Bits Bucket For January 22, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Fannie, Freddie Losses May Hit U.S. ~ WSJ ~ 1-21-10
The U.S. government’s move to deepen its ties to mortgage-finance giants Fannie Mae and Freddie Mac by agreeing to absorb unlimited losses for the next three years is igniting a debate over whether it should bring the business operations of the companies onto its books.
A decision on how the government treats Fannie and Freddie could have broader political implications. So far, the White House has resisted calls by Republicans to bring Fannie’s and Freddie’s obligations onto the government’s books, a move that could boost the federal deficit by tens of billions of dollars. At a time when the deficit is already at a postwar high, that could create added urgency for Congress and the administration to address the companies’ future.
The Congressional Budget Office has reiterated its support for bringing the companies onto the federal budget—and onto the government books—which would effectively mean accounting for their operations in the federal budget as if they were federal agencies.
So under their “leadership” 2000-2008, the GnOP unleashed the Great Housing Fraud upon the world through GSE’s and now they want to put said GSE’s on the FedGov balance sheet…..
“…calls by Republicans to bring Fannie’s and Freddie’s obligations onto the government’s books.”
Oh Geez, I clearly remember Cheney-Shrub hiding the “TrueCost™” of x2 Wars and yet that didn’t stop the young repubicans from Screaming, Pounding their Fists, Yelling: “Put GSE’s on the Gov’t Books!…Put GSE’s on the Gov’t Books!…Put GSE’s on the Gov’t Books!
They were so disappointed this never came about due the Cheney-Shrub reign.
In 2003, the Bush administration attempted to bring tighter oversight and control over Fannie Mae, Freddie Mac and the sub-prime market, which was promptly rejected by the Democrats as unnecessary.
“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,’’ said Rep. Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” Rep. Mel Watt, D-N.C., agreed. (The New York Times, Sept. 11, 2003)
And in 2003, that was probably true.
consultingbyrpm.com/blog/2009/12/krugman-did-identify-housing-bubble-in.html ·
Remember the stock market bubble? With everything that’s happened since 2000, it feels like ancient history. But a few pessimists, notably Stephen Roach of Morgan Stanley, argue that we have not yet paid the price for our past excesses.
I’ve never fully accepted that view. But looking at the housing market, I’m starting to reconsider.
In July 2001, Paul McCulley, an economist at Pimco, the giant bond fund, predicted that the Federal Reserve would simply replace one bubble with another. “There is room,” he wrote, “for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing.”
As Mr. McCulley predicted, interest rate cuts led to soaring home prices, which led in turn not just to a construction boom but to high consumer spending, because homeowners used mortgage refinancing to go deeper into debt. All of this created jobs to make up for those lost when the stock bubble burst.
Robert P. “Bob” Murphy
oxide,
It’s probably been long taken down, but someone here provided a great video link-montage of fiscal conservatives getting shut down in ‘03 any time they asked pointed questions of Franklin Raines, Frank etc.
Given their every fear has become a reality, it’s hardly flattering.
In July 2001, Paul McCulley, an economist at Pimco, the giant bond fund, predicted that the Federal Reserve would simply replace one bubble with another. “There is room,” he wrote, “for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing.”
Dang - he nailed it.
So what’s the next bubble? Is there any “room” left this time?
“As Mr. McCulley predicted, interest rate cuts led to soaring home prices”
But low interest rates don’t necessarily imply a lack of lending standards. In fact, standards should tighten with lower rates since the risk premium isn’t there.
rms …It’s low rates combined with faulty lending and a excessive money supply for investment that created the fake values in real estate . Wall Street obtained those investment funds for faulty lending by the inaccurate rating on the CDO’s that were really high risk junk paper . If a system obtains investment dollars by improper ratings on those investments than they obtained money by fraud ,(Yes this is my opinion and the big elephant in the room ) The bail outs just prevented the discovery of the essence of the markets morphing into a Ponzi Scheme.
Now the cheerleaders are saying that bad lending was the cause of the crisis ,but will they ever refer to what they did to obtain the investment funds to begin with ?
Housing Wizard,
All Natalie, myself and ‘handful’ of others are asking for is a little equal time. Yes……….., WS is f’d up, we GET it!
But seldom do we here about the headwaters that fed the mighty river we call securitization.
As usual, by and large I agree, and I haven’t any qualms about buying “junk” ( as long as it’s labeled accordinly! ) I mean, KC & the Sunshine Band cassette tapes are in the bargain bin for a reason.
“…do a little dance, make a little love, get down tonight, *huh*.. get down tonight!”
You people are simply can’t stop the “blame Bush” mentality.
I remember clearly when these lenders were getting out of control and the regulators went before congress to express the need to curtail the lending. Maxine Waters suggested we needed to go after the regulator and have him dismissed for trying to interfere with the marvelous job Franklin Raines was doing in shelling out money for fraudulent loans.
Barney Frank, Chairman of the finance committee saw Fannie and Freddie as doing a wonderful job getting poor folks homes and thought reigning them in was totally unnecessary and that they posed no threat to the financial system. Chris Dodd there with them.
These GSE’s were pork-barrel projects for the Democrats for years.
Remember well that Dem’s had control of Both houses in Bush’s last years, so let’s forget about the 8 years. I was really 6 and Bush was hampered by these inbred institutions that had been doing Democrat spending for decades.
While i agree that Bush was an idiot and should have put some constraints on the financial services industries, this is not “bush’s fault”. Sorry.
Dio,
Where do you want me to send the beer?
cases!
The Dems DID NOT control both houses. They barely reached parity.
Maybe you should remember that the Repubs controlled both houses for over 10 years and yet didn’t seem able to fixed the problem.
But don’t let the facts get in your way.
The 110 Congress was controlled by the Dems. Pelosi was Speaker. The Senate was close, but it was still led by the Dems - hence Reid was the Majority leader.
Um, yes, I’m pretty sure I said “…barely reached parity.”
Maybe I should have said “…barely reached majority.” I was implying that freshman Congressman don’t usually have the influence of senior members.
My bad.
So under their “leadership” 2000-2008, the GnOP unleashed the Great Housing Fraud upon the world through GSE’s
Excuse me - what? Sorry but no. The GSE push part of the housing bubble was almost purely a Dem thing, most if it by the Clinton administration. As stated the Pubs tried to rein in the GSE’s but were rejected by Frank & Co.
The Pubs had their hands in various housing bubble causes too (e.g. the Ownership Society initiatives) - but the GSE’s hand in it was pushed by the Dems all the way.
Clarity is wonderful to see on a bright Friday
morning, especially when backed by the truth.
Bright Friday morning? Hah! Here in Tucson, it’s been raining cats and dogs and puppies and kittens.
But the good news is that we’ve needed the moisture.
Ummmm… nice try but all three branches of govt were under tight GnOP control during the Great Housing Fraud years. And if your memory conveniently obscures historical fact at the moment, welcome to youtube.
http://www.youtube.com/watch?v=QYvtvcBKgIQ
Hey exeter
I celebrate my 22nd anniversary on Jan. 31.
Same Doug Williams won the Super Bowl.
You don’t have to like it… you don’t even have to acknowledge but the fact that republicans were in full control of all three branches of government during the housing fraud years will never change. It is historical fact.
Don’t have access to YouTube here, will need to check later.
Sorry but I beg to differ. We did have a Republican president, but we had a Dem majority in both the house and the senate for instance when the GSE Act was passed in 1992.
I can state many, many other similar instances of Dems pushing increased GSE involvement in subprime lending. I’d rather not waste my time though, since it’s been discussed ad nauseum before here and in tons of other places, and I’m sure you’d ignore it anyway.
Get off it.
The crime wasn’t committed in 1992. You know exactly when the fraud years were and you know exactly who owned all three branches of government during those years.
“…but we had a Dem majority in both the house and the senate for instance when the GSE Act was passed in 1992.”
Geez, I nearly forgot…the HBB started in 1992, thankxs for that revisionist “TrueDeceiver’s ™” interpretation.
Lets be clear in distortion of time recently past:
Employed Sir Greenisspent:
Cheney-Shrub
Control of Congress 2000-2006:
Cheney-Shrub
Administration responsible for Keeping their eye on the regulators:
Cheney-Shrub
Implementeted policies to protect Corporations over Citizen’s:
Cheney-Shrub
But this is all “hear-say”… there’s isn’t any evidence to prove any of it.
Geez, I nearly forgot…the HBB started in 1992, thankxs for that revisionist “TrueDeceiver’s ™” interpretation.
Yes, because of course the housing bubble was actually caused by the HBB.
You don’t have to like it… you don’t even have to acknowledge but the fact that republicans were in full control of all three branches of government during the housing fraud years will never change. It is historical fact.
“Historical fact”, eh?
Your partisan mind is so permanently set it’s amazing. I honestly can’t say I’ve ever seen someone so blinded by it.
Let’s start with this. Tell me - what exactly do you consider “the housing fraud years”, and why?
Face facts. NOTHING was done to reel in the GSE’s when it is blatantly obvious something could have and should have been done. They owned all three branches and did NOTHING. You can slither around all day and it won’t change those fundamental facts.
A. Yes nothing was done. But it wasn’t for lack of attempts - the Bush II admin did attempt to reel them in, primarily triggered by the accounting irregularities, but were pushed back by Frank & Co. (Dems)
B. The point is there should have been no need to reel them in, because they should never have been given the power and scope that they were given. This happened by various legislation in the 1990’s. There was only one period during all this in the 1990’s when all 3 branches were of the same party - the 103rd congress in 1993-1994 when all 3 were Dem.
I’m generally non-partisan, and blame both Dems and Pubs for the bubble itself (there are about 20 different causes). But when it comes to the GSE-related portion of the causes - the blame falls squarely on the Dems.
This is a historical fact.
But when it comes to the GSE-related portion of the causes - the blame falls squarely on the Dems.
On this issue, I would estimate you are about 60% correct.
But that percentage could still override a filibuster…
But that percentage could still override a filibuster…
Apparently only if it’s Republican :-).
“A. Yes nothing was done. But it wasn’t for lack of attempts - the Bush II admin did attempt to reel them in, primarily triggered by the accounting irregularities, but were pushed back by Frank & Co. (Dems)”
Yeah. That minority party really ran the table huh?
Get a grip.
I always viewed GSE’s as the bag holder and not the cause. Just another way for Wall Street CEO’s to off load risk onto US tax payer and other suckers. I found this article in truthout which suggests that they were a smaller component of the market from 2004-2007 vs years prior.
Banks would issue these loans because they knew they could dump them into the secondary market where securitizers would peddle them off to suckers all round the world. This is where Fannie and Freddie came in. They purchased many of the junk mortgages issued by banks in the years 2005 to 2007. According to the Flat-Earthers, this makes Fannie and Freddie the cause of the current crisis.
There is one basic problem with the Flat Earth story: Fannie and Freddie jumped into the junk mortgage market because they were trying to keep pace with the private issuers of mortgage-backed securities. Fannie and Freddie made a conscious decision to dive into the junk in order to protect their market share, which was being seriously eroded by the aggressive tactics of private giants like Citigroup and Merrill Lynch.
The market share of Fannie and Freddie. in the years 2004 to 2007, never came close to its level before the junk market took off. According to data from the Federal Reserve Board, Fannie and Freddie securitized $315.2 billion worth of mortgages in 2002, accounting for 50.1 percent of the new mortgage debt that year. In 2006, they securitized $276.0 billion in mortgages, giving them a market share of just 34.8 percent.
Fannie and Freddie’s conduct was despicable. Their decision to dive into the junk certainly contributed to the further expansion of the bubble and worsened the pain from its eventual collapse. However, they were followers, not leaders. They didn’t cause the bubble and the subprime craziness. This train had already left the station. Fannie and Freddie’s crime was going along for the ride.
Fannie and Freddie could have instead played a positive role in this crisis. Suppose in 2004 or 2005 one of these mortgage giants issued a statement warning of the dangerous over-valuation in many housing markets across the country. Instead of easing mortgage standards, imagine that Fannie or Freddie announced that it was tightening its rules for mortgages in the most over-valued markets, requiring nonborrowed down payments of 20 percent, or even 30 percent, in order to protect against anticipated price declines.
This action would have produced howls of outrage from builders, realtors, and other big beneficiaries of the housing bubble. It also would have led to headlines and possibly some serious analysis of the evidence for a housing bubble. It may have saved the country from much of the pain it is now suffering.
But this sort of step would have required real courage and leadership, traits rarely found in high positions in Washington, or on Wall Street. Fannie and Freddie should be blamed for following the herd off the cliff. They stand out as especially big sheep.
What he said………this was a “equal-opportunity” Charlie-Foxtrot.
And now our economy is Tango-Uniform.
An excellent post, measton. Thanks for taking the time.
I equate much of what has happened in the housing market during the past 10-20 years to a lapse of ethics - or the meteoric rise of moral relativism. Take your pick. It’s the bane of much of what is wrong in our society.
Whatever Fannie and Freddie did in 2003, at the time there was NO guaranteed government backing. They were still largely a private company with government backing that was only “implied.” As recently as 2007(?), we were all sitting here wondering if the gov was going to confirm that guarantee, or pull its backing and let F&F fail. F&F knew what they were doing, right? And Greenspan told us everything was OK, go out and get an ARM, right? Maybe that’s why the Dems allowed F&F to go on.
In the end, they bailed out F&F anyway.
We should keep this context in mind.
This might be the video that was mentioned earlier in the thread. There are others that might be better, but this has footage from the hearing to rein in Fan/Fred in 2004.
http://www.youtube.com/watch?v=_MGT_cSi7Rs
Dodd, Obama, and Kerry were the #1-3 recipients of money from Fannie and Freddie for the ‘HBB’ years. Pretty amazing when you consider how few years Obama was in office … but keep trying to blame the GOP.
All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Name Office State Party Grand Total Total from
PACs Total from
Individuals
Dodd, Christopher J S CT D $165,400 $48,500 $116,900
Obama, Barack S IL D $126,349 $6,000 $120,349
Kerry, John S MA D $111,000 $2,000 $109,000
Hmm, how was that possible when they controlled both houses for over 10 years? (Republican Revolution or “Revolution of ‘94″)
So are you saying they were ineffective or that they were dirty as well? Because I can’t find any other explanation.
” So far, the White House has resisted calls by Republicans to bring Fannie’s and Freddie’s obligations onto the government’s books”
Nah, learn from the ostrich, it hides its head in the sand when in danger and gets ready to “absorb unlimited losses”.
…Pogo, “We have seen the Enemy and it it Houses.”
Danged Weapons of Mass Distruction !
Buffett Plagiarist!
It would be hard to justify forcing banks to put their SIVs on their books, if the fed gov won’t do the same.
Bingo.
I am not an accountant, but I play one at work sometimes. You can’t cook the books and expect to make good financial decisions at the same time. You just can’t.
I don’t much care what role the GSE’s played in creating the subprime market. If they hadn’t been there, the private subprime originators would just have done more of it. I care that I am now on the hook for these bad loans, though I’m not sure I’m not on the hook for the other ones as well through the Fed purchases of MBS. But none of that really matters when it comes to this narrow item. When you have effectively guaranteed bad loans, you have to put a provision on your books for covering them. You just do. If you don’t want to put the provision on your books, you have to disavow the guarantee of the bad loans. Pick one. You can’t have both.
What if cooking the books IS a good financial decision? At least, it was a good financial decision for CEO’s who like bonuses andhigh lifestyles.
True. But it’s also good for government to do the same. It’s how they keep the minons in line, all the while taking their money to line their pockets.
So what’s the solution?
You can’t have both?
GS, AIG, et al just proved that wronged didn’t they?
Why is a decision in this matter even offered? Either the government’s obligation exists or it doesn’t. If the obligation exists then it it belongs on the government’s books.
I would agree, though it seems to be a difficult line to draw.
Since we have a government obligation to bail out GM, should GM now be a government agency? Same for AIG, for Chrysler, etc.
The GSE’s are of course different in that they were actually created by government mandate - but isn’t this mostly a difference of semantics? They’re still officially a private company - traded on the stock exchanges no less, providing a service, with earnings etc.
(Bottom line IMO is that we just shouldn’t bail them out at all.)
I’d argue that AIG, GM, etc are different. If GM takes more losses, then the government would lose only it’s investment. There is no agreement for another bailout.
The GSE’s however have a full gaurantee for unlimited funding. REALLY STUPID IDEA.
There is no agreement for another bailout.
The fact that there was no agreement in 2007 for a bailout didn’t stop the bailouts from happening in 2008 & 2009. No agreement required.
I would much rather explicit bailout guarantee - being transparent and negotiated beforehand - than implicit bailout guarantees.
“The fact that there was no agreement in 2007 for a bailout didn’t stop the bailouts from happening in 2008 & 2009. No agreement required.”
Agreed, but it certainly wouldn’t have made sense for there to be anything in the govt’s financial statements providing for it in 2007.
But there are explicit bailout guarantees for the GSEs, so it’s got to be accounted for.
I don’t understand why the same people who say “No Bailouts!” are often the same people who decry any reform that hurts the Dow and, therefore, their pocketbook (unless they are happy stuffing mattresses).
The whole reason for the bailouts was to save the Dow, and the only “good” job Geithner has done is to reinflate the bubble.
America will have to suck it up and accept that if we are to have real and needed reform, then we are in for some really painful times ahead. It will probably last for years.
I’m completely against bailouts and would love to see the Dow at half its current level, which is about where it belongs on a historical valuation basis.
sounds to me like the proposal is just a bunch of political garbage..
———
The CBO pegged the government’s total costs of bailing out the two companies at $291…
[snip]
..the White House has taken a different tack. It only projects costs equal to the actual cash infusions.. [snip] That tab is currently at $112 billion.
