Bits Bucket For January 30, 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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Further confirmation of Canada’s housing bubble
Call it what you want, but economists at Scotia Capital think the Canadian housing market is a bubble that faces downsides into next year – and the numbers continue to prove it.
Teranet’s measure of Canadian housing prices, the closest equivalent to the U.S. S&P/Cash Shiller Home Price Index, was just 0.1% off its all-time record high in November 2009.
“The gains are accelerating in recent months, and the December print is likely to firmly set a nationwide all-time record high,” Derek Holt and Karen Cordes said Wednesday.
While Canadian house prices went down like most other countries, they didn’t stay there. In fact, Teranet’s measure of house prices is up 92% nationwide since the beginning of 2000, blowing most other asset classes out of the water.
The economists compared this with U.S. home prices, which climbed 105% from the start of the decade until they peaked in 2006.
Regionally, Calgary is up 120% in the decade, Vancouver 116%, Montreal 110%, Ottawa 90%, Halifax 85% and Toronto 66%. But Scotia does not buy the assertion that only select markets are in frothy territory.
“All regions of the country have participated with hefty price gains over the past decade on the march to record nationwide prices,” the economists said.
And here’s what the man responsible has to say. Canada’s “Conservative” government guarantees mortgage lending:
Dec. 21 (2009) (Bloomberg) — Finance Minister Jim Flaherty said record Canadian home prices partly reflect a stabilizing economy and don’t constitute a bubble “right now,” even though the government is prepared to act if gains become excessive.
Flaherty, in an interview today, said recent price increases for homes in Canada are due to a “confluence” of factors including low interest rates, an improving economic outlook and a stabilizing job market.
“We always watch the housing market to make sure that we do not see the development of an asset bubble,” Flaherty, 59, said during an interview in his office in Ottawa. “There would have to be clear evidence of an asset bubble in residential real estate in Canada, which there is not right now,” for the government to take steps.
Flaherty, in an interview today, said recent price increases for homes in Canada are due to a “confluence” of factors including low interest rates, an improving economic outlook and a stabilizing job market.
“We always watch the housing market to make sure that we do not see the development of an asset bubble,” Flaherty, 59, said during an interview in his office in Ottawa. “There would have to be clear evidence of an asset bubble in residential real estate in Canada, which there is not right now,” for the government to take steps.
———————————
Sounds very much like the B.S. Greenspan was spewing back in 2003-2005.
Enjoy your bubble, Canada!
There is no fundamental reason for the average house price in Canada to be twice what it is in the US.
Blue:
Maybe they build them a whole lot better with thicker walls R39 R52 insulation…after all it gets a lot colder there then NYC
So does Buffalo.
Next rationalization?
Insulation irrelevant with a good Canadian woman under the covers.
Even better with a bad one.
Whether bad or good, can you guys send a few of them my way? Lonely over here.
Blue:
next Thursday 4th…5-7
http://www.bradmarshallart.com
my GF website on my handle
Nice dj,
That one “Universal Love” looks like a cross between a virgina and a bear trap. Conflicted is she?
At some level, construction costs matter little in the price of a house. The cost of the land will adjust in response.
“There is no fundamental reason for the average house price in Canada to be twice what it is in the US.”
Exactly. At 49-degrees (plus) North latitude it isn’t the weather.
Canada always lags the U.S. in economic terms. However this bubble is gonna blow and when it does, I’m thinking the fall, it’s going to be big, by Canadian standards.
Have been warned by F who is CRE, JUNE.
The really big fall is starting June.
“There is no fundamental reason for the average house price in Canada to be twice what it is in the US.”
I did not know that! Surprising.
Unexpectedly.
Just goes to show that a bubble is most difficult to see when you’re inside of it.
When you’re inside, no matter what direction you look, a bubble reflects your own image. See any trouble on the horizon? Nope. All I see is me in all my glory.
GroupThink. Mania. Bubbleview.
The Economist magazine had a cover story called “House of Cards” back in like 2004 or 2005, all about the global housing bubble. We were talking about it here. I did not know how it would play out - was the new lending really a new plateau? Or would it collapse. Soon though, I heard about NINJA loans (No Income No Job or Assets), heard Greenspan advocating people take out ARMs in a historically low interest rate environment, and the concept of the financial industry making risky loans to risky people, and I realized then there would be some kind of reckoning.
With the lesson of the US (and the world) freshly available, it should not be too difficult to discern whether Canada’s house price increase is a result of risky lending or some organic increase in demand.
Bank Failure Friday yielded six banks, bringing us to 15 for the year. I know people like to think this isn’t a big deal compared to the 1990s; but considering that the number of institutions is half now compared to two decades ago and the size of the failing institutions is singlificantly larger…I see the present rate as shocking for a number of reasons.
1) The suspension of mark-to-market and the slow realization of REO losses means that the failed institutions must be just a fraction of the true number of true insolvent institutions.
2) The easy money that can be made taking TARP funds and reinvesting in Treasury Bonds at interest.
3) The fact that credit has been dried up for over 16 months, meaning the 6-12 month buyback window for the majority of bank written residential mortgages has closed, so that buybacks have likely trickled to a crawl.
4) Consumer spending rose 1.5% in the fourth quarter 2009, and since J6P typically buys everything on credit, even small banks issuing cards can take the 2% merchant fee even if the cardholder pays off the balance in full every month.
5) Despite the recession being over, the rate of failure of banks in January suggests that the overall number of institutions that fail in 2010 will be equal to or exceed that of 2009 failures (140, vs projected failures of 140-180 for 2010).
6) Recall that not a single bank failed between June 25, 2004 and Febdruary 2, 2007. Four banks failed in the total of calendar year 2004, three failed in calendar year 2007. The number of banks closed January 29, 2010 is only one less than the sum of the number of banks closed in four calendar years 2004, 2005, 2006, and 2007.
The PTB can make as many or as few banks fail as they so choose. They can also declare them all insolvent or declare none of them insolvent as they so choose.
It appears they have chosen to meter out the bank failures so they will be slowly absorbed by the economy without too much disruption. That means if the economy improves then more bank failures will be declared. If the economy doesn’t improve then less bank failures will be declared. This makes the number of bank failures a sort of contrary indicator of how well the economy is doing.
(A little tounge in cheek here, but not a whole lot.)
1929 banks per 100,000 population: 21
2009 banks per 100,000 population: 2.3
(and sinking fast)
Killing the competition
Pack:
wonder what the ratio was in the 80’s before ATM’s?
Earliest FDIC official nums are 1984: 14,400 banks for 235M people. So that’d be 6.1 per 100,000 population.
Seems to be just a steady decline, though more rapid since 1985 - perhaps due to technology.
My 1929 number is from various google results stating that there were about 25,000 banks before the GD. Currently there are just under 7,000.
80’s before ATM’s?
DJ, that is a really good one. When people stood in lines patiently while someone wrote a check.
Lately I find myself standing in line behind more and more imbeciles who try to pay for their $5 purchase with a declined credit card.
Lately I’ve been that guy with the declined debit card…because the damn network is FUBAR.
No computers in 1929 implies a whole different level of efficiency then versus now (looks roughly like a factor of 100)…
10 (not 100) — time for bed, I guess!!!
Combo -
My vote for post of the week. Nice work.
I agree with Chile, combo. You’ve been on a roll this week!
“The PTB can make as many or as few banks fail as they so choose. They can also declare them all insolvent or declare none of them insolvent as they so choose.”
That’s right! It’s a New Era, folks! The old rules don’t apply any more (and in fact, it is some times hard to figure out whether any rules actually apply…).
My business bank is in the failures yesterday. I JUST put 265k into the account. Now we’re scrambling to have the client stop the check.
Amazing
“My business bank is in the failures yesterday. I JUST put 265k into the account. Now we’re scrambling to have the client stop the check.”
Best of luck cereal. Hopefully they stopped payment!
One real difference between the S&L crisis and the current one has to do with interstate banking laws. Back in the old days, under laws designed to protect local banks from competition, and to prevent insured banks from getting too big, there was very little interstate banking. About the only way for consumer banks to operate in more than one state was to take over the assets of a failed institution in a different state. This ammounted to a special incentive for banks to take over failed institutions. So banks were willing to take a small loss when taking over failed institutions because this opened up a whole new state for their business. By the time the S&L crisis was over, this made interstate banking become so prevalant, most of the remaining restrictions were removed. So new we have HUGE insured institutions, and banks in the flyover states failing because of the massive default rates in Florida.
140 banks were closed last year, and the 15 shuttered this month by the FDIC . If this pace of closures continues some 180 more banks could disappear by the end of 2010.
The FDIC doesn’t have the resources $ to handle that and will have to turn to the taxpayer for bailout funds.
http://www.rttnews.com/ArticleView.aspx?Id=1195524
The two shuttered banks in Georgia followed 25 bank failures there last year, more than in any other state.
The government’s resolution of First National Bank of Georgia is expected to cost the deposit insurance fund $260.4 million. That of Community Bank and Trust is estimated to cost $354.5 million. Florida Community Bank’s resolution is expected to cost the fund $352.6 million and Marshall Bank is expected to cost $4.1 million. The hit to the fund from American Marine Bank is estimated at $58.9 million.
“I know people like to think this isn’t a big deal compared to the 1990s;…”
Especially banking industry PR people, or so they tell us.
The thing the banking industry PR people consistently neglect to mention or to acknowledge is that the rules governing the system have effectively been suspended or repealed, due to the severity of the crisis. Hence banks which should be going or should have already gone under, aren’t.
Wonder why ‘we’ don’t unleash an army of auditors on F&F? Oh wait, we did that already… to no avail.
Fannie, Freddie Chase Bad Mortgages ~ WSJ~ 1-30-10
Lenders Like BofA, J.P. Morgan Repurchase Billions in Faulty Loans; Just a Drop in the Default Pool
It is payback time for Fannie Mae and Freddie Mac on some mortgages sold to the finance companies by lenders.
Stuck with about $300 billion in loans to borrowers at least 90 days behind on payments, Fannie and Freddie have unleashed armies of auditors and other employees to sift through mortgage files for proof of underwriting flaws. The two mortgage-finance companies are flexing their muscles to force banks to repurchase loans found to contain improper documentation about a borrower’s income or outright lies.
