Bits Bucket For February 1, 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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US deflation no longer seen as a risk ~ Washington ~ January 31 2010
The US has escaped the danger of a Japanese-style deflationary trap, according to James Bullard, a voting member of the Federal Reserve’s key policy-setting committee.
Mr Bullard, president of the Federal Reserve Bank of St Louis, told the Financial Times in an interview that his preoccupation throughout 2009 had been deflation, but the risk had “passed”.
Does this mean 19% interest coming to take care of our financial problems, this country has produced?
Be still my my beating heart!
It would be fantastic!!!
I wonder if his thoughts on inflation were along the lines of “if you can’t say anything nice, don’t say anything at all”?
Deflation has ‘passed’, just as subprime was ‘contained’. New words, same BS.
What a relief. For a while I thought we were headed for big trouble with the huge number of pending reseting mortgages.
Party on.
Silly, silly, combotechie. Didn’t you know this was just a small problem? We don’t need no stinking regulations, man! Deflation! Bah! We have Helicopter Ben.
“I am the Great and Powerful Wizard! No! Do not look at that mortgage reset behind the curtain!”
Roidy
P.S. Silly, silly, Roidy! “We don’t need no stinking perp walks, man!”
P.P.S. Too much espresso this morning and too giddy about the Saints.
Yep. Wait til the big banks collapse. Or don’t wait…Be sure you have most of your $ out of them before they collapse!
I think more and more underwater homeowners are considering jingle mail. It could be a rapidly escalating event if a core amount does it and the MSM reports it. This will drop house prices significantly.
With the laws out there offering no penalties for people who walk away, the right thing to do is walk away. And this will be the mother of economic crises.
Interest rates will stay 0 for several years, IMO. But nothing will stop home prices from falling.
“Wait til the big banks collapse.”
You know, I’m beginning to think they won’t collapse. The banks have been doing such a good job offloading bad debts onto the Treasury and Fed Reserve that they might well survive. Having said that, they’ll survive in a nation that is itself collapsing.
Bingo.
At this point, the big banks have been set up such that they simply won’t collapse unless/until the U.S. itself collapses - i.e. our very financial system as a whole and probably even the political system.
However in doing so - they’ve also made it a lot more likely that the U.S. itself will collapse, at a point in our not-too-distant future.
I agree that a big-bank collapse seems quite unlikely. They are all borrowing from the govt at 0.125% and then lending to the govt at 3% or so. An automatic profit at the expense of the taxpayer. My reaction is to go ahead and buy the bonds, not of the US govt, but of the banks and ins co’s that are being fed by Uncle Sam. Hence my “investment” a month or so ago in Zionsbank, when its 6-yr bonds were yielding about 9%; these opportunities have shriveled, but a few days I bought some bonds in AIG (yup, sorry, AIG!!) yielding 8.6% — it just seems the govt is bound and determined to keep these zombie institutions afloat.
Meanwhile, the Real People (my clientele) are not borrowing at all. They’re making prepayments at record speed, joining the de-leveraging frenzy. Because they’ve finally realized their property will NOT appreciate, and the fastest way to make money is to get rid of the 9% interest they’ve been paying to me.
“…..offloading the bad debts on the Treasury……”
Who, according to an item on “Mish” yesterday, they are handing right back, if the underlying security had fraudulent underwriting.
Planned or not, these a-holes may find themselves with their nutz in a vise yet…….
-Wall Street unloads their crap onto the taxpayers.
-The government, now that they “own” it, has all the documentation they need to show that not only was their paper crap, its strains credibility for them to say they didn’t know it was crap.
-The Justice Department starts issuing Joshua Tree treatments to people selling fraudulent crap to the government…….or the lawyers start having a field day with all of this government discovered “documentation”.
I said: Get real.
Remember the Whitewater development from the Savings and Loan scandals of the 1980’s?? Remember how Hillary was billing lots of hours for shuffling the papers around?
Remember the “files” got misplaced?
Look at all the room for political graft, corruption, bribery and extortion that the TRUTH would present. The TRUTH will be buried for the monied Bankster buddies, and the fleecing of the Taxpayer will continue.
Do you really think that Obama’s Attorney General, Eric Holder, will go after anybody except to figure out ways to line the pockets of the administration?
We’ve got Chicago “community organizers” running the government. They no how to do backroom deals.
Do you see “healthcare” being given the light of day?
Of course not.
Who knows where the money went? New Orleans perhaps?
They aren’t going to stop bailing out now. Honestly, your local bank probably has their money hidden in accounts at the big banks. Not to mention most of our employers have their money in those big fuc4ers.
Thinking on the foreclosures. I wonder how much the banks are still holding. My guess is it is substantial. If it was just stuff they were servicing they’d be looking to unload to make transaction fees. Still, that paper work situation must be a mess with all the slice and dice going on.
I have a feeling that we are looking at people staying in their foreclosed homes, rent free/tax free upwards of three years now.
And yet we renters get hosed on that deal: we have to actually make our housing payments AND the squatter “homeowners” get to sit on their houses vs. having them sold off at a fair price.
Great!
My wife and I have considered timing a house purchase such that by the time we got kicked out, we would be ready to purchase a house in cash. In this manner, we would get our share of bailout pie.
0) Buy a house 2 years before we are ready to purchase in cash. Never make a single payment. Pay costs with the $8500 giveaway.
1) 18-24 months of no payments. Sock it away, accelerate our cash savings.
2) Get kicked out, ruin credit score.
3) Credit score is immaterial, as we purchase next house in cash.
I estimate we could save an additional $30,000 above and beyond our normal $30,000 using this method.
Captain CC, I just want to warn you that the last time I bought a housing unit for cash, I was subjected to a credit check. Whether this was because the seller was a bank or whether it was because I was buying a condo and the association wanted to check me out, I am not sure. You can say you are not likely to buy a condo (probably good thinking), but you shouldn’t say you are not likely to buy from a bank (REO’s often the best deals).
How about this plan?
-Find a foreclosed house somewhere in the sticks, as far away from the regional offices of the major banks as you can get. Look for unplowed driveways a week after a major snowstorm.
-Move in…….tell the neighbors (if they ask) that you are renters.
-Squat until someone kicks you out. Ideally, you will not leave any tracks behind when you bail.
I hope you live in a non-recourse state.
What sort of house to you intend to buy with $60K (or whatever your cash is)? Wouldn’t it be a fixer-upper at the price? You need to save out enough cash to do immediate fix-ups then, since you won’t be able to do anything on credit.
“How about this plan?
-Find a foreclosed house somewhere in the sticks, as far away from the regional offices of the major banks as you can get. Look for unplowed driveways a week after a major snowstorm.
-Move in…….tell the neighbors (if they ask) that you are renters.
-Squat until someone kicks you out. Ideally, you will not leave any tracks behind when you bail.”
I am not sure about squatting laws, but if it is not criminal, it sounds like a good plan. If the utilities are turned on and the house is taken care of, it’s a win win win situation. Not only is the asset taken care of, but the neighborhood looks better, and the squatter is living very cheaply. Unfortunately, those brazen enough to do such a thing are probably not the most savory of characters.
I’m thinking about becoming “brazen” enough.
IMO, before this is all done, you are going to see houses literally being “given away”. Either by the banks, if the taxes/upkeep start generating serious losses, or by government entitiies, to expand the “tax base”.
We’ve got a lot of empty foreclosures locally, even here in one of the 10 “Cheapest places to buy” markets in the country. Kinda hard for house prices to inflate, when most of the civilian jobs are paying $10-15/hr, and 50% of that is being eaten up in taxes/user fees/etc.
RE: IMO, before this is all done, you are going to see houses literally being “given away”. Either by the banks, if the taxes/upkeep start generating serious losses, or by government entitiies, to expand the “tax base”.
Did n’t this happen in NYC in the 1970s ?
I wasn’t clear, I guess. We’ve been saving $30k a year for the last 4 years. In 4 more years, when I expect prices to be mostly reasonable, we should have well over $250k in cash, ~$300k if we took our slice of pie.
D’ya think all those loanowners sitting on massive principle w/ low interest loans will figure out Wall Street’s big ticket housing price scam?
Tricking greater fools into thinking they are getting a good deal w/ a low interest rate, when the payment is just as high as it would be w/ a high-interest rate and an affordable principle…
I doubt it.
You should see the looks I get (when we’re out and about doing our “trench work”/market research) when I say we’re waiting for higher interest rates. They really don’t get it.
The risk has passed, now the Fed can resume sleeping at the wheel.
“…mikey SHOUTS, “These messages are seven bloody hours old! Seven hours…”
What do you mean sleeping? Had they actually been asleep none of this crap would have happened. It was due to their vigilant efforts at inflating the economy that the deck of cards came down.
Since then, the efforts have been EXTRAORDINARY, bordering on illegal and unconstitutional to provide ALL KINDS of support to the banksters and markets.
The alphabet soup of lending facilities that Bernanke has concocted is too endless to list. They have been busy little bees working to save Wallstreet bonuses and salaries. They wouldn’t let their buddies lose any money, you know.
END the FED. Now.
I have to LOL every time I hear the phrase “Japanese-style deflation”. I’ve got news - it’s largely a myth, and is irrelevant to us anyway. Their CPI has been pretty much flat for 17 years now. It peaked at 104 13 years ago, and is down a whopping 4% since then. Not exactly a huge problem. Keep in mind this is a country in population decline as well, so you have an ever-shrinking population chasing the goods and services. Add to that the fact that Japan is an export-driven economy, ours is import-driven. Comparing us to Japan with regards to inflation or deflation risk is very much apples and oranges.
It is interesting to contemplate the navel (orange) though. While their “CPI” was flat to down, the price of world raw materials soared. They import just about all their raw materials to support the export driven economy. This suggests to me that the value added in Japan has been priced significantly lower.
There is an appliance store in town that has been closed for two years. Peering in through the window, I see that the kitchen range still has a price tag on it that has not changed one bit. Everybody in town knows the owner and could buy the range if they had the money. CPI doesn’t tell you much about deflation.
Packman, CPI is one thing, but what about asset values such as Japanese real estate, stocks, etc?
Those are indeed down. It follows what’s been proposed here many times - on the frontside of the bubble we saw inflation in luxuries (including stocks and RE) and on the backside we see deflation in same. All the while necessities - things that aren’t “investments” - are flat or up.
It’s a bit of a paradox / catch-22 for the PTB. They have to exclude investment things from the CPI, including real estate, so that they can claim that inflation is much lower than it actually is - when these things are going through the roof. However then they’re caught on the backside, when the CPI shows prices being flat when in reality the sum total (including luxuries) is going down. Apparently this hasn’t stopped them w/regards to Japan though. They still claim “deflation” on the backside even though CPI is flat, however they never claimed “high inflation” on the frontside even though the price of investments was skyrocketing.
b..b..but THIS is America!!
We can go on living on luxury thingies, investments and RE Forever…Can’t we ?
That’s so funny, it’s sad.
What’s an import-driven economy?? There is no such thing.
You mean a country that has stopped producing anything but paper promises and is sucking other countries into selling their goods for our “securities”.
That shell game is coming to an end. It just takes a while to realize you have been swindled. And time for things to pass thru the system.
Useful productive activity is what creates wealth.
Financial “innovation” is just another way of stealing it. This happens every generation or so. Some sharps get a new angle on selling shiny bobbles to unsuspecting rubes that believe they are entitled to wealth without the work. It’s as old as prostitution.
When the “financial services industry” is 20% of your economy, you have to realize you have REAL problems.
I believe it’s ~40% of our economy, but will have to look it up again.
“but the risk had “passed”.
Whew, that was close.
“US deflation no longer seen as a risk”
In the category of ironic and not necessarily related to anything, I just picked up two 10 lb bags of potatoes for $1 each. Typically, I’d pay $1 per one pound, not ten pounds. If deflation kicks in, would i get them for a dime?
If deflation really kicks in you may not get them at all.
Deflation can force (and has forced) farmers to stand by while their crops rot unpicked in the fields.
It looks like we are already loading up for a beef shortage in the not too distant future.
go vegetarian and you won’t miss it!
“….you won’t miss it”
If you’ve ever had a good steak or barbeque, you will……..
Tofu doesn’t even pass as good fishbait around here.
From the AP - Greece
Farmers blocked major roads earlier this week to demand financial help to overcome low food prices. The government has said the debt crisis makes it impossible to give them any more money.
If that don’t scream Cash is King, what does?
If that don’t scream Cash is King, what does?
The fact that the farmers will stop producing so much food and create shortages, thereby triggering inflation.
How much “cash” would you give for a basket of wheat when there is no bread on the shelves?
Perhaps the farmer decides to convert to “family farming” and just needs fuel and oil to run his equipment. I have a barrel of oil and want some bread. You have “cash”.
In the Wiemar Republic people were buying ANY commodities with cash to be able to have something to TRADE. The cash became more worthless by the hour.
As quickly has the housing mania became a “selloff” and the markets declined from 12,000 Dow, the money can drop even more precipitously if the idiot FED keeps their current policies. Panics cannot be halted when people realize that the paper they are holding is about as worthless as a “continental”. My, my, how quickly we forget history.
Or it just reverts to its “intrinsic value”. PAPER.
Diogenes, stop bringing up these little green men under the floorboards of reality. You’ll frighten people….
I can’t help myself. Today i have an inordinate amount of free time, so i have been able to read through this rather lengthy thread and just comment away about what i find disturbing, troubling?, or perhaps myopic views of the world?
I probably won’t have another chance like this after tomorrow because the weather will be improving……….
Just have a glass of cocoa and put it out of your head.
chiao.
Jan. 27 (Bloomberg) — The U.S. cattle herd may have shrunk to the smallest size since 1958, as mounting losses during the recession spurred beef and dairy producers to cull animals, analysts said.
Beef producers and dairy farmers held 93.181 million head of cattle as of Jan. 1, down 1.4 percent from a year earlier, according to the average estimate of seven analysts surveyed by Bloomberg News. That would be the smallest herd in 52 years, according to the Livestock Marketing Information Center.
“The U.S. cattle herd may have shrunk to the smallest size since 1958, as mounting losses during the recession spurred beef and dairy producers to cull animals, analysts said.”
Producers may be taking a bath, but grocers haven’t cut prices much at all for beef or milk. Some wholesale price declines aren’t filtering down to the retail level at all. Beef is still very expensive with very few price cuts or sales. More sales for milk, but still expensive.
No kidding. I’m still waiting for $3-4/lb striploins and rib eyes. Did get some rib-eyes at Sam’s Club yesterday for $6/lb. Not bad, but they’ve been at that price for years.
WinCo here is selling rib eyes for $2.98/lb.
we should do some sample price comparisons- given the posters here come from all over…..”rib-eye”…i’ll have to ask my wife to check the price
We have the great good fortune to have an actual, locally owned “butcher shop” here in town. I’d advise anyone to see if they have one in their area.
The quality of the beef is a lot higher that what you see in the chain groceries or Wally World. Prices are the same or a little higher, but it’s worth it when you look at the quality.
WinCo here is selling rib eyes for $2.98/lb.
What grade?
And what’s “WinCo”?
I’m going to agree that this has NOT translated into lower prices at the grocery stores I’ve shopped. It’s almost like the price fixing insofar as oil and gas are concerned. The consumer always gets shafted.