“Conservatorship”, which the current status, is considered “temporary”.
…some Republicans say the arrangement has become more than temporary.
Calling it… the “effective nationalization” of the companies, which “should absolutely be reflected on the balance sheet of the U.S. Treasury.”
http://online.wsj.com/article/SB10001424052748704381604575005242824023092.html?mod=WSJ_business_whatsNews
———-
So, I think it’s just Republicans wanting to inflate the deficit (or reflect it’s true size, depending on one’s political affiliations). The White House, of course, wants to avoid that.
Combotechie,
Exactly, are we (the government) on the hook or not?
This applies to all quasi-governmental operations, all welfare, Social Security, and all government loans to themselves.
In other words, we should be able to document what our “true” unfunded liabilites are, not what some accounting rule says they are.
“The Congressional Budget Office has reiterated its support for bringing the companies onto the federal budget—and onto the government books—which would effectively mean accounting for their operations in the federal budget as if they were federal agencies.”
How could you account for the operation of agencies which have been effectively turned into fiscal black holes, through elimination of their $400 bn credit line cap? I suppose you could just see how much beyond $400 bn their expenditures went. Would that be hard for rocket-scientist financiers to track?
Obama Proposal May Force JPMorgan, Goldman to Sell Buyout Units.
Jan. 22 (Bloomberg) — JPMorgan Chase & Co. and Goldman Sachs Group Inc. may have to sell some private-equity businesses and stop investing in buyouts under a proposal by President Barack Obama to limit bets made by banks with their own capital.
Obama asked Congress yesterday to prohibit banks from owning or making investments in private-equity and hedge funds that “are unrelated to serving customers.” While financial institutions could still manage the assets on behalf of clients, they wouldn’t be able to invest in their own funds or those run by firms such as Blackstone Group LP and KKR & Co.
The proposed rules may alter Wall Street’s role in private equity, where banks and investors commit money to buy companies, real estate and other assets. Banks also invest with buyout firms to help deepen their lending relationships.
The proposal is already tightening lending, which will cause more businesses to fail and increase the unemployement rate. Not to mention it caused the the Country’s stake in Citi to lose over 1.5 billion overnight and our Country’s 401ks lose much much more. It was poorly thought out and vague. A childish attempt by someone that doesn’t understand economics to lash out angrily and uncontrollably as a result of the Massachusetts Senate loss. His butt needs a spanking. His dirty politics and lack of knowledge will undoubtedly send us spiraling back into severe crisis mode. And many of us thought Bush was bad. . . he is about 1000x more unethical and confused with a disgusting degree of arrogance. Smart people regulate when bubbles begin to form, not after they burst. The government had the tools to regulate at the beginning of this mess (i.e., housing appreciation in excess of 10%) but did nothing. Next time he is about to have a temper tantrum, someone needs to lock him in a closet for all of our sakes.
hehe… i like your passion.
This administration sees the banks healing a little bit and think the time is ripe do some political “profit taking”.. and chop 2 or 3 hundred points off the DJIA.. oops! Oh well, who cares?
umm.. every one of us should care.
Why should we assume that a higher DJIA is a priori a good thing? Just like Real Estate, every extra dollar that a stock sells for, is an extra dollar FROM the buyer TO the seller. Certainly, many of us here think that both stocks and RE are STILL overpriced.
I care that politicians pop off without considering the consequences of their words, the latest example of which is the stock market’s negative reaction to BO’s threats to micromanage banks.
What’s next.. is some Senator gonna announce to the world that a bank is in danger of collapsing and cause a run on and collapse of that bank?
Oh.. wait a minute.. i think that already happened. Schumer.. IndyMac.
Politicians don’t give a rat’s ass. Should anyone care?
I guess it depends on your perspective.
Suppose the Feds said that they were going to totally deregulate the banking industry, and were prepared to back any and all losses with taxpayer money. Would the gains in their stock price be legitimate?
Any one with a lick of common sense would know that after Wall Street/IBs made one plus trllion dollars in taxpayer money go “poof”, that some kind of increased regulation was a given……so prospective stockholders should have been “pricing it in”.
Why should we assume that a higher DJIA is a priori a good thing?
Great question.
A high Dow average has become an article of faith for a wide swath of the population, including many who don’t know a common stock from shinola. In reality, it’s a very limited snapshot in time, but it makes 24-hour news life easier.
I would welcome a lower DJIA/S&P 500. I’m afraid to put any new funds into stocks at these valuations, because I think the shares are overpriced and due for a correction. If the government’s actions help to pop the bubble, then I say great.
I agree that the timing was pure politics. But do you honestly place our “stake in Citi” as more important than the prevention of the crap that got us here? This is the first time that Barack has shown any inclination to fix the system.
http://dealbook.blogs.nytimes.com/2010/01/22/us-takes-a-15-billion-hit-as-citi-drops/?partner=yahoofinance
Citi was just an example which evidenced a direct link. Our whole economy is in jeopardy with massive banking regulation and governmental controls. All of this would have been avoided by stricter controls on mortgage lending. This focus on hedging and secondary market transactions is misplaced. True they create systemic problems during massive deleveraging, but I prefer we deal at the source, rather than dealing with the side effects. Obama doesn’t want to confront the real issue that people should have never been able to get highly leveraged mortgages in the first place. Hell he represented ACORN! He instead wants to create strawmen to knock down and ignite class warfare for his own purposes, throwing away the Constitution and the best interests of our Country in the process. The truth is he needs to point the finger at main street, not wall street, and tell them they need to start living within their means and bearing the burdens of not doing so. He is not man enough to do so and is too busy trying to make a name for himself as the Chosen One. We cannot survive on green jobs. That is silly. The only real economy we had was finance based. Throw that out and we all begin farming?
“but I prefer we deal at the source”
Amen. How long have I been saying that? Had it not been for ex-con’s w/ zero qualifications brow beating appraisewhores into hitting the number while hard selling blue collar/ESL ‘marks’ ( would Credit Default Swaps have even been necessary )
Trip on ‘that’ for awhile!
Obama on May 22, 2009, talking about the new credit card regulations:
“So we’re not going to give people a free pass; we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives.”
Politicians always pay lipservice to Main Street.
Natalie, you honestly think that investment banks and hedge funds shouldn’t be regulated? After what has happened?
but I prefer we deal at the source
Isn’t the source of the massive deleveaging problem…massive leveraging in the first place? Who was regulating while this was going on? Your typical ACORN bogeyman?
Don’t blame Joe Six Pack. He was recruited into this war no differently than any Hession who joins because he’s starving.
And the REAL source was that these damn oligarch banks were monopolies and should have been broken up as such. Then they could all have failed separately without causing systemic ripples.
When depositary institutions are able to use deposits (which are FDIC insured) and 0% loans from the Fed to trade on their own accounts and make more money than they would making prudent loans to Main Street, they always will. There are plenty of people who are willing to put up their own capital for that sort of proprietary trading. Let them. If you want to live in the guaranteed world of FDIC and free money from the Fed, you are in the lending business, not the trading business. Go hire some people who have the math skills and the good judgement to recognize a good business plan, and make loans.
I actually believe they should. However, it should be a long carefully deliberated process with input from people that know what they are talking about, not one brought hastily to further someone’s political agenda. Let the economy heal a bit and think about it long and hard once unemployement is below 8%, not at over 10%. Bailout -takeover - charge - tax - bailout - takeover . . is lunancy. Through his entire political career self-interest, backstabbing, bullying and acting out in anger have been his trademarks. I want intelligent legislation, not just “any” legislation. It also bothers me he is focusing on the backside rather than the making of the initial loan. This of course is for political reasons and does not make sense otherwise.
Natalie, Obama has no choice but to focus on the backside. The initial loans have already been made. Cutting up the credit card in January doesn’t make the balance from Christmas go away.
At the same time, future loans are being tightened, at least a little.
I actually believe they should. However, it should be a long carefully deliberated process with input from people that know what they are talking about, not one brought hastily to further someone’s political agenda.
If you believe the Washington Post article this morning, this is an idea that Volcker has been studying and speaking about for a long time. It’s only now that it’s being seriously considered over Geithner’s and Wall St. objections.
The trades on those debts have been done as well. Im still seeing loans made at more than 2.5x gross income and less than 20% down.
“focusing on the backside rather than the making of the initial loan”
Yeah, Joe Sixpack was considered a shrewd, slimey, money grubbing MEW-aholic for years on this very blog. Now they are all innocents.
I can’t for the life of me understand how this somehow became another chicken or the egg argument?
“Cutting up the credit card in January” LOL!
No, it certainly won’t make anything “go away”. Oxide, all people like Natalie and myself are trying to share is that, until we get a handle on the origination process, it will continue to be nothing more than garbage in/garbage out.
It will be hard to convince that camp the measures currently being taken are anything more than token/pol. jockeying without serious revision on Main Street. If you’ll recall, about a year ago today, the President implored rank & file Americans to “put aside childish things”. He also emphasized that we -all- had a hand in this.
My guess is they have waited on tougher regulations to allow Wall Street and banks the chance to have secondary offerings and aquire more capital. Thus the market has been pumped up. I think Wells Fargo was the most recent. Now that many have received massive capital injections they feel they can start to put the screws to the banks. Of course I could be wrong and maybe this is all lip service, we’ll see if they follow through.
Our whole economy is in jeopardy with massive banking regulation and governmental controls. All of this would have been avoided by stricter controls…. Natalie
A instant classic!
Our whole economy is in jeopardy with massive banking regulation and governmental controls. All of this would have been avoided by stricter controls…. Natalie
Sorry! I was so excited…
AAN instant classic!Rio - you have to understand that the nature of the regulation and controls matter. It is not really a choice of no controls are complete control. The world is a little more complex than that. I am opposed to what is proposed, not all proposals.
“This focus on hedging and secondary market transactions is misplaced. True they create systemic problems during massive deleveraging, but I prefer we deal at the source, rather than dealing with the side effects.”
This isn’t an either/or situation. Better underwriting standards should be implemented. Limiting bank leverage should be implemented. Preventing banks from speculating with deposits should be implemented. Preventing banks from becoming TBTF should be implemented.
Ask any engineer. Having only one safety mechanism on a complex system is foolish.
I dont think it would have been bothered me as much if it came at a different time. I think it is too early and was brought at this time for outside reasons. After we spent all this money on the bailouts why dont we let things heal a bit before we talk about major disruptions. We are not on firm enough footing to handle many shocks.
“It also bothers me he is focusing on the backside rather than the making of the initial loan.”
If banks believe they are going to receive government support rather than allowed to fail after making bad loans, they will continue making bad loans. Likewise, for making bad trades.
Moreover, it was implicit government guarantees that encouraged TBTF institutions to fund bad lending practices via subprime lending channels (New Century etc), warehouse and package said loans, and then place bets on the outcome of said loans.
I dont think it would have been bothered me as much if it came at a different time. I think it is too early and was brought at this time for outside reasons.
Assuming there is no repeat collapse in the near future (which is a big assumption, IMHO), the political willpower will simply not exist if they wait much longer. No one will ever agree to these restrictions when they’ve forgotten where we were.
Yeah, Joe Sixpack was considered a shrewd, slimey, money grubbing MEW-aholic for years on this very blog. Now they are all innocents.
I don’t see how this became an either/or argument. I thought a consensus had long ago emerged on this blog that both the lenders and the borrowers behaved like complete idiots.
However, if you lend money to someone who doesn’t pay it back, and you did not demand ample collateral (20% downpayment, for example) to shield you against loss, then who’s the bigger moron?
The world is a little more complex than that. I am opposed to what is proposed, not all proposals.
Natalie,
It’s complicated, but I understand.
But right now, I suppose I need to disclose that I’m predisposed (because we got hosed) to be opposed to opposition to proposals that propose reining in the previously unopposed banks.
“Our whole economy is in jeopardy with massive banking regulation and governmental controls.”
Yeah cause we all know the bankers are paragons of honesty, don’t we?
“All of this would have been avoided by stricter controls on mortgage lending.”
Yes and no. It was the insatiable greed for CDOs which motivated, drove and powered the lenders to harvest as many mortgages as they could because hey! they weren’t on the hook for them once they were sold, were they? And neither were the big boys who in turn passed them on down the line.
You know, those NON regulated CDOs.
“It also bothers me he is focusing on the backside rather than the making of the initial loan.”
It ought to because you have it backwards.
The demand for CDOs was what drove the entire corrupt process.
The truth is he needs to point the finger at main street, not wall street,
not wall street,
That’s weirdly amusing.
I may be a little bit odd in this regard but I don’t blame investment bankers for being greedy as much as I do buyer’s not doing their homework and using common sense when making one of the biggest purchases of their life. The first I always expected. The second I find alarming.
“The first I always expected. The second I find alarming”
Kind of hard to refute.
Al,
Thanks for placing “better underwriting standards” 1st! And you’re right, my house has more than (1) circuit breaker. I ‘think’ it does?
I may be a little bit odd in this regard but I don’t blame investment bankers for being greedy as much as I do buyer’s not doing their homework and using common sense when making one of the biggest purchases of their life.
Do you also blame investment bankers for being inept, unwise, not using common sense, and outright lying, or do they get a pass on those particular sins?
“Housing prices will go up forever”? “Trust us, we’re financial professionals”? “Derivatives are the New Financial Frontier”? “30-to1 leveraging …Pffft?” — you’ll ignore all that and more while blaming the Average Joe for buying the hokum that the financial “experts” were peddling with such certainty from the great heights of Holy Mount Wall Street?
“The first I always expected. The second I find alarming”
Kind of hard to refute.
Natalie and DinOr,
It is not in the least hard to refute when one considers the context and the historical time. Human behavior was criminally manipulated by Wall Street. I expect Wall Street to be money grubbers but not criminal.
My more comprehensive refute has not posted yet.
And criminal they were. Selling what they knew was bad debt and passing it off as AAA.
Nope, no fraud there.
Sorry Natalie, but since when does the buyer have the final say one their credit worthiness to approve their loan?
Not that the buyers didn’t know they were in over their heads, but how did they have the power to approve the loans?
The loan approval processs is to protect the banks not the borrower.
Exactly! So why would the banks not perform due diligence and MAKE SURE the borrowers were qualified?
“…Smart people regulate when bubbles begin to form, not after they burst. The government had the tools to regulate at the beginning of this mess (i.e., housing appreciation in excess of 10%) but did nothing”
Is the answer to this question: Cheney-Shrub or Lil’ Opie? I’m as confused a baby in a topless bar…
Yours is precisely the reaction the bankers want to evoke. Sell!
And yours is exactly the kind that Obama wants to evoke. Loss of focus on his poor handling of health care reform and our troops, and feeling good about hurting the evil bogeyman rather than having people that took on too much debt admitting it was their own fault. Get ‘em Obama you are such a great man. Oh sorry, I mean deity.
Natalie,
Unfortunately for me, I have to be consistent here. When you look at the disparity in the way mutual fund companies are treated and the way that hedge funds ‘operate’ there IS need to get these clowns on a leash.
I saw a glimmer of hope in ‘03 when Elliot Spitzer got some reigns on what was described as “the largest skimming operation in the world” ( namely fees )
Yet HF’s ( and their schmoozy banking former co-workers ) have run an unregulated circus. Regulatory “shopping” has just got to stop.
“The only real economy we had was finance based.”
You haven’t got a clue.
Could it be perhaps Natalie… that your Cheney-Shrub 201K or your Shiti stock took a hit yesterday?
Natalie, ma’am.
Would you like a cup of coffee? You’re welcome anytime at our place here on the river. It would be a real pleasure talking with someone who has your straight to the
heart thinking.
Rancher
you and
Yeah, the Dittohead Talking Point Café. Logical fallacies on tap. The voters aren’t fooled. They can’t articulate exactly how these talking points are misleading, but they know it’s BS.
I admit, I do have an interest in the strength of the financials, but I think we all do one way or another.
“I admit, I do have an interest in the strength of the financials, but I think we all do one way or another.”
So, which is it? Prop up financials who, in a free-market, wouldn’t have made it? Or, try to rectify the situation thereby leading to more unemployment and losses in the stock market? I don’t think you can have both.
The American voter has spoken that they don’t approve of the bailouts. Are they now prepared to deal with the consequences that occur from lack of support?
BO, or any other candidate that would have won in 2008, is purely in a lose-lose situation, IMO. He should have demanded a recount.
I admit, I do have an interest in the strength of the financials, but I think we all do one way or another.
Natalie the financial leaders are not simply “boogymen” They are criminals that need to be put on a leash. We can’t afford too big to fail.
I was reading an article the other day about Wall Street hiring firms to put out propaganda on the web, I just have to ask do you work for one of these??
I admit, I do have an interest in the strength of the financials, but I think we all do one way or another.
I suspect Natalie that you went long in the financials…after the hit that they took when the supposed Antichrist announced that he was going to take on the Banking Industry, that seemed to really get your knickers bunched.
I’m sure that even though you will never support anything he does (even listening to Volcker), you would at least prefer he go back to keeping the hoi polloi in check by keeping Geithner and shilling for Wall Street.
“He should have demanded a recount” LOL!
( I know I… would )
So Natalie’s solution is to basically “let byegones be byegones”.
Whatever. My solution would be more along the line of some old fashioned, Old Testament retribution.
The problem is that Main Street, whatever it’s contributions to this problem, is paying for it out the nose now. I wasn’t involved, but I’m personally paying the price.
The guys that run Wall Street, however, are back to business as usual.
Yeah, Joe Sixpack was considered a shrewd, slimey, money grubbing MEW-aholic for years on this very blog. Now they are all innocents. I can’t for the life of me understand how this somehow became another chicken or the egg argument?
