing like OJT to get the Guard ready for a possible domestic insurgency.
This thought came to me, as I drove by one of the local National Guard motor pools, and saw a bunch of newly delivered, up-armored HUMVEES sitting in the lot.
“…China overtook the U.S. last year as the world’s largest automobile market with sales surging 46 percent to 13.6 million,”
This is really wonderful news, because being human they’re gonna make many, many, many mistakes, i.e., accidents…which well lead to disputes, which will lead to internal distractions, which will lead to resources of time being consumed on things that produce nothing. Oh, what a wonder self indulgent debacle about to bloom in a country with 1.1 Billion people…
And as the earthquake demonstrated, maybe the central commie Gov’ts policies are not what is best for people who want to have families that are different than the legal “mold” of 2 adults + 1 child
There are supposed to be 25 million guys in China, who will never find a female “mate”.
Either we’re going to have a real-life version of “Mars Wants Women”, (sans Martians), or the “Bravo Channel” is going to be the most popular channel in China.
Or Made-in-USA Golddiggers are going to be moving to more profitable territory.
Not that I have a problem with any of these things happening.
repost for Muggy:
Enjoy Muggy. It could be worse! I always say “It could be worse.”
I have concluded that a man really has little need for money directly. An occasional cigar or glass of nectar don’t really cost much. Women do though, and they need a house and children, and they need them before you have the money to buy them. The rest just follows. What else is the use of a man?
Why, if it weren’t for women, we’d all probably spend our lives at huntin camp or on a boat, thinking about finding a woman.
Eating nothing but beef jerky and leaving the toilet seat up!
Good times indeed.
“Why, if it weren’t for women, we’d all probably spend our lives at huntin camp or on a boat, thinking about finding a woman.”
Let’s not mince words: if it weren’t for women, we’d be hurtling feces at each other. I could live in a lean-to, but you know, I do enjoy good company. This is why I love being in education: I get to go wander off into the wild a few times a year. I have done anything crazy since the kiddos, but I’m overdue.
My wife knows what’s at stake; if we don’t find the right house at the right price, we’ll keep renting. It’s just that we;ve decided to seriously start looking, since we never really saw anything reasonable. Now we’re seeing reasonable prices (not always, but sometimes). The houses that are priced right, are selling. The only two we’ve liked so far have offers.
I get to come in from the wild a few times a year.
I won’t be throwing feces I think, thanks to my virtuous mother.
See how well I’m doing not trying to talk you into or out of anything? It’s a breakthrough for me, for sure.
http://www.squarefeetblog.com/commercial-real-estate-blog/2010/01/15/sam-zell-on-cnbc-discusses-housing-and-more/
Sam Zell comments on housing and CRE in general.
…”bottom already seen on residential, and on pretty optimistic on the demand side of the equation for institutional CBD office space”.
I can’t imagine why Zell would think that.
When gas is $7 a gallon, folks would prefer taking the bus/subway to their downtown offices, that’s why.
“When gas is $7 a gallon”
So when does your crystal ball say we get gas at $7.00 per gallon?
Repeat after me:
Inflation for needed goods
Deflation for wanted goods
$7/gallon gas could happen in the not too distant future. If I had a crystal ball I wouldn’t be wasting my time talking to you on this forum.
When gas is $7 a gallon, folks would prefer taking the bus/subway to their downtown offices, that’s why.
Actually, I’d prefer to telecommute.
“I can’t imagine why Zell would think that.”
Maybe because he is a veteran sucker fluffer?
More and more states on budget brink
California has the largest projected budget gap for fiscal 2011 but four other key states are also facing big problems ~ January 15, 2010
NEW YORK (Fortune) — California is hurtling into the budgetary abyss — and it’s not alone.
Across the nation, state tax collections in the first three quarters of 2009 posted their steepest decline in at least 46 years, according to a report this month from the public policy research arm of the State University of New York.
At least 30 states raised taxes in their most recently completed fiscal year — which ended in most cases in mid-2009. Even more cut services. All told, states raised $117 billion to fill last year’s budget gaps, the Pew Center on the States estimates.
Yet despite all those new taxes and deep cutbacks, pressure on state finances continues to build. Economists warn that without a new round of federal stimulus spending, states could face another round of layoffs that could kneecap an already shaky economic recovery.
Gov’t mortgage plan aids 7 percent of borrowers.