The worst roast I ever bought was at Safeway for all their advertising about ‘prime’ beef. I ended up throwing the whole thing away, it was that tough.
We have a local butcher who sells the best of the best at prices equal to the major markets.
Well it’s Willamette Valley Meat Co. beef from Portland - not marked so it’s probably USDA “edible” grade.
You have to buy the whole roast and cut steaks off as you see fit. My chunk is somewhat on the fatty side but the meat is tender and flavorful.
WinCo is a grocery store chain in 6 western states. They have had some interesting specials, especially in beef and seafood. Last summer lobster tails were $4 each - not really big ones, but a great bargain. Always have live steamer clams for $2.50/lb. Often they have whole tenderloins of beef for $4/lb.
http://www.wincofoods.com/locations.htm
I agree with Pot Buyer - some Safeway meat sucks. This WinCo special is much better for a cheap steak/roast.
Beef producers and dairy farmers held 93.181 million head of cattle
I’m surprised it’s that few. I’ve seen estimates that Brazil has 240 million head of cattle. But the cows here are pretty skinny.
It’s funny too. You can’t buy the same cuts here because they butcher them differently.
I’ve yet to see a ribeye or a porterhouse unless you go to a big international hotel.
Where are you guys finding all these deals? The local farmers market? I’m sure not seeing any price deflation on food.
I’m seeing targeted sales prices on selected items. But those sales prices are often no better, if that, than before the big price increases of a year or two ago. The non-sale prices haven’t budged much, at least not yet.
Agreed, sale prices on groceries can be good, and feel a bit deflationary as some items are on sale so often.
My favored brand of cheese supposedly retails for $4.95 a package, but in the last 6 weeks have gotten good sales:
Key food (NYC) 2 for $4.00 (this week)
Pathmark (NYC) sale $2.69 PLUS $5 coupon off next purchase (of anything at the store) with purchase of 3. (early-January)
A willingness to stock up on things I know I will use has saved me a bit. (Always rummage through the display to get the ones with a use by date that is farthest out.)
I review the sales on their websites every week and choose which stores to go by accordingly. Never buy certain things (breakfast cereal, etc,) unless on sale.
Think the retail prices are a bit like “wishing prices” on housing, and psychologically make you think “what a deal”.
Planning and a pantry cupboard - it’s a good thing.
Sorta like when production gets off-shored to China.
The US distributor gets his “wholesale” price cut 75%. He doesn’t lower the retail price and pockets the difference.
Precisely, GSfixr.
Same here Colorado, although after the recent 25%+ jump prices, it seems to have leveled off for the time being.
Now if my only my income would increase by 25%+.
Sam’s Club had rib-eye for $5.98 per pound, Henry’s/Boney’s/Sprout’s (same family-San Diego original base but three generations’ iterations) had it for $4.98. Too much fat. Went for the London Broil at Stater Bros. @ $1.77 per pound. Lean and tasty after proper trimming and (necessary) marinating.
“but the risk had “passed”.”
Like a hit and run.
The newest victims for the economic recovery: Asians. The West is “done, stick a fork in it” as Consumer Economics moves to the Far East.
“Forum sees Asia as the heart of the new global economic order”
http://biz.thestar.com.my/announcement/story.asp?file=/2010/1/30/business/5558242
“But even amidst the diversity, there was consensus on one theme – Asia is the new economic powerhouse of the world.
“The international community expects Asia to rise to the challenge and play a more prominent role in the changing economic landscape. Asian economies, by working together, can lay a solid foundation for sustainable economic development. ”
It’s now the Asians turn to go broke on easy credit, credit card gimmicks, and unsustainable debt ratios. The US was a creditor nation with our national characteristics being frugality, hard work, and fair play for most of our history. The 1920’s credit bubble was a lesson learnt by our grandfathers and grandmothers. We are normally an energetic, creative, hard working people who believe that frugality, hard work, and fairness are the true virtues.
Fairness? No, I’m not naive. Fairness was at one time a respected quality in a person or institution. Now we have “Life’s not fair get over it.” and of course the corollary “The people who are most effected by the crisis are the ones that had the least to do with it, and that is not fair.” ( I paraphrased that quote. We have all heard it in one form or another.)
So, Gentlemen, Start Your Visas! (or Diners Club, Master Card, etc.)
The credit disaster has a whole nother Continent to destroy. It will take about 30 years or less.
Have a nice day!
Roidy
Sounds good to me. Maybe we can sell them cheap crap for their stores.
You know roidy there are 2.4 billion people in China and India alone. There are 120 million in Japan. Indonesia is 130 million.
Back waters like Philipines and Vietnam are another 170 million. Include a few other places like the Korea’s, Taiwan exc. You are looking at 3.2 billion people OR 10x the population of the united states. Hence, we should expect not to be the “economic center of the universe”. Hell, I don’t even wish to be.
My hope is these guys all are more concerned about each other, they are closer together and we get to sit out a lot of the fun of the next 100 yrs of pri&k waving BS.
That is just Asia. I guess you throw in all the wonderful backwater places and there are another 3.2 billion.
Given the accuracy of the figures and all, the population of the United states might be considered a rounding error. Hence just a figment of our collective demented imagination.
It’s nice to have dreams…..or an overactive imagination.
More people doesn’t make you more wealthy. Depending on how their activities are directed, they can, in fact make you very poor.
Haiti is a great example. 8 or 9 million people with not much to do, but make more Haitians is a bad economic model, supported by the U.S. and the U.N. No one is concerned that they have no real economy. They are one of those “developing nations”. That means they have needed continual aid for generations.
Haiti was a disaster long before the recent geological movements disrupted an already disfunctional society.
The U.S. is failing because it has become a welfare state where hard work and earnest effort are displaced by Union guaranteed pensions and salaries and government mandates on businesses and individuals, all while draining as much wealth from the productive sector as possible.
You are envisioning a world where governments or industries can direct hundreds of millions of workers into a “workers’ paradise”, like Cuba, for instance, and turn them into production machines for either the State, or market economy. But there is much more to economies than the industrial revolution. These are very old civlizations. What if Johnny Chin-Lao just wants to hang out in his rice paddy and get a portion of rice and beans, with no real interest in the “advancement” of the social order. Should he be sent to a re-education camp? It was done by the Soviets and the Chinese, but really didn’t work out all that well.
America was a unique experiment in Government, Economy,
Religion and resource management. I don’t expect to see India or China, or any other country doing the things we have done in the long run. They have already built “empty” cities and towns, without markets to direct the top-down autocratic rule, they will make more mistakes. I expect them to have tremendous set-backs. The Mayan Civilization was overcome by Cocaine and never recovered. Do you think the Afghan tribes will “come together? One can never know the future, but i have my doubts about where the next big boom will be. It may be in Iran, but a boom of a different sort.
Yo Big D! It’s been a while since I’ve seen a post from you. How’s it hanging?
Roidy
It’s been an amazing start to the new year. i have joined the ranks of the unemployed, so have more time to sit around and either give advice or criticize others.
That is the reason that God made people with nothing to do.
As I am now one of them, I am trying to fulfill my role as a commenter on those who are actually doing something.
I think I am doing a fairly good job, but I need to be mindful of sloth. No time to dilly-dally. I must be movin’ on……….
D.
Wait until you retire, that’s when you really
have to be careful of sloth…hehe..
Sorry to hear about your job loss, diogenes. Hopefully, you’ll find better paying and more enjoyable employment in the near future.
In the meantime, enjoy the advice-giving and criticizing.
<i”The U.S. is failing because it has become a welfare state where hard work and earnest effort are displaced by Union guaranteed pensions and salaries and government mandates on businesses and individuals, all while draining as much wealth from the productive sector as possible.”
I fixed it for you.
The U.S. is failing because it has become a welfare state where hard work and earnest effort are displaced by insider trading, corporate cronyism and Wall St mandates on businesses and individuals, all the while draining as much wealth from the productive sector as possible.
Bingo, eco!!!
It’s not the workers who are/were the problem, it’s the corporations/elites who rake in huge profits when our jobs are outsourced and when they control money flows…and direct them into their own pockets.
It’s all about deal-making and trading, and it’s been this way for a while in the U.S. Productive work is not rewarded nearly as much as trading, buying/selling, brokering, merging, etc.
“Haiti is a great example. 8 or 9 million people with not much to do, but make more Haitians is a bad economic model, supported by the U.S. and the U.N. No one is concerned that they have no real economy. They are one of those “developing nations”. That means they have needed continual aid for generations.”
Low wage countries must compete with China.
A complete waste of time and money, unfortunately. All hat and no cattle.
US banks face insider trading probe.
Washington ~ January 31 2010
Neil Barofsky, the special inspector-general overseeing the US government’s financial rescue efforts, is to probe allegations of insider trading among bank executives and their associates.
Eight of the largest banks in the US received between $2bn and $25bn in October 2008 under a programme to prop up the financial system led by Hank Paulson, then Treasury secretary.
Why do you think it’s a waste of time and money?
Because year after year ‘we’ invest a lot of time and money, and in the end nothing of substance comes of it. Every once in a while a small sacrifice will be offered up. The laws and regulations in regard to insider trading have and do little to curtail the practice.
Round and round we go, any market that can be manipulated will be.
The current “we” may do a better job than the last “we.”
Sounds like marijuana laws. No one gets harmed but billions are spent investigating it. But the blue haired crowd demands hippie human sacrifice.
Actually, people do get harmed. In my little town of Eureka, California (Humboldt county)…the dope capital of the world…there has been little consequence of the economic collapse experienced by the rest of the country. Housing prices aren’t down, multiple offers on most housing (900 square foot moldboxes from the 1950’s costing $300K in bad neighborhoods), massive amounts of home invasions, huge homelessness, and lots of crime. All the result of one thing–the drug trade. But, despite layoffs in the lumber industry, everyone has money. You go to target and you see the longhairs pulling out their wad of C-notes to buy flat panels. Dope money is routinely laundered through the purchase of real estate, propping up home prices. And whole neighborhoods are laid waste due to the grow operations. So yes, marijuana growing is not exactly a harmless crime. I’ve seen it first hand in this place for the past five years, and it ain’t pretty. Don’t believe it, check out recent documentaries on this place like:
Pot City, USA
Marijuana, Inc.
Then tell me if you’d like your neighborhoods to become like this–overpriced, unsafe, corrupted, and losing population.
Legalized pot would be grown in better climates - like Florida, coastal Texas, and Lousiana (hot and humid).
I can recall traveling through the Louisiana bayou country in the early 1980s. I was riding solo on my bicycle, and was warned in no uncertain terms NOT to talk to people who didn’t appear to be employed, but had plenty of bling to flash around.
Who were those people? Drug traffickers. They were bringing it in from South America. It was also rumored that the stuff was being grown locally.
no jidding… don’t blame the drug blame the PROHIBITION…
sheesh….people really can’t learn from history…
gotta get hit by a car to know not to play in traffic
It’s not the pot smokers, it’s the whole song and dance related to smuggling it and distributing it.
For the record, I don’t do drugs of any kind, but if MJ was in the same category as alcohol and tobacco (regulationwise), it would be less of a headache or everyone.
Jus’ sayin’…
I agree with NoSingleOne. Outside of the occasional aspirin, I also do no drugs, not even caffeine.
IMO, MJ is less addictive than other mind altering substances, including nicotine and alcohol. It is environmentally friendly to produce, unlike meth and prescription drugs. The biggest problem is that it is illegal. It is costing too much to enforce regulations against it when compared its potential harm to individuals and society.
Years ago when I lived in Marin, yep, that
wealthy county north of the Golden Gate full
of trust babies and dopers, it was common
knowledge that the guys that hung out at the Trident in Sausalito wearing jeans and a ratty
sweat shirt were dopers, maybe it was the
$5,000 dollar hand wrought silver belt buckle
that gave them away…
I loved that movie The Serial (maybe it waas cereal) , with martin mull.
Leaving the fog of SF, the GG bridge, through that tunnel (there used to be a rainbow painted above the entrance), into the warmth of Marin.
I think everyone should experience it. i’d rather live in New England though.
Drugs did U say Drugs
There was a law firm in Charleston SC where the 5 partners all had Rolls Royces….wonder who their clients were…
How to thin the lawyer ranks real fast…prove the legal fees you were paid were made legally by your client.
Oh but wmbz, it matters not that all these make-believe investigations are just an excuse for our favorite Republicrats to preen and bloviate into the TV cameras for the benefit of yahoos. You see, every four years we have the opportunity to vote for HOPE and CHANGE.
Oh, wait….
Wasn’t the premise of the bailouts one giant insider deal for the banks?
No way!
The cynical side of me (by far the largest part) sees this as a way for the Administration to get the banks to fall in line, to get with the program.
Bankers are now taking their turn as being portrayed as the bad guys. (Not that they aren’t bad guys, but portraying bankers as the bad guys takes the heat off of the other bad guys.)
Who are the other bad guys? Bernanke/Geithner? There’s a side of me that thinks the bankers (+ toobigtofail) are the underlying cause, B/G are just symptoms.
“Who are the other bad guys?”
Everyone who participated in and profited from this economic fiasco - the sumptin’ for nuthin’ crowd - is a bad guy, IMO.
They number in the tens of thousands.
What justifies branding the people who profited bad?
Bad means illegal in my book, and aside from some small time mortgage fraudsters, there hasn’t been much proven illegality so far.
I guess lying on mortgage applications is illegal, of which there must have been tens of thousands of cases, but we haven’t seen even one arrest much less a conviction, afaik..
joeyinCalif,
Shy of setting up “Red Dawn” fenced in containment pens or creating Inland Empire FB Zones.., WTF are we going to do?
Again, Joe Dude buys house, has job, losses job.., and walks away from home politely handing over the keys? No problem.
Rampant FB Rich Dad wannabe’ w/ multiple “primary” residences? Lied on app? Problem.
Bad means illegal in my book
Thank you that is all I need to know.
What justifies branding the people who profited bad?
1. Insider trading like the FED official who bought GS shares knowing they would get bailed out.
2. Getting 100 cents on the dollar from AIG. Using influence with TG to get gov to pay 100 cents on the dollar and then try to cover it up.
3. TARP
4. Those who created the framework that allowed for securitization and crazy leverage knowing that this day would come, and knowing they would get bailed out.
5. Those that knowingly aggressively marketed and sold a defective product to their clients while at the same time shorting this product aggressively.
The list goes on and on Wallstreet PR agent Joey.
What about me? I had the foresight to sell my paid-off house in San Jose in May 2006 for megabucks, and then move out of the area with a big pile of cash. For some reason I don’t particularly feel like a “bad guy” for profiting from the insanity of stupid people.
oxide.. you best be real careful how wide you knit your “bad” net, or it might include you.
+1million, Dennis.
People who choose to make rational decisions with their own finances in the face of market irrationality are NOT bad guys. They are part of the solution—their actions help counter and repair the damage that the sheeple cause with their bubblicious stampede.
chiming in, i agree with dennis too
“I had the foresight to sell my paid-off house in San Jose in May 2006 for megabucks, and then move out of the area with a big pile of cash.”
One word: Envy.
@Measton,
#4 That was probably Miliken who first came up with a lot of the securitization strategy. (CDO stuff)
I think after his time in jail, the foundation he started has been trying to undo a lot of the damage. Mostly to no avail. Not sure how serious it is or if it was just a PR stunt to keep from getting sued for more money.