“The two mortgage-finance companies are flexing their muscles to force banks to repurchase loans found to contain improper documentation about a borrower’s income or outright lies.”
Lol. Let’s get real. Banks are already broke; Where are they supposed to get the money for this?
From new equity investors?
Bwahahahahahahahah….
Sorry. Couldn’t maintain a straight face. I’ll work on it.
Couldn’t maintain a straight face. I’ll work on it.
Don’t be to hard on yourself! ;>
Just watch the pols and bankers keep sour puss’ and practice practice practice!
I wonder if they will audit Stuyvesant town debt sold to them via Blackrock.
Theory
1. METLIFE BRIBES Tishman Speyer to way over pay for Struyvesant town. 3.4 billion. (Bribe was selling them the METLIFE building below market)
2. Tishman Speyer puts essentially nothing down then bribes Blackrock to sell debt to GSE’s and pensions
3. Currently Tishman Speyer is going to be sold for close to a 50% haircut. GSE’s and Pensions eat 1.5-2 billion in losses.
Where is the audit of this??
4. State pension funds that got toasted go to tax payers to make up for the losses.
5. Tax payers demand bonus reductions and more taxes on Banks.
Taxpayers continue voting for Republicrat politicians who are in bed with Wall Street and the Banksters, so the cycle of swindles continues.
If the originators of bad loans are forced to buy them back, we are going to see a huge spike in bank failures. There’s not enough bailout money on the planet to cover all these bad loans, much as the Banksters would like to foist them onto American taxpayers.
I’m wondering if the Asian “investors” who bought mortgage-backed securities fraudulently rated as AAA have any recourse against the big banks who sold them this toxic waste.
Sammy:
I would Love to see the re agents/brokers pay back their commissions if a property goes into foreclosure in the first year and 50% in the second. And to make it even more stringent…the debt will not be dischargeable in BK.
I would too. Since the REIC is completely incapable of regulating itself, I’d like to see tough new independent reviews of real estate transactions and an aggressive weeding-out (as in, yanking the licenses) of realtors who unscrupulously enable strawberry pickers, for example, to “purchase” homes far beyond their means.
While I despise the REIC as much as the average poster on this blog, holding the RE agent responsible to a buyer getting in over their head opens a whole can o’ worms. Suddenly Best Buy will have to verify a 15 year-old can afford a $13.99 CD, the eBay seller will have to verify bidders…etc.
What I would like is for RE agents (and the NAR) to be held responsible for providing investment advice. I’ve got no problem with them saying, “you can afford this” because they’re nothing more than salespeople. That is their job and is nothing more that standard salesdrone talk. I do have serious issues with them making any statement that reflects the future value of the property, including “real estate is an investment in your future”, “real estate always goes up”, and “buy now or be priced out forever”.
“What I would like is for RE agents (and the NAR) to be held responsible for providing investment advice. I’ve got no problem with them saying, “you can afford this” because they’re nothing more than salespeople. That is their job and is nothing more that standard salesdrone talk. I do have serious issues with them making any statement that reflects the future value of the property, including “real estate is an investment in your future”, “real estate always goes up”, and “buy now or be priced out forever”.
If you regulated that, you can also make a case for regulating every larger ticket purchase, like Luxury car salespeople telling people they can afford that Lexus.
We need less regulation, not more- IMO.
to be held responsible for providing investment advice.
whoa whoa whoa.
Lets start with banks dispensing investment advice. Oh, yes, ‘we’ threw that law away a few yrs ago.
2002, I asked if there were anything like an IO loan, on a MT prop
( now mind you I was curious and it WAS on a $40,000 4 plex in MT near a mjr school and had tenants already)
and the banker said NO way. Then just a couple yrs later, as we see here, it was SOP everywhere else.
I was premature on using OPM.
We need less regulation, not more- IMO.
Not with all the lies, cheating, theft, pilferage and general business done nowadays.
While I am no fan of the industry, I don’t think realtors should be responsible for auditing the financial situation, health status, martial status and occupational status of every purchaser - many reasons lead to foreclosure/bankruptcy, and financial irresponsibility is only one of many causes.
True enough. Obviously, whoever signs the mortgage contract bears primary if not sole responsibility for honoring that obligation. Of course realtors should not be held liable for buyer circumstances beyond their control. However, where there is clear evidence of unethical and illegal conduct by realtors to facilitate what are essentially fraudulent transactions, then they could and should be held accountable for their role in the transaction.
We are still talking the golden rule of 80/20. It isn’t all the re folks. However, once you see in any situation, that someone is blatantly getting away with something, one shakes their head and says, either no way, or gotta pay ‘my’ bills too.
Way back in the day when I worked in a retail establishment with a commission plan, if we were paid a commission on merchandise sold, if and when that merchandise was returned (all returns required receipts and or tags on the items- and all receipts and tags had the sales person’s ID on them) the amount of the sale was then deducted from whatever total we had going on at the time- so in effect, the company recouped any commission paid for merchandise that was later returned. It isn’t that hard, and there should be compensation policy in place for the bankers, brokers, and RE AGENTs who also work on commission. If what you sold goes bad- the amount of the bad product is deducted from your current sales thus reducing your commission. That would incent a body to not be making risky sales, or get drummed out of the business pretty darn fast.
Life is a risk.
How was the audit to “no avail?”
It seems that the audit told F&F to get on the ball and check all their pokes to make sure there are real pigs. And to shove any empty bags right back down Angelo Mozilo’s throat, where it belongs. And F&F is doing just that. F&F are passing losses — the worst of the losses — from their own balance sheets (ie, taxpayers) back onto the bank balance sheets.
If the gov run out of bailout money, then the banks will have to take back the houses and sell them on the steps for pennies on the dollar. Then the bank goes BK, F&F/taxpayer some hit but not too much, and house prices fall to some level “acceptable” to the PTB.
Sounds like an elegant plan.
Agree. It’s much better to have those “toxic” loans back on the private lenders’ books.
For 2 years now they’ve been funneling the old maid cards to the GSEs. That article is pure BS, a PR move. It won’t be long before we learn the real score.
Yeah, I’d like to see lots of this, but I don’t think that we really will. The banks are simply too politically powerful to let this happen, especially with the recent SC decision on corporate electionering.
Looks like our (HBB’ers) guesstimates were right on target!
‘Underemployment’ tops 20 pct in 3 states
‘Underemployment’ near or above 20 pct in 9 states as part-timers, discouraged workers grow.
WASHINGTON (AP) — President Barack Obama said in his State of the Union Wednesday that “one in 10 Americans still cannot find work.” But in nine states the figure is much worse — closer to one in five, according to Labor Department data released Friday.
The figures are a stark illustration of how tough it is to find a full-time job, even as the economy has grown for two straight quarters. The official unemployment rate of 10 percent doesn’t include people who are working part-time but would prefer full-time work, or the unemployed who have given up looking for work.
When those groups are included, the devastation in many parts of the country is clear: Michigan’s so-called “underemployment” rate was 21.5 percent in 2009, the highest in the nation. California’s was 21.1 percent, while Oregon’s was 20.7 percent.
Part time workers need to get more than one job in order to make ends meet which boosts the employment statistics which is a good thing in that it shows that the number of jobs is increasing and thus the economy must be improving.
Generally one full time employee is more expensive to an employer than two-or-more part time employees working the same number of hours. This is an incentive (as in survival tactic in this dismal economy) for an employer to get rid of full time employees and replace them with part-timers.
The employment stats get a boost as a result.
Or outsource, or subcontract to freelancers like AzSlim. They are raiding yet another pocket of value. This time it’s worker benefits, and not just overblown union benefits either. Even basic health insurance and a 2-3% 401K match is enough “fat” for an employer to cut.
I still think it was the right thing for Obama to (try to) tackle health care/insurance. Job-lock is a huge problem.
overblown union benefits
You MUST be referring to the old days of the 60-80s, cause for our small union, it aint so buddy.
I was referring to the Generous Motors stereotype. I was hoping to pre-empt that old Repub talking point that it was unions who destroyed business.
In my field, there are no unions, so I have no idea what they’re about. My new job automatically put me into a union, no big deal.
There was no “guesstimate” to it. Only research of readily available facts that just needed the dots connected.
Prof Bear
reg your post yesterday about FED officials buying stock in GS.
While the Fed was deciding whether or not to grant Friedman a waiver, he bought 37,300 Goldman shares on December 17, for an average price of $80.78, according to regulatory filings.
On January 22, he bought 15,300 more shares for average prices of $66.19 and $67.12, according to filings with the U.S. Securities and Exchange Commission. The January purchase brought his total holdings to 98,600 shares.
Goldman shares closed on Thursday at $133.73, meaning Friedman has profited handsomely, earning more than $3 million in total on the two purchases.
“Clearly he should not have done that (bought more Goldman shares), and probably even before he did that, he should have gotten off the board,” said Alfred Broaddus, former president of the Federal Reserve Bank of Richmond.
John Dunbar, a senior fellow at the Center for Public Integrity, a nonprofit watchdog group in Washington, said the stock purchases were a “complete conflict of interest.”
Why should FED officials ever be able to buy banks that they are actively bailing out. This is insider trading at it’s worst.
Good post, Measton. Of course THIS kind of insider trading will always go unpunished.
Somewhere, Bernie Madoff is screaming about the injustice of the situation….
I suspect ol’ Bernie’s jailhouse squeals may be unrelated to any perception of injustice….
Ewwwwwwwwwww.
Karma can be a biatch….
Bernie’s jailhouse squeals
He isn’t in that kind of jail. He is in the country club one with other schnooks like him. Light security.
Unless otherwise informed, the punishment is rarely meted out correctly.
While I wouldn’t want to defend a miserable criminal, I would point out it costs a lot more to put a prisoner, in say, the ADX supermax, then some club fed. You want to extract some degree of retribution, but on the other hand, in a land of decreasing resources (or should I say decreasing “paper” to print money on), do you really want Bernie to be in some really expensive high security prison, taking space of a violent criminal?