WASHINGTON (AP) — The Obama administration’s mortgage relief plan provided help to only 7 percent of borrowers who signed up last year, another black mark for the struggling program.
About 900,000 borrowers have enrolled in the $75 billion program since it launched in March, the Treasury Department said Friday. But as of last month, only about 66,500 homeowners had received permanent relief. Another 46,000 have been approved and should be finalized soon.
The plan aims to make borrowers’ mortgages more affordable by reducing the mortgage interest rate to as low as 2 percent. They receive temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete necessary paperwork, including proof of income and a letter explaining the reason for their financial hardship.
The Treasury Department is pressing the 102 mortgage companies that are participating in the program to do a better job.
The mortgage companies say they have struggled to get homeowners to return the necessary paperwork. Wells Fargo executives project that only about half of the borrowers who enrolled last summer will wind up being approved.
The rest will either won’t send back all the required documents or will be deemed ineligible according to the government’s formula. Collecting the documents up front would make the process much easier, said Mike Heid, co-president of Wells Fargo & Co.’s mortgage division.
$75 billion / (66,500 + 46,000) = $666,666.67 per homeowner who was helped…
You could buy a decent-sized San Diego McMansion for $666,667.
Haiti: Where will all the money go?
As donors worldwide open wallets to help Haiti, following the money will be a challenge ~ Friday January 15, 2010
WASHINGTON (AP) — Haiti has received billions of dollars in taxpayer and private aid from the United States and others, yet is so poor that few homes had safe drinking water, sewage disposal or electricity even before the earthquake. With sympathetic donors around the world sending money, making sure that aid is spent properly will be a challenge.
Corruption, theft and other crime and Haiti’s sheer shortage of fundamentals — reliable roads, telephone and power lines and a sound financial system — add to the difficulty as foreign governments and charities try not only to help Haiti recover from the disaster but pull itself out of abject poverty.
It is one of the poorest places on Earth. Most basic public services are lacking, people typically live on less than $2 a day, nearly half the population is illiterate and the government has a history of instability. The public has little opportunity to be sure that aid to the government is used honestly and well. Nor is following the money easy for donors, including the United States, 700 miles away and one of the country’s biggest helpers.
“As donors worldwide open wallets to help Haiti, following the money will be a challenge”
Easy prediction: Lots of the dough will be diverted away from disaster relief and into the hands of profiteers…
Haiti was a disaster before the earthquake.
Very true, but the U.N. rates Haiti as one of the most environmentally friendly places on the planet!
And we are going to be just as “environmentally-friendly”, (i.e. the rich elite skimming all the money, while 90% of the population lives in mud or cinder block hovels).
Haitians have Voodoo……we have “real estate only goes up” and “we’re running out of land”.
“And we are going to be just as “environmentally-friendly”, (i.e. the rich elite skimming all the money, while 90% of the population lives in mud or cinder block hovels”).
I only worry about things that I have control over. Haiti is never going to advance, we have dumped BILLIONS into that corrupt nest doesn’t fix a thing.
One African country* has asked that we stop sending money, all it does is feed the corruption, not the mouths of the hungry.
* I’ll look up the article
Green Chute?
Anyone else see a jump in tech-related job postings today?
I have a couple of “search agents” set at Dice.com and instead of the usual 2-3 job postings a day, I got over 15 listings for 01-14/01-15.
I’ll post back by Wednesday to let you know if this is an anomaly.
I’ve noticed a lot of new posting for pilots on the aviation related job site since January 1.
Mech postings are up also, but not as much as pilots. Quite a few positions open in Europe/Middle East.
Lavi:
Yes. In my local market, Austin, there’s been a noticeable rise in tech-related openings last 30 days. Most are contract to permanent. ‘Course this market’s weathered a bit better (still brutal competition, I hear, for non-specific or entry level stuff). For internet-related, there’s quite a bit available now.
Austin, “it’s different here”..?
(BTW: “green shoots” — as in newly sprouting plant)
Good news!
Oil Discovery Under Shallow Gulf Waters Estimated To Be Biggest In Decades ~ Oil, Commodities, Energy
McMoRan Exploration Co. announced Tuesday that an oil discovery beneath 20 feet of water off the Louisiana coast could be the biggest find in decades, the Houston Chronicle reports.
Drillers found a “135-foot column of hydrocarbon-filled sands” and have estimated the discovery to be nearly 2 trillion cubic feet of resources, a figure that rivals previous discoveries in the Gulf’s deeper waters.