Unfortunatly, one of the grand side effects of the Republicans’ regime was to underfund and prioritize the SEC. A few high profile nabs here and there but not effective enough.
Not sure how much we can do about insider trading anymore. Without major structural changes it is just too easy to game the system.
Insider trading and lack of regulation was one of the prime contributors to the Great Depression.
Nope. No parallels there.
“Who are the other bad guys?”
I think you would find the root of most of our problems if you could lift the cover off that grease trap known as “the Federal Reserve”. Sure it would stink but it would be telling. Follow the money.
Banks. Mortgage brokers. Realtors. Appraisers. Developers. The MSM. Congressional watchdogs.
And Joe6pk, who has fully demonstrated that what a fool believes he sees.
I almost forgot: Moody’s and Standard & Poors, who flushed their long-standing reputations right down the drain for some fleeting short-term gains.
If the banks hadn’t ripped their safety nets into shreds in the name of short-term profit with intent to ultimately stiff the taxpayer, the end-user “bad guy” re-al-tors, FB’s and associated ilk wouldn’t have been able to operate, as they would have had no money.
Bank gives strawberry picker 700k. Picker defaults. Who is the deepest pocket who could potentially rectify this situation? Bank could write off 400k loss. Worker could write off one strawberry, but never be able to do a darn thing about paying off the loan.
Rumor dept: April 5, new legislation takes effect, where banks must give a price(or at least respond to offers in 10 business days rather than ten business months or not at all) on their short sales.
IMO This would help rip the band aid off faster, if a true market price is allowed to be found. Anyone else hear of such legislation/regulation. I heard it from a real-tor
Argggh, more MBS-Derangement Syndrome!
Right, I’m sure in 2001 WaMu had it all figured out? Worked out great huh? Why is it we have this Smoke Jumper team that falls out of the sky at a moment’s notice anyone so much as notes J6P ‘might’ have had a hand in all this?
DinOR, it’s the pitchforks and torches mob mentality.
Banks are weak.. economy is weak. Seize the moment. Crush them all by the sheer weight of our numbers (not a big number, btw).
Rich and powerful = evil.
Participating in capitalism = bad.
Economic recovery = bad.
J6P = proletariat = good.. forgiven or excused for whatever sins and/or widespread exhibitions of dangerous stupidity which first ignited and then fueled the situation.
Rich and powerful = probably gamed the system and rode to power on the backs of the ever-squeezed middle class and poor = evil.
Participating in (infinite growth) capitalism/corporatism (where the rules are made through shady backroom deals with no regard to the triple bottom line) = bad.
(False) Economic recovery (based on FIRE, propped up house prices and selling Burger King fries to each other) = bad.
(MEW taking, spinner rim, plasma TV owning, can’t make the mortgage payments J6P) = stupid/evil…
Actual home-owners (no-mortgage) and responsible renters = screwed
Fixed that for you!
MrBubble
“Seize the moment”
Joey, that’s about all I can figure out where that mentality is concerned. I’ll be up front, I’ve never been a fan of MegaBank either. Typically held accounts at Navy Fed. C/U or whatever.
I’ve yet to have a positive experience w/ MB and I’m moving our accts. out of USB. But all of this knee-jerk finger pointing we’ve scripted in retrospect has just got-to-stop! Just insert “P’s & T’s” any time it shows up.
Rich and powerful = evil — Uh no the Wall Street titans who orchestrated this mess are evil.
participating in capitalism = bad - - And do we actually practice capitalism here?? Here’ s a hint, if your company can’t fail and will always be bailed out you are not practicing capitalism.
Economic recovery = bad — No market manipulation that is paraded as economic recovery is bad.
Blaming J6P for this is like blaming an untrained dog that follows a trail of steak bits left on the floor to a steak on the table and then eats the steak. I don’t blame the dog I blame the idiot/(criminal in this case) who left the door open, laid out a trail of steak bits and then left the steak on the table. That being said the dog still should get put outside and trained not to do it in the future. Prior to the dog eating the steak set up by Goldman Sach’s, GS sold the steak to 10 neighbors and then took out an insurance plan on the steak.
“I don’t blame the dog” ( figures? )
If the dog had agreed to RE-PAY for every bit of steak ( you just might an analogy there? )
Call off the Smoke Jumpers guys, we want to let this sucker burn! Guys, and I have no idea how we’ve perpetually placed the cart before the horse here but, big screens and spinners came ‘first’.
Or are vigorously debating that too?
I’m sure if you could ask the dog he would have agreed to pay for the steak. Many would have said it sincerely, as they didn’t realize the game being played. Others
I’ll gladly pay you Tuesday for a steak today!!
measton,
LOL! Yeah I imagine they would. One of the sharp posters at patrick.net ( and she posts here from time to time ) *athena ( Sonoma BB ) made a great observation years… ago.
She said, “NO! I am not interested in paying off your maxed out credit cards!” I think it speaks volumes as to the FB’s mindset. Rack up a bill and a half on plastic, re-fi, pay-off… plastic, rinse lather, repeat. Sell if necessary, re-load game.
And that for me, has been what the bubble was all about. None of us are oblivious to cause & effect here, but Housing Bubble vs. Credit Bubble and WS vs. MS at the very least deserve equal time. I don’t recall any FB’s running around screaming about how MegaBank and the Evil PTB were “screwing” them in 2005? Hell, they’d tell you “the banks are stupid, but hey!…”
that’s rich. The little people just don’t know any better? They have the minds and motivations of a dumb animals. That’s the excuse?
Fact is average people are real smart and pretty damn clever.
Poor and middle class regularly and habitually game the system. It’s the #1 favorite pastime of many.
——
Tried to game it once too often. “Yes, Mr. Broker. I certainly do make $250K a year! [wink] Show me where to sign.”
..but this time they wasn’t so smart or so lucky.. got their little doggy-tails caught in the door on their way out…
The bankers walked away from this mess with CASH. The typical can’t-do-math J6P got stuck with a depreciating asset.
I bought in 1999 and refi’d in 2003. Both times, the mortgage sales pimps pushed the biggest loan that they could possibly justify, and wanted to roll every last cent of theoretical income the ex and I made to inflate the number. All the time being told 3x income was “the old standard” that didn’t apply to “modern home finance”.
(this was when some of the banks were still doing “income verification”……silly them).
Unfortunately, people uncritically look to the “experts” for advice. Especially when they are saying what they want to hear.
Supposedly, bankers can do math. If a no-mind dip$hit like me can figure out that something is really wrong with the housing market by 2004, what’s their excuse? After all, they are the “professionals”.
X-GSfixr ..
How is it that you, a self described dip@#$ figured it out?
Why aren’t you one of the people who uncritically looked to experts for advice and got sucked in?
————
I suspect you’re just honest, and have a conscience along with some experience, which puts you on your guard whenever things smell a bit off.
Understand that the multitude is packed with scheming something-for-nothing crooks at heart. Income class makes no difference. Crooks exists at all levels. (obviously)
Can’t cheat an honest man.. but honest men often do pay for the damage caused by the cheaters.
If this is a war, honest people should wage it against ALL the cheats, not just some.
that’s rich. The little people just don’t know any better? They have the minds and motivations of a dumb animals. That’s the excuse
I wouldn’t say they were dumb, I’d say they were misinformed and cheap credit, PR from realtors, MSM, etc drove up the price, so they said hey I can make money at this. This is the hallmark of any good PONZI Scheme. I’ll blame them for being greedy (who isn’t out to make a profit), but I won’t blame the vast majority of Americans who purchased homes in the last decade for the collapse of our economy. That goes to the people who understand credit, who manipulated the laws, who manipulated the rating agencies, who manipulated the gov.
Again Joey, anyone who claims that the banks are innocent. (I think you said blaming the banks is like blaming your wallet for being empty) is either a fool, or is providing propaganda for Wall Street.
“but this time they wasn’t so smart or so lucky”
Perzactly. Goin’ double ‘er nuthin’ is great fun ( when you’re playing w/ someone else’s money )
And I’m not in denial about X-GS’s comments either. Hell, I’m the guy that’s been beating that to death. No reason to doubt every word is true. But it’s important to remember.., Ben Bernanke wasn’t listening in to the conversation on speaker phone feeding qualifying info into the slimey mortgage broker’s headset?
Obviously he’d have been a very busy man! I just get a little emphatic about this as we often lose that all important local connection.
X-GSfixr
you must have typed this wrong:
The bankers walked away from this mess with CASH. The typical can’t-do-math J6P got stuck with a depreciating asset.
bankers got stuck with the depreciated asset.. and a govt LOAN for which they had to put up company stock, or other forms of security, AND pay a hefty interest rate on the loan AND penalties for early payoff.. etc according to TARP rules.
The typical J6P drove away in his new beemer or hummer or whatever, trailing the new boat, free and clear.
measton, please don’t make me defend a mis-quote.. it was only yesterday.. not like it was a long, painful search.
The topic was my opinion on the most efficient pathway towards economic recovery and I said “imo, banks are not the problem any more than when you have an empty wallet, the wallet is the problem.”
Focusing on banks’ purported misdeeds will not help the economy recover.
And do we actually practice capitalism here?? Here’ s a hint, if your company can’t fail and will always be bailed out you are not practicing capitalism.
+10000 Measton! That’s a Bingo! Is that how you say it? That’s a Bingo?
We grew up poor, and it hasn’t been much better since I entered the workforce in 1973. Seems like the economy has been in “recession” in 20 of the 35 years I’ve been working.
Add to that a “whatever can go wrong, will go wrong” worldview, and direct experience that real estate prices CAN go down (during the 1980-82 recession), and this adds up to a highly developed BS detector, when it comes to Snake-Oil salesman.
When you live in a world where real, product and service producing businesses can only generate a 3-5% return on investment, you find it hard to believe that guys like Hedge Funds and Bernie Madoff can generate 10-20% a year, without really “producing” anything.
But the Wall Street “brain Trust” believed that if a manufacturer wasn’t generating 10-20% returns there was something wrong with the “management”, or the “overpaid employees”. So, you see thirty years of our industrial base being gutted, either by outsourcing/offshoring, or by cutting pay and benefits. And of course, these guys are the Harvard MBA “experts” that everyone listens to.
Wall Street and the Federal Reserve have been blowing up “bubbles” for the past 20 years, taking cash out of the “real” economy, and leaving crap IOUs. And telling everyone that if we couldn’t understand things, we weren’t sophisticated enough to understand.
I’ve been in the aviation business 30 years, and am a manager responsible for the care and upkeep of 20-30 million dollar aircraft, flying most of the important people in the company to generate new business, visit subsidiaries, etc. But inflation-adjusted, I’m making the same pay as I was as a new-hire mechanic out of school in 1979…….Essentially, the “market” values my 30 years of experience fixing airplanes at “ZERO”.
Maybe I’m old fashioned, but there is something fundamentally wrong with that. And I can name about a thousand other guys, in other businesses, in the same position.
What do I invest in? Tools, and old Dodge/Plymouth muscle cars. Over 20 years, my cars have a better return than any crap generated by Wall Street.
“but I won’t blame the vast majority of Americans that bought homes over the last decade for the collapse of our economy”
I could get on board w/ that ( and frequently -have- ) in particular regard to those with ample down payments, honest loan applications and a bit of savings going in.
But WhoTF did ‘that’? As per NAR’s own data, upwards of 40% of the homes sold in 2005 were 2nd homes! Hello? This is just revision of history.., saying “the vast majority”. Hell, who -wasn’t- a player in that era? I must say, apparently the FB’s have been very successful and highly adaptable in becoming nothing more than innocent victims in nothing flat?
now what.. we’re arguing the definition of capitalism?
No doubt bail outs are NOT a part of it..
lemme find one. wiki is handy.
:a socio-economic system based on the abstraction of resources into the form of privately-owned capital, with economic decisions made largely through the operation of an unregulated market.
an unregulated market??
Hey people.. aren’t most of you demanding an increase in market regulation? Either regulate banks/lenders or maybe just rip them to shreds? Same for Wall Street? Reinstate Glass-Steagall?
Are there any capitalists around here or just a bunch of hypocrites?
This must be a common story on the blog but I was talking to another Dad at my son’s boyscout meeting.
He bought a huge house here in the 06488. i don’t know if he got a second mortgage or what, but he bought a vacation home in Jackson Hole, Wyoming. Unfortunately he does some sort of engineering work mostly for subdevelopments. Needless to say, no big call for that at the moment.
last week he actually said, “I did everything right”, looked pretty sad.
Joey,
I hear what you’re saying here. However, I think there need to be structural changes in the banks.
Repeating myself; the banks will oppearte in a manner to generate the most profits. If that means being leveraged to the hilt with zero reserves and loss provisions then they will do it. The current reserve requirements are a BAD JOKE. So, I’m not attacking the bank but want the situation with reserves fixed. Hence, hard reserve requirements of 20%. Otherwise the loans have to be sold off before you lend more.
This will definitly change the velocity of money. The status quo is likely to generate another bailout situation over and over again. The bailouts have been done in a very unfair way that punishes savers and other people that were not involved in the risk taking. The inflationary measures not only punish a large portion of the middle class and older people on fixed income; they also potentially distabalize the situation. Each event pushes closer to a inflationary or deflationary collapse. It needs to stop and sooner would be better.
I also feel a carefull look at the ratings and pay to play relationships between investment banks and ratings agencies will reveal a criminal conspiracy that probably violated the RICO act. Hence the SEC and FBI should be all hell bent on investigating. Criminal conspiracy to defraud pension funds which should allow the government to sieze assets of hedge funds and bank employees as well as other assets undermanagement. Plenty of email traffic already points to misrepresentation of various securities sold to pension funds.
So, Goldman Sacks is at the top of the easy pickings. We should be able to use various fraud provisions to sieze assets they have pawned off to family members and what not. That along with some nice time at club Fed. And not the place at the reserve bank.
Not attacking rich people or capitalism here. I’m saying going after securities fraud. And this was the big bull moose of fraud.
Not to mention going after the NAR and banks for antitrust violations.
“You must have typed it wrong”
Last time I heard, nobody on Wall Street was taking IOUs/chickens/pigs/barter for their salaries and bonuses.
Joey says-
The bankers walked away from this mess with CASH. The typical can’t-do-math J6P got stuck with a depreciating asset.
bankers got stuck with the depreciated asset.. and a govt LOAN for which they had to put up company stock, or other forms of security, AND pay a hefty interest rate on the loan AND penalties for early payoff.. etc according to TARP rules. ”
No, you are confusing stock holders with management.
This is laughable
Tell us Joey, how much of the bonus compensation dolled out by the banks was paid out over the last decade. How much has the bailout pumped up bonus pay over the last year. How much insider stock was sold, or in the case of GS shorted by insiders. They walked with BILLIONS. That’s the ponzi scheme, but you already know that. You want to blame J6pk and the country for the crimes committed by bankers.
PS J6pk on average walked away with MASSIVE debt on a depreciating house , foreclosures, repo’s, unemployment, loss of benefits, pay cuts, and coming soon massive inflation. Joey thinks the guy who goes to Vegas and get’s free drinks then comes home with an empty wallet, no car, smelling of tobacco and booze was the winner. You sure showed Vegas J6pk, those guys are crying in their martini’s.