I do feel bad for those taken in by that horrible person, but what about investment losses for bad loans, bankrupt banks, stock market losses? I “lost” a lot of money in 2000 thanks to the dot com blowup, but my investment professionals didn’t go to jail (Thanks to this blog, Peter Schiff & others I got out in 2007 and got rid of the “professionals”). Yeah, you can argue “intent” but I would argue some of these mortgage brokers had the same intent as Madoff - defraud security purchasers by selling loans that had no chance of ever performing and collecting fat commissions. The jails would be full of fraudsters if magnitude wasn’t a really big factor starting with the leadership of Goldman Sachs.
I suspect ol’ Bernie’s jailhouse squeals may be unrelated to any perception of injustice….
I laughed at the joke, kinda. However I am not proud that our society and penal system allows, turns their head the other way to and condones rape. I mean it’s RAPE for gosh sakes. A lot of people are in there for pot and stuff.
How many convicts have been convicted of doing it WHILE they were IN prison. I think they should be. My gosh, if rape is not considered “Cruel and Unusual Punishment” what the heck would be?
And I understand Karma but what is the Karma for tolerating a system that allows rape?
Who says the system allows rape? you watch too many movies. Prison rape has been used as a (bad) joke so many times people started believing it’s an everyday occurrence.
In all seriousness, prison rape is no laughing matter. An estimated 500,000 rapes a year take place in our prison system. With the exception of sex offenders, I wouldn’t wish that on anyone, even Madoff. Prison officials don’t give a damn about inmates; they only wish to maintain “order” and turn a blind eye to inmate-on-inmate sexual violence. It’s a sad commentary on our penal system.
January? December?
I couldn’t find bear’s post you refer to as posted “yesterday” so I had to find the original article for myself.
…Friedman bought Goldman shares in December 2008 and in January of this year, which became public with a Wall Street Journal report on Monday.…
http://www.reuters.com/article/idUSTRE5468AF20090508?feedType=RSS&feedName=businessNews
This story (Reuters) is from last year.. Thu May 7, 2009.. Meaning the additional shares were bought in Dec 2008 and in January of 2009, over a year ago.
That means shares were purchased before the market had completely crashed (Mar 2009), and this risky investment would lose money before it gained any..
..Friedman obtained a waiver of the bank stock ownership rules, which the Journal said was granted just before he bought stock in January, that allowed him to hold them until the end of this year. Last week, he said he would resign by then...
Financials were selling off before the broader market. The broader market crash started in Sept. 2008. GS bottomed in Nov. 2008. The broader market bottomed in Mar 2009. Charts don’t lie.
GS bottomed in Nov. 2008.
yeah.. you’re right. I was looking at a 3-yr chart and it wasn’t defined well.
It looks like GS suffered two relatively sharp declines after Nov 2008 but never fell as far.
anyway, i’m not defending the stock purchase.. it stunk. It had the “Appearance of impropriety”. Everyone agreed, including the FED board.. But the waiver was granted and no law was broken from what anyone can determine. Friedman was pushed out.
What bugged me was the lack of year-dates posted, and the lack of a link. I hate searching for this stuff.
wrong joey, he bought the shares before any waiver was given.
measton, I imagine he applied for the waiver before buying the stock, perhaps “knowing” it would be granted?
Or maybe the shares were locked up but the sale was pending on condition of the waiver being granted?
Friedman obtained a waiver of the bank stock ownership rules, which the Journal said was granted just before he bought stock in January
..bought some in Dec ‘08.. then the waiver was granted.. and then he bought more.
Measton-Do Ron PAul and Peter Schiff know about this? I cannot believe they wouldn’t be on you tube b!tching about this.
This guy should be fined and fired.
“and probably even before he did that, he should have gotten off the board,”
Great to hear Fed officials taking such a strong stand against conflicts of interest!
This morning’s banner ad on the local newspaper’s website:
_______________________________
Real Estate Investing Seminars
Houston Real Estate Market has Bottomed and is Rebounding.
DESIRE and ACTION are the Only Requirements… (Money, Credit, or Experience Not Necessary)
_______________________________
Go for it, all you broke, bankrupt and inexperienced! All you need is a rebound….
Wanted: Debt Slaves. The experienced need not apply.
GARDEN GROVE, Calif. – Blaming a struggling U.S. economy, the megachurch founded by Robert H. Schuller Sr. is pulling its signature TV program “Hour of Power” and taking other measures to offset a nearly $8 million drop in revenue.
***
The church saw revenue drop 27 percent from roughly $30 million in 2008 to $22 million in 2009, church spokesman Mike Nason told The Associated Press. The church had projected an 18 percent revenue drop.
Church leaders blamed the decline on the struggling U.S. economy. They intend to save $4.9 million and stave off further financial collapse by selling 170 acres in southern Orange County, including a retreat and wedding center, laying off 50 employees
Red shoots from Satan?
?? They can’t survive on 22 million??????
Maybe the religious right will have to start thinking about their financial interests when they vote??
TV time is EXPENSIVE…..blame that on the LBO’s of media companies. So the stations cant cut the price too much Or they would probably make more $$$ running reruns of Gilligan’s Isle at 10 am on a Sunday
IF TV time is so expensive, then how do infomercials get on the air, even during weekend afternoons? People can’t possibly be buying those weird vacuums and exercise machines?
People can’t possibly be buying
vacumming now.. hehe, just kidding. Yes, they do. It is hugely profitable.
What I don’t get is when the Mega”churches” can’t advertise on the stations that cater TO them in the 1st place- Clear Media for one is owned by a “christian”, and so forth, then guess they don’t really take care of their own.
Yes oxide, they are. However, TV time has sliding rates that are time of day dependent, i.e. prime time costs more than 4am.
But yes, infomercials are indeed very successful. I’ve been told that they don’t think they’ll clear a million, they don’t air.
If and when the Messiah makes his earthly appearance, I’m guessing he won’t be gracing any megachurches with his presence. Just a hunch.
Me too. I try to avoid towers of Babel and such. The Blue Skye is enough for me.
Jesus doesn’t shop at Wal-Mart.
The bumper stickers told me so.
I suspect that the observation of the natural world tells us more about God and his divine purposes than any “revealed truths” and holy books, or evangelists, that purport to do the same.
…the natural world tells us more about God and his divine purposes than any “revealed truths” and holy books, …
I appreciate that idea but I wonder if the average person is capable, solely by observing nature, of learning and living religion’s crucial benifits to cultures and societies.
The Dalai Lama: “Every religion emphasizes human improvement, love, respect for others, sharing other people’s suffering. On these lines every religion had more or less the same viewpoint and the same goal.”
Nature is awesome, however I don’t think I’d be able to incorporate everything into my life that the Dali Lama just mentioned just by me staring at the Missouri River, a pretty flower or the Grand Canyon.
nice sammy,
that’s one of those things i kind of knew but never articulated out loud
I agree with JD. Nice post Sammy.
Me 2
I’m guessing that the Messiah will visit every single one of them, just to throw out the money-changers.
“…stave off further financial collapse by selling 170 acres in southern Orange County, including a retreat and wedding center, laying off 50 employees”
Well, well, well…if it’s the the 170 acres down by the railroad tracks in San Juan Capistrano, that land was bequeathed to them in the early ’90’s. I guess there was no “Keep-it-for-the-Lord’s-work” clause in the bequest.
Now could not be a better time to sell in “The O.C.”
Maybe they ought to “pull-a Warren” and just ask the “flock” for 1.8 Million $$$$$$$ dollars, @ “Warren’s Ratio”, that should net them around 5.1 Million $$$$$$$ in donations.
Who’s next “Trinity” ?
Maybe they ought to “pull-a Warren” and just ask the “flock” for 1.8 Million $$$$$$$ dollars, @ “Warren’s Ratio”, that should net them around 5.1 Million $$$$$$$ in donations.
AMEN. That is what I was going to suggest. Send out a pretty constant con tact email / newsletter and scare the bejesus out of the flock and cry ‘oh woe is me” and watch the money flood in.
Roubini Calls U.S. Growth ‘Dismal and Poor,’ Predicts Slowing
By Simon Kennedy
Jan. 30 (Bloomberg) — New York University Professor Nouriel Roubini, who anticipated the financial crisis, called the fourth quarter surge in U.S. economic growth “very dismal and poor” because it relied on temporary factors.
Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus. As these forces ebb, growth will slow to just 1.5 percent in the second half of 2010, he said.
“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini told Bloomberg Television in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “I think we are in trouble.”
Roubini said while the world’s largest economy won’t relapse into recession, unemployment will rise from the current 10 percent, posing social and political challenges.
“It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said.
If I recall a previous article from Roubini correctly, 2% growth is gamed into the numbers and actually indicates 0% growth. Thus,
11/2% growth is a return to recession. Although low-end buys may peak soon, I’m still looking at 2011-2012 for the true buyers market in desirable areas. But will my California teaching job still be there? No worries, Moonbeam Jerry Brown will rescue us.
“Gov. Moonbeam” Jerry Brown was so named because he had the temerity to suggest that CA invest its budget surplus in one of those new-fangled communications satellites. The CA Repubs laughed him out of office and installed Ronnie. France ran with the concept and launched “COMSAT” –and paid off their national debt with the money the US paid to lease it.
I hereby nominate the official song of the 2010 U.S. economy: “Trouble” by Lindsey Buckingham. You can view it on YouTube.
Always liked that song.
But but but…… “Roubini is a socialist, a liar, a communist, high school dropout, ideologue, doesn’t know what he’s talking about.”
-Larry “I’m not gay” Kudlow, 2004-2008
Guess what, Roubini has been dead on since the early days, has called out the failed ideology of “supply side” correctly known as “reaganomics” and endorse by every right wing Corporatist out there.
Of course the mindless droning on Main Street in support of the supply side lie(and oddly enough, they’re the same individuals with the most to lose) will say “gloom and doom”. Their willingness to blaze a path of economic destruction for all of us is profoundly disturbing.
People who speak truth to power tend to earn all sorts of unflattering labels.
Truth trumps power in the long run.
A few historical examples from the history of big ideas might bolster my point. Google any of these names if you want to gain insight regarding the eventual triumph of truth over power:
- Nicolas Copernicus
- Galileo Galilei
- Alfred Wegner
- Albert Einstein
- Charles Darwin
These men of science all were attacked for their revolutionary ideas at the time they introduced them. Eventually their ideas were so widely accepted that anyone who questioned them was regarded as a kook.