Energy XXI Chairman and CEO John Schiller said the discovery “verifies the ultra-deep potential of the Gulf of Mexico shelf and opens this horizon as a major exploration frontier.”
Calling that story “good news” is like saying that “home prices have stabilized at a high plateau”. Perfect example of one person’s good news being another person’s terrible news.
Plentiful US oil means less dependence on foreign oil sure, but plentiful oil in general means cheap oil which means over-consumption, waste and further deleterious environmental effects.
It’ll still take a decade to get any large oil field into production anyway.
MrBubble
Calling that story “good news” is like saying that “home prices have stabilized at a high plateau”.
“It’ll still take a decade to get any large oil field into production anyway”.
That is a stretch to say the very least.
What would you have us do? All buy electric cars? What runs electric generating plants? Nuclear, coal, hydro, oil?
You can forget the world as a whole coming to some miraculous energy conserving pact. It will not happen in your lifetime or your grandchildren’s, but feel free to pursue that dream, nothing wrong with that.
It drives many folks crazy that we keep finding more oil resources, and until we run ’slap’ out, we will keep burning it. That may be another 1000 or so years, who knows for sure.
Unless you can come up with a reasonable alternative, that’s the way it is and will be. Solar, wind, wave etc… Have a limited use in the energy consuming world we live in, period.
What about nuclear powered cars? If possible it would beat the hell out of the crap that’s being proposed. Only the fringe elements buy into it, the general public does not.
“It’ll still take a decade to get any large oil field into production anyway”.
I beg to differ. Here’s an example:
Early 1960s: Geologists started exploring the Prudhoe Bay area in Alaska in earnest
1968: They hit pay dirt
1974: Confirmation wells dug
1977: Production begins (added complication that they had to wait for the pipeline to be completed, but there are always complications, ever since Titusville)
1998: Peak production of Prudhoe Bay
When’s the last time you took a petroleum geology course?
“Solar, wind, wave etc… Have a limited use in the energy consuming world we live in, period.” That’s my point. The energy consuming world and consumption in general is a chimera and will be replaced by a lower impact, slower world.
What do I do about it? Grow my own food and preserve it, hunt, fish, turn down the thermostat and ride my bike, etc. Rode about 20 miles yesterday commuting (no car) and ate venison and morels from my last hunting/gathering trip.
[Full disclosure: I did not take my bike hunting. No gun rack. A friend and I took his tiny Toyota pickup and camping gear out last time, but I actually get a boar tomorrow morning. Too big to fit in the panniers]
MrBubble
MrBubble
Wow, Mr B, you actually wrote an interesting response without the personal attack thing almost. Well, the passive aggressive thing was there in the start of it. But hey.
Sustainable, low impact, freedom, red meat, I’m all in.
It would be great to discover tremendous new oil reserves in US waters (or better yet, on US soil). But I wonder how much of this announcement is intended to pump up the share price, rather than being based on provable reserves.
Big Banks involved in Short-Sale Fraud:
http://www.cnbc.com/id/34877347
“His companies include 1800CashOffer, HomeFlux.com and FastHomeOffer.com. Brandt has a huge network of short sale real estate agents, and over the past several months he’s been receiving all kinds of questions and complaints about trouble with second lien holders”.
“As we all know, during the housing boom, millions of Americans pulled cash out of their homes in the form of home equity loans and lines of credit. They also used “piggy back” loans in order to get even lower interest rates on their primary mortgages. Now, many of the borrowers in trouble, and many who are so far underwater on their loans that they don’t qualify for any refi or modification, are choosing short sales as a way out”.
This, I thought, was the gist of the article:
“But here’s what’s not legal and what’s apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say “on the side,” I mean in cash, off the HUD settlement statements, so the first lien holder doesn’t see it.”
While I can’t comment on the legality of getting money on the side, it’s not necessarily a bad thing IMHO. Basically there are 2 options for the home”owner”, which is (i) negotiate a short sale or (ii) foreclose. This greasing of the 2nd lienholder makes (i) somewhat easier which is a good thing. A house in foreclosure is owned by you the taxpayer via Fannie/Freddie, while its wiring and fittings are stolen by the previous owner or plain vanilla thieves. A house in foreclosure does nothing to price discovery as it sits off the MLS. A short-sold house on the other hand rolls over to the next home”owner” taking down the neighborhood housing prices in the transaction. The reduced mortgage belongs to the bank (or could be passed to Fannie/Freddie) but this mortgage is a lot “healthier”. The bank eats the losses on the short sale.
