Bits Bucket For February 8, 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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Strip Malls Turning Into Ghost Towns
CBS ~ Fresno California
Call it a sight for sore eyes… strip malls turning into eyesores because so many of its stores are closing up shop.
That’s especially true for malls that have lost their anchor tenants like large grocery stores.
Near a vacant Albertsons, Realtor Ryan Ramirez has been trying to sell a home for about three months. The owners even knocked down the price $25,000 dollars and still no bites.
Ramirez said, “I think everything has a domino effect right now, and even nationally, they’re telling us that this recession is over. From a local standpoint, it certainly doesn’t look that way.”
“even nationally, they’re telling us…..”
Where “they” live, in the nation’s capital, there has never ever been more money flowing.
Its like Imperial Rome all power is concentrating in one place
if every business has to work out a model that pleases Washington not what’s best for the whole country its going to be a poorer meaner future
And that is their goal: poor people who must lick the feet of the new Emperors… poor people also have less time to ask questions of their rulers, which is “good for ‘merika.”
“From a local standpoint, it certainly doesn’t look that way.”
From
a local standpointanywhere but Wall Street, it certainly doesn’t look that way.Much better, and closer.
I’ve seen strip malls emptying like that in past recessions in Fresno in the 70s and 80s. It’s very discouraging to see abandoned malls.
The years between 2002 and 2006 were the most optimistic years Fresno ever had, thanks to its false hopes that real estate will rescue them. In reality those years were the worst for the knifecatchers who did not understand the nature of Fresno economics.
Long time Fresnans (and former Fresnans such as my self) knew better that the cycle of blight will return. Despite it having a Cal State campus with a fine engineering school, most college graduates from Fresno go elsewhere for technical work. The salaries are far better elsewhere. In a Los Angeles Times article a few years back, a poll of Fresno high school college-bound graduates indicated a stunning majority plan to start their careers outside the farm belt of California. The best and brightest leave for better opportunities and perpetuate the depression in Fresno.
Also my dad used to tell me that there is no way the big corporate agriculture interests will allow the Fresno area to become a high tech center. It would result in overdevelopment and take away land for farming. It’s still an ag economy.
I drove my daughter to SoCal from Seattle for a new job this past weekend.
In the late 70’s early 80’s I spent a lot of time in the Visalia/Fresno/Bakersfield era. I was in the irrigation equipment industry at that time and the south valley was basically an agricultural area. I always enjoyed my business trips there. I would usually fly into Burbank or LAX and drive up the valley so the change from ultra-urban to ag was dramatic.
So, just for grins, on this trip I took 99 south from Sacramento through the San Jouquin valley just to see how it had changed. I can say it’s simply amazing how the boom bust is obvious from just in the number of vacant malls visable from the freeway. The number of houses that have been built bordering the freeway is also astounding. I wish I had the time to venture into the towns, but I was driving a rental truck and didn’t want to venture much from the highway.
Spokaneman,
Well, that had to be the very definition of bittersweet? Best of luck to her and I speak for all of us when I say we sincerely hope it works out well for her!
Made that trip a few years just… as they kinda’ realized they’d over-built just a tad and the Mrs. coined the term “roof farms” as we rolled thru Madera, CA. The phrase has stuck ever since!
The daughter is 23 and single. She got a good job at a good starting salary (with benefits) with a large company that I would think has a lot of growth potential.
I think SoCal is still a great place for that demographic. A great place to have fun, learn her craft and then hopefully over time get an appreciation for a slower pace of life. At that point maybe she can return to the backwater burg that is the Spokane we love.
Spokaneman,
FWIW, I stressed to both my daughters the importance of making it in “the big city” before retreating to the “backwaters”. Now of course neither of them heard a word of it! ( but ) they at least have an appreciation.
Young people at least need some exposure to “the show” so they’ll have a track record to draw references from. After that, they should feel free to purge all that BS.
I was thinking as I was spending 3 hours driving the 60 miles from San Fernando to Newport Beach, “what is it that keeps 17 million or so hardy soles living here?”, dealing with all of the crap that comes with big city life.
But something does I guess, so to each his own. There are 17 million of them and 400,000 of us. I think the same thing when I go to Chicago, New York, Miami, Houston and most of the other mega cities.
yes the rental truck
seem to remember Spokanesman that U-HAUL was charging much less to rent in Seattle and MORE to rent in LA (implying an exodus from the southland)
i heard this week that U-haul’s parent corp. had a blowout quarter…..i guess a lot of people are “gittin’ outta” somewhere
In a Los Angeles Times article a few years back, a poll of Fresno high school college-bound graduates indicated a stunning majority plan to start their careers outside the farm belt of California. The best and brightest leave for better opportunities and perpetuate the depression in Fresno.
Same thing’s happening here with University of Arizona graduates here in Tucson. Soon as they’re finished with the commencement ceremony, they’re outta here.
“Strip Malls Turning Into Ghost Towns”
Certainly true in Modesto, CA.
Check out:
www dot deadmalls dot com
Unlike most Americans, I actually like and use strip malls..? I have no doubt these will be amongst the first to fill up if/when the Faux Wrecovery begins!
God I can’t wait until REAL pawn shops return in droves.
Certainly true in Elk Grove, CA also
We have some good pawnshops around the Detroit area, and, of course, they’re quite busy. We have several strip malls that were built in the last year or so ( ! ) with only one or two tenants. The buildings are pretty and well-designed, but I have to wonder why they were built in the first place. Surely the owners knew that this was an iffy type of project.
You know, every once in a while I check out the pawn shop near my house, and I NEVER find any bargains there.
“…and I NEVER find any bargains there.”
I’ve noticed some pawn shops price their stuff at about 80% of the cost of new (or higher) which is ridiculous. I have haggled at pawn shops, though, with a reasonable amount of success.
It’s very discouraging to see abandoned malls.
Not much better to see occupied ones! Give me a Main St. with a handful of stores on it, anyday.
Silverback,
Interesting. We had a development go in by us ( Salem, OR area ) several years ago and Hollywood Video was ’supposed’ to be the anchor tenant.
Then on short notice ( and virtually NO explanation ) they backed out! It’s remained largely vacant since completion in ‘03 or so. There’s a Papa Murphy’s, tanning salon ( no strip mall is complete without one! ) and of course a Chinese rest.
It’s barely 1/3rd leased and ’should’ have served as a canary to all the res. builders up to their eyeballs in const. loans. But no….
I use pawnships for DVD’s and once in awhile a piece of jewelry, but very seldom. DVD’s are cheap at them. Right now, if I wanted a flatscreen tv, I’d go to one and check out their prices. Per an article in the Detroit News/Free Press Sunday edition late last year, there are flatscreens in the pawnshops in droves.
It unbelievable that they were building strip malls in the Detroit area in the past few years. What in the world could they have been thinking????
“Strip Malls Turning Into Ghost Towns”
It’s not just strip malls, either. I’m seeing lots of vacant storefronts even in posh suburban downtowns these days, including Palo Alto, Los Gatos, and Saratoga. No doubt the insane greed of the commercial landlords is part of the problem, but could the sharply reduced flow of borrowed home equity cash play a big role even in these ostensibly “rich” places? I think over the next few years we’re going to see a lot more shriveled willies as we find out who has been swimming naked.
Morning, HBB.
Went to a single open house yesterday, not because I enjoy open houses but Ms. Chile and Mini-chile thought this one was cute and it was the first available showing. I reluctantly went along based upon the listing stating all the bedrooms were on the second floor but the only full bathroom was on the first. Well, and I hadn’t left the apartment since Thursday and the wife was worried for my sanity. But I’m not into the “wake up, walk downstairs, take shower, walk back upstairs to get dressed” routine, espically in the fridgid and inhumane New England nine-month long winters. Not that I’ve ever done that morning routine, but I imagine if I ever did it I’d hate it.
So we pull up and there is the usual assortment of young couples, some with babies in tow and some with real estate agents in tow. Yawn. Place needs a paint job. And new soffits. And look, there is a massive settlement crack in the garage. Oh, and there is a crack indicating the front of the house settled relative to the back.
So as we’re walking in and I’m making nasty faces we walk past a dolled-up real estate agent and her two marks whispering about making an office. I thought this young couple might need help, so I observed to Mini-chile (who is eight months old, and therefore, really doesn’t care) that despite the house being 100 years old, the foundation for the front of the house is no more than ten years old and hence, that might explain the massive settlement crack. I later got a really nasty glance from that real estate agent, which I take it to mean she didn’t appreciate my statement.
In the kitchen as the listing agent was directing Ms. Chile to sign in I mad a snide comment about the suspended ceiling. I believe my exact words were “The kitchen ceiling looks like [obscenity deleted].” So I now have two real estate agents mad at me, which I count as a good thing.
Sure enough, the upstairs has only a toilet and sink, no shower. The hardwood floors exhibit significant water damage. They also slope to the front of the house. The basement was half carpeted with carpet that looks like it was rescued from Mrs. Robinson’s bedroom from The Graduate. That, perhaps, was the only interesting thing about the house. That and a collection of National Geographic magazines dating all the way back to 1972, proudly displayed in the basement (we really are a nation of hoarders).
So my estimate, which I loudly proclaimed to Mini-Chile, is that if you paid me a quarter of a million dollars I still wouldn’t live in this house. Ms. Chile was ok with my assessment of the house - listed at $379k, in our eyes, approximately $650k overpriced.
Ok…..
So a 100 year old house exhibiting differential settlement due to poorly compacted soils is priced at $650k and the corrupt realtors get mad at you for pointing out the defect….
Do I have this right?
” Realtors Are Liars”
I like the handle, but it sounds old fashioned. How about:
Realtors Are Less Than Accurate
I prefer to be brutally honest when it comes to commission salespeople.
I have a great Realtor. We went out last weekend to look at some foreclosures. Some were around 40% off peak prices. I asked him what he thought expecting the usual buy now before they move up again speech. He said expect a major second dip, and wait a year or so to see what happens - Obama is a nightmare even for the Democrats and asset valuation is still not based on a realistic mark-to-market - debt leverage is still way too high. I think I am in love.
I was extremely pleased with the realtor I used on my last purchase. Do I think the compensations are excessive? Yes. Do I think the bar is set very low for entry. Yes, yes, yes. Are there good realtors out there? Yes.
“I have a great Realtor.”
But the truth is the realtor has you.
So what is his name? Where is he located?
Do I have this right?
no
There is no differential settlement ocurring? speak up Cupcake.
You should have had the Realturds write up a -($250,000) offer.
And what if they accepted the $250k offer?
Never make an offer on something you don’t want to own.
Never make a comment without reading the original post.
Well you did have a double negative (parentheses and minus sign), so I initially read it as a net $250K offer too.
double negative. LOL -accounting police!
Zingggg!
Make an “offer,” I think.
Good story, and I agree with your assessment — but only if this “house” sits on 5 acres of land. Then you could tear it down and build on the old foundation.
I would pay good money to see the look on that REA’s face. And it’s good that you’re educating miniChile at an early age about house values.
We looked at three yesterday. My realtor is going to start taking names and complaining to PCAR because of all of the lying. He called ahead to make sure this one house was a true 3/2 — realtor said, “yes.” Nope, 3rd br in the a garage.
Everything out there is garbage in my neck of the woods.
Muggy - I agree with the lying. It just gets old to go look at a house and find you wasted your time, and there is just so much junk.
We’ve only seen one house we liked, but its location (off a busy road) was not to our liking.
“rescued from Mrs. Robinson’s bedroom” LOL!
I’m sure even Anne Bancroft would have been repulsed!
Anne Bancroft is only about 2 years older than Dustin Hoffman, so they were actually age appropriate. go figure…
Man, sounds like Maryland! A thousand flavors of run-down junk, all selling for stupid-high prices.
It’s possible the cracked foundation was due to the weight of 38 years worth of Nat Geos.
I looked at a house a few months ago that was perfect, except one corner of the house was noticeable slanted and that happened to be in the kitchen, which then created leveling problems for the counter top and dishwasher door (it didn’t close). Big crack in the basement floor and on the outside foundation wall. There was no easy fix to that. Funny, the listing simply said, “Bring your paint brush and level!”
“Bring your paint brush and level”
And trowel and house jacks and cement mixer and jack hammer…
My grandfather had a house like that: one corner was built on leftover fill from the construction process. The builders were total crooks and he had to fight with them every step of the way, and they STILL screwed him over in the end because of the sinking foundation. They (naturally) went of business not long after finishing that development, so he couldn’t even sue somebody for the time, money, and frustration he had to suffer with for about 30-years. The house was eventually sold dirt cheap to a counsin of mine (granddaughter of my grandfather), and they are still having to spend money fixing the foundation problem for the 2nd or 3rd time. ‘
Never, EVER buy a house on a bad foundation, and always remember that the typical realturd would gladly sell you a crumbling house on a sinking foundation if they can make a buck off of doing so.
I’m so confused: I thought that we’re supposed to buy crumbling, out-dated, poorly maintained houses at absurd prices because doing so helps us keep our weekends busy knocking down walls and that “real estate only goes up!” so clearly buying any old dump at any price is a bargain… how could this not be the case?
Hehehehe - good job on messing with the Realtors!
No Job Growth for Small Business Spurs Recovery Doubt.
Feb. 8 (Bloomberg) — Small businesses are becoming the Achilles heel of the U.S. recovery by limiting growth and job creation.
Companies with fewer than 500 employees, such as Phoenix Technologies Ltd. and Sonic Corp., helped lead the economy out of the four recessions since 1980. This time, they continue to cut capital spending and dismiss workers, eliminating 3,000 jobs in January, according to Roseland, New Jersey-based Automatic Data Processing Inc., the world’s largest payroll processor.
Improvement in the unemployment rate, which fell to 9.7 in January from 10 percent in December, may stall later this year if these firms aren’t hiring, and growth likely won’t meet the median 2.7 percent annual rate forecast for 2010 by 67 economists in a Jan. 14 Bloomberg News survey.
Those evil small businesses! Why aren’t they hiring and expanding and fixing everything? Someone should do something about those fat cats. Stoopid Achilles heels.
/sarc
Ottawa says housing bubble not a concern: No plan to tighten mortgage rules
http://www.theglobeandmail.com/report-on-business/ottawa-says-housing-bubble-not-a-concern/article1459673/
Fresh off yesterday’s article about the banks in Canada wanting to reduce the risks of a housing crash, it looks like the federal government has other ideas.
From the article:
‘Finance Minister Jim Flaherty appears to have no immediate plans to tighten Canadian mortgage rules despite the advice of senior bankers concerned about surging home prices.
Mr. Flaherty said he sees no evidence of a housing bubble in Canada….
Tightening mortgage rules could prove a challenging move politically as it could negatively affect the value of Canadian homes.’
As someone commented yesterday, I’m not sure why an individual bank cannot just raise its own standards and wait out this thing.
Also for REhobbyist, in curling we all use the club rocks, so special/custom rocks allowed.
Flaherty will have to add the word “unexpected” to his vocabulary in the not to distant future.
Got it. I grew up in Detroit, where everyone went to the bowling alley with their own ball. In Canada you go the curling club and use the club rocks.
Little finches knocking on my hotel window. Very cute, but I don’t think I’ll let them in.
Blahrety is a lackey who lost all his cred during the income trust flip-flop.
Perhaps changing the max amortization to 15 years would be a good thing in Canada, as too many Canadians carry high interest consumer debt. The banks will adjust their rules according to what the CHMC guarantees anyway, so they won’t lose.
holytrainwreck,
I totally agree…his 2006 halloween surprise was huge. I understand why he didn’t want Telus or Encana to switch to the income trust model, but I thought the best solution would be just to stop allow non-REIT trusts to convert.
The amount of spending/debt people carry up here is crazy…a 15 year mortgage wouldn’t go over well at all. CMHC in 2-3 years will be the next Fannie/Freddie!
66,000 would be considered a rip roaring success, when it comes to a gubmint run program.
Geithner Claims Mortgage Modifications a Success Despite House Probe.
Fox News
Millions more Americans are facing financial security as a result of stabilizing home prices, Treasury Secretary Tim Geithner said Sunday, even though only about 66,000 people have benefited from permanent mortgage loan modifications aimed to prevent foreclosure, a figure that has resulted in a House panel investigation.
Geithner said the mortgage modification program has helped 750,000 Americans so far to lower their monthly payments substantially even though he tacitly acknowledged that many of the temporary, verbal agreements have not been made permanent.
Geithner said the mortgage modification program has helped 750,000 Americans so far to lower their monthly payments substantially even though he tacitly acknowledged that many of the temporary, verbal agreements have not been made permanent.
Sort of like all of the pending sales that never close?
Geithner is a moron and a pathological liar. I think he has no redeeming value except being an expert at ‘extend and pretend’.
“66,000 would be considered a rip roaring success, when it comes to a gubmint run program.”
I had to laugh when I read about your “roaring success” comment. Trains chasing FBs came to mind. My Monday is better already.
“…Dunno, something about choo-choo..”
Mistake number 1: Suggesting that it is the government’s legitimate business to modify private mortgage contracts.
Mistake number 2: Massively failing to deliver on the offer to do so.
Sounds to me like good fodder for a populist revolt against bankers.
I still dont understand why people think someone should lower the principal on their loan to what it’s worth now. If they do it for houses, they should do it for cars as well. But I bet if the shoe was on the other foot, THEY (borrower’s) wouldnt accept a write down on money owed to THEM..
“If they do it for houses, they should do it for cars as well.”