So it will go with the demise of housing bubble era thinking. Eventually, the denialists will be scorned and ridiculed as fools who missed the obvious — just as foolish as Irving Fisher, who said “It appears the stock market has reached a permanently high plateau” just before the onset of the Great Crash of the 1930s.
All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.
-Arthur Schopenhauer
‘“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini told Bloomberg Television in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “I think we are in trouble.”’
It’s great to see that at least one practitioner of the Dismal Science remains steadfastly true to form.
The stock market is a key component of the Index of Leading Economic Indicators. A stumbling stock market is a sign of more bad times ahead for the U.S. economy (i.e., recovery, Shrubbery)…
Market Snapshot
Jan. 30, 2010, 12:01 a.m. EST
U.S. stocks stumbling into February
Pending economic data to play role in market sentiment this coming week
By Matt Andrejczak, MarketWatch
SAN FRANCISCO (MarketWatch) — U.S. stocks are stumbling into February, and a fresh batch of economic reports this coming week is likely to dictate investor sentiment.
…
“I think we are in trouble.”’
“It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said.”
He just described the last 30 years for J6P.
+1
Watch yourselves at foreclosure auctions. This is another example that I see in this area where the bank buys the property back at the foreclosure auction and then you see it for sale on the MLS at a great discount. This house was bought back for $170 k and now is listed asking $127 K. See link:
http://www.realtor.com/realestateandhomes-detail/1128-Carter-Lane_Bowling-Green_KY_42103_1115265537
From my perspective this is a good deal. Great school district, more than a fair price.
I believe that the banks do this because KY is a recourse state. They can pursue the former owners for their costs and the deficiency. I wish someone in the industry would chime in.
‘bank buys the property back at the foreclosure auction and then you see it for sale on the MLS at a great discount’
The lender ‘buying it back’ at the auction is actually the formal process of foreclosure. No money changed hands. The discount you see is actually an adjustment toward what the property is worth. A deal? That remains to be seen.
Thank you for your explanation.
Trapper
Ben –
I don’t recall getting a clear response on the question I have raised here on occasion about whether the premier MSM-favored real estate price statistics (e.g. Case-Shiller Index, Radar Logic 1-day, 7-day or 28-day indexes, NAR median price indexes, DataQuick median sale price by zip code, etc) treat those ‘lender buy-back’ figures as equivalent to arms-length sales transactions?
If this is the case, I suggest the following:
1) The treatment of foreclosure ‘buy back’ figures as equivalent to arms length sales results in an upwardly-biased indicator of market values, defined as the price a home could receive in an arms-length sale between a willing buyer and a willing seller; if the bank could have sold for more than the ‘buy back’ amount, they presumably would have.
2) If those indexes are promoted as representative of what a home would sell for in an arms-length sale, averaging in the bank ‘buy back’ figures without disclosure raises questions of statistical fraud.
3) Always remember, “There are three kinds of lies: Lies, damned lies and statistics.”
4) If anyone has evidence to bear on whether these various data providers take care to “clean” their individual sales transaction data of these (irrelevant) foreclosure ‘buy back’ amounts, I am highly interested.
I read some of the Cash-Shiller methodology paper a couple of years back, and my impression was that they made an effort to throw out any non-arms-length transactions.
How good a job they are doing, I don’t know; every large database will have some amount of error in it. But my impression was that they would attempt to throw out foreclosure “slaes” for that reason.
The methodology is publicly-available on the S&P website.
With a median household income of less than $30k in Bowling Green, that house is no bargain. 4x median income is still too high. I once knew a girl from Bowling Green, and that place is poor, poor, poor. Houses were historically well below $100k. In fact, you could buy little farmettes on 40 acres right outside the city for under $100k.
That house is close to… nothing.
No deal there.
U.S. sells weapons to Taiwan, angering China
washingtonpost.com > World > Asia/Pacific
Saturday, January 30, 2010
The Obama administration announced the sale Friday of $6 billion worth of Patriot anti-missile systems, helicopters, mine-sweeping ships and communications equipment to Taiwan in a long-expected move that sparked an angry protest from China.
The sale, formally announced by the Defense Security Cooperation Agency, is expected to prompt China to slow or even break military relations with the United States and cancel a visit by President Hu Jintao to Washington in April. Chinese officials have threatened other actions, including sanctions on the U.S. companies supplying the equipment or on businesses in the districts of congressional lawmakers known to be backers of Taiwan.
What does this have to do with housing, you ask? Remember, China is holding about a trillion dollars (literally) in dollars and T-bills - if they decide to dump or diversify those holdings, we could see the Mother of All Dollar Collapses. Which would make imports prohibitively expensive, and allow foreigners with sounder currencies than ours (everybody but Zimbabwe, I think) to snap up US properties for a song.
I expect precious metals to tank in the near term, but to soar if China makes any serious moves to reduce its dollar holdings or move away from the dollar as the world’s reserve currency.
consequences of a ticked off china would more likely be Higher interst rates( if indeed they cut back on the purchase of US treasuries) making the US Dollar MORE attractive.
Any stewing trade war/sanctions will more likely cause a slowing of chinese growth, something they appear to want already.
copper prices have been tanking faster than precious metals, fertilizer makers have no pricing power.
score a couple more for the deflationistas!
Break military relations? What does that mean, close the border to N. Korea?
Pride cometh before the fall. Escalating trade barriers is all I hear.
It means they want Taiwan. And sooner or later they will get it.
I have said this for year Iraq and Israel is a smoke screen for the real WW3 taiwan
If that’s true then maybe we will need 13 airctaft carriers. Not to keep US safe, but to honor a 60 year old treaty.
Hong Kong always was part of China, same with Taiwan. Same with the “British” counties in Northern Ireland are really Irish. The Falklands are obviously Argentinian.
Seems so obvious after the fact.
Damn… some interesting things going on. I’m going to have to start referring to Barry as “Duke Nukem”
‘Nobel Peace Prize-winner Barack Obama ups spending on nuclear weapons to even more than George Bush’s ~ UK Telegram
President Obama is planning to increase spending on America’s nuclear weapons stockpile just days after pledging to try to rid the world of them.
In his budget to be announced on Monday, Mr Obama has allocated £4.3billion to maintain the U.S. arsenal - £370million more than George Bush spent on nuclear weapons in his final year.
The Obama administration also plans to spend a further £3.1billion over the next five years on nuclear security.
President Barack Obama
bush
The announcement comes despite the American President declaring nuclear weapons were the ‘greatest danger’ to U.S. people during in his State of the Union address on Wednesday.
And it flies in the face of Obama’s Nobel Peace Prize, awarded to him in October for ‘his extraordinary efforts to strengthen international diplomacy and cooperation between peoples’.
The Nobel committee was attacked at the time for bestowing the accolade on a new president whose initiatives are yet to bear fruit – which included reducing the world stock of nuclear arms.
Barack Obama’s State of the Union speech:
Even as we prosecute two wars, we are also confronting perhaps the greatest danger to the American people - the threat of nuclear weapons.
I have embraced the vision of John F. Kennedy and Ronald Reagan through a strategy that reverses the spread of these weapons, and seeks a world without them.
To reduce our stockpiles and launchers, while ensuring our deterrent, the United States and Russia are completing negotiations on the farthest-reaching arms control treaty in nearly two decades.
And at April’s Nuclear Security Summit, we will bring forty-four nations together behind a clear goal: securing all vulnerable nuclear materials around the world in four years, so that they never fall into the hands of terrorists.
These diplomatic efforts have also strengthened our hand in dealing with those nations that insist on violating international agreements in pursuit of these weapons.
That is why North Korea now faces increased isolation, and stronger sanctions sanctions that are being vigorously enforced.
That is why the international community is more united, and the Islamic Republic of Iran is more isolated.
And as Iran’s leaders continue to ignore their obligations, there should be no doubt: they, too, will face growing consequences.
That is the leadership that we are providing — engagement that advances the common security and prosperity of all people.
The budget is higher than that allocated by George Bush – who was seen by many as a warmongering president in the wake of the Iraq invasion in 2003 – during his premiership.
Screw China. For some reason they seem to think they can survive without our, or our allies, retail and industrial market.
newobservations dot net /2010/01/27/property-values-projected-to-fall-12-percent-in-2010/#comment-780
Property Values Projected To Fall 12 Percent In 2010
We are in a radical real estate depression hidden from us by massive government fixes.
The government has made an enormous assumption in crafting its policy on housing: It assumes that maintaining values is of the utmost importance. It’s a tragic mistake.
Are you reading this, big brother?! C’mon! Get real.
“Property Values Projected to Fall 12 Percent in 2010″
… means …
Bank collateral projected to fall 12 percent in 2010.
“The government has made an enormous assumption in crafting its policy on housing: It assumes that maintaining values is of the utmost importance.”
“It’s a tragic mistake.”
That it is, in many respects.
i don’t see an option. Property prices falling is the root cause of the recession.
Property price support helps support fragile banks, and that supports the whole economy. I still say govt’s aim is supporting the economy, not nesessarily banks.
Bank support happens to be a link in the chain.
But only 12%? That’s wishful thinking, imo. 25% wouldn’t surprise me.
Even more of a drop would please me, as long as the overall economy can be disconnected from continued housing woes and keep chugging along without it.
Checking out rentals today, closing on the house I have been renting for over four years set for March 12 The landlord owes over 300k, the offer was in the 170`s, the bank that used to be WAMU came back and told them they could have it for $150,000.00 IMHO they are overpaying by about 50 grand, oh well at least the new owner has his place in Ohio that he couldn`t sell rented to a friend. This is gonna get really ugly.
“Property prices falling is the root cause of the recession.”
No, failed monetary policy and the subsequent massive bubble in housing prices is the cause of this recession. Lower housing prices are the cure. The increased spending power from those who have already shed the burden of oppressive mortgages will help this economy. Enslaving the population to exceedingly high mortgages and rents is counterproductive.
i don’t like arguing semantics.. the “cause” can be traced back a thousand years if someone cares to look that far.
Was there a recession before the bubble popped and began to deflate?
Have we suffered a perpetual recession due to failed monetary policy? If you think so, define “recession”.
..Enslaving the population to exceedingly high mortgages..
hehe.. slaves? Of course. Voluntary slavery.