We should be encouraging both short sales and principal renegotiation, while making sure that losses are swallowed by the banks involved. And principal renegotiations should go on the land records and be reflected on e.g. zillow etc.
WASHINGTON — A day after Lloyd Blankfein , the chairman and chief executive of Goldman Sachs , characterized as “improper” his firm’s practice of betting that securities it was selling as safe would plummet in value, the company denied he said that to the Financial Crisis Inquiry Commission .
The following is the full Goldman statement and a transcript of Blankfein’s remarks.
Goldman Sachs Clarifies Various Media Reports of Aspect of FCIC Hearing
NEW YORK , January 14, 2010 — The Goldman Sachs Group, Inc. (NYSE: GS): Today certain media reports have erroneously stated that, during testimony at the Financial Crisis Inquiry Commission in Washington, D.C. yesterday, Lloyd Blankfein said Goldman Sachs’ practices with respect to the sale of mortgage-related securities were “improper.” Mr. Blankfein said no such thing.
Mr. Blankfein was responding to a lengthy series of statements followed by a question that was predicated on the assumption that a firm was selling a product that it thought was going to default. Mr. Blankfein agreed that, if such an assumption was true, the practice would be improper. Mr. Blankfein does not believe, nor did he say, that Goldman Sachs had behaved improperly in any way.
In fact, his answer to the various statements explained the market making function and how our practices were entirely appropriate. As he stated in his testimony, the firm could not have known the future direction of housing prices.
The transcript of Blankfein’s testimony on Wednesday:
PHIL ANGELIDES (the commission chairman): I want to ask you about a very specific instance as a way of getting to how things worked and how things might be changing in the future . . . And it appears, at least according to public documents and other reports, that you may have simultaneously betted against securities you sold to clients. According to the reports, you sold about $40 billion in 2006, 2007. In December 2006 , you came to the conclusion the mortgage was heading south and you began to reduce your own positions. And many of the securities that you sold to institutional investors went bad within months of issuance. Now one expert in structured finance said, “The simultaneous selling of securities to customers and shorting them because they believe they are going to default is the most cynical use of credit information I’ve seen.”
Do you believe that was a proper legal, ethical practice? And would the firm continue to do that practice? Or do you believe that’s the kind of practice that undermines confidence in the marketplace?
LLOYD BLANKFEIN : Well, the way it’s . . . let me . . . the short answer is this is the practice of a market maker. And I would like to explain this. But the answer is I do think that the behavior is improper, and we regret the result — the consequence that people have lost money in it, but I just want to explain — and this is a very important — and I appreciate the opportunity to do this because there’s so much press swirling around this that I really want — I really need to explain . . .
My guess is GS has to be worried about major law suits given LLoyd’s statement.
“Don’t let your lyin’ ears deceive you…….according to my counsel, this is what I said.”
Europe hails but won’t copy Obama bank fee plan ~~ Jan 15, 2010
BERLIN (Reuters) - Europe’s leading economies showed no sign on Friday of adopting U.S. President Barack Obama’s proposal for a levy on banks to repay taxpayers for bailouts but vowed to press on with their own ideas to target the sector. The president of the Eurogroup of euro zone finance ministers, Jean-Claude Juncker, said Obama was right to propose the plan, which foresees Wall Street banks paying up to $117 billion to reimburse taxpayers for bailing them out.
“We have to see now in Europe … whether we proceed in the same way,” Jean-Claude Juncker, who is also Luxembourg’s prime minister, told a news briefing in Luxembourg.
“I have no preconceived idea but I would find it difficult to adopt a common approach as tax matters are decided on a national level,” he said, adding that euro zone finance ministers would discuss the idea at a meeting on Monday evening.
In Germany, Chancellor Angela Merkel said the United States had “conducted banking rescue in a much more extensive form.”
“We also levy considerable fees for the benefits we make available to banks,” she told a news conference, adding that she was waiting for an international discussion on the issue and favored a financial transaction tax.
More “green shoots” vs. “ground truth”,…..
My cousin works for one of the big credit rating agencies. Her position requires her to have fairly frequent contact with their office in California.
She was telling me the other night that the California office told her that many businesses in California have stopped accepting paper checks……..credit or debit cards only, because of the bouncing check problems.