I’ve never considered us innocents nor us slimy as a whole. Some were culpable too.
However I am more forgiving towards the people’s behavior than I am towards the financial/industrial complex’s actions because the banksters put Americans in a position where they knew they could take advantage of us. The basic instinct of survival was manipulated for the gain of a few. Never had such a plot been unleashed on the American people, and it was so counter-intuitive that most still don’t understand what happened.
We have to look at American’s behavior in the context of the period of time where jobs, pensions and access to health insurance had been under intense pressure since about 1973. It was a time when wages were falling and costs were rising.
On top of this we were incessantly and aggressively fed the free-market, greed is good, everyone for themselves dogma. The pension to 401K system change is a classic example.
It was every man for himself staring at a rising stock market inspiring magazines like Barron’s to have covers like “ARE YOU RICH YET?” Money Mag’s would feature couples getting wealthy by stocks. Down deep, many Americans felt they had to jump on this bandwagon to protect their family’s security.
When stocks crashed the PTB fiendishly spawned an even more diabolical scheme that fed on American’s ingrained adulation of the home…the “American Dream”. Some bought for greed and some were criminal however most people just wanted a place to live and to have an investment that could aid them when they got old as pensions used to do. This is understandable given our frayed safety net and the fact our stocks had been hammered.
In hindsight I’m not sure that most should have known it was a bubble because there had never been a period in American history where our government and Wall Street colluded so blatantly and nefariously in a market of such a basic need as housing. The collusion’s goal was for two purposes, to prop up a sick economy that had been gutted like a fish from globalization and to line Wall Street’s pockets.
Human behavior was manipulated. We have been conditioned and required to behave like a dog who chases his own tail. We are taught to spend, not save, and that it’s every man for himself in an economy that is sweeping us down a dangerous current. We were then sold, with zero down and low interest, the rope that was thought would save us.
Most Americans had no idea it would end up being the rope that hung us.
Rio, don’t forget that banks had spent DECADES being responsible lenders. How many of our parents or grandparents defaulted on a mortgage, short of a huge health problem or scandalous divorce? Very few — because they bankers only lent to borrowers whose house payment was in line with their income. Bankers had a down payment to prove it.
So when the young couple goes to the banker and asks for a mortgage, like any young couple in the past 60 years, and the banker says yes, of course it’s the couple’s instinct to trust the banker. At least for first-time home buyers. HELOC’s and trade-ups are on their own.
Rio, don’t forget that banks had spent DECADES being responsible lenders
bankers only lent to borrowers whose house payment was in line with their income
So when the young couple goes to the banker… of course it’s the couple’s instinct to trust the banker.
Thank you. Totally true and part of what I meant when I said “there had never been a period in American history where our government and Wall Street colluded so blatantly” I should have said Wall Street AND bankers but I’m in the habit of considering them joined.
As you say, bankers were known for decades to err on the side of prudence.
That is a key point in understanding the debacle.
Rio/oxide,
That is precisely the point I was making earlier. They were leaning on so much Tradition and stuffy banker image that of COURSE when John & Jill newlywed get their loan rubber stamped by some MB ( whom they ‘perceive’ to be of that caliber, well it must be alright then! )
Like the Comedy Central gal that said “They approved me for a $750k loan, ( I assume they knew what they were doing ) I mean they had pens and calculators on their desk and everything?”
Let’s start from the top shall we.
1. Banks aren’t lending b/c it is easier to make money trading securities on the taxpayers dime. Plus, there is overcapacity in a lot of things.
2. The government’s stake in Citi is not an investment.
3. The proposal is pretty specific and clear. There will be attempts to water it down, however.
4. Agree Mr. O doesn’t understand economics or else he wouldn’t surround himself with Geithner and Bernanke. The source of the proposal was Mr. Volcker, however.
5. The fed is in the business of creating bubbles to make its members money. Why would it impose regulation to hinder its effort?
“The government’s stake in Citi is not an investment.” The adminstration has stated many times that it fully expects its principal plus back. Also, through stock ownership it shares the risk/reward of gain/loss in Citi stock price.
it caused the the Country’s stake in Citi to lose over 1.5 billion overnight and our Country’s 401ks lose much much more. It was poorly thought out and vague. A childish attempt by someone that doesn’t understand economics to lash out angrily and uncontrollably as a result of the Massachusetts Senate loss.
So which way do you want it Natalie?
a) bailouts and stimulus, which have helped reinflate the Dow
or
b) bank taxes, accountability, and regulation, which will hurt the Dow
You simply cannot have both. I would love to see an argument, any argument, that says that the zombie businesses will get shaken out of the economy, while the Dow remains high and Americans can avoid economic pain.
That’s like saying you can have the body of a professional athlete by drinking Slimfast without the pain and risk of injury or an athletic lifestyle.
LOL, NSO. See my post above. You and I are on the same page…
You’re right, we are in total agreement.
I don’t understand the shills who think we should ignore the growing numbers of zombie businesses with fake financials in order to keep the Dow inflated for the sake of their 401Ks.
Screw that…park your money in a mattess, honey, if you can’t handle being a real capitalist investing in real businesses.
I actually supported limited targeted bailouts and stimulus, as control and regulation to some extent. I disagree that with the for or against argument. The details and timing matter. Both the details and timing bother me at this point.
Yes Natalie let’s let the banks continue to leverage to their eyeballs and guarantee that they will get bailed out. The bubble burst prior to him taking office. Personally I think he should have been doing this stuff sooner. I think GS and other large institutions should have been allowed to fail and stock holders and bond holders take it in the shorts. The gov could have taken them over and then sold off the remaining assets.
measton,
That is hardly what Natalie was implying and you know it. And forgive me for not considering “Truthout” as a credible source?
Naturally they’re not the only ones ‘discovering’ bubblicious quotes from 2001 and re-printing them in 2010.
Most Americans don’t even have a 401k. The last thing the administration needs to be concerned with is the scam market.
“The truth is he needs to point the finger at main street, not wall street, and tell them they need to start living within their means and bearing the burdens of not doing so.”
This is a hysterical comment. Main street just propped up the entire financial industry, and are bearing the heaviest burden of this crisis, yet you think they still need to be reprimanded? I have yet to see a banker who’s hurting. Wake up, Natalie.
invest in their own funds
Could the business-minded folks please elaborate on what is meant by “funds” and “money?” What is a fund to a bank? It’s not an earned physical asset, it’s just a promise from someone to pay money back over 30 years or so, or some derivative of that promise. In a way, a bank can invent its own money just as surely as the Fed.
Angelo Mozilo: Halo señor, wanna borrow $750K?
Strawberry picker: Ah si. I “promise” to pay it back. [actually I just want to flip in two years, but Angelo doesn't need to know that.]
Angel Mozilo: Woo-hoo! I now have “money/assets/funds” of $1.5 mil or so. I’m gonna buy me a hedge fund and take a little skim off just for me me me me. And, I’ll do the same tomorrow with a lettuce-picker. Maybe I can invent $2 mil from him.”
And then the gov back up the invented money with more invented money, and you guys think this shouldn’t be regulated? And that oh god the bank can’t lend and more businesses will fail and oh god forbid we might lose more jobs?
You know, I’m REALLY tired of the conservatives holding our jobs and FICO’s hostage to extort more fake money out of Main Street. IMO it’s better to let a business fail now, than kick the can and let it fail even worse later… just like any FB. If my taxes are going to pay for something, I’d rather it go directly to the unemployed in the form of UE and Cobra subsidies, than through the middleman banks, who take a lot more skim then they deserve to.
oxide,
Strangely, I’m in your corner on this one! Yet at it’s heart was a realtwhore/loan peddler/affinity fraud “specialist” that instigated the whole MBS securitization debacle.
True, Country-fried installed a “desktop underwriter” to provide con-men employees w/ all the tools they’d ever need to ‘tweak’ income and whatever they needed to get a “Yes!” from the system, but it all started w/ a scumbag in Gilroy, CA.
AFAIK, they still haven’t been able to find her?
I have to disagree that it “started” with the strawberry picker.
Say, for example, that it DID start on the level of the strawberry picker. If the secondary market infrastructure (with the attendant mortgage broker and his toolbox ) had not already been in place, then somebody at the bank would have said NO. That loan would have STOPPED at the level of the strawberry picker.* Or at least, somebody a couple levels up at the bank would have said NO. Instead, it was YES [skim], YES [skim], YES [skim], YES [skim], YES [skim]…all the way up to Alan Greenspan [skum]. It could have stopped at any one of those YES [skim]s. But it didn’t. Therefore, each one of those YES [skim]s deserves blame.
————
*It’s probable that the strawberry picker would have never applied for the loan in the first place. It was only after “everybody else is getting one” that the subprimes jumped into the pit.
oxide,
I’m the first to admit that a lot of what allowed for the Securitization Pipeline to become hopelessly polluted was much winking and nodding.
Since ( well up until recently? ) having a mortgage was almost as sacred as… your marriage or your faith, it made it awfully easy to lean on that tradition and think to one’s self, “these are 30 year commitments, no one f-a-l-s-i-f-y something as “sacred” as ‘that’ now would they?”
I’m the first to admit that a lot of what allowed for the Securitization Pipeline to become hopelessly polluted was much winking and nodding.
Securitization itself is a recipe for polluted loans. Why have well structured loans when you can sell them at full price to suckers via MBS and bought and paid for rating agencies.
“Securitzation itself”
Right, and one needn’t take the equation out one-step-further to know that will end badly. Nor should anyone misconstrue that I think berry-pickers were any ‘less’ victims than the bal. of the country!
To think they held the level of sophistication to even process what they were spoon-fed at the hands of the abuser is absurd. But the 1st “Yes [skim]” should have been nipped in the bud before it was fed into the pipeline.
Where were the STATE regulators in all of this? Hey, a lot of hands touched this before it got anywhere’s near… Lower Manhattan.
And remember, they didn’t start out with “strawberry picker loans”. Those loans started happening when they ran out of J6Ps who could actually pay back their mortgages.
That’s why Ditto-heads blaming “subprime” borrowers was such a joke. Anyone with any sense knows that those loans wouldn’t have happened, if Wall Street and the IBs didn’t want them to happen. They started happening, because Wall Street figured out how they could make money on it, whether they blew up in the country’s face or not.
They started happening, because Wall Street figured out how they could make money on it, whether they blew up in the country’s face or not.
Which makes WS’s occasional appeals to patriotism appear all the more laughable.
Where were the STATE regulators in all of this?
AS I recall the federal government squelched state investigations and attempts to clamp down on fraudulant lending.
measton,
Mmmmm, not that “I” recall. If you can perhaps provide a link or industry/regulator quote I’d be more inclined to sign off on that.
Be that as it may, THEY were the First Line of Defense. And they utterly failed! You know, many many times in my life I’ve been told by supervisors etc. that “This is the -only- thing that matters and the rest is just so much BS”.
Hell, we all have. But even a child knows when someone is abusing their authority and doing something inappropriate or unwelcome. We feign reverence, peer hard at their handwritten memo, and then go -right- back to doing what we knew all along was right. What’s sad, is there wasn’t even a windfall for these clowns?
AS I recall the federal government squelched state investigations and attempts to clamp down on fraudulant lending.
That is true. But they were squelched.
In fairness, several state regulators did try to crack down, but they were preempted in several cases by federal law. Still, as a group, one could have hoped for a more vigorous response to outrageous lending practices that were being carried through on a massive scale and hitting the most disadvantaged segments of society.
http://www.pbs.org/now/shows/412/housing-recession.html
And how many state regulators saw their neighbors shot down by the FEDS and then decided it was a waste of time going after this type of crime??
If and that’s a big IF, team Barry can some how put the screws to the mega banksters he will score huge points with the voting public. It is possible that someone in this administration actually started paying attention the public sentiment. People of all colors shapes and sizes have had enough of getting screwed by the to big to fails. Tired of paying for others mistakes, time and time again. Tired of playing by the rules while others do not. We will see, action speaks louder than words. I “hope” to be surprised this time, but don’t count on it.
Goldman would be hit hardest by prop-trading limits
Morgan Stanley, J.P. Morgan, B. of A., Citi would also be affected, analysts say
SAN FRANCISCO (MarketWatch) — Goldman Sachs Group would be the hardest hit if White House proposals to limit so-called proprietary trading become law, analysts said Thursday.
On a day when Goldman reported a full-year profit of more than $13 billion, President Barack Obama proposed that banks and financial institutions that contain banks should be banned from running proprietary trading operations unrelated to serving customers.
News Hub: White House Outlines Bank Restrictions
Under the White House’s proposed bank regulations, banks will be forced to choose between taking deposits and trading. The News Hub weighs in on what this means for the future of banking.
Obama also proposed that banks should not be able to own, invest in or sponsor hedge funds and private-equity funds.
The announcement shocked some banking analysts, making them more concerned about regulatory risk in the industry.
I don’t see any evidence of this overwhelming negative public sentiment you’re referring to. Where is it besides an occasional one liner by Leno, TV news talking heads and in the blogosphere?
“I don’t see any evidence of this overwhelming negative public sentiment you’re referring to”.
In my admittedly small circle of mostly self employed middle to upper middle class people, I see and hear PLENTY of negative sentiment toward the bailouts and gubmint take overs. On our local level ‘politics’ it is a consistent conversation. So what I am seeing is a negative bias toward the mega banks etc…
I can only refer to my observations, if you don’t see it then so be it.
While I don’t see negative sentiment on the street, something surely has goosed Obama.. My guess is it’s financial news commentary in the MSM.
Sure, BO needs to address his critics. Unfortunately, he’s addressing them by surrendering to them… by withdrawing from supporting the financial system, risking all that has been invested in recovery. He’s retreating. He’s working against his original plan.
His original plan was to give money to banks, and they would lend it.
The banks took the money and speculated with it.
Can you see a reason why BO would change things up?
Al,
First of all, TARP funds are a loan, and a very expensive one at that. There was no “give”.
Speculated with it? I thought the uproar was about executive pay and bonuses. No?
How are banks speculating while NOT lending? Even if they are “speculating”, that money is being put into circulation, which was the core purpose of the funds.
“TARP funds are a loan”
As I recall these “loans” were made, because the economy would supposedly implode, if they didn’t happen.
Sounds like extortion to me.
We are now in the position where the Main Street economy has imploded anyway, but Wall Street has learned nothing, other than getting a confirmation that they are “too big to fail”.
X-GSfixr,
Supposedly implode?
We have a historical example to go by.. the GDepression.
At that time, the government was limited in how much money it could lend to the failing banks. This limit was imposed by the gold standard. By law, any ‘new’ money had to be backed by some gold.. I think 10% was the figure.
When the govt reached the limit and could produce no more new money, ten thousand banks failed and.. well.. all the rest happened.
I’m always surprised at how many people would open the door to another GD for the sake of .. of what? What is worth it?
“How are banks speculating while NOT lending? ”
Instead of lending money to individuals/businesses, they’re speculating on stocks, bonds and commodities. The purpose was to lend, not merely get the money into circulation.
“Speculated with it? I thought the uproar was about executive pay and bonuses. No?”
That is a problem too, but I’d thought I’d let someone else bring that up.
“First of all, TARP funds are a loan, and a very expensive one at that. There was no “give”.”
TARP was the sideshow. The back door stuff via AIG, the GSEs and the Fed loans/buying MBS is the real show.
Even speculating with TARP was not squeaky clean. Borrow $100, gamble and make $120, pay back $105, pay out $15 in bonuses (or what have you). Not a bad deal, for a bank that had to be rescued.
Obama was shivved, and he’s livid.
Al, what is a bond if not a loan…
As to banks buying stocks and commodities, that may be true. I have no proof of it.
But would such purchases be speculation?
Lets compare a bank’s lending to a business to that bank buying a commodity, like gold. Which is riskier? Which is more speculative?
As for lending to consumers in current conditions, it’s hard to imagine a more speculative use for the money.. except maybe banks lending to other banks.
Al, one more thing..
The back door stuff via AIG, the GSEs and the Fed loans/buying MBS is the real show.
No, the govt’s buying troubled assets from the banks is pure FRONT door stuff.
wiki page..
The Troubled Asset Relief Program, commonly referred to as TARP, is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector.
[snip]
TARP allows the United States Department of the Treasury to purchase or insure up to $700 billion of “troubled assets”, defined as “(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages,… etc.
In return for that money, banks issue warrants.. (sort of a right to buy shares in the bank at a specific price..) or the banks give the Treasury shares of stock, or gives it some other kind of security.
The transactions are considered temporary, there’s nothing hidden.. it’s a loan.
‘Tarp was the sideshow. The backdoor stuff via AIG, the GSE’s and the Fed loans/buying MBS is the real show”
+ 1000, AL
‘ Obama was shivved, and he’s livid’
LOL Oxide, Obama has been staging this fake knife fight with Wall street for a year. Massachusset independent voters have called his bluff, so he calls in the hitman(Volker). If Volker has a real knife, good for Obama.
Kirisdad,
Well.., he’s livid ANYway, o.k! No, I think the President has a side to him that very much is an idealist. And that’s not a bad thing.
He figured he’d built up some good will w/ them for enabling the bailout, and now it was time for some back scratchin’ Chicago style. They punk’d him and I don’t believe it’s a mistake he’ll make twice.
Cold Senate reception for Bernanke
Friday, January 22, 2010
By David Rogers, Politico
The Massachusetts election storm is sending a few cold waves over the bow of the White House economic team–not to mention Federal Reserve Chairman Ben Bernanke.
In a matter of hours Thursday, 13 Democrats broke ranks with the Treasury over extending its financial bailout authority, and after a face-to-face meeting. Majority Leader Harry Reid was conspicuously silent on whether he will back Bernanke for a second term next week.