Since we’re talking causes, lets trace the root cause of why people willingly sign themselves into bondage.
yes Grizzly.
had this chat the other day with joey who thought it was crazy to encourage strategic defaults.
I just think people should make rationale financial decisions, which for many would include walking away.
Now, harm to me (or the “rest of us”)? I don’t see it. Sure there will be an unwinding of asset values, but at least we might have some sound footing from which to take off again.
Parachute popping all the way down seems to prolong the misery and thwart any meaningful recovery.
..Sure there will be an unwinding of asset values, but at least we might have some sound footing from which to take off again…
I dunno why you choose to assume that. This country has experienced an extreme unwinding. The banks failed. The economy was crushed. It happened early 20th century.
The result was not a “firm footing from which to take off again.”
Nothing of fiscal / regulatory / basic economic substance changed then, nor will it change this time around.
As for the harm a massive and sudden unwinding may cause us as individuals, the more damage done and the more widespread it is, the greater the chances you or I will suffer..
“Was there a recession before the bubble popped and began to deflate?”
My car ran the fastest it ever had on that nitrous oxide right before the motor blew. Nah, the nitrous wasn’t the problem…
“hehe.. slaves? Of course. Voluntary slavery.”
“Enslaving the population to exceedingly high mortgages and rents…”
You conveniently left out rents. I suppose, in your world, shelter is a luxury…
I just think people should make rationale financial decisions, which for many would include walking away.
From that newobservations article:
The smartest conclusion is obvious. Our highest priority must be to bring down the house of cards. We should encourage foreclosures. We should encourage default. We should bring overhead down. Our first goal must be inexpensive housing.
A motor buff?
Nitrous can be dangerous to an engine if it’s used improperly.
Nitrous supplies lots of extra O2. You gotta balance that with a ton of liquid fuel OR the mix will be lean.. and burn too hot and too fast.
A lean mix is powerful but also a great way to hole pistons.
Blame the engine’s blowing on nitrous if you like. I might blame it on an improper fuel/air ratio.
The blown motor problem could be due to mechanical weaknesses in the engine. An inability to handle the high HP produced.. Lack of cooling.. improper ignition timing..
I can think of 5 other possibilities off the top of my head.. but I don’t blame the nitrous in these cases either.
You gotta take responsibility for using things that can be dangerous, like credit for instance.
blame the nitrous.. the mechanic.. the driver.. the weather, easy credit or whatever. Nobody wins the blame game. Nobody loses.
‘It happened early 20th century.’
I’ll give an opinion of just a bit of why you’re off course. The GD was ancient history, and that time has little relevance to today. Even the fed chief was supposedly an expert in the GD, yet he walked us right into this mess.
Why aren’t we discussing what is relevant; the Japan experience. Modern, twin stock and RE bubbles. An era of central banks and ineffectual zero interest rates. And throw in the US copycat maneuver of papering over massive corporate losses. None of these things worked in a very similar situation (it is widely agreed that it made the situation much worse, eventually), yet we don’t hear these issues discussed where it counts.
Here’s a novel idea! How about starting with a recognition that we just experienced the biggest bubble in history. Then all sorts of policy paths might be clearer. Instead we hear of “firming up values” and see the govt. encouraging people to pay too much with little down!
‘Nothing of fiscal / regulatory / basic economic substance changed then, nor will it change this time around.’
You don’t know that. The GSE’s are basically done for. The fed and wall street are hated and under pressure as never before. They are still making blunder after blunder and looking more useless with every passing day. And we still haven’t seen how bad this thing will turn out, with the resultant public backlash. These are huge issues in an historic time, and I have more hope for real change than ever.
But looking back at the 1920’s is not relevant, and a distraction from what’s happening now IMO.
“These are huge issues in an historic time, and I have more hope for real change than ever.”
I share your hope for change. Eventually, the system will prove too-big-to-bail, and at that point, real change (aka rebuilding from the ground up) will be the only option. It appears to me that the current crisis may qualify, despite the surprisingly persistent efforts of top U.S. economic policy makers to pretend the crisis is over and to extend (resurrect?) the bubble. Denial can only last for so long before reality sets in.
“No, failed monetary policy and the subsequent massive bubble in housing prices is the cause of this recession. Lower housing prices are the cure. The increased spending power from those who have already shed the burden of oppressive mortgages will help this economy. Enslaving the population to exceedingly high mortgages and rents is counterproductive.”
Excellent excellent excellent.
Now if you made this statement on Main Street people will think you’ve completely lost your mind.
..You don’t know that…
I don’t know it, but I have little hope for change. While the specifics of the GD are certainly different, we the people of this country are the same now as then. We must change before we our world can change.
Will we continue to choose our leaders based on their promises of catering to our immediate, selfish best interests? If so, politics / government will not change.
Can we reasonably expect wealth accumulation at all levels of society (or any level) will cease to be the primary goal? If not, our habits and weaknesses and predictability will remain exploitable by the powers that be..
Is it reasonable to say that for our system to change in some fundamental way, we must experience an even greater shock and even more losses than happened in the GD? Will that level of pain manifest itself this time around? Perhaps..
—–
Like most people around here, I can imagine a better world rising from the ashes, and in some detail. Lots of attractive scenarios are possible.
But until we ourselves change only one scenario is likely, and it’s the one I expect: Business as usual.
we all must hear it all the time but it ticked me off again listening to the smarmy Saturday AM newscaster talking to a realt-whore about “looking up” “improvement” “finally rebounding”.
No good to be had from more inexpensive housing?
I’ll bet 6 months from now that notion will catch on. Like strategic default is becoming a more familiar notion.
“We must change before we our world can change.”
I beg to differ, though I acknowledge that it is better if we change before the world changes. The other direction of causality would be far more painful.
That “other direction” may be the only reasons we’ve ever changed suddenly.
severe drought.. famine.. Black Plague type events. Powerful shocks that might leave us no choice.
About your math Combo; the bank’s collateral isn’t the value of the property, it’s the equity in the property. A 10% drop in “value” can wipe out the collateral 100%.
Okay.
Thinking about this a bit furthur:
The bank’s collateral is directly related to the market price of the property. If the market price drops 19% then the value of the collateral drops 19%.
If this value drop is officially recognized by the bank in a writedown then the bank’s capital takes a hit. If the hit to the bank’s capital is greater than the the value of its capital then the bank is insolvent.
Sorry, I should have said something about the bank making a loss, but my brain wasn’t fully engaged.
I don’t get it, Blue Skye; the bank’s collateral IS the value of the property.
It sounds like you are describing the “owner’s” equity; a 10% drop in “value” can wipe out the owner’s equity, but the remaining 90% of value still serves as valuable collateral for the bank.
Let me go a step further. I am guessing these points you made are signs that cash is king. Am I on the right track?
So I’m sitting at a table at a beachfront bar last night with 3 Americans, 3 Brits, A Brazilian and a Frenchman. (I know it sounds like the beginning of a joke.) It happened to be at a restaurant serving the only real pepperoni (imported) on a pizza that I’d seen down here yet. Now THAT was good.
It’s hot. A Brit buys us Americans a round of cold beer, laughs and says, “Well your country (USA) is bankrupt, someone has to help pay for it.” Everybody laughs and I thank him for the pilsner draw and add that the “someone” paying for it was going to be us, the American taxpayers. They laugh and one American says, “yea, for the next 20 years”.
One Brit, was apparently very happy about the cold beer but very unhappy about the ongoing immigration influx in Britain, complaining that foreigners who don’t even like westerners or even try to assimilate now made up 20% of their population and it could be getting dangerous.
Later, real-estate came up and “unexpectedly”, two Americans told me it was a “good time to buy” in Florida. They knew that most of the east coast of Florida had dropped a lot in price however they seemed unaware when I commented that the Ft. Myers and Sarasota areas had dropped a lot too.
The Frenchman was trying to convince an American ex-patriot that it was a “great time” to buy in Rio because the entire nation was going to invest billions in Rio’s infrastructure, clean-up and crime reduction because of the 2014 World Cup and the 2016 Rio Olympics.
He said in fact that Rio’s condo prices have risen about 7% since Rio won the 2016 Olympics bid last October and the price of construction had risen too. The American was torn because he currently rents an ocean-view apartment for $580 per month (a heck of a rare deal). However he has one baby and one more on the way and Rio Apartments are “very, very small” compared to housing in America.
“He said in fact that Rio’s condo prices have risen about 7% since Rio won the 2016 Olympics bid last October and the price of construction has risen too.”
I love this logic. The Olympics coming to town is a one time hit to rents. What is going to happen to rents when the Olympics are over?
BTW, how have other Olympic hosting cities fared once their fifteen minutes were over? Anyone know?
how have other Olympic hosting cities fared once their fifteen minutes were over? Anyone know?
I think Sarajevo’s home prices were lower 10 years after their Olympics.
Didn’t that have something to do with sniper fire and artillery shelling?
Didn’t that have something to do with sniper fire and artillery shelling?
Yes but that kind of talk was bad for sales. Back then I think Sarajevo’s real estate agents preferred to describe the situation as “ethnically dynamic”.
Hard to believe that the country that gave us the fine Yugo automobile could ever fall apart….
I recall the RE hype before the Atlanta Olympics. People were hoping to rent their homes for ungodly sums of money. We had a great time, nonetheless.
I’ll never forget the soccer match between Nigeria and Brasil. It was a semi final match. By some miracle we got center-line front row seats. It was a thriller. Brasil won 3 - 2.
Correction. Nigeria won 3-2 in extra time.
I’m going to Orlando next week (I go there about 1 week in 5 on business). Came across this in the news
http://www.orlandosentinel.com/business/os-orlando-rental-vacancies-20100121,0,4745134.story
Seems that 28% of Orlando area housing units (apartments, condos, and SFH combined) are EMPTY. That’s not good.
It would be a miracle if this doesn’t turn into one of the nation’s biggest slums / crime infested areas. It’s on its way.
We had a discussion yesterday at work….My theory is most people are scared to stay in a place where they are not paying “rent” so they move
Even though the bank has no intention of foreclosing and evicting the tenants/owners for a year or two…or now even 3 years of free living.