Had to go by the NAPA store yesterday, to pick up a couple of things. Was BS’ing with the manager when I mentioned what my cousin had said. He told me they had $5K bucks worth of bounced checks sitting in their safe.
True, if the store’s business was big enough, $5K wouldn’t be a lot. But this was a store in a mid-size town in flyover country, where the unemployment rate is “reported” to be around 7%.
And he acted like $5000 was a lot of money.
$5K represents a lot of sales for a NAPA store. Wouldn’t surprise me if a lot of those bounced checks were from local car dealerships, though.
He’s out on the edge of town. Most of the dealer/repair shop accounts are run thru the NAPA store next to the dealers downtown. He only has a few repair shops within 2-3 miles of him, so I’m guessing that most of his traffic is DIY guys.
Strangely, other than the Pontiac franchise, we haven’t lost any dealers locally (other than a few Used lots). Mainly because we only have one dealer for each brand……next closest Toyota dealer (for example) is 35 miles away.
Of course, losing the Pontiac franchise means that a stand alone-Caddy dealership is unviable……..maybe he can sell it to the Chevy dealer, to give him something to put in that fancy new building he built last year, to sell Saturns.
Capital One charge offs top 10% ~ Washington Business Journal
The number of credit card accounts Capital One Financial Corp. now considers uncollectable rose in December, although fewer customers were falling behind on payments.
The McLean-based company, the nation’s third-largest issuer of Visa credit cards, says its charge offs in the U.S. rose to 10.14 percent in December, up from 9.6 percent in November. International credit card charge offs were 9.58 percent in December, while charge offs in the company’s auto finance business were 5.68 percent.
The percent of U.S. credit card holders at least 30 days behind on their payments was 5.78 percent, down from 5.87 percent in December.
Capital One (NYSE: COF), which reports fourth-quarter results later this month, set aside $296 million in the third quarter to cover potential loan losses.
Krawcheck Says 53% of Wealthy Fear Outliving Savings (Update2)
(Bloomberg) — A majority of wealthy Americans said they’re concerned that they won’t have enough retirement income to last through their lifetimes, according to a Bank of America Corp. survey.
The survey said 53 percent are concerned about making sure retirement assets will last. Fifty-nine percent of retirees also said rising health-care costs are a concern. More than half of non-retired respondents made some adjustments to their lifestyles last year, such as spending less on personal luxuries or giving less to charities, and 29 percent said they expect to retire later than originally planned, the study said.
“Helping our clients plan for retirement will continue to be a core focus for our business in the years ahead,” Sallie Krawcheck, president of global wealth and investment management for the Charlotte, North Carolina-based bank, said in a statement today.
The results are from a December phone survey conducted by Princeton, New Jersey-based Braun Research, a marketing research firm, which contacted 1,000 Americans with investable assets of at least $250,000.
Yeah, if your buying a Ferrari or Porsche, yachts, or 5 million dollar starter homes, I can see how you might worry about having enough for retirement.
Of course, doing something to prevent Wall Street scumbags from ripping off their fellow man, to finance said retirement is considered “socialism” in some quarters.
Well, do I buy this afternoon’s dip and sell when the market goes up Monday?
This is getting too easy… which means it can’t last.
“This is getting too easy… which means it can’t last”.
Correct-a-mundo!
Simple investing advice:
Don’t worry, be happy, and buy the dips…
Boeing lays off 36 workers
The Boeing Company laid off 36 workers today, a mix of engineers and support staff at Kennedy Space Center who received 60-day notices of job termination. Friday, January 15, 2010
“The forecast number was 40,” Boeing spokeswoman Susan Wells said.
Two workers were redeployed to Boeing programs in other areas.
“During that 60 days we’ll still work on redeploying them to other programs and offering career services,” Wells said. “Boeing is committed to preserve as many jobs as possible.”
Boeing employs about 1,000 workers in Brevard County, 300 of whom support the shuttle program directly. Boeing has forecast it will lose 330 workers by the time the shuttle program ends late this year or early in 2011. Additional layoffs are scheduled in May and in August. Layoff numbers have not been set.
“The forecast number was 40,”
Better than expected! Woo-hoo!
WASHINGTON – The notion that consumers will help lead the economic rebound received a stark rebuttal Friday: American families are being squeezed.
Workers saw their inflation-adjusted weekly wages fall 1.6 percent last year — the sharpest drop since 1990 — even as consumer prices rose only modestly.