X-GS,
( From your “work history” post above )
Yeah, I had the good fortune to work under a southern good ol’ boy Sr. Chief when I was in the Navy. There were times when he was real hard on me, especially when I told him I was getting OUT!
His advice at the time was “I know you’re thinking you’re some spring chicken son ( but you ain’t! ) At almost 30 y.o, you’d better think long and hard about your career choices b/c if you want to retire from the mil. or civil serv. you’re… just about at the point of no return!”
So, ever since, my career path has been just about the opposite of ‘your’s’. I elbowed my way into what I thought was a white collar job, sacrificed everything and was willing to do anything! ( Oddly, it all worked out just about the same? ) On my end though, it was more about disintermediation ( the same thing that happened to travel agents etc. ) so -none- of us have really been “immune”. Just an observation.
james,
Excellent, excellent post, seriously. One of the more balanced I’ve seen on the topic in some time. I would only differ in degree by saying -securitization… fraud- ( vice plain old securitIES fraud )
I know finite, but it makes a difference. When you look at the mess BofA is cleaning up w/ all of the old Coutrywide loans, it should be clear that “not ‘everyone’ was doing it”. Secondly, if Wall Street had all this omnipresent power ( where was the bailout for all the dot commer’s? ) I never get any takers on that one?
Obviously I like your focus on not leaving NAR out of the @$$-chewing session.
James, i agree with all that.
Lets say lots of fraud is found and the government has a real windfall.. confiscates billions. I don’t think it will filter down to the streets. I don’t foresee them being less ham fisted while throwing money at the “recovery” effort. Most all of it will probably be spent on congress’s pet projects.
What is the correct path to recovery? Is it up to the politicians? Is it up to the financial industry? I don’t think so. They have their own agendas and if we leave it to them it’ll never happen.
BO knows job loss is the big problem right now. No money in people’s pockets means no spending, no production and all sorts of attendant social costs. So, he pays lip service to job preservation and creation.
Recent proposal is $8 (?) billion for a high speed rail project. It’s safe to square it. 8 X 8 = $64 B total cost and few jobs. And perpetual govt subsidies thereafter. Amtrak Squared.
Rather than the so called “populist uprising” wasting energy begging govt to deal with banks and robbers, they should be screaming about unemployment.
BO and Congress do listen. They got right on the exec. bonus issue. Legislation towards regulating banks is being drafted. Why? Because people demanded it in a clear, loud voice.
How about job creation? So far nothing substantial, cause as far as govt knows, nobody much cares.
measton,
Again, not sure where you’re going w/ that whole Vegas analogy but.., what you keep almost willfully omitting is that all “J6P” wanted was, the Home Version of FatCat Banker!
Step in w/ no skin in the game, play a couple rounds of flip that loan, walk away w/ big fat stacks of cash and hey, who’s lookin’ back?
Be it short-term thinking or an unprecedented level of enthusiasm and tolerance for Fraud, we all had a hand in this. The problem is, we just don’t have a commitment to one another at ALL any more. It’s not how the game is played these days. Regardless of -where- you’re at on the Totem pole.
Joey, if you could, I dunno, post some facts with links, you might have a valid argument.
Until then, you don’t have a leg to stand on and sound more like a tool than an honest debater.
Mega bank and supporting corporations committed fraud and lots of it. And fraud was committed up and down the line. But I’ve NEVER heard of any borrower who could give themselves a line of credit, WITHOUT THE LENDER’S FINAL APPROVAL.
Let me know if it works some other way.
Check, check…
Nobody did anything about the Investment Bank/speculator runup in oil prices in 2008.
There’s always a big announcement about the “investigation”, but you never hear a thing about anybody actually going to jail. I’d feel a lot better if they just kept the announcements to themselves, until they actually indicted someone.
JDinCT,
Um… I thought “I did everything right” too! SOLD ( rented! ) stockpiled cash and played defense. ‘Still’ got f’d. Even though your friend and I have a -very- different take on doing things “right”.
What year did he buy in Jackson Hole by the way? ( Not that I would take any guilty pleasure in that? ) Yeah, his ‘version’ of doing right threw the rest of our versions under the bus!
Re jackson hole
A vacation home. I really don’t know how big. as you might imagine, I had heard enough.
It really does bastardize the notion of “I did it right” to hear him talk. i bet lots of people who got HELO’s to pay their credit card (or like him to buy more real estate) thought (and still think) “THEY screwed me.”
Wow….Things are starting to get exciting in my neck of the woods. I was doing my monthly check of foreclosure activity and I found a 300% increase in year over year order of notices. An order of notice is the first step in the foreclosure process here in MA. The last several Januarys for South Middlesex County:
2006: 0 orders of notice
2007: 122 orders of notice
2008: 153 orders of notice
2009: 82 orders of notice
2010: 343 orders of notice
Wow - even as anecdotal evidence goes, that seems…. incredible. Is that just in 4 weeks time? Perhaps some law/rule existed in 2009 holding up NOD’s, and that expired at the end of the year, unleashing the flood?
Nothing to my knowledge in 2009…They did do a 6 month moratorium on foreclosures here but that was in 2007 or 8.
Yes it was in 4 weeks.
Following some MA foreclosure stuff as well, 2 things I’ve noticed since January:
1. “better” towns seem to be showing up more often.
2. A lot more of the foreclosure auctions are resulting in 3rd party sales than ever before. Last year, it seemed that 96% of auctions ended up with the bank buying the property, this year, it seems closer to 85%.
Asparagus,
Interesting observations. Is it possible that less trendy, lower middle class neighborhoods were somewhat immune as MEW-pilfering simply wasn’t as lucrative?
After you weigh the cost of a re-fi, is it worth it to pay 15k in fees ( which seemed to be about the boom avg. ) to access $30k in equity? ) Not when folks the next town over are getting $300k out.
$15K sounds high to me - that would be 3 points on a $500K mortgage.
DennisN,
That’s just me being a little flippant about the whole MB’r thing. Among the guys “I” knew, $15k was the ‘objective’ for getting into ‘juicy’ loans.
Calculate in the Yield Spread Premium and Max Cash Out Appraisal and anything ‘less’ than 15k is just wasting your time!
I don’t really know what the difference is. My own theories abound, but I never thought of that one. I’m adding it to my list…
1. “better” towns seem to be showing up more often.
2. A lot more of the foreclosure auctions are resulting in 3rd party sales than ever before. Last year, it seemed that 96% of auctions ended up with the bank buying the property, this year, it seems closer to 85%.
——————————————————-
My observations precisely.
New condo building as the teaser rates expire from the builder financing??
Just a wild hypothesis — could this have anything to do with the obvious lull in reset volume in 2009?
This Old House just started a remodel of an ancient duplex forclosure in Roxbury. What a friggin mess, really a teardown IMO, but the govt owns it.
That show makes me throw shoes at the television.
My favorite was the conversion of an old barn into a house. As I recall, they spent something like a million bucks “restoring” the barn.
A million bucks out here in flyover will buy about half a County.
That show makes me throw shoes at the television.
That show deserves something heavier than a shoe. Personally, I’d rather heave an anvil.
FWIW - at least that show predated the housing bubble, by a lot. I haven’t watched in a long, long time, but back when I used to they had some pretty cool stuff, including some neat history tidbits.
I’m a nut for old houses. I had an 1890 house years ago - lots of work but lots of fun too. They definitely don’t build them like that anymore. Windows were original, old heart redwood. 2×4’s were of course true 2×4’s, and you couldn’t use standard 16-penny nails in them, the nails would just bend. I had to use screws, with pre-drilled holes at that. There wasn’t an even 90-degree corner in the house, or a nearly-flat floor.
I’d really like to redo/update/refurbish a house built circa 1890-1920, except for wondering if you can do it so that it’s not a money pit to heat and cool. (we see temps from 100F to below zero Fs, in a typical year)
They didn’t “renovate” that old barn, they built it new. Yeah, those insane and inane homeowners actually chose all that *#^$ they put into that house.
That project was met with infinite hostility from on the website. One comment: “looks like they’re living in a Lone Star Steakhouse.” This Old House took the hint. Their next project was the small addition to the Dutch Colonial, which turned out well.
oxide,
I’ve never been to TOH’s website, but it’s good to hear they took heed to the viewer feedback. I remember that project, and still, it was pretty interesting. The way they salvaged the beams etc.
To their credit, TOH never developed that patented “REIC swagger” the balance of shows did. I liked it best when Bob Vila hosted though, the era, not so much Bob.
http://www.houselogic.com is Realtwhores latest propaganda scam. Feel free to contact them on the contact page.
You think the NAR will ever apologize for leading homebuyers astray by the millions during the last few years? Promoting themselves as gurus seems their only mode of operation. ALWAYS consult a realtor prior to making mistakes, they will guide you on your way to financial ruin every step of the way…
That was then, this is now.
Now is the time to love the NAR because they are convincing FBs the bottom is near and they should hang on at all costs by keeping up with their mortgage payments.
pressboardbox
You’ve got that right. When ever I would go to a board meeting (UHS 2nd “job”), I not only had to take a shower after, I’d call my mother and thank her for grounding me, for not living up to my potential.
Apologize for it? They won’t even admit it.
Suzanne’s research strangely always benefits the NAR.
pressboardbox,
It’s also important to share w/ Realtwhore ‘friends’ that you ‘were’… contemplating a purchase at some point but are now too uncertain about your ‘own’ financial future or too paranoid about the savings you ‘do’ have left to commit!
To further drive the wooden stake into the heart of their pitch, I now take pains to share it’s small local biz’s I’ll be looking to bottom feed off of ( not some freakin’ turn-key REIC play? )
I’m no fan of the NAR, crooked appraisers, or mortgage brokers who aided and abetted bad decisions by dumb/greedy people. But it would be a mistake to give J6P - the guy/gal who signed the mortgage contract - a pass for their role in the bubble and still-unfolding train wreck. I get tired of hearing FBs wail about how they got “misled” by unscrupulous manipulators. When you’re taking on what will likely be the biggest financial obligation (not “investment”) of your life, you damned well better do your homework and make sure you get expert, INDEPENDENT legal advice from someone who doesn’t have a vested interest in selling you a house. If you gambled and lost, don’t come boo-hooing to me about what a “victim” you are - wise up next time and don’t try to make others pay for your mistake.
That site doesn’t seem bad. There is some decent advice about drainage and other issues that come up with owning. Are you being paid to advertise for them here?
dang.. he suckered me in too.. the page looks perfectly tame.
Want some good septic tank advice?
i got an amazed look and effusive compliments from the guy who pumped it last summer. I’ve been using a “septic energizer? once a month. No lumps, almost watery. sorry hate to brag.
the guy in upstate NY is a real mom/pop outfit.
I called to check on my order and though i had the wrong number cause he sounds like he’s 105 years old. I told him to call Ben andput an ad on the blog. He said he doesn’t want to get too busy.
the stuff works and could save somebody big $$$.
whoops forgot to mention the name…”flush-it”
had to advertise anything but i put this more in the category of helpful advice
“The efficiency and versatility of ONE FLUSH make it essential for preventing and solving many problems around the… Federal Reserve”
Back in 1982 it was labeled: 14+ %
Read more: http://www.doityourself.com/stry/oneflush#ixzz0eIhfH4cF
I will say one thing for my used-house salesperson……he was one of the old-timers, and knew who to call to get things fixed.
He had a retired Contractor who did stuff on the side, basically “referrals only” from his buddies. If he couldn’t fix it, he knew someone who could, all of it very reasonably priced. Especially if you paid cash.
Yeah…. just when I need help with site drainage issues, groundwater elevations and damp-proofing foundation walls, I’ll call Real-A-Turd.
Good Monday morning from Phoenix
I was playing golf yesterday and pointed out a condo on the golf course that sold for 57K about 6 months ago. In 2005/2006 they were selling for 210K. One of the girls said “I think the banks should just lower everyone’s balance on houses that are underwater” Of course I replied “what about the people who took out equity at the peak and are underwater because of that?” and “No one has lowered MY balance” This girl was one of the “houses never go down” and “houses will not be going up double digits, but they will not go down” belivers. The whole time I just nodded and kept my mouth shut. Now everything I tried to tell anyone who would listen has come true here in Phoenix. Golf course condo’s sellling for 25 cents on the dollar - Wow.
Wait ’till the golf course is shut down, then see what happens to prices.
Probably go up, due to less maintenance costs for broken windows, roof tiles, and pool screen holes.
Wait until they put in section 8 apartments on the land formerly occupied by the golf course.
You sound like George Carlin.
Huh? I didn’t use any of those words.
Carlin has a routine about building houses for the homeless on golf courses. Youbue has it.
That did happen at a course called El Caro, which is located at 19th ave and Northern Ave. The course was lined with condo’s and apartments - no houses. One day back in 2007 or so they closed with only a few days notice. The clubhouse was taken over by vagrants and eventually torn down. The new owners were going to build more condo’s on the course. They turned off the water and drained the lakes and that’s where it stopped. Right after the sale, the housing market tanked and work came to a streeching halt. Most of the trees are now dead and it is a real eye sour. It was really a shame - that course had been there for years and years.
One of the girls said “I think the banks should just lower everyone’s balance on houses that are underwater”
Obama kool-aid drinker, voter and supporter?
this was also the sentiment of John McCain - definitely not particular to Obama supporters.
McSame was a RINO. The fact that he and his clueless runnng mate were the best stardard bearers the GOP could come up with speaks volumes about the current Republican political “leadership.”
too funny sammy!
I think Browne (in MAss) won partly because they omitted teh word republican from hi campaign material.
Somebody wrote about Grayson (the Florida Rep.) who was received by the Libertarians like a rock star.
F#*!ing Democrats! If Obama would have ditched Bernanke and Geitner, picked up his bash the banks rhetoric, the Democrats wouldn’t control Congress they would BE congress.
oh well, that’s what happens when you’re on the take.
It makes perfect sense. It’s like a short sale, except the “sale” is to yourself.
I see a new “get rich quick” scheme!
* Make a backroom deal with FB
* Buy FB’s house on short sale
* Sell back to FB, pocket transaction costs
* FB doesn’t have to move, is happy FB
“Obama kool-aid drinker, voter and supporter?”
Don’t kid yourself; she only votes for and supports herself.
“The men the American people admire most extravagantly are the greatest liars; the men they detest most violently are those who try to tell them the truth.” ~H.L. Mencken
His epitaph reads:
“If, after I depart this vale, you ever remember me and have thought to please my ghost, forgive some sinner, and wink your eye at some homely girl.”
wiki
As it has always been with any empire.
In a nutshell: The present federal budget deficit is more than $1.35 trillion. President Obama aims to raise the shortfall in the next budget year to $1.6 trillion!!
The long-range projection is that the federal government will spend more than a trillion dollars more per year than it takes in for the next ten years.
Bottom line: We are in a monetary crisis and the federal government aims to make it worse. At least the administration is honest in saying that by 2020 the U.S. will have piled up a debt of a third of a quadrillion dollars.
Who’s going to buy all those treasuries? Especially if the FED stops buying the stinky MBS’s from the banks.
We, the taxpayer, will be on the hook.
Maybe they’ll force our retirement “investments” into T-bills… maybe they’ll just hyperinflate us all to oblivion… or something else. But rest assured, we’ll be on the hook for it all.