Treasury’s program survived the floor vote; Bernanke is still favored to win confirmation. But there’s a greater chill in the air, and with Bernanke’s term running out Jan 31, the administration has yet to secure the 60 votes needed to cut off debate on his nomination.
…
“I don’t see any evidence of this overwhelming negative public sentiment you’re referring to.”
I guess anyone wearing Fed-issued 3-D bubble vision goggles would have a hard time seeing this?
Excellent response! I think any pain that Obama can cause Wall Street bigwigs will make his popularity numbers soar.
Notice how the HBB’s resident PR staffers are speechless on that post? Must have struck a nerve there…
Great news! I’d love to see “Bailout Ben” shown the door. Let’s take a few moments to reflect upon some of his more memorable quotes:
[July 1, 2005, regarding the housing bubble, : will it pop, causing house prices to fall?]: “It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”
[November 2005, in response to questioning by Senator Paul Sarbanes, then Senate Banking Committee Chairman]:
SARBANES: “Warren Buffett has warned us that derivatives are time bombs, both for the parties that deal in them and the economic system. The Financial Times has said so far, there has been no explosion, but the risks of this fast growing market remain real. How do you respond to these concerns?”
BERNANKE: “I am more sanguine about derivatives than the position you have just suggested. I think, generally speaking, they are very valuable. They provide methods by which risks can be shared, sliced, and diced, and given to those most willing to bear them. They add, I believe, to the flexibility of the financial system in many different ways. With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well managed and do not create excessive risk in their institutions.”
[Feb. 15, 2007]: “Overall economic prospects for households remain good. The labor market is expected to stay healthy. And real incomes should continue to rise. The business sector remains in excellent financial condition.”
[March 28, 2007]: “The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”
[Feb. 28, 2008]: “Among the largest banks, the capital ratios remain good and I don’t expect any serious problems … among the large, internationally active banks that make up a very substantial part of our banking system.”
[June 9, 2008]: “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”
[July 16, 2008]: Fannie and Freddie are “adequately capitalized” and “in no danger of failing.”
[May 5, 2009]: “Currently, we don’t think [the unemployment rate] will get to 10 percent.”
The only plausible conclusions are that Bernanke is either an idiot or a serial liar. Either case is sufficient justification for terminating his tenure at the Federal Reserve.
* JANUARY 22, 2010, 11:41 P.M. ET
Populist Surge on Hill Eases the Support for Bernanke
By SUDEEP REDDY, GREG HITT And MARK GONGLOFF
Ben Bernanke faced ebbing support for a second term as Federal Reserve chairman as more senators adopted a populist, antibank stance even as the White House launched a public push to defend his candidacy.
The erosion of support crossed party lines. Two Democratic senators facing re-election in November, Barbara Boxer of California and Russ Feingold of Wisconsin, on Friday joined two Democrats and an independent who previously announced their opposition. Ten Republicans say they, too, will oppose Mr. Bernanke.
Fed Chairman Ben Bernanke’s path to a second term gets rockier as two more Democrats vote against his nomination. Plus, stocks finish up one of their worst weeks in recent memory. Dow Jones Newswires’ Paul Vigna discusses why the market gave up its gains for the year so quickly and what the future holds.
Alarmed that there might not be the 60 votes in the Senate needed to extend Mr. Bernanke’s term beyond its Jan. 31 expiration, the White House entered the fray publicly for the first time, with officials trying to win support among Democratic senators. President Barack Obama “has a great deal of confidence in what Chairman Bernanke did to bring our economy back from the brink,” deputy White House press secretary Bill Burton told reporters aboard Air Force One. “And he continues to think that he’s the best person for the job, and will be confirmed by the United States Senate.”
The prospect of a prolonged delay—and possible rejection—of Mr. Bernanke weighed on financial markets. “If there was a sense that Congress really wanted someone better, that would be one thing, but if this is for political theater, that’s particularly dangerous,” said Jason Trennert, chief investment strategist at Strategas Research Partners.
Although seen by many officials and economists as one of the heroes who helped stave off another Great Depression, Mr. Bernanke has been a lightning rod for public anger over the bailout of the banking system and the rescue of insurer American International Group. “It is time for Main Street to have a champion at the Fed,” said Sen. Boxer, who is seen as a potential victim of the voter unrest that gave Republicans a Senate seat from Massachusetts this week. “Our next Federal Reserve chairman must represent a clean break from the failed policies of the past.”
…
“I don’t see any evidence of this overwhelming negative public sentiment you’re referring to.”
Either all of your friends are bankers, or you have none.
LOL. I wonder what part of California Joey is from.
I think I just hurt myself laughing!
Good call GrizzlyBear!
ANALYSIS
AIR DATE: Jan. 22, 2010
Economic Woes Raise Questions on Bernanke
…
JUDY WOODRUFF: You know a lot about Ben Bernanke. You have followed him. You have written a book about him. How do you explain this uneasiness over him, and really much of it all of a sudden? How much of it is due to this — the results Tuesday in Massachusetts?
DAVID WESSEL: I think that Ben Bernanke has become a lightning rod for the public anger that Wall Street got bailed out and Main Street didn’t.
He was, like Tim Geithner, the treasury secretary, one of the people at the scene of the crime. And, in my view, he did a lot that saved us from a second Great Depression. But, right now, people are seeing 10 percent unemployment and big profits on Wall Street, and they’re angry about that, and he is a very convenient target.
And the Fed has often been a target through our history for people’s anger about money and stuff like that. And, so, people are remembering the bailout and they are angry about that. And they are not convinced that, as Mr. Bernanke has said, it could have been worse had he not done what he did.
JUDY WOODRUFF: Now, the opposition from Democrats, David, is based — is for different reasons from the opposition from Republicans, right?
DAVID WESSEL: Well, I think it’s basically motivated by similar public pressure, that people are angry about the bailout and angry about the economy.
They may differ in their — in the tone. The Democrats think he should do more to help housing and maybe do different things on consumer regulation. The Republicans say he was — he’s not doing enough to rein in the banks and he has created a situation where we may be setting up the seeds of the next crisis.
But all sides are holding him responsible both for his role at the Fed in the days leading up to the crisis and the years leading up to the crisis, and because they’re not happy with the fact that the bailout is so unpopular with their constituents.
You know, Senator Boxer, Senator Reid, Senator Feingold, all of whom have come out today, are all senators who are facing reelection, so they are very sensitive to the public mood.
…
Putting on my tinfoil hat (sort of).
Could this be a well disguised move towards creating ‘bad banks?’ We know the banks have massive losses sitting on their books, that they’re slowing writing off as investment profits rise to cover it. Instead of taking these losses, why not have the government ‘force’ them to split up the banks into smaller pieces. The new bank with the mortgage debt fails in a year or two and the bank with the investment portfolio goes on paying megabonuses.
If that were the case wouldn’t you expect Geithner to be all for it? He doesn’t appear to be a supporter of the idea.
Token resistance. Gotta put on a good show for the masses.
That how the game is always played.
If he supports it, why would he openly acknowledge his support, especially if this was a stealth plan to lop off bad banks in a move to divest Megabank, Inc of “hedge funds”?
It is a cool theory, but I question whether they could pull this off, given the microscope outside observers (e.g. Issa, Angelides, etc) have trained on DC and Wall Street these days.
Also being done in plain sight:
$1.25 trillion in MBS purchases by the Fed
Dropping standards for the GSEs so they can absorb risky refinancings, while the banks charge a fee
Allowing banks to hide bad assets with accounting changes
And don’t forget, no one will have been able to see the bad banks’ failures coming.
“Also being done in plain sight:
$1.25 trillion in MBS purchases by the Fed”
Do they come with an open acknowledgment that the Fed is now targeting not only the Fed funds interest rate, but also home prices, and by extension, the prices at which Megabank, Inc can unload its toxic MBS to the asset price fluffer of last resort?
I wouldn’t call it tinfoil as much as giving them too much credit to think and plan ahead and work together. Politicians and business tolerate each other, but any of them would the others throats in a heartbeat.
My question regarding good bank / bad bank is can it work today?
Is there any longer a need for it? I know it was considered as an option a while back, but the economic environment has changed quite a bit since then. Losses are slowly being written off, as you say.
Joey — You should consider a career in banking PR. You really do have a knack for it…
Or economic historian.
“Politicians and business tolerate each other, but any of them would the others throats in a heartbeat.”
I thank my lucky stars that there are no ex-bankers advising the President or any other politicians, otherwise your statement above might not be true.
yeah right.. business is not competitive.. politics is not competitive. Business vs politics never happens. It’s just one big conspiratorial cluster @#$. Ask Pb if ya don’t believe me.
“business is not competitive”
I’ve never made such a claim. Business is competitive, but that doesn’t mean that they can’t work together towards a common goal when it’s in their interest. Banker’s Associations, Builder’s Associations, etc exist for a reason.
“politics is not competitive”
Not even sure where this is coming from.
“Business vs politics never happens.”
Never claimed that. BO may very well believe that he’s introducing valuable reform, even though his advisors have another idea how to use such legislation.
“It’s just one big conspiratorial cluster @#$.”
Not required, nor implied.
You sure do read a lot into some posts.
“Ask Pb if ya don’t believe me.”
Don’t ask me — ask the HBB’s resident PR staffers / straw man caricaturists. They know what everyone who posts on this blog really thinks, and will happily tell you what you think if you ask them.
Politicians and business tolerate each other, but any of them would the others throats in a heartbeat.
????????????????????????????????????????????????????????????
Yes this is exactly the way it works, politicians hate big business???????????
They never go on to become lobbiests for big business
They never go asking for their cash
They never go on junkets w big business
They never write legislation with big business
They never give talks at corporations raking in millions (This is now called a Larry Summers)
These guys couldn’t be in bed more closely if they were Barney Frank and Larry Craig. The supreme court rulling will now cement that close relationship.
If you owned a business, who could you possibly hire to protect you from the politicians better than an ex-politician?
Politicians do each other favors and owe each other favors. That’s how the game is played. Although someone leaves office, those favors are still owed. Contacts still exist. Business hires political insiders not because they love them, but because they are useful.
..kinda like you taking your tax problems to a firm that hires ex-IRS agents..
Business hires political insiders not because they love them, but because they are useful.
Yes you are correct business does not love politicians. Love is an emotion, but to say that they merely tolerate each other is well insanely nieve at the least.
GS/Wall Street buys influence in gov via campaign contributions (now unlimited thanks to the idiots on teh supreme court), it inserts its minions, it uses it’s influence to screw the hell out of the American tax payer. I think the evidence speaks for itself joey.
And you see no contradiction in this statement and your previous one?
Seriously?
Oh dear.
Sorry, I was addressing joey.
I would love to see this punk get the ax.
UPDATE 3-Geithner aired concern on bank limits-sources
Fri Jan 22, 2010
WASHINGTON/NEW YORK, Jan 21 (Reuters) - U.S. Treasury Secretary Timothy Geithner has expressed some skepticism behind closed doors about the broad bank limits proposed on Thursday by his boss, President Barack Obama, according to financial industry sources.
The sources, speaking anonymously because Geithner has not spoken publicly about his reservations, said the Treasury chief is concerned the proposed limits on big banks’ trading and size could impact U.S. firms’ global competitiveness.
He also has concerns that limits on proprietary trading do not necessarily get at the root of the problems and excesses that fueled the recent financial meltdown, the sources said.
He’s the problem. He should just go away now while he has the chance. I’m sure that he can make tens of millions at GS in the remaining 5 years before the new regulations would take effect.
I would suggest the problem is much broader. More than ever, America’s “Democracy” is owned and operated by FIRE sector insiders:
1) Overly cozy ties forge a cooperative bond between top Wall Street banker and their regulators.
2) There is a revolving door flow of financial insiders from Wall Street to Washington and back.
3) Washington positions well-executed to banking industry’s advantage come with an implicit job offer for a far more lucrative position after the “low-paying” stint at a government job.
4) Bounteous Wall Street campaign financing supports pols who do Wall Street’s bidding.
So there it is: A hydra-headed monster of FIRE-sector influence has overrun the U.S. government. The only hope may be that,
like a fat cat banker who doesn’t know when to stop stuffing his pockets with cash and his face with food, it has reached a girth that makes it likely to collapse and die of a heart attack.
I think at the federal level, rich top executives in other industries also own a share of what used to be democracy.
At the state and local level, ownership is divided between public employee members with seniority (and those retired) and the real estate industry.
Everyone else is a serf.
I would suggest the problem is much broader. More than ever, America’s “Democracy” is owned and operated by FIRE sector insiders:
As we all know, when you play with FIRE, you can get burned.
And, while I type this, I hear a lot of pounding from across the street. It’s the neighbor over at the “investment” house. Section of his fence blew down during yesterday’s windstorm.
I chuckle to myself as I hear all of this pounding, because I know from personal experience that a hammer isn’t the best tool to use for fixing that fence. He’s going to have the same “nail pop” problem that crops up with drywall that was installed without the use of a screwgun.
Instead, he needs to set the tumbledown section back into place with a drill and some long wood screws.
“…2) There is a revolving door flow of financial insiders from Wall Street to Washington and back.”
I revert back to childhood, their “game” seems more like this game:
Chutes & Ladders
Geithner was an idiot for taking the job … i remember talking about what person (scapegoat) would possibly want that job.
Sure he’s against slapping down the banks at this time. He’s gonna take the heat for things like the predictable negative “impact on U.S. firms’ global competitiveness”.
Just BO’s threat of intervention on banks options to make money has had an immediate negative effect on the economy. The reality would be far more upsetting.
Geithner’s head is on the chopping block, not BO’s, who should keep his political nose out of the recovery..
“Geithner’s head is on the chopping block,…”
That sounds a bit dramatic. What’s the worst that could happen to him: He gets pushed out of his current post only to step into a new private sector position on Wall Street that increases his annual compensation by a large multiple?
If you’re correct, what’s he hanging around for? Why did he take the job? Why do any of these guys sacrifice the huge compensation you claim is waiting for them?
Maybe he likes being ignored, pushed around and made out to be a fool? It takes all kinds.
He took the job to pad his resume. He’s worth more on the open market after all this free publicity - and government contacts.
“…all anonymously sourced…”
Could one of the HBB’s resident PR staffers please clarify how this anonymous sourcing business works? Is it a matter of having MSM outlets print truthiful statements with vague references to “anonymous WH sources” or “Wall Street sources” when, in fact, they come straight from the Treasury Department’s PR division? If I am missing the point, please set me straight.
FX Analytics - Jan 22:
GEITHNER OFF THE RESERVATION…WALL STREET BECKONS
Jan 22 2010 11:08 am (EST)
Story By:
FX Analytics
After Thursday’s March on Wall Street by the White House, US Treasury Secretary Tim Geithner, a no better friend the big banks could have, may well be headed to Wall Street himself…his (and Summers) coddling approach to big banks seems to have been thrown under the bus in the wake of the Massachusetts election.
Geithner’s criticism of the Volcker plan was everywhere Thursday (all anonymously sourced). And though the Secretary and NEC Director were both on TV Thursday evening pledging support for the plan (Summers even said it was based on their memo to the President earlier this month), this is not a time for mutiny on the O’Bounty. Geithner’s Wall Street option (monetize political power) is increasingly short-dated with his policy influence now clearly in decline and with bank compensation under the carving knife of Uncle Sam. What Geithner’s tax problems showed in the confirmation process is that he was never a highly paid financial mogul. And there is surely nothing more challenging that running with financial moguls on a government pay scale. He could not even afford to keep his house in Larchmont and quickly put it up for sale (I think it is rented now and unsold).
…
I honestly believe Geithner took the job knowing that he was in line for a lucrative position at a Wall Street firm once his tenure was up.
That’s why he looks out for the banks…it has nothing to do with the good of the country, but it has everything to do with lining his own pockets. He has an underwater house and kids to send to college, after all.
yeah..
Geithner worked for Kissinger Associates, joined International Affairs division of the U.S. Treasury, worked the US embassy in Tokyo, was Under Secretary of the Treasury for International Affairs, worked the Council on Foreign Relations AND the IMF… but he needs his current job for the sake of street cred?
Oh yeah.. also was pulling down $400K as pres of the federal reserve of NY.. and already turned down Citi CEO job..
Let’s not forget he was a Rubin (26 years Goldman Sachs alum) protege. You can’t discount that kind of experience.
Geithner has milked his Ivy league degree to get into a lot of positions related to Pacific Rim finance, then into the IMF, the NY Fed, and finally Washington.
Now that he has become a FB, I have no doubt that he will try to leverage what little “street cred” he has left into a lucrative job, just like Sarah Palin. Seeing as he’s a Rubin protege, he probably expected a nice sinecure at Shittibank or one of its zombified clones.
Stick a fork in his ability to get meaningful work in the public sector, however, after his stint finishes (hopefully this year). Even Timmay’s smart enough to realize that.
“…What’s the worst that could happen to him: He gets pushed out of his current post”
Here’s how it worked when I was a part of “follow the team leader up the next Corporation ladder”… who, as time went by, became the CEO of a Fortune 50 Corporation.
Upon arrive in the “New” company with is “skeleton team” he’d find the current employee that had some “Body of Knowledge” of how things operated and seemed to have oddles of “ambition” and if a “problem” arose, he’d simply say: “Well, you’re the MAN, fix it!”
lil’ Opie, seems to have a similar “management” style.
Just BO’s threat of intervention on banks options to make money has had an immediate negative effect on the economy. The reality would be far more upsetting
Joey you confuse economy and daily stock market quotes.
What is a stock? Some measure of ownership in a company?
All stocks in the stock market are the ownership of most existing companies, wherein lies trade, production of goods and services, as well as most jobs? Jobs are vaguely related to paychecks?