Sounds good in principle, but in practice, there is an order of magnitude difference in the amount by which the value of a car can go underwater from its loan compared to the commensurate depth underwater for housing. For instance, if you bought a $50,000 car on credit, that is your maximum possible loss (i.e., even if you totaled the car, you would ‘only’ be out $50K).
By contrast, if you look at the post I made yesterday regarding upscale California housing, it appears (unsurprisingly) that many $1m+ homes purchased on credit over the past decade have gone into foreclosure. Moreover, the average decline in value for homes in wealthy areas of San Diego lies somewhere north of $400,000. The number of San Diegans who will earn enough over their future working lifetimes ( net of future taxes and other non-housing expenditures) to recover that loss is vanishingly small, suggesting that without a writedown of the principle value or an artificial measure to reflate the nominal value of San Diego housing, many households would do best by walking away from their unrepayable debt rather than struggling to repay it up until the point of financial exhaustion.
Or a write up to bubble values.
I think that the main failure was that they didn’t realize just how F’d the borrowers and the lenders are. What we have is a massive number of borrowers who are utterly incapable of making ammortizing payments on anything like the amount they’ve borrowed. And lenders who will be insolvent the day they recognize the fact that these loans are NEVER going to be paid off anywhere close to par. If this were a normal sized RE bubble, there would have been a reasonable enough percentage of borrowers that could have been helped. And that percentage would have been high enough to affect the RE market. But this program is a band aid on a bullet wound.
This is a good point. There were many people on pick-a-pay, I/O, and neg-am who couldn’t have afforded a 0% 30 year mortgage if they just had to pay the principal / (30 * 12) + taxes. What the heck are you supposed to do for these people–especially if they took out large loans against their house?
I’m still waiting for the gubmint to modify the rent terms with my landlord. Let’s see what happens if I stop paying my rent for a couple of months.
DebtinNation,
Point taken SIR! Yeah uh, we here at HBB Do -Not- endorse that specific “strategy” but hey.., it’s free country! LOL.
Really ,keys-in-leau with a bankruptcy chaser for those in recourse states IS their best option for many. Considering the amount of fraudulent information that was put on HUD-1s, they should be hoping for bankruptcy, not trying to avoid it.
While we’re at it, lets repeal those changes to the bankruptcy law. I think we can regard that experiment as a failure. Rather than discouraging borrowers from borrowing more than they could pay back, it ENCOURAGED lenders to lend out even more money to people who had no real prospect of paying it back. But all that interest and all those penalty fees sure looked real profitible for a quarter or two.
“I think we can regard that experiment as a failure” LOL!
SECOND! Aye, the motion carries.
“Let’s see what happens if I stop paying my rent for a couple of months.”
I will go out on a limb here to suggest a renter who stops making payments is in a far weaker condition than a homeowner who does the same. The problem a renter faces is that you don’t ‘own’ the home.
If they start lowering principal in large numbers, I’m going to demand they pay a portion of our rent.
Can someone not file a legal action against the govt (I think it’s not technically possible??) because they are discriminating against traditionally poor and minority people (renters)?
I would agree with this, CA renter.
CA renter—-Really one of the advantages of renting in a market like this is that you can renegotiate every year at the expiration of the lease. YOU’VE only agreed to a one year series of payments and you’re still complaining?
“I think that the main failure was that they didn’t realize just how F’d the borrowers and the lenders are.”
If only they had read a few of our posts back around 2006…
I’ve never actually watched Geithner on TV, since I try to avoid fungi and prefer to be in the Lord of the Rings, or hanging with vampires, or doing investing, or taking walks, or talking with my beloved husband, or seeing my daughter or something ( anything else, practically ), but I did see part of that broadcast yesterday. My, he’s a huge, huge liar, isn’t he. You can tell from his body language. He’s caught the virus of the previous administration: “tell them what ya want them to believe itis.” The facts have nothing at all to do with the statements made. Pathetic if this is the best we’ve got.
I’m still trying to figure out what the redeeming qualities of this runt are. How in the hell did he advance to this level? His public speaking skills are terrible to boot.
Another way to look at it is that while both Geithner and Saruman are liars, Saruman is at least a wizard and thus cool, while Geithner is a nasty little toady… sort of like Wormtongue.
I wonder if we looked at the 66K what we’d find. I bet a bunch of government elietes along with industry insiders getting megadeals while the rest of the program is an epic waste of time.
Just listened to an ABC news radio report regarding a new program for mortgage modification. These bozo’s are working 24-7 on the BS.
Three criteria apply:
#1. Must be an FHA backed mortgage.
#2. Applies to a mortgage holder that has had a sizable decease in income. #3. *Applies to a mortgage holder that has had a life changing event.
* No details on what the hell that means.
How about a 4th. Applies to a mortgage holder that just doesn’t feel like paying their mortgage, because it’s not fair.
Looks like NY is going to experience Spitzer II today. The local news says Paterson might be forced to resign as some news comes to light.
I suppose I should wait for the details but I’m preparing to have that creepy feeling of watching the NYS political mafia in action again.
Patterson is creepy. Was it just a couple of years ago that both he and his wife admitted to having affairs?
Sorry wmbz,
I meant for this to be its own thread.
It appears the NYT never ran the story. Funny how our press that never runs a story that isn’t 4-5 days old is all over it.
Who cares if Patterson, his wife, or both had affairs?
The man did not let Caroline Kennedy slither into the Senate, and for that alone deserves our thanks and admiration.
1. Fannie&Freddie looking for fraudulent mortgage assets, especially in verifying income.
2. Housing activists/advocates complaining that government isn’t doing enough.
3. Lawmakers trying for cramdowns, but lobbyists shutting it down.
4. Tax breaks for news buyers and buyers who were in their homes for 3(?) years, or for new buyers.
5. New criteria looking for “sizable decrease in income.”
I’m seeing a very rough pattern here: the government is trying (lamely) to separate the wheat from the chaff. They are helping the people who deserve the help. [not sure what they mean by Deserve.] There are a lot of victims of this housing bubble who didn’t participate in it. Like an FB who was doing just fine until he lost his job. Or someone who is underwater, but who has a fixed mortgage and can still pay it — gov is trying to discourage them from walking. Or a renter who stayed out the mess.* The problem is that, comparatively, there are very few (IMO) who deserve the help. That’s why those numbers are so low.
As for the housing advocates, they can expletive. If they had their way, they’d have all the strawberry pickers in McMansions, even if the McMansions were ultimately owned by the Chinese.
—————–
*I think the $8K is meant as a “reward” for the renters, but it’s backfiring in spectacular fashion. IMO it’s a trick. They frame it as a reward, but it really is a lame bait&switch. They use $8K of bait to try to snooker in ~$200k of our cash or 30 years of our future labor (a la Combo). Even indentured servants had a better deal. The smart money is rightly turning up its nose at this insult.
[not sure what they mean by Deserve.]
If you don’t understand this concept, then you most likely are not a deserving home owner.
“I didn’t deserve this. I was building a house”… Little Bill
“Deserve’s aint got nothing to do with it”… Will Munny
Haha, I was thinking about Eastwood’s line the other day but I forgot about the line that preceded it. What a fitting summary of the bubble.
Debt is Slavery.
Even if you get a sign up bonus.
It depends. I would qualify your statement to read, “Debt, backed by falling knife collateral, is slavery.”
Try not to get stucco, nor to catch yourself a falling knife real estate investment.
“I would qualify your statement to read, “Debt, backed by falling knife collateral, is slavery.””
No, PB: all debt is slavery.
Those with only falling-knife collateral-backed debt may be less enslaved than those holders of other debt, since it tends to be the easiest to walk away from without going BK (depending on state recourse laws, of course).
Slavery to the banks. Home loanership.
Loan ownership.
oxide,
Here here! You’re exactly right, there’s a ‘reason’ all these various ‘programs’ have had such limited applicability. As for the FB that “was doing just fine until he lost his job” ( it kills a little part of me every day )
This is not a problem of a few poor undeserving schmoes. It’s a widespread problem where millions of Fundamentally Broke people signed up to pay hundreds of thousands of dollars that they didn’t have, and never WILL have, no matter how many years they work. <— that’s the kicker. They never WILL have the money. Even the Printing Press isn’t fast enough to bail them all out. BK isn’t a matter of “if,” but when.
I wonder if Obama is realizing this just now…or if he knew all along but was hoping to avoid admitting it. He’s being blamed for things that are obviously not his fault, and no amount of explaining that will overcome the logical fallacy talking points. I think Obama would be happy to take the blame…IF he were allowed to fix it. In fact he tried just that. But the Repubs want it both ways: blame it on Obama AND prevent him from fixing it.
Let’s assume that he is smart.
What are you referring to, that Obama is trying to do right that those republicans are blocking?
oxide,
Well said. If it meant I would be banished for all my remaining years to Devil’s Island in solitary just so my kids wouldn’t have to face this music.., when do I board the steamer?
In shackles no less! I think virtually ‘any’ of the posters here would be only too happy to do the same if it meant getting the Debt Monkey off of the remaining 299,999,999 American’s back. If only “taking one for the team” could deliver that?
“…pay hundreds of thousands of dollars that they didn’t have, and never WILL have, no matter how many years they work.”
You left out the part about them working at jobs that now don’t exist and never should have existed and were purely the result of an out-of-control bubble.
pressboardbox,
Not to make excuses for the legions of ‘vicitms’ but, the perception from 2000-2006′ish was that “the job” need only last a handful of years and every mother’s Stanley Johnson was going to walk away a winner.
Oh and that brings me to something I thought about on the drive back from S. OR? If “things only got “really crazy” from say.., 2003/4 to 2005/6, why the hell are we still paying thru the nose for it!?
According to our NAR/REIC cheerleaders, if everything from ‘97 to ‘04 was nothing more than “normal appreciation” why are most of us -still- walking around like we got talked into “camping” w/ Ben Dover? All this pain was attributed to 2005-2007? Gotcha’!
I think Obama would be happy to take the blame…IF he were allowed to fix it.
You are assuming the messiah is above board. And how do tell is he going to “fix it”? And does this “fix” have anything to do with other people’s money? But that’s the catch isnt it? Why cant we let people fail anymore?
Blue Skye, I’m referring mainly the eeeeevil deficit spending. But we’ve acted out this play before, and we’re not going to agree on anything, so I’ll leave it there.
Yep pressboard, jobs that don’t exist. More and more, I believe this is an outsourcing/insourcing problem. I wonder just how many once-stable jobs are now done by foreign sweatshops/foreign factories/illegals/H1-B’s, and how that matches the number of unemployed now. There is some wiggle room for automation, productivity, and out-of-control construction, but I’d still be interested in the numbers. And no, I don’t think that all the jobs disappeared solely because of greedy unions.
Oxide, Ok deficit spending. I think we do agree on a lot of things. My lack of confidence ia just painted with a broader brush.
Step,
I can’t answer all your questions. If I had to give an opinion, I would say that Obama is not being entirely above board. He’s certainly not lying outright; it feels more as if he’s holding back the truth so as not to panic the public. I know lots of people refer to him as a “teleprompter.” But it seems to me that Obama’s teleprompter words are full of subtle references to what’s going on deep down. He knows and understands, even if he doesn’t seem to. This is why I am giving him time.
As for the “fix,” well, that’s no secret. Obama has laid it out repeatedly. Very simply, he wants non-outsource-able jobs, preferably ones that don’t depend heavily on impulse consumer spending. Energy, education, healthcare. Unfortunately, those jobs don’t just appear. You need infrastructure, and to develop infrastructure, you need to spend.
Yes, it probably will involve other’s people’s money, especially rich people’s money.
“I” say… Every Teleprompter for Himself!
oxide, right, I keep wondering what those of us on the right ‘would’ be satisfied to hear the man say? “It’s totally a f’d situation, you should bail outta’ here while you still can!”
( I’m sure that would go a long way toward calming the masses? )
Oxide,
1) What’s your definition of rich?
2) Are there enough taxes from rich Americans to fix the problems?
I think Northern Europeans are going to find out that their cradle to grave economic policies may work within small wealthy countries but, when they include ALL of the European union, it will fail.
1. I’ll go with Obama’s $250K salary figure, even though it’s a complicated question. Or, perhaps instead of defining some high figure, we should instead define a minimum salary for standard of living and go from there.
2. That’s Republican talking point and I refuse to engage.
Well, I’m not a registered Republican. I don’t believe there should be profit in Healthcare. I believe Netherlands (style) gov’t subsidized home ownership is unsustainable. I earn way less than $250k/yr. and I am a realist. Therefore, I know President Obama cannot be entirely truthful about the economy and I also know that people/politicians need to engage in realistic discussion, so our problems can be fixed.
Oxide, the One appears to have assumed an archetypal role similar to a Rorschach test, or a magic 8 ball. The true believers interpret the current platitudes (”subtle references”) as a Sign of Great Things. The realists listen, outraged, and hasten to add up their remaining fingers, arms and legs.
The realists understand that the pounds of flesh required as demonstrations of fealty will have to come from somewhere. If you don’t know who the sucker is at the poker table, it’s you.
We realists ‘get’ it. We ‘get’ it that we are all effed, and that we will be bled slowly and in controlled fashion, so as to prolong the pacification of the masses.
The True Believers are hanging on to the ‘gimme’ train for dear life. They have been bought with plastic toys and the promise of free houses.
The end game here is for the masses to cannibalize one another, thus leaving the nations’s remaining assets to the puppet masters, upon whom The One dances attendance.
The flyover country people see this picture clearly. What’s taking you intelligentsia so long to catch on?
Oxide think Obama would be happy to take the blame…IF he were allowed to fix it.
My view of fixing it would be to recognize all real estate losses tomorrow morning at 10:00. It would be tough for the ordinary man (and the ordinary women (politically correct) ) but losses would move up the ladder rather quickly (like instantly). So fast that you could call it a revolution.
I’m seeing a very rough pattern here: the government is trying (lamely) to separate the wheat from the chaff. They are helping the people who deserve the help. [not sure what they mean by Deserve.] There are a lot of victims of this housing bubble who didn’t participate in it. Like an FB who was doing just fine until he lost his job.
———————-
Let’s face it. If a renter loses his/her job, is the govt going to pay our rent for us because we “deserve” it?
Part of responsible budgeting means considering the “what ifs” in life: job loss, divorce, disability, children, etc. Those of us who try to factor all these things in when trying to make a large financial purchase are “priced out of the market” by the idiots who go full-steam into large purchases with only the rosiest scenarios in their minds (income always rising, full employment, always two full-time incomes, no sickness/disability/death, no divorce, a “free”(??) nanny…oh, and housing prices ALWAYS go up!).
“How about a 4th. Applies to a mortgage holder that just doesn’t feel like paying their mortgage, because it’s not fair.”
It really isn’t fair that hard working people doing the right thing have to be taxed to pay for the Acorn-lazies who want free houses.
Well so far, only 66,000 of those Acorn-lazies have been “bailed out” (had their loans modified), but we sure as hell left no banker behind!
The Powers are trying to bail out the Bankers by everything they do from loan modifications to trying to prop up the real estate
market . The bankers won’t go for cram downs unless the government pays for it ,in spite of the fact that they would get the lower amount in foreclosure given the natural course. In spite of the financial systems crashing in most the World ,they still haven’t come up with meaningful reform . Just can’t take away the players casino .
I don’t know if you have ever watched how demanding Wall
Street/Bankers are . This is what the problem is ,they own
the government . I’m sure that our forefathers didn’t intend
on the financial and banking sectors of the economy to carry this much weight . Wall Street/Investment firms think that everything revolves around investing in the short term movements of Companies and passive investments ,
but the real world revolves around Main Street and real production and real jobs . Investing or savings is only suppose to be 10 to 15 % of your income in a balanced economy . Health
care is up to 25% of the average salary for a decent policy . So I guess your suppose to go to the doctor three times a week and
spend the rest of the time churning your stocks by the state of affairs today if you go by the Power Brokers priorities . The Wall Street only cares if a Company makes money ,not
if the Company outsourced 100 thousands jobs to other countries at lower wages .
If the control and power remains in the current hands ,they will no doubt take America down for the majority .
Totally agree, Wiz. Thank you.
http://www.larouchepub.com/other/2010/3705new_statistics.html
The Emperor’s New Statistics
by John Hoefle
Jan. 29—U.S. government economic statistics and other economic reports increasingly remind one of the fable of the emperor’s new clothes. The statistics keep improving, while the economy keeps getting worse.
This observation is prompted by today’s report from the Department of Commerce that the nation’s gross domestic product rose 5.7% in the fourth quarter of 2009, after rising 2.2% in the third quarter. That’s quite an accomplishment, considering that the number of people employed fell by 1.2 million during the quarter, according to equally suspicions numbers from the Bureau of Labor Statistics.
Considering the avalanche of problems which usually befall people when they lose their jobs these days, it’s obvious that any statistic that purports to show that the economy is expanding, is but cloth from the emperor’s wardrobe. That is certainly the case for GDP, which, because it fails to take into account the difference between productivity and overhead, actually hides the way the economy is being destroyed.
The Obama Administration and Wall Street would have us believe that the economy has turned the corner and is recovering, each for its own reasons. But as with all habitual liars, watch what they do, instead of what they say. If they really believe the crisis has passed, why are they so committed to ramming fascist austerity measures down our throats? They talk about things getting better, but they are rather openly preparing for things to get worse—much worse.
Saving the Parasites
The great success of the “economic recovery,” we are encouraged to believe, has been the rebound of Wall Street. To believe that, however, you have to swallow some real whoppers.