All they really need to do is to raise the age of eligiblity for Medicare. I’m 64, this would not be good for ME — but it’s a simple fix that would quickly reduce the “structural” deficit.
Short the bounce!
wow! s + p getting a highly shortable relief rally here.
Good time to lighten up on longs or sell those covered calls
Government is still buying stock- short this fixed market at your own risk. PPT will crush you.
While I’m more and more getting into the deflationist camp, my investment style is the opposite. Only slightly more then 33% of my asset allocation is government securities. My precious metals allocation is good for either inflation or deflation. This is fun, my opinions can change but my investing style is like a rock.
bill
given your recent forecast (didn’t that include 6% t bills?)
it seems like stocks and bonds are both going to get whacked, and precious metals are no hedge at all. No?
Perhaps PMs are no hedge. I saw a post on Kitco about the same thing today. The election of Scott Brown changed things somewhat, is the idea. The inflation/deflation debate continues!
I have a friend back in the SF Bay Area (a leftist lawyer) who is always trying to hook me into his get-rich-quick schemes. Last year it was promoting mixed martial arts cage-fighting matches. That effort went belly-up.
Now yesterday he’s trying to let me in - “as a favor to a friend” - to his latest plan. He’s putting together a partnership to invest in apartment buildings in Nebraska and Iowa: sort of a roll your own REIT. He told me he could “guarantee” a 9% ROI. He said places like those had no more prospect of going down in value.
Let’s see….what’s wrong with his plan?
* Partners are personally liable in a partnership
* Neither of us know anything about the local CRE market there
* Talk about a guaranteed 9% ROI sounds like bunk
* CRE nationwide is just starting its downturn
NE and IA?
What’s the plan, to provide lost cost apartments to the illegals working in the meat packing plants?
“roll your own REIT” LOL!
If we could only get through the day without being propositioned by one of these hare brained schemes my sanity wouldn’t be nearly as in question?
Yeah, for every fooked REIC-player.., a comeback plan just around the corner! But obviously, as banks have wised UP, they’re forced to shaking down friends & family to keep their little glimmer of hope alive.
Then they’ll tell you it’s part of the appeal!
To a lawyer, the appeal is what happens after the guilty verdict.
DennisN,
The reason I’m so adamant about making sure these guys -remain- shut out of the system is, firstly they’re much to blame for our current situation and secondly, you just know they don’t have a long-term bone in their body!
Whatever they’re trying to sell you ( and the pitches are getting more sophisticated all the time! ) you just know they -still- have dollar signs in their eyes and can’t WAIT to flip that puppy for megabucks!
Recently ( after a heated email exchange among our HOA mbrs. ) I was given a “stern warning” by one of the former mbrs! That I had best watch what I was saying if I didn’t want the ‘next’ letter to come from an atty! Well.., why would some 80 y.o busted REIC’ster care about ‘that’? Dude, you’re out of the game! See, even these old guys want one last crack at this thing and this time..!?
I know a Nigerian government official who can get you an even bigger return for just a tiny initial investment of your own money and letting him use your personal information.
Has he ever even set foot in Nebraska or Iowa???
Oh my.
BTW, I like Nebraska and Iowa, I just can’t imagine anyone with no direct experience in the “flyover” could have a good handle on the situation.
Sounds like a new variation on the “foreclosure bus tour” mentality to me. Who in the world gave him this idea???
WHYoung,
It’s no coincidence they’re targetting mythical infestments in Flyover Country. They’ve made the pitch for multi-family on both busted coasts and weren’t able to invigorate any investor interest.
So rather than admit it’s a really dumb idea, they just moooove the dumb idea to a new location! They’re -banking- on the fact that you don’t know the first thing about that corn-belt market and it just gives the whole misguided notion that much more of a sense of plausibility.
Great…NE & IA
There isn’t nothing higher than a snowdrift or anything moving other than a broken cornsheave leaf blowing in the wind with their apt boom future.
Let’s see…invest now before the lost big city rubes hear about it, line up around the barn door and camp upon all of those profitable pumpkins.
Oh Yeeeah…you n’ me in a partnership or a Llc !
“invest now before the lost big city rubes”
LOL! Yeah, once they get wind of the fat hog we’re cuttin’, then -everybody- will want in on it! It’s just more of the same. A senior citizen gets scammed out of their money and then the cons go -back- to them to make those bad people PAY! ( But we’ll need a little money for court costs and legal fees… )
Real estate can only go up from here in nebraska.Buy now or be priced out forever.The NAR says things will get better.
aside from what rots away, i still think that the big realestate binge might leave the USA with some significant quantitites of usable realestate…
i feel genuinely sad when i think about an article I read 5 years ago about housing development popping up in Iowa. Litereally the world’s rchest farmland (8 feet of loam, covered wiht a subdivision)…. now that’s criminal and i’m no farmer
Some of the world’s richest farmland also lay in Santa Clara county CA - now fully paved over for “Silicon Valley”.
I remember all the fruit orchards DennisN.
My parents both “cut cots” when they were teenagers. Heck my dad’s stepfather was the town blacksmith of Santa Clara.
And Orange Groves in OC California.
Orange groves in OC and San Bernardino, plus olive groves and vineyards..everywhere.
DennisN
FWIW: (note:Hwy’s fond of aphorism’s)
Psychedelic Dude!
This must be going around. While I was home on leave, I had an old friend approach me asking for me to watch a “presentation” he had. He starts telling me about a friend who was in the military who loved whatever it was he was pitching.
I never went to see his “presentation”. It seems EVERYONE is after your money. It pisses me off. Everyone is after your pockets, the govt, friends, commercials everywhere.
I’m not giving my money to the stock market or anything else promising a “return”. I’m staying in cash, I and EE bonds and silver coins. I also started giving 2% of my salary to the TSP fund for govt employees again. But I refuse to go higher. Savings fund build up mode is what I am in…
It seems EVERYONE is after your money.
Well, that’s good old fashioned American capitalism for you.
And there’s always some fine-print “catch” to just about any product or service you can buy. Mainly to give people wiggle room to deny warranties, charge extra, etc.
If you have enough time and patience, you can usually get satisfaction, but some things just aren’t worth spending two weeks on the phone to get things corrected. So you blow it off, and move on with your life. And your blood pressure goes up another point or two.
I am doing the same. Cash, some gold and not spending anything beyond basics right now.
I am watching in horror, family and friends hitting brick walls.
But Nebraska has all that pristine oceanfront property! Sounds like a sure thing to me.
Home Front Story
The house I rented 2 years ago I suspect is being held in limbo by bank after foreclosure.
The owner purchased the house at the peak for close to 800k. Then put another 90k into it. This with a total rent (two units) of about 3300 dollars. He was loosing close to 2k a month when fully rented, and he did not rent half of it for a year. We moved out when we needed another bedroom and things looked like they might get worse for him. He told me at the time he had 12 months before BK. Well he put it on the market for slightly more than he paid at the peak despite the fact that the two houses next to his were asking significantly less. It went off the market so we decided to see if it sold. It is currently in the hands of willow park LLC. The transaction occurred right at the time he said he would enter bankruptcy. The sales price listed 0$. I Googled the LLC and could find nothing. I tried to find who it was registered to via state gov w/o luck so far. I know which bank held his loan when I was there but maybe they sold it?
measton,
Great story, talk about dodging a bullet? Yeah, I’ve Googled until my fingers bled but we can’t find a thing on our former ( now deceased ) developer.
He had a Realtwhore (TM) Sig. Other and it looks like she’s hightailed as well. The CCB in Oregon has told us in no uncertain terms the guy operated w/o lic. and ins. for several critical mos. during this debacle’s construction.
I just wish I was telling the story from your perspective! Oh, and while having a water-catchment contractor come out and give us a bid, he noted -several- other deficiencies in not only our gutters & downspouts, but the fact that our decks our on a collision course w/ collapse. ( But there’s no reason to be ‘bitter’ about all of this, right? )
measton,
That’s very good information.
From what it sounds like, it’s probably a bulk sale to REO buyers who buy in $10MM **minimum** increments, from what I’ve heard. The house has a $0 sales price on the tax rolls because the price is for the entire bulk (tens, hundreds, or thousands of properties).
I have various theories about these bulk buyers (foreign entities???), but this sounds very much like what you’ve witnessed with your former home. If you find anything else out, please let us know.
Thanks for sharing!
U.S. policies may be inflating another housing bubble: TARP overseer.
http://www.marketwatch.com/story/overseer-bank-bailout-program-has-mixed-results-2010-01-31
Reiterating my thoughts from a month ago:
Alternately, a controlled collapse allows them to fly under the radar in a way. Keep all the suckers who couldn’t say NO and bought 2000-2008 believing the prices are stable, banks allowed to hold burgeoning inventory off the books and meter them out piecemeal which slowing grinds away the grossly inflated median.
Wont’ falling rents keep CPI under control and allow them to keep rates low. Just rent out all of those homes and bingo rents collapse. Of course this might decrease demand for homes.
I’d also point out that they want to avoid riots. Massive unemployment and rapid inflation cause riots. I still think the stagflation route is their best case scenerio.
That being said see my post about my prior land lord likely loosing his house to foreclosure to an LLC that I can find no information on. The home is not on the market, and as far as I can tell he continues to live there.
While PTB would like to inflate housing I am not so sure they find enough suckers willing to pay inflated prices after what just happend. They won’t find enough investors to buy mortgage backed securities other than the usual suspects FREDDIE, FANNIE, FHA. If they are really serious to reinflate the bubble, then the entire thing has to be financed via the printing press.
Banks will have to withold their foreclosure inventory while paying taxes and maintainance. Squatters and vandals will move in. In my n’hood I see a lot of nasytgrams on people’s doors “Cut your grass or we’ll do it and put a lien on your place”.
It would require a tremendous amount of resources to keep the make-believe going.
Sure, they could give buyers ever increasing incentives to jump in, economic fundamentals be dammed. But I truely believe that the PTB can only fight economic reality for a finite amount of time (years, probably not decades) before gravity takes over. Once we go down that path this economy and the nation that depends on it will be doomed. We would degrade into a banana republic (like Argentina, Venzuela, Mexico) with nukes. It certainly would be the end of the American century.
Excellent post, packman.
There is no doubt in my mind that reinflating the bubble is definitely #1 on thier list of “things to do.”
In our area, it is working. There are tremendous numbers of people out there flipping and speculating, just as they were during the bubble peak. Tons of multiple offers and overbidding going on, too.
The bubble is back, and it’s back with a vengeance.
What a bunch of scared alley cats, frighten that they won’t be makin’ fees $$$$$$$$$$$$ from homeloans if mortgage rates rise. Someone should remind them that 14+% mortgage interest rates did not kill real estate or banks back in 1982…(sure did kill home price appreciation however). It’s a “Conundrum” High Home Price / Low interest Rate …or…Low Home Price / High interest Rate?
Ready, Set, Choose…
Wells Fargo Shuns Carry-Trade, Braces for Risk of Higher Rates:
By Dakin Campbell Bloomberg
Wells Isn’t ‘Speculating’
“I applaud Wells,” said Chris Whalen, managing director of Institutional Risk Analytics in Torrance, California. “The other three are speculating, taking a position on risk, and Wells is not.”
“By scaling back on the so-called carry trade, in which banks borrow in overnight lending markets at rates near zero and invest in higher-yielding securities, San Francisco-based Wells Fargo aims to protect against losses when rates rise. The three other lenders increased investments on the theory that profit will outpace any future losses.”
Loan Demand Lags:
Chief Financial Officer Howard Atkins said Wells Fargo is willing to forgo short-term income to avoid the risks of bigger losses down the road. “We don’t believe in the carry trade,” he said on the conference call. As one of the nation’s two biggest mortgage lenders with Bank of America, Wells Fargo could suffer if higher rates damp demand for home loans.
Federal Deposit Insurance Corp. Chairman Sheila Bair urged U.S. banks to prepare for losses driven by an end to low interest rates, saying rapid rate changes are “worrisome” because they may harm lending and earnings.
Wells Fargo Shuns Carry-Trade, Braces for Risk of Higher Rates
This is good news. Maybe, just maybe…we are coming to the end of this miserable period of abnormally low interest rates. The War on Savers has been fought long and hard, and we desperately need some relief from these low rates.
Let’s assume that Social Security and Medicare will work just like all those multi-tier pension plans and union contracts older generations have imposed on those coming after in the era of Generation Greed.
Anyone want to predict the year of birth after which people will simply not receive Social Security and Medicare, in order to assure the Chinese so they will lend the federal government all that is required to give those born earlier everything they have promised themselves?
I’m thinking some time between 1956 and 1958 — the 1960s generation will keep denying and rationalizing until it is all in, and then say that sacrifices are required but you can’t take anything away from existing beneficiaries.
They are more likely to means test the bennies than cut it off entirely to anyone.
means testing is the future of S.S.
Which is why I no longer silently laugh at goldbugs. I have no idea whether it’s a good or bad investment, but I can’t think of a better way to have no “means”.
They’ll be too far in debt to take benefits away from the future affluent alone. And they won’t dare take it away from existing beneficiaries.
Moreover, what do you mean by means? Past income — you should have saved? Or current income, which means that no one will have any incentive to save?
And won’t the public employee unions insist that their pensions not be counted?
I think they’ll go the easy route — no new beneficiaries until the federal debt falls below 30% of GDP, and watch late boomers and Gen-Xers die off early before receiving.
Means testing is not going to help much because so many of the boomers have very limited means to test. There will be a much stealthier approach of rationing life extending procedures under medicare. At some point the only solution to both SS and Medicare is to stop the ever increasing increase in the longevity. This kills (pardon the pun) two birds with one stone.
As I have said before on this site, I am approching Medicare age, and this concept give me no great grief. Publicly funded heart stints for 70 year olds makes no sense. (C Everett Koop not withstanding). If ya want a stint, pay for it yourself.
And won’t the public employee unions insist that their pensions not be counted?
——————
Not sure how it works elsewhere, but public employees who get pensions are not entitled to Social Security.
BTW, I have no doubt that public pension beneficiaries will be excluded from SS, even if they earned it during other (non-public) employment. Means testing. No way around it.
Professor Laurence J. Kotlikoff
Professor of Economics
Boston University -MIT guy was his co-author
A book about the future of SS. Here’s a link (a video) to the author of “The Coming Generational Storm”
http://mitworld.mit.edu/video/202/
“The basic story is bleak. We’re broke, we’re not thinking about it, or accepting it. We’re leaving a huge bill for our kids, endangering our kids. We at some level know we’re doing this. We’re not letting them vote about it. ”
Laurence J. Kotlikoff”
It isn’t that bleak. All that is required is to say that Medicare recipients are only entitled to the same level of spending/care that was present (say) five or ten years ago, and will have to pay for any add ons themselves. And people get to retire in birth order in a pace that keeps the ratio of workers to retirees at 3 to 1, working longer if necessary. And ask the retired to pay federal taxes at the same overall rate on their income that working people do. Presto, problem solved.
Except we won’t do it. We’ll hold tea parties, carp about death panels, send out an $250 check for a Social Security inflation adjustment when there is no inflation, and keep borrowing to pay for it all. And younger generations will pay taxes at current rates or higher, and get nothing.
No inflation? On planet would that be?