Will you admit there may be some connection between the stock market and the economy, or do I have to keep going?
If you’ll admit that much more of the movement of our stock market is due to speculation and manipulation.
manipulation.. like the way Obama manipulated the market?
Or was that just an accident… the poor guy doesn’t realize that as President of the United States, his words may affect things.
sure, there’s manipulation and speculation in the market. Not enough to matter much, but it’s always there. When you suspect it could affect your investments, take evasive action.
joey, you are either a flack or very naive.
I’m going with flack, because most people with a college education know that power corrupts and absolute power corrupt absolutely. And a few billion dollars NEVER makes for a humble experience.
Who do we want to replace him? Is it possible to get somebody in there who is not going to be pro-bank?
Does Wendy & Phil Gramm have any children about to graduate?
Geithner is doing the job he was hired to do: be the lightning rod.
And that’s all he was hired to do.
2,000-acre central Oregon golf resort files bankruptcy
Portland Business Journal
Remington Ranch LLC, developers of a 2,000-acre golf resort in Powell Butte filed for protection from creditors in U.S. Bankruptcy Court for Oregon on Thursday.
An attorney for the project said it was doomed by the economy and its lenders’ financial troubles.
“What triggered the bankruptcy is the economy in Bend and the ability of the lender to stay in the process,” said Stephen Werts of Cable Huston Benedict Haagensen & Lloyd, Remington Ranch’s Portland attorney.
Werts said the development team is revising its plans for an 800-home community with 400 guest units and three golf courses to reflect the new economy.
“You’re not going to be able to develop in the short term a destination resort with home sites and golf courses and memberships in Bend, Oregon,” Werts said.
Remington Ranch, which is led by James M. Pippin, managing member, said it plans to reorganize under Chapter 11.
The grand vision of a golf-themed resort crashed along with the rest of Bend’s superheated residential economy. No homes have been built and of the three courses initially planned, only one has been started. The Wicked Pony course, designed by celebrity golf course designer Tom Doak, is about three-quarters finished.
Turn it back into trees and 4 wheeler trails…
No need to turn it into anything. Just give it time and keep motorized, terrorism and anti-American regime supporting vehicles out. Who the heck wants to be out in “nature” and have to hear that racket? When I lived on the CT River, I’d be woken up by fools jet-skiing up and down the river. Get a canoe and slow the **** down pal.
MrBubble
Mr Bubble,
‘That’ was actually my -first- crusade, before the Tech and Housing Bubbles. I commuted a lengthy distance into Portland so I could enjoy the outdoors ( not be subjected to two-stroke dirt bikes going wing-ning-ning-ning each and every Saturday morning.
I failed on that one too. Only perma-collapse could put an end to $39 down and $39 a month motorized BS. Sadly…
Only perma-collapse could put an end to $39 down and $39 a month motorized BS. Sadly…
How about $6 a gallon gas? That’d put the damper on weekend boaters and their bloated boat-towin’ SUVs right quick.
There’s a very good book out called $20 Gallon Gas. Or something like that. My father bought it and highly recommended it to me. And I concur with his recommendation.
Book makes the point that although higher oil prices will hurt, they will also bring a lot of positive changes. Such as a thinner, healthier population.
“wing-ning-ning-ning”
Thank you, MrBubble. I don’t want to hear that racket either.
And, IMHO, a lot of the people I see on these motorized toys could stand to go for a brisk walk. That would help them burn off the excess body fat.
Good find. Who knew that there might be a problem getting folks pony up the money to jet on up to peaceful and quiet central Oregon for a few rounds of golf at a “destination resort”.
I would love to play a top golf course by Tom Doak for reasonable price and not too much effort. But how many hours of travel time and how many dollars does this fun junket require, please? My guess is lousy air connections to Bend from most places, and once you’re there, what’s there?
I think you’re supposed to be rich enough to have access to a private plane. But, as one of the members of this group will attest, that market ain’t what it used to be.
Isn’t Bend a-ways off the beaten track? I mean, why would anyone go out there to play golf?
Bend, OR = Palm Springs, CA wanna-be’s
Run Hwy,…RUN!
Being fairly new to Oregon (lived here past 4 years), I can only offer my limited view of Bend. I have never been there myself and there isn’t a major freeway to the place. My feeling with Bend is that it was a trendy, resort area.
I have friends that love it over at Bend area. I guess it is a wonderful place for recreation. My friends go to Sun River which is down the road a bit. Part of the appeal of Bend is that it is on the eastern side of the cascades so there is more sunshine. It is my understanding that a lot of folks moved up from California with their equity during boom times and we are seeing now that not many had any money.
For me, it is too far of a drive from Portland for a quick weekend get-away. But, others don’t seem to mind the 3 hours or so drive.
Hello guys,
Hypothetical question.
How much could the federal govt raise if it did away with all deductions for one tax year and just collected all taxes? What would the implications be?
I also know one idea brought was to pay off all mortgages that are under a certain amount like, say $260k. THAT would keep the bubble afloat…
“What would the implications be?”
Financial planning takes into account tax strategies. Suddenly changing the tax rules would screw up the planning and would create massive chaos.
Hi Stpn. I have no idea of how much the government could raise. Currently with the AMT the only deductions are charitable contributions, mortgage interest and property taxes. The government could make a bundle on those alone. But only people with a paycheck would be affected. Anybody who is a 1099 worker could still subtract expenses off their income on their Schedule C.
Mortgage deductions also start to phase out!
your AGI exceeds $150,500 (married) or $75,250 (not married) then your mortgage deduction are reduced!
The deduction is reduced by 3% of the amount by which your AGI exceeds the limits listed above, up to a maximum reduction of 20%.
I didn’t know that, Reuven. I’ve always done my own taxes, but started to use Turbotax three years ago, because my AMT calculations were always wrong and I always had to write a second check. Now I know why. Thank you!
I didn’t realize that either.
Exactly. Unless they also got rid of the standard deduction, the benefit is limited to the excess of mortgage interest+charitable deductions+state and local taxes+[a very few others] over the standard deduction. And the independent contractors still pay tax on their profit not their income.
People really get into the complexity caused by deductions. They aren’t that complex for most folks. Calculating profit for a business (schedule C or 1120) or gains on sale of a capital asset is where the real complexity rests.
“How much could the federal govt raise if it did away with all deductions for one tax year”
My guess is the government could raise about 100 million pitch forks and torches.
(but then again, they will have succeeded in generating a crises that they can then “rush in” to fix)
My guess is the government could raise about 100 million pitch forks and torches.
I think people have gotten too used to getting a refund. I say why give a refund? Pay your taxes and be done with it. Let the govt raise money, that’s what taxes are for..I guess I am too simplistic with it. I guess we have all forgotten about that “income shouldnt be taxed twice” thing…
“…I think people have gotten too used to getting a refund.”
I only recall getting a Gov’t issued “refund” from Cheney-Shrub
(I thought that odd considering the USA was fighting x2 foreign wars.)
Playing Golf may again revert to being a ”Rich man’s , or at least a well to do ” man’s Pastime , once this is all shaken out . Playing a few holes at a course is fine , but the ideas of building your abode , with a 30 year Morgage around one seems overdoing it to me . Admitidly , Golfing seems to be attractive , has been for a hundred years , where Tennis falls in and out of favor as the thing to do .
“Golfing seems to be attractive, has been for a hundred years, where tennis falls in and out of favor as the thing to do.”
Playing tennis takes a lot of energy while playing golf doesn’t.
Plus people can talk to each other more easily on the on the golf course than they can on the tennis court. There’s a lot of dead time in golf; such time is often spent in relaxed conversation. This is the time when a lot of unofficial business is conducted.
“Playing tennis takes a lot of energy while playing golf doesn’t.”
I assume that you mean human energy? Creating and maintaining a golf course takes a tremendous amount of fossil fuel energy when compared to tennis.
Yes, playing tennis takes a lot of human energy.
Jim Rome once said anything you can do as a 80 year old, while sucking on a oxygen bottle, is not a “sport”.
My father’s 85 and runs a mile every morning. Looks more like jogging now, but he’s still out there, pounding the streets of the neighborhood.
$8 per 18 after 3pm in sunny SLO.
Oh yeah, I can’t wait to pay for an over-priced house in a barely started subdivision!
Go to google maps and make sure to have ’sattelite’ on, the put this in: 19345 YELLOW CLOVER DR, Tampa, FL
http://tampa.craigslist.org/hil/reb/1563725644.html
————————
On another note, noticing more 4 and 5 bedroom houses in the 225-250 range (foreclosures) coming onto the market. Most are out in the boonies, but some are in more desirable locations. Still not ready to commit and buy , but this does give me hope that things are turning around in my favor.
I just love the amount of privacy one gets in their pool at this house below. I guess Susan researched this one!
http://tampa.craigslist.org/psc/reo/1564104132.html
You could sponsor a community swimming team! Or grant easements to your neighbors and make it a community pool! Possibilities are endless. Priced to move!
oh, to live in the heaven of glorious Zephyr Hills! actually, that’s Wesley Chapel area, just north of Saddlebrook. not too terrible, but still it’s a good ways out from Tampa, not that i would care at all to live in Tampa proper. i guess it beats Apollo Beach..
that common-back-lawn-for-all is ….ummm…. charming.
McDonald’s profit is $1.22B in 4th quarter.
McDonald’s says 4th-qtr profit rises 23 percent to $1.22 billion but annual sales slipped ~ January 22, 2010
CHICAGO (AP) — More hungry diners gobbling its cheap eats helped McDonald’s Corp.’s sales and profit grow in its fourth quarter, the company said Friday in an earnings report showing it continued to weather the downturn better than many competitors.
For the three months that ended Dec. 31, the world’s largest burger chain earned $1.22 billion, or $1.11 per share. That’s 23 percent more than a year earlier when it earned $985.3 million, or 87 cents per share. The results included a one-time benefit of 8 cents per share.
I bought a bunch of stocks when they went down in late 2002. I wish I had bought McDonald’s back then - it went down to about $15 per share. It’s done nothing but climb since then - even last March it went “down” to $50.
McDonalds is to America what grain storehouses were to ancient Egypt.
Cut off the McNuggets and you’ll see trouble.
“Cut off the McNuggets and you’ll see trouble”.
Man, you got that right!
One women in Fla. called 911 when the Micky-D’s where she was ran out of McNuggets, and another person rammed the building for the same reason.
Must be those Monsanto chemicals.
At least Monsanto was smart enough to get one of their in-house lawyers on the US Supreme Court.
A pilot I know worked for one of the agribusinesses who processed chickens.
Said the chicken business was like an assembly line in reverse. You start with whole chicken, and disassemble it, until you end up with the parts that nobody in the world will eat (beaks, a-holes, etc.) They you process what’s left into chicken feed, and feed it to the chickens.
He said the step just before the “chicken feed” was the step that they made “Chicken McNuggets”.
He was joking, but I’ve stayed away from Chicken McNuggets from then on………
Usually a little truth in every joke.
VC investments plunge 37 percent in 2009
Pittsburgh Business Times
Venture capital investments nationwide plunged 37 percent to $17.7 billion last year, compared to $28 billion in 2008, the lowest in 13 years. Transactions dropped 30 percent from 3,985 in 2008 to 2,795 in 2009.
It was the second consecutive year of annual declines in deals and dollars, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on Thomson Reuters data. Fourth-quarter investments were $5 billion in 794 transactions, down 2 percent in dollars but up 15 percent in deals compared to the third quarter; a year ago, $5.85 billion was invested in 910 companies.
It’s just insanity that two companies, Fannie and Freddie, have been allowed to soak up 10+ times more money than all venture capital deals made in this country in the last year.
This article should serve as a Red Alert to those living in the SF Bay Area where lots of this VC money used to be directed.
Imagine a continuous money losing operation, with no understanding of the radio ‘entertainment’ business. Along with bottom ratings from the very beginning, with talentless perma-pissed employees going bankrupt! LOL!
Liberal talk-radio station Air America files for bankruptcy, will go off the air. ~ Washington Post ~ January 22, 2010
Air America, the liberal talk-radio network that helped boost the careers of Al Franken and Rachel Maddow, said Thursday that it was declaring bankruptcy and going off the air.
The company, founded in 2004 and based in New York, strove to provide left-leaning commentary and call-in programs as an alternative to such popular conservative radio talkers as Rush Limbaugh, Sean Hannity and Michael Savage.
It was troubled almost from the start. The company had difficulty lining up affiliates and attracting a sizable audience. It filed for Chapter 11 bankruptcy-court protection just 30 months after its inception and was resold to an investor group in early 2007 for $4.25 million.
Charlie Kireker, one of Air America’s principal owners and its chairman, said in a memo to employees Thursday that the company was done in by “a perfect storm” of plunging ad revenues, intense competition, high debt and poor prospects for new financing. A search for new investors, he said, has been fruitless. The company declined further comment.
“It was troubled from the start. The company had difficulty lining up affiliates and attracting a sizable audience.”
The sizable audience it couldn’t attract were already attracted to MSM.
The conversative talk shows, on the other hand, attracted millions of listeners who have long been ignored by the MSM.
I’ll venture to guess that this station’s target market already listens to NPR. So, their liberal talk show needs are already taken care of.
I have an honest question to direct to whatever liberals might be out there. Why don’t you guys like listening to liberal talk radio?
Being a majority (or so they say), it seems like liberal-talk would outperform the conservative-talkers.
“I have an honest question…”
Is this some kind of rare event? Everyone drop what you are doing and answer the man’s ‘honest question’…
hey dude chill whydontcha..
These “liberal” and “conservative” labels are a touchy subject to some people. I want them to know I’m not just yanking their chains…
I think it’s a good question. My opinion is that conservative radio shows succeed b/c they are one of only a few legitimate options for the targeted audience, whereas liberal stations fail b/c MSM provides many other options for that target group. While certainly left-leaning, I don’t see NPR as a comparator for Air America, Rush, etc as it’s not political driven news IMO.
Mags57, maybe that’s the closest plausible answer.. that the MSM already provides what liberal-talk can.. but it still doesn’t feel right to me.
I think there might be more to it.
I’m no psychologist, but I’m pretty sure there is a big difference between the way the brain processes audio/video and audio alone.
Maybe the conservative ideology is better communicated by audio alone (who the hell wants to look at limbaugh’s mug?) whereas the liberal stuff is enhanced with some video support.
Radio and TV are entertainment. Rush Limbaugh is entertaining. Liberal talkers are not. There’s no profit in serious discussions. And there is no such thing as a conservative radio station - there are conservative radio talkers who are syndicated and their programs are sold. Probably a couple of more entertaining liberal talkers like Stephanie Miller and Randi Rhodes (both syndicated and not part of Air America) will still be able to get airtime. The rest of them, feh.
“Radio and TV are entertainment”.
Correct!! A simple point that goes over the heads of so many. Those that get it in the industry succeed those that don’t well…
Dittoheads are the silent congregation who like to relax and listen to hate screeds. It makes them feel good and validated that someone else is as hateful as they are. Libs are too busy thinking and disagreeing, and starting their own churches. And besides, they can’t stand the commercials.
Oxide, my dear progressive friend,
I don’t know from which you get your feelings dare I say thoughts? But woouldn’t it be enough to say that you disagree with Rush’s thoughts. Instead you have to call dittoheads “hateful”, inferring that liberals are “loving”.
Don’t you know that when you stoop to this kind of ad hominem attack, you have already lost the argument?
http://en.wikipedia.org/wiki/Ad_hominem
Liberals have their own talking points an boogymen, ya know.
Anyway, in order to be ad hominen, I would have to attack an irrelevant characteristic. It says so right in your Wiki link. I’m not sure if hate — or maybe contempt — is irrelevant here.
Because “liberals” have to work for a living?
Rush, OTOH, is on 24/7 in every locally owned business, and Doctor and Dentist’s office in the country…..you know, the self-proclaimed “backbone of America”. I’m betting he was a staple in every mortgage broker’s office back in the day.
My dentist plays some sort of Muzak, unidentifiable tunes with lots of strings, the kind that probably causes cavities. I guess that’s why he plays it.
David Brudnoy was the only talk radio host I ever found worth listening to.
Libertarian….but more importantly, amazingly kind and generous to all guests even those who he intellectually far outgunned. I felt he was intelligent enough to point out pros and cons on both sides of an argument. If only being intelligent and emotionally restrained sold.
Because I like music when I drive. I LOVE Sirius. My car is my sanctuary, and I can’t tolerate blather from any perspective. In my car that doesn’t have satellite radio I enjoyed a local jazz station until they decided we needed MORE talk radio in the morning. So much for my continued sponsorship.
I enjoyed a local jazz station until they decided we needed MORE talk radio in the morning. So much for my continued sponsorship.
Sounds like what happened to KUAZ-FM, the local jazz station and NPR affiliate. They’re one of the talking-est stations around now.
Rash Limpbaughs got to laugh with ya wmbz, while all these fellow workers get the axe… LMAO as well!
Limbaugh’s living large while radio boss Clear Channel implodes
May 05, 2009:
“Clear Channel’s fall from business grace remains epic in its proportions. In 10 years time the company has gone from dominating a flourishing radio industry to a corporation that now teeters on the brink. (Clear Channel stock traded for $90 a share in 2000. When the radio company went private last year, pre-crash, the stock was already down in the $30s.) Lots of over-extended, debt-ridden media conglomerates are struggling through today’s deep economic recession, but few face a future quite as perilous as the one staring back at the San Antonio radio giant.