The first of these is that Wall Street has actually recovered. Despite the biggest theft of public funds in history, Wall Street remains hopelessly bankrupt, its financial institutions holding enough uncollectable debt and toxic waste to sink them all many times over. The level of fraud is so great that, were proper investigations to be done and all the guilty punished, we’d have to build new prisons to hold all the bankers, accountants, lawyers, and regulators being incarcerated.
The second whopper is that the profitability of Wall Street is a valid marker for the health of the economy. That’s akin to measuring the health of a dog by the growing number of fleas it carries, since, just like the fleas, the bankers of Wall Street thrive by sucking wealth out of the economy. It was Wall Street, after all, which oversaw the dismantling of the industrial might of the nation, and promoted the transfer of U.S. production overseas, in the name of profits.
We would also have to believe that Wall Street is an American phenomenon, dedicated to the welfare of our nation. Wall Street is actually an arm of that London-centered global financial oligarchy known as the British Empire, and its actions are designed to destroy our nation. As it has.
The giant theft known as the “bailout” is actually designed to keep this imperial looting operation alive during the transition to an intended global fascist dictatorship. No recovery is intended, or even possible, under this regime.
Instead, what is planned is the systematic looting of the population, to keep the financial profits flowing as the economy continues to decline. President Obama’s health-care plan is a good example of what is intended, forcing people to pay premiums to the insurance companies, while at the same time cutting the care people will receive for their money. “Pay more, get less,” is the motto for this unholy future. As governments at all levels go broke, they will be under increasing pressure to raise fees on such basic infrastructure as roads, water, and sewer systems, or sell them to private companies which will jack up the fees.
The imperial bankers know we will rebel against such austerity measures, which is why they are so determined to expand the police-state apparatus. They know they will need it! This is the future that awaits us, under the present “recovery” policy.
(Continued)
That was an awesome article, NoVa. Thank you very much for posting it!
I thank you as well! That has some bite to it!
Gold - China’s End Game?
http://www.brasschecktv.com/page/800.html
This guy is saying that China is trying to become the worlds “reserve currency” by urging the Chinese citizens to buy gold. It’s a reasonably plausible argument. My problem with it is very simple: How do the Chinese continue to export like crazy with prices that undercut everyone else without a relatively cheap currency? They’d have to float their currency, true? This would presumably cause the yuan-to-anything-else exchange rates to rise meaning yuan becomes more valuable and Walmart is no longer the low price competitor. Of course the Chinese Gov’t would be able to run deficits at gargantuan levels like we do. That being said, I strongly suspect that they are already doing so.
Hmm, maybe they see that “American Consumerism” is finished and they need a new game?
Why the heck would they want the yuan to become a world reserve? It runs a risk of having the leaders heads on a pole. I mean they have 1.3 billion people of whom 1 billion are poor. These people need hope or there will be disaster.
Roidy
Good. The US govt has a mountain of gold and could sell it off. It has been around for a long time and not done us a lick of good. Hopefully they all blow their money for a couple of over priced ounces of worthless, mostly inert metal.
It has been around for a long time and not done us a lick of good
Are you serious? Do you not think that the US’s gold holdings affect the dollar/confidence in any way?
Drummin my man….Firefox 3.6 is not compatible with your wonderful Joshua tree extension….
Pretty please can we have an update…
Other than the relative current advantage between the US and the Eurozone (At least we don’t have Greece…..but we do have California), I cannot understand why anyone thinks the value of the dollar can preserved in a world economy with the uncontrolled debt spending. $1.6 trillion estimated, but after Obama’s cuts get axed by earmark lovers, Medicare increases are granted, Afghanistan costs, ?inevitable increases in interest rates, and the mother of all stimuluses as we enter the double dip, a $2 trillion deficit will be the best case.
I have asked a lot of smart financial people where is the best place to hide your cash, and nobody has a good answer.
Hmm, maybe they see that “American Consumerism” is finished and they need a new game?
——————
Yes, this is what I’m thinking (and they’d be right, IMHO).
Economic downturn spurs preference for low-cost liquor
http://www.news-journalonline.com/NewsJournalOnline/Business/Headlines/bizBIZ01020810.htm
Yup! I betcha Trader Joe’s stole lots ‘o business from BevMo lately. The TJ’s in Torrance has the 12-bottle boxes of “2 buck” along the front for people to buy in bulk. It’s about $26 or so for a box. At Bevmo it would be easily $260 for twelve. Ouch! I know, you get what you pay for. But I still get resveratrol.
For places that don’t have TJ stores, Two-buck Upchuck is sold under the Crane Lake label. Both roll off the same Bronco bottling line.
You forgot to add that 2 Buck Chuck is a bottle of hangover, and might be overpriced at $2.
Ugh, i’d rather use it on my salad. Emily Post says: don’t be serving 2-buck Chuck at parties….unless it’s in lieu of MadDog.
I still get vibes from this message board that some posters here can’t understand that debt that is not paid back is money that has gone poof.
One person’s debt is another person’s money. If a person who is owed money is not paid what he is owed then he is out that money. For him that money has gone poof.
If you loan a million bucks to the bank then the bank owes you a million bucks. That means that even though the bank is in possession of the million bucks you are still a millionaire. Few people will question this fact.
But if the bank can’t or won’t pay you back your million then you are no longer a millionaire. Few people will question this fact either.
So, what happened to the million bucks? The is the question that so many people seem to have trouble in understanding the answer.
What happens to any money that is owed but is not paid? Where will the promised pension and social security money go that will not be paid out in the future because the system is broke?
B-b-but there is a printing press that fixes everything. Relax.
Poof!
(I loved your poof-a-thon yesterday, btw). All this poofiness bodes well for my poof anticipating family. You see, while others were making promises to pay back borrowed money with a house as collateral, my li’l family was putting earned money in the bank.
POOF ON!
“POOF ON!”
Lol, thanks Muggy.
combotechie,
All we need do is take the next step and ask how all these NAR commissions were paid out on debt that was never going to be paid back?
Zero down, front loaded! How’d ‘that’ happen?
Also appraisal fees, mortgage broker’s fees, loan officer bonuses, bonuses for Freddie and Fannie execs, bonuses for CDO syndicators and the list goes on. The real reason that the whole thing continued as long as it did, is that it was a huge money party, ultimately thrown at the expense of taxpayers.
“poof-a-thon”
That’s going into the lexicon along with “storm stud.”
I had “poop-a-thon” in my bathroom after one too many chips with quakomole and cheese on during the Super Bowl.
On a second thought, that was too much info for the HBB. Nevermind.
Well, the jobless herds of FB managed to watch the superbowl on their 54′ CC Tee Vee’s in their underwater McMansions with their gourmet kitchens on their borrowed time. What’s on next for them ?
Why The All-American Poof-A-Thon of course.
LOL!
Maybe TMI, but I thought it was funny.
If the Fed is running its printing presses 24/7 is it just replacing the money that is going “poof” or is it increasing the overall money supply?
Up until a few months ago I was solidly in the deflationist camp. More recently I have felt that double-digit or at least high single-digit inflation was just around the corner, due to the Fed’s printing presses. Now I don’t know what to think. I see gasoline down to 2.35 a gallon, yet food prices are going up. Unemployment remains high yet some businesses are showing gains.
So I guess I’ll continue to sit tight.
“Now I don’t know what to think.”
I’m thinking stabilization, however the Fed defines that…
My guess is that stabilization requires an influx of dollars (aka a subsidy) into the asset class which is subject to stabilization. Later on, when the U.S. economy eventually roars back into action from its current comatose state, the asset classes which were stabilized will rapidly appreciate in nominal value, leaving those who played it safe by parking their dollars into FDIC-assured passbook accounts wondering why they suddenly feel so poor. What will have occurred is a stealth deferred devaluation of the U.S. dollar: the real value of the assets are currently much lower than the nominal value which stabilization artificially supports, and provided stabilization is successful, asset prices can only rise from this level during a future recovery.
This sounds like the plan: it rewards the crooks and dolts while punishing savers and honest people who don’t want to play the crook’s game. Since every plan put forth so far has been based on rewarding bad behavior, this one also makes sense.
My best guess (and it is just a guess) is that the Fed is going to attempt to “lock in” the dollar at some prescribed (”desired”) level of asset prices, based on targeted levels of headline indexes (e.g. DJIA for stocks, Case-Shiller/S&P for housing, etc). They will gradually create just enough wage inflation to align U.S. incomes with their financially-engineered asset price levels, then take away the punch bowl. At the end of the day, the value of the dollar will be lower, but not undergoing Zimbabwean/Weimar Republic style hyperinflation.
I am interested to hear why others agree or disagree with my scenario, and also to hear any and all suggestions about how one should hedge against becoming the bagholder who pays the Fed’s incipient inflation tax.
By the time this tightening plan is implemented, I expect them to be safely behind the curve, at which point they will say “no one could have seen it coming” in the face of “higher than expected” inflation.
* The Wall Street Journal
* FEBRUARY 8, 2010
Fed to Bare Tightening Plan
Bernanke Prepares Future Strategy for Curbing Credit; Policy Shift Remains Months Off
By JON HILSENRATH
WASHINGTON—Federal Reserve Chairman Ben Bernanke will begin this week to lay out a blueprint for a credit tightening, to be followed once the Fed decides the economy has recovered sufficiently.
The centerpiece will be a new tool Congress gave the central bank in October 2008: an interest rate the Fed pays banks on money they leave on reserve at the central bank. Known as “interest on excess reserves,” this rate is now 0.25%.
The Fed is still at least several months away from raising interest rates or beginning to drain the flood of money it poured into the financial system in 2008 and 2009. But looking ahead to when the economy is strong enough to warrant tightening credit, officials have been discussing for months which financial levers to pull, when to start and how best to communicate their intent.
When the Fed is ready to tap the brakes, it plans to raise the rate paid on excess reserves, according to Fed officials in interviews and recent speeches. The higher rate would entice banks to tie up money they otherwise might lend to customers or other banks. The Fed expects such a maneuver to pull up other key short-term rates, including the federal-funds rate at which banks lend to each other overnight—long the main tool for steering the economy.
“If the [Fed] were to raise the interest rate paid on excess reserves, this would raise the price of credit,” New York Fed President William Dudley said in a December speech. “That, in turn, would limit the demand for credit.”
…
DJIA = 10K or bust
Professor Bear,
I agree with your guess on the Fed’s goal and felt for some time now that targetting the dollar to a basket of asset classes was their objective. Of course, I do not know what the target is. The value of the dollar will drop relative to asset classes, not necessarily other currencies. And as always, I don’t expect the FED to be 100% accurate in their timing, probably being a little behind even their own curve. They’ll overshoot somewhat to the high side on inflation before the effects of shelving the punchbowl kick in.
What I struggle with is the concept of wage inflation in this environment. Just not sure how fast that part can be achieved.
PB. I think the problem is we don’t have good enough measures of velocity of money. So, the Fed is making guesses at the proper reserve requirements to make a certain wage level.
Additionally we have to deal with wage deflation due to outsourcing. I’m guessing a lot of the rich insiders also have a lot of exposure and there is infighting about the path forward. How can we cause wages to rise if the jobs just go overseas? Meanwhile our industrial base, aka our independance and freedom, are gutted.
Further the other is in mindset. The Fed might want to a lot of things but requires coorperation from the people on some level. The public might decide that govt spending needs to go down, already happening, and taxes need to go up to pay down the debt. Again a deflationary measure as the debt gets paid off.
The higher taxes will also be deflationary. Additonally on a personal level you can feel the “debt is slavery” mindset taking hold. People are cutting back on major purchases.
What is the saying? A banker is a person that lends you an umbrella but then wants it back when it starts to rain.
People don’t want to get in debt as they’ve seen the bank asking for the umbrella back when the storm came. All the emergency credit vanishes as companies slash your credit with out warning.
There is also some credit card reform starting the next couple of months. I suspect that will further cause deflation.
Another thing to remember about the Fed and their games. If you look at the bubble and what happened; clearly the Fed lost control of the money supply. Since banks have no reserves and are just rolling money over and over it started feeding back on itself. Totally without needing Fed money at all. Hence, they aren’t even able to control any of that.
I wonder if you can get a bunch of “conservatives” to agree to raise taxes to pay off debt? Since debt service is such a large portion of the govt budget you might be able to sell this.
“I wonder if you can get a bunch of “conservatives” to agree to raise taxes to pay off debt?”
Haha, good one. You got your choice of tax and spend Democrats (Santa Claus) or borrow and spend Republicans (Double Santa Claus).
Maybe we ought to cancel some of our imperial adventures overseas, that should be good for a few bucks.
While this may be the Feds goal, there will be no wage inflation. Wall Street has discovered that completely gutting American jobs and industries is the path to profit, and if this fails, they can get Bailed Out, so why give raises or even hire people?
I expect lots of printing of money to devalue the dollar to achieve various “target asset class prices” - followed by much confusion about how wages have gone nowhere in the face of this high inflation and that houses still aren’t expensive enough. Naturally “nobody could have seen this coming.” will be the reply.
Bill, I’m in the same camp you are. More and more it seems to me that the Fed prints whatever it takes to replace any money that’s going “poof” for a net gain of zero.
Good point Combo.
A lot of banks and other lenders get their primary income from people who have debt. They would hate to see a society of zero debt, but we are continuing down that path.
We’ll see more strides this year. The 83% of us who are working are focusing on paying off our credit cards (or already have).
Yes, more people/banks on the creditor side are losing income. That’s significant.
We’ll see more strides this year. The 83% of us who are working are focusing on paying off our credit cards (or already have).
Yes, more people/banks on the creditor side are losing income. That’s significant.
I’ve been sharing my tale of Trying to Register as a Federal Contractor. Which involves getting a DUNS number from Dun and Bradstreet, then being asked to fill out their credit form.
Now, you know me. I’m not a credit-seeking missile. I’m a pay-as-you-go kinda a gal.
Now I’m hearing that filling out the credit form isn’t needed. Since I already have a DUNS number, all I need to do is hie myself over to the Central Contractor Registry (ccr.gov) and fill out that form.
So, I’ll be on the ccr.gov site as soon as I get a few university client projects tamed.
“Now, you know me. I’m not a credit-seeking missile. I’m a pay-as-you-go kinda a gal.”
Sheesh…combo was right and Oly would have a 3 day field trip with that comment Slim !
Best of luck, AZ slim!
Good to hear you don’t need to fill out their form(s).
When you earn 1% in your money market
and your credit card charges 20% and your home loan is 6%. I suspect many are deciding to pay off debt as the best tax free investment they can make.
debt that is not paid back is money that has gone poof.
Actually, debt that IS paid back is also money that has gone poof. Right?
If I borrow money from you and write you an IOU, I have money, and you have an IOU, which is also considered money.
If I pay you back the money and you rip up the IOU, then money has gone poof.
“If I pay you back the money and you rip up the IOU, then money has gone poof.”
well they can make a new loan and create more money and they will do this if they beleive borrowers will work ahrd and pay back the loan with interest
new problem borrowers are not working extra extra hard to pay back big debt on falling assets
sort of a Moral Hazard thing
well they can make a new loan and create more money
Right. Money is debt. When a loan occurs, money is created. When a loan is cancelled– either because of repayment or default– money is destroyed.
For a currency proported to be near worthless, the demand for it has never been higher. The signs are every where, just look around. I mean all those women getting into stripping must know you can’t stuff much mello yello into a g-string!
King B. Berserkee will buy Treasuries and Social Security recipients will get paid in cash. Ala Kazaam! New Cash.
The King just printed trillions of dollars in new cash to buy Treasuries, mortgage backed securities, and GSE debt. He printed trillions more to refill the coffers of banks and non-banks. Don’t ignore the sound of the printing presses.
New cash same as the old cash
Just more of the same
B. Berserkee is King
Ah…welcome to the glittery world of “unfunded liability”!
But combotechie, I could print you out an IOU for a million that you can go sell to someother greater fool for a million…or better yet, heck, you don’t need a printing press.
Just tap a million IOU for me into your computer keyboard, and cyberspace can “create” your million back! Trust me, it’s on my hard drive.
“What happens to any money that is owed but is not paid?”
Doesn’t it depend on how much new money the Fed decides to print up?
For a concrete example, suppose a household purchases a San Diego ’starter home’ for the ‘affordable price’ of $729,750. Turns out they can’t afford the mortgage, and they go into foreclosure. But as luck would have it, the loan was federally guaranteed, which means some federal entity pays the lender $729,750 to make up for the loss on that loan.
From whence cameth that $729,750?
From whence cameth that $729,750?
QE ? well lets watch Greece and see what happens inflation or Deflation
Greece cannot print Euros.
Bingo!
From whence cameth that $729,750?
——————–
This is exactly the question I’m having a hard time with. When they “print” the money to cover the losses (of this and all the new “govt guaranteed debt” that’s been issued/guaranteed since 2008), is it being added to our national debt? How does the bookkeeping work?
No money is going poof. Try this scenario:
1. I have a million in cash in my closet.
2. A thief n steals it, now he has a million and I have nothing.
3. A thief n+1 steals from thief n. Now thief n has none
4. repeat steps 3 as many times as you like - maybe even a million times. If any money is going “poof” like in your theory then at some point there wouldn’t be any money left to steal.
Throw a bank in there and I don’t see how it makes any difference. The money isn’t going poof, it’s getting transferred to other groups of people. Somebody on Wall Street perhaps.
I guess I’m still missing something.
“I guess I’m still missing something.”
The printing press
No, seems more like combo’s missing the printing press. I claim there is no money going poof. Printing press is more proof there’s no poof.
What combo is saying is that when the thief takes you money, he deposits and IOU that can be sold on the open market for par value. You still have a million-dollar asset (the IOU) and the thief has a million dollars worth of cash. In essence, you both have a million dollars, which equals two million in aggregate.