Families’ spending power sank as a result. Slack pay and scarce job growth are slowing consumer spending, along with tight credit and a rising savings rate. That’s hindering the economy’s ability to mount a strong recovery.
For some families, the overall inflation rate last year — 2.7 percent — understates their burden. Many are struggling with surging costs for health care and college tuition, both of which have been galloping far above the overall inflation rate.
Energy led consumer prices higher last year, offsetting the biggest drop in food costs in nearly a half century, the Labor Department said Friday. Core inflation, which excludes the volatile food and energy sectors, rose 1.8 percent. That’s the second-smallest rise in four decades.
Falling inflation adjusted wages + decreased abillity to borrow + massive unemployment = collapsing housing prices.
Cash …
Nasa launches investigation after cocaine is found in space shuttle hanger
By Mail Foreign Service ~~ 15th January 2010
Nasa has launched an investigation to find out which of its employees breached a zero-tolerance policy on drugs after cocaine was found in a space shuttle hangar.
A bag containing residue from the drug was discovered outside a bathroom at the Kennedy Space Centre in Florida, where six astronauts including Briton Nick Patrick are due to blast off into orbit next month.
The American space agency says that the mission will not be affected.
Kennedy Space Centre in Florida
Nasa have launched an investigation after cocaine was found outside a bathroom at the Kennedy Space Centre in Florida
However, Nasa officials want to know how cocaine got into a restricted area, and which of its workers or contractors breached a zero-tolerance policy on drugs.
‘There are no obvious indications of anyone acting oddly or under the influence,’ Nasa spokesman Allard Beutel told the space.com website.
A guy I worked with used to bring empty beer cans to the office and left them laying around on desktops and in trash cans. The boss went crazy trying to discover who it was that was drinking on the job.
http://weblogs.sun-sentinel.com/news/politics/dcblog/2010/01/clinton_says_haitians_to_get_t_1.html
Hilary Clinton says that thousands of Haitian illegals in South Florida will get “temporary” legal status. Riiiight. Meaning, permanent residency for untold thousands more Democrat-on-Arrival illegal aliens, who can sign their “X” on the ballet when they vote in the next election.
who can sign their “X” on the ballet when they vote in the next election.
You get to sign “X” on the ballet only after you’ve taken your kids to see the Nutcracker. That’s a high bar.
And not a single position will be missed by the tax payer, more states will be doing this type of cutting which is a good thing.
Missouri to cut 31 commissions, 473 positions
St. Louis Business Journal
Missouri Gov. Jay Nixon said Friday he plans to eliminate 31 state government boards and commissions, which would eliminate 473 appointed positions.
The governor’s announcement followed recommendations by Commissioner of Administration Kelvin Simmons, whose department reviewed boards and commissions across state government.
Nixon signed executive orders Friday morning eliminating 13 boards and 227 positions. Nixon will ask the legislature to eliminate 18 additional boards and 246 positions that were created by statute.
The 2009 bonuses are said to total some $145 billion. That’s BILLION! Not all of it cash, of course. Corporate stocks will constitute a substantial chunk of the payoffs, but that $145 billion number is sticking in the craw of Mr. and Mrs. Main Street America. Almost everyone wants the financial institution boards to renege on contracts and pay smaller bonuses, or none at all.. But if the corporation made money…and 2009 was a big year, thanks to the big bailout…so, as the Latins say” “Pacta sunt servanda.” (The contract must be served.)
Mr. Pat Robertson’s theory — that Haitian slaves made a “pact with the devil” 200 years ago in order to free themselves from the hated clutches of Napoleon Bonaparte’s regime – resulting in a curse that led to the destruction of much of Port-au-Prince and a massive loss of life in Tuesday’s earthquake
Man you do have to love religion.
So is he saying that God did this or Satan?
Is he saying that God was allowing haitian slavery so they had to make a pact with the devil???
The Devil operates Pat Robertson’s brain.
I don’t know….I might sell my soul to the devil to get out from French rule.
“So is he saying that God did this or Satan?”
Since God is alleged to be all powerful then it must have been God.
Go read Leibniz’s “Theodicy”.
Good one Meatson!!!
Hadn’t thought of it that way!
Just in time for those newly impoverished Americans
DETROIT (AP) — The world’s cheapest car is being readied for sale in the U.S., but by the time India’s Tata Nano is retrofitted to meet emissions and safety standards, it won’t be that cheap.