And yet Clear Channel’s most famous employee, Rush Limbaugh, remains oblivious to it all. I sometimes wonder what Limbaugh thinks when he reads about the not-so-slow-motion collapse of his radio employer while lounging in his 24,000-square-foot Florida estate or motoring in his $450,000 car to the airport to ride in his $54 million jet. Does Limbaugh feel bad? Does he feel a little guilty? And does he ever think about giving some of his riches back so that thousands of radio colleagues wouldn’t have to be bounced to the curb?
Even for a pancaked industry like radio broadcasting, which has become somewhat numb to years’ worth of mass layoffs triggered by hyper, corporate consolidation, and more recently by an over-the-cliff advertising recession, last week’s HR wave of mutilation unleashed by industry giant Clear Channel Communications must have felt like a pile-on.
Drowning under massive debt and desperate to cut more costs, Clear Channel took an ax to its payroll — again — and hacked hundreds of radio pros out the door. Program directors, morning show hosts, production pros, news anchors — all of them tossed over the side. A “bloodbath,” one newspaper called it. (In Albany, New York, the entire on-air staff at a Clear Channel music station was sacked; same with a radio outpost in Exeter, New Hampshire)”
Whatching the ClearChannelCrimeSyndicate implode is sweet vindication. Good riddance CrimeChannel.
I agree!
Only those of us who grew up with radio in the 60s and 70s can appreciate how bad radio is now.
One of the reason us old guys bit#h about the “good old days, is that the “new and improved” version is usually neither.
Well, then you need to point your browser this-a-way and find out how much fun community radio can be.
Disclaimer: Like most people involved with KXCI, I’m a volunteer. And some of the station’s volunteer deejays have been there for decades.
Slim:
That is what Non commercial spectrum under 92 mhz was for…community radio
UNTIL NPR hogged upped all the high power channels in the 60’s 70’s and multiple networks ….leaving small community’s without any space on he dial…even colleges with broadcasting and journalism schools don’t have a radio station due to the “public” broadcasting corp.
So I would cut all funding for NPR and return the frequencies to local broadcasters.
They can fire it up again when Jeb gets in.
Note, my use of the word “when”. This is not a sign of support, it is an acknowledgement that the herd has become more than predictable. What should nanny do today, kiddies? Look for terrorists in your sock drawer or make sure your credit card still works?
Sarah’s going to pick Jeb as her running mate? :confused:
U.S. Life Insurers May Face More Real Estate Losses (Update2)
(Bloomberg) — U.S. life insurers, a group led by MetLife Inc. and Prudential Financial Inc., may face $15 billion in additional commercial real estate losses, most of which will be recognized in the next two years, Fitch Ratings said.
The life insurers have already booked about $5 billion in such losses since the economic crisis began, bringing the expected total to $20 billion, Douglas L. Meyer, a Fitch analyst, said today in an interview. Most future losses will be taken this year and in 2011, he said.
“The U.S. life industry has a large exposure to CRE- related assets through direct mortgage origination, investments in commercial mortgage-backed securities, and to a lesser degree, investment in real estate equity,” Fitch wrote in a note to clients.
The default rate for commercial mortgages bundled and sold as bonds rose 0.42 percentage point to 4.71 percent last month and may climb to 12 percent in 2012, Fitch said on Jan. 11. MetLife, the largest U.S. life insurer, has about $50 billion of its $338 billion portfolio in commercial property loans and CMBS.
Here come the rate increases on those life insurance policies!
This sounds a lot to me like wishful thinking, but who knows?
The Financial Times
Don’t bank on voters forgetting
By Christopher Caldwell
Published: January 15 2010 22:14 | Last updated: January 15 2010 22:14
The furore over record bonuses paid to bailed-out investment bankers was building even before JPMorgan Chase announced soaring fourth-quarter profits ($3.3bn) on Friday. Goldman Sachs announces its executive compensation next week. Industry-wide, bonus pay will be well over $100bn (€69.5bn, £61.5bn) in the year, with $50bn of it paid at the top five banks alone. Many bankers will receive theirs in the form of stock – including the top 30 executives at Goldman and everyone getting over $100,000 at Citigroup. Still, compensation levels have blown past where they were in the autumn of 2008, when banking practices brought the western economy to the brink of collapse. The public is unimpressed, and it is right to be unimpressed.
As a matter of common sense, it is an outrage that thousands of employees should collect millions of dollars apiece from companies that owe their continued existence to the largesse of US and European taxpayers. Barack Obama, the US president, sought to pre-empt accusations of laxity by announcing a levy on banks on Thursday. (This levy appears more likely to fall on bank customers than on the well-heeled bankers, who back both US political parties.) As a legal matter, though, the grounds for blocking big payouts are murky, at least for those banks – including Goldman, Citi and JPMorgan – that have returned the money advanced to them as part of the Troubled Asset Relief Programme (Tarp). The principles driving the public outcry have a tendency to shift.
But this does not mean that middle-class fury at bonuses is mere envy. The main grievance is that the bonuses are not a reward for competence, effort, or any other quantifiable benchmark. In the aftermath of Tarp, they can even be likened to a corporate dole. As Andrew Cuomo, attorney-general of the state of New York, put it in a report last summer, the financial crisis provided a “virtual laboratory in which to test the hypothesis that compensation in the financial industry was performance-based”. Bankers’ compensation rose along with a bull market for a decade and then stayed at bull-market levels even as the bankers’ practices brought the economy to the brink of ruin. Mr Cuomo described the bonus culture as “heads I win, tails you lose”.
…
The retired Pilots from Bankrupt United Airline got some kind of settlement ….One Pilot’s retirement was cut from an anticipated 80K to 27K per year when the Federal Program had to take over the plan .. Wow , that is a real hit , how do you live on that ??? That is why it’s so important to not put all your eggs in one basket , no matter what your age is .
“…from an anticipated 80K to 27K per year when the Federal Program had to take over the plan .. Wow , that is a real hit , how do you live on that..”
Especially, when said pilot has made financial obligations many years in advance of his/her retirement.
How do I know?, there’s one in the family.
how do you live on that ???
Many retired people actually live onless than that.
My mom lives on $2000/month - pension and social security, without a problem. That’s what a paid-for house permits. She also has a nice nest egg, but bless her heart, she wants to save it to leave to her grandchildren! She takes the required distribution every year, but likes to save it. After my dad passed in summer of 2007, her first independent financial act was to get the money away from his Morgan Stanley broker (which had lost him a lot of money) and deposit in laddered CDs at 5%. Smart lady!
Here I had been thinking it was the end of bonus season that sank stocks yesterday. Take careful note of the language posted below: According to the writers, Obama is not trying to actually reform the financial sector, but rather to run a “campaign to show he’s tough on Wall Street.” How could a little saber rattling over a proposal to rein in financial excesses, similar to others that have floated around for months already, suddenly sink stocks? Is the market really that irrationally exuberant?
One has to wonder whether the handful of Wall Street fat cats who now control forty percent of the banking sector and their financial support team in DC might feel tempted to deliberately create some bad financial market weather and blame it on new proposed financial regulations. The moral hazard for this sort of thing certainly appears to be there, although I have no idea about whether this actually has or will occur.
* JANUARY 21, 2010
New Bank Rules Sink Stocks
Obama Proposal Would Restrict Risk-Taking by Biggest Firms as Battle Looms
By JONATHAN WEISMAN, DAMIAN PALETTA And ROBIN SIDEL
From left, bank chiefs Lloyd Blankfein, James Dimon, John Mack and Brian Moynihan are sworn in on Capitol Hill earlier this month to testify before the Congressional Financial Crisis Inquiry Commission, which is investigating the causes of the financial crisis.
WASHINGTON—President Barack Obama proposed new limits on the size and activities of the nation’s largest banks, pushing a more muscular approach toward regulation that yanked down bank stocks and raised the stakes in his campaign to show he’s tough on Wall Street.
…
“…although I have no idea about whether this actually has or will occur.”
Ohhhhhhhhhhhhhh, conspiracy theories, goody.
But Mr. Bear, the x2 key “Actors/Actress’s” are:
1. Politicians*
2. CEO/Corporations*
So what may appear as pure fantasy, may in “reality” morph into: Non-Fiction
* (The names have been changed to confuse the public…i.e. Blackwater USA, is now Xe, Lehman is GoldenmanSucks, Merrill is Bank of Opportunist’s, etc., etc., etc.)
I love that shot of the Megabank, Inc CEOs all holding up their right hands while smirking into the camera. Can’t you just imagine the voice in the background of that scene: “Do you swear to tell the truth, the whole truth, and nothing but the truth, so help you God?”
Oil represents all that is the “TrueCost™” in the transparent mechanisms of ‘Free Markets” / “Supply & Demand”
Oil falls below $76 amid weak demand:
“…Goldman Sachs and other major banks have helped funnel billions of dollars of speculative money into oil and natural gas contracts during the past several years.”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
America = World’s largest consumer of energy
“America is consuming less petroleum than the same time last year, and refineries, which have struggled to pass higher crude costs along to consumers, are now operating at the lowest levels since September 2008.”
“This is the lowest level that refiners have operated at in at least 20 years, with the exception of hurricane-induced shutdowns,”
Natural gas supplies dropped more than expected to 2.6 trillion cubic feet and are now slightly lower than the five-year average.
“In the big picture, nothing is really changed on the demand side,” said Petromatrix’s Jakob. “It is still not there and the cold weather is not making much of a difference.”
Yet we still have gas at $2.70 a gallon?
U.N. Panel’s Glacier-Disaster Claims Melting Away
“The IPCC’s 2007 report, simply titled AR4, claimed that “glaciers in the Himalayas are receding faster than in any other part of the world, and if the present rate continues, the likelihood of them disappearing by the year 2035 and perhaps sooner is very high if the Earth keeps warming at the current rate.”
A letter just released to the Science Web site underscores the mistake. Written by J. Graham Cogley of the department of geography at Canada’s Trent University, it points out that “the claim that Himalayan glaciers may disappear by 2035 … conflicts with knowledge of glacier-climate relationships, and is wrong.”
“It’s about time that somebody started following the money trail to the big interests that want to prosper from the green regime, while the rest of the economy is crushed,” Orient told FoxNews.com. “It’s not as though the amount were a trickle.”
http://www.foxnews.com/scitech/2010/01/20/panels-glacier-disaster-claims-melting-away/
As always, we should follow the money.
The “United Nations” is a completely corrupt money sucking machine, and that is an undeniable ‘consensus’ no further discussion is necessary.
True Deceivers
WHO?
got H1N1 vaccine?
Yes. I had it in October and I’m still not completely over it. Can’t carry on a reasonable conversation after 6 PM because I cough so much. If you didn’t get it, be grateful.
Boy, we certainly have to wade through a ton of Republican talking points on this blog lately. As someone who hates both parties equally, I’d prefer if we could stick to housing and finance related topics.. or at least not rehash the same old garbage “libs vs. neocons” mindless droning.
+1000
As someone who hates both parties equally…
Ditto.
I like to use the term Gerald Celente coined, and call myself a “political atheist”. Mr. Celente is a trend analyst (both social and investment related), and is a pretty objective fellow.
+ Eleventy billion
I loathe have to wade through the talking points of both sides.
And having to hear people like Lip et al. “think” out loud [actually just emetically reproduce what Fox feeds them] about global warming/climate change is more than a bit painful. As I’ve written before, don’t bring the subject up and I won’t touch it.
So you guys are giving up on Cap ‘n Tax?
Count on FOX to obfuscate.
http://www.guardian.co.uk/environment/2010/jan/20/climate-change-glaciers-melting
But it doesn’t matter, since it’s volatility of climate change, not a warming trend, that’s of concern, right? Or have you guys changed your story back again?
History will be forever grateful to Obama if he pulls off a successful financial system reform against overwhelmingly long odds coupled with tremendous moral hazard to introduce reforms which appear meaningful but have no heft. I’m thinking it will become much harder for Megabank, Inc to unduly influence financial market weather if they leave the hedge fund business?
Jan. 21, 2010, 4:24 p.m. EST
Obama proposes new limits on big bank risky trading
Commercial banks could be prohibited from owning hedge funds, buyout shops
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) — In his toughest response yet to the financial crisis, President Barack Obama proposed Thursday that strict limits be imposed on the size and trading activities of the nation’s biggest banks.
“While the financial system is far stronger today than it was a year one year ago, it is still operating under the exact same rules that led to its near collapse,” said President Barack Obama at the White House.
“My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary,” Obama added.
…
I like the plan, and am glad Obama grew a pair. It isn’t an over-reaction. It isn’t going back to Glass-Stegal — banks would be allowed to underwrite securities as well as loans. But it would prevent them from gambling like hedge funds with the backing of their taxpayer-backed banking sector.
Also, it would increases (or at least prevent the decrease) in the number of major banks, perhaps sparing New York the fate of Detroit. I want at least ten major money center banks in every economically critical function, and would prefer 20.
But remember, we didn’t bail out Bear Stearns and AIG (and get creamed when we tried to draw the line at Lehman) because they WERE banks. We were blackmailed because they had BORROWED massively from banks, and threatened to take the banks (and money market funds) down with them. Something has to be done about that too.
it would prevent them from gambling like hedge funds with the backing of their taxpayer-backed banking sector.
Won’t work. When all the other government spigots are closed, banks will just cluster around the last remaining open-spigot: Fannie and Freddie, which wants carte blanche.
I am glad he grew a pair too. He will be facing a full frontal attack, but even the Republicans can only maneuver so much before they will be seen as being owned by Wall Street.
I suspect they will support the broad concept of reform but pursue niggling details that will keep them from voting for it.
All you can do is call your congresscritters and let them know how you want them to vote…mine are getting sick of hearing from me. For all the derogatory comments about ‘populism’, only by voting do we little people get to determine the legislative priorities of our supposed democracy. Otherwise, the kleptocracy will remain in control, since they were just given a blank check by the Supremes yesterday to do so.
Kleptocracy?
Maybe, but for some reason you’re overlooking thieves like all those who lied on their mortgage application, or the recent revelation that the $8,000 first-time-homebuyer taxpayer program is overrun by fraud.
I’m not overlooking them at all, reuven.
However, letting your congressmen know how you will be voting will be a good start by taking down the thieves with Cabinet level positions and Fed appointments.
We can then make sure that the proper law enforcement agencies are funded will ensure that the J6P level crooks are identified and prosecuted as well.
So are you saying the loan approval process was staffed by incompetents who didn’t exercise due diligence of verification?
Eh, yeah, right.
I’m thinking it will become much harder for Megabank, Inc to unduly influence financial market weather if they leave the hedge fund business?
You did see the most recent supreme court rulling on corporate sponsorship of candidates. My guess is that in the future congressman much like professional athletes will have to wear the bank logo of their master.
Not to worry. It will prove to be a Pyrrhic victory. Here’s why:
If you’ve been to 4th Avenue in Tucson, or whatever your city’s Funky Street Scene equivalent is, you’ve probably seen those earnest-looking people sitting at card tables. Y’know, the ones who are passing petitions to end corporate personhood. And, truth be told, they haven’t been too successful.
Until now.
A lot of people are pretty upset about this decision, and, in light of all the anger over the excesses of corporate power, you’re gonna see some changes around this country.
Just watch!
Do they have a web site?
I don’t know about the website. But they seem to represent some sort of group that would have one.
“My guess is that the future congressman much like professional athletes wil have to wear the bank logo of their master.”
Lol. Or masters (as in plural).
I can see it now: “This space for rent”.
“…History will be forever grateful to Obama if he pulls off a successful financial system reform against overwhelmingly long odds coupled with tremendous moral hazard to introduce reforms which appear meaningful”
When was the last time an American President rode in a Cadillac convertible in public?
(Excuse me, suddenly there’s a loud knocking at my door…)
I seem to recall that Nixon’s limo had a moon roof. It was there so he could stand up and flash the “V for victory” sign at the crowds as he motored by.
Bring on the pain, Mr Volcker! Let the greedy bastards squirm.
Harley-Davidson Posts 4Q Loss, First in 16 Years
NEW YORK January 22, 2010 (AP)
Harley-Davidson Inc. reported a fourth-quarter loss Friday, its first quarterly deficit in 16 years, as restructuring costs and the sluggish economy wore on the motorcycle maker. Its shares fell more than 5 percent in morning trading.
Harley-Davidson has spent the last year reorganizing its business to cope with falling demand of its high-end bikes. It has been laying off employees, closing factories and discontinuing or selling unwanted brands.
Who’d have ever guessed that toy companies, er, motorcycle manufacturers would join boat manufacturers in the current economic hosing.
There’s no end to the surprises.
Maybe they’ll finally decide to lower their prices so they sell for their actual value. Nah…
Imagine the uproar if such a thing were to happen!
“The HELOC you say!” (In Montana™)
Goldman-Sucks has not problem operating in the shadows, if Barry wants to score big, he should try and throw on the spotlight. The banksters run the show, so put them on stage, lets watch them preform in the open! Along with the FED! Transparency baby!
Obama Plan May Cost Banks $13 Billion, JPMorgan Says (Update2)
Jan. 22 (Bloomberg) — President Barack Obama’s plan to curb proprietary trading will cost Goldman Sachs Group Inc., Morgan Stanley, Credit Suisse Group AG, UBS AG and Deutsche Bank AG about $13 billion in revenue next year, according to JPMorgan Chase & Co. analysts.
Of the five banks analyzed, Obama’s proposals will impact Goldman Sachs the most, resulting in an estimated $4.67 billion drop in earnings in 2011, analysts led by London-based Kian Abouhossein said in a note today. UBS stands to lose the least, with revenue declining an estimated $1.92 billion.