All is fine until the thief informs you that you are not going to be paid back at all. Now, your IOU is worth zero (for illustrative purposes), and the thief has one million in cash, which equals one million dollars in aggregate. Essentially, one of the two million has been destroyed.
You’re missing the money/value that’s created by actual J6P labor. And the money that is *poofed* into existence based on J6P’ future labor. The thieves come in to steal the *poof* money based on future labor.
“The thieves come in to steal the *poof* money based on future labor.”
That’s the point of offering low-interest loans and tax credits to encourage FB’s to buy high-priced houses, no?
Now now, PB, thieves aren’t stealing the future labor. They are simply overestimating the worth of the future labor (by trillions of $$) and taking a leeetle skim — for their services, you see.
“They are simply overestimating the worth of the future labor (by trillions of $$) and taking a leeetle skim — for their services, you see.”
I stand corrected. My post reflected the prevalent delusion that many of the home loans currently being made on unaffordable principle balances relative to the buyers’ incomes will somehow miraculously be repaid some day.
I stand corrected. My post reflected the prevalent delusion that many of the home loans currently being made on unaffordable principle balances relative to the buyers’ incomes will somehow miraculously be repaid some day.
—————–
Now, that’s where the printing press comes in.
If, as I believe, the govt has spent the past couple of years refinancing everyone into govt-backed or govt-owned mortgages, much of this bad paper is now off the books of entities who don’t own a printing press (the private market), and guaranteed by the entity who owns the printing press (the Fed/Treasury/govt).
If they essentially fill all the holes created by defaults, then savers/prudent borrowers will be in bad shape. Yes, as you stated above, nominal prices will rise, while the dollar will fall through the floor.
They don’t necessarily need to raise wages, they just need to let people with stronger currencies come in to buy up all our assets. We’re one of the few countries that allows foreign ownership of our land (a foolish choice, IMHO).
That’s an even darker future: we can all have our savings devalued while working for peanuts for some foreign power that probably hates us. Perfect!
Worry about the printing press when that printed money starts ending up in consumers hands and they start spending it. That’s not happening right now, any inflation in one area will be offset by deflation in another until people earn more or borrow more.
What happened to it? This is not that complex.
It was loaned out for other projects, hoping they would return more than the loan payment is. If the other projects won’t, then there is no need to take the loan out in the first place is there?
Anyways, if those projects take the bank’s loans, but don’t have a proper return, then they close and liquidate and the assets are sold, and the bank attempts to repay you with money gained from those sales. The money is gone.
There is a risk that this would happen, that’s why the bank gives you a return in the first place. To compenstate you for your risk.
If money is owned but not paid, it is written off. There are timelimits as to how long money can be owed but not paid.
The goverment is somewhat different than you and I, because it has an unlimited (theoretically) life. It doesn’t have to worry about paying off it’s debts in a finite period of time. Thus it can float loans theoretically indefinitely, as long as it can manage the month to month payments.
I still get vibes from this message board that some posters here can’t understand that debt that is not paid back is money that has gone poof”
I was s’pling this very concept to my Wife yesterday , said I “homes will fall as well as the high standard of living Americans enjoy ” and some Americans who don’t under stand this may react to the new reality in unpredictable ways” ”
Gary Shilling is always a good read when I get “Inflation spooked “
You know, when people’s stock market portfolios were growing and their house prices (and the loans secured by those house prices) were going up, most people weren’t asking “where did this money come from?” It was “Who cares, we’ll all be rich!” Now that it’s vanishing like the mirage that it was, everybody want’s to know where it went. The HBB was one of the few places back in 2005 where we WERE asking “where did all this money come from?” And we didn’t like the answer.
China’s debt bomb: America’s No. 1 creditor holds the ultimate weapon
NY Post
February 8, 2010
ARTHUR HERMAN
‘He who pays the piper calls the tune”: That old saying captures perfectly America’s growing dependence on our No. 1 creditor in the world, Communist China.
By their carelessness Congress and the Obama administration are steadily handing over control of America’s economic and financial future to a handful of Chinese officials and generals in Beijing. Those who think the Chinese won’t use that control if they feel they have to are ignoring history — and the Chinese.
The ancient military strategist Sun Tzu said that the best strategy was to render an opponent’s army helpless even before the battle began. America may still have the biggest and best military in the world.
But many at the Pentagon are starting to realize that, thanks to our growing fiscal irresponsibility, we may be surrendering control of America’s destiny to a rival superpower — and all without a shot being fired.
…
The hundreds of billions of US dollars held by the Chinese are claims on American assets. The Chinese may soon give new meaning to the term “Buy American”.
Oh, and what happens to the hundreds of billions of US dollars invested in China by US corporations over the years if push comes to shove?
“… if push comes to shove?”
Pull comes to plug?
Easy Combo.
There is no private property in China. It all belongs to the state. All that money just went poof.
I think that the biggest con ever was US companies investing in a communist nation with no property or intellectual rights.
It WILL come back to bite them in the rear end. I would short any company that did that. It is just terrible long term business practice.
I will be sure to share your insight with my friend who occasionally takes trips over to Beijing to make real estate investments for his wealthy American clients.
Communism: All your poof is mine.
Suggested viewing: “The Last Station”
The setting is in the early 2000s, just before the Bolshevik revolution, and the plot suggests Tolstoy’s communitarian ideals may have helped ripen the Russian populace for a communist takeover.
Someday I need to read up on my Russian history to get this story straightened out in my mind…
PB…
You do mean the early 1900’s right?
Also check out the role of German intelligence supporting the bolchevicks in order to destabilize the tzar, and get them out of the war (it worked).
“You do mean the early 1900’s right?”
D’oh (need more caffeine…)
“I will be sure to share your insight with my friend who occasionally takes trips over to Beijing to make real estate investments for his wealthy American clients.”
Hopefully they can at least name whatever they purchase. That way, if they are lucky, their grandchildren may get to see the family name on a map as a souvenir of their lost inheritance. A large farm outside of Moscow still bears my family’s name despite the fact they were thrown off of it nearly a century ago.
I owrked for a company that had a Venezuela subsidiary. The sub got a contract with PDVSA, in the late ’90s.
In the early 2000’s after hundreds of thousands of investment dollars, and coutless man hours, the employees got to their offices in downtown Caracas to find soldiers guarding the places.
Hugo Chavez had declared them Persona Non Grata. To this day, the company has failed to recover one cent from their investments. In fact this was in a country that generally, by latam standards was pretty favourable for foreign investment.
After this nationalization, most US based companies lost their businesses over there (Exxon is in a multibillion dollar lawsuit with Venezuela), and untold amounts of money.
The chinese will follow that same path, when it is to their best interest. Right now it is in their best interest to make the west believe that they have a claim to the money and time invested. At the end of the day, the companies and individuals will have no claim, and no compensation.
What is this “long-term” of which you speak?
I would answer the long term question this way….
When is it better to buy a name brand vs a knockoff?
Will an original rolex tell the time better than a knockoff that costs 5%, and lasts 20%?
Once companies figure out that once they farm over their manufacturing to china, they will have to compete with “unofficial” products bearing their name, being manufactured in the same factory as “their” products, but being sold through 3rd parties that do not involve them, and through wich they see no profit, at lower prices than what they charge for them.
This is when the McKinsey alumni will go D’Oh!!!!
Once companies figure out
Oh, companies already know it. But it takes 5-10 years to blow up and by that time people will have stolen their pile and retired. And anyone who tries to think long-term is not making profit NOW, and is fired. There IS no long term.
The last person who actually prepared his finances for the “long-term” was probably Ramses II.
+1
“But many at the Pentagon are starting to realize that, thanks to our growing fiscal irresponsibility, we may be surrendering control of America’s destiny to a rival superpower — and all without a shot being fired.”
Isn’t that a far less expensive path to power than mutually assured destruction of developed nations’ capital stocks (as in WWI and WWII)?
If the Pentagon is so worried about the future, then why do they go along with an endless adventure to a wasteland? How is that recconcilable with maintaining military hegemony?
edge,
He who has Oil LAST.., WINS!
Not sure if this is true when nuclear armed nations face off.
What if…?
I hope my memory doesn’t fail me but I think is was packman that introduced this idea last week.
In a nutshell what would happen if the FED keeps on buying mortage backed paper no matter how low the quality? They own the printing press, so they will never run out of money. This in turn would create an infinite market for sub-prime mortgages an reinflate (or at minimum keep prices at current levels) the housing bubble. See, the FED is not really interested if this makes an economic sense; they are interested to keep banks solvent and bank’s colleteral (=housing) valued appropriately.
I would expect more tax credits to buyers, more sub-prime lending (like 3.5% down FHA loans, looks and smells like sub-prime) and more pumping up housing prices. The consequences? Consequences be damned as long as the banks get theirs. How would this end? Is there any valid exit strategy? How long can this go on before the day of reckoning?
The plug must be pulled on the Fed/Treasury unlimited printing/spending at all cost. The future of humanity depends on it. We need strong leadership in Washington soon or we are all dead.
“The plug must be pulled on the Fed/Treasury unlimited printing/spending at all cost. The future of humanity depends on it. We need strong leadership in Washington soon or we are all dead.”
The MSM is fully engaged in pacifying the masses and managing the public’s expectations about the economy. Listen to them and you are told time and again that “experts” are in charge and are doing all the best things for us, despite the challenges.
The reality is, of course, that our nation’s financial structure has been hijacked by the highest stage of criminal conspiracy yet to evolve on planet Earth - the Fed/Treasury monetary theft machine.
The result of all this grand larceny, graft, and corruption will be that 95% or more of the American public will soon be impoverished debt slaves dependant for their well-being upon a Central Government headed by a self-annointed braintrust of “leaders”.
Ignorant and passive Americans are easily swayed and herded by MSM propaganda and partisan politics.
Take a long, close, and detailed look at Zimbabwe to see exactly what’s coming. “All dead?” - probably not. “Mostly broke, hungry, diseased, and discouraged?” - more likely.
The end game of printing enough money to fill the hole created by the housing bubble is severe inflation or all out currency collapse. Currency collapse hurts everyone as business effectively stops. No one is willing to take cash for anything and few have goods to trade.
“…severe inflation or all out currency collapse.”
I am pretty certain that is not the plan, but also that it is a serious risk of the path we are on.
It ends when the FED has purchased enough of the MBS that letting them crash won’t bankrupt the banks, or when GS and JPM have unloaded all of their bad debt.
This scenario seems plausible: Who cares about myriad small bagholders, once Megabank, Inc is off the toxic mortgage ownersip hook?
Again I go back to Thomas Jeffersons quote about what happens if you give banks control of printing money. That’s what we have now. The banks are now unloading their bad debt and taking on cash. When they are flush is not the next move to pull out the price supports and let prices crash so that those with cash can buy up the pieces.
Or is it that politicians control the printing press and thus we will continue to print to stay in power.
I think the banks control most of the politicians.
I think our reps might get half a clue and grow a pair of nuts to realize how much power they have over these guys. To much fear and too little understanding.
A few changes to reserve rquirements. Re-fang the SEC. A couple grand jury adventures.
Some RICO act charges.
Yeah. We could have FIRE back to a reasonable size and less of a detriment to the country in no time.
I know the guys worry about media coverage but there is plenty of money from other sources along with free media (viva Ben Jones!)
It’s a fake Jefferson quote, but a good one nonetheless (check out on snopes dot com — don’t take my word for it…).
“In a nutshell what would happen if the FED keeps on buying mortage backed paper no matter how low the quality? ”
What if during such an event, you, I and others started actively (like with the tea parties) promoting underwater mortgage holders to walk away from their property? Shadow inventory would be unmasked rather quickly and TPTB would have to face the music. I’ve already convinced two parties to stop paying their mortgages and use the savings wisely while waiting for eviction. Three months and not a word from their banks.
I think this is about right.
The Housing Bubble will be propped up until some outside force results in a total collapse, after which affordable houses will the least of our worries. There will be much “unexpected” about this outcome, of course.
Recently, someone suggested that the bailouts are like a parachute, designed to stop the financial system from plunging to destruction. But I think I have a better analogy: bailouts are more like pulling a bandaid off a wound slowly, hair by excruciating. And this slow process allows more malinvestment, more moral hazard, more economic injustice, and more massive warping of the financial system by the US government.
Periodic recessions are supposed to wipe out malinvestment, like forest fires wiping out underbrush. Allow the underbrush to keep growing, and you get gargantuan fires that inevitably result.
Bogus prices for assets, shaky accounting, government encouraging more risky lending - all make for a slow painful process that will lead to more misery and economic stagnation in the long run. A quicker reckoning, removing moral hazard and the discouragement of malinvestment would get the economy back to sustainable growth more quickly. And with more economic justice (resulting in less dark amusement of those who follow what’s going on).
“…bailouts are more like pulling a bandaid off a wound slowly, hair by excruciating hair.”
Fun times with the Obamanomics Team’s financial rescue!
Comment by neuromance
2010-02-08 07:05:35
Recently, someone suggested that the bailouts are like a parachute, designed to stop the financial system from plunging to destruction. But I think I have a better analogy: bailouts are more like pulling a bandaid off a wound slowly, hair by excruciating. And this slow process allows more malinvestment, more moral hazard, more economic injustice, and more massive warping of the financial system by the US government.
Periodic recessions are supposed to wipe out malinvestment, like forest fires wiping out underbrush. Allow the underbrush to keep growing, and you get gargantuan fires that inevitably result.
————————-
Precisely!!!
This is why many of us have been saying that the **duration** of the downturn (not the depth) will cause the most damage.
Apparently, BB’s central bank independence issues could be worse.
The Wall Street Journal
* OPINION: THE AMERICAS
* FEBRUARY 8, 2010
Argentina Seizes the Central Bank
* By MARY ANASTASIA O’GRADY
After a month of wrangling, Argentine President Cristina Kirchner succeeded in sacking central bank President Martin Redrado last week. In his place she named Mercedes Marcó del Pont, a Yale-trained economist who has expressed the view that central bank autonomy ought to be limited.
The opposition howled at the news. Felipe Sola, former governor of Provincia de Buenos Aires, warned that the new bank president “is going to do what the executive decides and they are going to modify the bank charter to justify her doing what the executive tells her.”
Of course that would seem to be the point. Mr. Redrado was fired because he refused to turn over $6.6 billion in bank reserves to Mrs. Kirchner, who wants to pay foreign creditors but doesn’t want to use treasury revenues.Ms. Marcó del Pont, if she wants to keep her job, will follow the orders of the president.
Mrs. Kirchner is not the first politician to covet the wealth available from the monetary authority. Closer to home, there is Barack Obama, who didn’t back Ben Bernanke’s controversial second term as head of the Federal Reserve out of magnanimity. Mr. Bernanke kept his job because he has shown a willingness to finance Mr. Obama’s big-government agenda.
Yet Americans can still hold out hope that competing institutions will check the runaway power of a government that is being underwritten by the central bank. In Argentina, institutions are frail and it is far from certain that they can hold up under Mrs. Kirchner’s iron fist.
…
Is the assertion that the Argentina Bank won’t be independent tantamount to a tacit assertion that the Fed is independent?
Bloomberg
Argentina Bank Won’t Be Independent, Goldman Says (Update1)
February 04, 2010, 09:16 AM EST
More From Businessweek
By Eliana Raszewski and Drew Benson
Feb. 4 (Bloomberg) — The independence of Argentina’s central bank will be undermined following the nomination of Mercedes Marco del Pont to lead the institution, Goldman Sachs Group Inc. economist Alberto Ramos said.
President Cristina Fernandez de Kirchner yesterday named Marco del Pont, president of state-owned Banco de la Nacion Argentina, to replace ousted central bank chief Martin Redrado. The move came after a congressional committee backed Fernandez’s Jan. 7 decree dismissing Redrado for not supporting her plan to tap $6.6 billion of reserves to pay debt due this year.
“The new president is very closely aligned with the government and won’t have an independent voice,” Ramos said in an interview last night. “The government wants to continue spending at elevated rates to have short-term growth and the central bank won’t raise interest rates, it won’t have its own voice.”