Oh, and SS increases have been frozen for the next 3 years.
Oh, in addition to means testing, they need to eliminate the income cap for SS taxes.
Everytime I read one of these anti social security statements, I have to wonder.
Ok, lets say i have paid in to social security, 300k over the last 40 years. Now, why am I not entitled to receive my money back plus interest in the form of monthly payments?
I paid in! If you would have put that money in the bank, would you not expect to get it back with interest? So, whats this about social security being a greed generation thing?
Social security is not some form of welfare for those who paid in and are retired.
The problem is not with the social security system, its with what the Democrats did to the sysytem. Like use the money for spending and leave an IOU in the drawer. Every change in the system was voted in by democratic big spenders. I paid in, I want it back. Fair is fair.
Those of the younger generation, that hate this system, seem to have lost sight of the fact, that the money being paid out was taxed in. Pay in for 40 years, and you’ll feel the same way. I paid in heavily, why should I be cut to relieve you of your own retirement costs. You should be taxed more to compensate for the cost of your retirement…40 yrs down the road, just like I was .
“I paid in! If you would have put that money in the bank, …”
If ifs and buts were candies and nuts, then every day would be X-mas.
Terry, you didn’t pay into a bank. You paid into a Ponzi scheme, as did most everybody else. The problem is, like in any Ponzi scheme, that some presently collect much more than their fair share at the expense of future beneficiaries that are currently paying in.
“The problem is not with the social security system, its with what the Democrats did to the sysytem.”
Yes, the evil Democrats did it again. That money has been misallocated from day one, nothing to do with either party, except that both used that money to fund wars, bailouts and other pork barrel spending.
I predict that the government will first confiscate IRA/401K accounts either directly or by taxation along with means testing.
Anticipating this:
a. put the minimum into your 401K to get the maximum match. If you don’t get a match quit contributing.
b. keep your account balances to a minimum. Cash out every time you change your job. The 10% penalty tax is peanuts when compared to what is coming.
c. hide your assets (like actual gold, not that paper garbage) from the tax man (means testing).
d. your primary residence is probably pretty safe. Still be good to have a big lien against your property, preferably one you control through an intermediary.
In short, when you reach retirement age you don’t want to own a pot to piss in or a window to throw it out.
Mike in Miami,
I suppose I “paid in” too, but I’m hardly holding my breath. There are a few other 1099-type folks that post here and what I’ve noticed is that my Annual Statements have been falling off a cliff.
Since I’m no longer a W-2-type employee, much of my return centers around Sched. C. Legitimate business expenses. ( Which although I was often paying them before ) I’ve only recently been able to deduct.
This reduces your taxable income and as such, each year SS says I’ll be getting less and less at age 62. In fact, it’s not even worth bothering with any more.
Many moons ago, I realized that, for most of us, retirement will be something that we’ll do right before we hit the grave. Or the urn.
Why? Because it will prove to be too expensive (and boring) for people to do over the long run.
I’ll also admit to a certain anti-retirement bias on the paternal side of my family. (Shared the stories of my father and two of his relatives last week on this-here Bucket.) Add those to what I’ve seen happening to my mother* since retired from teaching school, and you’ve got one Slim who’s not interested in being put out to pasture.
*What’s happened to my mother can best be described as a prolonged state of loneliness and depression. There’s nothing in her life that has replaced the intense, all-day human interaction she had while she was teaching school. And believe me, she has looked high and low.
D, that makes sense; SS payouts are based on your highest 35 years of earnings. So having lower years of income will reduce your eventual benefit unless you already have your highest 35-years covered. If you have 35 higher years, then it should not reduce your benefit.
Note that there is also a floor in the computation, so that you can’t fall too far down, IIRC.
Prime,
Right, and you could legitimately assert that I’m getting a bit of that benefit upfront ( simply by having a lower taxable income )
Still there’s no doubt it feels like you’re working backwards b/c the projections look so bleak? Especially when compared to all the years I was a W-2 emp. Surprisingly, of ALL the things I complain about ( and they seem to know no bounds! ) Soc. Sec. just isn’t one of them.
It is what it is…
No, the government isn’t going to confiscate 401 or retirement accounts. No, social security is not a ponzi scheme.
When my father started collecting after 40 years, his monthly check, was half of mine. Of course, I paid alot more in taxes than he did. So, tell me who is taking advantage of the system? Those who now collect disability payments only collect based upon what they paid in, or they get just a stipend base amount if they paid nothing. The people who die early and do not collect or maybe for only a few years, contributions are dispersed into the fund. Yes, the spouses get the larger payment. AND yes, if your in your twenties, you will pay more in taxes than I did. Just like I paid more than my father.
Ponzi scheme? I think not. The system has worked since 1937. Yes, in 2016, I believe, it will balance and the outgoing will exceed the incoming, but like in the past, my taxes went up, so will yours. As to 401k and other retirement accounts, social security was never intended to be the only retirement income.
Social security has been and is a good system for retirement. As a ps to your own nothing in the end: All the problems and stories I have read here in the past few years, have been common since I can remember. Government, taxes, politicians, bubbles, this is nothing new. its old hat with a new slant.
Terry,
I can’t recall her name, but we’ve featured her here before! There was (1) gal that became the Poster Child for SS whining.
She worked P/T for a very, very brief time ( as a paralegal I recall ) and then “retired” on SS as being the 1st. recipient. Last I heard, she’s still alive or passed away only recently. Glad it worked out for her.
Terry,
Ida May Fuller! ( I knew… she sounded familiar? )
Born in 1874 ( and a classmate of Calvin Coolidge at Rutland ) she worked under the SS system for only 3 years before being awarded benefits.
She rec’d SS Check # 00-000-001.
What about all those elderly immigrants who are brought here by their kids - with the promise to provide for them - and then immediately start taking advantage of our Medicare system?
You didn’t “pay in” any more than Bernie Madoff’s clients “paid in.” The S.S. money taken from your paycheck last month went into my bank account this month (thank you very much!).
S.S. is hosed. The collapse is just a few years away. ALL beneficiaries will get perhaps 25% of what they currently get or would have gotten in the case of future retirees. The alternative is Zimbabwe-style inflation.
Medicare may survive, but only if it evolves to a program that just provides the “Two P’s,” Preventive and Palliative care.
“Those of the younger generation, that hate this system, seem to have lost sight of the fact, that the money being paid out was taxed in.”
False. Most of the current recipients end up taking out far more than what they paid in with interest—unless they die prematurely.
Now, I’m not one of those who hate the system; I used to when I was younger, but I came to terms with it when someone pointed out to me that the SS system dramatically reduces senior poverty. That’s a good thing.
But I also expect to be among those who draw out far less than they contributed, due to means-testing, etc; in fact, I may end up drawing out nothing.
Thank you, Terry. However, I doubt you have contributed $300k in 40 years. I’ve contributed for 37 years ( maxed out the last 20 years)and I think my contributions total around $100,000. Pay interest on that money (even at 5%) and it would more than pay for SS plus medicare. I would rather see the fica cap lifted, before means testing.
Does the $100K include employeer contributions as well?
I looked for a table of historical contribution levels and could not find one. But my recollection is that the maximum earnings were less than $50 K as recently as the late 80’s.
My guesstimate is that someone who has max contributions for 40 years would have contributed around $200K employee and employer contributins.
“Ok, lets say i have paid in to social security, 300k over the last 40 years. Now, why am I not entitled to receive my money back plus interest in the form of monthly payments?”
Because while you paid in payroll taxes, you had your income taxes cut — and health care costs soared, all paid for with borrowed money. Now there is no money for you, and the debts have to be paid back.
“I paid in heavily, why should I be cut to relieve you of your own retirement costs. You should be taxed more to compensate for the cost of your retirement…40 yrs down the road, just like I was .”
Your generation didn’t pay in enough, and took too much out, particularly on health care.
I am predicting that younger generations will pay in for 40 years at a higher rate, and get nothing.
Exactly Terry. It’s old “welfare queen” boogieman all over again, when it turns out the big corporations are the biggest welfare queens in the history mankind!
Oh good grief.
“the” “of”
All they have to do is play games with COLAs (like eliminate them!) and presto! Reduced benefits for everyone over the long haul!
Even simpler, just keep doing what they already have with hedonics and the CPI. No action necessary - except for the consumer that is, who should learn to garden or at least buy leather shoes now.
Or just base the COLAs on a rigged CPI. Like a CPI that doesn’t include the ever-growing preponderance of fees and such, doesn’t include property taxes going through the roof due to housing bubbles, etc.
In other words - one that assumes your “cost of living” isn’t really going up that much - as long as you’re constantly lowering your standard of living.
Anyone want to predict the year of birth after which people will simply not receive Social Security and Medicare, in order to assure the Chinese so they will lend the federal government all that is required to give those born earlier everything they have promised themselves?
I’m thinking some time between 1956 and 1958 — the 1960s generation will keep denying and rationalizing until it is all in, and then say that sacrifices are required but you can’t take anything away from existing beneficiaries.
Gee, thanks a lot. (Yours Truly was born in late 1957.)
Keep riding your bicycle Slim. They can’t take that away from us (can they)?
The bike I’m currently riding is of the “nobody wants to steal this” variety. It’s more than old enough to drink, and it looks like it’s had a few.
I used to have a bike like that. Some SOB stole it.
Business
Delphi salaried retirees take pension hit
By Rick Barrett of the Journal Sentinel
Posted: Jan. 30, 2010
Rick Wood
Dale Richards (right) at home with wife Judy, who suffers from a rare degenerative neurological disorder. She holds Parker, the family Boston terrier. Richards and other Delphi salaried retirees could see their monthly pension checks cut between 30% and 70%.
Close For 30 years, Dale Richards lived his dream, working in the automotive industry as a supervisor at the General Motors parts plant in Oak Creek. For a time, he was also the community’s mayor.
But his career was cut short after GM spun off parts-maker Delphi Corp., which closed the plant in November 2008. Now, Richards and thousands of other Delphi salaried retirees could see their monthly pension checks cut between 30% and 70% as the government-run Pension Benefit Guaranty Corp. has taken over the company’s retirement fund.
As a result, the average Delphi salaried retiree - many of whom were forced into early retirement by Delphi’s bankruptcy - stands to lose $300,000 in pension payments over his or her lifetime.
…It’s especially upsetting given that the pensions of Delphi’s hourly wage retirees, represented by the United Auto Workers, will not be reduced.
That’s because when General Motors spun off Delphi in 1999, it agreed to “top up” the hourly employees’ pensions if their plan ever fell short of what the employees would have earned had they remained at GM…
http://tinyurl.com/ydfhtv7
This brings up a good point Mikey. Apparently those carping about retirees pensions (never mind it was a contract) seems to have no clue that they themselves are not going to stay healthy all their lives and most of a retirees money ends up being spent on medical bills.
I’m shooting for a massive coronary or stroke, 3 months after I retire/can’t work any more. (whichever comes first).
X-GS,
And what would Dale Richards be getting if it weren’t for the Pension Benefit Guaranty Corp. ( i.e you & me ) ? Yeah, the sleeves from the vest.
But he would have signed on during the early 80’s and there certainly wasn’t any secret the Big 3 were having issues? And this at a time when you ‘could’ actually have your own savings.
That’s what always pi$$ed me off about the UAW. They acted as if their little world wasn’t affected by what went on outside of Ohio and Michigan. There are a lot of UAW members who would have preferred the Big 3 go down the crap tube, than face reality and give anything back on a contract.
Only matched by the stupidity of management, getting their companies in a position where they bled money if they had to shut down for a strike, among other decisions.
Of course, none of this matters now. Kinda hard for anyone in the USA to compete with $3/day labor in China.
Maybe our problem was actually a “Pay/Salary Bubble”.
“Only matched by the stupidity of management”
I haven’t lived in the MW for years and years, so I won’t pretend I know what’s going on there at the street level. I couldn’t pull off a ruse of that scale!
In the end though, we’re all responsible for our own retirement and the path they chose was thru the UAW? They made it infinitely harder for the rest of us to make the case there was safety in numbers?
Bad news X-GSfixr. Given modern medicine these days, all that means is you will be an invalid in a nasty nursing home and not even able to off yourself… while being sent a bill for the emergency cardiac treatment.
You might want to rethink that plan.
Bah. THere might be means testing but I doubt it. Honestly, do we think there is really a big pile of saving somewhere that is going to pay for retirement in SS?
No, that money isn’t around. So, it will just be printed into existance.
You will get your money but you’d better have a lot of extra if you want to have any decent kind of retirement. Your retirement will always be measured relative to what others around you have retired with. They will be competing for resources.
Personally, I’m looking forward to meeting Olygal in a couple years and beating all the rush. Mmm. I’m going to go have another plate of wings and some beer. Ahhhh. Happy thoughts. Ahhhh.
Retirement!
Been listening to that song “Aint no rest for the wicked” by Cage the elephant….
“There aint no rest for the wicked till we close our eyes for good…”
That would be us folks. And indeed we have been wicked.
My daughters turned me on to Cage The Elephant, and I must say, I rather like them! I just love basic Rock that contains itself within rudimentary guidelines.
Not 36 ‘additional’ tracks of meaningless “sweetner”. Even classics like Sticky Fingers probably had more tracks than were necessary. At least back then, the artists told the engineer what they wanted, not the other way around?
The fiscal problem isn’t SS, it’s Medicare. The means-testing of Medicare got a start under GWB administration. Those with incomes under $85K pay a Medicare premium equal to (I think) 1/4 of the average benefit. There are several income categories, and if you make $200K after age 65, your Medicare premium is 60% of the average benefit.
As I suggested somewhere way above, they could go a long way towards a fix if they just raised the age of eligibility to the same age when you are eligible to receive full SS.
New hit single that makes one what to, Shiek Rattle & Roll
“Bye Bye my Sweet Dubai”
The Dubai stock index trades for 5.2 times analysts’ 2010 earnings estimates, the cheapest level worldwide after Nigeria’s All Share Index, according to data compiled by Bloomberg.
While investors speculate on the recovery values of Dubai debt, the lifeline from Abu Dhabi is helping the state-owned companies meet their interest payments. Nakheel paid a $10.3 million coupon last month on its 2011 bond. Dubai Holding Commercial Operations Group LLC, the investment company owned by Dubai’s ruler, made about $100 million of scheduled payments in January on three bonds.
Dubai Bailout Rally Evaporates on Standstill Silence:
By Michael Patterson and Haris Anwar Bloomberg
Buy buy my sweet Dubai
Drove my Chevy to the airport when the HELOC ran dry
Them guys on Bharain were makin’ whiskey and rye
Singin’ muhlahs catch me - then I die
Muhlas catch me - then I die!
oxy
i find you and i think alike about many things.
It’s a lonely existence…
In the land of the blind, the one eyed man is…
…persecuted.
So last night the subject of Glass-Steagall came up again — you know, that linchpin of civilization and smoothly functioning economic activity which was callously pulled out by narrow-minded free market ideologues a decade ago, precipitating the current financial crisis.
Well, first I would like to say that I appreciate the recent improvement in spelling of this obviously critical Act, since previously many posters had mangled the orthography, errors which to me indicated something less than an encyclopedic knowledge of banking law on the part of the writers.