DJ, I hesitate to ask or to pry - do I read this correctly, that you found a job? There is no way to wipe the egg off my face if I misinterpreted this, or missed a previous post. So I apologize in advance.
Okay, who sleeps on a spring-free $2k latex mattress?
You mean the kind upon which you sweat to death while you sleep?
sweat to death
Speak to it!
I had one of those. It was absolutely awesome for the first year or two. Then, it developed a sag in the middle, and began giving me horrible back and shoulder aches. Couple that with the fact that the thing weighed as much as a small car and I’ll never purchase one of those again. Nuff said.
I have one and I will never go back to springs coiling up my ass. We keep the room as ice cold as possible to compensate for the insulating qualities that make them too warm to sleep in.
Jobless Turn to Family for Help ~ The New York Times ~
WARRENTON, Ore. — After Jean Ley lost her job as a mental health counselor in June 2008, she quickly realized how limited her options were. She had little savings. Unemployment benefits were not going to be enough to pay her bills. She was at risk of losing her home here on the Oregon coast.
Matt Ley and his wife, Sandy Brown, have been helping Mr. Ley’s mother pay her bills since she lost her job in June 2008.
As a last resort, Ms. Ley, 62, turned to her family. Her older brothers conferred with her son, Matt, and agreed that one of them would help pay her bills if needed.
But the assistance proved more than temporary. A year and half later, her son’s regular payments covering her mortgage and occasional emergencies, like a car repair or arthritis medication, have proven to be her bulwark from economic catastrophe.
“If my family weren’t able to help me out at this point, I wouldn’t have a home,” she said. “And I would be struggling.”
As joblessness persists, credit cards max out and the government’s safety net has grown thin, many Americans have turned to a patchwork quilt of family members and friends to stave off eviction, keep their electricity running or cover an unexpected medical bill. It is an underground banking system, complete with lenders and borrowers.
http://www.nytimes.com/2010/01/30/us/30borrow.html?hp
“The Leys’ situation was complicated by the fact that Matt Ley and his wife, Sandy Brown, had lent his mother money to pay legal bills when she went through a messy separation from a partner several years ago that depleted her savings. The assistance became a source of tension in her son’s marriage, prompting Mr. Ley and his wife to seek the help of a therapist.”
Well, that answered my question as to why Mom didn’t ditch the $750/mo. house and move in with the kiddies. Seems to me that being unemployed for two years would warrant reducing every possible expense.
What is the saying, fish or cut bait?
sheesh, after 6 months, you as a grownup, get a room mate, or rent the place out, Or let it go. Rent something really cheap. But don’t skroo up someone elses finances or relationships.
Contrarians may appreciate this remark by Butler Shaffer.
“Watch and read the mainstream media, and then reverse whatever they tell you; and pay attention to the Internet and the alternative voices who may provide you with the kinds of questions you have been trained not to ask.”
Amen.
The pain is Spain is growing. It’s raising retirement age from 65 to 67. And from AEP’s article in yesterday’s bits, youth unemployment is at 44 pct. How long can the US authorities borrow, pretend, and spend? What adjustments will the public be forced to swallow in the coming years?
FT: Spain unveils radical austerity budget
Spain unveiled a radical austerity plan on Friday in an attempt to boost its credibility among investors after a week of financial market turmoil for fellow eurozone member Greece.
Madrid rushed out hurriedly prepared measures to narrow its budget deficit by €50bn ($70bn, £43bn) over four years. It is also raising the national retirement age from 2013.
If the Repubs win in November, don’t expect tax increases to bridge the deficit gap. It’s going to be interesting watching the bond market’s response over the next two years.
Jan. 30 (Bloomberg) — Senate Republican Leader Mitch McConnell endorsed a deficit-cutting commission that would focus only on reducing spending, including for the Medicare and Social Security programs, and take any tax increases off the table.
…
“The problem we have is not because we tax too little,” McConnell said in ruling out tax increases. “We need to look at spending across the board, and a spending-reduction commission might well be the best way to go.”
Yep, this is the idiot we want to listen to, he barely eked out his recent term. Not that well liked in KY- little bit of a past, one could say.
WASHINGTON – The Supreme Court’s decision on campaign finance has jumbled a seemingly simple rule of American politics — foreigners should play no role in U.S. elections.
President Barack Obama and other critics say the court’s decision to let corporations spend their money to directly influence elections opened the floodgates to foreign involvement. In last week’s address to Congress and the nation, Obama asserted the court had allowed special interests, “including foreign corporations, to spend without limit on our elections.”
That was a step too far. At the moment, foreign corporations may not spend any money in U.S. elections under a provision of federal election law that was untouched by the high court.
The court’s majority opinion by Justice Anthony Kennedy specifically left for another day “whether the government has a compelling interest in preventing foreign individuals or associations from influencing our nation’s political process.”
But Justice John Paul Stevens said in his dissenting opinion that the reasoning underlying the ruling “would appear to afford the same protection to multinational corporations controlled by foreigners as to individual Americans.”
The more complicated question is how to treat U.S. subsidiaries of foreign companies or American corporations that are controlled by foreign investors.
Maybe China could just buy a dozen congressman to push Taiwan agenda etc.
This Robert court kowtows to China.
We can be sure that China hands will be in congress this November.
“The Supreme Court’s decision on campaign finance has jumbled a seemingly simple rule of American politics — foreigners should play no role in U.S. elections.”
Why can’t foreigners just launder ‘free speech’ campaign contributions through U.S. arms of foreign corporations? Wouldn’t that have First Amendment protection, at least according to the recent SCOTUS ruling?
WSJ: Movie Gallery will file bankruptcy next week
Portland Business Journal
The Wall Street Journal reports that Movie Gallery Inc. will file for bankruptcy as early as next week.
The Wilsonville-based chain operates a network of approximately 3,000 Hollywood Video, Movie Gallery and Game Crazy chains of video and game rental stores. It will be the second bankruptcy filing in less two years for the chain, which emerged from Chapter 11 in early 2008 but still faces ongoing challenges from changing consumer habits, new movie viewing technology and stiff competition from online services such as Netflix and Redbox.
A History Of The Internet - The First 100 Years - 1950 to 2050
Chapter 1.
Nobody saw it coming..
“A History Of The Internet - The First 100 Years - 1950 to 2050
Chapter 1.
Nobody saw it coming..”
Since Al Gore invented the internet, he sees everything including melting icebergs.
outdated proven to be false stuff.
yawn…
Prophets are rarely recognized by their contemporaries….
Good for them, as the false ones, once recognized, are to be stoned.
It was a dark and stormy night. Nobody saw it coming…..
Cities are running out of money, and they are squeezing everything now.
I noticed that on freeway 680 / Berryessa, gang of 3 or 4 California Highway Patrol routinely set up and ticketed motorists every other day.
Have never seen that before.
San Jose is also looking for anyone who filed 1099 last year, and demanded
them to pay business license fee ($125).
Legalize pot.
gee DD the idea is gaining currency.
Mexico, portugal…..the tide is turning in some places.
In my local park, they just removed all the trash cans. They also keep the bathrooms locked year-round. I’d gladly pay more taxes to keep such services going.
what’s your zip sammy?
06488
House I lost 2 Mondays ago that’s back on the market as of yesterday update: The winning bidder was a cash deal. Upon inspection they found some issues with the heater, fireplace flue, and asbestos siding in the garage. The estate was willing to work with them on all these issues, so the winning bidder kept finding more fault until their realtor said, “Look, they just want out of the deal.” So they’re out. Selling realtor puts another broadcast out to all who made an offer initially. There’s already one re-bid back in. I have until Monday or Tuesday to re-submit a bid if interested.
I think I’m over that place, that estate and their realtor. No re-bid.
But multiple bids and cash deals? Are we back to that? It’s 2001 all over again.
“House I lost 2 Mondays ago…”
“I think I’m over that place …”
That was quick.
Bidding wars will do that to ya. Well they will to me at least.
I may have you confused with another poster, but if I remember right you projected “the look of love” regarding this property and the seller (and realtor) picked up on this and decided to jack you.
I apologize if I am wrong.
Maybe a misinterpretation. I did think the house was good for me. And I know one of the neighbors who said the family was distraught over having to sell the house - so hard on them that it took a year after the mom passed away to list it. So I submitted a letter with my offer stating that my intent was to live in it and raise my son there, not flip it or sell in a few years. Trying a little personal touch tactic since supposedly the family was a very sensitive group (which I now don’t necessarily believe nor do I believe in the tactic).
My offer was the sole offer on the place for 4 days - 2 days past my deadline. What happened in there was that I was informed this would be an estate sale (was not aware prior to my offer) and all bids would be solicited and collected for a few days and submitted to the estate at one time. The selling realtor put a mass broadcast out that led to a parade of people in and out of the house the day before the bids were due and that led to multiple offers. That’s when I started to lose the excitement for the place.
Then my offer wasn’t chosen. And then it was suddenly back on the market less than 2 weeks later. Lather, rinse, repeat.
Me and the wife going to look at a place tomorrow. Our flat-rate intermediary calls us this afternoon, saying the selling agent for the place called and there were “other iterested parties that plan on making offers”, so we should be prepared to jump tomorrow. Because, ya know, it won’t last long.
We told our intermediary to call back and cancel the showing, saying we weren’t interested in playing games.
Done.
Be sure to update us with what happens with the place!
Hey Bad:
Why not do the opposite say: since you have so many bidders we will bid 10% UNDER list so we wont get it….
and Who knows maybe those other bidders are bidding 15-20% under list…and you will get what you want at the right price.
“We told our intermediary to call back and cancel the showing, saying we weren’t interested in playing games.”
Congrats, Bad Chile! Well played….
NYC - well, how do I put this delicately…
I was goat roped into the appointment without my knowledge, and upon seeing the listing I realized I wouldn’t pay 10% of asking to live there…
hahaha…funny….good luck
Back to that? Leverage was preferred up until the credit crunch.
RE Bubble heads stretched credit as far as it would go. Now they”ll use stupid-money.
People are sitting on a whole lot of cash /cash equivalents and various securities and investments. Trillions.
Some of it (the stupid portion) must be burned away before the RE market will cool completely.
What I meant was that this is how it all started for me. 2001 making offers and losing them to multiple bids and cash deals (although prices were way lower then, of course). And then it all ran away from me like a freight train.