…
Think were turning Argentine
Think were turning Argentine
I really think so
Don’t Cry For Me, America
http://2.bp.blogspot.com/_orkXxp0bhEA/SwgAXwEcpkI/AAAAAAAAX50/Wn1rIzPDBiE/s400/09112-arg-navy.jpg
In the early 20th century, Argentina was one of the richest countries in the world. While Great Britain ’s maritime power and its far-flung empire had propelled it to a dominant position among the world’s industrialized nations, only the United States challenged Argentina for the position of the world’s second-most powerful economy.
http://3.bp.blogspot.com/_orkXxp0bhEA/SwgAkT4PlHI/AAAAAAAAX58/OzcG6NY2rpw/s400/091120-arg-port.jpg
It was blessed with abundant agriculture, vast swaths of rich farmland laced with navigable rivers and an accessible port system. Its level of industrialization was higher than many European countries: railroads, automobiles and telephones were commonplace.
http://4.bp.blogspot.com/_orkXxp0bhEA/SwgBX5zyPyI/AAAAAAAAX6E/6NAiEMJ_vlc/s400/091120-arg-hip.jpg
In 1916, a new president was elected. Hipólito Irigoyen had formed a party called The Radicals under the banner of “fundamental change” with an appeal to the middle class.
http://3.bp.blogspot.com/_orkXxp0bhEA/SwgH1a-zioI/AAAAAAAAX6M/7xHd-4tT4h4/s400/091120-arg-pension.jpg
Among Irigoyen’s changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy. Put simply, the state assumed economic control of a vast swath of the country’s operations and began assessing new payroll taxes to fund its efforts.
http://2.bp.blogspot.com/_orkXxp0bhEA/SwgI1cnOf9I/AAAAAAAAX6c/J_YfG6Io_1w/s400/091120-arg-church.jpg
With an increasing flow of funds into these entitlement programs, the government’s payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers’ contributions. Put simply, it quickly became under-funded, much like the United States ’ Social Security and Medicare programs.
http://1.bp.blogspot.com/_orkXxp0bhEA/SwgIWfipXII/AAAAAAAAX6U/srXX52-AwUo/s400/091120-arg-perons.jpg
The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife aimed their populist rhetoric at the nation’s rich.
http://2.bp.blogspot.com/_orkXxp0bhEA/SwgJHeV2E3I/AAAAAAAAX6k/C7OoiYTzncc/s400/091120-arg-peron-speech.jpg
This targeted group “swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated.”
http://4.bp.blogspot.com/_orkXxp0bhEA/SwgJdUhYNfI/AAAAAAAAX6s/XPpkgwyf8HY/s400/091120-arg-perons-train.jpg
Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions.
http://1.bp.blogspot.com/_orkXxp0bhEA/SwgJy1zbwWI/AAAAAAAAX60/7bnr9AjbfVk/s400/091120-arg-desk.jpg
High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. But his populist rhetoric and “contempt for economic realities” lived on. Argentina ’s federal government continued to spend far beyond its means.
http://1.bp.blogspot.com/_orkXxp0bhEA/SwgKV4MXCMI/AAAAAAAAX7E/pw0Bz9fDZAc/s400/091120-arg-food-riot.jpg
Hyperinflation exploded in 1989, the final stage of a process characterized by “industrial protectionism, redistribution of income based on increased wages, and growing state intervention in the economy…”
http://2.bp.blogspot.com/_orkXxp0bhEA/SwgLFVzykjI/AAAAAAAAX7M/h1HyhmyrhFA/s400/091120-arg-food-riot2.jpg
The Argentinian government’s practice of printing money to pay off its public debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar Republic . Food riots were rampant; stores were looted; the country descended into chaos.
http://2.bp.blogspot.com/_orkXxp0bhEA/SwgLX298DlI/AAAAAAAAX7U/yziI0o2EOXY/s400/091120-arg-pension2.jpg
And by 1994, Argentina ’s public pensions — the equivalent of Social Security — had imploded. The payroll tax had increased from 5% to 26%, but it wasn’t enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth, and additional revenues based upon the sale of public enterprises. These crushed the private sector, further damaging the economy.
http://2.bp.blogspot.com/_orkXxp0bhEA/SwgMXR-yE7I/AAAAAAAAX7c/Ssd0PQUXsY8/s400/091120-arg-pension3.jpg
A government-controlled “privatization” effort to rescue seniors’ pensions was attempted. But, by 2001, those funds had also been raided by the government, the monies replaced by Argentina ’s defaulted government bonds
http://1.bp.blogspot.com/_orkXxp0bhEA/SwgMov9M8GI/AAAAAAAAX7k/BPZuo2QYRqQ/s400/091120-arg-crisis.jpg
By 2002, “…government fiscal irresponsibility… induced a national economic crisis as severe as America ’s Great Depression.”
* * *
In 1902 Argentina was one of the world’s richest countries. Little more than a hundred years later, it is poverty-stricken, struggling to meet its debt obligations amidst a drought.
http://4.bp.blogspot.com/_orkXxp0bhEA/SwgKFcAw_EI/AAAAAAAAX68/KLS5-sgArr8/s400/091120-arg-now.jpg
We’ve seen this movie before. The Democrats’ populist plans can’t possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter, complete disasters.
Today’s Democrats are guilty of more than stupidity; they are enslaving future generations to poverty and misery. And they will be long gone when it all implodes. They will be as cold and dead as Juan Perón when the piper must ultimately be paid.
References: A tear for Argentina’s pension funds; Inflation in Argentina; The United States of Argentina. Cross-posted at: Doug Ross @ Journal.
‘The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife aimed their populist rhetoric at the nation’s rich.
This targeted group “swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated.”’
Don’t cry for me Americanos
The truth is I never left you
All through my wild days
My mad existence
I kept my promise
Don’t keep your distance
And as for fortune, and as for fame
I never invited them in
Though it seemed to the world they were all I desired
They are illusions
They are not the solutions they promised to be
The answer was here all the time
I love you and hope you love me
I heard someone suggest that the simmering discontent that put a Republican in Ted Kennedy’s seat was simply a result of a dropping standard of living. It rang true.
And it seems to me that a significant component of lowered standard of living (in addition to skyrocketing housing, medical, energy, food, education costs, few or none of which are tracked in any index such as inflation), is increasing debt.
The more money that goes to servicing the debt means less money for a savings cushion and less money for other discretionary spending - ranging from a roof on the house, to an AA degree to a new car. Also, I wonder if more debt is a de facto decrease in leisure time for the individual as a result of being forced to take on more work hours in order.
Perhaps with a sufficient flow of newcomers from outside the beltway, the Washington establishment can get tipped away from the interests of Wall Street and refocused on the interests of Main Street.
The Wall Street Journal
* FEBRUARY 6, 2010
For GOP, No Experience Is No Problem
Party Drafts Political Newcomers as Candidates in a Bid to Capitalize on Voters’ Anti-Incumbent, Anti-Washington Mood
By SUSAN DAVIS
Scott Rigell is best known around Virginia Beach as a car dealer. Come January, he is hoping to be known by another title: congressman.
Seeking to tap into growing anti-establishment discord among voters, the Republican Party is actively seeking candidates who have never before held elected office.
Bruce O’Donoghue owns a company that makes traffic-light systems; he is challenging Florida Democratic Rep. Alan Grayson. Jon Runyan, a former player for the Philadelphia Eagles and San Diego Chargers, is running in southern New Jersey.
“My roots run deep in Tennessee, not politics,” reads the banner across the campaign Web site of Stephen Fincher, a Tennessee farmer and gospel singer heavily wooed by Washington Republicans to run this year.
Such Republicans are contesting six of the 20 most competitive House seats currently held by Democrats. At least as many are found in districts that could become more competitive as election season heats up. Filing deadlines to run for Congress are still months away in most states, so it is possible more newcomers could join the fold.
Running political newcomers is a proven strategy when the political tide swings drastically toward one side, and at times when voters have soured on Washington in general. In 1994, when Republicans won a majority of House seats after four decades in the minority, 55% of the party’s 73 freshmen lawmakers had never held political office. Similarly in 2006, when Democrats took control, 45% of their new lawmakers had never held office before.
Chris Russell, campaign consultant for Mr. Runyan, called 2010 a good year to be running as an outsider. “I don’t want to overstate it, but people hate politicians,” he said.
The strategy could help Republicans tap into enthusiasm generated among Tea Party groups and other conservatives. Though these activists have sprung from the right, they remain antagonistic toward the GOP establishment. The movement arose in part as a backlash against the government’s intervention in Wall Street and the auto industry, as well as opposition to Democratic initiatives, including a health-care overhaul.
…
I say B.S. Most Congresscritters used to do some kind of business before they ran for office. And now the only ones who can afford to run for congress are former businessmen/women. The two top Repubs running for guv in CA are Meg Whitman (EBay) and Steve Poizner (sold two high tech startups.) For senate the candidates are Carly Fiorina (HP) and Tom Campbell, former law professor at Stanford who has been a politician for more than 20 years.
And if Teaparty-ers are really that antagonistic to career politicians in the establishment, how is it that their biggest star is Sarah Palin, a career politician who specialized in securing pork for her socialized state of Alaska and served as the VP candidate for career politician McCain?
The Tea Partiers have no stars. Her supposed affiliation with them is new, and only because she appeared at their convention. Others were invited too, not all accepted.
Her affiliation may be new, but she is clearly their star. They loved her.
Suppose a whole slew of developed countries created debts they were unable to repay? What then?
Bloomberg
Russian Central Bank Says Credit Risks, Bubbles Are Main Threat
February 08, 2010, 07:24 AM EST
More From Businessweek
By Paul Abelsky and Maria Levitov
Feb. 8 (Bloomberg) — Russia’s central bank views credit risks and the possibility of an equity market bubble as the main threats to the economy, the central bank’s head of bank regulation and supervision said.
Delinquent loans at the country’s lenders, not including Russia’s biggest bank OAO Sberbank, stood at 5.4 percent of the total as of Jan. 1, Alexei Simanovsky, who heads Bank Rossii’s financial regulation division, told reporters in Moscow today. Bad debt probably won’t rise by the end of June, he said.
Non-performing loans in the world’s biggest energy exporter may climb to 20 percent of total lending this year, based on international definitions, Deutsche Bank AG analyst Bob Kommers said on Jan. 28. Investors are “underestimating” the risks and may expect too strong a recovery, he said. Banks have held back on lending, even after 10 central bank rate cuts, on concern borrowers may be unable to service their debt.
“The overall trend is toward a decline in bad loans,” Simanovsky said.
…
“”The overall trend is toward a decline in bad loans,’ Simanovsky said.”
I interpret this to mean there is a trend to ISSUING bad loans, not as a decline in already issued loans going bad.
The whole US economic policy IS based on MORE bad loans as fast as the Gov-backed agencies can write them.
pressboadbox,
Correct, then we just write Credit Default Swaps against the Credit Default Swaps.
Fixed!
It’s turtles all the way down.
The pieces of the former Soviet Union don’t appear to be running out of bad loans for the moment.
Which makes me wonder:
- Is it all contained?
- Has the global credit system fully decoupled by now?
* The Wall Street Journal
* FEBRUARY 8, 2010, 6:18 A.M. ET
Kazakh Central Bank Warns of Bad Loans
By KADYR TOKTOGULOV
ALMATY, Kazakhstan—Bad loans remain the main systemic risk for Kazakh banks as liquidity and currency risks gradually decline, Kazakhstan’s central bank said Monday, citing its survey of the country’s commercial banks.
“A big share of bad loans remains the main systemic risk of banks, though their (bad loans) quantity has stabilized, according to banks’ estimates,” the central bank said in a summary of its survey.
Liquidity and currency risks for banks are gradually declining, the central bank said its survey showed. Of the survey’s participants, 17% said liquidity risk was rising, down from 20% in the third quarter last year, while “only 8%” said currency risk was increasing, down from 17%, the bank said.
Banks say a pickup in lending will depend on Kazakhstan’s macroeconomic situation, loan portfolio quality and action by financial regulators.
“The toughening of regulatory norms may contribute to the containment of credits to the economy,” the central bank said.
…
“Bubbles Are Main Threat”
Major paradigm shift noted:
2005 — only tinfoil-hat wearing bloggers warn of impending bubble collapse, while central bankers enjoy living in collective bubble denial
2010 — central bankers and politicians use their global MSM bully pulpit to warn the world of the dangers of bubbles
Barn door left open
All of the horses have fled
Hurry, shut the door!
In a tight money environment, the central banker is king.
European Central Bank in a Squeeze
By JACK EWING
Published: February 7, 2010
FRANKFURT — Whether he likes it or not, Jean-Claude Trichet is not just the president of the European Central Bank. Mr. Trichet, 67, is also the de facto president of Europe, at least for the 16 nations that rely on the euro as their common currency.
Shoppers browsing second-hand goods in Athens. Greece’s high levels of debt are raising concerns in the euro zone and beyond that it might require a bailout.
On paper, the European Union has just established a new president in Brussels, and the central bank’s sole responsibility is to keep inflation in check. Moreover, the bank, based here, has almost no formal policy tools to help an ailing member country like Greece.
But as investor alarm about Greek, Spanish and Portuguese indebtedness increases, the crisis has highlighted the fundamental weakness of the European monetary union. With no strong political arm to ensure that members observe debt limits set by treaty, the responsibility falls to Mr. Trichet to try to resolve the crisis.
In the current situation, said Jörg Krämer, chief economist at Commerzbank in Frankfurt, only the bank’s president “has the authority and the expertise” to manage the situation.
On Saturday, Mr. Trichet told reporters at a meeting in Canada of the Group of 7 finance ministers and central bank presidents that he was confident that Greece would meet tough new belt-tightening goals.
“We expect and we are confident that the Greek government will take all the decisions that will permit it to reach that goal,” Mr. Trichet said, according to Reuters.
…
Related
Is Greece’s Debt Trashing the Euro? (February 7, 2010)
Asia Sails Smoothly Through Debt Waters (February 8, 2010)
Public-Sector Unions Bleed Taxpayers
One-third of last year’s $787 billion stimulus package was aid to state and local governments–an obvious attempt to bolster public-sector unions. And a successful one: While the private sector has lost 7 million jobs, the number of public-sector jobs has risen. The number of federal government jobs has been increasing by 10,000 a month, and the percentage of federal employees earning over $100,000 has jumped to 19 percent during the recession.
Obama and his party are acting in collusion with unions that contributed something like $400,000,000 to Democrats in the 2008 campaign cycle. Public-sector unionism tends to be a self-perpetuating machine that extracts money from taxpayers and then puts it on a conveyor belt to the Democratic party.
Sickening.
Or, one could say that one-third of the $787 billion was used to defer the collapse of public education by two years. Except in states that spent it all up front, which now face collapse after one year.
Worried about spending? Cut Medicare and Medicaid for today’s seniors (not tomorrows) to the amout that can be funded by the existing payroll tax and their own contributions, and the problem is solved.
I don’t expect that to be proposed, however. No, younger generations get lower benefits and higher taxes in every recession. Older generations get more benefits and lower taxes in every expansion.
Personally, I’ve never cared for the guy.., but Newt had it right when he said the first bailout was actually a ‘politicians’ bailout.
And it ‘is’ “self-perpetuating”.
“No, younger generations get lower benefits and higher taxes in every recession. Older generations get more benefits and lower taxes in every expansion.”
Older generations get continued support at the level they expected; younger generations get train wreck of a collapsed entitlement program.
Train wreck? Did I hear my name? Yes, welcome to the glitterful world of unfunded libilities.
But look on the bright side! Obama’s created lots of high paying unsustainable jobs!
Older generations will get what they promised themselves, but were unwilling to pay for in taxes. They were willing to believe in whoever promised something for nothing for 30 years, and ignored 30 years of fiscal warnings.
Younger generations will get the taxes, and face old age in poverty and ill health — if at all.
In twenty years when those currently young folks are in power I predict that they will pull the plug on SS and Medicare and re-establish the old folks poorhouse. And our generation will reap what we sowed. Only those with money will enjoy old age. The rest had better be nice to their kids!
“The rest had better be nice to their kids!”
I tutor mine every day in the hope that at least one of them will someday land a high paying job which might provide for some trickle down benefits to aging family members.
Smart dad.
How did we get to the point where 1 out 5 federal employees makes over 100k?
That’s beyond ridiculous!! That would never fly in the private sector… companies would simply go bankrupt!
Retirement at 50 years old? That sounds like heaven to me… I have to put money in my 401k hoping I will have enough money when I turn 70.
Brett,
After years of raising two daughters and spending approx. 20,000 hours stuck in traffic/commuting, I finally have the time to finish my reserve/military obligation.
When I got out back in the mid-90’s, the avg. FT technician was… making about $15 an hour. More thypically that would describe a shop supervisor’s hourly wage. NOW!? These guys are knocking down 60-75k as rank & file tech’s and there’s plenty of 100k+ openings!
‘My’ problem arises in that, given many of these guys had degrees and ‘easily’ a decade plus of hands on experience, they were, WERE grossly under-paid. Well, not any more!
I think that number is cooked, 1 out of 5 is bogus. If you really want to get the real number would you include the armed forces? What about the quasi government agencies that depend 100% on gov. funding. (Defense,Medical Research). I would bet the number is closer to 1 out of 8 make $100k+, still more than the average Joe 6pk and that is the root of the problem. The average Fed. employee pay should be slightly less than the same private sector job all things being equal.
Don’t forget all the work that has been outsourced. I imagine there are many that make much less.
Unions play off other unions for wage increases. IMO, and I have some experience in this area, the federal gov’t is going to have to get tough with the federal employees. Zero cost of living increases will set the example and trickle down to the state and local levels.
I wonder how much all those “private contractors” make. Perhaps more than $100K?
“the percentage of federal employees earning over $100,000 has jumped to 19 percent during the recession.”
PSST….
…there are several individuals on this very board that fall into this category. Federal employees and contract employees alike. In many cases, the tell-tale signs are those who hate big money corporate types, and those who think they know best how others should spend their money.
The developed world is always a step or two ahead of the developing world.
True in colonial times, true today. In colonial times, the developing world was fleeced through mercantilist policies. Today, they may have been fleeced through elaborate financial tricks.
China may - may - be an exception, as they are personally engaged in mercantilist policies. But it remains to be seen if they were too clever by half, by buying up so much US debt for their currency manipulations, while there is a good chance of the debt being inflated away.
China is today the industrial powerhouse that the US was yesterday. But the crap they make sucks! Were US products this lousy back when we were the World’s largest producer of stuff? We are in the chrome-plated-plastic twilight zone.
“But the crap they make sucks!”
We said the same thing about Japanese products in the 1960s.
Next up: Chinese manufacturers discover Deming’s statistical process control methods.
“Next up: Deming”
May already be the case. An acquaintance just returned from a 10-day trip to visit prospective suppliers in China & Taiwan. His last trip was 3 years back.