“Goldman Sachs is most at risk with its principal investments business at risk and high fixed-income gearing,” the analysts wrote in the note. Governments are stepping up regulation of banks and insurers after pumping in trillions of dollars to bail out firms.
not=no
In Congress yesterday, Rep. Ron Paul spoke in opposition to a “Condolences to Haiti” resolution (H Res 1021), because “it does not simply express our condolences, but rather it commits the US government ‘to begin the reconstruction of Haiti’ and affirms that ‘the recovery and long-term needs of Haiti will require a sustained commitment by the United States….’ I do not believe that a resolution expressing our deep regret and sorrow over this tragedy should be used to commit the United States to a ‘long-term” occupation of Haiti during which time the US government will provide for the reconstruction of that country.”
U.S. taxpayers are contributing millions of dollars worth of aid to Haiti in food, equipment and personnel. Private donations are providing millions more. Dr. Paul’s objection was not to the massive immediate aid pouring into Haiti. It was the bill’s commitment to rebuild Haiti. (Even the once mighty USA no longer has the resources to mend everything that breaks down in the world.)
Theoretically, I can agree with Senator Paul.
The reality is that if we are going to do any “Nation Building”, Haiti is a better candidate than Afghanistan. At least when you consider that Haiti is within sail boat range of Guantanamo Bay and Florida.
“…if we are going to do any “Nation Building”, Haiti is a better candidate than Afghanistan.”
(Hwy tosses out the “Shazam-Islam-is-now-Democracy” pamphlet, picks up the “HocusPocus-French-voodo-is-now-Socialist” pamphlet…
According to Hugo Chavez the U.S. caused the Haiti earthquake.
I posted a link to this story a while ago but it never showed up.
One of my more conspiratorially-minded neighbors sent me an e-mail saying that the quake was caused by a U.S. Navy test.
If the Navy knew how to make earthquakes, they’d do it to North Korea instead.
Would you rather have China do the rebuilding?
The Monroe Doctorine is there for a good reason.
And I say this as a supporter of Ron Paul.
Thank you yen.
Folks let’s not forget the Haitians fought in our Revolutionary War.
Here’s a couple of links:
http://tinyurl.com/yfua5sl
http://tinyurl.com/y8smp9y
Va. House rejects Kaine tax increase on 97-0 vote
Media General News Service
After prolonged debate and partisan finger pointing, the House of Delegates yesterday soundly rejected former Gov. Timothy M. Kaine’s $2 billion proposal to increase the income tax in connection with a plan to complete the phaseout of the local car tax.
The measure, which a GOP-dominated committee pushed to the floor to force Democrats to vote on it, was defeated 97-0. Del. Robert H. Brink, D-Arlington, the bill’s sponsor, abstained.
Brink tried to strike the bill, but the motion failed, leading to heated floor speeches during which House Minority Leader Ward L. Armstrong, D-Henry, fumed that Republicans were trying to embarrass Democrats.
The minority Democrats faced a choice of voting for a tax increase amid economic turmoil or voting against the suggestion of Kaine, chairman of their national party.
Kaine is the butter knife in the butcher block.
Good news for my po state, we are getting ahead in this ‘jobless’ recovery!
Unemployment rate in state reaches record high
Staff report January 22, 2010
South Carolina’s unemployment rate jumped to 12.6 percent last month, an all-time high for the state, as employers continued to slash jobs.
November’s rate of 12.3 percent also set a record. A year ago, the state’s unemployment rate was 8.8 percent.
Data from the South Carolina Employment Security Commission released today show that the state’s overall job count declined by 9,900 positions, mostly in tourism (-5,200 jobs), professional services (-4,000) and government (-1,100) . A slight uptick in trade, transportation and utilities jobs wasn’t enough to offset the losses.
The numbers are even more bleak than the unemployment numbers would suggest. In the handful of states that didn’t have worsening unemployment, it was mostly because the unemployed gave up looking for work.
How can there be any legitimate, sustainable recovery in housing with an economy that’s still bleeding jobs and wages and has a surplus of housing?
“In another nationwide trend, long-suffering states like California and Michigan saw their jobless rates stabilize even as they continued to bleed jobs. That’s because thousands of frustrated workers gave up hunting for work and dropped out of the labor force, which means they aren’t included in the unemployment rate”
“California lost 38,800 jobs. But its unemployment rate was unchanged at 12.4 percent, the fifth-highest in the nation. That’s because 107,000 people, or 0.6 percent of the state’s workforce, gave up and stopped job-hunting.”
“Michigan shed 15,700 jobs, but 31,000 people left the labor force. That caused the state’s jobless rate to fall slightly, to 14.6 percent from 14.7 percent. Michigan has the nation’s highest unemployment rate.”
“Nationally, more than 600,000 people left the labor force in December, according to government data. The large exodus from the labor force indicates that “unemployment is a lot worse than the numbers suggest,” Koropeckyj said.”
We have to be approaching GD levels of unemployment. All of the empty restaurants and stores I see everywhere can’t be wrong.
http://www.shadowstats.com/alternate_data/unemployment-charts
The broader measurement of unemployment, U6, continues to hold above 17 percent with the pre-1994 unemployment numbers including long-term discouraged workers above 20 percent.
Well, I have to move one more time! LL putting the townhouse on the market. So, for me, its either back to apartment living where the chances of me having to move are negligible; or I buy. This is the 2nd home I’ve had to move from due to it going on the market and I’m weary of moving now.
I’m constantly being harrassed by the realtor now about showing the place and the LL gave a whole $100 deduction off the rent for doing that. So not worth it! Of course, my revenge will be: I move out at the end of Feb. and they can neither rent it or sell it.
You gotta love the LLs that think they can hedge their bets. Keep renting the place out while trying to sell it, as if the renter won’t mind.
I’m seeing quite a few “for sale/for rent” signs here in Tucson. I interpret them to be a sign of desperation. As in, “We’ll take the money any way we can get it.”
What goes through their minds that families want to live month to month. There’s nothing more stressful than moving.
Gimme $500 off a month, and I’ll pack 1/2 my stuff this weekend so I wont be so stressed if I have only 30 days…but $100…..geez I’ll take my sweet time and You deal with the new “buyers”
“There’s nothing more stressful than moving.”
Agreed, and best of luck. After about 8-10 years I finally got tired of it and bought a house. I can still remember the moment I put the last box down and knew that I may never have to pack and move again. Renting does have a lot of benefits, but moving is just the biggest PITA.
Why ain`t she turning?
Jubak’s Journal1/21/2010 6:00 PM ET
Smooth sailing now; icebergs ahead
Many investors expect the economy to stay not too hot and not too cool, and they may be right about the year’s first half. But trouble looms on the horizon.
By Jim Jubak
The odds that the U.S. stock market will win its current bet look daunting.
Investors who’ve been pushing up stocks are betting that the U.S. economy will produce a big enough increase in earnings to keep stock prices headed higher and at the same time show enough signs of weakness to prevent the Federal Reserve from raising interest rates in 2010.
Seems like trying to get a camel through the eye of a needle?
Well, I think the odds are better than you might think — for the first half of 2010. Then they get progressively worse until, by 2011, the chances that the stock market will get the precise balance it needs are almost nil. (This column is an update of my how to worry/when to worry post at JubakPicks.com.)
Where is Eddie??? REALITY: Kills Trolls Dead
stop trolling..
We are just down to one resident PR guy on the HBB any more…
But then again, maybe Joey answers to the name of Eddie?
you too.. stop it.
REALITY: Kills Trolls Dead
Live by the Dow, die by the Dow…
Jobless rates climb in all 50 states
Business First of Buffalo
All 50 states ended 2009 with higher unemployment rates than a year earlier, according to a report issued Friday morning by the U.S. Bureau of Labor Statistics.
Nevada and West Virginia registered the sharpest upswings in unemployment last year, each rising by 4.6 percentage points. Nevada’s jobless rate soared from 8.4 percent in December 2008 to 13.0 percent in December 2009, while West Virginia’s rate climbed from 4.5 percent to 9.1 percent.
New York had the 32nd-sharpest increase among the 50 states and the District of Columbia, rising 2.4 points from an unemployment rate of 6.6 percent a year ago to 9.0 percent last month.
Minnesota and Nebraska showed the least upward movement. Their unemployment rates increased by just 0.8 percentage points during the past year.
And I was hoping for change.
“‘…the Obama administration issued a secret rule almost two weeks ago saying it was legal for the FBI to have skirted federal privacy protections.’
“As for Obama issuing a rule saying that breaking the law is legal… how does that work? The president doesn’t get to just declare something legal, especially when it clearly violates both the letter and intent of the law.”
via techdirt
Some telco trivia:
It used to be that in order to wiretap a telephone line some sort of external device needed to be hooked up to the line. Nowdays everything necessary to monitor a call is already built into the switch.
Wiretaps are SO last century!
More Layoffs Coming to American Airlines: APA
(AP)
Representatives for the Allied Pilots Association said they have been told to expect layoffs at Fort Worth-based American Airlines in the months ahead.
The APA’s Scott Shankland said American plans to layoff 130 pilots over a two-month period of time beginning at the end of February.
The union said it’s working with the company to try to minimize the number of pilots affected.
I just bought an AA ticket. At the end the girl gives me the cost of the fare and says “… plus the $20 telephone reservation fee.”
I was miffed about them nickle and dimeing me ..Had there been any other carrier that could take me where i’m going… well.. what the heck.. it’s only $20.
We flew AirTran recently. I booked the flight on their website. They charged me $6 per seat per leg to choose my seat assignments which I felt compelled to do because Mrs. Cowtown prefers to sit next to me for some reason. We were then charged $15 per bag at check-in on departure, and then again on return. Grand total extra charges: $108.
Southwest does not fly here, but they do fly to Oklahoma City. It is now more cost-effective to drive there to take advantage of their no-fees policies.
I’m gonna have some fun with my luggage this time.. The plan is to pack 7 days of clothes and stuff in a carry-on plus one small accessory bag.
So, i go get some of those space-saver bags to experiment.. (about $5 each at Wmart)
Fill the bag, hook up a vacuum cleaner and whoosh.. out goes the air.
And it works. I laid out more clothes than I’ll need, carefully packed the plastic bag, compressed it and the solid block of clothes easily fits in the carry-on.
To give you an idea, a pile of folded T-shirts 8 inches high will compress down to less than three. Probably exceed the weight limit (40 or 50lb?) in a carry-on if you try.
Wrinkles are no biggee.. hotel room has an iron..
And if the bag breaks or whatever, I can UPS some clothes home.
If there’s any entrepreneurs out there, they can have this one for free: Design a piece of luggage with an inbuilt system to evacuate the air and compress the clothing. These plastic bags would be a very poor substitute for something that’s purposely designed.
I fly Southwest on my own dime any time I can. If I’m paying, darn skippy I’m flying Southwest.
For work: Whatever fits my schedule and where I’m going and how guilty I feel. If I need to check bags I do, I don’t really care (anything less than a week I can do carry on, and not one of those moster carry ons that barely fit the overheads. Quarters are much smaller and easier to pack, and can be expensed relatively easy.) Anyway, the whole point of fees is business travelers. Airtran wants $12 extra to pick a seat? No worries.
Personal travel if sooo last century.
Tyson to cut 480 workers in Council Bluffs ~~ January 22, 2010
Meatpacking giant Tyson Foods Inc. announced today that it is scaling back operations at its Council Bluffs plant, a move that will end 480 of the 1,300 jobs there.
It’s the second blow to meatpacking jobs in western Iowa in a week. Smithfield Foods announced Wednesday that it is closing the John Morrell hog processing plant in Sioux City, eliminating 1,450 jobs there. That shutdown will be effective in April.
Tyson’s Council Bluffs facility processes beef and pork and packs them in cartons ready for retail sales. The company says it is cutting back part of its second shift there in mid-March and moving those operations to plants in Tennessee and Texas that are closer to its customer base.
Meatpacking giant Tyson Foods Inc. announced today that it is scaling back operations at its Council Bluffs plant, a move that will end 480 of the 1,300 jobs there.
Looks like there will be quite a few people heading back to their countries to the south of this one.
Tyson Foods Inc. = Crap Foodder
Since immigration raids them constantly, I’m pretty sure all that’s left are legals.
Marc Faber: White House Should Let Markets Work
22 Jan 2010 | CNBC.com
The US administration’s interventions in the market will not solve problems and will bring about unintended consequences, Marc Faber, author and publisher of the “Gloom, Boom & Doom Report,” told CNBC Friday.
President Barack Obama on Thursday proposed new limits on the size and trading practices of big banks, to prevent excessive risk-taking.
“I don’t have a very high opinion of Mr. Obama,” Faber told “Squawk Box Europe.” “I was negative of Mr. Bush but I think Mr. Obama makes him look like a genius.”
“Basically I think everybody will agree that in an economic system the market solves problems best.”
The result of the slashing of interest rates to 0 percent in the autumn of 2007 was the surge in oil prices in the first half of 2008, because investors were looking for a place to put their money to get a return, he explained.
““Basically I think everybody will agree that in an economic system the market solves problems best.””
As long as you forget about that recent, pesky little worldwide meltdown and extortion by the perpetrators.
Yep, works good.
In the roaring 1920’s, the bank we now know as Citibank, sold repackaged BAD Latin American Debt into securities, and sold them to U.S. investors. One of the many causes of the 1929 crash, but I found this interesting.
http://www.fdic.gov/about/learn/learning/when/1920s.html
Nope no parallels there. We all know it them thar po folks what lied on their loans that caused the current mess.
Starting to hear more of this, I’ll be sure and send the link to NAR.
Home Economics: The ‘American Dream’ Is a “Scam”, James Altucher Says
Jan 22, 2010 10:30am EST by Aaron Task
The past few years have certainly challenged the idea that real estate prices only go in one direction. But the downside of the “American Dream” is even more pronounced, says James Altucher of Formula Capital.
Owning a home has “never been a great investment,” Altucher says, noting housing went up a dismal 0.4% annually vs. 8% for the stock market from 1890 to 2004, according to the Social Security Advisory Board.
Moreover, Altucher says the notion buying a home is a ticket to financial security is a “scam” perpetrated on the American people by corporations seeking to keep us in debt, less mobile and with the storage to purchase all sorts of needless consumer goods.
That’s a provocative statement, hard to prove, and certainly subject to debate. Such a view also leaves out the intangibles of home ownership, such as the stability and other benefits raising a family in a community can bring.
wmbz,
If you actually pay off your home, your golden years are easier to weather, should a health or financial storm come your way. That’s why we’re buying again.
Absolutely!
Several people in my family own their houses free and clear. I think this fellows point was more to the address the myth that many have long believed it was a guaranteed road to wealth. At least that’s the way I read it.
Altucher is confusing actually owning a home (free & clear) with “renting from the bank”.
Owning a home free and clear is not necessarily a complete assurance of security.
My parents owned their home, but by the time my dad died, we had to move our mother elsewhere because the neighborhood they had lived in all their lives was no longer a place for woman to live alone. (NOT because of her age or health.)
“Owning a home has ‘never been a great investment’.”
Never say never. The price you pay determines your rate of return. There have been many times in the past when the price was right for buying a house.
Stay tuned for a return of one of these times.
“such as the stability and other benefits raising a family in a community can bring”
Um, yeah, I am a community leader and I rent. My family is also stable (albeit, a little crowded
).
combotechie
From your post to God’s eyes. We’re trying to pierce the shadow inventory market, with cash for an average primary residence, and the obstacles are enormous. The collusion is just amazing.
For instance, in the Pasadena (So Ca) zip code of 91104 the MLS show 2.29 months of inventory, while the real shadow inventory included figure is 19.77 months. It just boggles my mind this is allowed to go on.
Patience. Mr. Market will win in the end.
I’ll venture to guess that your shadow inventory is a lot like Tucson’s. House just sitting there empty.
While they’re just sitting there, they’re not being maintained. Repairs aren’t being made. What’s worse, they’re proving to be very tempting targets for vandals, squatters, and other up-to-no-goods.
I’ll confess to the fact that I once made money in real estate. That was the day that a dollar bill blew into my front year.
Oh, the Front 40?
Whoops! I meant to say front yard. My bad.
If “owning” a home was such a great investment, people should be paying off the home as fast as they possibly can, even at the cost of not having any other savings or 401(k).
But in the funny American economy, it’s better to take a loan and take a rather long time (30 years) to pay it off and to keep one’s savings and retirement money in the stock/bond market. It is truly ironic.
The big banks play the opposite game - they lend to you to finance your home, and borrow in the open market. They come out ahead. Guess who loses?
“…Altucher says, noting housing went up a dismal 0.4% annually vs. 8% for the stock market from 1890 to 2004.”
It’s not about the capital gains, it’s about not paying rent. When you can buy a house and pay it off in 10-20 years, then the years after that without a mortgage are where the benefit lies. I’m skeptical 30-40 year mortgages would make sense.
Bloomberg Hammers Obama, Congress Over Bank Plan
Mayor Says President’s Idea To Limit Size And Investments Will Lead To Big Problems For NYC, Including Layoffs NEW YORK (CBS) ―
New York City Mayor Michael Bloomberg is less than thrilled with President Barack Obama’s plan to limit the size of banks and their investments.
President Barack Obama’s demand Thursday that Congress clamp down on the size of banks and their investments got major blowback from New York City Mayor Michael Bloomberg, who said it could cause layoffs and hurt the city.
It’s a clash between the president and the mayor. President Obama wants to whittle away at the size of the financial services industry.
“The American people will not be served by a financial system that comprises just a few massive firms,” the president said.
Hmmm, Bloomberg is quite the pro-business conservative when his channel isn’t jamming pseudo-scientific global warming clap trap down your throat, his cops aren’t performing warantless searches in the subway or when he’s spending 153 million dollars to work at a job that pays a couple hundred grand a year. This man may be the biggest hypocrite in America.
Obama Seen as Anti-Business by 77% of U.S. Investors.