The next quantum step would be to actually try to LEARN something about the Glass-Steagall Act. I was surprised to find that despite this law having been one of the very cornerstones and foundational building blocks of life itself, the full text of the Act does not appear to be on the Internet anywhere.
So, for me to continue my research, one of three things has to happen:
1) Someone prove me wrong and post a link to the full text;
2) Polly, or someone else with Lexis access, finds and posts it; or
3) I have to pay a visit to my friendly local law library and look for it there.
To be continued …
Google - banking act of 1933 full text
The first hit is a Wikipedia article which has a link to it.
Still can’t find the full text. Do you have a direct link? And please see my comments below, re: Do not confuse “Banking Act of 1933″ with “Emergency Banking Act of 1933″.
In case my other posting doesn’t show up.
Search for banking act of 1933 full text.
oddly enough, the only copy I can find is hosted on a server in the Czech Republic.
http://tucnak.fsv.cuni.cz/~calda/Documents/1930s/EmergBank_1933.html
ok here’s a PDF version of same:
http://www.fame.org/PDF/Emergency%20banking%20act%20of%201933.pdf
Thanks rainmayun, but…
This is not the Glass-Steagall Act. The Glass-Steagall Act, also known as the “Banking Act of 1933″, is NOT the same law as the “Emergency Banking Act of 1933″. The Glass-Steagall Act is Public Law 73-66 (66th Law of the 73rd Congress). The Emergency Banking Act of 1933, I think is Public Law 73-1 (first law passed in that Congress).
callously pulled out by narrow-minded free market ideologues..
lets see.. “The bill that ultimately repealed the Act..”
passed in the Senate 90–8… and in the House: 362–57.
Unless a bunch of incumbents have been booted our, we still got a Congress chock full of free market idealogues..
wikipedia has a main page.. search Glass–Steagall.. peppered with numerous links to further reading of all flavors.. should keep you busy for a while.
Yes, I’ve checked Wikipedia. No, you haven’t given me a link to the full text of the Act.
this what you’re looking for?
http://en.wikisource.org/wiki/Emergency_Banking_Relief_Act
No, see my comments above. The Banking Act of 1933 is not the same thing as the Emergency Banking [Relief] Act of 1933. See, for example, the Wikipedia page “List of United States Federal Legislation”, under 1933, where they are listed separately.
US “walk away” concept goes MSM, at least in the UK:
http://www.guardian.co.uk/commentisfree/cifamerica/2010/feb/01/goldman-sachs-negative-equity
As a bonus, the author rips on Lord Blankfein and GS.
“We did calculations recently that showed that homeowners who bought near the peak in many bubble markets could easily save themselves more than $1,000 a month by renting equivalent units. This means that these underwater homeowners could be throwing out more than $12,000 a year in a desperate effort to keep up on their mortgages. Since most of these homeowners will never have any equity in their home, the mortgage check they send to the bank is money thrown in the garbage.”
Well said. Underwater borrowers should walk away en masse.
“Unfortunately, the current policy from the Obama administration goes in the opposite direction. Rather than realistically assessing what is best for homeowners, the policy seems intended to do everything possible to persuade people to keep sending checks to the banks, even using taxpayer dollars as an inducement. It would be far better economic policy if they sought to get people out from under their enormous mortgage debt.”
The Obama policy seems to assume borrowers are in trouble mostly because of job losses, not primarily because they paid too much because of the bubble.
So now BUYING is “cash in the trash,” “throwing your money away,” etc.?
I’m likin’ the irony!
SDGreg,
I don’t know what assumptions the current Admin. is working off of, but the point you raise is an important distinction. So much of this should be contingent on the borrower’s history w/ that ( and other ) home/s they currently ‘own’?
I’m all for helping out some poor non-REIC blue collar guy that never took out a dime in equity and only owns the home he is about to lose! We can’t do enough for that guy. But for the multitudes of other multi/MEW borrowers? Huh uh.
From my posts from last week…
The current administrations idea is that things were going “well” when prices were rising.
Hence the objective is do what ever it takes to make prices start rising.
Stuff like stratospheric debt levels, inflation, exc… none of that matters. They will also beat people with other viewpoints. Normally they use the GDP stick.
Good times, eh?
Well, at least Obama is entertaining to watch.
Hey BJ…..
Are you writing a book? If so, how far along are you?
CBS News Braces For 100 Layoffs After Horrible Ratings ~ Feb. 1, 2010,
CBS News is bracing for a round of layoffs this week.
News bureaus are going to take a hit, with as many as 100 positions, or 7% of CBS News 1,400-person staff could be cut, according to the Los Angeles Times.
Katie makes more $$ than the other 99 schmoes put together. Cut Katie, let the other 99 schmoes keep their jobs, and ratings will go up. Elegant and effective.
Now ‘there’s’ a thought! LOL.
Yeah, all during the Late Nite Wars all I could think was, no matter how successful, no matter how much money the networks are willing to throw at you.., being a late-night comic just isn’t what I’d call a “career”?
Just kind of an anomaly, pfftt, I don’t get it.
I couldn’t agree more. Can Katie, replace her with a Fox New’s blond news-babe cast off (anyone can read the prompter) for 5% of Katie’s salary and spare the common folks. My guess is ratings and profits would both improve.
Oh I don’t have anything against Katie ( although I’ve rarely if ever seen the show ) It’s the whole LOT of them! If you’ll notice, CNBC rotates shows/anchors so often, they can’t demand that much in salary.
A better way to go.
Layoffs at CBS? Must.control.schadenfreude.
For years CBS has been the purveyor of the most blatant liberal-elite propaganda outlets, right up there with TIME and NEWSPEAK. Watching them circling the drain is truly heart-warming.
Sammy, just flush, it’s faster.
It’ll be interesting to see how hard Iran rattles it’ sabers…
US raises stakes on Iran by sending in ships and missiles
Pentagon says Patriot shield will deter strike on American allies in the Gulf. guardian.co.uk 2-1-10
Tension between the US and Iran heightened dramatically today with the disclosure that Barack Obama is deploying a missile shield to protect American allies in the Gulf from attack by Tehran.
The US is dispatching Patriot defensive missiles to four countries – Qatar, United Arab Emirates, Bahrain and Kuwait – and keeping two ships in the Gulf capable of shooting down Iranian missiles. Washington is also helping Saudi Arabia develop a force to protect its oil installations.
American officials said the move is aimed at deterring an attack by Iran and reassuring Gulf states fearful that Tehran might react to sanctions by striking at US allies in the region. Washington is also seeking to discourage Israel from a strike against Iran by demonstrating that the US is prepared to contain any threat.
what a bunch of BS!!!
Those aircraft carriers won’t do anything to slow down 1) nuclear research, 2) aid to anti-US forces in Iraq or Afghanistan.
Guess the US navy has to be somewhere
I doubt they are aircraft carriers - too expensive an asset to risk in the Gulf. More likely a Aegis capable cruiser or destroyer.
Nuclear weapons are hard to make and expensive. Likely we get all excited at some point and in a grand effort to distract the population, Obama will probably bomb the Iranians into the stone age.
Maybe, if the Iranians are really lucky they get off a nuke or two. Maybe.
Iran is a much tougher target for the united states. Could easily take us 15-16 weeks to completely destroy the country.
That should distract us for enough time for BO to get re-elected. Maybe.
Personally had planned on bombing them a lot earlier. I mean why wait?
And don’t be mad at my war mongering self. You all went out and bought SUVS, lived in big houses and far away from cities. This is all your fault. Me, I just blow up people as we happen to need to. Kind of like the rain or seasons. No sense complaining about it.
Hopefully this all doesn’ end up in boring peaceful negotiations. Can’t stand that.
Other than nukes, Iran is not paticularly strong.
* Iran fought Iraq for 8 years and didn’t prevail militarily
* US defeated Iraq army in 6 weeks
* US has large forces on Iran’s western and eastern borders
And here’s another reason why Iran’s not that strong:
When the mullahs took over power in the late 1970s and early 1980s, Iran’s intelligentsia saw the handwriting on the wall and left. Many of them came to the United States.
If you’ve ever had the privilege of meeting Iranians who came here during that time, or their children, what a treat. You’ll enjoy people who are very proud of being Persian, and, at the same time, are very eager to take advantage of what this country offers. Real go-getters.
In short, Iran’s loss is our gain.
Doesn’t LA have more Farsi language TV stations thatn Tehran?
I believe so. After all, the LA area is where a lot of Iranian expats settled.
If the US was smart (big assumption, I know), we’d just sit back and let the mullahs hang themselves with their own rope. Make it real easy for young, educated Iranians to immigrate, for starters.
Time is on the kids side.
people have the higher opinion of the USA in Iran than in any other muslim country. Why? We’re not propping up their dictator(s) like in Saudi or Egypt.
Amen to that Slim. We know several and feel
privileged, they’re fine people.
I met in the early 80s I met a young man from Iran. He and his family fled Iran when the mullahs took power. He never called himself Iranian, he called himself a Persian.
Sh!t runs down hill… round 2.
Sharp cuts for some Delphi retirees
Business First of Buffalo
Another 2,900 Delphi Corp. salaried retirees soon will receive letters disclosing the amount of cuts in their pensions that will go into effect on March 1.
The Delphi Salaried Retirees Association said on its Website that the reductions are expected to be “staggering” for those affected — retirees younger than 62 with supplements.
Estimates range from 32 percent for retirees 61 years-old to 50 percent for 50 year-olds.
We have houses in the 1 to 4 million dollar price range on our local lake that have been on the market for more that 2 years, with no reductions.
Million-dollar misses. CNN Money
These luxury homes have been stuck on the market for months.
http://money.cnn.com/galleries/2009/fortune/0908/gallery.unsold_million_dollar_houses.fortune/index.html
the owners of the san diego house are renting to their kids. that’s what a guy at work is doing. he’s moving to an Orange county condo with his wife but has to sell in CT first…had been asking 500 k for his 4br., now 3 years later i think he wants to relist in the high 300’s. realizing that it may still not sell, plan B is to rent it to his son.
America’s Biggest Rip-offs.
Are you infuriated every time you open your cell phone bill? Livid when you buy a snack at the movies? These are nine of the rawest deals around.
http://money.cnn.com/galleries/2010/news/1001/gallery.americas_biggest_ripoffs/index.html
Local writer just penned this screed:
Secrets of a Stingy Scoundrel: 100 Dirty Little Money-Grubbing Secrets
Being of the stingy scoundrel sort, I borrowed it from the library. All sorts of good tips on how to push back against the ripper-offers.
do share!!
(i like to promise the rupuglicans money…then when the postage paid envelope comes i fill it with pebbles from the yard and refurn it)
Being a recovered Republican, I sent them pesos in retaliation for their illegal pandering, when they asked their base for $. I live in the epicenter (So Ca).
Being a political atheist is the way to go.
That is awesome. I’m an NRA member, so I end up getting a lot of alarmist mail from so-called “Conservative” or Republican organizations telling me what the evil libs are up to and asking for donations. I love telling them to ask their K Street pimps for some spending money, since I only support principled politicians.
“…And yes, there really is a 1,300% markup on Gummy Bears at the luxury Manhattan hotel Omni Berkshire Place. None of these hotels returned requests for comment, but a rep for the American Hotel & Lodging Association said guests pay a premium for the mini-bar’s convenience>”
Hey, a mere 1,300% markup on Hotel Gummy Bears is nothing, nothing to our-man-around town, Eddie.
The average mark-up for all consumer products in this country is 400%.
That’s just average.
Wells Fargo Shuns Carry-Trade, Braces for Risk of Higher Rates.
Feb. 1 (Bloomberg) — Wells Fargo & Co., unlike its three biggest competitors, is so convinced interest rates will rise that it sacrificed as much as $1 billion last year cutting back on fixed-income investments.
The nation’s fourth-largest bank, whose biggest shareholder is Warren Buffett’s Berkshire Hathaway Inc., reduced investments in mostly fixed-income securities by $34 billion in 2009’s second half, company filings show. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. boosted their holdings by an average of $35.5 billion.
By scaling back on the so-called carry trade, in which banks borrow in overnight lending markets at rates near zero and invest in higher-yielding securities, San Francisco-based Wells Fargo aims to protect against losses when rates rise. The three other lenders increased investments on the theory that profit will outpace any future losses.
“The bias is for higher rates,” Chief Executive Officer John Stumpf, 56, said on the company’s fourth-quarter earnings call. “We’re willing to wait for that to happen. We think that’s the better trade.”
“The three other lenders increased investments on the theory that profit will outpace any future losses.”
Except if interest rates rise, won’t they raise rates on borrowers pushing more of those borrowers into default, decreasing any profits?
I wonder if the bonsues paid on that “profit” will be returned upon realization of the “future losses?”
Nope. TARP II.
Some are getting all wee-weed up over the supremes ruling. Calm down, the D.C. cesspool has always been owned by W.Street and corporations… bought and paid for. Bitness as usual, nothing more, nothing less. “He who owns the gold,makes the rules”. And globalization just makes it mo better.
Johann Hari: This corruption in Washington is smothering America’s future. ~ Friday, 29 January 2010
How do you regulate banks effectively, if the Senate is owned by Wall Street?
This week, a disaster hit the United States, and the after-shocks will be shaking and breaking global politics for years. It did not grab the same press attention as the fall of liberal Kennedy-licking Massachusetts to a pick-up truck Republican, or President Obama’s first State of the Union address, or the possible break-up of Brangelina and their United Nations of adopted infants. But it took the single biggest problem dragging American politics towards brutality and dysfunction – and made it much, much worse. Yet it also showed the only path that Obama can now take to salvage his Presidency.
For more than a century, the US has slowly put some limits – too few, too feeble – on how much corporations can bribe, bully or intimidate politicians. On Tuesday, they were burned away in one whoosh. The Supreme Court ruled that corporations can suddenly run political adverts during an election campaign – and there is absolutely no limit on how many, or how much they can spend. So if you anger the investment bankers by supporting legislation to break up the too-big-to-fail banks, you will smack into a wall of 24/7 ads exposing your every flaw. If you displease oil companies by supporting legislation to deal with global warming, you will now be hit by a tsunami of advertising saying you are opposed to jobs and the American Way. If you rile the defence contractors by opposing the gargantuan war budget, you will face a smear-campaign calling you Soft on Terror.
Representative Alan Grayson says: “It basically institutionalises and legalises bribery on the largest scale imaginable. Corporations will now be able to reward the politicians that play ball with them – and beat to death the politicians that don’t… You won’t even hear any more about the Senator from Kansas. It’ll be the Senator from General Electric or the Senator from Microsoft.”
We should be able to vote for coorporations directly and by pass the middle man.
Who will win the 2012 election? GS, Microsoft, Exxon, Citibank or all of the above?
Alan Grayson is my kind of liberal. He tells it like it is and seems to have a genuine moral compass, unlike typical liberal sleazeballs like John Edwards or the late and unlamented Ted Kennedy.
Watch the movie “Rollerball”, way, way ahead of
it’s time..
You have problem with Corporate Communist Capitalism©®™, comrades?
Update from the job hunt:
X-GSfixr may have a new position lined up. A part time, contract position to go with the one I’ve already got. Approximately the same pay as I made at the full time job, except I get to pay for insurance, etc. out of my own pocket. The good news is that it could easily turn into a full time position.