His report: three years ago, factories in high-end hardware space (IT backbone) struggled to compete on quality, but were low-cost option. This trip — across the board — factories were at or better than US/EU competitors on both quality & price. “Scary good” was the quote.
Well, their tools are still complete sh!t. Ever used a Harbor Freight tool from hell?
“…Next up: Chinese manufacturers discover Deming’s statistical process control methods.”
But they’ll use more …emphasis:
x1 defect in a million?…bring in the owner & line manager…(they disappear behind a door) …(field promotions) you & you …make sure you do better than the last two.
I am going to go out on a limb here to suggest that it was different here, as American ingenuity was and remains a key driver of our national economic prowess. I take the impression that the Chinese (and the Japanese, for that matter) are quite capable of taking ideas from other places and profitably operationalizing them, but not nearly so good at original thinking as Americans have been over the last two centuries.
This suggests a path forward for any of our leaders who can pull their heads out of the sand for a brief moment to contemplate it:
Why not pour America’s collective wealth and energy into lowering barriers to innovation of new technologies that might lead us out of the economic doldrums? This is what we have traditionally done best, where our comparative advantage lies, and where we can continue to remain a dominant force in the global economy for years to come, provided our leaders don’t succeed with their misguided efforts to kill the goose which lays golden eggs by focusing too much energy on ever more lopsided attempts to reflate a collapsed housing bubble.
Professor Bear,
And that’s what makes the whole thing so damned frustrating! We -have- the potential, it’s just that we’d prefer to hype/fluff/extend & pretend and go begging for subsidies than roll up our sleeves.
I think *oxide made a beautiful point that where NAR/REIC is concerned, they visualize a McMansion in ‘every’ strawberry picker’s future ( even if it means the Chinese ultimately own it? )
Perhaps this is entirely too obvious to point out, but CONvincing middle America that they are going to be bled from above by Megabank, Inc and from below by entitlement programs to help unqualified buyers purchase homes they cannot afford obliterates the incentives for unlocking our collective potential.
“Perhaps this is entirely too obvious to point out…”
P.Bear, all middle-america cares about is how big a flatscreen/suv/house they can get their hands on however fleeting that period of posession may be. Trying to convince them anything else, matters (or even exists) is the definition of impossible. We have to write them off and start our own union. HBB Nation Unite!!!
“obliterates the incentives for unlocking our collective potential”
Sadly.., Amen. What better way to describe the sense of complete and utter despondence then when the Mortgage “Banker’s” Association and NAR were being “consulted” as to solutions for our now REIC-based economy?
This was snake oil salesmanship at it’s finest! I really couldn’t care less some schmuck got $8k for being your local NAR-tel office’s “Knifecatcher of the Week” but applying more leaches is the -last- thing we needed.
Yes, certainly US produced goods stank. You must be too young to remember the cr*p that used to come out of Detroit. So bad that American cars have never overcome the stigma, and it’s been 30 years now since the Japanese decisively whupped our a*ses in every quality measure. You must not remember the fact that the ‘planned obsolescence’ mantra was Made in USA.
Time is the last frontier. It cannot be replaced, bought or traded. Bad quality is a nuisance factor that robs the common man of his time, and ergo his life.
As long as we have entitlement factions in any area of our economy, whoever buys the cr*p they design and make will wind up paying for it with the ONE asset of which everybody has an equal amount - time. Until designing and ‘building it to last’ comes back into fashion, the only way to avoid having your life hijacked by caretaking your shoddy cr*p, is to opt out of acquiring it in the first place.
Simplifying your life gets it back for you, IMHO. The mainstream media and corporacrats, of course, hope that we are too dumb to understand this. Over the past twenty years, they have been proven right.
Nice post. I can vouch that I personally have spent far less time (and money) at the automotive repair shop since I started faithfully driving Toyotas and Hondas over the past twenty years.
So right you are!
Is anyone else getting the ‘Old Spice’ add? Has Google officially determined that I am now old?
No, there is a little dancing “lower-my-mortgage” guy on mine. I can get a $650k loan for $899/mo.
Go for it!
I have found ixquick to be a great search engine, that doesn’t retain your searches.
Firefox + AdBlock = ad free surfing
Last publicly accepted bastion of sexist male hegemony: The Sports Illustrated swimsuit issue
Jon Friedman’s Media Web
Jon Friedman
Feb. 8, 2010, 12:01 a.m. EST
Tiny bikinis, big money: SI’s swimsuit issue
Commentary: Sports Illustrated’s marketing bonanza
By Jon Friedman, MarketWatch
NEW YORK (MarketWatch) — Tiny bikinis equal big money at Sports Illustrated, which is publishing its annual swimsuit issue this week.
…
Thanks! I will keep my eyes open for the string bikini issue!
Reuters - Greece
Finance Minister George Papaconstantinou, said that as a result of the tax changes, the biggest burden would be felt by a small percentage of tax payers as 95 percent of earners report incomes below 30,000 euros a year.
Hmmm? Where have I heard that tune before? The one where 5% of the population carries the other 95% out of “redepression”? And, what part of that mystical 5%’s population is made up of unicorns, elves, and fairies?
How can politicians think that we will continue to believe that the 5% will just sit there and play nice and pay those higher taxes? Be realistic people, the working man always picks up the tab -enough with the populist fairy tales.
From “Little Pink Houses”:
“‘Cause the simple man baby pays for the thrills, the bills, the pills that kill”
Where have I heard that tune before?
AMT - Started out as a tax on top earners but now punishes those in the middle as it was not indexed for inflation. Expect to see that work here. If salaries can be pumped up, people will move into higher tax brakets and more will get hit by AMT. They will have lower purchasing power, and the gov will take a higher percentage of it. The elite don’t have to worry about this. The target is the ever shrinking middle and upper middle class.
measton,
I think congress has seen the error of their ways and tries every year to address the unintended consequences with a “patch”. ( Which is another word for “band-aid” )
Those of us in accounting/fin./estate planning etc. were hopeful it would be rectified once & for all, but then the darndest thing happened..?
I think congress has seen the error of their ways and tries every year to address the unintended consequences with a “patch”.
Yes, this is pretty much the story behind every one of the 200,000+ pages of Federal laws and regulations that we have on the books today. It’s always some bureaucrat thinking they’re smarter than the free market, and just one more little tweak will make everything A-OK.
DinOr
My wife said that a friend told her that by making over 600k a year you are not affected by AMT. I’ve seen graphs suggesting that the difference AMT makes does seem to deminish, but none of them go up above 500k/year. Regardless it appears that AMT has become a tax on the middle class and upper middle class and spared the elite.
If congress really saw the error they would make a permanent adjustment to AMT.
measton,
( Oh and duly noted LeghighValleyGuy! ) yes, the more complicated the better!
Personally, I’ve never seen anything to that effect within the internal rev. code. If you have charts or ref’s, I would be very open to seeing them.
My guess is that if you’re making over $500k a year ( likely you are -not- preparing your ‘own’ returns anyway ) so how essential is it for the IRS to make sure those endless tables and charts are on each and every 1040 long form? Shockingly, the Oregon Tax Table stops at $50k! ( Then they move you to a formula ) Sheesh.
This is from Wikipedia
Tentative Minimum Tax (TMT)
Applying a 26/28% rate schedule to the AMTI gives the “Tentative Minimum Tax” (TMT). TMT is 26% of AMTI up to $175,000, plus 28% of the rest of the AMTI, if any. The TMT is compared to the income-tax amount calculated for the taxpayer. If the regular income-tax amount is greater than the TMT, no special action is required. If the TMT is greater than the tax calculated using the regular rules, the difference between the TMT and the regular tax is added to the regular tax amount, so the taxpayer pays the full amount of the TMT. In effect, the tax liability (before application of credits) is the greater of the regular income tax amount and the TMT.
AMT Exemption Phaseout and Effective Marginal Rates
For 2007, the AMT Exemption is not fully phased out until AMTI surpasses $415,000 for joint returns. Like any deduction that phases out with income, the AMT Exception increases the effective marginal tax rate within the phase out range. Within the $150,000 to $415,000 range, the TMT rates of 26% and 28% are effectively multiplied by 1.25, becoming 32.5% and 35% (See note below). The TMT rate for capital gains becomes 21.5% to 22% rather than 15%, because each dollar of capital gain causes 25 cents more of ordinary income to be taxed at 26% or 28%. These are the true marginal federal tax rates for most taxpayers owing AMT. These marginal rates for TMT exceed regular tax rates at the lower end of this income range. Therefore AMT liability (the excess of TMT over regular tax) typically increases as income increases above $150,000. Non-deductibility of state income tax under the TMT exacerbates this problem. Advice to accelerate income when you will be liable for AMT is therefore exactly backwards for most taxpayers.
AMT Credit
A portion of the tax that is considered AMT may be available in later years as a “Minimum Tax Credit”, reducing the tax due in later years, but usually not below the taxpayer’s TMT level in those later years. A full description of the AMT Credit is beyond the scope of this article. The Fairmark web site has a guide to AMT Credit
The Grecian unicorns would only be acceptable if they’re of the gold-crapping varitety.
0bama says “hell yeah!”
Larry Kudlow is “the voice of the PPT”. -if you ever wondered what they sound like. The look is more of a mystery. I am picturing a row of Goldman nerds with like ten plastic credential-cards around their necks for clearance to the secret “bat-cave” where they sit hunched over their keyboards furiously buying securities whenever the “red-phone” rings.
Coming soon to an economy near you:
Washington - The Consumer Council of Zimbabwe said Friday that the cost of essential food items needed by low-income families rose more than 7 percent in January. CCZ Executive Director Rosemary Siyachitema told VOA that retailers have boosted prices in expectation of higher pay for state employees. Siyachitema said the cost of the basket of essential food items which it tracks was estimated to have risen from US$136 in December to US$146 in January for a 7.3 percent increase in basic living costs. Siyachitema noted “this expectation that at the beginning of the year civil servants will get their salary increases.” Unions representing state workers are in negotiations with the government seeking higher salaries, and have threatened to strike if their demands are not met. The Zimbabwe Congress of Trade Unions says a household of five needs an income of at least US$470 a month to make ends meet.
Sounds like their government is getting too big and has the people by the b@lls. Good thing the Obama administration is not doing anything that could result in anthing comparable in this country.
“Sounds like their government is getting too big and has the people by the b@lls. Good thing the Obama administration is not doing anything that could result in anthing comparable in this country.”
Do some reading about what Mugabe has done to that country. What is happening under the Obama administration is not remotely close to what has happened to Zimbabwe under Mugabe.
Hey does anyone know what the price of housing is doing in Zimbabwe? My guess is you can get a house for a loaf of bread, ie about a million dollars.
I unerstand a loaf of bread is about $10 billion -at least as of a couple months ago. Probably double that now. I am serious.
I stand corrected. Loaf of bread is $300 billion dollars in Zimbabwe:
http://www.cnn.com/2009/WORLD/africa/01/16/zimbawe.currency/index.html
Zimbabwe way back in 2002 gee what went wrong ?
Angola and Mozambique are encouraging white farmers from Zimbabwe to emigrate and settle in an attempt to revive their shattered agricultural sectors.
President Mugabe is adamant the farmers must go
Hundreds of white Zimbabweans have left for greener pastures in neighbouring countries such as South Africa and Botswana.
Others are heading for Britain, the United States of America, Canada and Australia.
But Angola and Mozambique, both of which have massive agricultural potential, are keen to welcome new arrivals.
About 95% of white-owned land in Zimbabwe has been earmarked by President Robert Mugabe for seizure and redistribution to black people.
Trend setters:
-Cholera Epidemic Was a Blessing in Disguise-
Naume Muza Karoi, February 07, 2010 - Zimbabwe’s cholera outbreak which killed over 4 000 people last year, have come as a blessing in disguise for women here as men take up the challenge of fetching water for their families
and ensure a constant supply of clean water to avoid another disaster.
Thirty-five year old Amos Maparamhaka starts his day each morning by fetching water for his family, a role traditionally reserved for women. He and other men and boys in his community in the small farming town of Karoi situated about 204 kilometers north-west of Harare, say they were forced to take up this role as a way of assisting the women in the community and also
to prevent another cholera outbreak in their area again.
”I wake up as early as five in the morning to fetch water and at times the search can last for 4 hours around town without success as not all houses
have water everyday in the same area,” he says, pushing a wheel-barrow with buckets full of water.
Maparamhaka, a married man with two daughters aged 12 and 8 years, does this in addition to his work as a vendor at a local flea market. “I could not leave this arduous task to my pregnant wife,” he says.
Shorai, her wife, is proud of her husband whom she says has become a “role model” for some men in the town. ”What he has been doing is now normal for the majority of men as water challenges we are facing here needs men who
understand that we need to complement each other.”
America’s Drunkest Cities.
1.) Fresno, CA F
2.) Reno, NV F
3.) Billings, MT F
4.) Riverside, CA F
5.) Austin, TX F
6.) St. Louis, MO F
7.) San Antonio, TX F
8.) Lubbock, TX F
9.) Tucson, AZ F
10.) Bakersfield, CA F
11.) Las Vegas, NV F
12.) Modesto, CA F
13.) Columbia, SC F
14.) Nashville, TN D-
15.) Madison, WI D-
16.) Colorado Springs, CO D-
17.) Denver, CO D-
18.) Phoenix, AZ D-
19.) Cheyenne, WY D-
20.) Sacramento, CA D-
My town, Columbia, SC, distinguishes itself again!
~ This time we show up on Health Magazine’s “Top 100 Drunkest Cities” list. There we are…#13!
The editors drew upon such data as death rates from alcoholic liver disease, booze-fueled car crashes, frequency of binge-drinking in the past month, number of DUI arrests, and severity of DUI penalties.
I’m surprised to see that Tucson is only #9 on this list. This is one of the drinkingest towns I’ve ever been in.
And this observation is coming from someone who was college educated at a Big 10 school which was/is known for its prowess in consuming alcohol and other mind altering substances. I also was born and raised in the great state of Pennsylvania, which, despite its weird liquor laws, can really chug-a-lug.
Oh please, Slim. You’re a Wolverine, yes? Ann Arbor has nothing on Bloomington, Madison or Columbus when it comes to excessive intake of ETOH.
In Bloomington ca. 1991, one had a choice of establishments that served penny beer and dime jello shots, on a school night.
I still wonder how I ever made it out of there with my liver intact.
Yup, I’m a Wolverine. A second generation Wolverine, in fact.
Speaking of which, here’s some Ann Arbor news with a Slim family angle:
Ann Arbor Borders headquarters faces uncertain future
My $.02 worth: During the last two Michigan Homecoming Weekends, Slim-Dad and I have gone to the Borders flagship store for a look-see.
The Slim family consensus is that this store is a real let-down. Fluff abounds, and you really have to hunt for the serious reading. After a lengthy search, we were able to find the scientific and technical books tucked away in a second floor hideaway.
There are better bookstores.
AA’s economy has taken a couple of hits lately. The Upjohn/Pfizer plant closed a while ago and now Borders seems to be on the ropes.
Ann Arbor residents certainly have the “It’s different here” speech well rehearsed. All those well heeled and free spending suburban Detroit and out of state kids seem to generate a sense of complacency among the locals and perhaps they’re right. It’s not as though U-M is going anywhere or shrinking.
As college towns go, I think it’s decent but rather expensive, much more so than other Big 10/11 towns. With so many east coasters there, the local merchants probably feel that they can get away with charging more than would appear justified for the midwest.
As college towns go, I think it’s decent but rather expensive, much more so than other Big 10/11 towns. With so many east coasters there, the local merchants probably feel that they can get away with charging more than would appear justified for the midwest.
Ya gotta point there.
Years ago, before I went off to Ann Arbor for the first time, Mom took me shopping for school supplies. We went to good ole West Chester, Pennsylvania, which certainly didn’t have stuff that said “Michigan Wolverines” on it. But Frugal Mom’s point was that West Chester-bought school supplies were cheaper than Ann Arbor’s.
Boy, was she right on that one. Ann Arbor’s prices were truly eye-popping. Talk about “It’s Different Here.” And this was in the fall of 1975.
We used to go to the original Border’s on Friday nights for a cheap date. They let us bring our own drinks and we could sit and read without buying. Good memories,along with Lamplighter Pizza and Drake’s sandwich shop.
…we could sit and read without buying.
And to think I thought I was the only one who did this. No wonder Borders is in trouble — it’s our fault!
Some are on there because they’re good places to party and some of the others because they’re bad places to live.
The funny thing about Lubbock is it’s in a “dry” county or was at least as of the late 1980’s as far as package beer and liquor sales. Conveniently, sort of, was that Lubbock was on the south edge of the county it was in and the next county south was “wet”. I guess the Baptists in that county were willing to look past the evils of drinking in return for the tax revenues from the liquor sales. Crossing the county line was sort of like entering Vegas except it was liquor stores rather than casinos lining the highway.
Did anyone besides me appreciate the dark view of the very near future envisioned by Audi’s Super Bowl ad? The “green police” were everywhere, checking garbage for recyclables and arresting violators, peering into kitchens to make sure you were going to compost that banana peel and not toss it in the garbage. A “green cop” even told a “regular” cop to put his foam coffee cup on the hood of his cop car as a prelude to being cuffed and stuffed. A traffic stop, like they do to catch DUI offenders today, had green cops checking every car and then letting the Audi diesel go on through.
That one kind of freaked out DH a little. I was wondering what Audi was thinking. The commercial didn’t exactly make us want to run out and buy an Audi and it didn’t seem to help the green cause either.
I must have a sick sense of humor because I thought it was very funny.