“But multiple bids and cash deals?”
Signs that it is a bad time to buy (unless you want to become the next greater fool to catch yourself a falling knife)…
Flippers are trying their best to turn the Fed’s housing reflation efforts into a quick buck. Thus prices are unstable, and likely to trend against you if you are a long-term end user just trying to buy a home to live in.
Asbestos?
Oh hell no.
Asbestos siding tiles are very stable, and have an extremely long lifetime. It’s only an issue if you decide to do something STUPID like sand them. I bought and sold a house totally sided in them, without issue on either transaction. Low maintenance stuff, too—the paint never even thought about peeling off of them.
Reduce your bid by 10%
We looked at about 10 houses today. Some serious dumps out there. We saw one that we thought about making an offer on, but it is on a canal and way too gatory. One house we liked has 14 offers and the agent told my agent “we’d have to come in well above asking.” We even crossed paths with a BMW-driving investor who gave us the “family pity” look.
I’m calling Q4 09 and Q1 10 the official bubble dead cat bounce for Florida. Get ready for the double dip.
BTW, the one with mad offers was listed at about $79 sq. ft. and 2,300 sq. ft. with a pool in Seminole, FL. It is in move-in condition.
“the one with mad offers was listed at about $79 sq. ft.”
H*ll, anywhere near $79/sq in move-in condition in Seattle, I would be bidding too. Dumps here are still 2-3X that.
Of course, I’m not bitter, cause I just scored a SWEET new rental, for less, for about half the monthly nut of buying it.
“cause I just scored a SWEET new rental”
Funny aside; while I was writing the sentence above, I was thinking about Casey Serin, and all the SWEET deals he was finding…
“Some serious dumps out there. We saw one that we thought about making an offer on, but it is on a canal and way too gatory.”
Sounds to me like you are seeing the signs that it is a bad time to buy.
“Sounds to me like you are seeing the signs that it is a bad time to buy.”
Definitely.
I was very clear with my wife and our realtor: I’ll look, but it’s going to take me a lot to come off the fence. I mean… A LOT.
Would a $20K tax credit do it for you, Muggy? Perhaps when they phase out the $8K credit this spring…
Yes, if a 3/2 1,500sq. ft. is going for around $100k
And the washer and dryer convey
And the roof was replaced in the last five years.
And, aww, nevermind…
I’m calling Q4 09 and Q1 10 the official bubble dead cat bounce for Florida. Get ready for the double dip.
San Diego as well too many homes selling not enough jobs to go around and the state is broke. And now the stock market is looking kinda sick just like 2008
Hey Muggy
Are some houses really more “gatory” than others?
how would you characterize the relative prevalence of gators since you’ve been in FL? upswing? downswing?
I was born and lived in West Palm Beach 1965- 1977,
I don’t remember any hurricanes or gators. I do remember being careful about rattle snakes.
“Are some houses really more “gatory” than others?”
Hell yeah. Gators are not in the town I live in now because there are no lakes, standing water, or large retention ponds. In Largo, and Seminole, there are many depending on where you live. I have a friend that lives in the Ridgecrest area of Largo, and there is a canal that connects Ridgecrest and Taylor park. Every spring a horny gator ends up being trapped after wandering around looking for love. SO, if you live near the canal, expect the occasional wanderer. When I lived in Seminole (on Lake Seminole) I had one living in my backyard. I have photos of that, but they are on an old computer. I’ll dig them out again soon.
The house I looked at today had a large easement behind it that would have easily supported a man killer gator. No dice because of my kiddos.
There are a lot of variables, but in my own experience, living between two large bodies of water that support multiple, large gators is asking for trouble.
The banksters are going to do their best to dodge and weave their way around this move to rein in their excesses — just as they do at the end of every financial crisis. Expect business as usual once the stock market and housing market start always going up again. I presume the Fed will do anything within their power to make sure asset prices start rising as quickly as possible, in order to mitigate political pressure for banking industry reform before anything of meaningful and lasting value occurs.
Closed-door meetings between politicians and bankers seldom produce anything of benefit to anyone except the politicians, the bankers and the PR consultants who are tasked with selling the New Deal to the clueless public. Call me skeptical, but with Barney Frank negotiating on behalf of Main Street, I expect plenty of PR work and nothing of substance to come out of any financial reform measures that are ultimately adopted.
Jan. 30, 2010, 2:42 p.m. EST
Uncertainty seen over global bank regulatory push
Davos bankers, politicians meet behind closed doors
By William L. Watts, MarketWatch
DAVOS, Switzerland (MarketWatch) — Bankers and politicians agreed on little in public during this week’s World Economic Forum gathering of top CEOs and policymakers in the Swiss Alps, other than the desire to see regulations coordinated around the globe.
But some attendees say it’s not clear that’s going to happen.
Bankers and politicians met behind closed doors at the annual meeting Saturday, though the discussions didn’t appear to produce any concrete agreements.
Bankers have acknowledged they are going to see more regulation, said U.S. Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee, after the meeting.
Deutsche Bank chief executive Josef Ackermann, who has emerged as an unofficial spokesman for the bankers at this year’s WEF , told an audience at a panel discussion later Saturday that “something has to happen quickly to restore confidence in the banking system.”
…
Japan experience. Modern, twin stock and RE bubbles. An era of central banks and ineffectual zero interest
Wow! well said Ben. It’s easy for people to think that if we cushion the blow, time will heal all wounds.
Would love to hear the explanation why it’ll be different here.
I get the impression that the Fed believes they will be more successful with ZIRP than Japan was. I guess I understand their belief: After all, this is America, so naturally it is different here.
LOL! Priceless, PB!
“I presume the Fed will do anything within their power to make sure asset prices start rising as quickly as possible”
Well my Money market account is paying .003% interest
Sounds like a pretty good incentive for you to dump that money market account and buy some assets, in order to help their prices rise.
That’s great news! Think of the tax savings you get to enjoy.
A bit more seriously: In a deflationary environment plain ol’ cash appreciates in real terms without the hassle of giving up some of the appreciation to the guvmnt.
My money market account at Zions Bank is paying about 1.35%. Why don’t you look around?
Jan. 30 (Bloomberg) — People’s Bank of China Deputy Governor Zhu Min said his government’s main goal is capping inflation and signaled officials have no immediate plans to change their currency or monetary policies.
“The first challenge is inflation expectations,” said Zhu in Davos, Switzerland, where he is attending the annual meeting of the World Economic Forum. “We’ll continue with current accommodative fiscal and monetary policy,” and added that a “stable” yuan has helped China during the financial crisis.
China is morphing into yet another Frankenstein monster of America’s own creation and empowerment, this time through the purchase of cheap manufactures.
* THE SATURDAY ESSAY
* JANUARY 30, 2010
Battling the Information Barbarians
China often views the ideas of foreigners, from missionaries in the 17th century to 21st-century Internet entrepreneurs, as subversive imports. The tumultuous history behind the clash with Google.
By IAN BURUMA
In 1661, Adam Schall, a Jesuit missionary from Germany and astronomer at the Chinese imperial court, fell victim to jealous mandarins, and was sentenced to death for teaching false astronomy and a superstitious faith. He was only just saved from being strangled, when a sudden thunderstorm convinced his judges that nature had spoken against their verdict. Father Schall died soon after. But the defensiveness of the mandarins, who saw his foreign ideas as a threat to their status, would be a recurring theme in Chinese relations with the outside world.
So, is it true after all, what they say about clashing civilizations? It is tempting to see the official Chinese response to Hillary Clinton’s speech on Internet freedom in that light. Spurred by Google’s announcement that it might pull out of the Chinese market in protest over censorship, Mrs. Clinton talked about Internet freedom in terms of universal human rights. Her speech was promptly denounced in a Communist Party newspaper as “information imperialism.” Foreign Ministry spokesman Ma Zhaoxu claimed that China’s regulation of the Internet (banning references to Tiananmen, Tibet, Taiwanese independence and so on) was in keeping with “national conditions and cultural traditions.”
The claim of universality is indeed an important facet of American culture, rooted in the American Revolution and Protestant ethics. It is considered proper for a U.S. secretary of state to give voice to the ideal of universal human rights. Just so, a Chinese official sees it as his duty to assert the uniqueness, or even superiority, of Chinese culture. This was true of Confucian scholar-officials in the imperial past. It is still true today.
Thought control, in terms of imposing an official orthodoxy, is a very old tradition. The official glue that has long been applied to hold Chinese society together is a kind of state dogma, loosely known as Confucianism, which is moral as well as political, stressing obedience to authority. This is what officials like to call Chinese culture.
One can take a more cynical view, of course, and see culture as a mere fig leaf meant to hide the machinations of political power. The latest Chinese salvo against the U.S., blaming the Americans for instigating rebellion in Iran through the Internet, reveals that the current spat has a hard (and opportunistic) political core. And the assumption that Google, as a Chinese editorial put it, is a “political pawn” of the U.S. government, is a clear case of projection.
…
Joey said,
A few short years ago the thought that GM would be nationalized would have made most Americans shuder with fear. Now, what cathartic event might snap people to their senses and make people see their worls, and pick their leaders differently?
I don’t know, but popping parachutes all the way down ain’t gonna make it happen.
GM might be more properly categorized as being under temporary conservatorship. The plan is to offer GM ownership to the public as an IPO soon.. a couple months from now at last notice.
I imagine it may be delayed depending on how strong GM is, and on how willing and able investors are to own some of it.
GM was a big, important employer and it was in danger of failing… and it’s nothing at all like Hugo Chavez nationalizing perfectly healthy oil, cement, rice and steel industries in Venezuela.
More happy thoughts on a RE bounce ending even in San Diego
While a 5% drop in the major indexes has gotten the Street’s attention, few observers are really very surprised by the move. After all, the market had gone up more than 65% from the lows of last March. Surely, a correction of 10% to 15% would not be out of order after such a run. Even a pullback of 10% or more, some people say, just might set the stage for a continued run, that a long-term bull market has been under way since March.
Prechter, who has a well-earned reputation as a permabear, begs to differ. Reuters reported that he had previously said he believes the 2007-2009 markets crisis and U.S. recession were harbingers of a severe longer economic slump. His book Conquer the Crash, first published in 2002, warned about the dangers of a coming deflationary depression and today he predicts the economy will struggle for years to come.