Tata Technologies Ltd., the global engineering arm of the Tata group conglomerate, brought the tiny car to Detroit as a publicity stunt for the engineering group.
Tata officials, while maintaining that they couldn’t speak for Tata Motors, maker of the $2,500 Nano, said they were involved with the Nano from concept until it launched last July in Mumbai.
They wouldn’t say when the Nano might arrive in the U.S. or how much it might cost here, although Ratan Tata, chairman of the group of Tata companies, has said it should be ready for U.S. distribution in about three years.
Tata Motors already has made a European version of the four-seat car that will cost about $8,000 when it debuts in 2011, and a Tata Technologies official said privately that the U.S. version is expected to have a comparable price. The official did not want to be identified because the price has not been made public.
Tata motors builds a complete POS makes the Yugo look like a technological marvel! Well, perhaps not that bad, but it will bomb here, and that’s a 100% guarantee.
what I have seen over the last 20 years is crap sells in the US of A. We buy Chinese products and gladly give our skilled jobs to India. Where is the revolt to call center jobs? When Americans have questions about products & services they gladly talk to Indians on the phone.
When a car with a name of POS made by Chindia companies they will be on the news and sell like hotcakes.
We-do’s what we wants….
Senate Can Pass Health With 51 Votes, Van Hollen Says
Jan. 15 (Bloomberg) — Even if Democrats lose the special election to pick a new Massachusetts senator Tuesday, Congress may still pass health-care overhaul through a process called reconciliation, a top House Democrat said.
That procedure requires 51 votes rather than the 60 needed to prevent Republicans from blocking votes on President Barack Obama’s top legislative priorities. That supermajority is at risk as the Massachusetts race has tightened.
“Even before Massachusetts and that race was on the radar screen, we prepared for the process of using reconciliation,” Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee, said.
“Getting health-care reform passed is important,” Van Hollen said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “Reconciliation is an option.”
Should Democrats take that route, the legislation would have to be scaled back because of Senate rules.
~These folks are lucky our power bill is up nearly 30% and our thermostat never has been above 62 degrees. ~
Families face shock 20% rise in heating bills as gas giants cash in on Big Freeze (UK)
Families face record winter gas bills averaging £360 as power companies reap a huge windfall from the big freeze.
The ‘big six’ energy suppliers have refused to pass on a steep fall in wholesale prices to customers.
They are collecting a profit bonanza of £846million in a single month by charging over the odds to keep homes warm.
Householders have had no choice but to turn up the heat to cope with the coldest spell in 30 years, with snow and ice blanketing the entire country.
Domestic demand for gas over the last month is predicted to be 60 per cent higher than in a normal winter.
This increased consumption will result in average bills of £360 for the three-month period from November through to the end of January, compared with £300 a year ago.
Greedy suppliers decided to reduce the tariff to customers by less than 10 per cent - even though the wholesale price of gas came down by some 60 per cent between 2008 and 2009.
Lol, the guy that will be our inspection guy… his nickname is “dealbreaker.”
Best of luck! Despite the conventional “wisdom” on this thread, I think you have made a considered and informed decision which should turn out to be a good one.
Thanks, Yen. One thing that everyone here should realize, is that you need to assemble a team that gets it. My realtor, the inspector, the mtg. guy, they all get it. There are still a lot of bubbleheads out there (especially in rentals), but there are some professionals that understand the new reality — these are the people still working.
“these are the people still working.”
You know what I mean. Not all of the people still working are good, I mean… aw, nevermind.
Just now heard Joseph Stiglitz discussing his new book, Freefall, with an NPR reporter. Stiglitz made a simple but powerful point:
The Fed could have made zero (or very low interest) loans directly to underwater U.S. households, to allow them to refinance their debt to a monthly payment they could have shouldered. Instead, the banks were offered the ZIRP finance, and underwater households were thrown under the bus (my words, not his).
The reporter followed up with a (dumb) question about whether this would have solved the problem of underwater households.
Stiglitz quickly clarified that the households would have stayed underwater on their mortgages, but would have at least been able to afford their monthly payments.
Professor Bear notes that Stiglitz’s solution-not-taken would have been a convenient way to reduce the present value of household debt obligations to the tune of hundreds of thousands of dollars per underwater California FB; only those with a solid grasp of finance would have perceived this a massive wealth transfer (i.e., such a measure might have made it past the propaganda-lubricated MSM radar screen). Of course, banks would then have enjoyed far less opportunity to seize REO collateral and hide it under the rug until the economy comes back, at which point they will doubtless try to sell it to make a killing.