I thought it was well done, there are plenty of people that would love to see ‘it’ happen. I know a few.
http://www.youtube.com/watch?v=Ml54UuAoLSo
Bill - if you want a dark view of the future, see Denzel and “The Book of Eli.” The 2010 version of Mad Max. Says Denzel’s character Eli, “People used to throw away things you kill for today.” Hopefully, fictional, however the commercial and the movie do bring “sustainability” to our consciousness. Like anything, you can go to extremes. However, whether or not you believe Al Gore et al, it doesn’t make much ecologic for single drivers to roam around cities in Hummers (it also doesn’t make ecologic sense for Hollywood actors to drive their Priuses to their Gulfstream Vs either). I just think the green movement is just a healthy reaction to our recognition that resources are limited and the earth has limits to how many people it can sustain.
NYT
Flush with cash despite the global economic downturn, China’s sovereign wealth fund quietly snapped up more than $9 billion worth of shares last year in some of the biggest American corporations, including Morgan Stanley, Bank of America and Citigroup.
Although most of the stakes were small, China Investment Corp., the government’s $300 billion investment fund, now owns stock in some of the best-known American brands, including Apple, Coca-Cola, Johnson & Johnson, Motorola and Visa.
*************
Some U.S. politicians in both parties have been nervous about China’s growing financial reach, and particularly wary that China might seek political influence in the West commensurate with its corporate stakes. Wariness in Washington flared four years ago when Congress discouraged Cnooc, a state-owned Chinese oil company, from buying Unocal.
?Are they nervous that China might buy influence in the US or are they nervous that they won’t get a piece? Thank you again Supreme Court.
“Are they nervous that China might buy influence in the US or are they nervous that they won’t get a piece? Thank you again Supreme Court.”
That might be the only thing that might encourage Congress to limit corporate influence is the fear of foreign influence. Of course, even that might not work if there are enough Senator Shelby’s in Congress trying to steer business from U.S. corporations (Boeing) to foreign corporations (Airbus).
Are they nervous that China might buy influence in the US or are they nervous that they won’t get a piece? Thank you again Supreme Court.
Measton, I’ve got news for ya. If someone has $9 billion and a message they want to get out, they’re going to get it out, campaign finance regs or no. The question is whether those of us who DON’T have $9 billion are going to be allowed to rebut/refute the message. Campaign finance rules, like pretty much all other regulations, only hurt the little guy.
The supreme court said that companies with 9 billion could donate it directly to their candidate. Judge Thomas said that candidates should be able to accept this money annonymously.
Tell me how preventing this hurts the little guy??
1) Because the co’s can hire zillions of lawyers and consultants to find ways to circumvent the ban. The little guy can’t.
2). Because there is no effective way to punish a corporation for violating the law, due to limited liability.
“…The question is whether those of us who DON’T have $9 billion are going to be allowed to rebut/refute the message.”
Wait a comment from:
Our Corporate sponsor : MUrDoch’s “TrueProvoker ™” Faux News
MUrDoch’s = “True Chupacabra™”
The Chinese government said today that it would acquire a $3 billion stake in the Blackstone Group, the private equity firm, in the country’s first effort to diversify its $1.2 trillion in foreign-exchange reserves beyond United States Treasury bills and into commercial enterprise.
The deal, which is set to coincide with Blackstone’s $4 billion initial public offering this year, will give China a roughly 8 percent stake in Blackstone, which owns companies that have 375,000 employees and $83 billion in annual sales.
and then
Burlingame, Calif. - Freescale Semiconductor, the world’s 10th largest chipmaker, has agreed to sell itself for $17.6 billion in cash, or $40 a share, to a group of privately held buyout firms led by The Blackstone Group.
so my friends who work at Freescale now say the place is swarming with Chinese Engineers busy transferring their property back home
“The deal, which is set to coincide with Blackstone’s $4 billion initial public offering this year, will give China a roughly 8 percent stake in Blackstone, which owns companies that have 375,000 employees and $83 billion in annual sales.”
Sounds like they are gearing up to purchase U.S. assets at fire sale prices.
All the more reason to let C, MS, and BAC go under.
I’m in the DC Metro area and thought that I’d give my two cents as to the local RE market (and I have some time as we’re still sitting under about 3 feet of snow which for us is like 30′ for some of you folks). I’m in Howard County MD, about halfway b/w DC and Balt. Houses are still moving at decent clip in terms of DOM, but the HB is definitely noticeable in terms of price. It’s interesting b/c the price drops have appeared to be very slow, but now after a few years of slow/steady drops the overall price drop is fairly substantial. IMO, many areas are already at 20-33% of the 2005/6 prices. I bought in early 2006, and I’d guess that we’re ‘down’ about 20%. Honestly not sure if I would do much different though in hindsight, as rents appear to have remained fairly stable and the price drops were, and continue to be, so gradual. I rented for a long time before we bought and I was just tired of the situation, so I’m not sure I could have lasted another 4+ years.
I think that many of the apts and THs are priced at, or close to, positive cash flow in general terms (ie not factoring in non-HOA payers, assessments, etc). Starting to see a noticeable number of foreclosures, shorts, and REOs - noticeable for this area IMO is basically admitting/advertising that such properties exist. Inventory appears lower than I would have thought though, however that is likely due to the shadow count as well as it being winter. There are some noticeable store closings/vacant CRE, but overall it doesn’t appear to me that the retail side is hurting too much. I think the UE numbers are relatively good for the area (lots of Feds as well), and are driving/propping up a lot of business, RE, etc. Curious to see what Spring brings in terms of RE.
One parallel I noticed between living in DC and in parts of coastal southern California was the general lack of space for some types of retail, such as grocery stores, to the point that it was sometimes difficult to keep the shelves stocked during the day because of the amount of volume.
One notable exception more recently in San Diego has been with the new mixed use developments, retail on ground floor and condos above. Much of that new retail space continues to sit vacant. Have you noticed similar trends in the DC area?
SDGreg,
If you want a real laugh, in many of the movies shot there “on location” from the 60’s and 70’s, they show people pulling up to shops right on PCH ( actually ‘finding’ a parking place ) and then -walking- across the Hwy!
I’d love to someone try that now? Kersplat.
Well, right now I’m not in a very urban type setting where you see those types of situations. However, I was in the Arlington/Tysons Corner area from the ‘99-’06 timeframe and saw quite a bit of the mixed use building. When I left in 06, it looked like a lot of the completed mixed use was vacant on the commercial side (and was glaring in its absence), but upon going back over the last few years I think a lot of it has filled up, at least in the Falls Church, Claredon, Arlington, VA areas. I think the real problem was that they created a lot of the mixed-use space in areas that weren’t truly walkable at the time (and still might not be).
Judson Phillips held it down and Sarah Palin drove a stake right through its heart live last night on C-Span in front of an unsuspecting audience”). He also observes that “Sarah Palin didn’t give a tea party speech last night. She gave a partisan Republican address”; he asks: “what was [Palin] doing justifying and perpetuating the foreign policy of George Bush at a tea party convention?”; and says that what began as “an authentic protest movement” — “of ragtag and unorganized libertarians, independents and conservatives [that] was something new and unique” — has now been completely annexed by Palin and her GOP operative-controllers who want a restoration of the standard Bush/Cheney agenda.
I think it was clear from the start that the populist and anti-Beltway rage fueling these gatherings was being diverted (absurdly) into standard Republican dogma, by the same party that ran the country with virtually no restraints for the last decade. And a large faction of this movement from the beginning was driven by the same ugly nationalism, Christian fanaticism, and Limbaughian hatreds that have long shaped the American GOP Right. There’s a reason why the Bush-revering Fox News embraced it from the beginning. But whatever else is true — whatever authentic elements once existed here — it is now nothing more than a vehicle for rejuvenating the standard GOP, draped with even more neoconservative extremism and religious fervor than drove it for the last ten years. That’s why Sarah Palin is their most beloved leader.
Link to come later. But this says it all.
I am afraid Sarah is just too dumb for me to ever consider voting for her.
Depends on who’s running against her. I didn’t like W but ended up voting for him anyway. In hindsight I wish I’d voted for Libertarians. I need to remember that if she does actually make it to the top of the ticket. It would be easy to get sucked into voting for her just as a vote against the D candidate…again.
Bear, you can’t discern anything about intellect from deficits in marketing machine packaging. Admit it. You have been Californicated completely - your are terrified at the thought of a capable woman toting a gun, bringing down a moose, being effective at fishing - in short, for not conforming to whatever politically correct screed you espouse.
I find my own visceral reactions reveal more about me than about the object of my revulsion. Please consider the following hypothetical: might you feel less repulsed by a smooth talking hack, a homogenized suit of (any) persuasion, who you can more easily imagine serving you beers in a bikini?
Hunting prowess or bikini-clad-attractiveness is not one of my criteria for leader of the country. Among my criteria are:
1) Mental endurance
2) Intelligence
3) The ability to make deadly important decisions - leadership skills.
4) A certain Machiavellian side, mixed with strong loyalty to this country and its citizenry.
I agree with your criteria, and would add another two - common sense (duh - I’ll give youse a bailout for a gazillion dollars, but I won’t put any conditions on how you spend it) and integrity to the principles of the republic. Which I don’t believe included privatizing gains and socializing losses.
I’ll admit it, I am resentful as all get out that I still have one to get through school, and my salary has declined as compared to college costs. I find it obnoxious to see the robber barons rolling in dough.
OK. Forget the politically correct terminology. I am not ‘resentful’. I AM MAD AS H*LL.
jane,
Back when the bailouts and the “financial crisis” were in full swing, Palin was questioned about the bailouts and she clearly had NO IDEA what “the bailouts” were about. After the shocked, startled look faded, she went into some kind of rant about healthcare. Seriously, this woman is about as intelligent as a drunk flea.
Didn’t catch that. Maybe we should have more people in power for whom bailouts would be an alien notion. Just sayin’.
“…it is now nothing more than a vehicle for rejuvenating the standard GOP, draped with even more neoconservative extremism and religious fervor than drove it for the last ten years.”
Rewrite:
“…it is now nothing more than a vehicle for rejuvenating the standard “TrueBeliever’s™ / TrueDeceiver’s ™” GOP, draped with even more neoconservative extremism and religious fervor than drove it for the last 16 years.
Sarah / Jeb 2012!
The “TrueAnger™” PeeParty tea toaddlers harken back to the days of “pitchforks & Coors”
Ross Perot is not dead!
Ross Perot is not dead!
Ross Perot is not dead!
IMHO, the “Tea Party” movement was not only co-opted by the Republicans. I think “they” are trying to use this movement as a way to get to the disenfranchised, unhappy voters who consider themselves to be Independents. “They” (the PTB) know that the two-party movement is having problems, so they are getting ready to create a viable “third party” which will end up being run by the same nefarious people (the PTB — those who have no term limits, and whose names we don’t even know) who run the Democratic and Republican parties. It’s all about distracting the masses and making them think that they are thinking for themselves.
/tin foil hat moment
CA renter,
I don’t think that is tin foil hat, it’s pretty accurate.
Now Get Rewarded for Simply Paying the Mortgage
“A New Jersey-based company has launched an incentive-based program to address the risk of strategic default, which is surely on the rise as a result of sinking property values.
Loan Value Group, LLC’s “Responsible Homeowner Reward” (RH Reward) program creates incentives for homeowners to stay current on payments without changing the terms of the loan or reducing principal.”
http://www.thetruthaboutmortgage.com/now-get-rewarded-for-simply-paying-the-mortgage/
This is a interesting idea . Pay a borrower a reward at the end of the year if they don’t default .The question is how much incentive is going to be given . Do you get taxed on the reward ?
Here is an interesting peek into why loan mods are hard to get these days from a pro REIC team.
http://thinkbigworksmall.com/mypage/archive/1/29027
Holy cow… video is well worth the time, folks.
un-F-ing believable!
What an interesting tale about IndyMac and the FDIC, and what goes on behind our backs. Thank you oc-ed, and Kim, for the nudge.
Interesting how GS thieves are in the mix again on being on the receiving end on this deal .
I’d like to see more details about this. Maybe we need to send this off to the MSM…or would they even care?
The fate of a consumer financial protection agency was thrown in doubt Friday, as the Senate Banking Committee chief said he planned to push a bill forward without Republican support.
Sen. Christopher Dodd, D-Conn., said on Friday that banking committee staff will draw up draft legislation on all regulatory reform to be voted on later this month — even though, “for now, we have reached an impasse” with the ranking Republican on that committee, Sen. Richard Shelby, R-Ala.
The sticking point is the consumer financial protection agency, which has long been considered the signature piece of the legislation offered by the Obama administration for redoing the regulatory system after the financial collapse.
Shelby said he supports consumer financial protection, but he’s concerned about the financial health of companies. He wants the regulator who protects consumers to also consider financial firms’ health, to strengthen “both consumer protection and safety and soundness regulation.”
“I will not support a bill that enhances one at the expense of the other, however,” Shelby said.
Big business and banking industry groups have targeted the consumer agency in particular, making it a priority to defeat. Financial service companies spent at least $439 million on lobbying in 2009, according to the Center for Responsive Politics. The U.S. Chamber of Commerce spent $74 million, although they also lobbied on health care issues.
Thank you Supreme Court. Money = Free Speach. It’s good to know that Shelby is concerned about the health of companies. ie if their sick they should be allowed to screw customers, if they are not sick they should be able to screw customers by claiming to be sick.
Frightening how little they care about their constituents/American citizens, isn’t it?
Rep. John Murtha, Iraq war critic, dies at 77.
Feb 8 02:55 PM US/Eastern
HARRISBURG, Pa. (AP) - U.S. Rep. John Murtha, an influential critic of the Iraq War whose congressional career was shadowed by questions about his ethics, died Monday. He was 77.
The Pennsylvania Democrat had been suffering complications from gallbladder surgery. He died at Virginia Hospital Center in Arlington, Va., spokesman Matthew Mazonkey said.
In 1974 Murtha, then an officer in the Marine Reserves, became the first Vietnam War combat veteran elected to Congress. One of Congress’ most hawkish Democrats, he wielded considerable clout for two decades as the ranking Democrat on the House subcommittee that oversees Pentagon spending.
Murtha voted in 2002 to authorize President George W. Bush to use military force in Iraq, but Murtha’s growing frustration over the administration’s handling of the war prompted him in November 2005 to call for an immediate withdrawal of U.S. troops.
Dow down 100 with 5 minutes to go. C’mon, PPT, you can do it! Crank that sucker back up!
Looks like Mr Market may have outfoxed them for once…
So, any predictions by when it will drop below 9000?
Never.
That’s my prediction — don’t have any evidence to back it up, aside from the appearance that the stock market receives price support…
Woot, watch em slide.
Has anyone here been to one of those housing auctions by Hudson & Marshall or REDC (Real Estate Disposition Corp)? IIRC (one or both) give you two weeks notice prior to the auction to get an inspection, and get your due diligence done.
Any feedback would be appreciated.
I just viewed a flip that was bought in Nov. 2009 $401K,and it’s back on the market for $530K. No earth shattering upgrades, but greed and hoping for an emotional buyer. (Taupe walls w/ white trim & new cabinet doors & SS)
We’re seeing lots of these flips around here. Tons of money being made in flipping again.
Question for you all….
I’ve watched an REO come on and off the market since July 2006. It just came back on so I emailed the servicer and asked what the status was and how I could submit an offer. (40% of ask in cash of course). The response was,
“Please be advised that this asset has been returned to the lien holder.”
Does this mean the lien holder doesn’t want to sell? How do I ID the lien holder?
TIA
Check your local Recorder of Deeds office (or equivilent). Our county has it online, but in some you have to call.
RAL,
Please let us know what you find out. This is interesting information. Do you think it was already an REO (actually owned by the bank)? If so, determining what happened to this REO is essential to understanding what’s going on in this market.
Another data point from The Great Recession: I’ve been in the process of looking at — and cutting — my health care costs.
For example, on the medical side, I’ve consolidated practitioners from two doctors and one physician assistant down to just the PA. (She’s quite good, BTW.)
On the dental side, I’ve already told you about that $655 deep cleaning that was recommended to me a year ago. Y’know, the one that the community college’s dental studies program’s student and lead instructor told me wasn’t needed. (Nothing like getting a second opinion, people!)
Well, I was so impressed with that dental studies program that I’m now on the patient call list. Will be going for a dental checkup a week from Friday.
Not that the dentist’s office has given up. Mind you, I haven’t darkened their doorway for a year. (Something about dodging an unneeded procedure costing $655.) But they’re calling and asking if I need any help in making an appointment.
Somehow, I don’t think they’re looking for this in the way of a reply:
“You could help by reducing your prices back to the levels they were at before Dr. Unneeded Procedures went heavily into cosmetic dentistry, then had to remodel the office to go with her new upscale practice. And you’d be a lot more believable if your expensive procedures were actually necessary.”
“And you’d be a lot more believable if your expensive procedures were actually necessary.”
Exactly!
Just took Mr. Cole, x1 cavity…they want to do semi-root canals on x3 baby teeth…$$$$$$$$
Bugs: “eh, I don’t think so Doc, ….eh, by the way Doc, is that a 2010 Lexus SUV your driving now…
The dentist I fired has a 7 series BMW.
I needed a root canal three years ago. Local dentists charged from $1400 to $2100 and all required multiple visits spread over several weeks. Then I started checking out the dentist in Progresso Mexico across the boarder from McAllen TX. The same exact procedure was priced from $300-$600. I drove down on a Wed. night (370 miles), booked a room for 2 nights, paid $380 for the dental work (gold crown too) and spent a grand total of $630 for the whole enchilada (pun intended). I would do it again in a heart beat.