Jan. 22 (Bloomberg) — U.S. investors overwhelmingly see President Barack Obama as anti-business and question his ability to manage a financial crisis, according to a Bloomberg survey.
The global quarterly poll of investors and analysts who are Bloomberg subscribers finds that 77 percent of U.S. respondents believe Obama is too anti-business and four-out-of-five are only somewhat confident or not confident of his ability to handle a financial emergency.
The poll also finds a decline in Obama’s overall favorability rating one year after taking office. He is viewed favorably by 27 percent of U.S. investors. In an October poll, 32 percent in the U.S. held a positive impression.
“Investors no longer feel they can trust their instincts to take risks,” said poll respondent David Young, a managing director for a broker dealer in New York. Young cited Obama’s efforts to trim bonuses and earnings, make health care his top priority over jobs and plans to tax “the rich or advantaged.”
One man’s “business” is another’s “Wall Street criminal”
Particularly if that “other” is anti-business and flies the red flag.
Another one that should given a swift kick in the azz, out the door!
Senate Dems Not Sure They Can Get Enough Votes to Reconfirm Bernanke
Amidst the voter anger at Wall Street and Washington, D.C., ABC News has learned that the Senate Democratic leadership isn’t sure there are enough votes to re-confirm Ben Bernanke for another term as chairman of the Federal Reserve.
Bernanke’s term expires on Jan. 31.
The White House did not respond to many requests for comment.
“The American people are disgusted with the greed and recklessness of Wall Street,” Sen. Bernie Sanders, I-Vt., said in an interview with The Associated Press last month. “People are asking, ‘Why didn’t the Fed intervene at the appropriate time to stop the casino-type activities of large financial companies?’”
There it is again. Some Senator claiming that the “American people” are behind him 100%..
“People are asking..”
What people, Senator?
Some 70.. or is it 80% (?) of the American people own stocks or bonds or somehow have their money tied up in Wall Street. And they like it when their investments make lots and lots of money.. Who are you calling greedy and reckless, Senator?
So Bernanke could possibly be replaced? Hmmmm. I’ll save my excitement for the announcement of a more suitable successor. But why do I expect it to just be a case of musical chairs meant to soothe ruffled feathers.
I have no problem with people making money on Wall St. as long as it’s done LEGALLY and without the taxpayer funding their trading operations via QE or TARP.
Entire Town of Wenden Az. Underwater After Storm
Surge of runoff floods streets, homes.
A 2-foot surge of runoff from a powerful winter storm early Friday morning flooded streets and an unknown number of homes in the western Arizona community of Wenden.
Lt. Glenn Gilbert of the La Paz County Sheriff’s Office says no one was reported missing or injured.
An unknown number of people were evacuated from their homes.
The flooding receded late Thursday, but returned several hours later when a surge of runoff came through a nearby wash. The flooding hadn’t slackened by 8 a.m. Friday.
Gilbert says a crew in a Marine Corps helicopter was flying over the area in case anyone had been swept away or stranded.
The community of 500 people about 100 miles west of Phoenix was hit by a more severe flood in 2000.
Early this morn, we had heavy winds and lots of rain here in Tucson. And we’re expected to get more.
This morning, on the fifth day of rain showers in LA, there was a series of heavy rains from the cells. I haven’t seen that in a long time. Heavy, light, heavy, light, and so forth. At 7:30 a.m. in the south bay part of L.A.
I love California weather. It’s usually dry for months in L.A. (”It never rains in Southern California,” goes the song). Five consecutive days of rain for L.A. is remarkable!
Similar story in SD. Yesterday, while driving around town, I needed to find an alternative route to avoid driving through a foot of water. Last night, throughout the night, we heard rain and hail pounding the windows.
A word for the prudent: Today my loverly wife heard through the grapevine that less than 1/2 mile away, during the crashing fury of last night’s storm, some innovative robber broke into a car, activated the garage door opener, marched straight in through the garage door entrance to the home, and cleaned out a substantial quantity of loot unnoticed. So I suggest you think hard before piling so much stuff in your garage that you have no room to store your car(s) inside.
Hugo Chavez says U.S. caused the Haiti earthquake.
http://www.foxnews.com/story/0,2933,583588,00.html
“…Citing an alleged report from Russia’s Northern Fleet, the Venezuelan strongman’s state mouthpiece ViVe TV shot out a press release saying..”
Rene Zellweger to Tom Cruise: “You had me at Faux news & “alleged”"
http://www.marinij.com/marinnews/ci_14239153
Marin IJ top story today.
Highlight: Ron Parks, “We have lost the borderline buyer,” he said. “They can’t get loans and they’re just sitting on the sidelines waiting it out and then prices will go up and they won’t be able to get a house. The window for them is pretty much closed.”
“Buy now or be priced out forever” is still in fashion in Marin.
Russ Feingold get’s another campaign contribution
A chief responsibility of the Chairman of the Federal Reserve is to ensure a sound financial system. Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression. Under Chairman Bernanke’s watch predatory mortgage lending flourished, and ‘too big to fail’ financial giants were permitted to engage in activities that put our nation’s economy at risk. And as it responds to the crisis it helped to usher in, the Federal Reserve under Chairman Bernanke’s leadership continues to resist appropriate efforts to review that response, how taxpayers’ money was being used, and whether it acted appropriately. When the full Senate considers his nomination, I will vote against another term for Chairman Bernanke.”
In 1999, Feingold voted against repealing the Depression-era safeguards put in place to protect businesses, investors, and consumers. In 2008, Feingold voted against the Troubled Asset Relief Program (TARP) and in 2009 voted against authorizing more funding for TARP.
ALL BUSINESS: Will Berkshire Hathaway change after stock split? Buffett says no.
NEW YORK (AP) — Warren Buffett better get used to crowd control — at least when it comes to his investors.
His company, Berkshire Hathaway, just opened itself up to the masses after a 50-to-1 split of its Class B shares took the stock price from around $3,500 to $69 each. That means you can buy a share of one of the world’s most successful companies for the same price of Salesforce.com or Panera Bread Co.
At a price like that, Berkshire shares will attract more buyers — but not necessarily the kind Buffett likes. Bigger and more aggressive investors could show up on his doorstep, many of whom don’t share his long-term views about investing.
Buffett has been smart during this recession. His companies have layed off over 42,000 people and he made sure the trail didn’t lead to him. I don’t buy this guys “hey I’m just a Joe 6P like the rest of you” story. He makes other folks do his dirty work so Becky Quick won’t fail to fawn over him on their next China junket.
http://www.cnbc.com/id/29488247
Yup. Never liked Buffet and always thought that he doesn’t practice what he preaches.
Don’t even get me started on this he’s just a regular man from midwest who loves stakes…….
“…he’s just a regular man from midwest who loves stakes”
Hey, that’s some financial Freudian slip: steaks-stakes! lol
I love Buffett. If you’ve never read one of his annual letters (for Berkshire), I bet that you’d enjoy it - easy to read and straightforward. Considering he’s one of the richest people in the world, he is indeed a J6P IMO. The guy still lives in the house he bought fifty years ago, and probably still answers the front door that either of us probably can walk up to an knock on - how many other billionaires are even close to this? Are his companies (which are under Berkshire btw) not supposed to lay people off in bad times? So I guess they shouldn’t hire people in good time either. IIRC, Berkshire is the #1 individual payer of Fed taxes in the U.S.
Also what the heck is wrong with CNBC’s female reporters? Do they want to sleep with these geezer types or what?
Quick fawning over Buffet
Carusso-Cabrera fawning over Carlos Slim
Bartiromo with WallStreet CEO types
Not sure about other women. I bet they all have their “special” CEO or billionaires. I think that’s how they get their “exclusive” interviews.
What about the CNBC’s male reporters?
Kudlow - Supply side apologist
Lischman - Fed apoligist
Goldman - Apple/Google/Tech apologist
Cramer - Mega idiot
So on and on.
Hopeful news for us older codgers! LOL.
Young gal at work (30ish) dates white-haired guy. I guess I should dye my brown hair white to impress her.
“…Bigger and more aggressive investors could show up on his doorstep, many of whom don’t share his long-term views about investing.”
Who cares if they don’t share his view…they’ve been had.
Feingold on recent supreme idiot court decision
“It is important to note that the decision does not affect McCain-Feingold’s soft money ban, which will continue to prevent corporate contributions to the political parties from corrupting the political process. But this decision was a terrible mistake. Presented with a relatively narrow legal issue, the Supreme Court chose to roll back laws that have limited the role of corporate money in federal elections since Teddy Roosevelt was president. Ignoring important principles of judicial restraint and respect for precedent, the Court has given corporate money a breathtaking new role in federal campaigns. Just six years ago, the Court said that the prohibition on corporations and unions dipping into their treasuries to influence campaigns was ‘firmly embedded in our law.’ Yet this Court has just upended that prohibition, and a century’s worth of campaign finance law designed to stem corruption in government. The American people will pay dearly for this decision when, more than ever, their voices are drowned out by corporate spending in our federal elections. In the coming weeks, I will work with my colleagues to pass legislation restoring as many of the critical restraints on corporate control of our elections as possible.”
“…their voices are drowned out by corporate spending in our federal elections.”
Who would’ve ever thunk that a chuck of ice could rip open the ironclad Titanic like a can-opener?
Who would’ve ever thunk that this decision: DRED SCOTT v. SANDFORD would cause a lankly IL lawyer to become Commander-in-Chief over the worst War in American history?
Chief Justice John Roberts…like Jefferson Davis…on the wrong side of American History!
And I nominate Abe Lincoln to be the center on the All-Presidential Basketball team. For power forward, I say Lyndon Johnson. A big man who knew how to throw his weight around.
Small forward? I’m gonna have to go with that other guy from Illinois, Obama. Nice outside shot that’s improved over the years.
Point guard? Washington. Persistent guy. Doesn’t give up. Natural leadership abilities too. Keeps his head in the game, no matter what the odds. Shooting guard? I say Jefferson. Real smart player.
…”stock selloff accelerates”…
Great. There goes what I made back on the value of my BRL currency CD as investors join the sigh…”flight to safety.” pfffft.
Looking back 11 years, my DOW 10,000! ball cap was a GREAT investment.
Yes, it’s a good compliment to my 201K beret!
Let’s go to All-4-1 / 1-4-All “sympathy party” and a good smashing time!
(Hwy swishes some new red red wine about)
Enjoy it while it lasts Rio!
Skye fills his tumbler with single malt. No swishing please.
fills his tumbler with single malt.
Man, I’m envious. That stuff is really expensive here. I just had a caipirinha made with the good stuff!
But it’s not the same…..
I don’t know if people have seen it, but there was an article in the WSJ online relating to supply of housing in CA.
Here’s the gist:
Less than 4 months of inventory of unsold homes (down from 5.6 months a year ago, and 16.6 months at the peak)–historical average from 1980 is about 8 months;
Percent of home sales that were foreclosures are down from 58% to 40% overall (better on coast than inland);
A few sob stories of people being outbid, unable to buy a house, etc.
I hate to say it (since I would like to buy), but for most homes (perhaps not the highest end homes), the bottom in CA may be behind us.
Big, big question is whether or not:
- The Fed MBS purchases will finish in March, without being extended
- The homebuyer credit will expire in April, without being extended
If the answer to those is Yes, and if there is no significant program to replace them, then CA will very quickly slump back down, with priced dropping below their bottoms of this past spring.
Otherwise - you may be right - the bubble may end up being extended indefinitely, until such time as population growth catches up. Prices may have bottomed for good this past spring.
There’s an article in Business Week today about how people are more aggressively buying mortgage backed bonds…I’m not sure the Fed slowing their purchases will stop things.
Median home prices in CA are about $300k, the homebuyer credit of $8k is about 3% of the median price. I’m sure there are some people who need the liquidity to purchase, but I think the “rush” into the market when everyone thought it was going to expire was more related to greed than need. Affordability in CA is at an all time high right now.
I don’t think the credit is as big a deal as people think, and it’s easier to buy MBS with home prices generally rising than when they are falling. By the time we get to March, home prices overall will have increased year on year according to Case-Shiller, and most individual markets will be the same thing. This will begin to change psychology regarding investing in MBS, especially when alternative rates are so low.
And in CA, population is caught up with the amount of housing (it had never not been caught up, prices just got out of hand).
Google Search “wsj online california housing inventory” and the page you (probably) refer to is at the top.
I could post the wsj url but it’s long, so i won’t.
From that page:
Some housing experts cautioned that inventories may be artificially low because many would-be sellers are waiting for the economy to improve before putting their homes on the market.
btw… normal historical inventory for Calif is 8 months, and if it’s only 4 months now, something is certainly way out of whack.
The article attributes that low inventory to the lack of foreclosures coming on the market. Misguided bottom feeders seeking “deals” are snapping them up (and paying too much, imo) while the rest of the properties get no love.
Less than 4 months of inventory of unsold homes
Don’t forget shadow inventory.
Are we forgetting all the ARMS that will hit this year? Not sure what you are talking about, since another round of foreclosures is about to hit.
About a third of the Option ARMs have already defaulted. A lot of these ARMs are for the low end. I’m not sure there is going to be another big blast at the low end (but perhaps at the high end–thus my parenthetical).
Update from slobbering Barney…
Fannie, Freddie Cannot Exist in Current Form: Frank
CNBC.com and Wires
Rep. Barney Frank (D-Ma.), chairman of the House Financial Services Committee, said Friday that Fannie Mae and Freddie Mac should be eliminated as they stand now.
“This committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance, that’s the approach rather than the piecemeal one,” Frank said.
Frank made his comments during the committee’s hearings on executive compensation.
A statement to CNBC.com from a senior congressional staff person said that Frank has said in the past that the current structure of Fannie and Freddie cannot exist and that in Frank’s words, ‘we cannot go back to the private entity with public responsibilities.’
And the move towards complete government-owned housing continues…
Not that I’m in favor of the GSE’s anyhow, but we should be moving in the other direction - towards total privatization with no TBTF status, not towards nationalization of real estate
ownershiplending.+1 with the addition of no or at best partial securitization. People who lend need to have skin in the game.
“This committee will be recommending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance, that’s the approach rather than the piecemeal one,”
How about a mortgage lending sector comprised of small, independent, competitive local community banks without any free TBTF-bailout insurance to back them up in case they make foolish lending decisions? I am guessing the market could do a better job of pricing the risk than Wall Street securitizers armed with free TBTF bailout insurance ready to buoy them up if their insanely stoopid gambles lead to massive losses. I am guessing pretty soon the mortgage lending sector could be restored to soundness and profitability in no time…
I guess the boyfriend broke up with Barney, and it wasn’t a good break up.
WASHINGTON – Dozens of current and former corporate executives have a message for Congress: Quit hitting us up for campaign cash.
Roughly 40 executives from companies including Playboy Enterprises, ice cream maker Ben & Jerry’s, the Seagram’s liquor company, toymaker Hasbro, Delta Airlines and Men’s Wearhouse sent a letter to congressional leaders Friday urging them to approve public financing for House and Senate campaigns. They say they are tired of getting fundraising calls from lawmakers — and fear it will only get worse after Thursday’s Supreme Court ruling.
The court ruled that corporations and unions can spend unlimited money on ads urging people to vote for or against candidates. The decision was sought by interest groups including one that represents American businesses, the U.S. Chamber of Commerce. They argued that restrictions on ads they could finance close to elections violated their free-speech rights, and the court agreed.
Congressional candidates who find themselves attacked by a flood of special-interest TV ads in the 2010 elections will likely reach out to their party’s biggest donors for money to help them counter the blitz.
“Members of Congress already spend too much time raising money from large contributors,” the business executives’ letter says. “And often, many of us individually are on the receiving end of solicitation phone calls from members of Congress. With additional money flowing into the system due to the court’s decision, the fundraising pressure on members of Congress will only increase.”
Let them have free speech. Run your speech at Superbowl halftime, I won’t watch it. Those demands for PAC contributions from the employer were such a pain.
Let them end bribes to Lawmakers.
Supreme Newspeak: “Money” = “Speech”
New construction now for rent:
http://www.realtor.com/realestateandhomes-detail/Lot-3-Pauli-Drive_Manlius_NY_13104_1115479129
Yeah $2300. Yesterday I posted one w/3 year lease requirement and someone was incredulous upstate properties commanded so much but $2000+ is the going rate for most SFHs for rent in good condition in this location. There is a shortage of them. And you have to remember these rent prices cover the bloated NYS property tax bill. When the town made Money Magazine’s Best Places to Live List in 2005, they listed median family income at $72,169.
Been a “bad” week on wall street. My NW dropped $30,000 in a couple of days. But I continue buying stocks. Crazy me. But what the hail.
Sold between 100 and 1000 shares of a particular small bank (surprise!) stock for a 31% gain in 13 months, so it will stay in cash awhile.
I will use my stock screeners to scout for undervalued stocks, but I think there are fewer and fewer these days. I’ll just keep a wish list.
Bill, I know you are an IT guy for hire, and currently have a contract. Do you ever actually do any …umm… work?
I will send you my time logs and I will keep a notebook of when I work just for you, Jane.
Now that you are picking on me alone, what about all the posters here who post all day? Or do you just assume they are all retired?
Populist Surge on Hill Eases the Support for Bernanke
BY SUDEEP REDDY, GREG HITT AND MARK GONGLOFF
Ben Bernanke faced ebbing support for a second term as Federal Reserve chairman as more senators adopted a populist, antibank stance even as the White House launched a public push to defend his candidacy.
The erosion of support crossed party lines. Two Democratic senators facing re-election in November, Barbara Boxer of California and Russ Feingold of Wisconsin, on Friday joined two Democrats and an independent who previously announced their opposition. Ten Republicans say they, too, will oppose Mr. Bernanke.
…