Can anyone come up with a back-of-the-envelope estimate of the value to the banking sector of the Fed’s decision to make zero percent loans to banks, only, rather than directly to households? It must certainly be a large figure, but I am not even sure how to begin to even estimate the order of magnitude (e.g., is the amount in the 10’s, 100’s or 1000’s of $billions?)…
The Fed needs to be ended and then Congress can lend people money at zero interest.
It sounds like Stiglitz might grasp the fact that securitization is dead. Do top managers at Megabank, Inc or at the Fed get it, or do they still live in a fog of denial?
The “moving business” analogy is not a bad one, though I am still quite partial to the “musical chairs” analogy — apparently the banks who got stuck with steaming dog piles of toxic mortgage debt on their books at the moment the music stopped either didn’t see it coming, or else thought some kind of a bailout was going to allow them to dump the fetid dung onto someone else’s plate. At any rate, their unbridled greed killed the securitization goose that laid golden eggs. They succeeded in burning not only the chair legs, but also the chair on which they sat and the room they were trying to heat. (Sorry for the metaphorical mish-mash — I just can’t resist the temptation.)
‘Securitization, the hottest financial-products field in the years leading up to the collapse, provided a textbook example of the risks generated by the new innovations, for it meant that the relationship between lender and borrower was broken. Securitization had one big advantage, allowing risk to be spread; but it had a big disadvantage, creating new problems of imperfect information, and these swamped the benefits from increased diversification. Those buying a mortgage-backed security are, in effect, lending to the homeowner, about whom they know nothing. They trust the bank that sells them the product to have checked it out, and the bank trusts the mortgage originator.
The mortgage originators’ incentives were focused on the quantity of mortgages originated, not the quality. They produced massive amounts of truly lousy mortgages. The banks like to blame the mortgage originators, but just a glance at the mortgages should have revealed the inherent risks. The fact is that the bankers didn’t want to know. Their incentives were to pass on the mortgages, and the securities they created backed by the mortgages, as fast as they could to others. In the Frankenstein laboratories of Wall Street, banks created new risk products (collateralized debt instruments, collateralized debt instruments squared, and credit default swaps, some of which I will discuss in later chapters) without mechanisms to manage the monster they had created.
They had gone into the moving business—taking mortgages from the mortgage originators, repackaging them, and moving them onto the books of pension funds and others—because that was where the fees were the highest, as opposed to the “storage business,” which had been the traditional business model for banks (originating mortgages and then holding on to them). Or so they thought, until the crash occurred and they discovered billions of dollars of the bad assets on their books.’
Just 3,000 South Floridians have won loan modifications through federal program
By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 12:25 p.m. Friday, Jan. 15, 2010
Fewer than 3,000 South Floridians have a permanent loan modification under President Obama’s nearly year-old program to stem home foreclosures.
In the Treasure Coast, just 111 troubled borrowers have seen permanent relief from the $75 billion plan announced in February.
The dismal performance of the program marketed as a helping hand for the nation’s more than 3.3 million delinquent home loans was released Friday in a Treasury Department progress report.
Throughout Florida, which by every measure is one of the states hardest hit by the real estate crash, there are 8,405 permanent modifications. In Palm Beach, Broward and Miami-Dade counties combined there are 2,987 permanent modifications.
Another 96,703 Florida loans are on trial modifications.
The Making Homes Affordable program gives incentives to banks to modify loans in three basic ways; reducing interest rates to as low as 2 percent, increasing the life of the loan, and reducing the principal owed on the loan.
“You keep hearing about this wonderful program the government is doing but it’s not working,” said Joel Bienvenu, who owns a home west of Boca Raton and has been trying to get a loan modification through Wells Fargo since August. “I keep getting excuses that they are just overwhelmed.”
Nationwide, 66,465 permanent modifications have been approved, less than 2 percent of the total loans that are 60 or more days delinquent. Another 46,056 permanent modifications have been approved by the lender, but not yet by the borrower.
The median monthly decrease to mortgages that received permanent modifications was $516, according to the Treasury Department.
been on road trip through Montana all day, Msla to Helena to Great Falla, seeing miles and miles and MILES of sidetracked TXX container cars, empty of course..