PS: I picked up a bag full of brand name meds (anti-biotics, pain relievers) for my family including 1 yr supply of heart-worm medicine for my dog for about 60% off US prices.
BlueStar
I appreciate the tale of cross border dentistry.
My thank you to all, for sharing your dental stories.
If anyone is interested in out of country medical procedures, there is a company, Planet Hospital, based out of Calabasas, (So) Ca. who has relationships with docs and hospitals out of the USA.(medical tourism)
http://www.planethospital.com/
I saw cosmetic work (in person) done in Argentina and Brazil and it looked great!
b..b..but we need to Drill..Baby..Drill !
Good for you, Slim!
A similar thing happened to me almost a decade ago. I had been going to the same group for years, then all of a sudden they hired a new guy - and boy, was he gunning for revenue! He told me I had four cavities and that I “needed” a whole bunch of expensive cosmetic dentistry (not covered by insurance, of course). On my way out the door I whispered to the technician that I would not be back, but still I cried the whole drive home. Then I got angry. I scheduled a second opinion. I had one cavity, not four. Due to moves and such, I’ve had three dentists since that experience, and none of them ever found a problem with those other three teeth. To this day I shudder whenever I think that there is a licensed but dishonest dentist out there willing to drill into perfectly healthy teeth. Being older and wiser, if it happened to me now I’d be reporting him to the medical board (and whoever would listen).
The good news is that he didn’t last long at that practice. My mother went there for an urgent visit a couple months later; it wasn’t her usual dentist, but this place was the only one who would accomodate her last minute on a Saturday - and she specifically asked not to see the dentist I saw. That dentist was gone. Alas, so were many of their patients. Mom said they literally begged her to ask me to come back. No thanks.
Had a similar thing happen throughout my childhood, unnecessary fillings. Found an honest dentist though, in DC i anyone is looking.
Nice going, Slim. I wonder… could it be that cash is now king even in the health care arena? Could it happen that more people will start to follow your lead, ask more questions, shop around, and save money on treatments? Might healthcare pricing be another huge bubble which could deflate on its own– gasp– WITHOUT government intervention??
Y,know, LehighValleyGuy, you have a point.
Further up the thread, I mentioned the physician assistant I’ve been patronizing. Matter of fact, I saw her in the Food Conspiracy Co-op this past Saturday.
Being a good health care professional, she asked me how I was. Well, I ‘fessed up to that allergy attack that snuck up on me late last month. I also told her how I counter-attacked with a bottle of nettles and quercetin that I’d bought at the co-op. Darn if that stuff didn’t start making a difference within 24 hours. I’m feelin’ much better, TYVM.
The PA approved of my approach.
“I wonder … could it be that cash is king even in the health care arena?”
If the “real” unemployment rate is as large as people say it is then that means there are a lot of people doing without health insurance. This includes dental and vision.
The dentists and optical guys have some hefty bills to pay for their office rent and fancy machines. Somebody has to pass on some cash to these guys. Those without jobs - which means without insurance - aren’t going to spend their out-of-pocket hard-to-get cash for checkups; They have more immediate concerns.
So that leaves the ever-shrinking pool of insured employees to make up the difference.
Look for a lot of consolidation and shrinkage of dentists and eyecare folks as this contraction thingy rolls on.
“So that leaves the ever-shrinking pool of insured employees to make up the difference.”
My state is about seven months behind in making payments to the health insurance carriers of its employees’ plans. Providers are not getting paid fast enough and throwing employees into collections. So in a way, those employees have health insurance, but they don’t have health insurance - all at the same time!
On the dental side, I’ve already told you about that $655 deep cleaning that was recommended to me a year ago. Y’know, the one that the community college’s dental studies program’s student and lead instructor told me wasn’t needed. (Nothing like getting a second opinion, people!)
—————-
Not sure what happened to the dental industry (greed???), but we had the same experience multiple times. One dentist acted as though all our teeth would fall out within a year if we didn’t get thousands of dollars of work done (including those “special” cleaning sessions). Went to another dentist, and they said everything was absolutely fine. No problems, not a cavity to be seen.
Something needs to be done about these quacks.
This sounds good.
“In discussing the Obama Administration’s Home Affordable Modification Program, which is arguably less successful than anyone intended, Wheeler made a comment leading some to believe that the Administration may be shifting focus from modifications to another program which simply gets troubled borrowers out of their homes as quickly and cleanly as possible.”
http://www.cnbc.com/id/35297731
Let’s hope this goes through. The comments are funny, though: “if you kick us out of “our” homes there will be a revolution!” Wow, is anyone else as blown-away by the sense of entitlement that’s so prevalent among home “owners”?
Given the printing press technology, I believe these debt fears are overblown. Look for DJIA above 10K by Friday this week, or bust.
Debt fears drag Dow below 10,000
By Alexandra Twin and Hibah Yousuf, staff writersFebruary 8, 2010: 6:25 PM ET
NEW YORK (CNNMoney dot com) — The Dow closed below 10,000 Monday for the first time in three months, with financial shares leading the way, as worries about the U.S. economy and European debt weighed on investor sentiment.
The Dow Jones industrial average (INDU) tumbled 104 points, or 1%, ending at 9,908.39. The last time the Dow finished below 10,000 was Nov. 4, when it closed at 9802.14.
The S&P 500 index (SPX) ended just below break-even. The Nasdaq composite (COMP) shed 15 points, or 0.7%. Neither closed at notable lows.
Since peaking at a rally high on Jan. 19, the Dow has lost 7.6%, the S&P 500 has lost 7.3% and the Nasdaq has lost 8.4%.
“I think you’re seeing a concern about how real this economic recovery is,” said Kevin Mahn, managing director at Hennion & Walsh. “The sovereign debt issue is the macro concern, but near term, it’s all about the economy.”
…
Annualized rate of return on the DJIA since Nov 4, 2009:
((9908.39/9802.14)^4-1)*100 = 4.4 percent —
Not that bad, considering we are comparing successive local mins…
A few timeless pieces of advice are in order:
1) Talk is cheap; action is dear.
2) Beware of debt bearing Greeks.
3) Beware of grift bearing geeks.
The Wall Street Journal
* AGENDA
* FEBRUARY 8, 2010, 7:47 P.M. ET
A Crisis of Sovereignty As Well As Debt
* By PATIENCE WHEATCROFT
The European Union is in need of a new economic strategy.
The veracity of that statement might seem indisputable, as various EU countries, led by Greece, struggle to avoid being crushed by their accumulated debts. But in the surreal bureaucratic thinking of the EU, the reason it needs a new economic strategy has as much to do with the fact that its previous one is nearing its expiry date as any desperate need to deal with the current crisis.
In March 2000, the EU set out its strategy for the next decade. It wasn’t unambitious. In fact, it showed an heroic determination to ignore what was going on elsewhere in the world, for at the heart of the economic policy was a new strategic goal: “to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion.”
It seems almost cruel now to revisit the document which explained how this was to be achieved. There was to be an emphasis on “modernizing the European social model, investing in people and combating social exclusion” and a drive to “improve the quality and sustainability of public finances.”
Such was the blinkered, Eurocentric vision of the world that it hadn’t focused on the challenges rising from China and India. The latter Monday said its growth was now steaming ahead at 7.2% a year, a level of dynamism EU countries couldn’t dream of emulating.
It seems unlikely that, when they meet in Brussels on Thursday for a special economic summit, the EU’s leaders will devote much time to assessing just how far short they have fallen of the targets they set in 2000. Neither are they likely to want to dwell on the reasons for such abject failure. The concise explanation though is that talking is easy, doing is much harder.
Europe’s leaders continue to utter grand pronouncements. Over the weekend, they were doing so in the suitably chilly environment of Iqaluit, Canada’s Inuit capital, at a meeting of the G-7 finance ministers.
According to Timothy Geithner, the U.S. secretary of Treasury: “The European authorities gave us a very comprehensive review of the program now in place to address the challenges faced by the Greek economy.”
If Mr. Geithner was truly reassured by what he heard, then either he must be gullible in the extreme, which wouldn’t be ideal, given the job he holds, or he was told rather more than the rest of the world has heard.
…
Did anyone else notice that in the Fed’s sabre-rattling about tightening, their first proposed step is an even bigger stealth-bailout of the banks?
Raising the interest-rate paid on reserved improves the spread the banks are already skimming risk-free: borrow @ 0%, leave on deposit at the Fed @ 5%?
Talk is cheap; action is dear.
Not sure if others have already posted this, but this week’s Economist has a good article, “Return to lender,” about Fannie and Freddie, as well as FHA (”which insures low-quality mortgages”), bouncing loans back to the banks because the borrowers lied about income or occupancy. The article didn’t mention whether the loans additionally carry a provision to convert such fraudulent loans from non-recourse to recourse. It would be thoroughly hilarious if so!
DURING the boom, American banks spent surplus profits on share buybacks. Now they are being forced into repurchases of a nastier kind: securitised mortgages whose flaws allow buyers to toss them back to the original lender.
Keenest to ensure that the banks own up to their past sins are Fannie Mae and Freddie Mac, the housing agencies that bought or guaranteed many of the loans. Their stock of seriously delinquent mortgages is rising sharply and stands at $300 billion. Now majority-owned by the government, they are under pressure to claw back every dollar possible for taxpayers—hence the hordes of employees poring over loans for signs of irregularities, such as false income statements by borrowers or second-home buyers posing as owner-occupiers.
According to Barclays Capital, banks were made to buy back $14.2 billion of mortgages from Fannie and Freddie in the first nine months of 2009, four times the amount a year earlier. The rate of repurchases has probably accelerated since then. The agencies have even begun rejecting loans that are iffy but still being paid, says Guy Cecala of Inside Mortgage Finance, a newsletter. The worst-hit banks will be Wells Fargo and Bank of America, respectively Freddie and Fannie’s biggest sources of mortgages. Last quarter Wells quietly set aside $316m of reserves for repurchases.
Banks have been pushing back, questioning the legality of some repurchase requests. But they are in a weak position. With the collapse of the private securitisation markets, Fannie and Freddie account for 70% of new mortgage issuance. Any threat to stop doing business with lenders is potent.
Christopher Whalen of Institutional Risk Analytics, a ratings firm, thinks the repurchase wave could knock a percentage point or more off banks’ returns as it builds. Freddie and Fannie are not alone in looking to send loans back: the Federal Housing Administration, which insures low-quality mortgages, is getting tougher too, as are private mortgage insurers, such as Radian and MGIC.
Optimists note that loans are now souring less because of poor underwriting than unemployment, which is not a reason to demand repurchase. And not every bought-back loan will go bad. Still, mortgage buybacks are one bit of new business banks could really do without.
Maybe we will go back to the days when lenders actually try to prevent
fraud and actually know who they are dealing with . When they didn’t clean up the corrupt front lines of mortgage packaging fraud they just begged for more from the same remaining corrupt groups.
More trouble in Dubai: funny.
http://hosted.ap.org/dynamic/stories/M/ML_DUBAI_TALLEST_BUILDING?SITE=FLDAY&SECTION=HOME&TEMPLATE=DEFAULT
The silver lining: Since the building is mostly unoccupied, it was primarily tourists wanting to take a trip to the top of the Arab world who were hurt by the power outage.
“In a brief statement responding to questions, building owner Emaar Properties blamed the closure on “unexpected high traffic,” but then suggested that electrical problems were also at fault.
Given that the building is nearly empty, I’m guessing the latter.
“Technical issues with the power supply are being worked on by the main and subcontractors and the public will be informed upon completion,” the company said, adding that it is “committed to the highest quality standards at Burj Khalifa.”
Could we get a real-life Towering Inferno? That would be awesome. Even better if the Fed and the Obama economic team were meeting on the upper floors.
Please explain if you can how the GSEs’ “unaffordable housing” policy helps taxpayers who are not homeowners? I can understand how their housing price inflation programs help underwater loan owners like Treasury Secretary Geithner, though.
The Wall Street Journal
* FEBRUARY 9, 2010
No Exit in Sight for U.S. As Fannie, Freddie Flail
By NICK TIMIRAOS And JAMES R. HAGERTY
MCLEAN, Va.—When Charles E. Haldeman Jr. became Freddie Mac’s chief executive officer in August, the ailing housing-finance giant had already consumed $51 billion of government money to stay afloat. It’s likely to need even more.
Freddie’s federal overseers nevertheless have instructed Mr. Haldeman to focus on something that isn’t likely to make the bleak balance sheet look any better: carrying out the Obama administration plan to allow defaulted borrowers to hang onto their homes.
Former Fannie CEO Daniel Mudd testifying in 2008, says the U.S. is running Fannie and Freddie ‘not as a business.’
On a recent afternoon, employees at Freddie’s headquarters here peppered Mr. Haldeman with concerns about the company’s future. He responded that they were “fortunate” to have such a clear mission—the government’s foreclosure-prevention drive. “We’re doing what’s best for the country,” he told them.
Freddie and its larger rival, Fannie Mae, were among the first big financial institutions to receive massive federal bailouts after the financial crisis hit in 2008. Government officials have been racing to fix bailed-out car makers and banks and are pushing to reshape the financial-services industry. But Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government.
Nearly a year and a half after the outbreak of the global economic crisis, many of the problems that contributed to it haven’t yet been tamed. The U.S. has no system in place to tackle a failure of its largest financial institutions. Derivatives contracts of the kind that crippled American International Group Inc. still trade in the shadows. And investors remain heavily reliant on the same credit-ratings firms that gave AAA ratings to lousy mortgage securities.
Fannie and Freddie, for their part, remain at the core of a housing-finance system that inflated a dangerous housing bubble. After prices collapsed, sending shock waves around the world, the federal government put America’s housing-finance system on life support. It has yet to decide how that troubled system should be rebuilt.
On Dec. 24, Treasury said there would be no limit to the taxpayer money it was willing to deploy over the next three years to keep the two companies afloat, doing away with the previous limit of $200 billion per company. So far, the government has handed the two companies a total of about $111 billion.
The government is willing to tolerate such open-ended exposure for two reasons. First, it sees the companies as essential cogs in the fragile housing market. Fannie and Freddie buy mortgages originated by others, holding some as investments and repackaging others for sale to investors as securities. Together with the Federal Housing Administration, they fund nine in 10 American mortgages. Worries about potential insolvency would cripple their ability to fund home loans, which would hamstring the market.
Second, the companies are a convenient tool for the administration to use in its campaign to clean up the housing mess.
“We’re making decisions on [loan modifications] and other issues, without being guided solely by profitability, that no purely private bank ever could,” Mr. Haldeman said in late January in a speech to the Detroit Economic Club.
Besides playing a key role in the loan-modification program, Fannie and Freddie have jump-started lending by state and local housing-finance agencies by helping to guarantee $24 billion in debt. They also are lending support to the apartment sector by becoming the main funders of loans to builders and buyers of apartment buildings.
Freddie CEO Charles Haldeman says: ‘We’re doing what’s best for the country.’
By using Fannie and Freddie for such initiatives, the White House doesn’t have to go to Congress for funding. The Treasury and White House can simply issue instructions to Fannie and Freddie via their federal regulator, the Federal Housing Finance Agency, or FHFA.
The government is “running Fannie and Freddie as an instrument of national economic policy, not as a business,” says Daniel Mudd, who was forced out as Fannie Mae’s chief executive in September 2008 when the government took control.
Assistant Treasury Secretary Michael Barr says that because Fannie and Freddie are “owned by the taxpayers in the middle of the biggest housing crisis in 80 years,” it would be unrealistic to expect the companies wouldn’t be used to help stabilize the market. He says the administration’s actions have been “prudent” and “consistent with taxpayer protection.”
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What happens to the value of the dollar if the EU comes apart at the seems?
The Financial Times
Traders in record bet against the euro
By Peter Garnham, Victor Mallet and David Oakley
Published: February 9 2010 02:00 | Last updated: February 9 2010 02:00
Traders and hedge funds have bet nearly $8bn (£5.1bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis.
Figures from CME Group, which are often used as a proxy of hedge fund activity, showed investors had increased their positions against the euro to record levels in the week to February 2.
The build-up in net short positions represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn. It suggests investors are losing confidence in the single currency’s ability to withstand any contagion from Greece’s budget problems affecting other European countries.
Amid growing nervousness in financial markets over whether countries including Spain and Portugal can repair their public finances, Madrid yesterday launched a PR offensive to try to assuage investors’ fears.
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Monday, February 08, 2010
Fed’s Bullard: Fed Could Keep Interest Rates Low Until 2012
By Peter Barnes
FOXBusiness
A member of the Federal Reserve’s policy-setting body suggested Monday that the central bank could keep short-term interest rates low until 2012 to encourage economic growth, but that it also could use some of its newer monetary tools to check excessive inflation if it materializes in the current economic recovery.
James Bullard, the president of the Federal Reserve Bank of St. Louis, is a new member of the Federal Open Market Committee, which faces tough, unprecedented policy decisions this year as the central bank unwinds first-time programs it launched during the financial crisis to prevent a second Great Depression.
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With the economy marking two quarters of expansion, Bernanke and his fellow FOMC members enter risky, uncharted policy waters: the Fed launched many rescue programs for the first time during the crisis and now for the first time is confronted with closing them. Mistakes could plunge the economy back into recession — or conversely trigger too much growth, overheating the economy and generating high inflation.
“It’s always a tough balancing act,” Bullard said. But it is especially tough now, he said, because of the Fed’s policy innovations: “We’ve got to be very good at what we do” to unwind them in an orderly way, he said.
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