“We probably have begun the next phase of the bear market,” Prechter told Reuters, adding that the S&P 500 could drop below the 666 mark hit in March from 1092 at the close Tuesday.
“…that a long-term bull market has been under way since March.”
Did anyone talk about bull markets in RE prior to the biggest bubble in history (1996-2006)? I personally doubt anyone would have even considered a single family home as a sensible financial investment vehicle before then, as single family residences used to be viewed as a place to live in. If anyone can present evidence of either the belief in or the existence of a ‘bull market’ in real estate at any point in U.S. history prior to 1996, I am highly interested.
Oops — sorry to be so dense, I thought the “bull market” was a reference to housing bubble reflation. Two glasses of red wine is apparently all it takes to turn me into a real estate bubble head…
..bull markets in RE prior to..
I was just comparing recessions in US history with periods of no Central Banks, and happened across at least one RE bubble..
Panic of 1797
Just as a land speculation bubble was bursting, deflation from the Bank of England [snip] crossed to North America and disrupted commercial and real estate markets in the United States and the Caribbean, and caused a major financial panic….
wiki.. List_of_recessions_in_the_United_States
An instance of land speculation later on (1834 or so) is credited for bringing the US out of a recession.
——-
OT, but interesting..
There was a period, 1837–1862.. the “Free Banking” era, during which there was no central bank but still experienced half a dozen recessions. One of which was..
Depression of 1839–43: This was one of the longest and deepest depressions. It was a period of pronounced deflation and massive default on debt….
So, getting rid of the central bank may not solve much..
“So, getting rid of the central bank may not solve much…”
It would solve a lot, if it became much harder for Wall Street’s Megabank, Inc to keep enjoying multi-million dollar bonuses while Main Street gets sent to the unemployment line.
“It was a period of pronounced deflation and massive default on debt….
So, getting rid of the central bank may not solve much..”
No, but getting rid of bankers would solve a lot!
I’m becoming more convinced that our definitions of recession and depression are just plain wrong. Recessions are the business cycles; depressions are the result of credit bubbles.
PB …I think these major contractions have a lot to do with faulty lending of anything ,stocks ,real estate ,you name it .
The faulty lending creates the bubbles ….agree with you Prime
I think bubble creation is more possible when the economy is at a stand still and profit % is in a lull and this is when the creative minded seems to come up with all these speculative games.
Maybe when to much investment money get built up it starts looking for a place to invest .In other words ,money supply cycles would be informative in how that contributes to faulty investment and lending.
PB …They had spots in the United States where they had real estate bubbles like the Great Real Estate Speculation bubble in Florida in the early 20’s. That bubble crashed and burned by 1926 ,way before the crash of the crash of the Stock Market in 1929 .
Don’t mess with real estate ,that’s all I have to say .
“…the S&P 500 could drop below the 666 mark hit in March from 1092 at the close Tuesday.”
Would that be a good time to buy the dip?
Simon Property Group (SPG) just sold $2.25 Billion worth of debt.
5, 10 , 30 year notes. who the hell would buy that? Calpers? thing +thing?
..five-year notes at a 4.2% interest rate…10-year notes at 5.65%; and 30-year notes at 6.75%.
I gotta admit those rates look pretty good compared to savings accounts or CDs.
What exactly is a “populist”? Is this any more than an insipid MSM label for anyone who dares to question the Fed’s absolute dictatorial hegemony over the American financial system? How dare they?
Populists and bankers
Strange meeting
The populist left meets the populist right to hammer the Fed
Jan 28th 2010 | ORLANDO, FLORIDA | From The Economist print edition
YouTube A star of the tiny screen
DEMOCRATS seldom come more partisan than Alan Grayson, who represents Florida’s eighth congressional district in the House of Representatives. He calls Republicans “foot-dragging, knuckle-dragging Neanderthals” and a “selfish party” whose advice to sick Americans is “Die quickly.” Yet when he dropped in on a convention of small-government libertarians in his home town of Orlando, Florida, last year, he was greeted like a rock star. He received two standing ovations and requests for his autograph.
The audience was not applauding Mr Grayson’s stand on health care or any other beloved Democratic cause, but his unrelenting attacks on the Federal Reserve. Though he has been in Congress only a year, his cross-examinations of Fed officials there are YouTube sensations. One, in which he demands to know who got more than $1 trillion in Fed emergency loans, has been viewed more than 3m times.
Mr Grayson’s antipathy towards the Fed is part of a resurgence of political populism on both the left and the right. This week that upsurge even threatened Ben Bernanke’s confirmation for a second term as chairman of the Fed, as senators in both parties looked for a scapegoat for both the financial crisis and continuing economic hard times. One of the few things populists of both left and right agree on is that bankers have been rescued at the expense of ordinary Americans, with the Fed’s help (see chart). Mr Grayson and Ron Paul, a conservative House Republican from Texas who briefly flirted with the presidency in 2008, have already succeeded in tacking on to a larger financial-regulation bill an amendment that would expose more of the Fed to congressional scrutiny.
In Kentucky Mr Paul’s son Rand, an ophthalmologist, is running for the Republican Senate nomination and threatening to defeat the party’s preferred candidate there. Mr Paul junior spent his student years in North Carolina agitating against taxes, and his campaign is heavily staffed by founders of a local “tea-party”. He opposes abortion and gay marriage, but seldom raises either issue. Instead he hammers away at government spending, the budget deficit and the prospect that it will be inflated away by the Federal Reserve. “It’s what motivates me,” he says. “What happens to our country when you destroy a currency? Out of the Weimar Republic, they elected Hitler.”
…
I stand corrected. I did not realize that populist actually referred to people in favor of reining in monopoly power (like me). Perhaps I, too, am a populist — that is, a man who stands up for the rights of all Americans to live free, under a fair rule of law which does not discriminate in favor of TBTF financial monopolists.
I am not sure about the agrarian and silver bits in the definition,though. In fact, I don’t even advocate “government control” of monopolies, aside from exercising the provisions of the Sherman Antitrust Act to prevent their existence except for in special circumstances where they provide a net benefit to the nation.
Main Entry: pop·u·list
Pronunciation: \ˈpä-pyə-list\
Function: noun
Etymology: Latin populus the people
Date: 1892
1 : a member of a political party claiming to represent the common people; especially often capitalized : a member of a United States political party formed in 1891 primarily to represent agrarian interests and to advocate the free coinage of silver and government control of monopolies
2 : a believer in the rights, wisdom, or virtues of the common people
Banks on the run, banks on the run
And the jailer man and sailor Sam
Were searching everyone
For the banks on the run, banks on the run
Banks on the run, banks on the run
* The Wall Street Journal
* JANUARY 29, 2010
At Davos, Bankers Are on the Run
By MARCUS WALKER and EMMA MOODY
DAVOS, Switzerland—Not so long ago, financiers ruled the roost at the glitzy annual gathering of the global economic elite here in the Swiss Alps. At this year’s gathering of the World Economic Forum, the unofficial theme seems to be, “First, kill all the bankers.”
The ire directed at bankers from all sides is palpable, acknowledged Donald Moore, chairman of Morgan Stanley in Europe, as he stood alone reading some charts amidst the hubbub at the forum’s Global Village cafe. Asked which other groups of people have been similarly unpopular in Davos in the past, he said: “terrorists.”
The quip reflects the mounting alarm with which bankers have come to view their besieged profession—even in Davos, a usually cozy gathering.
The scorn poured on the industry at this year’s get-together in the Swiss ski resort is a sign of a mounting international backlash against the financial sector. Popular anger about banks’ role in the financial crisis, and their behavior in its aftermath, has spilled over to the world’s elite business executives, politicians and regulators. Since gathering here Wednesday, they have been aiming sometimes bitter recriminations at the tainted masters of the banking universe.
“I think that the relationship between government and banks has changed irreversibly,” said Peter Sands, group chief executive of Standard Chartered Bank and a co-chair of the Davos meeting. “I think the banks have not helped themselves at all. We have been tone deaf, and shot ourselves in the foot,” he said, adding, “We all need a little humility.”
Such servings of humble pie are just a taste of a political atmosphere that has turned poisonous for banks. Many bankers are keeping a low profile, preferring private meetings to appearances on discussion panels. Under rising pressure, some bankers are even turning on their peers.
…
Are the subprime mortgage lending kingpins finally getting the chance to enjoy a heaping helping of the toxic loans they foisted on the rest of the world? What goes around, comes back.
* The Wall Street Journal
* JANUARY 30, 2010
Fannie, Freddie Chase Bad Mortgages
Lenders Like BofA, J.P. Morgan Repurchase Billions in Faulty Loans; Just a Drop in the Default Pool
By NICK TIMIRAOS
It is payback time for Fannie Mae and Freddie Mac on some mortgages sold to the finance companies by lenders.
Stuck with about $300 billion in loans to borrowers at least 90 days behind on payments, Fannie and Freddie have unleashed armies of auditors and other employees to sift through mortgage files for proof of underwriting flaws. The two mortgage-finance companies are flexing their muscles to force banks to repurchase loans found to contain improper documentation about a borrower’s income or outright lies.
The result: Freddie Mac required lenders to buy back $2.7 billion of loans in the first nine months of 2009, a 125% jump from $1.2 billion a year earlier. Fannie Mae won’t disclose its figure, but trade publication Inside Mortgage Finance said Fannie made $4.3 billion in loan-repurchase requests in the first nine months of 2009.
“Because taxpayers are involved, we’re being very vigilant,” said Maria Brewster, who oversees Fannie’s repurchase team. “No taxpayer should have to pay for a business decision that caused a bad loan to be sold to Fannie Mae.”
The get-tough stance comes amid pressure on Fannie and Freddie to make the most out of more than $100 billion in taxpayer funds they got to stay afloat. The U.S. government took them over in September 2008.
The biggest losers are likely to be Bank of America Corp., J.P. Morgan Chase & Co. and other mortgage lenders when the housing bubble burst. Such lenders also are being deluged with loans kicked back to them by holders of mortgage-backed securities who uncover deficiencies with loans bundled into the pools. One common example: a borrower who said the loan was for an owner-occupied home but used it for a second house.
…