From what I’m seeing, this is the new hiring plan; hire a guy as a contract employee until you decide he’s a good “fit”, (however long that takes), then take him on full time. That’s okay I guess, but it’s going to limit your pool of job candidates to local guys, because no one with half a brain is going to move cross-country to take a part time position.
So much for the much vaunted USA advantage of as “mobile work force”.
I’ve been doing the contract gig for 10 years now with no unemployed periods. You may find that you do not want to work directly for these outfits considering a defined term gig is usually more lucrative than getting hired permanently.
X-GSfixr may have a new position lined up. A part time, contract position to go with the one I’ve already got. Approximately the same pay as I made at the full time job, except I get to pay for insurance, etc. out of my own pocket. The good news is that it could easily turn into a full time position.
From what I’m seeing, this is the new hiring plan; hire a guy as a contract employee until you decide he’s a good “fit”, (however long that takes), then take him on full time. That’s okay I guess, but it’s going to limit your pool of job candidates to local guys, because no one with half a brain is going to move cross-country to take a part time position.
Slim here with a note of caution:
I’m not a tax accountant, and I don’t play one on teevee. So, take what I say with a grain of salt.
However, it seems to me that if a company wants to hire a contract worker, certain conditions must be met so that the hiree is not construed as an employee. For one thing, the company cannot control where and how you do your work. Nor can it provide the equipment for getting the job done, then say, “Oh, Joe’s not our employee, he’s an independent contractor!”
These issues and more are covered in the IRS 20 Questions, and here’s a link to how these questions are addressed in The Real World. Note: There’s a a pitch for the firm’s services at the very end.
http://bridgenex.com/irs-guidelines.html
Interesting……
My work schedule will require that I’m there for aircraft departures and returns. And they are providing the aircraft-specific tools i need to work on their model of aircraft.
The other job controls “when” I do my work, in that I work on it when it’s not flying/ in the hangar.
If what you say is the law, it’s really going to screw the “contractor” business model, at least the way it is practiced in the aviation business.
Here are the IRS 20 Questions mentioned above:
http://www.synergistech.com/20qs.shtml
FedEx was callind its drivers independent contractors.. Finally the employees got ticked and sued…as evidence of degree of control of the worker they cited the example of the fact that the drivers had to hang up a key on a hook using their pinky finger….
Hmmm…. we had a lot of “ETWs” (External Temorary Workers) at my old job. They all worked on site with employer provided equipment.
From what I’m seeing, this is the new hiring plan; hire a guy as a contract employee until you decide he’s a good “fit”, (however long that takes), then take him on full time.
This is becoming standard in the software development field. And just like you I have seen that the hourly rates aren’t all that great, same as a salary, but no bennies.
My problem:
There aren’t a huge number of jobs in my field being generated around here right now (but nationally, things have picked up significantly since January 1). The main advantage to this one, is that I wouldn’t have to relocate (relocation allowances are pretty much non-existant right now, not that that would make a huge difference with me), and they are planning on sending me to the two week school on the airplane, which is valuable career-wise. And the equipment is a big jump up the airplane “food chain”.
In the aviation business, Formal Training + hands-on experience in type = $$$$.
And besides, “aviation” guys are running this company, not “financial” guys. My experience with “financial” types running “aviation” businesses has been less than positive.
Gulfstream,
Are you actually beyotching that you landed a gig?
Dude!
Haven’t “landed” it yet.
But, having just been screwed and tattoo’d by my previous employer (Filed Chapter 11, got stuck with unpaid expense reports, 6 weeks of PTO disappeared, plus the escrow account that had my severance package went poof!) to the tune of about $15K, I’m real cynical about anything to do with suit wearing businessmen and their promises.
I know $15K is a rounding error to some of the high-rollers on this blog, but to me, that’s a lot of money.
Being a contractor/1099 guy is no picnic either; on top of the crap I normally have to worry about, now I’m finding that some guys don’t consider paying my invoices a high priority.
I know the “small businessman” is supposed to be elevated to Sainthood in this country, but my personal experience is that they pay lower salaries, with crappier benefits, will dump you in a heartbeat with little or no severance, and, when you are a contractor, take their own sweet time paying their bills.
Unfortunately, I don’t have enough contract work lined up to tell these guys to go pound sand.
Construction Spending Plunged Record 12.4% in 2009
U.S. construction spending fell 1.2% in December — its fifth decline in six months — the U.S. Commerce Department announced Monday, as private home-building continued to slump amid a glut of unsold homes created by the 2007 to 2009 recession.
What’s more, for all of 2009, construction spending plummeted a record 12.4% to $939.1 billion from $1.07 trillion. That’s the biggest, one-year decline since the Commerce Department started keeping records for the metric in 1964.
That’s all? 12%. Just saying because there is virtually no nostruction, residential or commercial, in the hamlet of Loveland, CO. McWhinney is building an office building in Centerra and there is a new Mini Cooper dealer (why didn’t they just buy the brand new, but bankrupt, closed and empty Chrysler dealer across the street?).
Other than that … zilch!
http://www.latimes.com/entertainment/news/la-et-oldsters30-2010jan30,0,1622426.story
Let’s atomize Wall Street ~ by Martin HutchinsonFebruary 01, 2010
Paul Volcker’s proposal that proprietary trading should be spun off from deposit-taking banks is a worthwhile step in the direction of stabilizing the financial services business. However, when you consider that business in detail, it becomes clear that further breakups are necessary in order to remove the excessive risks from the U.S. economic system.
Volcker became something of a hero to the left for his sponsorship of President Obama’s bank-bashing announcement. Indeed, I was very much hoping that he could ride this new-found enthusiasm through a defeat of Ben Bernanke in his Senate confirmation vote, followed by a more or less unanimous Senate approval of a Volcker nomination to replace him as Fed chairman. Assuming Volcker hadn’t suffered a Damascene conversion to sloppy monetary policy while I wasn’t looking, Obama and the left would be suffering buyer’s remorse within about an hour of Volcker’s arrival at the Fed, but by that stage the deed would be done. I was practicing my Dr. Evil laugh for this eventuality, but alas it was not to be.
There are three problems with the current setup on Wall Street: systemic risk, rent seeking and conflicts of interest. The Volcker proposal addresses the systemic risk problem to a great extent, but does not do much about the other two. For a complete solution, we thus need to go further.
http://www.prudentbear.com/index.php/thebearslairview?art_id=10339
NEW YORK – Citigroup Inc. agreed Monday to suspend plans to charge fees on certain kinds of checking accounts as part of a settlement reached with the New York Attorney General’s office.
The fees would have affected more than 1 million customers.
Attorney General Andrew Cuomo said Citigroup failed to provide adequate disclosures about the fees, and also didn’t offer a free checking program long enough before implementing the charges. Cuomo did say the bank had the right to start charging fees, but it needs to respect consumers’ rights and give proper notice.
I would like to see a thread “What do you see happening in your area with housing market”. I like seeing boots on the ground reporting from common folks. I have little trust of national media reports.
Sounds good to me, what are you seeing in your neck of the woods.
Home sales are very slow in the midlands of South Carolina, have been for nearly a year. We check listings of various area codes on a weekly basis and have been doing so for several years. Prices are not being reduced on the whole, most people that can are holding to their prices. When drops do occur they are laughable. Watched one over the weekend reduce from $179,900.00 to $179,600.00.
While houses have shown some serious price declines, I’m not seeing any bargains on land. As I have mentioned before, some raw land remains priced well above that of a same size parcel WITH a finished house on it. Bizarre. Here’s an example of the delusion which still permeates the minds of many. This is a complete teardown. What’s even more shocking, is that these still sell sometimes. Ten years ago, you couldn’t find a buyer for this place at $60k. Wages are DOWN from then, we had a massive bubble which burst, yet demand is still much higher than back then. The real estate euphoria has not worn off.
http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=300318841
The oil speculators, aka greedy Wall St. banks, seem to think that a rebound in the economy (or even talk of it) automatically translates into $100+ per barrel oil. I do not see any scenario in which this is even remotely possible unless we’re talking about an increase in wages. $3 per gallon gasoline sucks an amazing amount of discretionary funds out of the average household budget. In fact, I don’t think a healthy US economy is even remotely possible at $100 per barrel oil. It just does not pencil out. That $147 per barrel oil shut down businesses faster than anything ever seen before.
A tid-bit swirling around on the outer edges of the oil community is that Hatti and surrounding waters sit on top of sit on top of a sh!t load of Texas tea. Nothing like a disaster to open some doors that other wise may not be. At least that’s the buzz.
Refinery margin are pretty thin so i wonder how much gas prices will fall despite the fact demand is very slack. On the other hand, i heard some mega-refineries are about to come online (Asia, middle east)
Maybe taht will drop the price of gas….or just make the domestic refineries close faster
I have just realized: whatever I search for on Google prior to accessing this site, a related ad appears on your homepage, Ben. Now that’s good tracking!
Treasury Dept. projects $392B in first quarter borrowing to help finance record budget deficit.
WASHINGTON (AP) — The Treasury Department says it expects to borrow $392 billion in the current quarter to help finance the largest annual budget deficit in history.
The projection is $86 billion lower than an estimate the department issued in November, when it expected to borrow $478 billion. The improvement is largely due to higher-than-expected repayments of about $90 billion in bailout funds by large banks.
The department also says it borrowed $260 billion in last year’s fourth quarter, below an earlier estimate of $276 billion. Treasury expects to borrow $268 billion in the second quarter of this year.
The projections come the same day that President Barack Obama proposed a $3.83 trillion budget that forecast a record $1.56 trillion deficit for this year, an increase from the $1.41 trillion deficit in the 2009 budget year.
Renewable Energy Reduces Output, Cuts Jobs on Tax Credit Lapse.
Feb. 1 (Bloomberg) — Renewable Energy Group Inc., the largest U.S. biodiesel producer, said it has reduced output, cut pay and laid off workers, because a tax credit wasn’t extended.
The company, which runs a network of biodiesel plants with capacity to produce 300 million gallons annually, is producing at about 15 percent of capacity and has laid off about 21 employees so far, Chief Executive Officer Jeffrey Stroburg said today in a telephone interview.
“We began some layoffs and we’ve also taken pay cuts across the board,” he said. “With the uncertainty of the tax credit, fewer and fewer people are jumping up to take that risk” of buying biodiesel.
Yes, we need to cut off all diversions such as alternative energy so we can focus our entire economic might on reinflating the housing bubble. Wall Street’s bonus depends on it.
pressboardbox commented yesterday about a strategic defeult in the making, and it got me thinking about some people I know who refuse to make that move because it isn’t “honest”.
I think I may have stumbled on a plan of action that might change some hearts and minds:
I plan to suggest that one particular friend create an LLC and transfer ownership of his current bubble bought residence into said entity. He then will purchase a new residence using his savings, good credit, and good earnings. He then is free to run his previous residence as a rental under the LLC and separate out the gains/losses as a line item on his taxes.
How many years of showing a schedule C loss do you think it will take before he dumps the albatross?
I am going to tell them this. Not a bad idea.
http://www.youtube.com/watch?v=lDJc0PZV-Bk
Dylan Ratigan: FED GAVE Banks Access to 23.7 TRILLION DOLLARS NOT $700 Billion!
Yes ,Carrie Ann . All those short term loans from Fed based on the junk paper adds up. This is what I have been irate about . I didn’t know it added up to almost 24 trillion ,I thought it was more like 8 to 10 trillion . Does anybody wonder why the Government wants to prop up the price of housing .
“Toyota uber Alles”?
The “shim” fix for the accelerator pedals is a band-aid. They have an engine management software issue that will need new software loaded in the engine/body computers, or replacement of same (if they can’t be updated).
Seems they left out the logic/code that closes the throttle when brakes are applied.
For those of you with Toyotas with Start/Off buttons, instead of keys: The button has to be held for THREE FULL SECONDS to turn off the engine when the car is moving………which means, in hi performance models, you could be doing over 100mph if you were accelerating to highway speed, before you could get it shut down.
“For those of you with Toyotas with Start/Off buttons, instead of keys: The button has to be held for THREE FULL SECONDS to turn off the engine when the car is moving………which means, in hi performance models, you could be doing over 100mph if you were accelerating to highway speed, before you could get it shut down.
My old g/f never had that problem in her 1994 Nissan Sentra 4 clyinder auto. Heck, I could roll down the passenger window at 98 mph and that thing would stop.
Auuh…technology
Seems they left out the logic/code that closes the throttle when brakes are applied.
what’s up with that..
got one foot on the throttle and one on the brake? hmm.. I thought most cars allow that. Older ones did.
As for engine shutdown while moving.. i guess there are rare situations where it’s necessary… stuck accelerator.. although few drivers would be thinking clearly enough to even try and turn it off.
Still, that’s some serious stuff. A big loss money and reputation-wise.
Toyota.. might be showing signs it’s approaching maturity in the business sense. Trees don’t grow to the sky, nor do they live forever.
I only buy cars with standard transmissions (all subarus) anyone know if that brand is turning into crap - mine are 10 and 14 years old.
Good thing you have a manual tranny. My brother had one with an auto tranny that was going out. Best price he could find was $1800 bucks for a USED one, (it did have a 30 day warranty……)
An alternative in an emergency is to shift into neutral. This will cause the engine to rev up and run into rev limiter - better than an accident.
I wonder whether running into the rev limiter will trigger a software event that will release the throttle when the brakes are applied?
So, uhm, does all this mean you can’t shift into neutral? That was the first lesson I was taught. Throttles stuck a lot back then and hitting a dinosaur was bad news.
(Seriously, I don’t know. I’ve seen modern cars than won’t let you)
As I understand it, you don’t have a mechanical connection between your shift lever and the tranny anymore. So if the engine computer logic won’t permit it, depending on the imputs, you can’t shift it into neutral.
The aerospace OEMs have departments full of guys doing “what if” scenarios on aircraft software; then the FAA guys have a go at it before they let the flying public on the airplane. Plus, the aircraft “fly by wire” stuff is triple/quadruple redundant on the important stuff.
It appears that Toyota follows the Microsoft Game Plan (throw it out there, let your customers find the problems).
Cloudy Future for Fannie and Freddie
Minh Uong/The New York Times
By CHARLES DUHIGG
Published: February 1, 2010
The Great Bailout is mostly over for the banks. But for those troubled behemoths of the nation’s housing bust, Fannie Mae and Freddie Mac, the lifeline from Washington just keeps getting longer.
A home builder at a construction site in Bristow, Va. The housing market nationwide has struggled mightily in recent years.
Fifteen months after Fannie and Freddie were effectively nationalized, neither the Obama administration nor Congressional leaders see a quick solution to one of the thorniest problems in American finance: how to fix the twin mortgage giants without choking the flow of credit to homeowners and dealing a blow to a still-fragile housing market.
The administration had said for months that it would begin charting a new course for Fannie and Freddie when it released its budget proposal on Monday. The companies, crucial pillars of American housing, already have consumed over $112 billion of taxpayer dollars.
Bankers, builders and homeowners stand to win or lose from any plan for the two so-called government-sponsored enterprises, or G.S.E.’s. But, on Monday, that plan amounted to a single, ambiguous sentence from the White House:
“The administration continues to monitor the situation of the G.S.E.’s closely and will continue to provide updates on considerations for longer-term reform of Fannie Mae and Freddie Mac as appropriate.”
…